Upland is pleased to announce the publication of its audited annual report and financial statements for the period ended 30th June 2016 (“2016 Report”), extracts of which are set out below.
The Company’s 2016 Report will be posted to shareholders shortly and it will also be made available on the Company’s website at: http://upland.energy/
In addition, a copy of the 2016 Report will be uploaded to the National Storage Mechanism and will be available for viewing shortly at http://www.morningstar.co.uk/uk/NSM
The auditors, Wilkins Kennedy LLP, have reported on the 2016 accounts. Their report was unqualified and did not include a reference to any matters to which the auditors draw attention by way of emphasis without qualifying their report.
For further information, please visit www.upland.energy or contact:
| Upland Resources Limited | www.upland.energy |
| Steve Staley, CEO | Tel: 07704 974784 [email protected] |
| Optiva Securities Limited | |
| Jeremy King (Corporate Finance) | Tel: 020 3137 1904 [email protected] |
| Christian Dennis (Corporate Broker) | Tel: 020 3137 1903 [email protected] |
| FTI Consulting | |
| Ben Brewerton/Molly Stewart | Tel: +44 (0) 20 3727 1708 [email protected] |
| Flowcomms Ltd | |
| Sasha Sethi | Tel: +44 (0)7891 677441 [email protected] |
Chairman’s Statement
On behalf of the Board of Directors it gives me great pleasure to present the consolidated financial statements of Upland Resources Limited (the “Group”, the “Company” or “Upland”) for the year ended 30 June 2016.
Upland is a relatively new oil & gas exploration and production company that is building a portfolio of attractive upstream assets.
The year under review has been a highly successful one on a number of fronts.
Firstly, we achieved our stated goal of achieving a public listing. On the 26 October 2015 our shares were admitted to the Official List of the UK Listing Authority (”UKLA”) by way of a standard listing under Chapter 14 of the UKLA’s Listing Rules and to trading on the London Stock Exchange’s main market.
At listing, the Company issued 130,000,000 new ordinary shares at a price of 1 pence per share, raising £1.3 million before expenses. Market conditions were difficult but, despite this environment, we raised our target amount at the target price. As a result of this successful fundraising, Upland is in a strong financial position: able to fund its obligations in PEDL 299 (see below) and simultaneously assess new opportunities. We would like to thank our supportive shareholders for their confidence in the management team and our strategy.
Secondly, on 17 December 2015, the Upland consortium was offered for award Petroleum Exploration and Development Licence 299 (“PEDL 299″) in the East Midlands. During the assessment of the bids by the UK Oil and Gas Authority (“OGA”), the Upland consortium was combined with Ineos Upstream, part of the multinational Ineos conglomerate. As detailed below, of specific interest to Upland is the historically producing Hardstoft Oil Field (“Hardstoft”) that the development consortium plans to rejuvenate using modern technology.
Thirdly the Company has been busy assessing new opportunities in the UK, Malaysia and Morocco, accessed through its wide range of contacts both in-country and in the international oil industry.
Fourthly, since the year end, OGA has announced the execution by the Department of Energy and Climate Change (“DECC”) of PEDL 299 and Upland has been able to secure an increased interest of 25% in this license, subject to regulatory approval, following assignment of a partner’s interest.
Lastly, we have seen our share price make good upward progress against the background of a sector that continues to struggle with the ramifications of a low oil price environment. We operate with a lean corporate structure yet with the benefit of an enviable pool of technical, commercial and political experience.
Operating environment creating attractive opportunities
The year ending 30 June 2016 has been a difficult one for the oil and gas industry. Oil prices remain well below the levels seen two years ago; though at the time of writing prices appear to be holding firm.
However, following the successful fund-raising last year, Upland is well-funded for its work obligations and has relatively low overheads. Its recent listing gives it access to additional sources of funds that should enable it to take advantage of the market and to add further attractive assets to its portfolio.
As such there are a number of interesting opportunities (ranging in maturity from producing to exploration) that the Company has assessed during the year and some of which it continues to assess. We will update shareholders as these opportunities are matured.
PEDL 299 – Hardstoft Field
This is our first asset and is the result of a new interpretation of the existing data by Upland, following which we brought in Europa Oil & Gas and Shale Petroleum (UK) Limited as partners.
During the assessment of the bids by OGA our consortium was combined with Ineos Upstream, part of the multinational Ineos conglomerate, as OGA is keen to see both the conventional and unconventional potential of the area developed. Ineos’ focus is on unconventional shale gas and oil whereas the Upland consortium’s focus is on the exploration, appraisal and development of the conventional potential. Principally this is the rejuvenation of Hardstoft Oil Field, Britain’s first oil field, using modern technology. Hardstoft was first drilled in 1919 and successfully produced oil for five years utilising a simple vertical well; little water was produced. It is likely that this well did not cross any of the expected semi-vertical, natural fractures in the limestone reservoir and that the oil production came from the matrix of the rock. The PEDL 299 holders are planning to directionally drill a new well to also access the natural, vertical fractures which should allow a much more efficient production of Hardstoft’s resources. This particular PEDL is the only one of the 21 recently announced PEDLs awarded to Ineos in which they have partners.
