PPC.L Regulatory News (PPC)

11 May 2005 07:01

Meridian Petroleum PLC11 May 2005 11 MAY 2005 MERIDIAN PETROLEUM PLC ("Meridian" or the "Company") 2004 PRELIMINARY RESULTS WELL PLACED TO GROW IN COMING YEAR Meridian Petroleum, the AIM listed (symbol: MRP) independent oil & gasexploration and production company with key assets in the USA and Australia,today announced its preliminary results for the year ended 31 December 2004. Highlights • The company reported a loss of £1,173,544 for the year • Emery Hudson commenced production in July 2004 and is currentlyproducing at approximately 1 mmcfgd. A high angle step out well is planned forMay 2005 to enhance production further • Calvin has returned positive gas tests from the Sligo-Pettit zoneand Meridian plans to re-enter and complete the well in May 2005 with gas andcondensate production shortly thereafter • Further asset acquisitions are planned in the USA and an activedrilling programme is planned in both the USA and Australia during 2005 Anthony Mason, Chief Executive of Meridian said: "We have faced many challenges with many achievements and some set backs. Weare now well placed to grow and prosper during the coming year and will continueto acquire quality assets and of course implement the overall corporate strategyof developing those assets for cash flow growth." Enquiries: Meridian Petroleum (020 7409 5041)Tony Mason, Chief Executive Citigate Dewe Rogerson (020 7638 9571)Media: Martin Jackson / George CazenoveAnalysts: Nina Soon Chief Executive Officer's Statement & Review of Operations Since listing in July 2004, the company has been focused on implementing theshort term objectives set out in the Prospectus. The primary objective was toestablish cash flow by developing the asset base of North American properties.Despite some early difficulties in gaining access to equipment and with limitedfinancial resources, the Company has made significant progress towards thisobjective. North America The Emery Hudson field commenced production in July 2004. Meridian's share ofproduction was a total of 124 million cubic feet of gas ("mmcf") and 3,067barrels of condensate in the period to 31 December 2004. The current averagedaily production is approximately 1 mmcf. Meridian has a 50% working interest inthis producing property. We intend to conduct a high angle step out in thisreef in early summer 2005 to increase production levels in what appears to be avery large (over 100 acres in size) Niagaran Reef with excellent overallproduction potential. Drilling of the Calvin production wells commenced in October 2004 and resultedin positive gas tests from the upper portion of the Sligo Petit zone. We planto re-enter and complete the well in May 2005 with gas and condensate productionresulting shortly thereafter. The Company reduced its interest in the Brighton and Milford 36 fields to 25%each in early 2005 as part of our budget streamlining operation. The acquirersof this equity are Jordan Exploration, Savoy Exploration LLC and Don YoheEnterprises Inc, all of which are well known and respected oil and gas companieswith significant production in Michigan. We plan to drill both the Brighton 36and Milford 36 prospects in May 2005. The cost to Meridian of drilling both ofthese wells with a reduced working interest will be approximately £115,000. The Company also had some disappointments during the year with the West LeveesCreek prospect with oil shows but not in commercial quantities, and Lyon 22which was plugged and abandoned. Meridian is also seeking to acquire additional properties in the US. We expectto complete an acquisition in Michigan of a shut-in reserve, very similar innature to the currently producing Emery Hudson, over the next few months.Several other substantial opportunities are currently being evaluated in theonshore United States. Management believes that these additional acquisitionswill not only add assets but also meet the corporate criterion of being able toget the assets into production rapidly and generate cash flow. The primarycorporate objective is to grow both the asset base and cash flow base in arational, phased and balanced manner. Management believes that cash flow is acritically important component of our business plan going forward and willenable the company to grow organically in due course. Australia Meridian is currently seeking to farm out the cost of drilling an explorationwell on block PELA 132, Dolores. Meridian currently holds 100% of the equity inall of the blocks in Australia having acquired the balance of its interests inDecember 2004, and will offer equity in all these blocks to the party that farmsin. We expect to complete this farm-out during the first half of 2005 withdrilling taking place in the second half of 2005. The Company is committed toan active program in Australia and is actively looking at additional prospectswithin the company's acreage position. The Company holds approximately ninemillion acres in South Australia, which is strategically positioned close to theSouth East Australian domestic gas market. Proven and Probable Reserves The Company's net revenue interest proven and probable oil and gas reserves forthe company as at 31 December 2004 were: Total Oil Gas BOE bbl mmcf Acquisitions 467,133 33,800 2,600Production (23,734) (3,067) (124)Reserves at end of year 443,399 30,733 2,476 All of the above reserves relate to the Emery Hudson field. The reserves areDirectors' estimates based on the Scott Pickford report dated 12 July 2004. Itis the Director's intention to undertake a further reserves review during 2005.All of the reserves are based in North America. Board and Management Changes The Company has experienced some management changes with Brendon Joyce (FinanceDirector), Bruce Maclennan (Company Secretary) and John Rickards (Director)leaving the Company to pursue other interests. Subsequently, Peter Fleming wasappointed as Director of Finance and Niel Redpath as Company Secretary. TheBoard is also seeking to appoint another non-executive director. Outlook The objectives over the next year