Petrel Resources Regulatory News (PET)

22 Jun 2005 07:00

Petrel Resources PLC22 June 2005 Petrel Resources plc Petrel, the AIM listed oil explorer and developer focused on Iraq announces results for year ended 31st December 2004 Highlights of the Chairman's Statement accompanying the results: • Petrel maintains an ongoing presence in Baghdad. • A fourth oil field development tender for the Kormor field, submitted in April 2005. • Technical clarification completed on the Subba and Luhais tender submitted in 2004. We await a decision. • Continued development of our exploration model for Block 6 in the Western Desert of Iraq. • Positive indicators from an initial study of the East Safawi Block in Jordan, close to the Iraq border. • Fundraising of £1 million at 43p a share in March 2005. Chairman's Statement Petrel is a company with a specific objective of becoming an Iraqi oil producer.We have had a presence in Baghdad for years and have negotiated with the IraqiOil Ministry on both exploration and development contracts. Despite theuncertainties and difficulties in Iraq we have continued to make progress onboth our exploration proposal, Block 6 in the Western Desert, and on our tendersto develop oil fields. Three tenders were submitted in 2004 and the latest one,Kormor, was submitted in April 2005. Shareholders will understand that much ofwhat we do in the current circumstances must remain confidential. I can understand that in a period of $50 a barrel oil with proposals submittedto develop very large oil deposits that investors want quick action. We, as aboard, have said very little about our ongoing activities in Iraq. This is adeliberate strategy as any statements could compromise our hard earned positionin the country. Indeed uninformed media speculation in the latter half of 2004upset officials in Baghdad. Oil in Iraq is a matter of the highest priority forthe country. Decisions on oil development proposals can only and should only beannounced by the government. All announcements will come from an officialsource. In this context, I can state that in the past year Petrel has received noofficial announcements relating to either their oil field development proposalsor to the exploration proposals for Block 6 in the desert West of Baghdad. Letme try to explain. Petrel deals with the Oil Ministry in Baghdad. Thisorganisation has numerous subsidiaries which cover activities such asexploration, drilling, marketing and developments as well as a number ofproduction entities. All negotiations take place between Petrel and the relevantsubsidiaries. The three 2004 development tenders were submitted to the StateCompany for Oil Projects (SCOP). The Block 6 exploration proposal was negotiatedwith The Oil Exploration Company. Once the Oil Ministry finalised negotiations on the three oil field developmenttenders they made recommendations to the government which in turn passed therecommendations to the oil committee of the cabinet. Decisions made in thiscommittee are approved or not by the cabinet and the government. An officialannouncement will then be made by a government office. The status of our three development proposals remain unclear. We tendered forKhurmala in the north, Hamrin in the centre and Subba / Luhais in the south.Each of our three submissions faced critical technical and commercial evalutionsby teams of experts from the Oil Ministry. We passed all evaluations. In late 2004 media reports indicated that Khurmala had been awarded to an Arab /Turkish group. In Spring 2005 it was reported that Hamrin had been awarded to anArab / Canadian group. The tender prices reported in the media, if true, weresubstantially below our bids on these projects. To this day we have not receivedofficial notification and we are not aware that field work has started.Political uncertainty continued right through 2004 and it is only in recentweeks, after the 2005 elections, that a stable government has come into power. The third tender, to develop the Subba and Luhais fields, is the one Petrelknows best. In 2000 we first submitted a tender to develop the fields. Thistender was updated and refined for the 2004 submission. We are confident thatour technical and commercial specifications are as good as those of otherinterested parties. We continue to be encouraged by the Oil Ministry to submit tenders for newprojects. In April 2005, we submitted a multi volume tender to develop theKormor field in Kirkuk. While awaiting decisions on our tenders we have been active in refining ourknowledge and understanding of Block 6 - the 10,000 sq km exploration block inthe Western Desert. We have identified very large structures on the block whichneed to be drilled. We are ready to commence geochemical and seismic programmesonce the go ahead is given. Where we have made real progress is in Jordan. Our initial interest in theJordanian acreage was to improve our knowledge of the Western Desert but themore we looked at the data the more prospective the project became. We nowbelieve that there are drillable plays on the block. Petrel holds a Memorandumof Understanding on an area covering 8,750 sq kms west of the Risha gas field.We are completing structural studies as well as re-interpreting 4,350 km ofseismic. It is likely that the concession will be upgraded to an Explorationand