Preliminary Results

Immediate Release 22 April 2008

                                   
                                   
                       Gulfsands Petroleum plc
         Preliminary Results for Year Ended 31 December 2007
 
Summary

  * Strong overall performance in 2007

 

  * Profit for the year, gross profit, profit before taxation,
    revenue, fixed assets, net assets and shareholders' funds all up
    from year-end 2006

 

  * Significant reserves added through Khurbet East, Syria Discovery

 
London,  22nd  April,  2007:   Gulfsands  Petroleum  plc  (AIM:  GPX)
("Gulfsands",  "the  Group"  or  "the  Company"),  the  oil  and  gas
production, exploration and  development company  with activities  in
Syria, Iraq and  the USA  announces its preliminary  results for  the
year ended 31 December 2007.
 
HIGHLIGHTS
                                   

  * Profit for the year (after tax) of the Group increased by 28% to
    $2.7 million (2006: $2.1 million);

 

  * Gross profit of the Group increased by 15% to $15.4 million
    (2006: $13.4 million);

 

  * Profit before taxation of the Group increased by 16% to $5.2
    million (2006: $4.5 million);

 

  * Revenue of the Group increased by 10% to $37.3 million (2006:
    $33.9 million);

 

  * Net assets and shareholders' funds of the Group increased by 37%
    to $100.7 million (2006: $73.3 million);

 

  * Fixed assets of the Group increased by 23% to $75.5 million
    (2006: $61.3 million);

 

  * The Group drilled an oil and gas discovery well at Khurbet East
    in Syria and two successful appraisal wells with the Khurbet East
    3 appraisal well drill-stem tested at an average stabilized rate
    of 3,420 barrels of oil per day;

 

  * The first reserves study at Khurbet East was carried out in the
    Cretaceous Massive Reservoir as of 1 January 2008.  This study
    indicated gross life-of-field Proved and Probable Reserves of 66
    million barrels of oil ("MMBO") and Proved, Probable and Possible
    Reserves of 143 MMBO.  Gulfsands net attributable Proved and
    Probable Reserves were estimated at 11.3 MMBO after royalties,
    taxes and government share; and

 

  * Proved and Probable Reserves in the USA Gulf of Mexico and
    onshore Gulf Coast were 40.7 billion cubic feet of natural gas
    equivalents (BCFGE), or 6.8 million barrels of oil equivalent
    (MMBOE), as of 31 December 2007 (44.6 BCFGE or 7.4 MMBOE at 31
    December 2006). The net present value of the Proved and Probable
    Reserves at 31 December 2007 (discounted at 10%) increased to
    $226 million (2006: $197 million).

 
 
 
 
 
Gulfsands' Chairman, Andrew West, said:
 
"The Company  has made  significant progress  on a  number of  fronts
during 2007, the  most exciting  being the discovery  of the  Khurbet
East Field in Syria. We look forward to sustaining the achievement in
2008 as production  from Khurbet East  comes on stream  later in  the
year." 
 
Certain  statements  included   herein  constitute   "forward-looking
statements" within the meaning of applicable securities  legislation.
These forward-looking  statements are  based on  certain  assumptions
by Gulfsands and as such are  not a guarantee of future  performance.
Actual results  could  differ  materially  from  those  expressed  or
implied in such  forward-looking statements  due to  factors such  as
general  economic   and  market   conditions,  increased   costs   of
production or a decline in oil and gas prices. Gulfsands is under  no
obligation  to  update  or  revise  any  forward-looking  statements,
whether as a result of  new information, future events or  otherwise,
except as required by applicable laws.
 
