Circle Oil Plc Regulatory News (COP)

21 Jun 2005 06:00

Embargoed: 0700hrs, 21 June 2005 Circle Oil plc ("Circle Oil" or the "Company") Results for the Nine Month Period Ending 31 December 2004 Highlights * Raised new funds of ¢â€š¬7.3 million as a private company * Listed on AIM October 2004 * Significant acreage in Namibia, Oman and Ireland, * China Shine deal on Namibian licence * Awaiting award of Panamanian licence * Will be one of largest acreage holders in Oman, following award of second licence Chairman's StatementIntroductionAs I reflect on the Group's history and achievements since its inception just20 months ago, I am pleased to report that significant progress has been madeduring the period. We now have an acreage position which includes a number oflarge prospects in four locations throughout the world.These areas have been selected using the Group's philosophy of focusing onfrontier exploration acreage supported by geological evidence indicatingpotential for hosting hydrocarbons. Following an initial exploration programmewhich the Group will undertake, Circle will have the option of continuingexploration on its own on some or all of its properties or bringing in apartner to partly or wholly fund the higher risk, higher cost drilling anddevelopment phases.OperationsOur initial 90% holding in the reconnaissance licence in northern Namibia wassignificantly enhanced by Circle's aeromagnetic / aerogravity survey carriedout last summer. Results of this survey have added a number of new targets tothose which have already been delineated by previous exploration activities andare now ready for drilling. At the end of 2004 an approach was made to Circlefrom the Chinese group China Shine HF regarding the Namibian licence. ChinaShine has, subject to their further technical due diligence now underway andvarious government approvals being sought, agreed that, in return for a 72%interest in the licences, they will carry out a very substantial explorationprogramme and will also develop any discoveries on the licence at no furthercost to Circle. The Namibian Government has renewed Circle's reconnaissancelicence and the next phase of exploration work is expected to commence shortly.In Oman, Circle has signed the Exploration & Production Sharing Agreement(EPSA) with the Omani Oil Minister in relation to Block 49 which covers 15,500sq.kms onshore. In addition Circle has applied for and is in the final stagesof negotiating the EPSA in relation to Block 52. Block 52 covers over 100,000sq.kms offshore. Block 49 lies between Blocks 36 and 38 held by Sinopec andBlock 6 held by PDO, the Oman government oil company. Block 6 produces over 90%of Oman's oil production at about 600,000 barrels of oil per day mostly fromsalt basins. Circle's opinion is that there is a probability that Block 49 mayhost an untested hydrocarbon bearing salt basin. The Group intends to commenceits exploration programme on Block 49 in the autumn and will fly anaeromagnetic / aerogravity survey over the area once all the existing data hasbeen compiled and studied. In relation to Block 52, once the EPSA is signed,the intention is to carry out a reconnaissance seismic survey over the area.Discussions have already begun regarding the availability of a suitable surveyvessel to carry out this work.Regarding Circle's Irish licence, the Group is continuing its required workprogramme and will be submitting a report on this work to the Department ofCommunications, Marine and Natural Resources in due course. The decision toapply to renew the licence as an exploration permit will be made at that time.Circle is awaiting the award of a large licence block offshore Panama. Thislicence area has the potential to host an untested basin. The Caribbean hasrecently been attracting industry attention and several companies are becomingincreasingly active in the area. It is our intention, following an initialexploration programme to seek a suitable partner to fund further explorationincluding the drilling of a number of wells.Financial ResultsOn financial matters the Company raised ¢â€š¬7.3 million prior to obtaining itslisting on AIM on the London Stock Exchange in October. The Company hasrecently indicated that it intends to raise, by way of a placing, sufficientfunds to facilitate its ongoing exploration programmes as well as toaggressively seek new opportunities in prospective areas