Production Sharing agreement. Finance In March 2005 we raised just over £1 million at 43p a share to fund our ongoingactivities in Iraq and now Jordan. This funding covers our immediate needs aswell as financing the preparation of additional Iraqi tenders. Staffing On your behalf I want to extend thanks and praise to our staff. For years now wehave had a presence in Baghdad. When it became too dangerous to work in ouroffice our people worked from home. We are one of the very few organisationswhich has continued to operate in Baghdad. Our non Iraqi staff also deserve praise. Our Managing Director, David Horgan, isa frequent visitor to Baghdad and is ready to go again when the call comes. Thestaff who carry the tender documents from Amman, Jordan to Baghdad are thanked. We are blessed with a group of experienced oil men who share our vision and whoare not only prepared to put in long hours compensated by shares but are, whenrequired, prepared to take physical risks. Future Our future lies in the Middle East. Iraq will play a central role in the growthof an oil supply desperately needed to fuel the world economic machine. The newIraq is having a difficult birth but progress is being made. There is now agovernment and the rule of law is returning at least to certain parts of thecountry. A stable prosperous future for Iraq mandates the development of theirvast oil resources. Petrel, by maintaining a presence in Iraq, by continuing to submit tenders andthrough ongoing work on the exploration potential of Block 6 is showing ourcommitment to the country. Every passing year tightens the oil supply / demandbalance making development of Iraqi oil more critical for world consumers. Weremain confident that we will have a role to play in this development. Contacts: David Horgan + 353 87 292 3500John Teeling + 353 1 8332833 Bell Pottinger Corporate & FinancialNick Lambert +44 (0) 7811 358 764 Rowan DartingonBarrie Newton +44 (0) 1179 330011 Consolidated Profit and Loss Account for the year ended 31 December 2004 2004 2003 • • Administrative expenses (358,916) (244,638) LOSS ON ORDINARY ACTIVITIES BEFORE INTEREST (358,916) (244,638) Interest income 8,621 573 LOSS FOR THE YEAR BEFORE TAXATION (350,295) (244,065) Taxation - - LOSS FOR THE YEAR AFTER TAXATION (350,295) (244,065) Profit and loss account : opening - (deficit) (2,100,489) (1,856,424) Profit and loss account : closing - (deficit) (2,450,784) (2,100,489) Loss per share - basic (0.60c) (0.48c) Loss per share - fully diluted (0.60c) (0.48c) All gains and losses are dealt with through the profit and loss account. Resultsderive from continuing operations. The financial statements were approved by the Board of Directors on 21st June2005 and signed on its behalf by: John Teeling &David HorganDIRECTORS Consolidated Balance Sheet at 31 December 2004 Group Group 2004 2003 • • FIXED ASSETSTangible assets 596 3,011Intangible assets 2,218,409 1,373,863 2,219,005 1,376,874 CURRENT ASSETSDebtors 142,907 50,281Cash at bank 3,182 958,308 146,089 1,008,589 CREDITORS: (Amounts falling due within one year) (256,959) (183,140) NET CURRENT (LIABILITIES)/ASSETS (110,870) 825,449 TOTAL ASSETS LESS CURRENT LIABILITIES 2,108,135 2,202,323 CAPITAL AND RESERVES Called-up share capital 746,565 727,690Capital conversion reserve fund 7,694 7,694Share premium 3,804,660 3,567,428Profit and loss account - (deficit) (2,450,784) (2,100,489) EQUITY SHAREHOLDERS' FUNDS 2,108,135 2,202,323 The financial statements were approved by the Board of Directors on 21st June2005 and signed on its behalf by: John Teeling &David HorganDIRECTORS Consolidated Cash Flow Statement at 31 December 2004 2004 2003 • •NET CASH OUTFLOW FROM OPERATING ACTIVITIES (380,803) (68,811)RETURNS ON INVESTMENT AND SERVICING OF FINANCEInterest received 8,621 573 NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 8,621 573 TAXATIONCorporation tax paid - - CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPayments to acquire intangible fixed assets (844,546) (292,778)Payment to acquire tangible fixed asset - - NET CASH OUTFLOW BEFORE FINANCING (1,216,728) (361,018) FINANCINGIssue of ordinary share capital 261,086 1,390,263Share issue expenses (4,979) (77,584) NET CASH INFLOW FROM FINANCING 256,107 1,312,679 (DECREASE)/INCREASE IN CASH (960,621) 951,663 Notes: The financial information set out above does not constitute the Company'sfinancial statements for the years ended 31 December 2004 or 2003. Thefinancial information for 2003 is derived from the financial statements for 2003which have been delivered to the Registrar of Companies. The auditors havereported on the 2003 statements; their report was unqualified and did notcontain a statement under section 237(2) or (3) of the Companies Act 1985. Thefinancial statements for 2004 have been audited and will be delivered to theRegistrar of Companies following the Company's Annual General Meeting. Theauditors have reported on the 2004 statements; their report was unqualified anddid not contain a statement under section 237(2) or (3) of the Companies Act1985. A copy of the Company's annual report and accounts for 2004 will be mailed toshareholders shortly and will also be available for collection from theCompany's registered office. This information is provided by RNS The company news service from the London Stock Exchange