Falcon Oil & Gas : Financial Statements 31 March 2025
FO.V
Published on 05/19/2025 at 19:35
Interim Condensed Consolidated Financial Statements Three Months Ended 31 March 2025 and 2024
(Presented in U.S. Dollars)
19 May 2025
To the shareholders of Falcon Oil & Gas Ltd.
The accompanying unaudited interim condensed consolidated financial statements as at and for the three months ended 31 March 2025, have been prepared by the management of the Company and approved by the Audit Committee.
The Company's independent auditors have not performed a review of these financial statements.
Interim Condensed Consolidated Statement of Operations and Comprehensive Loss 4
Interim Condensed Consolidated Statement of Financial Position 5
Interim Condensed Consolidated Statement of Changes in Equity 6
Interim Condensed Consolidated Statement of Cash Flows 7
Notes to the Interim Condensed Consolidated Financial Statements 8
(Unaudited)
Notes
Three months ended
31 March 2025
$'000
Three months ended 31 March 2024
$'000
Revenue
Oil and natural gas revenue
-
-
-
-
Expenses
Exploration and evaluation expenses
(40)
(44)
General and administrative expenses
12
(491)
(528)
Foreign exchange gain
77
120
(454)
(452)
Results from operating activities
(454)
(452)
Finance income
4
98
8
Finance expense
4
(141)
(362)
Net finance expense
(43)
(354)
Loss and comprehensive loss for the period
(497)
(806)
Loss and comprehensive loss attributable to:
Equity holders of the company
(497)
(804)
Non-controlling interests
-
(2)
Loss and comprehensive loss for the period
(497)
(806)
Loss per share attributable to equity holders of the company:
Basic and diluted
5
($0.000)
($0.001)
The notes are an integral part of these interim condensed consolidated financial statements.
(Unaudited)
Notes
At 31 March
2025
$'000
At 31 December
2024
$'000
Assets
Non-current assets
Exploration and evaluation assets
6
53,347
50,291
Accounts receivable
56
56
Restricted cash
7
2,123
2,040
55,526
52,387
Current assets
Cash and cash equivalents
8
6,896
6,823
Accounts receivable
139
3,031
7,035
9,854
Total assets
62,561
62,241
Equity and liabilities
Equity attributable to owners of the parent
Share capital
406,684
406,684
Contributed surplus
47,446
47,446
Deficit
(410,652)
(410,155)
43,478
43,975
Non-controlling interests
690
690
Total equity
44,168
44,665
Liabilities
Non-current liabilities
Decommissioning provision
13
16,751
16,587
16,751
16,587
Current liabilities
Accounts payable and accrued expenses
14
1,642
989
1,642
989
Total liabilities
18,393
17,576
Total equity and liabilities
62,561
62,241
The notes are an integral part of these interim condensed consolidated financial statements.
(Unaudited)
Notes
Share capital
$'000
Contributed
surplus
$'000
Deficit
$'000
Equity interests of the parent
$'000
Non-Controlling interests
("NCI")
$'000
Total equity
$'000
At 1 January 2024
402,120
47,379
(407,197)
42,302
697
42,999
Share based compensation
9
-
36
-
36
-
36
Loss and total comprehensive loss for the period
-
-
(804)
(804)
(2)
(806)
At 31 March 2024
402,120
47,415
(408,001)
41,534
695
42,229
At 1 January 2025
406,684
47,446
(410,155)
43,975
690
44,665
Loss and total comprehensive loss for the period
(497)
(497)
-
(497)
At 31 March 2025
406,684
47,446
(410,652)
43,478
690
44,168
The notes are an integral part of these interim condensed consolidated financial statements.
(Unaudited)
Three months ended 31 March
Notes
2025
$'000
2024
$'000
Cash flows from operating activities
Net loss for the period
(497)
(806)
Adjustments for:
Share based compensation
9
-
36
Depreciation
-
1
Net finance expense
4
43
354
Effect of exchange rates on operating activities
(77)
(120)
Change in non-cash working capital:
Increase in accounts receivable
(110)
(83)
Increase in accounts payable and accrued expenses
19
7
Net cash used in operating activities
(622)
(611)
Cash flows from investing activities
Interest received
8
8
Exploration and evaluation assets
(2,384)
(2,869)
Legacy exploration permit bonds refund
19
-
R&D tax incentive refund
2,962
-
Net cash generated by / (used in) investing activities
605
(2,861)
Change in cash and cash equivalents
(17)
(3,472)
Effect of exchange rates on cash and cash equivalents
90
(231)
Cash and cash equivalents at beginning of period
6,823
7,992
Cash and cash equivalents at end of period
8
6,896
4,289
The notes are an integral part of these interim condensed consolidated financial statements.
