HDY.L Regulatory News (HDY)

24 Sep 2007 07:02

Hardy Oil & Gas plc24 September 2007 For Immediate Release 24 September 2007 Hardy Oil and Gas plc ("Hardy", "Company" or "Group") Interim Results for the Six Months Ended 30 June 2007 Hardy Oil and Gas plc (AiM: HDY), the oil and gas exploration and productioncompany with interests in India and Nigeria, is pleased to report its InterimResults for the six months ended 30 June 2007. HIGHLIGHTS Operational • CY-OS/2 (75%): Discovery of hydrocarbons in the Fan-A well (January 2007) on the Hardy operated exploration block located in the Cauvery basin • CY-OS/2: Approval by joint venture management committee of the appraisal programme for the Fan-A discovery, comprising of 3D seismic reprocessing and the drilling of three additional wells within two years • GS-01 (10%): Discovery of hydrocarbons in the GS-01-B1 well (March 2007) on the GS-01 exploration block located in the Gujarat-Saurashtra Basin • D9 (10%): First well scheduled to commence drilling in the second quarter of 2008 on the D9 block located in the KG basin • D3 (10%): Completion of Phase I (c.1,200km2) of a two phase 3D seismic acquisition programme on the D3 exploration block located in the KG basin • PY-3 (18%): Gross average daily oil production of 4,948 stock tank barrels per day (stb/d) (Net: 890stb/d) compared to 5,913stb/d for H1 2006 (Net: 1,064stb/d). Production level currently at 3,400stb/d due to the shut-in of the PY3-3RL well (10 August 2007) Financial • Revenue $7.0 million (H1 2007) compared to $11.9 million (H1 2006). Revenue was impacted lower sales volumes, prices and an increase in government's share of profit oil • Gross daily average sales of 801stb/d compared to 1,061stb/d for the same period in 2006 • Realisation of an average crude oil sales price of $62.8/stb (H1 2006: $65.3/stb) • Net profit $1.9 million (H1 2007) compared to $5.4 million (H1 2006) for the same period in 2006; the reduction principally resulting from lower revenues • Capital expenditures $28.1 million (H1 2007) compared to $7.3 million (H1 2006) incurred during the same period last year • Equity issue in June 2007 with net proceeds of $40.0 million • Cash and cash equivalent at 30 June 2007 was $36.9 million Corporate • Strengthening of the board with the appointment of Mr Dinesh Dattani as finance director • Adoption of IFRS effective 1 January 2007 with retrospective application Commenting on the results, Sastry Karra, Chief Executive of Hardy said: "Hardy has enjoyed a tremendous start to 2007 with discoveries on two of ourfour exploration blocks in India. Hardy's team is fully focused on implementingthe Hardy operated CY-OS/2 appraisal and PY-3 development drilling programmescomprising of five wells. In addition, during 2008, our exploration programmewill accelerate as we expect to drill on all three of our non-operatedexploration blocks in India." For further information please contact: Hardy Oil and Gas plc 020 7471 9850 Yogeshwar Sharma, Chief Operating Officer Dinesh Dattani, Finance Director Arden Partners plc 020 7398 1632 Richard Day Buchanan Communications 020 7466 5000 Mark Edwards Ben Willey Hardy web page: www.hardyoil.com Chairman's Statement The first half of 2007 has been a busy and exciting time for Hardy with thediscovery of hydrocarbons in the Fan A-1 (CY-OS/2 block) and B-1 (GS-01 block).This is an encouraging start to Hardy's exploration drilling programme andhighlights the potential of our exploration portfolio. The Company has been focused on interpreting the results from the Hardy operatedFan A-1 (CY-OS/2 block) well and the development of a comprehensive appraisalprogramme. As announced on 10 August 2007, the management committee of the CY-OS/2 joint venture have committed to a three well programme to appraise thepotential commerciality of the Fan A-1 discovery. In June 2007, Hardy successfully raised an additional $40.0 million to meet itsongoing exploration expenditure requirements through an equity issue which waswell supported by existing and new institutional shareholders. As a result,Hardy is financially well positioned to commence its active programme throughthe balance of 2007 and 2008 on all of its blocks. Revenue and net profit of the Group declined from the previous period resultingprincipally a reduction in Hardy's net average daily production from 1,064stb/dto 890stb/d and an increase in the Government of India's (GOI) share of profitoil. Hardy has also strengthened its board with the appointment of Dinesh Dattani asthe Company's finance director. Mr Dattani has significant upstream oil and gasindustry experience with publicly listed companies and we are delighted that hehas joined our team. Financial Review The Company has adopted International Financial Reporting Standards (IFRS). On20 September 2007, the Company published its restated financial information forthe year ended 31 December 2006 and six months ended 30 June 2006, its revisedaccounting policies under IFRS and comparison of results under IFRS with UKGAAP. The interim financial statements results for the six months ended 30 June 2007,including comparatives, have been prepared using IFRS. Revenues for the six months ended 30 June 2007 amounted to $7.0 million comparedto $11.9 million for the same period last year. As indicated above, thisresulted from a higher GOI share of profit oil, lower production volumes and alower crude oil price. The volume weighted average price achieved for our crudesales for this period was $62.8/stb compared to a price of $65.3/stb for thesame period in 2006. Production, depletion and decommission costs essentially remained at the samelevel as last year. Administrative costs decreased to $2.3 million from $3.3million principally resulting from overhead recovery from the CY-OS/2exploration programme and the absence of legal costs that were incurred in 2006. The Group recorded a net profit of $1.9 million compared to $5.4 million onrevenue of $11.9 million for the same period last year. The Group's capital expenditures amounted to $28.1 million compared to $7.3million incurred during the same period last year. Capital expenditures wereprimarily attributable to the drilling of the successful Fan A-1 (CY-OS/2 block)well, the drilling of B-1 (GS-01 block) discovery well and seismic acquisitionon the D3 exploration block. In June 2007, the Company placed 4,964,540 new ordinary shares at a price of£4.23 raising gross net proceeds of $40.0 million. As a result, the Company increased its cash position from $24.5 million at theend of 2006 to $36.9 million at 30 June 2007. Hardy is financially wellpositioned to commence its active programme during the balance of 2007 and 2008on all of its blocks. Operational Review CAUVERY BASIN - Eastern India PY-3: Oil production from the PY-3 field during the period averaged 4,948stb/d(2006: 5,913stb/d), a 16.3% decrease from the same period in 2006. Netproduction to Hardy was 890stb/d compared to 1,064stb/d for the same period in2006. As previously reported, the decrease in average production is attributedto natural decline in the field. As announced on 10 August 2007, due to excessive water entering the PY3-3RL wellin the PY-3 field, the well has been shut-in. The reduction in production hasbeen in the order of 1,100stb/d resulting in current production of approximately3,400stb/d. The Company does not expect production to recover until theimplementation of the planned Phase III development drilling programme scheduledin 2008. The programme includes the drilling of one development well and onewater injection well, upgrading of water injection facilities, and installationof various flow lines and equipment. During the period Hardy negotiated an extension to the operating contract forthe PY-3 production facilities for a further two year period, effective 01August 2007. The PY-3 field is located off the east coast of India approximately 80km southof Pondicherry in the Cauvery basin. The PY-3 block covers an area of 81 squarekilometres (km2) with water depths ranging from 40 to 200 metres (m). Hardy hasan 18% interest in PY-3. CY-OS/2: In January 2007, the Company announced the discovery of hydrocarbons inthe Fan A-1 well. The Fan A-1 well was drilled to test two potential targetswithin the Cretaceous formation. While the well encountered good quality sandsand presence of hydrocarbons in both of these intervals, a full well test wasnot completed. Another intermediate zone, located between the two prognosed maintargets, was successfully tested and flowed at an initial rate of 10 millionstandard cubic feet per day (MMSCFD). The well has been recognised as adiscovery by the Directorate General of Hydrocarbons (India) (DGH). On 10 August 2007, Hardy announced that the management committee of the jointventure had agreed to proceed with a three well appraisal programme. Theobjective of the programme is to evaluate the potential commerciality of