For further  information  including  the  Company's  recent  investor
presentation, please refer to the Company's website www.gulfsands.net
or contact:
 
 

Gulfsands Petroleum (Houston)                    + 1-713-626-9564
John Dorrier, Chief Executive Officer             
David DeCort, Chief Financial Officer             
                                                  
Gulfsands Petroleum (London)                     [phone]
Kenneth Judge, Director of Corporate Development [phone]
                                                  
Buchanan Communications Limited (London)         [phone]
Bobby Morse                                       
Ben Willey                                        
                                                  
RBC Capital Markets (London)                     [phone]
Andrew K. Smith                                   
Sarah Wharry

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHAIRMAN'S STATEMENT
 
 
I am pleased to report that the  year ended 31 December 2007 was  one
of conspicuous success for the Group.  The undoubted highlight of the
year was  the commercial  discovery  at Khurbet  East in  Syria.   In
addition revenues, profits and net assets all increased.   Production
from the Gulf of Mexico benefited from continuing strong oil and  gas
prices and the expiration of all remaining hedges.
 
 
SYRIA
In the Syrian Arab Republic, where the Group is Operator and owner of
a 50%  working  interest in  Block  26,  a significant  oil  and  gas
discovery was made in the  Khurbet East Field.  The initial  reserves
study indicated,  in the  Cretaceous Massive  Reservoir alone,  gross
life-of-field Proved and Probable Reserves  of 66 million barrels  of
oil ("MMBO") and Proved, Probable and Possible Reserves of 143 MMBO. 
Gulfsands'  net  attributable  Proved  and  Probable  Reserves   were
estimated at  11.3 MMBO  after all  royalties, taxes  and  government
share. 
 
The Khurbet  East Field  is currently  under development  with  first
production targeted  for  the  fourth quarter  of  2008.   Favourable
fiscal terms and  proximity to infrastructure  make the economics  of
this particular  development particularly  compelling.  Further  work
will also  be undertaken  to evaluate  in due  course the  commercial
viability of the  Kurrachine Dolomite  and Butmah  Reservoirs in  the
Khurbet East Field.
 
Commencing 23 August 2007  the Group initiated  the first three  year
extension period of  the Block  26 Exploration  Licence. The  minimum
work commitment during  this phase  includes the  acquisition of  250
square kilometres of 3D seismic  and the drilling of two  exploration
wells.  The seismic programme has already been completed and a number
of highly prospective exploration targets identified.   Additionally,
one of the  exploration well  commitments has been  satisfied by  the
drilling of  a  Khurbet  East  appraisal  well.  We  have  also  been
fortunate to secure rig commitments adequate to both our  development
and exploration requirements.
 
During  the  course  of  2007  the  Group  also  formed  a  strategic
partnership with Cham Holding  for the purpose  of acquiring oil  and
gas projects in Syria and Iraq.
 
 
USA
The Group's USA reserves decreased slightly during the year from 44.6
billion cubic feet of natural gas equivalents (BCFGE) or 7.4  million
barrels of oil equivalent (MMBOE) at  31 December 2006 to 40.7  BCFGE
or 6.8 MMBOE at 31 December 2007.  In terms of net present value this
decrease was,  however,  more  than  offset by  higher  oil  and  gas
prices.  All hedges on our Gulf of Mexico production have now expired
and we benefit fully from this strong price environment.
 
A combination of high operating costs in the Gulf of Mexico  combined
with very  favourable  economics  in  Block  26  in  Syria  makes  it
difficult to  justify re-investing  more in  our USA  assets than  is
necessary to recoup depletion.  However, the assets are in their  own
right attractive  and  will  remain  important  to  the  Group  as  a
generator of substantial and  reliable cash flow  at least until  the
Khurbet East Field becomes a significant producer.
 
IRAQ
We continue to  make progress in  our discussions with  the Iraq  Oil
Ministry  on  the  Maysan  Gas  Project  and  with  various  regional
administrations with regards to  this and other business  initiatives
in Iraq.
 
Iraq remains daily in the news and much of that news, as reported  by
the Western media, is not positive.  However, subject to the  obvious
caveats when dealing with a region beset by such uncertainties, there
is probably  more  reason  now  than  ever  before  to  believe  that
Gulfsands' continued  investment  of time  and  effort in  Iraq  will
result in  an eventual  payback  in some  tangible form.   We  remain
committed to that objective.
 
