Governance Information • May 10, 2017
Governance Information
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Annual Report 2010 2016
4
We turned in 2016. We turned from having a major focus on how to survive in this challenging time in the O&G market to focusing on how to create long term value by focusing on technical progress. This change in focus was enabled by our successful equity raising late 2016.
Badger Explorer had one active program in 2016, the Development Program. The Development Program represents a change in strategy for us, where the main diff erence from previous programs is that now we will aim to solve key challenges with the concept rather than building full scale Badger tools. This change in focus is done in order to reduce time to market and enabling us to introduce a commercial service earlier. The challenges are as follows;
In Q2 Statoil approved the fi rst Milestone in the Development Program comprising the concept of the cutting transport. The concept was approved by demonstrating successful transport of both dry and wet cuttings for several hundreds of hours.
For the remaining challenges, small steps have been made throughout the year despite the necessary focus on keeping expenses at a minimum. The work on the ultrasonic transducer must be mentioned specifi cally as this is one of the key enabling technologies to solve several of the Development Program challenges. The ultrasonic transducer was realized in Q1 and has been tested at the University of Glasgow thereafter.
The Badger tool is going to operate in an environment that is somehow known. It is known in the way todays traditional operations interact with it, but somewhat unknown the way the Badger tool is interacting with it in a confi ned cavity. To de-risk the operational performance, we also started designing necessary test equipment to simulate the subsurface environment.
We will continue having a close cooperation with partners and suppliers whose competence is key in solving the challenges at hand. In April 2016 we received a Letter of Intent from Statoil where they express their intent of supporting the program going forward. The negotiations with CNPC-DR are still ongoing. As earlier reported, CNPC-DR confi rmed their intention to join the Development Program already in Q1 2016.
Given a tough 2016, I am proud of what we have achieved and are looking forward to get a good traction in the Development Program where new team members and external partners are a given.
| 2016 | 2015 | |
|---|---|---|
| Selected items from income statement (1000 NOK) | ||
| Total revenues | 66 | 0 |
| Government grants | 1 651 | 6 574 |
| Capitalised development costs | -3 516 | -14 124 |
| Total operating expenses | 6 676 | 12 807 |
| EBIT | -6 611 | -12 807 |
| Net profi t (loss) for the year | -7 056 | -13 257 |
| Profi t (loss) attributable to equity holders of the company | -7 056 | -13 257 |
| Earnings per share (NOK) | -0.38 | -0.72 |
| Selected items from statement of fi nancial position (1000 NOK) | ||
| Capitalised development costs | 149 632 | 147 768 |
| Total non-current assets | 150 043 | 148 255 |
| Total current assets | 940 | 4 216 |
| Total assets | 150 983 | 152 471 |
| Total equity | 58 919 | 66 207 |
| Equity ratio | 39.0 % | 43.4 % |
| Total liabilities | 92 064 | 86 264 |
| Selected items from statement of cash fl ow (1000 NOK) | ||
| Net cash fl ow from operating activities | -8 105 | -12 351 |
| Net cash fl ow from investment activities | -3 516 | -14 124 |
| Net cash fl ow from fi nancing activities | 11 369 | 22 711 |
| Total net changes in cash fl ow | -251 | -3 765 |
| Cash and cash equivalents at end of period | 335 | 586 |
| Average number of employees | 5 | 8 |
No diff erences between the key fi gures and the fi nancial statement
Badger Explorer ASA is a Norwegian public limited company with its headquarters in Stavanger, Norway. The Company's shares are listed on the Oslo Stock Exchange (Oslo Axess list) with the ticker "BXPL".
Badger Explorer ASA continues to further develop the "Badger Explorer", a revolutionary technology for exploration and verifi cation of hydrocarbon prospects, without the risks, cost and complexity of drilling wells with a rig. The Badger Explorer tool acquires exploration data as it drills, and once installed at its target depth, can continue to monitor subsurface parameters to enhance development and production activities.
The Company has a long-term shareholder policy to maximize the shareholders' return on investments over time through a combination of dividends and increase in the share price/value.
BXPL provides its shareholders, Oslo Børs/Oslo Stock Exchange and the fi nancial markets generally (through Oslo Børs'/Oslo Stock Exchange's Distribution Network) with timely and accurate information. Such information takes the form of annual reports, quarterly interim reports, stock exchange notifi cations and investor presentations as applicable. BXPL communicates its long-term potential, including its strategy, value drivers and risk factors, maintains an open and proactive investor relations policy and a best-practice website, and gives presentations regularly in connection with annual and interim results in Oslo and Stavanger, Norway. BXPL has one class of shares and is dedicated to apply equal treatment to all shareholders. Each share carries one vote at the Company's General Meetings.
Financial events 2011 and investor BXPL's dividend policy aims to yield a competitive return on invested capital to the shareholders through a combination of dividends and share price development. The Company has been in the development phase and has not yet reached commercial status, therefore no dividend has so far been proposed.
By year-end, the number of outstanding BXPL shares amounted to 18,537,288, each with a nominal value of NOK 0.125. During 2016, the share price varied between NOK 2.64 (highest) and NOK 0.56 (lowest). The share price was at its highest on 27th April 2016 and at its lowest on 6th December 2016. On the last trading day of 2016 the share price was at NOK 0.78.
Badger Explorer ASA had 890 shareholders on 31st December 2016 (prior to the completion of the private placement announced in Q4 2016), compared to 793 shareholders as of 31st December 2015. Norwegian entities and individuals held 64.0% of the outstanding shares and the 20 largest shareholders held 53.4% of the outstanding shares.
The three largest shareholders were Deutsche Bank AG S/A Prime Brokerage (UK), Invesco Perp EURAN SMLER Comps FD BNY Mellon SA/NV (Belgium) and Gayanova Victoria with their holding 15.3%, 6.6% and 4.2% respectively of the number of outstanding shares. As of 31st December 2016, the 20 largest shareholders held 53.4% of the all outstanding shares. See also note 15.
The table below sets out the 20 largest shareholders on 31st December 2016:
| Name | Holding | Percentage |
|---|---|---|
| DEUTSCHE BANK AG S/A PRIME BROKERAGE | 2,829,997 | 15.27 |
| INVESCO PERP EUR SMA BNY MELLON SA/NV | 1,225,389 | 6.61 |
| GAYANOVA VICTORIA | 778,455 | 4.20 |
| EUROCLEAR BANK S.A. | 662,129 | 3.57 |
| ABN AMRO BANK (LUXEMBOURG) S.A. | 592,900 | 3.20 |
| ARGENTUM FONDSINVEST | 523,145 | 2.82 |
| DALVIN RÅDGIVNING AS | 426,872 | 2.30 |
| MACAMA AS | 355,514 | 1.92 |
| MAX INVEST AS | 300,000 | 1.62 |
| NORDNET BANK AB | 284,295 | 1.53 |
| ÅM KNUT | 242,600 | 1.31 |
| KOVACI RAMADAN | 235,112 | 1.27 |
| DREVDAL KJELL ERIK | 222,600 | 1.20 |
| BNP PARIBAS SECURITIES SERVICES | 220,000 | 1.19 |
| ØSTEBRØD EINAR HÅKON | 200,000 | 1.08 |
| ESPELID KARLSTEIN JOHAN | 170,000 | 0.92 |
| STOKKA SIGMUND | 168,693 | 0.91 |
| THOMAS FEARNLEY, STIFTELSEN | 150,983 | 0.81 |
| ANCHOR SECONDARY 4 AS | 150,982 | 0.81 |
| FAVØR HOLDING AS | 150,982 | 0.81 |
| TOTAL | 9,890,648 | 53.36 |
On 1st January 2016, there were 469,000 share options outstanding under Employee share option program. On 15th March 2016, the Board of Directors of BXPL implemented a new share options program for BXPL employees off ering a total of 190,000 share options at a strike price of NOK 1.80 and NOK 370,000 share options at a strike price of NOK 1.50, corresponding to 3% of all outstanding BXPL shares. Mr. Øystein Larsen was granted 370,000 share options which forfeited due to the resignation from his position as former CEO. Mr. Steinar's Bakke 185,000 share options vested on the date of the publication of the Company's Q4 2015 report. A further 185,000 share options forfeited due to the resignation from his position on 29th February 2016. Upon commencement of the employment, the current BXPL's CEO Mr. Valen was granted 250,000 share options. The previous share options program from 2014 was cancelled. The total number of 440,000 share options held by BXPL employees were outstanding on 31st December 2016. Fully vested and exercisable share options can be exercised between 3 to 10 days after the publication of the Company's Q4 2017 and Q4 2018 reports in 2018 and 2019.
On 22nd August 2016, Mr. Roald Valen took on the position as CEO of BXPL. Upon commencement of the employment, Mr. Valen was granted 250,000 share options in BXPL at a strike price of NOK 2.40 per share. 125,000 options will vest on the date of the publication of the Company's Q4 2017 report. A further 125,000 options will vest on the date of the publication of the Company's Q4 2018 report.
No share options were exercised during 2016.
As of 31st December 2016, the following members of the Company's Board of Directors held BXPL shares:
| Name | Holding | Percentage |
|---|---|---|
| Marcus Hansson through one nominee account and one ordinary account – Skandinaviska Enskilda Banken S.A. Luxembourg and Arctic Securities Oslo |
576,668 | 3.11 |
| Total | 576,668 | 3.11 |
| Name | Shares | Share options |
|---|---|---|
| CEO Roald Valen | 0 | 250,000 |
| CFO Gunnar Dolven through one ordinary account and through Dalvin Rådgivning AS |
434,872 | 0 |
| Total | 434,872 | 250,000 |
BXPL intends to release its quarterly reports for 2017 and aims at holding its quarterly investor presentations on the following dates:
| 23rd May 2017: | Q1 2017 Report |
|---|---|
| 6th September 2017: | H1/Q2 2017 Report |
| 1st November 2017: | Q3 2017 Report |
The Annual General Meeting for the fi scal year 2016 will be held on Wednesday, 31st May, 2017.
Badger Explorer ASA's Board of Directors approved this updated Corporate Governance Policy on 23rd February 2017.
In general, Corporate Governance regulates the responsibilities of the executive personnel and the Board of Directors of Badger Explorer ASA.
Badger Explorer ASA ("BXPL" or "Company") is a Norwegian public limited company, which shares are listed on the Oslo Børs/ Oslo Stock Exchange (Oslo Axess list) and it is therefore subject to the corporate governance requirements as set out in the Norwegian Code of Practice for Corporate Governance. BXPL works according the Norwegian Code of Practice for Corporate Governance dated 30th October 2014 (www.nues.no). Where BXPL does not fully comply with the recommendations, an explanation or comment is given.
Furthermore Oslo Børs/Oslo Stock Exchange prescribes that companies listed on the Oslo Børs/Oslo Stock Exchange must publish a report in their annual report on the company`s corporate governance.
BXPL aims to have eff ective systems in place for communication, monitoring, accountability and incentives that also enhance the market value, corporate profi t, long-term strength, continuity and overall success of the business of BXPL, and strengthen the confi dence amongst its shareholders.
Badger Explorer ASA's Board of Directors approves this Corporate Governance Policy annually, which can also be found on its website (www.bxpl.com) and is included in the annual report.
The Company's basic corporate values are incorporated in the Company's management system. The Board of Directors has implemented ethical guidelines and a corporate social responsibility policy, which are reviewed and re-issued annually.
In the Association BXPL's business is described as follows:
BXPL is developing a revolutionary drilling device for collection and analysis of data with regard to mapping and exploration of hydrocarbon deposits within the oil and gas industry, invest in and develop technology used for drilling, well service and maintenance globally within the oil and gas industry, as well as investments in securities, participation in other companies and activities related thereto.
The Company's objectives and principal strategies are described in the annual report.
The development of the Company's equity up to 31st December 2016 is described in the "Statement of change in equity" in the fi nancial statements of the annual report.
BXPL's dividend policy aims to yield a competitive return on invested capital to the shareholders through a combination of dividends and share price development. Because the Company has been in the development phase and has not yet reached commercial status, no dividend has therefore been proposed.
On 14th June 2016 the Annual General Meeting ("AGM") passed two Board authorizations.
The fi rst proxy grants the Board of Directors mandate to increase the Company's share capital by up to NOK 115,858 through the issuance of up to 926,864 shares of nominal value NOK 0.125. This mandate may be used to issue shares to employees, Directors and others connected with the Company as a part of the Company's share incentive scheme. The shareholder's preferential rights according to the Public Limited Liability Companies Act section 10-4 may be waived. Share issues may also be made against contributions in kind.
The second proxy authorizes the Board of Directors to increase the Company's share capital by up to NOK 231,716 through the issuance of up to 1,853,728 shares of nominal value NOK 0.125 to existing shareholders and external investors in connection with Company's expansion, development and/or strategic acquisition. The shareholder's preferential rights according to the Public Limited Liability Companies Act section 10-4 may be waived. Share issues may also be made against contributions in kind. The authorization is also valid in the event of a merger in accordance with the Public Limited Liability Companies Act Section 13-5 and may also be used when the Company has agreed payment in shares in connection with an acquisition etc.
Both Board authorizations expire at the latest by 30th June 2017.The authorizations are in accordance with Norwegian Code of Practice for Corporate Governance.
BXPL has one class of shares and is dedicated to apply equal treatment to all shareholders.
The decision to waiver the existing shareholders' pre-emption rights in the event of an increase in the share capital must be justifi ed. The Board of Directors will disclose such a justifi cation in the stock exchange notifi cation in connection with the increase in share capital.
If a transaction between the Company and a shareholder of the Company, a shareholder's parent company, a member of the Board of Directors or a member of executive personnel (or related parties to such persons) is considered to be material in accordance with the Norwegian Code of Practice for Corporate Governance, the Board will obtain a valuation from an independent third party. This will not apply if the GM's approval for such transactions is required according to the Norwegian Public Limited Companies Act §3-8.
Board members and the executive personnel shall notify the Board of any material direct or indirect interest in any transaction entered into by BXPL.
The shareholders' pre-emptive rights are exempted because the Company wishes to be able to (i) use share issues for its employees, Directors and others connected with the Company as a part of the Company's share incentive scheme and (ii) issue shares towards certain specifi cally chosen institutional investors or others if required or desired in conjunction with the Company's expansion, development and/or strategic acquisitions.
All BXPL shares carry equal rights and are freely negotiable. Each share represents one vote at the GMs. The nominal value per share amounts to NOK 0.125. There are no restrictions regarding transferability in the Company's Articles of Association.
The shareholders exercise the highest authority in BXPL through GMs.
In 2017 the Annual General Meeting of BXPL will be held on 31st May. The Company's fi nancial calendar has been published in a notice to the Oslo Stock Exchange and is available on BXPL's website. The AGM shall approve the annual accounts, the annual report, distribution of dividend, and otherwise make such resolutions as required under the Corporate Governance Policy and the applicable law.
The Board shall publish notices of GMs and any supporting material, such as the agenda, recommendations of the Nomination Committee, the information about the shareholder's right to propose resolutions in respect of matters to be dealt with by the General Meeting and other documents as set out in the bye-laws of the Company, no later than 21 days prior to the day of the GM, on the Company's website (www.bxpl.com). The Board will also ensure that the distributed notice and all supporting material are suffi ciently detailed. The Board will make reasonable eff orts to enable as many shareholders as possible to attend. The notice shall also include information on the procedure of representation through proxy, as well as a proxy that allows giving separate voting instructions for each matter to be considered by the General Meeting and for each candidate nominated for election. The Company will nominate a person who will be available to vote on the shareholder's behalf if the shareholder has not appointed a proxy.
The Board shall make such notices of General Meetings and the relevant supporting material available through the notifi cation system of Oslo Børs/Oslo Stock Exchange and on the Companys website no later than 21 days prior to the day of the GM. Every shareholder has the right to put matters on the agenda of a General Meeting along with a proposed resolution within the statutory timeframe.
The shareholders may be asked to notify their attendance prior to the GM. The deadline for the notifi cation of attendance for the AGM will be as close to the meeting as possible. Shareholders who are unable to attend may vote by proxy. A proxy form shall be attached to the notice of the GM.
The GM's chairperson shall be independent. The Company's Board and the chairperson of the GM shall ensure that the shareholders vote separately for each candidate nominated for a corporate body.