thediscovery. As Operator of the field, incorporating drilling results into our geological andgeophysical (G&G) interpretation model and securing the appropriate drillingequipment will dominate the team's focus over the remainder of the year. Thetiming of drilling will be dependent on securing a suitable drilling rig,however, the programme is anticipated to start in the later part of 2008. This 859km2 block is located in the northern part of the Cauvery basinimmediately offshore from Pondicherry. Hardy holds a 75% interest in the blockand is the Operator. Upon declaration of commerciality, Oil and Natural GasCorporation Ltd (ONGC), an India state company, has an option to assume a 30%interest in the block. GUJARAT-SAURASHTRA BASIN - Western India GS-01: On 15 May 2007, Hardy announced the discovery of hydrocarbons in theGS-01-B1 well. The exploration well was drilled to a depth of 2,282m measureddepth from the rotary table (MDRT) and encountered natural gas and condensatewithin the mid Miocene Limestone over an interval from 1,988 to 2,052m MDRT. Two intervals selected for cased hole drill stem testing (DST), were 1,988 to1,993m and 2,019 to 2038m MDRT respectively. The test produced natural gas at arate of 18.6MMSCF/D together with 415stb/d of condensate through a 56/64" chokewith a flowing tubing head pressure of 1,346psi. Early indications are very encouraging, however, the potential extent andcommerciality of the above discovery is yet to be established. Analysis of thewell results is ongoing. The proposed programme for 2008 comprises of the acquisition of an additional1,000km2 of 3D seismic and the drilling of three further wells which will meetthe Phase I work commitment for the exploration block. This GS-01 block covers an area of 8,841km2 and is located in the shallow watersof Gujarat-Saurashtra basin on the west coast of India. Reliance is the Operatorof this block holding a 90% interest. Hardy holds the remaining 10% interest. KRISHNA GODAVARI (KG) BASIN - Eastern India D9: As previously reported, the drilling of the initial well (A-1) is scheduledto commence in the second quarter of 2008. The Operator has submitted a requestfor quote (RFQ) for a deepwater drilling rig capable of operating in greaterthan 2,000m water depth. Bids are currently being evaluated by the Operator. This 11,850km2 block is located in the highly prospective KG basin off theeastern coast of India. Hardy holds a 10% interest in the block with theOperator Reliance Industries Limited (Reliance) 90%. D3: An extensive 3D acquisition programme was initiated at the beginning of theyear. Phase I of a two phase acquisition programme has been completed withprocessing of the data expected to continue into 2008. Phase II of the seismicacquisition programme is expected to start in the third quarter of 2008. Approximately 300km2 of the block is covered by previously acquired 3D seismicand several leads on the block are being assessed. We anticipate that, uponcompletion of processing and interpretation of the Phase I, 3D seismicprogramme, drilling of a well may commence in the later part of 2008. The 3,288km2 block is Hardy's second block within the KG basin, holding a 10%interest, with Reliance holding a 90% interest. NIGER DELTA BASIN - NIGERIA OZA: During the period, the Operator of the Oza field initiated field operationsinvolving clearing and securing the existing well sites. Following the recentfederal elections, Hardy and the Operator have initiated the planned welltesting programme. An initial slick-line survey has been carried out which confirmed positivewellhead pressures and verified the integrity of the existing well bores. Bottomhole static reservoir and temperatures as well as several bottom hole crudesamples were obtained. Wellheads have been refurbished in preparation for theplanned flow testing programme later this year. Discussions have also progressed with the adjacent facility owners to identifythe optimal development plan. Subject to test results, installation of an exportpipeline may commence by the second quarter of 2008. Located within the Niger Delta, the Oza block has three completed oil wellsacross approximately 20km2. Hardy, as the technical partner, holds a 40%interest in the block with the Operator, Millenium Oil and Gas Company Ltd,holding the remaining 60% interest. ATALA: Located in the mangrove swamps of the Niger Delta, Atala encompassedapproximately 34km2 and has one standing well. The block is operated