Pensana Plc Regulatory News (PRE)

6 Dec 2006 07:00

Pan Andean Resources PLC06 December 2006 Pan Andean Resources PLC "Pan Andean, or "the Company" Interim Results for the period ending September 30th 2006 Highlights > Profit up to £306,000 (205: £301,000) > Refurbishment of High Island 30 near to completion - revenue to come on stream early 2007 > Farm in deal has been agreed with Phoenix Exploration on High Island 52 > Seismic reprocessing and environmental and community relations programme progressing on Peruvian Licence John Teeling, Chairman of Pan Andean Resources commented, "Pan Andean has a strong model of production driven cash-flow balanced by anambitious exploration programme in a proven hydrocarbon province. With cash flows expected to rise due to a North American project coming back onstream, our Peruvian exploration programme developing nicely and furtherconsideration on wider exploration projects, we have every reason to lookforward to a brighter future for the company" For further information: Pan Andean Resources plc John Teeling 00 353 18332833Jim Finn 00 353 18332833 Corporate Synergy Plc Ian Rice 0117 933 0020Craig Howie 0207 448 4432 College Hill Paddy Blewer / Nick Elwes 0207 457 2020 Interim Statement Accompanying Results to 30th September 2006 Overview and Strategy Pan Andean is an oil and gas exploration and production company, with provenassets in the United States and in Bolivia and recently acquired explorationacreage in Peru. In the six months to September 30th 2006 Pan Andean made aprofit of £306,000 (2005: £301,000). Operations are profitable in the Gulf ofMexico, particularly the ongoing royalty from High Island 52, marginallyprofitable onshore Texas, while nothing is being received from our Bolivianoperations. Pan Andean primarily generates income from High Island 52 (Pan Andean 50%) inthe shallow waters of the Gulf Mexico. The income originates from a 1.3% royaltyon gas production from a small section on the block where Woodside produce over35m cubic feet of gas a day. The three producing onshore Texas assets provide asmall regular monthly income. Pan Andean's strategy is, to further exploit our US assets to maximise incomepotential, leverage our South American experience and expertise in countriesoutside of Bolivia and to examine opportunities open to Pan Andean in the MiddleEast and Africa, where the management has considerable experience. North America A valuable asset of the Company, High Island 30 in the Gulf of Mexico (PanAndean 62.9%), has been closed in since 2004 to add gas lift to the platform andto allow the construction of a new pipeline and pumping system to transport theoil and gas to shore. After extensive delays, due mainly to the aftermath ofhurricanes Katrina and Rita, a boat capable of undertaking the necessaryalterations was obtained and is completing work on the pumping installation.The pipelines are finished and the pumps should be operational in January 2007.After testing, production will commence at an expected rate of 300 barrels a dayof oil with associated gas. At current prices this implies a revenue of over$20,000 a day. Our US assets have been good to us and further potential exists. After extensivenegotiations, a farm in deal has been agreed with Phoenix Exploration wherebythey have an option to drill the deep plays on most of High Island 52. Havingevaluated existing seismic, it is believed that Phoenix will drill a deep wellon the block in early 2007. Pan Andean has a 2.15% royalty. Onshore Texas we are expecting to participate, in mid 2007, in a well on theVrazel property (Pan Andean 21%). There is a limited interest in the deep playon our Danbury Dome acreage (Pan Andean 100%). Latin America Peru, where we have begun to explore, has a natural advantage through favourablegeology. The economic terms are good. Pan Andean has a 90% interest in the 1.85mhectare Block 114 which was drilled in the 1970s, but abandoned due to lowprices. The focus is on the Rio Caco area in the block. The Rio Caco area hasextensive historical seismic information as well as drill data and oil shows.It contains known structures which have the potential to contain extensivedeposits of oil and gas. Seismic is being reprocessed and analysed using modern techniques. On theground, a detailed environmental and community relations programme is underway.Current plans call for a three well programme commencing in August 2007. Our Bolivian strategy is to monitor the developing situation. TheNationalisation Decree of May 1st 2006, when combined with the additionalroyalties and taxes, rules out any investment in the country. We will continueto study options on the large El Dorado gas discovery (Pan Andean 10%, BP 90%)while limited gas and oil production continues at our Monteagudo oil and gasfield (Pan Andean 30%, Repsol 40%, Petrobras 30%). The consortium is hopefulthat "marginal status" will be applied to this field. Marginal status applieslower tax and royalty levels which may offer the possibility of profitableoperation. Outlook The Company is profitable and generates a positive cash flow. From early 2007,both profits and cash flow will be enhanced by the restart of production on HighIsland 30. Near term upside potential comes from a deep well expected to be drilled byPhoenix in early 2007, the Vrazel well, expected to be drilled in mid 2007 andby the possibility of a 3 well programme on the Rio Caco structure in Peru . We are also investigating additional exploration opportunities in other SouthAmerican states, in addition to the continuing evaluation of Middle Easternpotential. John J Teeling Chairman 6th December 2006 Pan Andean Resources Financial Information (unaudited) Six Months ended 30 Sep 06 30 Sep 05 £'000 £'000Group Profit and LossTurnover 818 1,201Operating Costs (385) (770) Operating Profit 433 431Interest Receivable 46 39Interest Payable (42) (40) Profit before Taxation 437 430Taxation (131) (129) Profit for the period 306 301 Profit per share 0.26p 0.25p 30 Sep 06 30 Sep 05 £'000 £'000Group Balance SheetFixed Assets 13,930 13,458 Current Assets 5,554 5,981Current Liabilities (1,666) (1,594) Current Assets less Current Liabilities 3,888 4,387Creditors (amounts falling due after one year) (2,243) (1,773) Total Assets less Liabilities 15,575 16,072 Share Capital and Reserves 15,575 16,072 30 Sep 06 30 Sep 05 £'000 £'000Group Cash FlowOperating Profit 434 431Movements in Working Capital (80) 249Exchange Movements (211) 643 Net Cash Inflow from Operating Activities 143 1,323 Returns on Investments 4 (1)Capital Expenditure (356) (1,110) Decrease in Cash (209) 212 Notes 1. The figures for the six months to 30th September 2006 and 30th September2005 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. 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