U.S. Oil & Gas Plc.
(“U.S. Oil” or the “Company”)
Consolidated Audited Annual Results for Period Ended 31 July, 2018
The Company is pleased to report its consolidated annual results for the year period ended 31 July 2018.
– Funds raised $2.218 M
– Eblana – 3 well drilled
– Multiple hydrocarbon-bearing zones identified
– Perforation operations commenced
– Additional acreage acquired
– Administration expenses $1,052,926 (2017: $750,849. The increase in expenditure was primarily due to increased exploration activity over the period and loss on currency movements.
– Total comprehensive loss $1,063,234 (2017: $620,911) and cash and cash equivalents $1,956,971 (2017: $3,274,903). The Group is debt-free.
Review of the year ended 31 July 2018
During drilling operations at the Eblana-3 well in April 2018, multiple potential hydrocarbon-bearing zones were identified from cutting samples, mud logs, and processed wire-line logging data. After a review of all available data, six zones indicating a higher potential for hydrocarbons were selected for perforation. Downhole operations, including perforating selected formations, were conducted between June 18 and June 30. However, perforation equipment failures led to significant delays in the program, curtailing swabbing and preventing preliminary flow testing of the perforated zones. The Company announced that it would recommence testing operations when equipment and personnel could be reassembled (please see “Outlook and post balance sheet events,” below.).
Additional acreage acquired
On the basis of the initially encouraging results from the Eblana-3 drill, in June and July 2018 the Company bid for further Hot Creek Valley leases in auctions held by the Bureau of Land Management (BLM). The award of those leases was subsequently confirmed, bringing the total acreage position of the Company to 73,725 acres. However, since that time a third party has claimed that the BLM made a series of administrative errors, initiating a potential dispute involving two leases and 3,819.6 acres of the newly acquired land, approximately 5.2% of the Company’s current total acreage. The Company is currently seeking legal advice on the matter, but the Board’s view is that loss of the relevant leases, if that should occur, would not materially affect the Company’s current exploration or drilling plans.
During the financial year, the company raised funds in two Placings. The Company raised approximately $2.218 m (before currency adjustments) issuing 5,338,419 new Ordinary Shares at £0.30 per share. These fundraisings placed the Company in a strong financial position to move forward on both operational and corporate fronts.
Outlook and post balance sheet events
Preliminary testing of Eblana-3
Downhole operations on the Eblana-3 well, including perforating selected formations, were continued between 12 August and 19 August 2018. After well shut-ins, light crude oil of API 34.5 flowed to the surface. Workover rig operations were terminated and a jack pump set to pump monitored fluids for an extended period with the objective of clearing the formation. In the event that this does not succeed, subject to regulatory permissions, the well will be subject to a hydraulic fracturing (fracking) operation of short duration. The purpose is to increase the permeability of the targeted formations, and clear volcanic ash and tuff believed to be impeding flow. The data continues to support the belief that a viable hydrocarbon reservoir is present and that local permeability is preventing commercial flow.
Eblana-3 fracking proposal
In Q4 of 2018 and Q1 of 2019 the Company carried out a series of complex data modelling exercises to devise the potentially most effective fracking plan for Eblana-3. The well design was also re-evaluated. In addition, the Company carried out a comprehensive study of local water resources, requiring multiple samples be collected over an extended period and be independently analysed. The resulting hydrogeology report and fracking permit application was submitted to the authorities. Dialogue with the regulators and additional required data collection is ongoing at the time of this statement. The implementation of the fracking plan and the associated operational timetable is contingent on regulatory approvals. Every effort is being made by the Company to satisfy requirements, but no timescale can be offered for the completion of the process.
Leases NVN 87414 and NVN 87415 are set to expire on May 31 2019 if oil is not produced on the relevant lease in paying quantities. A successful hydraulic fracking of Eblana -3 resulting in commercial flows is required to secure Lease NVN 87414. Since no well will be drilled on Lease NVN 87415 by its expiry date, that lease will lapse. Lease NVN 87415 and Lease NVN 87414 each covers approximately 2,500 acres and each constitutes 3.4% of the currently held acreage. The Company’s geological studies indicate that Lease NVN 87415 is of only moderate relative prospectivity compared to other leases.
Funding, ongoing exploration and planning
The Company has shown itself capable of developing an appropriate forward-looking strategy, raising funds, and making significant operational progress. In December 2018 the Company raised an additional $527k in working capital. Planning for corporate development and a stock market listing continues but listing remains contingent on producing oil in commercial quantities.
