Falcon Oil & Gas Ltd.
Interim Condensed Consolidated Financial Statements Three Months Ended 31 March 2024 and 2023
(Presented in U.S. Dollars)
22 May 2024
To the shareholders of Falcon Oil & Gas Ltd.
Notice of No Auditor Review
The accompanying unaudited interim condensed consolidated financial statements as at and for the three months ended 31 March 2024, have been prepared by the management of the Company and approved by the Audit Committee.
The Company's independent auditors have not performed a review of these financial statements.
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Falcon Oil & Gas Ltd.
Interim Condensed Consolidated Financial Statements (Unaudited)
For the Three Months Ended 31 March 2024 and 2023
Table of Contents | |
Page Number | |
Interim Condensed Consolidated Statement of Operations and Comprehensive Loss | 4 |
Interim Condensed Consolidated Statement of Financial Position | 5 |
Interim Condensed Consolidated Statement of Changes in Equity | 6 |
Interim Condensed Consolidated Statement of Cash Flows | 7 |
Notes to the Interim Condensed Consolidated Financial Statements | 8 |
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Falcon Oil & Gas Ltd.
Interim Condensed Consolidated Statement of Operations and Comprehensive Loss (Unaudited)
Three months ended | Three months ended | ||
31 March 2024 | 31 March 2023 | ||
Notes | $'000 | $'000 | |
Revenue | |||
Oil and natural gas revenue | 3 | - | - |
- | - | ||
Expenses | |||
Exploration and evaluation expenses | (44) | (43) | |
General and administrative expenses | 12 | (528) | (597) |
Foreign exchange gain | 120 | 56 | |
(452) | (584) | ||
Results from operating activities | (452) | (584) | |
Finance income | 4 | 8 | 68 |
Finance expense | 4 | (362) | (144) |
Net finance expense | (354) | (76) | |
Loss and comprehensive loss for the period | (806) | (660) | |
Loss and comprehensive loss attributable to: | |||
Equity holders of the company | (804) | (658) | |
Non-controlling interests | (2) | (2) | |
Loss and comprehensive loss for the period | (806) | (660) | |
Loss per share attributable to equity holders of the company: | |||
Basic and diluted | 5 | ($0.001) | ($0.001) |
The notes are an integral part of these interim condensed consolidated financial statements.
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Falcon Oil & Gas Ltd.
Interim Condensed Consolidated Statement of Financial Position (Unaudited)
At 31 March | At 31 December | ||
2024 | 2023 | ||
Notes | $'000 | $'000 | |
Assets | |||
Non-current assets | |||
Exploration and evaluation assets | 6 | 52,462 | 51,287 |
Property, plant and equipment | 1 | 2 | |
Trade and other receivables | 25 | 26 | |
Restricted cash | 7 | 2,116 | 2,176 |
54,604 | 53,491 | ||
Current assets | |||
Cash and cash equivalents | 8 | 4,289 | 7,992 |
Trade and other receivables | 139 | 54 | |
4,428 | 8,046 | ||
Total assets | 59,032 | 61,537 | |
Equity and liabilities | |||
Equity attributable to owners of the parent | |||
Share capital | 402,120 | 402,120 | |
Contributed surplus | 47,415 | 47,379 | |
Deficit | (408,001) | (407,197) | |
41,534 | 42,302 | ||
Non-controlling interests | 695 | 697 | |
Total equity | 42,229 | 42,999 | |
Liabilities | |||
Non-current liabilities | |||
Decommissioning provision | 13 | 16,240 | 16,204 |
16,240 | 16,204 | ||
Current liabilities | |||
Accounts payable and accrued expenses | 14 | 563 | 2,334 |
563 | 2,334 | ||
Total liabilities | 16,803 | 18,538 | |
Total equity and liabilities | 59,032 | 61,537 |
The notes are an integral part of these interim condensed consolidated financial statements.
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Falcon Oil & Gas Ltd.
Interim Condensed Consolidated Statement of Changes in Equity (Unaudited)
Equity | Non- | ||||||
Share | Contributed | interests of | Controlling | Total | |||
capital | surplus | Deficit | the parent | interests | equity | ||
("NCI") | |||||||
Notes | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |
At 1 January 2023 | 402,120 | 47,063 | (403,860) | 45,323 | 701 | 46,024 | |
Contributions by and | |||||||
distributions to the owners: | |||||||
Share based compensation | 9 | - | 137 | - | 137 | - | 137 |
Loss and total | |||||||
comprehensive loss for the | |||||||
period | - | - | (658) | (658) | (2) | (660) | |
At 31 March 2023 | 402,120 | 47,200 | (404,518) | 44,802 | 699 | 45,501 | |
At 1 January 2024 | 402,120 | 47,379 | (407,197) | 42,302 | 697 | 42,999 | |
Contributions by and | |||||||
distributions to the owners: | |||||||
Share based compensation | 9 | 36 | 36 | 36 | |||
Loss and total | |||||||
comprehensive loss for the | |||||||
period | (804) | (804) | (2) | (806) | |||
At 31 March 2024 | 402,120 | 47,415 | (408,001) | 41,534 | 695 | 42,229 |
The notes are an integral part of these interim condensed consolidated financial statements.
