Bula expects annual cash flow of more than $20m from purchase of US oilfield

BULA Resources has negotiated the purchase of a US oil field for around $100 million €111 million), it was confirmed yesterday. The deal, which is subject to due diligence, financing and shareholder approval, is expected to produce an annual cash flow of more than $20 million for the Irish exploration company.

Speaking at Bula's annual general meeting yesterday, chairman, Mr Albert Reynolds, told shareholders that the field, understood to be located in the shelf of the Gulf of Mexico, would provide the company with an ongoing revenue stream while more substantial interests in Libya and Iraq continued to be mired in regulatory delays. The US deal should be completed by the end of October, according to Bula chief executive officer, Mr Tom Kelly.

As part of the same strategy, Bula has also concluded an agreement in principle to buy a 40 per cent interest in a former Tuskar oil field in Nigeria and has said that it is actively pursuing other potential acquisitions. The Nigerian deal is less advanced than the US purchase and is subject to further investigations of the oil reserves in the field. Bula is expected to fund these purchases partly though borrowings and partly through shareholder contributions.

The acquisition announcements failed to appease a band of discontented shareholders, many of whom took the floor to repeatedly express doubts about the company's past management. Mr Reynolds admitted that the board was disappointed to have so far failed to conclude a deal allowing for the commencement of production at its Libyan interests but said that Mr Tom Kelly, Bula's chief executive since June, was due to visit key Libyan officials in coming weeks in an attempt to progress the matter.

Relations between Bula and the Libyan National Oil Corporation (NOC) have in the past been strained but the company's Libyan manager, Mr Omar Yazigi told shareholders that Bula was now "on the border of breakthrough" and a contract would be signed "very soon". Bula's Iraqi operations were also the subject of much shareholder interest.

The a.g.m. was told that negotiations had been successfully completed on an exploration contract which was now in the hands of the Iraqi government.

Mr Riad al Taher, a director of Bula's Iraqi subsidiary, indicated that a change in Bula's board structure was essential to the company's success in Iraq and Mr Albert Reynolds told shareholders that Sunday's resignation of Bula technical executive director Mr William Lowry from the board was linked to this.

Mr Reynolds denied however that he personally had received a request for restructuring from the Iraqi authorities. Mr al Taher said that Bula needed people who were "more committed" to the company's future.

The Bula board is now comprised of just two directors: Mr Reynolds and Mr Kelly.

This follows yesterday's retirement of non-executive director Mr Tommy Dreelan and the withdrawal of Mr Patrick F Gillen's candidature for directorship. The a.g.m. heard that Bula registered an operating loss of £1.2 million for 2000, up 20 per cent on 1999. This related to a turnover of £314,000, down 36 per cent on the previous year.

Bula closed at 25 cents in Dublin last night, unchanged on the day.