NOSTRA TERRA OIL AND GAS COMPANY PLC

National Storage Mechanism | Additional information

RNS Number : 5465Q

Nostra Terra Oil & Gas Company PLC

31 May 2024

Nostra Terra Oil and Gas Company Plc

("Nostra Terra" or "the Company")

2023 Audited Annual Results

Notice of AGM

Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA, is pleased to announce its final results for the year ended 31 December 2023 (the "Results"). A copy of the Results, along with a Notice of AGM, is being posted to Shareholders and is available on the Company's website, www.ntog.co.uk . The AGM will be held at the offices of Druces LLP at Salisbury House, London Wal, London EC2M 5PS at 10.00 a.m. on 27 June 2024. Extracts from the Results are set out below.

This announcement contains information for the purposes of Article 7 of the EU Regulation 596/2014.

For further information, contact:


Nostra Terra Oil and Gas Company plc Paul Welch, CEO	Tel:	+1 214 234 3306
Beaumont Cornish Limited (Nominated Adviser) James Biddle/ Roland Cornish	Tel:	+44 (0) 20 7628 3396
Novum Securities Limited (Broker) Jon Belliss	Tel:	+44 (0) 207 399 9425

Extracts of the Results are set out below:

Chairman's Report

2023 - A year of reflection and change.

It is my pleasure to introduce Nostra Terra Oil & Gas Company PLC's annual report for the year ending 31 December 2023.

Over the past year, we have seen an escalation in turmoil across the globe, with the start-up of a conflict in the Middle East while the war in Ukraine continued unabated. Against this uncertain macro backdrop, the Company maintained its focus on its US domestic market activities with a renewed emphasis on cost controls and cash flow generation. This was important because oil prices were generally flat for the year while inflation increased our overall cost base.

The Company didn't drill or participate in any new wells in 2023 but did benefit from a favourable ruling from the Texas Railroad Commission on the Fouke Field. The Commission approved the operator's request to increase the field allowable production rate from 82 bopd to 124 bopd, allowing these wells to maintain their high production rates. As a result, the Company negotiated an agreement to review the existing 3D seismic data over the Pine Mills acreage and beyond, some 88,000 acres, looking for new opportunities similar to Fouke. This technical work is now nearing completion, and I'm optimistic about the results and the potential for further development opportunities in and around our Pine Mills asset.

Also, in line with our strategy for 2023, the treatment facilities at Pine Mills were expanded to increase their water handling and injection capabilities. These are mature facilities, and due to the high-oil price environment in 2022, a year in which we saw our highest corporate production levels, some maintenance activity was deferred. This work is almost complete, and I anticipate increasing volumes from the legacy Pine Mills wells in 2024.

Overall, 2023 was a year in which we undertook activities focused on improving our cost structure and technical understanding of our asset base. We also initiated reviews of each asset within the portfolio to determine whether they generated sufficient cash flow to be retained and, if not, what could be done to improve their performance. This work continues today, and I anticipate changes in the asset portfolio in 2024 that will enhance the Company's overall profitability.

The WAFD capital facility provided to Nostra Terra has been a valuable tool for the business, allowing us to undertake a range of activities without shareholder dilution. However, the increase in interest rates has raised the cost of this facility, and we plan to reduce our outstanding balance over the course of 2024. This reduction will allow us to continue reducing our overall operating costs and improve our profitability.

Finally, post-period, Matt Lofgran, our long-serving CEO, stepped down to pursue other activities beyond NTOG. I wish him the best in his future activities. I was pleased that Paul Welch, a current member of the board and someone with a deep understanding of NTOG and the sector, agreed to take up the role. I look forward to working with Paul on the next phase of NTOG's development.

As always, I want to thank you for your continuing support throughout the last year.

Dr Stephen Staley

Non-Executive Chairman

31 May 2024

Chief Executive Officer's Report

In 2023, the Company focused on creating new opportunities from its existing asset base whilst reviewing asset performance. This was done to increase corporate cash flows in a flat commodity price environment with increased costs due to inflation.

The continued success in the Fouke area indicated that there was potentially a significant yet undeveloped opportunity in our Pine Mills asset. This led us to enter into a strategic agreement with our partner in the Fouke wells, providing the Company with access to 80,000 acres (324 km2) of 3D seismic to locate Fouke analogue locations. The first results of this undertaking are now being received. The initial focus of this effort was on the Pine Mills field acreage, where the Company has a 100% working interest. I expect that we will have several locations to develop, subject to additional funding, in the very near term.

In addition to this technical effort, we took an opportunity to invest in the Pine Mills facilities to improve their efficiency and their ability to handle increased fluid volumes in the future. This will allow any future Fouke analogue wells to be tied in immediately after drilling, should they be successful. This is especially important because, as Steve mentioned, our partner successfully increased the field allowable to +120 bopd, making any future Fouke well potentially 50% more productive.

Finally, we initiated an asset performance review to better understand how efficiently the assets were contributing to our cash flow generation and what could be done to improve their performance. This review is still underway today, but early indications suggest that several assets can be significantly improved while others probably cannot. Once concluded, I anticipate that the changes we make in our investment activities will enhance our ability to generate cash flow from our asset base more efficiently.

Revenues for the year were $2,816,000, a 30% decrease from $4,021,000 in 2022. This reflects a combination of a 13% decrease in production sales and a deterioration in the commodity price environment (average $73.38 per barrel sold in 2023 compared to $91.17 in 2022). Gross profit before non-cash items (depreciation, depletion, and amortization) was $1,408,000, a reduction from $2,242,000 in 2022.

United States

All of Nostra Terra ' s operations in the US target conventional reservoirs (i.e., not shale), typically with lower lifting costs and longer-life reserves than unconventional ones.


Area	2023 Production (Barrels sold)	Percentage of Portfolio by sales
East Texas	33,375	87.0%
West Texas	3,347	8.7%
South Texas	1,651	4.3%

East Texas (33- 100% WI)

Nostra Terra ' s core asset is the Pine Mills Field (100% WI), which provides a baseline of low decline production of +/- 70 bopd. In 2023, production from the area accounted for 87% of the Company ' s sales. Production remained flat throughout the year from the core producing area. Within this core, the search for the Fouke analogue wells was initiated in 2023.

Chief Executive Officer ' s Report (continued)

West Texas (50 - 100% WI)

In 2023, production from the area accounted for 8.7% of the Company ' s sales (50-75% WI). During 2023, the Company completed a technical study of the completion operations and found that offset water injection had created a series of high-pressured water-filled zones that were frac'd when the Grant East #1 (GE#1) well was completed. The fluid contribution from these zones made the completion of the GE#1 subeconomic and a challenge for the remainder of the locations within the Grant East acreage. As a result, post-period, the Grant East lease was not renewed for another year.

