REG - Petrel Resources PLC - Preliminary Results for the Year Ended 31 Dec 2023
20/06/2024 07:00
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RNS Number : 1127T Petrel Resources PLC 20 June 2024
20 June 2024
Petrel Resources plc
("Petrel" or the "Company")
Preliminary Results for the Year Ended 31(st) December 2023
Petrel Resources, the hydrocarbon explorer with interests in Iraq and Ghana
today announces its unaudited preliminary results for the year ending 31
December 2023.
The Company expects to shortly publish its 2023 audited Annual Report &
Accounts and Notice of AGM, which will be notified in due course.
For further information please visit http://www.petrelresources.com/
(http://www.petrelresources.com/) or contact:
Enquiries:
Petrel Resources
David Horgan, Chairman +353 (0) 1 833 2833
John Teeling, Director
Strand Hanson Limited- Nominated &
Financial Adviser
Richard Johnson +44 (0) 20 7409 3494
James Bellman
Robert Collins
Novum Securities Limited - Broker
Colin Rowbury
+44 (0) 20 399 9400
BlytheRay - PR +44 (0) 207 138 3206
Megan Ray
+44 (0) 207 138 3553
Teneo
Luke Hogg +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
CHAIRMAN'S STATEMENT
Petrel is a hydrocarbon explorer with interests in Iraq and Ghana.
Highlights
Market overview
• 2024 shows record demand for oil and LNG, with high oil prices reflecting
emerging supply constraints due to under-investment since 2014. In normal
markets this would drive exploration of new, as well as existing acreage.
• Recent years should have seen the opening of new petroleum basins, as
well as additional acreage in existing basins, and many discoveries which are
now economic to develop.
• Available fiscal terms, however, still reflect the boom conditions
between 2003 and 2014 rather than current market conditions. States have
been slow to engineer contractual terms so as to align the interest, and thus
maximise value for all parties. In much of the MENA region, fiscal terms
restrict financing ability, especially for juniors.
• Geopolitical tensions, from Guyana to the Middle East, are positive for
oil prices but negative for early-stage exploration and developments.
• Oil explorers are not yet attracting strong investor interest in western
markets. Producers buy shares back and issue dividends rather than invest
the $610bn necessary to supply future demand. There is still little farm-in
interest, especially in new basins, but the attempted 2024 BHP bid for Anglo
American may finally signal a shift in industry sentiment.
Assets overview
• In Ghana, ratification discussions on Tano 2A block continue with the
Ghanaian authorities - though acreage adjustments are likely, and governance
remains an issue.
• In Iraq, an updated Merjan oil field development proposal has been
prepared to reflect evolving Ministry guidelines.
• Iraqi oil output was adjusted to 4.2 million barrels daily in Spring 2024,
with exports of 3.4 mmbod in line with OPEC+ agreements.
• Petrel is considering participating in upcoming licencing rounds,
subject to qualification and contractual terms necessary for financing
partners. Generally, such bid rounds are expensive and risky compared to
direct negotiations - especially for juniors.
Outlook
• The board is considering expansion opportunities for oil & gas in the
MENA region, including reviewing oil & gas assets with prospectivity for
other gas resources such as helium which the Board believes would offer some
beneficial diversification given current market conditions outlined above.
We offer a long-established record and potentially high liquidity and capital
appreciation for the right story. As investors re-focus on 'hard industries'
and cash flow, this is a time of opportunity.
Financial Markets are jittery but also cynical. Oil & LNG (as well as
coal) demand reached record highs in 2023/24. And prices are trending
upwards.
This should be excellent news for explorers. But exploration budgets have
been slashed in oil & gas since 2014, and earlier for minerals - even
critical minerals necessary for the 'Green transition'.
Have normal market dynamics broken down or are we just passing through a
cyclical correction - albeit a long one?
Despite the human tragedies in Gaza and elsewhere the destruction has had
little impact on oil output or flows so far. Major sea-routes need not pass
close by - though Red Sea trade is disrupted by re-routing around the Cape and
increased insurance and freight rates. Gaza has no production, while Israeli
output is modest. But that could change if Iranian production and export
infrastructure were damaged, especially if Iran retaliated against producers
with western links.
Escalation is in nobody's interests, but international leadership seems more
dysfunctional than any time since 1914. The gradually escalating Middle
Eastern crises are thus worrying for energy markets.
