TIDMWTE
RNS Number : 8525S
Westmount Energy Limited
09 November 2023
9 November 2023
WESTMOUNT ENERGY LIMITED
("Westmount" or the "Company")
Final Results & Notice of AGM
The Company is pleased to announce its Final Results for the
year ended 30 June 2023, and hereby gives notice that the Annual
General Meeting of Westmount Energy Limited will be held at No 2
The Forum, Grenville Street, St Helier, Jersey JE1 4HH, Channel
Islands on 7 December 2023 at 11.00.
Copies of the Company's results and Notice of AGM are available
on the Company's website, www.westmountenergy.com, and will be
posted to shareholders today.
CHAIRMAN'S REVIEW
2023 Highlights
-- Canje Block, Guyana - Cumulative Impact Assessment filed with
Guyanese EPA in September 2023 suggests potential drilling on Canje
from Q2 2024 - though specific guidance on timeline not yet
available from Canje partners
-- Kaieteur Block - Exit of ExxonMobil and Hess with return of
licence equity to Ratio Petroleum 50% and CEC 50%; Ratio Petroleum
already in discussions with major oil companies with a view to
bringing a new entrant or entrants to the block
-- Orinduik Block - ECO Atlantic to acquire Tullow's
participating interest and become block operator with 75% equity
interest
-- Investment in Africa Oil Corp - confirmation that Orange
Basin, offshore Namibia, is a major emerging hydrocarbon province
with 5 significant discoveries reported since early 2022
-- Major milestones reported in the appraisal of the giant Venus
light oil discovery, with successful drilling of a 13km step-out
appraisal well at Venus-1A and the successful testing of
sidetracked Venus-1X discovery well
-- Continuing newsflow anticipated from Namibian investment in
Q4 2023 with the testing of Venus-1A appraisal well and the
spudding of Mangetti-1 exploration well
-- JHI acquires 100% interest in Production Licence PL001 in the
North Falkland Basin from Argos Resources Ltd.
-- CEC's Return of Capital Transaction yields additional USD $356k cash
-- Cash balance of GBP0.48M at 30 June 2023; no debt
With the gradual recalibration of global oil markets to a post
pandemic world, the last 12-month period has been characterised by
a continued volatility in oil prices, a weakening global
macroeconomic outlook and the changing dynamics of energy
transition politics. After peaking at over $120 per barrel in June
2022, the average monthly Brent crude price had declined to less
than $75 per barrel by June 2023 in response to slowing
international trade and the perceived risk of a global recession.
This gloomy macroeconomic outlook was reinforced by tightening
monetary policies in all the major economies, with prolonged higher
interest rates being used to tackle persistent inflation. In
addition, the disruption in global supply chains caused by the war
in Ukraine and a major slowdown in the property market in China,
the primary oil demand growth centre, have also contributed to
reduced world trade flows. In May 2023, the OPEC+ alliance moved to
support slumping oil prices with a strategy of aggressive supply
restraint - initially with several members agreeing a collective
reduction in oil production of 1.2 million b/d. This strategy was
further bolstered in July with unilateral declarations of
additional voluntary cuts in production of 1 million b/d by Saudi
Arabia and 500k-300k b/d by Russia - voluntary cuts which have
subsequently been extended to year end. The net effect has been a
sharp rebound in oil prices throughout the summer months with Brent
crude reaching circa $95 per barrel in late September before the
rally petered out in the face of renewed macroeconomic concerns and
signs of demand destruction in the US and some emerging
markets.
In the meantime, governments continue to recalibrate their
energy transition policies and emission reduction targets in the
face of energy security concerns sparked by the war in Ukraine and
the challenge of energy affordability for citizens grappling with
cost-of-living increases on the back of global inflationary
pressures. Notwithstanding record global EV sales and battery and
solar installations in 2022 and the massive investment and buildout
of renewable energy capacity over the past 5 years, renewables have
only met 51% of new energy demand during this period, with
fossil-fuel use continuing to grow in absolute
terms and energy related CO(2) emissions continuing to rise(1) .
Conflicting views also prevail with respect to the timing of peak
oil demand, with OPEC's Annual World Oil Outlook suggesting peak
oil demand will not be reached until 2045, at 116 million b/d, in
stark contrast with the analysis of the International Energy Agency
(IEA) which is forecasting oil demand peaking, at circa 106 million
b/d, prior to 2030(2,3) . Recently announced giant M&A deals by
ExxonMobil/Pioneer Natural Resources and Chevron/Hess Corporation
reinforces the view that oil and gas are going to continue to play
a role for some time. In the more immediate term, the surprise
attack by Hamas on Israel on the 7 October has sharply increased
geopolitical risk in the Middle East. Though the initial response
of the oil markets has been relatively modest the situation is
uncertain with a particular oil market concern that extended
military conflict may lead inter alia to stricter enforcement of
existing US sanctions on Iranian oil exports and precipitate
spiking prices in a tight market.
While upstream investment is forecast by the IEA to reach USD
$528 billion in 2023(3) , its highest level since 2015, in common
with the broader energy spectrum, the risk of underinvestment,
relative to what is needed to meet forecast energy demand across a
range of 'net zero' demand trajectories, remains a key theme for
the oil and gas sector(4,5) . Recent improvement in the financial
performance of the upstream sector combined with a drive by the
bigger companies to high-grade their portfolios with higher return,
lower carbon (Scope 1 and 2 emissions), oil and gas prospects is
likely to contribute to increased exploration spending in the near
term(6) . Spending in deepwater and ultra-deepwater areas is
forecast to grow most rapidly as the inherent emission advantages
of developing large resources in highly productive deepwater
reservoirs should continue to attract capital as industry players
high-grade prospect portfolios to align with ESG investment metrics
and financial return thresholds. Deepwater production is projected
to increase by over 60% between 2022 and 2030 with the NOCs and
majors continuing to dominate while Mid-Caps retreat from this
space(7) . Exploration 'hotspots' in the deepwater Guyana-Suriname
Basin, offshore Guyana and the Orange Basin, offshore Namibia are
two areas that are well positioned to capture their share of this
increased exploration spending.
Guyana-Suriname Basin (offshore Guyana)
Since 2015 offshore Guyana has been transformed from a frontier
deepwater exploration opportunity into the industry's largest new
oil province with more than 11 billion barrels of oil equivalent
discovered recoverable resource to date. Guyana is now established
as a significant oil producing nation, currently averaging
production of circa 380k BOPD in Q2 2023 from Liza Phase 1 and
Phase 2 projects, with three other developments already sanctioned
and on track for start-up - Payara (220k BOPD, Q4 2023); Yellowtail
(250k BOPD, 2025); Uaru (250k BOPD, 2026), with the expected
installation of at least 6 Floating Production Storage and
Offloading (FPSO) units on the Stabroek Block by end 2027 (with a
production capacity of more than 1.2 million BOPD) and the
potential for up to 10 FPSOs(5) .
In parallel with the development of the already discovered
resource offshore Guyana, the multi-billion barrels undiscovered
upside in the basin continues to attract aggressive exploration
investment, driven by large prospects, low breakeven costs, low
carbon emissions and the energy transition dynamics. It is
anticipated that Guyana's total recoverable oil deposits will
increase as exploration activities expand to deeper plays and other
offshore blocks, which remain underexplored. On the Stabroek Block,
the JV partners have maintained an outstanding exploration success
rate. Aside from a rare duster reported to have occurred at
Kokwari-1 during Q1 2023(8) , the Stabroek exploration drilling
effort has yielded a total of twelve significant discoveries since
early 2022 (Fangtooth-1, Lau Lau-1, Patwa-1, Lukanani-1,
Barreleye-1, Seabob-1, Kiru Kiru-1, Yarrow-1, Sailfin-1, Fangtooth
SE-1, Lancetfish-1 and Lancetfish-2) bringing the total number of
discoveries to date, on the Stabroek block to thirty three(5,8) .
The positive outcome at Fangtooth-1 is of particular significance
as this was the first well dedicated to a deep exploration target
in the Stabroek area, with the results indicating the potential for
commercial exploitation of the deeper plays and offering
encouragement for the drilling of deep targets elsewhere in the
basin, including on the Kaieteur and Canje Blocks. The potential
for a significant deep discovery at Fangtooth was confirmed in
January 2023 when the Stabroek partners reported that 61 metres of
oil-bearing sandstone reservoirs had been encountered at Fangtooth
SE-1, which was drilled circa 13 kms to the southeast of the
original Fangtooth-1 discovery. A further discovery in this area
was reported in April 2023, with 28 metres of oil-bearing sandstone
encountered at Lancetfish-1. This discovery was confirmed in
October 2023 with the Lancetfish-2 appraisal well which encountered
38 metres of net oil pay in the same reservoirs as well as an
additional 20 metres of net oil pay in a new interval(8) . In July
2023, Hess reported that the Stabroek partners had secured a
one-year extension to the Stabroek exploration licence, from
October 2026 to October 2027, as
well as the postponement of a 20% relinquishment decision until
October 2024, both as a result of force majeure due to the COVID-19
pandemic(8) .
Outside of Stabroek, in May 2022, the Joint Venture of CGX
Energy Inc. and Frontera Energy Corporation announced a discovery
at Kawa-1 in the north of the Corentyne Block. Logging of this well
indicated 69 metres of net hydrocarbon pay across multiple Upper
Cretaceous reservoirs. Reservoir fluids are uncertain as MDT fluid
samples were not obtained from the well, though third-party
analyses indicated the presence of light oil in the deeper
Santonian and Coniacian reservoirs, and gas condensate in the
shallower Maastrichtian and Campanian, consistent with neighbouring
discoveries on the Stabroek block and in Block 58, Suriname(9) .
Kawa-1 was plugged and abandoned and the commercial potential of
the discovery has yet to be determined. After realignment of
stakeholder interests on the Corentyne Block a follow-up joint
exploration/appraisal effort, Wei-1, was spudded on 20 January
2023, targeting stacked Campanian and Santonian channel sandstone
reservoirs. On 13 June 2023, some significant cost overruns and
operational problems were reported, including the loss of a
sampling tool, which necessitated the drilling of a by-pass well
bore (Wei-1BP1) to reach the planned TD. Nevertheless, on 28 June
2023, CGX Energy Inc. announced that 64 metres of hydrocarbon
bearing sandstone had been logged in the Santonian interval though
oil samples had not been obtained due to downhole tool failure. In
addition, the previously announced discovery of 23.5 metres of net
oil pay in the Maastrichtian-Campanian interval was confirmed with
fluid sampling indicating the presence of light oil in the
Campanian and sweet medium crude oil, 24.9(o) API, in the
Maastrichtian(9) . The commercial potential of the Wei-1 discovery
has yet to be determined.
Separately, in December 2022, the Guyanese government launched a
Licensing Round for 14 offshore blocks (3 deepwater and 11 shallow
water blocks) under revised fiscal and contractual terms including
biddable signature bonus with a minimum threshold of USD $20M and
$10M for deepwater and shallow water blocks, respectively. In
parallel, the government has indicated that some other blocks, ex
Licensing Round, have been set aside with a view to exploration and
development of these blocks via strategic direct
government-to-government partnerships. On 15 September, it was
announced that bids had been received for eight of the fourteen
blocks on offer, with a total of 14 bidders in 6 groups, including
the ExxonMobil/Hess/CNOOC and the
TotalEnergies/QatarEnergy/Petronas groups. These bids are currently
under evaluation with the government looking to commence
negotiations with bidders in early November 2023.
