Pensana Plc Regulatory News (PRE)

23 Sep 2005 07:00

Pan Andean Resources PLC23 September 2005 PAN ANDEAN RESOURCES PLC ANNOUNCEMENT OF PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005 CHAIRMAN'S STATEMENT This is an interesting time to be an oil and gas producer. The financialresults, reported below, show Pan Andean profitable with a good cash flow. Inthe US, we produce gas from 7 locations onshore and offshore Texas. Our oilproducing offshore block High Island 30 is due on stream within weeks. Ahurricane, not Katrina, but Ivan in 2004, seriously delayed the re-start. At thetime of writing, the refurbishment and reconnections are almost completed withstart up expected in October. Once operational, production of 300 barrels a day(62% to Pan Andean) is anticipated. Exploration companies are comfortable with risk. We take geological politicaland technical risks as a matter of course. Weather risks are another matter. AsI write, hurricane Rita is powering across the Gulf of Mexico toward Texas. Ourplatforms which totally escaped all damage in recent storms, are in the generalarea. Production is closed in offshore. Disruption to energy supplies isdriving US oil and gas prices to unprecedented levels. We are focused onincreasing output from our US assets to capitalise on this opportunity. High US gas prices are good for all of our Texan assets onshore and offshore.Our production and royalty on block High Island 52 is highly profitable atpresent while the payback on the onshore wells, Zachry and Vrazel, is in monthsnot years. Exploration plays both onshore and offshore are more attractive atbetter prices. There is a significant revival of interest in the shallow watersof the Gulf but the targets are deeper. We are examining seismic on both HighIsland 52 and High Island 30 seeking deeper plays. We had high hopes for our first deep well on our Danbury Dome acreage. Theindications were good and a number of potential pay zones were encountered buteventually the well was plugged. We are working through the logs and seismic andwe believe that there remains potential. There is a frenzy of activity in the US oil and gas industry. It is virtuallyimpossible to obtain a drilling rig, onshore or offshore or to rent service /crew boats in the Gulf of Mexico. Rig rates have risen from $12,000 a day toover $30,000 a day if you can get them. We have been waiting for rigs sinceApril to drill two new shallow wells on the Zachry acreage in Danbury Dome. Our acreage and assets in the US are growing in value. This is easily understoodwhen you see gas costing 30 cents for 1000 cubic feet selling at $10. In thecoming year we will participate in a number of onshore wells and we will alsoseek partners for deeper offshore exploration. Our Bolivian operation at Monteagudo continues to produce oil and gas but it isseriously hampered by growing political uncertainty and tough taxation policies.We have good assets in Bolivia but they have limited value for the foreseeablefuture as political instability tears the country apart. Our large gas discoveryat El Dorado is years away from start up while new taxes makes it difficult tobreakeven in Monteagudo. Bolivia is a country with vast potential and equallyvast needs. At present it is not suitable for investment. After years of searching in South America we have finally found a project whichcan use our local expertise. It is an early stage exploration project in Peru.The Block 114 exploration project shares many geological similarities with ourformer projects in the Ixiamas and Chapare areas of Bolivia. It also hassimilarities with the giant Camisea gas project being developed in Peru. Duringthe next two years, we will conduct a grass roots exploration programme,including seismic and, if indicated, drill. Our Bolivian team of employees andconsultants will be used as much as possible. Some time ago we made a strategic decision to seek new projects outside of theAmericas. For the past year we have been actively seeking a way into the Iranianoil industry. Iran is the third biggest oil producer in the world with hugeundeveloped reserves and vast unexplored acreage. The National Iranian OilCompany (NIOC) has many joint ventures but so far only with largemultinationals. We have made persistent approaches which may bear fruit. Yourdirectors are associated with a mineral exploration venture in Iran and an oilventure in neighbouring Iraq and Jordan. These connections are proving useful inproviding credibility. Let me caution you, that this project is at a very earlystage and there is no certainty that we will succeed in getting anything in Iranbut the prize is worth the effort. FUTURE Pan Andean shareholders have so far failed to participate in the general upliftin resource company share prices. We are profitable, with positive cash flow,money in the bank and a suite of US assets which is growing in worth. It isdifficult to find acquisitions in the oil/gas industry at present. While we arean oil and gas producer and explorer, we are not blind to the fact that high oiland gas prices impact on the economics of substitutes which may provideexcellent investment opportunities. We will keep a weather eye on possibleopportunities outside of our current business. We have been cautious in committing ourselves to new projects. We seek to tradepolitical risk against geological risk. Many of the projects we evaluate simplydo not have the necessary risk / reward ratio required. We have found itvirtually impossible to find good value projects in South America. Peru is anexception. A stable government has introduced good terms to attract explorersinto the difficult territory in the East of the country. I see a good future. The high gas prices are likely to continue thus providing astream of cash to Pan Andean. The delays in the commissioning of High Island 30have a silver lining in that the $40 oil of last year is now selling at $60.Re-interpretation and reworking of seismic is offering tantalising prospects ofdeep oil and gas plays on our shallow water gulf blocks. The weather is anunknown variable but hopefully disruptions will only be temporary. We have newexploration projects in Peru and the possibility of getting a toe into theIranian oil industry. John TeelingChairman23 September 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 March 2005 2005 2004 £ £ TURNOVER 2,133,186 3,547,568Cost of sales (613,832) (1,630,469) GROSS PROFIT 1,519,354 1,917,099Administrative expenses (837,975) (628,321) OPERATING PROFIT 681,379 1,288,778Interest receivable and similar income 64,618 4,963Interest payable and similar charges (72,328) (90,324) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 673,669 1,203,417Tax on profit on ordinary activities (202,101) (361,025) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION FOR THE FINANCIAL YEAR 471,568 842,392 Earnings per share 0.41p 0.86pEarnings per share - diluted 0.39p 0.83p All income arises from continuing operations. CONSOLIDATED BALANCE SHEETAs at 31 March 2005 2005 2004 £ £FIXED ASSETSTangible assets 12,393,150 11,143,948Investments 2,789 2,810 12,395,939 11,146,758 CURRENT ASSETSDebtors 1,896,831 1,962,484Cash at bank 3,790,367 1,450,758 5,687,198 3,413,242 CREDITORS :(Amounts falling due within one year) (1,516,285) (1,117,092) NET CURRENT ASSETS 4,170,913 2,296,150 TOTAL ASSETS LESS CURRENT LIABILITIES 16,566,852 13,442,908 PROVISION FOR LIABILITIES AND CHARGES (1,668,356) (1,508,105) NET ASSETS 14,898,496 11,934,803 CAPITAL AND RESERVESCalled-up share capital 1,192,178 973,220Share premium account 20,229,168 17,715,926Profit and loss account - (deficit) (6,522,850) (6,754,343) EQUITY SHAREHOLDERS' FUNDS - ALL EQUITY 14,898,496 11,934,803 CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 March 2005 2005 2004 £ £ NET CASH INFLOW FROM OPERATING ACTIVITIES 1,220,246 1,406,326 RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 64,618 4,963Interest paid (72,328) (90,324) NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (7,710) (85,361) TAXATION (55,409) - CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPayments to acquire tangible fixed assets (1,549,718) (1,333,812) NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (1,549,718) (1,333,812) NET CASH OUTFLOW BEFORE FINANCING (392,591) (12,847) FINANCING Issue of ordinary share capital 2,840,442 -Costs associated with shares issued during year (108,242) - NET CASH INFLOW FROM FINANCING 2,732,200 - (DECREASE)/INCREASE IN CASH 2,339,609 (12,847) STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 31 March 2005 2005 2004 £ £Profit for the financial year 471,568 842,392Currency translation adjustments (240,075) (1,253,447)Total recognised gains/(losses) recognised since last annual report 231,493 (411,055)and financial statements RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS 2005 2004 £ £Profit in the financial year 471,568 842,392Currency translation adjustments (240,075) (1,253,447)New share capital subscribed 2,732,200 -Net change in equity shareholders' funds 2,963,693 (411,055)Opening equity shareholders' funds 11,934,803 12,345,858Closing equity shareholders' funds 14,898,496 11,934,803 Notes: The financial information set out above does not constitute the Company'sfinancial statements for the years ended 31 March 2005 and 2004. The financialinformation for 2004 is derived from the financial statements for 2004 whichhave been delivered to the Registrar of Companies. The auditors have reportedon the 2004 statements; their report was unqualified and did not contain astatement under section 237(2) or (3) of the Companies Act 1985. The financialstatements for 2005 have been audited and will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting. The auditors havereported on the 2005 statements; their report was unqualified and did notcontain a statement under section 237(2) or (3) of the Companies Act 1985. A copy of the Company's annual report and accounts for 2005 will be mailed toshareholders shortly and will also be available for collection from theCompany's registered office, 20-22 Bedford Row, London WC1R 4JS. For further information: Jim Finn, Finance Director, Pan Andean Resources plc - 00 353 1833 2833John Teeling, Chairman, Pan Andean Resources plc - 00 353 1833 2833Barrie Newton, Rowan Dartington & Co. Limited - 0117 933 0011 This information is provided by RNS The company news service from the London Stock Exchange