South Texas (100% WI)

The Caballos Creek asset, comprising two leases, did not perform well in 2023. Numerous equipment and technical issues caused problems, and after a detailed review of the operations, NTOG decided not to invest further in these assets and is now actively looking to divest them .

Senior Lending Facility

The facility is currently close to its maximum level of US$4,250,000. As Steve mentioned , the cost of this facility has increased as interest rates have risen, and it's the desire of the BOD to decrease the cost of this facility throughout 2024 with a reduction in the facility amount and a forecast decrease in interest rates. The facility is a valuable tool for our business , but with the change in interest rates , its costs are higher than I would like . T he planned reduction in size will free up cash in future periods that can be inves ted more efficiently into the assets.

Outlook

The Company intends to focus on reducing costs and generating cash flow from its existing asset base . Additionally, we intend to complete our technical studies and asset reviews and take the appropriate actions to improve the performance of our assets. Finally, we intend to reduce the Company ' s debt levels, further reducing our operating costs, with any cash surplus being used to grow our production volumes efficiently .

I'm very grateful for the warm reception that I've received from our shareholders since my arrival. It's been much appreciated. On behalf of the entire team at Nostra Terra, I want to thank you for your support, and I look forward to delivering value to everyone in the future.

Paul Welch

Chief Executive Officer

31 May 2024

Consolidated Income Statement

For the year ended 31 December 2023


		2023	2022
	Notes	$'000	$'000
Continuing operations

REVENUE		2,816	4,021
COST OF SALES
Production costs		(1,408)	(1,779)
Exploration		-	-
Well impairment		-	(897)
Depletion, depreciation, amortisation		(617)	(539)
Total cost of sales		(2,025)	(3,215)

GROSS PROFIT		791	806

Share based payment		(41)	(156)
Administrative expenses		(870)	(1,074)
Foreign exchange (loss) / gain		(6)	26

OPERATING LOSS	7	(126)	(398)

Finance costs	5	(368)	(199)
Other income	6	22	51

LOSS BEFORE TAX		(472)	(546)

Income tax	8	-	-

LOSS FOR THE YEAR		(472)	(546)
ATTRIBUTABLE TO:
Owners of the company		(472)	(546)

EARNINGS PER SHARE
Continued operations
Basic & diluted (cents per share)	10	(0.06)	(0.07)

The accompanying accounting policies and notes are an integral part of these financial statement

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2023


	2023	2022
	$'000	$'000
LOSS FOR THE PERIOD	(472)	(546)

OTHER COMPREHENSIVE INCOME:

Currency translation differences	-	-
Total comprehensive income for the year	(472)	(546)

TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO:
Owners of the company	(472)	(546)

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

Consolidated Statement of Financial Position

As at 31 December 2023


		2023	2022
	Notes	$'000	$'000

ASSETS
NON-CURRENT ASSETS
Intangible assets	11	2,389	2,224
Property, plant and equipment, Oil and gas assets	12	1,230	1,308
Total non-current assets		3,619	3,532

CURRENT ASSETS
Trade and other receivables	15	548	558
Deposits and prepayments		28	66
Cash and cash equivalents	16	26	132
Total current assets		602	756

LIABILITIES
CURRENT LIABILITIES
Trade and other payables	17	924	1,051
Borrowings	18	110	94
Lease liabilities	13	-	-
Total current liabilities		1,034	1,145

NET CURRENT LIABILITIES		(432)	(389)

NON-CURRENT LIABILITIES
Decommissioning liabilities	17	382	340
Borrowings	18	4,319	3,886
Lease liabilities	13	-	-
Total non-current liabilities		4,701	4,226

NET LIABILITIES		(1,514)	(1,083)

EQUITY
Share capital	19	8,142	8,142
Share premium		22,115	22,115
Share based payment reserve		464	423
Translation reserve		(676)	(676)
Retained losses		(31,559)	(31,087)
Total equity		(1,514)	(1,083)

The financial statements were approved and authorised for issue by the Board of Directors on 31 May 2024 and were signed on its behalf by:

Paul Welch

Director

Company registration number: 05338258

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

Company Statement of Financial Position

As at 31 December 2023


		2023	2022
	Notes	$'000	$'000

ASSETS
NON-CURRENT ASSETS
Fixed asset investments	14	-	-
Intangible assets	11	263	305
Property, plant and equipment, Oil and gas assets	12	130	144
Total non-current assets		393	449

CURRENT ASSETS
Trade and other receivables	15	24	22
Cash and cash equivalents	16	3	17
Total current assets		27	39

LIABILITIES
CURRENT LIABILITIES
Trade and other payables	17	3,802	2,842
Borrowings	18	110	94
Total current liabilities		3,912	2,936

NET CURRENT LIABILITIES		(3,885)	(2,897)

NON-CURRENT LIABILITIES
Decommissioning liabilities	17	30	22
Borrowings	18	72	130
Total non-current liabilities		102	152

NET LIABILITIES		(3,594)	(2,600)

EQUITY
Share capital	19	8,142	8,142
Share premium		22,115	22,115
Share based payment reserve		464	423
Translation reserve		(676)	(676)
Retained losses		(33,639)	(32,604)
Total equity		(3,594)	(2,600)

The parent company's loss for the financial year was $ 1,035,000 (20 22 : $ 1,242,000).

The financial statements were approved and authorised for issue by the Board of Directors on 31 May 2024 and were signed on its behalf by:

Paul Welch

Director

Company registration number: 05338258

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

Consolidated Statement of Changes in Equity

For the year ended 31 December 2023


	Share capital	Deferred shares	Share premium	Share option reserve	Translation reserve	Retained losses	Total
	$'000	$'000	$'000	$'000	$'000	$'000	$'000
As at 1 January 2022	1,538	6,549	21,976	306	(676)	(30,579)	(886)
Loss for the year	-	-	-	-	-	(546)	(546)
Total comprehensive loss for the year	-	-	-	-	-	(546)	(546)
Shares issued	55	-	139	-	-	-	194
Cost of shares issued	-	-	-	-	-	-	-
Exercise of warrants	-	-	-	(38)	-	38	-
Share based payments	-	-	-	155	-	-	155
As at 31 December 2022	1,593	6,549	22,115	423	(676)	(31,087)	(1,083)
Loss for the year	-	-	-	-	-	(472)	(472)
Total comprehensive loss for the year	-	-	-	-	-	(472)	(472)
Shares issued	-	-	-	-	-	-	-
Cost of shares issued	-	-	-	-	-	-	-
Expired options & warrants	-	-	-	-	-	-	-
Share based payments	-	-	-	41	-	-	41
As at 31 December 2023	1,593	6,549	22,115	464	(676)	(31,559)	(1, 514)

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

Share capital is the amount subscribed for shares at nominal value.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of those shares net of share issue expenses. Share issue expenses in the year comprise costs incurred in respect of the issue of new shares.

