RNS Number:9579P
Sefton Resources Inc
19 September 2003
SEFTON RESOURCES INC.
("Sefton" or "the Company"))
RESULTS FOR THE SIX MONTHS TO JUNE 30, 2003
Chairman's Statement:
The highlights of the first six months of 2003 were:
*Revenue Increased, for the first six months of 2003 via the sale of oil &
gas to $326,449 from $188,673; a 42% increase over the comparative period in
2002. This increase is primarily a result of increased commodity prices and
oil and gas production volumes.
*General and Administrative Costs Decreased, from $563,512 through 30 June
2002 to $389,366 through June 30 2003; a 31% decrease, which was a result of
more cost effective management.
*Net Loss Reduced, as a result of increased revenues, decreased general
administrative expenses; some initial invoices related to the Tapia blowout
were renegotiated. The loss for the six month period 30 June 2003 was
$242,617 compared to $585,863 for the comparative period in 2002; a 59%
decrease.
*Settled Lawsuit with a Former Operator of Tapia Canyon Field: to the
benefit of the company in so far as the company reduced its Royalty burden
at Tapia (Net present day value in excess of litigated amount) and obtained
oilfield equipment that was subsequently sold for cash.
*Re-commenced the Development of California Assets: in which a shallow gas
discovery has been added to the company's asset base, which could ultimately
play a very significant economic role in the development of our heavy oil
field.
With additional surface equipment that increased capacity at Eureka Canyon Oil
Field, we can now bring on additional wells over the coming year, prior to
looking at the undeveloped but potentionaly significant portion of our
associated oil and gas lease.
At the Tapia Canyon Oil Field: The Yule #6 well that "blew-out" after
establishing a shallow gas zone, and re-establishing the Yule heavy oil zone was
ultimately plugged, after removing all equipment stuck in the hole at the time
of the blow-out. Although an attempt was made to complete the well, the "cavity"
created by the shallow gas zone blow-out was determined to be a potential
problem, and since the gas could be produced from an adjacent existing location
(Yule #4), it was determined to minimize the risk by plugging the well.
The Yule #8 well has been drilled 20 meters east of the Yule #6 on the same
drilling pad and both shallow gas sands and Yule heavy oil sand were logged,
pipe has been set and we are awaiting a completion rig to establish additional
oil production.
We believe the shallow gas zone may be fairly extensive) and have obtained
additional acreage to the north of the Tapia oil leases.
In the coming months we will be determing the extent, quality and quantity of
gas available to us, which could add new reserves to the Company and have a
significant impact on the economics of the heavy oil development at Tapia.
Although the Company has not received any information as of this date, we
believe our subsidiary is party to a lawsuit filed by the families of the
drilling crew involved in the Yule #6 blow out. The Company believes that
through a combination of insurance and contractual indemnifications, such action
should not result in any material liability and our attorneys will respond
accordingly.
In Canada, we disposed of a couple of small properties, but the cash flow from
the remaining assets has proved more stable this year, to the point of making
the subsidiary itself profitable.
With all three assets producing positive cash flow at the field level, very few
additional wells in Tapia and Eureka will enable Sefton itself to achieve
profitability at the corporate level, particularly with our focus on cost
effective management and development of existing assets.
With additional funding of approximately $1,500,000 (U.S.) required to develop
existing assets to the point of self-financing, we have been looking to align
ourselves with strategic partners that can assist the Company above and beyond
current equity financing (i.e. joint ventures, banking and institutional
relationships etc. Unfortunately, the association with Hall, Wells, Dinardo, LLC
did not meet our objectives so the contract has been terminated. We are
currently discussing such a relationship with other entities that have expressed
an interest in our company and a desire to work with us.
In summary our focus in the remaining part of the year will be to improve the
balance sheet and develop our existing assets by focusing mainly on cost
effective operations.
John J. Ellerton
Chairman and Chief Executive Officer
18, September 2003
For more information, please contact:
Jim Ellerton, Chairman and CEO Tel: +1 303 542 1922
Consolidated Statements of Operations and Comprehensive Loss
For the six months ended June For the year
30 ended
2003 2002 December 31,
2002
(un-audited) (un-audited) (audited)
Revenues
Oil and gas sales $326,449 $188,673 $454,428
Costs and expenses
Oil and gas production 106,579 126,982 347,981
costs
Depletion, Depreciation & 65,615 45,293 132,494
Amortization
Plug & Abandonment Accrual - 37,578 -
(Canada)
General and administrative 389,366 563,512 984,577
expenses
________ ________ _________
561,560 773,365 1,465,052
________ ________ _________
(Loss) from operations (235,111) (584,692) (1,010,624)
________ ________ _________
Other income (expense)
Interest income 1,017 1,282 1,586
Interest expense (3,523) - (570)
Foreign currency transaction (5,000) (2,453) (747)
gains
________ ________ __________
(7,506) (1,171) 269
________ ________ __________
Net (loss) available for $(242,617) $(585,863) $(1,010,355)
common stock
Basic and diluted earnings $(0.0005) $(0.0026) $(0.0034)
(loss) per share
Weighted average shares 451,644,500 221,644,500 299,644,500
outstanding
=========== =========== ===========
Net loss $(242,617) $(585,863) $(1,010,355)
Other comprehensive income
translation adjustment (50,208) 81 (44,781)
Comprehensive loss $(292,825) $(585,782) $(1,055,136)
Consolidated Balance Sheets
As of June 30 December 31
