Europa Oil & Gas banked non-dilutive funding - ICYMI

Europa Oil & Gas (Holdings) Plc (AIM:EOG) this week announced a revenue swap deal with a Canadian investor to raise $500,000 in non-dilutive funding.

The investor will receive 4.5% of revenue from the Wressle 1 well in return, with the arrangement working similarly to a royalty.

Europa Oil & Gas told investors the funding allows it to accelerate development plans, at the Wressle and Cloughton projects, without shareholder dilution.

CEO Will Holland joined the Proactive studio to tell us all about it, here we take a closer look at what was said.

 

Proactive: joining me is Europa Oil and Gas CEO Will Holland. Will, very good to speak with you.

You've announced a revenue swap agreement with a Canadian investment company for $500,000. Can you tell us more about it?

Will Holland: Basically, we've agreed a revenue swap with this Canadian investor, who is a specialist oil and gas investor. They are paying us $500,000.

In return, they are getting a 4.5% revenue stream from the rest of the well.

The important aspect of this is, it's not secured.

It's like a royalty, but it isn't a royalty. It's fixed to the amount of production that we produce and the price that we receive for the crude, but it's not secured.

It's only a very small amount. So that $500,000 is effectively a presale of production from the Wressle 1 well for the rest of the well-life.

 

Proactive: Why have you gone this route Will? And is there a benefit to shareholders?

Will Holland: Oh, there is. So basically this is a non-dilutive transaction that we've done. So we're not diluting shareholders in any way.

We've brought forward these cash flows that we would get over the life of the Wressle 1 well to today, which gives us capital to then continue to progress, at the pace we want to, with our other projects.

Specifically at Cloughton, but also at Wressle for the rest of the development.

 

Proactive: So take us through the latest at Wressle. This is a single well field at the moment, but you want to push ahead with the further development of the field.

How is the planning application going?

Will Holland: Our planning application is going well. We've had a screening opinion through so we now know that we don't need to do an EIA as a part of this application. So that's progressing.

We expect to get a planning decision on the development plan, which is a two-well development plan with gas processing and a pipeline tied back to the local gas distribution system.

We expect that planning decision to come through in July, and then that will allow us to progress with that development.

 

 

Proactive: You mentioned Cloughton Will, could you give us an update on the progress down there?

Will Holland: Cloughton’s going very well. We've submitted our planning application, and we're going through a phase now where we are discussing it with the planning officer.

The site is undeniably a very good site that we've chosen.

There's been no issues whatsoever. All of the independent experts who assessed the impact of what we're planning to do at the site have all come back and said this is a very good site. It's well concealed, it won't be visible, and it's accessed through an existing industrial site.

There's already an entrance off a main road where there are lorries coming back and forth to this existing site. Our plans will only increase HGV traffic by 1%, so there will be a very negligible impact on traffic.

The emissions report said that it would be insignificant. No problem with the water table, no problem with the heritage case. So every report's coming back saying this is a good site that you've chosen for this appraisal well.

So we're quietly confident that the planning office is going to recommend that the planning application gets approved.

Proactive: Will, I hope you'll keep us posted on progress on both of those fronts. Thank you very much for the update.