Oil Quest Resources PLC
14 September 2005
Oil Quest Resources plc
Final Results for the Period Ended 30 June 2005
Chairman's Statement
In this inaugural Annual Report and Accounts of Oil Quest Resources plc
following the changes described below, I am pleased to report positively and
with confidence on the UK focused hydrocarbon activities of your Company. The
board is of the strong opinion that the UK presents an ideal opportunity to
participate in exploration in a low cost environment where commercial
discoveries can be brought to development status within a short timeframe.
The financial period under review has seen tremendous change. Following an
Extraordinary General Meeting convened in April 2005, Hereward Ventures plc
changed its name to Oil Quest Resources plc ('Oil Quest') and shareholders also
voted in support of numerous other corporate changes that have since been
implemented. The Company's Balkan gold exploration assets were sold and other
peripheral mineral interests were relinquished to allow Oil Quest to consolidate
its strategy and further build upon its hydrocarbon interests within the United
Kingdom. This sale was part of a wider reorganisation of the Company which
included the consolidation of its existing share capital from 1p to 5p ordinary
shares and an extremely successful institutional placing in London and Paris
that raised approximately £3.4 million. I would like to thank all of our
advisers who worked diligently on our behalf to make these transactions happen.
Another important component to the above was a board restructuring to reflect
the Company's focus on the hydrocarbon sector. In April 2005 Dr Richard
Stabbins and David Racher, both very experienced industry professionals joined
Oil Quest as non-executive directors. A brief biography of their careers within
the hydrocarbon sector follows. I would like to mention that contrary to the
title non-executive, Richard, David and Joe O'Farrell are very much 'hands on'
contributing on an almost daily basis to the development of your Company.
Dr Richard Stabbins is a geologist and former Chairman of the Petroleum
Exploration Society of Great Britain. Richard has over 30 years' experience in
the international hydrocarbon sector and has held senior positions with Murphy
Oil and Ranger Oil. In addition, he was formerly exploration director of Goal
Petroleum and a director of Fusion Oil and Gas until its acquisition by Sterling
Energy in 2004.
David Racher, also a geologist, began his career in 1970 with Union Corporation
and Phillips Petroleum in the early years of North Sea exploration. David later
joined Mesa Petroleum where he was an integral part of the development team for
the Beatrice oilfield. From 1979 to 2003 he held several senior management
positions with Lasmo plc, Eurosov Energy and Planet Oil, later acquired by
Hardman Resources.
In addition, complementing our technical team, Graham Bull acts as an
independent consultant to the Company and deserves recognition for his
enthusiastic contribution and input in respect of our licence acquisition
strategy embarked upon in October 2003.
Since that time Oil Quest's hydrocarbon portfolio has grown considerably and
comprises interests in 13 UK licences. The interests are considered to hold
medium to high upside potential in proven hydrocarbon basins, namely the
Wessex-Channel, Weald and Cleveland. Our objective is to add value by discovery
and development. In order to achieve this aim, Oil Quest has to participate in
the drilling of wells. During the current financial year Oil Quest participation
in numerous wells is planned. As I write, the Sandhills-2 appraisal and
Sandhills-2Z sidetrack wells have been drilled and encountered hydrocarbons,
however they are deemed not to be capable of economic production. Bouldnor
Copse-1 on the Isle of Wight will be spudded following the completion of
operations at Sandhills. This well will target a large prospect in the Sherwood
Sandstone with the Great Oolite as a secondary objective.
The operator, a subsidiary of Northern Petroleum Plc, also intends to implement
a 2006 drill programme. In the Weald Basin an appraisal well of an extension of
the Horndean oilfield into PEDL 126 and the appraisal of the Hedge End-1 oil
discovery are strong possibilities. Other structures are currently being
evaluated. Oil Quest looks forward to its involvement in this drilling activity.
In the north of England, Egdon Resources plc is at an advanced stage in respect
of the planning for the Kirkleatham and Westerdale wells to be drilled on
licence PEDL 068. The licence is located within the Cleveland Basin, an onshore
continuation of the prolific offshore Southern Gas Basin. Oil Quest holds a 15
per cent. equity interest in this project and the acquisition of a further 5 per
cent. interest is currently being negotiated.
As part of our ongoing exploration strategy and to broaden our scope of
opportunity, Oil Quest joined application groups seeking licences in the UK 23rd
Offshore Licensing Round. On 6 September 2005, the Company was offered by the
Department of Trade and Industry, an interest in Block 43/6, situated within the
Southern Gas Basin of the North Sea. Potential reserves of between three to five
billion barrels of oil equivalent remain to be unlocked in the North Sea
environment. Oil Quest will now be involved in the exploration for a share of
these potential reserves.
A comprehensive summary of our UK licence interests can be found in the Review
of Operations section of the Annual Report.
The financial statements contained within the Annual Report reflect the 15 month
period ended 30 June 2005. The decision was made to extend the reporting period
to enable the presentation of the accounts to reflect the ongoing affairs of Oil
Quest rather than issue an historical set of group accounts covering the
activities of the former Hereward Ventures subsidiaries which have now been
sold. Notwithstanding this the extended period has not affected the timing of
our announcement of the financial statements and our original timetable has been
adhered to. The loss for the period reflects the disposal of the Company's
mineral exploration interests. The sale of the Balkan subsidiary companies was
based on an independent valuation of the underlying licences. However, as
referred to in the 2004 Hereward Ventures plc Annual Report, the Company had
been in discussion with Gold Fields Limited, the outcome of which was that the
Company was able to retain a substantial amount of the deposit paid by Gold
Fields which has mitigated the loss on the eventual sale. Details of these
transactions are given in the financial statements.
