Columbus Energy Resources PLC (LON:CERP)

Columbus Energy Resources PLC (LON:CERP)


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Columbus Energy Resources PLC RNS Release

Report and Accounts and Notice of AGM


RNS Number : 8387A
Columbus Energy Resources PLC
03 June 2019
 

               

3 June 2019

 

 

Columbus Energy Resources Plc

("Columbus", "CERP" or the "Company")

 

Annual Report and Accounts 2018 and Notice of Annual General Meeting

 

Columbus, the oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America, is pleased to announce that the Company's audited Annual Report and Accounts (the "Annual Report and Accounts") for the year ended 31 December 2018 are being posted to shareholders and will be available later today on the Company's website, www.columbus-erp.com.  Extracts are set out below.

 

The Company also announces that the Company's Annual General Meeting ("AGM") will take place on 27 June 2019 at 11.00 am and will be held at the offices of the Company's solicitors, Kerman & Co LLP, whose address is 200 Strand, London WC2R 1DJ.   The documentation relating to the AGM, including the Annual Report and Accounts, Notice of AGM and the Form of Proxy, are being sent to shareholders today.  The documents will also be available on the Company's website.

 

 

Enquiries:

Columbus Energy Resources Plc

+44 (0) 207 203 2039

Leo Koot / Gordon Stein / Tony Hawkins




Beaumont Cornish Limited

+44 (0) 20 7628 3396

Nomad and Joint Broker


Roland Cornish / Rosalind Hill Abrahams




VSA Capital

+44 (0) 20 3005 5000

Joint Broker


Andrew Monk / Andrew Raca






This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014

 



 

Highlights

For the Year ended 31 December 2018

FINANCIAL

 

·    Sales Revenues:  £7.57 million (2017: £4.79 million), an increase of 58.0%

·    Gross Profit:  £1.45 million (2017: £0.08m)

·    Average realised sales price:  US$59.71 per barrel (2017: US$48.58 per barrel)

·    Company maintained its cashflow positive position from Trinidad operations in 2018

·    Pre-tax Group loss for the period of £2.70 million (2017: loss of £5.02 million)

·    Cash in hand:  £1.71 million (2017: £4.0 million)

·    Debt:  £0.67 million (2017: £1.21 million)

·    G&A savings:

Management continued to receive 50% of their salaries in shares throughout 2018; and

Company downsized London office (August 2018)

·    Material exceptional payments in 2018:

Legacy costs in Spain of £0.91 million, including one-off redundancy costs of £0.47 million, and

Full repayment of £1.09 million loan inherited as part of Steeldrum transaction

 

OPERATIONS

 

·    Average Production:  541 bopd (2017:  368 bopd), an increase of 47.0%

·    Peak production:  1,021 bopd (2017:  561 bopd)

·    Appraisal:  Snowcap-1 & Snowcap-2 wells on the Cory Moruga block (December 2018).

·    Water injection:  Commencement of Goudron Waterflood Pilot "A" (June 2018).

·    HSE:  No Lost Time Incidents

·    Heritage:  Transfer of Company's agreements with Petrotrin to Heritage during second half of 2018

·    Steeldrum:  Integration of the Steeldrum assets and personnel completed Q4 2018.

 

CORPORATE

 

·    Trinidad

Restructuring of BOLT Transaction and new Agreement for Lease for Bonasse Licence Area in the South West Peninsula (March 2018)

Cory Moruga Licence extension until 2032 (September 2018)

Completion of Steeldrum transaction (October 2018)

Completion of purchase of a 50% interest in the Icacos field from Primera Oil and Gas Limited (December 2018)

·    Spain:

Formal termination of the La Lora Concession (March 2018)

Completion of Collective Dismissal Procedure (March 2018)

Spanish Government decision not to re-tender the La Lora Concession (November 2018)

 

·    General:

Capital raise of £2.5m (before expenses, November 2018)

 

POST YEAR END

·    Trinidad: Grant of Bonasse Private Petroleum Licence (May 2019)

·    Company fully funded for planned 2019 work programme



 

Executive Chairman's Review

2018 was a year in which the Company made significant progress in transforming the business in Trinidad.  We completed the agreements that will allow us to explore the South West Peninsula under far better commercial terms than previously, we completed the Steeldrum and Icacos transactions, we also reached peak production of 1,021 bopd and our sales revenues increased by some 58% (+£2.78 million).   This was an excellent achievement involving management and staff across the business.

It was also a year where we faced a number of challenges, including lower than expected average production growth, an oil price consistently sitting in a range where Special Petroleum Tax ("SPT") had a disproportionate impact on our cashflows and the unexpected decision by the Spanish authorities in late 2018 not to re-tender the La Lora Concession in Spain.  

In order to improve our financial position for 2019 and beyond, we also took some hard decisions to address some legacy issues which impacted on our 2018 cashflows.

We also commenced an extensive programme of activities to spread our wings into other South American countries through further M&A opportunities, a programme which resulted in a number of bids being made and our announcement (in April 2019) of a planned new country entry.  We are excited about the possibilities this opportunity will bring, as well as allowing us to spread our business risks across a far wider portfolio than existed in early 2018.    

The Company, therefore, entered 2019 in a much stronger position than we did at the start of 2018 and whilst we need to continue to address certain challenges, I remain confident that we can do so and build a sustainable business in Trinidad and beyond.

Operational

In 2017, I spoke about the "Good, the Bad and the Ugly".  In 2018, it was sometimes "Tales of the Unexpected", with the Company overcoming a number of obstacles throughout the year.  For example, we achieved peak production of 1,000 bopd but average production was less than we had hoped due to a variety of factors. 

The Company spent a significant amount of time in the latter half of 2018 refining our operations so that we can maximise revenue from these varying production levels.  This has not always been an easy process and one we will continue to work on.  The Company will remain focussed on optimising profits, we will not seek to grow production if that production is not profitable.   This change in strategy was introduced as a direct result of operational learnings and lower international oil prices over the course of 2018. 

The acquisition of Steeldrum, which brought three new assets, as well as the transaction to take full ownership and operatorship of Icacos, has provided Columbus with a far broader production base to play with going forward.   Deciding where we can best achieve "bang for our buck" is now a key part of our day to day operational decision-making processes and we no longer need to rely on Goudron as being our main source of revenue.  Again, I believe this demonstrates stronger risk mitigation processes than we have seen in the past.   

Financial

The Company recorded a significant improvement in sales revenues with £7.57 million being achieved in 2018, some £2.78 million greater than the £4.79 million recorded in 2017 (+58.0%).  The was due to a mix of increased average production over the course of the year and higher average oil prices for much of 2018.  The WTI oil price in 2018 started the year just under US$60 per barrel and stayed in the US$60 - US$70 range for the majority of the first three quarters of the year, before falling sharply in the fourth quarter, to a low of US$47 near year end.  This had a knock-on effect to the Company's revenue in late 2018, but the Company ended the year with £1.71 million cash and has minimal debt after making debt repayments of £1.63 million in 2018.  Of those debt repayments, the Company chose to repay £1.09 million which we inherited from the Steeldrum acquisition in order to improve our financial position moving into 2019.  The Company could have continued to service that debt but the decision to repay earlier was considered to be a prudent one for the future. 

In 2018, the Company incurred significant costs that will not be repeated in 2019 and beyond, for example the redundancy costs associated with the termination of the La Lora Concession in Spain, additional decommissioning contributions in Trinidad and integration costs associated with the Steeldrum transaction.  Again, we believe these prudent actions provide us with a stronger financial base going forward.

We continue to reduce our cost base across the Group wherever possible, for example in a move of our London office in August 2018 to far smaller premises, achieving savings in excess of £0.11 million per annum.   I continue to challenge the management team on our cost base, seeking to make sure it is appropriate for what we are seeking to deliver.   

The Company undertook a capital raise in November 2018, that allowed the Company to deal with some of the integration costs associated with the Steeldrum transaction.  We thank our shareholders for their support during this process.

Corporate

The Company made significant progress during 2018 in consolidating its position in Trinidad.  In the first quarter, we successfully renegotiated the BOLT transaction and entered into the lease agreements that would later form the foundation of the Bonasse Private Petroleum Licence (issued in May 2019). In the third quarter, we competed the Steeldrum transaction.  This deal makes our business substantially stronger, reducing our reliance on just one producing field and significantly strengthening our operational capabilities. We finished the year by completing the Icacos transaction, adding another field to our operating asset portfolio. All of these activities involved extensive work "behind the scenes" by staff across the business with a view to establishing a far stronger foundation for the future. 

Outlook

The Company remains committed to our strategy of using the free cash flow from production to fund profitable production enhancements, exploration in the South West Peninsula and M&A activity.  In particular, the Company is looking forward to commencing our exciting drilling campaign in the SWP during the second half of 2019. The Company has established a world-class economic and regulatory framework to exploit any oil and gas in the SWP and is confident that even a modest discovery in the SWP has the potential to transform the Company.

I would like to thank our shareholders and counterparties for their support during 2018 and also and all of our management and staff for their hard work and diligence.

 

 

Financial Review

 

The key financial highlights for 2018 were as follows:

 

·    Sales Revenues:  £7.57 million (2017: £4.79 million), an increase of 58.0%

·    Gross Profit:  £1.46 million (2017: £0.08m)

·    Average realised sales price: US$59.71 per barrel (2017: US$48.58 per barrel)

·    Company maintained its cashflow positive position from Trinidad operations in 2018

·    Pre-tax Group loss for period of £2.64 million (2017: loss of £5.02 million)(2016 loss of £11.89 million), partially reflecting various legacy costs in 2018 which will not recur in 2019 and increased depreciation charges

·    Cash in hand:  £1.71 million (2017: £4.0 million)

·    Company fully funded for planned 2019 work programme

·    Successful £2.5 million (gross) capital raise (November 2018)

·    Debt: £0.67 million (2017: £1.21 million), (2016: £1.87 million). Additionally, Company fully repaid £1.09 million to North Energy Capital AS (inherited as part of the Steeldrum transaction) in Q4 2018  

·    Administrative costs (excluding extraordinary costs): £3.33 million (2017: £2.72 million (increase largely due to additional staff arising from the Steeldrum acquisition)

·    Spain legacy costs: £0.91 million, including a redundancy process costing £0.47 million. 

Other items to note

·    Employee numbers increased across the Group from 26 in 2017 to 57 on 31 December 2018, largely due to the acquisition of Steeldrum in 2H 2018 and the need to improve the Company's operational capabilities across its wider portfolio. 

·    Headcount in London reduced from 6 Full Time Equivalent (FTE) people in December 2017 to 4.5 FTE in December 2018

·    All members of the leadership team continuing to take 50% of their fees in shares in their second year of employment, calculated at a share price of 5.1p per share, aligning themselves to the Company's shareholders

·    Acquisition of Steeldrum was announced in July 2018 and completed in October 2018.  Production and revenues from Steeldrum licences were incorporated into the Company's accounts with effect from 1 October 2018 in accordance with IFRS requirements.

Background

The Company entered 2018 in a stronger financial position than it had seen for a number of years after the new leadership team implemented a major shift in strategy and business activities in mid-2017.  This strategy continued into 2018 with the key financial objectives for the year being as follows:

·    Continue to deliver increased cashflow from operations in Trinidad by optimising production and, as a result, growing revenues: The focus was to increase the cashflow positive position from operations by optimising the existing wellstock through a campaign of continual well workover and stimulation activities involving a number of rigs, rather than through the drilling of new infill wells at far greater cost.  Maintaining a positive cashflow position would help fund and progress other planned business activities in 2018 and beyond.

·    Increase the Company's asset portfolio in Trinidad: It was recognised that maintaining dependency on the Goudron field for most of the Company's operational cashflows and profits left the Company at risk in the event of any negative operational or other issues arising in that field.  Increasing the number of producing assets onshore Trinidad would spread risks, reduce dependency on Goudron and enable the Company to determine where to secure the best cashflow returns from the various competing assets (given differing licence arrangements, etc).

·    Re-structure the BOLT transaction to secure the SWP leases/licence on far more favourable terms and lower up-front costs: This acquisition had been in progress since 2013 under commercial terms which were no longer beneficial for the economics of the potentially transformational SWP opportunity.  A new structure was required to allow the SWP opportunity to commence in 2019.

·    Progress other M&A opportunities in Trinidad and elsewhere in South America: As well as reducing the Company's dependency on Trinidad, the Company had stated a wish to spread its wings into other countries in South America, thereby increasing its opportunity base and spreading risks across a wider portfolio.  An active programme of pursuing new M&A deals in other countries would be progressed, led by the new Legal & M&A Director who had been appointed on 1 January 2018 (Tony Hawkins). 

·    Seek to minimise legacy costs in Spain: Ongoing costs in Spain to maintain the suspended Ayoluengo concession were a drain on the Company's cash resources and needed to be minimised.  The Company planned to participate in a new tender for the concession in 2018, which the Spanish authorities indicated would take place in Q3 2018, providing the conditions for such a tender were commercially viable.

·    Continue to reduce corporate running costs: The Company had commenced a cost reduction process for its corporate costs in 2017 and an objective was to continue to reduce costs in 2018, in particular moving technical and other support activities to Trinidad where possible, focusing resources on other value-adding opportunities.   It was recognised this would result in some short-term legacy costs.   

