LASMO Announces Results for Six Months Ended June 30, 1999.LONDON--(BUSINESS WIRE)--July 29, 1999-- LASMO plc (NYSE NYSE See: New York Stock Exchange :LSO LSO London Symphony Orchestra LSO Lesotho (ISO Country code) LSO Laser Safety Officer LSO Landing Signal Officer LSO Large Send Offload LSO Longwood Symphony Orchestra (Brookline, MA) ), the international oil and gas exploration and production company, today announced its 1999 interim results. Highlights 1. (pound)28m net profit, up from a loss of (pound)4m for the same period in 1998. 2. Robust financial performance, despite historically low oil prices -- Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. per barrel up by 10 percent to (pound)1.08/boe -- Average cost of sales per barrel reduced by 12 percent at (pound)5.72/boe -- On track to achieve overhead savings of (pound)15m from reorganization -- Profitable disposal of peripheral assets 3. Successful acquisition of Monument Oil & Gas -- Strengthened positions in UK, Pakistan, North Africa and the Caspian -- Integration process close to completion 4. Substantially strengthened financial position -- Improved gearing down from 74 percent to 46 percent 1H1999 1H1999 1H1998 Profit before exceptional items ($m) 19 ((pound)m) 12 (4) Profit after exceptional items ($m) 44 ((pound)m) 28 (4) Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses ($m) 289 ((pound)m) 183 113 Net debt / equity (percent) 46 (percent) 46 74(a) Production (Mboepd) 169 189 Realizations ($/boe) 12.33 14.00 Average cost of sales ((pound)/boe) 5.72 6.47 Operating profit ((pound)/boe) 1.08 0.98 (a) year end 1998 Rudolph Agnew, Chairman, said: "I am pleased with the progress that is demonstrated by the results today. Clearly there is much more to do. Achieving strong financial results against a backdrop of depressed prices Depressed price In the context of stocks, stock whose market price is low in comparison to stocks in its sector. reflects a combination of a long term, low cost strategy and specific actions taken by the Company in recent months. "These results show that LASMO has the right assets, operational capabilities and cost base to grow in a challenging environment. We will build on these strengths to maximize returns from existing assets through operational performance, portfolio management and through actively seeking new investment opportunities. The right management team is in place to unlock the value from our strengthened portfolio of assets. "The acquisition of Monument, which has already been integrated into the Group, brings a number of high quality and complementary assets to LASMO. This combination also presents new opportunities which our geographic presence and technical expertise will allow us to exploit fully in the future for the benefit of our shareholders. "LASMO is well positioned to deliver returns throughout the cycle and is committed to optimizing the balance between current and future investments. This will be key in maximizing value for LASMO's shareholders." Chairman's Statement It is a widely held belief that the only constant feature of this industry is the capacity of the oil price to surprise. At the time of writing we are experiencing a lively rally in commodity prices, the pace of which has surprised most market observers, though the sustainability of which is uncertain. This recovery follows a period during the first half of 1999 that has seen prices touch their lowest levels for over 20 years. It is against this backdrop of depressed prices that I am pleased to report a robust financial performance, with a 10 percent improvement in unit operating profit to (pound)1.08 per boe, and profits before exceptional items of (pound)12 million for this first half. This compares with a (pound)4 million loss in the first half of 1998, when average realized prices were some 10 percent higher. This financial result has been delivered during a period that has seen our production levels average 169 Mboepd, 11 percent lower than the first half of 1998. This reduction has been in part due to the disposal of producing assets and in part due to anticipated lower levels of Indonesian entitlement production. We forecast a level of around 185 Mboepd for the full year, and a long term annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. average production growth rate of between 5 and 10 percent. I am pleased to report the successful acquisition and integration of Monument Oil & Gas, which has substantially strengthened both our financial position and our asset portfolio in our core geographic areas. The acquisition has not distracted us from the continued attack on our cost base. The Group reorganization program, which we announced last year, is set to deliver the planned overhead savings of (pound)15 million in 1999. These savings are partly reflected in lower like for like administration costs of (pound)12 million for the first half, representing a reduction of some 20 percent on the same period in 1998. Further benefit will accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. as the reorganization continues. Financial performance The average Brent price Hartley Brent Price (born December 9 1968 in Shawnee, Oklahoma) is an American former professional basketball player in the NBA. He is the younger brother of former Cleveland Cavaliers point guard Mark Price. for the first six months of 1999 was $13.38, a fall of two percent on the first half of 1998. The effect on financial performance was more than offset by a continuing reduction in cost of sales to (pound)5.72 per barrel for this first half, representing a 12 percent reduction over the comparable period last year, in line with our commitment to drive down our breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations price. I am pleased to report a material improvement in operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: and consequent profitability. At mid year, profit before exceptional items stood at (pound)12 million against a (pound)4 million loss for the same period in 1998. Our profit for the period after exceptional items amounted to (pound)28 million, which includes a profit of (pound)16 million arising on the disposal of peripheral Algerian assets. Cash flow from operations amounted to (pound)183 million compared to (pound)113 million in the first half of 1998. Following the acquisition of Monument Oil and Gas plc, our mid year balance sheet gearing stands at 46 percent (39 percent pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma including agreed disposal proceeds) against 74 percent at December 31, 1998. The Acquisition of Monument Oil and Gas The acquisition of Monument Oil and Gas plc, which was declared wholly unconditional on June 14, 1999, is now close to completion. The acquisition has strengthened LASMO's financial position and built upon our asset positions in the UK, Pakistan, North Africa and the Caspian. In the UK, we have added to our interests in the Liverpool Bay Liverpool Bay is a bay of the Irish Sea between north-east Wales, Cheshire, Lancashire and Merseyside to the east of the Irish Sea. The bay is a classic example of a region of freshwater influence. The rivers Alt, Conwy, Dee and Mersey drain into the bay. fields and increased our influence over its operational performance. In Pakistan, the acquisition has reinforced our position in the Kirthar gas play, and operational and marketing synergies are anticipated. Due to the combined efforts of both LASMO and Monument staff, the integration of the activities of the two companies is now largely complete. We anticipate that general and administrative cost administrative cost Managed care A cost incurred by the 'business' end of a health care facility or university–eg, staffing and personnel costs, nursing home and hospital administration, insurance, and overhead expenses. Cf Indirect costs. savings will total approximately (pound)6 million before tax. Our interim results do not include any contribution from Monument during the period. Monument's assets will add approximately 25 Mboepd to our production in the second half of the year. As a result of the acquisition, I am pleased to welcome two new non-executive directors A non-executive director (NED, also NXD) or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. to our Board. Tim Eggar joins LASMO from Monument Oil and Gas plc where he was Chief Executive. Thierry de Rudder rudder, mechanism for steering an airplane or a ship. In ships it is a flat-surfaced structure hinged to the stern and controlled by a helm. When the ship is on a straight course, the rudder is in line with the vessel; if the rudder is turned to one side or the other also joins having served as a non-executive director of Monument Oil and Gas plc. Both bring significant expertise and we look forward to the contribution they will make to LASMO's business. Asset Management Asset management continues to be an integral part of our business. During the period we announced two asset disposals: the sale of two packages of Southern North Sea assets and an agreement to sell our interests in blocks 401a and 402a in Algeria's Berkine Basin. Taken together, these deals result in approximately (pound)30 million of profit on disposal, to be booked in 1999. These transactions are examples of our intent to both maximize value and to accelerate profitability from non-core assets through disposal. Following our strategic disposals of our assets in Colombia and Italy during 1998, LASMO continues to develop a track record of achieving attractive sales prices. The disposal of peripheral assets will continue as we seek to improve the enlarged Group's portfolio. Outlook In light of the oil price recovery of recent weeks, we believe the greatest threat to independent exploration and production companies lies in complacency com·pla·cen·cy n. 1. A feeling of contentment or self-satisfaction, especially when coupled with an unawareness of danger, trouble, or controversy. 