Regal slashes loss

24/06/2008 Robert Tyerman

Oil and gas play Regal Petroleum is developing its Ukraine prospects after cutting its annual loss from £57.5 million to £8.5 million.

The AIM-quoted company, once run by the controversial Frank Timis but now steered by Shell veteran David Greer, increased turnover 32 per cent to £7.2 million last year from the sale of Ukrainian gas and condensate and spent the bulk of its £6.5 million capital outlay on field development in the Ukraine. Regal, which is also developing projects in Romania and Egypt, achieved average daily production from the Ukraine of 4.88 million cubic feet of gas and 280 barrels of concentrate, together equivalent to 1,157 barrels of oil a day.

The company says the realised price for its Ukrainian gas rose 38 per cent between January 2007 and January 2008. After raising £80.6 million in February with a placing at 150p, Regal says it now has net cash of nearly £67 million.

Greer says several potential partners have shown interest in coming in with the company on its Ukraine projects. But he argues it ‘is in shareholders’ best interests that our significant asset potential is developed by our own team’.

Regal shares hit 509p in 2005 under the Timis regime before the revelation of a dry well at Kallirachi in Greece sent them reeling to 32p. Highlighted by Growth Company Investor last November as offering speculative potential at 173p, they now trade at 289p, down 3p this morning.

Partial profit-taking might be prudent, though they should be able to make further progress.

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