Hardstoft is an excellent first asset for the Company and, following extensive technical work by Upland and its highly experienced bid partners, we have a high degree of confidence in the success of rejuvenating this field. With low work programme costs, a low risk of failure and economics which are robust even at depressed oil prices, Hardstoft aligns well with our strategy to ensure that our assets have an attractive risk/reward balance.
An independent Competent Person’s Report (“CPR”) prepared by Blackwatch Petroleum Services Limited (“Blackwatch”) on behalf of Upland estimates remaining resources to be 3.10 million barrels of oil (“MMbbl”) of contingent resource plus 3.65 MMbbl prospective resource (making a total of 6.75 MMbbl resource) in the broader Hardstoft structure alone, all sitting in Block SK46c and on a ‘best’ or central case basis. Total Hardstoft resource net to Upland, based on Blackwatch’s CPR and our original interest of 16.67%, is estimated at 1.125 MMbbl. Blackwatch estimates the chance of success for the contingent resource at 80% and 64% for the prospective resource.
Following the acquisition by Europa Oil & Gas (Holdings) plc (“Europa plc”) of Shale Petroleum (UK) Limited (“Shale Petroleum”), both of which were members of the Upland bid consortium referred to above, Europa plc has agreed, subject to regulatory approval, to assign Shale Petroleum’s 16.665% interest in PEDL 299 – as to 8.33% to Upland Resources (UK Onshore) Limited, a wholly-owned subsidiary of Upland (“Upland UK”) and as to 8.335% to Europa plc’s wholly-owned subsidiary, Europa Oil & Gas Limited. OGA announced on 6 October 2016 that DECC had executed PEDL 299. Subject to the approval of the OGA, Upland UK’s participating interest in INEOS-operated PEDL 299, which contains the Hardstoft Oil Field and Hardstoft East prospect, will therefore increase from 16.67% to 25%.
The consortium will now seek to embark upon the first steps toward Hardstoft Field development, beginning with seismic acquisition.
Director Appointment
We are very pleased to have secured the services of Bolhassan Di as a Non-executive Director of the Company in July this year. Bolhassan brings a wealth of knowledge and experience in both the oil & gas sector, and in Malaysia and the wider region.
Outlook
We believe that Upland has a bright future ahead of it. I look forward to reporting further progress towards our stated goals.
M N B Zakaria
Chairman
31 October 2016
Strategic Report for the Year Ended 30 June 2016
The directors present their strategic report for the year ended 30 June 2016.
Principal activity
The Company and Group was formed for the purpose of acquiring assets, businesses or target companies that have operations in the oil and gas exploration and production sector that it will then look to develop and expand.
Fair review of the business
The past year has been another exciting one for Upland Resources Limited. We undertook a successful fundraising, issuing 130,000,000 new ordinary shares at a price of 1 pence per share, raising £1.3 million before expenses. We remain in a strong financial position with significant cash in the bank, and with low corporate overheads.
The price of oil continued to fall for most of the year, though rallying somewhat toward the end of the reporting period. Many oil companies continue to feel the negative impact of this low price. This has led in turn to opportunities for Upland through reduced levels of competition for acreage, farm-in opportunities and produced an environment with markedly reduced service costs.
During the year, Upland continued to consider a large number of potential farm-ins, acquisitions and new permit applications over a range of geographies. These were principally in the UK, Malaysia and Morocco, and several of these are currently under assessment.
In October 2014, Upland made an application for a PEDL in the UK 14th Onshore Oil and Gas Licensing Round. During the assessment of the bids by OGA, the Upland bid consortium was combined, at OGA’s request, with Ineos Upstream and on 17 December 2015 the expanded consortium was offered the area for licence as PEDL 299. Subsequently, the Upland consortium and Ineos have agreed an in-principal split of the acreage, essentially along the lines of unconventional hydrocarbon accumulations (solely Ineos) and conventional accumulations (all parties). Upland’s wholly owned subsidiary, Upland Resources (UK Onshore) Limited holds a 16.67% interest in the “conventional” part. This area contains all the parts of Hardstoft Field that lie within PEDL 299; this was the primary objective of Upland’s interest in the area.
Significant events since the balance sheet date:
Following the acquisition by Europa Oil & Gas (Holdings) plc of Shale Petroleum (UK) Limited, both of which were members of the Upland bid consortium referred to above, Europa plc has agreed, subject to regulatory approval, to assign Shale Petroleum’s 16.665% interest in PEDL 299 – as to 8.33% to Upland UK and as to 8.335% to Europa’ s wholly-owned subsidiary, Europa Oil & Gas Limited. OGA announced on 6 October 2016 that DECC had executed PEDL 299. Subject to the approval of the OGA, Upland Resources (UK Onshore) Limited’s participating interest in INEOS-operated PEDL 299, which contains the Hardstoft Oil Field and Hardstoft East prospect, will increase from 16.67% to 25%.
The group’s key financial and other performance indicators during the year were as follows:
| 2016 | 2015 | |
|---|---|---|
| Cash outflow from operating activities | £329,832 | £216,712 |
See pdf for full report