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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Management Resource Solutions Plc | LSE:MRS | London | Ordinary Share | GB00B8BL4R23 | ORD EUR0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.30 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:8939C
Melrose Resources PLC
29 August 2007
Embargoed for release at 0700 29 August 2007
Melrose Resources plc
Unaudited Interim Results for the six month period ended 30 June 2007
Melrose Resources plc (LSE: MRS), the oil and gas exploration and production
company with interests in Egypt, Bulgaria, USA and France, today announces its
interim results for the six months to 30 June 2007.
Highlights
Operational Highlights
* 7 appraisal and development wells drilled in Egypt
* First production from the West Khilala field achieved in February 2007
* Progressed West Dikirnis development project with first oil expected in
October 2007
* Awarded 40% working interest in, and operatorship of, Mesaha exploration
block in Upper Egypt
* Completed second phase of Galata onshore compression project in Bulgaria
Financial Highlights
* 49% increase in turnover to $75.8 million (2006 - $50.8 million)
* 51% increase in EBITDAX to $59.5 million (2006 - $39.3 million)
* Operating loss of $16.6 million (2006 - profit of $17.9 million)
* Loss after tax of $41.3 million (2006 - profit of $2.9 million)
Commenting on the results, Robert Adair, Chairman, said:
"The first half of 2007 was a period of high activity for Melrose in Egypt as we
focussed on the successful appraisal and development of our operated West
Khilala and West Dikirnis fields. The first of these came on stream in February
and the second is due on production in October. Together they will drive
significant production and profits growth for the company. At the same time,
our exploration team has assembled an impressive inventory of prospects in the
Nile Delta which we plan to drill over the months and years ahead. Also in
Egypt, we have been awarded operatorship of the high potential Mesaha block in
Upper Egypt.
Elsewhere in the portfolio, we have been preparing to implement waterflood
projects in our US Permian Basin fields and to recommence drilling activities
in East Texas, where we plan to drill two wells by year end. In Bulgaria, we
drilled three deep-water wells in the Black Sea which established the presence
of an active hydrocarbon system but with limited reservoir development. Our
exploration activity in the area will now be reduced and will focus on the
lower-risk, shallow-water areas around the Galata gas field.
We were also very pleased that David Thomas joined us as our new Chief Executive
on 4 June 2007. David holds a BSc in Mining Engineering and an MSc in Petroleum
Engineering and has 28 years of experience in the international oil and gas
industry, primarily gained with Conoco, Lasmo, Eni and Centurion. David has the
qualities to lead Melrose through the next stages of its development and I
warmly welcome him to the Melrose team."
For further information please contact:
Melrose Resources plc 0131 221 3360
Robert Adair, Executive Chairman
David Thomas, Chief Executive
Munro Sutherland, Finance Director
Alasdair Robinson, Company Secretary
Buchanan Communications 0207 466 5000
Tim Thompson
Ben Willey
or visit www.melroseresources.com
Chairman's Statement
In the first year since the acquisition of Merlon Petroleum, Melrose has
focussed on integrating its technical teams in Egypt and Edinburgh and enhancing
its operating performance through close cooperation between our Egyptian joint
operating company and technical capabilities within Melrose. Expertise and
experience has been shared across the Group and the blending of skills and ideas
is already yielding tangible operating benefits.
Egypt
Activity in Egypt in the first half of 2007 has focussed on the appraisal and
development of the West Khilala and West Dikirnis fields. At the same time, our
explorationists in Edinburgh and Cairo have assembled an impressive prospect
inventory for drilling in the months and years ahead. These prospects have been
generated from 3-D seismic which has been very recently acquired and from
earlier 3-D which has now been re-processed. Further data acquisition is in
progress and we expect the prospect inventory to continue to grow.
The West Khilala field went on production on 5 February 2007 and two further
production wells were drilled in the period. The West Khilala No.6 was drilled
in order to establish the down-dip limits of the field on the western flank. The
well achieved its objective by extending the known limits of the reservoir
beyond the mapped area of high seismic amplitude. The well was then side-tracked
and intersected a gross vertical pay interval of 68 ft. This well was put on
production on 1 May 2007. West Khilala No.5 was drilled to test the northern
limits of the field. The well intersected a gross vertical pay interval of 54 ft
with 45 ft interpreted as net pay in an excellent sand reservoir. This well is
expected to be put on production shortly when the pipeline to the production
plant is complete.
