Petrel Resources Regulatory News (PET)

21 Sep 2007 07:01

Petrel Resources PLC21 September 2007 21st September 2007 Petrel Resources plc Interim Results for the Six Month Period to 30 June 2007 Petrel Resources plc ("Petrel" or "the Company") is very pleased to announce itsinterim results for the 6 months to 30 June 2007. Highlights: Strong operational progress • Continued strong relationship with Iraqi Ministry of Oil • Passing of Hydrocarbon Law will allow application for Production Sharing Agreements • Strong progress at Subba & Luhais field: completed surveys and initial delivery of equipment underway • Successful completion of Merjan Oil Field Technical Co-operation Agreement (TCA) in partnership with ITOCHU • Awarded a TCA over the Dhufriya oil field in Central Iraq, to be carried out in partnership with ITOCHU David Horgan, Managing Director of Petrel commented: "There is no current oil and gas opportunity to match Iraq. The undevelopedproven and probable reserves alone are immense, let alone the unexplored deeperhorizons, which have proven to hold massive reserves throughout the widerregion. We currently base our strategy around three key partnerships; with the IraqiMinistry of Oil in Baghdad, with the local communities where we are currentlyactive in the South of Iraq, and finally with ITOCHU, one of the majordownstream oil companies in the world. We are confident that our approach will prove to be successful. Managing TCAagreements has provided Petrel with vital on the ground experience. We areconfident that this expertise will be applicable to potential high valuedevelopment, exploration and production projects. After 10 years experience in Iraq, we have a built up an extensive high qualitycontact base in the region and retain a belief in Iraq and its people. Iraqtoday is, and will remain, a place where international oil and gas players canbe highly successful." Enquiries: Petrel ResourcesDavid Horgan, Managing Director + 353 87 292 3500John Teeling, Chairman + 353 1 833 2833 College HillPaddy Blewer +44 (0)20 7457 2020Nick Elwes Blue Oar Securities PlcJohn Wakefield +44 (0) 1179 330020Simon Moynagh www.petrelresources.com In recent months Petrel has driven towards its ultimate objective ofparticipating in the development of Iraqi oil, via risk-sharing agreements.These agreements will be partnerships with the Iraqi Ministry of Oil. Suchcontracts require passage of the Hydrocarbon Law. This legislation isexclusively a matter for the elected authorities, but it is hoped and expectedthat the outstanding proposal will be passed shortly. In the meantime, Petrel continues to be very active in Iraq. We operate themajor Engineering, Procurement and Supervision of Construction (EPC) contract onthe Subba & Luhais fields in southern Iraq. Basic design has been completed andsigned off. Detailed design work is largely finalised. Recently, in depthsurveys have been carried out on-site without significant difficulties. Thefirst major long-lead items of equipment are now being delivered to SCOP, theState Company for Oil Projects. We completed the Merjan Oil Field Technical Cooperation Agreement (TCA) in May2007. The study was undertaken in partnership with ITOCHU, a Japaneseconglomerate, which is one of the major takers of crude oil in the PacificBasin. We were recently awarded an additional Technical Cooperation Agreement over theoil field, Dhufriya, in central Iraq. Seismic and geological data are now beingprepared for reprocessing and reinterpretation. This work will be conducted ona shared basis with our partner, ITOCHU. Petrel will be the operator. Petrel operates under the explicit authority of the Iraqi Ministry of Oil anddoes not work with any regional authority. Accordingly, legal questions as totitle awarded by the sovereign Iraqi state and its elected and internationallyrecognised government are not expected. We also work closely with local peopleand communities. We do not use, nor have ever needed foreign securitycontractors. It is anticipated that the Hydrocarbon Law will be passed in the near future.Hopefully, this will be a single national law. But at a minimum, it is expectedto legislate for projects in the southern, predominantly Shia areas of Iraq,where Petrel is working. Southern Iraq has the best oil potential with theleast risk. It has large structures, existing pipelines and export facilities. In time, there will be sufficient legal and physical security to