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LONDON (Alliance News) - Petrel Resources PLC Wednesday said its pretax loss widened slightly in 2013 and warned that its assets in Ireland, Ghana and Iraq all face difficulties.
The AIM-listed oil-and-gas explorer, which is yet to produce any revenues, said its pretax loss widened to EUR526,783 from EUR469,767 the previous year.
The explorer said the vast majority of its costs were administrative expenses, which increased to EUR528,597 from EUR481,427 during the period.
The company said its interest in the Block 6 oil exploration licence in the Anbar province of Iraq has been hit by the ongoing crisis in the country, with war raging in the province for months.
Petrel said little work has been done or can be done on the licence, but noted that it would be hit hard if there was fragmentation of the country, as the licence is in the Sunni-dominated west. The company said it wasn't giving up on Iraq as it remains the "best source of oil in the world".
In Ghana, the company has struggled with a dispute over its rights to an exploration block, known as the Ghana Tano 2A block, in shallow water offshore.
The company was granted an injunction during April after discovering that a rival rights application, which overlapped with a portion of the rights it believes it has on the block, had apparently been ratified. Despite the injunction, the Ghanaian parliament fully ratified the award in May.
The company said it has now suspended the ongoing court case and is hoping that with goodwill on both sides, a satisfactory solution can be found.
"Problems with co-ordinates and overlapping licence awards are part and parcel of international exploration. Often the bureaucrats lack the resources to implement the actions of politicians. Offices are overburdened and mistakes are made," Chairman John Teeling said in a statement.
Furthermore, the company's flagship projects in the Atlantic Ocean's Porcupine Basin, offshore Ireland, may be hit by changes to the fiscal regime in Ireland, including royalties and higher taxes, which have pushed some investors from the country.
"There is now a question mark over all Irish hydrocarbon exploration despite the statement of no retrospective changes to existing licences," Teeling said. "Successful explorers will need a development licence. Certainty is now gone. It is incumbent on the state to offset the weak geology and difficult environment with attractive terms. The Porcupine needs to be drilled."
There was a large wave of interest by investors in Irish offshore assets during 2013, but despite 158 wells in the country, Ireland has yet to find any commercial oil discovery.
Teeling said that luckily, its exploration in Ireland will occur in the near future at no cost, due to an ongoing joint venture with Australia's Woodside Petroleum Ltd. It also noted that an application for additional blocks offshore Ireland is being prepared, and it keeps active discussions ongoing with other parties holding interests in the Irish offshore and elsewhere.
"The importance of a successful oil discovery offshore Ireland cannot be exaggerated. One oil discovery in the Porcupine is likely to be big enough to supply all of Ireland's oil demand if not more. Ireland currently imports all of its 132,000 barrel a day oil consumption and 95% of its gas needs. Apart from security of supply, the fiscal implications are immense," Teeling said.
Petrel Resources shares were down 16% to 8.25 pence, putting it in the worst 10 AIM All-Share fallers on Wednesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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