Europa sees improved revenues during 'very active' first half

UK and Ireland-focussed oil and gas exploration, development and production company Europa Oil & Gas Holdings reported a slight improvement in revenue in its interim results on Friday, to £0.9m from £0.8m a year earlier.

The AIM-traded firm’s pre-tax loss in the six months ended 31 January totalled £0.4m, narrowing from £0.5m year-on-year, while net cash used in operating activities totalled £0.3m, swinging from excess cash from operating activities of £16k.

Its cash balance as at 31 January was £4.4m, rising from £1.8m, after the firm successfully raised £4.3m before expenses from existing and new shareholders including BGF Investment Management - a wholly owned subsidiary of the Business Growth Fund.

Europa said about 33% of its shares were now owned by institutions, and a further 9.5% were held by the board.

On the operational front, Europa said it continued negotiations regarding farm-in agreements to three Irish licences - LO 16/20, FEL 1/17 and FEL 3/13 - with a major international oil company.

Europa said it expected to be fully carried on a well on each licence, and to retain a material interest in each licence.

The board said it was confident of concluding the farm-ins in the coming months, however it said there could be no guarantee that the current negotiations would lead to completed agreements.

A final investment decision was being awaited from the major’s head office.

Site surveys for wells at Inishkea, Kiely East and Edgeworth were being targeted for summer, and were currently under application subject to regulatory approval.

Europa said it was “successfully executing” its strategy to manage the decline in production at onshore UK fields.

A workover of the WF6 well at West Firsby was utilising a drain hole jetting technique, with WF6 currently producing six barrels of oil equivalent per day, having previously produced nil oil.

The company said a total of 90 boepd was produced in in the first half, down from 97 boepd in the same period a year ago.

It explained that it was in the final phase of discussions with the National Office of Hydrocarbons and Mines (ONHYM) in respect of securing a petroleum agreement in Morocco.

Post-period end, Europa said a planning appeal on Wressle was submitted to the Planning Inspectorate on 5 February, with a draft bespoke programme issued by the inspectorate on 13 February.

Gross unrisked prospective resources at the Inishkea gas prospect in LO 16/20 were confirmed as 1.5 tcf, with a one-in-three chance of success, as announced on 26 February.

The company also transferred operatorship of PEDL 143 to UK Oil & Gas, as it confirmed on 14 March.

“The last six months have been a highly active period for Europa, not just in terms of the progress we are making to advance our industry-leading licence position offshore Ireland, which to date has estimated gross prospective resources of 6.4 billion barrels of oil and 1.5 tcf of gas and where negotiations are ongoing for a farm-in for three licences with a major international oil and gas company,” said Europa Oil & Gas chief executive Hugh Mackay.

“In addition, we completed a £4.3m fundraising, which increased the institutional representation on our shareholder register to over one third.

“We also restored production at the WF6 well at West Firsby and moved closer towards landing a high impact new venture in Morocco.”

Mackay said the momentum behind the firm had continued since the period ended, with the completion of a “major” piece of exploration work at its flagship Inishkea gas project.

“I look forward to providing further updates on our progress during the second half, a period which will see the resumption of drilling activity in the South Porcupine Basin at CNOOC International’s Iolar prospect.

“Success here would be a value trigger event for Europa, as it would significantly de-risk our drill-ready prospects in the basin, specifically, the 280 mmboe Kiely East and 225 mmboe Edgeworth targets.”