Management Resource Solutions Regulatory News (MRS)

29 Aug 2007 07:00

Melrose Resources PLC29 August 2007 Embargoed for release at 0700 29 August 2007 Melrose Resources plc Unaudited Interim Results for the six month period ended 30 June 2007 Melrose Resources plc (LSE: MRS), the oil and gas exploration and productioncompany with interests in Egypt, Bulgaria, USA and France, today announces itsinterim results for the six months to 30 June 2007. Highlights Operational Highlights • 7 appraisal and development wells drilled in Egypt • First production from the West Khilala field achieved in February 2007 • Progressed West Dikirnis development project with first oil expected in October 2007 • Awarded 40% working interest in, and operatorship of, Mesaha exploration block in Upper Egypt • Completed second phase of Galata onshore compression project in Bulgaria Financial Highlights • 49% increase in turnover to $75.8 million (2006 - $50.8 million) • 51% increase in EBITDAX to $59.5 million (2006 - $39.3 million) • Operating loss of $16.6 million (2006 - profit of $17.9 million) • Loss after tax of $41.3 million (2006 - profit of $2.9 million) Commenting on the results, Robert Adair, Chairman, said: "The first half of 2007 was a period of high activity for Melrose in Egypt as wefocussed on the successful appraisal and development of our operated WestKhilala and West Dikirnis fields. The first of these came on stream in February and the second is due on production in October. Together they will drivesignificant production and profits growth for the company. At the same time,our exploration team has assembled an impressive inventory of prospects in theNile Delta which we plan to drill over the months and years ahead. Also inEgypt, we have been awarded operatorship of the high potential Mesaha block inUpper Egypt. Elsewhere in the portfolio, we have been preparing to implement waterfloodprojects in our US Permian Basin fields and to recommence drilling activitiesin East Texas, where we plan to drill two wells by year end. In Bulgaria, wedrilled three deep-water wells in the Black Sea which established the presenceof an active hydrocarbon system but with limited reservoir development. Ourexploration activity in the area will now be reduced and will focus on thelower-risk, shallow-water areas around the Galata gas field. We were also very pleased that David Thomas joined us as our new Chief Executiveon 4 June 2007. David holds a BSc in Mining Engineering and an MSc in PetroleumEngineering and has 28 years of experience in the international oil and gasindustry, primarily gained with Conoco, Lasmo, Eni and Centurion. David has thequalities to lead Melrose through the next stages of its development and Iwarmly welcome him to the Melrose team." For further information please contact: Melrose Resources plc 0131 221 3360Robert Adair, Executive ChairmanDavid Thomas, Chief ExecutiveMunro Sutherland, Finance DirectorAlasdair Robinson, Company Secretary Buchanan Communications 0207 466 5000Tim ThompsonBen Willey or visit www.melroseresources.com Chairman's Statement In the first year since the acquisition of Merlon Petroleum, Melrose hasfocussed on integrating its technical teams in Egypt and Edinburgh and enhancingits operating performance through close cooperation between our Egyptian jointoperating company and technical capabilities within Melrose. Expertise andexperience has been shared across the Group and the blending of skills and ideasis already yielding tangible operating benefits. Egypt Activity in Egypt in the first half of 2007 has focussed on the appraisal anddevelopment of the West Khilala and West Dikirnis fields. At the same time, ourexplorationists in Edinburgh and Cairo have assembled an impressive prospectinventory for drilling in the months and years ahead. These prospects have beengenerated from 3-D seismic which has been very recently acquired and fromearlier 3-D which has now been re-processed. Further data acquisition is inprogress and we expect the prospect inventory to continue to grow. The West Khilala field went on production on 5 February 2007 and two furtherproduction wells were drilled in the period. The West Khilala No.6 was drilledin order to establish the down-dip limits of the field on the western flank. Thewell achieved its objective by extending the known limits of the reservoirbeyond the mapped area of high seismic amplitude. The well was then side-trackedand intersected a gross vertical pay interval of 68 ft. This well was put onproduction on 1 May 2007. West Khilala No.5 was drilled to test the northernlimits