Share based payment reserve i s a reserve used to recognize the cost and equity associated with the fair value of issues of share options and warrants.

Translation reserves arose due to the adoption of US dollars as the presentational currency at the start of a prior accounting period.

Retained loss represents the cumulative losses of the company attributable to owners of the company.

Company Statement of Changes in Equity

For the year ended 31 December 2023


	Share capital	Deferred shares	Share premium	Share option reserve	Translation reserve	Retained losses	Total
	$'000	$'000	$'000	$'000	$'000	$'000	$'000
As at 1 January 2022	1,538	6,549	21,976	306	(676)	(31,400)	(1,707)
Loss for the year	-	-	-	-	-	(1,242)	(1,242)
Total comprehensive loss for the year	-	-	-	-	-	(1,242)	(1,242)
Shares issued	55	-	139	-	-	-	194
Cost of shares issued	-	-	-	-	-	-	-
Exercise of warrants	-	-	-	(38)	-	38	-
Share based payments	-	-	-	155	-	-	155
As at 31 December 2022	1,593	6,549	22,115	423	(676)	(32,604)	(2,600)
Loss for the year	-	-	-	-	-	(1,035)	(1,035)
Total comprehensive loss for the year	-	-	-	-	-	(1,035)	(1,035)
Shares issued	-	-	-	-	-	-	-
Cost of shares issued	-	-	-	-	-	-	-
Expired options & warrants	-	-	-	-	-	-	-
Share based payments	-	-	-	41	-	-	41
As at 31 December 2023	1,593	6,549	22,115	464	(676)	(33,641)	(3,596)

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

Share capital is the amount subscribed for shares at nominal value.

Share based payment reserve i s a reserve used to recognize the cost and equity associated with the fair value of issues of share options and warrants.

Translation reserves arose due to the adoption of US dollars as the presentational currency at the start of a prior accounting period.

Retained loss represents the cumulative losses of the company attributable to owners of the company.

Consolidated and Company Statement of Cash Flows

For the year ended 31 December 2023


	GROUP		COMPANY
	2023	2022	2023	2022
	$'000	$ ' 000	$'000	$ ' 000

LOSS FOR THE YEAR	(473)	(546)	(1,035)	(1,242)
ADJUSTMENTS FOR:
Depreciation	324	299	18	18
Amortisation	251	202	42	40
Depletion	42	38	9	8
Well impairment	-	897	-	-
Foreign exchange	6	26	4	28
Share based payments	41	156	41	156
Other income	(22)	(51)	-	-
Operating cash flows	169	1,021	(921)	(992)

Decrease/(increase) in receivables	19	(211)	(3)	(13)
(Decrease)/increase in payables	(89)	105	947	1,543
(Increase)/decrease in deposits & prepayments	38	(50)	-	-
Interest paid	369	199	17	26

Net cash from operating activities	506	1,064	40	564

Cash flows from investing activities:
Purchase of plant and equipment	(248)	(719)	(4)	(50)
Purchase of intangibles	(416)	(1,318)	-	-
Disposals	2	40	-	-
Increase in decommissioning liabilities	42	38	9	9

Net cash from/(used) in investing activities	(620)	(1,959)	5	(41)

Cash flows from financing activities
Shares issued	-	194	-	194
Costs of shares issued	-	-	-	-
Net borrowing	377	1,003	(42)	(690)
Finance costs	(369)	(199)	(17)	(26)
Lease payments	-	(16)	-	-

Net cash from/ (used) in financing activities	8	982	(59)	(522)

Net (decrease)/increase in cash and cash equivalents	(106)	87	(14)	1
Cash and cash equivalents at the beginning of the year	132	45	17	16
Cash and cash equivalents at the end of the year	26	132	3	17

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

Notes to the Financial Statements

For the year ended 31 December 2023

General Information

Nostra Terra Oil and Gas Company plc (Nostra Terra) is a company incorporated in England and Wales and quoted on the AIM market of the London Stock Exchange. The address of the registered office is disclosed on the company information page of this annual report. The principal activity of the Group is described in the directors' report.

1. Summary of significant accounting policies

The financial statements are presented in United States Dollars, rounded to the nearest $'000, as that is the currency of the primary environment in which the Group operates.

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

These financial statements have been prepared in accordance with UK adopted International Financial Reporting Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) (IFRS) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

Going concern

The financial statements have been prepared on the assumption that the Group is a going concern. When assessing the foreseeable future, the directors have looked at a period of 12 months from the date of approval of this report.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive Officer's report and Directors' report. In addition, note 20 to the financial statements includes the G roup's objectives, policies and processes for managing its capital, its financial risk management objectives and its exposures to credit risk and liquidity risk.

The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group should be able to operate within the level of its current cash resources , however a material uncertainty exists in relation to the Group's ability to repay its liabilities as they become due. We note that as at the balance sheet date, the Group has net current liabilities of $432,000 and net liabilities of $1,514,000.

The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. T hese projections include the proceeds of future fundraising necessary within the next 12 months to meet the Company's and Group's overheads and planned discretionary project expenditures and to maintain the Company and Group as going concerns. Although the Company has been successful in raising finance in the past, there is no assurance that it will obtain adequate finance in the future. This represents a material uncertainty related to events or conditions which may cast significant doubt on the Group's and Company's ability to continue as going concerns and, therefore, that they may be unable to realise their assets and discharge their liabilities in the normal course of business. However, the directors have a reasonable expectation that they will secure additional funding when required to continue meeting corporate overheads and exploration costs for the foreseeable future and therefore the directors believe that the going concern basis is appropriate for the preparation of the financial statements.

After making enquiries, the directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. T hey continue to adopt the going concern basis in preparing the annual report and financial statements , however as noted above a material uncertainty exists which may cast significant doubt on the Group's ability to continue operating as a going concern.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

New standards, amendments and interpretations adopted by the Group and Company

The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1 January 2023. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements:


Standards /interpretations	Application
IAS 1 amendments	Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies
IAS 8 amendments	Changes in Accounting Estimates and Errors: Definition of Accounting estimates
IAS 12 amendments	Deferred Tax related to Assets and Liabilities arising from a Single Transaction
IFRS 17	Insurance Contracts

New standards, amendments and interpretations not yet adopted


Standards /interpretations	Application
IAS 1 amendments	Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current and Non-Current Liabilities with Covenants Date: Effective 1 January 2024
IFRS 16 amendments	Lease Liability in a Sale and Leaseback: Effective 1 January 2024

There are no IFRS's or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company or Group.