In the Surinamese sector mixed results have been reported during
this period. The TotalEnergies/Apache consortium increased its
discovery count from 4 to 6 with the announcement of the Krabdagu-1
(Block 58) and Baja-1 (Block 53) discoveries in February and August
2022, respectively, although non-commercial outcomes were reported
at Rasper-1, Dikkop-1 and Awari-1(10) . In contrast, significant
light oil flow test results were achieved from Campanian reservoirs
in appraisal wells at Sapakara South-1, Sapakara South-2 and
Krabdagu-1 during this period. In August 2023 a successful
appraisal well was reported at Krabdagu-3, approximately 14 kms
from the discovery well. Prior stacked reservoir discoveries on
Block 58 reported generally light oil and gas-condensate pay in
shallower Maastrichtian-Campanian reservoirs overlying light oil
pay in deeper Santonian reservoirs - pointing towards some
potential challenges around valorization of large associated gas
volumes. The initial mixed exploration and appraisal drilling
results on Block 58, which included three gas-condensate
discoveries, redirected the consortium to focus on proving up
sufficient oil volumes in the shallower, Campanian, Sapakara and
Krabdagu discoveries in the east of the block. In September 2023
the operator, TotalEnergies, reported that the Sapkara South and
Krabdagu low-GOR oil discoveries we've now fully appraised bringing
together a combined 700 million barrels of recoverable resources
which would be developed using a 200,000 barrels per day FPSO, with
full gas reinjection, meeting the operator's requirements in terms
of unit cost and emissions intensity. FID is targeted for the end
of 2024 with first oil planned for 2028(11) .
Exploration drilling results continue to support the presence of
multiple plays, quality reservoirs and the potential for
stacked-pay drilling opportunities within the basin. Although the
Upper Cretaceous Maastrichtian-Campanian Liza play dominates in
terms of number of discoveries and discovered volumes to date, the
deeper Santonian pools on Block 58, in conjunction with the deeper
hydrocarbons reported at Liza-3, Tripletail-1, Yellowtail-2,
Uaru-2, Turbot-2, Longtail-3, Hassa-1, Fangtooth-1 and Fangtooth
SE-1 on the Stabroek Block, together with the hydrocarbon shows
reported at Sapote-1 on the Canje Block, and the logged net pay in
the Santonian-Coniacian intervals at Kawa-1 and Wei-1 on the
Corentyne Block, all suggest an extensive emerging deeper play
fairway within the basin. Offshore Suriname, oil pay was also
reported from the Zanderij-1 (Shell, Block 42) where the
operator was targeting the Santonian and deeper intervals, with
well results currently under evaluation(12) .
It is against this backdrop that the hydrocarbon plays and
prospect inventories on the Kaieteur, Canje and Orinduik blocks are
being reassessed - with a view to the identification of optimal
targets for the next phase of drilling, while progressing the
ongoing environmental permitting processes and financing challenges
where relevant.
Orange Basin (offshore Namibia)
Although Namibia does not yet produce any oil or gas, in early
2022, the deepwater Orange Basin became the latest global
exploration hotspot, ignited by the announcements in quick
succession of major oil discoveries by groups headed by Shell and
TotalEnergies. Firstly, on 4 February 2022, Shell (45%, operator)
and partners QatarEnergy (45%) and NAMCOR (10%) announced a
significant oil discovery at Graff-1x, on Block 2913A. The well is
understood to have found oil in two Upper Cretaceous reservoirs and
a subsequent DST at Graff-1x is reported to have flowed at
exceptional rates ("flowed like a train")(13, 14) .
Following a successful appraisal by the Rona-1x well, initial
resource estimates from NAMCOR suggest 2.38 bn bbls of oil in place
at Graff(15) , with a separate estimate of 700 MMbbls recoverable
offered by a Wood Mackenzie analysis. Secondly, on the 24 February
2022, TotalEnergies (40%, operator) and partners QatarEnergy (30%),
Impact (20%) and NAMCOR (10%) announced a major light oil with
associated gas discovery at Venus-1x, on Block 2913B. This
play-opening discovery well encountered a high-quality, light
oil-bearing sandstone reservoir of Lower Cretaceous age, with 84
meters of net oil pay(16) . Subsequently, the discovery has been
successfully appraised during 2023 with the drilling of Venus-1A
appraisal well, and with a positive flow test performed in a
sidetrack of the discovery well Venus-1x(11) . Initial resource
estimates from NAMCOR suggest 5.1 bn bbls of oil in place at the
Venus-1x discovery(15) . This second significant discovery at
Venus-1x, in a stratigraphically deeper Cretaceous play, has
confirmed the enormous potential of the Orange Basin as a major
emerging hydrocarbon province.
Less than two years later, this initial wave of deepwater
exploration in the Orange Basin has, to date, yielded a total 5 oil
discoveries (Graff-1x, Venus-1x, La Rona-1x, Jonker-1x and
Lesedi-1x) from 7 exploration wells, with an estimated 11 bn bbls
of oil in place and 9 TCF of associated gas discovered since early
2022(15) . Accelerated work programs, including the drilling and
testing of large appraisal step-out wells, is currently ongoing at
Venus (Venus-1A) and Jonker (Jonker-1A) with these discoveries
already high-graded as potential fast track, multiphase
developments. A further ramping up of exploration activity in the
basin has been triggered by these early successes with a number of
big company farm-ins (Chevron and Woodside) resulting in large
scale 3D seismic acquisition programs on adjacent acreage, in
addition to infill 3D acquisition programs on the discovery blocks.
In parallel with these developments, additional exploration
drilling on the discovery blocks and adjacent acreage is also
anticipated in the near term with the imminent spudding of
Mangetti-1 by TotalEnergies on Block 2913B (PEL 56) and the
spudding of the first exploration well, in a potential two well
program, by Galp Energia on Block 2813B (PEL 83), in Q4 2023.
With moderate above ground risks, favourable fiscal terms
(government take is circa 57%), prolific deepwater reservoirs and
multiple play opening discoveries, the Orange Basin, offshore
Namibia looks to be at the early part of the creaming curve with
the potential for the discovery of additional large scale
advantaged resources.
Guyana-Suriname Basin - offshore Guyana
Kaieteur Block (offshore Guyana)
The first well on the Kaieteur block, Tanager-1, remains the
deepest well drilled in the Guyana-Suriname Basin to date. It was
spudded on 11 August 2020, using the Stena Carron drillship. The
well was drilled in a water depth of 2,900 metres and reached a
total depth of 7,633 metres circa mid-November 2020. Evaluation of
LWD, wireline logging and sampling data confirmed 16 metres of net
oil pay (20(o) API oil) in high-quality sandstone reservoirs of
Maastrichtian age. Although high quality reservoirs were also
encountered at the deeper Santonian and Turonian intervals, initial
interpretation of the reservoir fluids was reported to be
equivocal, requiring further analysis - results of which have yet
to be disclosed. Post well
analysis and integration of the data collected continues with a
view to high-grading the next drilling target on the Kaieteur
block.
A post-well Netherland, Sewell & Associates Inc. ("NSAI")
published CPR (14 February 2021) indicates that the Tanager-1
Maastrichtian discovery contains a 'Best Estimate' Unrisked Gross
(2C) Contingent Oil Resource of 65.3 MMBBLs (Low to High Estimates
17.7 MMBBLs to 131 MMBBLs) - with a 'Best Estimate' Unrisked Net
(2C) Contingent Oil Resource attributable to the Kaieteur Block of
42.7 MMBBLs (Low to High Estimates 11.3 MMBBLs to 86 MMBBLs).
However, this discovery is currently considered to be
non-commercial as a standalone development.
Subsequent to the Tanager-1 discovery, on 24 May 2021, it was
announced that Hess Corporation ("Hess") had increased its working
interest ("WI") in the Kaieteur Block, offshore Guyana, from 15% to
20% via the farm-down of a 5% WI by Cataleya Energy Limited
("CEL"). Although the details of this farm-in transaction were not
disclosed this farm-in, by one of the Stabroek block partners and a
leading player in the Guyana-Suriname basin, suggests confidence in
the prospective resource potential of the Kaieteur Block and augurs
well for the continuing exploration of the area.
On 23 August 2021, it was announced that the date for elective
nomination, by the operator, of the prospect target for the 2(nd)
well on the Kaieteur Block had been extended by seven months and on
22 March 2022 a further extension of the nomination date was agreed
to 2 October 2023. The Kaieteur Block partners agreed to this
extension to facilitate continuing geological and geophysical
analysis by the operator and integration of recent and ongoing deep
play drilling program results on adjacent blocks into the Kaieteur
prospect nomination decision. Under a farm-in agreement executed
with ExxonMobil (operator) in 2016, any drilling consequent to the
2(nd) well prospect nomination decision would commence within nine
months of the nomination date. The operator, as farminee, continued
to bear all farmor JV expenses during the prospect nomination
extension period.
In September 2021, the operator, ExxonMobil, submitted an
application to the Guyanese Environmental Protection Agency ("EPA")
seeking environmental authorization to proceed with an up to 12
well exploration campaign on the Kaieteur Block. Although the EPA
initially declared that the project was exempt from the requirement
of an Environmental Impact Assessment (EIA), following appeals
submitted against the EPA's decision, it was subsequently
determined in August 2022 that an EIA would be required to assess
the potential 'collective impacts' of the proposed drilling
campaigns on Kaieteur and the contiguous blocks.
On 27 September 2023, it was announced by Ratio Petroleum Energy
Limited Partnership ("Ratio Petroleum"), that ExxonMobil had
decided not to commit to drilling a second well on the Kaieteur
Block and that both ExxonMobil and Hess had elected to withdraw
from the Kaieteur Block and return their participating interests to
the original Kaieteur Licence holders, Ratio Guyana Limited ("RGL")
and Cataleya Energy Limited ("CEL"). The parties are now seeking
government approval to reassign the participating interests, so
that RGL and CEL will each retain a 50% participating interest, and
to appoint RGL as the operator of the block. It was also announced
that under the terms of the Kaieteur Petroleum Agreement, and upon
submission of an application to enter the second extension period,
the participating interests on the block will have until February
2025 to commit to drilling a well. In this context, it was noted,
that Ratio Petroleum is seeking a farm-down of participating
interests and operatorship and is already in discussions with major
oil companies with a view to bringing a new entrant or entrants to
the block.
In this regard, it is also of note that the two deepwater blocks
(D1 & D2), immediately adjacent to the Kaieteur block, have
each been the subject of at least one application during the recent
Guyanese Bid Round which offered acreage under less benign fiscal
terms than the original Kaieteur Block terms.
As of 30 June 2023, the Kaieteur Block is operated by an
ExxonMobil subsidiary, Esso Production & Exploration Guyana
Limited (35%), with CEL (20%), RGL (25%) and a subsidiary of Hess
Corporation, Hess Guyana (Block B) Exploration Limited (20%) as
partners. Subsequent to the announcement on 27 September 2023 of
the withdrawal from the Kaieteur Block of the ExxonMobil and Hess
subsidiaries and upon the reassignment of their interests to the
original Kaieteur Licence holders, the Kaieteur Licence interests
will be as follows: RGL 50% and operator; CEL 50%. Westmount
retains a holding of approximately 5.3% of the issued share capital
of Cataleya Energy Corporation ("CEC") the parent company of CEL
and circa 0.04% of the issued share capital of Ratio Petroleum
Energy Limited Partnership ("Ratio Petroleum") the ultimate holding
entity with respect to RGL.