6
Falcon Oil & Gas Ltd.
Interim Condensed Consolidated Statement of Cash Flows (Unaudited)
Three months ended 31 March | |||
2024 | 2023 | ||
Notes | $'000 | $'000 | |
Cash flows from operating activities | |||
Net loss for the period | (806) | (660) | |
Adjustments for: | |||
Share based compensation | 9 | 36 | 137 |
Depreciation | 1 | 1 | |
Net finance expense | 354 | 66 | |
Effect of exchange rates on operating activities | (120) | (56) | |
Change in non-cash working capital: | |||
Increase in trade and other receivables | (83) | (61) | |
Increase in accounts payable and accrued expenses | 7 | 51 | |
Net cash used in operating activities | (611) | (522) | |
Cash flows from investing activities | |||
Interest received | 8 | 78 | |
Exploration and evaluation assets | (2,869) | (2) | |
Net cash (used in) / generated by investing activities | (2,861) | 76 | |
Change in cash and cash equivalents | (3,472) | (446) | |
Effect of exchange rates on cash and cash equivalents | (231) | (70) | |
Cash and cash equivalents at beginning of period | 7,992 | 16,785 | |
Cash and cash equivalents at end of period | 8 | 4,289 | 16,269 |
The notes are an integral part of these interim condensed consolidated financial statements.
7
Falcon Oil & Gas Ltd.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)
For the Three Months Ended 31 March 2024 and 2023
1. General Information
Falcon Oil & Gas Ltd. ("Falcon") is an oil and gas company engaged in the exploration and development of unconventional oil and gas assets. Falcon's interests are located in Australia, Hungary, and South Africa. The carrying value at 31 March 2024 of the Company's interest in Australia is $52.5 million, while the Hungarian asset is nil due to a determination in 2014 that the estimated recoverable amount was insufficient to cover the carrying value of the asset. For the South African interest, costs associated with the technical cooperation permits are expensed as incurred.
Falcon is incorporated in British Columbia, Canada and headquartered in Dublin, Ireland with a technical team based in Budapest, Hungary. Falcon's common shares are traded on Toronto's TSX Venture Exchange ("TSX-V") (symbol: FO.V); and AIM, a market operated by the London Stock Exchange (symbol: FOG).
The information provided herein in respect of Falcon includes information in respect of its wholly-owned subsidiaries: TXM Oil and Gas Exploration Kft., a Hungarian limited liability company ("TXM"); Falcon Oil & Gas Ireland Ltd., an Irish limited liability company ("Falcon Ireland"); Falcon Oil & Gas Holdings Ireland Ltd., an Irish limited liability company ("Falcon Holdings Ireland"); Falcon Exploration and Production South Africa (Pty) Ltd., a South African limited liability company ("Falcon South Africa") and its 98.1% majority owned subsidiary, Falcon Oil & Gas Australia Limited, an Australian limited liability company ("Falcon Australia") (collectively, the "Company" or the "Group").
2. Accounting policies
Basis of preparation and going concern
These Interim Condensed Consolidated Financial Statements ("Interim Statements") of the Group have been prepared in accordance with IAS 34 'Interim Financial Reporting' and, except as described below, on the basis of the same accounting principles as, and should be read in conjunction with, the Consolidated Financial Statements for the year ended 31 December 2023 (pages 11 to 18) as filed on the Canadian Securities Administrator's System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca.
There are no amended accounting standards or new accounting standards that have any significant impact on these interim financial statements applicable as at 1 January 2024.
The Interim Statements are presented in United States dollars ("$"). All amounts, except as otherwise indicated, are presented in thousands of dollars. Where referenced in the Interim Statements "CDN$" represents Canadian Dollars, "£" represents British Pounds Sterling, "HUF" represents Hungarian Forints, and "A$" represents Australian Dollars.
As at 31 March 2024 the Group had $4.3 million of cash and cash equivalents. Management has plans and estimations in various stages of progress for additional funding which are estimated to be sufficient to cover Falcon's operating costs and it's Beetaloo committed costs for the next 12 months from the date of the approval of this document, however as outlined below further funding will be required for Falcon Australia's continued participation in the Beetaloo. Falcon Australia holds a 22.5% Participating Interest ("PI") in the Exploration Permits situated in the Beetaloo Sub-basin, Northern Territory, Australia with Tamboran B2 appointed as operator. As part of the transaction agreed and the latest executed JOA, Tamboran B2 granted Falcon Australia an additional carry beyond Stage 3 of A$30 million and terms were agreed on DSUs for sole risk operations, the size of these DSUs vary depending on (a) the type and length of the well to be drilled and (b) whether or not the well is a "commitment well" under the terms of the exploration permit, a non-commitment well creates a DSU to a maximum of 6,400 acres, while a commitment well creates a DSU to a maximum of 25,600 acres, providing Falcon Australia with participation optionality on the drilling of future wells. As announced on 25 March 2024 Falcon has elected to reduce its working interest in the proposed Pilot Project from 22.5% to 5%, optimizing Falcon's interest in the Beetaloo, since Falcon will only have to pay for 5% of the costs of the two wells to be drilled in 2024 as part of the Pilot but will still retain a 10% working interest in the enlarged area of circa 72,000 acres around the Pilot and a 22.5% working interest in the remaining 4.52 million acres.
