Granby Oil and Gas PLC, the oil and gas exploration and production company focused on the UK North Sea and Europe, announces its interim results for the six months ended 30 September 2007.
Granby has a development and exploration portfolio of over 30 blocks in the North Sea, and onshore interests in the UK and Poland. First production is expected in Q1 2008. Proven P50 reserves are 4.4 million barrels of oil equivalent, and net unrisked contingent resources are 425.6 million barrels of oil equivalent. At 30 September 2007, the Company had a positive cash balance of £4.7 million with an additional £12.4 million cash expected as proceeds from the sale of the Company’s interest in the Galoc oil field in mid December.
Highlights
In the six months to 30 September 2007, Granby has:
• completed seismic operations over four UK North Sea blocks and participated in an additional seismic survey operated by Petro-Canada over two blocks where shared prospectivity has been identified
• signed Farm-in Agreements with Fox Energy and Atlantic Petroleum to farm out a 16.66% interest in UKCS blocks 14/9a and 14/14b
Since 30 September 2007, Granby has:
• signed an agreement for the sale of its entire interest in the Galoc Oil Field offshore development in the Republic of the Philippines for US$25.50 million cash plus one million shares and four million options in the purchaser, Otto Energy Limited (ASX: OEL) ('Otto'). Completion of the transaction is expected by 14 December 2007.
• reached agreement with Gas Plus International B.V. ('GasPlus') to participate with a 50% working interest in two blocks onshore in Poland, including one which contains discovered oil and gas
• completed the first phase of development operations of the Tristan NW field
• booked P50 reserves of 14.7 billion cubic feet (2.5 million barrels of oil equivalent) for its 54% participating interest in the Tristan NW field
• farmed in to the currently drilling Kerloch appraisal well with a 10% interest
• booked one well slot on the semi submersible drilling rig Transocean Prospect for April/May 2008
• commenced drilling operations on the Burton Agnes prospect on licence PEDL071, where Granby has a 10% carried interest
Financial highlights:
• Loss before and after tax £1.1 million (2006: Loss £0.9 million)
• Cash at 30 September 2007 £4.7 million (30 September 2006: £13.6 million, 31 March 2007: £8.5 million)
Resource highlights:
• Booked Reserves increased by 131% to 4.4 million barrels of oil equivalent as a result of booking Tristan NW gas reserves. Booked reserves will however fall by 1.9 million barrels of oil equivalent to 2.5 million barrels of oil equivalent in the current half year as a result of the Galoc sale
• Unrisked and risked resources each down 7% since 31 March 2007 to 426 million barrels unrisked and 70.6 million barrels risked. The decrease is essentially due to the farm outs to Fox and Atlantic announced in June 2007
Outlook
Increasing demand for energy against a background of supply concerns has continued to induce rises in the prices of both oil and gas worldwide. Of particular note is the current strength of UK gas prices. However, industry costs have also continued to rise. In particular, the semi submersible rig market remains very tight, and Granby is fortunate to have booked a well slot for next year already. The jack up and onshore rig markets offer a little more flexibility and the addition of onshore licences in Poland will help ensure continued exploration activity.
With continued market sceptism about the funding of many AIM listed oil and gas companies, Granby is well positioned in that, post the sale of Galoc, the Group will be in strong financial health and will have more than sufficient funding to carry out additional appraisal and development activity.
2008 is expected to be another very active year as the Group continues to manage its portfolio, proactively seeking to add further value and provide exposure to exploration, development and production opportunities for investors.
David Grassick, Managing Director of Granby Oil and Gas, said:
“Granby has made excellent progress in recent months and the Board anticipates this to continue over the coming year. We expect to crystallise the value of the Galoc development created over the last two years by Granby by completing the sale in mid December 2007. The US$25 million consideration plus our current cash will provide more than sufficient funding for the Group’s growth over the next year. First production is also anticipated next year from the Tristan NW development project, which is financed and underway, with a development well about to commence drilling.
We have an active exploration and appraisal programme underway. An exploration well is currently drilling onshore in Yorkshire, an appraisal well is also drilling the northern North Sea Kerloch discovery, and an appraisal well is planned for the Monkwell gas discovery. We have committed to one well slot on a semi-submersible rig, and are in discussions regarding a second, to enable at least two exploration wells to be drilled on Granby’s central North Sea portfolio in mid 2008. Finally, we have added an opportunity for further onshore exploration with the recent option over two blocks in Poland.
For a Group of Granby’s size this is an immense amount of activity, which we seek to maintain, as we continue to provide our investors with exposure to a balanced portfolio of opportunities.”