29 October 2021

WESTMOUNT ENERGY LIMITED

("Westmount" or the "Company")

Final Results & Notice of AGM

The Company is pleased to announce its Final Results for the year ended 30 June 2021, and hereby gives notice that the Annual General Meeting of Westmount Energy Limited will be held at No 2 The Forum, Grenville Street, St Helier, Jersey JE1 4HH, Channel Islands on 9 December 2021 at 11.00.

Copies of the Company's results and Notice of AGM are available on the Company's website, www.westmountenergy.com, and will be posted to shareholders today.

CHAIRMAN'S REVIEW

2021 Highlights

·      High quality reservoirs identified in first drilling campaign on Kaieteur and Canje blocks - but no standalone commercial discoveries to date¹

·      Tanager-1 Discovery contains gross 65.3 MMbbls (42.7 MMbbls Net to Kaieteur Block) contingent resources (2C, unrisked)² in high quality Maastrichtian reservoir - but is non-commercial as a standalone development

·      Detailed analysis and integration of multi-play drilling results and newly acquired sub-surface data into regional petroleum system models to high-grade potential follow-on drilling targets

·      Applications for environmental authorisation submitted by operator to the Guyanese EPA with respect to potential new drilling programs on the Canje and Kaieteur blocks from 2022

·      Shares commenced cross trading on the US OTCQB market under the ticker symbol "WMELF"

·      Final repayment of the 10% Convertible Unsecured Loan Notes 2021; the company is now debt free

·      Cash balance of £1.2M at year end, 30 June 2021

Global economic recovery, the ebb and flow of the COVID-19 pandemic, an accelerating energy transition in parallel with an Opec+ stabilization of oil markets have been the central themes in the upstream sector over the past 12 months. The green shoots of economic recovery that were in evidence in the second half of 2020 have continued to sprout in 2021. Vaccination programs and improving management strategies are pointing towards light at the end of the pandemic tunnel. Increasing economic activity, population mobility and oil demand, combined with OPEC+ supply discipline, has driven a sustained oil price rally over this period with Brent crude trading consistently above US$80/bbl since the start of October. While the clean energy transition has also gained momentum during this period, the redirected capital flows and poor regional performance of some renewable sources (wind and hydro) during summer 2021 have had some unintended consequences - such as gas shortages in Europe and Asia boosting demand for crude - while adding significantly, at least in the near term, to gas and oil pricing pressures. So, while pandemic threats remain in the form of mutant strains, other economic threats are now moving centre stage - such as rising inflation driven by rebound demand and spiking energy prices - together with uncertainties around future energy policies, the pace and direction of decarbonisation and energy capital allocation decisions in the face of an array of technologies with variable cost, carbon and reliability profiles, not to mention societal impacts. As the 'unintended consequences' in 2021 have shown energy transition is complex and multi-dimensional which suggests that reliable sources of energy such as low cost, low carbon oil and gas that can be rapidly commercialised, will have a role to play in the energy system for decades to come.

During the last 12 months the development of the upstream sector in Guyana has continued to power ahead making Guyana the world's fastest growing economy in 2020 with standout economic growth of over 40%. Building on the foundations of a world class petroleum province the country continues its transformation towards a significant oil producing nation - with potential for the installation of at least 6 Floating Production Storage and Offloading (FPSO) units on the Stabroek Block by 2027 and a discovered resource inventory, to date, which underpins up to 10 FPSOs³.  Three of these FPSOs are already operating or are under construction - with the Liza Phase 1 (Destiny FPSO) reaching its plateau production rate of 120,000 BOPD during the past year, Liza Phase 2 (Unity FPSO) about to commence installation and hook-up offshore Guyana and on track to achieve first oil in early 2022, with a capacity of 220,000 BOPD and with a third field development, Payara (Prosperity FPSO), also with 220,000 BOPD capacity, undergoing topsides fabrication at drydock in Singapore and targeting first oil in 2024. In addition, it is anticipated that the Stabroek consortium will submit to the government a 4^th development plan, for the Yellowtail discoveries, by the end of 2021, targeting a gross production capacity of 220,000-250,000 BOPD and first oil in 2025. At this stage a number of follow-on developments are also envisaged including development of the Mako/Uaru and Whiptail discoveries, subject to government approvals and project sanctioning⁴. 

Six years on since the world-class Liza-1 discovery, the Guyana-Suriname Basin continues to manifest the hallmarks of a prolific emerging hydrocarbon province. With more than 50 wells drilled in the basin since 2015, in excess of 11 billion oil equivalent barrels discovered between Stabroek and Block 58 (with estimated 70% oil or liquids)⁵ and a total basin potential now estimated to be more than twice the discovered resource⁶, the basin continues to be an outlier in terms of global exploration performance and investment growth.  Large prospects, high success rates and continuous aggressive exploration and appraisal drilling has catapulted Guyana to the number three position for proven oil reserves in the Latin America-Caribbean region⁷.These advantaged barrels, characterised by low breakeven costs, low carbon emissions and potential for rapid commercialisation, are likely to continue to make Guyana a preferred destination for deepwater exploration and production investment.

In October 2021, on the back of a string of exploration successes, estimates of gross discovered resources to date on the Stabroek Block alone have been revised upwards to approximately 10 billion barrels of oil equivalent⁸. Successful exploration and appraisal wells reported during the last 15 months include Redtail-1, Yellowtail-2, Uaru-2, Mako-2, Longtail-3, Turbot-2, Whiptail-1, Whiptail-2, Pinktail-1 and Cataback-1 bringing the total number of reported significant discoveries to date on the Stabroek Block to twenty-one. In addition, circa 15m of oil bearing, Santonian, sandstone was reported in the Hassa-1 well, which is located proximal to the Canje block boundary. These frenetic activity levels are supported by the current deployment of six drillships, offshore Guyana, with a 7th drillship plus one semi-submersible rig operating offshore Suriname.