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Subsidiaries

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group . The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group 's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group .

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group 's share of the net identifiable assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The Group allocates goodwill to each business segment in each country in which it operates.

Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimated of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried art a revalued amount in which case the reversal of impairment loss is treated a revaluation increase.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Property, plant and equipment

Tangible non-current assets are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life:

Plant and machinery - over 7 years

The assets' residual values and useful economic lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable value. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within other (losses) or gains in the income statement. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

Investments

Investments are stated at cost less provision for any impairment value.

Cash and cash equivalents

Included in the statement of financial position comprise cash at bank and in hand and other short-term highly liquid investments with original maturities of three months or less.

For the purposes of the statement of cash flows , cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired.

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Borrowings

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

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Functional currency translation

(i) Functional and presentation currency

Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the entity operates (the functional currency), which is mainly United States Dollars (US$). The financial statements are presented in United States Dollars (US$), which is the Group 's presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the presentational currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

(iii) Group Companies

All consolidated entities are presented in US$ and so no translation is required on consolidation.

Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differed from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The entity's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Deferred tax

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

The carrying amount of deferred tax is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited directly to equity; in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Financial instruments

Financial assets and financial liabilities are initially classified as measured at amortised cost, fair value through other comprehensive income, or fair value through profit and loss when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows expire, or the Group no longer retains the significant risks or rewards of ownership of the financial asset. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires.

Financial assets are classified dependent on the Group 's business model for managing the financial and the cash flow characteristics of the asset. Financial liabilities are classified and measured at amortised cost except for trading liabilities, or where designated at original recognition to achieve more relevant presentation. The Group classifies its financial assets and liabilities into the following categories:

Financial assets at amortised cost

The Group 's financial assets at amortised cost comprise trade and other receivables. These represent debt instruments with fixed or determinable payments that represent principal or interest and where the intention is to hold to collect these contractual cash flows. They are initially recognised at fair value, included in current and non-current assets, depending on the nature of the transaction, and are subsequently measured at amortised cost using the effective interest method less any provision for impairment.

Financial liabilities at amortised cost

Financial liabilities at amortised cost comprise finance lease obligations and trade and other payables. They are classified as current and non-current liabilities depending on the nature of the transaction, are subsequently measured at amortised cost using the effective interest method.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Financial instruments (continued)

Financial assets at fair value through profit and loss

The Group holds a derivative against the price of oil held for operation purposes. These are recognised and measured at fair value using the most recent available market price with gains and losses recognised immediately in the profit and loss.

The fair value measurement of the Group 's financial and non- financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy').

Level 1 Quoted prices in active markets

Level 2 Observable direct or indirect inputs other than Level 1 inputs

Level 3 Inputs that are not based on observable market data

The Group measures financial instruments relating to platform holdings at fair value using Level 1.

The Company provides financial guarantees to licensed banks for credit facilities extended to a subsidiary company. The fair value of such financial guarantees is not expected to be significantly different as the probability of the subsidiary company defaulting on the credit lines is remote.

Impairment of trade and other receivables

In accordance with IFRS 9 an expected loss provisioning model is used to calculate an impairment provision. We have implemented the IFRS 9 simplified approach to measuring expected credit losses arising from trade and other receivables, being a lifetime expected credit loss. This is calculated based on an evaluation of our historic experience plus an adjustment based on our judgement of whether this historic experience is likely reflective of our view of the future at the balance sheet date. In the previous year the incurred loss model is used to calculate the impairment provision.

Oil and gas assets

The Group applies the successful efforts method of accounting for oil and gas assets and has adopted IFRS 6 Exploration for and evaluation of mineral resources.

Exploration and evaluation ("E&E") assets

Under the successful efforts method of accounting, all licence acquisition, exploration and appraisal costs are initially capitalised in well, field or specific exploration cost centres as appropriate, pending determination. Expenditure incurred during the various exploration and appraisal phases is then written off unless commercial reserves have been established or the determination process has not been completed.

Pre-licence costs

Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income statement as they are incurred.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Exploration and evaluation ("E&E") costs

Costs of E&E are initially capitalised as E&E assets. Payments to acquire the legal right to explore, together with the directly related costs of technical services and studies, seismic acquisition, exploratory drilling and testing are capitalised as intangible E&E assets.

Tangible assets used in E&E activities (such as the Group 's drilling rigs, seismic equipment and other property, plant and equipment used by the company's exploration function) are classified as property, plant and equipment. However, to the extent that such a tangible asset is consumed in developing an intangible E&E asset, the amount reflecting that consumption is recorded as part of the cost of the intangible asset. Such intangible costs include directly attributable overheads, including the depreciation of property, plant and equipment utilised in E&E activities, together with the cost of other materials consumed during the exploration and evaluation phases.

E&E costs are not amortised prior to the conclusion of appraisal activities.

Treatment of E&E assets at conclusion of appraisal activities

Intangible E&E assets relating to each exploration licence/prospect are carried forward until the existence (or otherwise) of commercial reserves has been determined, subject to certain limitations including review for indications of impairment. If commercial reserves are discovered the carrying value, after any impairment loss of the relevant E&E assets, is then reclassified as development and production assets. If, however, commercial reserves are not found, the capitalised costs are charged to expense after conclusion of appraisal activities.

Development and production assets

Development and production assets are accumulated generally on a field-by-field basis and represent the cost of developing the commercial reserves discovered and bringing them into production, together with the E&E expenditures incurred in finding commercial reserves transferred from intangible E&E assets as outlined above.

The cost of development and production assets also includes the cost of acquisitions and purchases of such assets, directly attributable overheads and the cost of recognising provisions for future restoration and decommissioning.

Decommission ing liability

Where a material liability for the removal of production facilities and site restoration at the end of the productive life of the assets exist, a provision for decommissioning liability is recognised. The amount recognised is the present value of estimated future expenditure determined in accordance with local conditions and requirements. An intangible asset of an amount equivalent to the provision is recognised and depreciated on a unit production basis. Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and the associated intangible asset. Period changes in the present value arising from discounting are included in depletion, depreciation and amortisation cost in cost of sales.

Commercial reserves

Commercial reserves are proven and probable oil and gas reserves, which are defined as the estimated quantities of crude oil, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from known reservoirs and which are considered commercially producible.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Depletion, amortisation and impairment of oil and gas assets

All expenditure carried within each field is amortised from the commencement of production on a unit of production basis, which is the ratio of oil and gas production in the period to the estimated quantities of commercial reserves at the end of the period plus the production in the period, on a field-by-field basis. Costs used in the unit of production calculation comprise the net book value of capitalised costs plus the estimated future field development costs to access the related commercial reserves. Changes in the estimates of commercial reserves or future field development costs are dealt with prospectively.

