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Paladin Resources (PLR)

  Print      Mail a friend       Annual reports

Tuesday 05 September, 2000

Paladin Resources

Interim Results

Paladin Resources PLC
5 September 2000
                       PALADIN RESOURCES plc
                   ('Paladin' or 'the Company')
       Interim Results for the half year ended 30 June 2000
Paladin,  the oil and gas exploration and production company  with
interests  in  the  North  Sea, USA and Indonesia,  announces  its
interim results for the half year ended 30 June 2000.


*    Average production increased by 26% to 6,610 boepd (1H 1999:
     5,236 boepd)

*    Turnover increased by 155% to £17.6 million (1H 1999: £6.9m)

*    Operating profit of £6.1 million (1H 1999: £0.1m)

*    Post-tax profit of £3.3 million (1H 1999: £0.2 million)

*    Cash flow from operations of £8.4 million (1H 1999: £0.8

*    Bittern Field now producing at close to planned capacity

*    Group production currently running at around 8,000 boepd

*    Blake Field on schedule for first production in 2001

Roy Franklin, Chief Executive of Paladin, commented:

'Strong underlying operating performance from assets acquired over
the  last  two  years,  combined with high commodity  prices,  has
produced  healthy first half results.  With the Bittern Field  now
producing at close to planned capacity, the Company is set for  an
even better second half performance.'


Paladin Resources plc                        Tel: 020 7534 2900
Roy Franklin, Chief Executive

College Hill                                 Tel: 020 7457 2020
James Henderson
Archie Berens

I  am  pleased  to report a healthy financial performance  in  the
first  half  of  the  year - the direct result of  high  commodity
prices  combined  with  substantially increased  Group  production
resulting from last year's Warrior acquisition.

I  am  also pleased to report good progress on the Company's  UKCS
development projects. The plan of development for the Blake  Field
was  approved  by the DTI in January and is now being implemented;
joint  venture  discussions  on the optimum  development  for  the
Goldeneye  Field  are  progressing well;  the  Bittern  Field  was
brought  on production in mid-April and is now producing at  close
to planned capacity.


In  the six months to 30 June 2000, turnover increased by 155%  to
£17.6  million, compared to £6.9 million for the first six  months
of  1999;  the positive impact of the Warrior acquisition  in  the
second  half  of 1999, combined with substantially higher  product
prices more than offset reduced production from North America  due
to natural decline and asset sales.

Operating profit for the period was £6.1 million. This compares to
an  operating profit of £0.1 million for the corresponding  period
in  1999.  Net interest paid was £0.1 million (1999: £0.4  million
received),  resulting in a pre-tax profit of £6.1  million  (1999:
£0.5  million).  After a tax charge of £2.8 million, the post  tax
profit  for  the period was £3.3 million compared to £0.2  million
for the same period in 1999.


Net  production for the half year was 998,000 barrels of  oil  and
1,228 million cubic feet of gas, an average of 6,610 boepd, and an
increase of 26% from 5,236 boepd for the same period in 1999.


The  gross  production from fields in the South East  Sumatra  and
Offshore  North West Java PSC areas has been broadly in line  with
expectations. Total entitlement production from Indonesia averaged
5,929  boepd,  an increase of 63% from 3,630 boepd  for  the  same
period  in  1999.   This substantial, but less  than  anticipated,
increase  was due to the impact of higher oil prices on  the  cost
recovery  barrels attributable to Paladin and hence on the  number
of reported entitlement barrels.

The  South  East  Sumatra PSC (Paladin interest 7.5%)  contributed
4,444  bopd  to  this  total. The operator, Maxus,  maintained  an
active  programme of workovers and infill drilling to help  arrest
the  natural decline in production from existing fields. Nine  low
cost  exploration  wells were also drilled within  the  PSC  area,
resulting in three discoveries.

Paladin's entitlement production from the Offshore North West Java
PSC   (Paladin  interest  2.5%,  acquired  through   the   Warrior
acquisition)  averaged 664 bopd and 4.9 mmscfd, a total  of  1,485

In May, the Company signed an agreement to farm-out a 5.7% working
interest in the Blora PSC to Amerada Hess. Under the terms of  the
farm-out,  the Company's costs of drilling the Rembang-2 appraisal
well,  which  is planned for later this year, will be  carried  by
Amerada  and the Company's working interest will reduce to  13.3%.
An  additional seismic programme across the southern part  of  the
PSC   area  has  been  completed  and  data  are  currently  being
interpreted.  It  is  expected that  this  will  lead  to  several
prospects being matured for possible drilling.

United Kingdom

The  Bittern Field was brought on production through the  'Triton'
FPSO in mid-April, initially at a constrained oil rate to minimise
gas  flaring pending commissioning of the gas compression  system.
Gas sales commenced in mid-June and the field is now producing  at
close  to  the  planned capacity of 60,000  bopd.   Paladin's  net
production to 30 June was 21,332 barrels of oil and 5.4  mmscf  of
gas,  an  average  of 122 boepd for the half year.  Agreement  was
reached  with  the  unit partners to fix the  field  equity  split
between  Blocks 29/1a and 29/1b at 50:50, as part of a package  to
resolve   a  number  of  outstanding  commercial  issues.   As   a
consequence,  Paladin's interest in the field  has  become  2.422%
(previously 2.49416% on a provisional basis).

The  Blake Field development project, in which the Company  has  a
2.4%  interest,  is progressing under budget and on  schedule  for
first  production  in  the  second half  of  2001.  Following  DTI
approval  of  the  field development plan in  January,  all  major
contracts  have  been awarded and development  drilling  began  in
April. The first two horizontal wells, a water injector and an oil
producer, have been drilled successfully.

Subsurface  and  development  studies  for  the  Goldeneye   Field
(Paladin  interest  15%  in  Block  20/4b)  have  progressed   and
agreement  has  now been reached with the owners of  the  adjacent
licences,  into  which  the field extends,  to  enter  into  joint
studies to identify the optimal development scheme for the  field.
It  is  hoped that these studies can be completed later this  year
and  incorporated into a field development plan  for  approval  in

United States

Production for the half year averaged 558 boepd (1,047  boepd  for
the corresponding period in 1999), 47% of which was oil. Paladin's
properties  in  the  USA have been reduced  to  a  core  of  three
operated   fields,  Fort  Chadbourne,  Rhoda  Walker  and   Parks,
following the sale of peripheral non-operated properties early  in
the  year.  The 3D seismic survey over Fort Chadbourne and  Parks,
acquired as part of the collaboration with King Ranch Energy  (now
St.  Mary  Land), has been completed and interpreted. A number  of
infill  drilling locations have been identified in Fort Chadbourne
for  drilling later in the year; at current product prices,  these
offer the potential for rapid payback on investment.

The  operations  organisation in Abilene has been further  reduced
and  a  move to more cost-effective rented accommodation has  been
successfully completed.


Paladin's  operated  interest in the  Exploration  and  Production
Sharing Agreement covering Blocks XIII (Pelican) and XV (Midia) in
the  Black  Sea increased to 80% as a result of the withdrawal  of
Justinian  Explorations. 1600 km of high resolution  seismic  data
were  acquired over the Doina discovery and adjacent area  in  the
Midia  Block and across a previously identified lead in the nearby
Pelican  Block.   Interpretation of these  data  is  currently  in
progress.  Seabed  site surveys over potential drilling  locations
will  be carried out in the autumn with appraisal drilling of  the
Doina discovery now scheduled for the first half of 2001.


Plans  for  drilling  in the Dar es Salaam,  Kisangire  and  Mafia
Island  Blocks  (Paladin  20%) are  progressing  with  a  view  to
drilling  in late 2000 or early 2001, subject to rig availability.
The  acquisition of gravity survey and infill seismic data  across
the Rufiji Delta is also planned for later in the year to firm  up
possible leads in the area.

Product prices

A  very  strong  oil market in the first half of 2000  provided  a
substantial uplift in realised oil prices to US$24.19  per  barrel
compared to US$11.97 per barrel over the same period in 1999.  The
retained properties in the USA also benefited from much higher gas
prices  in  the  six  month period, with  an  average  realisation
(including  the  impact  of hedging) of  US$3.14  per  mcf  (1999:
US$2.04 per mcf).

20,000 million British thermal units per month, approximately  37%
of  US  gas production, were hedged at US$3.07 per mmbtu  for  the
months of May to October inclusive.


Operating  cash  flow, being defined as earnings before  interest,
tax  and  depletion (and after allowing for movements  in  working
capital),  increased to £8.4 million compared to £0.8  million  in
the first half of 1999. After capital expenditure of £5.9 million,
payment  of  £2.5 million deferred consideration for  the  Bittern
Field acquisition, a small net interest charge, cash taxes of £3.5
million  and credit of disposal proceeds from US divestments,  net
debt  at  30 June 2000 was £19.0 million, compared to net debt  of
£16.4 million at 31 December 1999.