Canje Block (offshore Guyana)
The first well on the Canje block, Bulletwood-1, was spudded on
31 December 2020 using the Stena Carron drillship and was completed
in early March 2021. The well was safely drilled in a water depth
of 2,846 metres to its planned target depth of 6,690 meters. The
primary target in the well was a Campanian age confined channel
complex. The well encountered quality reservoirs but non-commercial
hydrocarbons. There has been limited disclosure of the well results
to date as detailed analysis of the data collected is ongoing.
However, the initial results confirm the presence of the
Guyana-Suriname petroleum system and the potential prospectivity of
the Canje Block.
Initial drilling operations at the second well on the Canje
block, Jabillo-1, commenced on 14 March 2021 using the Stena Carron
drillship. Previously published information indicated that
Jabillo-1 was targeting a Late Cretaceous, Liza-age equivalent,
basin floor fan. After interruption for a brief period of
maintenance work on the drillship drilling operations at Jabillo-1
recommenced circa 5 June 2021 and were completed in early July. The
well was safely drilled in a water depth of 2,903 metres to its
planned target depth of 6,475 meters. The well did not encounter
commercial hydrocarbons.
The third well on the Canje block, Sapote-1, was spudded circa
29 August 2021, using the Stena DrillMAX drillship, and reached TD
in late October 2021. This well is located in the southeast of the
Canje Block, approximately 60kms north of the Campanian and
Santonian Maka Central-1 stacked pay discovery. The well was safely
drilled in a water depth of 2,549 metres to a total depth of 6,758
meters. It encountered non-commercial hydrocarbons in one of the
deeper exploration targets.
Subsequent to the completion of the first phase of drilling on
block the focus of the Canje JV partners has been on the analysis
and assimilation of the 2021 drilling results and data gathering
program, the reprocessing and re-interpretation of the 3D seismic
data, and the high-grading of the Cretaceous prospect inventory
including the prospects in the deeper emerging Santonian-Cenomanian
plays.
In August 2021 the Canje operator submitted an application for
Environmental Authorisation to the Guyanese Environmental
Protection Agency ("EPA") seeking approval to undertake a follow-on
drilling campaign of up to twelve wells. Although the EPA initially
declared that the project was exempt from the requirement of an
Environmental Impact Assessment (EIA), following appeals submitted
against the EPA's decision, it was subsequently determined in
August 2022 that an EIA would be required to assess the potential
'collective impacts' of the proposed drilling campaigns on Canje
and the contiguous blocks.
On 11 September 2023, the operator filed a Cumulative Impact
Assessment ("CIA") for the Canje Block with the EPA. This CIA
report indicates that exploration drilling on the Canje Block could
potentially recommence in the second quarter of 2024, though this
guideline has not yet been confirmed by JHI or any of the Canje
partners.
Westmount holds an indirect interest in the Canje Block as a
result of its circa 7.2% interest in the issued share capital of
JHI Associates Inc. ("JHI"), as of 30 June 2023. The company also
holds an additional indirect interest in the Canje Block as a
result of its shareholding in Eco (Atlantic) Oil and Gas Ltd.
("EOG") and following the investments in JHI Associates Inc.
("JHI") announced by EOG on 28 June 2021 and 19 January 2022.
On 25 September 2023, Argos Resources Limited ("Argos")
announced the completion of a transaction with JHI which resulted
in the acquisition of operatorship and 100% working interest in
North Falklands Basin Production Licence PL001 by JHI in return for
a consideration of 8,467,820 JHI Common Shares ("the Consideration
Shares") and GBP303,500 in cash. It was stated that these
Consideration Shares are expected to represent approximately 9.3
per cent of the enlarged share capital of JHI following completion
of the transaction. Furthermore, it was also announced, that
following the passing of resolutions at the Argos general meeting
held on 22 September 2023, that Argos had been placed into members
voluntary liquidation and that Argos having agreed with certain
creditors to settle those liabilities using Consideration Shares,
that approximately 7.9 million of the Consideration Shares would be
available for distribution on a pro-rata basis to Argos'
shareholders on the register at the relevant date. Given
Westmount's holding of 1 million shares in Argos, on the relevant
date, it is estimated that the net effect of this transaction on
Westmount's holding in JHI will be to increase the number of JHI
shares held by Westmount by approximately 33,600 shares and to
reduce Westmount's interest in the enlarged issued share capital of
JHI to circa 6.24%.
Subsequent to the initial EOG transaction and a previous 2018
farm-out to Total, JHI was fully carried/funded for the 2021 three
well drilling campaign and is also funded for additional drilling,
with a reported USD$19.7M in cash and cash equivalents as of 31
December 2021(17) .
The Canje Block is currently operated by an ExxonMobil
subsidiary, Esso Exploration & Production Guyana Limited (35%),
with TotalEnergies E&P Guyana B.V. (35%), JHI Associates (BVI)
Inc. (17.5%) and Mid-Atlantic Oil & Gas Inc. (12.5%) as
partners.
Orinduik Block (offshore Guyana)
Westmount continues to hold an indirect interest in the Orinduik
Block as a result of its circa 0.4% interest in the issued share
capital of Eco (Atlantic) Oil and Gas Ltd. ("EOG"). Over the last
24 months the focus of the Orinduik Block JV partners has continued
to be on the analysis and assimilation of the 2019/20 drilling
results and data gathering program, the reprocessing and
re-interpretation of the 3D seismic data, and the high-grading of
the Cretaceous light oil prospect inventory with a view to target
selection for the next drilling campaign on the Orinduik Block.
However, progress towards drilling on the block appeared to be
stymied during this period due to the diverging strategies between
the operator and some of the JV partners with respect to
exploration investment.
On 10 August 2023, EOG announced that it had signed a Sale
Purchase Agreement ("SPA") pursuant to which its wholly owned
subsidiary, Eco Guyana Oil and Gas (Barbados) Limited ("Eco
Guyana"), will acquire a 60% Operated Interest in the Orinduik
Block, offshore Guyana, through the acquisition of Tullow Guyana
B.V. ("TGBV"), a wholly owned subsidiary of Tullow Oil Plc.
("Tullow") in exchange for an initial payment of USD$700,000 cash
and a series of contingent payments based upon a commercial
discovery outcome and subsequent success case development
milestones.
The operated interest includes the Jethro and Joe Tertiary oil
discoveries, made during the initial drilling campaign in 2019,
which are currently considered non-commercial. As of 31 December
2022, the gross 2C resource attributable to the Orinduik 60%
operated interest amounted to 47.7mmbls. Upon completion of the
transaction the stated intention of EOG, as operator and 75%
interest holder, is to revitalise the exploration process(17) and
attract new partners with a view to drilling prospects in the more
prolific Cretaceous play, which remains unexplored on the Orinduik
Block.
As of 30 June 2023, the Orinduik Block is operated by Tullow
Guyana B.V. (60%), with TOQAP Guyana B.V. (25%) and Eco (Atlantic)
Guyana Inc. (15%) as partners. TOQAP Guyana B.V. is jointly owned
by TotalEnergies E&P Guyana B.V. (60%) and Qatar Petroleum
(40%). Post period end and subject to the completion of the
transaction announced by EOG on 10 August 2023, EOG will become the
operator and will hold an aggregate 75% Participating Interest in
the block via its subsidiaries Eco Guyana and Eco (Atlantic) Guyana
Inc. TOQAP Guyana B.V will continue to hold a Participating
Interest of 25%.
EOG reported its cash and cash equivalents to be USD$4.7M at 30
August 2023.
Orange Basin - offshore Namibia and South Africa
Blocks 2913B & 2912 (PEL 56 & PEL 91) (offshore
Namibia)
Westmount holds an indirect interest in Blocks 2913B and 2912
via its shareholding in Africa Oil Corp ("AOC"). The purchase of
this shareholding was announced on 9 June, 2023 and it was acquired
with a view to offering shareholders liquid exposure to the near
field exploration and appraisal drilling and testing program that
is underway on the giant Venus light oil and associated gas
discovery in the Orange Basin. AOC is the only publicly-listed
independent oil and gas company with an effective economic interest
in this accumulation (effective interest of 6.2% and 5.9% in Blocks
2913B & 2912, respectively), which is understood to be the
largest oil discovery made globally in 2022. AOC holds its
effective interest in these blocks via its circa 31% shareholding
in Impact Oil & Gas Limited ("Impact") a privately owned,
Africa-focused, exploration company. Impact (through its wholly
owned subsidiary, Impact Oil and Gas Namibia (Pty) Ltd.) holds a
20% working interest ("WI") in Block 2913B - with partners
TotalEnergies (40% operator), QatarEnergy (30%) and Namcor (10%) -
and an 18.89% WI in Block 2912 - with partners TotalEnergies
(37.78% operator), QatarEnergy (28.33%) and Namcor (15%).
On 24 February 2022, Impact announced that the play-opening
discovery well Venus-1X, drilled on Block 2913B, had encountered a
high-quality, light oil-bearing sandstone reservoir of Lower
Cretaceous age, with 84 meters of net oil pay(16) .
On 22 February 2023, Impact announced the imminent commencement
of a multi-well drilling and testing program in Blocks 2913B and
2912, using the Tungsten Explorer drillship and the Deepsea Mira
semi-submersible rig, targeting up to 4 wells, including the
re-entry, sidetracking and testing of the Venus-1X discovery well,
the drilling and testing of the Venus-1A appraisal well, the
drilling and potential testing of the Nara-1X exploration well on
Block 2912 and a contingent appraisal well at Nara-1A in the
success case. Separately, it was reported that TotalEnergies the
operator was spending 50% of its global exploration budget for 2023
on this project(18) .
Updates on the progress of this multi-well program were provided
by AOC and Impact on 28 September 2023 and via the TotalEnergies
Investor Day presentations on 27 September 2023. These updates
heralded a major milestone in the appraisal of the giant Venus
light oil discovery with the successful re-entry, sidetracking and
drill stem testing ("DST") of the Venus-1X discovery well, which
should contribute to the progression of development studies
supporting the first commercial development in Block 2913B(11) .
With the operator expressing sufficient confidence to declare that
there will be an oil field development at Venus, though the size
has yet to be determined, this implies that the prerequisite
permeability and well productivity has been demonstrated by the
initial DST flow test of the Cretaceous reservoir at Venus-1X,
which augurs well for the forward appraisal and exploration program
on Block 2913B.
The update also confirmed the successful drilling, coring and
logging of the first appraisal well, Venus-1A, which was drilled
approximately 13km north of the Venus-1X discovery well, using the
Tungsten Explorer drillship. Venus-1A has subsequently been
re-entered in early October and is currently undergoing a DST
program using the Deepsea Mira rig. In addition, it was reported
that the Nara-1X exploration well, drilled on Block 2912, appeared
to be oil bearing but in poor quality reservoir facies and was
deemed non-commercial(11) . Following the completion of operations
at Nara-1X the Tungsten Explorer drillship has been mobilized to
drill the substantial Mangetti-1X prospect, located on Block 2913B,
at the northern end of the giant Venus light oil accumulation. The
operator also indicated that the immediate program included
additional 3D seismic acquisition to completely cover the acreage
and the potential for a final appraisal well on the north of Venus
itself(11) .