Falcon Oil & Gas Ltd. ("Falcon") is an oil and gas company engaged in the exploration and development of unconventional oil and gas assets. Falcon's interests are located in Australia, Hungary, and South Africa.
Falcon is incorporated in British Columbia, Canada with a registered office at 1200 Waterfront Centre, 200 Burrard Street, Vancouver BC V7X 1T2, Canada and headquartered in Dublin, Ireland. Falcon's common shares are traded on Toronto's TSX Venture Exchange ("TSX-V") (symbol: FO.V); and AIM, a market operated by the London Stock Exchange (symbol: FOG).
The information provided herein in respect of Falcon includes information in respect of its wholly-owned subsidiaries: TXM Oil and Gas Exploration Kft., a Hungarian limited liability company ("TXM"); Falcon Oil & Gas Ireland Limited, an Irish limited liability company ("Falcon Ireland"); Falcon Oil & Gas Holdings Ireland Limited, an Irish limited liability company ("Falcon Holdings Ireland"); Falcon Exploration and Production South Africa (Pty) Ltd., a South African limited liability company ("Falcon South Africa") and its 98.1% majority owned subsidiary, Falcon Oil & Gas Australia Limited, an Australian limited liability company ("Falcon Australia") (collectively, the "Company" or the "Group").
These Interim Condensed Consolidated Financial Statements ("Interim Statements") of the Group have been prepared in accordance with IAS 34 'Interim Financial Reporting' and, except as described below, on the basis of the same accounting principles as, and should be read in conjunction with, the Consolidated Financial Statements for the year ended 31 December 2024 (pages 11 to 16) as filed on the Canadian Securities Administrator's System for Electronic Document Analysis and Retrieval ("SEDAR+") at https://www.sedarplus.ca.
There are no amended accounting standards or new accounting standards that have any significant impact on these interim financial statements applicable as at 1 January 2025.
The Interim Statements are presented in United States dollars ("$"). All amounts, except as otherwise indicated, are presented in thousands of dollars. Where referenced in the Interim Statements "CDN$" represents Canadian Dollars, "£" represents British Pounds Sterling, "HUF" represents Hungarian Forints, and "A$" represents Australian Dollars.
As at 31 March 2025 the Group had $6.9 million of cash and cash equivalents which is sufficient to cover Falcon's own ongoing operating costs for the next 12 months from the date of the approval of these financial statements, However, as outlined below, further funding will be required for Falcon Australia's continued participation in the Beetaloo and estimated costs to be incurred in H2 2025, which is within the 12 months from the date of approval of the financial statements. Falcon Australia holds a 22.5% participating interest ("PI") across exploration permits 76, 98 and 117 (collectively known as the Exploration Permits) situated in the Beetaloo Sub-basin, Northern Territory, Australia with Tamboran B2 Pty Ltd. ("Tamboran B2") appointed as operator. As part of the executed joint operating agreement, Tamboran B2 granted Falcon Australia an additional gross carry beyond Stage 3 of A$30 million (net A$6.75 million to Falcon Australia) and terms were agreed on drilling space units ("DSU") for sole risk operations, the size of these DSUs depending on (a) the type and length of the well to be drilled and (b) whether or not the well is a "commitment well" under the terms of the Exploration Permits, a non-commitment well creates a DSU to a maximum of 6,400 acres, while a commitment well creates a DSU to a maximum of 25,600 acres, providing Falcon Australia with participation optionality on the drilling of future wells. As announced on 25 March 2024 Falcon Australia elected to reduce its working interest from 22.5% to 5% in the first two wells of the pilot, with the pilot consisting of 2 wells drilled in 2024 and a further three wells to be drilled in 2025, collectively known as the "Pilot Project". Falcon further announced on the 24 January 2025 it would not be participating in the wells to be drilled in 2025.
The A$263.8 million gross cost cap and gross A$30 million (net A$6.75 million to Falcon Australia) additional carry for 2023 and 2024 are now utilized, therefore cash on hand at 31 March 2025 will contribute to costs of completion of the first two wells in the Pilot Project, however funding will be required to meet estimated expenditure in H2 2025.
Management and those charged with governance are confident that further funding required can be raised through either an equity raise or debt funding. As at the date of the approval of these financial statements no such further funding has been raised and there can be no certainty that sufficient funds can be raised if required. This indicates the existence of a material uncertainty, which may cast significant doubt over the Group's ability to continue as a going concern, and therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of
business. The financial statements do not include adjustments that would result if the Group was unable to continue as a going concern. Having given due consideration to the cash requirements of the Group, management and those charged with governance has a reasonable expectation that the Group will have adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of these financial statements. For this reason, the Board continues to adopt the going concern basis in preparing these consolidated financial statements which assumes the Group will be able to meet its liabilities as they fall due for the foreseeable future.
Based on internal reporting information, it was determined that there is one reportable segment. All of the Group's operations are in the petroleum and natural gas industry with its principal business activity being in the acquisition, exploration and development of petroleum and natural gas properties. The Group has no producing petroleum and natural gas properties, the Group has unproven petroleum and natural gas interests in Australia, South Africa and Hungary.
The key performance measures reviewed for the segment which management believes are the most relevant information when evaluating the results of the Group are:
the progress and extent to which farm-out agreements have been executed over the Group's acreage; and
cash flow, capital expenditure and operating expenses.
An analysis of the geographic areas is as follows:
Australia
South Africa
Hungary
Other
Total
$'000
$'000
$'000
$'000
$'000
Three months ended 31 March 2025:
Net loss (i)
(104)
(15)
(118)
(260)
(497)
Capital assets (ii)
53,347
-
2,091
32
55,470
Three months ended 31 March 2024: Net loss (i)
(194)
(16)
(253)
(341)
(804)
Capital assets
52,462
-
2,084
34
54,580
Net loss attributable to equity holders of the company.
Capital assets consist of exploration & evaluation assets and restricted cash.
Three months ended 31 March
2025
2024
Notes
$'000
$'000
Finance income
Interest income on bank deposits
8
8
Net foreign exchange gain
90
-
98
8
Finance expense
Accretion of decommissioning provisions
13
(141)
(130)
Net foreign exchange loss
-
(232)
(141)
(362)
Net finance expense
(43)
(354)
Basic and diluted loss per share is calculated as follows:
For the three months ended 31 March
2025
2024
$'000
$'000
Loss attributable to equity holders of the company
(497)
(804)
Weighted average number of common shares in issue - (thousands)
1,109,142
1,044,347
Loss / diluted loss per share
($0.000)
($0.001)
Future shares issuable under the Group share option plan would be anti-dilutive as those shares would reduce the loss per share.
At 31 March
2025
$'000
At 31 December
2024
$'000
Opening balance
50,291
51,287
Additions
3,057
5,804
R&D tax incentive refund
-
(2,941)
Grant of ORRIs
-
(4,000)
Decommissioning provision
(1)
141
Closing balance
53,347
50,291
E&E assets consist of the Group's Australian exploration project which is pending the determination of proven or probable reserves.
Restricted cash includes cash held by financial institutions as collateral for ongoing Group operations. In January 2015, the Group placed $2 million on deposit for the benefit of the Hungarian mining authority as a security deposit with regards the Group's decommissioning obligations, with movements period on period related to foreign exchange revaluations.
31 March
2025
31 December
2024
$'000
$'000
Restricted cash
2,123
2,040
2,123
2,040
Cash and cash equivalents include cash on hand, deposits held on call with banks, other short term highly liquid investments with initial maturities of three months or less at inception.
