28 December 2018

Nu-Oil and Gas plc

("Nu-Oil" or "the Company")

Preliminary Results for the year ended 30 June 2018

Nu-Oil, the independent Oil and Gas Company, today announces its results for the year ended 30 June 2018.

HIGHLIGHTS

Building a portfolio of Stranded Fields

· The Company anticipates the continued focus on the identification and development of stranded and marginal fields through the investment in, and relationship with, Marginal Field Development Company (MFDevCo) Ltd. ('MFDevCo') in which Nu-Oil and Gas plc. ('Nu-Oil' or the 'Company') holds a 50% interest.

· This marginal field strategy will seek to utilise innovative engineering solutions that reduce both Capex and Opex and are redeployable to build a portfolio of low risk, highly appraised marginal assets.

· The Company continues to actively seek new assets in conjunction with MFDevCo.

Western Newfoundland

· The Company entered into a Production Sharing Agreement (the 'PSA') with PVF Energy Services Inc. ('PVF') for PL2002-01(A) on 31 January 2017. The PSA provides for the Company to receive 50% of net revenue from production following the recovery of any costs incurred by PVF in performing its obligations.

· PVF has faced some challenges in developing operations on PL2002-01(A) which has resulted in unexpected delays hampering, but not halting progress.

· The Company, with PVF and others are also in discussion regarding wider regional rejuvenation plans which would provide a step change in the portfolio interest as it currently stands.

Financial

· Loss before tax for the year was £1,878,000 (2017: £1,671,000). The main area of expense has been the continuing development of the foundations for the marginal field initiative. Management continued to maintain its cost discipline in western Newfoundland, this cost discipline was in part off-set by the continued expenditure with respect to the implementation of the marginal field strategy. The loss included depreciation, amortisation and provision charges of £341,000 in the period relating to tangible and intangible assets consistent with its accounting policies

· The Group has a net liability position of £1,053,000 (2017: £1,880,000). The net liabilities are mainly due to the loan owed to Shard Capital Management ('Shard') and to related party creditors. At this time neither Shard nor related parties have sought to recover these debts.

· The Group had cash balances of £861,000 at 30 June 2018 (2017: £654,000).

· The status of commercial discussions, the Company's ability to raise capital and the Company's cash position provide management with the confidence that the business model has the potential to allow the Group to satisfy its liabilities and operate as a going concern.

· During the year the Company raised £2,706,000 net through the issue of new ordinary shares.

OUTLOOK

· Clear focused strategy for commercialising stranded and marginal fields.

· Recent enquiries provide directors and management with confidence regarding the viability of the business model and provide confidence that the Company can add further projects to its portfolio.

Nigel Burton, CEO of Nu-Oil, commented:

"The Company has made progress on several projects this year and we are excited about the opportunities that lie ahead. Activity has increased in MFDevCo and we look forward to updating the market as it acquires projects and concludes investigations into alternative marginal field commercialisation methods.

I'd like to thank all stakeholders, in particular shareholders, for their support and we look forward to providing updates in 2019."

Annual General Meeting

The Company also announces that its Annual General Meeting of shareholders ("AGM") will be held at the Castlefield Hotel, Liverpool Road, Manchester, M3 4JR on Friday 25 January 2019 at 11:30 a.m.

Financial Statements

Included with this announcement is a summary of the Company's Annual Accounts for the year ended 30^th June 2018 as extracted from the Annual Report, being:

· Strategic Report

· Consolidated Income Statement

· Consolidated Statement of Comprehensive Income

· Consolidated Statement of Financial Position

· Consolidated Statement of Changes in Equity

· Consolidated Statement of Cashflows

· Notes to the Financial Statements

The full Annual Report and Financial Statements for the year ended 30 June 2018 and the notice of AGM are available to download from the Company's website at www.nu-oilandgas.com. Those shareholders who have elected to receive paper copies of all communications will receive a copy of both documents in addition to the AGM Letters and proxy forms, which have been sent to all shareholders today. Shareholders can change their chosen method of communication in Shareview at the following address: https://portfolio.shareview.co.uk/7/Portfolio/Default/en/Anonymous/Pages/Login.aspx.

Enquiries

Nu-Oil and Gas plc
Simon Bygrave Investor Relations & Communications	Tel: +44 (0)161 817 7460
Nigel Burton Chief Executive Officer	Tel: +44 (0)7785 234447
Strand Hanson Limited Rory Murphy/Ritchie Balmer/Jack Botros	Tel: +44 (0)20 7409 3494
Novum Securities Limited	Tel: +44 (0) 20 7399 9425
Jon Bellis

Disclaimer

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

STRATEGIC REPORT

Chairman's Statement and Operational Review

As Chairman I reconfirm that our objective remains to build our company, primarily through its interest in Marginal Field Development Company ('MFDevCo') Ltd. ('MFDevCo'), into a leader in the development and production of marginal or stranded oil and gas fields with a portfolio of offshore and onshore assets. In this statement I will outline the progress we have made towards that objective this year. Our priority remains to secure projects and access production as quickly as possible.

The Company continues to focus on its strategy to target undervalued opportunities within the oil and gas sector which are generally referred to as marginal or stranded assets. There is a huge population which varies according to changes in the external environment such as oil price, field size, economic strategies and many other factors. It's a dynamic population increasing and decreasing according to changes in external factors and hence complex but if successfully acquired, such opportunities can be very profitable for far lower investment than if commenced at the exploration stage. This is why we believe our strategy is attractive from an economic point of view, but also why it is complex to implement.

We continue to negotiate a number of specific opportunities at different stages of the 'commercialisation cycle'; we have submitted proposals which are being considered and we are hopeful that we will be able to update shareholders with positive developments in due course. Our marginal field proposals span a range from larger scale opportunities to more standard repeatable and smaller projects, resources are being applied proportionally as required. We are building a team to speed delivery and as always, our objective remains the identification and acquisition of projects in the 'marginal, stranded' domain with the most appropriate revenue stream and efficient use of capital to maximise returns.

These opportunities are the result of the Company's continual innovation, whether it be configuring technology, embracing novel ways to recover resources or adopting ideas from other industries, which enable us to identify and generate additional value. Similarly, as we strive to maximise the value from our current assets, we seek new opportunities to create value in both domains, offshore and onshore. With this mindset the Board has identified new opportunities which fit our strategy to target low-risk, undervalued assets, in addition to the acquisition of projects by MFDevCo and the development of our assets in Canada, via Enegi Oil Inc. ('Enegi'). MFDevCo is focused on offshore projects, particularly where there is established production or resources that can generate near-term revenue; Nu-Oil will also seek suitable onshore projects. We will prioritise appraisal opportunities but will also consider exploration opportunities where the value of new investment is demonstrable. By 'demonstrable', we mean where it can be shown that the risk / return trade off is significantly better than industry norms.

Marginal Field Development Company Ltd. ("MFDevCo")

MFDevCo has made tangible progress in a number of ways this year. Firstly, negotiations have continued on a number of larger scale and undervalued opportunities with effort directed to complete the key tasks required to meet MFDevCo's objectives and those of the counterparty. The technical evaluation including operating plans has been satisfactorily concluded, with the assistance of consortium members, and are being integrated with financing requirements. The larger the size and value of the project, the longer it takes to conclude the negotiations and noting the 'arbitrage' element that characterises the opportunities we target, shareholders will, I am sure, understand the complexities involved to conclude a deal. Significant project finance will be required to unlock these opportunities but there are innovative means, analagous to shipping finance, in which this can be done.