2. An instance of contented self-satisfaction. . We firmly believe that we must manage the business in order to deliver financial performance throughout the commodity price cycle. Our strategy of rigorously managing our existing portfolio and pursuing growth in low cost areas is beginning to deliver results. However, the operational challenges in managing a portfolio of international production and development assets lead us to examine the balance between current and future returns. We must also remain sensitive to the level of financial risk in the business, and to that end we intend to retain a strong balance sheet. Driving operational performance, further cost reduction and active portfolio management remain fundamental aspects of our business. I believe the Company is well positioned to extract further value from our enlarged portfolio and to deliver improving financial performance for our shareholders. Operational Review During the first half of 1999 LASMO produced 169 Mboepd, with increased production from Algeria and Venezuela and first oil from a new development, the Ross field in the UK, ahead of schedule. Production is forecast to grow as the Group's major development projects come on stream in Algeria, Libya, Pakistan and Venezuela. This first half production level represents an 11 percent decrease in output relative to the first half of 1998. This lower level reflects the disposal of producing assets in Colombia and a reduced share of entitlement production in Indonesia under the terms of the production sharing contract. Our strategy of focusing on low cost, prolific basins for future growth has started to deliver cost benefits. Production was realized at a unit cost of sales of (pound)5.72 per barrel, 12 percent lower than the first half 1998 level of (pound)6.47 per barrel. LASMO participated in discoveries during the first half in Pakistan, Indonesia and the UK. So far 1999 has also seen successful appraisal of both the Bhit and Zamzama fields in Pakistan, and new production in the North Sea from the Ross field. Exploration and appraisal spend for the first half amounted to (pound)32 million of which (pound)12 million has been written off. Expected full year spend will be approximately (pound)67 million. The focus for E&A will switch to Venezuela and Indonesia for the second half, where extensive exploration drilling programs are planned. Development spend for the first half of the year amounts to(pound)83 million. A total of(pound)175 million is anticipated for the full year as activity on our Dacion redevelopment progresses. UK Production from the UK averaged 91 Mboepd in the first half of 1999 against 107 Mboepd in the first half of 1998. This result reflects decline in the Piper and Saltire fields in addition to operational problems in the Liverpool Bay fields, partly offset by increased production in the Galley galley, long, narrow vessel widely used in ancient and medieval times, propelled principally by oars but also fitted with sails. The earliest type was sometimes 150 ft (46 m) long with 50 oars. and Andrew fields as well as new production from the Ross field which was brought onstream ahead of schedule. Production from the Liverpool Bay fields averaged over 65 Mboepd gross for the first half. Subsequent to the acquisition of Monument, LASMO will have a 45 percent equity interest in this asset. The additional equity will give the Group increased influence to work with the Operator to increase production and drive operating costs operating costs npl → gastos mpl operacionales down, thereby improving asset performance. Additional production in the second half will come from the Ravenspurn and Hudson fields, currently producing a combined 7 Mboepd net to LASMO, following the completion of the Monument acquisition. Exploration and appraisal activity during the first half included a discovery in block 29/4d in the Central North Sea. In the West of Shetlands, activity includes the acquisition of seismic over Tranches Tranches A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". 22 and 30, and preparations for re-entry RE-ENTRY, estates. The resuming or retaking possession of land which the party lately had. 2. Ground rent deeds and leases frequently contain a clause authorizing the landlord to reenter on the non-payment of rent, or the breach of some covenant, when the into last years well on the Eribol prospect on block 213/23 in Mobil-operated Tranche Tranche One of several related securities offered at the same time. Tranches from the same offering usually have different risk, reward, and/or maturity characteristics. tranche A class of bonds. 6 are underway. Other 1999 activity will include a well on the Vrackie prospect in block 204/28. During the first half of 1999 LASMO disposed of its interests in all Southern North Sea assets with the exception of the LASMO-operated Markham field through a successful asset management program. The assets were sold as two packages, to Gaz de France Gaz de France (GDF) is a French company which produces, transports and sells natural gas around the world and especially in France which is its main market, but also Belgium, the United Kingdom, Germany and other European countries. and Centrica Resources Limited for a combined consideration of (pound)90.2 million, resulting in a profit on disposal of some (pound)14 million to be booked during the second half of 1999. Indonesia In the first half of 1999, 145 LNG LNG (liquefied natural gas): see under natural gas. cargoes were exported from the Bontang LNG plant. Of these, 19.3 standard cargoes were attributable to LASMO (equivalent to 390 MMscfd), for its share of the Sanga Sanga a type of draft cattle with a small cervicothoracic hump and long horns, originating in eastern and southern Africa. It includes many varieties. Sanga Production Sharing Contract. Activity in Sanga Sanga during the period was focused on the continued evaluation of additional exploration potential following the acquisition of extensive 3D seismic over large tracts of the PSC (Public Service Commission) Same as PUC. . In addition, infill in·fill n. 1. The use of vacant land and property within a built-up area for further construction or development, especially as part of a neighborhood preservation or limited growth program. 2. development drilling and re-completions continued as scheduled in the field to ensure that gas deliverability is comfortably maintained to meet current and future LNG sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. . An extensive review of operations has been carried out during the first half of 1999. Designed to optimize capital investment and operational support requirements over the future years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time results of this work are expected to significantly add to the value of LASMO's interests in this PSC. The Bontang LNG Plant continued with its expansion activity during the period. Construction of the eighth LNG processing facility (Train H) is on schedule and the train is due to commence production later in 1999. This will reinforce Bontang's position as the largest LNG facility in the world. LASMO views the prospectivity of Indonesia and the long term strength of regional gas markets as providing an attractive investment environment. On May 1 this year LASMO farmed into three Unocal PSCs offshore East Kalimantan East Kalimantan (Indonesian: Kalimantan Timur abbrv. Kaltim) is Indonesian province on the east of Borneo island. The resource-rich province has two major cities, Samarinda (the capital and a center for timber product) and Balikpapan (a petroleum center with oil . The prospectivity of the acreage was confirmed by the first well, North Janaka-1, which was a discovery. LASMO is now seeking to extend the relationship with Unocal to other opportunities in Indonesia where their low cost deepwater drilling technology can provide competitive advantage. In March this year LASMO drilled the Mako-1 well which is part of the Cumi Cumi PSC, in the Natuna Sea. The well encountered non-commercial gas shows and LASMO is currently reviewing the future potential of this PSC. Elsewhere in Indonesia LASMO completed a 2D seismic acquisition program in the Malagot concession in Irian Jaya Irian Jaya, province, Indonesia: see Papua. . The technical evaluation The study and investigations by a developing agency to determine the technical suitability of material, equipment, or a system for use in the Military Services. See also operational evaluation. is in progress with a view to exploration drilling in 2001. Venezuela LASMO's redevelopment and exploration of the Dacion Area continues apace. Since assuming operatorship on March 31, 1998, over 60 well workovers have been completed and 25 new infill wells have been drilled. From a baseline level of 11 Mbopd, production had reached 16 Mbopd by end 1998 and 27 Mbopd during recent weeks. Flow rates from the new infill wells have been particularly encouraging, however facilities constraints are holding back production at present. The upgrading of the processing facilities will take production, as planned, to in excess of 40 Mbopd by around the end of the year. Phasing of capital investment is continually under review in order to achieve the right balance between new investment and current production. Looking forward, the Group will continue with the infill drilling and exploration program through the rest of the year and into 2000. In parallel we will complete a surface facilities review with the aim of planning for and procuring Procuring, in general, is the act of acquiring goods or services, usually by contract. It may refer to:
The Group is pleased to report encouraging discussions with PDVSA PDVSA Petroleos De Venezuela, SA on plans to increase production levels to 120 Mbopd. As a first step in this process, LASMO will construct a new 20 inch export pipeline which will ultimately be extended to access increased capacity. The acquisition of 600 square km of 3D seismic data over the entire contract area was completed during March 1999, with interpretation commencing over the first tranche during January. These data are of excellent quality and initial results are encouraging. The dataset has been used to define the location for the first Dacion exploration well, to be located on the Tortola prospect, which is due to spud during August 1999. Pakistan Progression of the LASMO-operated Bhit field toward full development has continued during the first half of 1999. The appraisal program has been completed and a development plan submitted to partners for approval. The next step is to seek Government approval for the development with a view to producing first gas in 2001. Meanwhile the Gas Sales Agreement is currently being finalized See finalization. with the state gas utility company. In March this year LASMO announced it had discovered gas in the Badhra prospect, adjacent to the Bhit field. This is the first well to test the Mughal Mughal (m  gŭl`) or Mogul (mō`gəl, mōgŭl`), Muslim empire in India, 1526–1857. Kot formation, and is indicative of additional potential within LASMO's Kirthar Foldbelt acreage. Based on the proximity to the Bhit development the well is likely to represent a commercial discovery and we intend to appraise appraise v. to professionally evaluate the value of property including real estate, jewelry, antique furniture, securities, or in certain cases the loss of value (or cost of replacement) due to damage. this discovery. The Group plan to drill a further exploration well on the Kirthar block later in 1999. The Monument acquisition has materially strengthened LASMO's position in the Kirthar Foldbelt, through the addition of an interest in the Zamzama discovery located in the Dadu concession, 40 km to the northeast of the Bhit field. We anticipate synergy benefits of the order of (pound)15 million through both operational and marketing co-operation. The discovery was successfully appraised earlier this year, producing 94 MMscfpd on test. In April this year LASMO signed an agreement to enter into a partnership with Petronas Carigali for an exploration license covering block 2769-4 in the Middle Indus. Petronas will operate the license, while LASMO will support seismic and drilling operations using our in-country expertise. North Africa LASMO's production from Algeria began in May 1998 from the HBNS HBNS Health Behavior News Service field in the Berkine basin, and since January of this year, oil export from this initial phase of production has been via the new 30 inch diameter Nezla pipeline to Hassi Massaoud. Gross production rates have averaged 54 Mbopd for the first half of 1999. Performance tests at HBNS have demonstrated a production capacity in excess of the design capacity, and following Sonatrach approval a letter of intent for the construction of expanded facilities has been signed. Development drilling in the HBNS field continues, with the objective of ultimately delivering a phase two target production level of 135 Mbopd by the end of 2001. It is expected the construction contracts for both HBNS phase 2 and HBN HBN Hexagonal Boron Nitride HBN Health Building Notes HBN Brinell Hardness (metallurgy) HBN Health-Based Numbers HBN HomeBrew Network (gaming) HBN High Bandwidth Networking will be awarded in the second half of 1999. Other development activity is focussed on the HBN and Ourhoud (formerly Qoubba) fields. LASMO has entered into an agreement to sell its entire interest in the BHP-operated blocks 401a and 402a to Agip Algeria Exploration BV a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of ENI for $42.3 million. LASMO has approximately 13 MMbbls of oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally booked in these blocks. This is an example of LASMO's active portfolio management process and has served to maximize the value of these assets. As a result of the Monument acquisition, LASMO now operates the IAN IAN Interactive Affiliate Network IAN i am nothing IAN Instrumentation & Automation News IAN Ianuarius (Latin: January) IAN Instituto Agronomico Nacional (Paraguay) IAN Incident Area Network appraisal and El Ouar II exploration areas in block 212 in the Berkine basin. The IAN discovery was made in 1997, with the discovery well flowing 6.6 Mbopd of light oil/condensate and 47 MMscfpd of gas on test. The block 212 agreements are subject to ratification The confirmation or adoption of an act that has already been performed. A principal can, for example, ratify something that has been done on his or her behalf by another individual who assumed the authority to act in the capacity of an agent. by the