worldwide. Our lossfor the period of approximately ¢â€š¬1.2 million includes the cost of the admissionprocess which was in excess of ¢â€š¬300,000. This cost is a non-recurring item. TheNet Assets of the Group at December 31st amounted to ¢â€š¬5.7 million whichincluded cash balances of ¢â€š¬5.4 million.OutlookThe period under review has been an exciting one for Circle as we haveproceeded to carefully build a portfolio of assets with potential. The dramaticrise in oil and gas prices due to rapidly growing demand for energy in thedeveloping Asian countries, in particular China, the uncertainty of supply fromthe Middle East and the general decline, however temporary, in explorationactivity by majors and large independent companies, underpins Circle'sopportunity for growth. Our focus remains on frontier areas of the world withgood exploration potential thus enabling Circle to attract large industrypartners to fund drilling and development costs at moderate or no cost toCircle. This should allow the Group to retain significant upside interests indiscoveries and developments on its licences in the future.Thomas Anderson,Chairman14 June 2005For further information:David Hough, ChairmanCircle Oil PlcTel. 00 353 61 354 831John McDonnell, Chief Financial OfficerCircle Oil PlcTel. 00 353 61 333 730Ben SimonsHansard CommunicationsTel. 00 44 207 245 1100OPERATIONS REVIEWCircle currently has offices in Ireland, Houston and Dubai and will shortlyopen an office in London. Through these centres the company has vetted aconsiderable number of exploration and production projects over the past 20months. The technical team based in Houston have between them over 80 years ofoil and gas exploration experience and they have been instrumental in selectingand acquiring the licence blocks in our portfolio. Following the technicalvetting process, a number of new areas will be applied for in the comingmonths. The licence blocks currently held by Circle are in Namibia, Oman andIreland with an application pending for a block in Panama.NamibiaCircle's operations onshore Namibia are focused on the Owambo Basin located inthe northern part of the country. The area held under licence coversapproximately 49 million acres (200,000 sq.kms.) and has undergone explorationactivity since 1960 but remains relatively unexplored. Only one well in thewestern region of the licence area penetrated the objective Otavi groupcarbonates.The Etosha Petroleum Company, a subsidiary of Texas Eastern Gas andTransmission Company, operated in the area from 1959 until 1966. During thattime, it acquired aeromagnetic and gravity data and drilled a singlestratigraphic test well. Brilund Ltd. acquired Etosha Petroleum in 1966 andconducted a surface geochemical survey, acquired 2,000 kms. of 2-D seismicdata, and drilled three exploration wells in the southwestern portion of thelicence area between 1968 and 1970. Overseas Petroleum Investment Corporationfarmed-in with Brilund Ltd. in 1988 and acquired aerogravity data, 800 kms. of2-D seismic data, and drilled one shallow corehole over a three-year period.Occidental Petroleum signed a study participation option agreement with Brilundin 1993 and conducted an outcrop sampling program. Circle Oil, through itswholly owned subsidiary First African Oil Corporation, acquired 7,627 kms. ofaerogravity and aeromagnetic data in 2004.The Owambo Basin is located on the far southwestern portion of the Congo Cratonand is part of a larger system of Pan African Basins that extends into Zaireand Botswana. The primary reservoir objective is the Otavi carbonate sequencethat was deposited during the late Proterozoic. Secondary reservoir objectivesare present in the sandstones of the Ordovician-to-Devonian age.A number of hydrocarbon indicators point to the existence of an operatinghydrocarbon charge system. These include oil extracts from cuttings in wells5-1 A and 2-1, hydrocarbon indicators around mines in the area, results from asoil gas survey and reported oil seeps. The extracts from the wells exhibit lowmaturity and the oil seeps and presence of specific clay minerals at depthindicate that the current temperature regime within the basin shows that allpotential source rocks would be in the oil window.The majority of the structurally defined prospects and leads were probablyformed by the Hercynian Orogenic event that occurred at the end ofCarboniferous time. In