The large volumes of high quality data collected during the Eblana-3 drill are currently being integrated with all other data, including geochemical, VSP, geomagnetic and geophysical data, to generate targets for the next drilling campaign. Additional geophysical surveys are also planned. The Company views the results of these latest studies as highly encouraging, supporting the belief that its Hot Creek Valley lease area features a major oil system analogous to that in Railroad Valley. Of considerable importance for the cost of future drills is the finding that the areas now seen as of greatest potential require much shallower wells than have been necessary to date, as both Tertiary and Palaeozoic strata are found to be much closer to the surface. Highly prospective targets are clearly emerging from these studies and will form the basis of a multi-well development proposal now being prepared.
Consolidated Statement of Comprehensive Income
for the year ended 31 July 2018
31 Jul ‘18 31 Jul ‘17
Administrative expenses (1,052,926) (750,849)
Operating loss (1,052,926) (750,849)
Finance Income 65 61
Interest payable and similar charges – (110)
Loss for the year/period before taxation (1,052,861) (750,898)
Income tax expense – –
Loss for the year from the continuing operations (1,052,861) (750,898)
Other Comprehensive Income
Loss for the year from the continuing operations (1,052,861) (750,898)
Foreign exchange movement (10,373) 129,987
Total Comprehensive Loss for the year (1,063,234) (620,911)
Loss attributable to:
Equity holders of the Company (1,052,861) (750,898)
Total Comprehensive Loss attributable to:
Equity holders of the Company (1,063,234) (620,911)
Earnings per share from continuing operations
Basic loss per share (cent) (1.81) (1.52)
Diluted loss per share (cent) (1.71) (1.45)
Consolidated Statement of Financial Position
as at 31 July 2018
31 Jul ‘18 31 Jul ‘17
Intangible Assets 7,684,174 5,173,729
Total Non-Current Assets 7,684,174 5,173,729
Trade and other receivables 78,518 124,747
Cash and cash equivalents 1,956,971 3,274,903
Total Current Assets 2,035,489 3,399,650
Total Assets 9,719,663 8,573,379
Capital and Reserves
Share capital presented as equity 7,722 7,074
Share premium 16,815,961 14,598,277
Other reserves 324,738 335,111
Retained loss (7,548,909) (6,496,048)
Attributable to owners of the Company 9,599,512 8,444,414
Total Equity 9,599,512 8,444,414
Trade and other payables 120,151 128,965
Total Current Liabilities 120,151 128,965
Total Liabilities 120,151 128,965
Total Equity and Liabilities 9,719,663 8,573,379
The statements in this communication reflect the current thinking of the Board and the Company’s present plans. The Company reserves the right to alter plans in the light of developing knowledge and circumstances. Shareholders’ attention is drawn to the note below concerning Forward-looking Statements.
This press release contains certain “forward-looking statements” and “forward-looking information”. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to: business plans and strategies of US Oil and Gas; operating or technical difficulties in connection with drilling or development activities; availability and costs associated with inputs and labour; drilling and exploration costs; the speculative nature of oil exploration and development; diminishing quantities or quality of reserves; synergies and financial impact of completed acquisitions; the benefits of the acquisitions and the development potential of properties of US Oil and Gas; the future price of oil; supply and demand for oil; the estimation of reserves; the realization of reserve estimates; costs of production and projections of costs; success of exploration activities; capital expenditure programs and the timing and method of financing thereof; the ability of US Oil and Gas to achieve drilling success consistent with management’s expectations; net present values of future net revenues from reserves; expected levels of royalty rates, operating costs, general and administrative costs, costs of services and other costs and expenses; expectations regarding the ability to raise capital and to add to reserves through acquisitions, assessments of the value of acquisitions and exploration and development programs; geological, technical, drilling and processing problems; treatment under governmental regulatory regimes and tax laws.
All statements other than statements of historical fact are forward-looking statements
THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
Neither this announcement nor the information contained herein constitutes an offer or solicitation by U.S. Oil and Gas Plc for the purchase or sale of any securities nor does it constitute a solicitation to any person in any jurisdiction where solicitation would be unlawful.
For further information contact:
Brian McDonnell, Chief Executive Officer +353 (1) 631 9022
About U.S. Oil & Gas:
U.S. Oil & Gas plc is an oil and gas exploration company with a strategy to identify and acquire oil and gas assets in the early phase of the upstream life-cycle and mature them. The Company’s main asset is in Nye County, Nevada where it holds the entire share capital of US-based company, Major Oil International LLC (“Major Oil”). Major Oil has acquired rights to exploration and development acreage in Hot Creek Valley, Nye County, adjacent to the oil and gas rich Railroad Valley area of Nevada, both of which are part of the Sevier Thrust of central Nevada and western Utah, USA.
For further information please refer to our website at: www.usoil.us