The USA is not exercising a moderating influence, due to distractions in
Ukraine and Taiwan, biased domestic lobbying and, especially, because the US
is now largely self-sufficient in oil, gas, and coal - though not in many
critical resource minerals.
Due to the success of US fracking, especially from 2003 - 2014, the USA is now
less import-dependent. Together with the C-19 lock-downs, and slowing Asian
growth, this has allowed OPEC+ to build up some spare capacity, up to 6mmbod.
However, demand growth remains strong at 1.5mmbod yearly, and exploration
budgets have been slashed since 2014. For likely future demand, the sector
is expected to need $610bn of investment yearly (depending on rig-rates,
etc.), but manage only $360bn - and this is mainly in existing fields and
provinces, mostly in the Americas. There has been little frontier
exploration since 2015. Most of the developing world is starved of
investment.
This is part of a general investors' "strike" which has also impacted
minerals, such as copper and nickel - which are critical to the 'new economy'
- which is why the USA and now EU have passed acts to boost investment in such
minerals. Unfortunately, developers must go where the deposits are - many
key resources are in challenging locations, such as in Africa and South
America.
Resource nationalists do not understand finance, and politicians frequently
worsen difficulties by posturing, or demanding up-front cash, rather than
aligning interests. Former bid rounds, involving up-front fees,
qualification criteria better suited to majors, and limited upside, are not
the best way to expedite projects, keep cost control and optimise reservoir
recovery. That is why Petrel prefers direct negotiations, where possible,
after which we can bring partners via farm-ins.
In the meantime, there is market interest in Petrel's strong shareholder
following and liquidity - especially at times of intense news-flow.
Accordingly, and noting my commentary above, your board is considering a
number of expansion opportunities in the MENA region.
Financing
The directors and their supporters have funded working capital needs during
C-19, and the investors' strike and are prepared to participate in any
necessary, future fundings.
David Horgan
Chairman
20 June 2024
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
€ €
Administrative expenses (304,453) (310,813)
Impairment of Exploration and Evaluation assets (186,633) -
Operating loss (491,086) (310,813)
Loss before taxation (491,086) (310,813)
Income tax expense - -
Loss for the financial year (491,086) (310,813)
Other comprehensive income - -
Total comprehensive income for the financial year (491,086) (310,813)
Earnings per share attributable to the ordinary equity holders of the parent 2023 2022
Cents Cents
Loss per share - basic and diluted (0.28) (0.19)
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023
2023 2022
€ €
Assets
Non-current assets
Intangible assets 746,534 933,167
746,534 933,167
Current assets
Trade and other receivables 10,354 33,807
Cash and cash equivalents 35,667 166,309
46,021 200,116
Liabilities
Current liabilities
Trade and other payables (1,019,524) (889,927)
Total liabilities (1,019,524) (889,927)
Net (liabilities)/assets (226,969) 243,356
Equity
Share capital 2,235,898 2,223,398
Capital conversion reserve fund 7,694 7,694
Capital redemption reserve 209,342 209,342
Share premium 21,819,781 21,811,520
Share based payment reserve 26,871 26,871
Retained deficit (24,526,555) (24,035,469)
Total equity (226,969) 243,356
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
Share Capital Share Premium € Capital Redemption Reserve Capital Conversion Reserve Fund Share Based Payment Reserve Retained Deficit Total
€ € € € € €
At 1 January 2022 1,962,981 21,786,011 209,342 7,694 26,871 (23,724,656) 268,243
Issue of shares 260,417 25,509 - - - - 285,926
Total comprehensive income for the financial year - - - - - (310,813) (310,813)
At 31 December 2022 2,223,398 21,811,520 209,342 7,694 26,871 (24,035,469) 243,356
Issue of shares 12,500 8,261 - - - - 20,761
Total comprehensive income for the financial year - - - - - (491,086) (491,086)
At 31 December 2023 2,235,898 21,819,781 209,342 7,694 26,871 (24,526,555) (226,969)
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
2023 2022
€ €
Cash flows from operating activities
Loss for the year (491,086) (310,813)
Impairment 186,633 -
Foreign exchange 1,474 2,527
Operating cashflow before movements in working capital (302,979) (308,286)
Increase in trade and other payables 129,597 97,497
Decrease/(increase) in trade and other receivables 23,453 (8,144)
Cash used in operations 153,050 89,353
Net cash used in operating activities (149,929) (218,933)
Investing activities
Payments for exploration and evaluation assets - -
Net cash used in investing activities - -
Financing activities
Shares issued 20,761 285,926
Net cash generated from financing activities 20,761 285,926
Net cash (decrease)/increase in cash and cash equivalents (129,168) 66,993
Cash and cash equivalents at the beginning of year 166,309 101,843
Exchange gains / (loss) on cash and cash equivalents (1,474) (2,527)
Cash and cash equivalents at the end of the year 35,667 166,309
NOTES:
1. ACCOUNTING POLICIES
There were no changes in accounting policies from those used to prepare the
Group's Annual Report for financial year ended 31 December 2022. The
financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and in
accordance with the provisions of the Companies Act 2014.