Where there has been a change in economic conditions that indicates a possible impairment in an oil and gas asset, the recoverability of the net book value relating to that field is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future oil and gas prices and future costs. Any impairment identified is charged to the income statement as additional depletion and amortisation. Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.

Depletion, amortisation and impairment of oil and gas assets

Share-based compensation

The fair value of the employee and suppliers' services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting year is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets).

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each statement of financial position date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Share-based compensation (continued)

The fair value of share-based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour and is selected based on past experience, future expectations and benchmarks against peer companies in the industry.

The Group does not operate any cash-settled share-based payments and as such are not affected by the amendments to IFRS 2 - Share-based payments.

Revenue recognition

Revenue comprises the fair value of the consideration received or receivable in relation to the proceeds by the prospects which the company has a working interest in. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group . Revenue is recognised when the oil and gas produced is despatched and received by the customers. The directors consider this the point when the Company's performance obligation is satisfied.

The directors consider that revenue generation is exclusively for oil production in the US and so no further segmentation is required.

Leased assets

The Group as a lessee

A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'.

To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

· the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group

· the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract

· the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use.

Measurement and recognition of leases as a lessee

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

1. Summary of significant accounting policies (continued)

Measurement and recognition of leases as a lessee (continued)

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in trade and other payables.

2. Critical accounting estimates and judgements

The preparation of consolidated financial statements requires the Group to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below:

Impairment of property, plant and equipment

Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is determined based on value in use calculations prepared on the basis of management's assumptions and estimates.

Recoverability of exploration and evaluation costs

E&E assets are assessed for impairment when circumstances suggest that the carrying amount may exceed its recoverable value including decommissioning costs. This assessment involves judgment as to (i) the likely future commerciality of the asset and when such commerciality should be determined, and (ii) future revenues and costs pertaining to the asset in question, and the discount rate to be applied to such revenues and costs for the purpose of deriving a recoverable value.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

2. Critical accounting estimates and judgements (continued)

Share-based payments

Note 1 sets out the Group 's accounting policy on share-based payments, specifically in relation to the share options and warrants that the Company has granted. The key assumptions underlying the fair value of such share-based payments are discussed in note 23. The fair value amounts used by the Group have been derived by external consultants using standard recognised valuation techniques.

3. Segmental analysis

In the opinion of the directors, the Group has one class of business, being the exploitation of hydrocarbon resources.

The Group 's primary reporting format is determined by geographical segment according to the location of the hydrocarbon assets. The Group 's reportable segments under IFRS 8 in the year are as follows:

United Kingdom - being the location of the head office.

US Mid-Continent properties at year end included the following:

· East Texas: 100% working interest in the Pine Mills oilfield

· East Texas: 32.5% working interest in the Cypress farmout area of Pine Mills

· West Texas: 50- 100 % working interest leases located in the Permian Basin

· South Texas: 100% working interest in the Caballos Creek oilfield

The chief operating decision maker's internal report for the year ended 31 December 20 23 is based on the location of the oil properties as disclosed in the below table:


SEGMENTAL RESULTS	US mid-continent 2023 $'000	Head office 2023 $'000	Total 2023 $'000
Revenue	2,816	-	2,816
Operating profit (loss) before depreciation, well impairment, share-based payment charges, restructuring costs and gain (loss) on sale of assets and foreign exchange:	1,470	(974)	496
Depreciation of tangibles	(324)	-	(324)
Amortisation of intangibles	(251)	-	(251)
Share based payments	-	(41)	(41)

Foreign exchange gain	(2)	(4)	(6)
Operating profit/(loss)	893	(1,019)	(126)

Finance expense	(351)	(17)	(368)
Other income	22	-	22
Profit/(loss) before taxation	563	(1,035)	(472)

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

3. Segmental analysis (continued)


SEGMENTAL ASSETS	US mid-continent 2023 $'000	Head office 2023 $'000	Total 2023 $'000
Property, plant and equipment	1,230	-	1,230
Intangible assets	2,389	-	2,389
Cash and cash equivalents	23	3	26
Trade and other receivables	552	24	576
	4,194	27	4,221

The chief operating decision maker's internal report for the year ended 31 December 20 22 is based on the location of the oil properties as disclosed in the below table:


SEGMENTAL RESULTS	US mid-continent 2022 $'000	Head office 2022 $'000	Total 2022 $'000
Revenue	4,021	-	4,021
Operating profit (loss) before depreciation, well impairment, share-based payment charges, restructuring costs and gain (loss) on sale of assets and foreign exchange:	2,217	(1,087)	1,130
Depreciation of tangibles	(299)	-	(299)
Amortisation of intangibles	(202)	-	(202)
Well impairment	(897)	-	(897)
Share based payments	-	(156)	(156)

Foreign exchange gain (loss)	(2)	28	26
Operating profit/(loss)	817	(1,215)	(398)

Finance expense	(172)	(27)	(199)
Other income	51	-	51
Profit/(loss) before taxation	696	(1,242)	(546)

SEGMENTAL ASSETS
Property, plant and equipment	1,308	-	1,308
Intangible assets	2,224	-	2,224
Cash and cash equivalents	115	17	132
Trade and other receivables	602	22	624
	4,249	39	4,288

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

4. Employees and Directors


	2023	2022
	$'000	$'000

Directors' fees	147	127
Directors' remuneration	190	275
Social security costs	13	14
	350	416


	2023	2022
	Number	Number
The average monthly number of employees (including directors)
during the year was as follows:
Directors	4	4

Directors' remuneration

Other than the directors, the Group had no other employees. Total remuneration paid to directors during the year was as listed above.

The director's emoluments and other benefits for the year ended 31 December 2023 is as follows:


	2023	2022
	$'000	$'000

M B Lofgran	190	275

5. Finance expense


	2023	2022
	$'000	$'000

Finance expense	369	199

Finance expense relates to interest charged on borrowings. Further details for which can be found in note 18.

6. Other income


	2023	2022
	$'000	$'000

Other income	22	51
	22	51

Other income relates to sundry income received from operating oil wells in addition to the oil sales .

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

7. Operating loss


	2023	2022
	$'000	$'000
The operating loss the year ended 31 December is stated after
charging/ (crediting)
Depreciation of property, plant, and equipment	324	299
Amortisation of intangibles	251	202
Well impairment	-	897

The analysis of administrative expenses in the consolidated income statement by nature of expense:

Directors' remuneration	190	275
Depreciation on ROU asset	-	-
Social security costs	13	14
Directors' fees	147	127
Travelling and entertainment	9	23
Accountancy fees	82	81
Legal and professional fees	252	218
Auditors' remuneration	22	27
Bad debt costs	-	-
Other expenses	155	309
	870	1,074

8. Income tax


The income tax charge for the year was as follows:	2023	2022
	$'000	$'000

Current tax	-	-
Corporation tax	-	-
Overseas corporation tax	-	-
TOTAL	-	-

Loss before tax	(472)	(546)

Loss on ordinary activities before taxation multiplied by the
standard rate of UK corporation tax of 25% (2022:19%)	(118)	(104)

Effects of:
Non-deductible expenses	10	30
Other tax adjustments	108	74
CURRENT TAX CHARGE	-	-

At 31 December 202 3 , the Company had an estimated excess management expenses to carry forward of $ 6,375,110 (20 22 : $ 5 , 942,883 ). The deferred tax asset at 25% (202 2 : 19%) on these tax losses of $ 1,593,778 (202 2 : $1 ,129,000 ) has not been recognised due to the uncertainty of recovery. The current US corporate tax rate is 21%.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

9. Loss of Parent Company

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was $1,035,000 (20 22 : $ 1, 242,000 ).

10. Earnings per share

The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue during the year. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group had two classes of dilutive potential ordinary shares, being those share options granted to employees and suppliers where the exercise price is less than the average market price of the Group 's ordinary shares during the year, and warrants granted to directors and one former adviser.

Details of the adjusted earnings per share are set out below:


	2023	2022
GROUP

Loss attributable to ordinary shareholders ($'000)	(472)	(546)

Weighted average number of shares	746,520,534	732,742,452

CONTINUED OPERATIONS: BASIC AND DILUTED EPS - LOSS (cents)	(0.06)	(0.07)

The diluted loss per share is the same as the basic loss per share as the loss for the year has an antidilutive e ffect.


	2023	2022
	$'000	$'000
Gross profit before depreciation, depletion, amortisation and impairment	1,408	2,242
EPS on gross profit before depreciation, depletion, amortisation and impairment (cents)	0.19	0.30

RECONCILIATION FROM GROSS PROFIT TO GROSS PROFIT BEFORE DEPLETION, DEPRECIATION, AMORTISATION AND IMPAIRMENT

Gross profit	791	806
ADD BACK:
Exploration	-	-
Well impairment	-	897
Depletion, depreciation and amortisation	617	539

Gross profit before depletion, depreciation, amortisation and impairment	1,408	2,242

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

11. Intangible assets


GROUP	Licences $'000	Exploration & evaluation assets $'000	Development & production assets $'000	Total $'000
COST
At 1 January 2022	524	1,949	2,973	5,446
Additions	-	-	1,319	1,319
Disposals	-	(10)	-	(10)

At 31 December 2022	524	1,939	4,292	6,755
Additions	-	-	416	416
Disposals	-	-	-	-

At 31 December 2023	524	1,939	4,708	7,171

PROVISION
At 1 January 2022	524	1,939	969	3,432
Charge for the year	-	-	202	202
Impairment	-	-	897	897
Disposals	-	-	-	-

At 31 December 2022	524	1,939	2,068	4,531
Charge for the year	-	-	251	251
Impairment	-	-	-	-
Disposals	-	-	-	-

At 31 December 2023	524	1,939	2,319	4,782

CARRYING VALUE	-	-	2,389	2,389
At 31 December 2023

At 31 December 2022	-	-	2,224	2,224

The G roup assesses at each reporting date whether there is an indication that the intangible assets may be impaired, by considering the net present value of discounted cash flows forecasts. If an indication exists an impairment review is carried out by reference to available engineering information. At the year -end, $ nil (20 22 : $ 897,000 ) was provided for the well at Grant East #1 .

Amortisation, impairment charges and any profit or loss on disposal of the capitalised intangible costs is included within cost of sales in the consolidated income statement.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

11. Intangible assets (continued)


COMPANY	Development & production assets $'000	Total $'000
COST
At 1 January 2022	398	398
Additions	-	-
Disposals	-	-

At 31 December 2022	398	398
Additions	-	-
Disposals	-	-

At 31 December 2023	398	398

PROVISION
At 1 January 2022	53	53
Charge for the year	40	40
Impairment	-	-
Disposals	-	-

At 31 December 2022	93	93
Charge for the year	42	42
Impairment	-	-
Disposals	-	-

At 31 December 2023	135	135

CARRYING VALUE	263	263
At 31 December 2023

At 31 December 2022	305	305

The Company assesses at each reporting date whether there is an indication that the intangible assets may be impaired, by considering the net present value of discounted cash flows forecasts. If an indication exists an impairment review is carried out by reference to available engineering information. At the year -end, $nil (20 22 : $ nil ) was provided.

Amortisation, impairment charges and any profit or loss on disposal of the capitalised intangible costs is included within cost of sales in the consolidated income statement.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

12. Property, plant and equipment


GROUP	Office space - right of use $'000	Plant & equipment - oil and gas assets $'000	Total $'000
COST
At 1 January 2022	48	1,568	1,616
Additions	-	719	719
Disposals	-	(30)	(30)

At 31 December 2022	48	2,257	2,305
Additions	-	248	248
Disposals	-	(2)	(2)

At 31 December 2023	48	2,503	2,551

DEPRECIATION
At 1 January 2022	48	650	698
Charge for the year	-	299	299
Disposals	-	-	-

At 31 December 2022	48	949	997
Charge for the year	-	324	324
Disposals	-	-	-

At 31 December 2023	48	1,273	1,321

CARRYING VALUE
At 31 December 2023	-	1,230	1,230

At 31 December 2022	-	1,308	1,308

Depreciation charges are included within cost of sales in the Consolidated Income Statement.

In addition, the directors are of the opinion that no impairment should be provided.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

12. Property, plant and equipment (continued)


COMPANY	Plant & equipment - oil and gas assets $'000	Total $'000
COST
At 1 January 2022	128	128
Additions	50	50
Disposals	-	-

At 31 December 2022	178	178
Additions	4	4
Disposals	-	-

At 31 December 2023	182	182

DEPRECIATION
At 1 January 2022	16	16
Charge for the year	18	18
Disposals	-	-

At 31 December 2022	34	34
Charge for the year	18	18
Disposals	-	-

At 31 December 2023	52	52

CARRYING VALUE
At 31 December 2023	130	130

At 31 December 2022	144	144

Depreciation charges are included within cost of sales in the Consolidated Income Statement.