The second strand of activity during the past year has focused on the smaller projects which can be acquired and developed more quickly to deliver significant growth. MFDevCo has continued to evaluate ways that Helvick and Dunmore, in both of which MFDevCo has a 10% interest with the option to increase to 50%, might be economically developed. Noting that they typify what the U.K.'s Oil and Gas Authority ('OGA') and others refer to as 'small pools', while great fanfare surrounded the industry's initiative to unlock these fields, it is unsurprising that little appears to have been achieved given the cost and market volatility associated with traditional developments approaches. MFDevCo believes it has identified a development mode that could make Helvick and Dunmore economic to develop and has informed its licence partners accordingly. We believe that this work will create 'standard, repeatable' projects I referred to earlier which, logically, should be quicker to deliver.

The third strand of activity is consistent with my theme of continual innovation. There are a number of aspects to this including more innovative approaches to project delivery, financing, use of proven technology and how these impact upon the opportunities that can be garnered. We have identified an alternative way to commercialise a subset of late-life marginal fields and significant progress has been made to create a larger population of viable targets which will have a strong impact upon potential growth. Once we are comfortable with its viability shareholders will be informed.

This brings me neatly to the fourth strand of activity currently being undertaken which is the restructuring of the management and team to implement the above plans more effectively than we have been able to do to date. During the year we have recruited a number of people with the experience to manage the interface with the consortium more effectively and as a result to speed up the evaluation and assessment process of identified opportunities. Due diligence is an imperative in choice of opportunity and this additional resource is a significant benefit. Three positions have been filled, that of Developments Manager, Projects Manager and CEO of MFDevCo (Brazil) Limited, a recently formed subsidiary of MFDevCo.

Western Newfoundland

The Company remains committed to developing the assets in western Newfoundland which it holds via its 100% owned Canadian operating subsidiary, Enegi. Operating in western Newfoundland has always presented unique challenges but even noting the difficulties associated with the region, we have a high degree of confidence in the potential of these assets and the possibility to use them as catalyst for a wider regional development.

The Board has been reassessing the approach to generate production from PL2002-01(A) (also known as Garden Hill) more effectively than has resulted from the activities being undertaken by PVF Energy Services Inc. ('PVF'). We are committed to optimising the value of Garden Hill, which in-house subsurface models built up over the years, and acknowledged as the most comprehensive available models of the area, indicate holds up to 97mmboe. We entered into the Production Sharing Agreement ('PSA') with PVF believing this would achieve our objective and PVF has expended around C$1 million on the work programme to date. However, shareholders will be aware that a variety of technical issues have delayed the production test on the PAP#1-ST#3 well. Technical and commercial discussions with PVF are ongoing to determine the most effective route to achieving production. These discussions are expected to conclude imminently at which point we will update the market with our plan for the next stage of development.

Furthermore, meetings have taken place with the Department of Natural Resources ("DNR") in order to judge the viability of the regional play we are considering and this information will be important input as to when we and on what terms we choose to conclude a farm-in.

EL1070

The Company also holds, via Enegi, 100% interest in the deep rights in Exploration Licence 1070 ('EL1070'), which is located almost adjacent to Garden Hill. While exploration is not our priority, we believe this licence has significant potential. Meetings have been held with the Canada-Newfoundland Offshore Petroleum Board ('C-NLOPB') to determine how the licence can be advanced while the moratorium on hydraulic fracturing is in place and which affects the shallow rights, held by Shoal Point Energy ('SPE'). Further discussions took place with G2 Energy Corp. ("G2") who wish to extend the current agreement, although our own discussions with the regulator will provide better direction and G2's option was allowed to lapse. As a result, we intend to take direct contact with SPE to agree the way forward and we will update the market accordingly.

Outlook

As I am, shareholders will be frustrated by delays in concluding project negotiations. Unfortunately, this is a characteristic of the oil sector as a result of the scale of projects, regulatory and legal hurdles, complexity of operations, construction and general engineering. However, I am confident that we will be able to announce the first acquisition of a marginal field, along with its development plan, in 2019. As we work to close negotiations for larger marginal field projects, I expect the Company to expand its portfolio by acquiring the smaller, late-life projects I have outlined.

The demand for solutions capable of unlocking marginal fields continues to grow worldwide. Support from governments is driven by the need for energy security, the falling away without replacement of so many projects and the concern that energy resources must be utilised.

I emphasise again, that negotiations to secure marginal field projects of various types are ongoing and, with much of the due diligence completed, potential sources of finance and build facility identified, and the Consortium ready to go, MFDevCo is well placed to start project development once agreement is reached.

I expect activities in Newfoundland to deliver results within the year ahead. While the marginal fields we are advancing will MFDevCo will be the future of the Company, I look forward to finally seeing past efforts deliver value from these legacy assets.

Finally, I would like to thank both management and shareholders for their continued support and look forward to realising the rewards from the opportunities that have been created over the last few years.

Alan Minty

Chairman

Financial Review

Revenue

No revenue was generated during the year. Management awaits the results of activity on its lease, PL2002-01(A), to assess the likelihood of it becoming revenue generating in future years. The Company entered into a Production Sharing Agreement (the 'PSA') with PVF Energy Services Inc. ('PVF') for PL2002- January 2017. The PSA provides for the Company to receive 50% of net revenue from production following the recovery of any costs incurred by PVF in performing its obligations.

Loss before tax

Loss before tax for the year was £1,878,000 (2017: £1,671,000 loss). The main area of expense has been the continuing development of the marginal field initiative. Management continued to cut costs in western Newfoundland but maintained its expenditure with respect to the implementation of the marginal field strategy. The loss included depreciation, amortisaton and provision charges of £341,000 (2017: £367,000) in the period relating to tangible and intangible assets. Operating loss in effect was £1,537,000.

Statement of Financial Position

Net liabilities at 30 June 2018 were £1,053,000 (2017: net liabilities of £1,880,000). The decrease in net liabilities reflects fundraising activities that were undertaken in the period. During the year the Company raised £2,706,000 through the issue of new ordinary shares. The majority of the Group's liabilities are due to related parties and to Shard Capital Management. It is the Group's view that these creditors are supportive of the Group.

At 30 June 2018, the Group had cash balances of £861,000 compared to £654,000 at 30 June 2017. The Group had trade and other payables of £3,381,000 at 30 June 2018 (2017: £3,781,000). These cash balances when considered with the additional information provided in Note 1 to the financial statements allow the Directors to conclude that the Group and Company should be treated as a going concern.

Cash flows

Cash inflows for the year were £207,000 compared to a cash inflow of £654,000 in 2017. The Group's cash position was carefully managed during the year while it sought to implement its marginal field strategy.

Future funding and capital requirements

The Directors believe the Group has developed a very attractive business model in choosing to focus on the development of stranded and marginal fields. The Directors believe that the Group has the necessary foundations in place with the potential to see an upturn in activity in 2019. Management believes the Company has sufficient resources to allow significant, tangible progress to be achieved from its current resources in the short term but longer term and as a result of the size of projects that the Company is targeting, further funding, much of it project finance, will be required to realise project returns.

