Europa Oil and Gas saw pre tax losses rise markedly to £5.4m, its accounts for the year to July 2020 revealed today.
The loss, which included £4m write-offs following the relinquishment of Irish licences, compared with £0.7m in 2019.
Revenues were down by £0.5m to £1.2m.
But the company predicted a “step-change” in its fortunes when production begins at the Wressle oil site, where it has a 30% stake:
“Our UK production, which is set to dramatically increase once Wressle comes online, provides us with a low risk cash flow generative platform.”
The Wressle site, near Scunthorpe, is due to begin producing oil late this year, after receiving planning permission in January 2020. The initial gross rate has been estimated at 500 barrels of oil per day (bopd).
The accounts said:
“At this rate, Wressle will more than double Europa’s existing UK onshore production to over 200 bopd.”
The break-even price for Wressle oil was US$17.6 per barrel, which is “well below current prices”, Europa said.
Europa’s other fields at West Firsby, Crosby Warren and Whisby-4 in the East Midlands averaged 92 boepd, slightly up on the previous year.
Net cash was up slightly at £0.8m, compared with £0.7m in 2019. Cash balances were down to £0.8m, from £2.9m in 2019. This was enough to fund Europa’s share of the Wressle development, the company said.
But it added:
“In the absence of incremental production from Wressle in 2020 additional funding for the Company would be required, either via the issuance of new shares, the addition of a layer of debt funding or the sale of assets.
“If additional funding were not able to be secured on satisfactory terms, there is a risk that commitments could not be fulfilled, or that assets may be relinquished.”