BXPL will publish the minutes of GMs (alternatively only such resolutions that were not made in accordance with the proposals made in the notice to the GM) through the notifi cation system of Oslo Børs/Oslo Stock Exchange and on its website no later than 15 days after a GM has been held, and will maintain them available for inspection in the Company's offi ces. The Annual General Meeting for the fi scal year 2015 was held in Stavanger on 14th June 2016 where 48.42% of all shares were represented.
The Norwegian Code of Practice for Corporate Governance demands that the Board of Directors as a whole, the members of the Nomination Committee and the Auditor are present at the General Meetings. BXPL considers it suffi cient that only the chairperson of the Board and the Auditor attend GMs.
BXPL's Nomination Committee consists of two to three members, elected by the Company's General Meeting. The majority of the members shall be independent of the Board of Directors and the Company's executive personnel. No more than one member of the Board of Directors shall be member of the Nomination Committee, and should not off er himself for re-election to the Board. The members of the Nomination Committee are elected by the shareholders in a GM for a period of no longer than two years.
The Nomination Committee proposes to the GM candidates for election to the Board. The composition of the Board of Directors should refl ect the provisions of the Company's Corporate Governance Policy, commitment to shareholder return, independence and experience in relevant sectors (technology and business development, fi nancing and accounting, disclosure and regulatory, etc.). The Nomination Committee also proposes the remuneration to be paid to the members of the Board of Directors.
The Nomination Committee's recommendations shall include justifi cation as to how the recommendations take into account the shareholder interests and the Company's requirements. The following information about the proposed candidates, in particular each person's age, education, business experience, term of appointment to the Board (if applicable), ownership interest in the Company, independence, any assignments (other than the proposed Directorship) for the Company and material appointments with other companies and organizations will be disclosed. In the event that the Nomination Committee recommends re-electing current Directors, the recommendation will include information on when the Directors were appointed the Board and their attendance records.
The Nomination Committee shall elect its own chairperson according to the Company's Articles of Association. Meetings of the Nomination Committee shall be convened when deemed necessary by any of its members to adequately fulfi ll its assigned duties. Notice of a meeting shall be issued by the chairperson of the Nomination Committee no later than one week prior to the meeting, unless all members approve a shorter notice period.
The Company will provide information on its website regarding the membership of the Committee and any deadlines for submitting proposals to the Nomination Committee.
The Nomination Committee consists of: Steinar Bakke (chairperson) – elected until AGM in 2018 Richard Urbanski – elected until AGM in 2018 Frode Vaksvik – elected until AGM in 2018
All members of the Nomination Committee are considered independent of the Board of Directors.
The Companys Articles of Association regulate the election of the chairperson of the Nomination Committee. According to §6 of the Articles of Association of Badger Explorer ASA the Nomination Committee elects its own chairperson.
The Norwegian Code of Practice for Corporate Governance requires guidelines regarding the Nomination Committee's duties to be set out by the General Meeting. At BXPL, the Committee itself sets out its duties in accordance with the duties presented in chapter 8 of the Company's Corporate Governance Policy.
BXPL shall be headed by a Board with collective responsibility for the success of the Company.
The Board shall comprise between four and eight Directors according to §5 of BXPL's Articles of Association. Currently the Board consists of four Directors, who have all been elected by the shareholders and are not representatives of BXPL's executive personnel. The members of the Board of Directors are elected for a period of two years.
The members of the Board of Directors are: Marcus Hansson (Chairman) – elected until AGM in 2018 Belinda T. Ingebrigtsen – elected until AGM in 2017 Birte Noer Borrevik - elected until AGM in 2018 David S. Ottesen – re-elected until AGM in 2017
Mr. Hansson was elected as chairman of the Board of Directors by the AGM held on 27th April 2011.
All members of the Company's Board of Directors are considered independent according to the Norwegian Code of Practice for Corporate Governance. Detailed information on the individual Board member can be found in the Company's website (www.bxpl.com) and in the Annual Report.
Marcus Hansson and close associates own a total of 20,616,668 shares which represents a total of 3.11% as of 23rd February 2017.
According to the Norwegian Public Limited Companies Act § 6-35 and the Norwegian Code of Practice for Corporate Governance a company with more than 200 employees is required to elect a corporate assembly. The Company has less than 200 employees and has therefore not yet elected a corporate assembly.
The Board shall ensure that the Company is well organized and that operations are carried out in accordance with applicable laws and regulations, and in accordance with the objects of BXPL as specifi ed in its Articles of Association and guidelines given by the shareholders through resolutions in GMs.
BXPL's Board of Directors has the ultimate responsibility for inter alia the Company's executive personnel, supervision of its activities and the Company's budgets and strategic planning. The Board of Directors produces an annual plan of its work.
To fulfi ll its duties and responsibilities, the Board has full access to the Company's relevant information. The Board shall also consider for example obtaining such advice, opinions and reports from third party advisors as it deems necessary to fulfi ll its responsibilities.
The "Rules of Procedure for the Board of Directors of Badger Explorer ASA and the Relation to CEO" were approved by the Board on 27th April 2016 and were implemented.
The Board of Directors has appointed an Audit Committee. Marcus Hansson is a member of said committee.
The Board of Directors evaluates its own performance and expertise once a year.
The Board of Directors held 5 ordinary Board meetings and 4 extraordinary Board meeting during the fi scal year 2016.
The Norwegian Code of Practice for Corporate Governance requires the Board of Directors to consider appointing a remuneration committee. At BXPL, the Board itself prepares all matters relating to compensation paid to the Company's executive management.
BXPL has implemented internal control and risk management systems appropriate to the size and nature of the Company's activities. The Company's core values, ethical guidelines and the corporate social responsibility policy are incorporated in the internal control and risk management systems.
The Board of Directors carries out an annual review of the control and risk management systems and the Company's most signifi cant exposures.
In the annual report, the Board of Directors describes the main features of the Company's internal control and risk management systems in relation to the Company's fi nancial reporting.
The remuneration of the members of the Board of Directors refl ects the Board's responsibilities, expertise, the committed time and the complexity of the Company's activities.
The Board Members' remuneration (form and amount) will be reviewed annually by the Nomination Committee and is not linked to the Company's performance. It is the Nomination Committee's responsibility to prepare a proposal for the Annual General Meeting regarding the above mentioned remuneration.
At the Annual General Meeting for the fi scal year 2015, held on 14th June 2016, the GM provided the Board with a proxy to enter into agreements with close associates for the period from 14th June 2016 until the next Annual General Meeting to be held in 2017, but in no event longer than until 30th June 2017. The remuneration is limited to NOK 1,500 per hour. The total remuneration for such agreements shall not exceed the amount of NOK 250,000 for the time period set above. Time schedule and detailed specifi cations of duties shall be approved by the Board.
The Board of Directors establishes, as required by law, guidelines for the remuneration of the members of the executive personnel. The AGM will vote on these guidelines which help ensure convergence of the fi nancial interest of the executive personnel and the shareholders.
The guidelines for remuneration of the executive personnel are published in the Annual Report 2016 in note 6.
Performance related remuneration of the Company's executive personnel shall aim for value creation for BXPL's shareholders or the Company's earnings performance. Such arrangements shall encourage performance and be based on quantifi able factors which can be infl uenced by the employee. Performance related remuneration shall be subject to an absolute limit.
As of 23rd February 2017, the executive personnel's holdings of shares and share options are the following:
| Name | Shares | Share options |
|---|---|---|
| Gunnar Dolven through Dalvin Rådgivning AS | 2,834,872 | 0 |
| Roald Valen | 2,400,000 | 250,000 |
| Total | 5,234,872 | 250,000 |
BXPL provides its shareholders, Oslo Børs/Oslo Stock Exchange and the fi nancial markets generally (through Oslo Børs/Oslo Stock Exchanges Distribution Network) with timely and accurate information. Such information takes the form of annual reports, quarterly interim reports, stock exchange notifi cations and investor presentations as applicable. BXPL communicates its long-term potential, including its strategy, value drivers and risk factors, maintains an open and proactive investor relations policy and a best-practice website, and gives presentations regularly in connection with annual and interim results in Oslo and Stavanger, Norway.
The Company's current fi nancial calendar with dates of important events including the Annual General Meeting, publishing of quarterly reports and its presentations, etc. are accessible for all shareholders on www.oslobors.no and on the Company's website www.bxpl.com. Subscription to news about BXPL can be made on the Company's website (www.bxpl.com).
Generally, BXPL, as a company listed on Oslo Børs/Oslo Stock Exchange, discloses all required information as defi ned by law. Certain resolutions and circumstances will in any event be disclosed, including but not limited to Board and GM resolutions regarding dividends, mergers/de-mergers or changes in share capital, issue of warrants, issue of convertible or other loans, any changes in the rights vested in the shares of the Company (or other fi nancial instruments issued by BXPL) and all agreements of material importance that are entered into between the Company and a shareholder, member of the executive personnel, or related parties thereof, or any other company in the Badger Explorer ASA.
An announcement regarding BXPL's share capital and number of votes related thereto shall be made by the end of each month during which changes to any of these have occurred.
BXPL will disclose all material information to all recipients equally in terms of timing and content.
The Company has not implemented any specifi c guidelines on how to act in the event of a takeover bid.
The Company has not yet implemented guidelines in case of a takeover. Any bid will be dealt with by the Board of Directors in accordance with applicable laws and regulations, the Norwegian Code of Practice for Corporate Governance and based on their recommendation the shareholders' approval will be requested.
Under Norwegian law the auditor of the Company (the "Auditor") is elected by the shareholders in a GM. The current Auditor serves until a new auditor has been elected.
The Auditor participates in meeting(s) of the Board that deal with the annual accounts as well as the General Meetings. At these meetings the Auditor reviews any variations in the accounting principles applied, comments on material accounting estimates and issues of special interest to the Auditor, including possible disagreements between the Auditor and the management.
At least once a year the Auditor and the Board of Directors meet without any members of the Company's executive personnel present.
The Auditor presents annually to the Audit Committee/Board of Directors the main features of its plan for the audit of the Company, as well as a review of the Company's internal control procedures.
The Board of Directors established guidelines in respect to the use of the auditor by the Company's executive personnel for services other than the audit.
The remuneration of the Auditor and all details regarding the fees of the audit work and other specifi c assignments are presented at the AGM.
The Company's auditor shall annually submit a written confi rmation that the Auditor still continues to satisfy with the requirements for independence and a summary of all services in addition to audit work that has been undertaken for the Company.
The purpose of this policy is to provide information to all our stakeholders about Badger Explorer ASA's ("BXPL" or "Company") approach to ethical and corporate social responsibility and how we as a Company propose to work towards achieving it. BXPL is committed to enhancing shareholder value in an ethical and socially responsible manner.
By implementing this policy the Company aims to be responsible and an exemplar of good practice. Honesty, integrity and respect for people underpin everything we as employees do, and are the foundation of the Company's business practice. We are judged by how we act and the Company's reputation will be upheld if each one of us acts in accordance with the law and the Company's social responsibility and ethical standards set out herein. The Company's reputation and future success are critically dependent on compliance, not just with the law, but also with high ethical and social standards. A reputation for integrity is a priceless asset. This policy is a further commitment to integrity for all of us and will help to safeguard that asset.
This document applies to staff , Board members, temporary employees, consultants and any person or entity acting on behalf of Badger Explorer ASA. We encourage our business partners to strive for similar performance.
We are committed to continuous improvement in our corporate social and ethical responsibility and the Board of Directors and the Company will therefore review this policy regularly.
This policy was approved by the Board of Directors on 23rd February 2017 and shall apply until revised and re-approved.
BXPL's business information is disclosed accurately, timely and entirely. According to the applicable laws and regulations and stock exchange listing standards, BXPL provides complete and precise accounts in all its periodic fi nancial reports, in its public communication and documents submitted to regulatory authorities and agencies.
No information shall be withheld from the external or internal auditor.
All employees who draw up such documents are expected to apply the utmost care, and caution and will use the applicable accounting standards.
BXPL performs its business in such a manner that customers, partners and suppliers can trust in the Company and competes in a fair and open way.
Corruption diminishes legitimate business activities, destroys reputations and distorts competition. The Company opposes all forms of corruption. Through Company procedures, tight internal control and this policy all employees have to comply with, BXPL acts to prevent corruption within the Company.
Bribery, trading in infl uence, facilitation payments and all forms of corruption are prohibited. BXPL promotes its policy on corruption amongst its business partners, contractors and suppliers.
BXPL complies with all applicable national and international laws and regulations (for example the OECD Guidelines for Multinational Enterprises and the International Chamber of Commerce Rules of Conduct to Combat Extortion and Bribery) with respect to improper payments to local and foreign offi cials.
BXPL opposes inappropriate, inaccurate or careless communications as it can create serious liability and compliance risks for the Company. All employees are required to exercise due care when communicating both internally and externally and particularly when the communication is a written document (including email).
BXPL does not support any political party. An individual employee may become involved politically as a private person without referencing to their relationship with the Company.
BXPL respects the principles of the UN's Universal Declaration of Human Rights and is guided by its provisions in the conduct of the Company's business. The Board of Directors adopted this policy to express the Company's requirements for business practice and personal conduct and to demonstrate the Company's commitment to maintaining a high standard of social responsibility, ethics and integrity.
Relations with employees are based on respect. BXPL is committed to a working environment with mutual trust and where everyone is accountable for their own actions and share responsibility for the performance and reputation of BXPL.
BXPL does not tolerate any kind of discrimination of employees, customers and partners on account of religion, gender, sexual orientation, age, nationality, political views, disability or other circumstances. BXPL does not tolerate unlawful employment discrimination of any kind.
The Company expects all of its employees to treat others they come in contact with through work with respect and courtesy, and to refrain from harassment, discrimination and any other behavior that may be regarded threatening or degrading.
It is everyone's responsibility to create and contribute to a positive working environment for all employees.
Employees of BXPL must not buy sexual services when it might be perceived that they are representing BXPL. Purchasing sexual services may be illegal, and may support human traffi cking. The Company strongly opposes human traffi cking.
BXPL assets are of considerable value, whether fi nancial or physical assets or intellectual property, and may therefore only be used to advance BXPL business purposes and goals. These assets must be secured and protected in order to preserve their value.
All employees are entrusted with Company assets in order to do their jobs, and are personally responsible for safeguarding and using these appropriately. Such assets include buildings and sites, equipment, tools and supplies, communication facilities, funds, accounts, computer programs and data, information, technology, documents, and know-how, patents, trademarks, copyrights, time, and any other resources or property of BXPL.
Employees are responsible for protecting Company assets against waste, loss, damage, misuse, theft, misappropriation or infringement and for using those assets in responsible ways. Use of Company assets without direct relation to BXPL requires the prior authorization of the employee's supervisor.
To protect the Company's legitimate interests and the individual's privacy and integrity, every employee shall apply the utmost care to prevent disclosure of confi dential information. The Company's property or information gained through the employee's position in BXPL may never be used for personal benefi t.
The duty of confi dentiality continues after the termination of the employment.
Individuals acting on behalf of BXPL shall behave objectively and without any kind of favoritism. Companies, organizations or individuals the Company does business with shall not be given any improper advantages.
No employee may work on any matter or participate in any decision in which they, their spouse, partner, close relative or any other person with whom they have close relations has a material direct or indirect fi nancial interest or where there are other circumstances that may undermine the trust in the employee's impartiality or the integrity of their work.
Closely related parties shall not have positions within the Company where one is the other's supervisor without the CEO's prior approval.
No employee may participate through employment, directorship or any other assignment in companies in the same line of business as BXPL without the prior written approval of the CEO or the Chairman of the Board. Members of the Company's Board shall inform the chairman of the Board of their involvement in other companies.
No employee may, directly or indirectly, accept gifts from any of the Company's associates. This rule applies also to ongoing negotiations. If an employee is off ered or may be off ered such a gift, he/she shall immediately contact his/her supervisor, who will decide if the gift will aff ect the employee's independence should it be accepted.
Token gifts in connection with Christmas, anniversaries and the like may be exempted from this rule.
The Company is developing the Badger Explorer, a revolutionary technology for exploration and verifi cation of hydrocarbon prospects, without the risks, cost and complexity of drilling an exploration well with a rig. The Badger Explorer tool acquires exploration data as it drills, and once installed at its target depth, can continue to monitor subsurface parameters to enhance development and production activities.
BXPL is committed to achieving excellence in all business activities, including health, safety and environmental performance. BXPL's overriding goal is to operate safely, in environmentally and socially responsible ways, and thereby:
BXPL aims to provide a safe, secure and healthy working environment for all its employees, contractors and suppliers. We believe that accidents and occupational illnesses and injuries are preventable, and hence apply our eff orts and resources to achieving the goals listed above.
BXPL has adopted the Norwegian "inkluderende arbeidsliv" (equal opportunity rights) scheme, incorporating procedures for an active follow-up on employees' sick leave and cooperating with the Company's health service. During 2016 absence due to sickness in BXPL was 46 days compared to 70 days in 2015.
No injuries or accidents have been reported in 2016. Increased test operations will expose staff to potential risks and more hazardous environments. Recognizing this, pro-active measures and other industry best practice have been implemented, to increase awareness and minimize the probability of accidents or injuries. Continued emphasis and awareness of issues related to health, safety and the environment will ensure that BXPL's systems and processes grow alongside the technical and commercial development.
Responsibility for HSE performance is shared by the Company management and its employees. Supervisors are responsible for ensuring appropriate preventive and mitigating measures are practical, available and used in practice. Employees are also responsible for using such measures and equipment, and identifying areas for improvement.
BXPL owned and operated facilities and equipment operates with the necessary permits, approvals and controls to protect health, safety and the environment. BXPL contractors and other business partners are expected to commit to the same levels of HSE protection as BXPL.
We continually set targets for improvement and agree measures by which we appraise and report performance.
BXPL provides ongoing training to all employees to ensure that our commitment to excellence in HSE management is refl ected throughout the Company. Health, safety and environmental performance are key factors in evaluating and rewarding employees and in selecting contractors.
BXPL is committed to providing a safe and productive work environment for its employees and contract staff . This means ensuring, among other things that the workplace is free from substance abuse; i.e. use of illegal drugs, misuse of legal drugs or other substances, and abuse of alcohol. All employees shall recognize the threat posed by substance abuse and the risks involved with it.
The Board takes on the responsibility for the Company's impact on the environment. It is the responsibility of the Company's management to meet the Company's set environmental goals and to comply with all applicable legislation and regulations.
BXPL aims to reduce the Company's carbon footprint and its impact on the environment through a commitment to continual improvement.
The Badger Explorer tool in operation will reduce the environmental impact of hydrocarbon exploration and the mapping of hydrocarbon resources from two perspectives.
The fi rst is the environmental impact of an operation using the Badger Explorer as compared to a conventional operation. The Badger Explorer requires much less equipment, occupies a smaller footprint, requires fewer people for deployment, and can even be operated un-manned after it is deployed. The environmental impact is therefore much less than conventional operations, and the HSE exposure to personnel is substantially reduced.
Secondly, the Badger Explorer can play an important role in environmental monitoring. By measuring, for example, both formation resistivity and true formation water resistivity while drilling, the Badger can establish a baseline for formation water resistivity. Once deployed to the target depth, these parameters can be monitored continuously. Any changes may be related to contamination of aquifers. Conversely, lack of change in resistivity can demonstrate that
contamination has not occurred. Further, the ability to monitor distributed strain along the length of the cable enables new environmental measurements and monitoring to be performed, such as monitoring for subsurface heave or subsidence. These types of measurement are very diffi cult to obtain with existing conventional technology.
A number of specifi c policies and practices have been established to minimize the Company's environment impact through routine business activities.
Everyone to whom this policy applies shall make themselves familiar with the same and carry out their duties accordingly.
All employees shall without undue delay contact their supervisor, the CEO or the chairman of the Board in the event of ethical doubts, breaches of this policy or when discovering anything illegal or unethical.
Managers shall ensure that this Company policy is communicated to their staff , and shall give advice on how they are to be interpreted. Operations within their department shall be conducted according to this policy.
In 2016 BXPL devoted more focus and attention to the Company's ethical and corporate social responsibility.
2016 was characterized by a high level of development activities; through the systems and process that are currently in place and the Company's emphasis and awareness of issues related to health, safety and the environment, BXPL can to report another year without workplace injuries and accidents. BXPL aims to provide a safe and healthy working environment for all its employees.
The Company established specifi c policies and practices to minimize the environmental impact of the Company's routine business activities:
BXPL will work with and assign more priority to corporate social responsibility in 2017. BXPL aims to keep absence due to sick leave low in 2017. With further emphasis on HSE, the Company works towards another accident and injury free year at BXPL.
The systems and procedures currently in place for "Business Practice", "Personal Conduct", "HSE" and the "Environment" will be assessed on a regular basis to ensure that they align with the Company's technical and commercial development.
Mr. Valen has broad experience form the oil and gas industry. He previously held positions in ABB Robotics, National Oilwell Varco, Robotic Drilling Systems and Zaptec and has knowledge and handson experience of managing and engineering advanced robotic solutions.
Mr. Dolven holds a MBA in Corporate Finance from the Norwegian School of Economics & Business Administration (NHH), Bergen, Norway and a M.Sc. in applied mathematics from the same institution. He has more than 25 years' managerial experience from the fi nancial sector and the oil & gas industry including positions as COO and CEO of SpareBank1 and Sr. Vice President/Director of group planning in Statoil ASA. He has extensive board experience including positions as chairman from several companies.
Mr. Hansson has extensive experience from the fi nancial services sector as a Portfolio Manager and former Stockbroker within Hedge Fund Sales. Currently, Mr. Hansson works as a business developer and London based investor. Previously, Mr. Hansson held a position as Portfolio Manager within the Proprietary Trading Department at Credit Suisse Europe LTD in London investing money for the Arbitrage Strategies group. For more than 10 years Mr. Hansson has also worked as a Stockbroker and Hedge Fund Sales for Carnegie Investment Bank and SEB Enskilda focusing on Long/Short strategies, Special Situations and Risk Arbitrage. Mr. Hansson holds a M.Sc. in Business Administration and Economics from the University of Stockholm.
Mr. Hansson has been a member of the Company's Board since December 2010. He was elected chairman in April 2011.
Having started her career with Statoil in 1980, Ms. Birte N. Borrevik brings experience from roles in Drilling Project management and operational HSE. She currently holds the position of HSE & Operations Manager in Explora Petroleum AS. She also spent 18 years in various roles in BP both in Norway and internationally in the Drilling- and Major project organizations. Ms. Borrevik has a BSc in Petroleum Engineering from the University of Stavanger.
Ms. Borrevik was elected a member of the Company's Board in May 2014.
Mrs. Belinda T. Ingebrigtsen is a senior lawyer in Kluge's real property department. Before joining Kluge, Mrs. Ingebrigtsen worked as an assistant professor at the University of Bergen, and as a deputy judge and an appointed judge at the Stavanger district court. Mrs. Ingebrigtsen works mainly with dispute resolution and litigation within a wide range of areas, and with sale and purchase, leasehold and development of real property.
Mrs. Ingebrigtsen was elected a member of the Company's Board in September 2015.
David S. Ottesen has 34 years of experience from the oil service industry. He was the general manager of Baker Hughes Inteq Scandinavia Region 1993-2000. He also headed Baker Hughes Inteq Eastern and Western Hemisphere 2000-2004. At present he is the CEO of Risavika Havn AS, Stavanger.
Mr. Ottesen has been a member of the Company's Board since May 2013.
Badger Explorer ASA (BXPL) continues to develop the "Badger Explorer", a revolutionary technology for exploration and verifi cation of hydrocarbon prospects, without the risks, cost and complexity of conventional drilling operations. The Badger Explorer tool acquires exploration data as it drills, and once installed at its target depth, the tool can continue to monitor subsurface parameters to enhance development and production activities.
The Badger Explorer idea originated at IRIS in 1999. The Company was established in 2003 and listed on the Oslo Stock Exchange (Oslo Axess list) in 2007.
Badger Explorer ASA's head offi ce is located at Prof. Olav Hanssens vei 15, 4021 Stavanger, Norway and is organized under the laws of Norway.
The main focus during 2016 has been to secure suffi cient funding for the remaining part of the Development Program while keeping a steady progress reducing the technical risk level.
In April 2016 Badger Explorer received a Letter of Intent from Statoil where they express their intent of supporting the program going forward
In July 2016 Statoil approved the fi nal key deliverable of Milestone 1 of the Badger Explorer Development Program.
In December 2016 Badger Explorer secured the fi rst out of two Private Placements enabling a ramp up of the Development Program activities.
Despite the challenging funding situation in 2016, Badger Explorer has had a steady technical progress.
The ongoing Petromaks2 project - high power High Pressure High Temperature [HPHT] Transducers for the drilling and compaction system - passed milestone 1 in Q1 2016. This milestone realized the necessary components and enables the project to start using these components in relevant testing scenarios. Throughout 2016 the project delivered promising results regarding the use of cutting edge piezo-electric materials for transducer design used in the compaction process. The research into a key enabling technology for successful compaction and drilling will continue in Q1 2017.
The work on the drilling solution that will handle drilling in low fl uid formations was scaled up in Q4 2016 where drill-bit design, control system and the utilization of the ultrasonic transducer were included. These are all improvements of an already existing and functional drilling solution that will expand the tool's working range signifi cantly.
Further work on the locomotion was also initiated in Q4 2016. The locomotion of the tool has very few analogs to refer to which means that Badger Explorer over the years have used a broad range of external expertise to understand the challenge in advance of deploying the tool. Several solutions have been evaluated and Badger Explorer has continued working on the most promising ones in second half of 2016. Promising test results mean reduced friction and enhanced propulsion for the tool. In addition, a dedicated test equipment was designed that will be used to qualify the eff ect of the various locomotion solutions.
The Cuttings Transport module was developed in 2016 and the chain based transporting system passed relevant endurance tests including handling dry and wet cuttings in a satisfactory way. Statoil approved the Cuttings Transport test results in Q2 2016.
While the sponsorship program with Statoil has been active through 2016, the negotiations with CNPC-DR are still ongoing. As earlier reported, CNPC-DR confi rmed their intention to join the Badger Explorer Development Program already in Q1 2016. Badger Explorer is expecting to fi nalize the contract with CNPC during 2017.
In December 2016, Badger Explorer conducted a successful private placement (PP1) raising NOK 45 million in gross proceeds securing liquidity for the Company. In addition, a subsequent off ering (SO1) launched after the reporting period raised another NOK 10 million from eligible shareholders. These exercises secure suffi cient funding for the remaining part of the Development Program. The Company has continued to keep expenses for Q4 2016 at a low level.
After the reporting period, Badger Explorer successfully raised further NOK 300 million in gross proceeds in a new private placement (PP2). The subsequent off ering (SO2) for eligible shareholders raised another NOK 30.4 million. The total raised gross proceeds is therefore NOK 385.4 million (PP1+SO1+PP2+SO2). See note 17.
The Badger Explorer Development Program has been formulated to mature and qualify robust solutions for the following components of the Badger Explorer concept:
Drilling
Enhanced ultrasonic drilling in low permeability formations
Cuttings transport
To be able to prove the performance of the selected solutions, Badger Explorer plans to build testing equipment that refl ects the expected operating environments. The most important testing equipment is a subsurface test chamber (STC) that can apply high temperature and high pressure (HTHP) conditions to the tested equipment. With the STC, Badger Explorer will be able to verify expected process behaviour as well as qualifying the engineering solutions at an earlier stage than previously expected.
During 2016, the Company spent NOK 4.493 million (NOK 16.823 million in 2015) on research and development related to the Badger Development Program.
The fi nancial statements of BXPL have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU on 31st December 2016.
Total revenues from operations for BXPL were NOK 65,600 in 2016, compared to no revenue in 2015.
Total operating expenses for BXPL were NOK 6.676 million in 2016, compared to NOK 12.807 million the previous year, which is a decrease of 47.8%. The Company signifi cantly reduced its cost structure in 2016 to improve the liquidity position.
All development costs incurred during 2016 and 2015 were related to the development of the Badger Explorer technology in BXPL. In 2016, BXPL spent NOK 4.493 million on development projects, of which NOK 3.516 million were capitalized, compared to NOK 16.823 million, of which NOK 14.124 million were capitalized in 2015.
The public grants from the RCN and pledged tax deduction from Skattefunn amounted to NOK 5.155 million for 2016 and NOK 8.060 million for 2015. The public grants were deducted from the carrying amount of the capitalized development costs.
Net fi nancial items for BXPL amounted to NOK -445,072 for 2016, compared to NOK -450,308 for 2015. Net fi nancial loss decrease was primarily attributable to fees and fi nancial expense related to the overdraft facility.
Net loss attributable to equity holders of the Company was NOK -7.056 million for 2016, compared to NOK -13.257 million for 2015. Ordinary earnings per share from operations of BXPL amounted to NOK -0.38 in 2016 (NOK -0.72 in 2015).
| Badger Explorer ASA | ||
|---|---|---|
| All fi gures in NOK million at Year End | 2016 | 2015 |
| Total Assets1 | 151.0 | 152.5 |
| Total Equity | 58.9 | 66.2 |
| Equity Ratio | 39.0% | 43.4% |
| Total Intangible Assets2 | 150.0 | 148.2 |
| Share Capital3 | 2.3 | 2.3 |
| Total Liabilities4 | 92.1 | 86.3 |
| Debt fi nancial institutions5 | 6.9 | 6.7 |
| Net Cash Position6 | 0.3 | 0.6 |
Deferred tax assets are not recognised in the statement of fi nancial position as BXPL is in a development phase and is currently generating losses.
BXPL's annual result amounted to a loss of NOK -7.056 million. The Company has no distributable equity. The Board of Directors proposes that the loss is transferred to retained earnings.
Risk management is a critical success factor for BXPL. The Board focuses on risk management and deems it important that the Company maintains the necessary measures to manage controllable risk factors in order to keep these within acceptable limits.
BXPL is exposed to a number of fi nancial and non-fi nancial risks. Financially, the main risk factors are fl uctuations in interest rates and exchange rates, oil price fl uctuations, credit risk and liquidity risk. Non-fi nancial risks include technology risk, competing technologies, market risks, regulatory permits and environmental exposure.
BXPL has implemented internal control and risk management systems appropriate to the size and nature of the Company's activities. The Company's core values, ethical guidelines and the corporate social responsibility policy are incorporated in the internal control and risk management systems.
The Board of Directors carries out an annual review of the control and risk management systems and the Company's most signifi cant exposures.
The Company's fi nancial income and fi nancial costs in the statement of profi t or loss are infl uenced by changes in interest rates as the interest on credit facility with Sparebanken Vest is on a fl oating basis. The Company had NOK 356,671 in interest expense for the overdraft facility in 2016.
The Company's cash reserves of NOK 334,886 are deposited in the Norwegian bank Sparebanken Vest. The main transactions for the Company are in NOK but the Company has suppliers invoicing in USD and GBP. When commercial operations in larger scale commence, a foreign currency exchange risk policy will be introduced.
BXPL only trades with recognised, creditworthy third parties. It is the Company's policy that all customers that wish to trade on credit terms are subject to credit verifi cation procedures. All cash in the Company is deposited in the Norwegian bank Sparebanken Vest. Credit risk is managed through a framework that sets out policies and procedures covering the measurement and management of credit risk.
BXPL monitors its liquidity on a regular basis, and produces rolling liquidity forecasts on a monthly basis in order to identify liquidity requirements in future periods. The target for BXPL's management of liquidity risk is to maintain a liquidity corresponding to its net liquidity requirements for 12 months. The cash position of BXPL at year-end 2016 was NOK 334,886, compared to NOK 585,953 in 2015.
Following the successful launch of the private placement at the end of 2016, the Company's fi nancial and liquidity position has signifi cantly improved. The net proceeds from the Private Placement will be used for further development of the Badger tool and pursue opportunities which can accelerate the commercialization of the Company's patents and knowhow. See note 17 for more details.
The management will continue to focus on effi cient operations, good planning and close monitoring of the liquidity situation and maintaining a clear business development strategy.
Oil and natural gas prices are volatile and subject to fl uctuations and are aff ected by numerous factors beyond the Company's control, including, but not limited to, worldwide economic and political conditions, levels of supply and demand, the policies of OPEC (the Organization of Petroleum Exporting Countries), advances in exploration and development technology, and the availability and exploitation of alternate fuel sources. The petroleum industry´s ability and willingness to invest in new technology and technology companies has historically been closely linked to the price of oil and gas prices. The Company has historically received funding from oil companies in periodic large lump sums. This has changed to smaller milestone based funding in response to the decline in oil and gas prices over the past two years. Should the oil and gas price decline further in the years to come, there might be implications in the Company´s expected funding from the oil companies, which may have a signifi cant negative eff ect on the Company's fi nancial position.