CONSOLIDATED INCOME STATEMENT

For the year ended 30 June 2018

	2018 £'000	2017 £'000
Revenue	-	-
Cost of sales	-	-
Gross Result	-	-

Administrative expenses	(1,672)	(1,457)
Loss from operations	(1,672)	(1,457)

Finance costs	(206)	(214)
Loss before tax	(1,878)	(1,671)

Taxation	-	-
Loss for the year	(1,878)	(1,671)

Loss per share (expressed in pence per share)
Basic	(0.1p)	(0.2p)
Diluted	(0.1p)	(0.2p)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2018

	2018 £'000	2017 £'000

Loss for the year	(1,878)	(1,671)
Other comprehensive (expense)/income:
Currency translation differences	(1)	1
Other comprehensive (expensive)/income for the year, net of tax	(1)	1
Total comprehensive expense for the year	(1,879)	(1,670)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2018

	2018 £'000	2017 £'000

Non-current assets
Tangible fixed assets	195	242
Intangible assets	813	1,123
Other long-term assets	477	493
	1,485	1,858

Current assets
Trade and other receivables	993	922
Cash and cash equivalents	861	654
	1,854	1,576
Total assets	3,339	3,434

Current liabilities
Trade and other payables	(3,381)	(3,781)
Due to related parties	(541)	(1,044)
	(3,922)	(4,825)

Non-current liabilities
Provisions	(470)	(489)
Total liabilities	(4,392)	(5,314)
Net liabilities	(1,053)	(1,880)

Equity
Ordinary share capital	3,072	2,757
Share premium account	31,062	28,671
Reverse acquisition reserve	9,364	9,364
Other reserves	(2,487)	(2,487)
Warrant reserve	409	409
Accumulated losses	(42,473)	(40,594)
Total equity	(1,053)	(1,880)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2018


	Ordinary share capital £'000	Share premium account £'000	Reverse acquisition reserve £'000	Other reserves £'000^{(1) (2)}	Warrant reserve £'000⁽³⁾	Accumulated Losses £'000	Total equity £'000

Balance at 1 July 2016	2,022	26,431	9,364	(2,487)	355	(38,924)	(3,239)

Comprehensive (expense)/income
Loss for the year	-	-	-	-	-	(1,671)	(1,671)

Other comprehensive income
Currency translation differences	-	-	-	-	-	1	1

Total other comprehensive income	-	-	-	-	-	1	1
Total comprehensive expense	-	-	-	-	-	(1,670)	(1,670)

Transactions with owners
Effects of fundraisings	735	2,294	-	-	-	-	3,029
Effects of warrants	-	(54)	-	-	54	-	-
Total of transactions with owners	735	2,240	-	-	54	-	3,029

Balance at 30 June 2017	2,757	28,671	9,364	(2,487)	409	(40,594)	(1,880)

Comprehensive expense:
Loss for the year	-	-	-	-	-	(1,878)	(1,878)

Other comprehensive expense:
Currency translation differences	-	-	-	-	-	(1)	(1)

Total other comprehensive expense	-	-	-	-	-	(1)	(1)
Total comprehensive expense	-	-	-	-	-	(1,879)	(1,879)

Transactions with owners
Effects of fundraisings	315	2,391	-	-	-	-	2,706
Effects of warrants	-	-	-	-	-	-	-
Total of transactions with owners	315	2,391	-	-	-	-	2,706

Balance at the 30 June 2018	3,072	31,062	9,364	(2,487)	409	(42,473)	(1,053)

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2018

	2018 £'000	2017 £'000

Cash flows from operating activities
Cash used in operations	(2,156)	(2,375)
Net cash used in operating activities	(2,156)	(2,375)

Cash flows from financing activities
Share capital issued for cash	2,706	3,029
Repayments of loan	(343)	-
Net cash generated from financing activities	2,363	3,029

Net increase in cash and cash equivalents	207	654
Cash and cash equivalents at the start of the year	654	-
Cash and cash equivalents at the end of the year	861	654

NOTES TO THE FINANCIAL STATEMENTS

CORPORATE INFORMATION

The consolidated and Company financial statements of Nu-Oil and Gas plc ("NUOG" or the "Company" and its subsidiaries, together the "Group") for the year ended 30 June 2018 were authorised for issue in accordance with a resolution of the Board of Directors on 27 December 2018.

Nu-Oil and Gas plc was incorporated in the United Kingdom on 13 September 2007 and has registered address of 5th Floor, Castlefield House, Liverpool Road, Manchester, M3 4SB. Enegi Oil Inc., which is the principal operating subsidiary of the Group, was incorporated in the Province of Newfoundland and Labrador in Canada on 5 May 2006 and has registered address of 36, Quidi Vidi Road, St.John's, NL A1A 1C1, Canada. The Group is domiciled in the UK for tax purposes and its shares are listed on the Alternative Investments Market ("AIM") of the London Stock Exchange.

The principal activity of the Company and Group is the identification, development and operation of hydrocarbon opportunities with its focus being on the acquisition of stranded/marginal fields the location of which could be in any jurisdiction.

1. BASIS OF PREPARATION

The consolidated financial statements of the Group and the financial statements of the parent Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), the Companies Act 2006 that applies to companies reporting under IFRS, and IFRS-IC interpretations. The consolidated financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 2.

a) New and amended standards adopted by the group

There are no new or amended standards adopted by the group in the year.

b) New standards, amendments and interpretations not yet adopted

The following new standards, which have been issued but are not yet effective, have not been early adopted by the Group or Parent Company:

· IFRS 9 'Financial instruments (effective for annual periods beginning on or after 1 January 2018);

· IFRS 15 'Revenue from contracts with customers' (effective for annual periods beginning on or after 1 January 2018);

· Amendment to IFRS 15, 'Revenue from contracts with customers' (effective for annual periods beginning on or after 1 January 2018);

· IFRS 16 'Leases' (effective for annual periods beginning on or after 1 January 2019).

These changes are not expected to have a material impact on the Group.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

Going concern

The Directors continue to adopt the going concern basis in preparing the Consolidated and Parent company Financial Statements as they have a reasonable expectation that the Group and Company has sufficient resources for the short term and, will be able to obtain adequate funding to continue operating for the foreseeable future. In forming this judgement the Directors reviewed the Group's funding, budget and business plan for the twelve months from signing the financial statements. The Directors have relied upon the critical assumption that the Group will be able to achieve the key milestones of the business plan associated with its strategy to acquire and develop stranded and marginal fields which they believe will result in the availability of adequate additional funding.

The assumptions described above reflect the Company's circumstances at the date that the financial statements were approved by the Board and to the extent that any of the assumptions are shown to not be valid the Directors believe that there are a number of actions that they may take to ensure that the Company remains a going concern. To the extent that the above assumptions are not valid, there exists a material uncertainty that may cast significant doubt upon the Group's and the Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group or Parent Company were not considered to be a going concern.

Basis of consolidation

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases.

Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying value is increased or decreased to recognise the investor's share of the change in net assets of the investee after the date of acquisition.

The group's share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. Distributions received from an associate reduce the carrying amount of the investment.

The Group has a 50% interest in the Marginal Field Development (MFDevCo) Ltd. The directors deem that the Group has significant influence but not control over this entity. In accordance with IAS 28 this investment is accounted for using the equity method of accounting. At the year end the investment balance is held at £nil after deduction of the Group's share of post-acquisition losses recognised.

2. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies have been applied consistently throughout the year.

Revenue recognition

Production revenues are recognised upon transfer of title to the customer upon collection or delivery of oil. Revenue comprises the fair value of the consideration received or receivable for the sale of oil production net of sales taxes.

Segment Reporting

Tangible and intangible oil and gas assets

Tangible oil and gas assets relate to assets for a specific prospect where proven reserves are known to exist. Such assets include the development expenditure in bringing a specific prospect into production.

Intangible oil and gas assets relate to assets for a specific prospect without proven reserves. Such assets include exploration costs at a specific site to locate proven reserves. At the point where proven reserves are discovered intangible assets are transferred to tangible assets.

Intangible assets also include expenditure on the development of engineering solutions adopted in the Marginal Field Initiative such that the key engineering principles of those solutions could be easily replicated for application to other projects.

Oil and gas properties

Properties comprise payments made to obtain or extend the working interest in a specific prospect. Property acquisition costs are capitalised within oil and gas properties and depreciated on a straight-line basis at the point production commences. Property assets are reviewed on an annual basis to confirm that drilling activity is planned and it is not impaired. If no future activity is planned, the remaining balance of the licence and property acquisition costs is written off. Upon determination of economically recoverable reserves ("proved reserves" or "commercial reserves"), the costs are depreciated over the useful economic life of the related prospect based on known production levels and estimated commercial reserves.

