Half Year Report

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the EU Market Abuse Regulation 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

30 September 2024

Coro Energy Plc

("Coro" or the "Company" and together with its subsidiaries the "Group")

Half Year Report

Coro Energy PLC, the South East Asian energy company with a natural gas and clean energy portfolio, announces its unaudited interim results for the six month period ended 30 June 2024.

Highlights

Operational

·          The Company signed a binding 14-year power purchase agreement ("PPA") with Mobile World Group ("MWG") to deliver power at the first ten C&I rooftop solar sites as a pilot phase with a capacity of 430kw.

·          Signature of a second binding PPA with MWG for the next 30 sites with a capacity of circa 1MW.

·          Second Wind Energy Service Contract (WESC) secured in the Philippines.

·          Conrad Asia Energy Limited, the holder of a 76.5% operated interest in the Duyung Production Sharing Contract, in which the Group has a 15% interest, signed binding key terms for the sale and purchase of the domestic portion of the Mako gas field with PT Perusahaan Gas Negara Tbk. 

·         The Company received a letter from two lenders holding 68% of the Company's Luxembourg listed Eurobonds which were due to expire on 12 April 2024 granting a conditional standstill on the repayment of the Company's current debt obligations whilst the ongoing constructive discussions with the Company in respect of the Eurobonds continue.

Post Balance Sheet Events

·          Conrad Asia Energy Limited, the holder of a 76.5% operated interest in the Duyung Production Sharing Contract, in which the Group has a 15% interest, signed a binding Gas Sales Agreement for the sale and purchase of the export portion of natural gas from the Mako gas field with Sembcorp Gas Pte Ltd, a wholly-owned subsidiary of Sembcorp Industries Ltd, a leading energy and urban solutions provider, headquartered in Singapore.

·          Third binding PPA with MWG entered into and initiated construction at the next 50 sites with MWG with an aggregate capacity of c.1.9MW which brings the total contracted capacity to 3.3MW across 90 sites.

·          Six month US$500,000 secured convertible loan note with River Merchant Capital and Fenikso Limited secured.

·          Harry Beamish appointed as an independent non-executive director of the Company.

For further information please contact:

STATEMENT FROM THE CHAIRPERSON

The Company continues to make progress across its South East Asian portfolio.  Important milestones have been met at Duyung and work continues to find a Farm in partner. Our renewables portfolio across both the Philippines and Vietnam continues to grow with the recent funding secured locally to help speed up the roll out of the MWG rooftop solar project. The target remains to build greater critical mass in both Vietnam and Philippines through a larger pipeline of opportunities across renewables.

Post the period under review, the Company raised US$500,000 via a secured convertible loan with River Merchant Capital, an existing lender to the Company under the Company's Luxembourg 8% listed Eurobond and Fenikso Limited. The proceeds of this loan will be utilised to fund the Group's renewables business and for general working capital purposes. The Group's forecasts that this loan together with existing bank balances provides sufficient funding to fund the Company's working capital requirements through to the end of January 2025. The Company continues to work towards a broader debt restructuring and recapitlisation of the business.

Notwithstanding the above, management have prepared a consolidated cash flow forecast for the period to 31 December 2025 which shows that the Group will require additional financing to meet its obligations and intended renewables work programme in Asia beyond this date. We enjoy the ongoing support of our lenders whilst we continue to grow the renewables business activities but will continue to explore options which include issuing equity and disposals. Shareholders attention is drawn to the Going Concern language in the Annual Report published on the 9^th of September.

Oil & Gas

Italy

The Company disposed of its Italian natural gas assets to Zodiac Energy plc by way of the sale of the entire issued share capital of Coro Europe Limited, which was completed in November 2023. In June 2024 the Company signed an agreement to accelerate the next nine months of payment in exchange for a 22 per cent discount on payments of circa US$46 per month.

Indonesia

The Mako gas field is one of the largest gas discoveries (437 Bcf gross, full field) 2C (contingent recoverable resources) in the West Natuna Basin and, the Directors believe, the largest confirmed undeveloped resource in the area.

The Operator of the Duyung PSC is WNEL, a 100%-owned subsidiary of Conrad Asia Energy Ltd ("Conrad"), and has continued to technically mature the development of the Mako gas field alongside negotiations of a GSA, both in preparation for FID.

