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Europa Oil & Gas (Holdings) Plc - Final Results for the year to 31 July 2020

Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas

13 October 2020

Europa Oil & Gas (Holdings) plc (‘Europa’ or ‘the Company’)

Final Results for the year to31 July 2020

Europa Oil & Gas (Holdings) plc, the AIM traded , and focused oil and gas exploration, development and production company, announces its final results for the 12 month period ended . IrelandMoroccoUK31 July 2020

The full Annual Report and Accounts will be available shortly on the Company’s website at and will be mailed in to those shareholders who have requested a paper copy.    www.europaoil.comNovember 2020

Operational highlights

Onshore – production on course to more than double to over 200bopdUK

Offshore - portfolio refocused on proven gas play in theIrelandSlyne Basin

Offshore - awarded 11,228 square km Inezgane licence in theMoroccoAgadir Basin

COVID-19

Financial performance

Board

Post reporting period events

“The award of the Inezgane permit offshore , the granting of planning consent for the Wressle Oil Field, the refocus of the Offshore Ireland portfolio onto the proven gas play of the following the acquisition of FEL3/19 and the 1.2 tcf Edge prospect – much progress has been made during the year under review.  While the ongoing pandemic and volatility in oil and gas prices may impact exact timings of planned activity, we are confident that the momentum behind our various projects will continue to build in the year ahead. , CEO of Europa, said:Simon OddieMoroccoSlyne Basin

“In Morocco, work carried out to date has seen our team map up to 30 prospects and leads which we believe, in aggregate, have the potential to hold close to 10 billion barrels of unrisked oil resources.  The size of 50 blocks in the , our Inezgane licence had already attracted the attention of existing operators in the area and, while there is more work to be done to de-risk the prospectivity further, we are growing more and more confident that this attention is set to increase as we build a prospect inventory ahead of the launch of a farm-out.  Onshore , the Wressle Oil Field remains on track to be brought online at an initial gross rate estimated at 500bopd in late 2020 following the commencement of site works in the summer.  At this rate and with a c. per barrel breakeven oil price, Wressle will more than double Europa’s production to over 200bopd and in the process transform the Company’s financial profile.  Offshore Ireland, once the acquisition of FEL 3/19 has been completed, Europa will own 100% of the most material gas prospects that lie in the same play as Corrib, Ireland’s biggest producing gas field.  We will soon look to launch the farmout of what we view as an unrivalled strategic position in offshore Ireland’s only gas producing basin.UK North SeaUK$18

“Our objective is to expose our shareholders to significant value creating opportunities while minimising risk. Our production, which is set to dramatically increase once Wressle comes online, provides us with a low risk cash flow generative platform.  Our offshore and offshore assets, which hold company-making volumetrics, provide us with multiple opportunities to generate significant value. We also intend to resume our efforts to add a third leg to our business by securing a late stage appraisal project, once market conditions improve. Our confidence in Europa’s assets and team remains as high as ever and with this in mind, I look forward to providing further updates on our progress in the year ahead.”    UKIrelandMorocco

Chairman's statement

COVID-19, lockdowns, volatile energy markets - the world is a different place to what it was 12 months ago.  Award of the large Inezgane permit offshore , the pivot to gas offshore , the granting of planning permission for the development of the Wressle oil field in – Europa is a different junior oil and gas company to what it was 12 months ago.  Today, Europa’s portfolio of multistage licences is exposed to three jurisdictions: onshore , offshore , and offshore . Our strategic position offshore is now centred around the proven gas play of the Slyne basin and includes 100% interests in two prospects with the potential to hold 2.7tcf of gas, the most material prospects that lie in the same play as the nearby producing Corrib field. MoroccoIrelandNorth LincolnshireUKIrelandMoroccoIreland

The above is in line with our objective to expose shareholders to potentially value creating events while minimising risk.  We intend to achieve this by building a production-based, cash flow generative platform in the which covers both our low cost base as well as exploration activity focused on de-risking prospects to the point at which partners can be secured to drill high impact wells.  While the ongoing pandemic and measures taken to combat it may affect timings, work streams in line with our corporate objective are underway in all three of our licence areas.  As a result, I am confident that in 12 months’ time, Europa will once again be a different junior oil and gas company to the one it is today, one which has a financial profile that has been transformed by the commencement of production at Wressle and one that has a prospect inventory comprised of multiple company-making targets located in not just one but two jurisdictions.UK

OnshoreUK

Europa produces oil from three fields in the East Midlands.  Due to the natural decline of the fields, net production has been on a downward trajectory for a number of years.  Thanks to our active management programme, production during the 12 months to averaged 92boepd, a rate slightly up on the previous year’s.  This is a highly creditable outcome and one which is testament to our excellent operations and technical teams. 31 July 2020

Active management of old fields can only go so far.  To achieve a step-change in production, new fields need to be brought online.  Following the granting of planning consent in , the Wressle Development Project on licences PEDL180 & 182 in , is one such new field which is expected to lead to a step-change in Europa’s net production.  Work is currently underway at the site to bring Wressle into production at an initial gross rate estimated at 500bopd in late 2020.  At this rate, Wressle will more than double Europa’s existing onshore production to over 200bopd.  Moreover, production at Wressle is expected to be highly geared to oil price recovery: a stress testing exercise of the economic model demonstrated that, with an estimated break-even oil price of per barrel excluding Europa’s corporate overheads, the development plan for the field is economically robust at today’s oil prices.  January 2020North LincolnshireUKUS$17.6

While the focus is very much on bringing Wressle online, there are a number of low cost/low risk follow-up opportunities on PEDLs 180 & 182. During testing at Wressle, a total of 710 barrels of oil equivalent per day were recovered from three separate reservoirs: the Ashover Grit; the Wingfield Flags; and the Penistone Flags. Producing reserves in the Penistone Flags at Wressle is one area of development which we, along with our partners, expect to pursue in the future.  PEDL 180 also holds , a prospect adjacent to an historic discovery which was assigned gross mean un-risked prospective resources of 0.6 million boe and a geological chance of success of ~50% in a CPR.  Wressle therefore does not just represent a one-off scaling up of our production profile, but opens up a series of potential step-ups going forward. Broughton North

However, in the absence of incremental production from Wressle in 2020, additional funding for the Company would be required, either via the issuance of new shares, the addition of a layer of debt funding or the sale of assets. If additional funding were not able to be secured on satisfactory terms, there is a risk that commitments could not be fulfilled, or that assets may be relinquished.

OffshoreIreland

Even before the Irish Government took the decision in to phase out oil but not gas exploration, our flagship project offshore was the 1.5 tcf Inishkea gas prospect in Frontier Exploration Licence (‘FEL’) 4/19.  Located in the proven gas play of the and close to the producing Corrib field and associated processing facilities, we have long viewed Inishkea as lower risk infrastructure-led exploration compared to the higher risk unproven plays being targeted elsewhere in the Irish Atlantic Margin.   When the opportunity arose to effectively double up our position in the Slyne for a nominal sum by acquiring a 100% interest in FEL 3/19, which holds the 1.2 tcf Edge prospect, we acted swiftly.September 2019IrelandSlyne Basin

Following the acquisition, which is subject to regulatory sign-off, Europa will hold 100% interests in the only two tcf+ prospects which lie in the same gas play that has yielded the Corrib field.  Corrib plays an important role in satisfying Ireland’s energy needs, but the field is in decline.  This represents a major opportunity for Europa.  With the Corrib gas field already in decline, nearby existing processing facilities are likely to have spare capacity in the future, which would potentially have positive implications for development costs.  With gas being viewed by the Irish Government as a key transition fuel as the economy moves towards net zero emissions, the acquisition will give Europa an unrivalled strategic position, one which has the potential to hold gross unrisked prospective resources of 2.7 tcf.  With the above in mind, our intention is to relaunch the farm-out of our revamped position in the once the acquisition of FEL 3/19 has received regulatory sign-off.Slyne Basin

The flip side of the rebalance of our Irish portfolio towards gas is the streamlining of the Company’s exposure to oil plays in the Irish Atlantic Margin.  In line with this we have elected to relinquish all exploration licences offshore which were targeted on oil rather than gas.Ireland

OffshoreMorocco

The Inezgane block, which lies offshore , is at an earlier stage of development when compared to Europa’s and Irish positions having only been awarded the licence in .  This has not however prevented significant progress being made during the period in terms of building a prospect inventory.  In , we announced that technical work centred around reprocessing and interpreting historic 3D seismic data had resulted in the mapping of 14 prospects and 16 leads in the Lower Cretaceous play, a prolific producer elsewhere in West Africa.  In aggregate these 30 targets have the potential to hold close to 10 billion barrels of unrisked oil resources.  Two of the targets, the 827 mmboe Falcon and 204 mmboe Turtle prospects, have been assigned a geological chance of success of 20-35% by Europa.MoroccoUKSeptember 2019July 2020

Work is underway to further de-risk the targets ahead of launching a farm-out to secure partner(s) to drill wells. Europa continues to maintain dialogue with potential partners, a number of whom expressed an interest in Inezgane at the time of the award.   

Board Changes

Europa’s asset base is not the only area of the business to undergo major change since last year’s Annual Report.  The Board too has seen a change in personnel culminating in my appointment in as non-executive Chairman of the Company, replacing who took on the role of Chief Executive Officer on a permanent basis.  Simon had temporarily assumed this role in following the departure of long-serving CEO .  These were not the only changes to the Board during the year. In , we announced that had decided to step down from his position as non-executive Director after 12 years, and in Finance Director informed the Board of his intention to retire having held this role since .  , Co-CEO of Reabold Resources plc (AIM: RBD), has been appointed to the Board as an independent non-executive Director. Stephen has also agreed to take on the role of Chairman of the Audit committee, and Senior Independent Director. Following Phil’s departure, the responsibilities of the Finance Director will for now be divided and assigned to existing members of the Europa team.August 2020November 2019March 2020July 2020January 2008Simon OddieHugh MackayRoderick CorriePhil GreenhalghStephen Williams

Conclusions

This is my first Chairman’s Statement for Europa.  Having previously held the position of senior non-executive Director of the Company, I was of course already very familiar with Europa: with its focus on exposing shareholders to value creating events while minimising risk; with its asset base which combines stable production and high impact exploration; with its team, which has done much to increase the industry’s understanding of Ireland’s various basins and plays.  