Intangible capitalised exploration costs

Geological and geophysical exploration costs are charged against income as incurred. Costs directly associated with an exploration well are capitalised as an intangible asset until the drilling of the well is complete and the results have been evaluated. If hydrocarbons are not found, but it is deemed possible that further expenditure on the drilled well will lead to a hydrocarbon discovery, the costs associated with the well continue to be capitalised as an intangible asset.

Until the commencement of further expenditure on the drilled well the capitalised exploration costs will be deemed to have a useful economic life of 5 years and will be amortised accordingly. If the planned further activity on the well is deemed to have been terminated, then the full value of the associated intangible asset is written off but reinstated should the activity on the well recommence at a future date.

If hydrocarbons are not found, and are not expected to be discovered, the total exploration expenditure is written off. If hydrocarbons are found and are likely to be capable of commercial development, the costs continue to be carried as an asset. All such carried costs are subject to technical, commercial and management review at least once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer the case, the costs are written off.

When proved reserves of oil and natural gas are determined, development is sanctioned and production (rather than testing) commences, the relevant expenditure is transferred to development assets within tangible fixed assets. At that point, the Company will begin to depreciate the assets over the course of their useful life.

Tangible capitalised development costs

Expenditure on the drilling of development wells, including unsuccessful development or delineation wells, and the construction, installation or completion of infrastructure facilities such as storage tanks, is capitalised within tangible fixed assets as development costs.

Development assets are accumulated on a field by field basis and represent the cost of developing the commercial reserves discovered and bringing them into production. Changes in the estimates of commercial reserves or future field development are dealt with prospectively.

Tangible capitalised development costs are assessed for impairment annually.

Production assets

The net book values of production assets are depreciated on a field by field basis using the unit of production method by reference to the ratio of production in the period to the related commercial reserves of the field, taking into account any future development expenditures at current prices necessary to bring those reserves into production. The Group had no assets of this nature during the year.

Impairment of tangible and intangible oil and gas assets

The Company assesses assets or groups of assets for impairment annually. Individual assets are grouped for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. If any such indication of impairment exists, the Company makes an estimate of the recoverable value of the asset. An asset group's recoverable amount is the higher of its fair value less costs to sell and its value in use. Where the carrying amount of an asset group exceeds its recoverable amount, the asset group is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are adjusted for the risks specific to the asset group and are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money.

The Company has no assets with an indefinite useful life.

Licences

Exploration licence costs capitalised within intangible assets are reviewed at each reporting date to confirm that there is no indication that the carrying amount exceeds the recoverable amount. This review includes confirming that exploration drilling is still under way or committed or that it has been determined, or work is under way to determine, that the discovery is economically viable based on a range of technical and commercial considerations and sufficient progress is being made on establishing development plans and timing. If no future activity is planned, the remaining balance of the licence costs is written off. Upon recognition of proved reserves and internal approval for development, the relevant expenditure is transferred to property, plant and equipment.

Intangible capitalised development costs

Expenditure incurred on the development of solutions, processes and systems that can be utilised within the marginal field initiative is capitalised within tangible fixed assets as development costs.

Intangible capitalised development costs are assessed for impairment annually.

Fixtures and fittings, equipment

Office furniture, fittings and equipment is stated at cost less accumulated depreciation and any impairment losses. The initial cost of an asset comprises its purchase price, any costs directly attributable to bringing the asset into operation, the initial estimate of any decommissioning obligation, if any, and, for qualifying assets, borrowing costs.

Office furniture, fittings and equipment is depreciated on a straight-line basis over its expected useful life. The useful life of the Company's office furniture, fittings and equipment is as follows:

Office equipment	3 to 15 years
Office furniture, fixtures and fittings	5 to 15 years

The expected useful lives and residual values of office furniture, fittings and equipment are reviewed on an annual basis and, if necessary, changes in useful lives are accounted for prospectively. The carrying value of office furniture, fittings and equipment is reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. An item of office furniture, fittings and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated income statement in the period the item is derecognised.

Other long-term assets

Long term assets usually in the form of deposits or investments, are recognised initially at fair value and subsequently measured at amortised cost less any provisions for impairment. A provision for impairment is established when there is objective evidence that the Company will not benefit from cash flows of an amount at least equal to the carrying value of the asset.

Financial instruments

Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any provisions for impairment. A provision for impairment is established when there is objective evidence that the Company will not be able to collect all amounts due. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the consolidated income statement within administrative costs. Subsequent recoveries of amounts previously written off are credited against administrative costs in the income statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, and other short-term, highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest of the assets of the Group after deducting all of its liabilities.

Trade and other payables

Trade payables are non interest bearing and are stated initially at fair value and then amortised cost.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Asset retirement provisions

The Company recognises the fair value of estimated asset retirement provisions related to well sites as a liability when new wells are drilled. The asset retirement cost is recorded as part of the cost of the related long-lived asset at an amount that is equal to the initial estimated fair value of the asset retirement provision. Fair value is estimated using the present value of the future estimated cash flows, adjusted for inflation, using the Company's credit adjusted risk-free interest rate.

Changes in the estimated provision resulting from revisions to estimated timing or amount of undiscounted cash flows are recognised as a change in the asset retirement provision and the related asset retirement cost. Actual retirement expenditures incurred are charged against the provisions in the period incurred. Over provisions and under provisions are set off against profit for the period in which the over or under provision is recognised.

Employee Benefit Trust

The assets and liabilities of the Employee Benefit Trust are brought onto the balance sheet of the Company. Shares held by the trust are consolidated as a deduction from equity.

Performance Share Plan costs

The fair value of awards granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date, using an appropriate pricing model taking into account the terms and conditions upon which the award was granted, and is spread over the period during which the awards vest. The amount recognised as an expense is adjusted to reflect the actual number of share awards that vest in the same period. At each balance sheet date, the Company revises its estimates of the number of options that are expected to vest. The Company recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

Foreign currency translation

The Company's functional currency is Sterling. Enegi Oil Inc.'s (a subsidiary) functional currency is Canadian dollars. The Group's presentation currency is Sterling.

In preparing the financial statements of the individual companies, transactions in foreign currencies other than the functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair values that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair values were determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.

Exchange rate differences arising on the settlement of monetary items and on the retranslation of monetary items are included in profit or loss for the period. Exchange rate differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

On consolidation, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the rate at the date of the transaction is used.

Exchange differences that arise on long term intra-Group loans are recognised in the income statement in the individual financial statements of each Group company.

Income taxes

Current income tax

Current income tax assets and liabilities for the current and prior period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the balance sheet date.

Deferred income tax

Deferred income tax is provided using the liability method on temporary differences at the consolidated balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable income will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying value of deferred income tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each consolidated balance sheet date and are recognised to the extent that it has become probable that future taxable income will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the income statement.

Deferred income tax assets and liabilities are offset, if a legally enforceable right exists to set off current assets against current income tax liabilities, and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

· Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

· Receivables and payables that are stated with the amount of sales tax included.

Accrued liabilities

Trade payables and accrued liabilities are carried at payment or settlement amounts. Where agreements have been reached with suppliers to discount the amount payable, the discount is only recognised at the point at which it becomes unconditional.

Share capital

Issued share capital is recorded in the balance sheet at nominal value with any premium at the date of issue being credited to the share premium account. The share premium account is used to write off directly related expenses of any share issue.

Share-based transactions

From time to time, the Company may pay for goods or services through the issue of new shares. The cost of such equity-settled transactions is recognised in the income statement, together with a corresponding increase in equity, in the period during which the goods or services are received.

