3Legs Resources Swings To Loss On IPO Costs, New Hires

Poland-focused shale gas explorer 3Legs Resources PLC (3LEG.LN) Wednesday swung to a 2011 loss, reflecting higher administrative costs incurred in connection with its initial public offering last year, additions to senior management and adverse foreign exchange movements.

For 2011, the company posted a net loss of GBP2.3 million compared with a profit of GBP2.5 million a year earlier. The company incurred administrative expenses of GBP5.3 million compared with GBP1 million in 2010, which was partly due to IPO-related costs, of which GBP1.1 million was charged to the income statement.

The company posted no revenue and isn't declaring a dividend. The company did, however, post other income of GBP2.7 million, compared with GBP3.2 million in 2010. Other income includes oil major ConocoPhillips' (COP) funding for seismic surveys and the drilling of three wells on 3Legs' western licenses, in return for an option to acquire a 70% interest in them.

3Legs holds three licenses in the western Baltic Basin and three licenses in the eastern Baltic Basin.

The explorer, which raised a net GBP58.1 million in June last year in an IPO, said it will conduct further seismic surveys on its licenses as well as another vertical well on the Lebork concession on the western Baltic Basin, in line with its option agreement with ConocoPhillips.

On Tuesday ConocoPhillips said it would exercise its option to acquire a 70% interest in each of 3Legs' three western Baltic licenses.

Subsequently, ConocoPhillips will become operator of the licenses with a 70% interest, leaving 3Legs with the remaining 30% interest. 3Legs said the deal demonstrates ConocoPhillips' firm commitment to shale in the Baltic Basin. It added: "We are continuing to consider, together with ConocoPhillips, options for the three eastern Baltic Basin concessions."

3Legs said it is also considering other resource opportunities, including those outside its preferred area of Europe.

The company ended 2011 with GBP50.9 million in cash and said that at Feb. 29 it had GBP48.1 million.

At 0930 GMT shares were flat at 68.75 pence.

-By Iain Packham, Dow Jones Newswires; 44-20-7842-9269; iain.packham@dowjones.com

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