EDR.L Regulatory News (EDR)

24 Oct 2005 07:00

Egdon Resources PLC24 October 2005 For immediate release 24 October 2005 Egdon Resources Plc ("Egdon" or "the Company") Preliminary Results Egdon Resources Plc (AIM : EDR), the UK focused energy Company is pleased toannounce its Preliminary Results, for the year ended 31 July 2005. Operational Highlights • Confirmation of oil discovery at Waddock Cross • Multi-well drilling programme to commence in November 2005 • Portland Gas Storage Project progressing well - now targeted to store up to 35 Bcf • Avington drilling anticipated to recommence in near future • Transfer from OFEX to AIM completed in December 2004 Financial Highlights • Placing in December 2004 - raising £4.5 million • Loss for the period £420,617 (2004: £246,350) • Loss per share 0.92p (2004: 0.72p) • Net Cash position of £2.95 million (2004: £552,405) Commenting on the results, Philip Stephens Chairman of Egdon, said: "The Company has made good progress since joining AIM in December 2004, and weare looking forward to an active phase of exploration and appraisal drillingwhich should add material value to the Company. "The potential of our gas storage project at Portland will also driveshareholder value." For further information please contact: Egdon Resources Plc 01256 702292Andrew Hindle, Joint Managing DirectorMark Abbott, Joint Managing Director Buchanan CommunicationsBen Willey 020 7466 5000Alastair Watson 01943 883 990 Notes to the Editors Egdon is an established, UK-based energy company primarily focused on thehydrocarbon-producing basins of the onshore UK. Egdon also has explorationinterests in the offshore UK and France. Egdon was formed in 1997 by Dr Andrew Hindle and Mark Abbott. In December 2004,Egdon's shares commenced trading on AIM, having been previously traded on Ofexsince July 2000. The Company is developing two major business areas; an oil andgas exploration and production business which has a portfolio of twentyexploration licences containing identified oil and gas prospects ranging fromdiscoveries under appraisal through to higher risk but higher reward "wild cat"exploration prospects; and a gas storage business initially focused on thedevelopment of a salt cavern gas storage facility on the Isle of Portland,Dorset. CHAIRMAN'S STATEMENT "In this my first year as Chairman I am pleased to report that the periodcovered by these Results was one of significant progress for your Company. The Company recorded a consolidated loss of £420,617 for the year ended 31 July2005 (2004: £246,350). No dividend is being recommended for the period. The Company is currently debt free with cash of £2.95 million at 31 July 2005(2004: £552,405), enabling it to pursue its growth strategy through an activeprogramme of evaluation and drilling of its assets. During the year the Company has been able to announce Waddock Cross as asignificant oil discovery. We have further developed our licence portfolio withsuccess in the twelfth landward and twenty third seaward licensing rounds andhave undertaken an extensive programme of seismic acquisition. We are now aboutto embark on our first multi-well drilling programme. The Company has also added a major new area of business through its entry intothe UK gas storage market via the Portland Gas Storage Project, a businessventure that your Board considers has the potential to add significantshareholder value. Gas would be stored under pressure in a series of cavernswithin a thick salt sequence approximately 2000m below ground level. Thesecaverns would be created by dissolving salt with sea water circulated undercontrolled conditions. This project is managed through a newly incorporatedwholly owned subsidiary, Portland Gas Limited. Initial feasibility work has been completed on the potential size and operatingparameters for the project. It is anticipated that ultimately 18 caverns couldbe constructed from the site, with 6 caverns built in each of three phases. Theinitial phase will have a working storage volume of 330 million cubic metres ("mcm") (or 11.6 billion cubic feet ("bcf")), increasing on completion of stagestwo and three to 660mcm (23.2 bcf) and 990mcm (34.8 bcf) respectively. ThePortland Gas Storage Project will be designed as a high deliverability facilitywith planned gas export capabilities to the national gas grid increasing from 18to 54mcm/day through the three phases. The next stage in the development of the project is to drill a well to confirmthe thickness and properties of the salt sequence and subject to receivingplanning consent, this will