 
OUTLOOK
 
With the commercial discovery  in Khurbet East,  the Group reached  a
key milestone in its  evolution.  When we begin  to produce and  sell
oil from  the  field that  will  be another,  even  more  significant
milestone.  Against  a backdrop  of  rising oil  and gas  prices  and
having regard to all pertinent factors, I am persuaded that Gulfsands
is as well-positioned as any small exploration and production company
and that our prospects for the coming years are exciting.
 
 
 
Andrew West
Chairman
18 April 2008
 
 
 
GULFSANDS PETROLEUM PLC
Unaudited Consolidated Income Statement
Years Ended 31 December
 
 

                                              Note     2007      2006
                                                      $'000     $'000
Revenue                                              37,309    33,934
Cost of sales                                                        
   Depreciation                                     (5,034)   (4,716)
   Impairment                                         (947)   (1,334)
   Other cost of sales                             (15,883)  (14,465)
Total cost of sales                                (21,864)  (20,515)
Gross profit                                         15,445    13,419
                                                                     
Administrative expenses before exceptional
items                                               (7,204)   (4,455)
Share based payments                                  (882)     (851)
Total administrative expenses                       (8,086)   (5,306)
                                                                     
Hurricane repairs                                   (1,856)   (2,573)
                                                                     
Operating profit                                      5,503     5,540
                                                                     
Unwinding of discount on decommissioning            (1,475)   (2,223)
Interest income                                       1,190     1,193
                                                                     
Profit before taxation                                5,218     4,510
                                                                     
Taxation                                            (2,557)   (2,433)
                                                                     
PROFIT FOR THE YEAR - attributable to equity
holders of the Company                                2,661     2,077
                                                                     
Earnings per share (cents):                                  
Basic                                            2     2.48      2.17
Diluted                                          2     2.37      2.15

 
 
 
The results for 2007 and 2006 relate entirely to continuing
operations.
GULFSANDS PETROLEUM PLC
Unaudited Consolidated Balance Sheet
As at 31 December
 
 

                                                       2007      2006
                                            Notes     $'000     $'000
ASSETS                                                               
Non-current assets                                                   
           Property, plant and equipment        3    46,925    46,247
           Intangible assets                    4    28,593    15,097
           Deferred tax asset                           -         176
                                                     75,518    61,520
                                                                     
Current assets                                                       
           Trade and other receivables               11,154     9,629
           Cash and cash equivalents                 34,611    26,724
                                                     45,765    36,353
Total Assets                                        121,283    97,873
                                                                     
LIABILITIES                                                          
Current liabilities                                                  
           Trade and other payables                 (6,672)  (12,717)
           Provision for decommissioning            (2,512)   (3,319)
           Oil and gas price derivatives                -       (101)
                                                    (9,184)  (16,137)
                                                                     
Non-current liabilities                                              
           Deferred tax liabilities                 (1,932)       -  
           Provision for decommissioning            (9,475)   (8,420)
                                                   (11,407)   (8,420)
Total Liabilities                                  (20,591)  (24,557)
NET ASSETS                                          100,692    73,316
                                                                     
EQUITY                                                               
Capital and reserves attributable to equity
holders                                                              
           Share capital                             11,997    11,047
           Share premium                             79,389    56,506
           Share-based payments reserve               1,733       851
           Merger reserve                            11,709    11,709
           Retained losses                          (4,136)   (6,797)
TOTAL EQUITY                                        100,692    73,316

 
 
 
 
 
 
 
 
 
GULFSANDS PETROLEUM PLC
Unaudited Consolidated Statement of Changes in Equity
Years Ended 31 December
 
 
 