Whilst there may be a recovery in the oil and gas prices, uncertainty related to future price development remains high, and therefore uncertainty with respect to the oil companies´ or other industrial sponsorship of the Company remains high.
The Company's technologies have evolved through the Company´s Prototype Program (2005-2011) and Demonstrator Program (2012-2014). The current Development Program (2015-2019) will focus on four cornerstone technologies for the Badger Explorer Concept, characterized by the following technical risks:
The Development Program does not include the logging sensors nor the power provision system (cable module) as these are evaluated to be engineering tasks secondary to the core technologies. There is a risk that the needed technology solution is not available in the market to an acceptable cost and within the necessary timeline. In-depth tests may also prove the execution more challenging than expected requiring extension of time and cost which could consequently have a material adverse eff ect on the Company's business and fi nancial position.
The Company´s technology is competing with traditional exploration drilling using drill rigs where both are verifying the actual presence of hydrocarbons in a Prospect Resource to classify the Reservoir as Contingent Resource (SPE Petroleum Resource Management System). If the Company's technology is commercialized, there is no guarantee that the Company will take market share from such established competitors. Should the Company be unsuccessful in gaining such market share, this will have a material adverse eff ect on the Company's business and fi nancial results.
The Company has not identifi ed any direct competitors with the same technology and services. There are new technologies for improving seismic and EM operations, which will increase the quality of their services, but these services, are considered complementary to the Company's services. Competitors with similar technology could, however, appear if the Company´s technology and services prove successful. There is a risk that competing solutions could consequently have material adverse eff ect on the Company´s business and fi nancial position.
The Company is operating in the oil and gas industry making it aff ected by the general market movements in the industry.
The Company has successfully developed a tool, which, through the Demonstrator Program (2012-2014), exhibited performance which may not be scalable to target commercial conditions. The Development Program (2015-2019) is scheduled to qualify component technologies critical for such scaling. Extended time or extended funding may be necessary to execute subsurface tests for development of these technologies. Exposure to unforeseen operational problems during such testing may lead to service downtime, unexpectedly high operating costs and/or loss of earnings which could have a material adverse eff ect on the fi nancial position of the Company.
The Company´s operations are subject to numerous national and supra-national, environmental, health and safety laws, treaties and conventions and/or other regulations, including, inter alia, those controlling the discharge of materials into the environment, requiring removal and cleanup of environmental contamination, establishing certifi cation, licensing, health and safety, taxes, labor and training standards or otherwise operations relating to the protection of human health and the environment. The amendment or modifi cation of existing regulations or the adoption of new regulations curtailing or further regulating the Company´s business could have a material adverse eff ect on the Company´s operating results and fi nancial condition. The Company cannot predict the extent to which future earnings or capital expenditures may be aff ected by compliance with such new regulations. In addition, the Company may be subject to signifi cant fi nes, penalties or liabilities if it does not comply with any such existing or future regulations.
The products and services developed by the Company shall undergo strict qualifi cation and certifi cation by international standardization organizations, and shall be certifi ed in accordance with applicable regulations all areas of operation. The Company shall also procure insurance coverage deemed adequate for the Company´s business and operations. Notwithstanding this, there is no guarantee that met qualifi cations, standards, and insurance will be suffi cient in all circumstances.
Pursuant to section 3-3 (a) of the Norwegian Accounting Act, it is confi rmed that the conditions for assuming that BXPL is a going concern are present, and that the fi nancial statements have been prepared on the basis of this assumption. The Company has reported signifi cant doubt about the Company`s ability to continues as a going concern in the previous periods as a result of a very tight liquidity situation. Additional funding was required to carry on the future development of the Badger tool and pay overdue debt. The overdraft facility of NOK 7.5 million with Sparebanken Vest was in breach with the agreed covenants during 2016 and at year end 31st December 2016. The Board assesses that there is not signifi cant uncertainty related to going concern as of today based on the private placement of NOK 385.4 million carried out in Q1 2017, and the further planned subsequent off ering as described in note 17 "Events after the reporting date" in this report.
Good HSE systems and procedures are a precondition for an eff ective and safe working environment. The Board of Directors works continuously with the Company's management to ensure that business is conducted in a responsible manner and with respect for the employees and the environment.
BXPL has adopted the Norwegian "inkluderende arbeidsliv" (equal opportunity rights) scheme, incorporating procedures for an active follow-up on employees' sick leave and cooperating with the Company's health service. During 2016 absence due to sickness in BXPL was 46 days compared to 70 days in 2015.
No injuries or accidents have been reported in 2016. Increased test operations exposed staff to potential risks and more hazardous environments. Recognizing this, pro-active measures and other industry best practice have been implemented, to increase awareness and minimize the probability of accidents or injuries. Continued emphasis and awareness of issues related to health, safety and the environment will ensure that BXPL's systems and processes grow alongside the technical and commercial development.
BXPL is committed to equal opportunity and non-discrimination. BXPL had 4 permanent employees, of which 2 were female employees, for the years ended December 31st, 2016 and 2015, respectively.
In 2016, salaries for male employees averaged NOK 875,895 (compared to NOK 925,310 in 2015). Salaries for female employees averaged NOK 604,710 for 2016 (compared NOK 643,178 in 2015).
Both in 2016 and in 2015, 33% of BXPL's employees were of foreign nationality. All members of BXPL's Executive Management were of Norwegian nationality in 2016.
The Company is dependent upon engaging the best competence available. Competence is sourced without preference for gender, race, religion, political- or sexual inclination.
The Board takes responsibility for the Group's impact on the environment. It is the responsibility of the Company's Management to meet the set environmental goals and to comply with legislation and regulations.
One of the major benefi ts of the Badger Explorer, whether in initial fi eld deployments or as part of the exploration and derisking of a major new deep-water project, will be the reduced environmental impact and HSE exposure, compared to a drilling rig and associated support. From an environmental perspective, signifi cantly less equipment, traffi c and support activities will be required for a Badger deployment. During operation, the tool can be run un-manned, which eliminates a whole range of safety exposures.
BXPL is committed to enhancing shareholder value in an ethical and socially responsible manner. By implementing the CSR Policy and Ethical Guidelines, the Company aims to take responsibility and set an example of good practice. The Board of Directors reviews the policy and the guidelines yearly and adopted the latest versions of the CSR Policy and the Ethical Guidelines on 23rd February 2017. These guidelines are available on the Company's website (www.bxpl.com). The documents apply to staff , Board members, temporary employees, consultants and any person or entity acting on behalf of BXPL.
Corruption diminishes legitimate business activities, destroys reputation and distorts competition. BXPL opposes all forms of corruption and will act to prevent corruption within the Company. The set of ethical guidelines adopted by the Board clearly states the standards of behaviour expected by all BXPL employees. Bribery, trading in infl uence, facilitation payments and all form of corruption are prohibited. BXPL promotes its policy on corruption amongst its business partners, contractors and suppliers.
BXPL complies with all applicable national and international laws and regulations (for example, the OECD Guidelines for Multinational Enterprises and the International Chamber of Commerce Rules of Conduct to Combat Extortion and Bribery) with respect to improper payments to foreign offi cials.
BXPL is also committed to providing a safe, secure and healthy working environment. BXPL's overriding goal is to operate safely, in environmentally and socially responsible ways, and thereby:
The Company believes that accidents and occupational illnesses and injuries are preventable, and hence applies eff orts and resources to achieve the goals listed above. BXPL is proud of its good HSE statistics. During 2015, BXPL did a lot of testing and hands-on development work, without recording any injuries or accidents.
The responsibility for the HSE performance is shared by the Company's management and its employees. Supervisors are responsible for ensuring that appropriate preventive and mitigating measures are practical, available and used in practice. Employees are responsible for using such measures and equipment, and for identifying areas of improvement. BXPL operated facilities and equipment must operate with the necessary permits, approvals and controls to protect health, safety, security and the environment.
The Company provides ongoing training to ensure that BXPL's commitment to excellence in HSE management is refl ected throughout the Company. Health, safety and environmental performance are key factors in evaluating and rewarding our employees as well as when selecting contractors.
BXPL does not tolerate any kind of discrimination of employees, customers and partners on account of religion, gender, sexual orientation, age, nationality, political views, disability or other circumstances. We will not tolerate unlawful employment discrimination of any kind. The Company expects all of its employees to treat others they come in contact with through work with respect and courtesy, and to refrain from harassment, discrimination and any other behaviour that may be regarded threatening or degrading. Honesty, integrity and respect for people underpin everything BXPL staff does, and are the foundation of the Company's business practice.
BXPL aims to reduce the Company's carbon footprint and its impact on the environment through the commitment to continual improvement. The Company strives to keep the pollution of the external environment as low as possible by its current activities. A number of specifi c policies and practices have been established to minimize the Company's environmental impact through routine business activities
Corporate Governance is performed within the framework of the Norwegian Code of Practice for Corporate Governance dated 30th October 2014 (www.nues.no). The Board reviews the Corporate Governance Policy annually and approved the latest version on 23rd February 2017 which can also be found on the Company's website (www.bxpl.com) and is included in this Annual Report.
As required for a public limited company listed on the Oslo Stock Exchange (Oslo Axess List) BXPL provides its shareholders, the Oslo Stock Exchange and the fi nancial market with timely and accurate information. Such information takes the form of annual reports, quarterly interim reports, stock exchange notifi cations and investor presentations as applicable.
BXPL communicates its long-term potential, strategy, value drivers and risk factors. The Company maintains an open and proactive investor relations policy and a best-practice website and presents regularly in connection with annual and interim results in Norway. Sound corporate governance underpins growth to benefi t shareholders, employees and other stakeholders. The Board strives continuously to build confi dence in the Company through the implementation of corporate governance-, accounting- and Oslo Stock Exchange standards. The Board of Directors emphasizes transparency and openness, equal treatment of all shareholders, competence in the Company's governing bodies, independence of auditors and accuracy of information distributed by the Company refl ecting its status and operations.
The composition of the Board of Directors and the Board members' competences and expertise are chosen to support the Company's goals. BXPL's Board consists of four members, two males and two females.
The Board of Directors held fi ve ordinary Board meetings and four extraordinary Board meeting during the fi scal year 2016.
The Board's Audit Committee consists of Chairman Mr. Marcus Hansson. The Board conducts an annual evaluation of its work.
On 6th December 2016, BXPL has carried out Private Placement I issuing 360,000,000 new ordinary shares for gross proceeds of NOK 45 million with a subscription price of NOK 0.125. The proceeds were received on 13th January 2017. Private Placement I will be used to fund the Company's ongoing Development Program as well as for general corporate purposes.
At the extraordinary general meeting on 9th January 2017, the Company's shareholders resolved to approve Private Placement I and authorized a Subsequent Off ering. As a result of the share issue, the Company's new registered share capital was NOK 47,317,161 divided into 378,537,288 shares, each with a nominal value of NOK 0.125 on 16th January 2017. Costs and fees of NOK 3.050 million related to the transaction were recognized as a reduction to equity.
On 2nd February 2017, The Company announced that it had raised NOK 300 million in gross proceeds through a new Private Placement II consisting of 600,000,000 new shares with a subscription price of NOK 0.50 per share. The net proceeds from Private Placement II will be used for further development of the Badger tool and pursue opportunities which can accelerate the commercialization of the Company's patents and knowhow. The Company has already evaluated potential investments and is continuing to see interesting investment opportunities.
The Norwegian Financial Supervisory Authority has on 15th February 2017 approved a prospectus prepared by BXPL. The prospectus comprise (i) listing of 360,000,000 new shares (the "Private Placement I Shares") issued in a Private Placement I conducted on 6th December 2016 (the "Private Placement I"), (ii) listing of 600,000,000 new shares (the "Private Placement II Shares") to be issued in connection with Private Placement II conducted on 2nd February 2017 (the "Private Placement II"), (iii) the off er and listing of 80,000,000 shares (the "Off er I Shares") in connection with the Subsequent Off ering I and (iv) the off er and listing of 80,000,000 new shares (the "Off er II Shares") in connection with the Subsequent Off ering II.
At the extraordinary general meeting on 23rd February 2017, the Company's shareholders resolved to approve the Private Placement II and authorized a Subsequent Off ering II. As a result of the Subsequent Off ering I, the Company's new registered share capital is NOK 132,317,161 divided into 1,058,537,288 shares, each with a nominal value of NOK 0.125 on 7th March 2017. The gross proceeds from the Private Placement II and Subsequent Off ering I amounted to NOK 310 million. Costs and fees of NOK 13.687 million related to the capital increase transactions were recognized as a reduction to equity.
On 20 March 2017, BXPL agreed to acquire 100% of the outstanding shares of Dwellop AS, the Norwegian-based independent systems and technology provider delivering topside handling equipment for well intervention and plugging & abandonment (P&A) operations. The agreed purchase price is NOK 190 million, whereof NOK 60 million shall be settled in cash at closing and NOK 130 million shall be settled by issuance of new shares in the Badger Explorer ASA at an agreed subscription price of NOK 0.65 per share (the "Remuneration Shares").
On 23 March 2017, the Subsequent Off ering II of up to 80,000,000 new shares at a subscription price of NOK 0.50 per share was subscribed for gross proceeds of NOK 30.4 million. As a result of the Subsequent Off ering II, the Company's new share capital is NOK 139,909,055 divided into 1,119,272,438 shares, each with a nominal value of NOK 0.125.
No other events have taken place after the reporting period that would have aff ected the fi nancial statements or any assessments carried out.
The recent equity off erings have dramatically improved the positon of Badger Explorer in terms of strategic fl exibility and ability to accelerate business development. As a result of the recent transactions, the Company will now be able to maximize the value potential of the existing business and related technologies. While ramping up the Development Program, Badger Explorer will continue to have a prudent strategy for developing the Badger tool and aims to maintain costs at a low level. Furthermore, the strong liquidity position enables the Company to pursue other investment opportunities that arise within the oil services industry. Given the current downturn in the industry, the Company is in a unique position compared to many of its peers and will seek to capitalize on that position and expand into other oil services segments. The Company has already evaluated potential investments and is continuing to see interesting investment opportunities. The aim of the Company is to initiate one or more transactions within a relatively short time frame.
The Board of Directors wishes to extend their gratitude to the entire BXPL staff for the considerable technical progress and achievements made in advancing the Badger tool throughout 2016.
Stavanger, 29th March 2017
The Board of Directors and the Chief Executive Offi cer of Badger Explorer ASA
We confi rm, to the best of our knowledge that the fi nancial statements for the period 1st January to 31st December 2016 have been prepared in accordance with IFRS as adopted by the European Union and generally accepted accounting practice in Norway, and give a true and fair view of the assets, liabilities and fi nancial position and result of Badger Explorer ASA.
We also confi rm, to the best of our knowledge that the Board of Directors' report includes a true and fair overview of the development, performance and fi nancial position of Badger Explorer ASA, together with a description of the principal risks and uncertainties they face.