of the field. The well intersected a gross vertical pay interval of 54 ftwith 45 ft interpreted as net pay in an excellent sand reservoir. This well isexpected to be put on production shortly when the pipeline to the productionplant is complete. Development drilling on the West Dikirnis field continued in the period withthree further development wells drilled in preparation for productionoperations. These wells confirmed that the Qawasim reservoir has highproductivity, which augers well for the oil rim development. West Dikirnis No.3,drilled in the central part of the field, came in low to prognosis butintersected a 40 ft gross oil column and was flow tested at 4,320 bopd with agas rate of 7 MMcfpd. This well has been suspended as an oil producer. WestDikirnis No.9, which was drilled as a production well in the western part of thefield, successfully intersected a 117 ft gross hydrocarbon column, consisting of49 ft of gas and 68 ft of oil. This well was flow tested at 4,370 bopd and 7.3MMcfpd. Recently, West Dikirnis No.8 was drilled as an oil producer in thecentral-eastern area of the field. The well intersected 73 ft of net oil pay andis currently being tested. One appraisal well, West Dikirnis No.6, was drilledto test a separate culmination to the south of the main field and the Qawasimreservoir interval was found to be water wet. Progress on the West Dikirnis development project is broadly on schedule and isnow 90% complete. The 6 inch and 10 inch pipelines to the process plant havebeen completed and they await testing. Construction of the storage tanks and thefoundations for the process vessels skids and pipe-racks is progressing well andshipment of the various process skids to Egypt is imminent. We now expect firstproduction in October with full target production of 10,000 bopd in November. During the reporting period, Salaka No.1 was put on production at an initialrate of 13 MMcfpd and, recently, Tummay No.1 started producing at 1.8 MMcfpd.The Rawda No.1 is expected to be put on production shortly after the Gas SalesAgreement has been signed at a potential flow rate of 7 MMcfpd. This will be thefirst producing well from the South East Mansoura Concession. As a result of the wells drilled at West Khilala and in light of the pressureand production history from the field, our estimates of the gross provedreserves recoverable over the field life have been increased from 218 Bcf at thebeginning of the year to 256 Bcf. The gross proved and probable reserves,however, have been revised down from 378 Bcf to 288 Bcf. On West Dikirnis, grossproved reserves are broadly unchanged at 98 Bcf and 10.9 MMbbl. The proved andprobable gas reserves are also unchanged at 129 Bcf, while the liquids have beenrevised from 23.8 MMbbl to 20.2 MMbbl. This reduction is primarily due to theresults from West Dikirnis No.3, which indicated the reservoir to be lower thanexpected in the southern-central area of the field. Following a further reviewof the production issues at South Batra, gross ultimate recoverable proved andprobable reserves have been reduced to 61 Bcf. Melrose now has an advancedunderstanding of the different reservoir qualities and performancecharacteristics in the Nile Delta and future exploration and developmentactivity will make full use of the lessons learned over the last year. Production from West Khilala has been maintained at a controlled rate ofapproximately 80 MMcfpd. We expect production from West Khilala to increase to100 MMcfpd in the fourth quarter. Production from the El Mansoura Concessionreached over 120 MMcfpd and 2,300 bpd of oil and condensate. Current productionis 104 MMcfpd gas with 1,821 bpd of oil and condensate. One exploration well was drilled in the period. The main objective of WestKhilala No.7 (deep) was to test an exploration prospect in the deeper Qawasimformation but the well also served to delineate the edge of the main productiveAbu Madi reservoir in the south-eastern direction. As prognosed, the wellencountered a 35 ft of gross gas bearing reservoir in the Abu Madi, thusconfirming the limit of the West Khilala reservoir. The well then encountered astrong water flow from the deeper main target in the Qawasim formation and,following well control operations, the well was plugged and abandoned. Melrose currently has two rigs drilling in Egypt. Drilling activity is nowswitching to exploration drilling on the first prospects which have beenscreened and prioritised by the combined exploration teams. To date, nineprospects have been approved for drilling and we expect that up to five of thesewill be drilled this year. A further twenty-two prospects and leads are beingfurther evaluated and ranked for drilling in 2008 and 2009. The grossrisk-adjusted mean reserves being targeted by this programme total 440 Bcf and77 MMbbls. The quality of the prospect generation process is based on extensive use of ourlarge inventory of 3-D data. Seismic acquisition is now complete over the wholeof the Mansoura Concession and the northern area of South East El Mansoura.Further 3-D seismic acquisition is planned over Qantara and South East ElMansoura in late 2007 and into 2008 and we are also reprocessing some of theexisting 3-D seismic data. This new data will facilitate the continuinggeneration of new exploration prospects for drilling in 2009 and beyond. The Concession Agreement for our new Mesaha Concession in Upper Egypt (MelroseResources 40% and operator) is expected to be signed shortly. Bulgaria Production from the Galata field in the first half of the year matchedcontracted sales volumes of 5.3 Bcf (149.5 Mm(3)). The second stage of onshorecompression on the field was successfully installed, on time and on budget, andcommissioning of the new facilities is underway. During the six-month period, three exploration wells were drilled in the westernBlack Sea: Izgrev, Ropotamo and Obzor. All three wells encountered strong gasshows, indicating the presence of an active hydrocarbon system, but hadinsufficient reservoir pay to justify flow testing and all were plugged andabandoned. Also this year, a total of 2,600 km of new 2-D seismic data was acquired in theshallow waters of Blocks Emine and Kaliakra 99. The Emine block is relativelyunder-explored and the new data will facilitate the identification of anydrillable targets in this area. In Kaliakra 99, the new seismic is concentratedon already recognised leads to ascertain whether they can be matured intodrillable prospects. The interpretation of the seismic data will be completed inconjunction with a review of the three deep-water well results in order to fullyunderstand the remaining prospectivity of the Emine, Kaliakra 99, Rezovska andBourgas Deep blocks. Our efforts to re-acquire the exploration rights to the Galata concession, whichsurrounds the Galata producing field, have continued during 2007 and a finalcourt decision on whether the concession may be awarded to Melrose is expectedin mid-September. USA Capital expenditures in our properties in the Permian Basin of West Texas andEastern New Mexico were curtailed in the first half of 2007 due to otherfinancial priorities. Operational activity was directed to continuingpreparatory work for the planned waterflood projects and to remedial work toensure regulatory compliance. Planning is now in hand for an active developmentdrilling and well conversion programme and we expect to make continuous use ofone drilling rig and three work-over rigs, commencing in the first quarter of2008. Planned capital expenditures on these projects during 2008 and 2009 totalapproximately $40 million and our goal is to increase production there to over2,500 boepd. In East Texas, two appraisal well locations have been selected for drilling inOctober/November 2007. Both wells are defined by seismic anomalies and aretargeting relatively low-risk extensions of current producing fields. Based onan evaluation of our proprietary 3-D seismic data, future exploration plays arealso being defined in several reservoir horizons and further explorationdrilling is planned for early in 2008. France The exploration work programme continues in the Rhone Maritime licence with afocus on reducing the risk on the presence of an active petroleum system. Thisde-risking programme has commenced with the purchase of new satellite image datawhich is aimed at defining surface oil seeps. This data can help locatehydrocarbon migration pathways and delineate areas for future exploration. Asampling survey of the surface seeps is also planned during 2007 with the aim tocharacterize the exact nature of the hydrocarbons. Work is also continuing on identifying direct hydrocarbon indicators within theseismic data. If successful, this will reduce the risk on the presence andmigration of hydrocarbons in the licence area and provide locations forpotential leads and prospects. Reservoir studies are also progressing fortargets in the Pliocene and Miocene stratigraphic sections. This work isfocussed on recognising and delineating reservoir depositional sequences andhence possible drilling targets from the 2-D seismic data. If the results of this work programme are encouraging, the goal in 2008 will beto seek