Registered number: 11267780
HIGH POWER PETROLEUM (SEAPULSE) UK LTD
FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 DECEMBER 2023
TWP Accounting LLP
Chartered Accountants & Statutory Auditors
The Old Rectory
Church Street
Weybridge
Surrey
KT13 8DE
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
REGISTERED NUMBER: 11267780
BALANCE SHEET
AS AT 31 DECEMBER 2023
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Investments in equity accounted investees
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 14 February 2025.
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Philip Mitchell
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The notes on pages 2 to 9 form part of these financial statements.
Page 1
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
High Power Petroleum (Seapulse) UK Limited (the "company") is a private company limited by shares incorporated in England and Wales. The registered office of the company is 93-95 Gloucester Place, London, W1U 6JQ.
The Company’s principal activity is the investment in, and to act as a holding company for, oil and gas development and production opportunities.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The financial statements are presented in USD which is the functional currency of the company and rounded to the nearest $.
The following principal accounting policies have been applied:
The Company is, in the short term, wholly dependent on funding from its immediate and ultimate parent companies, High Power Petroleum LLC and Blue Spark Energy Systems Inc (BSES). BSES intend to fund their operations and growth through a combination of operating cash flows and, to a significant extent, proceeds from new private placement equity raises.
BSES is currently engaging with a range of potential investors and is confident that additional finance will be secured within the required timeframe, this is though not wholly within BSES control. Therefore, whilst the directors are confident that the Company has the support of its parent company to continue in operational existence for the foreseeable future and meet its financial obligations, the aforementioned factors indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. The directors have a reasonable expectation that the entity remains a going concern and accordingly, have prepared the financial statements on a going concern basis of accounting.
Page 2
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is USD.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
Interest income is recognised in profit or loss using the effective interest method.
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Investments in subsidiaries and joint ventures and associates are stated at cost, less any accumulated impairment losses.
The carrying value of investments is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Short term debtors are measured at transaction price, less any impairment.
Page 3
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short term creditors are measured at the transaction price.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and which are not classified as available for sale. Loans and receivables are initially recognised at fair value including direct and incremental transaction costs and are subsequently measured at amortised cost. Amortised cost is the present value of the receivables future cash flows discounted at the effective interest rate. Loans and receivables are included in debtors in the balance sheet.
At each reporting date, the Company assesses whether there is any indication that loans and receivables may be impaired. Where an indicator of impairment exists, the company makes an estimate of the recoverable amount based on the present value of the estimated future cashflows discounted at the original effective interest rate. Where the carrying amount exceeds its recoverable amount, loans and receivables are considered impaired and written down to recoverable amounts.
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The average monthly number of employees, including directors, during the year was 3 (2022 - 3).
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Page 4
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Seacrest Petroleo
Bermuda Ltd
(a)
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Seapulse Ltd
(Joint venture)
(b)
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Page 5
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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(a)Seacrest Petroleo Bermuda Ltd. (“Seacrest Bermuda”)
As at December 31, 2022, High Power Petroleum (Seapulse) UK Ltd held 18,099,706 common shares at a total of $11 million (being initial $6 million plus the additional $5 million consideration paid by High Power Petroleum (Seapulse) UK Ltd representing 9.8% of the total issued common shares and Series A shares of Seacrest Bermuda. High Power Petroleum (Seapulse) UK Ltd had a Board seat and Operating Committee seat and therefore had significant influence and accounted for the investment using the Equity Method as per FRS102 section 14 "Investments in Associates".
On February 23, 2023, Seacrest Bermuda closed an IPO on the Oslo Stock Exchange at a price of NOK6 per share. High Power Petroleum (Seapulse) UK Ltd shareholding in Seacrest Bermuda at the IPO date amounted to 18.1 million shares and High Power Petroleum (Seapulse) UK Ltd ownership was reduced to 2.8%. During April 2023, Seacrest Bermuda executed a reverse share split with two existing shares being consolidated into one share (revised High Power Petroleum (Seapulse) UK Ltd shareholding of 9.1 million). As a result of the IPO, High Power Petroleum (Seapulse) UK Ltd no longer has a right to a Board seat and Operating Committee seat and is no longer deemed to have significant influence over Seacrest Bermuda.
Given High Power Petroleum (Seapulse) UK Ltd has lost significant influence in relation to its investment in Seacrest Bermuda and, in accordance with FRS 102 1A, the use of the equity method has been discontinued. The investment has been reclassified to Other investments (above) measured at fair value and subsequently accounted for under FRS 102 1A.
(b) SeaPulse Ltd
On October 12, 2018, High Power Petroleum (Seapulse) UK Limited (“H2P Seapulse”) entered into a shareholders agreement with Seacrest Group Ltd to each acquire a 50% interest in the common shares of Seapulse Ltd (“Seapulse”), a Bermuda company whose purpose is to explore and develop a portfolio of offshore drill-ready hydrocarbon prospects.
Pursuant to an amended and restated shareholders agreement and by-laws effective March 19, 2021, the share capital of Seapulse was reorganized and H2P Seapulse’s common share interest was reduced to 25% with a right to appoint one of three board directors while it holds a minimum 10% common share interest. The CEO of H2P has been appointed as a director and the CEO of Seapulse. Seat. Therefore, Seapulse has been assessed to have significant influence and have accounted for the investment as an associate using the equity method
On March 19, 2021, H2P Seapulse also entered into agreements committing to subscribe for 200,000 Seapulse Series A shares. H2P Seapulse’s first tranche subscription of $1.5 million was completed in April 2021, and the funds were used by Seapulse to secure a right to farm-in to Block 2B, an offshore exploration prospect in South Africa (“Block 2B”). As at 31 December 2022, H2P Seapulse completed four additional subscriptions totalling $1.0 million ($0.4 million in December 2021 and $0.2 million in March 2022, June 2022 and September 2022).
