Pensana Regulatory News (PRE)

19 Dec 2007 07:01

Pan Andean Resources PLC19 December 2007 Pan Andean Resources Plc "Pan Andean, or "the Company" Interim Results for the period ended September 30th 2007 Highlights • Farm out negotiations near to completion on Blocks 114 and 131 in Peru. • Farm out negotiations ongoing on Block 141 in Peru. • Success in Colombia with the award of the Antorcha oil block. • Successful drilling and tie in on Block High Island 52 in the Gulf of Mexico. • Turnover increased by 7.8% to £882,000 • Profit before tax increased by 3% to £451,000 Recent months have been a period of intense activity in both the US and SouthAmerica. Our strategy of using our US assets to fund our exploration in SouthAmerica is working. Our success in obtaining three quality exploration blocksin Peru, thereby becoming one of the largest land holders, has paid off. Anumber of international oil companies have approached us to joint venture ourground. Whilst we continue to conduct activities, particularly on Block 114 in Peru,taking a partner will expedite exploration operations, driving towards drillingin 2009 and will reduce financial expenditure. Drilling in the Peruvian junglehas high potential but has high costs. We are at a very advanced stage in agreeing a farm in with a major internationalcompany on Blocks 114 and 131 in the Ucayali Jungle area of Peru. This will seeour partner become operator in return for a significant carried interest for PanAndean. An announcement is expected in the near future. Block 141 in the Lake Titicaca area of Peru is a large early stage oilexploration play. A major oil company has been in discussion with Pan Andean tojoint venture the property. A deal is likely in the coming months. Our work in Colombia finally paid off when we were awarded the Antorcha Block inthe oil prolific Middle Magdalena Basin. Preliminary studies suggestsignificant quantities of 10 to 20 API oil at depths of less than 2000 feet.Initial work is ongoing. Here again there is joint venture interest. In Bolivia, production continues at Monteagudo where Pan Andean, with ourpartners Repsol and Petrobras, continues dialogue with the government on aregime which will allow production to continue as well as encourage Pan Andeanto drill the deep exploration play. The growing demand for Bolivian gas in the Southern cone of South America isimproving the prospect for the development of our El Dorado (10% Pan Andean, 90%BP) gas discovery. We fund our South American operations from our US cash flows where we havesignificantly reduced operational risk in the Gulf of Mexico by passingabandonment liabilities on Block High Island 52 to a new company and byappointing Hunt Oil as operator of High Island 30. High Island 52 - Gulf of Mexico In August 2007 Phoenix Exploration Inc. successfully drilled an exploration wellto a target depth of 8,700 feet and encountered over 160 feet net pay ofhydrocarbon column in three separate sections. Production commenced in Novemberat 5 million cubic feet of gas per day (mcfd), is currently producing at 6 mcfdand is expected to increase to 10 mcfd over the next few months. Phoenix has ateam reviewing all available data, seismic etc. with a view to drilling a deepwell in 2008. They have now earned into the block and have taken over theplatform and related abandonment liabilities; estimated at US$6 million. PanAndean holds a 2.15% revenue royalty on all wells to be drilled by Phoenix. In the Northeast quarter of the block, Woodside are producing over 35 mcfd from3 wells. Pan Andean holds a 1.32% revenue royalty which produces significantcash flow each month. High Island 30 L - Gulf of Mexico The long awaited restart of production on HI 30 L (62.7% Pan Andean) has againbeen delayed due to leaks in the Tammany owned pipeline which transports oilfrom HI 24 to shore. Production started on 11th November 2007 but had to stopalmost immediately as leaks were discovered on the four and a half mile pipelinebelonging to Tammany Oil. Production is now expected to restart in the firstquarter of 2008 when repair work on the pipeline is completed. We expectproduction to start at over 300 barrels of oil per day. Since March 2007 theplatform has been completely refurbished and gas lift installed. We are in theprocess of abandoning a number of the old obsolete wells on the block. High Island A68 - Gulf of Mexico The platform and wells on the HI68 lease which expired in 2005 were abandoned inJune 2007. Onshore - Texas We continue to work on our onshore assets where our main focus is finding apartner to drill Danbury Dome. The Vrazel and North Bob West leases continue toprovide a steady monthly income. Financials Higher gas prices have driven a 7.8% increase in turnover in the period, from£818,000 to £882,000 in the same period last year. Pan Andean remains one of thevery few profitable oil & gas producing companies listed on AIM, with a rise inPBT of 3% to £451,000 from £437,000. Pan Andean remains financially robust through its strong cash flow. Future Pan Andean has a portfolio of exploration opportunities, the quality of which isseen in the parade of potential partners. We will select partners with thetechnical and financial muscle to expedite state of the art exploration on ourthree Peruvian blocks and potentially on our Colombian block. The frustrating delays in restarting production on High Island 30 masks oursuccess on High Island 52 and the adept management of our US assets to minimiseour environmental expense and to upgrade our facilities. We are well placed to take on additional exploration opportunities. John J TeelingChairman19 December 2007 For further information: Pan Andean Resources PlcDavid Horgan, Managing Director + 353 87 292 3500John Teeling, Chairman + 353 1833 2833 Blue Oar Securities PlcSimon Moynagh / John Wakefield + 44 (0)117 933 0020 College HillPaddy Blewer / Nick Elwes + 44 (0)207 457 2020 www.panandeanresources.com Financial Information (unaudited) Six Months ended 30 Sep 07 30 Sep 06 £'000 £'000Group Profit and LossTurnover 882 818Operating Costs (416) (385) Operating Profit 466 433Interest Receivable 26 46Interest Payable (41) (42) Profit before Taxation 451 437Taxation (135) (131) Profit for the period 316 306 Profit per share 0.26p 0.26p 30 Sep 07 30 Sep 06 £'000 £'000Group Balance SheetFixed Assets 15,784 13,930 Current Assets 3,195 5,554Current Liabilities (2,021) (1,666) Current Assets less Current Liabilities 1,174 3,888Creditors (amounts falling due after one year) (1,730) (2,243) Total Assets less Liabilities 15,228 15,575 Share Capital and Reserves 15,228 15,575 30 Sep 07 30 Sep 06 £'000 £'000Group Cash FlowOperating Profit 466 434Movements in Working Capital (501) (80)Exchange Movements (423) (211)Net Cash (Outflow)/Inflow fromOperating Activities (458) 143 Returns on Investments and Servicing of Finance (15) 4Capital Expenditure (1,145) (356) Decrease in Cash (1,618) (209) Notes 1. The figures for the six months to 30th September 2007 and 30th September2006 are unaudited. The financial information set out above and does notconstitute full statutory accounts within the meaning of section 240 of theCompanies Act 1985. 2. The interim unaudited results have been prepared on a going concernbasis and in accordance with International Financial Reporting Standards. 3. Copies of this announcement will be sent to shareholders and will beavailable for inspection at the Company's registered office at 20-22 BedfordRow, London, WC1R 4JS. This information is provided by RNS The company news service from the London Stock Exchange