MELROSE Resources, the Edinburgh-based oil and gas operator, posted higher first-half profits yesterday, driven by a rise in oil prices.
Chief executive David Thomas said it was likely to generate incremental sales of more than £5million a month from Bulgarian gas fields to start producing soon.
The company expects Kaliakra and Kavarna in Bulgaria to contribute about 7,000 barrels of oil equivalent per day (boepd) to its overall production after the fields come on stream by October.
Mr Thomas said: “Most importantly they are going to drive a step-change in our cash generation.”
Melrose, which is planning to sell its assets in the Permian Basin in America because it feels there are better investment opportunities elsewhere in its portfolio, said it had identified some parties interested in acquiring the assets.
Mr Thomas said that he expected the sale would be completed by the first quarter of 2011.
The company, which has operations in Egypt, Bulgaria, Romania, the US, France and Turkey, was also confident of meeting full-year analyst estimates, Mr Thomas said.
Analysts on average expect Melrose to post full-year pre-tax profits of £41million on revenue of £162.6million.
For the six months to June 30, pre-tax profits were £16.8million, compared with £12.7million a year earlier. Revenue was up 13% to £70.5million, while production rose by 13% to 40,100boepd.
Melrose also said it was confident of achieving production of 40,000boepd for 2010 and expected to increase production by about 5% in 2011 even after disposing of the US assets.
Executive chairman Robert Adair said: “The first half of 2010 has been a very active period for Melrose, during which the company delivered strong production performance, completed the West Dikirnis Phase II and South Damas development projects in Egypt and achieved two exploration successes in Egypt and Bulgaria.
“Melrose made significant progress and continued to deliver strong operating cash flow while advancing a number of material business growth initiatives. Production has been maintained at close to record levels.”
