A MAJOR boost in production at a time of record fuel prices has resulted in a massive surge in profits at Melrose Resources.
The Edinburgh-based oil and gas explorer, which was promoted to the FTSE-250 for the first time earlier this year, revealed a 209 per cent increase in revenue to $234 million for the six months to 30 June.
Production increased 47 per cent to 21,30
0 barrels of oil equivalent per day. Melrose reported a pre-tax profit of $134.2m, compared to a loss of $34.3m last year, and announced its first interim dividend of 1.2p a share.
Production was boosted mainly by four new production wells in Egypt coming on stream. The company is conducting its largest capital expenditure programme this year, targeting spending $260m in 2008 on exploration and bringing discoveries on stream.
Melrose is understood to be aiming to replace its reserves at twice the rate of production, and said yesterday it was on track to do so, replacing more than 150 per cent of reserves.
Unusually, however, much of the recent interest in Melrose centres on a well in offshore Bulgaria which is nearing the end of its commercial life.
Melrose's Galata field is close to being exhausted, but its commercial benefits could go on, with the company in negotiations with the Bulgarian government to use the well as a gas storage facility, part of an EU requirement requiring member states to store large amounts for emergencies.
Melrose said it was in negotiations with the Bulgarian government over the project so it could not discuss what the well could be worth.
However, chief executive David Thomas said Melrose viewed predictions by analysts that it could be worth $100 million as "conservative".
Brewin Dolphin said the results were clearly ahead of market forecasts and upgraded the firm's full-year revenue and profit forecasts. But shares fell 4 per cent to 397.25p.
The full article contains 332 words and appears in The Scotsman newspaper.
