Gasol Makes Headway in Gulf of Guinea for 2009

Gasol, which is actively pursuing a strategy to monetize stranded gas assets in the Gulf of Guinea, announced its interim results for the six months ended September 30, 2009.

Operational Highlights:

  • Securing of first gas in Equatorial Guinea in a joint venture with SONAGAS
  • Progress achieved in South East Nigerian project (SENCO)
  • Completion of £3 million fundraising program
  • Senior management changes
  • Appointment of financial advisor

Haresh Kanabar, Chairman, said, "Gasol's development and success will depend on its ability to turn its existing partnerships with upstream, technology and downstream companies into project development agreements thereby crystallising gas monetisation opportunities. Gasol expects to progress its projects in the Gulf of Guinea in the coming year."

Chairman's Statement

for the Six Months Ended September 30, 2009

In the period since March 31, 2009, Gasol has continued to make significant progress in developing its unique strategy of monetising stranded gas assets in the Gulf of Guinea. The Group has gained access to its first gas in Equatorial Guinea, made progress on its South East Nigeria project (SENCO), completed its £3 million fund raising target and has appointed Panmure Gordon (UK) Limited as its new nominated advisor and broker. Most recently Gasol has announced it is undertaking a strategic review of the gas monetization opportunities in West Africa.

Although the economic environment has improved over the last six months, it remains difficult for a development group such as Gasol to progress its business as quickly as it had hoped 18 months ago, especially with respect to financing. However, despite the challenging environment, the Directors believe that there is still a strong interest in a well-managed, risk-mitigated, innovative group.

Business Update

On 23rd June 2009 Gasol announced its direct equity participation in a Joint Venture with SONAGAS, the national gas company of Equatorial Guinea, and so has acquired access to gas currently being flared in the Zafiro Development Area ("ZDA"). A Joint Venture, SONAF, has been established to develop gas commercialisation projects and associated infrastructure in Equatorial Guinea, with particular emphasis on Block B in the ZDA. Gasol and its partners have commissioned a detailed study of the gas reserves in Block B in the ZDA which were previously estimated at 500-750 bcf. Once Gasol and its partners obtain an accurate estimate of the gas reserves in place, they will be able to decide on the best project development plan to follow.

On December 11, 2009, Gasol announced that it had commenced a review of the strategy of the Group, with its largest shareholder African Gas Development Corporation ("AfGas"). In particular, the Group will reassess all of the opportunities available for monetisation of stranded gas assets in the Gulf of Guinea, taking into account the speed with which projects can be developed and desire to achieve early shareholder returns. Gasol anticipates that the review will result in new business activities to be developed alongside the existing projects already under development. The Company expects to announce the conclusion of the review during the first quarter of 2010.

Management Change

Theo Oerlemans, Gasol's Non-Executive Chairman, unexpectedly stepped down in October 2009 to devote time to personal matters relating to his health. Theo has been instrumental in the early development of Gasol. I have been appointed Non-Executive Chairman while Gasol's Board actively seeks a candidate with strong experience and expertise in the gas business in West Africa.

Ewen Wigley was appointed to the Board as Chief Operating Officer on 11th December 2009 while Soumo Bose resigned as Chief Executive Officer on the same day to pursue other career opportunities. Ewen is currently Head of Corporate Development for AfGas. He has more than 20 years structural and operating experience in the City of London. Ewen will be responsible both for managing the gas monetisation projects in West Africa and supporting the Board on strategic matters.

Corporate Update

Gasol appointed Panmure Gordon (UK) Limited as its new nominated advisor and broker in December 2009. Panmure Gordon has established a reputation for excellence during its 130-year history as corporate and institutional stockbroker and investment bank. The group provides corporate and institutional clients with access to the combined financial expertise of approximately 280 dedicated professionals across eight cities in the UK and the US. Panmure brings extensive experience in the Oil and Gas sector, a focus on small companies, and an ability to assist Gasol in its fund raising activity throughout its development.

In August 2009, Gasol completed its £3 million funding programme which had been announced in January 2009. Afren and AfGas, Gasol's two main shareholders, have shown their confidence and trust in Gasol's strategy and management and have continued to support the company financially throughout the year.

Gasol is fully aware that significant funding will be required in order to realise its strategy and to progress its projects to final investment decision stage and beyond, and this is being taken into account as part of the strategic review. The longer term success of Gasol will, to a large extent, depend on its ability to mobilise the required funding for its projects and its corporate development expenditure. Through 2010, we expect to report good progress in fund raising activities.

Financial Review

The Group recorded a loss for the period of £3,351,837 (2008: loss £1,624,642), equating to a loss of 0.32 pence per share (2008: a loss of 0.26 pence per share). The loss includes an amount of £884,032 within Finance Costs that reflects a fair value of the warrants that were issued as part of the £1 million placing in August 2009. The Group had cash balances of £0.3 million (2008: £3.0 million) and no debt at 30 September 2009 (2008: nil) and has continued to manage its cash position carefully.

The consolidated results include the whole of the loss incurred in SONAF, as Gasol provides all of the debt funding to SONAF and this partnership would have no net assets to distribute to equity holders in the event of a winding up.

Outlook

Gasol's development and success will depend on its ability to turn its existing partnerships with upstream, technology and downstream companies into project development agreements thereby crystallising gas monetisation opportunities. Gasol expects to progress its projects in the Gulf of Guinea in the coming year. Ultimately Gasol's success will depend primarily on its capability to raise money, both for the projects and for corporate business development activities.
 

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