·    Reduce Company's debt position: Continue to pay down the Lind debt through monthly payments in cash and help strengthen the balance sheet. 

·    Share Register:  Continue to increase the percentage of institutional investors who have a medium to long-term investment horizon on the Company's share register.  

·    Raise new funds when the opportunity arose: This would allow further growth opportunities to be progressed but the leadership confirmed this would only be undertaken in a manner they considered accretive manner for our shareholders.

Oil Price Environment

The international oil price sentiment in 2018 was mixed with WTI commencing the year at around US$58 per barrel and increasing in price to around $70 per barrel by mid-year before dropping suddenly to US$47.98 per barrel between October 2018 and December 2018.  This compared to a WTI oil price of around US$45 in mid-2017 (and as low as US$42.53 in February 2017).  Columbus, alongside other operators in Trinidad, who until late 2018 sold their oil into the Pointe-a-Pierre refinery on the island, receive a monthly sales price from Heritage (the successor to Petrotrin) which is usually at a price lower than WTI.  The range of discounts to WTI averaged 8.0% in 2018 (7.4% in 2017) with this discount ranging between 2.0%-12.4% over the course of 2018.  As a result, the oil prices received by Columbus from Heritage in 2017 and 2018 were as follows:  


Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Q4 18

WTI Average Price

US$ 54.22

US$ 49.88

US$ 49.53

US$ 55.48

US$ 62.29

US$ 67.79

US$ 69.56

US$ 58.73

Average Price achieved

US$ 47.60

US$ 44.89

US$ 46.86

US$ 54.39

US$ 58.43

US$ 60.00

US$ 60.90

US$ 57.58

Discount to WTI

US$ 6.62

US$ 4.99

US$ 2.67

US$ 1.09

US$ 3.86

US$ 7.79

US$ 8.66

US$ 1.15

Average % Discount

12.2%

10.0%

5.4%

2.0%

6.2%

11.5%

12.4%

2.0%

 

The Trinidad Government decided to close the Pointe-a-Pierre refinery in late Q3 2018 and since then Columbus has sold its oil to Heritage who on-sell the crude into the international market.  It is envisaged that Columbus and other operators will receive a reduced discount (or even a premium) from Heritage now that the Pointe-a-Pierre refinery is no longer involved in the oil sale chain and this was borne fruit in Q1 2019 where Columbus realised an average sale price of US$55.67 and peaking at $58.17 in March 2018 with this delivering a premium of 1.5% against average WTI for the month (US$54.83).  It is not known if such premiums will continue in 2019 or whether this was a short-term oil price situation. 

 

The international oil price environment has continued to improve in Q2 2019 with WTI recovering to reach approximately US$70 per barrel at one point and sitting in a range of US$60-US$65 per barrel.  Columbus envisages receiving oil prices in 2019 of between US$55-US$65 per barrel as long as international market conditions remain as per late Q1 2019.    

 

Special Petroleum Tax - impact on value

SPT is payable for onshore oilfields in Trinidad at a rate of 18% at the end of each quarter as and when the sales price received during that period exceeded an average price of US$50.01 per barrel.  The SPT calculation also takes account of allowable capex spent by the producer during that period, with deductions being applied in the SPT calculations accordingly (eg. 20% of capex spent during that quarter can be offset against the SPT amount due and any brought forward offsets from previous quarters can also be applied).  This can sometimes mean that no SPT is payable by a company for a quarter if the capex spend offsets are greater than the SPT payments due for that period on sales.   During periods of high capex spend, SPT may not be payable in cash from one quarter to another. 

 

The "sweet spot" for profits depends on various factors, including the level of current and past allowable capex spend, as referred to above.  Likewise, it can be difficult to confirm the oil price at which a company would be better-off above US$49.95 given capex offsets.  However, as a general rule of thumb, an oil price received around US$61.00/barrel would be required to obtain the same level of profits from sales at US$49.95 if capex spend is zero for that period.    

 

Columbus regularly meets with Trinidad Government representatives and also liaises with other oil & gas companies operating in Trinidad with a view to improving the tax environment for oil companies operating in-country, in particular with a view to amending the SPT regime to soften the impact on companies once the oil price received exceeds US$50.01/barrel.   This is an ongoing dialogue but like most taxation considerations, there are various other commercial, social and political issues in play which Governments and their advisers need to consider.  This generally means that the pace of any changes can be slow.  The Company will provide relevant updates via RNS if there are any changes to the current SPT arrangements in Trinidad.

 

2018 Results 

The Company announced on 13 July 2018 that it had signed a Sale and Purchase Agreement to acquire Steeldrum Oil Company Inc ("Steeldrum") and confirmed on 8 October 2018 that it had completed the purchase.   Steeldrum is the parent company for the West Indian Energy Group Ltd and is the owner of the licences for the Innis-Trinity field, South Erin field and the Cory Moruga development project.

 

The Steeldrum transaction added production of approximately 200-250 bopd to the Company's portfolio and reduced the reliance on Goudron as being the main source of cashflow.   In accordance with IFRS and the Company's accounting policies, the production and revenues from the Steeldrum licences were incorporated into the Company's accounts with effect from 1 October 2018, the beginning of the month when Columbus took over full effective control.     

 

Sales Revenues

Sales revenues in 2018 showed a significant increase of nearly 58% when compared to 2017, impacted by an increase in Trinidad production levels, a reduction in Spain revenues and an increased average realised oil price in 2018 (as described above).   Production peaked in Trinidad at 1,021 bopd during December 2018 and totalled 197,315 barrels over the year (average of 541 bopd), an increase of 47.0% on the 134,320 barrels produced in Trinidad in 2017 (average of 368 bopd).

 

The table below shows the additional sales revenues arising from the Steeldrum acquisition in 2018 with sales revenues being booked from 1 October 2018 (as described above).  The last oil sales in Spain were made in February 2017 after the termination of the La Lora concession in late January 2017:  

 


2018

2017

Increase/(Decrease)

Increase/(Decrease)

Entity

£'000

£'000

£'000

%

Columbus Trinidad

7,046

4,501

2,545

56.5%

Columbus Spain

0

293

(293)

N/A

Steeldrum Trinidad

527

0

527

N/A

Total

7,573

4,794

2,779

58.0%

 

Cost of Sales

The costs of operating the Company's fields in Trinidad are largely fixed with limited variable costs, with the exception of workovers and well stimulation activities which involve the use of rigs and other equipment.   Although sales revenues increased by some 58% in 2018, the cost of sales only increased by 0.8%;  £2.40 million in 2017 to £2.42 million in 2018.    Well maintenance and stimulation activities are largely discretionary with the Company incurring some £1.35 million in 2018 (around 56% of total cost of sales). 

 

Gross Profit

After taking account of increased depreciation of oil & gas assets (due to increased production in 2018), Columbus posted a gross profit of £1.46 million in 2018, compared to a profit of £0.08 million in 2017.   Excluding the depreciation charge, Net Revenues totalled £2.97 million in 2018 (£1.23 million in 2017). 

 

SPT

The imposition of SPT once oil prices exceeded US$50.01 per barrel resulted in charges of £0.68 million in 2018 (2017:  £Nil). 

 

Capex

Total capex spend in 2018 amounted to £1.53 million (2017:  £1.38 million), made up of £0.72 million on tangible assets (mainly Goudron) and £0.82 million in Intangible Assets (mainly BOLT transaction).  

 

Administrative Expenses 

During 2018, the Company continued to take action to reduce administrative costs across the Group where possible.  Like 2017, the Company had to take action to address some legacy issues which were unavoidable but added a continuing drain on the Company's cash resources.  The table below highlights the breakdown of costs in 2018 and 2017:

 


2018

2017

Variation


Activity

£'000

£'000

£'000

Comments

Columbus admin. expenses

2,873

2,723

+150

Includes fully built-up (100%) costs of director fees/management salaries in 2018 - £0.44m of management fees not paid in cash in 2018, to be paid in shares (see further details below)

Steeldrum admin expenses

454

0

+454

Additional management, finance & admin staff inherited as part of Steeldrum transaction

Spain - ongoing costs

433

348

+85

All care & maintenance costs for the Ayoluengo field now charged to administration since licence suspended.  Included technical studies carried out by third parties in 2018, required by the Spanish authorities to terminate the licence.  

Spain - exceptional costs for Collective Dismissal Procedure (CDP)

472

0

+472

One-off costs of legal redundancy process undertaken due to closure of the La Lora concession and need to cut ongoing costs. 

Previous Director Contractual & Termination Costs

108

352

-244

Costs all completed by May 2018.

 

As noted above, all members of leadership team continued to take 50% of their fees in shares in their second year of employment, calculated at a share price of 5.1p per share, aligning themselves to the Company's shareholders.  The financial accounts for 2018 include the fully built-up (100%) costs for all members of the leadership team;  if the cash value of the fees which are payable in shares were deducted from the Columbus admin expenses, the total Columbus administrative expenses amount paid in cash would be reduced to £2.43 million, some 10.4% lower than the £2.72 million costs incurred in 2017. 

 

The Company also made various other cost savings in 2018, including a move to a smaller London office in early August 2018, reducing costs by around £0.11 million per annum. In addition, staff numbers in the corporate office were reduced from 6 Full-Time Equivalent (FTE) people in December 2017 to 4.5 FTE in December 2018.   

 

Corporate

Debt reduction:   In 2018, the Company continued with its strategy of reducing debt on the balance sheet by making repayments in cash.  Total debt outstanding stood at £0.67 million at 31 December 2018, a reduction of £0.53 million on the total of £1.21 million on 31 December 2017.   Details of the various loans are highlighted in Note 16 to the Accounts and specific issues to note are as follows:

·    Lind Loans:  The amount outstanding on the loans taken out from Lind in December 2016 and October 2017, totalling £2.35 million, had reduced to £0.29 million at 31 December 2018.  This debt will be fully repaid by September 2019.   With one monthly exception, loan repayments, with associated interest, have been made to Lind monthly in cash and the security held over certain assets of Columbus was released by Lind in October 2018 once the outstanding debt fell below US$0.5 million (~£0.38 million). 

·    New Steeldrum loans: The Company inherited outstanding loans totalling £1.13 million upon the acquisition of Steeldrum and, in order to release the security over certain Steeldrum assets, the Company fully repaid a £1.09 million loan to North Energy Capital AS in November 2018. The repayment has provided the Company with greater operational flexibility going forward and also improved the Company's balance sheet. 

·    New Lind Loan Facility:  Upon the announcement of the Steeldrum acquisition in July 2018, the Company also announced the establishment of a new loan facility from Lind of up to US$3.25 million to provide Columbus with access to additional funds, should they be required in 2H 2018, to support the integration of Steeldrum and accelerate certain operational activities. This facility, which was available for drawdown at the Company's exclusive option for up to six months, was in effect a "financial insurance policy" to allow the Company to deal with any unexpected financial issues arising from the Steeldrum acquisition. This facility was never drawn-down and was allowed to lapse in early January 2019.

Equity raise:  The Company undertook a placing in Q4 2018 with new and existing shareholders including Schroder Investment Management Limited, Michael Joseph and Burggraben Holding AG at a price of 3.5 pence per share to raise approximately £2.5 million (before expenses).  This placing was approved at a General Meeting on 2 November 2018 and was raised to repay the North Energy loan referred to above, establish and implement a multi-well drilling campaign on the Steeldrum assets and in the SWP, to upgrade facilities in the SWP, particularly at Bonasse and Icacos, to speed up oil production growth and sales and also allow for early sales from any exploration success at the SWP in 2019.

Legacy Costs:  Spain 

As Columbus entered 2018, the Company was led to believe that it was the intention of the Spanish authorities to re-tender the La Lora concession (the "Concession") in Q3 2018.  The Company's subsidiary, Compañía Petrolifera de Sedano S.L.U. ("CPS"), had suspended the employment of 14 of its employees in Spain in early 2017, following the termination of the Concession in late January 2017. This action was taken to reduce costs given that the Ayoluengo was no longer on production. However, it became clear in early 2018 that the duration of the tendering process was still uncertain and, as such, the Company was not prepared to un-necessarily continue to bear the ongoing costs of the employee suspensions which needed formal renewal in late February 2018 for a further year. CPS therefore undertook the Collective Dismissal Procedure (CDP) in Q1 2018 affecting our employees in Burgos, Spain. The redundancy plan, which was approved by the vast majority of the 14 affected employees and was also formally approved by the Trade Union, was completed in late March 2018.

 

The CDP process cost the Company approximately £0.47 million, a cost which was unavoidable and a clear drain on the Company's cash resources. The total costs incurred in Spain in 2018 of £0.91 million also had a material effect on the Company's financial accounts, increasing the pre-tax Group loss by this amount accordingly at a time when actions were being taken in Trinidad to improve profitability.   

 

The actions taken in early 2018 significantly reduced ongoing running costs for the Company in Spain.  Whilst two employees were retained by CPS to manage ongoing "care and maintenance" activities on the old Ayoluengo production field, the Spanish authorities informed CPS in November 2018 that they had decided not to re-tender the Concession and confirmed that CPS was now required to decommission the Ayoluengo field and all facilities, etc.  This decision was un-expected and a change of policy by the Spanish Government.  A de-commissioning plan was subsequently prepared and submitted by CPS and approved by the Spanish authorities in late Q1 2019 and work commenced on implementing this plan in Q2 2019, initially consisting of removal of above-ground facilities.  The costs are expected to be met from sale of equipment and scrap and the de-commissioning will take approximately 2-3 years at no material cost to the Group.            