The value of such share based payments is measured by reference to the fair value of the goods or services received or the market value of the shares issued, whichever value is more readily determinable.

Warrants

From time to time, the Company may issue warrants to suppliers as partial payment for goods or services or to investors or advisers in relation to the raising of new equity finance. When warrants are issued as partial payment for goods or services related to operations, the fair value of those warrants is recognised as a cost in the income statement. When warrants are issued in relation to the raising of new equity finance, the fair value of those warrants is set off against share premium. Warrants issued but not exercised are held in a warrant reserve within equity.

Investment in subsidiary undertakings

Investments in subsidiary undertakings are recorded at cost plus incidental expenses less any provision for impairment. Impairment reviews are performed by the Directors when there has been an indication of potential impairment.

Critical accounting judgments and estimates in applying the Group's accounting policies

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments and estimates that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. In the process of applying the Group's accounting policies, management have made the following estimates that may have a significant effect on the amounts recognised in the financial statements:

Asset retirement obligation: Under the terms of the lease and licence, the Group is obliged to return the associated land to the state it was in when the lease and licence were first awarded. The Group has recognised a provision in its consolidated statement of financial position in relation to this future obligation. This provision is based on a series of assumptions and estimates which are set out in Note 9.

Exploration costs: Under the successful efforts method of accounting for exploration costs, such costs are capitalised as intangible assets by reference to the appropriate pool costs, and are assessed for impairment when circumstances suggest that the carrying amount may exceed its recoverable value. This assessment involves judgment as to (i) the likely future commerciality of the asset and when such commerciality should be determined, (ii) future revenues and costs pertaining to any wider cost pool with which the asset in question is associated, and (iii) the discount rate to be applied to such revenues and costs for the purpose of deriving recoverable value.

Impairment of tangible and intangible oil and gas assets: The Company assesses assets or groups of assets for impairment annually. Individual assets are grouped for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. If any such indication of impairment exists, the Company makes an estimate of the recoverable value of the asset. An asset group's recoverable amount is the higher of its fair value less costs to sell and its value in use. Where the carrying amount of an asset group exceeds its recoverable amount, the asset group is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are adjusted for the risks specific to the asset group and are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money.

Capitalisation of Intangible Development Costs: The Company capitalises expenditure on the development of engineering solutions adopted in the Marginal Field Initiative such that the key engineering principles of those solutions could be easily replicated for application to other projects. To recognise the advancing nature of technology and solutions within the field of engineering the Company assesses for impairment annually.

Impairment of Investments: The Company assesses the carrying value of its investment in all entities in which its holds an equity interest on an annual basis. It considers impairing such investments if the underlying value of the investment is deemed to not support the carrying value of the investment.

Finance Costs

Finance costs include costs associated with the Company's management of cash, cash equivalents and debt. To the extent interest expense on borrowings are included within finance costs, the interest expense is calculated using the effective interest rate method.

3. SEGMENTAL INFORMATION

IFRS 8 Operating Segments requires that the segments should be reported on the same basis as the internal reporting information that is provided to the chief operating decision-maker. The group adopts this policy and the chief operating decision-maker has been identified as the Board of Directors of the Company. The Directors consider there to be two operating and reportable segments, being that of the development of the marginal field initiative and the operations in western Newfoundland.

Internal reports reviewed regularly by the Board provide information to allow the chief operating decision-maker to allocate resources and make decisions about the operations.

Over the past year, given the state of the Group's operations, the chief operating decision maker relies primarily on an understanding of the cash requirements of the business to make decisions about how resources are to be allocated across the business. The oil and gas industry has experienced a significant downturn which has affected the operations of the Group. Nevertheless, the Company has been able to generate new investment into each operating segment. In western Newfoundland the new investment has taken the form of a production sharing agreement under which its operating costs are covered by a third party.

The marginal field initiative operating segment is contained within the parent company, Nu-Oil and Gas plc. The results of that operating segment are shown under the Consolidated Income Statement on page 32 and its net liabilities are shown on page 34 via the Company Statement of Financial Position.

The operations in western Newfoundland are conducted by Nu-Oil and Gas plc.'s wholly owned subsidiary Enegi Oil Inc. Management have reduced costs significantly over recent periods such that its reported loss for the period is £134,000 (2017: £180,000), excluding intercompany items. It should be noted that the loss for 2018 includes an amortisation cost of £118,000 from the adoption of the accounting policy with respect to Exploration Licence EL1070.

Excluding intercompany balances, the net assets of Enegi Oil Inc. at 2018 are as follows:

	2018 £'000	2017 £'000

Non-current assets
Tangible fixed assets	4	9
Intangible fixed assets	326	453
Other long-term assets	477	493
	807	955

Current assets
Trade and other receivables	34	15
Cash and cash equivalents	-	-
	34	15

Total assets	841	970

Current liabilities
Trade and other payables	(196)	(222)
Due to related parties	(183)	(189)
	(379)	(411)

Non-current liabilities
Provisions	(470)	(489)
Total liabilities	(849)	(900)

4. ADMINISTRATIVE EXPENSES

Administrative expenses included in the consolidated income statement are as follows:

	2018 £'000	2017 £'000
Depreciation, amortisation and impairment of assets (Note 8)	341	367
Consulting	-	137
Employee benefit expense (Note 17)	264	463
Directors fees (Note 17)	210	96
Site operations	-	12
Legal and professional	219	118
Accounting and finance fees	153	62
Write back of overstated liabilities	-	(46)
Business travel	41	33
Office running costs	42	14
Rent and Rates	6	22
Recharge of costs incurred on the development of MFDevCo	(235)	(211)
Provision for receivables due from MFDevCo	595	390
Other expenses	36	-
	1,672	1,457

Any geological or geophysical costs which are not capitalised have been charged as professional fees.

Auditors' remuneration

During the year, the Group obtained various services from its auditors, the costs of which are set out below:

	2018 £'000	2017 £'000

Fees payable to company's auditors and its associates for the audit of parent company and consolidated financial statements	35	35
Fees payable to company's auditors and its associates for other services	-	10
Fees for tax compliance services	3	3
	38	48

5. FINANCE COSTS

	2018 £'000	2017 £'000

Interest expense	206	214
	206	214

On 25 November 2013, the Company obtained a loan of £1,000,000 from Shard Capital Management. Under the terms of the loan, which had a term of 12 months, the Company was due to pay an interest amount of £200,000.

In December 2014, the Company obtained a further loan of £200,000 from Shard Capital Management. Under the terms of the loan, the Company was due to pay a further £120,000 interest on the original loan of £1,000,000 from November 2013 and £20,000 on the additional loan of £200,000 for a total interest expense in the period of £140,000. Interest continues to accrue as shown above and Shard Capital Management holds security over PL2002-01(A) for the debt and the Company has the right to convert the debt to equity.

6. TAXATION

The Group has no current or deferred tax charge in the current or previous financial year. The Group has a net unrecognised deferred income tax asset. Differences were accounted for as follows:

	2018 £'000	2017 £'000

Loss before tax	(1,878)	(1,671)
Statutory income tax rate	19.00%	19.75%
Expected income tax recovery	(357)	(330)
Effect of overseas tax rates	(21)	(70)
Permanent difference	21	11
Transferred to losses	357	389
Total tax	-	-

The deferred income tax asset not recognised at 30 June 2018 is comprised of the following:

	2018 £'000	2017 £'000

Non-capital loss carried forward	8,377	8,020
Canadian Pool Assets	1,746	1,805
	10,123	9,825

As at 30 June 2018, the Group had Canadian Development Expense pool carry forward of £3.2 million, Canadian Exploration Expense pool carry forward of £0.3 million and non-capital loss carry forward balances of approximately £19.54 million (£1.82 million will expire in 2026, £2.16 million will expire in 2027, £1.19 million will expire in 2028, £2.75 million will expire in 2029, £0.80 million will expire in 2030, £1.36 million will expire in 2031, £1.09 million will expire in 2032, £1.59 million will expire in 2033, £1.0 million will expire in 2034, £4.57 million will expire in 2035, £0.25 million will expire in 2036, £0.75 million will expire in 2037 and £0.21 million will expire in 2038) that are available to reduce future years' taxable income.

