The Group’s strategy is to build shareholder value through the exploration and development of its existing assets, while seeking potential new opportunities.
In pursuit of these aims, the Group’s management utilises its technical and financial expertise and connections to partner with other, like-minded companies in making applications for new exploration acreage.
The Group’s strategy has continued to focus on lower-risk assets with well-understood geology, nearterm commercial potential, access to (or ownership of) infrastructure situated in established hydrocarbon basins and stable fiscal jurisdictions such as the Netherlands and the UK.
In 2019 HALO’s results reflect the effects of a weaker gas price resulting in falling revenues, and the unsuccessful drilling campaign in the UK Andromeda licence, leading to an impairment charge of £20.8m in the period. There was progress in other aspects of the portfolio; notably, the awards of new licences in F4 and F5 offshore Netherlands.
We were also pleased to report that we were able to place Surety Bonds of €25m with Aspen American Insurance Company to cover the company’s Decommissioning Security Agreements, in respect of the
offshore Netherlands licences.
In terms of the Group’s growth strategy, we believe the Proposed Transaction, announced in September 2019, is consistent with the objectives of expanding on existing core areas and will add material
production and reserves for the Group. Despite delays encountered in receiving government and partner approvals, HALO expects to complete the acquisition but cannot guarantee that this will occur within the
current global environment & industry conditions. Regardless, HALO will continue to screen suitable opportunities as they arise focusing on those which meet the strategic objectives and are deemed to be
value-accretive within our established jurisdictions.
HALO’s renewed strategy is a greater focus on maintaining cost-consciousness and efficient management capacity within the Group. In these very challenging times for the industry, the Group will continue the
twin approach of strictly managing costs and protecting revenue through a well-managed hedging program and cost-reductions (or deferrals). Administrative costs were held at £1.20m, below the level in
2018 (£1.40m), and management expect to further reduce head office costs in 2020 towards a target of ca. 50% reduction by Q3 2020. At the same time, we will look for growth opportunities where they fit
within the overall strategy and expand the fundamental base of the Company.
Further afield, HALO maintains its interests in the Philippines but will review its continuing participation during the course of the year, as it is not a core area of interest. However it remains an interesting
prospect for the future and attracts de minimis costs net to the Group.