addition to mounded features identified as possible reefbuildups, which may be self sourcing and act as stratigraphic traps, severallarge structures have also been identified and mapped using the availableseismic control. Currently the most prospective feature is the OpononoProspect, an elongated west-northwest to east-southeast trending anticlinelocated in the western central portion of the licence area. The structure iswell defined with good seismic control. Structural closure can be mapped atthree prospective levels and seismic time structure maps show that these threelevels have maximum closures of 53,800 acres (218 km2), 56,100 acres (227 km2),and 41,900 acres (170 km2), respectively. Approximately 15 percent of thepermit area is covered by a coarse grid of seismic data. Potential exists forstructural development in the remainder of the permit area, especially alongthe eastern and northern margins of the interpreted source rock basin.Notwithstanding finalization of the agreement with China Shine HF, Circleintends to pursue an aggressive exploration programme in this basin and willsoon start the acquisition of new seismic data with a view to drilling itsfirst well.Sultanate of OmanThe Sultanate of Oman is located on the eastern tip of the Arabian Peninsulaand covers an area of 309,500 sq.kms. Between the Oman mountains (elevation3,000m) in the North and the Dhofar Mountains (elevation 1,800m) in the South,most of the terrain consists of a relatively accessible gravel plain. In thewestern part of the country, the gravel plain is partially covered with sanddunes, while the Rub Al Khali desert straddles the border with Saudi Arabia.Circle Oil's Block 49 is located in this border area.Exploration in Oman started in 1924 and has resulted in the discovery of morethan 109 producing oil fields with reservoirs ranging in age from Precambrianto Cretaceous and peak production around 950,000 bbls/day of black oil/condensate. In addition, significant volumes of gas have been found and theexport of LNG was started in 2000.Exploration opportunities in Oman are geologically and geographically diversewith hydrocarbon producing areas extending from offshore the Musandam Peninsulain the extreme northern part of the country to the Marmul area (Block 6) in thesouth. The variety of proven exploration plays combined with the highexploration success record demonstrates Oman's prospectivity and hydrocarbonpotential and thus Circle's interest in this country. The four fundamentalelements of a working petroleum system namely charge, seal, reservoir and trapare found in rocks ranging in age from Precambrian to Tertiary.Onshore Block 49Circle Oil's Block 49 occupies an area of 15,438 sq.kms. and is located in theRub Al Khali Basin. The southern part of the block straddles the Ghudun-KhasfahHigh on the Western Margin of the South Oman Salt Basin. The block is coveredby a total of some 11,438 kms. of 2D seismic data approximately half of whichis post 1987. The remainder includes reprocessed older PDO and BP data. In 1996Japex acquired 2,272 kms. of 2D seismic data and 18,047 kms. of high resolutionaeromagnetics.To date, two main play concepts have been pursued, namely the Sahmah play andthe Lower/Middle Haima play. The Sahmah play was tested by Wadi Qitbit-1 andgas shows were encountered in the well. This well is located on thesoutheastern flank of the Rub Al Khali Basin, which to the north-west in SaudiArabia contains large Paleozoic light oil accumulations. In Oman, the playcomprises Silurian source rocks that charge sandstone reservoirs which arecapped by a shaley section and the regional seal. The play has been provensuccessful in Elf's Sahmah Field. A total of 8 wells have been drilled in theperiod 1955-1999 and hydrocarbons have been encountered in at least three ofthem though not in commercial quantities. The Lower/Middle Haima play has stillto be tested on the block and potentially large stratigraphic traps could alsobe present in Block 49.Circle's primary objectives are Precambrian and Infracambrian targets which arevery productive in the adjacent Block 6 and have been postulated but notdrilled on Block 49.Offshore Block 52Circle has applied for and is negotiating an EPSA agreement in relation toblock 52. This block, located off the southern coast of Oman, includes the oldBlocks 23 and 24 and covers an area of approximately 100,000 sq.kms. Waterdepths