With Wressle on course to commence production by the end of the year, the rebalancing of our Irish portfolio to gas, and the excellent results of ongoing technical work offshore , I believe I have stepped up to the role of Chairman at an exciting time in Europa’s development, albeit one that is set against a backdrop dominated by COVID-19, an unprecedented decline in global demand for oil and gas, and consequently low commodity prices. However, we know that this business is cyclical, and remain confident that demand and pricing will recover. The wellbeing of all those involved with Europa is of paramount importance to the Board and as we advance our various workstreams we will at all times adhere to the prevailing government advice and guidance. Morocco

Finally, on behalf of the Board I would like to thank the management, employees and consultants for their hard work during what has been and continues to be an unprecedented period for everyone.  I look forward to continuing working with the team in the year ahead as we look to advance all our assets and at the same time seek to add a late stage appraisal venture to our portfolio so that Europa has exposure to all stages of the oil and gas cycle.

Mr Brian O’Cathain (non-executive Chairman)

Operations

Operational review

Production -UKEast Midlands

Europa produces oil from three onshore fields: West Firsby; ; Whisby-4.  During the financial year ended , an average of 92boepd were recovered from the three fields.  This is a similar performance to the previous 12 month period and is testament to the Company’s ongoing active management of the three fields which is focused on maximising production.UKCrosby Warren31 July 2020

A 1% interest in the West Firsby licence was assigned to FourTrees Energy Limited following the successful workover of the WF6 well.

UK Development – Wressle Oil Field

Planning consent for the development of Wressle in , which lies on licences PEDL180 & 182 (‘the Licences’), was granted on .  Under the development plan, Wressle is expected to commence production at an initial gross rate of 500bopd from the Ashover Grit formation. As well as more than doubling Europa’s existing onshore production to over 200bopd, oil recovered from Wressle is expected to be highly profitable.  In , the Company announced the results of a stress testing exercise of the economic model undertaken by the operator Egdon Resources in light of the current low oil price environment.  The results demonstrate that, with an estimated break-even oil price of per barrel (excluding Europa’s corporate overheads), the development plan for the field is economically robust at today’s oil price levels.North LincolnshireUK17 January 2020March 2020US$17.6

Wressle is expected to be brought online late 2020.  Work at the site is underway in line with the development plan which is comprised of a number of key stages.  These along with work carried out to date are listed below:

The civil works contractor has commenced works to reconfigure the Wressle production area.  Works being undertaken include the installation of a new High Density Polyethylene impermeable membrane; a French drain system; an approved surface water interceptor; the construction of a purpose-built bund area for storage tanks; a tanker loading plinth; and an internal roadway system.

Europa holds a 30% working interest in the Licences alongside Egdon Resources (operator, 30%), and Union Jack Oil (40%). The Wressle Oil Field was discovered by the Wressle-1 well in 2014.  During testing, a total of 710 barrels of oil equivalent per day were recovered from three separate reservoirs: the Ashover Grit; the Wingfield Flags; and the Penistone Flags. In , a Competent Person’s Report provided independent estimates of reserves and contingent and prospective oil and gas resources for the Wressle discovery of 2.15 million stock tank barrels classified as discovered (2P+2C). There is additional development potential on the Licences including , a low risk exploration prospect lying on the footwall side of a fault, adjacent to the historic Broughton-B1 discovery made by BP in 1984 which the CPR assigned gross mean un-risked prospective resources of 0.6 million boe and a geological chance of success of  49% for the Penistone Flags and 40% for the Ashover Grit. Further development of the Wressle field, including producing additional reserves existing in the Penistone Flags formation, is expected in the future. September 2016Broughton North

During the period, £403,000 was received from North Lincolnshire Council (‘NLC’) in settlement of gross costs incurred by the partners in relation to the appeal process. This followed a favourable ruling by the Planning Inspector regarding Egdon’s application for costs against NLC when planning consent for Wressle was granted on appeal on .  The gross sum has been divided between the partners in Wressle proportionate with their interests.  As a result, Europa received £120,900.17 January 2020

Exploration: Offshore Ireland

During the period, the Company took the decision to rebalance its portfolio of offshore licences in favour of gas, specifically the proven gas play in the which is home to the producing Corrib gas field.  The Company regards this as lower risk infrastructure exploration due to the close proximity of Corrib and associated processing facilities.  Furthermore, Europa’s flagship project is the nearby 1.5tcf Inishkea gas prospect. IrelandSlyne Basin

In line with the above, in the Company announced the acquisition of a 100% interest in Frontier Exploration Licence (‘FEL’) 3/19 from DNO. FEL 3/19, which holds the 1.2 tcf Edge prospect, lies close to Corrib and Europa’s 100% owned FEL 4/19 which holds the 1.5 tcf Inishkea prospect. The directors believe the acquisition, which is subject to regulatory sign-off, will provide Europa with a key strategic position in the proven gas play of the .  FEL3/19 was formerly the LO16/23 block which DNO acquired following the acquisition of Faroe Petroleum.  In 2016, CNOOC farmed into the block, acquiring an 80% interest and operatorship. CNOOC has since exited and having assumed CNOOC’s 80% interest, DNO is now selling 100% of the licence to Europa for a nominal upfront fee. June 2020Slyne Basin

