Gulfsands Petroleum Regulatory News (GPX)

15 Jun 2005 07:00

Gulfsands Petroleum PLC15 June 2005 15 June 2005 Gulfsands Petroleum PLC("Gulfsands" or "the Group") Full Year Results for the Year Ended 31st December 2004 Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration,development and production company with activities in the USA, Syria and Iraqannounces its results for the year ended 31 December 2004. FINANCIAL HIGHLIGHTS • Net income increased to $1,622,000 (2003: loss of $2,437,000) primarily as a result of increased production in the Gulf of Mexico • Turnover increased to $33,056,000 (2003: $6,852,000) • Operating profit increased to $8,862,000 (2003: loss of $371,000) • Cash flow from operating activities increased to $14,802,000 (2003: $3,134,000) OPERATIONAL HIGHLIGHTS • Average daily net working interest production for Northstar Gulfsands LLC, owned 52.6% by Gulfsands, increased from approximately 1,000 barrels of oil equivalent per day ("boepd") in 2003 to 5,000-6,000 boepd by year end 2004. • Proved and probable reserves within Northstar Gulfsands LLC, of which Gulfsands owns 52.6%, increased significantly to 4.7 million barrels of oil ("mmbbls") and 29.2 billion cubic feet of natural gas ("bcf") as of 1 November 2004 (2003: 2.4 mmbbls and 5.4 bcf). • Darcy Energy, owned 75% by Gulfsands, participated at a 25% working interest in a successful gas well in an onshore Texas gas re-development known as Emily Hawes. First production is expected to commence early in the third quarter of 2005. STRATEGIC HIGHLIGHTS Since the year end, Gulfsands has: • increased its ownership in Block 26, Syria from 20% to 50% and became the operator. • participated in a new gas discovery on Eugene Island Block 83 in the Gulf of Mexico through its 52.6% ownership in Northstar Gulfsands LLC, whereby Northstar Gulfsands LLC owns a 10% working interest in the well. • signed a Memorandum of Understanding on the Misan Gas Project in Iraq and increased its interest to 100%. • completed an Initial Public Offering on the Alternative Investment Market of the London Stock Exchange raising approximately $57 million after expenses. John Dorrier, CEO of Gulfsands Petroleum, said: "This was a landmark year for Gulfsands. We made pleasing progress financially,operationally and strategically. Turnover increased significantly, the Groupretained its first annual profit and there was a significant increase in oil andgas reserves. "The Group's activities in the USA Gulf of Mexico, Syria and Iraq continue toprovide significant potential for expansion during 2005 and beyond." Enquiries:Gulfsands Petroleum (Houston) 713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Ben Brewerton / Jim Joseph Seymour Pierce (London) 020-7107-8000Richard RedmayneJonathan Wright NB. Gulfsands Petroleum PLC did not acquire the share capital of GulfsandsPetroleum Ltd. until after 31 December 2004, therefore the results presented arethe results of Gulfsands Petroleum Ltd. and its subsidiaries for the year ended31 December 2004. Operating Review USA During the year, Northstar Gulfsands LLC, a subsidiary company owned 52.6% byGulfsands, closed acquisitions in the USA Gulf of Mexico that doubled oilreserves and increased natural gas reserves over five-fold bringing the totalnumber of fields in the Gulf in which Northstar Gulfsands owns an interest to 39fields, with 8 of these fields operated by Northstar Gulfsands. This expansionof reserves, interests and operations at very competitive cost was the source oflarge growth in asset value for the Group during 2004. As a result, net production to Northstar Gulfsands increased from approximately1,000 boepd to 5,000-6,000 boepd, resulting in large increases in both turnoverand net profit for the Group. Gulfsands' financial performance was also helpedby very strong oil and gas prices during this period. During 2004, the Group also established a subsidiary company, Darcy Energy, toconduct onshore USA Gulf Coast field re-development and exploration. Darcyacquired interests in two onshore projects during the year and participated inits first well in the Emily Hawes Field on Matagorda Island. The Group expectsits first onshore production from these activities to commence during the thirdquarter of 2005, and is actively reviewing additional re-development andexploration projects for acquisition. Syria Subsequent to the end of 2004, the Group