Deferred tax assets were not recognised as there is significant uncertainty regarding the timing of future profits against which these assets could be utilised.

7. LOSS PER SHARE (EXPRESSED IN PENCE PER SHARE)

Loss per share amounts are calculated by dividing the loss for the year by the weighted average number of common shares in issue during the year.

	2018 £'000	2017 £'000

Loss attributable to shareholders of the Company	(1,878)	(1,671)
Weighted average number of shares in issue	1,257,654,599	708,074,539
Fully diluted weighted average number of shares in issue	1,257,654,599	708,074,539
Basic loss per share (expressed in pence per share)	(0.1p)	(0.2p)
Diluted loss per share (expressed in pence per share)	(0.1p)	(0.2p)

8. TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS

Group

As at 30 June 2018, the cost of tangible fixed assets consisted of the following:

	Restated oil and gas properties £'000	Restated tangible capitalised development costs £'000	Fixtures and fittings, equipment £'000	Asset Retirement Obligation £'000	Restated Total £'000

Balance at 01 July 2016	3,842	14,080	423	799	19,144
Foreign exchange movement	111	418	6	11	546
Balance at 30 June 2017	3,953	14,498	429	810	19,690
Foreign exchange movement	(130)	(491)	-	-	(621)
Balance at 30 June 2018	3,823	14,007	429	810	19,069

Balances at 01 July 2016 have been restated to include the transfer between tangibles and intangibles performed in 2017. There is no impact to the balances at 30 June 2017 and 30 June 2018.

As at 30 June 2018, the accumulated depreciation and impairment of tangible fixed assets consisted of the following:

	Oil and gas properties £'000	Tangible capitalised development costs £'000	Fixtures and fittings, equipment £'000	Asset Retirement Obligation £'000	Total £'000

Balance at 01 July 2016	(3,842)	(14,080)	(5)	(789)	(18,716)
Charge for the year	-	-	(188)	(1)	(189)
Foreign exchange movement	(111)	(418)	(3)	(11)	(543)
Balance at 30 June 2017	(3,953)	(14,498)	(196)	(801)	(19,448)
Charge for the year	-	-	(46)	(1)	(47)
Foreign exchange movement	130	491	-	-	621
Balance at 30 June 2018	(3,823)	(14,007)	(242)	(802)	(18,874)

As at 30 June 2018, the net book value of tangible fixed assets was:

		Oil and gas properties £'000		Tangible capitalised development costs £'000	Fixtures and fittings, equipment £'000	Asset Retirement Obligation £'000	Total £'000

Net book value at 30 June 2018	-		-		187	8	195
Net book value at 30 June 2017	-		-		233	9	242

As at 30 June 2018, the cost of intangible oil and gas assets consisted of the following:

	Intangible capitalised development costs £'000	Restated capitalised exploration costs £'000	Licences £'000	Total £'000

Balance at 01 July 2016	899	1,943	472	3,314
Foreign Exchange Movement	-	43	14	57
Balance at 30 June 2017	899	1,986	486	3,371
Foreign Exchange Movement	-	(67)	(16)	(83)
Balance at 30 June 2018	899	1,919	470	3,288

Balances at 01 July 2016 have been restated to include the transfer between tangibles and intangibles performed in 2017. There is no impact to the balances at 30 June 2017 and 30 June 2018

As at 30 June 2018, the accumulated amortisation and impairment of intangible oil and gas assets consisted of the following:

	Intangible capitalised development costs £'000	Capitalised exploration costs £'000	Licences £'000	Total £'000

Balance at 01 July 2016	(51)	(1,503)	(472)	(2,026)
Impairment charge for the year	(178)	-	-	(178)
Foreign Exchange Movement	-	(30)	(14)	(44)
Balance at 30 June 2017	(229)	(1,533)	(486)	(2,248)
Impairment charge for the year	(179)	-	-	(179)
Amortisation charge for the year	-	(115)	-	(115)
Foreign Exchange Movement	-	51	16	67
Balance at 30 June 2018	(408)	(1,597)	(470)	(2,475)

As at 30 June 2018, the net book value of intangible oil and gas assets was:

	Capitalised development costs £'000	Capitalised exploration costs £'000	Licences £'000	Total £'000

Net book value at 30 June 2018	491	322	-	813
Net book value at 30 June 2017	670	453	-	1,123

During the prior year, the Directors conducted a review of the carrying value of the Group's tangible and intangible fixed assets and after considering the implied valuation of discounted cash flow models that consider the future productivity of the PAP#1 well the Directors concluded that its producing Canadian assets should remain fully impaired. The Company applied its accounting policy to the intangible capitalised development costs and has retained value on Shoal Point on EL1070 pending the outcome of a regulatory assessment of fracking.

Tangible assets attributable to the company equalled £187,000 (2017: £233,000). Intangible assets for the company equalled £491,000 (2017: £670,000).

9. 9. PROVISIONS

Under the terms of the lease and licence, the Company is obliged to return the associated land to the state it was in when the lease and licence were first awarded. This involves closing in any wells and removing the well-head equipment, removing any buildings, engineering structures, materials and waste from the site and then replanting the land to restore it to its original condition. It is not expected that the liability contemplated by the provision would be payable before 2023 as PL2002-01(A) was extended until 11 August 2022 during the year.

The Company recognises this future obligation in its consolidated statement of financial position as a provision. The following table presents the reconciliation of the beginning and ending aggregate carrying amount of the obligations associated with the retirement of the Company's oil and gas assets:

	2018 £'000	2017 £'000

Balance at beginning of year	489	466
Effects of foreign currency translation	(15)	32
Effect of discount rate unwinding	(4)	(9)
Balance at end of year	470	489

The Group is confident that the provision taken at 30 June 2018 accurately reflects the current value of its future obligations.

At 30 June 2018, the estimated future cash flows required to settle this obligation totalled £470,000. Assuming an inflation rate of 2.0%, the undiscounted future cost of this obligation was £500,000. The liability for the expected cash flow requirement has been discounted using a pre-tax risk-free rate of 1.5%. This obligation will be settled based on the operating lives of the underlying assets, which currently are estimated to be from one to fifteen years with the majority of costs expected to occur between 2022 and 2023. Any settlement amounts will be funded from general corporate resources at the time of retirement and removal.

10. OTHER LONG-TERM ASSETS AND INVESTMENTS

As at 30 June 2018, the Group's other long-term assets consisted of the following:

	2018 £'000	2017 £'000

Licence deposits	477	493
	477	493

The licence deposits are held by the relevant regulatory body. They were paid over when the Company acquired its stakes in the lease and licence and will either be returned at the expiry of the lease and licence or set off against royalty payments if and when they become due.

The majority of the licence deposits relate to the Company's activities on production lease PL2002-01 in western Newfoundland. The production lease expired in August 2012 and as the lease contained a producing well, production lease PL2002-01(A) was issued which expires in August 2022 following the recent award of a 5-year extension to the expiry of PL2002-01(A).