In tandem with the acquisition of FEL 3/19, the Company has elected to reduce its position in more early stage and prospective areas of the Irish Atlantic Margin where the primary target is oil.   This decision was taken following the Irish Government’s announcement in of its intention to phase out oil but not gas exploration.  In line with this and in addition to the acquisition of FEL 3/19, during the period the Company announced the relinquishment of four licences in the where the primary target was oil. FEL 1/17 has not yet been relinquished pending a possible evaluation of gas potential. Following these changes, Europa’s Irish portfolio consists of three FELs with combined gross prospective resources of 2.7tcf of gas and gross mean un-risked prospective resources of 3.9 billion barrels oil equivalent. September 2019South Porcupine Basin

Subject to the approval of the acquisition of FEL 3/19 by the Irish authorities, the forward plan for is to launch a farm-out process for both licences which combined have company-making gross unrisked prospective resources of 2.7 tcf.  In tandem with ongoing farm-out discussions, the site survey process for a drilling location at Inishkea continues to be advanced.Ireland

Further to the application to relinquish of licences LO16/19, LO16/22, FEL2/13 and FEL 3/13, and the pending situation on FEL 1/17 the decision has been taken to write off the value of these intangible assets, resulting in a non-cash charge to income of £4,004,000.

Exploration: Offshore Morocco

In , Europa was awarded a 75% interest in and operatorship of the Inezgane Offshore licence with the remaining 25% interest held by the Moroccan regulator, ONHYM (Office National des Hydrocarbures et des Mines). Covering an area of 11,228 sq km, Inezgane is the equivalent of approximately 50 blocks, or over half the size of Wales.  Europa’s focus is on the Lower Cretaceous fan sand play, which is a prolific play in but is highly under-explored offshore . Out of just 10 wells that have been drilled in deepwater to date, only three have penetrated a complete Lower Cretaceous section. Despite this Europa has identified all the key elements of source (including the world class Cenomanian-Turonian source rock), reservoir and seal within the Inezgane licence. September 2019UKCS North SeaWest AfricaMoroccoMorocco

The licence period commenced in and since then work has been focused on reprocessing and interpreting historic seismic data to de-risk large prospects in the Lower Cretaceous play.  Initial results have been highly encouraging.  To date, 14 prospects and 16 leads have been mapped, which the Company estimates have the potential to hold in aggregate close to 10 billion barrels of unrisked oil resources.  All the identified prospects have mean resources in excess of 150 mmboe which taken together add up to total resources in excess of 5 billion barrels of oil equivalent.  The prospects have stacked reservoir potential and include a wide range of structural styles including for example 4-way dip closure in the case of the 827 mmboe Falcon and 204 mmboe Turtle prospects. Europa has assigned a geological chance of success to these prospects of 20-35%. In addition, examples of shallow gas anomalies have been seen on seismic data which is a positive indication of a working petroleum system operating in the basin.November 2019

Ongoing work is focused on further de-risking these prospects and leads while the forward plan is to build a robust prospect inventory and, subject to the results, secure partner(s) to drill wells. A farm-out process will be formally launched shortly, however the Company has maintained dialogue with three companies, all of whom have expressed interest in Inezgane.

A number of other oil and gas companies are currently active in this area of , notably Shell, ENI, Repsol, Hunt, Chariot, SDX, Sound, Schlumberger and Genel.Morocco

The Inezgane Permit is of 8-years duration comprising three phases of which the Initial Phase of the licence comprises 2-years. The Initial Phase includes 3D seismic reprocessing as well as other technical studies. At the end of the Initial Phase, Europa has the option to commit to drilling an exploration well in the Second Phase of the licence or to relinquish the licence.

Financials

Revenue was £1.2 million (2019: £1.7 million). The average oil price achieved was /bbl (2019:  US$66.7/bbl) and the average Sterling exchange rate was (2019: ). An average of 92 boepd (2019: 91 boepd) was recovered from our three onshore fields. Production was down at West Firsby, relatively flat at Crosby Warren, but increased at Whisby.US$48.0US$1.27US$1.29UK

Stringent cost controls continue to be implemented. Cost of sales was £1,438,000 (2019: £1,682,000).

Administrative expenses of £823,000 (2019: £811,000) included £81,000 on new licence evaluations (2019: £102,000).

Net cash spent on operating activities was £844,000 (2019: cash spent £661,000).

Purchase of intangible fixed assets of £1,148,000 (2019: £1,973,000) was spent advancing the portfolio.

The Group’s cash balance at was £0.8 million (: £2.9 million), sufficient to fund Europa’s share of the Wressle development.31 July 202031 July 2019

Non-financial Key Performance Indicators (‘KPIs’)

There were no reportable accidents or incidents in the year (2019: zero).

One new licence, the Morocco Inezgane Offshore exploration permit, was signed in the year. (2019: zero).

Conclusion and Outlook

Despite the disruption caused by the ongoing pandemic, much has been achieved across Europa’s asset base during the year.  As a result, the foundations are in place for further progress to be made in the year ahead starting with first production at Wressle. As well as doubling Europa’s net production to over 200boepd, bringing the field on stream will open up a number of low risk opportunities on the licence to build production further.  By scaling up Europa’s internally generated revenues and cash flows, Wressle will put the Company in a strong position to pursue these follow-up opportunities. In the absence of incremental production from Wressle in 2020 additional funding for the Company would be required, either via the issuance of new shares, the addition of a layer of debt funding or the sale of assets. If additional funding were not able to be secured on satisfactory terms, there is a risk that commitments could not be fulfilled, or that assets may be relinquished.

Outside the , farm-out will be the focus.  Offshore Ireland, a farm-out of Europa’s strategic position in the will be launched once the acquisition of FEL3/19 has been approved.  With combined gross prospective resources of 2.7 tcf and located close to the producing Corrib gas field, the Board believes FELs 3/19 and 4/19 represent a compelling investment opportunity and remains confident that one or more partners will be secured to take these licences forward.  Offshore Morocco, once technical work has been completed to de-risk what is a sizeable prospect inventory, a farm-out will be launched, although discussions have been taking place with interested parties on an informal basis ever since Inezgane was awarded to Europa. UKSlyne Basin

Outside our existing portfolio, the Board remains keen to add a third leg to the business, specifically a late stage appraisal project to complete Europa’s exposure to the full oil and gas cycle.  While COVID-19 has delayed this process, together with volatile oil and gas markets, it may yet generate opportunities as assets are divested that may have not warranted Europa’s serious attention prior to the onset of the pandemic.  Importantly, once Wressle is in production, Europa will have a much-improved financial profile with which to secure a new venture and further build the Company.  

Qualified Person Review

This release has been reviewed by , geophysical advisor to Europa, who is a geophysicist with over 39 years' experience in petroleum exploration and a member of the Society of Exploration Geophysicists, European Association of Geoscientists and Engineers and the Petroleum Exploration Society of Great Britain, and has consented to the inclusion of the technical information in this release in the form and context in which it appears.Rowland Thomas

(CEO)Simon Oddie

The financial information set out below does not constitute the company's statutory accounts for 2020 or 2019. The financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union on a basis that is consistent with the accounting policies applied by the group in its audited consolidated financial statements for the year ended . Statutory accounts for the years ended and have been reported on by the Independent Auditors.31 July 202031 July 201931 July 2018

The Independent Auditors' Report on the Annual Report and Financial Statements for 2020 and 2019 were unqualified, but included a material uncertainty in relation to going concern, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended have been filed with the Registrar of Companies. The statutory accounts for the year ended will be delivered to the Registrar in due course.31 July 201931 July 2020

For the year ended 31 July

Consolidated statement of comprehensive income

   

As at 31 July

Consolidated statement of financial position

These financial statements were approved by the Board of Directors and authorised for issue on and signed on its behalf by:  12 October 2020

P Greenhalgh (Finance Director)

Company registration number 5217946



Consolidated statement of changes in equity

Attributable to the equity holders of the parent

   

For the year ended 31 July

Consolidated statement of cash flows



Notes to the financial statements

1           Intangible assets

Intangible assets comprise the Group’s pre-production expenditure on licence interests as follows:

Exploration write-back

On the Group sold its interest in PEDL143 (Holmwood) to UK Oil & Gas Plc (‘UKOG’) for 25,951,557 shares in UKOG at 1.156p per share.8 May 2019

If the Group is not able to or elects not to continue in any other licence, then the impact on the financial statements will be the impairment of some or all of the intangible assets disclosed above. Further details of commitments are included in note 25.

Intangible assets - Company

Intangible assets comprise the Company’s pre-production expenditure on licence interests as follows:

LO 16/22 and LO 16/19  were relinquished due to a lack of commercial prospects and the £371,000 spent to date was written off.

2          Property, plant & equipment

Property, plant & equipment - Group

The producing fields referred to in the table above are the production assets of the Group, namely the oilfields at Crosby Warren and West Firsby, and the Group’s interest in the Whisby W4 well, representing the Group’s three cash generating units.

The carrying value of each producing field was tested for impairment by comparing the carrying value with the value-in-use. The value-in-use was calculated using a discounted cash flow model with production decline rates of 5-12%, Brent crude prices rising from per barrel in 2021 to per barrel in 2023 and a pre-tax discount rate of 13.4%. The pre-tax discount rate is derived from a post-tax rate of 10% and is high because of the applicable rates of tax in the . Cash flows were projected over the expected life of the fields which is expected to be longer than five years. There was an impairment of £160,000 for the West Firsby oilfield in the year (2019:  No impairment).US$48US$61UK

Sensitivity to key assumption changes

Variations to the key assumptions used in the value-in-use calculation would cause impairment of the producing fields as follows:

Property, plant & equipment - Company

* * ENDS * *

For further information please visit or contact:www.europaoil.com

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

--  Wressle Development granted planning consent on appeal
    --  First oil at Wressle set to commence at an estimated gross rate of
        500bopd late 2020
    --  Estimated break-even oil price (excluding Europa’s corporate overheads)
        of  per barrel for Wressle, well below current oil prices
    --  92boepd produced from Europa’s three existing  onshore fields during
        the year – matches FY 2019 performanceUS$17.6UK
--  Acquisition of a 100% interest in Frontier Exploration Licence (‘FEL’)
        3/19, offshore , from DNO (pending regulatory approval)
        o Located close to the ~1tcf producing Corrib gas field in the Slyne
          basin and the 1.5 tcf Inishkea prospect on Europa’s 100%-owned FEL
          4/19
        o Includes the 1.2 tcf Edge prospectIreland
--  Applications submitted for the relinquishment of four licences offshore
         where primary prospectivity is oil - LO16/19, LO16/22, FEL2/13
        and FEL3/13
    --  Total non-cash write-off of £4.0 million
    --  Forward plan to include FEL 3/19 in a relaunch of the farmout of its
        strategic position in theIrelandSlyne Basin
--  Area equivalent to about 50  blocks
    --  14 prospects and 16 leads with the potential to hold in aggregate close
        to 10 billion barrels of unrisked oil resources mapped in the Lower
        Cretaceous fan sand play, a prolific producer in 
    --  The 14 prospects each have mean resources in excess of 150 mmboe which
        add up to total resources in excess of 5 billion barrels of oil
        equivalent
    --  The 827 mmboe Falcon and 204 mmboe Turtle prospects have been assigned a
        geological chance of success of 20-35% by Europa
    --  Licence attracting interest from a number of operators looking to
        farm-in
    --  Shell, ENI, Repsol, Hunt, Chariot, SDX, Sound, Schlumberger and Genel
        are currently active in the areaUKCS North SeaWest Africa
--  At the reporting date of  there was minimal impact from
        Covid-19 on operations
    --  Operations have continued at the three production sites
    --  Brent crude price fell dramatically (with  and 
        increasing production as the scale of the pandemic became apparent) but
        recovered somewhat by period-end
    --  Directors,  based staff and consultants have been working from
        home since , and agreed a temporary salary/rate cut of 20%
        since 
    --  Given the success of home working, the Company has given notice to
        terminate the  office lease from , which will further
        cut costs31 July 2020March 20201 April 2020December 2020RussiaSaudi ArabiaLondonLondon
--  Revenue £1.2 million (2019: £1.7 million)
    --  Pre-tax loss before exploration write-off / write-back £1.2 million
        (2019: £0.9 million)
    --  Pre-tax loss of £5.4 million including write-offs taken following
        relinquishment of Irish licences (see post period reporting events
        below) (2019: pre-tax loss £0.7 million)
    --  Net cash used in operating activities £0.8 million (2019: £0.7 million)
    --  Cash balance: £0.8 million (: £2.9 million)31 July 2019
--   stepped down as CEO,  was appointed as Interim
        CEO and Executive Chairman
    --  Appointment of  as independent Non-Executive director,
        replacingHugh MackaySimon OddieStephen WilliamsRoderick Corrie
--  Commencement of site works at Wressle Oil Field
    --  Appointment of  as CEO on a permanent basis
    --  Senior Independent non-executive Director Mr Brian O’Cathain appointed
        non-executive Chairman
    --  Since  the Board increased the reduction in their salary
        and fees to 50%Simon Oddie1 August 2020
--  Key planning conditions have been discharged, detailed design tendering
        is underway and all HSE documentation and procedures are progressing in
        line with expectations
    --  Four groundwater boreholes have been installed and two rounds of
        sampling and analysis undertaken to date
    --  Reconfiguration of the site - Site works are underway
    --  Installation and commissioning of surface facilities
    --  Sub-surface operations
    --  Commencement of production
2020     2019

                                                          Note     £000     £000

Revenue                                                           1,244    1,713

Cost of sales                                                   (1,438)  (1,682)

Impairment of producing fields                             2      (160)        -

Total cost of sales                                             (1,598)  (1,682)

                                                                 ------   ------

Gross (loss)/profit                                               (354)       31

Exploration (write-off)/ write back                        1    (4,004)      270

Administrative expenses                                           (823)    (811)

Finance income                                                        7       43

Finance expense                                                   (266)    (187)

                                                               -------- --------

Loss before taxation                                            (5,440)    (654)

Taxation charge                                                       -        -

                                                               -------- --------

Loss for the year                                               (5,440)    (654)

                                                                 ======   ======

Other comprehensive income

Items which will not be reclassified to profit /(loss)

Loss on investment revaluation                                    (197)     (59)

                                                               -------- --------

Total other comprehensive loss                                    (197)     (59)

                                                                 ======   ======

Total comprehensive loss for the year attributable to the       (5,637)    (713)
equity shareholders of the parent

                                                                 ======   ======
Earnings per share (EPS) attributable to the  Pence per share Pence per share
equity shareholders of the parent

Basic and diluted EPS                                 (1.22)p         (0.17)p
2020     2019

                                                    Note     £000     £000

Assets

Non-current assets

Intangible assets                                    1      4,965    7,818

Property, plant and equipment                        2        476      575

                                                           ------   ------

Total non-current assets                                    5,441    8,393

                                                           ------   ------

Current assets

Investments                                                    44      241

Inventories                                                    12       19

Trade and other receivables                                   234      315

Restricted cash                                               245      251

Cash and cash equivalents                                     768    2,905

                                                           ------   ------

Total current assets                                        1,303    3,731

                                                           ------   ------

Total assets                                                6,744   12,124

                                                           ======   ======

Liabilities

Current liabilities

Loans                                                         (2)        -

Trade and other payables                                  (1,013)  (1,086)

