Argos Resources, the Falkland Islands based company focused on the North Falkland Basin, has announced its interim financial results for the six months ended 30 June 2020. Argos holds a 100% interest in Licence PL001, which covers approx. 1,126 sq kms in the North Falkland Basin. The licence boundary is just 3km from the Sea Lion oil field, a significant discovery currently being considered for development.
- $192 thousand loss for the period (H1 2019: loss of $176 thousand);
- $560 thousand cash reserves at 30 June 2020 (YE 2019: $768 thousand);
- The current Second Phase of the Licence expires in May 2021. The Company intends to request an extension to the Licence period.
During the reporting period of the first half of the year, Brent crude oil prices plummeted from over $65/bbl at year-end 2019 to a low of $20/bbl in April 2020, before recovering somewhat to around $42/bbl by the end of June. The fall in prices was driven initially by competition from OPEC for market share and then exacerbated later in the period by the significant drop in global energy demand as a result of the Covid-19 pandemic supressing oil and gas consumption globally.
The industry has been hit hard by this unexpected sharp drop in demand and commodity prices, and has responded by reducing costs, cutting capital expenditure and delaying projects. Acknowledging this slowdown in activity, the Company intends to request an extension to the Licence term, which currently runs to 1st May 2021, as more time will be required to recover from this downturn.
Despite the above, the Company continues to seek partners to participate in drilling on its Licence and is currently engaged with a number of counterparties who have expressed interest. Given the current challenging environment the Company believes it may be some time before any expressions of interest are translated into commitments.
The Group loss for the six months to 30 June 2020 was $192 thousand (2019: loss of $176 thousand) giving an undiluted loss per share of 0.09 cents (2019: 0.08 cents loss per share).
Administrative expenses were $148 thousand compared to $175 thousand for the same period in 2019.
Net assets of $29.3 million reflect a decrease of $192 thousand since December 2019 as a result of the loss for the period.
The industry slowdown has meant that some costs which were expected to be incurred in the current year have been delayed and the Group has sufficient cash resources to continue for a period of at least 12 months from the date these financial statements were signed. In order to continue as a going concern beyond that the Company will need to raise further finance. The going concern comments in Note 1 on pages 7 and 8 contain further information.