be drilled as part of the Company's multi-wellprogramme early in 2006. Conditional upon satisfactory results from this wellthe Company will work to submit a full planning application for the projectduring mid-2006. Returning to the Company's conventional oil and gas activities, wheresignificant progress has been made during the year. The Company now has aportfolio of oil and gas assets comprising of interests in twenty licencescontaining over fifty identified oil and gas prospects. A key priority for theCompany continues to be the commercialisation of the Waddock Cross and Avingtonoil discoveries and realisation of cash-flow from oil production. The Company has been able to confirm Waddock Cross as a significant oildiscovery for the onshore UK following testing and an independent review during2004, and has initiated an active appraisal programme. A twelve square kilometre3D seismic survey was acquired in spring 2005 which has improved the structuralunderstanding of the field leading to almost a doubling of the mapped in placeoil. Planning has been granted for two horizontal appraisal wells, the first ofwhich is due to commence drilling in early November 2005. The Waddock Cross-3well will target an elevated part of the structure identified by the 3D seismicsurvey. We anticipate test production from Waddock Cross will commence duringDecember 2005. Following the Waddock Cross well two exploration wells will be drilled on theKirkleatham and Westerdale prospects in North Yorkshire. Previous wells down-dipon both prospects have encountered gas. Following these wells the rig willreturn to Dorset to drill at Portland and potentially a further appraisal wellat Waddock Cross. This "back-to-back" drilling programme has resulted in significant overall costsavings on materials, equipment and services. The continued delays in the drilling of the Avington-3 well caused by theprotracted sale of the operator have been frustrating, but with the completionof the acquisition of Pentex Management Limited by Star Energy Plc, we can nowlook forward to further appraisal of the Avington discovery during the earlypart of 2006. Progress has also been made on the Company's international project, the Grenadeheavy oil accumulation in SW France, where engineering studies, have confirmedthe potential for a commercial development. An appraisal programme is plannedstarting with the acquisition of seismic data in November 2005 and leading topossible drilling in 2006. Also of note is the award of a 50% interest in block 15/7 in the recentlyannounced twenty third seaward round of licensing which contains the Funnelheavy oil accumulation. The operator has estimated most likely recoverable oilof 16 million barrels. Elsewhere in the Company's UK portfolio wells are planned during 2006 to testthe Tees Prospect, in offshore block 42/27 where the Company has a 10% interestand the Holmwood Prospect in Surrey (Egdon interest 38.4%) which is subject toreceipt of planning consent. Drilling on the Fraisthorpe Prospect, where seismicwas acquired during 2005, may also be undertaken during late 2006. In Dorset,multiple prospects have been identified within the Sherwood Sandstone which isproductive at the giant Wytch Farm oilfield located ten kilometres to the eastof the Company's licences. We intend to seek planning permission during 2006 todrill one of these prospects. The Company has an enviable exploration success record with oil discoveriesbeing made in two out of the three wells in which it has participated to date.The challenge now is to continue this record of exploration success as we embarkupon an accelerated phase of exploration drilling and to move the discoveries atWaddock Cross and Avington into profitable production at the earliestopportunity. In addition to our conventional oil and gas exploration and production portfolioour entry into the gas storage market represents a unique opportunity for theCompany to create significant shareholder value. We look forward to an exciting future and we thank you for your continuedsupport" Philip StephensChairman21st October 2005 EGDON RESOURCES PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 JULY 2005 2005 2004 Note £ £ Turnover 11,133 33,457 Cost of sales (9,674) (37,406) Gross profit/(loss) 1,459 (3,949) Administration expenses (533,663) (252,222)Other operating income 80,877 36,193 Operating loss (451,327) (219,978) Interest receivable 73,210 8,628Interest payable (42,500) (35,000) Loss on ordinary activities before taxation (420,617) (246,350) Taxation - - Retained loss for the year £(420,617) £(246,350) Basic and diluted loss per share 1 (0.92)p (0.72)p The accompanying notes are an integral part of this consolidated profit and lossaccount. There were no recognised gains or losses other than the loss for the year. The consolidated profit and loss account has been prepared on the basis that alloperations are continuing. EGDON RESOURCES PLC CONSOLIDATED BALANCE SHEET AS AT 31 JULY 2005 2005 2004 Note £ £ Fixed assetsIntangible assets 2,598,711 1,775,490Tangible assets 2,977 4,160 2,601,688 1,779,650Current assetsDebtors 232,859 70,657Investments 2,044,580 -Cash at bank and in hand 903,965 552,405 3,181,404 623,062Creditors: amounts falling due withinone year including convertible debt (105,598) (386,906) Net current assets 3,075,806 236,156 Total assets less current liabilities 5,677,494 2,015,806 Provision for liabilities and charges (93,500) (28,800) NET ASSETS £5,583,994 £1,987,006 Capital and reservesCalled up equity share capital 515,950 365,950Share premium account 2 3,867,605 2,542,589Profit and loss account 2 1,200,439 (921,533) EQUITY SHAREHOLDERS' FUNDS £5,583,994 £1,987,006 EGDON RESOURCES PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 JULY 2005 2005 2004 Notes £ £ £ £ Net cash inflow from operating 3activities (477,125) (217,323) Returns on investment andservicing of financeBank and investment interest receipts 73,210 8,628Bank interest paid (42,500) (35,000) 30,710 (26,372)Capital expenditure and financialinvestmentPayments to acquire tangible fixed assets (1,829) (768)Payments to acquire intangible fixed assets (823,221) (613,522)Receipts from sale of intangible fixed assets - 106,000 (825,050) (508,290)Net cash flow before use of liquidresources and financing (1,271,465) (751,985) Management of liquid resources(Increase)/decrease in short term deposits (2,044,580) 250,584 FinancingProceeds from issue of Ordinary shares 4,500,000 675,000Costs associated with share issue (482,395) (32,500)Repayment of Debentures (350,000) - 3,667,605 642,500 Increase in cash 4 £351,560 £141,099 Reconciliation of net cashflow tomovement in net fundsIncrease in cash in the year 351,560 141,099Cash to repurchase debenture 350,000 -Cash used to increase/(decrease)liquid resources 2,044,580 (250,584) Change in net funds 2,746,140 (109,485)Net funds at 1 August 2004 202,405 311,890 Net funds at 31 July 2005 £2,948,545 £202,405 NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 JULY 2005 1. EARNINGS PER SHARE 2005 2004 £ £ Net loss for the financial year (420,617) (246,350) Basic weighted average ordinary shares inIssue during the year 45,718,262 34,315,615 Pence PenceBasic loss per 1p ordinary share (0.92) (0.72) The basic earnings per share has been calculated on the loss on ordinaryactivities after taxation of £420,617 divided by the weighted average number ofordinary shares in issue of 45,718,262 during the period. At the year endoptions were in place over 2,000,000 shares. No diluted loss per share ispresented as the effect of the exercise of the share options would be todecrease the loss per share. 2. RESERVES Share Profit premium and loss account account Total £ £ £Group At 1 August 2004 2,542,589 (921,533) 1,621,056On shares issued in the year 4,350,000 - 4,350,000Share issue costs (482,395) - (482,395)Capital redemption (2,542,589) 2,542,589 -Loss for the year - (420,617) (420,617) At 31 July 2005 £3,867,605 £1,200,439 £5,068,044 On 15 November 2004 shareholders passed a resolution approving the cancellationof the Company's share premium account which stood at £2,542,589. Thecancellation became effective on 8 December 2004 following registration of anorder of the High Court of Justice of England and Wales with the Registrar ofCompanies in England and Wales. 3. RECONCILIATION OF NET INCOME RESOURCES TO NET CASH INFLOW FROMOPERATING ACTIVITIES 2005 2004 £ £ Operating loss for the year (451,327) (219,978) Depreciation 3,012 4,048(Increase)/decrease in debtors (162,202) 24,296Increase/(decrease) in creditors 68,692 (19,856)Increase in provisions 64,700 (5,833) £(477,125) £(217,323) 4. ANALYSIS OF CHANGES IN NET FUNDS As at As at 1 August 31 July 2004 Cash flow 2005 Cash at bank and in hand 552,405 351,560 903,965Debt due within one year (350,000) 350,000 -Current asset investments - 2,044,580 2,044,580 £202,405 £2,746,140 £2,948,545 5. ACCOUNTING POLICIES The accounts for the year ended 31 July 2005 have been prepared and audited onthe basis of accounting policies set out in previous years. This information is provided by RNS The company news service from the London Stock Exchange