range from 200 to 2,000 metres. The southern part of block is situatedin Salalah Bay and lies totally within a Tertiary Basin while the northern partcovers the Sawqirah Bay area and is located in the Tertiary Basin south of theonshore Eastern Flank area.Several vintages of 2D seismic data have been acquired between 1966 and 1989 byShell, Sunoil, Phillips, Amoco and PDO. Aeromagnetic data were acquired overselected areas of the Block and the total 2D seismic coverage is approximately14,332 kms. To-date only two wells have been drilled in this large area -Sawqirah Bay #1 and Sawqirah Bay South #1. The first well was drilled in 1979by Amoco and found Cretaceous carbonates on top of basement, with traces ofdead oil in the Natih, Shuaiba and Kharaib Formations. Minor gas shows in theNatih were tested, resulting in production of some gas and formation water. TheSawqirah Bay South #1 well was drilled in 1992 by PDO and found Mesozoiccarbonates resting on basement.Block 52 has geological variety and thus broad exploration scope. Thestructural association with a productive hydrocarbon trend in Yemen isencouraging, as is the proven reservoir quality in the Tertiary reefs.IrelandCircle Oil's part blocks 49/22, 49/23, 49/24 and 49/25 are located on thesouthern margin of the North Celtic Sea Graben in water depths of approximately90 metres. No wells have been drilled on these blocks with the nearestsignificant well being well 49/19-1 drilled by Marathon in 1984. This well hadoil shows from a drill stem test and confirmed the presence of a thick"Greensand" section on the southern margin of the basin.A combination of exploration targets is present in the Lower Cretaceous Wealdenand Greensand sandstones in addition to Upper Jurassic and Triassic-agedSherwood sandstones. The Greensand produces gas from the Kinsale Head andBallycotton Fields located nearby in Blocks 48/20 and 48/16. This sand ispresent throughout the basin with good porosity and permeability.Upper Jurassic sandstones were tested at flow rates up to 10,000 bbls/day fromthe Gulf Oil 49/9-2 well drilled on the northern margin of the basin. Thesesandstones are also present on the southern margin but remain relativelyuntested. The most promising targets for Jurassic oil are prospects where thesesandstones are faulted against the high potential hydrocarbon source rocks ofLias age.The Greensand Formation is currently the major producing horizon in the NorthCeltic Sea Graben. The Kinsale Head Field has been producing gas from thisformation since 1978 with reported original estimated reserves of greater than1 trillion cubic feet. In this field, the sand has an average net pay thicknessof 103 feet and an average porosity and water saturation equal to 20 and 25percent, respectively.Circle Oil is at present evaluating the petroleum potential of these blocks andit will be several months before the final results are available.PanamaCircle Oil is at present awaiting the granting of a Prospecting Permit for alarge block in the southwestern sector of the Colombia Basin, offshore Panama.This basin is one of the major basins in the Caribbean plate. The CaribbeanSea, is a partially enclosed sea with a very complex geological history thatcontains at several locations, particularly along the basin margins, a thick,deep sedimentary section which presents favourable geologic conditions as wellas good source rocks for the accumulation of commercial quantities ofhydrocarbons.The geological history of the region and the results of various regionalseismic exploration programmes indicate that late vertical movements appear tohave preserved thick sections of shallow-water origin beneath the presentdeep-sea areas. The thick Miocene sections of the southern Colombian Basinappear most prospective.The area was selected because the elements of a petroleum system appear to bein place based on the presence of oil and gas seeps onshore Panama, hydrocarbonproduction onshore Colombia and oil and gas shows in various wildcat wellsdrilled onshore Panama. To-date no wells have been drilled in the thrust andfold belt of offshore Panama which is in the vicinity of Circle's block.There is not much information available from the deeper sedimentary section ofthe block selected because of the presence of thick overlying youngersediments, the absence of deep drilling and the lack of deep penetrationseismic data.Seismic