Stavanger, 29th March 2017
The Board of Directors and the Chief Executive Offi cer of Badger Explorer ASA
All fi gures in NOK
| Note | 2016 | 2015 | |
|---|---|---|---|
| REVENUES | |||
| Other income | 65 600 | 0 | |
| Total revenues | 65 600 | 0 | |
| OPERATING EXPENSES | |||
| External services for development project | 3 | 1 561 431 | 8 725 892 |
| Payroll and related expenses | 14 | 4 140 499 | 9 921 081 |
| Depreciation | 16 | 99 174 | 200 371 |
| Other operating expenses | 4 390 750 | 8 083 181 | |
| Capitalised development costs | 3 | -3 515 506 | -14 123 964 |
| Total operating expenses | 6 676 347 | 12 806 562 | |
| Operating profi t (loss) | -6 610 747 | -12 806 562 | |
| Finance income | 11 | 30 195 | 38 831 |
| Other fi nance income | 11 | 8 244 | 15 518 |
| Finance expenses | 11 | 483 511 | 504 656 |
| Net fi nance income (loss) | -445 072 | -450 308 | |
| Profi t (loss) before taxes | -7 055 820 | -13 256 869 | |
| Tax on ordinary result | 12 | 0 | 0 |
| Net profi t (loss) | -7 055 820 | -13 256 869 | |
| Profi t (loss) attributable to equity holders of the company | 13 | -7 055 820 | -13 256 869 |
| Earnings per share | 13 | -0.38 | -0.72 |
| Earnings per share diluted | 13 | -0.37 | -0.70 |
All fi gures in NOK
| Total comprehensive income | 2016 | 2015 |
|---|---|---|
| Profi t (loss) for the year | -7 055 820 | -13 256 869 |
| Other comprehensive income - items that will later be reclassifi ed to profi t or loss |
0 | 0 |
| Total comprehensive income for the year, net of tax | -7 055 820 | -13 256 869 |
| Total comprehensive income attributable to: | 2016 | 2015 |
| Equity holders of the company | -7 055 820 | -13 256 869 |
| Total comprehensive income | -7 055 820 | -13 256 869 |
All fi gures in NOK
| ASSETS | Note | 2016 | 2015 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Capitalised development costs | 2,3 | 149 631 849 | 147 767 798 |
| Patent rights | 3 | 386 668 | 386 668 |
| Total intangible assets | 150 018 516 | 148 154 466 | |
| Property, plant & equipment | 16 | 23 995 | 100 933 |
| Total tangible assets | 23 995 | 100 933 | |
| TOTAL NON-CURRENT ASSETS | 150 042 512 | 148 255 399 | |
| CURRENT ASSETS | |||
| Other receivables | 2,8,10 | 605 374 | 3 629 859 |
| Total receivables | 605 374 | 3 629 859 | |
| Cash and cash equivalents | 3 | 334 886 | 585 953 |
| TOTAL CURRENT ASSETS | 940 260 | 4 215 812 | |
| TOTAL ASSETS | 150 982 772 | 152 471 211 | |
| EQUITY AND LIABILITIES | Note | 2016 | 2015 |
| EQUITY | |||
| Share capital | 15 | 2 317 161 | 2 317 161 |
| Share premium | 15 | 218 069 985 | 218 069 985 |
| Other paid in capital | 14 | 3 935 228 | 4 167 490 |
| Total paid in equity | 224 322 374 | 224 554 636 | |
| Retained earnings | -165 403 218 | -158 347 399 | |
| Total equity attributable to equity holders of company | -165 403 218 | -158 347 399 | |
| TOTAL EQUITY | 58 919 156 | 66 207 237 |
| Capitalised grants | 5 | 81 500 000 | 75 000 000 |
|---|---|---|---|
| Total long term liabilities | 81 500 000 | 75 000 000 | |
| Accounts payable | 8,9 | 2 063 022 | 3 077 545 |
| Public duties payables | 8 | 280 623 | 474 324 |
| Debt fi nancial institutions | 6 | 6 889 452 | 6 711 379 |
| Other short term liabilities | 7 | 1 330 519 | 1 000 727 |
| Total short term liabilities | 10 563 616 | 11 263 975 | |
| TOTAL LIABILITIES | 92 063 616 | 86 263 975 | |
| TOTAL EQUITY AND LIABILITIES | 150 982 772 | 152 471 211 |
Stavanger, 29th March 2017
All fi gures in NOK
| Other | ||||||
|---|---|---|---|---|---|---|
| Share | Share | paid in | Retained | Total | ||
| Note | capital | premium | capital | earnings | equity | |
| Equity as of 1 January 2015 | 2 317 161 | 218 069 985 | 3 659 643 | -145 090 529 | 78 956 260 | |
| Profi t (loss) for the year | -13 256 869 | -13 256 869 | ||||
| Other comprehensive income | 0 | 0 | ||||
| Total comprehensive income | -13 256 869 | -13 256 869 | ||||
| Option plan payment | 14 | 507 847 | 507 847 | |||
| Equity as of 31 December 2015 | 2 317 161 | 218 069 985 | 4 167 490 | -158 347 399 | 66 207 237 | |
| Profi t (loss) for the year | -7 055 820 | -7 055 820 | ||||
| Other comprehensive income | 0 | 0 | ||||
| Total comprehensive income | -7 055 820 | -7 055 820 | ||||
| Option plan payment | 14 | -232 262 | -232 262 | |||
| Equity as of 31 December 2016 | 2 317 161 | 218 069 985 | 3 935 228 | -165 403 218 | 58 919 156 |
All fi gures in NOK
| Note | 2016 | 2015 | |
|---|---|---|---|
| Cash fl ow from operational activities | |||
| Contributions from operations* | -6 714 576 | -12 382 980 | |
| Change in accounts receivable and accounts payables | -1 014 522 | 683 066 | |
| Change in other receivables and payables | -375 822 | -936 207 | |
| Net cash fl ow from operating activities | A | -8 104 920 | -12 636 121 |
| Cash fl ow from investment activities | |||
| Capitalisation of development costs | 3 | -3 515 506 | -14 123 964 |
| Net cash fl ow from investment activities | B | -3 515 506 | -14 123 964 |
| Cash fl ow from fi nancing activities | |||
| Government grants | 2 | 5 165 620 | 8 060 043 |
| Contributions from industry partners | 5 | 6 500 000 | 8 389 786 |
| Proceeds from borrowings fi nancial institutions | 6 | 178 072 | 6 711 379 |
| Other fi nance income | 11 | 8 244 | 15 518 |
| Interest paid | 11 | -482 576 | -181 188 |
| Net cash fl ow from fi nancing activities | C | 11 369 360 | 22 995 538 |
| Total net changes in cash fl ow | A+B+C | -251 067 | -3 764 547 |
| Cash and cash equivalents at beginning of period | 3 | 585 953 | 4 350 500 |
| Cash and cash equivalents at end of period | 3 | 334 886 | 585 953 |
| Net result attributable to equity holders of the company | -7 055 820 | -13 256 869 | |
| Employee options | 14 | -232 262 | 507 847 |
| Depreciation | 16 | 99 174 | 200 371 |
| Finance income | 11 | -8 244 | -15 518 |
| Finance expenses | 11 | 482 576 | 181 188 |
| *Total contributions from operations | -6 714 576 | -12 382 980 |
Badger Explorer ASA (BXPL) is a public limited company, incorporated in Norway, headquartered in Stavanger and listed on the Oslo Stock Exchange (Oslo Axess list), address headquarter: Professor Olav Hanssens vei 15, 4021 Stavanger, Norway.
The fi nancial statements of Badger Explorer ASA for the fi scal year 2016 were approved in the board meeting on 29 March 2017.
The Company's activities are described in the Board of Director's report.
BXPL's fi nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) which have been adopted by the EU and are mandatory for fi nancial year beginning on or after 1 January 2016, and Norwegian disclose requirements listed in the Norwegian Accounting Act as of 31 December 2016.
Intangible assets that have been acquired separately are carried at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is expensed as incurred.
Internally generated intangible assets, excluding capitalised development costs, are not capitalised but are expensed as occurred.
Intangible assets not ready to use are tested for impairment annually ref. note 1.4. Such intangibles are not amortised.
Gains or losses arising from derecognition of an intangible asset are measured as the diff erence between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profi t or loss when the asset is derecognised.
Expenses relating to research and development are recognised in the income statement when they are incurred. Expenses relating to development are capitalised if the following criteria are met in full:
When all the above criteria are met, the costs relating to development are capitalised. All costs related to the Badger Explorer development project is capitalised continuously every month. Project manager performs a continuous assessment to identify whether the cost relates to the development project or to normal operations. Expenses that are capitalised include the costs of materials, direct wage costs and a share of the directly attributable common expenses. Internal hours used in the development project are capitalised at cost (no mark-up).
Costs, which have been charged as expenses in the previous accounting periods, are not capitalised.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefi t. During the period of development, the asset is tested for impairment annually. No depreciation has been performed for the development project yet.
Amounts paid for patents and licences are capitalised and amortised in a straight line over the expected line over the expected useful life from the time the technology it relates to is ready for use. The expected useful life of patents and licences varies from 5 til 20 years.
Government grants are recognised when it is reasonably certain that the Company will meet the conditions stipulated for the grants and that the grants will be received. Operating grants are recognised systematically during the grant period. Grants are deducted from the cost which the grant is meant to cover. Investment grants are capitalised and recognised systematically over the asset's useful life.
Government grants received to date are related to development project (ref. note 3) and deducted in the carrying amount of the related project.
When the contributions from the partners are subject to specifi c requirements, the contributions are recognised in the balance sheet as long term liabilities. When the contributions from the partners are not subject to specifi c requirements, the contributions are recognised in the statement of fi nancial position as a deduction of the carrying amount of the related project. ref. note 5.
Estimates and their underlying assumptions that aff ect the application of accounting principles and reported amounts of assets and liabilities, income and expenses are based on historic experience and other factors considered reasonable under the circumstances. The estimates constitute the basis for the assessment of the net book value of assets and liabilities when these values cannot be derived from other sources. Actual results may diff er from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods aff ected. In particular, information about signifi cant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most signifi cant eff ect on the amount recognised in the fi nancial statements, is given in the notes 1.2 and 3.
The preparation of the Company's fi nancial statements requires management to make judgements, estimates and assumptions that aff ect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities aff ected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a signifi cant risk of causing a material adjustment of the carrying amounts of assets and liabilities within the next fi nancial year, are described below.
BXPL capitalises development costs for the Badger Explorer technology in accordance with the accounting policy. Development expenditure is capitalised only if development costs can be measured reliably, the technology is technically and commercially feasible, future economic benefi ts are probable, and BXPL intends to and has suffi cient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the assets for its intended use. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the Badger Explorer technology. Such assessments are performed based on a fair oil indutry gross margin which is agreed with the industry partners. Moreover, the Company analyses development works in terms of continuously meeting the conditions for capitalising costs and impairment. This valuation is reviewed by the Audit Committee.
Given the complexity of the Badger technology, technical capability of the product to meet expectations to the customers, the future oil markets and the innovative technological nature of the product give rise to some uncertainty as to when the technology will be commercialized. In order to ramp up further development and commercialization of the Badger Explorer tool, it is important to address the current challenges. Eff ective collaboration with industry partners, continuos funding from governmental institutions, successful completion of equity raising, clear R&D strategy will serve as tools for accelerating commercialization of the cost-saving, unique and novel Badger Explorer technology. Investments in research and development are absolutely essential for Company's future growth and competitive position in the marketplace and are directly related to timely development of Badger Explorer technology that is central to the Company's core business strategy.
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired.
An assessment of impairment losses on assets is made when there is an indication of a fall in value. Intangible assets not ready to use are tested for impairment annually. Such intangibles are not amortised. If an asset's carrying amount is higher than the asset's recoverable amount, an impairment loss will be recognised in the statement of profi t or loss. The recoverable amount is the higher of the fair value less costs to sell and the discounted cash fl ow from continued use. The fair value less costs to sell is the amount that can be obtained from a sale to an independent third party minus the sales costs. The recoverable amount is determined separately for all assets but, if this is impossible, it is determined together with the entity as there is only one CGU (cash generating unit) in the Company.
Impairment losses recognised in the statements of profi t or loss of previous periods are reversed when there is information that the need for the impairment loss no longer exists or is not as great as it was. However, no reversal takes place if the reversal leads to the carrying amount exceeding what the carrying amount would have been if normal depreciation periods had been used.
Cash includes cash in hand and at bank. Cash equivalents are short-term liquid investments that can be immediately converted into a known amount of cash and have a maximum term to maturity of three months.
The statement of cash fl ows is prepared in accordance with the indirect method and based upon IAS 7.
The Company's presentation currency is NOK. This is also the Company's functional currency.
Transactions in foreign currency are translated at the rate applicable on the transaction date. Monetary items in a foreign currency are translated into NOK using the exchange rate applicable on the balance sheet date. Non-monetary items that are measured at their historical price expressed in a foreign currency are translated into NOK using the exchange rate applicable on the transaction date. Non-monetary items that are measured at their fair value expressed in a foreign currency are translated at the exchange rate applicable on the balance sheet date. Changes to exchange rates are recognised in the income statement as they occur during the accounting period.
Where necessary, comparative fi gures have been adjusted to conform to changes in presentation in the current year.
Financial assets are classifi ed, at initial recognition, as fi nancial assets at fair value through profi t or loss, receivables, available-for-sale fi nancial assets, as appropriate. All fi nancial assets are recognised initially at fair value plus, in the case of fi nancial assets not recorded at fair value through profi t or loss, transaction costs that are attributable to the acquisition of the fi nancial asset. The Company determines the classifi cation of its fi nancial assets at initial recognition. The Company's fi nancial assets include cash and cash equivalents, trade and other receivables.
The subsequent measurement of fi nancial assets depends on their classifi cation as described below:
Receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. After initial measurement, such fi nancial assets are subsequently measured at amortised cost using the EIR method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in fi nance income in the statement of profi t or loss. The losses arising from impairment are recognised in the statement of profi t or loss in cost of sales or other operating expenses for receivables.
This category includes accounts receivable and other receivables carried at amortised cost or at nomal amount less provision for bad debt wher this can be regarded as a reasonable proxy for fair value.
Financial liabilities are classifi ed, at initial recognition, as fi nancial liabilities at fair value through profi t or loss, borrowings, as appropriate.
BXPL's fi nancial liabilities include trade and other payables and debt to fi nancial institutions.
The measurement of fi nancial liabilities depends on their classifi cation as described below:
After initial recognition, borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profi t or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as fi nance costs in the statement of profi t or loss.
A fi nancial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Financial assets and fi nancial liabilities are off set and the net amount is reported in the statement of fi nancial position if there is a currently enforceable legal right to off set the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses. When fi xed assets are sold or disposed of, the gross carrying amount and accumulated depreciation are derecognised, and any gain or loss on the sale or disposal is recognised in the statement of profi t or loss.
The gross carrying amount of fi xed assets is the purchased price, including duties/taxes and direct acquisition costs relating to making the asset ready for use. Subsequent costs, such as repair and maintenance costs, are recognised in profi t or loss as incurred. When increased future economic benefi ts as a result of repair/maintenance work can be proven, such costs will be recognised in the statement of fi nancial position as additional to fi xed assets.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:
Plant and machinery: 6 - 10 years
Fixtures, fi ttings and vehicles: 3 - 5 years
The depreciation period, the depreciation method and the residual value of fi xed assets are evaluated annually.
Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are evaluated at the end of each month and adjusted to refl ect the available information about the provision. When the information available is insuffi cient, the best estimate is used.
Revenue is recognised when it is probable that transactions will generate future economic benefi ts that will fl ow to the Company and the amount can be reliably estimated. Revenues are presented net of value added tax and discounts. The Company's technology is still in the research and development phase, and there is no revenue from sales of products yet.
Interest income is recognised in the statement of profi t or loss based on the eff ective interest method as they are earned.
The tax expense consists of the tax payable and changes to deferred tax. Deferred tax/tax assets are calculated on all diff erences between the book value and tax value of assets and liabilities.
Deferred tax assets are recognised when it is probable that the Company will have a suffi cient profi t for tax purposes in subsequent periods to utilise the tax asset. The Company recognise previously unrecognised deferred tax assets to the extent it has become probable that the Company can utilise the deferred tax asset. Similarly, the Company will reduce a deferred tax asset to the extent that the Company no longer regards it as probable that it can utilise the deferred tax asset.
Deferred tax and deferred tax assets are measured on the basis of the expected future tax rates applicable to the Company where temporary diff erences have arisen.
Deferred tax and deferred tax assets are recognised at their nominal value and classifi ed as non-current asset (long-term liabilities) in the balance sheet.
Taxes payable and deferred taxes are recognised directly in equity to the extent that they relate to equity transactions.
Contingent liabilities are not recognised in the annual accounts. Signifi cant contingent liabilities are disclosed, with the exception of contingent liabilities that are unlikely to be incurred.
Contingent assets are not recognised in the annual accounts but are disclosed if there is a certain probability that a benefi t will be added to the Company.
Employees of BXPL receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in note 14. That cost is recognised in employee benefi ts expense, together with a corresponding increase in equity (other capital reserves), over the period in which the service and, where applicable, the performance conditions are fulfi lled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date refl ects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profi t or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfi ed, provided that all other performance and/or service conditions are satisfi ed.
When the terms of an equity-settled award are modifi ed, the minimum expense recognised is the grant date fair value of the unmodifi ed award, provided the original terms of the award are met. An additional expense, measured as at the date of modifi cation, is recognised for any modifi cation that increases the total fair value of the share-based payment transaction, or is otherwise benefi cial to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profi t or loss.
Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modifi cation of the original award, as described in the previous paragraph. All cancellations of equity-settled transaction awards are treated equally.
Social security tax on options is recorded as a liability and is recognised over the estimated vesting period.
Transaction costs directly related to an equity transaction are recognised directly in equity after deducting tax expenses.