In the Surinamese sector, at the south-eastern end of the basin two additional stacked pay discoveries were announced by the Total/Apache consortium in Block 58, during this period - Kwaskwasi-1 and East Keskesi-1 - bringing the number of reported discoveries on the block to four. These discoveries reported light oil and gas-condensate pay in the shallower Campanian reservoirs overlying light oil pay in deeper Santonian reservoirs. Appraisal of these discoveries has commenced, with Total as operator, targeting FID for the first development in early 2022 and first oil by the end of 2025. Initial appraisal progress has been mixed with early success at Sapakara South-1, disappointments at Kwaskwasi and Keskesi East-1, and the general challenges around valorization of large associated gas volumes.  In December 2020, Petronas announced a discovery at the Sloanea-1 exploration well on Block 52, where several hydrocarbon-bearing sandstone packages with good reservoir qualities were encountered in the Campanian.

Exploration drilling results continue to support the presence of multiple plays, quality reservoirs and the potential for stacked-pay drilling opportunities within the basin. Although the Upper Cretaceous Maastrichtian-Campanian Liza play dominates in terms of number of discoveries and discovered volumes to date the deeper Santonian pools on Block 58, in conjunction with the deeper hydrocarbons reported at Liza-3, Tripletail-1, Yellowtail-2, Uaru-2, Turbot-2, Longtail-3 and Hassa-1 on the Strabroek Block, suggest an extensive emerging deeper play fairway within the basin.

It is against this backdrop that the first 'large step-out play extension wells' have been drilled on the Kaieteur and Canje blocks during the last 15 months - with results to date confirming the presence of high-quality reservoirs and the extension of the Cretaceous petroleum system outboard of the Liza-Sloanea trend. 

Kaieteur Block

The first well on the Kaieteur block, Tanager-1, remains the deepest well drilled in the Guyana-Suriname Basin to date. It was spudded on the 11 August 2020, using the Stena Carron drillship. The well was drilled in a water depth of 2,900 metres and reached a total depth of 7,633 metres circa mid-November 2021. Evaluation of LWD, wireline logging and sampling data confirmed 16 metres of net oil pay (20^oAPI oil) in high-quality sandstone reservoirs of Maastrichtian age. Although high quality reservoirs were also encountered at the deeper Santonian and Turonian intervals, initial interpretation of the reservoir fluids was reported to be equivocal, requiring further analysis - results of which have yet to be disclosed. Post well analysis and integration of the data collected continues with a view to high grading the next drilling target on the Kaieteur block.

A post-well Netherland, Sewell & Associates Inc. ("NSAI") published CPR (14 February 2021) indicates that the Tanager-1 Maastrichtian discovery contains a 'Best Estimate' Unrisked Gross (2C) Contingent Oil Resource of 65.3 MMBBLs (Low to High Estimates 17.7 MMBBLs to 131 MMBBLs) - with a 'Best Estimate' Unrisked Net (2C) Contingent Oil Resource attributable to the Kaieteur Block of 42.7 MMBBLs (Low to High Estimates 11.3 MMBBLs to 86 MMBBLs). However, this discovery is currently considered to be non-commercial as a standalone development.

Subsequent to the Tanager-1 discovery, on 24 May 2021, it was announced that Hess Corporation ("Hess") had increased its working interest ("WI") in the Kaieteur Block, offshore Guyana, from 15% to 20% via the farm-down of a 5% WI by Cataleya Energy Limited ("CEL"). Although the details of this farm-in transaction were not disclosed this farm-in, by one of the Stabroek block partners and a leading player in the Guyana-Suriname basin, suggests confidence in the prospective resource potential of the Kaieteur Block and augurs well for the continuing exploration of the area.

On the 23 August 2021 it was announced that the date for elective nomination, by the operator, of the prospect target for the 2nd well on the Kaieteur Block has been extended by seven months to the 22 March 2021. The Kaieteur Block partners agreed to this extension to facilitate continuing analysis by the operator and integration of extensive multi-play drilling results and comprehensive data collection programs into regional petroleum system models and the prospect nomination decision.

Subsequently, in September 2021, the operator, ExxonMobil, submitted an application for environmental authorization to the Environmental Protection Agency (EPA) to proceed with a 12 well exploration campaign on the Kaieteur Block.

The Kaieteur Block is currently operated by an ExxonMobil subsidiary, Esso Production & Exploration Guyana Limited (35%), with Cataleya Energy Limited ("CEL") (20%), Ratio Guyana Limited ("RGL") (25%) and a subsidiary of Hess Corporation, Hess Guyana (Block B) Exploration Limited (20%) as partners. Westmount retains a holding of approximately 5.3% of the issued share capital of Cataleya Energy Corporation ("CEC") the parent company of CEL and circa 0.04% of the issued share capital of Ratio Petroleum Energy Limited Partnership ("Ratio Petroleum") the ultimate holding entity with respect to RGL.

Canje Block

The first well on the Canje block, Bulletwood-1, was spudded on the 31 December 2020 using the Stena Carron drillship and was completed in early March. The well was safely drilled in a water depth of 2,846 metres to its planned target depth of 6,690 meters. The primary target in the well was a Campanian age confined channel complex. The well encountered quality reservoirs but non-commercial hydrocarbons. There has been limited disclosure of the well results to date as detailed analysis of the data collected is ongoing.  However, the initial results confirm the presence of the Guyana-Suriname petroleum system and the potential prospectivity of the Canje Block.

Initial drilling operations at the second well on the Canje block, Jabillo-1, commenced on the 14 March 2021 using the Stena Carron drillship. Previously published information indicated that Jabillo-1 was targeting a Late Cretaceous, Liza-age equivalent, basin floor fan⁹. After interruption for a brief period of maintenance work on the drillship drilling operations at Jabillo-1 recommenced circa the 5 June 2021 and were completed in early July. The well was safely drilled in a water depth of 2,903 metres to its planned target depth of 6,475 meters. The well did not encounter commercial hydrocarbons.

The third well on the Canje block, Sapote-1, was spudded circa the 29 August 2021, using the Stena DrillMAX drillship. This well is located in the southeast of the Canje Block, approximately 60kms north of the Campanian and Santonian Maka Central-1 stacked pay discovery, in a new depositional setting linked to the Berbice canyon system. It is an independent multi-layer prospect, with several Upper Cretaceous targets, and is potentially the largest prospect drilled on the Canje block to date. Drilling of Sapote-1 is anticipated to take 60 days, with results anticipated in late October. At the time of going to press the results of the well are pending.

