Board of Irish explorer Petrel Resources concerned about group’s survival

Almost €1m is owed to key management personnel in respect of remuneration due at the balance sheet date

Irish oil explorer Petrel Resources incurred a loss of €164,206 in the six months to end of June as the company warned of “significant doubt” on its ability to continue as a going concern.

Petrel is a hydrocarbon explorer with interests in Iraq and Ghana. Its loss for the year was down from €310,813 incurred in the same period last year. It has net current liabilities of €854,017, up from €689,811.

It warned that these conditions represent “a material uncertainty”. Included in the liabilities is an amount of €902,531, up from €857,531 last year, owed to key management personnel in respect of remuneration due at the balance sheet date.

Key management have confirmed that they will not seek settlement of these amounts in cash for a period of at least one year after the date of approval of the financial statements or until the group has generated sufficient funds from its operations after paying its third-party creditors.


The company had a cash balance of €51,098, down from €166,309, at the balance sheet date.

Additional finance may be required to fund working capital requirements and develop existing projects. As the group is not revenue- or cash-generating, it relies on raising capital from the public market.

Petrel said it had fine-tuned its Iraqi proposals following feedback. It has contractors and suppliers identified but is seeking improved fiscal terms to attract partners.

Iraqi oil output fell to 4.2 million barrels daily in July, in line with Opec+ output cut agreements. Iraqi potential is substantially higher, while infrastructural issues are being addressed.

However, despite strong energy prices, and recovered demand, oil and gas explorers’ shares remain out of favour in the London market – though there is Australian interest.

Fiscal terms in the Middle East still reflect historical conditions rather than current market realities, Petrel said. Politicians “are slow” to agree contractual terms that maximise value for all parties.

“Europe is de-industrialising, due to policies generally hostile to reliable fuels, but global oil and gas demand continues to recover, as Asia recovers from lock-downs,” said chairman David Horgan.

“The withdrawal of most majors from non-core basins undermined the farm-out market after 2014.

“Majors who had entered OPEC country projects, often on uneconomic terms, now exit marginal or non-core projects as they buy shares back and issue record dividends instead of exploring.

“Institutional reluctance to invest in exploration for reliable fuels continues. Available funds are from private clients and traders demanding discounts.

“We prefer to avoid incurring work commitments requiring dilution at current prices. We prefer to prepare early-stage projects to farm down when markets turn.”

Mr Horgan said Australian brokers and investors had profited through the liquidity of Petrel’s sister company, Clontarf Energy.

“They press Petrel Resources to accept Australian and Asian participation,” he said. “So far, we have avoided dilution, but as we roll out high-potential new projects, and the share price hopefully rises, it may be attractive to accept funding.”

Petrel has assessed various expansion projects, which failed due diligence or did not deliver funding on satisfactory terms. These included oil and gas, as well as in new sectors. Proposals are many but cash at market rates is sometimes lacking, added Mr Horgan.

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter