Nautical Petroleum, which specialises in development of heavy-oil assets, said yesterday it continued to move ahead with plans to bring two fields south-east of Shetland on stream.
At Kraken, the company expects to submit a field development plan next year, followed by production in 2012.
Meanwhile a field development plan for Mariner (operated by Statoil) is expected in 2011, followed by first oil in 2015.
Nautical has a 35% stake in Kraken and is also operator of the field, while it has a 26.67% holding in Mariner. The company announced yesterday pre-tax losses of £6.6million for the year to the end of June, compared to losses of £4.5million in the previous 12 months.
However, the firm said it had a strong cash position of £19million at the end of the financial year, was debt-free plus it had a £7.5million secured facility undrawn and fully available. Chairman John Conlin said it had been a further year of significant progress in the development of Nautical’s asset portfolio.
He added: “This progress has, however, been tempered by a period driven primarily by the dramatic collapse in oil prices seen in the second half of 2008 and the onset of global recession.
“Our market capitalisation bottomed out at a value equivalent to our cash in hand, where it remained for some six months.
“Plainly at oil prices of around $40 per barrel, the market assigned no value to our portfolio of discovered hydrocarbons or our diverse exploration portfolio.
“Stimulated by the welcome fiscal boost from the chancellor’s April 2009 budget announcement of the new field allowance for heavy oil fields, and subsequently by a recovery in oil price to levels above $70, the share price has stabilised to its current level.”
Mr Conlin said the potential value of Nautical’s interests in the successful development of Mariner and Kraken was still very heavily discounted, but he was confident these assets would see their value go up once these field developments move into the execution phase.
The chairman said the Nautical bosses continued to position the group to obtain the necessary financing to implement their heavy oil development strategy through the most effective combination of debt, equity funding and other means.
He added: “In that regard, the fact that a number of capital raisings have recently being achieved in the exploration and production sector at moderate discounts is evidence of emerging confidence in the sector.
“In parallel, we continue to receive encouraging signals from advisers and the principal lending institutions of fertile ground for project financing particularly for those heavy oil projects put under the spotlight by HM Government’s fiscal encouragement.”
Mr Conlin said the past 12 months had been turbulent for exploration and production companies, and while the overall economy remains fragile, there were signs of confidence returning to the sector.
“Importantly for Nautical, there is some evidence albeit mixed as yet, of a lower-cost environment emerging and having successfully preserved our financial resources during this period of instability we are now better positioned to take advantage of this.”
Nautical shares closed last night at 61p, up 1p or 1.67%.