24/04/2009 - 14:31

Tap Oil cuts exploration spend by 65%

24/04/2009 - 14:31

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Tap Oil says it will farm-out interests in some of its projects in order to boost its forward cash flow while it cuts its 2009 exploration expenditure by 65 per cent on the back of lower oil prices.

Tap Oil says it will farm-out interests in some of its projects in order to boost its forward cash flow while it cuts its 2009 exploration expenditure by 65 per cent on the back of lower oil prices.

Chairman Neale Taylor told shareholders at the annual general meeting today the company will spend about $20 million in exploration during calendar 2009, a 65 per cent drop from last year.

"This level in part reflects the phasing of Tap's various exploration programs and in part a scale back to recognise the outlook for lower average oil prices over 2009 before expected recovery in 2010," Mr Taylor said.

He added the company will look to control other costs in order to purse Tap's overall business plan, which could include acquisitions.

"Tap will only pursue those opportunities where action does not dilute existing shareholders and where the opportunities are within Tap's near-term financial capability to complete," he said.

"These activities require staff and costs but it is within Tap's expectation that gross administrative costs will be reduced by about 20% in 2009."

In addition to advancing Tap's business plan, the company will also look to farm-out some interests for "additional leverage to Tap's forward cash flow".

Tap Oil's business plan also includes returning the Harriet oil and gas project to full production after it was affected by the Varanus Island gas explosion in June last year.

Meantime, concern from some shareholders about Tap's remuneration system were dispelled at the meeting after investors overwhelmingly approved the remuneration report.

Mr Taylor acknowledged there had been some concern and said there were a number of regulatory reviews of the company's remuneration system currently underway.

At the end of the 2008 calendar year, Tap had $54 million in cash and no debt.

Shares in Tap closed up five cents to 85 cents today.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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