DES.L Regulatory News (DES)

25 Apr 2005 07:00

Desire Petroleum PLC25 April 2005 Desire Petroleum plc ("Desire" or "the Company") Preliminary results for the year ended 31 December 2004 Following the successful Share Placing and Open Offer, details of which weresent to shareholders on 14 February 2005, conducted by Seymour Pierce Ltd, theCompany's Nominated Advisor and Broker, the Company is now preparing to resumedrilling in the North Falkland Basin. The Share Placing and Open Offer wassubstantially over- subscribed and all 55,890,656 new shares were taken up. Thenew monies raised are not reflected in the Accounts for the year ended 31December 2004, as they were raised post this date, and the Company now has,therefore, a much stronger balance sheet than that shown in these Results. As has been announced, Rockhopper Exploration Limited has agreed to farm-in forup to a 15% working interest in Tranches C and D by paying up to 30% of thecosts of the proposed three-well drilling programme. Given the importance and complexity of operating a drilling programme in theNorth Falkland Basin, it was further announced that Dr. Ian Duncan, already anon-executive director of the Company, had been made full-time Chief Executiveand that Peak Well Management had been appointed to manage the drillingprogramme on the Company's behalf. Dr. Duncan and I, together with Robert Lyons,the Managing Director of Peak Well Management, have recently returned from avisit to the Falklands to initiate the drilling programme. There are many legal,operational and logistical factors to cover before drilling can commence andthese will take from six to eight months to put in place. I am pleased to reportthat we continue to receive the fullest help and support from the FalklandIsland Authorities and from their advisor, the British Geological Survey. In my Chairman's letter accompanying the Placing and Open Offer, I indicatedthat the Company had put out invitations to tender for a rig contract to drillthe three-well programme, and that, because of the high, current oil prices, therig market had become very tight. This has been borne out by the response to thetender invitations. However, a number of the responses are now the subject ofdiscussion and negotiation and your Board remains hopeful that drilling willre-commence in late 2005 or early 2006; shareholders will be kept informed ofprogress. The most important consideration will be not just the availability butalso the suitability of the rig eventually contracted. Although Dr. Duncan is the first full-time employee of Desire, it is not yourBoard's intention to build up staff but, wherever possible, to outsource ourrequirements and maintain as low an overhead as possible. However, it has becomeclear that Dr. Duncan will need increased specialist support at Board level andthe composition of the Board has been reorganised to reflect this. Dr. JohnMartin, Dr. David Quick and Ian Forrest will be retiring from the Board at theAnnual General Meeting on 24 May 2005. All three have given valuable service tothe Company and I would like to thank them sincerely on behalf of allshareholders. As of 1 May 2005, Lewis Clifton, OBE and Andrew Windham will bejoining the Board. Lewis Clifton is a resident of the Falkland Islands and willbe playing an essential role both before and during the drilling programme, hewas a member of the Board prior to the Company's merger with Gaelic Resourcesplc. Andrew Windham is a lawyer with considerable experience of all aspects ofoil-company activity and already acts as a consultant to the Company. I wouldlike to extend a warm welcome to both of them. As a result of the appointment of Dr. Ian Duncan as Chief Executive, and of theother Board changes, Stephen Phipps will become Chairman of the Audit Committeeand Andrew Windham will become Chairman of the Remuneration Committee. Since the acquisition of the 3-D seismic survey in 2004, the Company has madesteady progress towards the resumption of drilling in the North Falkland Basin.The 3-D seismic has had a major impact on the elucidation of the geology of theBasin and continuing work on its interpretation is revealing additional drillingtargets which can be added to the Company's prospect inventory. The Company isnow entering a very important phase of its development and, given that we haveno staff, I shall be relying very heavily on the input of my colleagues on theBoard. As in previous years, it is the intention of the Remuneration Committeeto recognise this input by allocating share options. I would like to thank allBoard members for their continuing support in the Company's progress. Yours sincerely, Dr. Colin B. Phipps Contacts: Dr. Ian Duncan, CEO, Desire Petroleum plc: 01684 892242Ewan Leggat, Seymour Pierce Limited: 020 7107 8000 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 December 2004 2003 2004Oil exploration costs (62) (56)Administration and other expenses (462) (627)Operating loss (524) (683)Write down of investments (5) -Loss on ordinary activities before interest (529) (683)Interest receivable 2 38Interest payable (1) (1)Loss on ordinary activities before taxation (528) (646)Taxation - (6)Loss for the financial year (528) (652)Loss per ordinary share - Basic (0.47)p (0.41)p BALANCE SHEETAt 31 December 2004 The Group The Company 2003 2004 2003 2004Fixed assets - 3 - 3Tangible fixed assets 2,348 5,508 2,348 5,508Intangible fixed assets 2,348 5,511 2,348 5,511Current assetsDebtors due within one year 36 41 29 33Investments 1 - - -Cash at bank and in hand 46 459 25 446 83 500 54 479CreditorsAmounts falling due within oneyear (605) (129) (543) (65)Net current assets (522) 371 (489) 414Total assets less currentliabilities 1,826 5,882 1,859 5,925Capital and reservesCalled-up share capital 1,125 1,627 1,125 1,627Share premium account 16,744 20,950 16,743 20,949Merger reserve 13,343 13,343 - -Profit and loss account (29,386) (30,038) (16,009) (16,651)Equity shareholders' funds 1,826 5,882 1,859 5,925 CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 December 2004 2003 2004Net cash outflow from operting activities (138) (1,069)Returns on investments and servicing of finance 1 37Capital expenditure and financial investment (15) (3,163)Cash outflow before financing (152) (4,195)FinancingIssue of ordinary share capital (net of costs) - 4,708Loan repaid - (100)Increase/(decrease) in cash in the year (152) 413Reconciliation of net cash flow to movement in net fundsIncrease/(decrease) in cash in the year (152) 413Movement in net funds in the year (152) 413Net funds at the beginning of the year 198 46Net funds at the end of the year 46 459 NOTES ON THE FINANCIAL STATEMENTS31 December 2004 1. Statutory Accounts The financial information for the year ended 31 December 2004 does not contitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thecomparative results have been extracted from the audited accounts of the Companyfor the year ended 31 December 2003. 2. Calculation of loss per share The calculation of basic earnings per ordinary share is based on a loss of£652,000 (2003: loss £528,000) and on 159,664,501 (2003: 112,500,552) ordinaryshares, being the wieghted average number of ordinary shares in issue during theyear. As the Group reported a loss for the period then, in accordance with FinancialReporting Standard Number 14, the share options in issue are not considereddilutive. 3. Dividend The Directors are not proposing that a dividend payment be made. This information is provided by RNS The company news service from the London Stock Exchange