also work inpredominantly Sunni areas of the Western Desert, where we have an interest inthe 10,000 sq km Block 6. Title to this block needs to be ratified. Lack oflegal clarity may persist in areas of northern Iraq. Petrel is not working inthese areas. Iraq is one of the last great under explored and under developed onshore oilprovinces. The exploration success rate is very high. Iraq's oil bearingstructures are large with straightforward reservoirs and low geological andengineering risks. The deep oil horizons which provide most productionelsewhere in the world have to date been largely unexplored and untouched inIraq. Iraq's challenging geopolitical conditions require attractive terms to enticeforeign investment and technology unlike those offered in neighbouring SaudiArabia, Kuwait and Iran, where there is limited foreign involvement. Such acombination of large structures and limited geological risk will not recur inour lifetime. Most major companies are deterred by the current situation: nowis the time for boldness. Petrel's competitive advantage is the knowledge and relationships built up over10 years working on the ground. One specific competence is the technology toquickly increase recoveries from existing reservoirs and to add new barrels toIraq's reserves. This can enable a rapid build up of Iraqi oil exports. We can work in Iraq. The successful management of the large Subba & Luhais oilfield development shows that dedicated contractors can operate on the ground.We have had no direct incidents and have enjoyed the cooperation of localcommunities. The Iraqi authorities and especially, the Ministry of Oil,continue to be committed to, and supportive of, our efforts. Petrel staff, both Iraqi and International, have shown exceptional dedicationand flexibility. Apart from on the ground operations, they have producedtenders for the development of oil and gas fields which are considered thetechnical benchmark by the relevant bodies. Our Technical Cooperation Agreementanalysis and technology transfer has also been judged first rate. Petrel'spioneering exploration work in the Western Desert blends local expertise withstate of the art technology. In ITOCHU, our Japanese partner, we have the long term support of one of theworld's largest downstream oil players. Future Petrel shareholders have shown long term commitment in the face of sanctions andwar. Though political uncertainty remains, Iraq now has a sovereign electedgovernment committed to developing hydrocarbons. Legal title to risk sharingagreements must soon be a reality. Petrel is demonstrating that it can operate in the oil rich south of Iraq. Wewill continue to aggressively deepen and broaden our activities in this region. As the only London Stock Exchange company working in southern Iraq, Petrel has adecade of presence and experience, giving us early mover advantage in the mostprospective oil province in the world. Though political stability remainselusive, there is no uncertainty over the fact that Iraqi oil must be developed.Iraq needs it, but so too does the rest of the world. Petrel has the expertise, experience and skills to work with the Iraqi people todevelop the industry. David HorganManaging Director 21st September 2007 Financial Information (Unaudited) Six Months Ended 30 June 07 30 June 06 •'000 •'000Group Profit and LossOperating Loss (330) (227)Investment Income 26 19Loss before Taxation (304) (208)Taxation 0 0Loss for the period (304) (208) Loss per share (.44c) (.31c) 30 June 07 30 June 06 •'000 •'000Group Balance SheetFixed Assets 3,665 4,169 Current AssetsStock - Work in Progress 13,184 1,716Debtors 187 28Bank 6,549 9,378 19,920 11,122Current LiabilitiesProject Advance Payments (14,344) (7,568)Creditors (1,049) (171) (15,393) (7,739) Current Assets less Current Liabilities 4,527 3,383 8,192 7,552 Share Capital and Reserves 8,192 7,552 Six Months Ended 30 June 07 30 June 06 •'000 •'000Group Cash FlowNet Cash (Outflow)/Inflow from Operating Activities (3,823) 5,143Returns on Investments and Servicing of Finance 26 19Capital Expenditure (255) (305)Financing - Issue of Ordinary Share Capital 1,151 792(Decrease) / Increase in Cash (2,901) 5,649 Notes: 1. The figures for the six months to 30 June 2007 and 30 June 2006 are unaudited. The financial information set out 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. This information is provided by RNS The company news service from the London Stock Exchange