Rocksource Dominates 3Q 2007 with E&P Program
Rocksource says that the results for the quarter was dominated by an ambitious exploration program, where the Group is investing substantial amounts. This reflects the commitment to the exploration strategy, where the key target is to drill EM based wells starting from year 2008.
The drilling campaign in the US progresses according to plan, and as more wells are put on stream the high margin production continues to increase. The EM survey campaign offshore Norway, where we are leveraging the technological advantage that Rocksource has built up within EM led exploration, has been a major driver. The campaign, where we are doing extensive EM testing of prospects, is part of the preparation for the 20th Norwegian Continental Shelf (NCS) License Round coming up in 2008. Our integrated exploration approach, where we are using our proprietary EM technology, will help us target the right prospects and to increase the chance of getting the right awards from the license round. The acquisition of the EM data that was started in the second quarter was finalized early November.
In US the production build-up is going according to plan. The average barrels of oil equivalents per day (boepd) in 3rd quarter were 650, up from 53 boepd in the same period last year, and up from 522 boepd in Q2 2007, (5.61mcf equivalent to 1 boe).The end 2007 target of 1,000 barrels per day was reached in October. Rocksource has accelerated the 2008-year end target of 2,000 boepd, where we expect the target to be reached within third quarter 2008.
Revenue from the oil and gas production totaled NOK 15.4 million in the 3rd quarter, compared to NOK 1.5 million same quarter last year. The production in the 3rd quarter was 279 million cubic feet of gas considerably up from 3rd quarter 2006 of 25.0 million cubic feet of gas. The production of oil condensate was 10,026 barrels in the quarter, up from 747 barrels same quarter last year.
The total revenue for the 3rd quarter amounted to NOK 15.4 million, compared to NOK 3.3 million 3rd quarter last year. The Group's operating expenses in 3rd quarter of NOK 94.5 million is considerably higher than 3rd quarter last year mainly due to the ongoing EM acquisition on the NCS (NOK 54 million).
Costs relating to the Group's activities on the NCS totaled NOK 81.8 million, of which 78% - equal to NOK 63.8 million - have been booked as a refundable taxable income in 3rd quarter.
The periodic result for the 3rd quarter was a loss of NOK -27.1 million, compared to a loss same quarter last year of NOK -9.6 million. This gives a basic and diluted earnings per share of NOK -0.110
The Group had a cash flow of NOK -106.7 million in 3rd quarter (NOK -11.6 million same quarter last year). Investing activities, mainly relating to the US assets and the ongoing drilling campaign, accounted for NOK -33.0 million. The Group's cash balance at the end of the quarter was NOK 148.4 million.
The Group 's working capital at the end of this quarter is NOK 228 million (NOK 268.2 million in 2nd quarter 2007) and the equity equaled NOK 332.5 million, down NOK 20.0 from NOK 352.5 in 2nd quarter 2007, giving the Group an equity ratio of 56.2% down from 57.3% in second quarter. The Group has a bond loan of NOK 200 million. There has been no withdrawal from the NOK 150 million credit facility related to NCS exploration.