                                                         -------- --------

Total current liabilities                                 (1,015)  (1,086)

                                                         -------- --------

Non-current liabilities

Loans                                                        (48)        -

Trade and other payables                                     (31)        -

Long-term provisions                                      (3,163)  (2,917)

                                                           ------   ------

Total non-current liabilities                             (3,242)  (2,917)

                                                           ------   ------

Total liabilities                                         (4,257)  (4,003)

                                                          -------  -------

Net assets                                                  2,487    8,121

                                                           ======   ======

Capital and reserves attributable to equity holders
of the parent

Share capital                                               4,447    4,447

Share premium                                              21,010   21,010

Merger reserve                                              2,868    2,868

Retained deficit                                         (25,838) (20,204)

                                                           ------   ------

Total equity                                                2,487    8,121

                                                           ======   ======
Share Share premium   Merger Retained deficit  Total
                         capital                reserve                   equity

                            £000          £000     £000             £000    £000

Balance at 1 August 2018   3,014        18,481    2,868         (19,508)   4,855

Comprehensive loss for
the year

Loss for the year                                                  (654)   (654)
attributable to the            -             -        -
equity shareholders of
the parent

Other comprehensive loss                                            (59)    (59)
attributable to the            -             -        -
equity shareholders of
the parent

                          ------        ------ --------          -------  ------

Total comprehensive loss
for the year                   -             -        -            (713)   (713)

                          ------        ------ --------          -------  ------

Contributions by and
distributions to owners

Issue of share capital     1,433         2,546        -                -   3,979

Issue of share options         -          (17)        -               17       -
(note 22)

Share-based payments           -             -        -                -       -
(note 23)

                          ------        ------   ------         -------- -------

Total contributions by     1,433         2,529        -               17   3,979
and distributions to
owners

                          ------        ------ --------          -------  ------

Balance at 31 July 2019    4,447        21,010    2,868         (20,204)   8,121

                          ======        ======   ======           ======  ======
Share Share premium   Merger Retained deficit  Total
                         capital                reserve                   equity

                            £000          £000     £000             £000    £000

Balance at 1 August 2019   4,447        21,010    2,868         (20,204)   8,121

Comprehensive loss for
the year

Loss for the year              -             -        -          (5,440) (5,440)
attributable to the
equity shareholders of
the parent

Other comprehensive loss       -             -        -            (197)   (197)
attributable to the
equity shareholders of
the parent

                          ------        ------ --------          -------  ------

Total comprehensive loss       -             -        -          (5,637) (5,637)
for the year

                          ------        ------ --------          -------  ------

Contributions by and
distributions to owners

Share-based payments           -             -        -                3       3
(note 23)

                          ------        ------   ------         -------- -------

Total contributions by         -             -        -                3       3
and distributions to
owners

                          ------        ------ --------          -------  ------

Balance at 31 July 2020    4,447        21,010    2,868         (25,838)   2,487

                          ======        ======   ======           ======  ======
2020     2019

                                                      Note     £000     £000

Cash flows used in operating activities

Loss after tax from continuing operations                   (5,440)    (654)

Adjustments for:

Share-based payments                                              3        -

Depreciation                                           2        186       94

Impairment of producing field                          2        160        -

Exploration write off/ (write back)                    1      4,004    (270)

Finance income                                                  (7)     (43)

Finance expense                                                 266      187

Decrease in trade and other receivables                          72        7

Decrease in inventories                                           7        1

(Decrease)/increase in trade and other payables                (95)       17

                                                           -------- --------

Net cash used in operations                                   (844)    (661)

Income taxes paid                                                 -        -

                                                           -------- --------

Net cash used in operating activities                         (844)    (661)

                                                             ======   ======

Cash flows used in investing activities

Purchase of property, plant and equipment                     (100)      (1)

Purchase of intangible assets                               (1,148)  (1,973)

Cash guarantee re Morocco                                       (1)    (251)

Sale of part interest in licence – associated costs            (12)      (8)

Interest received                                                 7       16

                                                            -------  -------

Net cash used in investing activities                       (1,254)  (2,217)

                                                             ======   ======

Cash flows (used in)/ from financing activities

Gross proceeds from issue of share capital                        -    4,299

Costs incurred on issue of share capital                          -    (320)

Proceeds from borrowings                                         50        -

Lease liability payments                                       (73)        -

Lease liability interest payments                               (3)

Finance costs                                                   (1)      (5)

                                                            -------  -------

Net cash (used in)/from financing activities                   (27)    3,974

                                                             ======   ======

Net (decrease)/ increase in cash and cash equivalents       (2,125)    1,096

Exchange (loss)/gain on cash and cash equivalents              (12)       38

Cash and cash equivalents at beginning of year                2,905    1,771

                                                            -------  -------

Cash and cash equivalents at end of year                        768    2,905

                                                             ======   ======
Intangible assets – Group    2020    2019

                             £000    £000

At 1 August                 7,818   5,959

Additions                   1,151   1,869

Disposal                        -    (10)

Exploration write-off     (4,004)       -

                          ------- -------

At 31 July                  4,965   7,818

                           ======  ======
2020    2019
                                                           £000    £000