In March 2024, Conrad provided an update on the Mako Gas Field reserves and resources as of 31 December 2023 prepared by Gaffney, Cline & Associates (Consultants) Pte Lt which updated its assessment of resources for current expectations of Final Investment Decision and production commencement delay. Conrad proposes a two-phase development plan based on six initial development wells tied back to a leased production platform at the Mako gas field, with sales gas transported via the West Natuna Transport System ("WNTS") pipeline to Singapore for sale to the Singapore market, and potentially to the Indonesian domestic market via a yet-to-be constructed spur from the WNTS. Two further development wells are planned 3 years after first gas. The development plan proposes a plateau production of 120 MMscfd for 3.5 (Low case), 6.5 (Best case), or 11.5 (High case) years.

The revised estimates of gross (full field - 100%) recoverable dry gas as of 31 December 2023 per the Update Report are:

Consequently, the net attributable to Coro 2C resources are reduced from 42.1 to 36.6 Bcf gas.

In June 2024, Conrad signed a binding Gas Sales Agreement with PT Perusahaan Gas Negara Tbk, the gas subsidiary of PT Pertamina (Persero), the national oil company of Indonesia. This agreement which includes a seven month long stop date, is subject to the construction of the pipeline connecting the West Natuna Transportation System with the domestic gas market in Batam, and it forms part of the Domestic Market Obligation, as set out in Mako's revised Plan of Development.  The total contracted gas volume under this agreement is up to 122.77 trillion British Thermal Units ("TBtu") with estimated plateau production rates of 35 billion British Thermal Units / day ("BBtud")

Renewables

Vietnam

A 3 MW rooftop solar pilot project was completed in 2022 and has continued to deliver revenue throughout 2023 and into 2024. The next material project is with the Mobile World Group ("MWG"), where the Company currently has 10 existing producing sites (cc.0.4MW) and a further 30 sites (c.1MW) currently under construction.  All sites are contracted with a Purchasing Power Agreement ("PPA") with a 14 year term which is extendable in certain circumstances and includes a variable price with a floor of circa US$11.2 cents / kilowatt hour.   

Coro continues to evaluate further solar projects in Vietnam.

Philippines

During 2022, the Marcos administration was entrusted with the presidency of the Philippines for a six-year term. With new ministerial appointments in key departments, such as that of Energy, the administration has strengthened the need for greater renewables generation in country, reducing dependency on fuel imports and addressing climate change matters that the country is vulnerable to. The Government of the Philippines continues to champion renewable energy and looks to enact legislation changes to make investment easier than ever before. The 2022 changes had impacts on 2023, with key changes surrounding 100% foreign ownership of power generating companies coming into effect, however, these decisions made at top level Government have taken and continue to take time to filter through all Government Departments, providing challenges on timings to project permitting tasks.

Our projects in the Philippines are driven by an experienced in-country team comprising of a board of three Filipino national Directors. The board is supported by a further team of three, fulfilling a range of roles across technical, financial and administration.

With the 100 MW wind project desktop studies completed, during 2021, it was planned during 2022 to deploy a Lidar wind data collector to gain real evidence of the wind resource in our chosen location and prior to deploying a 130-metre Met Mast for bankable wind data collection. From the Lidar deployment in 2022, suitable confidence was achieved from data collected to invest in the Met Mast. In mid-2023 a procurement exercise was completed and a contract awarded to a local provider in the Philippines, who began construction of the Met Mast in September which became operational in early January 2024. The Met Mast will provide bankable data to the project and has the potential to support neighbouring projects due to its designed siting and location. Coro believes this will add tremendous value to the project(s), as well as providing key information to determine engineering decisions that need to be made throughout 2024.

The Met Mast and Lidar working harmoniously will deliver robust data, needed for debt providers and provide risk mitigation for wind turbine design and performance.

In May 2024 the Company received approval by Philippines Department of Energy on its application for a Wind Energy Service Contract ("WESC") in respect of a second area of interest for the onshore Oslob Wind Power Project. This WESC is Coro's second contract and neighbours the Company's first project site and would be in respect of an additional installed capacity of circa 100MW. The above mentioned 130 metre meteorological mast installed by the Company January 2024 will also serve this second project in gathering data and determining the wind resource available.

Coro continues to evaluate further wind and solar projects in the Philippines.

Post Reporting Period

Indonesia

As announced on the 2 September 2024 by the Company, Conrad Asia Energy Limited, the holder of a 76.5% operated interest in the Duyung Production Sharing Contract, in which the Group has a 15% interest signed  binding Gas Sales Agreement for the sale and purchase of the export portion of natural gas from the Mako gas field with Sembcorp Gas Pte Ltd, a wholly-owned subsidiary of Sembcorp Industries Ltd, a leading energy and urban solutions provider, headquartered in Singapore. 

