Gulfsands Petroleum Regulatory News (GPX)

15 Sep 2005 07:01

Gulfsands Petroleum PLC15 September 2005 15 September 2005 Gulfsands Petroleum PLC("Gulfsands" or "the Group") Half Year Results for the Six Months Ended 30 June 2005 Strong Revenue and Profit Growth Cash Flow Increased to over $12 million Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration,development and production company with activities in the USA, Syria and Iraq,announces its results for the six months ended 30 June 2005. FINANCIAL HIGHLIGHTS • Turnover for period increased to $26.04 million (30 June 2004: $8.95 million). • Operating profit for period increased to $8.74 million (30 June 2004: $1.45 million). • Cash flow from operating activities for the period increased to $12.03 million (30 June 2004: $434,000). • Retained profit for period increased to $1.54 million (30 June 2004: $33,000). OPERATIONAL HIGHLIGHTS • Proved and probable reserves within Northstar Gulfsands LLC, of which Gulfsands owns 52.6%, increased significantly as of 30 June 2005 to 58.1 billion cubic feet of natural gas equivalents (BCFGE) with a net present value discounted at 10% (NPV10) of $248.1 million (30 June 2004: 51.7 BCFGE with a NPV10 of $137.5 million). • Gulfsands increased its working interest in Block 26 in Syria to 50% and became the operator. • Gulfsands signed a Memorandum of Understanding with the Iraq Ministry of Oil on the Misan Gas Project. • Gulfsands increased its ownership in Misan Gas Project, Iraq to 100% from 85%. • Gulfsands successfully listed on AIM in April 2005 and raised approximately £30 million (net of expenses). • Northstar Gulfsands LLC had a natural gas discovery in the Gulf of Mexico that tested natural gas at a rate of 5.2 million cubic feet of gas per day with net reserves potential of approximately 1 BCFGE. • Northstar Gulfsands LLC participated in 10 recompletions and workovers on wells which resulted in approximately 3.2 BCFGE reserve additions at a cost of approximately $.50 per million cubic feet of natural gas. STRATEGIC HIGHLIGHTS Subsequent to 30 June 2005: • Gulfsands commenced the acquisition of some 1,170 kilometers of 2D seismic on Block 26, Syria. • Northstar Gulfsands LLC participated in two new natural gas discoveries in the Gulf of Mexico with net potential reserves of some 2 - 5 BCFGE. • Darcy Energy LLC, owned 80% by Gulfsands, participated in a natural gas discovery in Fort Bend County Texas with a 37.5% working interest. The well was production tested at a daily rate of 1.5 million cubic feet of natural gas and 36 barrels of condensate. • Darcy Energy LLC commenced onshore gas production from the Emily Hawes Field in Calhoun County Texas at a 34.375% working interest. John Dorrier, CEO of Gulfsands Petroleum, said: "Gulfsands' IPO, the acquisition of the additional interests in Syria and Iraq,and the continued strong performance in the Gulf of Mexico are key achievementsduring the first half of the year. Gulfsands is pleased to report thatNorthstar Gulfsands' operations suffered minimal damage from Hurricane Katrina.Current production is over 90% of pre-storm levels and expected to increasefurther during the next few weeks as the few affected facilities are returned toproduction." Enquiries:Gulfsands Petroleum (Houston) 713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Ben Brewerton / Nick Elwes 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 forJune 30, 2004 and December 31, 2004 are the results of Gulfsands Petroleum Ltd.and its subsidiaries. Operating Review USA During the period, Northstar Gulfsands LLC, a subsidiary company owned 52.6% byGulfsands, participated in a Gulf of Mexico natural gas discovery. NorthstarGulfsands LLC has participated in two further natural gas discoveries in theGulf of Mexico since 30 June 2005. Additionally, the LLC participated in 10recompletions and workovers on wells within existing producing fields in theGulf of Mexico which resulted in the addition of approximately 3.2 BCFGE net tothe LLC at a cost of approximately $.50 per million cubic feet of natural gas. As a result of a large acquisition completed in 2004, net production toNorthstar Gulfsands LLC increased to 5,000-6,000 barrels of oil equivalent perday during the period resulting in large increases in both turnover and netprofit for the Group. Gulfsands' financial performance was also helped bystrong oil and gas prices during this period. Subsequent to 30 June 2005, Darcy Energy LLC, owned 80% by the Group,participated with a 37.5% working interest in a natural gas discovery in FortBend County Texas whereby the well was production tested at a daily rate of 1.5million cubic feet of natural gas and 36 barrels of condensate. Also,subsequent to 30 June 2005, Darcy commenced production from the Emily HawesField located in Calhoun County Texas whereby it has a 34.375% working interest. Syria The Group capitalised on an opportunity to increase its interest in Block 26,located in northeast Syria, by purchasing Devon Syria Ltd., holder of 80%interest in Block 26, following a corporate decision by Devon Energy Corporationto exit Syria. 