evidence of gas hydrates, the presence of mud volcanoes, seabed coringby British Petroleum offshore Colombia together with other geochemicaltechniques increases the evidence for a widespread hydrocarbon source in thesouthern Colombian Basin. Circle Oil believes additional exploration isrequired to further evaluate the potential of this frontier area.POLICY ON ENVIRONMENTAL RESPONSIBILITYIt is Circle Oil's policy to conduct all its activities in an environmentallyresponsible manner. Due consideration is given at all stages of the Company'splanning and operations to the protection of the environment and strictadherence to appropriate planning and environmental laws is maintained by itsmanagement and staff.In dealing with contractors environmental considerations form an integral partof the bidding process and contracts are not awarded on price alone asenvironmental and other performance criteria are considered to be important.CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED DECEMBER 31 2004 Notes For the nine For the period months ended 31 from December 2004 Incorporation to 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ TURNOVER 1 - - ADMINISTRATION EXPENSES (927,920) - EXCEPTIONAL ITEM 2 (313,685) - OPERATING LOSS (1,241,605) - Interest receivable and similar 3 30,625 94income (LOSS) / PROFIT BEFORE TAXATION 4 (1,210,980) 94 Taxation 5 (27,178) - (LOSS) / PROFIT FOR THE (1,238,158) 94 FINANCIAL PERIOD Profit brought forward 94 - PROFIT AND LOSS ACCOUNT CARRIED (1,238,064) 94FORWARD Basic (loss) per share 6 (2.4c) - Diluted (loss) per share 6 (2.3c) - CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31 2004 Notes 31 December 31 March 2004 2004 Euro ¢â€š¬ Euro ¢â€š¬ FIXED ASSETS Oil & Gas Interests 8 637,245 156,908 Tangible assets 9 8,648 - 645,893 156,908 CURRENT ASSETS Debtors 11 84,804 - Cash at bank 20 5,383,697 1,946,697 5,468,501 1,946,697 CREDITORS (Amounts falling due 12 (434,966) (116,130) within one year) NET CURRENT ASSETS 5,033,535 1,830,567 TOTAL ASSETS LESS CURRENT 5,679,428 1,987,475LIABILITIES NET ASSETS 5,679,428 1,987,475 CAPITAL AND RESERVES Called up share capital 13 1,268,639 50,000 Share premium 14 5,627,556 - Capital subscribed not yet issued 15 - 1,937,381 Profit and loss account 16 (1,216,767) 94 SHAREHOLDERS' FUNDS - All Equity 17 5,679,428 1,987,475 COMPANY BALANCE SHEET AS AT DECEMBER 31 2004 Notes 31 December 31 March 2004 2004 Euro ¢â€š¬ Euro ¢â€š¬ FIXED ASSETS Oil & Gas Interests 8 544,442 116,615 Tangible assets 9 8,016 - Financial Assets 10 7,348 16 559,806 116,631 CURRENT ASSETS Debtors 11 64,591 - Cash at bank 5,310,836 1,946,546 Intercompany loan 277,348 - 5,652,775 1,946,546 CREDITORS (Amounts falling due 12 (316,528) (75,702) within one year) NET CURRENT ASSETS 5,336,247 1,870,844 TOTAL ASSETS LESS CURRENT 5,896,053 1,987,475LIABILITIES NET ASSETS 5,896,053 1,987,475 CAPITAL AND RESERVES Called up share capital 13 1,268,639 50,000 Share premium 14 5,627,556 - Capital subscribed not yet issued 15 - 1,937,381 Profit and loss account 16 (1,000,142) 94 SHAREHOLDERS' FUNDS - All Equity 17 5,896,053 1,987,475 CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE PERIOD ENDED DECEMBER 312004 Notes For the nine For the period months ended 31 from December 2004 Incorporation to 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ (Loss)/Profit for the (1,238,158) 94financial Period Exchange translations 16 21,297 -adjustment Total recognised (loss) / (1,216,861) 94gains for the period CONSOLIDATED CASHFLOW STATEMENT AS AT DECEMBER 31 2004 Notes 31 December 31 March 2004 2004 Euro ¢â€š¬ Euro ¢â€š¬ NET CASH (OUTFLOW) / INFLOW 18 (984,983) 116,130 FROM OPERATING ACTIVITIES RETURN ON INVESTMENTS AND SERVICING OF FINANCE Interest received 30,625 94 NET CASH OUTFLOW FROM RETURNS ON (954,358) 116,224INVESTMENTS AND SERVICING OF FINANCE TAXATION Franchise tax (27,178) - CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire oil & gas (480,337) (156,908)interests Payments to acquire tangible fixed (9,941) -assets TOTAL CAPITAL EXPENDITURE AND (490,278) (156,908)FINANCIAL INVESTMENT NET CASH OUTFLOW BEFORE (1,471,814) (40,684) USE OF LIQUID RESOURCES AND FINANCING FINANCING Issue of ordinary share capital 5,230,961 2,076,396 Share issue expenses (322,147) (89,015) NET CASH INFLOW FROM FINANCING 4,908,814 1,987,381 INCREASE IN CASH 3,437,000 1,946,697 NOTES TO THE FINANCIAL STATEMENTS1.TURNOVERAs