Westmount holds an indirect interest in the Canje Block as a result of its circa 7.2% interest in the issued share capital of JHI Associates Inc. ("JHI")¹⁰. The company also holds an additional indirect interest in the Canje Block as a result of its shareholding in Eco (Atlantic) Oil and Gas Ltd. ("EOG") and following the investment in JHI Associates Inc. ("JHI") announced by EOG on the 28 June 2021. Subsequent to this EOG transaction and a previous 2018 farm-out to Total JHI is fully carried/funded for the 2021 three well drilling campaign and is also funded for the drilling of additional wells.

The Canje Block is currently operated by an ExxonMobil subsidiary, Esso Exploration & Production Guyana Limited (35%), with TotalEnergies E&P Guyana B.V. (35%), JHI Associates (BVI) Inc. (17.5%) and Mid-Atlantic Oil & Gas Inc. (12.5%) as partners.

Orinduik Block

Westmount continues to hold an indirect interest in the Orinduik Block as a result of its circa 0.75% interest in the issued share capital of Eco (Atlantic) Oil and Gas Ltd. ("EOG"). Over the last 12 months the focus of the Orinduik Block JV partners has been on the analysis and assimilation of the 2019/20 drilling results and data gathering program, the reprocessing and re-interpretation of the 3D seismic data, and the high grading of the Cretaceous light oil prospect inventory with a view to the next drilling campaign on the Orinduik Block. EOG remains fully funded for its 15% working interest share of further planned/near term drilling on the block, which is anticipated to commence as soon as it is practical to do so.

The Orinduik Block is currently operated by Tullow Guyana B.V. (60%), with TOQAP Guyana B.V. (25%) and EOG (15%) as partners. TOQAP Guyana B.V. is jointly owned by TotalEnergies E&P Guyana B.V. (60%) and Qatar Petroleum (40%).

Block 47, Suriname

Westmount retains a minor indirect interest in Block 47, Suriname, via its circa 0.04% holding in Ratio Petroleum. The first well on Block 47, the Goliathberg-Voltzberg North-1 ("GVN-1") well was spudded circa 25 January 2021, using the Stena Forth Drillship and was reported by the operator Tullow Oil to have reached total depth on the 18 March 2021. The well was drilled to a total depth of 5,060 metres in a water depth of 1,856 metres and was targeting Turonian-Cenomanian stacked reservoirs. The well is reported to have encountered good quality reservoir with minor oil shows and was subsequently plugged and abandoned.  

Block 47 is operated by Tullow Suriname B.V. (50%), with Petroandina Resources Corporation N.V (30%) and Ratio Suriname Ltd. (20%) as partners.

Portfolio Effect

Westmount's investment strategy has been to provide shareholders exposure to a portfolio of drilling outcomes in the Guyana-Suriname Basin. Since 2019, we have participated, indirectly via our investee companies, in six wells (Jethro-1, Joe-1, Tanager-1, Bulletwood-1, Jabillo-1 and Sapote-1¹), offshore Guyana, which have yielded 3 oil discoveries (Jethro, Joe and Tanager), but no standalone commercial success to date.  While these initial drilling outcomes are below our expectations for the portfolio, the results provide encouragement and must be viewed in the context of 'large step-out' wells evaluating giant stratigraphic prospects while seeking to establish the perimeter of the multiple Tertiary and Cretaceous play fairways both to the northeast and southwest of the prolific Stabroek block. 

In any case, the drilling to date has confirmed the presence of high-quality reservoirs of various stratigraphic ages in the Kaieteur, Canje and Orinduik areas, which are capable of supporting deep-water developments when containing commercial volumes of light oil. Recent public domain presentation and commentary suggests that trap adequacy and hydrocarbon migration/timing are the key exploration risks inferred from these initial drilling results, out with of the Stabroek Block sweet-spot. These results together with the analysis and synthesis of the extensive well data gathering programs executed by the respective operators should improve understanding of the plays, reduce sub-surface risk and inform prospect selection for the next round of drilling on these blocks.  We remain hopeful that the geoscience learning curve combined with the portfolio effect provided by drilling an extended sequence of prospects in this prolific basin will win out over individual prospect risks to yield a commercial discovery. We look forward to the next drilling campaign across these blocks which will potentially commence in early 2022. ExxonMobil, the operator of the Kaieteur and Canje blocks, has already submitted an application for environmental authorization to the Environmental Protection Agency (EPA) with respect to potential 12 well drilling programs on both the Kaieteur and Canje blocks. 

Investment portfolio rebalancing and optimisation of exposure to 2021 drilling activity

During the period under review your company executed a number of transactions with a view to rebalancing the investment portfolio and optimising exposure to the more immediate and material drilling opportunities that were presented by the scheduled three well campaign on the Canje block in 2021.

On the 10 September 2020 the company announced that it had purchased 1,550,000 common shares in JHI by way of the issue of 18,290,000 new ordinary shares of no par value in Westmount ("New Ordinary Shares"), representing approximately 12.7% of Westmount's enlarged issued share capital. This share exchange transaction was agreed with the counterparties on the basis of a share swap metric of 11.8 new ordinary shares in Westmount for each common share in JHI - with Westmount shares being valued at 14.745p per share and JHI shares being valued at CAD$3 per share.

Two additional 'cash only' JHI share purchase transactions were also entered into by Westmount during the period under review. On the 22 December 2020 the company announced that it had purchased 250,000 common shares in JHI at an aggregate cost of US$400,000. On the 18 January 2021 the company announced that it had purchased 287,500 common shares at an aggregate cost of CAD$718,750. Following these purchases, Westmount holds a total of 5,651,270 shares in JHI, representing approximately 7.2% of the issued common shares in JHI as of 30 June 2021.

On the 17 November 2020 Westmount sold 1,200,000 shares in Ratio Petroleum for an aggregate consideration of ILS 1,514,681 (£338,480 after costs). On the same date the company sold 300,000 WL2 Warrants for an aggregate consideration of ILS 69,251 (£15,282 after costs). A residual holding of 89,653 WL2 warrants were exercised on the 14 January 2021 for an aggregate consideration of ILS 116,280 (£27,378). After rebalancing and the WL2 warrants exercise, Westmount continues to hold 89,653 shares in Ratio Petroleum representing approximately 0.04% of the issued share capital.