                                      Share                          
                     Share   Share    based   Merger Retained   Total
                   capital premium payments reserves   losses  equity
                     $'000   $'000    $'000    $'000    $'000   $'000
Year ended 31
December 2007                                                        
At 1 January 2007   11,047  56,506      851   11,709  (6,797)  73,316
Options exercised        9     187      -        -        -       196
Shares issued          941  22,946      -        -        -    23,887
Share issue costs      -     (250)      -        -        -     (250)
Share-based
payment charge         -       -        882      -        -       882
Profit for 2007        -       -        -        -      2,661   2,661
At 31 December
2007                11,997  79,389    1,733   11,709  (4,136) 100,692
                                                               
Year ended 31
December 2006                                                        
At 1 January 2006    9,971  53,651      -     11,709  (8,874)  66,457
Options exercised    1,076   2,855      -        -        -     3,931
Share-based
payment charge         -       -        851      -        -       851
Profit for 2006        -       -        -        -      2,077   2,077
At 31 December
2006                11,047  56,506      851   11,709  (6,797)  73,316

 
 
 
 
 
 
 
 
GULFSANDS PETROLEUM PLC
Unaudited Consolidated Cash Flow Statement
Years Ended 31 December
 
 
 

                                                        2007     2006
                                              Notes     $000     $000
Cash flows from operating activities:                                
Operating profit                                       5,503    5,540
Depreciation                                           5,034    4,716
Impairment charge                                        947    1,334
Share-based payment charge                               882      851
Non-cash bonus                                           252         
Loss on disposal of assets                                 2         
Increase in receivables                              (2,266)  (3,888)
(Decrease)/increase in payables                      (5,399)    7,441
Net cash from operations                               4,955   15,994
                                                                     
Interest received                                      1,190    1,193
Taxation paid                                          (356)  (1,111)
Net cash from operating activities                     5,789       82
                                                                     
Investing activities                                                 
Exploration and evaluation expenditure              (13,511)  (9,375)
Oil and gas properties expenditure                   (5,175) (17,896)
Purchase of minority interest                            -      (277)
Other capital expenditures                              (45)    (234)
Plug and abandonment costs paid                      (2,752)  (2,062)
Net cash used in investing activities               (21,483) (29,844)
                                                                     
Financing activities                                                 
Cash proceeds from issue of shares                    23,831    3,931
Share issue costs                                      (250)      -  
Net cash from financing activities                    23,581    3,931
                                                                     
Increase/(decrease) in cash and cash
equivalents                                            7,887  (9,837)
                                                                     
Cash and cash equivalents at beginning of
year                                                  26,724   36,561
Cash and cash equivalents at end of year              34,611   26,724

 
 
 
GULFSANDS PETROLEUM PLC
NOTES TO THE PRELIMINARY RESULTS
1.  Basis of preparation
 
1.1       Introduction
 
Gulfsands Petroleum plc  is a  public limited company  listed on  the
Alternative Investment Market  ("AIM") of the  London Stock  Exchange
and incorporated in England.  
 
On 1 January 2007,  in accordance with the  rules of the AIM  Market,
the Group  adopted  International Financial  Reporting  Standards  as
adopted by the European Union ("IFRS").
 
The Group's financial statements for the year ended 31 December 2007,
from which this financial information has been extracted, and for the
comparative year ended 31 December  2006 are therefore prepared on  a
going concern basis  and in  accordance with IFRS,  including IFRS  6
'Exploration  for  and  Evaluation  of  Mineral  Resources'  and   in
accordance with those parts of  the Companies Act 1985 applicable  to
companies reporting under IFRS.
 
As this  is  the first  year  in which  the  Group has  prepared  its
financial statements under IFRS, the comparatives have been  restated
from UK Generally Accepted Accounting Practice ("UK GAAP") to  comply
with IFRS. 
 
The  financial  information  contained   in  this  report  does   not
constitute full statutory accounts within the meaning of Section  240
of the  Companies  Act 1985.   The  figures are  extracted  from  the
unaudited financial statements  for the year  ended 31 December  2007
which will  be  filed  with  the  Registrar  of  Companies,  sent  to
shareholders and  will  be  available on  the  Company's  website  at
www.gulfsands.net following formal completion of the audit.
 