outlined in the Directors' report the Group is in the process of identifyingnew exploration sites and has not to-date generated any turnover.2. EXCEPTIONAL ITEMOn October 18th, 2004 the Company was admitted to the Alternative InvestmentMarket (AIM). The costs associated with the listing on this market amounted to¢â€š¬313,685.3. INTEREST RECEIVABLE AND SIMILAR INCOME For the nine For the period months ended 31 from December 2004 Incorporation to 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Interest receivable 30,625 94 4. LOSS BEFORE TAXATION For the nine For the period months ended 31 from December 2004 Incorporation to 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Loss before taxation is stated after charging: Directors' remuneration and transactions - Fees 38,476 - - Other emoluments, including 211,215 -pension contributions 249,691 - For the nine For the period months ended 31 from December 2004 Incorporation to 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Depreciation 1,293 - Auditors Remuneration 30,000 5,000 31,293 5,000 5. TAXATIONGroup For the nine For the period months ended 31 from December 2004 Incorporation to 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Arising on ordinary trading - -activities US State Franchise tax 27,178 - Total 27,178 -Company For the nine For the period months ended 31 from December 2004 Incorporation to 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Arising on ordinary trading - -activities Total - -6. BASIC AND DILUTED LOSS PER SHAREThe calculation of basic loss per share is based on the Group's loss of ¢â€š¬1,238,158 which is after taxation and on the weighted average number of equityshares in issue of 52,192,043.The effect of options granted at the time of listing on AIM on October 18th,2004 is to increase the weighted average number of shares for the calculationof the diluted earnings per share by 1,386,987 to 53,579,030.7. EMPLOYEES AND REMUNERATION For the nine For the period months ended 31 from December 2004 Incorporation to 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Employee costs during the year: Wages and salaries 196,464 - Social welfare costs 14,751 - Other pension costs - - 211,215 Average number of persons employed: Administration 2 28. OIL & GAS INTERESTS - Group Namibia Celtic Sea Total Deferred development Euro ¢â€š¬ Euro ¢â€š¬ Euro ¢â€š¬expenditure: Cost: At 1 April 2004 142,314 14,594 156,908 Additions 469,977 10,360 480,337 At 31 December 2004 612,291 24,954 637,245 Net book value: At 31 December 2004 612,291 24,954 637,245 OIL & GAS INTERESTS - Company Namibia Celtic Sea Total Deferred development Euro ¢â€š¬ Euro ¢â€š¬ Euro ¢â€š¬expenditure: Cost: At 1 April 2004 102,021 14,594 116,615 Additions 417,467 10,360 427,827 At 31 December 2004 519,488 24,954 544,442 Net book value: At 31 December 2004 519,488 24,954 544,442 Oil & Gas InterestsDeferred development expenditure at 31 December, 2004 represents explorationand related expenditure.The realisation of this intangible asset is dependent on the development ofeconomic reserves. The directors are aware that by its nature there is aninherent uncertainty in such expenditure as to the value of the asset.Having reviewed the deferred development expenditure at 31 December 2004, thedirectors are satisfied that the value of the intangible asset is not less thannet book value.9. TANGIBLE ASSETS - GROUP Office and Total Computer Equipment Cost: Euro ¢â€š¬ Euro ¢â€š¬ At 1 April 2004 - - Additions 9,941 9,941 Disposals - - At 31 December 2004 9,941 9,941 Accumulated Depreciation: At 1 April 2004 - - Charge for period 1,293 1,293 Disposals - - At 31 December 2004 1,293 1,293 Net Book Value: At 31 December 2004 8,648 8,648 At 31 March 2004 - -TANGIBLE ASSETS - COMPANY Office and Total Computer Equipment Cost: Euro ¢â€š¬ Euro ¢â€š¬ At 1 April 2004 - - Additions 9,309 9,309 Disposals - - At 31 December 2004 9,309 9,309 Accumulated Depreciation: At 1 April 2004 - - Charge for period 1,293 1,293 Disposals - - At 31 December 2004 1,293 1,293 Net Book Value: At 31 December 2004 8,016 8,016 At 31 March 2004 - -10. FINANCIAL ASSETS 31 December 31 March 2004 2004 Euro ¢â€š¬ Euro ¢â€š¬ Shares in subsidiary companies % Owned (unlisted shares) at cost: First African Oil Corporation 100% 16 16 20,000 ordinary shares purchased of US$0.001 per share Circle Oil (Panama) Limited 100% 7,332 - 100 