2. LOSS PER SHARE
Basic loss per share is computed by dividing the loss after taxation for the
year attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue and ranking for dividend during the year. Diluted
loss per share is computed by dividing the loss after taxation for the year by
the weighted average number of ordinary shares in issue, adjusted for the
effect of all dilutive potential ordinary shares that were outstanding during
the year.
The following tables set out the computation for basic and diluted earnings
per share (EPS):
2023 2022
€ €
Numerator
For basic and diluted EPS Loss after taxation (491,086) (310,813)
Denominator No. No.
For basic and diluted EPS 177,899,197 160,919,745
Basic EPS (0.28c) (0.19c)
Diluted EPS (0.28c) (0.19c)
Basic and diluted loss per share are the same as the effect of the outstanding
share options and warrants is anti-dilutive.
3. GOING CONCERN
The Group incurred a loss for the financial year of €491,086 (2022: loss of
€310,813) and had net current liabilities of €973,503 (2022: €689,811)
at the balance sheet date. These conditions as well as those noted below,
represent a material uncertainty that may cast significant doubt on the
Group's ability to continue as a going concern.
Included in current liabilities is an amount of €947,531 (2022: €857,531)
owed to key management personnel in respect of remuneration due at the balance
sheet date. Key management have confirmed that they will not seek settlement
of these amounts in cash for a period of at least one year after the date of
approval of the financial statements or until the Group has generated
sufficient funds from its operations after paying its third party creditors.
The Group had a cash balance of €35,667 (2022: €166,309) at the balance
sheet date. The directors have prepared cashflow projections for a period of
at least twelve months from the date of approval of these financial statements
which indicate that additional finance will be required to fund working
capital requirements and develop existing projects. As the Group is not
revenue or cash generating it relies on raising capital from the public
market.
In January 2024, the Group received £90,000 from the exercise of warrants.
Further information is detailed in Note 8 below.
These conditions as well as those noted below, represent a material
uncertainty that may cast significant doubt on the Group and Company's ability
to continue as a going concern.
As in previous years the Directors have given careful consideration to the
appropriateness of the going concern basis in the preparation of the financial
statements and believe the going concern basis is appropriate for these
financial statements. The financial statements do not include the adjustments
that would result if the Group and Company were unable to continue as a going
concern.
4. INTANGIBLE ASSETS
Group Group
2023 2022
€ €
Exploration and evaluation assets:
Cost:
At 1 January 933,167 933,167
Additions - -
Impairment (186,633) -
At 31 December 746,534 933,167
Carrying amount:
At 31 December 746,534 933,167
Segmental analysis Group Group
2023 2022
€ €
Ghana 746,534 933,167
Iraq - -
746,534 933,167
Exploration and evaluation assets relate to expenditure incurred in
exploration in Ghana. The directors are aware that by its nature there is an
inherent uncertainty in Exploration and evaluation assets and therefore
inherent uncertainty in relation to the carrying value of capitalized
exploration and evaluation assets.
During 2018 the Group resolved the outstanding issues with the Ghana National
Petroleum Company (GNPC) regarding a contract for the development of the Tano
2A Block. The Group has signed a Petroleum Agreement in relation to the block
and this agreement awaits ratification by the Ghanian government.
As ratification has not yet been achieved in the current year the directors,
as a matter of prudence, opted to write down 20% of the carrying value of the
Tano 2A Block historic expenditure. Accordingly, an impairment charge of
€186,633 was recorded in the current year.