Algerian government. In Libya, the NC174 (Elephant) field was declared commercial in February 1999 and the development plan was approved. The front-end engineering design for Phase 1 of the project has been completed. Further exploration prospectivity has been identified within NC174, and LASMO has secured an extension to the exploration term of the license. In addition, the Group is negotiating with the Libyan authorities for further acreage in the Murzuk basin. Technical studies have been ongoing in the Group's other North African North Africa A region of northern Africa generally considered to include the modern-day countries of Morocco, Algeria, Tunisia, and Libya. North African adj. & n. Adj. 1. exploration interests during the first half of 1999. In Morocco, LASMO has completed an initial technical evaluation of the Ras Tafelney Reconnaissance License and is considering an application for an extension to the license and the acquisition of further seismic data. In Tunisia, following the Jenein-1 exploration well in the South Jenein block, further seismic acquisition and interpretation is underway, whilst consideration is being given to drilling a further well in 2000. The Caspian Region In Turkmenistan, LASMO has acquired interests in both the Nebit Dag Dag(h)da great god of Celts; father of Danu. [Celtic Myth.: Parrinder, 68; Jobes, 405] See : Fatherhood Dag (h)da god of abundance, war, healing. [Celtic Myth. and Garashsyzlyk PSAs following the Monument transaction. Production from the Nebit Dag PSA (Professional Services Automation) An information system designed to organize, track and manage all opportunities, work, resources, costs, revenues and invoices to improve the productivity and efficiency of the workforce. comes from the Burun field, in which LASMO holds a 35 percent interest and is operator. Production averaged 11 Mbopd through the first half of 1999. The current focus is on the collection of production data to enable an informed decision on field development to be taken during 2000. Export of hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. is one of the primary concerns for assets in this geographic region. Two export routes are available to LASMO, either westward through Azerbaijan and Georgia, or by means of a swap agreement through Iran. There is significant exploration potential on both the Nebit Dag PSA and the adjoining Mobil-operated Garashsyzlyk PSA, in which LASMO holds a 27.6 percent interest. The latter was ratified rat·i·fy tr.v. rat·i·fied, rat·i·fy·ing, rat·i·fies To approve and give formal sanction to; confirm. See Synonyms at approve. on the June 21 of this year. Seismic will be acquired over Garashsyzlyk during the remainder of 1999 to allow a drilling and workover campaign to commence in 2001. Work has continued on the technical assessment of the hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen potential of the Iranian sector in the southern Caspian following the award of an exploration study in December 1998, to a group comprising LASMO and Shell and the Khazar Exploration and Production Company (KEPCO KEPCO Korea Electric Power Corporation KEPCO Kansai Electric Power Company, Inc. (Japan) KEPCO Kyushu Electric Power Company, Inc. (Japan) ). The agreement has a 24 month initial study period, with the consortium having the right to select up to six blocks and a further 12 month period in which to negotiate service agreements. An extensive seismic program will be acquired over the study area, commencing in the second half of 1999. Offshore Azerbaijan, LASMO has acquired through Monument a 12.5 percent interest in the BP Amoco-operated Inam block, on which a 3D seismic survey has been completed and the drilling of an exploration well is expected in 2000. In Georgia, LASMO has acquired the right to farm in to a 15 percent interest in Block 12. Should exploration results be encouraging, the Group has the right to increase equity levels to a maximum of 40 percent. A well is planned on the block for the fourth quarter of 1999. Middle East In Iran LASMO is pursuing opportunities in the second Iranian buyback round and has submitted proposals for the Darquain and Ab-Teymur projects to the National Iranian Oil Company The National Iranian Oil Company (NIOC), under the direction of the Ministry of Petroleum of Iran, is an oil and natural gas producer and distributor headquartered in Tehran. It was established in 1948. . During 1998, LASMO entered into a partnership with an Iranian joint venture, PEC-IOID as part of our commitment to develop local partners and increase the Iranian content of our project submissions. In Kuwait, the emphasis has been on building relationships through LASMO's subsidiary Khaleej Petroleum and work has been on-going with our partner BP Amoco on positioning the group for access to future field redevelopment projects. Financial Review Basis of Preparation A new accounting standard, Financial Reporting Standard 12 "Provisions, Contingent Liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. and Contingent Assets Contingent Asset An asset in which the possibility of ownership depends solely upon future events uncontrollable by the company. Notes: An example might be a settlement from a lawsuit. See also: Asset, Balance Sheet, Contingent Liability, Liability " ("FRS FRS abbr. Fellow of the Royal Society FRS, n “flexed rotated side-bent,” an osteopathic abbreviation used to describe vertebral position in cases of spinal dysfunction. 