an industry partner to acquire new seismic data over areas of particularinterest in the concession with a view to drilling an exploration well at alater date. Results for the six months ended 30 June 2007Turnover in the six months ended 30 June 2007 was $75.8 million (six monthsended 30 June 2006 $50.8 million). Operating loss was $16.6 million (six monthsended 30 June 2006, profit of $17.9 million). Loss before taxation in the firsthalf was $34.3 million (six months ended 30 June 2006, profit of $6.6 million).Loss after taxation was $41.3 million (six months ended 30 June 2006, profit of$2.9 million). The results have been heavily impacted by the charge of $43.6million for unsuccessful exploration costs in the period. Net daily production statistics and product pricing information during theperiod were as follows: 6 months ended 6 months ended 12 months ended 30 June 2007 30 June 2006 31 December 2006 Gas Oil/ condensate Gas Oil/ condensate Gas Oil/ condensate MMcfpd bpd MMcfpd bpd MMcfpd bpd--------- -------- -------- -------- -------- -------- --------Bulgaria 29.2 - 49.8 - 49.2 -Egypt 43.0 941 12.2 196 15.9 396USA 5.4 650 1.6 755 4.7 734 -------- -------- -------- -------- -------- --------Total 77.6 1,591 63.6 951 69.7 1,130 -------- -------- -------- -------- -------- -------- MMcfepd 87.1 69.3 76.5 Average $3.40 $56.67 $3.47 $63.51 $3.56 $63.31price -------- -------- -------- -------- -------- -------- Financing costs of $18.8 million include $1.4 million in respect of theamortisation of loan arrangement fees and $3.2 million in respect of thereduction in value of an option to acquire shares in an AIM company which isheld as a financial asset. EBITDAX for the period was $59.5 million (six months ended 30 June 2006, $39.3million). Capital expenditures during the period amounted to $98.7 million (sixmonths ended 30 June 2006, $44.0 million). Capital expenditures were splitbetween Egypt - $58.4 million, Bulgaria - $ 34.7 million, USA - $5.2 million andFrance - $ 0.4 million. ------------------- ----------- ----------- -----------EBITDAX 6 months ended 6 months ended 12 months ended 30 June 2007 30 June 2006 31 December 2006 $000 $000 $000------------------- ----------- ----------- -----------(Loss)/profit fromoperations (16,634) 17,861 37,515Add back:Depletion 31,993 15,909 40,646Decommissioning charge 286 736 1,621Unsuccessful explorationcosts 43,595 4,620 8,298Depreciation 292 181 530 ----------- ----------- -----------EBITDAX 59,532 39,307 88,610 ----------- ----------- ----------- Outlook Current gross production in Egypt is approximately 112 MMcfepd and this isexpected to rise to over 210 MMcfepd during the second half of 2007. This willyield net production for Melrose in Egypt of around 85 MMcfepd of whichapproximately 34% is expected to be oil and condensate. Production from theGalata field in the second half of 2007 is expected to be in line withproduction in the first half. In the USA, current production of approximately1,678 boepd is expected to decline slightly in the second half of the year. We look forward with interest to the results of the exploration drillingprogramme which is now underway in Egypt. Our experienced team ofexplorationists is now working with an impressive and expanding database of 3-Dseismic and well data and our inventory of prospects and leads offers attractiveupside for Melrose. We expect that our planned appraisal and developmentactivity in the US in 2007 and 2008 will lead to a steady increase in productionthere and the anticipated low-risk accretion in value of these assets providesgood stability within our portfolio of interests. Robert F M AdairChairman28 August 2007 Independent Review Report to Melrose Resources plc Introduction We have been instructed by the company to review the financial information forthe 6 months ended 30 June 2007 which comprises the consolidated incomestatement, consolidated statement of recognised income and expense, consolidatedbalance sheet, and consolidated cash flow statement and related notes 1 to 7. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, 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 for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly, we do notexpress an audit opinion on the financial information. 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. KPMG Audit PlcChartered AccountantsEdinburgh28 August 2007 Consolidated income statementfor the six months ended 30 June 2007 ---------------------- ----- ---------- ---------- ---------- 6 months ended 6 months ended 12 months ended 30 June 2007 30 June 2006 31 December 2006 $000 $000 $000 Unaudited Unaudited Audited---------------------- ----- ---------- ---------- ---------- Note Revenue 3 75,841 50,843 116,336 Depletion (31,993) (15,909) (40,646)Decommissioning charge (286) (736) (1,621)Unsuccessfulexploration costs (43,595) (4,620) (8,298)Other cost of sales (9,846) (6,312) (17,912) ---------- ---------- ----------Total cost of sales (85,720) (27,577) (68,477) ---------- ---------- ---------- Gross (loss)/profit (9,879) 23,266 47,859 Administrative expenses (6,755) (5,405) (10,344) ---------- ---------- ----------(Loss)/profit fromoperations 3 (16,634) 17,861 37,515 Financing income 1,080 709 1,892Financing costs (18,767) (11,961) (28,284) ---------- ---------- ---------- (Loss)/profit beforetaxation (34,321) 6,609 11,123 Income tax expense (7,000) (3,661) (11,082) ---------- ---------- ----------(Loss) /profit for theperiod (41,321) 2,948 41 ---------- ---------- ---------- (Loss)/earnings per share(cents)Basic 4 (38.6) 3.7 - ---------- ---------- ----------Diluted 4 (38.6) 3.7 - ---------- ---------- ---------- The loss for the period is 100% attributable to equity shareholders.Note: All activities are continuing activities. Consolidated statement of recognised income and expensefor the six months ended 30 June 2007 ----------------------- ---------- --------- ---------- 6 months ended 6 months ended 12 months ended 30 June 2007 30 June 2006 31 December 2006 $000 $000 $000 Unaudited Unaudited Audited----------------------- ---------- --------- ---------- Exchange differences onnon-functional currencyentities 57 (14) (69)Cash flow hedges (378) - 358- effective portion of changesin fair valueDeferred tax on cash flowhedges 136 - (136) ---------- --------- ----------Net (loss)/income recognised directly in equity (185) (14) 153 (Loss)/profit for theperiod (41,321) 2,948 41 ---------- --------- ----------Total recognised(loss)/income for theperiod (41,506) 2,934 194 ---------- --------- ---------- Consolidated balance sheetas at 30 June 2007------------------ ---- --------- --------- ---------- As at As at As at 30 June 2007 30 June 2006 31 December 2006 $000 $000 $000 Unaudited Unaudited Audited------------------ ---- --------- --------- ---------- NoteNon-current assetsGoodwill 66,173 60,589 66,173Intangible assets 78,700 115,654 85,701Property, plant, andequipment 503,413 393,009 473,839Financial assets 1,883 3,544 5,011Deferred tax asset 20,537 22,095 16,468 --------- --------- ---------- 670,706 594,891 647,192 --------- --------- ---------- Current assetsInventories 29,955 15,213 24,104Trade and otherreceivables 44,784 43,245 28,338Cash and cash equivalents 13,689 11,607 17,769 --------- --------- ---------- 88,428 70,065 70,211 --------- --------- ---------- --------- --------- ----------Total assets 759,134 664,956 717,403 --------- --------- ---------- Current liabilitiesBank loans 5 - (126,687) -Other loans 5 - - (3,229)Trade and other payables (52,214) (38,422) (34,677)Provisions (1,537) (797) (1,889) --------- --------- ---------- (53,751) (165,906) (39,795) --------- --------- ---------- Non-current liabilitiesBank loans 5 (305,442) (260,526) (287,149)Deferred tax liability (79,892) (64,685) (81,245)Provisions (10,366) (7,564) (10,027) --------- --------- ---------- (395,700) (332,775) (378,421) --------- --------- ---------- --------- --------- ----------Total liabilities (449,451) (498,681) (418,216) --------- --------- ---------- --------- --------- ----------Net assets 309,683 166,275 299,187 --------- --------- ---------- Equity attributable toshareholdersIssued capital 7 19,925 14,322 18,502Share premium 7 191,945 10,612 141,629Special reserve 7 101,244 111,244 101,244Retained reserves 7 (3,431) 30,097 37,812 --------- --------- ----------Total equity 309,683 166,275 299,187 --------- --------- ---------- The accounting policies and notes form part of these financial statements. Consolidated cash flow statementfor the six months ended 30 June 2007 ------------------------- ---------- --------- ----------- 6 months ended 6 months ended 12 months ended 30 June 2007 30 June 2006 31 December 2006 $000 $000 $000 Unaudited Unaudited Audited------------------------- ---------- --------- ----------- Cash flows from operatingactivities(Loss)/profit for theperiod (16,634) 17,861 37,515Adjustments for:Depreciation 292 181 530Depletion anddecommissioning charge 32,279 16,645 42,267Unsuccessful explorationcosts 43,595 4,620 8,298Loss on disposal of assets - - 16Equity-settled share-basedpayment expenses 438 244 438Income tax charge onEgyptian revenue (11,734) (2,925) (6,129) ---------- --------- -----------Operating cashflow beforechanges in working capital 48,236 36,626 82,935 Increase in inventory (5,851) (2,179) (11,072)(Increase)/decrease intrade and otherreceivables (17,109) 4,122 (4,393)Increase in trade andother payables 19,179 4,486 36,939 ---------- --------- -----------Cash generated fromoperations 44,455 43,055 104,409Income taxes paid (400) - - ---------- --------- -----------Net cash inflow fromoperating activities 44,055 43,055 104,409 ---------- --------- ----------- Cash flows from investingactivitiesProceeds from sale ofproperty, plant andequipment - - 150Proceeds from sale ofinvestments - 547 547Interest received 514 207 765Acquisition of property,plant and equipment andintangible assets (98,740) (44,175) (116,276)Acquisition of subsidiary(net of cash received) - (284,354) (252,340) ---------- --------- -----------Net cash outflow frominvesting activities (98,226) (327,775) (367,154) ---------- --------- ----------- Cash flows from financingactivitiesProceeds from the issue ofshare capital 52,523 2,151 141,128Fees payable (784) (878) (3,656) ---------- --------- -----------Net proceeds from theissue of share capital 51,739 1,273 137,472 Interest paid (13,655) (7,369) (18,835)Loan arrangement fees paid (1,272) (9,284) (13,644)Borrowings raised 17,929 394,692 448,987Repayment of borrowings (3,229) (91,000) (279,919)Dividends paid - - (2,222) ---------- --------- -----------Net cash inflow fromfinancing activities 51,512 288,312 271,839 ---------- --------- ----------- Net (decrease)/increase incash and cash equivalents (2,659) 3,592 9,094Cash and cash equivalentsat start of period 17,769 7,965 7,965Effect on exchange ratefluctuations on cash held (1,421) 50 710 ---------- --------- -----------Cash and cash equivalentsat end of period 13,689 11,607 17,769 ---------- --------- ----------- Notes to the interim accounts 1 General information Melrose Resources plc (the "Company") is a company registered in England. Thisinterim report contains the financial information of the Company and itssubsidiaries (together referred to as the "Group") for the six month periodended 30 June 2007. The interim report was authorised for issue by the directors on 28 August 2007. The comparative figures for the year ended 31 December 2006 do not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. A copyof the statutory accounts for that year has been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified and did notcontain statements under section 237(2) or (3) of the Companies Act 1985. 2 Accounting policies - basis of preparation The financial statements have been prepared and approved by the directors inaccordance with International Financial Reporting Standards as adopted by theEU. On 29 June 2006, the Company acquired 100% of the issued share capital of MerlonPetroleum Company. As at the 30 June 2006 the fair values of the assets acquiredwere estimated for the interim financial statements. Since that date, moreinformation has been gathered, as a result of which the estimated fair valueswere amended. The same accounting policies and methods of computation have been applied inthis interim financial report as were applied in the statutory accounts for theyear ended 31 December 2006, which are available on the Company's website,www.melroseresources.com. 3 Segmental reporting The Group has a single class of business which is oil and gas exploration,development and production. All sales are to third parties. ----------------- ---------- ---------- ----------Geographical area 6 months ended 6 months 12 months ended 30 June 2007 ended 31 December $000 30 June 2006 2006 $000 $000----------------- ---------- ---------- ---------- RevenueBulgaria 19,957 30,166 60,472Egypt 42,488 10,787 29,399USA 13,396 9,890 26,465 ---------- ---------- ---------- Total 75,841 50,843 116,336 ---------- ---------- ---------- (Loss)/profit from operationsBulgaria (32,378) 13,276 27,348Egypt 18,274 2,760 7,131USA 1,598 4,251 8,451 Unallocated corporate expenses (4,128) (2,426) (5,415) ---------- ---------- ----------Group (loss)/profit fromoperations (16,634) 17,861 37,515 ---------- ---------- ---------- 4 Earnings per share The calculation of basic and diluted earnings per share is based upon thefollowing:--------------------- ----------- ---------- ---------- 6 months 6 months 12 months ended ended ended 31 December 30 June 2007 30 June 2006 2006 $000 $000 $000--------------------- ----------- ---------- ---------- (Loss)/profit for the periodattributable to ordinaryshareholders (41,321) 2,948 41(basic and diluted) ----------- ---------- ---------- Cents