New information on the Company's fi nancial position at the end of the reporting period which becomes known after the reporting period is refl ected in the annual accounts. Events after the reporting period that do not aff ect the company's fi nancial position at the end of the reporting period but which will aff ect the Company's fi nancial position in the future are disclosed if signifi cant.
The operations of the Company are only for the development of the Badger tool and, as a result of that, there is only one operating segment.
The accounting policies adopted are consistent with those of the previous fi nancial year, except for the amendments to IFRS which have been implemented by the Company during the current fi nancial year. Below are listed the amendments in IFRS which have been applicable for the Company's 2016 fi nancial statements, as well as the eff ect of the amendments.
The amendments to IAS 1 are intended to promote the use of professional judgment to a greater extent in relation to which information to include in the notes and how to structure the accounts, and is part of the IASB's "Disclosure Initiative."
The annual report was revised according to the "Disclosure initiative" and restructured in 2016 compared to the previous years.
These changes apply to fi nancial years starting 1 February 2015 or later. The Company has applied these amendments for the fi rst time for the annual accounts for 2016. The amendments concern:
The amendment clarifi es defi nitions relating to vesting conditions, including the following:
The amendment is implemented prospectively.
The amendment is a clarifi cation that trade receivables and payables which are not interest-bearing can be valued at invoice amount when the eff ect of discounting is immaterial.
The amendment is implemented retrospectively and clarifi es that a business which provides management services and supplies key staff for the management is a related party which is covered by the requirements of disclosure for related parties. In addition, a company that employs such services must disclose the costs incurred for management services.
These changes apply to fi nancial years starting 1 January 2016 or later. The Company has assessed these amendments and none of them is currently applicable.
Standards and interpretations that are issued up to the date of issuance of the fi nancial statements, but not yet eff ective are disclosed below. The Company's intention is to adopt the relevant new and amended standards and interpretations when they become eff ective, subject to EU approval before the fi nancial statements are issued.
IFRS 9 Financial instruments / Finansielle instrumenter (unoffi cial Norwegian translation)
In July 2014, IASB published the last sub-project for IFRS 9 and the standard has now been completed. IFRS 9 constitutes amendments linked to the classifi cation and valuation, hedge accounting and impairment. IFRS 9 will replace IAS 39 Financial Instruments - Recognition and Valuation. Those parts of IAS 39 which have not been changed as part of this project have been transferred and included in IFRS 9.
The standard will be implemented retrospectively, except for hedge accounting, but preparing comparative fi gures is not a requirement. The rules for hedge accounting should mainly be implemented prospectively but with some exceptions. The Company has no plans for implementing the standard early. The standard has accounting eff ect from 1 January 2018. The Company does not expect material changes in the accounts based on a new standard but it might impact disclosure information.
The amendments are part of the IASB "Disclosure Initiative" and requires companies to provide disclosures that enables users of fi nancial statements to understand the changes in liabilities arising from fi nancing activities, including changes with and without cash fl ow eff ect. The amendments must be implemented prospectively and the expected eff ective date is 1 January 2017.
The amendments are designed to eliminate disparate practices in the classifi cation and valuation of specifi c types of sharebased payments, and concerns three areas:
The core principal of IFRS 15 is that revenue is recognised to depict the transfer of promised goods or services to customers in an amount that refl ects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard has accounting eff ect from 1 January 2018. The Company is not yet in a commercial position and the eff ects of the new standards have not been assessed yet.
IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer ("lesse") and the supplier ("lessor"). The eff ective date for IASB is from January 1, 2019 but not yet endorsed by EU. The Company has a lease agreement for the offi ce space with 3 months notice period. As of such, the lease standard is not expected to have a material eff ect on the fi nancial statements.
The amendments will initially be implemented prospectively, but retrospective adoption is permitted if this is done in all three areas. The expected eff ective date is 1 January 2018.
Badger Explorer ASA (BXPL) has no sales revenue, but receives grants and tax incentive schemes from diff erent government sources, such as the Research Council of Norway (RCN), Innovation Norway and SkatteFUNN, reported as Government grants. The projects of the Badger Explorer Development Program are funded with a percentage of the total project costs. Received government grants in 2016 and 2015 was NOK 5.166 and NOK 8.060 million respectively.
For the fi nancial year 2016, the funding of NOK 2.057 million was granted and received from RCN through its PETROMAKS2 program to further develop HPHT ultrasonic system, compared to NOK 5.138 million for the same period in 2015. The project period is from January 2014 to June 2017.
R&D projects have been approved for the SkatteFUNN arrangement, a Norwegian tax incentive scheme. BXPL has two approved projects covering all its major R&D activities, supported by SkatteFUNN from 2014 to 2016. For the fi nancial year 2016, the Company received NOK 2.547 million, compared to NOK 2.922 million in 2015. The Company has booked a receivable of NOK 367,027 as at 31 December 2016 to be received in 2017.
The government grants and all project development costs of BXPL, related to the Badger Explorer Development Program, are capitalised in accordance with the IFRS regulations, except of NOK 977,038 as of 31 December 2016, compared to NOK 2.699 million as of 31 December 2015.
(All fi gures in NOK)
BXPL has recognised the following assets in the statement of fi nancial position (including internal built up assets such as development costs).
| Development | ||
|---|---|---|
| Patents* | costs | Total |
| 400 000 | 147 767 798 | 148 167 798 |
| 0 | 3 515 506 | 3 515 506 |
| 0 | -1 651 455 | -1 651 455 |
| 400 000 | 149 631 849 | 150 031 849 |
| 13 332 | 0 | 13 332 |
| 386 668 | 149 631 849 | 150 018 516 |
* The patent applies to the Badger Explorer technology and has a validity of 20 years from date it was granted 18 March 2002. Depreciation will commence when the technology is ready for its intended use.
** The additions in the year 2016 consist of external services of NOK 1.269 million, purchase of manufactured parts, components and materials of NOK 183,857, internal personnel costs of NOK 1.954 million, travel expenses of NOK 109,043 for the Badger Explorer development project.
(All fi gures in NOK)
| Development | ||||
|---|---|---|---|---|
| Year ended 31 December 2015 | Patents* | costs | Total | |
| Cost at 1 January 2015 | 400 000 | 140 217 614 | 140 617 614 | |
| Additions in the year** | 0 | 14 123 964 | 14 123 964 | |
| Government grants | 0 | -6 573 781 | -6 573 781 | |
| Cost at 31 December 2015 | 400 000 | 147 767 798 | 148 167 798 | |
| Accumulated depreciations at 31 December 2015 | 13 332 | 0 | 13 332 | |
| Book value at 31 December 2015 | 386 668 | 147 767 798 | 148 154 466 |
** The additions in the year 2015 consist of external services of NOK 8.162 million, purchase of manufactured parts, components and materials of NOK 451,619, internal personnel costs of NOK 5.398 million and travel expenses of NOK 112,619 for the Badger Explorer development project.
There has not been made any depreciation on intangible asset in 2016 and 2015, respectively.
All development costs in 2016 and 2015 are related to the development of the Badger Explorer technology in BXPL. The development work contains inherent technology risk and risk related to the funding contributions from the partners, see notes 1.2 and 1.4 for more information.
The capitalized development of NOK 149.632 million is the main asset of BXPL, equivalent to 99.1% of total assets. Future sales of Badger Explorer operations have a minimum net price indication of USD 12 million according to the Badger Explorer Demonstrator Program Agreement. The price can vary and is subject to licence/sector, complexity, anticipated depth of operations and certainly how comprehensive logging and sensors package the customer wants or needs in the specifi c operation. The industry partners have fi rst right of refusal to buy an equal share of the full manufacturing and operational capacity of all Badger Explorers for a period of up to 6 years from commercialization. BXPL is of the opinion that the industry partners will use their fi rst right to place orders for the Badger Explorer tool as soon as a fully functional tool is ready. The partners having signed the Badger Explorer Development Program Agreement has a right to buy service at a set gross margin, which is set at acceptable oil industry standards. The Company has prepared a stress test for the valuation of the intangible asset in relation to estimated sales price, margin and expected sales volumes for a fully functional tool available for use. The stress-test is assessed as prudent and reasonable, and shows that a limited amount of yearly sales of units over the fi rst years after commercialization support the book value of the technology. As a result of the analysis, the Company has not identifi ed impairment for the capitalised development cost. Sales of four to fi ve units the fi rst year, gives the Company a capacity to repay all partner grants, generate additional orders from the industry partners and secure future sales. The year-end evaluation of the capitalised technology must be seen in this perspective. There are no indications as of reporting date that impairment is necessary.
| Note 4 Cash and cash equivalents | ||
|---|---|---|
| (All fi gures in NOK) | ||
| 2016 | 2015 | |
| Cash at bank | 334 886 | 585 953 |
| Total cash at bank | 334 886 | 585 953 |
(All fi gures in NOK)
Through strategic industrial cooperation agreements, BXPL has received contributions amounting to NOK 81.5 million whereas NOK 75 million were received prior to 2015. The Badger Demonstrator Program (2012 -2014) Agreement has been supported by Statoil, Chevron Energy Technology Company, ExxonMobil Exploration and Production Norway AS, Wintershall Norge AS and China National Petroleum Corporation Drilling Research Institute (CNPC DR). The Badger Explorer Development Program, which commenced in 2015, has been co-sponsored by Statoil. According to the Development Program, funds are awarded to BXPL when the agreed milestone is reached.
When commercial sales to the market has started, all participants and Shell Technology Norway AS (the previous partner of the Badger Explorer Prototype Program Agreement) will share 5% royalty of all BXPL's sales of products and services related to the Badger Explorer on a yearly basis. This royalty is limited to a total of 150% of received contributions.
The industry partners having signed the Badger Explorer Development Program Agreeement have a fi rst right of refusal to buy an equal share of the full manufacturing and operational capacity of all Badger Explorers at a pre-negotiated gross margin. This gross margin is considered to be acceptable and fair oil industry standard. The partners do have this right for a period up to 6 years from commercialization. Should a partner not employ its fi rst right of refusal, this right and the corresponding share of manufacturing capacity will fall to the remaining partners. For further details see note 3.
(All fi gures in NOK)
| Short term liabilities | 2016 | 2015 |
|---|---|---|
| Debt fi nancial institutions | 6 889 452 | 6 711 379 |
BXPL has entered into a revolving credit facility with its Norwegian bank Sparebanken Vest on 22 August 2012 that provides for borrowings of up to NOK 7.5 million with an interest rate of 4.95%. In addition, there is a yearly commission of 1.0% on the credit line. As of 31 December 2016, NOK 6.889 million has been drawn on the overdraft facility. Interest incurred of NOK 431,671 have been repaid during 2016. Financial covenants: equity - not be less that NOK 75 million and should exceed more than 50% of the book equity ratio. The book equity less intangible assets must be positive. Accounts receivable - must exceed 75% of the withdrawn credit facility. Financial review - quarterly fi nancial statement submission to the bank. The overdraft facility of NOK 7.5 million with Sparebanken Vest is in breach with the agreed covenants during 2016 and at year ended 31 December 2016.
The outstanding debt of NOK 6.889 million was repaid due to the private placement of NOK 45 million on 13 January 2017 ref. note 17.
(All fi gures in NOK)
| Other short term liabilities | 2016 | 2015 |
|---|---|---|
| Unpaid vacation pay | 275 141 | 628 907 |
| Government grants* | 772 419 | 0 |
| Other accrued costs | 92 437 | 181 297 |
| Other** | 190 522 | 190 522 |
| Total other short term liabilities | 1 330 519 | 1 000 727 |
*The actual costs for the PETROMAKS2 program (HPHT ultrasonic system) for 2016 were lower than the amounts indicated in the cost plan and the amounts disbursed from Research Council of Norway. Unused funds were repaid to the RCN on 9 March 2017.
** Other short term liabilities include outstanding balance payable to CNPC DR for having two Chinese engineers working at Badger Explorer ASA's HQ from May to September in 2015.
(All fi gures in NOK)
BXPL is subject to market risks (foreign currency exchange risk and interest rate risk), credit risk and liquidity risk.
The Company's management oversees the management of these risks and assures that BXPL's fi nancial risk-taking activities are governed by appropriate policies and procedures and that fi nancial risks are identifi ed, measured and managed in accordance with the Company's policies. It is the Company's policy that no trading in derivates for speculative purposes shall be undertaken. The Board of Directors reviews and agrees on policies for managing each of these risks, which are summarised below.
The Company's cash reserves of NOK 334,886 are deposited in the Norwegian bank Sparebanken Vest. The main transactions for the Company are in NOK but the Company has suppliers invoicing in USD and GBP. When commercial operations in larger scale commence, a foreign currency exchange risk policy will be introduced.
The Company's fi nancial income and fi nancial costs in the statement of profi t or loss are infl uenced by changes in interest rates as the interest on credit facility with Sparebanken Vest is on a fl oating basis. The Company had NOK 356,671 in interest expense for the debt to fi nancial institutions in 2016.
BXPL only trades with recognised, creditworthy third parties. It is the Company's policy that all customers that wish to trade on credit terms are subject to credit verifi cation procedures. All cash in the Company is deposited in the Norwegian bank Sparebanken Vest. Credit risk is managed through a framework that sets out policies and procedures covering the measurement and management of credit risk.
(All fi gures in NOK)
BXPL monitors its liquidity on a regular basis, and produces rolling liquidity forecasts on a monthly basis in order to indentify liquidity requirements in future periods. The target for BXPL's management of liquidity risk is to maintain a liquidity corresponding to its net liquidity requirements for 12 months. The cash position of BXPL at year end 2016 was NOK 334,886, compared to NOK 585,953 in 2015.
Following the successful launch of the private placement at the end of 2016, the Company's fi nancial and liquidity position has signifi cantly improved. The net proceeds from the Private Placement will be used for further development of the Badger tool and pursue opportunities which can accelerate the commercialization of the Company's patents and knowhow. See note 17 for more details.
The management will continue to focus on effi cient operations, good planning and close monitoring of the liquidity situation and maintaining a clear business development strategy.
The table below shows a maturity analysis for BXPL's total short term liabilities:
| 2016 | within 3 months |
within 6 months |
within 9-12 months |
|---|---|---|---|
| Accounts payable | 2 063 022 | 0 | 0 |
| Public duties payables | 280 623 | 0 | 0 |
| Debt fi nancial institutions (due as a result of breach of covenents ref. note 6) | 6 889 452 | 0 | 0 |
| Other short term liabilities | 1 055 378 | 275 141 | 0 |
| 2015 | within 3 months |
within 6 months |
within 9-12 months |
|---|---|---|---|
| Accounts payable | 3 077 545 | 0 | 0 |
| Public duties payables | 474 324 | 0 | 0 |
| Debt fi nancial institutions (due as a result of breach of covenents ref. note 6) | 6 711 379 | 0 | 0 |
| Other short term liabilities | 371 820 | 628 907 | 0 |
BXPL's main objective for the management of its capital structure is to maximise value creation for shareholders, while at the same time maintaining a sound fi nancial position and a good credit rating.
BXPL manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may issue new shares. No changes were made in the objectives policies or processes during the fi nancial year.
BXPL monitors its capital structure using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, debt fi nancial institutions, trade and other payables, less cash and short-term deposits.
