Europa counts on Wressle oil production in 2020

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Wressle well site in North Lincolnshire, subject of a public inquiry in November 2019. Photo: Used with the owner’s consent

The future of Europa Oil & Gas Limited depends on production this year from the Wressle well in north Lincolnshire, the company’s accounts have revealed.

Without it, the company said it risked failing to meet commitments unless it issued shares or sold assets.

The accounts for the year to July 2019 assumed planning permission would be granted for long-term production at Wressle following a public inquiry in November 2019. They also assumed the well would produce this year at expected levels.

The inquiry’s outcome has not yet been announced but it is expected imminently. North Lincolnshire Council withdrew its case before the hearing and the only opposition was from local people.

Europa has a 30% stake in the Wressle licence, PEDL180, and estimated that production from the well would more than double its production revenues.

But evidence from the inquiry revealed that several operations were needed before production could begin. The site operator, Egdon Resources, said there would be upgrades to the site, including a new wellsite platform, oil storage bund, new access and tanker loading areas, site liner and additional security.

The natural flow of oil from the reservoir had also been impaired. This would need to be resolved by either acidisation, proppant squeeze or drilling a sidetrack well, the inquiry was told.

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Planning inspector Phillip Ware, opening the Wressle inquiry on 5 November 2019. Photo: DrillOrDrop

Critical assumption on going concern

The accounts said the “critical assumption” for the going concern of the company was that the inquiry had “a positive outcome and production commences at the forecasted rate in 2020”.

They added:

“In the absence of incremental production from Wressle in 2020 then additional funding by the issuance of shares or sale of assets would be required.

“If additional funding was not available there is a risk that commitment could not be fulfilled, and assets would be relinquished.”

The accounts also said:

“If additional funding cannot be obtained there is a risk that the Group cannot continue to provide financial support to the company”.

Other key points

Europa revealed that its three production oil fields in the East Midlands had yielded an average 91 barrels of oil equivalent per day.

The company sold its 20% stake in PEDL143, known as the Holmwood licence in Surrey, to UKOG for shares worth £300,000. They were valued at £241,000 at the account year end.

It also reported it was the first UK onshore company to use a drain hole jetting technique to increase production at its West Firsby WF6 well. As a result of the operation, Europa said its net production rose from zero to 7 barrels of oil per day, amounting to 8% of the company’s UK production.

Key figures

Revenue: £1,712,000; 2018: £1,635,000

Administrative expenses: £1,144,000; 2018: £690,000

Loss for the year: £1,728,000; 2018: £2,888,000

Dividend: Nil; 2018: nil

Total assets: £4,970,000; 2018: £5,487,000

Total liabilities: £19,816,000; 2018: £18,216,000

Loss from operations: £1,669,000; 2018: £2,888,000

Employees: 4; 2018: 4

Wages and salaries: £209,000; 2018: £177,000

Loan from parent company: £16,517,000; 2018: £14,988,000

Europa interests

100% interest and operator of oil production fields: West Firsby (licence DL003) and Crosby Warren (DL001).

65% interest in production field Whisby-4 oil field (PL199/215)

50% interest and operator of PEDL181

35% interest in Third Energy’s Cloughton gas licence (PEDL343)

30% interest in the Wressle PEDL180 oil licence operated by Egdon Resources

30% interest in Egdon’s Broughton North licence (PEDL182)

25% interest in Ineos’s Hardstoft oil licence (PEDL299)

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