Westmount continues to hold a total of 567,185 common shares in CEC, representing approximately 5.3% of the issued share capital of CEC as of 10 August 2020.

Westmount continues to hold 1,500,000 shares in EOG, representing approximately 0.75% of the common shares in issue as of 6 September 2021.

On the 1 April 2021 the company announced that final repayment had been made with respect to the 10% p.a. convertible unsecured loan notes 2021 ("Convertible Loan Notes"), due on 31 March 2021. The final repayment was a total of £456,548 cash, consisting of £400,000 residual principal of Convertible Loan Notes plus £56,548 in accrued interest. This transaction completed the repayment in full of all Convertible Loan Notes issued on the 23 October 2018 and the company is now debt free.

The reported financial loss for the period is primarily made up of a non-cash loss on financial assets held at fair value through the profit and loss, some of which is as a result of Foreign Exchange movements on the portfolio Investments when valued at the period end.

US OTCQB Cross Trading Facility

On 1 December, 2020 we announced that the company's ordinary shares of no par value each ("Ordinary Shares") commenced cross-trading on the "OTCQB Market" in New York, U.S., under the ticker symbol "WMELF".

The cross-trading facility on the OTCQB Market will allow Westmount's Ordinary Shares to be traded in US Dollars by broker-dealers in the United States. Westmount's Ordinary Shares continue to trade on the AIM market of the London Stock Exchange with the ticker symbol "WTE".

Summary/Outlook

The green shoots of economic recovery that were in evidence in the second half of 2020 have continued to sprout in 2021. Vaccination programs and improving management strategies are pointing towards light at the end of the pandemic tunnel. Increasing economic activity, population mobility and oil demand, combined with OPEC+ supply discipline, has driven a sustained oil price rally over the past 12 months with Brent crude trading consistently above US$80/bbl since the start of October 2021. While the clean energy transition has also gained momentum during this period, the redirected capital flows and poor regional performance of some renewable sources (wind and hydro) during summer 2021 have had some unintended consequences - such as gas shortages in Europe and Asia boosting demand for crude - while adding significantly, at least in the near term, to gas and oil pricing pressures.

Drilling activity in the Guyana-Suriname basin continues to accelerate driven by the industry's focus on 'advantaged barrels' as a result of the unique combination of prospect sizes, reservoir quality, low carbon intensity and low breakeven metrics (US$25/bbl-US$35/bbl) that are available offshore Guyana. While the initial drilling outcomes from the Westmount portfolio have yet to deliver a standalone commercial discovery, the results to date provide encouragement and must be viewed in the context of initial 'large step-out' wells evaluating giant stratigraphic prospects while seeking to establish the perimeter of the multiple play fairways both to the northeast and southwest of the prolific Stabroek block. We are also heartened by the industry's continuing appetite for exploration acreage in the Guyana-Suriname basin - such as the Hess 5% farm-in on the Kaieteur Block (post Tanager-1) and the award of 3 blocks in the Surinamese Shallow Offshore Bid Round 2020/21 to Chevron (Block 5) and TotalEnergies + Qatar Petroleum (Blocks 6 and 8). Furthermore, the applications for environmental authorisation submitted to the Guyanese EPA by ExxonMobil the operator of the Canje and Kaieteur blocks augurs well for potentially extensive new drilling programs on these blocks from 2022.

Westmount's strategy remains one of offering shareholders exposure to high impact drilling outcomes in the Guyana-Suriname Basin via material indirect holdings in some key licences. In this context, and in spite of the access challenges, your Board remains focused on investment opportunities and deployment of capital that gives additional exposure to drilling in this prolific emerging basin. In addition, subject to future drilling outcomes, there are likely to be some consolidation opportunities within the basin amongst the junior players, as exploration matures and in response to risk management demands of investor capital. For the moment Westmount remains the only US OTCQB and London AIM listed junior player offering exposure to drilling outcomes across 3 blocks offshore Guyana. We travel in hope.

GERARD WALSH

Chairman

28 October 2021

Notes

¹At time of going to press results of the Sapote-1 well are pending
²CPR by Netherland, Sewell & Associates Inc. ("NSAI") dated 14 February 2021- published by Ratio Petroleum
³Hess Corporation Presentation, 9 September 2021
⁴Hess Corporation Q2 2021 Earnings Conference Call remarks
⁵Westwood Global Energy Group
⁶ExxonMobil 2021 Investor Day Presentation
⁷https://oilnow.gy/featured/guyana-has-3rd-highest-crude-oil-reserves-in-latin-america-caribbean-region/
⁸ExxonMobil Corporation press release, 7 October 2021
⁹JHI's Website https://www.jhiassociates.com
¹⁰Based on JHI's issued share capital inferred from JHI transaction dated 28 June 2021

For further information, please contact:

Westmount Energy Limited                               www.westmountenergy.com

David King, Director                                              Tel: +44 (0) 1534 823059

Anita Weaver                                        

Cenkos Securities plc (Nomad and Broker)       Tel: +44 (0) 20 7397 8900

Nicholas Wells/Peter Lynch (Corporate Finance)

DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2021

The Directors present their annual report and the audited financial statements of Westmount Energy Limited (the "Company") for the year ended 30 June 2021.

PRINCIPAL ACTIVITIES

The principal activity of the Company is, and continues to be, an energy investment company. Development of the Company's activities and its prospects are reviewed in the Chairman's Review on pages 3 to 8.

The Company was incorporated in Jersey on 1 October 1992 under the Companies (Jersey) Law 1991, as amended, and is a public company with registered number 53623. The Company is listed on the London Stock Exchange Alternative Investment Market ("AIM"). On 1 December 2020 the Company commenced cross-trading on the OTCQB Market in New York, U.S., under the ticker symbol "WMELF".

DIRECTORS AND DIRECTORS' INTERESTS

The Directors who served during the year and subsequently to the date of this report were as follows:

RESULTS AND DIVIDENDS

The result for the year is set out on page 19 in the Statement of Comprehensive Income. The Directors do not recommend the payment of a dividend in respect of these financial statements (2020: £Nil). 