Relating to the remaining exploration and evaluation assets at the financial
year end, the directors believe there were no facts or circumstances
indicating that the carrying value of the intangible assets may exceed their
recoverable amount and thus no impairment review was deemed necessary by the
directors. The realisation of these intangible assets is dependent on the
successful discovery and development of economic reserves and is subject to a
number of significant potential risks, as set out below:
· licence obligations;
· exchange rate risks;
· uncertainty over development and operational costs;
· political and legal risks, including arrangements with Governments
for licences, profit sharing and taxation;
· foreign investment risks including increases in taxes, royalties and
renegotiation of contracts;
· financial risk management; and
· ability to raise finance.
5. OTHER PAYABLES
Group Group
2023 2022
€ €
Amounts due to key personnel 947,531 857,531
Accruals 16,500 12,000
Other payables 55,493 20,396
1,019,524 889,927
It is the Group's normal practice to agree terms of transactions, including
payment terms, with suppliers. It is the Group's policy that payments are made
between 30 - 45 days and suppliers are required to perform in accordance with
the agreed terms. The Group has financial risk management policies in place to
ensure that all payables are paid within the credit timeframe.
Key management personnel have confirmed that they will not seek settlement in
cash of the amounts due to them in relation to remuneration for a period of at
least one year after the date of approval of the financial statements or until
the Group has generated sufficient funds from its operations after paying its
third party creditors.
6. SHARE CAPITAL
2023 2023 2022 2022
Number € Number €
Authorised
Ordinary shares of €0.0125 each
800,000,000 10,000,000 800,000,000 10,000,000
Ordinary Shares - nominal value of €0.0125
Allotted, called-up and fully paid:
Number Share Capital Share Premium
€ €
At 1 January 2022 157,038,467 1,962,981 21,786,011
Issued during the year 20,833,333 260,417 25,509
At 31 December 2022 177,871,800 2,223,398 21,811,520
Issued during the year 1,000,000 12,500 8,261
At 31 December 2023 178,871,800 2,235,898 21,819,781
On 21 December 2023 a total of 1,000,000 warrants were exercised at a price of
1.8p per warrant.
7. SHARE BASED PAYMENTS
The Group issues equity-settled share-based payments to certain directors and
individuals who have performed services for the Group. Equity-settled
share-based payments are measured at fair value at the date of grant. Fair
value is measured by the use of a Black-Scholes valuation model.
Options
The Group plan provides for a grant price equal to the average quoted market
price of the ordinary shares on the date of grant. The options vest
immediately.
The options outstanding at 31 December 2023 have a weighted average remaining
contractual life of 4 years.
31 December 2023 31 December 2022
Options Weighted average exercise price in pence Options Weighted average exercise price in pence
Outstanding at beginning of year 500,000 10.50 500,000 10.50
Granted during the year - - - -
Outstanding at end of year 500,000 10.50 500,000 10.50
Warrants
31 December 2023 31 December 2022
Warrants Weighted average exercise price in pence Warrants Weighted average exercise price in pence
Outstanding at beginning of year 20,833,333 1.8 - -
Issued - - 20,833,333 1.8
Exercised (1,000,000) 1.8 - -
Outstanding at end of year 19,833,333 1.8 20,833,333 1.8
On 21 December 2023 a total of 1,000,000 warrants were issued at an exercise
price of 1.8p per warrant. Further information is detailed in note 6 above.
8. POST BALANCE SHEET EVENTS
Between 3 and 5 January 2024 a total of £90,000 was received from the
exercise of 5,000,000 warrants by warrants holders at the exercise price of
1.8p per share.
9. ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on 25 July 2024 in the Hotel
Riu Plaza The Gresham, 23 O'Connell Street Upper, Dublin 1, D01 C3W7 at 12.00
pm.
10. GENERAL INFORMATION
The financial information prepared using accounting policies consistent with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union included in this preliminary statement does not constitute the
statutory financial statements for the purposes of Chapter 4 of part 6 of the
Companies Act 2014. Full statutory statements for the year ended 31
December 2023 prepared in accordance with IFRS, upon which the auditors have
given an unqualified report, have not yet been filed with the Registrar of
Companies. The financial information for 2022 is derived from the financial
statements for 2022 which have been filed with the Registrar of
Companies. The auditors had reported on the 2022 statements; their report was
unqualified.
A copy of the Company's Annual Report and Accounts for 2023 will be mailed
shortly only to those shareholders who have elected to receive
it. Otherwise, shareholders will be notified that the Annual Report will be
available on the website at www.petrelresources.com
(http://www.petrelresources.com) . Copies of the Annual Report will also be
available for collection from the Company's registered office, 162 Clontarf
Road, Dublin 3, Ireland.
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