Alliance Resources - Final Results

RNS No 6169u
ALLIANCE RECOURCES PLC
24th October 1997

              PRELIMINARY ANNOUNCEMENT OF RESULTS
               FOR THE YEAR ENDED 30 APRIL 1997
                               
Chairman's Statement

The results for the year ended 30 April 1997 are inevitably
overshadowed by the successful acquisition of LaTex Resources
Inc. which was completed just after the year end on 1 May
1997. Details of the acquisition were included in Listing
Particulars sent to shareholders on 4 April 1997.
Nevertheless, while the results themselves predate the
completion of the acquisition, a considerable part of the
fiscal year was devoted to negotiating and completing the
transaction.

The completion of the LaTex acquisition represented a key
milestone in the development of the Alliance Group and
considerable progress has already been made in combining, and
rationalising, the operations and interests of the new,
enlarged group. The acquisition has transformed the prospects
of the new Group with production, which averaged 460 barrels
of oil equivalent per day (boepd) during the year ended 30
April 1997, now averaging approximately 2,100 boepd.

Since 1 May 1997, a number of disposals of non-core properties
have been completed and operational efforts have been directed
at enhancing existing production from the Group's principal
fields. The proceeds of the disposals have been reinvested in
the core oil and gas assets of the Group and applied towards
strengthening the combined group's balance sheet. The next
phase of operational activity will be directed at unlocking
the considerable potential of the Group's non-producing
reserves through an active recompletion programme.


Trading Results and Financial Position

The results for the year ended 30 April 1997 show a loss on
ordinary activities before and after tax of US$1.827 million
(1996 - loss of US$3.593 million) giving a loss per share of
0.3p (1996 - loss per share of 0.8p).

However, we are pleased to report that turnover was virtually
unchanged at US$3.681 million (1996 - US$3.686 million).
Following various property disposals production declined to
166,000 barrels of oil equivalent for the year (1996 - 225,000
boe), representing approximately 460 boepd (1996 - 620 boepd).
The decline in volumes was offset by the improved price
environment for both oil and gas in North America resulting in
an average realised price of US$21.13 per barrel of oil
equivalent (1996 - US$14.81/boe).

Although cost of sales showed a reduction from the previous
year, these costs still amounted to US$2.744 million for the
year (1996 - US$3.930 million). Administrative expenses were
relatively unchanged at US$2.575 million (1996 - US$2.629
million). However, the acquisition has already resulted in
rationalisation of the combined group's overheads with the
consolidation of the North American operations in Tulsa. The
results for the year continued to be adversely affected by
some non-recurring costs, although these costs are now running
at an immaterial level.

During the year ended 30 April 1997 proceeds of US$2.227
million were received for property disposals covering
approximately 426 thousand barrels of oil equivalent.

The Group ended the financial year at 30 April 1997 with cash
balances of $1.461 million and no material debt.


LaTex Acquisition

As mentioned earlier, the acquisition of LaTex was completed
on 1 May 1997. At the same time the Group also completed the
acquisition of an overriding royalty interest from Bank of
America, effected a share consolidation pursuant to which
every 40 ordinary shares of 1p each were consolidated into 1
ordinary share of 40p and entered into revised credit
arrangements with Bank of America.

Since the completion of the LaTex acquisition in May
considerable progress has been made:

Disposals: Disposals of non core properties completed to
date have realised US$4.536 million and the properties held by
the Group have now been rationalised to approximately 400 core
properties.

Production: The remedial programme has yielded
significant early success with gross production from eleven
key fields increasing from 244 barrels of oil equivalent per
day in early May 1997 to in excess of 865 boed by mid August.

Overheads: Consolidation of operations in Tulsa, and the
consequent closure of Alliance's previous offices in Houston
and Lafayette, has reduced the enlarged group's overhead.

Oil & Gas Prices: LaTex's previous oil and gas price
hedges were bought out for $1.128 million in May, thereby
providing exposure to the recent favourable price environment.

The next phase of the Group's business plan will focus on
crystallising the potential of the currently non producing
reserves through a programme of recompletions which should
result in a significant increase in production and producing
reserves. I would also like to highlight the excellent terms
which management has achieved in concluding the farm-out
arrangement on the Group's Jefferson Island property which is
described in the Operations Review which follows. This deal,
which is the result of careful geoscience review and
painstaking negotiations, has the potential for significant
addition to shareholder value in the coming years.


Board Matters

I would like to welcome to the Board two new non-executive
directors, appointed on the completion of the LaTex merger.
Although Jeff Wilson will not be standing for re-election as a
director at the forthcoming Annual General Meeting, John
Martinson brings considerable oil and gas expertise to the
Board. He was a non-executive director of LaTex and is
currently managing director of Wood Roberts LLC, a petroleum-
oriented investment banking and advisory partnership.

This will be my last report to you as Chairman of Alliance. I
have decided not to stand for re-election as a director when
my term of office ends by rotation at the forthcoming Annual
General Meeting. I have come to this decision because the
tasks which needed to be accomplished when I was elected
Chairman in late 1995 - no less than the restructuring and
revitalisation of Alliance to ensure its survival - are now
complete, and because there are people better qualified than I
to carry the Group forward into its next phase of development.


Prospects

Alliance's goal is to become a major international independent
oil and gas company by pursuing a production-oriented strategy
focusing on older, undeveloped assets or undervalued companies
thereby continuing the strategic rationale which led to the
acquisition of LaTex. We believe that this strategy provides
the opportunity for significant growth potential with
considerably less risk than one based on exploration

The current financial year has already started positively with
the focus on rationalising the property portfolio, increasing
production from the core properties and improving the quality
of the balance sheet. We will remain focused on extracting
value from our existing assets while remaining committed to
appraising international opportunities.

While the Board is disappointed at the recent trading range of
the  share price, we believe that the progress currently being
made will be reflected in the share price in the near term.
We look forward to the future with confidence. It is envisaged
that a Form 10-Q, covering the results of the Group for the
quarter ended 31 July 1997, will be filed with the U.S.
Securities and Exchange Commission in the near future.


D Patrick Maley
Chairman

Enquiries to:

Alliance Resources PLC
Brian Williams , Finance Director       Tel: [phone]
Jak Keenan, Managing Director           Tel: [phone]

Basham & Coyle
John Coyle                              Tel: [phone]

Consolidated profit and loss account


                              Notes  Year ended   Year ended
                                      30 Apr 97    30 Apr 96
                                         US$000     US$000


Turnover                                  3,681      3,686
                                         ______     ______

Operating costs
  Exceptional costs
  arising from irregularities  1          (292)      (589)
  Other operating costs        2        (5,319)    (6,559)
                                         ______     ______
                                        (5,611)    (7,148)
                                         ______     ______

Operating loss                          (1,930)    (3,462)

Exceptional amounts
written off investments      3               -       (201)
                                         ______     ______
Loss on ordinary activities
before interest and tax                 (1,930)    (3,663)

Other interest receivable
and similar income                         113       257
Interest payable
and similar charges         4              (10)      (187)
                                         ______     ______
Loss on ordinary activities
before and after taxation
transferred to reserves                 (1,827)    (3,593)

Loss per share (pence)      5             (0.3)p     (0.8)p

The results derive solely from continuing activities


Consolidated balance sheet


                                          As at      As at
                                      30 Apr 97   30 Apr 96
                                         US$000     US$000

Fixed assets
 Tangible fixed assets                    4,276      7,311
                                          _____      _____

Current assets
 Debtors                                  2,850      1,357
 Cash at bank and in hand                 1,461      1,177
                                          _____      _____
                                          4,311      2,534
Creditors
 Amounts falling due within one year     (2,505)    (1,998)
                                          _____      _____
Net current assets                        1,806        536
                                          _____      _____
Total assets less current liabilities     6,082      7,847
Creditors
 Amounts falling due after more than
    one year                                (85)       (92)
 Provisions for liabilities and charges     (36)         -
                                          _____      _____
Net assets                                5,961      7,755


Capital and reserves
 Called up share capital                  5,105      5,105
 Share premium account                   20,157     20,157
 Merger reserve                             401        401
 Profit and loss account                (19,702)   (17,908)
                                          _____      _____
Shareholders' funds - equity              5,961      7,755


Consolidated cash flow statement

                                     Year ended   Year ended
                                      30 Apr 97   30 Apr 96
                                         US$000     US$000

Net cash outflow from
operating activities                      (524)     (5,399)
Returns on investments
and servicing of finance                    54         208
Capital expenditure
and financial investment                 1,432      (2,512)
                                         ______     ______
Cash inflow / (outflow) before use
of liquid resources and financing          962      (7,703)

Financing                                 (674)      9,765
                                         ______     ______
Increase in cash in the period              288      2,062


Reconciliation of net cashflow to movement in net
funds / (debt)

Increase in cash in the period              288      2,062
Decrease in loan                              7        528
Translation difference                       33          -
                                         ______     ______
Movement in net funds in the period         328      2,590
Net funds / (debt) at beginning of period 1,048     (1,542)
                                         ______     ______
Net funds at end of period                1,376      1,048


Notes:

1.  Exceptional costs arising from irregularities
    
    The exceptional charge comprises:

                                       30 Apr 97 30 Apr 96

                                          US$000    US$000
    Loss arising from transactions
    with certain companies
    related to Mr O'Brien                      -        73

    Professional fees                        121       788

    Settlement with Mr O'Brien               171     (272)
                                           _____     _____
                                             292       589


     Professional fees

     The exceptional cost of US$121,000 in the year to 30 April
     1997 (1996: US$788,000)  relates to the cost of
     professional assistance obtained by the directors in
     relation to actions taken arising from the alleged
     fraudulent activities in the period in which Mr O'Brien
     was Chief Executive.

     Proceeds resulting from the settlement with Mr O'Brien

     As part of the settlement reached with Mr. O'Brien, the
     10,351,966 shares in the Company held in the name of
     Progas Holdings Ltd. have now been sold and the Company
     has received the proceeds of such sale amounting to
     US$123,023.

2.   Operating costs
                                      30 Apr 97  30 Apr 96
                                         US$000    US$000

    Total operating costs were:           5,611     7,148

    Made up as follows:

    Cost of sales
     Operating costs and production taxes1,701     2,318
     Depletion of oil and gas interests  1,043     1,612
                                         _____     _____
                                         2,744     3,930
   
    Administrative expenses
     Exceptional professional fees net of
     settlement proceeds  (note 1)         292       589
     Administrative expenses             2,575     2,629
                                         _____     _____
                                         2,867     3,218
   
   
    The gross profit / (loss) was:-        937     (244)
   


3.  Exceptional amounts written off investments

    Following the removal of Mr O'Brien in September 1995,
    the Group reviewed its portfolio of investments, unlisted
    investments and joint venture interests.  It was
    considered unlikely that significant amounts would be
    recovered from the Tatarstan investment or from the Geos
    joint venture.  Accordingly, additional charges were made
    to the profit and loss account in the year ended 30 April
    1996 in respect of costs incurred in relation to these
    investments .

4.  Interest payable and similar charges

                                      30 Apr 97  30 Apr 96
                                         US$000    US$000

    On bank loans and overdrafts             10        28

    Foreign exchange loss                     -       159
                                           ____      ____
                                             10       187

     The foreign exchange gain in the current year has been
     included in other interest receivable and similar income

5.   Loss per share

    The calculation of loss per share is based upon the
    following:
                                      30 Apr 97  30 Apr 96

    Loss for the period (US$000)          1,827     3,593



    Weighted average
    number of shares               324,152,633 317,175,674



6.   UK and Canadian Generally Accepted Accounting Principles

     The financial statements have been prepared in accordance
     with  accounting  principles generally  accepted  in  the
     United Kingdom. The Group's consolidated loss on ordinary
     activities  after taxation and the Group's share  capital
     and  reserves for the financial year ended 30 April  1997
     would not have differed had the financial statements been
     prepared in accordance with Canadian GAAP.


The financial information contained herein does not constitute
the  Company's statutory accounts for the years ended 30 April
1997  or 1996. Statutory accounts for the year ended 30  April
1996  have  been delivered to the Registrar of  Companies  and
those  for  the  year ended 30 April 1997  will  be  delivered
following  the Company' Annual General Meeting.  The  auditors
have  reported  on  both  the 1997 and  1996  accounts.  Their
reports  for 1997 and 1996 were unqualified and  their  report
for 1996  contained a statement that proper accounting records
had  not  been  kept for the period up until the investigation
into  Mr. O'Brien's involvement in the Group's activities  had
been concluded.

Statement of Proved and Probable Oil and Gas Reserves

                                  Oil        Gas     Total
                            thousands   millions     BOE's
                                   of   of cubic     thousands
                              barrels       feet 

Net proved reserves
disclosed at 1 May 1996           628     2,384      1,026

Changes during the year
- Production                    (147)      (114)     (166)
- Disposals                      (65)    (2,165)     (426)
- Revisions                       302      1,943       625
                               ______     ______    ______
Net proved reserves
disclosed at 30 April 1997        718      2,048     1,059

Of which

Proved developed producing        377        144       401
Proved developed behind pipe       25          -        25
Proved developed non-producing     22          -        22
Proved undeveloped primary        294      1,904       611
                               ______     ______    ______
Net proved reserves
disclosed at 30 April 1997        718      2,048      1,059

Net probable reserves
disclosed at 30 April 1997       546       2,755      1,005




The  1997  Annual  Report  and Financial  Statements  will  be
delivered to shareholders in due course.


Registered Office:                    Company  No:2532955
Kingsbury House
15-17 King Street
London  SW1Y 6QU


END


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