by BayelsaOil Company Limited and Hardy is the technical partner holding a 20% interest inthe block. The Operator has been actively taking steps to source an appropriate swamp bargedrilling rig for an appraisal programme comprising the re-entry and testing ofthe existing well. The Operator is also associated with a consortium of other independent operatorsseeking suitable equipment for the collective drilling programmes. Futureactivity will result upon securing an appropriate rig for this prospective area. OTHER Hardy holds a strategic 8.5% equity interest in Hindustan Oil ExplorationCompany (HOEC), a Company with oil and gas interests in India. As of 30 June2007, the market value of Hardy's interest in HOEC was $18.6 million. During the period, HOEC drilled several exploration and development wells withvarying results. HOEC's primary activity involved the development of their PY-1asset, located directly adjacent to Hardy's PY-3 field, where HOEC successfullydrilled one development well and secured a natural gas sales agreement with PPNPower Generating Company Private Limited. Outlook Looking forward, Hardy will continue to assess investment opportunities thatwill complement the Company's asset portfolio. The Company's main focus remainsin India where the Company has assembled an exceptional exploration andproduction team. Preparatory work in connection with the listing of Hardy's ordinary shares onthe Official List of the UK Listing Authority is continuing. The Company expects to maintain the current PY-3 field gross daily productionlevel of 3,400stb/d through the remainder of 2007. The implementation of the CY-OS/2 appraisal drilling programme, and PY-3 PhaseIII development programme will dominate Hardy's focus throughout the remainderof 2007. Hardy is looking forward to a number of specific initiatives for 2008: • PY-3 Phase III - Implement the Phase III development plan with the drilling of one development well and a water injection well to extend the field life, and potentially add recoverable reserves • CY-OS/2 - Upon securing an appropriate rig, the commencement of appraisal drilling in the later part of 2008 • GS-01 - Initiate acquisition of an additional 1,000km2 of 3D seismic in the first quarter of 2008 and commence drilling of three additional wells in the second quarter of 2008 • D9 - Commencement of drilling by the end of the second quarter in 2008 • D3 - The processing and interpretation of the newly acquire Phase I 3D seismic data with the possibility of commencement of drilling by the third quarter of 2008 • Oza - Initiating well testing prior to year-end. Subject to a successful test, sustainable production may begin by the second quarter of 2008 We have strengthened our board with the addition of Mr Dattani as FinanceDirector and I am pleased to report that your Company is in an excellent shapewith the entire team focused on implementing the Company's substantialexploration and appraisal programme. We look forward to keeping you apprised of our progress. E. Paul Mortimer Chairman 24 September 2007 Glossary: 3D: three dimensional DGH: Directorate General of Hydrocarbons (India) DST: drill stem test G&G: geological and geophysical GOI: Government of India H1: first half of H2: second half of HOEC: Hindustan Oil Exploration Company Limited IFRS: International Financial Reporting Standards km2: square kilometres m: metres MDRT: measured depth from rotary table MMSCFD: million standard cubic feet per day Official List: Official List of the UK Listing Authority ONGC: Oil and Natural Gas Corporation Ltd Reliance: Reliance Industries Limited RFQ: request for quote stb/d: stock tank barrel of oil per day Independent Review Report to Hardy Oil and Gas Plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprise the group income statement, thegroup balance sheet, the group cash flow statement, and notes to the interimfinancial statements. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the Rules of theAlternative Investment Market of the London Stock Exchange which require thatthe accounting policies and presentation applied to the interim figures shouldbe consistent with those applied in preparing the preceding annual accountsexcept where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board of the Financial Reporting Council foruse in the United Kingdom. A review consists principally of making enquiries ofmanagement and applying analytical procedures to the financial information andunderlying financial data and based thereon, assessing whether the accountingpolicies and presentation have been consistently applied unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit performed in accordance with International Standards onAuditing (UK and Ireland) and therefore provides a lower level of assurance thanan audit. Accordingly we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. Horwath Clark Whitehill LLP Chartered Accountants 21 September 2007 HARDY OIL AND GAS plcGROUP INCOME STATEMENT for six months ended 30 June 2007 Notes Six months Six months Year ended ended 30 June ended 30 June 2007 2006 31 December 2006 US$ US$ US$Revenue 7,001,426 11,878,101 21,316,935Cost of salesProductioncosts (1,286,640) (1,504,090) (2,999,086)Depletion (757,854) (492,099) (1,887,911)Decommissioning charge (122,195) (167,158) (304,899)-------------------- ------ ---------- ----------- -----------Gross profit 4,834,737 9,714,754 16,125,039Otheroperatingincome - - 1,000,000Administrativeexpenses (2,259,275) (3,270,458) (5,700,416)-------------------- ------ ---------- ----------- -----------Operatingprofit 2,575,462 6,444,296 11,424,623Interest andinvestmentincome 434,300 1,041,584 2,288,954Finance costs (123,411) (148,341) (275,428)-------------------- ------ ---------- ----------- -----------Profit onordinaryactivitiesbeforetaxation 2,886,351 7,337,539 13,438,149Tax on profiton ordinaryactivities (963,439) (1,972,611) (3,205,381)-------------------- ------ ---------- ----------- -----------Profitattributableto the equityshareholdersof the parentcompany 1,922,912 5,364,928 10,232,768-------------------- ------ ---------- ----------- ----------- Earnings pershare - basic 1 0.03 0.10 0.18Earnings pershare -diluted 2 0.03 0.09 0.17-------------------- ------ ---------- ----------- ----------- Notes: 1. The basic earnings per share is calculated on a profit ofUS$1,922,912 (2006: US$5,364,928) on a weighted average of 57,115,977 (2006:56,101,126) ordinary shares. 2. The diluted earnings per share is calculated on a profit ofUS$1,922,912 (2006: US$5,364,928) on a weighted average of 57,115,977 (2006:56,101,126) ordinary shares and the dilutive potential ordinary shares of3,247,099 (2006: 2,799,099) relating to share options. 3. Comparative amounts have been restated due to changes in accountingpolicies arising from the implementation of IFRS. HARDY OIL AND GAS plcGROUP STATEMENT OF CHANGES IN EQUITY Six months Six months Year ended ended 30 June ended 30 June 2007 2006 31 December 2006 US$ US$ US$ Opening equity 91,401,836 60,897,060 60,929,902---------------------------- --------- --------- ---------- Totalrecognisedgains for theperiod 1,922,912 5,364,928 10,232,768Valuation gain/ (loss)transferred toequity 4,786,353 (5,495,897) (6,910,256)Deferred taxasset /(liability) onvaluation gainor loss (1,340,179) 1,538,851 1,934,872Issue of shares 39,965,300 24,522,656 24,527,092Shares to beissued 507,336 301,107 687,459 ---------------------------- --------- --------- ----------Closing equityattributableto thecompany'sequity holders 137,243,558 87,128,705 91,401,836---------------------------- --------- --------- ---------- HARDY OIL AND GAS plcGROUP BALANCE SHEET at 30 June 2007 30 June 30 June 31 December 2007 2006 2006 US$ US$ US$AssetsNon-current assetsIntangible assets - exploration 95,325,323 23,452,406 67,216,281Property, plant and equipment 4,126,904 6,502,907 5,064,070Intangible assets - others 160,529 286,573 217,198Investment 18,623,263 12,472,355 13,836,910Site restoration deposit 3,256,639 2,663,394 2,784,660 ----------- ----------- ---------- 121,492,658 45,377,635 89,119,119 Current assetsInventories 2,054,992 1,334,890 2,729,764Trade and other receivables 6,398,644 6,857,942 4,637,062Cash and cash equivalent 36,892,735 51,838,403 24,490,939 ----------- ----------- ---------- 45,346,371 60,031,235 31,857,765 Total assets 166,839,029 105,408,870 120,976,884 ----------- ----------- ---------- LiabilitiesCurrent liabilitiesTrade and other payables (14,526,612) (7,162,777) (16,809,807) ----------- ----------- ---------- (14,526,612) (7,162,777) (16,809,807) Non-current liabilitiesProvisions for liabilities andcharges (4,500,000) (4,500,000) (4,500,000)Provision for deferred tax (10,568,859) (6,617,388) (8,265,241) ----------- ----------- ---------- (15,068,859) (11,117,388) (12,765,241) Total liabilities (29,595,471) (18,280,165) (29,575,048) ----------- ----------- ---------- ----------------------- --- ----------- ----------- ----------Net