Final Results
April 29 2003 - 9:14AM
UK Regulatory
RNS Number:5036K
Desire Petroleum PLC
29 April 2003
DESIRE PETROLEUM PLC
("the Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002
CHAIRMAN'S REPORT
The period since the Company published its Interim Report has been a frustrating
one as far as progress in achieving a farm-out of the North Falkland Basin
Licences is concerned. The technical merit of the Licences is generally
acknowledged and several potential farminees have, or are, conducting technical
analyses of the data. However, the farm-out process has been severely hampered
by the continuing political and economic uncertainties currently affecting the
Oil Industry as a whole.
Although the price of oil has remained relatively high, the Industry in general
has been very cautious in its approach to new ventures. This appears to be
directly related to the conflict in Iraq. Although the conflict has led to high
spot prices for oil, it is the widely-held view that, post the resolution of the
conflict, the USA will sponsor the opening up and massive development of the
Iraq Oil Industry, resulting in:
(a) opportunities to participate in this development, and
(b) a sharp drop in oil prices; and this view is confirmed by the oil-futures
market. Accordingly, the majority of companies are either keeping their
powder dry or concentrating on their core areas.
The Falkland Islands are remote from any area of substantial off-shore drilling
activity, the nearest being Brazil, and the cost of brining a suitable rig to
the North Falkland Basin will be considerable. As I have explained in previous
reports to shareholders, this requires a drilling programme of 2-3 wells in
order to justify that cost. The uncertainty concerning the future direction of
oil prices is, therefore, causing companies to adopt a wait-and-see position.
It does not necessarily follow that lower oil prices would militate against
drilling in the North Falkland Basin. Indeed, lower oil prices will almost
certainly lead to an overall reduction in exploration activity, especially in
politically risky countries, with a concomitant reduction in rig-hire rates
which could, in turn, make drilling in the politically-stable Falkland Islands
both cheaper and more attractive. The most important factors are the return of
political stability and economic growth. In the meantime, your Board, together
with the Falkland Island Government, continues vigorously to pursue a farm-out
deal.
TRANCHE F
Sodra Petroleum AB (a wholly-owned subsidiary of Talisman energy Inc.) the
operator of Tranche F, in which Desire holds a 12.5% interest, are in the
process of concluding a study of the North Falkland Basin which will form the
basis of their future activities. Hopefully, these will include a decision to
undertake further drilling.
RESULTS
Given the uncertainties outlined above, your board has continued to conserve the
Company's financial resources and overheads have been reduced yet further. It is
not yet possible, without a concise proposal for further drilling, to calculate
future cash requirements and we are advised that the current state of the Stock
Market does not allow for any major fundraising. I am pleased to be able to
report, however, that current cash resources are sufficient to meet the
Company's existing commitments going forward. This is largely due to the fact
that your directors, and the companies they represent, have, for a second year,
taken placings in the Company's shares equal to the fees that they have
received. In return, the Remuneration Committee considered it appropriate to
award new options to the Directors concerned. In addition, Phipps & Company
Limited, the Company's Managers, have waived a very substantial part of their
fee entitlement in lieu of which they will be allotted appropriate options
during the current year.
FUTURE ACTIVITIES
As demonstrated by their readiness to subscribe for additional shares in the
company, your Directors continue to be very positive about the prospectivity of
the North Falkland Basin. It is disappointing not to have a firm date for
further drilling but the quality of the licences is such that it can confidently
be expected to take place. It is, therefore, important to continue to improve
the quality of the technical data and farm-out documents. These are being
continuously up-graded and, with the sustained commitment of my colleagues, I
hope to be able to report progress to shareholders as, and when, the climate for
a farm-out improves.
Dr. Colin B. Phipps
CHAIRMAN
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2002
2001 2002
#000 #000
Oil exploration costs (211) 46
Administrative and other expenses (650) (429)
____ ____
Operating Loss (861) (383)
Write off of oil and gas interests (6,275) -
______ ____
Loss on ordinary activities before interest (7,136) (383)
Interest receivable 23 6
______ ____
Loss on ordinary activities before taxation (7,113) (377)
Taxation (4) -
_____ ____
Loss for the financial year (711,7) (377)
_____ ____
Earnings per ordinary share - Basic (6.83)p (0.35)p
- Diluted (6.82)p (0.35)p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 2002
2001 2002
#000 #000
Loss for the financial year (7,117) (377)
Currency-translation difference on foreign-currency
net investment (2) -
_____ ____
Total recognised gains and losses for the year (7,119) (377)
_____ ____
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
For the year ended 31 December 2002
2001 2002
#000 #000
Total recognised gains losses for the year (7,119) (377)
New share capital subscribed 664 358
_____ ____
Net decrease in shareholders' funds (6,455) (19)
Opening shareholders' funds 8,829 2,374
_____ _____
Closing shareholders' funds 2,374 2,355
_____ _____
CONSOLIDATED BALANCE SHEET
At 31 December 2002
2001 2002
#000 #000
Fixed Assets
Intangible fixed assets 2,297 2,333
_____ _____
2,297 2,333
Current Assets
Debtors due within one year 39 59
Investments 6 6
Cash at bank and in hand 413 198
___ ___
458 263
Creditors
Amounts falling due within one year (381) (241)
____ ____
Net current assets 77 22
____ ____
Total assets less current liabilities 2,374 2,355
_____ _____
Capital and reserves
Called-up share capital 1,074 1,125
Share premium account 16,437 16,744
Merger reserve 13,343 13,343
Profit and loss account (28,480) (28,857)
_______ _______
Equity shareholders' funds 2,374 2,355
_______ _______
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2002
2001 2002
#000 #000
Net cash outflow from operating activities (691) (548)
Returns on investments and servicing of finance 23 6
Taxation (20) (4)
Acquisitions and disposals - 9
Capital expenditure and financial investment (452) (36)
______ _____
(1,140) (572)
Financing
Issue of ordinary share capital (net of costs) 665 358
Decrease in cash in the year (475) (215)
______ _____
Reconsolidation of net cash flow to movement in net
debt
Decrease in cash in the year (475) (215)
Exchange movements 17 -
______ _____
Movement in net funds in the year (458) (215)
______ _____
Net funds at the beginning of the year 871 413
______ _____
Net funds at the end of the year 413 198
______ _____
NOTES:
1. Loss per share
Basic loss per share has been calculated on the Company's loss attributable
to share holders of #377,000 (2001: #7,117,000) and on the weighted average
number of shares in issue during the financial period, which was 108,577,924
(2001: 104,195,007).
Fully diluted loss per share has been calculated on the same loss on the
weighted average number of shares, adjusted for options and warrants, which
was 53,140 (2001: 218,392).
2. Dividends
The Directors are not proposing that a dividend payment be made.
3. The financial information set out above does not constitute statutory
accounts within the meaning of section 240 of the Act.
Copies of the financial statements for the year ended 31 December 2001 have
been delivered to the Registrar of Companies in England and Wales. The
financial statements for the year ended 31 December 2002 have been prepared
in accordance with applicable law and the Board of the Company accepts
responsibility for them. Hacker Young, Chartered Accountants and Registered
Auditors, of St James Building, 79 Oxford Street, Manchester M1 6HT, have
made a report under section 235 of the Act in respect of the statutory
consolidated financial statements for the year ended 31 December 2001. Such
report was unqualified and did not contain a statement under section 237(2)
or (3) of the Act.
The accounts for the year ended 31 December 2002 are expected to be posted
to shareholders on the 9th May. Copies will be available from the registered
office of the Company, 22 Bruton Street, London W1J 6QE.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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