 

The Company is also taking action to seek compensation from the Spanish authorities for the significant costs incurred by CPS between the announcement of the termination of the licence in late January 2017 and their decision not to re-tender the Concession in November 2018; a period of some 22 months. CPS has taken appropriate legal advice and will be commencing action in the near future with a target compensation amount in mind.   

Cashflow Summary

The Company has made progress on a number of fronts as it focuses on profitability across the Group.  It has, however, been constrained by ongoing legacy issues and the cash in hand position has also been affected by the aggressive repayment of debt (totalling some £1.62 million in 2018) and the pursuit of new M&A activities to grow the business.   On looking at the loss from operations in the Income Statement, a further breakdown shows the following: 

 

Income Statement

2018 (£'000)

Loss from operations

(3,743)

Add back: 


  Legacy costs - Spain

905

  Legacy costs - Previous Director Contractual & Termination Costs

108

  Management salaries paid in shares (not cash)

435

  Depreciation of oil & gas assets

1,529

  Amortisation and depreciation

750

  Share Based payments

98

Adjusted Profit from operations

82

 

The above analysis indicates that by deducting unavoidable legacy costs which the Company has faced, together with depreciation and non-cash charges from the £3.74 million loss from operations, the Company breakeven point is around 540 bopd at the oil prices obtained in 2018 and under the current commercial arrangements.   The focus of the Company in 2019 will continue to be to optimise profit as opposed to chasing more and more production, whilst seeking to improve the commercial terms of the licences with Heritage and other parties.  Such discussions are ongoing at the time of drafting this report. 



 

Financial Statements

GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

 

 

Year ended

 

Year ended

 

 

 

31 December 2018

 

31 December 2017

 

Note

 

£ 000's

 

£ 000's

Net Petroleum Sales

2

 

7,573

 

4,794

Royalties

 

 

(2,177)

 

(1,157)

 

 

 

5,396

 

3,637

Cost of sales

 

 

(2,422)

 

(2,403)

Depreciation of oil and gas assets

3

 

(1,529)

 

(1,156)

Gross profit/(loss)

 

 

1,445

 

78

 

 

 

 

 

 

Administrative expenses

 

 

(2,873)

 

(2,723)

Steeldrum Administration costs (post acquisition)

 

 

(454)

 

-

Spanish operations (ongoing administration costs)

 

(433)

 

(348)

Spanish operations (redundancy costs)

 

 

(472)

 

-

Previous Director contractual & termination costs

 

 

(108)

 

(352)

Amortisation and depreciation

3

 

(750)

 

(617)

Share based payments

 

 

(98)

 

(234)

Loss from operations

 

 

(3,743)

 

(4,196)

 

 

 

 

 

 

Gain on bargain purchase (Steeldrum acquisition)

 

 

1,295

 

-

Impairment charge

 

 

(132)

 

-

Finance (charges)/income

9

 

(123)

 

(824)

Loss before taxation

 

 

(2,703)

 

(5,020)

 

 

 

 

 

 

Income tax expense

5

 

(348)

 

(12)

Loss for the year attributable to equity holders of the parent

 

 

(3,051)

 

(5,032)

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

Exchange differences on translation of foreign operations

 

 

395

 

(1,586)

Other comprehensive income for the year net of taxation

 

 

395

 

(1,586)

 

 

 

 

 

 

Total comprehensive income for the year attributable to equity holders of the parent

 

 

(2,656)

 

(6,618)

 

 

 

 

 

 

Loss per share (pence)

 

 

 

 

 

Basic and diluted

8

 

(0.45)

 

(0.94)

 

 

 

 

 

 

All operations are considered to be continuing (see note 2).

The accompanying accounting policies and notes form an integral part of these financial statements.

 

GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017

 



As at 31 December 2018

As at 31 December 2017


Note

£ 000's

£ 000's

Assets


 

 

Non-current assets


 

 

Intangible evaluation assets

10

5,026

4,327

Oil and gas assets

 

11

16,379

13,865

Property, plant and equipment

11

2,724

1,588

Investment in associate

12

37

35

Escrow and abandonment funds

14

601

-

Deferred tax asset

5

2,072

-

Total non-current assets


26,839

19,815



 

 

Current assets


 

 

Trade and other receivables

14

2,808

1,459

Inventories

15

655

192

Cash and cash equivalents

21

1,712

4,002

Total current assets


5,175

5,653

Total assets


32,014

25,468



 

 

Liabilities


 

 

Current liabilities


 

 

Trade and other payables

16

(4,616)

(1,931)

Borrowings

17

(542)

(837)

Taxation

5

(11)

(12)

Deferred consideration

16

(120)

(120)

Total current liabilities


(5,289)

(2,900)



 

 

Non-current liabilities


 

 

Borrowings

17

(132)

(370)

Provisions

18

(1,913)

(1,257)

Deferred tax liability

5

(45)

-

Total non-current liabilities


(2,090)

(1,627)

Total liabilities


(7,379)

(4,527)

Net assets


24,635

20,941



 

 

Shareholders' equity


 

 

Called-up share capital

19

4,390

4,299

Share premium


75,582

69,421

Share based payments reserve

20

1,610

1,525

Retained earnings


(61,406)

(58,617)

Revaluation surplus


2,673

2,922

Foreign exchange reserve


1,786

1,391

Total equity attributable to equity holders of the parent


24,635

20,941

The accompanying accounting policies and notes form an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

 



 

COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018

 

 

 

As at 31 December 2018

As at 31 December 2017

 

Note

£ 000's

£ 000's

Assets

 

 

 

Non-current assets

 

 

 

Intangible assets

10

16

49

Property, plant and equipment

11

2

6

Investment in subsidiaries

12

1

1

Trade and other receivables

14

47,349

39,849

Total non-current assets

 

47,368

39,905

 

 

 

 

Current assets

 

 

 

Trade and other receivables

14

182

253

Cash and cash equivalents

 

1,176

3,820

Total current assets

 

1,358

4,073

Total assets

 

48,726

43,978

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

16

(707)

(422)

Borrowings

17

(291)

(612)

Deferred consideration

16

(120)

(120)

Total current liabilities

 

(1,118)

(1,154)

 

 

 

 

Non-current liabilities

 

 

 

Borrowings

17

-

(232)

Total non-current liabilities

 

-

(232)

Total liabilities

 

(1,118)

(1,386)

Net assets

 

47,608

42,592

 

 

 

 

Shareholders' equity

 

 

 

Called-up share capital

19

4,390

4,299

Share premium

 

75,582

69,421

Share based payments reserve

20

1,610

1,525

Retained earnings

25

(33,974)

(32,653)

Total equity attributable to equity holders of the parent

 

47,608

42,592

 

 

 

 

The accompanying accounting policies and notes form an integral part of these financial statements.

 

 

 

 

 

 

 

 

 



 

GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

Year ended 

Year ended 

 

31 December 2018

31 December 2017

 

£ 000's

£ 000's

Cash outflow from operating activities

 

 

Operating loss

(3,743)

(4,196)

(Increase)/decrease in trade and other receivables

(137)

(384)

(Decrease) in trade and other payables

675

(108)

Decrease/(increase) in inventories

(462)

265

Depreciation

1,904

1,504

Amortisation

342

269

Impairment

132

-

Share based payments

98

234

Income tax paid

(278)

(12)

Net cash (outflow) from operating activities

(1,469)

(2,428)

 

 

 

Cash flows from investing activities

 

 

Payments to acquire intangible assets

(815)

(21)

Payments to acquire tangible assets

(718)

(1,355)

Cash acquired from business combination

337

-

Net cash outflow from investing activities

(1,196)

(1,376)

 

 

 

Cash flows from financing activities

 

 

Issue of ordinary share capital

2,556

7,806

Share issue costs

(125)

(392)

Finance income/(charges) paid

(124)

(626)

Repayment of borrowings

(1,539)

(1,274)

Proceeds of borrowings

-

569

Net cash inflow from financing activities

768

6,083

 

 

 

Net increase/(decrease) in cash and cash equivalents

(1,897)

2,279

Foreign exchange differences on translation

(393)

(104)

Cash and cash equivalents at beginning of year

4,002

1,827

Cash and cash equivalents at end of year

1,712

4,002



 

COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

Year ended

Year ended

 

31 December 2018

31 December 2017

 

£ 000's

£ 000's

Cash outflow from operating activities

 

 

Operating loss

(1,090)

(1,352)

Decrease/(increase) in trade and other receivables

(2,779)

207

(Decrease)/increase in trade and other payables

285

(296)

Depreciation

4

56

Amortisation

33

33

Impairments

132

-

Share based payments

98

234

Net cash outflow from operating activities

(3,317)

(1,118)

 

 

 

Cash flows from investing activities

 

 

Loans granted to subsidiaries

(1,094)

(1,698)

Payments to acquire intangible assets

-

-

Payments to acquire tangible assets

-

(1)

Net cash outflow from investing activities

(1,094)

(1,699)

 

 

 

Cash flows from financing activities

 

 

Issue of ordinary share capital

2,556

7,806

Share issue costs

(125)

(392)

Finance charges paid

(109)

(615)

Repayments of borrowings

(553)

(1,235)

Proceeds of borrowings

-

569

Net cash inflow from financing activities

1,769

6,133

 

 

 

Net increase/(decrease) in cash and cash equivalents

(2,642)

3,316

Foreign exchange differences on borrowings

(2)

(96)

Cash and cash equivalents at beginning of year

3,820

600

Cash and cash equivalents at end of year

1,176

3,820


 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

Called up share capital

Share premium reserve

Share based payments reserve

Retained earnings

Foreign exchange reserve

Revaluation surplus

Total Equity

 

£ 000's

£ 000's

£ 000's

£ 000's

£ 000's

£ 000's

£ 000's

Group

 

 

 

 

 

 

 

As at 31 December 2016

4,184

62,122

1,341

(53,846)

2,977

3,122

19,900

 

 

 

 

 

 

 

 

Loss for the year

-

-

-

(5,032)

-

-

(5,032)

Revaluation surplus amortisation

-

-

-

200

-

(200)

-

Lapsing of warrants

-

-

(61)

61

-

-

-

Currency translation differences

-

-

-

-

(1,586)

-

(1,586)

Total comprehensive income

-

-

(61)

(4,771)

(1,586)

(200)

(6,618)

Share capital issued

115

7,691

-

-

-

-

7,806

Cost of share issue

-

(392)

-

-

-

-

(392)

Share based payments

-

-

245

-

-

-

245

Total contributions by and distributions to owners of the Company

115

7,299

245

-

-

-

7,659

As at 31 December 2017

4,299

69,421

1,525

(58,617)

1,391

2,922

20,941

 

 

 

 

 

 

 

 

Loss for the year

-

-

-

(3,051)

-

-

(3,051)

Revaluation surplus amortisation

-

-

-

249

-

(249)

-

Lapsing of warrants

-

-

(13)

13

-

-

-

Currency translation differences

-

-

-

-

395

-

395

Total comprehensive income

-

-

(13)

(2,789)

395

(249)

(2,656)

Share capital issued

91

6,286

-

-

-

-

6,377

Cost of share issue

-

(125)

-

-

-

-

(125)

Share based payments

-

-

98

-

-

-

98

Total contributions by and distributions to owners of the Company

91

6,161

98

-

-

-

6,350

As at 31 December 2018

4,390

75,582

1,610

(61,406)

1,786

2,673

24,635

 

Company

 

 

 

 

 

 

 

As at 31 December 2016

4,184

62,122

1,341

(30,551)

-

-

37,096

 

 

 

 

 

 

 

 

Loss for the year

-

-

-

(2,163)

-

-

(2,163)

Lapsing of warrants

-

-

(61)

61

 

 

-

Total comprehensive income

-

-

(61)

(2,102)

-

-

(2,163)

Share capital issued

115

7,691

-

-

-

-

7,806

Cost of share issue

-

(392)

-

-

-

-

(392)

Share based payments

-

-

245

-

-

-

245

Total contributions by and distributions to owners of the Company

115

7,299

245

-

-

-

7,659

As at 31 December 2017

4,299

69,421

1,525

(32,653)

-

 

 

 

 

 

 

 

 

Loss for the year

-

-

-

(1,334)

-

-

(1,334)

Lapsing of warrants

-

-

(13)

13

-

-

-

Total comprehensive income

-

-

(13)

(1,321)

-

-

(1,334)

Share capital issued

91

6,286

-

-

-

-

6,377

Cost of share issue

-

(125)

-

-

-

-

(125)

Share based payments

-

-

98

-

-

-

98

Total contributions by and distributions to owners of the Company

91

6,161

98

-

-

-

6,350

As at 31 December 2018

4,390

75,582

1,610

(33,974)

-

 



 

 

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

 

1

Summary of significant accounting policies

 

 

1.01

General information and authorisation of financial statements


Columbus Energy Resources Plc is a public limited company registered in the United Kingdom under the Companies Act 2006.  The address of its registered office is Suite 114, 90 Long Acre, London, WC2E 9RA.  The Company's Ordinary shares are traded on the AIM Market operated by the London Stock Exchange.  The Group financial statements of Columbus Energy Resources Plc for the year ended 31 December 2018 were approved for issue by the Board on 30 May 2019 and the balance sheets signed on the Board's behalf by Mr. Leo Koot and Mr. Gordon Stein.