31 March
2025
31 December
2024
$'000
$'000
Cash
6,896
6,823
6,896
6,823
The Group, in accordance with the policies of the TSX-V, may grant options to directors, officers, employees and consultants, to acquire up to 10% of the Group's issued and outstanding common stock. The exercise price of each option is based on the market price of the Group's stock at the date of grant, which may be discounted in accordance with TSX-V policies. The exercise price of all options granted to date has been based on the market price of the Group's stock at the date of grant, and no options have been granted at a discount to the market price. The options can be granted for a maximum term of five years. The Group records compensation expense over the vesting period based on the fair value at the grant date of the options granted. All Options granted have a vesting schedule allowing one third of the Options to vest immediately at the date of grant with an additional one third vesting on each subsequent anniversary. These amounts are recorded as contributed surplus. Any consideration paid on the exercise of these options together with the related contributed surplus associated with the exercised options is recorded as share capital.
The Group incurred no share-based expense for the period ended 31 March 2025 (2024: $36,000).
A summary of the Group's stock option plan as of 31 March 2025 and 31 December 2024 and changes during the periods then ended, is presented below:
Three months ended 31 March 2025
Year ended 31 December 2024
Weighted
Weighted
Number
average
Number
Average
of
exercise
of
Exercise
options
price
options
Price
Outstanding at beginning of period
59,750,000
£0.11
59,750,000
£0.11
Outstanding at end of period
59,750,000
£0.11
59,750,000
£0.11
Exercisable at end of period
59,750,000
£0.11
59,750,000
£0.11
The exercise prices of the outstanding options are as follows:
Date of grant
Options
Exercise price
Date of Expiry
Weighted average
contractual life remaining (years)
18 February 2021
21,500,000
£0.08
17 February 2026
0.88
18 February 2021
16,500,000
£0.12
17 February 2026
0.88
10 September 2021
3,000,000
£0.10
9 September 2026
1.44
6 June 2022
16,250,000
£0.15
5 June 2027
2.18
29 November 2022
2,500,000
£0.15
28 November 2027
2.66
59,750,000
£0.11
A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the methods outlined below. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Cash and cash equivalents, restricted cash, accounts payable and accrued expenses
As at 31 March 2025 and 31 December 2024, the fair value of cash and cash equivalents, restricted cash, accounts payable and accrued expenses approximated their carrying value due to their short term to maturity.
The following tables provide fair value measurement information for financial assets and liabilities as at 31 March 2025 and 31 December 2024. The carrying value of cash and cash equivalents, restricted cash, and accounts payable and accrued expenses included in the consolidated statement of financial position approximate fair value due to the short term nature of those instruments. Financial assets in the table below are measured at amortized cost.
31 March 2025
31 December 2024
Carrying value
$'000
Fair value
$'000
Carrying value
$'000
Fair value
$'000
Financial assets:
Cash and cash equivalents including restricted cash
9,019
9,019
8,863
8,863
Financial Liabilities:
Other financial liabilities
Accounts payable and accrued expenses
1,642
1,642
989
989
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1 Fair Value Measurements
Level 1 fair value measurements are based on unadjusted quoted market prices.
Level 2 Fair Value Measurements
Level 2 fair value measurements are based on valuation models and techniques where the significant inputs are derived from quoted indices.
Level 3 Fair Value Measurements
Level 3 fair value measurements are based on unobservable information. No financial assets or liabilities have been valued using the Level 3 fair value measurements.
For the three months ended 31 March
Notes
2025
$'000
2024
$'000
Accounting and audit fees
(55)
(53)
Consulting fees
(21)
(19)
Legal fees
(13)
(4)
Investor relations
(48)
(59)
Office and administrative costs
(32)
(36)
Payroll and related costs
(244)
(243)
Directors' fees
(59)
(59)
Travel and promotion
(19)
(19)
Shared based compensation
9
-
(36)
(491)
(528)
A reconciliation of the decommissioning provision for the period ended 31 March 2025 and the year ended 31 December 2024 is provided below:
31 March
2025
31 December
2024
$'000
$'000
Balance as at beginning of year
16,587
16,204
Additions to Beetaloo working interests
-
105
Revision to previous Beetaloo decommissioning provision
(1)
37
Foreign exchange revaluation
24
(236)
Accretion
141
477
Non - current; balance at end of period
16,751
16,587
The Group's decommissioning provision results from its ownership interest in oil and natural gas assets. The total decommissioning provision is estimated based on the Group's net ownership interest in the wells, estimated costs to reclaim and abandon these wells and the estimated timing of the costs to be incurred in future years.