The comparative figures for the year  ended 31 December 2006 are  not
the statutory  accounts for  that financial  period. Those  accounts,
which were  prepared under  UK GAAP,  have been  reported on  by  the
Company's auditors and delivered to  the Registrar of Companies.  The
report of the auditors  was (i) unqualified, (ii)  did not include  a
reference to any matters to which the auditors drew attention by  way
of emphasis  without  qualifying  their report,  and  (iii)  did  not
contain a statement under section 237(2) or (3) of the Companies  Act
1985.
 
These financial  statements  consolidate the  accounts  of  Gulfsands
Petroleum plc  and all  its subsidiary  undertakings drawn  up to  31
December each year.
 
In the Group financial statements, merged subsidiary undertakings are
treated as if they had always been a member of the Group. The results
of such subsidiaries are included for the whole year in the year they
join the Group.
 
1.2 Accounting policies
 
A full listing of accounting policies is shown in the Group financial
statements.  The significant accounting policies are detailed below:
 
(a) Reporting currency
These  preliminary  results  are  presented  in  U.S.  dollars.   The
Company's operations and  the majority of  all costs associated  with
foreign operations  are  paid  in  U.S. dollars  and  not  the  local
currency  of  the  operations.   Therefore,  the  presentational  and
functional currency is the U.S. dollar. Gains and losses from foreign
currency transactions, if any, are recognised in the income statement
for the year.  The effective exchange  rate to the Pound Sterling  at
31 December was £1 : US$1.99.
 
(b) Oil and gas properties
The Group applies  the requirements  of IFRS 6  "Exploration for  and
Evaluation of  Mineral Resources"  and where  additional guidance  is
needed, IAS 16 "Property, Plant and Equipment" and IAS 36 "Impairment
of Assets" noting that several items  in the later two standards  are
excepted due to the  application of IFRS 6.    Set out below are  our
interpretation of the principles set out in IFRS 6 and other  IFRSs. 
It should be noted that guidance on certain aspects of IFRS 6 has not
yet been provided by the  IASB or IFRIC. Accordingly, amendments  may
be required to the accounting policies set out below in future years.
 
There are  two categories  of  oil and  gas assets,  Exploration  and
Evaluation  assets  which  are  included  in  Intangible  assets  and
Development and  Production assets  which are  included in  Property,
Plant and Equipment.
 
Oil and gas assets:  exploration and evaluation assets
Recognition and measurement:
Exploration and evaluation assets ("E&E") consist of costs of license
acquisition,  exploration,  evaluation,  appraisal  and   development
activities and evaluating  oil and gas  properties.   Costs  incurred
prior to  having  obtained  the  legal  rights  to  explore  an  area
('pre-license costs') are expensed  directly to the income  statement
as they are incurred and are  not included in E&E assets.  E&E  costs
are  accumulated  and  capitalized  into  cost  pools  and  added  to
Intangible Assets pending determination of commercial reserves. 
 
The Group currently has two intangible E&E cost pools, being Block 26
in Syria and onshore  USA.  E&E assets  relating to each  exploration
license/prospect are not  depreciated but are  carried forward  until
the  existence  or   otherwise  of  commercial   reserves  has   been
determined.  If commercial reserves have been discovered, the related
E&E assets  are assessed  for impairment  on a  cash generating  unit
basis as set out below and  any impairment loss is recognised in  the
income statement.  The carrying  value of the  E&E assets, after  any
impairment loss, is then  reclassified as development and  production
assets in Property, Plant and Equipment. 
 
Impairment:
E&E assets are assessed for  impairment when facts and  circumstances
suggest that the carrying amount may exceed its recoverable  amount. 
Such indicators include the point at which a determination is made as
to whether commercial reserves exist.
 