As at 30 June 2018, the Company's investments consisted of the following:

	2018 £'000	2017 £'000
Investment in Group Companies at 1 July	478	516
Impairment	(152)	(38)
Investment in Group Companies at 30 June	326	478

During the year, the Directors conducted a review of the carrying value of the Company's other long-term assets, which consists of investments in Group companies and in MFDevCo as described in Note 21. The balance represents the carrying value of the investment in Enegi Oil Inc. Impairment in the period reflects the application of the Group's accounting policy with respect to the amortisation of Enegi Oil Inc.'s capitalised exploration costs.

The Group holds a 50% interest in MFDevCo in which it has invested as part of its marginal or stranded field strategy. Its investment has been accounted for using the equity method and as is deemed at this point to have zero value as the cumulative losses in MFDevCo exceed the investment that has been made by the Group. Losses at this stage of MFDevCo's development are as expected as MFDevCo seeks to establish itself.

The Group has no obligations to contribute to any excess losses or creditors that reside within MFDevCo.

11. TRADE AND OTHER RECEIVABLES

As at 30 June 2018, trade and other receivables consisted of the following:

	2018 £'000	2017 £'000

Sales taxes receivable	178	162
Prepayments and other receivables	815	760
	993	922

At 30 June 2018, trade and other receivables were within trading terms and therefore considered to be fully recoverable and as a result there was no provision for impairment (2017: £nil).

The trade and other receivables showing in the Company's statement of financial position relate to sales taxes receivable of £168,000 (2017: £154,000) and prepayments and other receivables of £790,000 (2017: £753,000).

The majority of the Group's other receivables relate to services that it has provided to MFDevCo as part of its marginal field strategy. The Group expects these balances to be repaid or converted to equity in MFDevCo in the course of the next 12 months. Nevertheless, the Group has decided to continue to provide against receivables balances due from MFDevCo over 4 years to reflect the pre-revenue nature of the business, reversing such provision upon settlement or conversion.

12. DUE TO RELATED PARTIES

Group

The Group incurred the following charges during the year with companies related by way of directors or common shareholders:

	2018 £'000	2017 £'000

RMRI Group (U.K.)	208	259
	208	259

The transactions above include Directors' Fees of £150,000 for both fees attributable to the year and prior years in which directors deferred fees due to the financial state of the Group. Transactions occurred in the normal course of operations and, where applicable, are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

The balances owed to related parties outlined below are, unsecured, not guaranteed, and are to be settled under normal credit terms, as would have applied with unrelated parties, and have arisen from the transactions referred to above.

	2018 £'000	2017 £'000

RMRI Group (U.K.)	358	855
RMRI (Canada) Inc.	183	189
	541	1,044

In addition to the above, £556,000 (2017: £529,000) is recorded in the Company's accruals as Applications for Payment but not yet invoiced. Applications for Payment are utilised where there is uncertainty with respect to the timing of payment so as to not generate a VAT liability for the service provider until payment is made.

Alan Minty and Damian Minty are shareholders in the related parties listed above and RMRI holds a 50% interest in MFDevCo. Management believe that the related parties have been crucial to the operation of the Company during the year. They expect the related parties to continue to provide certain services to the Company in the future. Any transactions with related parties are approved by an independent director.

Company

In 2018 the Company was owed an additional £136,000 by its principal trading subsidiary, Enegi Oil Inc. As a result of the trading performance of Enegi Oil Inc. the Company has provided in full against this additional receivable in 2018 and as such the amount carried at 30 June 2018 was £nil.

Amounts owed by the Company to the companies listed above totalled £358,000 (2017: £855,000). During the year the Company incurred charges of £58,000, excluding Directors' fees from the RMRI group companies.

13. ORDINARY SHARE CAPITAL AND SHARE PREMIUM ACCOUNT

In October 2015, the Company undertook a reorganisation of its share capital. Under the Companies Act a company is unable to issue shares at a subscription price which is lower than the nominal value. Therefore, in order to raise additional funding a reorganisation of the company's share capital was performed.

The reorganisation subdivided existing shares into new ordinary shares with a nominal value of £0.001 and deferred shares with a nominal value of £0.009. The deferred shares, amongst other things, are not traded, do not receive dividends and do not have voting rights. The issue of new ordinary shares will not require the issuance of deferred shares to new subscribers. At the time of the reorganisation 189,792,348 shares were in circulation.

At 30 June 2018, the Company had the following shares in issue:

	Number of shares	Ordinary Share capital £'000

Issued ordinary shares of 0.1p each	1,364,027,131	1,364
Issued deferred shares of 0.9p each	189,792,348	1,708

The weighted average number of ordinary shares in issue during the year was 1,257,654,599 (2017: 708,074,539).

The movement in share capital and share premium in the current is as follows:

Group and Company	Number of Ordinary Shares (thousands)	Number of Deferred Shares (thousands)	Ordinary share capital £'000	Share premium account £'000	Total £'000

At 1 July 2017	1,048,792	189,792	2,757	28,671	31,428
Share Placements and exercise of Warrants	315,235	-	315	2,391	2,706
Effect of Warrants	-	-	-	-	-
At 30 June 2018	1,364,027	189,792	3,072	31,062	34,134

Included in shares issued and fully paid are 860,000 shares issued to the Employee Benefit Trust.

As at 30 June 2018, the warrants relating to the Company's ordinary share capital had been issued:

	Number of shares	Exercise price £	Expiry date

Warrants issued to Company's Nominated Advisor	9,416,885	0.0063	6/11/21
Warrants issued to Novum Securities	13,043,478	0.0115	28/03/21
Warrants issued to Beaufort Securities Ltd.	10,000,000	0.011	27/07/22

14. TRADE AND OTHER PAYABLES

As at 30 June 2018, the Group's trade and other payables consisted of the following:

	2018 £'000	2017 £'000

Trade payables	481	367
Accruals	1,157	1,532
Taxation and social security	98	10
Loan repayable to Shard Capital	1,643	1,780
Other payables	2	92
	3,381	3,781

In December 2014, the Company obtained a further loan of £200,000 from Shard Capital Management. Under the terms of the loan, the Company was due to pay a further £120,000 interest on the original loan of £1,000,000 from November 2013 and £20,000 on the additional loan of £200,000 for a total interest expense in the period of £140,000. The loan and interest are repayable on demand. In the current year additional interest of £206,000 has been accrued on the loan balance.

The trade and other payables shown in the Company's statement of financial position relate to trade payables and accruals of £1,531,000 (2017: £1,768,000), other payables £11,000 (2017: £11,000) and Loan repayable to Shard Capital of £1,643,000 (2017: £1,780,000).

15. CASH USED IN OPERATIONS

During the year ended 30 June 2017, the net change in the Group's working capital balances were made up as follows:

	2018 £'000	2017 £'000

Loss before income tax	(1,878)	(1,671)
Decrease in related party payable	(503)	(470)
Decrease in trade and other payables	(57)	(823)
Depreciation, amortisation and impairment	341	367
(Increase) / decrease in receivables	(71)	228
Other non-cash movements	12	(6)
Cash flows used in operating activities	(2,156)	(2,375)

During the year ended 30 June 2018, the net change in the Company's non-cash working capital balances was made up as follows:

	2018 £'000	2017 £'000

Loss before income tax	(1,954)	(1,606)
Decrease in related party payable	(497)	(476)
Decrease in trade and other payables	(31)	(599)
(Increase) / decrease in receivables	(51)	42
Depreciation, amortisation and impairment	377	226
Other non-cash movements	-	38
Cash flows used in operating activities	(2,156)	(2,375)

16. PERFORMANCE SHARE PLAN

The Company commenced the operation of a Performance Share Plan which is an equity incentive scheme at the time of the Company's initial public offering in March 2008. The remuneration committee oversees the Performance Share Plan, approves the subscription price of awards under the Plan and any criteria to be satisfied before exercise is permitted, and monitors the effectiveness of the Performance Share Plan as an incentive to the executives and staff.

