Europa Oil & Gas (Holdings) plc recorded its highest interim revenues from the onshore Wressle oil field but swung to a pre-tax loss due to an offshore exploration impairment charge in Morocco.
FINANCES
The company’s unaudited interim results for the six months ended 31 January 2023 showed revenues increased to £3.7 million (H1 2022: £2.2m), with gross profit of £1.5m (H1 2022: £0.9m).
Pre-tax losses were £1.3m (H1 2022: pre-tax profit £700,000) after an exploration impairment charge of £1.7m (H1 2022: impairment reversal £400,000).
Net cash from operating activities amounted to £1.7m (H1 2022: £0.9m).
The company held an unrestricted cash balance at 31 January 2023 of £5.1m (31 July 2022: £1.4m).
OPERATIONS
In Morocco, Europa relinquished the Inezgane offshore licence after failing to find a farm-out partner.
The company fared better in its joint venture (JV) at the Wressle oil field in Lincolnshire which continued to exceed expectations, generating “strong levels of revenues and production”.
Net production to the company increased 55% from 134 bopd to 207 bopd.
The field, now the second most productive onshore UK oil field, continues to produce under natural flow with zero water cut and “remains highly cash generative”.
NEW WELL
Europa added that a new seismic interpretation and mapping exercise on the field had highlighted a “potentially significant increase” in resources from the Ashover Grit.
Results of the analysis are being incorporated into the field development plan.
“The intention is that the next development well will be drilled from the existing Wressle site and planning and permitting work for the well is ongoing.
“The well will be drilled at the earliest opportunity, subject to receipt of regulatory approval.”
The company said that work continued to utilise the associated gas produced from Wressle which is expected to lead to further increases in oil production during H2 2023.
The JV has commissioned an independent technical report, which will incorporate the new field interpretation, historical production performance data and the field development plan.
The report is due for completion during June 2023.
Europa and its JV partners continue to donate £100,000 to the Wressle Community Fund, which has been operating since early 2022.
OPTIMISATION
New chief executive Will Holland added that Wressle’s continued “excellent performance” had underpinned significant growth in revenues.
“A number of projects are underway to enable increased oil production and gas monetisation from the field.
“The first phase of the gas utilisation project was completed in January 2023, whereby three microturbines were connected to provide site power which have resulted in a c. 10% increase in oil production.
“The second stage is the installation of a gas engine to generate 1.4 MW of electricity into a local private power network.
“Europa remains a highly cash generative business, and our robust financial foundations will enable us to continue to work towards optimising our existing assets in the second half of the year, whilst we also pursue potential UK offshore and onshore opportunities to add to our well-balanced portfolio and deliver further value for shareholders.”