Europa narrows loss as it works towards production

Ireland and UK-focussed oil and gas exploration, development and production company Europa Oil & Gas announced its interim results for the six months to 31 January on Tuesday, with revenue rising marginally to £0.8m from £0.6m.

The AIM-traded firm narrowed its pre-tax loss to £0.2m year-on-year, from £0.6m, and reported net cash used in operating activities of £0.3m, down from £0.5m in the first half of the prior year.

It reduced administrative expenses to £0.22m, from £0.36m, and had a cash balance at 31 January of £1.4m, down from £1.7m at the start of the period.

On the operational front, Europa extended phase 1 of the Irish South Porcupine Basin licences FEL 2/13 and FEL 3/13 to 4 July 2017, to enable existing prospects to be matured and detailed mapping performed of all potential prospective levels.

Constructive discussions were held with a number of large oil companies in respect of farm-out of Europa’s Irish acreage, the board said, and discussions were ongoing with a number of parties with the company concluding one farm-out to Cairn Energy.

The sale of a 3.34% interest in PEDL180 & 182 (Wressle) to Union Jack Oil was agreed, for £0.6m in cash.

It also agreed the sale - conditional on planning approval - of a 10% interest in PEDL180 & 182 (Wressle) to Upland Resources for up to £1.85m - consisting of £1.3m in cash, £0.3m in Upland shares and a contingent consideration of £0.25m in Upland shares

Europa acquired Shale Petroleum during the period, increasing Europa’s interest in PEDL299 (Hardstoft) and PEDL343 (Cloughton).

The board did note that the Wressle planning decision had delayed the start of production, pending an appeal.

“Since the beginning of the financial year, a number of farm-outs and sales have been signed across our licence base raising non-dilutive capital for Europa,” said CEO Hugh Mackay.

“The remainder of 2017 will see Europa participate in high impact development and exploration projects for which our share of the costs is now funded.”

“Offshore Ireland, following our farm-out, 3D seismic will be acquired and funded by Cairn on LO 16/19 in the Irish Atlantic Margin.”

Mackay said with drilling set to commence in the region this summer, the company was well-placed to benefit from any positive results due to a potential de-risking of four billion boe of prospective resources in Europa’s licences in the Porcupine.

“We have landed one farm-out in Ireland and I am confident we will close out more in our other six licences offshore Ireland, as we look to maintain the momentum behind our strategy to monetise our asset base, manage risk and generate value for our shareholders.

“In the UK, we are carried on a potentially transformational well targeting the conventional Holmwood prospect, which neighbours the Horse Hill discovery and Brockham oil field in the Weald Basin.”

Mackay said with a 20% interest, Europa was materially exposed to considerable upside without having to put any of the company’s capital at risk drilling the well.

“Still in the UK and, subject to planning consent being granted, we expect our existing production to almost double to around 220 bopd if the Wressle discovery is brought online following our planning appeal.”