In addition, the directors are of the opinion that no impairment should be provided.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

13. Leases

Lease liabilities are presented in the statement of financial position as follows:


	2023	2022
	$'000	$'000

Current - within 1 year	-	-

Non-current - within 1 - 2 years	-	-
	-	-

The Group has a lease for the office space in Dallas, Texas, USA. T he Company has entered into short-term lease effective from 1 February 2023 and is annually renewed. The Group does not hold any other office leases.

14. Fixed Asset Investments


COMPANY	Investment in subsidiaries $'000	Loans to subsidiaries $'000	Total $'000
COST
At 1 January 2022	1	15,434	15,435
Additions	-	-	-
Reductions	-	-	-

At 31 December 2022	1	15,434	15,435
Additions	-	-	-
Disposals	-	-	-

At 31 December 2023	1	15,434	15,435

PROVISON
At 1 January 2022	1	(15,434)	(15,435)
Charge for the year	-	-	-
Reductions	-	-	-

At 31 December 2022	1	(15,434)	(15,435)
Charge for the year

At 31 December 2023	1	(15,434)	(15,435)

CARRYING VALUE
At 31 December 2023	-	-	-

At 31 December 2022	-	-	-

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

14. Fixed Asset Investments (continued)

In the opinion of the directors, the aggregate value of the Company 's investment in subsidiary undertakings is not less than the amount included in the statement of financial position.

Historically, loans to participating interests are reported as in increase in the Company's investment in the joint venture but have been provided for. As the Group acquired 100% shareholding in the joint venture in 2017 this balance had been transferred to loan to subs idiaries .

The details of the subsidiaries held at 31 December 2023 are as set out below:


	Shareholding	Country of incorporation	Nature of business
New Horizon Energy 1 LLC (NHE)	100%	USA	Oil & gas exploration
Buccaneer Operating, LLC (Buccaneer)	100%	USA	Oil & gas exploration

15. Trade and other receivables


	GROUP		COMPANY
	2023	2022	2023	2022
	$'000	$'000	$'000	$'000
CURRENT
Trade and other receivables	143	52	-	-
Other taxes and receivables	405	506	24	22
	548	558	24	22

The directors consider the carrying value of the receivables to approximate their fair value .

16. Cash and cash equivalents


	GROUP		COMPANY
	2023	2022	2023	2022
	$'000	$'000	$'000	$'000

Bank current accounts	26	132	3	17

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

17. Trade and other payables


	GROUP		COMPANY
	2023	2022	2023	2022
	$'000	$'000	$'000	$'000
CURRENT
Trade payables	779	777	3,702	2,771
Accruals and deferred income	86	273	52	70
Other taxes payables	3	1	3	1
Other payables	56	-	45	-
	924	1,051	3,802	2,842

Decommissioning liability	382	340	30	22

Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going expenses. The directors consider that the carrying amount of trade and other payables approximates their fair value.

Included in trade payables is the d ecommissioning liability , this has been calculated at a discount rate of 10% and an inflation factor of 3%. This is comparable to the Group's options at the time of the well in-servic e dates .

18. Financial liabilities - borrowing


	GROUP		COMPANY
Maturity of the borrowings is as follows:	2023	2022	2023	2022
	$'000	$'000	$'000	$'000
Repayable within one year
Bank loan	-	-	-	-
Other loans	110	94	110	94
Repayable after one year
Bank loan	4,247	3,756	-	-
Other loans	72	130	72	130
	4,429	3,980	182	224

Borrowings include a facility where the loans are secured against the Group 's interest in its assets. At the year end the outstanding balance was $ 4,247,000 (20 22 : $ 3,756,000 ). Interest is currently charge d for any day per annum at 8.75 %. In September 2021 the facility was extended by three years to 29 January 2025 and the nominal facility size was increased to $10 million. The Borrowing Base has been reduce d to US$4, 2 50,000 based on improved production and cashflow during 202 3 . The size of the Facility and Borrowing Base will be reassessed at least twice yearly. The Board anticipates the Facility and Borrowing Base will increase as the Company's production and reserves increase.

The G roup also has a loan agreement in place with related parties, with a total outstanding balance as at the year- end of $ 182,000 (2 0 22 : $ 224,000 ). Further details can be found in Note 22.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

19. Share capital


Number	Class	Nominal value	2023 $'000	2022 $'000

746 million (2022: 746 million)	Ordinary	0.1	1,593	1,593

4,110 million (2022: 4,110 million)	Deferred	0.098p	6,549	6,549

T here were no share issuance during the year.

20. Risk and sensitivity analysis

The G roup's activities expose it to a variety of financial risks: interest rate risk, liquidity risk, foreign currency risk, capital risk and credit risk. The G roup's activities also expose it to non-financial risks: market, legal and environment risk. The G roup's overall risk management programme focuses on unpredictability and seeks to minimise the potential adverse effects on the Group 's financial performance. The board, on a regular basis, reviews key risks and, where appropriate, actions are taken to mitigate the key risks identified.

Capital risk

The G roup's objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Market risk

The G roup also faces risks in conducting operations in US mid-continent, which include but are not limited to:

· Fluctuations in the global economy could disrupt the Group 's ability to operate its business in the US Mid-Continent and could discourage foreign and local investment and spending, which could adversely affect its production.

Environmental risk

The G roup faces environmental risks in conducting operations in the US Mid-Continent which include but are not limited to:

· If the G roup is found not to be in compliance with applicable laws or regulations, it could be exposed to additional costs, which might hinder the G roup's ability to operate its business.

Credit risk

The G roup's principal financial assets are bank balances and cash, trade and other receivables. The G roup's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

20. Risk and sensitivity analysis (continued)

Volatility of crude oil prices

A material part of the G roup's revenue will be derived from the sale of oil that it expects to produce. A substantial or extended decline in prices for crude oil and refined products could adversely affect the G roup's revenues, cash flows, profitability and ability to finance its planned capital expenditure. West Texas Intermediate ("WTI") oil prices ranged from $70.25 to $89.43 in 20 23 and $ 73.17 to $ 120.93 in 20 22 . The G roup had no hedging activity during 202 3 .

Interest rate risk

The G roup does not hedge this risk. At 31 December 2023, t he G roup ha d borrowings of $ 4,429,000 (20 22 : $ 3,980,000 ) , with total interest for the year of $ 369,000 (20 22: $199,000). A 100-basis point change in the rates will increase finance costs by $ 44,000 .

Liquidity risk

The G roup expects to fund its exploration and development programme, as well as its administrative and operating expenses throughout 20 23 , principally using existing working capital and expected proceeds from the sale of future crude oil production. The G roup had a bank balance of approximately $ 25,622 at 31 December 20 23 (2022: $132,000) .

Cash flow risk

The G roup expects to have sufficient working capital to continue operations and to remain cash flow positive through 2023. This will be continuously monitored and reviewed by the directors through the inclusion of regular cash flow forecasts in management reports.

