Petrel Resources Regulatory News (PET)

28 Sep 2005 07:00

Petrel Resources PLC28 September 2005 Petrel Resources plc Interim Results for the six month period to 30 June 2005 Petrel aims to become an Iraq centered oil independent. In recent months, wehave made major progress with the award of a large oil field development servicecontract. The award is a major milestone after six years working on thisproject. We will expand and accelerate our Iraqi activities, working closelywith the Ministry of Oil and local communities. Oil Field Development The Iraqi ministry of Oil has awarded Petrel the Subba and Luhais oil fielddevelopment services contract. We have worked on this project since 1999. At $197 million contract price, itis the biggest and most attractive of the oil field development contracts issuedso far. The project is located in a part of Southern Iraq where securitychallenges are manageable. There is an established infrastructure: site location is about one hour by goodroad from Basra, whose port facilities can be supplemented, if necessary, bythose in neighbouring Kuwait, providing excellent staging points for deliveriesand services to support our work programme. Our objective is to boost oil production from current levels of under 50,000barrels daily to a capacity of over 200,000 barrels daily. A programme of workswill facilitate increased production in phases. Our contract has options tobecome more involved in the field development plan as well as the responsibilityfor the commissioning and start up of both the Luhais Central and North and theSubba Central and North Stations and oil and gas export pipeline systems. We will be working closely with the Ministry of Oil and hope to broaden anddeepen our working relationship. Petrel has started mobilising our Project Teamfor Engineering definition and is in detailed discussions with main suppliers. The award represents a statement of confidence in Petrel by the elected Iraqisovereign government and especially the internationally respected Ministry ofOil. It would not have awarded this high profile contract had they not beensatisfied by the excellence of technical design and commercial approach. Last week Petrel, together with other tenderers, sent a full team of alldisciplines for discussions to finalise technical commercial and contractualpoints on the Kormor Gas Field Project, near Kirkuk in Northern Iraq /Kurdistan. Negotiations were completed and the outcome is awaited. Our engineersare now updating our offer in the light of these clarifications. Following understandable delays in Iraq, while the newly elected government tookcharge and reviewed policy, rapid progress is now being made towards the keynational goal of boosting oil production. Further projects are expected in2006. Petrel will be an active participant in the tenders. Iraqi Exploration We hope that there will soon be swift progress, following the upcomingelections, on clarifying the status of pre-war contracts and facilitating thenegotiation of new exploration and development contracts. The industry hopes that a new Hydrocarbon Law will clarify the situation. Thismay confirm the traditional pre-2003 Iraqi Model Contracts that were agreed orunder negotiation, including Petrel's interest in Western Desert Block 6.Petrel has already identified targets and is ready to acquire closely spacedseismic and drill wells as soon as legal title is confirmed. In the meantime, it is possible to sign Technical Cooperation Agreements. Thesegive no formal rights, but give confidential access to much-coveted data on someof the world's highest potential oil prospects. Petrel is especially interestedin the central area spreading Eastwards from the Western Desert intoMesopotamia. Substantial progress has been made in negotiating the terms of acooperation agreement. Petrel's plan is to invest in, where appropriate, reprocessing andreinterpretation of existing 2D seismic together with regional work based onsurface geological sampling and satellite imagery. Our extensive work to date inthe Western Desert shows that much can be learnt from the application of newtechniques like Apatite Fission Tract Analysis and the integration of regionaldata. After decades of sanctions, isolation and war, access to Iraqi data isimproving. Other Arabian Desert Exploration As part of Petrel's work on Arabian Desert hydrocarbon potential, our staffcollected data from Jordan, Syria and Saudi Arabia. The enthusiasticcooperation and vision of the Jordanian authorities encouraged Petrel tore-evaluate opportunities on the Jordanian side of the Arabian Desert. Thegeology is complex. A reinterpretation of available data has shown that pastanalysis and models were flawed. In January 2005, Petrel signed a six-month Memorandum of Understanding with theJordanian Natural Resources Authority on East Safawi. This is a large (8,750kmsq.) exploration block bordering Syria and Saudi Arabia and is beside theproducing Risha gas field operated by the Jordanian National Petroleum Company.The work threw up unexpected geological complexity. We have not yet finaliseddrillable targets, but we are developing a model and believe there is a shallowTriassic oil play as well as deeper gas and condensate targets. Applying newtechniques, including the reprocessing of 2D seismic, which previously yieldedpoor definition images, has greatly improved our understanding. Petrel hasagreed a work programme and basic terms with the Jordanian authorities. We lookforward to formalising a Production Sharing Agreement soon. Any concession issubject to Parliamentary approval and Royal assent. During the six-month period ending 30 June 2005, Petrel recorded a small loss of€244,000. This is modest in relation to the scale of the projects Petrel isworking on and in relation to progress achieved. There is strong interest amonginternational financiers in Petrel's projects. We do not anticipate fundingdifficulties. Petrel is mobilising a strong technical team in the Middle East to addressprogress both in Iraqi and neighbouring countries. Such opportunities comerarely in the oil industry. Iraq is remarkably under-explored. The potentialis vast. The only constraints are guts and imagination. After the frustrationsof sanctions and conflict, we are now embarked on a thrilling phase of our goalof contributing to the development of Iraqi oil resources. John Teeling Chairman 28 September 2005 Group Profit and Loss Accountfor the six months ended 30 June 30 June 05 30 June 04 (unaudited) (unaudited) •'000 •'000Operating loss (245) (126)Investment income 1 0Loss before taxation (244) (126)Taxation 0 0Loss for the period (244) (126)Loss per share (.40c) (.22c) Group Balance Sheetas at 30 June 30 June 05 30 June 04 (unaudited) (unaudited) •'000 •'000Fixed assets 2,597 1,782Current assets 795 484Current liabilities (219) (159)Current assets less current liabilities 576 325 3,173 2,107Share capital and reserves 3,173 2,107 Group Cash Flowfor the six month period to 30 June 30 June 05 30 June 04 (unaudited) (unaudited) •'000 •'000Net cash outflow from operating activities (223) (193)Returns on investments and servicing of finance 1 6Capital expenditure (378) (405)Financing - issue of ordinary share capital 1,309 20Increase/(decrease) in cash 709 (572) Notes: 1. The figures for the six months to 30 June 2005 and 30 June 2004 are unaudited. The financial information set out above does not constitute full statutory accounts within the meaning of section 240 of the Companies Act 1985. 2. Copies of this announcement will be sent to shareholders and will be available for inspection at the Company's registered office at 162 Clontarf Road, Dublin 3, Ireland. Contacts: Petrel Resources plcDavid Horgan + 353 87 292 3500John Teeling + 353 1 8332833Jim Finn + 353 1 8332833 Bell Pottinger Corporate & FinancialNick Lambert + 44 (0) 7811 358 764 Rowan Dartington & Co. LimitedBarrie Newton + 44 (0) 117 9330011 This information is provided by RNS The company news service from the London Stock Exchange