are to increase production from the USproperties, complete the farm-out and drilling program in Australia and acquireadditional properties and production in the US. In summary, 2004 was a year of many challenges with many achievements and someset backs. The Company is now well placed to grow and prosper during the comingyear and will continue to acquire quality assets and of course implement theoverall corporate strategy of developing those assets for cash flow growth. After the current drilling activities have been completed, the Company's fundingposition and strategy will be reviewed by the directors. A decision will be madeat the time of the review whether the Company's existing resources aresufficient to meet the expected capital costs associated with the growthstrategy or that additional capital will be required. CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the period ended 31 December 2004 2004 2004 £ £TurnoverContinuing operations -Acquisitions 355,982 355,982 Cost of sales (119,172)Gross profit 236,810 Other operating charges 1,429,151 Operating LossContinuing operations (397,512)Acquisitions (794,829) (1,192,341) Interest receivable 18,797 Loss on Ordinary Activities (1,173,544)Before Taxation Tax on ordinary activities - Loss for the financial year (1,173,544) Retained Loss for the Period (1,173,544) Loss per share (pence) (2.6) The accompanying accounting policies and notes form an integral part of thesefinancial statements. There are no recognised gains or losses other than the loss for the period shownabove. CONSOLIDATED BALANCE SHEETAt 31 December 2004 2004 £Fixed assets Intangible assets: Exploration costs and leases 577,194 Tangible Assets 2,026,896 Total Fixed Assets 2,604,090 Current assetsDebtors 259,093Cash at bank and in hand 742,036 Total current assets 1,001,129 Creditors: amounts falling due within one year (225,821) Net current assets 775,308 Total assets less current liabilities 3,379,398 Capital and reservesCalled up share capital 2,829,660Share premium account 1,517,282Profit and loss account (967,544)Total equity shareholders funds 3,379,398 COMPANY BALANCE SHEETAt 31 December 2004 2004 £ Fixed assets Investments 2,250,000 Current Assets Debtors 1,335,527 Cash at bank and in hand 671,876 Total current assets 2,007,403 Creditors: amounts falling due (48,853) within one year Net current assets 1,958,550 Total assets less current 4,208,550 liabilities Capital and reservesCalled up share capital 2,829,660Share premium account 1,517,282Profit and loss account (138,392) Total equity shareholders' funds 4,208,550 CONSOLIDATED CASH FLOW STATEMENTFor period ended 31 December 2004 2004 £ Net cash outflow from operating activities, (698,079) Returns on investments and servicing of financeInterest received 18,797 Net cash inflow from returns on investments and servicing of finance 18,797 Capital expenditure and financial investmentExploration and development expenditures (763,047) Acquisitions and disposalsNet cash acquired with subsidiary undertakings 87,424 Net cash outflow before financing (1,354,905) FinancingIssue of shares 2,478,208Expenses paid in connection with share issues (381,267) Net cash inflow from financing 2,096,941 Increase in cash 742,036 Notes to the Consolidated Financial Statements for the year ended 31 December2004 1. The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.The summarised balance sheet at 31 December 2004 and the summarised profit and loss account, summarised cash flow statement and associated notes for the period then ended have been extracted from the Group's 2004 statutory financial statements upon which the auditors opinion is unqualified and does not include any statement under Section 237 of the Companies Act 1985. Those financial statements have not yet been delivered to the registrar of companies. Copies of the Annual Report and Accounts for the year ended 31 December 2004 will be sent to shareholders in due course and will be available from the Company at 42 Berkeley Square, London, W1J 5AW. 2. The financial statements have been prepared under the historical cost convention and in accordance with applicable UK Accounting Standards and the Statement of Recommended Practice "Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities" revised in June 2001 (the SORP). 3. The Directors do not recommend a dividend for the year. 4. The year-end cash balance was £742,036. 5. The net cash outflow from operating activities during 2004 was £698,079. Interest received amounted to £18,797. 6. On 26 May 2004, the Company completed the purchase of Meridian Resources Limited and its two subsidiaries. The book value of assets acquired was £530,862. The assets were acquired for £2,250,000, an amount the directors considered to be fair value. The consideration for the acquisition was the issue of shares in the Company. 7. Reconciliation of Movements in Shareholders' Funds: 2004 £Loss for the financial year (1,173,543)Issue of shares (net of costs) 4,346,941Share options granted 206,000Net increase in shareholders' funds 3,379,398Shareholders' funds at 16 April 2004 -Shareholders' funds at 31 December 2004 3,379,398 8. Net Cash Outflow from Operating Activities: 2004 £Operating loss (1,192,341)Amortisation 15,250Depletion 67,770Decrease in debtors (19,696)Increase in creditors 224,938UTIF 17 stock options charge 206,000Net cash outflow from operating activities (698,079) 9. The Group operates a single class of business being oil exploration, production and related activities in North America and Australia. 10. Earnings per Share The calculations of earnings per share are based on the following profit andweighted average number of shares: The calculations of earnings per share are Year endedbased on the following profit and numbers ofshares: 31 December 2004 £ Loss for the year 1,173,544 Weighted average number of shares:Basic 45,178,443 Further information regarding Meridian is available on the Company's website,www.meridianpetroleum.com This information is provided by RNS The company news service from the London Stock Exchange