Block 2B (offshore South Africa)
Westmount holds an indirect interest in Block 2B via its
shareholding in EOG. On 18 November 2022, it was reported that the
Gazania-1 well, on Block 2B in the Orange Basin offshore South
Africa, had reached target depth of 2,360m but did not show
evidence of commercial hydrocarbons. The well was subsequently
plugged and abandoned with further analysis of the Gazania-1 well
data, and the existing AJ-1 light oil discovery, being undertaken
by EOG to determine next steps on the Block(17) . On 15 November
2022, EOG, on behalf of the Block 2B JV partners, submitted a
Production Right Application with respect to the AJ-1 discovery, to
the Petroleum Agency of South Africa.
Block 3B/4B (offshore South Africa)
Westmount holds an indirect interest in Block 3B/4B via its
shareholdings in AOC and EOG. On 8 March 2023, following the
completion of the reprocessing of 2,200 km(2) of 3D seismic, AOC
reported the results of an independent review of Block 3B/4B
prospective resources which had been undertaken by RISC Advisory
(UK) Limited ("RISC")(19) . The RISC analysis of the licence
identified a total Unrisked Gross P50 Prospective Resource of
approximately 4 billion barrels of oil equivalent ("BOE") in 24
prospects, with individual prospect probabilities of success
ranging from 11% to 39%.
Subsequent to a Letter of Intent announced by EOG on 11 July
2023 and the entry into an Assignment and Transfer Agreement on 14
July 2023, EOG agreed to farm out a 6.25% Participating Interest in
Block 3B/4B, offshore South Africa to AOC for up to US$10.5 million
in cash, payable via a series of contingent milestone payments.
Subject to the completion of this transaction the Block 3B/4B
Licence holders will be: Africa Oil SA Corp a wholly owned
subsidiary of AOC (26.25%, operator), Azinam Limited a wholly owned
subsidiary of EOG (20%) and Ricocure (Proprietary) Limited
(53.75%). EOG also reported during the period that a separate
collaborative farm-out process was underway on Block 3B/4B, with up
to 55% gross working interest available from the JV partners, and
with a view to a two well drilling campaign on the block. In
this
regard, it was also reported that the Environmental
Authorisation process for drilling is underway with respect to
prospects defined on 3D seismic in a high-graded area in the north
of Block 3B/4B.
Investment portfolio summary
As of 30 June 2023, Westmount had a cash balance of GBP0.48M and
is debt free.
On 9 June 2023, Westmount announced that it had purchased
300,000 shares in Africa Oil Corp. ("AOC") representing
approximately 0.065% of the issued common shares in AOC as of 28
August 2023.
On 30 June 2023, Westmount held a total of 5,651,270 shares in
JHI, representing approximately 7.2% of the issued common shares in
JHI as of 31 December 2021. Subsequent to balance sheet date and
the completion of the Argos-JHI transaction announced on 25
September 2023, the entry into members voluntary liquidation by
Argos and the planned pro rata distribution of JHI Consideration
Shares to Argos shareholders, it is estimated that Westmount will
hold circa 5,684,866 shares in JHI, representing approximately
6.24% of the enlarged issued share capital of JHI.
On 9 January 2023, Westmount reported that it had elected to
participate in the pro rata Return of Capital Transaction ("ROC
Transaction") offered to the shareholders of Cataleya Energy
Corporation ("CEC") which reduced the number of outstanding common
shares ("Common Shares") in CEC in issue by 16%.
The ROC Transaction was structured such that each Participating
Shareholder effectively received, for each Common Share held prior
to the transaction that is ultimately cancelled pursuant to the ROC
Transaction, an amount equal to approximately USD$3.906 per share.
The aggregate amount returned to participating CEC shareholders via
the ROC Transaction was approximately USD $6,720,000, with these
funds being provided to CEC through the issuance of incremental
convertible loan notes to a certain noteholder (the "Noteholder")
that previously advanced USD$35,000,000 to CEC in April 2020.
Prior to the ROC Transaction, Westmount held a total of 567,185
Common Shares in CEC, representing approximately 5.28% of the
issued common shares in CEC. Post completion of the ROC
Transaction, on 6 January 2023, Westmount holds a total of 474,816
Common Shares in CEC, retaining approximately 5.26% of the issued
common shares of CEC outstanding post the ROC transaction.
Westmount also received a cash return of USD$355,954 (net of
expenses).
Westmount continues to hold 1,500,000 shares in EOG,
representing approximately 0.4% of the common shares in issue as of
2 August 2023.
Westmount continues to hold 89,653 shares in Ratio Petroleum
representing approximately 0.04% of the issued share capital.
On 30 June 2023, Westmount retained a legacy holding of
1,000,000 shares in Argos, representing approximately 0.4% of the
issued common shares in Argos. Subsequent to the Argos-JHI
transaction announced on 25 September 2023, the entry into members
voluntary liquidation by Argos and the cancellation from admission
to trading on AIM of Argos shares from 26 September 2023, it is
anticipated that Westmount will receive circa 33,600 JHI shares
from Argos by way of a post liquidation pro rata distribution of
assets to Argos shareholders.
The complete investment portfolio is summarised in Table 1. The
reported financial loss for the period is primarily made up of a
non-cash loss on financial assets held at fair value through the
profit and loss, some of which is as a result of Foreign Exchange
movements on the portfolio Investments when valued at the period
end.
Summary/Outlook
The oil and gas exploration sector continues to be a challenging
space for investors in the context of volatile oil prices, a
weakening global macroeconomic outlook, conflicting peak demand
scenarios and the vagaries of energy transition politics.
Nevertheless, in common with the broader energy spectrum, risk of
underinvestment, relative to what is needed to meet forecast energy
demand across a range of 'net zero' demand trajectories, remains a
key theme for the oil and gas business. Recent improvement in the
financial performance of the upstream sector combined with a drive
by the bigger companies to high-grade their portfolios with higher
return, lower carbon (Scope 1 and 2 emissions), oil and gas
prospects is likely to contribute to increased exploration spending
in the near term. Spending in deepwater and ultra-deepwater areas
is forecast to grow most rapidly with the NOCs and majors
continuing to dominate while Mid-Caps retreat from this space.
Exploration 'hotspots' in the deepwater Guyana-Suriname Basin,
offshore Guyana and the Orange Basin, offshore Namibia are two
areas that are well positioned to capture their share of this
increased exploration spending.
Westmount's strategy continues to be one of seeking value
creation for shareholders via exposure to high impact exploration
and appraisal drilling programs. With respect to offshore Namibia,
a recent update by our investee, AOC, confirms our view that the
Orange Basin is a major emerging, prolific, hydrocarbon province
which offers Westmount shareholders immediate exposure to high
impact drilling outcomes, including the ongoing Mangetti-1
exploration well. The update also heralded a major milestone in the
appraisal of the giant Venus light oil discovery with the
successful re-entry, sidetracking and drill stem testing ("DST") of
the Venus-1X discovery well and the successful drilling, coring and
logging of the first appraisal well, Venus-1A, a 13km step-out to
the north of the Venus-1X discovery well. Venus-1A has subsequently
been re-entered in early October and is currently undergoing a DST
program. Newsflow from the results of this DST program and the
drilling of Mangetti-1 is anticipated in Q4 2023.
With respect to offshore Guyana, we note the September 2023
filing by the operator ExxonMobil of a Cumulative Impact Assessment
("CIA") for the Canje Block with the EPA. This CIA report indicates
that exploration drilling on the Canje Block could potentially
recommence in the second quarter of 2024, though this guideline has
not yet been confirmed by our investee, JHI, or any of the Canje
partners. The exit of ExxonMobil and Hess from the Kaieteur Block
is a setback with respect to drilling timeframes for Kaieteur,
though we are encouraged that Ratio Petroleum is already reported
to be in discussions with major oil companies with a view to
bringing in a new deepwater operator to the block. In this regard,
it is also of note that the two deepwater blocks (D1 & D2),
immediately adjacent to the Kaieteur block, have each been the
subject of at least one application during the recent Guyanese Bid
Round which offered acreage under less benign fiscal terms than the
original Kaieteur Block terms. The recently announced entry of
Chevron to Guyana, via its acquisition of Hess Corporation, may
also bring its own dynamic with respect to exploration drilling in
the deepwater area of the Guyana-Suriname Basin.
Westmount is well capitalised with a minimal cost base and
investment exposure to some high impact exploration and appraisal
drilling opportunities offshore Guyana and offshore Namibia. Our
primary investee companies CEC, JHI and EOG are currently well
funded though, in some cases, the shifting priorities of the
incumbent majors and Mid-Caps is likely to require new farm-ins
prior to drilling. In this changing landscape, some of our
investees are also likely to consider portfolio diversification and
possible consolidation manoeuvres as part of their risk management
strategies. In all cases, line of sight to indirect participation
in high impact drilling remains the key investment objective for
Westmount.
GERARD WALSH
Chairman
8 November 2023
Notes
(1) DNV Energy Transition Outlook 2023
(2) OPEC World Oil Outlook 2023
(3) IEA Oil 2023 - Analysis and Forecast to 2028
(4) Wood Mackenzie - Doing More with Less - Is there enough
upstream investment? - July 2023
(5) Hess Corporation presentation 7 September 2023 - Barclays
CEO Energy-Power Conference
(6) Wood Mackenzie Insight - Exploration quietly recovering -
August 2023
(7) Wood MacKenzie - Global-deepwater-production-to-increase-60%
- November 2022
(8) Hess Corporation Press Releases - Estimated Results for
First, Second & Third Quarters 2023
(9) CGX Energy Inc. News Releases 28 June 2023, 13 June 2023, 9
May 2022, 1 March 2023.
(10) APA Corporation News Releases - 21 February, 21 June and 23
August 2022; 2 August 2023.
(11) TotalEnergies 2023 Strategy & Outlook - Investor Day
Presentations & Transcript 27 September 2023
(12) Hess 3(rd) Quarter 2022 Conference Call Remarks.
(13) Shell Press Releases 22 April 20 22 & 6 March 2023
(14)
https://www.upstreamonline.com/exclusive/-like-a-train-oil-flows-at-supercharged-rate-from-shell-s-ground-breaking-namibia-probe/2-1-1450289
(15)
https://www.reuters.com/article/namibia-oil-idUKL8N3A41HS
(16)
https://impactoilandgas.com/major-light-oil-discovery-offshore-namibia/
(17) Eco (Atlantic) Oil & Gas Ltd. News Releases 14 March
2022, 27 February 2023 and 19 August 2023.
(18)
https://www.upstreamonline.com/exploration/totalenergies-throws-half-of-this-years-exploration-budget-into-potential-new-golden-block/2-1-1400964
(19)
https://africaoilcorp.com/news/africa-oil-announces-new-competent-persons-report-122876/
For further information, please contact:
Westmount Energy Limited www.westmountenergy.com
David King, Director Tel: +44 (0) 1534 823000
Cavendish Securities plc (Nomad and Broker) Tel: +44 (0) 20 7397 8900
Neil McDonald / Pete Lynch
DIRECTORS' REPORT
FOR THE YEARED 30 JUNE 2023
The Directors present their annual report and the audited financial
statements of Westmount Energy Limited (the "Company") for the
year ended 30 June 2023.
PRINCIPAL ACTIVITIES
The principal activity of the Company is, and continues to be,
an energy investment company. Development of the Company's activities
and its prospects are reviewed in the Chairman's Review on pages
3 to 13.