Our balance sheet is strong in contrast to the financial period ended 31 March
2004. Net current assets and shareholders' funds have doubled and our cash
balances at 1 September 2005 stood in excess of £3.2 million. In relation to
Oil Quest's capital commitments for future drilling, we are cash covered more
than three times.
Following the reorganisation of the Company a rationalisation programme has been
implemented and savings especially in the area of salaries and directors' fees
will be positively reflected in our next set of accounts. The operations of Oil
Quest have been streamlined and more than 85 per cent. of shareholders' funds
are being expended on exploration.
In summary, I believe that Oil Quest shareholders hold a stake in a solid, 'no
frills' junior oil company, well positioned in these times of increasing energy
prices to become a successful explorer, leading to production in due course.
Michael B Thomsen
Non-Executive Chairman
14 September 2005
Profit and Loss Account
For the Period Ended 30 June 2005
15 months ended 12 months ended
30 June 2005 31 March 2004
£ £
Amounts written off intangible assets (84,764) -
Administrative expenses (1,141,193) (721,058)
Operating loss (1,225,957) (721,058)
Gain on forfeiture of deposit 770,568 -
Interest receivable and similar income 65,393 12,616
Loss on sale of investments (1,788,717) -
Loss on ordinary activities before taxation (2,178,713) (708,442)
Tax on loss on ordinary activities - -
Loss for the financial period (2,178,713) (708,442)
Basic loss per share (7.14p) (3.55p)
Loss per share during the 15 month period ended 30 June 2005 reflects a share
consolidation from a 1p ordinary share in the 12 months ended 31 March 2004 to a
5p ordinary share during the period.
There were no recognised gains or losses other than the loss for the financial
period.
Balance Sheet
As at 30 June 2005
30 June 31 March
2005 2004
£ £
Fixed assets
Intangible assets 578,840 397,796
Tangible assets 17,242 15,022
Investments 888,967 80,794
1,485,049 493,612
Current assets
Debtors 377,953 2,106,606
Cash at bank and in hand 3,357,371 651,038
3,735,324 2,757,644
Creditors : amounts falling due within one year (230,774) (955,922)
Net current assets 3,504,550 1,801,722
Total assets less current liabilities 4,989,599 2,295,334
Capital and reserves
Called up share capital 2,216,755 1,162,350
Share premium account 6,713,437 2,894,864
Profit and loss account (3,940,593) (1,761,880)
Equity shareholders' funds 4,989,599 2,295,334
Cash Flow Statement
For the Period Ended 30 June 2005
15 months ended 12 months ended
30 June 2005 31 March 2004
£ £
Net cash outflow from operating activities (1,209,403) (636,055)
Returns on investment and servicing of finance
Interest received 65,393 12,616
Capital expenditure and financial investment
Purchase of intangible fixed assets (347,985) (93,956)
Purchase of tangible fixed assets (10,056) (13,631)
Purchase of investments (50,000) -
Amounts loaned to group undertakings (198,894) (339,822)
Net cash outflow from capital expenditure and
financial investment (606,935) (447,409)
Acquisitions and disposals
Expenses on disposal of subsidiary undertakings (62,700) -
Advance payment for sale of shares in subsidiary
undertaking - 327,341
Net cash (outflow)/inflow from disposals (62,700) 327,341
Movement in liquid resources
Funds (placed on)/removed from deposit (2,503,475) 4,000
Financing
Issue of shares 4,829,000 720,000
Expenses of share issue (309,022) (36,000)
Net cash inflow from financing 4,519,978 684,000
Increase/(decrease) in cash 202,858 (55,507)
Notes
1. The financial information set out in this preliminary announcement does
not constitute statutory accounts as defined in section 240 of the Companies
Act 1985.
The balance sheet at 30 June 2005 and the profit and loss account and cash
flow statement for the period then ended have been extracted from the
Group's 2005 statutory financial statements upon which the auditors' opinion
is unqualified.
2. The calculation of loss per share is based on the loss for the financial
period £2,178,713 (2004: £708,442) divided by the weighted average number of
shares in issue during the period 30,535,456 (2004: 19,971,931). There is
no dilutive effect on the loss per share as a result of share options and
warrants. The comparative figures have been restated the 1p to 5p share
consolidation during the period.
3. The Company will post copies of the Annual Report and Accounts for the
period ended 30 June 2005 to its shareholders on 21 September 2005.
4. Copies of the Annual Report and Accounts for the period ended 30 June
2005 will be available from the Company's registered office, Ovalsec Limited,
One London Wall, London EC2Y 5EB.
Enquiries:
David Bramhill Maxine Barnes/Dominic Barretto
Oil Quest Resources plc Bishopsgate Communications Ltd
+44 (0) 117 957 3666 +44 (0) 20 7430 1600
[email protected] [email protected]
www.oilquest.net
Tim Feather
Westhouse Securities LLP
+44 (0)20 7601 6101
[email protected]
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