DIRECTORS' BIOGRAPHICAL INFORMATION

Gerard Walsh, Chairman, age 58, a Swiss resident, is a member of the Chartered Institute of Management Accountants and has been involved in financing oil and gas companies for over 20 years. Mr Walsh maintains his knowledge and skills via direct contact with senior industry investors and other operators, and via monitoring of significant market activities within the global energy sector.

David R King, age 63, a Jersey resident, is a Fellow of the Institute of Chartered Accountants in England and Wales and has over 25 years' experience in capital markets and cross border structuring gained from senior positions in a number of offshore jurisdictions, notably the Cayman Islands, Hong Kong, Luxembourg and Jersey. He is an experienced professional Non-Executive Director and is regulated personally by the Jersey Financial Services Commission. He maintains his knowledge and skills via fulfilment of regular continuing professional development obligations and by close monitoring of significant market activities within the sector.  Mr King acts as an independent director and oversees the efficient operation of Company Secretarial, Registrar and Administrative operations of the Company. 

Thomas P O'Gorman, age 69, a Northern Ireland resident, is a long term investor in the resource sector and is the former Chairman of Cove Energy Plc (formerly Lapp Platts Plc) who has been involved in financing oil and gas companies for over 40 years. Mr O'Gorman maintains his knowledge and skills via direct contact with senior industry investors and other operators, and via monitoring of significant market activities within the global energy sector.

Dermot Corcoran, age 62, a Republic of Ireland resident, is a petroleum geologist and geophysicist, with more than 30 years' experience working with both major and minor hydrocarbon exploration companies globally. Mr Corcoran has wide experience in technical and commercial aspects of petroleum exploration and production, gained from employment and investment experience in Europe, North Africa, West Africa, Kurdistan, Syria, Pakistan and the USA. Mr Corcoran maintains his knowledge and skills via direct contact with senior industry investors and other operators, attendance and engagement at industry conferences and seminars and via monitoring of significant market activities within the global energy sector.

SECRETARY

The Secretary of the Company is Stonehage Fleming Corporate Services Limited.

AUDITOR

The auditor, Moore Stephens Audit & Assurance (Jersey) Limited, has indicated its willingness to continue in office, and a resolution that it is re-appointed will be proposed at the next annual general meeting.

STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

Jersey Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) and applicable law. Under Company law the Directors must prepare financial statements that give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·      state whether the financial statements have been prepared in accordance with IFRS as adopted by the European Union; and

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

As far as the Directors are aware, there is no relevant audit information of which the Company's auditor is unaware and each Director has taken all the steps that he ought to have undertaken as a director in order to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The Company's website is maintained in compliance with AIM Rule 26 and the applicable OTCQB Market standards.

Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm that they have complied with all of the above requirements in preparing these financial statements.

On behalf of the Board

D R KING

Director

28 October 2021

CORPORATE GOVERNANCE

The Board have adopted the Quoted Companies Alliance Corporate Governance Code ("the QCA Code") following the London Stock Exchange's requirement for AIM listed companies to adopt and comply with a recognised corporate governance code.

Strategy and Business Model

The strategy of the Company is to invest in and provide follow on capital to small and medium sized companies which have significant growth possibilities operating in the oil and gas sector. Members of the Board have specialist knowledge and experience in the upstream sector of the oil and gas industry (gained from extensive investing activity over a number of decades) allowing them to identify projects and growth companies with potentially higher returns, commensurate with acceptable levels of risk. The Company undertakes extensive due diligence on potential investment opportunities and monitors performance of its investments via close contact with the companies concerned and analysis of their public announcements and presentations. In common with other investment companies in this sector, access as a minority shareholder to projects and valuable investments is challenging but the Board is confident of its ability to continue to source attractive investment opportunities given close relationships with a number of companies and their management teams, and recognition of the Board's experience and strong network.

Shareholder Relations

The Company engages closely with its principal shareholders, a number of whom are Directors of the Company, primarily via face-to-face meetings and publishes announcements of significant activity consistent with market requirements. Shareholders receive annual and half-year financial statements and are invited to the Company's Annual General Meeting. Contact details for the Company are maintained on the website and on Regulatory News Service announcements. The Board seeks to build strong relationships with its institutional shareholders which are managed by the Chairman and supported by other members of the Board.

Gerard Walsh, Chairman, and Dermot Corcoran, Director, are primarily responsible for shareholder liaison, and can be contacted via the Contact Page on the Company's website.

Stakeholder and Social Responsibilities

The Board has identified its key stakeholders as being its shareholders and investee companies, given it has no employees and a small range of contracted service providers. It maintains contact with shareholders, of whom a significant proportion are Directors, via Regulatory News Service and periodic feedback from these parties. Contact with investee companies is operated via the Chairman and individual Board directors responsible for the relevant investment recommendation, and is geared to key operational, project and transactional cycles identified for the company concerned.

Risk Management

The Company actively monitors and manages risk in its activities, principally through oversight and operation of its investment portfolio. The Company identifies key risks in all of its investments during the selection and due diligence cycle, and subsequent recommendations for investment by the Company consider for each proposal a range of risks and mitigating factors. Identification of these risks is achieved by direct engagement with the companies in which Westmount seeks to invest, close analysis of their market opportunities and threats, combined with detailed knowledge of the market sector where they operate and their competitors.

Board Composition, Evaluation and Decision Making

The Board comprises three shareholder Directors (including the Chairman Gerard Walsh) and one Non-Executive Director (David King) resident in Jersey, who is considered to be independent.

The Company deviates from the requirements of the QCA Code in that it has only one independent non-executive director. The Directors consider that the structure of the Board is appropriate and proportionate for the business at this stage of the Company's growth, and that the Independent Director, in conjunction with the Company's Nominated Adviser, provides appropriate challenge to the executive directors on all corporate governance matters. The Board intends to keep all aspects of its corporate governance - independence and the balance of executive and non-executive roles in particular - under review going forward.

Each of the four directors has considerable experience in their respective fields and act collectively in all decision making of the Company. The Board is satisfied that it has a suitable balance between independence on the one hand and knowledge of the Company's activities, to allow it to properly discharge its responsibilities and duties. Directors are expected to use their judgement and experience to challenge and assess the appropriateness of operations and decision making at all times.

