Payment delay contributes to Petrel loss

Petrel Resources, an Irish oil and gas exploration company, said today its full-year loss widened due in part to payment delays from a contract on a southern Iraqi oil field.

The company, which has had a presence in Iraq since 1999 reported a pretax loss of €518,935, 25 per cent up on the €415,570 loss for 2006. Revenues over the year ending December 31st were €28.95 million. The statement did not give an equivalent revenue figure for 2006.

Executive chairman, John Teeling, said that while Iraq remained a difficult operating environment "things are getting better" and added that observers believe the country's estimated oil reserves could rise to 300 billion with exploration, bringing them to a par with those in Saudi Arabia. "It has vast quantities of quality oil which can be extracted at low cost", he said.

However, delays passing the Iraqi hydrocarbon law to regulate the development of Iraq's oil resources has required Petrel to proceed under the terms of pre-invasion laws, Mr Teeling said.

Work on the development of the Subba and Luhais oilfield in southern Iraq, which is expected to produce 200,000 barrels a day when it comes on stream in 2010 was almost 50 per cent complete, he said. 

Revisions to the design and production layout has caused delayed and he noted that "significant sums are outstanding" to Petrel and its joint venture partner Makman. Petrel was awarded the $197 million development contract for the project in 2005.

Petrel has two other projects in Iraq; an evaluation of the reserves of the Dhufriya field near Kut in south central Iraq and the Block 6 exploration project in the western desert.

He said a technical and geological review of the Merjan oilfield has recently been completed to the satisfaction of Iraqi authorities.

Outside Iraq, Petrel has an exploration project in Jordan where it has production-sharing agreement with the authorities in Jordan for the development of the 8,750 sq km East Safawi oil and gas block.

Petrel made a loss per share of 75 cent last year compared to 62 cent in 2006. Its net assets as of December 31st stood at €12.9 million, up from €7.3 million.