(All fi gures in NOK)
2016 2015 Debt fi nancial institutions 6 889 452 6 711 379 Trade and other payables 3 674 165 4 552 596 Bank deposits -334 886 -585 953 Net debt 10 228 730 10 678 022 Equity 58 919 156 66 207 237 Total capital 58 919 156 66 207 237 Capital and net debt 69 147 886 76 885 259 Gearing ratio 14.8 % 13.9 % Equity ratio 39.0 % 43.4 %
Set out below is a comparison by category of carrying amounts and fair values of all of the Company's fi nancial instruments:
| 2016 | 2015 | |||
|---|---|---|---|---|
| Carrying amount |
Fair value | Carrying amount |
Fair value | |
| Financial assets | ||||
| Cash and cash equivalents | 334 886 | 334 886 | 585 953 | 585 953 |
| Current receivables | 605 374 | 605 374 | 3 629 859 | 3 629 859 |
| Financial liabilities | ||||
| Debt fi nancial institutions | 6 889 452 | 6 889 452 | 6 711 379 | 6 711 379 |
| Trade and other payables | 3 674 165 | 3 674 165 | 4 552 596 | 4 552 596 |
As at 31 December 2016, the ageing analysis of receivables is as follows:
| Neither past | |||||||
|---|---|---|---|---|---|---|---|
| due nor | Past due but not impaired | ||||||
| Total | impaired | <30 days | 30-60 days | 60-90 days | 90-120 days | >120 days | |
| 2016 | 367 028 | 367 028 | 0 | 0 | 0 | 0 | 0 |
| 2015 | 3 442 667 | 3 442 667 | 0 | 0 | 0 | 0 | 0 |
(All fi gures in NOK)
The following table provides the total amount of transactions that have been entered into with related parties controlled by the members of executive management of BXPL for the relevant fi nancial year. The purchases from related parties are made at terms equivalent to those that prevail in arm's lenght transactions.
| Transactions with related parties | 2016 | 2015 |
|---|---|---|
| Purchased services | 1 400 526 | 2 515 589 |
| Other short term liabilities to related parties | 0 | 0 |
| Account payable to related parties | 1 250 | 0 |
In June 2013, BXPL entered into a consultancy agreement with two of its largest shareholders - Dalvin Rådgivning AS and Nilsholmen AS. For the year ended 31 December 2016, payments totalling NOK 820,000 were made to Dalvin Rådgivning AS in respect of performed consultancy services and NOK 14,001 related to travel expenses. Mr. Gunnar Dolven, who is CFO of BXPL, is a director of Dalvin Rådgivning AS.
For the year ended 31 December 2016, Nilsholmen AS (Mr. Kjell Markman was Sr.VP Business Development & Strategy of BXPL) received payments of NOK 345,000 in respect of performed consultancy services. The consultancy agreement with Nilsholmen AS was terminated on 30 June 2016.
In March 2016, BXPL entered into a consultancy agreement with the former Company's CEO and its shareholder Mr. Steinar Bakke. As of 31 December 2016, payments totalling NOK 214,359 were made to S.Bakke Consulting AS in respect to performed consultancy services and NOK 7,166 related to travel expenses. The consultancy agreement with S.Bakke Consulting was terminated on 30 November 2016.
| Note 10 Total receivables | ||
|---|---|---|
| (All fi gures in NOK) | ||
| 2016 | 2015 | |
| Skattefunn & Research Council of Norway receivables | 367 028 | 3 108 774 |
| Prepaid expenses | 238 346 | 187 192 |
| Refundable VAT | 0 | 333 893 |
| Total receivables | 605 374 | 3 629 859 |
For age distribution of accounts receivables see note 8.
(All fi gures in NOK)
This section provides additional information about individual line items of fi nance income and fi nance expense in the statement of profi t or loss by type.
| Finance income: | 2016 | 2015 |
|---|---|---|
| Interest income related to cash and cash equivalents | 180 | 5 309 |
| Other fi nancial income | 8 244 | 15 518 |
| Currency gain | 30 015 | 33 521 |
| Total fi nance income | 38 439 | 54 349 |
| Finance expenses: | 2016 | 2015 |
| Interest expense related to debt to fi nancial institutions | -482 576 | -181 188 |
| Currency losses | -935 | -323 468 |
| Total fi nance expenses | -483 511 | -504 656 |
| Net fi nance income (loss) | -445 072 | -450 308 |
(All fi gures in NOK)
| Income tax expense | 2016 | 2015 |
|---|---|---|
| Payable tax | 0 | 0 |
| Other | 0 | 0 |
| Tax from previous years | 0 | 0 |
| Changes in deferred tax | 0 | 0 |
| Total tax expense | 0 | 0 |
| Total basis for tax | 0 | 0 |
|---|---|---|
| Changes in temporary diff erences | 7 255 426 | 12 757 276 |
| Permanent diff erences | -199 606 | 499 593 |
| Earnings before tax | -7 055 820 | -13 256 869 |
| Calculation of basis for tax |
| Total | -165 144 235 | -157 888 809 |
|---|---|---|
| Loss carried forward | -164 996 013 | -157 257 028 |
| Fixed assets | -148 222 | -631 781 |
| Summary of temporary diff erences: |
(All fi gures in NOK)
| Deferred tax asset | 2016 | 2015 |
|---|---|---|
| Loss carried forward | -39 599 043 | -39 314 257 |
| Fixed assets | -35 573 | -157 945 |
| Total deferred tax asset | -39 634 616 | -39 472 202 |
| Valuation allowance | 39 634 616 | 39 472 202 |
| Total deferred tax asset recognised in the statement of fi nancial position | 0 | 0 |
The Company has not recognised a deferred tax asset in the statement of fi nancial position for 2016 and 2015 as the Company is in a development phase and is currently generating losses.
| Loss carried forward as of 31 December 2016 | 2016 | 2015 |
|---|---|---|
| Unlimited carrying forward | 164 996 013 | 157 257 028 |
| Eff ective tax rate | 2016 | 2015 |
| Profi t / (loss) before tax | -7 055 820 | -13 256 869 |
| 25% tax of earnings before tax | -1 763 955 | -3 579 355 |
| Permanent diff erences | -49 902 | 134 890 |
| Changes in deferred tax asset not recognised in the statement of fi nancial position | 162 414 | 286 688 |
| Eff ect due to changes in tax rate from 25% to 24% on the deferred tax asset* | 1 651 442 | 3 157 776 |
| Calculated tax cost | 0 | 0 |
| Eff ective tax rate | 0 % | 0 % |
*With eff ect from the 2017 fi nancial year, the corporate taxable profi ts (ordinary income) are taxed at a fl at rate of 24%. Deferred tax assets and liabilities at 31 December 2016 have been calculated using 24% tax rate (2015: 25% tax rate).
(All fi gures in NOK)
Earnings per share is calculated as net profi t (loss) for the year attributable to equity holders of the Company divided by the weighted average number of shares outstanding over the year.
Diluted earnings per share is calculated as net profi t (loss) for the year attributable to equity holders of the Company divided by the weighted average number of shares outstanding over the year plus the weighted average number of dilutive potential shares.
Options, awarded to employees at the end of 2006 and 2007, were waived and not included in the calculation of diluted earnings per share. The eff ect of options awarded to employees in September 2009, June 2010, October 2011, September 2013, February 2014 and March 2016 is included in the calculation of diluted earnings per share for 2016 and 2015.
| 2016 | 2015 | |
|---|---|---|
| Profi t (loss) attributable to equity holders of the Company | -7 055 820 | -13 256 869 |
| Weighted average number of outstanding ordinary shares during the year | 18 537 288 | 18 537 288 |
| Eff ect of dilution - share options | 440 000 | 469 000 |
| Weighted average outstanding diluted shares | 18 977 288 | 19 006 288 |
| Earnings (loss) per share | 2016 | 2015 |
| Ordinary | -0.38 | -0.72 |
| Diluted | -0.37 | -0.70 |
(All fi gures in NOK)
| Payroll and related expenses | 2016 | 2015 |
|---|---|---|
| Salaries and vacation pay | 3 504 429 | 7 015 003 |
| Social security tax | 534 999 | 1 145 796 |
| Pension expense ("OTP") | 143 801 | 301 163 |
| Employee share option program expense (incl. national insurance contributions) | -232 262 | 507 847 |
| Remuneration to the Board of Directors and the Nomination Committee | 0 | 545 000 |
| Other benefi ts | 189 532 | 406 271 |
| Total payroll and related expenses | 4 140 499 | 9 921 081 |
| Number of employees | 2016 | 2015 |
|---|---|---|
| The average number of full time equivalent employees | 5 | 8 |
The Company has a defi ned contribution pension scheme that complies with the Norwegian occupational pension legislation (called "OTP"). The pension contributions range from 4% 0 - 7.1 G to 7% 7.1 -12 G of the employee's salary - maximized to a percentage of 12 G (NOK 1,111,912). The National Insurance scheme basic amount for 2017 is NOK 92,576. The retirement age for all employees, including the management, is 67 years.
| 2016 | 2015 | |
|---|---|---|
| Contributions expensed during the year | 143 801 | 301 163 |
(All fi gures in NOK)
The total remuneration for the members of the management was NOK 1.421 million in 2016, compared to NOK 2.558 million in 2015.
Total remuneration to management during the year ended 31 December is as follows:
| 2016 | 2015 | |||||
|---|---|---|---|---|---|---|
| Other | Other | |||||
| Salary | Remuneration Pension cost | Salary | Remuneration | Pension cost | ||
| Steinar Bakke, (CEO)* | 257 027 | 2 681 | 1 055 | 1 305 362 | 14 535 | 54 792 |
| Øystein Larsen, (CEO)** | 746 309 | 21 501 | 31 357 | 0 | 0 | 0 |
| Roald Valen, (CEO)*** | 335 184 | 7 955 | 17 712 | 0 | 0 | 0 |
| Øystein Larsen, (CTO)** | 0 | 0 | 0 | 1 099 842 | 28 326 | 54 792 |
*Eff ective from 20 January 2016, Mr. Steinar Bakke resigned his position as CEO of BXPL. He has stepped down from his position as CEO and took up a new role as Senior Advisor of BXPL until 29 February 2016.
**Mr. Øystein Larsen took on the position as CEO of BXPL, eff ective from 20 January 2016. On 9 September 2016, Mr. Larsen resigned his position as CEO of BXPL. Mr. Larsen was until 31 December 2015 the Chief Technical Offi cer of the Company.
***Eff ective from 22 August 2016, Mr. Roald Valen commenced as CEO of the Company.
At the end of the fi nancial year 2016, executive management of BXPL consists of CEO and CFO. Remuneration for CFO is included in the note 9 "Transactions with related parties".
| Number of | Exercise price | ||||
|---|---|---|---|---|---|
| shares | % shares | Options | (NOK) | ||
| Roald Valen, CEO | 0 | 0.0 % | 250 000 | 2,40 | |
| Gunnar Dolven, CFO | 434 872 | 2.3 % | 0 | 0 | |
| Total | 434 872 | 2.3 % | 250 000 |
| Options as of 1 January 2016 |
Options granted in the period |
Options for feited in the period |
Options vested in the period |
Options as of 31 December 2016 |
|
|---|---|---|---|---|---|
| Steinar Bakke, CEO | 370 000 | 0 | 185 000 | 185 000 | 0 |
| Øystein Larsen, CEO | 0 | 370 000 | 370 000 | 0 | 0 |
| Roald Valen, CEO | 0 | 250 000 | 0 | 0 | 250 000 |
| Total | 370 000 | 620 000 | 555 000 | 185 000 | 250 000 |
See the section "Remuneration policy for members of executive management" for further information.
(All fi gures in NOK)
The annual general meeting held on 14 June 2016 resolved changes to the composition of the Board of Directors and remuneration of the Board members and the Nomination Committee members. The allocation of remuneration to the members of the Board and Nomination Committee is paid as follows in 2015 and 2016:
| 2016 | 2015 | |
|---|---|---|
| Marcus Hansson - Chairman of the Board, Audit Committee* | 0 | 120 000 |
| Birte N. Borrevik - Board member* | 0 | 60 000 |
| Belinda T. Ingebrigtsen - Board member | 0 | 0 |
| Tone Kvåle - Board member, Audit Committee (until 2015) | 0 | 200 000 |
| Rolf E. Ahlqvist - Nomination Committee | 0 | 25 000 |
| Bjørge Gretland - Board member* | 0 | 60 000 |
| David Ottesen - Board member* | 0 | 60 000 |
| Richard Urbanski - Nomination Committee | 0 | 10 000 |
| Knut Åm - Nomination Committee | 0 | 10 000 |
| Total remuneration | 0 | 545 000 |
*Eff ective from 28 July 2015, the members of the Board was initially paid out NOK 545,000 of the total remuneration of NOK 995,000 as a result of the Company's tight cash position in 2015. The remaining NOK 450,000 of the total Board remuneration for 2014, and the remuneration for 2015 of NOK 522,500 was paid on 15 February 2017, see the table below.
| Sum paid in | |||
|---|---|---|---|
| 2014 | 2015 | 2017 | |
| Marcus Hansson - Chairman of the Board, Audit Committee | 180 000 | 200 000 | 380 000 |
| Birte N. Borrevik - Board member | 90 000 | 100 000 | 190 000 |
| Belinda T. Ingebrigtsen - Board member | 55 000 | 55 000 | |
| Rolf E. Ahlqvist - Nomination Committee | 12 500 | 12 500 | |
| Bjørge Gretland - Board member (until 2015) | 90 000 | 45 000 | 135 000 |
| David Ottesen - Board member | 90 000 | 100 000 | 190 000 |
| Richard Urbanski - Nomination Committee | 5 000 | 5 000 | |
| Knut Åm - Nomination Committee | 5 000 | 5 000 | |
| 450 000 | 522 500 | 972 500 |
On 1 January 2016, there were 469,000 share options outstanding under Employee share option program. On 15 March 2016, the Board of Directors of BXPL implemented a new share options program for BXPL employees off ering a total of 190,000 share options at a strike price of NOK 1.80 and NOK 370,000 share options at a strike price of NOK 1.50, corresponding to 3% of all outstanding BXPL shares. Mr. Øystein Larsen was granted 370,000 share options which forfeited due to the resignation from his position as former CEO. Mr. Steinar's Bakke 185,000 share options vested on the date of the publication of the Company's Q4 2015 report. A further 185,000 share options forfeited due to the resignation from his position on 29 February 2016. Upon commencement of the employment, the current BXPL's CEO Mr. Valen was granted 250,000 share options. The previous share options program from 2014 was cancelled. The total number of 440,000 share options held by BXPL employees were outstanding on 31 December 2016. Fully vested and exercisable share options can be exercised between 3 to 10 days after the publication of the Company's Q4 2017 and Q4 2018 reports in 2018 and 2019.
(All fi gures in NOK)
On 22 August 2016, Mr. Roald Valen took on the position as CEO of BXPL. Upon commencement of the employment, Mr. Valen was granted 250,000 share options in BXPL at a strike price of NOK 2.40 per share. 125,000 options will vest on the date of the publication of the Company's Q4 2017 report. A further 125,000 options will vest on the date of the publication of the Company's Q4 2018 report.
The number of employees share options and average exercise prices for BXPL and development during the year:
| 2016 | 2015 | |||
|---|---|---|---|---|
| Summary of outstanding options: | Share options |
Weighted average exercise price |
Share options | Weighted average exercise price |
| Balance at 1 January | 469 000 | 6.71 | 523 000 | 6.80 |
| Granted during the year | 810 000 | 1.85 | 0 | 0.00 |
| Cancelled during the year | -81 000 | 7.51 | 0 | 0.00 |
| Forfeited during the year | -758 000 | 4.08 | -54 000 | 7.51 |
| Balance at 31 December | 440 000 | 2.14 | 469 000 | 6.71 |
| Vested options | 0 | 0.00 | 33 000 | 7.51 |
| Weighted Average Fair Value of options granted during the period | 810 000 | 1.15 | 0 | 0.00 |
| Charged against the income statement: | -232 262 | 507 847 | ||
| Charged against the income statement - Employers' national insurance contribution: |
0 | 0 |
Fair value of the options granted is measured using the Black-Scholes model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility, weighted average expected life of the instruments, expected dividends, and the risk-free interest rate. At the end of each reporting period, the Company revises its estimates of the number of options that are expected to vest. It recognizes the impact of the revision to original estimates, if any, in profi t or loss, with a corresponding adjustment to equity. Changes to the estimates may signifi cantly infl uence the expense recognized during a period.
The Board of Directors holds an authorisation to issue shares in the Company resolved by the Annual General Meeting on 14 June 2016. This authorisation is valid until the next General Meeting to be held in 2017 with an ultimate expiry date on 30 June 2017. The authorisation is provided for increasing the Company's share capital with up to NOK 115,858 by way of issuance of up to 926,864 shares in connection with the Company's share incentive scheme.
The main principle of the Company's remuneration policy for BXPL's management is to off er competitive terms in an overall perspective taking into account salary, payments in kind, bonuses, pension plans and other benefi ts, to retain key staff .
Management salaries and benefi ts for 2016 was based on the principles noted below.
The fi xed salary for each member of the management shall be competitive and based on the individual's experience, responsibilities as well as the results achieved during the previous year. Salaries as well as other benefi ts shall be reviewed annually, and adjusted as appropriate. The salary for the CEO and executive management has been reduced during 2016.
