Cluff Natural Resources Plc (CLNR ) has announce audited results for the year ended 31 December 2019 ('FY 2019') highlighting the successful farm out’s with Shell agreed during the year and has finished the period with a strong balance sheet ensuring the company is fully funded until 2021. 

Successful Farm Outs

During the period the Company successfully farmed out Licences P2252, containing the Pensacola Prospect, and P2437, containing the Selene Prospect, to Shell UK Ltd ("Shell”). The firm continues to work closely with Shell toward firm well commitments for both Pensacola and Selene with processing of the 3D seismic data for Pensacola still ongoing. 

Future Farm-outs

Furthermore, the farm-out process on Dewar Oil prospect is continuing and technical work is continuing on Licence P2428 (Cupertino), P2424 (Cortez) and P2435 (Blackadder) in advance of prospective farm-outs. 

License applications

During the period, the Company submitted multiple applications for additional licences in the UK Oil & Gas Authority's latest Offshore Licensing Round, with awards expected in summer 2020. Success will further expand, enhance and diversify the existing portfolio, without adding any near-term cost liabilities. 

Strong Balance Sheet

During the period, the Company received US$0.6m from Shell for the initial consideration of the Selene prospect and completed a ‘transformational equity fundraise’ of £15m (gross), which fully funds the Company through to 2012, including its contribution of the costs to the Pensacola and Selene wells. 

Net cash outflow from operations and investing activity for the year was therefore of £1.8 million (FY18: £2.2 million) resulting in a cash position of £13.8 million as at 31 December 2019 (FY18: £1.42 million) on a debt free basis. Furthermore, as at 31 March 2020, the Company had unaudited cash on hand (unaudited) of £13.2 million.  

Shares in Cluff Natural Resources opened flat in early morning trading.

FY20 Outlook

Notwithstanding the current COVID-19 Crisis and commodity price volatility, the Company believes it can benefit from the opportunity to commit to drilling its wells at a time of relatively low cost, including advantageous rig rates, and ultimately be in a position to monetise successful drilling and discoveries at a point in the future when commodity prices are significantly higher. 

The Company believes that the ‘North Sea continues to have huge potential and the UK benefits from a top quartile fiscal and regulatory regime, making it one of the most attractive areas in which to do business and invest’ and expects investment decisions on Selene and Pensacola and the ongoing farm-out of Dewar to progress during the year in addition to the award of additional licences in the latest UK licensing round.  

Achievement of which would obviously represent major drivers of value for shareholders. 

Graham Swindells, Chief Executive Officer: "2019 was a transformational year for our Company, agreeing two farm-outs with Shell over our Pensacola and Selene Prospects in the Southern North Sea as well as securing financing to ensure we are fully funded for our current requirements, including the drilling of wells on both prospects. 

"Despite the effects of Covid-19 and commodity price volatility, given the Company's low overheads, no debt, and its attractive portfolio of prospects, we remain in a strong position from which to deliver exceptional growth. 

"We have a number of key drivers of value as we continue to work with Shell towards firm well commitments on both Selene and Pensacola, the ongoing farm-out of Dewar, the progression of our other gas licences and the potential award of additional licences in the latest UK licensing round.  Achievement of each of these would be a major driver of value and we look forward to updating shareholders in due course."