The Group has estimated the net present value of the decommissioning provision for its Hungarian well interests to be
$14 million as at 31 March 2025 (31 December 2024: $14 million) based on an undiscounted total future liability of
$16.3 million (31 December 2024: $16.4 million). These payments are expected to be made in 5 years. The discount factor, being the risk-free rate related to the liability, was 3.23% as at 31 March 2025 (31 December 2024: 3.23%). The inflation factor related to the liability, was 2.45% as at 31 March 2025 (31 December 2024: 2.45%). A 1% increase / (decrease) in the discount rate to 4.23% / 2.23% will (decrease) / increase the provision by ($629,000) / $665,000.
The estimated net present value of the decommissioning provision for its Australian Beetaloo well interests is $2.6 million as at 31 March 2025 (31 December 2024: $2.5 million) based on an undiscounted total future liability of $5.9 million (31 December 2024: $5.8 million). These payments are expected to be made between 3-30 years. The discount factors, being the risk-free rate related to the liability, were 3.82% and 4.83% respectively as at 31 March 2025 and 31 December 2024. The inflation factor related to the liability, was 2.50% as at 31 March 2025 and 31 December 2024. A 1% increase / (decrease) in the discount rate will (decrease) / increase the provision by ($301,000) / $387,000.
31 March
2025
31 December
2024
$'000
$'000
Current
Accounts payable
943
475
Accrued expenses
699
514
1,642
989
There were no related party transactions during the period.
Work program commitments
Australia - Beetaloo Sub-Basin, Northern Territory, Australia
The Group planned a drilling programme which commenced in 2015 with its farm-in partners. Work recommenced in 2019 following the moratorium on hydraulic fracturing, details of current operations are included in the Management's Discussion & Analysis document for the three months ended 31 March 2025.
Since April 2020 Falcon Australia holds a 22.5% PI in the Exploration Permits and there was also an overall cost cap of A$263.8 million resulting from farm out transactions agreed to up to that date. In October 2022, Falcon Australia was granted an additional carry on costs up to A$30 million (gross) and there was the introduction of DSUs on sole risk operations providing optionality to Falcon Australia on future wells drilled. The size of a DSU varies depending on (a) the type and length of the well to be drilled and (b) whether or not the well is a "commitment well" under the terms of the Exploration Permits, a non-commitment well creates a DSU to a maximum of 6,400 acres, while a government commitment well creates a DSU to a maximum of 25,600 acres. The optionality created by the DSUs allows Falcon Australia to participate at its PI of 22.5% or reduce its interest as low as 0% in a particular DSU without impairing the percentage it participates in a future DSU across the acreage. The cost cap and the additional carry have now been consumed and Falcon Australia is contributing to the costs in proportion to its 22.5% PI or reduced interest as elected. A Pilot Project at the Shenandoah South location commenced in 2024 with Falcon Australia electing to reduce its PI in the first two wells of the Pilot Project to 5% and further reducing its PI in the remaining wells to be drilled in the Pilot Project through 2025 to 0%.
The terms of the Beetaloo Joint Venture continue to necessitate specific minimum work obligations through May 2028. Future commitments for the next three years to May 2028 include an expected gross spend of A$106 million across the Exploration Permits, related to drilling and multi-stage stimulations, 3D seismic survey, and sub-surface studies, with gross expenditure across EP76 of A$20.75 million, EP98 of A$63.5 million and EP117 of A$22.5 million. Falcon Australia's level of future spend will be dependent on the PI it opts into each of the joint operations at.
South Africa - Karoo Basin, South Africa
On granting of an approved exploration right in South Africa, the Group will be required to make a payment to the South African government of approximately $0.7 million. Management does not foresee this payment falling due within the
next 12 months based on the expected timeframe of being granted an approved exploration right.
Hungary - Makó Trough, Hungary
The Group is not committed to any independent technical operations in Hungary.
There were no other significant changes in the state of affairs of the Company that occurred since the end of the period under review.
These Interim Financial Statements were approved by the Audit Committee as delegated by the Board of Directors and authorised for issue on 19 May 2025.
Disclaimer
Falcon Oil & Gas Ltd. published this content on May 19, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 19, 2025 at 23:34 UTC.