RNS Number:2871M
Sefton Resources Inc
13 June 2003
Sefton Resources, Inc.
("Sefton" or "the Company")
Results for the year to 31 December 2002
And Re-commencement of Drilling in California.
Chairman's Statement:
2002 was Sefton's second full year as a public company, and like its first year
there were successes and setbacks but overall we believe the Company is
positioned for growth.
Revenues increased in 2002 by $271,928 over 2001, a rise of more than 140%. The
increase was due to a combination of higher crude oil and natural gas prices, as
well as increased production. Production in 2002 increased to 22,644 BOE a 157%
gain over 2001. The increases in production volumes were primarily due to the
full year impact of the Canadian assets acquired in 2001, the re-starting of
production at the Tapia Canyon field (California), after changing field
operators, and the initial production from our Eureka Canyon acquisition late in
2002.
All of Sefton's three operating assets, Tapia Canyon, Eureka Canyon (both in
California) and the Canadian assets are generating positive net operating
revenue at the field level. Our year-end reserve studies indicate proven
developed reserves increasing from 3,235,924 BOE to 4,420,049 BOE an increase of
27% (1,184,125 BOE). These year-end 2002 reserves have a before tax Present
Value of $25.2 million, based upon USconstant costs and prices with a 10%
discount factor.
Revenues were negatively impacted in 2002 by several factors. While completing
our first well in the Tapia Field Development Program, the drilling contractor
encountered high pressures in a natural gas zone that caused the well to
blowout. Clean up and containment of the blowout resulted in unexpected expenses
of approximately$350,000. These expenses caused Sefton to re-allocate its
available cash from its drilling program to the expense of containment and clean
up of the well. In addition, Sefton instituted litigation proceedings against
its original drilling contractor, thereby incurring unexpected legal expenses.
The combination of these two events together with higher than expected corporate
administration expenses required us to defer Sefton's 2002 drilling program.
The presence of this gas zone may be economically very significant and it will
be evaluated during drilling of further development wells.
Net loss for 2002 was $1,010,355 compared to a net loss of $736,951 for 2001, an
increase of 27%, which represents a loss of $0.004 per share for both years.
Subsequent to year end, Sefton has initiated a strategic relationship with Hall,
Wells and DiNardo, LLC, a team with many years of experience in the energy
industry, to assist Sefton in obtaining additional financing and to implement an
operations plan that is designed to improve operating results and the balance
sheet. As part of this plan Sefton has: reduced staffing and overhead expenses
by approximately 20% to date, settled the drilling contractor litigation on
favorable terms, reduced payables through negotiations of past billings (related
to blow-out expenses), completed a small placing in the UK, re-commenced
development of its California assets and began the process of seeking new
investments to support the future drilling and work-over program.
Sefton estimates that its cash requirements will be approximately $500,000 in
the next six months to reduce the current payables resulting from the blowout
and support ongoing operations until a new funding program can be completed. The
June auction sale of a drilling rig and workover equipment included in the
litigation settlement raised less than we had hoped, but nevertheless when added
to insurance settlements from the blowout will result in cash to Sefton in the
range of $100,000. Sefton has recently completed the sale of additional shares
to some of its existing UK shareholders netting approximately $350,000. These
funds are being used to re-start the Tapia Canyon drilling and Eureka Canyon
workover programs, and provide ongoing working capital. The drilling programs
will boost California production and thus increase operating cash flow.
With focused management and success in raising additional drilling funds in
2003, Sefton can begin to realize the value of its reserves for the benefit of
its shareholders.
John James (Jim) Ellerton
Chairman and Chief Executive Officer
12 June 2003
SEFTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER, 31 2002, 2001 AND 2000
2002 2001 2000
Revenues
Oil and gas sales $454,428 $182,500 $71,933
Consulting income - - 13,750
_________ _________ _________
454,428 182,500 85,683
Costs and expenses
Oil and gas production 347,981 97,172 73,522
Depletion and 132,494 122,900 2,522
depreciation
General and 984,577 719,076 273,350
administrative
_________ _________ _________
1,465,052 939,148 349,394
_________ _________ _________
(Loss) from operations (1,010,624) (756,648) (263,711)
Other income (expense)
Interest income 1,586 20,379 -
Interest expense (570) (473) (33,597)
Foreign currency (747) (209) 49,726
transaction (losses)
gains
_________ _________ _________
269 19,697 16,129
_________ _________ _________
Net (loss) (1,010,355) (736,951) (247,582)
Dividends on preferred - - (12,500)
stock
__________ _________ _________
Net (loss) available for $(1,010,355) $(736,951) $(260,082)
common stockholders
========= ======== ========
Basic and diluted (loss) $(0.004) $(0.004) $(0.002)
per share
====== ====== ======
Basic and diluted weighted
average
shares outstanding 259,452,719 192,292,445 122,138,324
========= ========= =========
Net (loss) $(1,010,355) $(736,951) $(247,582)
Other comprehensive (loss)
translation adjustment (44,781) (6,350) -
__________ _________ _________
Comprehensive (loss) $(1,055,136) $(743,301) $(247,582)
========= ======== ========
SEFTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2002, 2001, AND 2000
Current assets 2002 2001 2000
Cash $34,063 $269,240 $1,321,010
Accounts receivable 147,343 16,100 19,322
Other receivables - related 318,168 271,293 -
party (Note 7)
Prepaid expenses and other 24,117 52,767 18,936
assets
Stock subscription - - 447,840
receivable
__________ __________ __________
Total current assets 523,691 609,400 1,807,108
__________ __________ __________
Oil and gas properties, full 2,376,510 1,900,074 881,780
cost method, net (Note 2)
Equipment and vehicle, net 52,395 36,056 28,402
(Note 3)
Other receivables - related - 250,000 -
party (Note 7)
__________ __________ __________
Total assets $2,952,596 $2,795,530 $2,717,290
========= ========= =========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $491,689 $40,400 $13,944
Accrued expenses 49,584 6,551 26,617
Accrued expenses - related 5,596 37,060 57,769
parties (Note 7)
Note payable, current portion 80,454 - -
(Note 5)
Notes payable - related party,
current portion
(Notes 4 and 7) 35,006 - 65,605
__________ __________ __________
Total current liabilities 662,329 84,011 163,935
Note payable, net of current 35,193 - -
portion (Note 5)
Notes payable - related party,
current portion
(Notes 4 and 7) - - 158,750
__________ __________ __________
Total liabilities 697,522 84,011 322,685
__________ __________ __________
Stockholders' equity (Notes 1
and 6)
Common stock, no par value,
1,000,000,000
shares authorized, 299,644,500
(2002),
221,664,500 (2001) and
186,644,500 (2000)
shares issued and 5,411,536 4,803,390 3,743,175
outstanding
Stock subscription receivable (49,046) (39,591) (39,591)
(Note 7)
Accumulated (deficit) (3,057,208) (2,046,853) (1,309,902)
Accumulated other (50,208) (5,427) 923
comprehensive income (loss)
__________ __________ __________
Total stockholders' equity 2,255,074 2,711,519 2,394,605
__________ __________ __________
Total liabilities and $2,952,596 $2,795,530 $2,717,290
stockholders' equity
========= ========= =========
SEFTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
2002 2001 2000
Cash flows from operating
activities:
Net (loss) $(1,010,355) $(736,951) $(247,582)
Adjustments to reconcile net
(loss) to net cash
(used) by operating
activities:
Depreciation and depletion 132,494 29,900 2,522
Write-down of asset due to - 93,000 -
impairment
Stock issued for oil and gas 25,000 - -
interest
Stock issued for services 45,000 - 25,050
Stock options issued for 28,146 - -
services
Foreign exchange (44,781) (6,350) (14,501)
translation
Change in assets and
liabilities:
Accounts receivable (146,690) (9,837) (12,289)
Prepaid expenses 28,650 (20,843) (12,468)
Other assets - related 210,327 (521,293) -
party
Accounts payable 463,789 26,456 (7,961)
Accrued expenses - related (31,464) (20,709) 65,559
party
Accrued expenses 43,033 (20,066) 7,186
Notes payable - related 35,006 - -
party
__________ __________ __________
Net cash (used) by operating (221,845) (1,186,693) (194,484)
activities
Cash flows from investing
activities:
Purchase of oil and gas (496,942) (1,133,190) -
properties
Purchase of property and (26,390) (15,587) (300,679)
equipment
__________ __________ __________
Net cash (used) by investing (523,332) (1,148,777) (300,679)
activities
__________ __________ __________
Cash flows from financing
activities:
Proceeds from sale of common 510,000 1,508,055 1,413,337
stock
Repayment of note payable - (224,355) (101,062)
Proceeds from debentures - - 496,500
__________ __________ __________
Net cash provided by 510,000 1,283,700 1,808,775
financing activities
__________ __________ __________
Net increase (decrease) in (235,177) (1,051,770) 1,313,612
cash
Cash - beginning of year 269,240 1,321,010 7,398
__________ __________ __________
Cash - end of year $34,063 $269,240 $1,321,010
====== ====== ======
Supplemental disclosures of cash flow information:
Cash paid during the year for interest was $-0-, $20,990 and $21,443 for the
years ended December 31, 2002, 2001 and 2000, respectively.
The Company paid no income taxes for the years ended December 31, 2002, 2001 and
2000.
Supplemental non-cash financing and investing activities:
During 2002, the Company purchased services to bring a well under control after
a blowout with
a note payable of $115,647. (See Note 9)
During 2002, the Company paid accrued director fees of $45,000 with the issuance
of common stock.
During 2000, stock options for the purchase of 34,650,000 shares of common stock
were exercised. In exchange the Company was relieved of accrued liabilities of
$198,665, satisfied accrued dividends on preferred stock of $27,890 and was
released from a note payable of $30,000.
During 2000, all outstanding preferred stock was satisfied through the issuance
of 3,761,670 shares of common stock and a note payable in the amount of
$158,750, which represented the outstanding balance of preferred stock of
$150,000 and accrued dividends. All preferred shares were cancelled upon
conversion.
The Company issued 3,300,000 shares of common stock valued at $180,000 in
December 2000 in conjunction with the acquisition of the remaining 10% of the
Tapia Oil Field.
During 2000 the Company issued convertible debentures in the amount of $496,500,
which were converted to 9,102,830 shares of common stock in November 2000.
Notes
1. Financial Statements
The summary financial statements set out above have been extracted from the
Company's audited financial statements for the year ended 31 December 2002
(not presented herein). Those financial statements were prepared in
accordance with United States Generally Accepted Accounting Principles.
These summary financial statements do not constitute financial statements in
accordance with United States Generally Accepted Accounting Principles as
they omit substantially all the disclosures required by United States
Generally Accepted Accounting Principles.
The annual report and accounts will be posted to shareholders by 30 June
2003, copies of which will be available from the Company Secretary, Masons
Secretarial Services Limited, 30 Aylesbury Street, London EC1R 0ER. The
Annual General Meeting of the Company will be held on Thursday 31 July 2003
at the corporate office: 1600 Broadway, Suite 2400, Denver, Colorado 80202.
2. Net Loss Per Share
The Company applies the provisions of Statement of Financial Accounting
Standard No. 128, "Earnings Per Share" (FAS 128). All dilutive potential
common shares have an antidilutive effect on diluted per share amounts and
therefore have been excluded in determining net loss per share. The
Company's basic and diluted loss per share are equivalent and accordingly
only basic loss per share has been presented.
3. Dividends
The directors are not recommending the payment of a dividend.
For further information, contact:
Jim Ellerton, Chairman & CEO Tel: 001 303 542 1922
This information is provided by RNS
The company news service from the London Stock Exchange
END
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