Under the terms of the Plan, an employee benefit trust ('EBT') subscribed for ordinary shares in the Company. The trust is administered by Appleby Limited. The trustee can distribute shares at its discretion directly to beneficiaries on the recommendation of the Board. All administrative costs associated with the EBT are met by the Company. The Employee Benefit Trust owns shares to be distributed at the discretion of the trustees and the employee owns any value in the shares in excess of the subscription price.

On 20 March 2008, the Company placed 860,000 shares into the EBT. The market price of the shares was £1.81 each and the market value of the shares was £1,556,600. At 30 June 2018, the EBT jointly owned 860,000 shares in the Company with a nominal value of £8,600, representing 0.06% of the allotted share capital of the Company. None of the shares held were under option or conditionally gifted.

Under the Performance Share Plan, the options outstanding to Directors and Senior Management, as approved by the Company's Remuneration Committee, is as follows:

Name	Already Vested	Average Vest Price (£)	To Vest	Average Vest Price (£)	Total Options
Alan Minty	20,000,000	0.006	-	-	20,000,000
Damian Minty	20,000,000	0.006	-	-	20,000,000
Tejvinder Minhas	20,000,000	0.006	-	-	20,000,000
Nigel Burton	8,000,000	0.006			8,000,000
Frank Jackson	8,000,000	0.006	-	-	8,000,000
Mike Bowman	4,000,000	0.006			4,000,000

17. EMPLOYEES AND DIRECTORS

During the year, the Group incurred employee benefit costs as follows:

	2018 £'000	2017 £'000

Wages and salaries	218	412
Directors' fees	210	108
Social security costs	46	51
	474	571

During the year, the average monthly number of people employed (including executive directors) was as follows:

2018

Number of employees

2017

Number of employees

Average monthly number of people employed

The Directors during the year were:

	Date of appointment	Date of resignation

Alan Minty	13 September 2007	-
Nigel Burton	20 October 2015
Damian Minty	1 October 2011	-
Prof. Mike Bowman (Non-executive director)	31 March 2014	-
Frank Jackson (Non-executive director)	1 October 2011	-
Tejvinder Minhas (Non-executive director)	28 March 2013	-

Effective July 2017, Tejvinder Minhas, Executive Director, moved to a position of Non-Executive Director with the Company. The executive directors are considered to be the key management personnel of the Group. Their aggregate remuneration was as follows:

	2018 £'000	2017 £'000
Short-term employee benefits	168	400
Directors' fees	160	108
	328	508

The largest director emoluments for the year were £160,000 (2017: £190,000).

18. COMMITMENTS AND CONTINGENCIES

Capital commitments

Under the terms of the Group's interest in its petroleum lease, the Group commenced a seismic research programme prior to 12 August 2007 as required. The cost to complete the seismic research programme is £1,178,250. None of the costs that relate to the seismic programme have been incurred to date.

19. FINANCIAL INSTRUMENTS

The Company's principal financial instruments comprise cash, trade and other receivables, trade and other payables and accruals and amounts owed to related parties. The carrying values of the Company's financial instruments approximate their fair values due to the short-term maturity and normal trade credit terms of these instruments.

20. FINANCIAL RISK MANAGEMENT

The Group is subject to certain financial risks. The Directors consider the following risk factors, which are not exhaustive, particularly relevant to the Group's business activities:

Currency risk: The Group is exposed to changes in the exchange rate between the British pound and Canadian dollar (CAD). Such movements could significantly impact the financial performance of the Group. The Group's principal operating subsidiary holds a significant proportion of its cash and cash equivalents in CAD and has a functional currency of CAD.

At each period end, assets and liabilities that are held in a currency other than the Group's reporting currency are translated into sterling. The resultant foreign currency gain or loss arising is reflected in the consolidated statement of comprehensive income (SOCI) in the period in which it arises. During the year, a further 10% gain in the value of CAD versus the pound would have led to an increase in the amount recognised in the SOCI of £20,000 (2017: increase of £35,000).

Going forward, the Group will mitigate the effects of its structural currency exposure by converting funds raised for investment and operations into the relevant currency of the investment or operations when the funds are raised. The Group's policy will also be to hedge most of its foreign exchange exposure at the point when a contractual obligation creates a forward exposure. The Group's policy is not to undertake any speculative currency positions.

Commodity prices: The Group's future revenues and cash flows will come primarily from the sale of oil and gas. If oil and gas prices should fall below and remain below the Group's cost of production for any sustained period, the Group may experience losses and may be forced to curtail or suspend some or all of its operations. In addition, the Group would also have to assess the economic impact of low oil or gas prices on the Group's ability to recover any losses which the Group may incur during this period and on the Group's ability to maintain adequate reserves.

Oil and gas prices are volatile and are influenced by factors beyond the Group's control such as supply and demand, political and social developments, exchange rates, interest rates and inflation.

Liquidity risk: The Group has based its future projections on achieving commercial production from the implementation of the Marginal Field Initiative business model. The implementation of the Marginal Field Initiative business plan will require an injection of new capital into the business, but the value that additional capital is able to generate should significantly exceed the effect of any potential shareholder dilution.

The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. The Company has access to funding and these are considered sufficient to meet the anticipated funding requirements. Rolling cash flow forecasts of the Company's liquidity requirements are monitored to ensure it has sufficient cash to meet operational needs over the next twelve months.

Counterparty risk: The Group shares working interests in its offshore prospects with third parties. To the extent that these third parties are unable to meet their obligations under the terms of the exploration licence, the Group may face additional costs for developing those assets. The Directors monitor the financial positions of these working interest partners and look to minimise the risk of additional costs through the use of farm-in and farm-out arrangements if appropriate.

21. SUBSIDIARY COMPANIES AND INVESTMENTS

Principal Group investments

The principal Group investments are disclosed below. For a full list of subsidiaries see annual return per Companies House. Other than the effect of foreign exchange, transactions between subsidiaries and between the parent Company and its subsidiaries are eliminated on consolidation.

Name	Nature of business	Country of incorporation	Type of share	Subsidiary / Investment	Group shareholding

Enegi Finance Limited	Intra-group finance provider	UK	Ordinary	Subsidiary	100%
Gestion Resources Limited	Working interest holder	UK	Ordinary	Subsidiary	100% via Enegi Oil Inc.
Enegi Oil Inc.	Principal operating subsidiary	Canada	Ordinary	Subsidiary	100%
Marginal Field Development Company (MFDevCo) Ltd.	Marginal field development solutions	UK	Ordinary	Investment	50%

All investments are held at cost less any provision for diminution in value.

The registered office of each company is as follows:

Name	Registered Address	Country of incorporation

Enegi Finance Limited	5th Floor, Castlefield House, Liverpool Road,Manchester. M3 4SB	UK
Gestion Resources Limited	5th Floor, Castlefield House, Liverpool Road,Manchester. M3 4SB	UK
Enegi Oil Inc.	36, Quidi Vidi Road, St. Johns, Newfoundland	Canada
Marginal Field Development Company (MFDevCo) Ltd.	5th Floor, Castlefield House, Liverpool Road,Manchester. M3 4SB	UK

Notes to the Financial Statements Ends

Non-Statutory Accounts

The figures for the years ended 30 June 2018 and 2017 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the year ended 30 June 2018 have been extracted from the statutory accounts for that year and they have yet to be delivered to the Registrar of Companies. The figures for the year ended 30 June 2017 have been extracted from the statutory accounts for that year and have been delivered to the Registrar of Companies.

An auditor's report was made on the statutory accounts for both 2018 and 2017. In each case the audit report was unqualified but emphasised that there was a material uncertainty relating to Group's ability to continue as a going concern.

No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts.