Gulfsands looking beyond Syria

published 3 April 2012

Oil and gas producer Gulfsands Petroleum is looking to build a presence in a new country as it waits for the mess in Syria to clear up.

"Our objectives for 2012 are to consolidate our position in Tunisia and build a viable non-Syrian leg to the business within the capacity of the group's financial resources," revealed Chief Executive Officer, Richard Malcolm.

The company, which has substantial interests in the crisis-torn country, posted a leap in post-tax profits in 2011 despite being forced to declare force majeure on its site in Syria as a result of sanctions imposed on Syria by the European Union.

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Despite the Syrian problems having a "significant" effect on the group's financial statements, net profit rose 23% to $55.1m from $44.7m, while cash from operating activities rose 34% to $94.3m from $70.2m.

At the end of the year free cash balances were $124.2m compared to $80.6m.

However, group working interest production was down by 17% to 8,542 barrels of oil equivalent per day (boepd) compared to 10,308 boepd in 2010.

During the period the firm drilled six exploration wells on Block 26 in Syria, which resulted in three discoveries.

Group probable working interest reserves were up by 34% to 76.3m barrels of oil equivalent (mmboe) compared to 56.9 mmboe in 2010.

Speaking of the force majeure declaration (a common clause in contracts that basically frees both parties from liability or obligation when an extraordinary event beyond the control of the parties occurs) the company's Chairman, Andrew West, said: "We have since that date ceased to be involved in production or exploration activities, one key consequence of which is that currently and for the foreseeable future we can expect to receive no revenue from our principal asset."

West also emphasised that the company is maintaining what it called a balanced approach to a "bewilderingly complicated and constantly evolving situation" in order to preserve its position in Syria for when sanctions are eventually lifted.

The share price fell 3.08% to 149.25p.