capitalized on an opportunity toincrease its interest in Block 26, located in northeast Syria, by purchasingDevon Syria Ltd., holder of 80% interest in Block 26, following a corporatedecision by Devon to exit Syria. Gulfsands has identified some 27 leads andprospects in the Block with aggregated potential exceeding 1 billion barrels ofoil reserves. Concurrent with the acquisition of the Devon interest, the Groupfarmed-out a 50% interest in the Block to SoyuzNefteGas, a private Russian oiland gas company. Gulfsands is now operator of Block 26 and is activelyconducting the work program of seismic acquisition and expects to drill thefirst exploration well in the Block by early 2006. Iraq In Iraq, the Group completed a Feasibility Study for the Misan Gas Project inAugust 2004 and presented the final results to the Iraqi Oil Ministry in October2004. The Misan Gas Project is a midstream project that gathers gas that iscurrently being flared at the oil fields in Southern Iraq, brings the gas to acentral processing plant to clean it of impurities and remove the lighthydrocarbon liquid fraction (Natural Gas Liquids), and then transmits thenatural gas for further distribution and use in Iraq. The extracted hydrocarbonliquids are then transmitted to a southern port for storage, offloading andexport. The Group signed a Memorandum of Understanding with the Iraq OilMinistry on 5 January 2005 to continue cooperation on this project and to begindiscussion of a definitive contract during 2005. In May 2005, Gulfsandsincreased its interest in the Misan Gas Project to 100%. AIM Listing The directors of the Group decided in 2004 to list its business on the LondonStock Exchange (AIM market) and began formalities to implement this resolutionduring the second half of the year. This process was completed in early April2005 when Gulfsands Petroleum PLC's shares began trading in London. The Groupplaced approximately $57 million of new equity (net of expenses) at 130 penceper share. These new funds will enable the Group to re-structure the financingin Northstar Gulfsands, conduct active exploration programs in the Gulf ofMexico and Syria, and continue its business development activity in Iraq and inparticular the Misan Gas Project. Outlook In summary, 2004 was a very active and successful year for Gulfsands, resultingin significant increase in oil and gas reserves, turnover of $33 million and anet profit for the year. In addition the Group's activities in the Gulf ofMexico, Syria and Iraq continue to provide significant potential for expansionduring 2005 and beyond. GULFSANDS PETROLEUM LTD. AND SUBSIDIAIRES Consolidated Profit and Loss AccountFor the years ended 31 December 2004 and 2003 (in thousands of U.S. dollars except earnings (loss) per share) 2004 2003 Turnover 33,056 6,852Cost of sales (19,485) (3,954)Write down of oil and gas properties - (900)Gross profit 13,571 1,998 General and administrative expenses (4,602) (2,262)Write down of goodwill (107) (107)Administrative expenses (4,709) (2,369) Operating profit (loss) 8,862 (371) Investment Loss (675) -Interest receivable 143 28Interest payable (3,477) (1,459)Accretion of net present value of decommissioningprovision (1,352) (327) Profit (loss) on ordinary activities before taxation 3,501 (2,129) Tax on profit (loss) on ordinary activities 1,038 - Profit (loss) on ordinary activities after taxation 4,539 (2,129) Minority interests (2,917) (308) RETAINED PROFIT (LOSS) 1,622 (2,437) Basic earnings (loss) per share 0.33 (0.50)Diluted earnings (loss) per share 0.20 (0.50) Consolidated Balance SheetsAt 31 December 2004 and 2003 (in thousands of U.S. dollars) 2004 2003Fixed assetsTangible fixed assets 56,038 21,833Intangible fixed assets 2,629 1,842Investments - 463 58,667 24,138 Current assetsDebtors: amounts falling due within one year 9,001 3,132Cash at bank and in hand 19,579 7,599 28,580 10,731 Creditors: amounts falling due within one year (18,688) (3,382) Net current assets 9,892 7,349Total assets less current liabilities 68,559 31,487 Debtors: amounts falling due after one year 1,748 -Creditors: amounts falling due after more than one year (29,947) (11,826)Provision for liabilities and charges (16,427) (2,889)Equity minority interests (7,873) (2,546) NET ASSETS 16,060 14,226 Share capital 7 7Share premium account 17,448 17,448Revaluation reserve - (212)Profit and loss account (1,395) (3,017) SHAREHOLDERS' FUNDS 