SER.L Regulatory News (SER)

3 Sep 2008 07:00



Sefton Resources, Inc.

("Sefton" or the Group)

Interim Results for the six months to 30 June 2008

Highlights

Revenue doubled to $2.6m from $1.3m

Profits increased five fold to $904k from $179k

Banking facility increased to $15m

New Nominated Advisor and Broker appointed

Chairman, Jeremy Delmar-Morgan pointed out that 'the Group's financial position continues to improve, bringing Sefton closer to its stated goal of "building a strong platform of assets, generating sufficient cash flow to operate and grow the business". While we will continue to grow our California assets, we will now embark of the development of our Kansas assets, utilizing the improved banking facility and growing cash flow. The appointment of a new nominated Nomad and Broker will, we believe, assist us in enhancing the Group's profile to the benefit of all shareholders.

Chairman's statement

In my last annual statement I was able to forecast that Sefton was now ready to take the next step in its development programme. I am please to report that the results of the past hard work are starting to show in our financial results.

During the first half of 2008 oil and gas revenue more than doubled to $2,594,873 from $1,276,127 for the comparative period in 2007 and $2,977,691 for the whole of 2007. The increased activity meant that costs and expenses increased to $1,690,510 from $1,096,993, but profit improved five fold to $904,363 from $179,134 at this time last year and $204,652 during all of 2007.

The encouraging increase in oil and gas revenue and net income was a result of spending $2,889,028 on our oil and gas assets, compared to $488,380 for the same period in 2007 - a function primarily of utilizing some cash flow and some of the available bank facility.

Total assets increased by over $5m to $13,488,405 from the comparative period in 2007, and while liabilities increased by almost $4m, to $5,300,258 - the majority of which is attributable to the use of $3.3m draw from the bank facility - the total shareholder equity increased from $6,831,299 to $8,128,147.

Our steaming and drilling programmes at Tapia are on schedule. The results have been extremely encouraging, but the differences in reservoir and drainage conditions can result in variances between the wells response. All show an improvement and we are extremely excited about applying the cyclic-steam stimulation to both old and new wells field-wide.

We will be working on the two gas wells Yule#8 and Snow#1 in the coming weeks. If the mechanical issues in either of these wells can be solved, such that gas can be supplied from them to the steam generator at the appropriate rate and pressure, the systematic steaming of other wells in the field will begin accordingly.

We have also budgeted funds for the drilling of three new wells on the Yule Lease during the fourth quarter of 2008. One of the new wells may be used to provide a new gas supply well. The other two will be oil producers. In addition we have initiated permitting of five new wells on the other Tapia leases, which should be completed in the coming months for drilling to start during 2009.

At our Eureka Canyon field we successfully carried out the clean-out and pump replacement operation during June. Monthly production has improved from an average of 230 BOPM to 410 BOPM during July. Work with W.L Gore, Inc is continuing on the geochemical survey and field work for the follow-up which is scheduled for this month - September. We are now in the process of refining our sampling grid identified in the initial survey.

An updated engineering report by Reed W. Ferrill and Associates was prepared for the first half period, which reflected an improvement in the Group's proved developed reserves to the year end 31 December 2007 resulting from the expenditures on the Group's assets. This does not reflect the encouraging results that we have achieved from the current cyclic steaming pilot programme, which will be reflected in the 2008 report. The present day value is approximately $165,000,000 (constant costs/prices, discounted 10%).

I am pleased to be able to report that as a result of improved reserves, production, revenue and net income, the line of credit facility with the Bank of the West has been increased to $15m.on extremely competitive terms.

The revised line of credit will also enable Sefton to buy back the Group's stock from surplus funds if we consider this appropriate. This revised agreement adds flexibility to the Group's financing options in developing and growing.

Finally, the Board has decided to engage the firms of Blomfield Corporate Finance Ltd as Nomad and Religare Hichens, Harrison plc as Broker, both effective from October 1, 2008. Management believes that the profile in the marketplace of Sefton will be enhanced by this move. With the improvement in financials, banking facilities and the new Nomad/Broker we have greater flexibility in our growth path.

Jeremy Delmar-Morgan

Chairman

September 3, 2008 

Enquiries:

Jim Ellerton, CEO 00 1 303 759 2700

Jeremy Delmar-Morgan, Chairman 077 8900 4874

David Millham, Investor Relations 07850 949324

Jonathan Wright/Nicola Marrin, Seymour Pierce  020 7107 8000