12") is effective for the interim results. FRS 12 requires the full discounted cost of decommissioning Decommissioning is a general term for a formal process to remove something from operational status. Some specific instances include:
v. 1. To set right; correct. 2. To refine or purify, especially by distillation. environmental damages arises. Previously the provision for decommissioning costs was built up over the life of the field. Prior period figures have been adjusted to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current period's presentation. The implementation of FRS12 does not have a significant impact on current Group earnings. Acquisition of Monument Oil and Gas plc The recommended share offer for Monument Oil and Gas plc ("Monument") was declared wholly unconditional on June 14, 1999. The transaction has been accounted for using the acquisition method and a preliminary fair value exercise of Monument's assets and liabilities has been carried out for the purposes of preparing the Group interim balance sheet. Turnover Turnover for the six months ending June 30, 1999, including the Group's share of joint venture's turnover, totaled (pound)239 million (1998 (pound)290 million) down 18 percent as a result of lower average realized prices and lower production. Sales realizations for the first half of 1999 averaged (pound)7.61 (US$12.33) per boe (1998 (pound)8.49 (US$14.00) per boe), down 10 percent due to a decrease of 12 percent in average realized US dollar price levels, offset by a 2 percent strengthening of the US dollar against sterling. The effect of the Group's oil price risk management program was to reduce sales realizations in the first half of 1999 by approximately 36 cents per boe (1998 nil). Total production for the first half of 1999 was 169 Mboepd, which represents a decrease of 20 Mboepd compared with production in the same period in 1998 of 189 Mboepd. This decrease mainly results from the withdrawal from Colombia in the second half of 1998, reductions in certain maturing North Sea fields and a reduced share of entitlement production in Indonesia, partially offset by increased production from Venezuela and Algeria. Operating Profit Operating profit for the period was (pound)30 million (1998 (pound)30 million). Cost of sales in the first half of the year amounted to (pound)159 million, down 20 percent from the same period in 1998 ((pound)199 million). Average cost of sales were (pound)5.72 per boe (1998 (pound)6.47) down 12 percent primarily due to lower operating costs in the North Sea and lower depletion charges following the write-down of the Group's oil and gas assets at December 31, 1998. Exploration and appraisal expenditure written off amounted to (pound)12 million (1998 (pound)17 million). Administrative expenses totaled (pound)15 million (1998 (pound)15 million) including a one-time charge of (pound)3 million (1998 nil) in respect of the reorganization of the Monument business. Profit/(loss) for the period The Group's share of the operating profit of its Unimar joint venture was (pound)10 million (1998 (pound)11 million). Disposal of the Group's peripheral Algerian assets gave rise to an exceptional profit of (pound)16 million (1998 nil). Net finance charges amounted to (pound)5 million (1998 (pound)15 million), the decrease being primarily due to the (pound)9 million release of an accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for interest payable on corporation tax for prior years following the settlement of the tax position in the first half of 1999. The Group's tax charge for the period was (pound)23 million (1998 (pound)30 million), the decrease resulting largely from lower net revenues generated in Indonesia. As a result, the profit for the first half of 1999 before exceptional items amounted to (pound)12 million (1998 loss (pound)4 million). The profit for the period after exceptional items amounted to (pound)28 million. There were no exceptional items in the first half of 1998. Profit/(loss) attributable to members of the parent company After deducting minority interests of (pound)2 million (1998 nil) the profit attributable to members of the parent company before exceptional items amounted to (pound)10 million (1998 loss (pound)4 million). Profit attributable to members of the parent company after exceptional items amounted to (pound)26 million. Profit/(loss) attributable