21. Financial commitments

Capital commitments

The G roup had no material capital commitments at the year-end.

22. Related party transactions

Group

No related party transactions other than those highlighted below.

Company

At the year end, the Company owed its subsidiaries $ 3,108,000 (202 2 : $ 2,246,000 ) in respect of intercompany loans that are unsecured and interest-free.

The Company has the following loans outstanding with related parties:

In December 2023, the Company obtained short-term loans from a director totalling $45,000 (2022: $nil) which remains outstanding as of year-end. The loan is unsecured and bears interest free and repayable upon demand .

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

23. Share-based payments

The G roup has a share-ownership compensation scheme for senior executives of the G roup whereby senior executives may be granted options to purchase ordinary shares in the C ompany. The G roup has previously issued warrants to senior executives as a welcome incentive and to third parties as consideration for their services. A share - based payment charge of $ 40,481 (2022: $155,000) for share options was expensed during the year .

Date of grant	At 31.12.22	Granted	Exercised	Expired	At 31.12.23	Exercise price	Exercise/ vesting date
						pence	From	To
Warrants
08/04/20	73,611,000	-	-	(73,611,000)	-	0.60	08/04/20	08/04/23
08/01/21	108,000,000	-	-	(108,000,000)	-	0.85	08/01/21	08/01/23
Options
29/10/14	675,000	-	-	(375,000)	300,000	0.4	29/10/14	28/10/24
04/06/18	9,500,000	-	-	-	9,500,000	5	04/06/18	03/06/25
29/09/20	5,000,000	-	-	-	5,000,000	0.5	29/09/20	29/09/27
29/09/20	5,000,000	-	-	-	5,000,000	0.75	29/09/20	29/09/27
29/09/20	5,000,000	-	-	-	5,000,000	1	29/09/20	29/09/27
29/09/20	733,333	-	-	-	733,333	0.5	29/09/20	29/09/27
29/09/20	733,333	-	-	-	733,333	0.75	29/09/20	29/09/27
29/09/20	733,334	-	-	-	733,334	1	29/09/20	29/09/27
29/09/20	1,666,666	-	-	-	1,666,666	0.5	29/09/20	29/09/27
29/09/20	1,666,667	-	-	-	1,666,667	0.75	29/09/20	29/09/27
29/09/20	1,666,667	-	-	-	1,666,667	1	29/09/20	29/09/27
29/09/20	1,333,333	-	-	-	1,333,333	0.5	29/09/20	29/09/27
29/09/20	1,333,333	-	-	-	1,333,333	0.75	29/09/20	29/09/27
29/09/20	1,333,334	-	-	-	1,333,334	1	29/09/20	29/09/27

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

23. Share-based payments (continued)

The total number of options and warrants outstanding at 31 December 20 23 and 31 December 20 22 are as follows:

Total at 31 December 202 3 : 36,000,000

Total at 31 December 202 2 : 217,986,000

The number of options and warrants outstanding to the directors at the year-end were as follows:


Director	Warrants		Options		Total Warrants & Options
2023	2022	2023	2022	2023	2022

M Lofgran	-	16,000,000	21,300,000	21,6 00,000	21,300,000	37 , 6 00,000
S Staley	-	2,000,000	5,000,000	5,000,000	5,000,000	7 ,000,000
J Stafford	-	-	5,500,000	5,500,000	5,500,000	5,500,000
Total	-	18,000,000	31,800,000	32,100,000	31,800,000	50,100,000

The estimated fair value of the warrants issued in previous years was calculated by applying the Black-Scholes option pricing model. Volatility is based on historic share prices of the Company. The assumptions used in the calculation were as follows (the warrants issued on 8 April 2020 were to subscribers of shares in a fundraising and are not considered to be share based payments) :


Warrants	7 Feb 2017	02 Sep 2020	25 Sep 2020	8 Jan 2021
Share price at grant date	2.5 3 p	0.23p	0.3p	0.53p
Exercise price	2.55p	0.6p	0.35p	0.85p
Option life in years	5 years	2 years	2 years	2 years
Risk free rate	1%	1%	1%	0.5%
Expected volatility	50%	50%	50%	50%
Expected dividend yield	0%	0%	0%	0%
Fair value of option/warrant	1. 08 p	0.01p	0.07p	0.07p
Weighted average remaining life (years)	-	-	-	-

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

23. Share-based payments (continued)


Options	28 Oc t 2014	21 July 2017	21 July 2017	21 July 2017
Share price at grant date	2.65p	1.55p	1.55p	1.55p
Exercise price	0.4p	3p	4.5p	6 p
Option life in years	10 years	5 years	5 years	5 years
Risk free rate	1%	1%	1%	1%
Expected volatility	50%	50%	50%	50%
Expected dividend yield	0%	0%	0%	0%
Fair value of option/warrant	0.13p	0.52p	0. 35 p	0. 25 p
Weighted average remaining life (years)	0.83	-	-	-


Options	4 June 2018 - Directors	29 Sep 2020	29 Sep 2020	29 Sep 2020
Share price at grant date	2.50p	0.38p	0.38p	0.38p
Exercise price	5p	0.5 p	0.75p	1 p
Option life in years	7 years	7 years	7 years	7 years
Risk free rate	1%	1%	1%	1%
Expected volatility	50%	50%	50%	50%
Expected dividend yield	0%	0%	0%	0%
Fair value of option/warrant	1. 85 p	0. 1 6p	0.50p	0.26p
Weighted average remaining life (years)	1.43	3.75	3.75	3.75

Notes to the Financial Statements (continued)

For the year ended 31 December 2023

Contingent l iabilities and g uarantees

The G roup has no contingent liabilities in respect of legal claims arising from the ordinary course of business and it is not anticipated that any material liabilities will arise from contingent liabilities other than those provided for.

Ultimate c ontrolling p arty

The C ompany is quoted on the AIM market of the London Stock Exchange. At the date of the annual report there was no one controlling party.

Events after the reporting period

On 11 January 2024 the Company raised £300,000 (before expenses) through a subscription and placing of 250,000,000 new ordinary shares at a price of 0.12p per share.

After the year end the Group sold the Coleman and Raschke assets for approximately $40,000.

END.

Nominated Adviser

Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated Adviser and is authorised and regulated by the FCA. Beaumont Cornish's responsibilities as the Company's Nominated Adviser, including a responsibility to advise and guide the Company on its responsibilities under the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed solely to the London Stock Exchange. Beaumont Cornish is not acting for and will not be responsible to any other persons for providing protections afforded to customers of Beaumont Cornish nor for advising them in relation to the proposed arrangements described in this announcement or any matter referred to in it.

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END

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