 

 

1.02

Statement of compliance with IFRS

 

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The principal accounting policies adopted by the Group and Company are set out below.

 

 

New and revised standards and interpretations not applied


The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2018:

-       IFRS 9 Financial Instruments

-       IFRS 15 Revenue from Contracts with Customers

No retrospective adjustments were required following the adoption of IFRS 9 and IFRS 15.

 

On 1 January 2018 (the date of initial application of IFRS 9), the Group's management assessed which business models apply to the financial assets held by the Group and classified its financial instruments into the appropriate IFRS 9 categories. No reclassifications were required.

 

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements, were in issue but not yet effective for the year presented:

-       IFRS 16 in respect of Leases which will be effective for accounting periods beginning on or after 1 January 2019.

-       IFRS 17 Insurance Contracts (effective date 1 January 2021).

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

 





 

The Directors do not expect that the adoption of the Standards and Interpretations listed above will have a material impact on the financial statements of the Group in future periods however, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

 

 

1.03

Basis of preparation

 

The consolidated financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis.

 

The Company's internal cashflow forecasts monitor both the short and long term timelines, factoring in the known risks and uncertainties.  These forecasts are regularly updated and demonstrate that with the current cash reserves and forecasted future revenue, the Company is able to continue in operation for at least the next 12 months. The Group financial statements have therefore been prepared on a going concern basis.

 

 

The financial report is presented in Pound Sterling (£) and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated.

 

 

1.04

Basis of consolidation

 

The consolidated financial information incorporates the results of the Company and its subsidiaries ("the Group") using the purchase method.  In the consolidated balance sheet, the acquiree's identifiable assets, liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained. Inter-company transactions and balances between Group companies are eliminated in full.

 

The investment in associate has been recorded at cost and has not been adjusted to reflect the Group's 25% share of the net profits/losses and assets/liabilities of the associate from the date of acquisition to the balance sheet date as it was deemed immaterial.

 

1.05

Business combinations

 

On the acquisition of a subsidiary, the business combination is accounted for using the acquisition method. The cost of an acquisition is measured as the aggregated amount of the consideration transferred, measured at the date of acquisition. The consideration paid is allocated to the assets acquired and liabilities assumed on the basis of fair values at the date of acquisition. Acquisition costs are expensed when incurred and included in general and administrative expenses.

 

If the cost of acquisition exceeds the identifiable net assets attributable to the Group, the difference is considered as purchased goodwill, which is not amortised but annually reviewed for impairment. In the case that the identifiable net assets attributable to the Group exceed the cost of acquisition, the difference is recognised in profit and loss as a gain on bargain purchase.

 

 

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

 

If the initial accounting for a business combination cannot be completed by the end of the reporting period in which the combination occurs, only provisional amounts are reported, which can be adjusted during the measurement period of 12 months after acquisition date.

 

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

 

1.06

Intangible assets

 

Intangible assets are recorded at cost less eventual amortisation and provision for impairment in value.

 

1.07

Oil and gas exploration assets and development/producing assets

 

The Group applies the successful efforts method of accounting for oil and gas assets, having regard to the requirements of IFRS 6 'Exploration for and Evaluation of Mineral Resources'.

 

 

All licence acquisition, exploration and evaluation costs are initially capitalised as intangible fixed assets in cost centres by field or by exploration area, as appropriate, pending determination of commerciality of the relevant property. Directly attributable administration costs are capitalised insofar as they relate to specific exploration activities, as are finance costs to the extent they are directly attributable to financing development projects. Pre-licence costs and general exploration costs not specific to any particular licence or prospect are expensed as incurred.

 

 

If prospects are deemed to be impaired ('unsuccessful') on completion of the evaluation, the associated costs are charged to the income statement. If the field is determined to be commercially viable, the attributable costs are transferred to development/production assets within property, plant and equipment in single field cost centres.

 

 

Subsequent expenditure is capitalised only where it either enhances the economic benefits of the development/producing asset or replaces part of the existing development/producing asset.

 

 

Increases in the carrying amount arising on revaluation of oil and gas properties are credited to other comprehensive income and shown as revaluation surplus reserve in shareholders' equity. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against revaluation surplus reserve directly in equity; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement, and depreciation based on the asset's original cost is transferred from 'revaluation surplus reserve' to 'retained earnings'.

 

 

Net proceeds from any disposal of an exploration asset are initially credited against the previously capitalised costs. Any surplus proceeds are credited to the income statement. Net proceeds from any disposal of development/producing assets are credited against the previously capitalised cost. A gain or loss on disposal of a development/producing asset is recognised in the income statement to the extent that the net proceeds exceed or are less than the appropriate portion of the net capitalised costs of the asset.

 

1.08

Commercial reserves

 

Commercial reserves are proven and probable oil and gas reserves, which are defined as the estimated quantities of crude oil, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from known reservoirs and which are considered commercially producible. There should be a 50 per cent statistical probability that the actual quantity of recoverable reserves will be more than the amount estimated as a proven and probable reserves and a 50 per cent statistical probability that it will be less.

 

 

1.09

Depletion and amortisation

 

All expenditure carried within each field is amortised from the commencement of production on a unit of production basis, which is the ratio of oil and gas production in the period to the estimated quantities of commercial reserves at the end of the period plus the production in the period, generally on a field by field basis. In certain circumstances, fields within a single development area may be combined for depletion purposes. Costs used in the unit of production calculation comprise the net book value of capitalised costs plus the estimated future field development costs necessary to bring the reserves into production. Changes in the estimates of commercial reserves or future field development costs are dealt with prospectively.

 

 

1.10

Decommissioning

 

Where a material liability for the removal of production facilities and site restoration at the end of the productive life of a field exists, a provision for decommissioning is recognised. The amount recognised is the present value of estimated future expenditure determined in accordance with local conditions and requirements. The cost of the relevant tangible fixed asset is increased with an amount equivalent to the provision and depreciated on a unit of production basis. Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and the associated fixed asset.

 

1.11

Property, plant and equipment

 

Property, plant and equipment is stated in the Balance Sheet at cost less accumulated depreciation and any recognised impairment loss. Depreciation on property, plant and equipment other than exploration and production assets, is provided at rates calculated to write off the cost less estimated residual value of each asset on a straight-line basis over its expected useful economic life of between one and five years.

 

Leasehold improvements are classified as property, plant and equipment and are depreciated on a straight-line basis over the period of the lease.

 

 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

1.12

Inventories

 

Inventories are stated at the lower of cost and net realisable value.  Cost is determined by the weighted average cost formula, where cost is determined from the weighted average of the cost at the beginning of the period and the cost of purchases during the period.  Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

 

1.13

Revenue recognition

 

Revenue represents amounts invoiced in respect of sales of oil and gas exclusive of indirect taxes and excise duties and is recognised on delivery of product. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

 

 

1.14

Foreign currencies

 

Transactions in foreign currencies are translated at the exchange rate ruling at the date of each transaction. Foreign currency monetary assets and liabilities are retranslated using the exchange rates at the balance sheet date. Gains and losses arising from changes in exchange rates after the date of the transaction are recognised in the income statement. Non‑monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated at the exchange rate at the date of the original transaction.

 

 

 

In the consolidated financial statements, the net assets of the Company are translated into its presentation currency at the rate of exchange at the balance sheet date. Income and expense items are translated at the average rates for the period. The resulting exchange differences are recognised in equity and included in the translation reserve.

 

 

1.15

Operating leases

 

The costs of all operating leases are charged against operating profit on a straight-line basis at existing rental levels. Incentives to sign operating leases are recognised in the income statement in equal instalments over the term of the lease.

 

 

1.16

Financial instruments

 

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. 

 

 

 

The particular recognition and measurement methods adopted are disclosed below:

 

 

 (i)

Cash and cash equivalents

 

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

 

 (ii)

Trade receivables

 

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

 

 

 (iii)

Trade payables

 

Trade payables are not interest-bearing and are stated at their nominal value.

 

 

 (iv)

Investments

 

Investments in subsidiaries are stated at cost and reviewed for impairment if there are indications that the carrying value may not be recoverable. The investment in associate has been recorded at cost and has not been adjusted to reflect the Group's 25% share of the net profits/losses and assets/liabilities of the associate from the date of acquisition to the balance sheet date as it was deemed immaterial.

 

 

 (v)

Equity instruments

 

Equity instruments issued by the Company and the Group are recorded at the proceeds received, net of direct issue costs.

 

(vi)

Derivative instruments

 

Derivative instruments are recorded at cost, and adjusted for their market value as applicable.  They are assessed for any equity and debt component which is subsequently accounted for in accordance with IFRS's.

 

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

1.17

Finance costs

 

Borrowing costs are recognised as an expense when incurred.

 

1.18

Borrowings

 

Borrowings are recognised initially at fair value, net of any applicable transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method (if applicable).

 

Interest on borrowings is accrued as applicable to that class of borrowing.

 

 

1.19

Provisions

 

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

 

 

 

When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

 

 

1.20

Dividends

 

Dividends are reported as a movement in equity in the period in which they are approved by the shareholders.

 

 

1.21

Taxation

 

The tax expense represents the sum of the tax currently payable and deferred tax.

 

 

 

Current tax, including UK corporation and overseas tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.

 

 

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

 

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

 

 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and adjusted to the extent that it is probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

 

 

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.   Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.  

 

1.22

Impairment of assets

 

At each balance sheet date, the Group assesses whether there is any indication that its property, plant and equipment and intangible assets have been impaired. Evaluation, pursuit and exploration assets are also tested for impairment when reclassified to oil and natural gas assets. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash‑generating unit to which the asset belongs is determined.

 

 

The recoverable amount of an asset or a cash‑generating unit is the higher of its fair value less costs to sell and its value in use. The value in use is the present value of the future cash flows expected to be derived from an asset or cash‑generating unit. This present value is discounted using a pre‑tax rate that reflects current market assessments of the time value of money and of the risks specific to the asset, for which future cash flow estimates have not been adjusted. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is recognised as an impairment loss.

 

 

 

The Group's impairment policy is to recognise a loss relating to assets carried at cost less any accumulated depreciation or amortisation immediately in the income statement.

 

 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

 

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash‑generating units, or groups of cash‑generating units, that are expected to benefit from the synergies of the combination. Goodwill is tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. An impairment loss is recognised on cash‑generating units, if the recoverable amount of the unit is less than the carrying amount of the unit. The impairment loss is allocated to reduce the carrying amount of the assets of the unit by first reducing the carrying amount of any goodwill allocated to the cash‑generating unit, and then reducing the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

 

 

 

If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount but limited to the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised in the income statement. Impairment losses on goodwill are not subsequently reversed.

 

 

1.23

Share based payments

 

Equity settled transactions:

 

The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

 

 

 

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black-Scholes model.

 

 

 

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Columbus Energy Resources Plc (market conditions) if applicable. The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group's best estimate of the number of equity instruments that will ultimately vest. The Income Statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

 

 

 

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting date).

 

 

 

No expense is ultimately recognised for awards that do not vest.

 

 

 

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

 

 

 

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

 

1.24

Segmental reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

 

The Board has determined there is a single operating segment: oil and gas exploration, development and production however, there are six geographical segments: Trinidad & Tobago, Spain and Cyprus, St Lucia, the U.S.A. & the U.K., four of which are non-operating.

 

Spain and Trinidad & Tobago have been reported as the Group's direct oil and gas producing entities and are the Group's only third-party revenue generating operations. The UK is the Group's parent and management entity and is reported on as a separate segment. The entities in Cyprus, St Lucia and the U.S. are non-operating in that they either hold investments or are dormant. Their results are consolidated and reported on together as a single segment.

 

1.25

Share issue expenses and share premium account

 

Costs of share issues are written off against the premium arising on the issues of share capital.

 

 

1.26

Share based payments reserve

 

This reserve is used to record the value of equity benefits provided to employees and Directors as part of their remuneration and provided to consultants and advisors hired by the Group from time to time as part of the consideration paid.

 

 

1.27

Revaluation surplus Reserve

 

This reserve is used to record the increase on revaluation of assets, in particular of oil and gas properties.

 

 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

1.28

 

Critical accounting estimates and assumptions

 

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

 

 (i)

Recoverability of intangible oil and gas costs

 

Costs capitalised as intangible assets are assessed for impairment when circumstances suggest that the carrying value may exceed its recoverable value. This assessment involves judgement as to the likely commerciality of the asset, the future revenues and costs pertaining and the discount rate to be applied for the purposes of deriving a recoverable value.

 

 

 (ii)

Decommissioning

 

The Group has decommissioning obligations in respect of its Spanish and Trinidadian assets. The full extent to which the provision is required depends on the legal requirements at the time of decommissioning, the costs and timing of any decommissioning works and the discount rate applied to such costs. 

 

 

 (iii)

Share-based payment transactions

 

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model.

 

 

1.29

Earnings per share

 

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

 

 

 

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

 

 

(i)

Costs of servicing equity (other than dividends) and preference share dividends;

 

 

(ii)

The post-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

 

 

(iii)

Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

2

Turnover and segmental analysis

 

 

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions.