Where the  E&E assets  concerned  fall within  the  scope of  a  cash
generating unit, the E&E assets  are tested for impairrment  together
with all Development and Production assets associated within the cash
generating unit.  The  aggregate carrying value  is compared  against
the expected recoverable amount of  the pool, generally by  reference
to the present  value of  the future net  cash flows  expected to  be
derived from  production  of commercial  reserves.   Where the  E&  E
assets to be tested fall outside the scope of a cash generating unit,
there will generally  be no  commercial reserves and  the E&E  assets
concerned will generally be written off in full.
 
Any impairment  loss is  recognized in  the income  statement and  is
separately disclosed.  On  the balance sheet  it is recorded  against
the carrying value of the related E&E asset.
 
Oil and gas assets: development and production
Tangible oil and gas assets are  grouped into a cash generating  unit
or groups  of  units  for  purposes of  impairment  testing  and  for
depreciating  the  development   and  production   assets.   A   cash
generating unit  is a  well,  field, area,  block, region,  or  other
defined area that is  considered interrelated in producing  revenue. 
Interrelationships  can  be  measured  by  oil  and  gas   production
agreements, reserve  reports,  or other  documentation  showing  such
relationships.  The only limitation in the size of a cash  generating
unit is that  it cannot  be larger than  a reporting  segment of  the
Group.
 
Recognition and measurement:
Development  and  production  assets   are  accumulated  on  a   cash
generating unit  basis  and  represent the  cost  of  developing  the
commercial reserves  discovered and  bringing them  into  production,
together with  the E&E  expenditures incurred  in finding  commercial
reserves transferred from intangible E&E assets.
 
The cost of development and production assets also includes the  cost
of acquisitions and purchases  of such assets, directly  attributable
overheads,  and  the  cost  of  recognizing  provisions  for   future
restoration and decommissioning.
 
Depreciation of producing assets
Net book values carried within each cash generating pool are
depreciated by a unit of production method using the ratio of oil and
gas production in the year compared to the estimated quantity of
commercial reserves at the beginning of the year. Changes in
estimates of commercial reserves or future development costs are
dealt with prospectively.
 
Impairment:
An impairment  test is  performed whenever  events and  circumstances
arising during the development or production phase indicate that  the
carrying value of a  development or production  asset may exceed  its
recoverable amount.  The aggregate carrying value is compared against
the recoverable  amount of  the cash  generating unit,  generally  by
reference to the present value of the future net cash flows  expected
to be derived from production of commercial reserves. 
 
(c)  Decommissioning
Where a material liability for  the removal of production  facilities
and site restoration  at the end  of the productive  life of a  field
exists, a provision  for decommissioning is  recognized.  The  amount
recognized is  the  present  value of  estimated  future  expenditure
determined in accordance with  local conditions and requirements.   A
fixed asset of an amount equivalent to the provision is also  created
(included in development and production assets) and depreciated on  a
unit of  production  basis.   Changes  in  estimates  are  recognized
prospectively, with corresponding  adjustments to  the provision  and
the associated fixed asset.
 
2.    Earnings per share  
 

                                           2007                  2006
                                          $'000                 $'000
                                    except  per           except  per
                                  share amounts         share amounts
Profit for the year                       2,661                 2,077
Basic earnings (cents                      2.48                  2.17
per share)
Diluted earnings                           2.37                  2.15
(cents per share)
                                                                     
                                           2007                  2006
Weighted average                         Number                Number
number of shares:
For basic earnings per
share                               107,223,298            95,565,086
Options outstanding                   5,184,859               930,600
For diluted earnings
per share                           112,408,157            96,495,686

 
 
 
3.   Property, plant and equipment
 

                              Development and Other fixed       Total
                          production assets -
                                          USA      assets            
                                        $'000       $'000       $'000
Cost:                                                                
At 1 January 2006                      41,372          50      41,422
Additions                              19,656         223      19,879
At 31 December 2006                    61,028         273      61,301
Additions                               6,600          45       6,645
Disposals                                 -           (8)         (8)
At 31 December 2007                    67,628         310      67,938
                                                                     