The Company was incorporated in Jersey on 1 October 1992 under
the Companies (Jersey) Law 1991, as amended, and is a public company
with registered number 53623. The Company is listed on the London
Stock Exchange Alternative Investment Market ("AIM"). On 1 December
2020 the Company commenced cross-trading on the OTCQB Market in
New York, U.S., under the ticker symbol "WMELF".
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during the year and subsequently to the
date of this report were as follows:
Shares held at Options held
at
30 June 2023 30 June 2023
G Walsh (Chairman) 11,933,565 500,000
T P O'Gorman 4,650,000 250,000
D Corcoran 5,250,000 1,250,000
D R King - 250,000
RESULTS AND DIVIDS
The result for the year is set out on page 24 in the Statement
of Comprehensive Income. The Directors do not recommend the payment
of a dividend in respect of these financial statements (2022:
GBPNil).
During the prior year, Ukraine was invaded by the Russian military.
This had an immediate impact on the global economy due to sanctions
being imposed on Russia. Oil and gas prices have risen significantly
and there have been restrictions on the exportation of goods from
both the Ukraine and Russia. In preparing these financial statements,
these uncertainties have been considered throughout. The Directors
will continue to monitor the situation on a regular basis.
DIRECTORS' BIOGRAPHICAL INFORMATION
Gerard Walsh, Chairman , age 60, a Swiss resident, is a member
of the Chartered Institute of Management Accountants and has been
involved in financing oil and gas companies for over 20 years.
Mr Walsh maintains his knowledge and skills via direct contact
with senior industry investors and other operators, and via monitoring
of significant market activities within the global energy sector.
David R King , age 65, a Jersey resident, is a Fellow of the
Institute of Chartered Accountants in England and Wales and has
over 25 years' experience in capital markets and cross border
structuring gained from senior positions in a number of offshore
jurisdictions, notably the Cayman Islands, Hong Kong, Luxembourg
and Jersey. He is an experienced professional Non-Executive Director
and is regulated personally by the Jersey Financial Services Commission.
He maintains his knowledge and skills via fulfilment of regular
continuing professional development obligations and by close monitoring
of significant market activities within the sector. Mr King acts
as an independent director and oversees the efficient operation
of Company Secretarial, Registrar and Administrative operations
of the Company.
Thomas P O'Gorman , age 71, a Northern Ireland resident, is a
long term investor in the resource sector and is the former Chairman
of Cove Energy Plc (formerly Lapp Platts Plc) who has been involved
in financing oil and gas companies for over 40 years. Mr O'Gorman
maintains his knowledge and skills via direct contact with senior
industry investors and other operators, and via monitoring of
significant market activities within the global energy sector.
Dermot Corcoran , age 64, a Republic of Ireland resident, is
a petroleum geologist and geophysicist, with more than 30 years'
experience working with both major and minor hydrocarbon exploration
companies globally. Mr Corcoran has wide experience in technical
and commercial aspects of petroleum exploration and production,
gained from employment and investment experience in Europe, North
Africa, West Africa, Kurdistan, Syria, Pakistan and the USA. Mr
Corcoran maintains his knowledge and skills via direct contact
with senior industry investors and other operators, attendance
and engagement at industry conferences and seminars and via monitoring
of significant market activities within the global energy sector.
SECRETARY
The Secretary of the Company is Stonehage Fleming Corporate Services
Limited.
AUDITOR
The auditor, Moore Stephens Audit & Assurance (Jersey) Limited,
has indicated its willingness to continue in office, and a resolution
that it is re-appointed will be proposed at the next annual general
meeting.
STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the Directors' Report
and the financial statements in accordance with applicable law
and regulations.
Jersey Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance
with International Financial Reporting Standards as adopted by
the European Union (IFRS) and applicable law. Under Company law
the Directors must prepare financial statements that give a true
and fair view of the state of affairs of the Company and of the
profit or loss of the Company for that period. In preparing these
financial statements, the Directors are required to:
* select suitable accounting policies and then apply
them consistently;
* make judgements and accounting estimates that are
reasonable and prudent;
* state whether the financial statements have been
prepared in accordance with IFRS as adopted by the
European Union; and
* prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping proper accounting records
that are sufficient to show and explain the Company's transactions
and disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial
statements comply with the Companies (Jersey) Law 1991. They are
also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
As far as the Directors are aware, there is no relevant audit information
of which the Company's auditor is unaware and each Director has
taken all the steps that he ought to have undertaken as a director
in order to make himself aware of any relevant audit information
and to establish that the Company's auditor is aware of that information.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Company's
website. The Company's website is maintained in compliance with
AIM Rule 26 and the applicable OTCQB Market standards.
Legislation in Jersey governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
The Directors confirm that they have complied with all of the
above requirements in preparing these financial statements.
On behalf of the Board
D R KING
Director
8 November 2023
CORPORATE GOVERNANCE
The Board have adopted the Quoted Companies Alliance Corporate
Governance Code ("the QCA Code") following the London Stock
Exchange's requirement for AIM listed companies to adopt and comply
with a recognised corporate governance code.
Strategy and Business Model
The strategy of the Company is to invest in and provide follow
on capital to small and medium sized companies which have
significant growth possibilities operating in the oil and gas
sector. Members of the Board have specialist knowledge and
experience in the upstream sector of the oil and gas industry
(gained from extensive investing activity over a number of decades)
allowing them to identify projects and growth companies with
potentially higher returns, commensurate with acceptable levels of
risk. The Company undertakes extensive due diligence on potential
investment opportunities and monitors performance of its
investments via close contact with the companies concerned and
analysis of their public announcements and presentations. In common
with other investment companies in this sector, access as a
minority shareholder to projects and valuable investments is
challenging but the Board is confident of its ability to continue
to source attractive investment opportunities given close
relationships with a number of companies and their management
teams, and recognition of the Board's experience and strong
network.
Shareholder Relations
The Company engages closely with its principal shareholders, a
number of whom are Directors of the Company, primarily via
face-to-face meetings and publishes announcements of significant
activity consistent with market requirements. Shareholders receive
annual and half-year financial statements and are invited to the
Company's Annual General Meeting. Contact details for the Company
are maintained on the website and on Regulatory News Service
announcements. The Board seeks to build strong relationships with
its institutional shareholders which are managed by the Chairman
and supported by other members of the Board.
Gerard Walsh, Chairman, and Dermot Corcoran, Director, are
primarily responsible for shareholder liaison, and can be contacted
via the Contact Page on the Company's website.
Stakeholder and Social Responsibilities
The Board has identified its key stakeholders as being its
shareholders and investee companies, given it has no employees and
a small range of contracted service providers. It maintains contact
with shareholders, of whom a significant proportion are Directors,
via Regulatory News Service and periodic feedback from these
parties. Contact with investee companies is operated via the
Chairman and individual Board directors responsible for the
relevant investment recommendation, and is geared to key
operational, project and transactional cycles identified for the
company concerned.
Risk Management
The Company actively monitors and manages risk in its
activities, principally through oversight and operation of its
investment portfolio. The Company identifies key risks in all of
its investments during the selection and due diligence cycle, and
subsequent recommendations for investment by the Company consider
for each proposal a range of risks and mitigating factors.
Identification of these risks is achieved by direct engagement with
the companies in which Westmount seeks to invest, close analysis of
their market opportunities and threats, combined with detailed
knowledge of the market sector where they operate and their
competitors.
Board Composition, Evaluation and Decision Making
The Board comprises three shareholder Directors (including the
Chairman Gerard Walsh) and one Non-Executive Director (David King)
resident in Jersey, who is considered to be independent.
The Company deviates from the requirements of the QCA Code in
that it has only one independent non-executive director. The
Directors consider that the structure of the Board is appropriate
and proportionate for the business at this stage of the Company's
growth, and that the Independent Director, in conjunction with the
Company's Nominated Adviser, provides appropriate challenge to the
executive directors on all corporate governance matters. The Board
intends to keep all aspects of its corporate governance -
independence and the balance of executive and non-executive roles
in particular - under review going forward.
Each of the four directors has considerable experience in their
respective fields and act collectively in all decision making of
the Company. The Board is satisfied that it has a suitable balance
between independence on the one hand and knowledge of the Company's
activities, to allow it to properly discharge its responsibilities
and duties. Directors are expected to use their judgement and
experience to challenge and assess the appropriateness of
operations and decision making at all times.
The Board has formally met two times this financial year and
Directors each dedicate between 12 and 150 days' time to the
Company per annum, including informal contact with other Board
members and advisors, and attendance at the Annual General
Meeting.
The Board regularly takes advice from its Nominated Advisor,
Cavendish Securities plc, and other external advisors (principally
its external lawyers) in relation to periodic investment
opportunities and fund raising.
The Board completes an annual self-evaluation of its performance
based on externally determined guidelines appropriate to the
composition of the Board and the Company's operation, including
Board Sub Committees. The scope of the self-evaluation exercise
will be re-assessed each year to ensure appropriate depth and
coverage of the Board's activities consistent with corporate best
practice. The Board has adopted a board effectiveness
questionnaire, which assesses the composition, processes,
behaviours and activities of the board through a range of criteria,
including board size and independence, mix of skills and
experience, and general corporate governance considerations in line
with the QCA code.
Given the stage of the business' maturity, the responsibilities
of a nomination committee are delegated to the Board, and there are
no formal succession planning processes in place. The Board intends
to keep this under review as the business develops.
Corporate Culture
Westmount Energy supports the growing awareness of social,
environmental and ethical matters when considering business
practices. These statements provide an outline of the policies in
place that guide the Company and its employees when dealing with
social, environmental and ethical matters in the workplace.
Code of Conduct
Westmount Energy maintains and requires the highest ethical
standards in carrying out its business activities in regards to
dealing with gifts, hospitality, corruption, fraud, the use of
inside information and whistle-blowing.
Westmount Energy maintains a zero-tolerance policy towards
bribery and corruption.
Equal Opportunity and Diversity
Westmount Energy promotes and supports the rights and
opportunities of all people to seek, obtain and hold employment
without discrimination.
It is our policy to make every effort to provide a working
environment free from bullying, harassment, intimidation and
discrimination on the basis of disability, nationality, race, sex,
sexual orientation, religion or belief.
Joint Venture Partners, Contractors and Suppliers
Westmount Energy is committed to being honest and fair in all
its dealings with partners, contractors and suppliers.
Procedures are in place to ensure that any form of bribery or
improper behaviour is prevented from being conducted on Westmount
Energy's behalf by joint venture partners, contractors and
suppliers. Westmount Energy also closely guards information
entrusted to it by joint venture partners, contractors and
suppliers, and seeks to ensure that it is never used
improperly.
Operating Responsibility and Continuous Improvement
Westmount Energy adopts an environmental policy which sets
standards that meet or exceed industry guidelines and host
government regulations. This is reviewed on a regular basis.
Wherever we operate we will develop, implement and maintain
management systems for sustainable development that will strive for
continual improvement.
Westmount Energy is committed to maintaining and regularly
reviewing its Health and Safety and Environmental Policies.
Periodic feedback from stakeholders, as described in relation to
Stakeholder and Social Responsibilities (above), allows the Board
to monitor the culture of the Company, as well as its ethical
values and behaviours.
Governance Structures
The Board operates to manage and direct the affairs of the
Company via close contact between Board members and through both
regular scheduled and ad-hoc Board meetings. The Board aims to meet
regularly with a timetable set by the external Company Secretary
with formal agendas and papers delivered in advance supporting key
matters for consideration or approval. Additionally, contact is
maintained between the directors via email and telephone given the
geographic separation of the Board.
Mr Walsh as Chairman is responsible for setting the strategy of
the Company and maintaining performance of the Board in line with
the broad objectives set in that strategy. He is responsible for
liaison with key stakeholders, including shareholders and
prospective investee companies, and also with advisers and
regulatory authorities.
Mr King, as a Jersey resident, maintains close contact with the
Company Secretary and other contracted service providers from
Jersey. The Board does not operate separate sub-committees (Audit,
Remuneration or Nomination) given its small size and close contact
for key decisions. The Company does not plan to establish new
sub-committees for the foreseeable future.
The Board retains full authority for the Company such that all
decisions on behalf of the Company are reserved for the Board.
Communication with Stakeholders
The Company communicates with shareholders through the Annual
Report and Audited Financial Statements, annual and half year
results announcements, the Annual General Meeting, and periodic
meetings with significant institutional shareholders and
analysts.
Corporate information (including all Company publications and
announcements) is available to all shareholders, prospective
investors and the public and is maintained on the Company's
website, www.westmountenergy.com .
In the last 12 months there were no votes of shareholders where
a significant proportion voted against a resolution.
INDEPENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF WESTMOUNT ENERGY LIMITED
Opinion
We have audited the financial statements of Westmount Energy
Limited (the 'Company') as at and for the year ended 30 June 2023
which comprise the Statement of Comprehensive Income, the Statement
of Financial Position, Statement of Changes in Equity, the
Statement of Cash Flows and the notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is International Financial Reporting Standards
('IFRSs') as adopted by the European Union and the requirements of
the Companies (Jersey) Law 1991.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 June 2023 and of its loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report.
We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in Jersey, including the Financial Reporting Council's
Ethical Standard as applied to listed entities, and we have
fulfilled our ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
An overview of the scope of our audit
During our audit planning, we determined materiality and
assessed the risks of material misstatement in the financial
statements including the consideration of where directors made
subjective judgements, for example, in respect of the assumptions
that underlie significant accounting estimates and their assessment
of future events that are inherently uncertain. We tailored the
scope of our audit in order to perform sufficient work to enable us
to provide an opinion on the financial statements as a whole taking
into account the Company, its accounting processes and controls and
the industry in which it operates.
Emphasis of matter
We draw your attention to note 6 and note 12 of the financial
statements, which include unlisted investments held by the Company
and carried at GBP4,049,925 (2022: GBP6,852,817) based on
Directors' valuations. These are Level III investments and have
been valued based on the recent sales price of the investments
and/or using relevant market proxies where available. The Directors
have also considered market expectations of future performance of
the entity's industry sector, in particular known interest in the
area of current exploration, in arriving at their valuations. Our
audit opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
-- Valuation of Investments. The valuation of the Company's
investments is a key driver of the Company's investment return and
investments represent a material proportion of the Company's
financial assets. The relevant accounting policies and
investment composition are discussed in note 2 and note 6,
respectively, to the financial statements.
The investments represent listed and unlisted equity instruments
amounting to GBP0.73 million and
GBP4.05 million, respectively, as at 30 June 2023. The
identified risk predominantly relates to the unquoted investment
which valuation carries a greater degree of judgement by the
directors and has been valued based upon the price of recent
investments, a valuation basis included in the International
Private Equity and Venture Capital Guidelines (IPEVC
Guidelines).
Our main audit procedures to address the identified risk in
respect of the unlisted investment were (a) we discussed with
management their unlisted valuation methodology, and assessed the
recognition and measurement of the unlisted investment held for
compliance with IFRSs, and whether it had been accounted for in
accordance with the stated accounting policy and with IPEVC
Guidelines; (b) we substantiated the nature and background of
recent transactions which had been used as the basis of the
valuation. We have not identified any material issues from the
completion of the above procedures; and (c) where the price of
recent transaction does not coincide to the Company's year-end, we
have performed independent research about events or conditions that
may indicate the need to recalibrate the price to take into account
the impact of such event or condition.
-- Risk of management override of controls. In accordance with
ISAs (UK), we are required to consider the risk of management
override of internal controls. Due to the unpredictable nature of
this risk, we are required to assess it as a significant risk
requiring special audit consideration.
Our audit work included, but was not restricted to, specific
procedures relating to the risk that are required by ISA (UK) 240,
The Auditor's Responsibilities Relating to Fraud in an Audit of
Financial Statements, which includes the testing of journal
entries, evaluation of judgements and assumptions in management's
estimate, and test of significant transactions outside the normal
course of business. We have not identified any material issues from
the completion of the above procedures.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the Company's
ability to continue to adopt the going concern basis of accounting
included understanding the nature of the Company, its business
model, system of internal control and related risks, reviewing the
performance of the underlying investments, critically assessing the
key assumptions made by management including its appropriateness in
the context of the financial reporting framework, and evaluating
the directors' plans for future actions in relation to their
assessment.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of misstatements
on our audit and on the financial statements. For the purposes of
determining whether the financial statements are free from material
misstatement we define materiality as the level of misstatement
that would probably influence the economic decisions of a
reasonably knowledgeable person.
We have used approximately 2% of gross assets rounded down, or
GBP106,000 (2022: GBP165,000) which reflects the fact that this is
an investment fund where its market value is determined
predominantly by its gross asset value.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements, or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the chairman's review or
the directors' report.
We have nothing to report in respect of the following matters
where the Companies (Jersey) Law 1991 requires us to report to you
if, in our opinion:
-- adequate accounting records have not been kept, or
-- returns adequate for our audit have not been received from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities with regard to the financial statements set out on
page 15, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
The objectives of our audit in respect of fraud, are to identify
and assess the risks of material misstatement of the financial
statements due to fraud; to obtain sufficient appropriate audit
evidence regarding the assessed risks of material misstatement due
to fraud, through designing and implementing appropriate responses
to those assessed risks; and to respond appropriately to instances
of fraud or suspected fraud identified during the audit. However,
the primary responsibility for the prevention and detection of
fraud rests with both management and those charged with governance
of the Company.
Our approach was as follows:
-- We obtained an understanding of the legal and regulatory
requirements applicable to the Company and considered that the most
significant but not limited to the Companies (Jersey) Law 1991, AIM
Rule 26 and the applicable OTCQB Market standards. We also reviewed
the laws and regulations applicable to the Company that has
indirect impact to the financial statements.
-- We obtained an understanding of how the Company complies with
these requirements by discussions with management and those charged
with governance.
-- We assessed the risk of material misstatement of the
financial statements, including the risk of material misstatement
due to fraud and how it might occur, by holding discussions with
management and those charged with governance.
-- We inquired of management and those charged with governance
as to any known instances of non-compliance or suspected
non-compliance with laws and regulations.
-- We reviewed the compliance reports and minutes of the meeting
to see whether there is non-compliance reported to management and
those charged with governance.
-- Based on this understanding, we designed specific appropriate
audit procedures to identify instances of non-compliance with laws
and regulations. This included making enquiries of management and
those charged with governance and obtaining additional
corroborative evidence as required.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's shareholders as a
body, in accordance with Article 113A of the Companies (Jersey) Law
1991. Our audit work has been undertaken so that we might state to
the Company's shareholders those matters we are required to state
to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
shareholders as a body, for our audit work, for this report, or for
the opinions we have formed.
Jeff Vincent
For and on behalf of Moore Stephens Audit & Assurance
(Jersey) Limited
1 Waverley Place
Union Street
St Helier Jersey
Channel Islands JE4 8SG
8 November 2023
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2023
Year ended Year ended
30 June 30 June
2023 2022
Notes GBP GBP
Net fair value losses on financial
assets held at fair value through
profit or loss 6 (2,718,218) (7,203,727)
Investment income 11,816 -
Finance income 9,096 133
Administrative expenses 4 (253,071) (247,627)
Foreign exchange (losses)/gains (23,893) 23,971
Operating loss (2,974,270) (7,427,250)
Loss before tax (2,974,270) (7,427,250)
Tax 3 - -
Loss after tax (2,974,270) (7,427,250)
Other comprehensive income - -
------------ ------------
Total comprehensive loss for the ( 2,974,270
year ) (7,427,250)
============ ============
Basic earnings per share (pence)
continuing and total operations 5 (2.06) (5.16)
------------ ------------
Diluted earnings per share (pence)
continuing and total operations 5 (2.06) (5.16)
------------ ------------
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
As at As at
30 June 30 June
2023 2022
Notes GBP GBP
ASSETS
Non-current assets
Financial assets held at fair value
through profit or loss 6 4,779,202 7,261,904
-------------- ---------------
4,779,202 7,261,904
-------------- ---------------
Current assets
Other receivables and prepayments 7 44,977 10,146
Cash and cash equivalents 8 478,200 1,003,090
-------------- ---------------
523,177 1,013,236
-------------- ---------------
Total assets 5,302,379 8,275,140
============== ===============
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 9 54,439 52,930
-------------- ---------------
54,439 52,930
-------------- ---------------
Total Liabilities 54,439 52,930
-------------- ---------------
EQUITY
Stated capital 16,652,482 16,652,482
Share based payment reserve 11 469,670 469,670
Retained deficit (11,874,212) (8,899,942)
-------------- ---------------
Total equity 5,247,940 8,222,210
-------------- ---------------
Total liabilities and equity 5,302,379 8,275,140
============== ===============
These financial statements were approved and authorised for issue
by the Board of Directors on 8 November 2023 and were signed on
its behalf by:
D R King
Director
8 November 2023
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2023
Stated Share-based Retained Total
capital payment deficit equity
reserve
GBP GBP GBP GBP
As at 1 July 2021 16,652,482 469,670 (1,472,692) 15,649,460
Comprehensive income
Total Comprehensive
loss for the year ended
30 June 2022 - - (7,427,250) (7,427,250)
As at 30 June 2022 16,652,482 469,670 (8,899,942) 8,222,210
----------- -------------- ------------- ------------
Comprehensive income
Total Comprehensive
loss for the year ended
30 June 2023 - - (2,974,270) (2,974,270)
As at 30 June 2023 16,652,482 469,670 (11,874,212) 5,247,940
----------- -------------- ------------- ------------
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2023
Year ended Year ended
30 June 30 June
2023 2022
Notes GBP GBP
Cash flows from operating activities
Loss for the year (2,974,270) (7,427,250)
Adjustments for:
Net loss on financial assets at fair
value through profit or loss 2,718,218 7,203,727
Movement in other receivables and
prepayments (34,831) (5,704)
Movement in trade and other payables 1,509 13,395
Net cash used in operating activities (289,374) (215,832)
------------- -------------
Cash flows from investing activities
Proceeds from return of capital on
investment 6 299,320 -
Purchase of investments 6 (534,836) -
------------- -------------
Net cash used in investing activities (235,516) -
------------- -------------
Net decrease in cash and cash equivalents (524,890) (215,832)
------------- -------------
Cash and cash equivalents at beginning
of year 1,003,090 1,218,922
Cash and cash equivalents at end
of year 8 478,200 1,003,090
------------- -------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2023
1. GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH INTERNATIONAL
FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION
Westmount Energy Limited (the "Company") operates solely as an energy
investment company. The investment strategy of the Company is to
invest in and provide follow on capital to small and medium sized
companies that have significant growth possibilities.
