PA Resources' Profits Soar in Second Quarter

PA Reseources has issued its financial results for the second quarter ended June 30, 2008.

Summary second quarter 2008

  • Group revenue referring to sales of crude oil during the second quarter increased to SEK 921.7 (868.1) million.
  • Profit for the period amounted to SEK 246.3 (314.3) million, affected by increased amortizations and write–downs together with higher interest expenses and an increased tax burden.
  • Earnings per share before dilution amounted to SEK 1.70 (2.17) and earnings per share after dilution became SEK 1.68 (2.15).
  • Average production of oil was 12,887 (20,500) barrels per day. A total of 1,000,010 (1,691,000) barrels of oil was sold to a high average price of 119.57 (66.62) USD per barrel.
  • Successful drillings in Equatorial Guinea has continued during the second quarter.

Summary first half of 2008

  • Group revenue referring to sales of crude oil during the first half of 2008 increased to SEK 1,578.7 (1,263.4) million.
  • Profit for the period increased to SEK 480.3 million compared with SEK 354.2 million the corresponding period prior year.
  • Earnings per share before dilution amounted to SEK 3.31 (2.44) and earnings per share after dilution became SEK 3.29 (2.42).
  • Average production of oil was 12,394 (14,022) barrels per day. A total of 2,272,010 (1,987,000) barrels of oil was sold to an average price of 108.09 (64.65) USD per barrel.
  • Cash flow from operating activities amounted to SEK 469.6 (234.8) million.

CEO's Comments

PA Resources is currently in a period of intensive work to increase the Group’s oil production in both a short and long term perspective.

Focus on increased production In Tunisia, several drilling programs are ongoing in order to increase the production. At the Didon field the production from a new well could commence in June and an additional production well is expected to be finalized during the third quarter. At the El Bibane field a new production well has been producing during the entire quarter and yet another new well was put on stream in July. Drillings of new production wells are also continuing at the Ezzaouia field. In Norway, the Volve field contributes to the production at the same time as supplementary wells will be drilled.

High oil prices

Our result is favored by the high oil prices. Up to now the Brent price on crude oil has reached a peak of 147 USD per barrel and is now traded at around 110 USD per barrel. During the second quarter the Group has been able to sell oil to an average price of 119.57 USD per barrel.

Future exploration activities

With the aim of securing the long-term production and the Group’s assets in oil and gas reserves, several exploration activities are ongoing in the geographical areas in which we are active. Gas and/or gas discoveries have been made in all six wells that have been drilled in Block I in Equatorial Guinea. During the second quarter an appraisal well was drilled on the Benita structure where tests confirm good oil flow rates. In July an additional discovery of oil and gas condensate was made in the Diega structure. In Norway a discovery of oil was made on the Draupne prospect in PL 001B during the second quarter and the preliminary well result on the Ipswich prospect in PL 274 have shown indications of hydrocarbons. In May we were awarded shares in a large exploration licence on Greenland and the Group hereby expands its operations into a new exciting area with a long-term great potential.

Financial result

Our financial position has strengthened during the second quarter with a profit for the period amounting to SEK 246 million corresponding to earnings per share before dilution SEK 1.70. The Group’s positive cash flow from operating activities finances investments for increased production as well as exploration for increased reserves.

Interesting market for acquisitions and sales

The situation on the world market offers opportunities of interesting acquisitions and sales. During the second quarter the acquisition of the exploration licence Mer Profond Sud and the Azurite field in the Republic of Congo was formally completed. A promising exploration license in the North Sea outside the United Kingdom was also acquired.

The acquisitions as well as the many new discoveries in Equatorial Guinea have together increased the value of PA Resources assets and will enable the Group’s continued development of the collected portfolio.

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