 

The Board has determined there is a single operating segment: oil and gas exploration, development and production however, there are six geographical segments: Trinidad & Tobago, Spain and Cyprus, St Lucia, the U.S.A. & the U.K., five of which are non-operating.

 

Spain and Trinidad & Tobago have been reported as the Group's direct oil and gas producing entities and are the Group's only third-party revenue generating operations. The UK is the Group's parent and management entity and is reported on as a separate segment. The entities in Cyprus, St Lucia and the U.S.A. are non-operating in that they either hold investments or are dormant. Their results are consolidated and reported on together as a single segment.

 

The concession in Spain was classified as operating and this remained the case in 2017 as Spanish authorities had notified the company that it intended to hold a re-tender process for a new concession, a process the Company planned to participate in. The Company was informed in November 2018 that the Spanish authorities no longer plan to re-tender and from this date is no longer classified as operating.

 

 

 

 

Year ended 31 December 2018

Management

Non-Producing

Operating

Non-operating

Total

 

 

UK (*)

Spain

Trinidad

Cyprus, St Lucia & USA


 

 

£'000

£'000

£'000

£'000

£'000

 

Operating profit/(loss) by geographical area

 

 

 

 

 

 

Sales revenue (**)

-

-

7,573

-

7,573

 

 

 

 

 

 

 

 

Operating profit/(loss)

(1,090)

(1,017)

(1,611)

(25)

(3,743)

 

Finance (charges)/income

(109)

-

(14)

-

(123)

 

Impairment of non-current assets

(132)

-

-

-

(132)

 

Gain on bargain purchase

-

-

-

1,295

1,295

 

Profit/(loss) before taxation

(1,331)

(1,017)

(1,625)

1,270

(2,703)

 

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

Depreciation and amortisation

(37)

(31)

(2,211)

-

(2,279)

 

Capital additions

1

-

1,532

-

1,533

 

 

 

 

 

 

 

 

Segment assets

 

 

 

 

 

 

Non-current assets

18

106

26,715

-

26,839

 

Trade and other receivables

182

7

2,619

-

2,808

 

Inventories

-

-

655

-

655

 

Cash

1,176

4

529

3

1,712

 

Consolidated total assets

1,376

117

30,518

3

32,014

 

 

 

 

 

 

 

 

Segment liabilities

 

 

 

 

 

 

Trade and other payables

(707)

(18)

(3,875)

(16)

(4,616)

 

Taxation

-

-

-

(11)

(11)

 

Borrowings

(291)

-

(383)

-

(674)

 

Deferred tax liability

-

-

(45)

-

(45)

 

Deferred consideration

(120)

-

-

-

(120)

 

Provisions

-

(860)

(1,053)

-

(1,913)

 

Consolidated total liabilities

(1,118)

(878)

(5,356)

(27)

(7,379)

 

 

 

 

 

 

 

 

(*) Intercompany balances and transactions between Group entities have been eliminated.

(**) Sales revenues were derived from a single customer within each of these operating countries.

 

 

    

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

2

Turnover and segmental analysis (continued)

 

 

 

Year ended 31 December 2017

Management

Operating

Operating

Non-operating

Total

 

 

UK (*)

Spain

Trinidad

Cyprus, St Lucia & USA


 

 

£'000

£'000

£'000

£'000

£'000

 

Operating profit/(loss) by geographical area

 

 

 

 

 

 

Revenue (**)

-

293

4,501

-

4,794

 

 

 

 

 

 

 

 

Operating profit/(loss)

(1,352)

(766)

(2,053)

(25)

(4,196)

 

Finance (charges)/income

(813)

-

(11)

-

(824)

 

Profit/(loss) before taxation

(2,165)

(766)

(2,064)

                         (25)

(5,020)

 

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

Depreciation and amortisation

(89)

(33)

(1,651)

-

(1,773)

 

Capital additions

1

-

1,375

-

1,376

 

 

 

 

 

 

 

 

Segment assets

 

 

 

 

 

 

Non-current assets

56

136

19,623

-

19,815

 

Trade and other receivables

253

19

1,187

-

1,459

 

Inventories

-

-

192

-

192

 

Cash

3,820

42

138

2

4,002

 

Consolidated total assets

4,129

197

21,140

2

25,468

 

 

 

 

 

 

 

 

Segment liabilities

 

 

 

 

 

 

Trade and other payables

(422)

(36)

(1,458)

(15)

(1,931)

 

Taxation

-

-

-

(12)

(12)

 

Borrowings

(844)

-

(363)

-

(1,207)

 

Deferred consideration

(120)

-

-

-

(120)

 

Provisions

-

(847)

(410)

-

(1,257)

 

Consolidated total liabilities

(1,386)

(883)

(2,231)

(27)

(4,527)

 

 

 

 

 

 

 

(*) Intercompany balances and transactions between Group entities have been eliminated.

(**) Sales revenues were derived from a single customer within each of these operating countries.



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

3

Operating loss

2018

2017

 

 

£ 000's

£ 000's

 

Operating loss is arrived at after charging:

 

 

 

Fees payable to the Company's auditor for:

 

 

 

-the audit of the Company and Group accounts

37

37

 

-audit related assurance services

2

2

 

Directors' emoluments - fees and benefits (*)

683

1,152

 

Depreciation (**)

1,904

1,504

 

Amortisation

375

269

 

 

 

 

 

 

(*) See note 7 for further details.

(**) Depreciation of certain oil and gas assets of £1,529,000 (2017: £1,156,000) has been recognised within cost of sales.

 

 

4

Employee information (excluding Directors')

2018

2017

 

 

£ 000's

£ 000's

 

Staff costs:

 

 

 

Wages and salaries

2,245

1,173

 

Employer NIC's

121

254

 

Total

2,366

1,427

 

 

 

 

Number

Number

 

The average number of employees working on a full time equivalent basis:

 

 

 

Administration

17

8

 

Operations

38

18

 

Total

55

26

 

5

Taxation

2018

2017

 

 

£ 000's

£ 000's

 

Analysis of tax charge in the year

 

 

 

Tax charge/(income) on ordinary activities

348

12

 

 

 

 

 

Factors affecting the tax charge for the year:

 

 

 

Loss on ordinary activities before tax

2,703

5,020

 

Standard rate of corporation tax in the UK

19%

20%/19%

 

 

 

 

 

Loss on ordinary activities multiplied by the standard rate of corporation tax

513

966

 

Effects of:

 

 

 

Non-deductible expenses

(52)

(50)

 

Special petroleum tax

679

-

 

Overseas tax on profits

11

12

 

Overseas deferred tax credit

(377)

-

 

foreign exchange difference

36

-

 

Future tax benefit not brought to account

(462)

(916)

 

Current tax charge/(income) for the year

348

12

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

 

 

 

 

Deferred tax:

 

The net deferred tax balances solely relates to the Company's Trinidad operations. The components of the liability for the years ended December 31, 2018 and 2017 were as follows:

 

 

Steeldrum acquisition balances:

 

 

 

Losses carried forward

3,134

 

 

Property and equipment

(1,484)

-

 

Net deferred tax asset recognised at acquisition (note 13)

1,650

 

 

Post-acquisition losses carried forward

348

-

 

Adjustment to Property and equipment

74

-

 

Deferred tax asset

2,072

-

 

 

 

 

 

Property and equipment (non Steeldrum)

(45)

-

 

Deferred tax liability

(45)

-

 

 

6

Dividends

 

During the year, no dividends were paid or proposed by the Directors (2017: nil).



 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

7

Directors' remuneration

 

 

 

 

 

 

2018

2017

 

 

 

 

 

 

£ 000's

£ 000's

 

Directors' remuneration

 

 

 

683

1,152

 

 

 

 

 

Directors fees

 

Pension and medical benefits

 

 

Employer NIC's

Contractual and   termination benefits

Share-settled payments

 

 

Total

 

 

£000's

£000's

£000's

£000's

£000's

£000's

 

2018

 

 

 

 

 

 

 

Executive Directors

 

 

 

 

 

 

 

Leo Koot

150

16

20

-

150

336

 

Gordon Stein

98

8

12

-

95

213

 

Neil Ritson

-

-

-

85

-

85

 

Fergus Jenkins

-

-

-

6

-

6

 

James Thadchanamoorthy

-

-

-

17

-

17

 

 

 

 

 

 

 

 

 

Non-Executive Directors

 

 

 

 

 

 

 

Michael Douglas

24

-

2

-

-

26

 

Gordon Stein

-

-

-

-

-

-

 

Stephen Horton

-

-

-

-

-

-

 

 

272

24

34

108

245

683

 

 

 

 

 

 

 

 

 

 

The Executive Directors being Leo Koot and Gordon Stein, and the new Executive Management Members being Stewart Ahmed and Anthony Hawkins (together the "Leadership Team"), agreed to receive 50% of their fees for the first year of their employment in Company shares, implemented by way of nil cost options (see the Directors' Report for further details).  The Leadership Team all agreed to continue to take 50% of their fees in their second year of employment with the number of share options awarded for these fees being calculated and accrued monthly.  Alternatively, each member of the Leadership Team is entitled to receive 100% of their fees in cash by giving the Company one month's notice of this request in writing.  The Company share price used to calculate the number of shares to be awarded via share options for the second year of employment for all members of the Leadership team is 5.1p.   The figures above include accruals for the fees to be settled by the issue of share options as at 31 December 2018. At the year-end, Leo Koot was owed £243,750 and Gordon Stein was owed £146,458 in fees, payable via nil cost share options as referred to above (see note 20).

 

 

 

 

Directors fees

 

Pension and medical benefits

 

 

Employer NIC's

 

Contractual and termination benefits

Share-settled payments

 

Total

 

 

£000's

£000's

£000's

£000's

£000's

£000's

 

2017

 

 

 

 

 

 

 

Executive Directors

 

 

 

 

 

 

 

Leo Koot

193

6

26

-

65

290

 

Gordon Stein

104

3

14

-

65

186

 

 

 

 

 

 

 

 

 

Neil Ritson

75

4

21

131

-

231

 

Fergus Jenkins

58

6

8

25

-

97

 

James Thadchanamoorthy

69

8

20

141

-

238

 

 

 

 

 

 

 

 

 

Non-Executive Directors

 

 

 

 

 

 

 

Michael Douglas

24

-

1

-

15

40

 

Gordon Stein

10

-

1

-

-

11

 

Stephen Horton

-

-

4

55

-

59

 

 

533

27

95

352

145

1,152

 

 

Stephen Horton retired from the Board of Directors on 10 January 2017. Gordon Stein joined as a Non-Executive Director on 10 January 2017 then later was appointed Chief Financial Officer on 15 June 2017, replacing James Thadchanamoorthy. Leo Koot was appointed Executive Chairman on 10 May 2017, replacing Neil Ritson. Fergus Jenkins stepped down from the Board on 1 August 2017. One-off contractual and termination payments due to the previous Executive Directors, Neil Ritson, Fergus Jenkins and James Thadchanamoorthy, are shown separately above.

 

 

 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

8

Loss per share

 

The calculation of loss per share is based on the loss after taxation divided by the weighted average number of shares in issue during the year:

 

 

2018

2017

 

Loss after taxation (£000's)

(3,051)

(5,032)

 

 

 

 

 

Weighted average number of ordinary shares used in calculating basic loss per share (millions)

685

534

 

Weighted average number of ordinary shares used in calculating diluted loss per share (millions)

802

597

 

 

 

 

 

Basic loss per share (expressed in pence)

(0.45)

(0.94)

 

Diluted loss per share (expressed in pence)

(0.45)

(0.94)

 

 

 

As the inclusion of potentially issuable ordinary shares would result in a decrease in the loss per share, they are considered to be anti-dilutive and as such, a diluted loss per share is not included.

 

In March 2017, the Company reorganised its share capital and reduced the number of ordinary shares in issue by a ratio of 20:1.

 

 

9

Finance charges/(income)

2018

2017

 

 

£ 000's

£ 000's

 

Loan interest payable

123

250

 

Loan facility fees

-

574

 

Realised (gain)/loss on loan maturity

-

-

 

Total

123

824

 

 

 

 

 

Loan facility fees include the fair value of the options issued in connection with the second convertible security from Lind Partners LLC (Lind) (see note 19) and the fair value of the shares issued in connection with the re-negotiation of the Convertible Security Funding Agreement with Lind, as announced by the Company on 11 September 2017.

 

 

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

10

Intangible assets

 

 

2018

 

 

Intangible evaluation assets

Software

Total

 

 

£000's

£000's

£000's

 

Cost

 

 

 

 

As at 1 January 2018

15,800

133

15,933

 

Additions

815

-

815

 

Foreign exchange difference on translation

466

-

466

 

As at 31 December 2018

17,081

133

17,214

 

 

 

 

 

 

Amortisation and Impairment

 

 

 

 

As at 1 January 2018

11,522

84

11,606

 

Amortisation

342

33

375

 

Foreign exchange difference on translation

207

-

207

 

As at 31 December 2018

12,071

117

12,188

 

 

 

 

 

 

Net book value

 

 

 

 

As at 31 December 2018

5,010

16

5,026

 

As at 31 December 2017

4,278

49

4,327

 

 

 

 

 

 

Impairment review

 

The Directors carried out an impairment review of the intangible assets and concluded that a write-down was not required.

