Petrel Resources Regulatory News (PET)

28 Jun 2007 07:01

Petrel Resources PLC28 June 2007 Preliminary Results for the year ended 31 December 2006 Petrel Resources (AIM:PET) the AIM listed Iraq focused oil company is pleased toannounce Preliminary Results for the year ended 31 December 2006. Highlights: • The passage of the Iraqi Hydrocarbon Law is expected to open up significant opportunities for Petrel. • Work continues on the development of the 240,000 barrel a day Subba and Luhais oil field in southern Iraq which is expected to come on stream in 2010. Petrel is the project contractor. • The technical and geological review of the Merjan oil field has been completed and submitted to the Iraqi authorities. A further study is likely. • Our exploration and technical partnership with ITOCHU of Japan was used on the Merjan study. • In May 2007, a Production Sharing Agreement between Petrel and the Jordanian authorities was signed covering the 8,750 sq. km East Safawi oil/gas block. John Teeling, Executive Chairman of Petrel Resources, Commented: "We have worked in Iraq for 8 years and understand the potential and the needfor oil development in the country. We have worked hard to be a good partner ofthe Iraqi people and authorities. The imminent passing of the Hydrocarbon Law will offer numerous developmentopportunities. With the backing of our partner, the Japanese giant ITOCHU, wehope to participate in these developments, delivering considerable value to ourshareholders" For further information please contact: Petrel Resources PLC David Horgan, Managing Director +35318332833 College Hill Paddy Blewer +44 (0) 20 7457 2020 Nick Elwes Blue Oar Securities Plc John Wakefield +44 (0) 1179 330 020 Chairman's Statement Each year when reporting to you I highlight the vital role that Iraq will playin the future of world energy. Let me remind you why. Iraq has the second orthird largest proven oil resources in the world, some 115 billion barrels.Production costs, below $2 a barrel, are probably the lowest in the world.There are dozens of proven undeveloped oil discoveries each containing over 1billion barrels. The West Qurna oil field, with at least 16 billion barrelsrecoverable, is the best undeveloped oil discovery in the world. Yet, there has been relatively little oil exploration across the deserts of Iraqor at depth. The total number of oil wells drilled to date in Iraq is less thanthe number drilled in the Gulf of Mexico. Many experts believe that Iraq willultimately contain over 300 billion barrels of oil and will rival Saudi Arabiaas the world's number one oil producer. These are the reasons why Petrel focused on Iraq. We have had a continuouspresence there since 1999. Since early 2000 we have worked on the large 10,000sq km Block 6 exploration concession in the western desert. After submittingfour tenders to develop oil fields we were successful in 2005 when we wereawarded the $197 million Subba and Luhais development contract. In 2005, wenegotiated a technical co-operation agreement on the Merjan oil field. We areconfident that the passing of the Hydrocarbon Law will open additional andexciting opportunities for Petrel. To the average investor watching television or reading the newspapers theturmoil in Iraq must suggest the impossibility of normal activities. Yet lifegoes on. The reality is that in many sectors of society, progress is beingmade. By far and away the most important development in Iraq is the newHydrocarbon Law which is expected to pass in 2007. The law, the terms of whichhave been widely reported, recognises the need to develop Iraq's vast oilresources using international technology and capital. The necessary debatebetween the various parts of the country as to how oil reserves are controlledand distributed is ongoing and is expected to be resolved in the near term. Currently Petrel is busy with the large oil field development at Subba andLuhais. This development, the largest awarded in recent years by the Iraqi OilMinistry, will produce 200,000 barrels of oil a day and 120 million cubic feetof gas when commissioned in 2010 and will cost about $197 million. Most of thework to date has been in engineering design, plant layout and design and projectteam mobilisation. The Iraqi Ministry of Oil currently produces oil at lowerproduction rates from the fields. Apart from our work in Subba and Luhais, we are active on the Merjan oil fieldtechnical agreement. We were awarded this contract as part of a very goodprogramme whereby the Iraqi authorities ask international oil companies toanalyse and evaluate selected undeveloped or complicated oil discoveries.Because of work carried out by Petrel on our Block 6 exploration concession, theauthorities commissioned Petrel to study Merjan some 45 km east of Block 6.During 2006, we reprocessed over 500 kms of seismic and conducted structural,stratigraphic, petrophysical and petroleum engineering studies. The finalreport was presented in May 2007. An additional study is being considered. We have worked on Block 6 in the western desert of Iraq since 2000. This 10,000sq km block has had only exploratory seismic surveying and no drilling. Ourwork suggests that there is significant hydrocarbon potential. Though we signedan agreement on Block 6 with the Oil Ministry in Baghdad we expect the contractto change to reflect the better terms in the new law. Further, in recent years we have worked with the Oil Ministry to upgrade theirtechnical, financial and commercial skills. This involves Petrel runningcourses employing world class instructors to work with their own technicalstaff. These courses have been held in Amman and Istanbul. Partner We have a significant partnership with ITOCHU of Japan. ITOCHU is one ofJapan's leading upstream oil and gas companies. We have had a relationship forsome years which was formalised in 2006 with the signing of a strategicpartnership to cover future exploration activities in Iraq. Jordan For some years now Petrel has been looking at opportunities in Jordan. The workdone by Petrel on Block 6 in Iraq showed similar geology and, we hope, forsimilar opportunities in Jordan close to the Iraq border. In 2005, Petrelsigned an initial agreement with the Jordanian authorities on the East SafawiBlock, an 8,750 sq km area adjoining the Risha gas field. In May 2006 wenegotiated the terms of a Production Sharing Agreement (PSA) which was finallysigned in May 2007. The PSA provides for a three year exploration phase leadingto drilling. We are currently reprocessing and reinterpreting seismic and welllogs. This will be followed by new seismic. Commercial terms are good inJordan. Future Having operated in Iraq for the past 8 years we are sanguine about prospects.Much of the future of Iraq lies in oil development. All parties recognise thisfact. The Hydrocarbon Law will pass. We expect to benefit from this in anumber of ways, ratification of our Block 6 interests, the possibility ofobtaining a PSA on Subba and Luhais and interesting opportunities in otherprojects which are likely to be put on offer. Our foundations are built on our staff, who over the years have operated in adifficult environment and who have built strong relationships with executives inthe Oil Ministry and with people in the country. Over the years we havedemonstrated our commitment to Iraq. We are prepared to live, work and investin the country and we have shown our technical ability to deliver world classprojects. The people of Iraq need peace and stability.When they are ready todevelop their industry we will be there to participate and grow with them. John Teeling 28th June 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 • • Administrative expenses (483,108) (521,255) LOSS ON ORDINARY ACTIVITIESBEFORE INTEREST (483,108) (521,255) Interest receivable and similar income 67,538 39,720 LOSS FOR THE YEAR BEFORE TAXATION (415,570) (481,535) Taxation - - LOSS FOR THE YEAR AFTER TAXATION (415,570) (481,535) Loss per share - basic (0.62c) (0.77c) Loss per share - fully diluted (0.62c) (0.77c) All gains and losses are dealt with through the profit and loss account.Results derive from continuing operations. CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 2006 2005 • •FIXED ASSETS Intangible assets 3,410,242 4,919,367 CURRENT ASSETS Stock - work in progress 10,396,141 -Debtors 43,895 37,716Cash at bank and in hand 9,450,875 3,729,121 19,890,911 3,766,837 CREDITORS: (Amounts fallingdue within one year) (15,957,136) (1,718,353) NET CURRENT ASSETS 3,933,775 2,048,484 NET ASSETS 7,344,017 6,967,851 CAPITAL AND RESERVES Called-up share capital 843,351 828,851Capital conversion reserve fund 7,694 7,694Share premium 9,840,861 9,063,625Profit and loss account (deficit) (3,347,889) (2,932,319) EQUITY SHAREHOLDERS' FUNDS 7,344,017 6,967,851 CONSOLIDATED CASH FLOW STATEMENT AT 31 DECEMBER 2006 2006 2005 • • NET CASH INFLOW FROMOPERATING ACTIVITIES 14,533,274 1,051,421 RETURNS ON INVESTMENT ANDSERVICING OF FINANCE Interest received 67,538 39,720 NET CASH INFLOW FROM RETURNSON INVESTMENTS AND SERVICINGOF FINANCE 67,538 39,720 TAXATION Corporation tax paid - - CAPITAL EXPENDITURE ANDFINANCIAL INVESTMENT Payments to acquire intangible assets (10,023,638) (2,700,958)Receipts in respect of disposal of intangible assets 1,136,622 NET CASH INFLOW/(OUTFLOW)BEFORE FINANCING 5,713,796 (1,609,817) FINANCING Issue of ordinary share capital 7,958 5,477,382Share issue expenses - (136,131) NET CASH INFLOW FROM FINANCING 7,958 5,341,251 INCREASE IN CASH 5,721,754 3,731,434 Notes: 1. The results set out above are not full accounts as defined in the Companies Act. Statutory accounts for the year ended 31st December 2006 together with a report from the auditors will be filed with the Companies Office in due course. 2. A copy of this announcement will be available at the company's registered offices at 162 Clontarf Road, Dublin 3, Ireland 14 days from the date of this announcement. www.petrelresources.com This information is provided by RNS The company news service from the London Stock Exchange