The Company was incorporated in Jersey on 1 October 1992 under the
Companies (Jersey) Law 1991, as amended, and is a public company
with registered number 53623. The Company is listed on the London
Stock Exchange Alternative Investment Market ("AIM"). On 1 December
2020 the Company commenced cross-trading on the OTCQB Market in
New York, U.S., under the ticker symbol "WMELF".
Basis of Preparation
The financial statements are prepared on a going concern basis in
accordance with International Financial Reporting Standards as adopted
by the European Union ("IFRS") and applicable legal and regulatory
requirements of the Companies (Jersey) Law 1991. The financial statements
have been prepared under the historical cost convention as modified
by the valuation of financial assets held at fair value through
profit or loss.
The Directors are satisfied that the Company has sufficient liquidity
to meet its operational expenditure and obligations from the date
of approval of the financial statements. The Directors monitor the
income and expenditure of the Company and have concluded that, at
the time of approving the financial statements of the Company, there
is a reasonable expectation that the Company has adequate resources
to continue in operational existence for the foreseeable future.
Thus they have adopted the going concern basis of accounting in
preparing the annual financial statements.
Ukraine invasion
During the prior year, Ukraine was invaded by the Russian military.
This had an immediate impact on the global economy due to sanctions
being imposed on Russia. Oil and gas prices have risen significantly
and there have been restrictions on the exportation of goods from
both the Ukraine and Russia. In preparing these financial statements,
these uncertainties have been considered throughout. The Directors
will continue to monitor the situation on a regular basis.
2. ACCOUNTING POLICIES
The significant accounting policies that have been applied in the
preparation of these financial statements are summarised below.
These accounting policies have been used throughout all periods
presented in the financial statements.
New standards, amendments and interpretations to existing standards
that are effective in the current year
There are no standards, amendments to standards or interpretations
that are effective for annual periods beginning on 1 July 2022 that
have a material effect on the nancial statements of the Company
.
New standards, amendments and interpretations to existing standards
that are not yet effective and have not been adopted early by the
Company
At the date of authorisation of these financial statements there
are no other standards that are not yet effective and that would
be expected to have a material impact on the Company in the current
or future reporting periods and on foreseeable future transactions.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and the exercise of judgement
by management while applying the Company's accounting policies in
relation to the value of options issued and derivative financial
instruments, as set out in notes 11, 12 and 13. Derivative financial
instruments, which are embedded in the convertible loan notes issued
by the Company, have been presented separately from the host contract.
The bifurcation of the embedded derivative financial instruments
requires judgement by management to estimate the fair value of the
derivatives on initial recognition of the financial instrument.
These estimates are based on the management's best knowledge of
the events which existed at the date of issue of the financial statements
and at the statement of financial position date however, the actual
results may differ from these estimates.
Financial assets at fair value through profit and loss that are
not listed have been valued in accordance with IFRS using the International
Private Equity and Venture Capital ("IPEVC") Guidelines and information
received from the investment entity. The inputs to value these assets
require significant estimates and judgements to be made by the Directors.
The Directors have considered the sensitivity of the valuations
as detailed in note 12.
Functional and presentation currency
The functional currency of the Company is United Kingdom Pounds
Sterling ("Sterling"), the currency of the primary economic environment
in which the Company operates. The presentation currency of the
Company for accounting purposes is also Sterling.
Foreign currency monetary assets and liabilities are translated
into Sterling at the rate of exchange ruling on the last day of
the Company's financial year. Foreign currency non-monetary items
that are measured at fair value in a foreign currency are translated
into Sterling using the exchange rates at the date when the fair
value was determined. Foreign currency transactions are translated
at the exchange rate ruling on the date of the transaction. Gains
and losses arising on the currency translation are included in administrative
expenses in the Statement of Comprehensive Income in the year in
which they arise.
Financial instruments
Financial assets and financial liabilities are recognised when the
Company becomes party to the contractual provisions of the instrument.
(a) Classification
The Company classifies its financial assets in the following measurement
categories:
* those to be measured subsequently at fair value
(either through other comprehensive income or through
profit or loss); and
- those to be measured at amortised cost.
The classification depends on the entity's business model for managing
the financial assets and the contractual terms of the cash flows.
The Company determines the classification of its financial assets
and financial liabilities at initial recognition.
Financial liabilities which are not financial liabilities held at
fair value through profit or loss are classified as other financial
liabilities and held at amortised cost.
(b) Recognition and measurement
Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable
to the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognised immediately
in the statement of comprehensive income.
Subsequent to initial recognition, financial assets at fair value
through profit or loss are re-measured at fair value. For listed
investments, fair value is determined by reference to stock exchange
quoted market bid prices at the close of business at the end of
the reporting year, without deduction for transaction costs necessary
to realise the asset. For non-listed investments fair value is determined
by using recognised valuation methodologies, in accordance with
the IPEVC Guidelines. Gains or losses arising from changes in the
fair value of financial assets at fair value through profit or loss
are presented in the statement of comprehensive income in the period
in which they arise.
Subsequent measurement of the Company's debt instruments depends
on the model for managing the asset and the cash flow characteristics
of the asset.
The Company measures debt instruments at amortised cost if they
are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured
at amortised cost. The Company recognises any impairment loss on
initial recognition and any subsequent movement in the impairment
provision in the statement of comprehensive income.
Debt instruments which do not represent solely payments of principal
and interest are measured at fair value through profit or loss.
Financial liabilities, which includes borrowings, are measured at
amortised cost using the effective interest method. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability
or, where appropriate, a shorter period, to the net carrying amount
on initial recognition.
Financial liabilities at fair value through profit or loss are re-measured
at fair value. Gains or losses arising from changes in fair value
of financial liabilities at fair value through profit or loss are
presented in the statement of comprehensive income in the period
in which they arise.
(b) Impairment
Under IFRS 9, the impairment model requires the recognition of impairment
provisions based on expected credit losses ("ECL") rather than only
incurred credit losses as was the case under IAS 39. IFRS 9 permits
a simplified approach to trade and other receivables which allows
the Company to recognise the loss allowance at initial recognition
and throughout its life at an amount equal to lifetime ECL. ECL
are a probability-weighted estimate of credit losses. A credit loss
is the difference between the cash flows that are due to an entity
in accordance with the contract and the cash flows that the entity
expects to receive discounted at the original effective interest
rate. ECL consider the amount and timing of payments, thus a credit
loss arises even if the entity expects to be paid in full but later
than when contractually due.
The historical default rate has been considered by the Directors
and there is no history of bad debt. Under IFRS 9 ECL Model as well,
which is forward looking, all factors that could contribute to expected
future losses have been considered by the Directors and there is
no expectation of credit loss in the future. As such the Directors
concluded that there is no material impact on the financial statements.
(c) Derecognition
A financial asset or part of a financial asset is derecognised when
the rights to receive cash flows from the asset have expired and
substantially all risks and rewards of the asset have been transferred.
The Company derecognises a financial liability when the obligation
under the liability is discharged, cancelled or expired.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on
call with banks and cash with broker. For the purpose of the Statement
of Cash Flows, cash and cash equivalents are considered to be all
highly liquid investments with maturity of three months or less
at inception.
Equity, reserves and dividend payments
Ordinary shares are classified as equity. Transaction costs associated
with the issuing of shares are deducted from stated capital. Retained
deficit include all current and prior period retained profits and
losses. Shares are classified as equity when there is no obligation
to transfer cash or other assets.
Income and Expenditure
The income and expenses of the Company are recognised on an accruals
basis in the Statement of Comprehensive Income.
Share options
Equity-settled share-based payment transactions are measured at
the fair value of the goods and services received unless that cannot
be reliably estimated, in which case they are measured at the fair
value of the equity instruments granted. Fair value is measured
at the grant date and is estimated using valuation techniques as
set out in note 11. The fair value is recognised in the Statement
of Comprehensive Income, with a corresponding increase in equity
via the share option account in profit or loss. When options are
exercised, the relevant amount in the share option account is transferred
to stated capital. When options expire, the Company does not subsequently
reverse the amounts already recognised for services received from
the Directors.
3. TAXATION
The Company is subject to income tax at a rate of 0%. The Company
is registered as an International Services Entity under the Goods
and Services Tax (Jersey) Law 2007 and a fee of GBP300 has been
paid, which has been included in administrative expenses.
4. ADMINISTRATIVE EXPENSES
2023 2022
GBP GBP
Administration and consultancy fees 52,871 55,755
Advisory fees 29,779 26,922
Audit fees 19,264 16,636
Directors' fees 60,000 60,000
Legal and professional fees 26,556 20,853
Printing and stationery 23,324 20,720
Registered agent's fees 20,733 22,459
Other expenses 20,544 24,282
253,071 247,627
-------- --------
5. EARNINGS PER SHARE
2023 2022
Basic earnings per share (pence) (2.06) (5.16)
Diluted earnings per share (pence) (2.06) (5.16)
Current year loss
The calculation of diluted earnings per share is not required
this year as the loss for the year is not diluted. The calculations
have been left in for information.
The table below presents information on the profit attributable
to the shareholders and the weighted average number of shares used
in the calculating the basic and diluted earnings per share.
2023 2022
Basic earnings per share GBP GBP
Loss attributable to the shareholders
of the Company (2,974,270) (7,427,250)
Diluted earnings per share
(Loss)/profit attributable to the shareholders
of the Company:
Used in calculating basic earnings per
share (2,974,270) (7,427,250)
Add interest expense - -
Loss attributable to the shareholders
of the Company used in calculating diluted
earnings per share (2,974,270) (7,427,250)
------------ ------------
No. of shares No. of shares
Weighted average number of ordinary shares
used as the denominator in calculating
basic earnings per share 144,051,486 144,051,486
Adjustments for calculating of diluted
earnings per share:
Share options - -
Weighted average number of ordinary shares
and potential ordinary shares used as
the denominator in calculating diluted
earnings per share 144,051,486 144,051,486
-------------- --------------
Share options
The share options have been included in the determination of
the diluted earnings per share to the extent to which they
are dilutive.
6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2023 2022
GBP GBP
Equity investments
Africa Oil Corp ("AOC") 503,317 -
Argos Resources Ltd ("Argos") 3,480 17,400
Cataleya Energy Corporation ("Cataleya") 1,867,404 4,670,296
Eco Atlantic Oil & Gas Ltd ("Eco Atlantic") 216,750 384,750
JHI Associates Inc ("JHI") 2,182,521 2,182,521
Ratio Petroleum Energy Limited Partnership
("Ratio") 5,730 6,937
Total investments 4,779,202 7,261,904
------------------ ---------------------
Net changes in fair value of financial assets designated at
fair value through profit or loss
2023 2022
GBP GBP
Opening cumulative unrealised (loss) /
gain (5,599,369) 1,604,358
Net unrealised movement (2,251,229) (7,203,727)
Cumulative unrealised (loss) / gain on
financial assets at fair value through
profit or loss (7,850,598) (5,599,369)
------------------ ---------------------
2023 2022
GBP GBP
(7,203,727
Unrealised loss (2,251,229) )
Realised loss on return of capital of (466,989) -
financial assets
Net changes in fair value of financial
assets at fair value through profit or
loss (2,718,218) (7,203,727)
-------------------------------------- ---------------------
On 30 June 2023, the fair value of the Company's holding of 300,000
(2022: GBPNil) ordinary fully paid shares in AOC, representing
0.06% (2022: 0.00%) of the issued share capital of the company,
was GBP503,317 (2022: GBPNil) (1.68p per share (2022: GBPNil)).