Accumulated depreciation
and impairment:                                                      
At 1 January 2006                     (8,998)        (21)     (9,019)
Depreciation charge for
2006                                  (4,642)        (59)     (4,701)
Impairment charge for
2006                                  (1,334)         -       (1,334)
At 31 December 2006                  (14,974)        (80)    (15,054)
Depreciation charge for
2007                                  (4,926)        (93)     (5,019)
Impairment charge for
2007                                    (947)         -         (947)
Disposals                                 -             7           7
At 31 December 2007                  (20,847)       (166)    (21,013)
Net book value at 31
December 2007                          46,781         144      46,925
                                                                     
Net book value at 31
December 2006                          46,054         193      46,247

 
Depreciation and amortization of oil and gas properties is calculated
on a  unit-of-production  basis,  using  the ratio  of  oil  and  gas
production in  the year  to the  estimated quantities  of proved  and
probable reserves at the end of the year plus production in the  year
(i.e. estimated reserves at  the beginning of the  year), on a   cost
generating unit  basis.  Proved  and probable  reserve estimates  are
based on a  number of  underlying assumptions including  oil and  gas
prices, future costs, oil and gas in place and reservoir performance,
which are inherently uncertain.  Management uses established industry
techniques to  generate its  estimates and  regularly references  its
estimates against those of external consultants.  However, the amount
of reserves that will ultimately  be recovered from any field  cannot
be known with certainty until the end of the field's life.
 
Included in development and  production assets above are  capitalized
decommissioning costs with a  net book value of  $9,420,000 as at  31
December 2007 (2006 - $9,327,00)
 
The impairment charges for 2006 and 2007 relate to provisions against
the Group's carrying  values of its  USA producing assets,  following
the end of the year reserves review.  In 2007 a field in the Gulf  of
Mexico had a  decrease in  reserves and  it was  determined that  the
carrying value  was $947,000  higher than  its recoverable  value  as
referenced by the present value of the future net cash flows expected
to be derived from production of the commercial reserves.
 
The Directors have  assessed the carrying  value of the  oil and  gas
properties and  in  their  opinion,  no  additional  impairments  are
considered necessary for the year ending 2007.
 
 
4.      Intangible assets
 

                     Exploration and
                          evaluation   Computer
                              assets   software                 Total
                               $'000      $'000                 $'000
Cost:                                                                
At 1 January 2006              5,691         38                 5,729
Additions                      9,375         11                 9,386
At 31 December 2006           15,066         49                15,115
Additions                     13,510          1                13,511
At 31 December 2007           28,576         50                28,626
                                                                     
Accumulated
depreciation:                                                        
                                                                     
At 1 January 2006                -          (3)                   (3)
Charge for the
period                           -         (15)                  (15)
At 31 December 2006              -         (18)                  (18)
Charge for the
period                           -         (15)                  (15)
At 31 December 2007              -         (33)                  (33)
                                                                     
Net book value at 31                                                 
December 2007                 28,576         17                28,593
                                                                     
Net book value at 31
December 2006                 15,066         31                15,097

 
 
The amounts for intangible exploration and evaluation ("E&E")  assets
represent active exploration  projects all in  Syria.  These  amounts
are written off to the profit and loss account as exploration expense
unless commercial  reserves  are  established  or  the  determination
process is not completed and there are no indications of impairment. 
The  outcome  of  ongoing  exploration,  and  therefore  whether  the
carrying value  of  E&E  assets  will  ultimately  be  recovered,  is
inherently uncertain.  The Directors, however, have reviewed the  oil
and  gas  E&E  costs  for  possible  impairment.   No  provision  for
impairment is considered necessary against E&E costs incurred in  the
oil and gas field under exploration as at 31 December 2007.
5.  Dividends
No dividends are proposed in respect of the current financial year.
6.  Annual General Meeting
The Annual General Meeting of  Shareholders will take place at  11:00
A.M. on 23 June  2008 at the offices  of Buchanan Communications,  45
Moorfields, London, England.  All shareholders are welcome to attend.

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