Development drilling on the West Dikirnis field continued in the period with
three further development wells drilled in preparation for production
operations. These wells confirmed that the Qawasim reservoir has high
productivity, which augers well for the oil rim development. West Dikirnis No.3,
drilled in the central part of the field, came in low to prognosis but
intersected a 40 ft gross oil column and was flow tested at 4,320 bopd with a
gas rate of 7 MMcfpd. This well has been suspended as an oil producer. West
Dikirnis No.9, which was drilled as a production well in the western part of the
field, successfully intersected a 117 ft gross hydrocarbon column, consisting of
49 ft of gas and 68 ft of oil. This well was flow tested at 4,370 bopd and 7.3
MMcfpd. Recently, West Dikirnis No.8 was drilled as an oil producer in the
central-eastern area of the field. The well intersected 73 ft of net oil pay and
is currently being tested. One appraisal well, West Dikirnis No.6, was drilled
to test a separate culmination to the south of the main field and the Qawasim
reservoir interval was found to be water wet.
Progress on the West Dikirnis development project is broadly on schedule and is
now 90% complete. The 6 inch and 10 inch pipelines to the process plant have
been completed and they await testing. Construction of the storage tanks and the
foundations for the process vessels skids and pipe-racks is progressing well and
shipment of the various process skids to Egypt is imminent. We now expect first
production in October with full target production of 10,000 bopd in November.
During the reporting period, Salaka No.1 was put on production at an initial
rate of 13 MMcfpd and, recently, Tummay No.1 started producing at 1.8 MMcfpd.
The Rawda No.1 is expected to be put on production shortly after the Gas Sales
Agreement has been signed at a potential flow rate of 7 MMcfpd. This will be the
first producing well from the South East Mansoura Concession.
As a result of the wells drilled at West Khilala and in light of the pressure
and production history from the field, our estimates of the gross proved
reserves recoverable over the field life have been increased from 218 Bcf at the
beginning of the year to 256 Bcf. The gross proved and probable reserves,
however, have been revised down from 378 Bcf to 288 Bcf. On West Dikirnis, gross
proved reserves are broadly unchanged at 98 Bcf and 10.9 MMbbl. The proved and
probable gas reserves are also unchanged at 129 Bcf, while the liquids have been
revised from 23.8 MMbbl to 20.2 MMbbl. This reduction is primarily due to the
results from West Dikirnis No.3, which indicated the reservoir to be lower than
expected in the southern-central area of the field. Following a further review
of the production issues at South Batra, gross ultimate recoverable proved and
probable reserves have been reduced to 61 Bcf. Melrose now has an advanced
understanding of the different reservoir qualities and performance
characteristics in the Nile Delta and future exploration and development
activity will make full use of the lessons learned over the last year.
Production from West Khilala has been maintained at a controlled rate of
approximately 80 MMcfpd. We expect production from West Khilala to increase to
100 MMcfpd in the fourth quarter. Production from the El Mansoura Concession
reached over 120 MMcfpd and 2,300 bpd of oil and condensate. Current production
is 104 MMcfpd gas with 1,821 bpd of oil and condensate.
One exploration well was drilled in the period. The main objective of West
Khilala No.7 (deep) was to test an exploration prospect in the deeper Qawasim
formation but the well also served to delineate the edge of the main productive
Abu Madi reservoir in the south-eastern direction. As prognosed, the well
encountered a 35 ft of gross gas bearing reservoir in the Abu Madi, thus
confirming the limit of the West Khilala reservoir. The well then encountered a
strong water flow from the deeper main target in the Qawasim formation and,
following well control operations, the well was plugged and abandoned.
Melrose currently has two rigs drilling in Egypt. Drilling activity is now
switching to exploration drilling on the first prospects which have been
screened and prioritised by the combined exploration teams. To date, nine
prospects have been approved for drilling and we expect that up to five of these
will be drilled this year. A further twenty-two prospects and leads are being
further evaluated and ranked for drilling in 2008 and 2009. The gross
risk-adjusted mean reserves being targeted by this programme total 440 Bcf and
77 MMbbls.
The quality of the prospect generation process is based on extensive use of our
large inventory of 3-D data. Seismic acquisition is now complete over the whole
of the Mansoura Concession and the northern area of South East El Mansoura.
Further 3-D seismic acquisition is planned over Qantara and South East El
Mansoura in late 2007 and into 2008 and we are also reprocessing some of the
existing 3-D seismic data. This new data will facilitate the continuing
generation of new exploration prospects for drilling in 2009 and beyond.
The Concession Agreement for our new Mesaha Concession in Upper Egypt (Melrose
Resources 40% and operator) is expected to be signed shortly.
Bulgaria
Production from the Galata field in the first half of the year matched
contracted sales volumes of 5.3 Bcf (149.5 Mm(3)). The second stage of onshore
compression on the field was successfully installed, on time and on budget, and
commissioning of the new facilities is underway.
During the six-month period, three exploration wells were drilled in the western
Black Sea: Izgrev, Ropotamo and Obzor. All three wells encountered strong gas
shows, indicating the presence of an active hydrocarbon system, but had
insufficient reservoir pay to justify flow testing and all were plugged and
abandoned.
Also this year, a total of 2,600 km of new 2-D seismic data was acquired in the
shallow waters of Blocks Emine and Kaliakra 99. The Emine block is relatively
under-explored and the new data will facilitate the identification of any
drillable targets in this area. In Kaliakra 99, the new seismic is concentrated
on already recognised leads to ascertain whether they can be matured into
drillable prospects. The interpretation of the seismic data will be completed in
conjunction with a review of the three deep-water well results in order to fully
understand the remaining prospectivity of the Emine, Kaliakra 99, Rezovska and
Bourgas Deep blocks.
Our efforts to re-acquire the exploration rights to the Galata concession, which
surrounds the Galata producing field, have continued during 2007 and a final
court decision on whether the concession may be awarded to Melrose is expected
in mid-September.
USA
Capital expenditures in our properties in the Permian Basin of West Texas and
Eastern New Mexico were curtailed in the first half of 2007 due to other
financial priorities. Operational activity was directed to continuing
preparatory work for the planned waterflood projects and to remedial work to
ensure regulatory compliance. Planning is now in hand for an active development
drilling and well conversion programme and we expect to make continuous use of
one drilling rig and three work-over rigs, commencing in the first quarter of
2008. Planned capital expenditures on these projects during 2008 and 2009 total
approximately $40 million and our goal is to increase production there to over
2,500 boepd.
In East Texas, two appraisal well locations have been selected for drilling in
October/November 2007. Both wells are defined by seismic anomalies and are
targeting relatively low-risk extensions of current producing fields. Based on
an evaluation of our proprietary 3-D seismic data, future exploration plays are
also being defined in several reservoir horizons and further exploration
drilling is planned for early in 2008.
France
The exploration work programme continues in the Rhone Maritime licence with a
focus on reducing the risk on the presence of an active petroleum system. This
de-risking programme has commenced with the purchase of new satellite image data
which is aimed at defining surface oil seeps. This data can help locate
hydrocarbon migration pathways and delineate areas for future exploration. A
sampling survey of the surface seeps is also planned during 2007 with the aim to
characterize the exact nature of the hydrocarbons.
Work is also continuing on identifying direct hydrocarbon indicators within the
seismic data. If successful, this will reduce the risk on the presence and
migration of hydrocarbons in the licence area and provide locations for
potential leads and prospects. Reservoir studies are also progressing for
targets in the Pliocene and Miocene stratigraphic sections. This work is
focussed on recognising and delineating reservoir depositional sequences and
hence possible drilling targets from the 2-D seismic data.
If the results of this work programme are encouraging, the goal in 2008 will be
to seek an industry partner to acquire new seismic data over areas of particular
interest in the concession with a view to drilling an exploration well at a
later date.
Results for the six months ended 30 June 2007
Turnover in the six months ended 30 June 2007 was $75.8 million (six months
ended 30 June 2006 $50.8 million). Operating loss was $16.6 million (six months
ended 30 June 2006, profit of $17.9 million). Loss before taxation in the first
half was $34.3 million (six months ended 30 June 2006, profit of $6.6 million).
Loss after taxation was $41.3 million (six months ended 30 June 2006, profit of
$2.9 million). The results have been heavily impacted by the charge of $43.6
million for unsuccessful exploration costs in the period.
Net daily production statistics and product pricing information during the
period were as follows:
6 months ended 6 months ended 12 months ended
30 June 2007 30 June 2006 31 December 2006
Gas Oil/ condensate Gas Oil/ condensate Gas Oil/ condensate
MMcfpd bpd MMcfpd bpd MMcfpd bpd
--------- -------- -------- -------- -------- -------- --------
Bulgaria 29.2 - 49.8 - 49.2 -
Egypt 43.0 941 12.2 196 15.9 396
USA 5.4 650 1.6 755 4.7 734
-------- -------- -------- -------- -------- --------
Total 77.6 1,591 63.6 951 69.7 1,130
-------- -------- -------- -------- -------- --------
MMcfepd 87.1 69.3 76.5
Average $3.40 $56.67 $3.47 $63.51 $3.56 $63.31
price
-------- -------- -------- -------- -------- --------
Financing costs of $18.8 million include $1.4 million in respect of the
amortisation of loan arrangement fees and $3.2 million in respect of the
reduction in value of an option to acquire shares in an AIM company which is
held as a financial asset.
EBITDAX for the period was $59.5 million (six months ended 30 June 2006, $39.3
million). Capital expenditures during the period amounted to $98.7 million (six
months ended 30 June 2006, $44.0 million). Capital expenditures were split
between Egypt - $58.4 million, Bulgaria - $ 34.7 million, USA - $5.2 million and
France - $ 0.4 million.
------------------- ----------- ----------- -----------
EBITDAX 6 months ended 6 months ended 12 months ended
30 June 2007 30 June 2006 31 December
2006
$000 $000 $000
------------------- ----------- ----------- -----------
(Loss)/profit from
operations (16,634) 17,861 37,515
Add back:
Depletion 31,993 15,909 40,646
Decommissioning charge 286 736 1,621
Unsuccessful exploration
costs 43,595 4,620 8,298
Depreciation 292 181 530
----------- ----------- -----------
EBITDAX 59,532 39,307 88,610
----------- ----------- -----------
Outlook
Current gross production in Egypt is approximately 112 MMcfepd and this is
expected to rise to over 210 MMcfepd during the second half of 2007. This will
yield net production for Melrose in Egypt of around 85 MMcfepd of which
approximately 34% is expected to be oil and condensate. Production from the
Galata field in the second half of 2007 is expected to be in line with
production in the first half. In the USA, current production of approximately
1,678 boepd is expected to decline slightly in the second half of the year.
We look forward with interest to the results of the exploration drilling
programme which is now underway in Egypt. Our experienced team of
explorationists is now working with an impressive and expanding database of 3-D
seismic and well data and our inventory of prospects and leads offers attractive
upside for Melrose. We expect that our planned appraisal and development
activity in the US in 2007 and 2008 will lead to a steady increase in production
there and the anticipated low-risk accretion in value of these assets provides
good stability within our portfolio of interests.
Robert F M Adair
Chairman
28 August 2007
Independent Review Report to Melrose Resources plc
Introduction
We have been instructed by the company to review the financial information for
the 6 months ended 30 June 2007 which comprises the consolidated income
statement, consolidated statement of recognised income and expense, consolidated
balance sheet, and consolidated cash flow statement and related notes 1 to 7. We
have read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
KPMG Audit Plc
Chartered Accountants
Edinburgh
28 August 2007
Consolidated income statement
for the six months ended 30 June 2007
---------------------- ----- ---------- ---------- ----------
6 months ended 6 months ended 12 months ended
30 June 2007 30 June 2006 31 December
2006
$000 $000 $000
Unaudited Unaudited Audited
---------------------- ----- ---------- ---------- ----------
Note
Revenue 3 75,841 50,843 116,336
Depletion (31,993) (15,909) (40,646)
Decommissioning charge (286) (736) (1,621)
Unsuccessful
exploration costs (43,595) (4,620) (8,298)
Other cost of sales (9,846) (6,312) (17,912)
---------- ---------- ----------
Total cost of sales (85,720) (27,577) (68,477)
---------- ---------- ----------
Gross (loss)/profit (9,879) 23,266 47,859
Administrative expenses (6,755) (5,405) (10,344)
---------- ---------- ----------
(Loss)/profit from
operations 3 (16,634) 17,861 37,515
Financing income 1,080 709 1,892
Financing costs (18,767) (11,961) (28,284)
---------- ---------- ----------
(Loss)/profit before
taxation (34,321) 6,609 11,123
Income tax expense (7,000) (3,661) (11,082)
---------- ---------- ----------
(Loss) /profit for the
period (41,321) 2,948 41
---------- ---------- ----------
(Loss)/earnings per share
(cents)
Basic 4 (38.6) 3.7 -
---------- ---------- ----------
Diluted 4 (38.6) 3.7 -
---------- ---------- ----------
The loss for the period is 100% attributable to equity shareholders.
Note: All activities are continuing activities.
Consolidated statement of recognised income and expense
for the six months ended 30 June 2007
----------------------- ---------- --------- ----------
6 months ended 6 months ended 12 months ended
30 June 2007 30 June 2006 31 December
2006
$000 $000 $000
Unaudited Unaudited Audited
----------------------- ---------- --------- ----------
Exchange differences on
non-functional currency
entities 57 (14) (69)
Cash flow hedges (378) - 358
- effective portion of changes
in fair value
Deferred tax on cash flow
hedges 136 - (136)
---------- --------- ----------
Net (loss)/income recognised
directly in equity (185) (14) 153
(Loss)/profit for the
period (41,321) 2,948 41
---------- --------- ----------
Total recognised
(loss)/income for the
period (41,506) 2,934 194
---------- --------- ----------
Consolidated balance sheet
as at 30 June 2007
------------------ ---- --------- --------- ----------
As at As at As at
30 June 2007 30 June 2006 31 December
2006
$000 $000 $000
Unaudited Unaudited Audited
------------------ ---- --------- --------- ----------
Note
Non-current assets
Goodwill 66,173 60,589 66,173
Intangible assets 78,700 115,654 85,701
Property, plant, and
equipment 503,413 393,009 473,839
Financial assets 1,883 3,544 5,011
Deferred tax asset 20,537 22,095 16,468
--------- --------- ----------
670,706 594,891 647,192
--------- --------- ----------
Current assets
Inventories 29,955 15,213 24,104
Trade and other
receivables 44,784 43,245 28,338
Cash and cash equivalents 13,689 11,607 17,769
--------- --------- ----------
88,428 70,065 70,211
--------- --------- ----------
--------- --------- ----------
Total assets 759,134 664,956 717,403
--------- --------- ----------
Current liabilities
Bank loans 5 - (126,687) -
Other loans 5 - - (3,229)
Trade and other payables (52,214) (38,422) (34,677)
Provisions (1,537) (797) (1,889)
--------- --------- ----------
(53,751) (165,906) (39,795)
--------- --------- ----------
Non-current liabilities
Bank loans 5 (305,442) (260,526) (287,149)
Deferred tax liability (79,892) (64,685) (81,245)
Provisions (10,366) (7,564) (10,027)
--------- --------- ----------
(395,700) (332,775) (378,421)
--------- --------- ----------
--------- --------- ----------
Total liabilities (449,451) (498,681) (418,216)
--------- --------- ----------
--------- --------- ----------
Net assets 309,683 166,275 299,187
--------- --------- ----------
Equity attributable to
shareholders
Issued capital 7 19,925 14,322 18,502
Share premium 7 191,945 10,612 141,629
Special reserve 7 101,244 111,244 101,244
Retained reserves 7 (3,431) 30,097 37,812
--------- --------- ----------
Total equity 309,683 166,275 299,187
--------- --------- ----------
The accounting policies and notes form part of these financial statements.
Consolidated cash flow statement
for the six months ended 30 June 2007
------------------------- ---------- --------- -----------
6 months ended 6 months ended 12 months ended
30 June 2007 30 June 2006 31 December
2006
$000 $000 $000
Unaudited Unaudited Audited
------------------------- ---------- --------- -----------
Cash flows from operating
activities
(Loss)/profit for the
period (16,634) 17,861 37,515
Adjustments for:
Depreciation 292 181 530
Depletion and
decommissioning charge 32,279 16,645 42,267
Unsuccessful exploration
costs 43,595 4,620 8,298
Loss on disposal of assets - - 16
Equity-settled share-based
payment expenses 438 244 438
Income tax charge on
Egyptian revenue (11,734) (2,925) (6,129)
---------- --------- -----------
Operating cashflow before
changes in working capital 48,236 36,626 82,935
Increase in inventory (5,851) (2,179) (11,072)
(Increase)/decrease in
trade and other
receivables (17,109) 4,122 (4,393)
Increase in trade and
other payables 19,179 4,486 36,939
---------- --------- -----------
Cash generated from
operations 44,455 43,055 104,409
Income taxes paid (400) - -
---------- --------- -----------
Net cash inflow from
operating activities 44,055 43,055 104,409
---------- --------- -----------
Cash flows from investing
activities
Proceeds from sale of
property, plant and
equipment - - 150
Proceeds from sale of
investments - 547 547
Interest received 514 207 765
Acquisition of property,
plant and equipment and
intangible assets (98,740) (44,175) (116,276)
Acquisition of subsidiary
(net of cash received) - (284,354) (252,340)
---------- --------- -----------
Net cash outflow from
investing activities (98,226) (327,775) (367,154)
---------- --------- -----------
Cash flows from financing
activities
Proceeds from the issue of
share capital 52,523 2,151 141,128
Fees payable (784) (878) (3,656)
---------- --------- -----------
Net proceeds from the
issue of share capital 51,739 1,273 137,472
Interest paid (13,655) (7,369) (18,835)
Loan arrangement fees paid (1,272) (9,284) (13,644)
Borrowings raised 17,929 394,692 448,987
Repayment of borrowings (3,229) (91,000) (279,919)
Dividends paid - - (2,222)
---------- --------- -----------
Net cash inflow from
financing activities 51,512 288,312 271,839
---------- --------- -----------
Net (decrease)/increase in
cash and cash equivalents (2,659) 3,592 9,094
Cash and cash equivalents
at start of period 17,769 7,965 7,965
Effect on exchange rate
fluctuations on cash held (1,421) 50 710
---------- --------- -----------
Cash and cash equivalents
at end of period 13,689 11,607 17,769
---------- --------- -----------
Notes to the interim accounts
1 General information
Melrose Resources plc (the "Company") is a company registered in England. This
interim report contains the financial information of the Company and its
subsidiaries (together referred to as the "Group") for the six month period
ended 30 June 2007.
The interim report was authorised for issue by the directors on 28 August 2007.
The comparative figures for the year ended 31 December 2006 do not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. A copy
of the statutory accounts for that year has been delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985.
2 Accounting policies - basis of preparation
The financial statements have been prepared and approved by the directors in
accordance with International Financial Reporting Standards as adopted by the
EU.
On 29 June 2006, the Company acquired 100% of the issued share capital of Merlon
Petroleum Company. As at the 30 June 2006 the fair values of the assets acquired
were estimated for the interim financial statements. Since that date, more
information has been gathered, as a result of which the estimated fair values
were amended.
The same accounting policies and methods of computation have been applied in
this interim financial report as were applied in the statutory accounts for the
year ended 31 December 2006, which are available on the Company's website,
www.melroseresources.com.
3 Segmental reporting
The Group has a single class of business which is oil and gas exploration,
development and production. All sales are to third parties.
----------------- ---------- ---------- ----------
Geographical area 6 months ended 6 months 12 months ended
30 June 2007 ended 31 December
$000 30 June 2006 2006
$000 $000
----------------- ---------- ---------- ----------
Revenue
Bulgaria 19,957 30,166 60,472
Egypt 42,488 10,787 29,399
USA 13,396 9,890 26,465
---------- ---------- ----------
Total 75,841 50,843 116,336
---------- ---------- ----------
(Loss)/profit from operations
Bulgaria (32,378) 13,276 27,348
Egypt 18,274 2,760 7,131
USA 1,598 4,251 8,451
Unallocated corporate expenses (4,128) (2,426) (5,415)
---------- ---------- ----------
Group (loss)/profit from
operations (16,634) 17,861 37,515
---------- ---------- ----------
4 Earnings per share
The calculation of basic and diluted earnings per share is based upon the
following:
--------------------- ----------- ---------- ----------
6 months 6 months 12 months ended
ended ended 31 December
30 June 2007 30 June 2006 2006
$000 $000 $000
--------------------- ----------- ---------- ----------
(Loss)/profit for the period
attributable to ordinary
shareholders (41,321) 2,948 41
(basic and diluted) ----------- ---------- ----------
Cents Cents Cents
(Loss)/earnings per share
Basic (38.6) 3.7 -
Diluted (38.6) 3.7 -
The weighted average number of ordinary shares used in the calculation of basic
and diluted earnings per share for each period was calculated as follows:
--------------------- ----------- ---------- -----------
6 months ended 6 months ended 12 months ended
30 June 2007 30 June 2006 31 December
2006
No. of shares No. of shares No. of shares
--------------------- ----------- ---------- -----------
Issued ordinary shares at
start of period 102,623,456 78,582,376 78,582,376
Shares issued during the
period 7,349,435 1,349,948 24,041,080
----------- ---------- -----------
Shares in issue at end of
period 109,972,891 79,932,324 102,623,456
----------- ---------- -----------
Weighted average number of
ordinary shares at end of
period 107,162,709 79,374,098 90,348,313
Effect of share options in
issue 638,449 1,222,572 887,110
----------- ---------- -----------
Weighted average number of
ordinary share at end of
period - for diluted
earnings per share 107,801,158 80,596,670 91,235,423
----------- ---------- -----------
5 Bank loans and financial instruments
The Group's interest-bearing loans and borrowings are as follows:
----------------------- --------- --------- -----------
As at As at As at
30 June 2007 30 June 2006 31 December
2006
$000 $000 $000
----------------------- --------- --------- -----------
Current liabilities
Bank loans - 126,687 -
Loan from parent company - - 3,229
Non-current liabilities
Bank loans 305,442 260,526 287,149
--------- ---------
--------
305,442 387,213 290,378
--------- --------- --------
The following table indicates the effective interest rates of interest-bearing
liabilities at the balance sheet date, and the period in which they mature or
fall due:
Repayable
Effective Total Repayable Repayable Repayable after
Rate within 1 year 1-2 years 3-5 years 5 years
% $000 $000 $000 $000 $000
------------------ ------- ------- -------- -------- -------- --------
As at 30 June 2007
Secured bank loans 9.2 305,442 (1,570) (1,566) 258,704 49,874
As at 31 December
2006
Secured bank loans 8.9 287,149 (2,336) 101,945 177,580 9,960
Loan from
parent company 8.0 3,229 3,229 - - -
As at 30 June 2006
Secured bank loans 9.1 260,526 - 62,787 197,739 -
Other loans 8.7 126,687 126,687 - - -
6 Financial instruments
The Group is exposed to currency risk arising from purchases, sales, borrowings,
cash and cash equivalents that are denominated in currencies other than US
Dollars. It is Group policy that borrowings should match the currency of the
cashflows from which it is expected that they will be repaid. This has been the
case throughout the interim reporting period.
7 Consolidated statement of changes in equity attributable to shareholders
Share Share Special Retained
capital premium reserve reserves
$000 $000 $000 $000
------------------------- -------- -------- -------- ---------
Balance as at
1 January 2006 14,080 8,579 111,244 29,661
Issue of share capital 242 2,033 - -
Total recognised
income and expense - - - 2,934
Equity-settled
transactions,
net of tax - - - (286)
Dividends paid - - - (2,212)
-------- -------- -------- ---------
Balance as at
30 June 2006 14,322 10,612 111,244 30,097
Issue of share capital 4,180 134,673 - -
Issue costs - (3,656) - -
Transfer from
Special reserve to
retained earnings - - (10,000) 10,000
Total recognised
income and expense - - - (2,740)
Equity-settled
transactions,
net of tax - - - 465
Dividends paid - - - (10)
-------- -------- -------- ---------
Balance as at
31 December 2006 18,502 141,629 101,244 37,812
Issue of share
capital 1,423 51,100 - -
Issue costs - (784) - -
Total recognised
income and expense - - - (41,506)
Equity-settled
transactions,
net of tax - - - 263
-------- -------- -------- ---------
Balance as at
30 June 2007 19,925 191,945 101,244 (3,431)
-------- -------- -------- ---------
Glossary
bbl barrel of oil or condensate
Bcf billion cubic feet of gas
bcpd barrel of condensate per day
bpd barrels per day
boe barrel of oil equivalent
boepd barrel of oil equivalent per day
bopd barrel of oil or condensate per day
EBITDAX earnings before interest, taxation, depletion, depreciation,
amortisation and exploration costs
Mbbl thousand barrels of oil or condensate
Mboe thousand barrels of oil equivalent
Mcf thousand cubic feet of gas
Mm3 thousand cubic metres of gas
MMbbl million barrels of oil or condensate
MMboe million barrels of oil equivalent
MMcf million cubic feet of gas
MMcfpd million cubic feet of gas per day
MMcfepd million cubic feet of gas equivalent per day
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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