On November 18, 2022 it was announced that the Gazania-1 exploration well on Block 2B offshore South Africa did not encounter commercial hydrocarbons during exploration. As a result, the Gazania-1 exploration was plugged and abandoned. This, in addition to uncertain UK government permitting policies, windfall tax threats and climate activist opposition has prevented Seapulse from attracting investors for Northern Sea exploration prospects. As such, investment in Seapulse has been impaired in full.
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Page 6
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Transfer of investment at historic cost (a)
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Loss on fair value recognition (a)
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Fair value gain/(loss) prior to sale of shares (b)
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Disposal – sale of shares (b)
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Acquisition of shares (b)
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Fair value gain/(loss) post-acquisition of shares
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(a)Transfer of investment and fair value loss on recognition
Due to the Seacrest Bermuda IPO and resulting loss of significant influence outlined in Note 4 the investment was reclassified to Other investments at the carrying value of $11m and then measured at fair value at the IPO date being February 23, 2023. High Power Petroleum (Seapulse) UK Ltd shareholding in Seacrest Bermuda was subject to a lock up period which expired on August 22, 2023
On February 23, 2023, Seacrest Bermuda closed an IPO on the Oslo Stock Exchange at a price of NOK6 per share. High Power Petroleum (Seapulse) UK Ltd shareholding in Seacrest Bermuda at the IPO date amounted to 18.1 million shares. The resulting fair value was assessed as NOK6 per share ($0.58 USD equivalent at closing rate of 0.0968) adjusted for a 11.88% lack of marketability discount to reflect the remaining lock up period. The lack of marketability discount was calculated by applying the Finnerty Discount for Lack of Marketability for a three month restriction period and using a volatility of 75%. The resulting loss on recognition of the investment at fair value was assessed to be $1.74m.
During April 2023, Seacrest Bermuda executed a reverse share split with two existing shares being consolidated into one share (revised High Power Petroleum (Seapulse) UK Ltd shareholding of 9.1 million).
(b) Share disposal and re-acquisition
On 30 June 2023, High Power Petroleum LLC, the company’s ultimate parent company, and Newstar Investments LLC entered into an amended loan agreement whereby High Power Petroleum (Seapulse) UK Ltd transferred all of its shares in Seacrest Bermuda to Newstar’s designee, Ivanhoe Capital. The consideration price was $8.45 million and this was set-off against the outstanding loan amount under the H2P and Newstar Investments LLC loan facility agreement. The difference between the fair value on recognition and consideration was recognized as fair value loss.
Pursuant to a share transfer agreement dated September 8, 2023, High Power Petroleum (Seapulse) UK Ltd reacquired the 9.1 million Seacrest Bermuda shares from Ivanhoe Capital for consideration of $8.65 million.
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Page 7
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Amounts owed by group undertakings
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A loan of $1 million was made by High Power Petroleum (Seapulse) UK Limited to Seapulse Ltd. This loan has been fully provided against.
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Cash and cash equivalents
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Amounts owed to group undertakings
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured, interest-free, and repayable on demand. These balances are due to related group entities, which do not have the current intention to demand repayment until the Company has sufficient available liquidity.
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Allotted, called up and fully paid
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100 (2022 - 100) Ordinary shares of $0.01 each
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Related party transactions
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The company has taken advantage of the exemption available under paragraph 33.1A of FRS 102 whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertakings of the group.
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Page 8
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HIGH POWER PETROLEUM (SEAPULSE) UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The immediate parent undertaking of the Company is High Power Petroleum LLC, a company incorporated in the United States of America and registered in the state of Delaware.
As at 31 December 2023, the ultimate parent undertaking and controlling party of the Company is I-Pulse Inc., a company incorporated in the United States of America and registered in the state of Delaware. Copies of the accounts of I-Pulse Inc. are available at the parent company's registered office address from 251 Little Falls Drive, Wilmington, Delaware.
However, following a restructuring after year-end, as of 31 May 2024, the Company is now wholly owned by Blue Spark Energy Systems Inc.
The auditor's report on the financial statements for the year ended 31 December 2023 was unqualified.
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In their report, the auditor emphasised the following matter without qualifying their report:
We draw attention to note 2.2 in the financial statements. These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. While we did not see anything during our work that indicated that the company and the group of companies would be closed, we were unable to obtain sufficient evidence regarding the parent company support or intentions for the entity for at least the next 12 months from the date of approval of these accounts. Our opinion is not modified in respect of this matter
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. The audit work has been undertaken so that Auditors' might state to the company’s members those matters the Auditors' are required to state in an auditor’s report and for no other purpose. To the fullest extent permitted by law, TWP Accounting LLP will not accept or assume responsibility to anyone other than the company and the company’s members as a body, for the audit work, for the Independent Auditors' Report, or for the opinions formed.
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The audit report was signed on 18 February 2025 by Paul Hawksley FCA,CTA, MAAT (Senior Statutory Auditor) on behalf of TWP Accounting LLP.
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