 

10

Intangible assets

2018

 

 

Company

 

 

Software

 

 

£000's

 

Cost

 

 

As at 1 January 2018

133

 

Additions

-

 

Foreign exchange difference on translation

-

 

As at 31 December 2018

133

 

 

 

 

Amortisation and Impairment

 

 

As at 1 January 2018

84

 

Amortisation

33

 

Foreign exchange difference on translation

-

 

As at 31 December 2018

117

 

 

 

 

Net book value

 

 

As at 31 December 2018

16

 

As at 31 December 2017

49

 

 

 

 

 

 

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

 

10

Intangible assets

 

 

2017

 

 

 

Intangible evaluation assets

Software

Total

 

 

 

£000's

£000's

£000's

 

 

Cost

 

 

 

 

 

As at 1 January 2017

16,302

133

16,435

 

 

Additions

21

-

21

 

 

Foreign exchange difference on translation

(523)

-

(523)

 

 

As at 31 December 2017

15,800

133

15,933

 

 

 

 

 

 

 

 

Amortisation and Impairment

 

 

 

 

 

As at 1 January 2017

11,386

51

11,437

 

 

Amortisation

236

33

269

 

 

Foreign exchange difference on translation

(100)

-

(100)

 

 

As at 31 December 2017

11,522

84

11,606

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

As at 31 December 2017

4,278

49

4,327

 

 

As at 31 December 2016

4,916

82

4,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

Intangible assets

2017

 

 

Company

 

 

Software

 

 

£000's

 

Cost

 

 

As at 1 January 2017

133

 

Additions

-

 

Foreign exchange difference on translation

-

 

As at 31 December 2017

133

 

 

 

 

Amortisation and Impairment

 

 

As at 1 January 2017

51

 

Amortisation

33

 

Foreign exchange difference on translation

-

 

As at 31 December 2017

84

 

 

 

 

Net book value

 

 

As at 31 December 2017

49

 

As at 31 December 2016

82

 

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

11

Tangible assets

2018

 

 

 

 

 

Group

Company

 

 

Oil and gas assets

Property, plant and equipment (*)

Decommissioning costs

Total

Property, plant and equipment (*)

 

 

£ 000's

£ 000's

£ 000's

£ 000's

£ 000's

 

Cost or Valuation

 

 

 

 

 

 

As at 1 January 2018

22,042

3,366

1,160

26,568

26

 

Additions

269

384

-

653

1

 

Acquisition of Steeldrum

3,165

1,110

-

4,275

-

 

Disposals

-

(45)

-

(45)

-

 

Foreign exchange difference on translation

1,100

211

(7)

1,304

-

 

As at 31 December 2018

26,576

5,026

1,153

32,755

27

 

 

 

 

 

 

 

 

Depreciation and Impairment

 

 

 

 

 

 

As at 1 January 2018

8,177

2,087

851

11,115

20

 

Depreciation

1,529

339

36

1,904

5

 

Disposals

-

-

-

-

-

 

Foreign exchange difference on translation

491

137

5

633

-

 

As at 31 December 2018

10,197

2,563

892

13,652

25

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

As at 31 December 2018

16,379

2,463

261

19,103

2

 

As at 31 December 2017

13,865

1,279

309

15,453

6

 

 

 

 

 

 

 

 

(*) Property, plant and equipment includes leasehold improvements.

 

 

 

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

11

Tangible assets

2017

 

 

 

 

 

Group

Company

 

 

Oil and gas assets

Property, plant and equipment (*)

Decommissioning costs

Total

Property, plant and equipment (*)

 

 

£ 000's

£ 000's

£ 000's

£ 000's

£ 000's

 

Cost or Valuation

 

 

 

 

 

 

As at 1 January 2017

22,597

3,594

1,134

27,325

258

 

Additions

1,123

172

60

1,355

1

 

Disposals

-

(233)

-

(233)

(233)

 

Foreign exchange difference on translation

(1,678)

(167)

(34)

(1,879)

-

 

As at 31 December 2017

22,042

3,366

1,160

26,568

26

 

 

 

 

 

 

 

 

Depreciation and Impairment

 

 

 

 

 

 

As at 1 January 2017

7,639

2,064

825

10,528

197

 

Depreciation

1,156

316

32

1,504

56

 

Disposals

-

(233)

-

(233)

(233)

 

Foreign exchange difference on translation

(618)

(60)

(6)

(684)

-

 

As at 31 December 2017

8,177

2,087

851

11,115

20

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

As at 31 December 2017

13,865

1,279

309

15,453

6

 

As at 31 December 2016

14,958

1,530

309

16,797

61

 

 

 

 

 

 

 

 

(*) Property, plant and equipment includes leasehold improvements.

 

 

 

 

 

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

12

Investment in associate

2018

2017

 

Group

£ 000's

£ 000's

 

Cost

 

 

 

As at 1 January

35

38

 

Additions

-

-

 

Foreign exchange difference on translation

2

(3)

 

As at 31 December

37

35

 

 

 

Columbus Energy Resources Plc, the parent company of the Group, holds 25% of the share capital of the following company:

 

 

Company

Country of registration

Proportion held

Nature of business

 

Indirect

 

 

 

 

Via Leni Trinidad Ltd

 

 

 

 

Beach Oilfield Limited

Trinidad & Tobago

25%

Oil and Gas Production and Exploration Company

 

12

Investment in subsidiaries

2018

2017

 

Company

£ 000's

£ 000's

 

Cost

 

 

 

As at 1 January

1

1

 

Additions

-

-

 

Disposals

-

-

 

As at 31 December

1

1

 

 

 

 

 

 

 

 

 

 

Columbus Energy Resources Plc, the parent company of the Group, holds 100% of the share capital of the following companies:

 

 

Company

Country of registration

Proportion held

Nature of business

 

Direct

 

 

 

 

Columbus Energy Holdings Ltd

Cyprus

100%

Holding Company

 

 

 

 

 

 

Indirect

 

 

 

 

Via Columbus Energy Holdings Ltd

 

 

 

 

Columbus Energy CPS (Cyprus) Ltd

Cyprus

100%

Investment Company

 

Columbus Energy Byron Ltd

Cyprus

100%

Investment Company

 

Columbus Energy (Cyprus) Ltd

Cyprus

100%

Investment Company

 

Columbus Energy Investments Ltd

Cyprus

100%

Investment Company

 

 

 

 

 

 

Via Columbus Energy CPS (Cyprus) Ltd

 

 

 

 

Compañia Petrolifera de Sedano S.L.U.

Spain

100%

Oil and Gas Production and Exploration Company

 

 

 

 

 

 

Via Columbus Energy Byron Ltd

 

 

 

 

Leni Gas and Oil US Inc.

United States

100%

Dormant Company

 

 

 

 

 

 

Via Columbus Energy (Cyprus) Ltd

 

 

 

 

Columbus Energy (St Lucia) Ltd

St Lucia

100%

Investment Company

 

 

 

 

 

 

Via Columbus Energy (St Lucia) Ltd

 

 

 

 

Leni Trinidad Ltd

Trinidad & Tobago

100%

Oil and Gas Production and Exploration Company

 

Columbus Energy Services Ltd

Trinidad & Tobago

100%

Oil and Gas Services Company

 

Goudron E&P Ltd

Trinidad & Tobago

100%

Oil and Gas Production and Exploration Company

 

Caribbean Rex Ltd

St Lucia

100%

Investment Company

 

Steeldrum Oil Company Inc

St Lucia

100%

Investment Company

 

Steeldrum Petroleum Group Ltd

Trinidad & Tobago

100%

Investment Company

 

FRAM Exploration (Trinidad) Ltd

Trinidad & Tobago

100%

Oil and Gas Production and Exploration Company

 

Jasmin Oil & Gas Ltd

Trinidad & Tobago

100%

Oil and Gas Production and Exploration Company

 

Cory Moruga Holdings Ltd

Trinidad & Tobago

100%

Oil and Gas Production and Exploration Company

 

West Indian Energy Group Ltd

Trinidad & Tobago

100%

Oil and Gas Services Company

 

T-REX Resources (Trinidad) Ltd

Trinidad & Tobago

100%

Oil and Gas Production and Exploration Company

 

The names of the subsidiaries in Cyprus and St Lucia changed in 2018.

 

13

Business combination

 

Acquisition in 2018

 

On 13 July 2018, Columbus Energy Resources PLC (CERP) announced they had signed a Sale and Purchase Agreement ("SPA") to acquire Steeldrum Oil Company Inc ("Steeldrum"). Upon completion of the Steeldrum acquisition, the Company issued 109,166,209 shares to the sellers of Steeldrum. This consisted of 92,743,775 shares (the "Base Consideration Shares") and 16,422,434 shares for the licence extension of the Cory Moruga Block (Contingent Consideration Shares). The Cory Moruga licence extension was granted on the 9th September 2018 and following the completion of the transaction on 10 October 2018 these shares were issued.

 

Assets acquired and liabilities assumed

 

The fair values of the identifiable assets and liabilities of the Steeldrum Group as at the date of acquisition were:

 

 

 

 

Fair value recognised on acquisition

Assets

£ 000's

Cash and cash equivalents

337

Trade and other receivables

2,072

Inventories

455

Deferred Tax Asset (note 5)

1,650

Property, plant and equipment (note 11)

4,275


8,789

Liabilities

 

Trade and other payables

(2,294)

Provisions (Note 18)

(373)

Borrowings

(1,006)


(3,673)

Total identifiable net assets at fair value

5,116

Gain on bargain purchase (included in statement of comprehensive income)

(1,295)

Purchase consideration transferred (shares issued at fair value)

3,821

 

 

Analysis of cash flows on acquisition

 

Net cash acquired with the subsidiary (included in cash flows from investing activities)

337

Net cash flow on acquisition

337

 

 

 

 

 

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

14

Trade and other receivables

2018

2017

 

 

Group

Company

Group

Company

 

 

£ 000's

£ 000's

£ 000's

£ 000's

 

Current trade and other receivables

 

 

 

 

 

Trade receivables

1,348

-

605

-

 

VAT receivable

900

34

387

46

 

Taxation receivable

36

-

62

-

 

Other receivables

436

114

304

132

 

Prepayments

88

34

101

75

 

Total

2,808

182

1,459

253

 

 

 

 

 

 

 

Non-current trade and other receivables

 

 

 

 

 

Escrow and Abandonment funds (*)

601

-

-

-

 

Loans due from subsidiaries (**)

-

47,349

-

39,849

 

Total

601

47,349

-

39,849

 

 

 

 

 

 

 

 (*) Pursuant to certain production and exploration licences, the Company is obligated to remit payments into an Escrow Fund and a separate Abandonment fund based on production, amounts paid vary by licence. The Company remits US$0.25 per barrel of crude oil sold (Escrow fund), and between US$0.28 to US$1.00 (varying by licence) to an abandonment fund. per barrel for and the funds will be used for the future abandonment of wells in the related licenced area. As at December 31, 2018, the Company classified £601,000 of accrued or paid fund contributions as long-term abandonment fund assets (2017: Nil).

(**) The loans due from subsidiaries are interest free, have no fixed repayment date and are denominated in GBP.

 

            

15

Inventories

2018

2017

 

 

Group

Company

Group

Company

 

 

£ 000's

£ 000's

£ 000's

£ 000's

 

Crude Oil

117

-

20

-

 

Consumables

538

-

172

-

 

Total

655

-

192

-

 

 

 

 

 

 

 

 

16

Trade and other payables

2018

2017

 

 

Group

Company

Group

Company

 

 

£ 000's

£ 000's

£ 000's

£ 000's

 

Current trade and other payables

 

Trade and other payables

3,368

49

1,286

47

 

Accruals

1,248

658

645

375

 

Sub total

4,616

707

1,931

422

 

Deferred consideration payable

120

120

120

120

 

Taxation payable

11

-

12

-

 

Total

4,747

 

 

 

 

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

17

Borrowings

2018

2017

 

 

Group

Company

Group

Company

 

 

£ 000's

£ 000's

£ 000's

£ 000's

 

Current borrowings

 

 

 

 

 

Secured loan 1

-

-

334

334

 

Unsecured loan 2

291

291

278

278

 

Secured loan 3

41

-

39

-

 

Unsecured loan 4

196

-

186

-

 

Secured loan 5

14

-

-

-

 

Total

542

291

837

612

 

 

 

 

 

 

 

Non-current borrowings

 

 

 

 

 

Secured loan 1

-

-

-

-

 

Unsecured loan 2

-

-

232

232

 

Secured loan 3

105

-

138

-

 

Unsecured loan 4

-

-

-

-

 

Secured loan 5

27

-

-

-

 

Total

 

 

 

 

 

 

 

1 In December 2016, the Company signed a US$8.6m Convertible Security Funding Agreement with Lind and drew down $1.825m in order to refinance and retire the outstanding BNP Paribas loan.  Repayments were over 2 years with 24 monthly payments of $94,500. Lind were able to convert the outstanding balance at a conversion price of 4.5 pence, subject to restrictions. The loan was denominated in US Dollars.

 

The final loan repayment was made in June 2018 and no conversion was requested by Lind during the period the loan was outstanding. 

 

2 In October 2017, the Company drew down US$0.75m under the Convertible Security Funding Agreement. Repayments are over 2 years with 24 monthly payments of $38,719. Lind are able to convert the outstanding balance at a conversion price of 4.5 pence, subject to restrictions. The loan is denominated in US Dollars.  Whilst the loan was initially a secured loan, the security fell away in September 2018 when loan repayments reduced the amount outstanding to less than US$500,000.  The charge on that loan was therefore released by Lind on 1 October 2018 and the final monthly payment on this loan is forecast for September 2019. 

 

 

 

3 The loan was issued by RBC Royal Bank Limited in April 2015. Repayments are over 7 years and the loan is denominated in Trinidad Dollars.

 

 

 

4 The loan was issued by BNP Paribas in 2015. In December 2016, the outstanding balance of US$2.6m was refinanced and retired, and all security was removed, leaving a final unsecured payment of US$0.25m due on 31 December 2019. The loan is denominated in US Dollars.

 

5 The loan was issued by Ansa Merchant Bank Limited in May 2018 and was inherited by Columbus as part of the Steeldrum acquisition. Repayments are over 4 years and the loan is denominated in Trinidad Dollars.

 

In addition, the Company inherited a secured loan of £1.09 million from North Energy Capital AS upon completion of the Steeldrum acquisition in October 2018.  That loan was issued in May 2017 and was fully repaid by the Company in November 2018 in order to release the security held on that loan over certain Steeldrum assets.  The security was subsequently released by the lender.   

 

 

 

The carrying amounts of all the borrowings approximate to their fair value.

 

 

18

Provisions

2018

2017

 

Provisions for decommissioning costs

Group

Company

Group

Company

 

 

£ 000's

£ 000's

£ 000's

£ 000's

 

At 1 January

1,257

-

1,188

-

 

Additions

231

-

72

-

 

Acquisition of Steeldrum

373

-

-

-

 

Foreign exchange difference on translation

52

-

(3)

-

 

At 31 December

1,913

-

1,257

-

 

 

 

 

 

 

 

The provisions relate to the estimated costs of the removal of the Spanish and Trinidadian production facilities and site restoration at the end of the production lives of the facilities.

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

19

Share capital

 

Called up, allotted, issued and fully paid ordinary shares of 0.05p each

Number of shares

Nominal value

 

 

 

£ 000's

 

As at 31 December 2016 - before capital reorganisation

8,367,599,626

4,184

 

As at 31 December 2016 - after capital reorganisation

418,379,981

4,184

 

9 March 2017 consideration at 2.38p per share

7,181,147

4

 

31 March 2017 cash at 2.20p per share

113,636,374

57

 

19 September 2017 consideration at 3.00p per share

20,300,000

10

 

9 October 2017 cash at 5.00p per share

60,000,000

30

 

9 October 2017 cash at 5.00p per share

2,000,000

1

 

10 October 2017 consideration at 4.50p per share

2,512,333

1

 

2 November 2017 cash at 5.00p per share

20,129,349

10

 

8 November 2017 consideration at 4.50p per share

5,067,242

2

 

As at 31 December 2017

649,206,426

4,299

 

13 August 2018 consideration at average price of 4.15p per share

1,079,986

1

 

11 October 2018 consideration at 3.50p per share

92,743,775

46

 

11 October 2018 consideration at 3.50p per share

16,422,434

8

 

31 October 2018 cash at 3.50p per share

71,428,571

36

 

As at 31 December 2018

830,881,192

4,390

 

 

 

 

During the year, 181.7 million shares were issued (2017: 230.8 million).

 

 

In March 2017, the Company reorganised its share capital and reduced the number of ordinary shares in issue by a ratio of 20:1. The nominal value of each ordinary share remained unchanged at 0.05p.

 

At the end of 2018, the number of shares in issue comprised 412.5 million ordinary shares and 418.4 million deferred shares.

 

Total share options in issue

As at 31 December 2018 the options in issue were:

Exercise price

Vesting criteria

Expiry date

Options in issue

 

20p

-

31 Dec 2020

2,800,000

 

20p

500 bopd

31 Dec 2020

2,466,667

 

20p

600 bopd

31 Dec 2020

2,466,667

 

20p

700 bopd

31 Dec 2020

2,466,667

 

80p

1250 bopd

31 Dec 2020

812,500

 

80p

1500 bopd

31 Dec 2020

2,250,000

 

80p

1750 bopd

31 Dec 2020

812,500

 

3p

-

8 Apr 2020

19,721,077

 

3p

-

14 Jul 2020

4,163,231

 

8.7p

-

22 Feb 2021

4,893,596

 

2.2-10.0p

4.0-20.0p

9 May 2022

15,000,000

 

2.2-10.0p

4.0-20.0p

14 Jun 2022

10,000,000

 

8.1p

-

12 Jul 2022

5,472,136

 

2.2-10.0p

4.0-20.0p

20 Aug 2022

18,800,000

 

5.0-12.0p

8.0-24.0p

31 Dec 2022

10,000,000

 

5.0-12.0p

8.0-24.0p

29 Jun 2023

3,000,000

 

Zero cost (*)

-

Various 2025

23,628,937

 

As at 31 December 2018

 

 

128,753,978

 

 

During the year, 42.1 million options were issued (2017: 56.1 million). No options lapsed during the year (2017: nil), no options were cancelled in the year (2016: nil), and no options were exercised during the year (2017: nil). The number of share options in issue as at the date of the capital reorganisation were divided by 20 and the exercise prices were multiplied by 20.  (*) See Note 20 for explanation of zero cost options.

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

19

Share capital (continued)

 

 

Total warrants in issue

 

As at 31 December 2018 the warrants in issue were:

 

Exercise price

Expiry date

Warrants in issue

 

6.5p

12 Oct 2020

2,460,000

 

As at 31 December 2018

 

2,460,000

 

 

During the year, no warrants were issued (2017: 2.46 million).  0.38 million warrants lapsed during the year (2017: 0.51 million), no warrants were cancelled during the year (2017: nil), and no warrants were exercised during the year (2017: nil). The number of warrants in issue as at the date of the capital reorganisation in early 2017 were divided by 20 and the exercise prices were multiplied by 20.

 

20

Share based payments

 

Share options

 

The Company has established share option plans to enable the issue of options as part of remuneration of key management personnel and Directors. Options were granted under the plan for no consideration. Options were granted for between a 5 and 7.5 year period. There are vesting conditions associated with the options. Options granted under the plan carry no dividend or voting rights.

 

 

Under IFRS 2 'Share Based Payments', the Company determines the fair value of options issued to Directors and Employees as remuneration and recognises the amount as an expense in the income statement with a corresponding increase in equity. As at 31 December 2018 the unexpired share options were:

 

Name

Date granted

Vesting date /criteria

Number (*)

Exercise price (pence) (*)

Expiry date

Share price at grant date (pence) (**)

Fair value after discount (pence)

(**)


Neil Ritson

1 Jul 2013

1 Jul 2013

1,250,000

20

31 Dec 2020

0.73

0.51


Neil Ritson

1 Jul 2013

31 Aug 2014

1,250,000

20

31 Dec 2020

0.73

0.20


Neil Ritson

1 Jul 2013

31 Aug 2014

1,250,000

20

31 Dec 2020

0.73

0.20


Neil Ritson

1 Jul 2013

30 Sep 2014

1,250,000

20

31 Dec 2020

0.73

0.20


Steve Horton

1 Jul 2013

1 Jul 2013

250,000

20

31 Dec 2020

0.73

0.51


Steve Horton

1 Jul 2013

31 Aug 2014

166,667

20

31 Dec 2020

0.73

0.20


Steve Horton

1 Jul 2013

31 Aug 2014

166,667

20

31 Dec 2020

0.73

0.20


Steve Horton

1 Jul 2013

30 Sep 2014

166,667

20

31 Dec 2020

0.73

0.20


Fergus Jenkins

1 Jul 2013

1 Jul 2013

500,000

20

31 Dec 2020

0.73

0.51


Fergus Jenkins

1 Jul 2013

31 Aug 2014

375,000

20

31 Dec 2020

0.73

0.20


Fergus Jenkins

1 Jul 2013

31 Aug 2014

375,000

20

31 Dec 2020

0.73

0.20


Fergus Jenkins

1 Jul 2013

30 Sep 2014

375,000

20

31 Dec 2020

0.73

0.20


Management

1 Jul 2013

1 Jul 2013

500,000

20

31 Dec 2020

0.73

0.51


Management

1 Jul 2013

31 Aug 2014

375,000

20

31 Dec 2020

0.73

0.20


Management

1 Jul 2013

31 Aug 2014

375,000

20

31 Dec 2020

0.73

0.20


Management

1 Jul 2013

30 Sep 2014

375,000

20

31 Dec 2020

0.73

0.20


Consultants

1 Jul 2013

1 Jul 2013

300,000

20

31 Dec 2020

0.73

0.51


Consultants

1 Jul 2013

31 Aug 2014

300,000

20

31 Dec 2020

0.73

0.20


Consultants

1 Jul 2013

31 Aug 2014

300,000

20

31 Dec 2020

0.73

0.20


Consultants

1 Jul 2013

30 Sep 2014

300,000

20

31 Dec 2020

0.73

0.20

 

Steve Horton

1 Dec 2014

31 Dec 2014

750,000

80

31 Dec 2020

3.675

0.59

 

Iain Patrick

1 Dec 2014

31 Dec 2014

750,000

80

31 Dec 2020

3.675

0.59

 

Michael Douglas

1 Dec 2014

31 Dec 2014

750,000

80

31 Dec 2020

3.675

0.59

 

James Thadchanamoorthy

1 Dec 2014

31 Dec 2014

  812,500

80

31 Dec 2020

3.675

1.79

 

James Thadchanamoorthy

1 Dec 2014

31 Dec 2014

812,500

80

31 Dec 2020

3.675

0.59

 

Lind Partners LLC

9 Dec 2016

9 Dec 2016

19,721,077

3

8 Apr 2020

0.13

0.13

 

Lind Partners LLC

15 Mar 2017

15 Mar 2017

4,163,231

3

14 Jul 2020

3.68

0.13

 

Leo Koot

21 Aug 2017

4p

3,000,000

2.2

20 Aug 2022

2.28

1.52

 

Leo Koot

21 Aug 2017

8p

3,000,000

4

20 Aug 2022

2.28

0.64

 

Leo Koot

21 Aug 2017

12p

3,000,000

6

20 Aug 2022

2.28

-

 

Leo Koot

21 Aug 2017

16p

3,000,000

8

20 Aug 2022

2.28

-

 

Leo Koot

21 Aug 2017

20p

3,000,000

10

20 Aug 2022

2.28

-

 

Gordon Stein

21 Aug 2017

4p

2,000,000

2.2

20 Aug 2022

2.28

2.29

 

Gordon Stein

21 Aug 2017

8p

2,000,000

4

20 Aug 2022

2.28

1.00

 

Gordon Stein

21 Aug 2017

12p

2,000,000

6

20 Aug 2022

2.28

-

 

Gordon Stein

21 Aug 2017

16p

2,000,000

8

20 Aug 2022

2.28

-

 

Gordon Stein

21 Aug 2017

20p

2,000,000

10

20 Aug 2022

2.28

-

 

Michael Douglas

21 Aug 2017

4p

600,000

2.2

20 Aug 2022

2.28

1.64

 

Michael Douglas

21 Aug 2017

8p

600,000

4

20 Aug 2022

2.28

0.71

 

Michael Douglas

21 Aug 2017

12p

600,000

6

20 Aug 2022

2.28

-

 

Michael Douglas

21 Aug 2017

16p

600,000

8

20 Aug 2022

2.28

-

 

Michael Douglas

21 Aug 2017

20p

600,000

10

20 Aug 2022

2.28

-

 

Management

21 Aug 2017

4p

3,800,000

2.2

20 Aug 2022

2.28

1.64

 

Management

21 Aug 2017

8p

3,000,000

4

20 Aug 2022

2.28

0.71

 

Management

21 Aug 2017

12p

3,000,000

6

20 Aug 2022

2.28

-

 

Management

21 Aug 2017

16p

3,000,000

8

20 Aug 2022

2.28

-

 

Management

21 Aug 2017

20p

3,000,000

10

20 Aug 2022

2.28

-

 

Lind Partners LLC

23 Oct 2017

23 Oct 2017

4,893,596

8.7

22 Feb 2021

6.00

0.23

 

Management

1 Jan 2018

8p

2,000,000

5

31 Dec 2022

5.00

4.00

 

Management

1 Jan 2018

12p

2,000,000

6

31 Dec 2022

5.00

-

 

Management

1 Jan 2018

16p

2,000,000

8

31 Dec 2022

5.00

-

 

Management

1 Jan 2018

20p

2,000,000

10

31 Dec 2022

5.00

-

 

Management

1 Jan 2018

24p

2,000,000

12

31 Dec 2022

5.00

-

 

Michael Douglas

29 Jun 2018

8p

600,000

5

29 Jun 2023

5.00

3.00

 

Michael Douglas

29 Jun 2018

12p

600,000

6

29 Jun 2023

5.00

-

 

Michael Douglas

29 Jun 2018

16p

600,000

8

29 Jun 2023

5.00

-

 

Michael Douglas

29 Jun 2018

20p

600,000

10

29 Jun 2023

5.00

-

 

Michael Douglas

29 Jun 2018

24p

600,000

12

29 Jun 2023

5.00

-

 

Lind Partners LLC

12 Jul 2018

12 Jul 2018

5,472,136

8.1

12 Jul 2022

5.15

-

 

Leo Koot

9 May 2018

 (***)

8,656,417

Zero cost

9 May 2025

5.25

-

 

Gordon Stein

14 Jun 2018

 (***)

5,327,169

Zero cost

14 Jun 2025

4.70

-

 

Management

15 Jun 2018

 (***)

5,327,169

Zero cost

15 Jun 2025

4.70

-

 

Management

31 Dec 2018

 (***)

4,318,182

Zero cost

31 Dec 2025

2.90

-

 

 

 

 

 

 

 

 

 

 

As at 31 December 2018

 

 

128,753,978

 

 

 

 

 

 

 

 

 

 

 

 

 

(*) The number of share options in issue as at the date of the capital reorganisation were divided by 20 and the exercise prices were multiplied by 20.