300,000 shares were purchased in the current year. No shares were
disposed of in the current nor prior years.
On 30 June 2023, the fair value of the Company's holding of 1,000,000
(2022: 1,000,000) ordinary fully paid shares in Argos, representing
0.43% (2022: 0.43%) of the issued share capital of the company,
was GBP3,480 (2022: GBP17,400) (0.35p per share (2022: 1.74p per
share)). No shares were purchased or disposed of in the current
nor prior years.
On 30 June 2023, the fair value of the Company's holding of 1,500,000
(2022: 1,500,000) ordinary fully paid shares in Eco Atlantic, representing
0.44% (2022: 0.44%) of the issued share capital of the
company, was GBP216,750 (2022: GBP384,750) (14.45p per share (2022:
25.65p per share)). No shares were purchased or disposed of in
the current year nor prior years.
On 30 June 2023, the fair value of the Company's holding of 89,653
(2022: 89,653) ordinary fully paid shares in Ratio, representing
0.04% (2022: 0.04%) of the issued share capital of the Company,
was GBP5,730 (2022: GBP6,937) (6.39p per share (2022: 7.74p per
share)). No shares were purchased or disposed of during the current
nor prior years.
On 30 June 2023, the Directors' estimate of the fair value of the
Company's holding of 474,816 (2022: 567,185) shares in Cataleya
was GBP1,867,404 (2022: GBP4,670,296) (GBP3.93 per share (2022:
GBP8.23)). During the year, Cataleya completed a return of capital
transaction for 92,369 shares for a total amount of GBP299,320.
No shares were purchased during the current nor prior years.
On 30 June 2023, the Directors' estimate of the fair value of the
Company's holding of 5,651,270 (2022: 5,651,270) shares in JHI
was GBP 2,182,521 (2022: GBP 2,182,521 ) (GBP0.39 per share (2022:
GBP0.39 per share)). No shares were purchase or disposed of in
the current year.
7. OTHER RECEIVABLES AND PREPAYMENTS 2023 2022
GBP GBP
Accrued income 11,816 -
Prepayments 33,161 10,146
------- -------
44,977 10,146
------- -------
8. CASH AND CASH EQUIVALENTS
2023 2022
GBP GBP
Cash at bank 475,569 465,501
Cash at broker 2,631 537,589
-------- ----------
478,200 1,003,090
-------- ----------
9. TRADE AND OTHER PAYABLES 2023 2022
GBP GBP
Accrued expenses 54,439 52,930
------- -------
10. STATED CAPITAL
Allotted, called up and fully paid: Ordinary Ordinary shares
shares
No. GBP
1 July 2021 144,051,486 16,652,482
Additions - -
------------- ----------------
1 July 2022 144,051,486 16,652,482
Additions - -
------------- ----------------
At 30 June 2023 144,051,486 16,652,482
------------- ----------------
There were no share issues nor redemptions during the year ended
30 June 2023 (2022: GBPNil).
11. SHARE-BASED PAYMENT RESERVE
2023 2022 2017
GBP GBP GBP
At 1 July 469,670 469,670 49,906
Share options expense - - 3,000
At 30 June 469,670 469,670
-------- --------
The number and weighted average exercise price of share options
are as follows:
2023 2023 2022 2022
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
(p) (p)
Outstanding at start
of the year 15.00 2,250,000 11.25 4,500,000
Granted during the - -
year - -
Expired during the
year - - - (2,250,000)
Exercised during the - - - -
year
Outstanding at end
of the year 15.00 2,250,000 15.00 2,250,000
---------- ------------ ---------- ------------
Exercisable at end
of the year 15.00 2,250,000 15.00 2,250,000
---------- ------------ ---------- ------------
No options expired during the year (30 June 2022: 2,250,000).
12. FINANCIAL RISK
The Company's investment activities expose it to a variety of financial
risks: market risk (including foreign exchange risk, price risk
and interest rate risk), credit risk and liquidity risk. The Company's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects
on the Company's financial performance.
a) Market risk
i) Foreign exchange risk
The Company's functional and presentation currency is sterling.
The Company is exposed to currency risk through its investments
in Cataleya, JHI and Ratio, and cash at bank. The Directors have
not hedged this exposure.
Currency exposure as at 30 June: Assets and Assets and
net exposure net exposure
2023 2022
Currency GBP GBP
US Dollars 2,461,455 5,003,663
Canadian Dollars 2,550,667 2,047,350
Israeli Shekel 5,730 6,937
Total 5,017,852 7,057,950
------------------------- -------------------------
If the value of sterling had strengthened by 5% against all of
the currencies, with all other variables held constant at the reporting
date, the equity attributable to equity holders and the loss for
the period would have decreased by GBP250,893 (2022: GBP352,898).
The weakening of sterling by 5% would have an equal but opposite
effect. The calculations are based on the foreign currency denominated
financial assets as at year end and are not representative of the
period as a whole.
ii) Price risk
Price risk is the risk that the fair value of the future cash flows
of a financial instrument will fluctuate due to changes in market
prices. The Company is exposed to price risk on the investments
held by the Company and classified by the Company on the Statement
of Financial Position as at fair value through profit or loss.
To manage its price risk, management closely monitor the activities
of the underlying investments.
The Company's exposure to price risk is as
follows: Fair value
GBP
Fair Value Through Profit or Loss,
as at 30 June 2023 4,779,202
Fair Value Through Profit or Loss,
as at 30 June 2022 7,261,904
With the exception of JHI and Cataleya, the Company's investments
are all publicly traded and listed on either the AIM, OTCQB, Tel
Aviv Stock Exchange or Toronto Stock Exchange. A 30% increase in
market price would decrease the pre-tax loss for the year and increase
the net assets attributable to ordinary shareholders by GBP218,783
(2022: GBP122,726). A 30% reduction in market price would have
increased the pre-tax loss for the year and reduced the net assets
attributable to shareholders by an equal but opposite amount. 30%
represents management's assessment of a reasonably possible change
in the market prices.
A 30% increase in the market price of JHI and Cataleya would decrease
the pre-tax loss for the year and increase the net assets attributable
to ordinary shareholders by GBP1,214,978 (2022: GBP2,055,845).
A 30% reduction in market price would have increased the pre-tax
loss for the year and reduced the net assets attributable to shareholders
by an equal but opposite amount. 30% represents management's assessment
of a reasonably possible change in the market price of JHI and
Cataleya based on the price of share purchases over the last two
years.
iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not exposed to material
interest rate risk.
a) Credit risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet commitments it has entered into with
the Company. The Directors do not believe the Company is subject
to any significant credit risk exposure regarding trade receivables.
At the end of the reporting period, the Company's financial assets
exposed to credit risk amounted to the following: 2023 2022
GBP GBP
Cash and cash equivalents 478,200 1,003,090
-------- ----------
The Company considers that all the above financial assets are not
impaired or past due for each of the reporting dates under review
and are of good credit quality.
b) Liquidity Risk
Liquidity risk is the risk that the Company cannot meet its liabilities
as they fall due. The Company's primary source of liquidity consists
of cash and cash equivalents and those financial assets which are
publicly traded and held at fair value through profit or loss and
which are deemed highly liquid.
The following table details the contractual, undiscounted cash
flows of the Company's financial liabilities
As at 30 June 2023 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Trade and other payables 54,439 - - 54,439
--------------- ------------- ------------ -------
54,439 - - 54,439
--------------- ------------- ------------ -------
As at 30 June 2022 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Trade and other payables 52,930 - - 52,930
52,930 - - 52,930
--------------- ------------- ------------ -------
Capital Management
The Company's objective when managing capital is to safeguard the
Company's ability to continue as a going concern in order to provide
optimum returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce cost of
capital.
In order to maintain or adjust the capital structure, the Company
may issue new shares, return capital to shareholders or sell assets.
The Company does not have any debt nor is the Company subject to
any external capital requirements.
Fair Value Estimation
The Company has classified its financial assets as fair value through
profit or loss and fair value is determined via one of the following
categories:
Level I - An unadjusted quoted price in an active market provides
the most reliable evidence of fair value and is used to measure
fair value whenever available. As required by IFRS 7, the Company
will
not adjust the quoted price for these investments, (even in situations
where it holds a large position and a sale could reasonably impact
the quoted price).
Level II - Inputs are other than unadjusted quoted prices in active
markets, which are either directly or indirectly observable as
of the reporting date, and fair value is determined through the
use of models or other valuation methodologies.
Level III - Inputs are unobservable for the investment and include
situations where there is little, if any, market activity for the
investment. The inputs into the determination of fair value require
significant management judgment or estimation.
The following table shows the classification of the Company's financial
assets:
Level I Level II Level III Total
GBP GBP GBP GBP
At 30 June 2023 729,277 - 4,049,925 4,779,202
At 30 June 2022 409,087 - 6,852,817 7,261,904
The Company has classified quoted investments as Level I, derivative
financial instruments as Level II and unquoted investments as Level
III. The Level III investment is at an early stage of development
and therefore has been valued based on the recent price of the investment.
The Directors have considered market expectations of future performance
of the entity's industry sector, in particular known interest in
the area of current exploration. As such, the Directors consider
that the recent price of the investment in Cataleya fairly reflects
the value of the investment as at 30 June 2023. Following a recently
completed transaction in JHI the Directors have used this price as
their basis for determining the Company's fair value investment in
JHI. There have been no movements in classifications during the year.
A reconciliation of the movements in Level III investments is shown
below:
2023 2022
GBP GBP
At start of the year 6,852,817 13,989,918
Proceeds from return of capital (299,320) -
Change in fair value (2,503,572) (7,137,101)
At end of the year 4,049,925 6,852,817
13. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2023 2022 2023 2022
Directors' Directors' Options Options
fees fees outstanding outstanding
GBP GBP
D R King 20,000 20,000 250,000 250,000
D Corcoran - - 1,250,000 1,250,000
G Walsh 20,000 20,000 500,000 500,000
T O'Gorman 20,000 20,000 250,000 250,000
60,000 60,000 2,250,000 2,250,000
----------- ----------- ------------- -------------
At the year end the Company owed GBP10,000 (2022: GBP10,000) in outstanding
Directors' fees.
During the year consultancy fees of GBP21,469 (2022: GBP23,694) were
paid to D Corcoran.
No options were granted during the current year. No options were
exercised during the current nor prior years.
The shares held by the Directors are declared in the Directors' report.
The Company does not employ any staff except for its Board of Directors.
The Company does not contribute to the pensions or any other long-term
incentive schemes on behalf of its Directors.
14. RELATED PARTIES
Canaccord Genuity as a significant shareholder of the Company is
considered a related party under AIM rules. The Company paid GBP400
in Custody fees to Canaccord Genuity for the year (2022: GBP400).
The shares held by the Directors are declared in the Directors' report.
15. CONTROLLING PARTY
In the opinion of the Directors, the Company does not have a controlling
party.
16. SUBSEQUENT EVENTS
In the opinion of the Directors, there are no significant events
subsequent to the year-end that require adjustment or disclosure
in the financial statements.
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END
FR UPGGCGUPWGMR
(END) Dow Jones Newswires
November 09, 2023 02:00 ET (07:00 GMT)
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