TomCo Energy Plc (LON:TOM), the US operating oil development group focused on using innovative technology to unlock unconventional hydrocarbon resources, has announced its audited results for its financial year ended 30 September 2024.
CHAIRMAN’S STATEMENT
I am pleased to provide this statement to, amongst others, the stakeholders in TomCo Energy PLC as part of the Annual Report and Financial Statements for its financial year ended 30 September 2024.
The period under review did not turn out as any of us could have anticipated. In late May, our much respected and well-liked Chief Executive, John Potter, passed away suddenly at the age of 54. I am most grateful to all who sent their condolences and who rallied around with support over the summer, particularly my fellow directors.
Operational Review
Prior to John’s passing, progress in Utah had been frustratingly slow for some time, despite the team’s best efforts. This was essentially due to the lack of a suitable funding package to pursue the construction of up to two oil sands separation plants capable of processing at least 6,000 tonnes per day of oil sands at our preferred permitted site in Uintah County, Utah, USA, which did not materialise during the period or subsequently. The potential funding source that John was focused on may yet come to fruition in 2025, however a successful conclusion and consummation of the requisite committed funding package remains uncertain, particularly as to timing. Alternative funding avenues such as potential strategic investors, joint venture or funding partners will continue to be explored.
In the absence of sufficient funding to enable us to purchase the remaining 90% of Tar Sands Holdings II LLC (“TSHII”) and consequent expiration, at the end of 2023, of our subsidiary, Greenfield Energy, LLC’s (“Greenfield”) exclusive right to exercise its related option, we were subsequently approached in early August 2024 by the counterparty, Endeavor Capital Group, LLC (“Endeavor Capital”) with a proposal to redeem Greenfield’s 10% membership interest for cash. Such redemption would serve to facilitate Endeavor Capital in disposing of 100% of TSHII to a third party interested in potentially refurbishing an historic dilapidated refinery on TSHII’s acreage for the future processing of crude brought in from other locations. Cognisant of the Group’s working capital requirements, we proceeded to negotiate terms for the redemption on the basis that:
(i) TSHII agreed not to terminate the existing lease arrangement between AC Oil, LLC (“AC Oil”), a wholly-owned subsidiary of Greenfield, and TSHII (the “Lease”) in respect of approximately 320 acres of land and associated rights and certain non-producing historic infrastructure, plant and equipment in Uintah County, Utah, USA, owned by TSHII (the “Lease Area”). Such Lease grants AC Oil the exclusive right to explore, drill and mine for, and extract, store, and remove oil, gas, hydrocarbons and other associated substances on and from the Lease Area, together, inter alia, with the right to erect, construct and use such plant and equipment and infrastructure as required; and
(ii) TSHII also agreed to use best efforts to negotiate in good faith with Greenfield with respect to entering into an additional lease to provide mining rights on certain further acreage owned by TSHII that is not otherwise needed for the aforementioned planned refurbished refinery (the “Additional Lease”) which could potentially be a source of additional tar sands to feed Greenfield’s future proposed separation plants. Accordingly, once the Additional Lease is secured, Greenfield will remain well positioned to continue to pursue its existing tar sands development project subject to ultimately securing the requisite additional funding and permitting going forwards.
Further to the receipt of shareholder approval at a duly convened general meeting of the Company and successful completion of the redemption of the Group’s 10% membership interest in TSHII, we received, in aggregate, gross proceeds of $1.575m in cash, thereby enabling us to settle the Group’s then outstanding trade creditors and secure essential additional working capital. We are currently in discussions with Endeavor with respect to how best to formulate the Additional Lease.
On the ground, our partners Valkor began to drill for oil on neighbouring state lands, having secured permits from the Utah regulators for them to operate on those areas and on our AC Oil lease. Valkor experienced practical difficulties in the first few months of drilling, including a problem with heating the tar underground so that oil could readily be pumped to surface. They have ended up using a different heater in December 2024 that appears to be yielding much better results. We hope to finalise terms for Valkor to commence drilling on our adjacent AC Oil lease, subject to finance, in the first half of 2025. All being well, this should generate revenue for the Group.
TurboShale RF Technology
The potential future exploitation of the Company’s legacy TurboShale and Oil Mining Company assets, which are fully impaired from an accounting perspective, will be reassessed when appropriate in due course. With a more positive and supportive political backdrop in the USA, the oil and gas industry continues to evolve with the application of increasingly advanced technological solutions. Time may therefore well be our friend in this regard.
Corporate Review
Whilst seeking to carefully manage our cash reserves and working capital position, the Company has undertaken a number of financing transactions throughout the year to progress its development plans for Greenfield, satisfy general overheads and repay certain indebtedness.
In summary, such transactions have comprised:
– October 2023: equity subscription to raise £0.1m gross at a price of 0.08p per share.
– January 2024: equity subscription to raise £0.05m gross at a price of 0.10p per share.
– February 2024: equity placing and subscription to raise, in aggregate, £0.3m gross at a price of 0.045p per share.
Maintaining a tight control over overhead costs is a constant theme for pre-revenue project development companies such as TomCo, particularly during periods of high inflation. Your Board believes that the potential participation in drilling on the Group’s Lease offers the best prospect of revenue generation in the near term whilst Greenfield’s tar sands development project affords the possibility of significant returns over a longer-term horizon, subject to securing the requisite project financing. Alongside our focus on these key strategic initiatives, we intend to continue to identify and evaluate appropriate new project opportunities to potentially expand the Company’s asset portfolio going forwards.
Accordingly, I believe there are good grounds for optimism over the remainder of 2025 and beyond and we look forward to updating shareholders on our future progress.
Malcolm Groat
Executive Chairman, TomCo Energy
10 March 2025
