Perth-based Carpathian Resources Ltd has announced a net loss of $1.8 million, a 38 per cent fall from last year's loss $1.1 million, after a disappointing year at its Krasna oil wells.
Perth-based Carpathian Resources Ltd has announced a net loss of $1.8 million, a 38 per cent fall from last year's loss $1.1 million, after a disappointing year at its Krasna oil wells.
A letter from company chairman Grant Priest is pasted below
Dear Shareholders
I am pleased to present the third report of the present board for the financial year ended 30 June 2006.
Carpathian has enjoyed a productive year both operationally and at an exploration level. The board has continued to pursue the development of the cornerstone assets for the company. In doing this, your company is now operating on an cashflow positive basis, save for major exploration activities.
The Company's United Kingdom shareholders supported further fund raisings via share placement between October and November of 2005 for 29,000,000 shares at 3 ⅛ pence per share (£906,250). The funds raised were used to fund the drilling of the Ja11 well and the seismic programme.
Operating Activities
Carpathian has two producing assets, Ja3a in our Janovice Gas Field and the KS 4, 7 and 8 wells in our Krásná Oil Field.
The Ja3a well commenced gas production in late October 2005 with production volumes above expectation. A programmed test of the field in February 2006 led to an upgrading of the estimated gas in place from 1.5 -1.7 bcf to 3.8 - 4.0 bcf. Above budget production volumes along with a strong gas price delivered significant cashflow to your company in the period ended 30 June 2006. Currently net
operating revenue after direct production costs is estimated at AUD $1.9 million for the 2006 calendar year for the Ja3a well.
The KS4, KS7 and KS8 oil wells in our Krásná oil field continue to provide a degree of disappointment. Despite a concentrated effort the wells have not contributed significant and reliable production revenues. The KS7 well was successfully restarted in April but production could not be re-established from KS8 and the well was shut in. The KS8 equipment was uplifted and reinstalled at KS 4 location where a long-term test commenced in late June and will continue until the 06/07 winter shutdown at which time the performance of the field and the future production potential will be assessed.
Exploration Programme
The 12 month drilling programme for the year ended 30 June 2006 was limited to Ja11 near the Janovice Gas Field. Unfortunately, although a good reservoir was found, a drill stem test demonstrated that it was wet.
A significant seismic and interpretation programme was commenced by the company in the last half of 2005 over several of our exploration assets, principally the Morava permit, the Janovice / Raškovice- Morávka and the Rožnov licence areas.
An outline of the results of these studies at the date of this report is as follows:
Janovice / Raškovice - Morávka (60% interest)
The studies were focused on an area immediately to the east of Ja3a in our Raškovice - Morávka (60%) exploration permit. Several attractive features have been identified but until the results of the geophysical reports have been fully digested, the optimum approach to further exploration of the permits cannot be determined.
Mošnov (90% interest, 100% contributing)
We have identified an attractive drilling target in Tertiary sandstones and sands at a depth of 400m, which are close to an existing coal exploration hole from which gas flowed at up to 80,000m³/day in 1961. We hope to drill in the last quarter of the 2006 calendar year subject to receiving a drilling permit and concluding the drilling contract.
Morava (90% interest, 100% contributing)
The Morava interest is located in the northern part of the Vienna Basin - a prolific oil and gas production area. A seismic interpretation report incorporating the data acquired in 05/06 was recently received from the operator. Review of the data to hand has identified some promising features one of which could perhaps be drilled as early as the last quarter of 2006 calendar year unless further work is required.
Rožnov (90% interest, 100% contributing)
Initial seismic data received in early 2006 is being compared to a second detailed report. Once this is completed it is hoped that targets will be selected for drilling in 2007. Positive progress has also been made with local and regional planning authorities.
These exploration activities represent the company's focus and objectives in developing a cornerstone asset, which will add significant value to shareholders.
Whilst Czech Republic gas prices continue at above US $7.50 mcf, which is 3 times the gas price in Australia, the company will operate cashflow positive before exploration expenditure. This is a significant achievement for the company that has established a strong base to work from.
Subject to the various asset seismic and geophysical reports being finalised favourably we expect to be drilling 2-3 holes over the coming twelve months. This drilling programme will require further fund raisings. It is the company's intention to remain focused on UK fund raisings supported via its London Stock Exchange AIM listing.
The directors remain committed to your company's objectives and believe its activities going into 2007 will be very positive for your company and its shareholders.