The Board has met 5 times this financial year and Directors each dedicate between 12 and 150 daystime to the Company per annum.

The Board regularly takes advice from its Nominated Advisor, Cenkos Securities plc, and other external advisors (principally its external lawyers) in relation to periodic investment opportunities and fund raising.

The Board completes an annual self-evaluation of its performance based on externally determined guidelines appropriate to the composition of the Board and the Company's operation, including Board Sub Committees. The scope of the self-evaluation exercise will be re-assessed each year to ensure appropriate depth and coverage of the Board's activities consistent with corporate best practice. The Board has adopted a board effectiveness questionnaire, which assesses the composition, processes, behaviours and activities of the board through a range of criteria, including board size and independence, mix of skills and experience, and general corporate governance considerations in line with the QCA code.

Given the stage of the business' maturity, the responsibilities of a nomination committee are delegated to the Board, and there are no formal succession planning processes in place. The Board intends to keep this under review as the business develops.

Corporate Culture

Westmount Energy supports the growing awareness of social, environmental and ethical matters when considering business practices. These statements provide an outline of the policies in place that guide the Company and its employees when dealing with social, environmental and ethical matters in the workplace.

Code of Conduct

Westmount Energy maintains and requires the highest ethical standards in carrying out its business activities in regards to dealing with gifts, hospitality, corruption, fraud, the use of inside information and whistle-blowing.

Westmount Energy maintains a zero-tolerance policy towards bribery and corruption.

Equal Opportunity and Diversity

Westmount Energy promotes and supports the rights and opportunities of all people to seek, obtain and hold employment without discrimination.

It is our policy to make every effort to provide a working environment free from bullying, harassment, intimidation and discrimination on the basis of disability, nationality, race, sex, sexual orientation, religion or belief.

Joint Venture Partners, Contractors and Suppliers

Westmount Energy is committed to being honest and fair in all its dealings with partners, contractors and suppliers.

Procedures are in place to ensure that any form of bribery or improper behaviour is prevented from being conducted on Westmount Energy's behalf by joint venture partners, contractors and suppliers. Westmount Energy also closely guards information entrusted to it by joint venture partners, contractors and suppliers, and seeks to ensure that it is never used improperly.

Operating Responsibility and Continuous Improvement

Westmount Energy adopts an environmental policy which sets standards that meet or exceed industry guidelines and host government regulations. This is reviewed on a regular basis. Wherever we operate we will develop, implement and maintain management systems for sustainable development that will strive for continual improvement.

Westmount Energy is committed to maintaining and regularly reviewing its Health and Safety and Environmental Policies.

Periodic feedback from stakeholders, as described in relation to Stakeholder and Social Responsibilities (above), allows the Board to monitor the culture of the Company, as well as its ethical values and behaviours.

Governance Structures

The Board operates to manage and direct the affairs of the Company via close contact between Board members and through both regular scheduled and ad-hoc Board meetings. The Board aims to meet at least quarterly with a timetable set by the external Company Secretary with formal agendas and papers delivered in advance supporting key matters for consideration or approval. Additionally, contact is maintained between the directors via email and telephone given the geographic separation of the Board.

Mr Walsh as Chairman is responsible for setting the strategy of the Company and maintaining performance of the Board in line with the broad objectives set in that strategy. He is responsible for liaison with key stakeholders, including shareholders and prospective investee companies, and also with advisers and regulatory authorities.

Mr King, as a Jersey resident, maintains close contact with the Company Secretary and other contracted service providers from Jersey. The Board does not operate separate sub-committees (Audit, Remuneration or Nomination) given its small size and close contact for key decisions. The Company does not plan to establish new sub-committees for the foreseeable future.

The Board retains full authority for the Company such that all decisions on behalf of the Company are reserved for the Board. 

Communication with Stakeholders

The Company communicates with shareholders through the Annual Report and Audited Financial Statements, annual and half year results announcements, the Annual General Meeting, and periodic meetings with significant institutional shareholders and analysts.

Corporate information (including all Company publications and announcements) is available to all shareholders, prospective investors and the public and is maintained on the Company's website, www.westmountenergy.com.

In the last 12 months there were no votes of shareholders where a significant proportion voted against a resolution.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF WESTMOUNT ENERGY LIMITED

Opinion

We have audited the financial statements of Westmount Energy Limited (the 'Company') as at and for the year ended 30 June 2021 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, Statement of Changes in Equity, the Statement of Cash Flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards ('IFRSs') as adopted by the European Union and the requirements of the Companies (Jersey) Law 1991.

In our opinion, the financial statements:

·    give a true and fair view of the state of the Company's affairs as at 30 June 2021 and of its loss for the year then ended;

·    have been properly prepared in accordance with the IFRSs as adopted by the European Union; and

·    have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Jersey, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included understanding the nature of the Company, its business model, system of internal control and related risks including relevant impact of the COVID-19 pandemic to the business, reviewing the performance of the underlying investments, critically assessing the key assumptions made by management including its appropriateness in the context of the financial reporting framework, and evaluating the directors' plans for future actions in relation to their assessment.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Emphasis of matter

We draw your attention to note 8 and note 15 of the financial statements, which include unlisted investments held by the Company and carried at £13,989,918 (2020: £10,943,867) based on Directors' valuations. These are Level III investments and have been valued based on the recent sales price of the investments and/or using relevant market proxies where available. The Directors have also considered market expectations of future performance of the entity's industry sector, in particular known interest in the area of current exploration, in arriving at their valuations. Our audit opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

·       Valuation of Investments. The valuation of the Company's investments is a key driver of the Company's investment return and investments represent a material proportion of the Company's financial assets. The relevant accounting policies and investment composition are discussed in note 2 and note 8, respectively, to the financial statements.

The investments represent listed and unlisted equity instruments amounting to £0.47 million and
£13.99 million, respectively, as at 30 June 2021. The identified risk predominantly relates to the unquoted investment which valuation carries a greater degree of judgement by the directors and has been valued based upon the price of recent investments which is a valuation basis included in the International Private Equity and Venture Capital Guidelines (IPEVC Guidelines).