(**) The share prices at the grant dates and the fair value after discount figures prior to the capital reorganisation in March 2017 have not been restated.

(***) The Executive Directors being Leo Koot and Gordon Stein, and the new Executive Management Members being Stewart Ahmed and Anthony Hawkins (together the "Leadership Team"), agreed to receive 50% of their fees for the first year of their employment in Company shares, implemented by way of nil cost options (see the Directors' Report for further details).  The Leadership Team all agreed to continue to take 50% of their fees in their second year of employment with the number of share options awarded for these fees being calculated and accrued monthly.  Alternatively, each member of the Leadership Team is entitled to receive 100% of their fees in cash by giving the Company one month's notice of this request in writing.  The Company share price used to calculate the number of shares to be awarded via share options for the second year of employment for all members of the Leadership team is 5.1p.   The figures above include accruals for the fees to be settled by the issue of share options as at 31 December 2018.

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

20

Share based payments (continued)

 

 

The fair value of the options vested during the year was £98,000 (2017: £234,000). The assessed fair value at grant date is determined using the Black-Scholes Model which, takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The fair value is then discounted for the probability of the options actually vesting. The expected price volatility reflects the assumption that the historical volatility is indicative of future trends which, may not necessarily be the actual outcome.

 

If options are issued in connection with loans, the assessed fair value at grant date is determined using the estimated cash equivalent value. The options issued on 15 March 2017 and 23 October 2017 were in connection with loans and therefore the related share based payment expense of £11,000 (2016: £32,000) has been recognised within finance charges (see note 9).

 

 

 

 

Warrants

 

 

As at 31 December 2018 the unexpired warrants were:

 

 

Date granted

Vesting date

Number

Exercise price (pence)

Expiry date

Share price at grant date (pence)

Fair value (pence)

 

 

12 Oct 2017

12 Oct 2017

2,460,000

6.5

12 Oct 2020

6.9

-

 

As at 31 December 2018

2,460,000


 



 

 

 


 


 



 

 

The charge for the fair value of the warrants that were granted and vested during the year was nil (2017: nil) because the warrants were issued in lieu of share issue costs and lapsed during the year was £12,722 (2017: £61,000). The assessed fair value at grant date is determined using the Black Scholes model or the estimated cash equivalent value, if issued in connection with loans.

 

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

21

Financial instruments

 

The Group uses financial instruments comprising cash, and debtors/creditors that arise from its operations. The Group holds cash as a liquid resource to fund the obligations of the Group. The Group's cash balances are held in various currencies. The Group's strategy for managing cash is to maximise interest income whilst ensuring its availability to match the profile of the Group's expenditure. This is achieved by regular monitoring of interest rates and monthly review of expenditure forecasts.

 

The Company has a policy of not hedging foreign exchange and therefore takes market rates in respect of currency risk; however it does review its currency exposures on an ad hoc basis. Currency exposures relating to monetary assets held by foreign operations are included within the foreign exchange reserve in the Group Balance Sheet.

 

The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.

 

To date the Group has relied upon equity funding, short-term debt and sales revenue from operations to finance its business activities. The Directors are confident that adequate cash resources exist to finance operations to commercial exploitation but controls over expenditure are carefully managed.

 

The net fair value of financial assets and liabilities approximates the carrying values disclosed in the financial statements. The currency and interest rate profile of the financial assets is as follows:

 

The financial assets comprise cash balances in bank accounts at call.

 

 

Cash and short-term deposits

2018

2017

 

 

£ 000's

£ 000's

 

Sterling

1,159

3,578

 

Euros

8

46

 

US Dollars

455

249

 

Trinidad Dollars

90

129

 

Total

1,712

4,002

 

 


Oil Price Risk





The Group is exposed to commodity price risk regarding its sales of crude oil which is an internationally traded commodity. The Group sales prices are based on two benchmarks, West Texas Intermediate (WTI) for sales in Trinidad.


The spot prices per barrel of both benchmarks are shown below:

 

 

2018

2017

 

 

Low

Average 

High

Low

Average 

High

 

 

US$

US$

US$

US$

US$

US$

 

WTI

42.53

64.59

76.41

42.48

50.80

60.46

 

Brent

49.93

71.69

84.98

43.98

54.12

66.80

 

 


 

The below shows the Group's 2018 revenue sensitivity to an average price that is up to 30% lower and up to 30% higher than the average price for that year:

 

 


Decrease

Current

Increase


30%

20% 

10%


10%

20% 

30%


£ 000's

£ 000's

£ 000's

£ 000's

£ 000's

£ 000's

£ 000's

Trinidad

5,301

6,058

6,816

7,573

8,330

9,088

9,845

Total

5,301

6,058

6,816

7,573

8,330

9,088

9,845

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

21

Financial instruments (continued)

 

Foreign currency risk

 

The following table details the Group's sensitivity to a 10% increase and decrease in the Pound Sterling against the relevant foreign currencies of Euro, US Dollar, and Trinidadian Dollar. 10% represents management's assessment of the reasonably possible change in foreign exchange rates.

 

The sensitivity analysis includes only outstanding foreign currency denominated investments and other financial assets and liabilities and adjusts their translation at the year-end for a 10% change in foreign currency rates. The table below sets out the potential exposure, where the 10% increase or decrease refers to a strengthening or weakening of the Pound Sterling:

 

 

 

Profit or loss sensitivity

Equity sensitivity

 

 

10% increase

10% decrease

10% increase

10% decrease

 

 

£ 000's

£ 000's

£ 000's

£ 000's

 

Euro

92

(113)

69

(84)

 

US Dollar

-

-

-

-

 

Trinidad Dollar

148

(180)

(3,092)

1,813

 

Total

240

(293)

(3,023)

1,729

 

 

Rates of exchange to £1 used in the financial statements were as follows:

 

 

 

 

 

 

 

 

As at 31 December 2018

Average for the relevant consolidated year to 31 December 2018

As at 31 December 2017

Average for the relevant consolidated year to 31 December 2017

 

Euro

1.110

1.131

1.126

1.141

 

US Dollar

1.269

1.334

1.349

1.288

 

Trinidad Dollar

8.642

8.957

9.132

8.674

 

 

 

22

Commitments and contingencies

 

As at 31 December 2018, the Company had the following material commitments:

 

In Goudron E&P Ltd, under the Incremental Production Service Contract, there are capital commitments relating to exploration activity to be completed by November 2019, that are not expected to have a material cost to the Company.    

 

In FRAM Exploration (Trinidad) Limited, under the Incremental Production Service Contract, there are capital commitments relating to exploration activity to be completed by January 2020, that are not expected to have a material cost to the Company.   

 

In Jasmin Oil & Gas Ltd, under the Farmout Agreement, there are capital commitments relating to exploration activity to be completed by December 2021, that are not expected to have a material cost to the Company. 

 

On 19 March 2018, the Company announced the renegotiation of the Beach Oilfield Limited ("BOLT") transaction.  Completion of the BOLT transaction is not expected until the end of 2019, at an estimated cost of US$395,000 during the course of 2019.

 

On 20 December 2018, the Company completed the purchase of 50% of the Icacos oil field from Primera Oil & Gas Limited ("Primera").  The consideration for the transaction was USD$500,000 (the "Minimum Payment"). The Company did not pay any upfront consideration for the purchase but will pay the consideration over time until 1 January 2021 through Primera receiving the net revenue it would have received had it retained its interest. Primera will also receive, in the event of increased production, 25% of any net revenue above the set baseline.  Should these cumulative payments not exceed the Minimum Payment, the Company will pay the difference between the amount received and the Minimum Payment.  The Company does not expect there to be a material payment to Primera due at 1 January 2021.

 

The Company's loan with BNP Paribas (taken out in 2015) has one final unsecured payment of US$0.25 million due on 31 December 2019.

 

 

 

 

 



 

 

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED)

 

 

23

Related party transactions

 

 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between other related parties are outlined below.

 

 

 

 

 

Remuneration of Key Management Personnel

 

The Directors of the Company are considered to be the Key Management Personnel. Details of the remuneration of the Directors of the Company are disclosed below, by each of the categories specified in IAS24 Related Party Disclosures.

 

 

 

 

 

 

 

2018

2017

 

 

£ 000's

£ 000's

 

Short-term employee benefits

330

902

 

Termination benefits

108

105

 

Share-based payments

245

145

 

Total

683

1,152

 

 

 

 

 

 

See note 7 for further details of the Directors' remuneration and note 20 for details of the Directors' share-based payment benefits. 

 

24

Events after the reporting period

 

 

Not applicable.

 

 

 

25

Profit and loss account of the parent company

 

As permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company has not been separately presented in these accounts. The parent company loss for the year was £1,331,708 (2017: £2,163,000).

 

 

 

Qualified Person's statement:

The information contained in this document has been reviewed and approved by Stewart Ahmed, Chief Technical Officer for Columbus Energy Resources plc.  Mr Ahmed has a BSc in Mining and Petroleum Engineering and is a member of the Society of Petroleum Engineers.  Mr Ahmed has over 32 years of relevant experience in the oil industry. The estimates provided in this statement are based on the Petroleum Resources Management System ("PRMS") published by the Society of Petroleum Engineers ("SPE") and are reported consistent with the SPE's 2011 guidelines.   Definitions used in the announcement have the meaning given to them in the PRMS.

 

 

Glossary and notes

 

1P

proved reserves

2P

proved plus probable reserves

3P

proved plus probable plus possible reserves

AIM

London Stock Exchange Alternative Investment Market

barrel or bbl

42 US gallons of oil

bbls

barrels of oil

best estimate or P50

the most likely estimate of a parameter based on all available data, also often termed the P50 (or the value of a probability distribution of outcomes at the 50% confidence level)

BNPP

BNP Paribas

BOLT

Beach Oilfield Limited

bopd

barrels of oil per day

bwpd

barrels of water per day

contingent resources

those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality

C-sand

sandstone reservoirs below the pre-Mayaro unconformity and above the pre-Lower Cruse unconformity encompassing sandstones of equivalent age to both the Gros Morne and the Lower Cruse formations

CESL

Columbus Energy Services Limited

CPR

Competent Persons Report

CPS

Compañia Petrolifera de Sedano

EOR

enhanced oil recovery

FTG

Full Tensor Gravity Gradiometry. Full tensor gradiometers measure the rate of change of the gravity vector in all three perpendicular directions

GEPL

Goudron E&P Limited

Goudron Sandstone

reservoir sands above the pre-Mayaro unconformity, also known as the Mayaro Sandstone

Heritage

Heritage Petroleum Company Limited (previously known at Petrotrin)

IPSC

incremental production service contract, the form of contract under which the Goudron field is operated on behalf of Petrotrin

La Lora

La Lora Production Concession in Spain

Lind

Lind Partners, LLC

LTL

Leni Trinidad Limited

Mayaro Sandstone

reservoir sands above the pre-Mayaro unconformity, also known as the Goudron Sandstone

MEEI

Trinidad and Tobago Ministry of Energy and Energy Industries (formally the Ministry of Energy and Energy Affairs, MEEA)

m

thousand

mm

million

mmbbls

million barrels of oil

Petrotrin

The Petroleum Company of Trinidad and Tobago Limited

PPL

private petroleum rights license

pre-Cruse

early to mid-Miocene sandstone reservoir below the pre-Cruse unconformity

proved reserves

those quantities of petroleum, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable (1P), from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations

probable reserves

those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P)

possible reserves

those additional reserves which analysis of geoscience and engineering data suggest are less likely to be recoverable than Probable Reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of Proved plus Probable plus Possible (3P) Reserves, which is equivalent to the high estimate scenario

PRMS

Petroleum Resources Management System

reserves

those quantities of petroleum anticipated to be commercially recovered by application of development projects to known accumulations from a given date forward under defined conditions

Saint-Gobain

Saint-Gobain Vicasa SA

Schroders

Schroders Investment Management Limited

STOIIP or oil in place

stock tank oil initially in place, those quantities of oil that are estimated to be in known reservoirs prior to production commencing

side-track

an additional or replacement well bore created from an existing well bore at a depth below the surface casing

SWP

South West Peninsula of Trinidad

WTI

West Texas Intermediate; oil price marker crude

 

 

Note to the announcement

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2018 or 2017.  The financial information for the year ended 31 December 2017 is derived from the statutory accounts for that year.  The audit of statutory accounts for the year ended 31 December 2018 is complete and auditors have provided an unqualified report.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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