Cents Cents(Loss)/earnings per shareBasic (38.6) 3.7 -Diluted (38.6) 3.7 - The weighted average number of ordinary shares used in the calculation of basicand diluted earnings per share for each period was calculated as follows: --------------------- ----------- ---------- ----------- 6 months ended 6 months ended 12 months ended 30 June 2007 30 June 2006 31 December 2006 No. of shares No. of shares No. of shares--------------------- ----------- ---------- ----------- Issued ordinary shares atstart of period 102,623,456 78,582,376 78,582,376Shares issued during theperiod 7,349,435 1,349,948 24,041,080 ----------- ---------- -----------Shares in issue at end ofperiod 109,972,891 79,932,324 102,623,456 ----------- ---------- ----------- Weighted average number ofordinary shares at end ofperiod 107,162,709 79,374,098 90,348,313Effect of share options inissue 638,449 1,222,572 887,110 ----------- ---------- -----------Weighted average number ofordinary share at end ofperiod - for dilutedearnings per share 107,801,158 80,596,670 91,235,423 ----------- ---------- ----------- 5 Bank loans and financial instruments The Group's interest-bearing loans and borrowings are as follows: ----------------------- --------- --------- ----------- As at As at As at 30 June 2007 30 June 2006 31 December 2006 $000 $000 $000----------------------- --------- --------- ----------- Current liabilitiesBank loans - 126,687 -Loan from parent company - - 3,229Non-current liabilitiesBank loans 305,442 260,526 287,149 --------- --------- -------- 305,442 387,213 290,378 --------- --------- -------- The following table indicates the effective interest rates of interest-bearingliabilities at the balance sheet date, and the period in which they mature orfall due: Repayable Effective Total Repayable Repayable Repayable after Rate within 1 year 1-2 years 3-5 years 5 years % $000 $000 $000 $000 $000------------------ ------- ------- -------- -------- -------- -------- As at 30 June 2007Secured bank loans 9.2 305,442 (1,570) (1,566) 258,704 49,874 As at 31 December2006Secured bank loans 8.9 287,149 (2,336) 101,945 177,580 9,960Loan fromparent company 8.0 3,229 3,229 - - - As at 30 June 2006Secured bank loans 9.1 260,526 - 62,787 197,739 -Other loans 8.7 126,687 126,687 - - - 6 Financial instruments The Group is exposed to currency risk arising from purchases, sales, borrowings,cash and cash equivalents that are denominated in currencies other than USDollars. It is Group policy that borrowings should match the currency of thecashflows from which it is expected that they will be repaid. This has been thecase throughout the interim reporting period. 7 Consolidated statement of changes in equity attributable to shareholders Share Share Special Retained capital premium reserve reserves $000 $000 $000 $000------------------------- -------- -------- -------- --------- Balance as at1 January 2006 14,080 8,579 111,244 29,661 Issue of share capital 242 2,033 - -Total recognisedincome and expense - - - 2,934Equity-settledtransactions,net of tax - - - (286)Dividends paid - - - (2,212) -------- -------- -------- ---------Balance as at30 June 2006 14,322 10,612 111,244 30,097 Issue of share capital 4,180 134,673 - -Issue costs - (3,656) - -Transfer fromSpecial reserve toretained earnings - - (10,000) 10,000Total recognisedincome and expense - - - (2,740)Equity-settledtransactions,net of tax - - - 465Dividends paid - - - (10) -------- -------- -------- ---------Balance as at31 December 2006 18,502 141,629 101,244 37,812 Issue of sharecapital 1,423 51,100 - -Issue costs - (784) - -Total recognised income and expense - - - (41,506)Equity-settledtransactions,net of tax - - - 263 -------- -------- -------- ---------Balance as at30 June 2007 19,925 191,945 101,244 (3,431) -------- -------- -------- --------- Glossary bbl barrel of oil or condensateBcf billion cubic feet of gasbcpd barrel of condensate per daybpd barrels per dayboe barrel of oil equivalentboepd barrel of oil equivalent per daybopd barrel of oil or condensate per dayEBITDAX earnings before interest, taxation, depletion, depreciation, amortisation and exploration costsMbbl thousand barrels of oil or condensateMboe thousand barrels of oil equivalentMcf thousand cubic feet of gasMm3 thousand cubic metres of gasMMbbl million barrels of oil or condensateMMboe million barrels of oil equivalentMMcf million cubic feet of gasMMcfpd million cubic feet of gas per dayMMcfepd million cubic feet of gas equivalent per day END This information is provided by RNS The company news service from the London Stock Exchange