2003 2002 2002
(un-audited) (un-audited) (audited)
Assets
Current assets
Cash $288,322 $6,545 $34,063
Stock subscription - 503,500 -
receivable
Accounts receivable 163,255 53,075 147,343
Other receivables - related - 34,040 318,168
party
Prepaid expenses and other 24,327 52,417 24,117
assets
________ ________ ________
Total current assets 475,904 649,578 523,691
________ ________ ________
Oil and gas properties, full 2,682,533 1,898,301 2,376,510
cost method, net
Equipment and vehicle, at 47,819 43,132 52,395
cost, net
Other receivables - related - 315,000 -
party
_________ _________ _________
Total assets $3,206,256 $2,906,012 $2,952,596
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable $619,729 $138,178 $ 491,689
Accrued expenses - related 5,071 38,018 5,596
parties
Accrued expenses 99,986 41,739 49,584
Note payable, current 71,770 - 80,454
portion
Notes payable - related
party, current portion - - 35,006
_______ _______ _______
Total current liabilities 796,556 217,935 662,329
Note payable, net of current - - 35,193
portion
Notes payable - related
party, net of current
portion - - -
_______ _______ _______
Total liabilities 796,556 217,935 697,522
_______ _______ _______
Commitments and
contingencies
Stockholders' equity
Common stock, no par value,
1,000,000,000 shares
authorized, 451,644,500 (June
30,2003)
299,644,500 (December 31,
2002)
shares issued and 5,784,636 4,803,390 5,411,536
outstanding
Additional common shares - 562,500 -
subscribed: 75,000,000 (June
30, 2002)
Stock subscription (19,903) (39,591) (49,046)
receivable
Accumulated other (55,208) (5,508) (50,208)
comprehensive income (loss)
Accumulated deficit (3,299,825) (2,632,716) (3,057,208)
_________ _________ _________
Total stockholders' equity 2,409,700 2,688,075 2,255,074
_________ _________ _________
Total liabilities and $3,206,256 $2,906,010 $2,952,596
stockholders' equity
========== ========== ==========
Consolidated Statement of Cash Flows
As of June 30, December 31
2003 2002 2002
(unaudited) (unaudited) (unaudited)
Cash flows from operating
activities
Net (loss) $ (242,617) $585,863) $ (1,010,355)
__________ __________ __________
Adjustments to reconcile net
(loss) to net cash
(used in) operating
activities
Depreciation and depletion 65,615 45,294 132,494
Write-down of asset due to - - -
impairment
Stock issued for oil and gas - - 25,000
interest
Stock issued for services - - 45,000
Stock options for services - 45,000 28,146
rendered
Foreign exchange translation/ (55,208) (81) (44,781)
transactions
Change in assets and
liabilities
Accounts receivable (15,912) (23,987) (146,690)
Prepaid expenses (210) 1,906 28,650
Other assets - - -
Other assets - related party 318,168 157,709 210,327
Accounts payable 128,040 97,778 463,789
Accrued expenses - related (525) 958 (31,464)
party
Accrued expenses 50,402 35,188 43,033
Notes payable (43,877) - -
Notes payable - related party (35,006) - 35,006
_______ _______ _______
411,487 359,765 788,510
_______ _______ _______
Net cash (used in) operating 168,870 (226,098) (221,845)
activities
_______ _______ _______
Cash flows from investing
activities
Purchase of oil and gas (317,710) (12,454) (496,942)
properties
Purchase of property and - (38,143) (26,390)
equipment
_______ _______ _______
Net cash (used in) investing (317,710) (50,597) (523,332)
activities
_______ _______ _______
Cash flows from financing
activities
Proceeds from sale of common 403,099 - 510,000
stock
Proceeds from sale of subscribed - 14,000 -
common stock
Repayment of note payable - - -
_______ _______ _______
Net cash provided by financing 403,099 14,000 510,000
activities
_______ _______ _______
Net increase (decrease) in 254,259 (262,695) (235,177)
cash
Cash - beginning of year 34,063 269,240 269,240
_______ _______ _______
Cash - end of period $288,322 $6,545 $34,063
======== ======= =======
Notes to the financial statements dated 30 June 2003
1. The financial information for the year to 31 December 2002 has been
extracted from the full audited financial statements.
2. The results for the half-year to 30 June 2003 and the comparatives to
30 June 2002 are both unaudited.
3. The financial information included in this document has been prepared
on a consistent basis and using the same accounting policies as the
audited financial statements for the year to 31 December 2002 and has
been approved by the Directors of the Company.
4. The decision to issue 152,000,000 shares was approved by the Board in
May 2003. The subscription agreements for those shares were signed in
May 2003. Funds for the shares were actually received in June 2003.
5. The Plug and Abandonment Accrual reflected on the Consolidated
Statement of operations and Comprehensive Loss is expected to be a
one-time event and is related to the Meekwap non-unit working interest
property in Canada.
6. The acquisition of the Eureka Canyon field in Ventura County,
California was finalized subsequent to 30 June 2002.
7. The long-term receivable of $315,000 reflected on the balance sheet
accounts for a loan made to a shareholder and former operator at Tapia
Canyon, secured by equipment, which was in default. Additionally, there
are other items in dispute that the Company was seeking to recover. The
Company proceeded with litigation with the borrower and settled on terms
favorable to the Company, during the early part of 2003.
8. Canadian oil and gas production costs consist of actual figures for
the first quarter of 2003 and include an estimate for the second quarter
of 2003. The second quarter estimate is 60% of second quarter gross
revenue accruals. This cost estimate is necessary due to a lag in
receiving actual revenue and cost data.
9. There was no dividend paid in the reporting period.
10. Copies of the Interim Statement will be sent to shareholders in
October 2003. Copies of the Interim Statement will be available from the
Company Secretary, Masons Secretarial Services Limited, 30 Aylesbury
Street, London EC1R 0ER.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UKSAROARKAAR