Europa Oil Sees Loss Deepen as UK Regulatory Environment Derails Plans

Europa Oil & Gas (Holdings) PLC has reported a loss of GBP 6.78 million ($8.78 million) for the 12 months to July, compared to GBP 852,000 ($1.1 million) for its prior accounting year, as it recognized GBP 4.97 million ($6.44 million) in exploration impairment.

The impairment resulted from Europa’s decision to allow its license for the Serenity discovery in the North Sea to lapse last September. “The recent change in government in the UK and the continued uncertainty of the domestic regulatory and fiscal environment has sharply increased the possibility of future fiscal changes for the oil and gas industry, which we believe could negatively impact the economics of the Serenity project”, the London-based company reported on its website.

The extension project for the Wressle field, where Europa holds a 30 percent stake, has also been derailed by a Supreme Court decision that regulators must consider Scope III emissions in Environmental Impact Assessments. A legal challenge has been leveled against the project’s planning consent and the consortium decided they could not mount a defense, according to a statement from Europa October 18.

Besides the exploration write-off, Europa logged GBP 189,000 ($244,790) in additional impairment from producing fields for the year to July.

Gross profit for the year stood at GBP 260,000 ($336,750). Loss before taxation totaled GBP 6.78 million ($8.78 million), with no taxation expense recorded. Total comprehensive loss attributable to the parent’s shareholders was GBP 6.8 million ($8.81 million).

Besides impairments, lower production and realized prices also weighed down on Europa’s financial results, with yearly revenue falling 46 percent to GBP 3.57 million ($4.62 million). Wressle, located onshore North Lincolnshire and straddling Petroleum Exploration and Development License (PEDL) 180 and PEDL 182, produced just 357 barrels of oil a day after a three-month shut-in.

Wressle’s proven and probable reserves (2P) have been raised by 263 percent to 2.37 billion barrels of oil equivalent (boe), Europa reported January 2. That was in comparison to a 2016 assessment, which put 2P resources at 655 million boe.

The extension project, approved September, aims to drill two additional wells and build natural gas processing facilities and an underground pipeline to connect the field to the local distribution network. The extension project was expected to start production 2025.

“We are disappointed that the planning permission is likely to be rescinded following a legal challenge in light of the recent Finch Supreme Court judgment which ruled that scope three emissions must be considered in planning applications for oil and gas developments”, Europa said in its results report. “The Wressle Joint Venture is now going to submit further information that covers potential scope three emissions such that a future planning process could be approved”.

Europa is also preparing to drill Cloughton, another onshore field in the United Kingdom, in 2026 “to determine if commercial rates can be obtained using modern completion techniques so that the 192 BCF (Pmean) GIIP potential can be monetized”, Europa said.

“At Cloughton, appraisal drilling to test the reservoir productivity could result in the UK’s largest onshore gas field, which, given its proximity to gas infrastructure, could be brought online quickly”, non-executive chair Brian O’Cathain said.

“In addition, we have exciting near-term gas exploration opportunities at our Equatorial Guinea license, as well as our Ireland license, and continue to search for ideal farm-inees for both assets. Both assets are close to gas infrastructure so, like Cloughton, both can be brought online quickly following a successful well”.

Europa registered GBP 2.78 million ($3.6 million) in current assets at the end of July including GBP 1.46 million ($1.89 million) in cash and cash equivalents. Meanwhile its current liabilities stood at GBP 1.39 million ($1.8 million).

Europa said it has now changed its accounting reference date from end-July to end-December. “Accordingly, its current accounting period, which commenced on 1 August 2024, will now end on 31 December 2025”, the company said.

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