ordinary shares purchased of US$100 per share Total 7,348 1611. DEBTORSGROUP 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ VAT 18,738 - Prepayments 66,066 - 84,804 -COMPANY 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ VAT 18,738 - Prepayments 45,853 - 64,591 12. CREDITORSGROUP 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Trade creditors and accruals 415,384 116,130 Other creditors: - Payroll taxes 19,582 - 434,966 116,130COMPANY 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Trade creditors and accruals 296,946 75,702 Other creditors: - Payroll taxes 19,582 - 316,528 75,70213. CALLED UP SHARE CAPITAL 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Authorised 500,000,000 ordinary shares of ¢â€š¬0.01 5,000,000 1,000,000each (2004: 100,000,000 ordinary shares of ¢â€š¬0.01 each) Allotted, called up and fully paid 126,863,850 ordinary shares of ¢â€š¬0.01 1,268,639 50,000each (2004: 5,000,000 ordinary shares of ¢â€š¬0.01 each) 14.SHARE PREMIUMGROUP AND COMPANY 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Opening Balance - - Arising on issue of shares 6,510,178 Less Cost of bonus issue of shares (560, 475) - Less Share issue expenses (322,147) - Closing Balance 5,627,556 - On 21 May 2004 bonus shares at a ratio of 9:1 were issued from the sharepremium account to all ordinary shareholders.15.CAPITAL SUBSCRIBED NOT YET ISSUED 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Opening Balance 1,937,381 - Capital subscribed 5,230,961 2,076,396 Increase in Issued Share Capital (1,218,639) (50,000) Increase in Share Premium (Note 14) (5,627,556) - 322,147 2,026,396 Write off of expenses incurred on (322,147) (89,015)the raising of share capital Capital Subscribed Not Yet Issued - 1,937,381 16. PROFIT AND LOSS ACCOUNTGROUP 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Opening Balance 94 - (Loss) / profit for the financial (1,238,158) 94period Exchange translations adjustment 21,297 - Closing Balance (1,216,767) 94 COMPANY 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Opening Balance 94 - (Loss) / profit for the financial (1,000,236) 94period Closing Balance (1,000,142) 94 17. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDSGROUP 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ (Loss) / Profit for the financial (1,238,158) 94period Increase in share capital (Note 15) 5,230,961 2,076,396 Write off of expenses incurred on (322,147) (89,015)the raising of share capital Exchange translations adjustment 21,297 - Increase in shareholders' funds 3,691,953 1,987,475 Opening shareholders' funds 1,987,475 - Closing shareholders' funds 5,679,428 1,987,475 COMPANY 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ (Loss) / Profit for the financial (1,000,236) 94period Increase in share capital (Note 15) 5,230,961 2,076,396 Write off of expenses incurred on (322,147) (89,015)the raising of share capital Increase in shareholders' funds 3,908,578 1,987,475 Opening shareholders' funds 1,987,475 - Closing shareholders' funds 5,896,053 1,987,475 18.RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATINGACTIVITIES 31 December 2004 31 March 2004 Euro ¢â€š¬ Euro ¢â€š¬ Operating (loss) (1,241,605) - Increase in creditors 318,836 116,130 (Increase) in debtors (84,804) - Exchange translations adjustment 21,297 - Depreciation 1,293 - NET CASH (OUTFLOW) / INFLOW FROM (984,983) 116,130OPERATING ACTIVITIES 19.RISK MANAGEMENTThe Group's financial instruments comprise cash balances and various items suchas trade creditors which arise directly from trading operations. The mainpurpose of these financial instruments is to provide working capital to financegroup operations.The Group does not enter into any derivative transactions and it is Grouppolicy that not to trade in financial instruments.The main financial risk arising from the group's financial instruments isliquidity risk.Interest Rate RiskThe Group finances its operations through the issue of equity shares and has nofixed interest rate agreements. The Group has no significant exposures tointerest rate risk.Liquidity RiskThis exposure is not considered to be significant and is fully financed fromoperating cashflow or, where this is insufficient during the development stage,through additional issues of ordinary equity shares.Foreign Currency RiskAlthough the Group is based in the Republic of Ireland, amounts held asdeferred development expenditu