Our main audit procedures to address the identified risk in respect of the unlisted investment were (a) we discussed with management their unlisted valuation methodology, and assessed the recognition and measurement of the unlisted investment held for compliance with IFRSs, and whether it had been accounted for in accordance with the stated accounting policy and with IPEVC Guidelines; and (b) we substantiated the nature and background of recent transactions which had been used as the basis of the valuation. We have not identified any material issues from the completion of the above procedures.

·       Risk of management override of controls. In accordance with ISAs (UK), we are required to consider the risk of management override of internal controls. Due to the unpredictable nature of this risk, we are required to assess it as a significant risk requiring special audit consideration.

Our audit work included, but was not restricted to, specific procedures relating to the risk that are required by ISA (UK) 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, which includes the testing of journal entries, evaluation of judgements and assumptions in management's estimate, and test of significant transactions outside the normal course of business. We have not identified any material issues from the completion of the above procedures.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on our audit and on the financial statements. For the purposes of determining whether the financial statements are free from material misstatement we define materiality as the level of misstatement that would probably influence the economic decisions of a reasonably knowledgeable person.

We have used approximately 2% of gross assets rounded down, or £313,000 (2020: £270,000) which reflects the fact that this is an investment fund where its market value is determined predominantly by its gross asset value.

An overview of the scope of our audit

During our audit planning, we determined materiality and assessed the risks of material misstatement in the financial statements including the consideration of where directors made subjective judgements, for example, in respect of the assumptions that underlie significant accounting estimates and their assessment of future events that are inherently uncertain. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole taking into account the Company, its accounting processes and controls and the industry in which it operates.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.  If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information.  If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the chairman's review or the directors' report.

We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

·    adequate accounting records have not been kept, or

·    returns adequate for our audit have not been received from branches not visited by us; or

·    the financial statements are not in agreement with the accounting records and returns; or

·    we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the statement of directors' responsibilities with regard to the financial statements set out on page 9, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.  Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.  Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

The objectives of our audit in respect of fraud, are to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the Company.

Our approach was as follows:

·      We obtained an understanding of the legal and regulatory requirements applicable to the Company and considered that the most significant but not limited to the Companies (Jersey) Law 1991. We also reviewed the laws and regulations applicable to the Company that has indirect impact to the financial statements.

·      We obtained an understanding of how the Company complies with these requirements by discussions with management and those charged with governance.

·      We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.

·      We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.

·      We reviewed the compliance reports and minutes of the meeting to see whether there is non-compliance reported to management and those charged with governance.

·      Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Company's shareholders as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company's shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

Jeff Vincent

For and on behalf of Moore Stephens Audit & Assurance (Jersey) Limited

1 Waverley Place

Union Street
St Helier Jersey
Channel Islands JE4 8SG
 

28 October 2021
 

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2021

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2021

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2021

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

1.         GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION

Westmount Energy Limited (the "Company") operates solely as an energy investment company. The investment strategy of the Company is to invest in and provide follow on capital to small and medium sized companies that have significant growth possibilities.

The Company was incorporated in Jersey on 1 October 1992 under the Companies (Jersey) Law 1991, as amended, and is a public company with registered number 53623. The Company is listed on the London Stock Exchange Alternative Investment Market ("AIM"). On 1 December 2020 the Company commenced cross-trading on the OTCQB Market in New York, U.S., under the ticker symbol "WMELF".

Basis of Preparation

The financial statements are prepared on a going concern basis in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and applicable legal and regulatory requirements of the Companies (Jersey) Law 1991. The financial statements have been prepared under the historical cost convention as modified by the valuation of financial assets held at fair value through profit or loss.

The financial statements have been prepared on a going-concern basis as, in the opinion of the Directors, the Company has adequate resources to continue for the foreseeable future.

COVID-19

The Directors acknowledge the continued outbreak of Coronavirus ("COVID-19") and its potentially adverse economic impact. The Directors consider that at this stage the Company is not experiencing any major disruption to its business model from COVID-19 nor its effect on the oil and capital markets. The Directors will continue however, to closely monitor the ongoing impact of COVID-19 on the Company's operations.

2.         ACCOUNTING POLICIES                                                                                                         

The significant accounting policies that have been applied in the preparation of these financial statements are summarised below. These accounting policies have been used throughout all periods presented in the financial statements.

New standards, amendments and interpretations to existing standards that are effective in the current year

There are no new standards or amendments to standards that have been applied for the first time for the reporting period commencing 1 July 2020.

New standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company

At the date of authorisation of these financial statements there are no other standards that are not yet effective and that would be expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and the exercise of judgement by management while applying the Company's accounting policies in relation to the impairment of intangible assets, value of options issued and derivative financial instruments, as set out in notes 6, 11, 14 and 15. Derivative financial instruments, which are embedded in the convertible loan notes issued by the Company, have been presented separately from the host contract. The bifurcation of the embedded derivative financial instruments requires judgement by management to estimate the fair value of the derivatives on initial recognition of the financial instrument. The valuation and subsequent impairment reviews of the Company's intangible assets requires the use of accounting estimates and judgement by the management.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

2.          ACCOUNTING POLICIES (continued)

Use of estimates and judgements (continued)

These estimates are based on the management's best knowledge of the events which existed at the date of issue of the financial statements and at the statement of financial position date however, the actual results may differ from these estimates

Financial assets at fair value through profit and loss that are not listed have been valued in accordance with IFRS using the International Private Equity and Venture Capital ("IPEVC") Guidelines and information received from the investment entity. The inputs to value these assets require significant estimates and judgements to be made by the Directors.  The Directors have considered the sensitivity of the valuations as detailed in note 15.

Functional and presentation currency

The functional currency of the Company is United Kingdom Pounds Sterling ("Sterling"), the currency of the primary economic environment in which the Company operates. The presentation currency of the Company for accounting purposes is also Sterling.

Foreign currency monetary assets and liabilities are translated into Sterling at the rate of exchange ruling on the last day of the Company's financial year. Foreign currency non-monetary items that are measured at fair value in a foreign currency are translated into Sterling using the exchange rates at the date when the fair value was determined. Foreign currency transactions are translated at the exchange rate ruling on the date of the transaction. Gains and losses arising on the currency translation are included in administrative expenses in the Statement of Comprehensive Income in the year in which they arise.

Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes party to the contractual provisions of the instrument.

(a)        Classification

The Company classifies its financial assets in the following measurement categories:

-           those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss); and

-           those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows. The Company determines the classification of its financial assets and financial liabilities at initial recognition.

Financial liabilities which are not financial liabilities held at fair value through profit or loss are classified as other financial liabilities and held at amortised cost.

(b)        Recognition and measurement

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the statement of comprehensive income.

Subsequent to initial recognition, financial assets at fair value through profit or loss are re-measured at fair value. For listed investments, fair value is determined by reference to stock exchange quoted market bid prices at the close of business at the end of the reporting year, without deduction for transaction costs necessary to realise the asset. For non-listed investments fair value is determined by using recognised valuation methodologies, in accordance with the IPEVC Guidelines.  Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in the statement of comprehensive income in the period in which they arise.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

2.         ACCOUNTING POLICIES (continued)

(b)        Recognition and measurement (continued)

Subsequent measurement of the Company's debt instruments depends on the model for managing the asset and the cash flow characteristics of the asset.

The Company measures debt instruments at amortised cost if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. The Company recognises any impairment loss on initial recognition and any subsequent movement in the impairment provision in the statement of comprehensive income.

Debt instruments which do not represent solely payments of principal and interest are measured at fair value through profit or loss.

Financial liabilities, which includes borrowings, are measured at amortised cost using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Financial liabilities at fair value through profit or loss are re-measured at fair value. The fair value of the derivative financial instruments is determined by reference to stock exchange quoted market bid prices at the close of business at the end of the reporting year, without deduction for transaction costs incurred by the Company on realisation of the liability, see note 11. Gains or losses arising from changes in fair value of financial liabilities at fair value through profit or loss are presented in the statement of comprehensive income in the period in which they arise.

(c)        Impairment

Under IFRS 9, the impairment model requires the recognition of impairment provisions based on expected credit losses ("ECL") rather than only incurred credit losses as was the case under IAS 39. IFRS 9 permits a simplified approach to trade and other receivables which allows the Company to recognise the loss allowance at initial recognition and throughout its life at an amount equal to lifetime ECL. ECL are a probability-weighted estimate of credit losses. A credit loss is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive discounted at the original effective interest rate. ECL consider the amount and timing of payments, thus a credit loss arises even if the entity expects to be paid in full but later than when contractually due.

The historical default rate has been considered by the Directors and there is no history of bad debt. Under IFRS 9 ECL Model as well, which is forward looking, all factors that could contribute to expected future losses have been considered by the Directors and there is no expectation of credit loss in the future. As such the Directors concluded that there is no material impact on the financial statements.

(d)        Derecognition

A financial asset or part of a financial asset is derecognised when the rights to receive cash flows from the asset have expired and substantially all risks and rewards of the asset have been transferred.

The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled or expired.

Intangible assets

Separately acquired Net Profit Interest licences ("NPI licences") are classified as intangible assets and are shown at historical cost. Such NPI licences, which are not subject to amortisation, allow the Company to benefit from exploration and extraction of energy resources, if successful, from investee companies granting such NPI licences.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

2.         ACCOUNTING POLICIES (continued)

Intangible assets (continued)

The value of the NPI licences are assessed periodically for possible impairment when events indicate that the fair value of the intangible asset may be below the Company's carrying value. When such a condition is deemed to be other than temporary, the carrying value of the investment is written down to its fair value, and the amount of the write-down is included in net profit or loss on financial assets held at fair value through profit or loss. In making the determination as to whether a decline is other than temporary, the Company considers such factors as the duration and extent of the decline, the investee company's financial performance, and the Company's ability and intention to retain its investment for a period that will be sufficient to allow for any anticipated recovery in the NPI licences' market value.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held on call with banks and cash with broker. For the purpose of the Statement of Cash Flows, cash and cash equivalents are considered to be all highly liquid investments with maturity of three months or less at inception.

Equity, reserves and dividend payments

Ordinary shares are classified as equity. Transaction costs associated with the issuing of shares are deducted from stated capital. Retained earnings include all current and prior period retained profits. Shares are classified as equity when there is no obligation to transfer cash or other assets.

Expenditure

The expenses of the Company are recognised on an accruals basis in the Statement of Comprehensive Income.

Share options

Equity-settled share-based payment transactions are measured at the fair value of the goods and services received unless that cannot be reliably estimated, in which case they are measured at the fair value of the equity instruments granted. Fair value is measured at the grant date and is estimated using valuation techniques as set out in note 14. The fair value is recognised in the Statement of Comprehensive Income, with a corresponding increase in equity via the share option account. When options are exercised, the relevant amount in the share option account is transferred to stated capital.

3.         TAXATION                                                                                                       

The Company is subject to income tax at a rate of 0%. The Company is registered as an International Services Entity under the Goods and Services Tax (Jersey) Law 2007 and a fee of £300 has been paid, which has been included in administrative expenses.

4.       ADMINISTRATIVE EXPENSES

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

5.          EARNINGS PER SHARE (continued)

Current year loss

The calculation of diluted earnings per share is not required this year as a loss for the year is not diluted. The calculations have been left in for information.

The table below presents information on the profit attributable to the shareholders and the weighted average number of shares used in the calculating the basic and diluted earnings per share.

Share options

The share options have been included in the determination of the diluted earnings per share to the extent to which they are dilutive. The share options granted prior to 30 June 2020 are considered to be dilutive, and will be included in the calculation of diluted earnings per share, as the option price is below the average share price.

750,000 share options were granted on 6 August 2020.  These will not be included in the calculation of diluted earnings per share because they are antidilutive as at 30 June 2021.  These potentially dilute earnings per share in the future as these may not be exercised before their expiration date.

Convertible loan notes

Conversion options over convertible loan notes are considered to be potential ordinary shares and have been included in the determination of comparative diluted earnings per share from their date of issue. Interest accrued on the convertible loan notes, which may be converted to ordinary shares, is also considered to be dilutive and is included in the comparative diluted earnings per share. On 31 March 2021 the loan notes were repaid in full along with the accrued interest.

6.     INTANGIBLE ASSETS