16,060 14,226 Consolidated Cash Flow StatementFor the years ended 31 December 2004 and 2003 (in thousands of U.S. dollars) 2004 2003 Net cash inflow from operating activities 14,802 3,134 Interest received 143 28Interest paid (2,916) (1,354)Net cash outflow from returns on investments and servicing of finance (2,773) (1,326) Capital expenditurePayments to acquire tangible fixed assets (22,912) (19,864)Payments to acquire intangible fixed assets (895) (1,209)Net cash outflow from capital expenditure (23,807) (21,073) FinancingIssues of ordinary share capital 1,187 10,488Contributions in subsidiary undertaking 160 750Issue costs of share capital - (521)Receipts from new loans 35,236 14,134Repayment of loans (12,825) (1,646)Net cash inflow from financing 23,758 23,205 Increase in cash 11,980 3,940 Cash at bank and in hand, beginning of year 7,599 3,659Cash at bank and in hand, end of year 19,579 7,599 Non-cash investing and financingNon-cash capital contributions in subsidiary undertaking 2,250 -Provision for decommissioning 17,000 2,562Receipt of investment for oil and gas properties - 675 Notes to the Summary Financial Statements: The summary financial statements set out above have been extracted from theGroup's audited statements for the year ended 31 December 2004 and 2003 (notpresented herein). Those financial statements were prepared under the historicalcost convention in accordance with applicable UK accounting standards and withthe provisions of the Companies Act 1985 that would apply if these werestatutory financial statements, except that consolidated figures only have beenpresented. In addition to the requirements of UK accounting standards, theaccounting for oil and gas exploration and production activities is guided bythe Statement of Recommended Practice (SORP) "Accounting for Oil and GasExploration, Development, Production and Decommissioning Activities", issued bythe UK Oil Industry Accounting Committee on 7 June 2001. The financialinformation has been prepared in accordance with the provisions of the SORP. These summary statements do not constitute financial statements in accordancewith UK accounting standards as they omit substantially all the disclosuresrequired. The Annual Meeting of Shareholders will take place 11:00 A.M. on Friday, 5August 2005 at the offices of College Hill Associates Limited located at 78Cannon Street in London, England. All shareholders are welcome to attend. Ifunable to attend, shareholders are encouraged to fill out the form of proxy andreturn it to Computershare Investor Services PLC. Note to Editors • Gulf of Mexico, USA The Group has a 52.6% interest in Northstar Gulfsands, which owns interests in39 producing oil and gas fields offshore Texas and Louisiana and operates 8 ofthose fields. Northstar Gulfsands has proved and probable reserves of 4.7 mmbblsof oil and some 29.2 bcf of gas as of 1 November 2004. • Syria In Syria, Gulfsands owns a 50% working interest in Block 26 and is the operator.The block covers 11,000 sq kms and surrounds areas which currently produce over100,000 bopd from existing fields. The Group is planning the acquisition of anextensive 2D seismic programme and the drilling of the first well by the firstquarter of 2006. Gulfsands has identified 27 exploitation and explorationprospects and leads with mean resources potential of 1 billion barrels ofrecoverable oil. • Iraq Gulfsands has recently signed a Memorandum of Understanding with the Ministry ofOil in Iraq for the Misan Gas Project in Southern Iraq and is currentlynegotiating the definitive contract for the project. The project will gather,process and transmit natural gas that is currently a waste by-product of oilproduction in the region and will end the environmentally damaging practice ofgas flaring. Gulfsands has completed a feasibility study and expects to conductfurther technical work and commercial discussions with the Iraq Oil Ministry inthe first half of 2005. • Onshore USA At the Emily Hawes field, which has previously produced approximately 1.7 bcf ofnatural gas before being shut-in, gas production is expected to start during thesummer of 2005. The first well in the Barb Mag oil field is expected to bedrilled in the third quarter of 2005. Darcy Energy has a 25% and 37.5% workinginterest in these fields respectively. This information is provided by RNS The company news service from the London Stock Exchange