Vietnam

The Group has recently initiated construction at the next 50 sites with MWG with an aggregate capacity of c.1.9MW which brings the total contracted capacity to 3.3MW across 90 sites.  

To facilitate the MWG construction, the Company has entered into an EPC contract and agreed upon payment arrangements with the EPC provider which will in effect provide deferred payment terms for 85% of the EPC costs.  These arrangements defer payment for two months and the deferred payments are subject to a 12% annual coupon and a 2% fee. The Company currently can draw up to a total of US$1.5M (excluding VAT). 

Corporate

As announced on 15 August 2024 the Company signed a six month US$500,000 secured convertible loan note with River Merchant Capital, an existing lender to the Company under the Company's 8% listed Eurobond, which is under standstill as announced on 12 April 2024, and Fenikso Limited.

Harry Beamish was appointed as an independent non-executive director of the Company.

Tom Richardson

Chairman

FINANCIAL REVIEW

Results from continuing operations

The Group made a loss after tax from continuing operations of $1.4m (H1 2023: $2.5m). The overall reduction in loss after tax compared to the first half of 2023 was primarily due to the decrease in general and administrative expenses of $0.5m and net finance expense of $0.6m, which comprised mainly of an increase in unrealised foreign exchanges gains related to the translation of the Eurobond debt.

General and administrative expenses of $1.1m (H1 2023: $1.6m) saw a reduction of $0.5m from the comparative period. As shown in more detail in note 4, there were decreases in employee benefits ($51k), business development ($125k) and corporate and compliance ($56k) expenses. There were no share-based payments for the period (H1 2023: $212k).

Going concern

The interim financial statements have been prepared under the going concern assumption, which presumes that the Group will be able to meet its obligations as they fall due for the foreseeable future.

The Group ended the period with cash of $0.5m and current receivables of $0.5m related to the residual sales proceeds from the sale of the Italian operations. The Group's Eurobond obligation matured on 12 April 2024 with the outstanding balances, including the rolled up coupon, or US$31.4 million. The Group has been in active discussions with bondholders in relation to the restructuring of the bonds and received a letter from two lenders holding 68% of the Eurobonds on 12 April 2024 (the "Standstill"). The Standstill, which the Company is advised is binding on the parties, provides a conditional standstill on the repayment of the Group's current debt obligations on expiry whilst the ongoing constructive discussions with the Group in respect of the Eurobonds continue and whilst certain inflexion points in the business materialise, including the outcome of the Duyung Operator's farm out process. The Group is working on a broader debt restructuring, which it intends to formally propose to all Eurobond holders and shareholders in due course. The Standstill conditions include a requirement for lender consent on material capex spend during the period of the standstill together with requirements for the provision of certain information and the appointment of a financial advisor nominated by the noteholders to provide advice to the Board and the lenders. During the course of the Standstill, the Group will work with the lenders and the financial advisor reviewing the existing arrangements and working towards a permanent debt restructuring solution for the business. The Group cautions that, notwithstanding the ongoing constructive discussions to-date and the agreement of this Standstill, noteholders could withdraw the Standstill at any time which would result in the Company triggering a default.

Post the period under review, the Company raised US$500,000 via a secured convertible loan with River Merchant Capital, an existing lender to the Company under the Company's Luxembourg 8% listed Eurobond and Fenikso Limited. The proceeds of this loan will be utilised to fund the Group's renewables business and for general working capital purposes. Under the Group's forecast, this loan together with existing bank balances provides sufficient funding to fund the Company's working capital requirements through to the end of January 2025.

During 2023 the Group secured a non-binding lending commitment from HD Bank in Vietnam whereby the bank has provided the Group with an in principle commitment letter initially focussed on providing debt finance for 50% of the capital spend commitment for the ten locations in the pilot stage of the previously announced 50MW MOU with Mobile World Investment Corporation to install rooftop solar systems across their portfolio.

Management have prepared a consolidated cash flow forecast for the period to 31 December 2025 which shows that the Group will require additional equity financing to meet its obligations and intended work renewables work programme in Asia during this period. The Group is actively pursuing a significant fundraise and the directors have a reasonable expectation that sufficient funds can be raised on equity markets to provide this liquidity, although the ability to raise sufficient capital is not guaranteed.

Based on the above, the Directors consider it appropriate to continue to adopt the going concern basis of accounting in preparing the Group and Company financial statements for the period ended 30 June 2024. Should the Group and Company be unable to continue trading, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities which might arise and to classify fixed assets as current. The auditors make reference to a material uncertainty in relation to going concern within their audit report.