In addition to their base salary, the Company's management may be granted additional remuneration in the form of a bonus. If a bonus scheme would have been implemented in 2016, the assessment criteria would have be based on both Company's performance and the individual's performance. The targets to be reached by the CEO were to be determined by the Company's Board of Directors. The CEO will set relevant targets for the other members of the management team, based on principles defi ned by BXPL's Board of Directors. No provision for bonus has been recognised for 2016.
The Company's management will receive payment in kind such as cell phone expenses and payment of IT and telecommunication expenses.
On 15 March 2016, the Board of Directors of BXPL implemented a new share options program for BXPL employees off ering a total of 190,000 share options at a strike price of NOK 1.80 and NOK 370,000 share options at a strike price of NOK 1.50, corresponding to 3% of all outstanding BXPL shares. The options granted will be vested in tranches and can be exercised between three and ten days after publications of the Company's Q4 2017 and Q4 2018 results in 2018 and 2019.
On 15 January 2016, CEO Øystein Larsen was granted 370,000 share options at a strike price of NOK 1.50. All share options forfeited due to the resignation from his position as CEO on 9 September 2016.
On 22 August 2016, Mr. Roald Valen took on the position as CEO of BXPL. Upon commencement of the employment, Mr. Valen was granted 250,000 share options in BXPL at a strike price of NOK 2.40 per share. 125,000 options will vest on the date of the publication of the Company's Q4 2017 report. A further 125,000 options will vest on the date of the publication of the Company's Q4 2018 report. Upon exercise of the options, the option holder shall pay to the Company a price of NOK 2.40 per option share. If on the exercise day the market price of the Company's shares is exceeding NOK 25, the exercise price shall be increased by an amount equivalent to 8% of the market price deducting NOK 25. The option holder is free to exercise of fully vested options at his sole discretion.
All members of the management are included in the Company's occupational pension scheme drawn up by BXPL for all its employees. The pension scheme is a defi ned contribution scheme and contributions range from 4% to 7% of the employee's salary - maximized to a percentage of 12 G (NOK 1,080,816). The National Insurance scheme basic amount for 2016 was NOK 90,068. The retirement age for all employees, including management, is 67 years.
The main principle of the Company's remuneration policy for BXPL's management is to off er competitive terms in an overall perspective taking into account salary, payments in kind, bonuses, pension plans and other benefi ts, to retain key staff .
Management salaries and benefi ts for 2017 will be based on the principles noted below.
The fi xed salary for each member of the management shall be competitive and based on the individual's experience, responsibilities as well as the results achieved during the previous year. Salaries as well as other benefi ts shall be reviewed annually, and adjusted as appropriate.
In addition to their base salary, the Company's management may be granted additional remuneration in the form of a bonus. If a bonus scheme is implemented in 2017, the assessment criteria will be based on both the Company's performance and the individual's performance. The targets to be reached by the CEO are to be determined by the Company's Board of Directors. The CEO will set relevant targets for the other members of the management team, based on principles defi ned by BXPL's Board of Directors.
The Company's management will receive payment in kind such as cell phone expenses and payment of IT and telecommunication expenses.
On 15 March 2016, the Board of Directors of BXPL implemented a new share options program for BXPL employees off ering a total of 190,000 share options at a strike price of NOK 1.80 and NOK 370,000 share options at a strike price of NOK 1.50, corresponding to 3% of all outstanding BXPL shares. The options granted will be vested in tranches and can be exercised between three and ten days after publications of the Company's Q4 2017 and Q4 2018 results in 2018 and 2019.
On 22 August 2016, Mr. Roald Valen took on the position as CEO of BXPL. Upon commencement of the employment, Mr. Valen was granted 250,000 share options in BXPL at a strike price of NOK 2.40 per share. 125,000 options will vest on the date of the publication of the Company's Q4 2017 report. A further 125,000 options will vest on the date of the publication of the Company's Q4 2018 report. Upon exercise of the options, the option holder shall pay to the Company a price of NOK 2.40 per option share. If on the exercise day the market price of the Company's shares is exceeding NOK 25, the exercise price shall be increased by an amount equivalent to 8% of the market price deducting NOK 25. The option holder is free to exercise of fully vested options at his sole discretion.
All members of the management are included in the Company's occupational pension scheme drawn up by BXPL for all its employees. The pension scheme is a defi ned contribution scheme and contributions range from 4% 0 - 7.1 G to 7% 7.1 -12 G of the employee's salary - maximized to a percentage of 12 G (NOK 1,110,912). The National Insurance scheme basic amount for 2017 is NOK 92,576. The retirement age for all employees, including the management, is 67 years.
The following table shows remuneration related to professional services rendered by the Company's principal auditor, Ernst & Young AS, for fi scal year 2016 and 2015. The amounts shown are exclusive of value added tax.
| Total | 236 476 | 308 229 |
|---|---|---|
| Other assistance*** | 49 121 | 100 538 |
| Assurance services** | 37 355 | 42 691 |
| Audit fee* | 150 000 | 165 000 |
| 2016 | 2015 |
* Audit fee relate primarily to services provided by Ernst & Young AS for auditing BXPL's fi nancial statements and its internal controls.
** Assurance services include primarily review of the Company's quarterly fi nancial statements and the annual report.
*** Other assistance relates primarily to other attestation services required under regulatory requirements, advisory services, preparation of tax returns,the prospectus, going concern assumption review.
(All fi gures in NOK)
Share capital as at 31 December 2016 was NOK 2.317 million, being 18,537,288 ordinary shares at a nominal value of NOK 0.125 each. All shares carry equal voting rights.
New shares have been issued in 2017, ref. note 17.
| Number of ordinary shares | 2016 | 2015 |
|---|---|---|
| Ordinary shares at 1 January | 18 537 288 | 18 537 288 |
| Capital increase | 0 | 0 |
| Ordinary shares at 31 December | 18 537 288 | 18 537 288 |
(All fi gures in NOK)
Badger Explorer ASA had 890 shareholders on 31 December 2016. Norwegian entities and individuals held 64.0% of the outstanding shares and the 20 largest shareholders held 53.4% of the outstanding shares. As at 31 December 2016, the 20 largest shareholders were as follows:
| Shareholders | Number of shares | % shares | |
|---|---|---|---|
| 1 | DEUTSCHE BANK AG | 2 829 997 | 15.3 % |
| 2 | INVESCO PERP EURAN SMLER COMPS FD | 1 225 389 | 6.6 % |
| 3 | GAYANOVA VICTORIA | 778 455 | 4.2 % |
| 4 | CLEARSTREAM BANKING S.A. | 662 129 | 3.6 % |
| 5 | ABN AMRO BANK (LUXEMBOURG) S.A. | 592 900 | 3.2 % |
| 6 | ARGENTUM FONDSINVESTERINGER AS | 523 145 | 2.8 % |
| 7 | DALVIN RÅDGIVNING AS | 426 872 | 2.3 % |
| 8 | MACAMA AS | 355 514 | 1.9 % |
| 9 | MAX INVEST AS | 300 000 | 1.6 % |
| 10 | NORDNET BANK AB | 284 295 | 1.5 % |
| 11 | ÅM KNUT | 242 600 | 1.3 % |
| 12 | KOVACI RAMADAN | 235 112 | 1.3 % |
| 13 | DREVDAL KJELL ERIK | 222 600 | 1.2 % |
| 14 | BNP PARIBAS SECURITIES SERVICES | 220 000 | 1.2 % |
| 15 | ØSTEBRØD EINAR HÅKON | 200 000 | 1.1 % |
| 16 | ESPELID KARSTEIN JOHAN | 170 000 | 0.9 % |
| 17 | STOKKA SIGMUND | 168 693 | 0.9 % |
| 18 | THOMAS FEARNLEY, STIFTELSEN | 150 983 | 0.8 % |
| 19 | ANCHOR SECONDARY 4 AS | 150 982 | 0.8 % |
| 20 | FAVØR HOLDING AS | 150 982 | 0.8 % |
| Total shares for top 20 shareholders | 9 890 648 | 53.4 % | |
| Toatl shares for other 870 shareholders | 8 646 640 | 46.6 % | |
| Total shares (890 shareholders) | 18 537 288 | 100 % |
The following members of the Board of Directors and member of executive management held shares as of 31 December 2016:
| 2016 | 2015 | |
|---|---|---|
| ABN AMRO Bank (Luxembourg) S.A. (Chairman - Marcus Hansson) | 565 000 | 565 000 |
| Dalvin Rådgivning AS (CFO - Gunnar Dolven) | 426 872 | 426 872 |
| Nilsholmen Investering AS | 64 422 | 209 222 |
| Senior Advisor - Steinar Bakke | 473 | 155 000 |
| Nilsholmen AS | 0 | 20 200 |
| Chairman - Marcus Hansson | 11 668 | 11 668 |
| CFO - Gunnar Dolven | 8 000 | 8 000 |
| Board member - Tone Kvåle (until 31 March 2015) | 0 | 5 000 |
| Ordinary shares | 1 076 435 | 1 400 962 |
| % of total shares | 5.8 % | 7.6 % |
(All fi gures in NOK)
The Board of Directors holds two authorisations to issue shares in the Company resolved by the Annual General Meeting on 14 June 2016. These authorisations are valid until the next Annual General Meeting to be held in 2017 with an ultimate expiry date on 30 June 2017. The fi rst authorization is provided for increasing the Company's share capital with up to NOK 115,858 by way of issuance of up to 926,864 shares in connection with the issuance of shares to employees, directors and others connected with the Company as part of the Company's share incentive scheme and the share issue against payment in other cash payment (contribution). The second authorization is provided for increasing the Company's share capital with up to NOK 231,716 by way of issuance of up to 1,853,728 shares in conjunction with the issuance of shares to existing shareholders and new investors for a cash deposit or cash contributions and mergers.
(All fi gures in NOK)
| Property, plant & equipment |
Total 2016 | Property, plant & equipment |
Total 2015 | |
|---|---|---|---|---|
| Cost price at 1 January | 5 793 447 | 5 793 447 | 5 793 447 | 5 793 447 |
| Additions | 22 236 | 22 236 | 0 | 0 |
| Cost price at 31 December | 5 815 683 | 5 815 683 | 5 793 447 | 5 793 447 |
| Accumulated depreciations at 31 December | -5 791 688 | -5 791 688 | -5 692 515 | -5 692 515 |
| Booked value at 31 December | 23 995 | 23 995 | 100 933 | 100 933 |
| Depreciation | -99 174 | -99 174 | -200 371 | -200 371 |
| Depreciation rate %: | 10% - 33% | 10% - 33% | ||
| Estimated useful life: | 3 - 10 years | 3 - 10 years | ||
| Depreciation method: | straight-line | straight-line |
The depreciation period and method are assessed each year to ensure that the method and period used harmonize with the fi nancial realities of the non-current asset. The same applies to the scrap value.
In March 2016, the Company signed a lease for offi ce and workshop purposes. BXPL moved its administration and workshop to new facilities located at the International Research Institute of Stavanger (IRIS) building. The lease agreement specifi es 4 quarterly payments of NOK 100,000 beginning 1 April 2016, the commencement of the lease, and at the fi rst day of each of the next three quarters. The rental agreement of 174 square meters expires on 31 March 2017. After that, the lease of the premises continues automatically. The period of notice is 3 months. The annual rental amount for this space amounted to NOK 300,000 as of 31 December 2016.
The rental agreeement also includes a garage rent for storage at NOK 18,000 annually.
| Operating leasing costs | 2016 | 2015 |
|---|---|---|
| Rent costs on buildings | 862 337 | 2 019 520 |
| Operational leasing costs | 14 150 | 32 551 |
| Total operating leasing costs | 876 487 | 2 052 071 |
(All fi gures in NOK)
The future minimum rents related to non-cancellable leases fall due as follows:
| Within 1 year | 2-5 years | After 5 years | |
|---|---|---|---|
| Operational leasing costs | 4 000 | 0 0 |
|
| Rent costs on buildings | 104 500 | 0 0 |
|
| Total | 108 500 | 0 0 |
The lease agreement for the previous offi ce (headquarters) at Forusskogen 1 expired on 31 March 2016. The fi nal outstanding lease payment of NOK 1,164,803 was repaid on 18 January, 2017.
(All fi gures in NOK)
On 6 December 2016, BXPL has carried out Private Placement I issuing 360,000,000 new ordinary shares for gross proceeds of NOK 45 million with a subscription price of NOK 0.125. The proceeds were received on 13 January 2017. Private Placement I will be used to fund the Company's ongoing Development Program as well as for general corporate purposes.
At the extraordinary general meeting on 9 January 2017, the Company's shareholders resolved to approve Private Placement I and authorized a Subsequent Off ering. As a result of the share issue, the Company's new registered share capital was NOK 47,317,161 divided into 378,537,288 shares, each with a nominal value of NOK 0.125 on 16 January 2017. Costs and fees of NOK 3.050 million related to the transaction were recognized as a reduction to equity.
On 2 February 2017, The Company announced that it had raised NOK 300 million in gross proceeds through a new Private Placement II consisting of 600,000,000 new shares with a subscription price of NOK 0.50 per share. The net proceeds from Private Placement II will be used for further development of the Badger tool and pursue opportunities which can accelerate the commercialization of the Company's patents and knowhow. The Company has already evaluated potential investments and is continuing to see interesting investment opportunities. The aim of the Company is to initiate one or more transactions within a relatively short time frame.
The Norwegian Financial Supervisory Authority has on 15 February 2017 approved a prospectus prepared by BXPL. The prospectus comprise (i) listing of 360,000,000 new shares (the "Private Placement I Shares") issued in a Private Placement I conducted on 6 December 2016 (the "Private Placement I"), (ii) listing of 600,000,000 new shares (the "Private Placement II Shares") to be issued in connection with Private Placement II conducted on 2 February 2017 (the "Private Placement II"), (iii) the off er and listing of 80,000,000 shares (the "Off er I Shares") in connection with the Subsequent Off ering I and (iv) the off er and listing of 80,000,000 new shares (the "Off er II Shares") in connection with the Subsequent Off ering II.
At the extraordinary general meeting on 23rd February 2017, the Company's shareholders resolved to approve the Private Placement II and authorized a Subsequent Off ering II. As a result of the Subsequent Off ering I, the Company's new registered share capital is NOK 132,317,161 divided into 1,058,537,288 shares, each with a nominal value of NOK 0.125 on 7th March 2017. The gross proceeds from the Private Placement II and Subsequent Off ering I amounted to NOK 310 million. Costs and fees of NOK 13.687 million related to the capital increase transactions were recognized as a reduction to equity.
On 20 March 2017, BXPL agreed to acquire 100% of the outstanding shares of Dwellop AS, the Norwegian-based independent systems and technology provider delivering topside handling equipment for well intervention and plugging & abandonment (P&A) operations. The agreed purchase price is NOK 190 million, whereof NOK 60 million shall be settled in cash at closing and NOK 130 million shall be settled by issuance of new shares in the Badger Explorer ASA at an agreed subscription price of NOK 0.65 per share (the "Remuneration Shares").
On 23 March 2017, the Subsequent Off ering II of up to 80,000,000 new shares at a subscription price of NOK 0.50 per share was subscribed for gross proceeds of NOK 30.4 million. As a result of the Subsequent Off ering II, the Company's new share capital is NOK 139,909,055 divided into 1,119,272,438 shares, each with a nominal value of NOK 0.125.
No other events have taken place after the reporting period that would have aff ected the fi nancial statements or any assessments carried out.
Pursuant to section 3-3 (a) of the Norwegian Accounting Act, it is confi rmed that the conditions for assuming that BXPL is a going concern are present, and that the fi nancial statements have been prepared on the basis of this assumption. The Company has reported signifi cant doubt about the Company`s ability to continues as a going concern in the previous periods as a result of a very tight liquidity situation. Additional funding was required to carry on the future development of the Badger tool and pay overdue debt. The overdraft facility of NOK 7.5 million with Sparebanken Vest was in breach with the agreed covenants during 2016 and at year end 31 December 2016. The Board assesses that there is not signifi cant uncertainty related to going concern as of today based on the private placement of NOK 385.4 million carried out in Q1 2017, and the further planned subsequent off ering as described in note 17 "Events after the reporting date" in this report.
Published by Badger Explorer ASA Layout: Inventas as Photos: Fredrik Ringe © Badger Explorer ASA 2017
Org.nr. 985 955 107 MVA
Visiting address: Professor Olav Hanssens vei 15, 4021 Stavanger Postal address: P.O.Box 8046, 4068 Stavanger
e-mail: [email protected] Switchboard: +47 407 66 049
http://www.bxpl.com
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