assets 137,243,558 87,128,705 91,401,836----------------------- --- ----------- ----------- ---------- EquityCalled-up share capital 622,292 572,513 572,530Share premium account 92,898,521 52,978,564 52,982,983Shares to be issued 1,447,429 301,107 940,093Other reserves 9,810,883 7,383,048 6,364,709Retained earnings 32,464,433 25,893,473 30,541,521----------------------- --- ----------- ----------- ----------Total equity 137,243,558 87,128,705 91,401,836----------------------- --- ----------- ----------- ---------- HARDY OIL AND GAS plcGROUP CASH FLOW STATEMENT for the six months ended 30 June 2007 Six months Six months Year ended ended 30 June ended 30 June 31 December 2006 2007 2006 US$ US$ US$Operating activitiesCash generatedfrom (used in)operatingactivities 660,956 5,494,305 23,942,864Taxation paid - (97,312) (143,280)---------------------------- ---------- ---------- ----------Net cashgenerated from(used in)operatingactivities 660,956 5,396,993 23,799,584 Investing activitiesPurchase ofintangibleassets -exploration (28,109,042) (7,270,129) (51,034,004)Purchase ofintangibleassets others - (172,472) (176,972)Purchase ofproperty,plant andequipment (11,124) (72,927) (148,215)Purchase ofother fixedassets (16,854) (137,557) (247,992)Purchase ofinvestment - - (2,778,914)Siterestorationdeposit (471,979) (2,663,394) (2,784,660)---------------------------- ---------- ---------- ----------Net cash usedin investingactivities (28,608,999) (10,316,479) (57,170,157) Financing activitiesInterest andinvestmentincome 507,950 1,149,198 2,376,072Finance costs (123,411) (148,341) (275,428)Issue of shares 39,965,300 24,522,656 24,527,092---------------------------- ---------- ---------- ----------Net cashprovided byfinancingactivities 40,349,839 25,523,513 26,627,736 Net (decrease)/ increase incash and cashequivalent 12,401,796 20,604,027 (6,743,437)Cash and cashequivalent atthe beginningof the period 24,490,939 31,234,376 31,234,376---------------------------- ---------- ---------- ----------Cash and cashequivalent atthe end of theperiod 36,892,735 51,838,403 24,490,939---------------------------- ---------- ---------- ---------- HARDY OIL AND GAS plcRECONCILIATION OF OPERATING PROFT TO CASH FLOW GENERATED FROM (USED IN)OPERATING ACTIVITIES for the six months ended 30 June 2007 Six months Six months Year ended ended 30 ended 30 31 December 2006 June 2007 June 2006 US$ US$ US$ Operatingprofit 2,575,462 6,444,296 11,424,623 Depletion anddepreciation 899,619 577,003 2,137,699Decommissioning charge 122,195 167,158 304,899Share basedpaymentcharges 507,336 301,107 687,459 ---------- ---------- ---------- 4,101,612 7,489,564 14,554,680(Increase) /decrease ininventories 674,772 (984,961) (2,379,835)Decrease/(increase) intrade andotherreceivables (1,835,233) (2,537,487) 225,800Increase /(decrease) intrade andother payables (2,283,195) 1,527,189 11,542,219 ---------- ---------- ----------Cash flowgenerated from(used in)operatingactivities 660,956 5,494,305 23,942,864 ---------- ---------- ---------- HARDY OIL AND GAS plc NOTES TO THE INTERIM FINANCIAL STATEMENTS for the six months ended 30 June 2007 Accounting policies (i) Basis of preparation Interim consolidated financial statements have been prepared on a basisconsistent with the Group's IFRS accounting policies for 2007. Comparativeinformation has been restated under IFRS. (ii) Changes in accounting policies On 1 January 2007 it became mandatory for the Group to comply with InternationalFinancial Reporting Standards. The interim results for the six months ended 30 June 2007 have been prepared onthe basis of all standards and interpretations issued by the InternationalAccounting Standards Board effective for the Group's reporting year ending 31December 2007. Restatement of 2006 results from UK GAAP to IFRS for the Group, including adescription of revised accounting policies under IFRS, was published on 20September 2007. The restatement document also provided reconciliations ofcomparative information from UK GAAP to IFRS. These interim financial statements are prepared in accordance with IFRS 6"Exploration for and evaluation of mineral resources". The Group has continuedto follow its existing full cost accounting policy for oil and gas assets toboth exploration and appraisal activity and the assets in the development andproduction phases. This information is provided by RNS The company news service from the London Stock Exchange