Petrel Resources Regulatory News (PET)

22 Jun 2006 07:00

Petrel Resources PLC22 June 2006 Preliminary Results for the year ended 31 December 2005 Petrel Resource (AIM:PET) the AIM listed Iraq focused Oil Company is pleased toannounce Preliminary Results for the year ended 31 December 2005. Highlights: • Petrel was appointed project manager and developer of the 200,000 barrel a day Subba and Luhais oil field. This $197m contract is the largest awarded by the Iraqi Ministry of Oil since 2003. • In October 2005, Petrel signed a Technical Cooperation Agreement on the Merjan oil field, in central Iraq. • Petrel has continued work on the 10,000 sq km Block 6 area in the Western. Desert of Iraq first awarded in 2003. This block awaits ratification under a new hydrocarbon law. • In Jordan, Petrel has negotiated a Production Sharing Agreement on the East Safawi block in Jordan. This awaits parliamentary ratification. John Teeling, Executive Chairman of Petrel Resources, Commented: "2005 was a year of very significant development for Petrel. Our focus remainedfirmly on Iraq and I am pleased to report significant progress on a number offronts. We have received our first payment on Subba and Luhais, and we haveacquired an excellent partner in Iraq. On the exploration front the Merjan deal is a significant forward step. We havebeen in negotiations with a large international group to participate in ourIraqi exploration ventures. These talks may come in fruition in the nearfuture. We are optimistic about the future. In the coming months we will complete theinitial Merjan study and place orders for Subba and Luhais equipment. We knowthat the government of Iraq is working on a new hydrocarbon law. Once passed weexpect confirmation of our Block 6 contract and, at least as important, weanticipate that new oil field development contracts will be open fornegotiation." For further information please contact Petrel Resources PLC David Horgan, Managing Director +353 1833 2833 Bell Pottinger Corporate & Financial Nick Lambert +44 (0) 7811 358 764 Rowan Dartington Ian Rice +44 (0) 1179 330 020 Chairman's Statement This has been a period of significant development for Petrel in Iraq. We havemade progress on both oil field development and exploration while in Jordan weawait parliamentary ratification of a Production Sharing Agreement on the EastSafawi block. Subba -Luhais Oil Field Development This project, located in Southern Iraq, is on schedule and due to becommissioned in 2009. The main features to date are: a) First $20m advance payment received April 2006. b) Significant construction, security and financial joint venture agreed withMakman, a major local Iraqi company. c) Full project management team in place operating in the UK, Italy, Turkey andIraq. d) Engineering design and site/route work underway. Our Iraqi partners provide local services including security. The securityrisks in Southern Iraq are manageable. Merjan Oil Field In October 2005, Petrel signed an agreement with the Iraqi Oil ExplorationCompany to study the Merjan field located near to the city of Hillah and some 45kms to the east of Block 6. This is a discovered field with an estimated 760million barrels of light crude in place. Technical Cooperation Agreements in Iraq give no formal rights but provideaccess to data on some of the world's best oil plays. Work done by Petrel inthe Western Desert using modern techniques will give an improved understandingof the Merjan resource. Western Desert Block 6 This large block was awarded to Petrel in 2003 but the agreement was neverratified. In the past 3 years Petrel has continued work using available dataand with modern techniques has identified a number of drill targets, two ofwhich are structural and one stratigraphic. Ratification of our concessionaryrights await the passing of a new hydrocarbon law. East Safawi Block Jordan While our very clear focus is on Iraq, the extensive regional work done byPetrel in the Western Desert identified opportunities in neighbouring countries,which share similar geology. In early 2005, Petrel signed a Memorandum ofUnderstanding (MOU) with the Jordanian authorities on the 8,750 sq km. EastSafawi Block which adjoins the producing Risha gas field, close to the Iraqiborder. In May 2006, Petrel made formal application to convert the MOU to aProduction Sharing Agreement. The identified plays on the block are gas in thePaleozoic and oil in the shallow Mesozoic strata. Staffing This area is vital to our future success. Over the years in Iraq, we have builta team which can work in the country and in the oil industry. One of our mainboard directors is Arabic speaking, with decades of experience in the MiddleEast. Our Country Manager is a former senior executive of the Iraq National OilCorporation. We have Arabic speaking, engineers working on Subba and Luhais andmanagers with many years experience in the oil industry and the Middle Eastregion, supervising the project. Our joint venture with the Makman group bringsadditional in-country expertise with particular strength in construction. Theywill oversee security. Finance As the Subba and Luhais project develops cash outflow will increase. The firstadvance payment for work done on Subba and Luhais, $20 million, was received inApril 2006. As orders for piping steel and equipment are placed they will be financed byLetters of Credit from Iraq. There will be a need for working capital. We arein negotiation with international financial institutions to obtain any requiredfinance. Exploration needs equity. There is ongoing expenditure on Merjan, the WesternDesert and East Safawi. We are at an advanced stage in agreeing a joint venturewith a multinational oil company which will fund much of the exploration. Future Prospects The coming months will be busy for Petrel. We expect a new hydrocarbon law tobe enacted in Iraq. This should lead to the ratification of our Black 6exploration contract. The new law is also likely to provide for the negotiationof contracts to develop existing known discoveries. Petrel has targeted onesuch mulit-billion barrel field and, in anticipation, is preparing a submission.Final engineering plans will be agreed on Subba and Luhais and equipmentordered in the next few months. Almost no mineral has better economics than oil and in world oil Iraq is thelowest cost producer. Iraq is crucial to the world's energy future. The onlyquestions are how and when the reserves will be developed. Politicaldifficulties originally gave Petrel access to the opportunity but over the pastnine years we have demonstrated our commitment to Iraq and have shown ourtechnical abilities in exploration and now in oil field development. Political stability and a new hydrocarbon law are the priorities for Iraq. TheIraqi people, and the world economy, need the development of Iraqi oil. Petrelwill be part of this development. John TeelingChairman22nd June 2006 PETREL RESOURCES PLC. CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 • • Administrative expenses (521,255) (358,916) LOSS ON ORDINARY ACTIVITIESBEFORE INTEREST (521,255) (358,916) Interest receivable and similar income 39,720 8,621 LOSS FOR THE YEAR BEFORE TAXATION (481,535) (350,295) Taxation - - LOSS FOR THE YEAR AFTER TAXATION (481,535) (350,295) Loss per share - basic (0.77c) (0.60c) Loss per share - fully diluted (0.77c) (0.60c) All gains and losses are dealt with through the profit and loss account.Results derive from continuing operations. PETREL RESOURCES PLC. CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2005 2005 2004 • • FIXED ASSETS Tangible assets - 596Intangible assets 4,919,367 2,218,409 4,919,367 2,219,005 CURRENT ASSETS Debtors 37,716 142,907Cash at bank and in hand 3,729,121 3,182 3,766,837 146,089 CREDITORS : (Amounts falling due within one year) (1,718,353) (256,959) NET CURRENT ASSETS/(LIABILITIES) 2,048,484 (110,870) NET ASSETS 6,967,851 2,108,135 CAPITAL AND RESERVES Called-up share capital 828,851 746,565Capital conversion reserve fund 7,694 7,694Share premium 9,063,625 3,804,660Profit and loss account - (deficit) (2,932,319) (2,450,784) EQUITY SHAREHOLDERS' FUNDS 6,967,851 2,108,135 PETREL RESOURCES PLC. CONSOLIDATED CASH FLOW STATEMENT AT 31 DECEMBER 2005 2005 2004 • • NET CASH INFLOW/(OUTFLOW) FROMOPERATING ACTIVITIES 1,051,421 (380,803) RETURNS ON INVESTMENT ANDSERVICING OF FINANCE Interest received 39,720 8,621 NET CASH INFLOW FROM RETURNS ONINVESTMENTS AND SERVICING OF FINANCE 39,720 8,621 TAXATION Corporation tax paid - - CAPITAL EXPENDITURE ANDFINANCIAL INVESTMENT Payments to acquire intangible fixed assets (2,700,958) (844,546) NET CASH OUTFLOW BEFORE FINANCING (1,609,817) (1,216,728) FINANCING Issue of ordinary share capital 5,477,382 261,086 Share issue expenses (136,131) (4,979) NET CASH INFLOW FROM FINANCING 5,341,251 256,107 INCREASE/(DECREASE) IN CASH 3,731,434 (960,621) Notes: 1. The results set out above are not full accounts as defined in the CompaniesAct. Statutory accounts for the year ended 31st December 2005 together with areport 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 registeredoffices at 162 Clontarf Road, Dublin 3, Ireland 14 days from the date of thisannouncement. This information is provided by RNS The company news service from the London Stock Exchange