The A$263.8 million cost cap and additional carry for 2023 are now fully utilized, therefore cash on hand at 31 March 2024, funds raised as announced on 22 April 2024 of $8.9 million, the 2024 carry and an estimation for a R&D refund for exploration costs in the Beetaloo under the Research and Development Tax Incentive, which will be completed and submitted for approval to the Australian authorities in the coming months, are sufficient to cover estimated committed costs for the 2024 Pilot programme including the well pad and the two commitment wells and other estimated Beetaloo general operating costs for twelve months from the date of the approval of the financial statements, however funding will be required to meet expenditure beyond this date.
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Falcon Oil & Gas Ltd.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)
For the Three Months Ended 31 March 2024 and 2023
2. Accounting policies (continued)
Management and those charged with governance are confident that further funding required can be raised through either an equity raise or debt funding. As at the date of the approval of this document no such further funding has been raised and there can be no certainty that sufficient funds can be raised if required. This indicates the existence of a material uncertainty, which may cast significant doubt over the Group's ability to continue as a going concern, and therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include adjustments that would result if the Group was unable to continue as a going concern. Having given due consideration to the cash requirements of the Group, management and those charged with governance has a reasonable expectation that the Group will have adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of this document. For this reason, the Board continues to adopt the going concern basis in preparing its consolidated financial statements which assumes the Group will be able to meet its liabilities as they fall due for the foreseeable future.
3. Segment information
Based on internal reporting information, it was determined that there is one reportable segment. All of the Group's operations are in the petroleum and natural gas industry with its principal business activity being in the acquisition, exploration and development of petroleum and natural gas properties. The Group has no producing petroleum and natural gas properties, the Group has unproven petroleum and natural gas interests in Australia, South Africa and Hungary.
The key performance measures reviewed for the segment which management believes are the most relevant information when evaluating the results of the Group are:
- the progress and extent to which farm-out agreements have been executed over the Group's acreage; and
- cash flow, capital expenditure and operating expenses.
An analysis of the geographic areas is as follows: | |||||
Australia South Africa | Hungary | Other | Total | ||
$'000 | $'000 | $'000 | $'000 | $'000 | |
Three months ended 31 March 2024 | |||||
Revenue | - | - | - | - | - |
Net loss (i) | (194) | (16) | (253) | (341) | (804) |
At 31 March 2024 | |||||
Capital assets (ii) | 52,462 | - | 2,084 | 34 | 54,580 |
Australia | South Africa | Hungary | Other | Total | |
$'000 | $'000 | $'000 | $'000 | $'000 | |
Three months ended 31 March 2023 | |||||
Revenue | - | - | - | - | - |
Net loss (i) | (156) | (14) | (107) | (381) | (658) |
At 31 March 2023 | |||||
Capital assets (ii) | 42,979 | - | 2,113 | 39 | 45,131 |
- Net loss attributable to equity holders of the company.
- Capital assets consist of exploration & evaluation assets, restricted cash and property, plant and equipment.
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Falcon Oil & Gas Ltd.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)
For the Three Months Ended 31 March 2024 and 2023
4. | Finance income and expense | |||
Three months ended 31 March | ||||
2024 | 2023 | |||
Notes | $'000 | $'000 | ||
Finance income | ||||
Interest income on bank deposits | 8 | 68 | ||
8 | 68 | |||
Finance expense | ||||
Accretion of decommissioning provisions | 13 | (130) | (75) | |
Net foreign exchange loss | (232) | (69) | ||
(362) | (144) | |||
Net finance expense | (354) | (76) | ||
5. | Loss per share | |||
Basic and diluted loss per share is calculated as follows: | ||||
For the three months ended 31 March | ||||
2024 | 2023 | |||
$'000 | $'000 | |||
Loss attributable to equity holders of the company | (804) | (658) | ||
Weighted average number of common shares in issue - (thousands) | 1,044,347 | 1,044,347 | ||
Loss / diluted loss per share | ($0.001) | ($0.001) |
Future shares issuable under the Group share option plan would be anti-dilutive as those shares would reduce the loss per share.
6. Exploration and Evaluation ("E&E") assets
Australia - Total | |
$'000 | |
At 1 January 2024 | 51,287 |
Additions | 1,211 |
Decommissioning provision | (36) |
At 31 March 2024 | 52,462 |
Australia - Total | |
$'000 | |
At 1 January 2023 | 42,977 |
Additions | 8,648 |
Decommissioning provision | (338) |
At 31 December 2023 | 51,287 |
E&E assets consist of the Group's Australian exploration project which is pending the determination of proven or probable reserves.
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Falcon Oil & Gas Ltd. published this content on 23 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 May 2024 05:18:07 UTC.