Interim Consolidated Statement of Financial Position

The accompanying notes from an integral part of these consolidated financial statements

Interim Consolidated Statement of Changes in Equity

The accompanying notes from an integral part of these consolidated financial statements.

Interim Consolidated Cash Flow Statement

The accompanying notes from an integral part of these consolidated financial statements.

Notes to the Interim Consolidated Financial Statements

1          Reporting entity

Beacon Energy plc (the "Company") is domiciled in the Isle of Man. The Company's registered office is at 55 Athol Street, Douglas, Isle of Man IM1 1LA.  These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the "Group"). The Group is primarily involved in the E&P business.  

Events during the period

On 11 April 2023, the Company acquired the entire issued share capital of Rhein Petroleum GmbH, an upstream oil and gas business operating in Germany.  The Company's shares were re-admitted to trading on AIM on 11 April 2023.

2          Basis of accounting

These interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting". These interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements for the period ended 31 December 2022, which were prepared in accordance with IFRSs as adopted by the United Kingdom.  However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those disclosed in the Group's statutory financial statements for the year ended 31 December 2022.

The interim conciliated financial statements are presented in US Dollars unless otherwise indicated.

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial period beginning on or after 1 May 2022 that would be expected to have a material impact on the Group.

The consolidated financial statements of the Group as at and for the period ended 31 December 2022 are available upon request from the Company's registered office at 55 Athol Street, Douglas, Isle of Man or the Company's website  www.beaconenergyplc.com 

These interim consolidated financial statements have been approved and authorised for issue by the Company's Board of directors on 29 September 2023.

3         Going concern

The financial statements have been prepared on a going concern basis. The Group monitors its cash position, cash forecasts and liquidity on a regular basis and takes a conservative approach to cash management.

On 11 April 2023, the Group completed the acquisition of Rhein Petroleum GmbH. Drilling operations for the SCHB-2 well commenced on 19 June 2023. The well encountered a material oil accumulation with excellent reservoir properties however, due to significant operational issues during drilling, delays and additional costs were experienced and as a result the rig had to be released in mid-September, prior to completion of the clean-up of the well. Installation of the rod pump is expected to be undertaken during October 2023. In the interim period reservoir clean-up will continue into the wellbore.

Notes to the Interim Consolidated Financial Statements (continued)

As a result of excellent drilling results and increased expectations around recoverable volumes and production, the Company successfully completed an oversubscribed fundraise of £4.3 million with new and existing shareholders on 15 September 2023.

As at 28 September 2023, the Group had cash resources excluding 'restricted cash' of approximately US$6.5 million.

Management's base case is that the SCHB-2 well will continue to clean-up and by the end of November 2023 production flow rates from the well will be consistent with, or exceed, the "best estimate" outlined in the Competent Persons Report ("CPR") published in December 2022.

Management have also considered a number of downside scenarios, including scenarios where the well clean-up is more protracted, the production flow rate from the well is materially below the "best estimate" outlined in the CPR, or additional activities (and expenditure) are required in order to increase flow rates.

Under the base case forecast, the Group will have sufficient financial headroom to meet forecast cash requirements for the 12 months from the date of approval of these consolidated financial statements.

However, in the downside scenarios, in the absence of any mitigating actions, the Group may have insufficient funds to meet its forecast cash requirements. Potential mitigants include deferral and/or reduction of expenditure and raising additional equity or debt funding.

Accordingly, after making enquiries and considering the risks described above, the Directors have assessed that the cash balance and forecast cash flows provide the Group with adequate headroom for the following 12 months. As a result, the Directors are of the opinion that the Group is able to operate as a going concern for at least the next twelve months from the date of approval of these financial statements.

Nonetheless, these conditions indicate the existence of a material uncertainty which may cast doubt on the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would be required if the Group were unable to continue as a going concern.

4               Expenses

Administration fees and expenses consist of the following:

Notes to the Interim Consolidated Financial Statements (continued)

5               Directors' remuneration

The remuneration of those in office during the period ended 30 June 2023 was as follows:

It should be noted that (a) the Directors (other than Ross Warner) have agreed to receive Director Fee Shares in lieu of a proportion of their proposed fees for the 24 month period following Admission, calculated on the basis of the Fundraise Price; and (b) Ross Warner has agreed for the 24 month period following from Admission to waive one third of the fees due to him under his NED appointment letter. Larry Bottomley and Mark Rollins have agreed to take 55 percent. and 50 percent., respectively, of their proposed fees as Director Fee shares, and Stewart MacDonald, Leo Koot and Stephen Whyte have agreed to take 33 percent. of their proposed fees as Director Fee Shares.

Share options and warrants with a value of $98,000 were issued to employees accrued during the 6- month period to 30 June 2023. In the period ended 31 December 2022, the warrants issued to employees and advisors accrued with a value of $166,000.

6               Business Combination

On 11 April 2023, the Company acquired the entire issued share capital of Rhein Petroleum GmbH, an upstream oil and gas business operating in Germany. This transaction can be best described as a business combination under IFRS3.

The reverse takeover transaction consisted of equity consideration of 3,488,549,633 ordinary shares and an associated consideration of 1,186,953,301 warrants at a price of 0.11 pence which is the fair value per share. On the basis that the net assets acquired exceeded the consideration paid, negative goodwill arose. This negative goodwill has been written off through the profit and loss. Details of the purchase consideration and the net assets acquired are as follows:

Notes to the Interim Consolidated Financial Statements (continued)

7               Earnings per share

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted   average number of ordinary shares outstanding during the year.              

In accordance with International Accounting Standard 33 'Earnings per share', no diluted earnings per share is presented as the Group is loss making.

8               Restricted cash

At reporting date, the Group had US$2,075,000 restricted cash, which is backing guarantees to the mining authority related to future decommissioning. This amount forms part of the US$2,196,000 cash balances acquired shown within the cash flow statement.

9               Trade and other payables

Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. The increase in trade payables reflects increased spend related to the SCHB-2(2) well.

Notes to the Interim Consolidated Financial Statements (continued)

10             Non-current liabilities

The non-current liabilities consist of a loan with Tulip Oil Holding B.V and provisions in relation to future abandonment and decommissioning costs.

11               Shares in issue

The number of shares in issue at the beginning of the period was 1,527,613,961. The number of options and warrants on issue at the start of the period was 618,259,511. On 11 April 2023 there was an issue of 5,491,516,026 ordinary shares for £0.011 to raise £6.0 million. A further 3,488,549,633 shares were issued as consideration shares. The number of ordinary shares in issue at the end of the period is 10,507,679,620. The number of options and warrants increased to 2,709,564,441.

Options and warrants in issue:

Notes to the Interim Consolidated Financial Statements (continued)

12             Commitments and contingencies

There were no capital commitments authorised by the Directors or contracted other than those provided for in these financial statements as at 30 June 2023 (31 December 2022: None).

13             Subsequent events

On 15 September 2023, the Company announced that it had issued 2,867,000,000 new ordinary shares by way of placing and a Primary Bid Offer at a fundraise price of 0.15 pence to raise £4.3 million (the "Fundraise"). The net proceeds of the Fundraise together with the Company's existing cash resources will be used for general working capital prior to receipt of proceeds from the sale of commercial production from SCHB-2(2.). Following admission, the Company now has 13,374,679,620 ordinary shares in issue.