Ireland FEL 2/13 (Doyle A, B, C, Kilroy, Keane & Kiely)       -   1,280

Ireland FEL 3/13 (Beckett, Wilde, Shaw)                       -   1,255

Ireland FEL 1/17                                              -     636

Ireland LO 16/19                                              -      89

Ireland FEL 4/19 (Inishkea)                               1,482   1,259

Ireland LO 16/22                                              -     213

UK PEDL180 (Wressle)                                      2,947   2,867

UK PEDL181                                                  118     101

UK PEDL182 (Broughton North)                                 29      29

UK PEDL299 (Hardstoft)                                       12      12

UK PEDL343 (Cloughton)                                       78      77

Morocco (Inezgane)                                          299       -

                                                        ------- -------

Total                                                     4,965   7,818

                                                         ======  ======

Disposal

UK PEDL143 (Holmwood)                                         -      10

                                                         ======  ======

Exploration write-off

Ireland FEL 2/13 (Doyle A, B, C, Kilroy, Keane & Kiely)   1,445       -

Ireland FEL 3/13 (Beckett, Wilde, Shaw)                   1,343       -

Ireland FEL 1/17                                            845       -

Ireland LO 16/19                                             94       -

Ireland LO 16/22                                            277       -

                                                        ------- -------

Total                                                     4,004       -

                                                         ====== =======
2020    2019

                                          £000    £000

Consideration for the PEDL143 interest       -     300

Disposal costs                               -    (20)

Book value of remaining interest             -    (10)

                                       ------- -------

Exploration write-back                       -     270

                                        ======  ======
2020   2019
                              £000   £000

At 1 August                    302    198

Additions                       69    106

Transfer to Group companies      -    (2)

Exploration write-off        (371)      -

                            ------ ------

At 31 July                       -    302

                            ====== ======
2020   2019
                        £000   £000

Ireland LO 16/19           -     89

Ireland LO 16/22           -    213

                      ------ ------

Total                      -    302

                      ====== ======

Exploration write-off



                        2020   2019
                        £000   £000

Ireland LO 16/19          94      -

Ireland LO 16/22         277      -

                      ------ ------

Total                    371      -

                      ====== ======
Furniture & computers Producing Right of use assets
                                            fields                      Total

                                    £000      £000                £000   £000

Cost

At 1 August 2018                      52    10,790                   - 10,842

Additions                              1         -                   -      1

                                  ------    ------              ------ ------

At 31 July 2019                       53    10,790                   - 10,843

Additions                              3        97                   -    100

On transition                          -         -                 147    147

Disposals                           (50)         -                   -   (50)

                                  ------    ------              ------ ------

At 31 July 2020                        6    10,887                 147 11,040

                                  ======    ======              ====== ======

Depreciation,
depletion and
impairment

At 1 August 2018                      51    10,123                   - 10,174

Charge for year                        1        93                   -     94

                                  ------    ------              ------ ------

At 31 July 2019                       52    10,216                   - 10,268

Charge for year                        1       112                  73    186

Disposal                            (50)         -                   -   (50)

Impairment in year                     -       160                   -    160

                                  ------    ------              ------ ------

At 31 July 2020                        3    10,488                  73 10,564

                                  ======    ======              ====== ======

Net Book Value

At 31 July 2018                        1       667                   -    668

                                  ======    ======              ====== ======

At 31 July 2019                        1       574                   -    575

                                  ======    ======              ====== ======

At 31 July 2020                        3       399                  74    476

                                  ======    ======              ====== ======
Further impairment
                                                           of producing fields
                                                                          £000

Production decline rate (current assumption 5-12%)

12%                                                                         55

15%                                                                        279

Brent crude price per barrel (current assumption /bbl
in 2021 rising to /bbl in 2023)

 flat                                                                   531

 flat                                                                   111

Pre-tax discount rate (current assumption 13.4%)
20%                                                                        310

25%                                                                        725US$42US$61$42$50
Furniture & computers Right of use assets Total

                    £000                  £000                £000

Cost

At 1 August 2018    52                    -                   52

Additions           1                     -                   1

                    ------                ------              ------

At 31 July 2019     53                    -                   53

At transition       -                     117                 117

Additions           3                     -                   3

Disposals           (50)                  -                   (50)

                    ------                ------              ------

At 31 July 2020     6                     117                 123

                    ======                ======              ======

Depreciation

At 1 August 2018    51                    -                   51

Charge for the year 1                     -                   1

                    ------                ------              ------

At 31 July 2019     52                    -                   52

Charge for year     1                     65                  66

Disposals           (50)                  -                   (50)

                    ------                ------              ------

At 31 July 2020     3                     65                  68

                    ======                ======              ======

Net Book Value

At 31 July 2018     1                     -                   1

                    ======                ======              ======

At 31 July 2019     1                     -                   1

                    ======                ======              ======

At 31 July 2020     3                     52                  55

                    ======                ======              ======
Simon Oddie                         Europa                 +44 (0) 20 7009 2010

Christopher Raggett / Simon Hicks / finnCap Ltd            +44 (0) 20 7220 0500
Tim Harper

Frank Buhagiar / Megan Dennison     St Brides Partners Ltd +44 (0) 20 7236 1177

Quick facts: Europa Oil & Gas Holdings PLC

Price: -

Market: AIM
Market Cap: -
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