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 holds a 50% workinginterest and has commenced the acquisition of 1,170 kilometers of 2D seismic.The Group expects to drill the first exploration well in the Block in early2006. Gulfsands has identified some 27 leads and prospects with aggregatedpotential exceeding 1 billion barrels of recoverable oil reserves. Iraq In Iraq, the Group signed a Memorandum of Understanding with the Iraq OilMinistry on 5 January 2005 for the Misan Gas Project. Also, during the periodthe Group submitted a definitive contract for the Misan Gas Project to the IraqOil Ministry and commenced with negotiations. The Misan Gas Project is amidstream project that gathers gas that is currently being flared at the oilfields in Southern Iraq, brings the gas to a central processing plant to cleanit of impurities and remove the light hydrocarbon liquid fraction (Natural GasLiquids), and then transmits the natural gas for further distribution and use inIraq. The extracted hydrocarbon liquids are then transmitted to a southern portfor storage, offloading and export. In May 2005, Gulfsands increased itsinterest in the Misan Gas Project to 100% from 85%. AIM Listing The Group formally completed an IPO on the London Stock Exchange (AIM market)and raised approximately £30 million (net of expenses). Dealings commenced on 8April 2005. These new funds will enable the Group to re-structure the financingin Northstar Gulfsands LLC, 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, the Company showed strong growth during the first half of 2005. Itaccomplished its objectives of listing the Company's shares for trading on theAIM in London, and raising adequate capital to consolidate its USA business inthe Gulf of Mexico, expand ownership and assume operatorship of Block 26 inSyria, and continue its development of the Misan Gas Project in Iraq. Duringthe second half of 2005, the Company anticipates completing the re-financing ofits Gulf of Mexico operations, completing its seismic programme in Block 26Syria, and negotiating the terms and conditions of a definitive contract for theMisan Gas Project in Iraq. Gulfsands Petroleum plc and SubsidiariesConsolidated Profit and Loss AccountFor the six months ended 30 June 2005 and 2004,and year ended 31 December 2004 (in thousands of U.S. dollars except earnings per share) Six months ended 30 June Year Ended 2005 2004 31 December 2004 (unaudited) (unaudited) (audited) Turnover 26,040 8,947 33,056Cost of sales (14,117) (5,492) (19,485)Gross profit 11,923 3,455 13,571 General and administrative expenses (3,132) (1,957) (4,602)Write down of goodwill (54) (53) (107)Administrative expenses (3,186) (2,010) (4,709) Operating profit 8,737 1,445 8,862 Investment Loss - - (675)Interest receivable 447 65 143Interest payable (2,761) (1,425) (3,477)Accretion (843) (491) (1,352) Profit (loss) on ordinary activities before taxation 5,580 (406) 3,501 Tax on profit (loss) on ordinary activities (1,038) 1,017 1,038 Profit on ordinary activities after taxation 4,542 611 4,539 Minority interests (3,006) (578) (2,917) RETAINED PROFIT FOR THE PERIOD 1,536 33 1,622 Basic earnings per share 0.02 0.01 0.33Diluted earnings per share 0.02 0.00 0.20 Consolidated Balance SheetsAt 30 June 2005 and 2004, and 31 December 2004 (in thousands of U.S. dollars) 30 June 2005 30 June 2004 31 December 2004 (unaudited) (unaudited) (audited) Fixed assets Tangible fixed assets 55,993 55,548 56,038 Intangible fixed assets 6,034 2,273 2,629 Investments 463 - 62,027 58,284 58,667Current assets Debtors: amounts falling due within one year 12,462 9,391 9,001 Cash at bank and in hand 78,023 7,964 19,579 90,485 17,355 28,580 Creditors: amounts falling due within one year (12,965) (6,542) (18,688) Net current assets 77,520 10,813 9,892Total assets less current liabilities 139,547 69,097 68,559 Debtors: amounts falling due after one year 1,747 - 1,748 Creditors: amounts falling due after more than one year (34,143) (28,149) (29,947) Provision for liabilities and charges (20,808) (20,521) (16,427) Equity minority interests (10,915) (6,168) (7,873) NET ASSETS 75,428 14,259 16,060 Share capital 10,000 7 7 Share premium account 65,289 17,448 17,448 Revaluation reserve - (212) - Profit and loss account 139 (2,984) (1,395) SHAREHOLDERS' FUNDS 75,428 14,259 16,060 Consolidated Statements of Cash FlowFor the six months ended 30 June 2005 and 2004,and for the year ended 31 December 2004 (in thousands of U.S. dollars) Year Six months ended 30 June Ended 2005 2004 31 December 2004 (unaudited) (unaudited) (audited) Net cash inflow (outflow) from operating activities 12,032 434 14,802 Interest received 447 65 143Interest paid (2,523) (1,314) (2,916)Net cash outflow from returns on investments and (2,076) (1,249) (2,773)servicing of finance Capital expenditurePayments to acquire tangible fixed assets (4,631) (17,250) (22,912)Payments to acquire intangible fixed assets (3,459) (485) (895)Net cash outflow from capital expenditure (8,090) (17,735) (23,807) FinancingIssues of ordinary share capital 58,297 2,563 1,187Contributions in subsidiary undertaking 36 794 160Issue costs of share capital (464) (63) -Receipts from new loans 1,209 28,446 35,236Repayment of loans (2,500) (12,825) (12,825)Net cash inflow from financing 56,578 18,915 23,758Increase in cash 58,444 365 11,980 Cash at bank and in hand, beginning of period 19,579 7,599 7,599Cash at bank and in hand, end of period 78,023 7,964 19,579 Non-cash investing and financingNon-cash capital contributions in subsidiary undertaking - 2,250 2,250Provision for decommissioning - 17,000 17,000 Notes to the Summary Financial Statements: The summary financial statements for 31 December 2004 set out above have beenextracted from the Group's audited statements (not presented herein). Thefinancials statements for 30 June 2005 and 2004 are unaudited financialstatements prepared by management of the Group. All financial statements wereprepared under the historical cost convention in accordance with applicable UKaccounting standards and with the provisions of the Companies Act 1985 thatwould apply if these were statutory financial statements, except thatconsolidated figures only have been presented. In addition to the requirementsof UK accounting standards, the accounting for oil and gas exploration andproduction activities is guided by the Statement of Recommended Practice (SORP)"Accounting for Oil and Gas Exploration, Development, Production andDecommissioning Activities", issued by the UK Oil Industry Accounting Committeeon 7 June 2001. The financial information has been prepared in accordance withthe provisions of the SORP. These summary statements do not constitute financial statements in accordancewith UK accounting standards as they omit substantially all the disclosuresrequired. Note to Editors • Gulf of Mexico, USA The Group has a 52.6% interest in Northstar Gulfsands LLC, which owns interestsin 39 producing oil and gas fields offshore Texas and Louisiana and operates 8of those fields. Northstar Gulfsands LLC has proved and probable reserves of58.1 billion cubic feet of natural gas equivalents, consisting of 28.85 billioncubic feet of natural gas and 4.88 million barrels of oil as of 30 June 2005. • Syria In Syria, Gulfsands owns a 50% working interest in Block 26 and is the operator.The block covers 11,000 square kilometres and surrounds areas which currentlyproduce over 100,000 barrels of oil per day from existing fields. The Groupcommenced the acquisition of an extensive 2D seismic programme during August2005 and anticipates the drilling of the first well during the first quarter of2006. Gulfsands has identified 27 exploitation and exploration prospects andleads with mean resources potential of 1 billion barrels of recoverable oil. • Iraq Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministryof Oil 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. • Onshore USA Gulfsands operates onshore USA through its subsidiary company Darcy Energy LLC.Gulfsands recently increased its ownership in Darcy Energy to 80%. At the EmilyHawes field, initial gas production commenced in the summer of 2005. The firstwell in the Barb Mag oil field has been drilled and wireline logged with some 38feet of potential net pay and production tested at 1.5 million cubic feet ofnatural gas and 36 barrels of condensate per day. Production from this wellshould commence by October 2005. Darcy Energy has a 34.375% and 37.5% workinginterest in these fields respectively. This information is provided by RNS The company news service from the London Stock Exchange