to ordinary shareholders After deducting preference dividends of (pound)7 million (1998 (pound)6 million) the profit attributable to ordinary shareholders before exceptional items was (pound)3 million (1998 loss (pound)10 million). Profit attributable to ordinary shareholders after exceptional items amounted to (pound)19 million in the first half of 1999. Dividend The Board is not proposing a dividend in respect to the six months ending June 30, 1999 (1998 nil). Cash flow and capital expenditure Net cash inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. from operations after taxation amounted to (pound)183 million (1998 (pound)113 million), including (pound)147 million received from the re-negotiation of the gas sales agreement for the Liverpool Bay fields (1998 nil). The principal changes in underlying cashflow, period to period, relate to lower revenues and increased operating working capital. Accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. exploration and appraisal expenditure for the first half of 1999 was (pound)32 million (1998 (pound)33 million). Accrued development and production expenditure reduced slightly to (pound)105 million from (pound)117 million in the first half of 1998. Net debt and Gearing The Group's net debt at June 30, 1999 was (pound)644 million (December 31, 1998 (pound)672 million). Gearing at June 30, 1999 was 46 percent, significantly lower than gearing levels at December 31, 1998 of 74 percent. Adjusting for proceeds of approximately (pound)105 million to be received in the second half of 1999 arising from the disposal of the Group's interest in the Johnston field and certain Southern North Sea gas assets, pro forma gearing at June 30, 1999 was 39 percent. Year 2000 A Group-wide project has been in place since mid 1997, phases one and two of which were completed some time ago. The first phase developed a risk-prioritized inventory of computer and micro-processor based systems and the second involved the audit of these systems for Year 2000 compliance. The third phase, to take corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or where necessary, will be completed by the end of August, slightly behind schedule. The fourth and final phase of the project is also progressing satisfactorily. The purpose of this phase is to create contingency plans A plan involving suitable backups, immediate actions and longer term measures for responding to computer emergencies such as attacks or accidental disasters. Contingency plans are part of business resumption planning. to deal with events that might arise despite the best endeavors of the Group to identify and resolve all the non-compliance situations that could impact the business. This work will be largely complete by the end of the third quarter of 1999. In the normal course of business, the Group depends on customers, suppliers, joint venture partners and various other entities, and an essential element of the project concerns the manner in which these organizations are handling the Year 2000 issue. The Group's aim is, wherever possible, to establish a shared awareness of business risk and thereafter to put in place work programs that eliminate the risk. Where a satisfactory conclusion cannot be reached and residual risk Residual risk Related: Unsystematic risk is deemed to exist, then appropriate refinements will be made to our contingency plans up to the year end. Based on current information, the cost to the Group of dealing with the Year 2000 issue is expected to be approximately (pound)5 million. In addition to LASMO's listing on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. , LASMO shares trade on the London, Toronto and Montreal Stock Exchanges Montreal Stock Exchange See Bourse de Montreal, Inc. (Canadian Derivatives Exchange) . Shares are quoted on the SEAQ SEAQ See: Stock Exchange Automated Quotation System System, and prices may be accessed on the Reuter Equities 2000 Service under the symbol LSMR LSMR Landing Ship, Medium, Rocket .L and on Quotron under the symbol LSMRU.EU. For further information, visit LASMO's web page at http:\\www.lasmo.com. FOR TABULAR tab·u·lar adj. 1. Having a plane surface; flat. 2. Organized as a table or list. 3. Calculated by means of a table. tabular resembling a table. INFORMATION, PLEASE CALL TAYLOR RAFFERTY ASSOCIATES AT 212-889-4350 Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for the historical information contained herein, this press release includes forward-looking statements as defined in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities Exchange Act of 1934 that involve risk and uncertainties, including commodity price, exploration, development, and operational risks, and other risk factors detailed from time to time in the company's publicly available SEC reports, which could cause actual results to be materially different. |
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