The  Group's  operating  profit of £6.1 million  includes  a  £0.6
million exceptional charge relating to abortive acquisition costs,
primarily  associated  with  third  party  preparatory  work   for
regulatory approvals.

Acquisitions and disposals

Disposal   proceeds  of  £2.6  million  were  realised  from   the
divestment  of  primarily non-operated peripheral  US  properties.
Offers  received  for the retained US properties did  not  reflect
their  value,  particularly in the light of  commodity  prices  at
current levels.

During  the  first  half  of the year,  a  number  of  acquisition
opportunities were reviewed and, in certain instances,  bids  were
submitted   and   detailed  negotiations  held.   Ultimately,   no
transactions were concluded.

Board positions

Jay Hellums, Enron's nominee on the Board, resigned on 14 April. I
would like to thank him for his contribution during his period  of
service and wish him well for the future. He was replaced by  Paul
Chivers,  Vice President and Regional CFO of Enron Europe Limited,
following the Annual General Meeting on 12 May 2000.


With  Bittern Field production now close to its planned  capacity,
the  Company's net production is currently running at around 8,000
boepd  compared with the first half average of 6,610 boepd.  This,
together with the near-term commodity price outlook, points  to  a
strong second half performance from the Company's existing assets.

Notwithstanding current oil price levels, we continue to plan, and
evaluate   longer-term   investment  decisions   and   acquisition
opportunities,  using a Brent oil price in the mid-teens  in  real
terms.  The  asset trading market, both in the UKCS and  overseas,
remains  very  active.  I  am  confident  that  we  will  identify
acquisition  opportunities to purchase  quality  assets  on  terms
which   have  the  potential  to  add  material  value   for   our
shareholders  and  contribute to the further  development  of  the

J. Malcolm Gourlay
5 September 2000

                       Paladin Resources plc
                   Group Profit and Loss Account
               For the six months ended 30 June 2000

                                    Six months      Six months       Year       
                                 ended 30 June   ended 30 June      ended
                                                               31 December
                                          2000            1999        1999
                        Note              £000            £000       £000
Turnover                                17,642           6,943     18,587

Cost of sales                                                                 
Production costs                        (7,125)         (3,467)    (8,740)
Exceptional production                       -           (155)       (169)
Depletion and                           (2,593)         (2,167)    (4,899)

Gross profit                             7,924           1,154      4,779
Administrative                          (1,177)         (1,015)    (1,992)
administrative            2               (642)              -          -

Operating profit                         6,105             139      2,787
Interest                                  (40)             398        660

Profit before taxation                   6,065             537      3,447
Taxation                 3              (2,755)           (346)    (1,607)

Retained profit for                      3,310             191      1,840
the period

Earnings per share                       1.65p           0.10p      0.92p

Earnings per share                                                            

excluding exceptional                    1.97p           0.17p     1.00p

Weighted average                                                              
number of shares                   200,694,381     200,694,381  200,694,381

                       Paladin Resources plc
       Group Statement of Total Recognised Gains and Losses
               For the six months ended 30 June 2000

                                  Six months       Six months      Year ended
                               ended 30 June    ended 30 June     31 December
                                        2000             1999            1999
                                        £000             £000            £000
Profit for the period                  3,310              191           1,840
Unrealised foreign                                                           
exchange differences                   3,783            2,278           1,185

Total recognised gains for             7,093            2,469           3,025
the period
                       Paladin Resources plc
                       Summary of Net Assets
                          At 30 June 2000
                                 At                At                  At
                            30 June           30 June         31 December
                               2000              1999                1999
                               £000              £000                £000

Fixed assets                 84,069            44,656                  78,323
Current assets                                                           
Stock                           588               538                    516
Debtors                       4,517             2,541                  5,905
Cash at bank and in hand      1,439            20,537                  2,195
                              6,544            23,616                  8,616
Creditors: amounts                                                       
falling due
within one year              (5,189)           (5,080)               (10,184)
Net current assets            1,355            18,536                 (1,568)
Total assets less            85,424            63,192                 76,755
current liabilities
Long term debt              (20,462)           (6,110)               (18,614)
Provision for                                                            
liabilities and charges        (420)             (189)                  (692)

Net assets                   64,542            56,893                 57,449
                       Paladin Resources plc
                        Cash Flow Statement
               For the six months ended 30 June 2000

                                   Six months      Six months     Year ended
                                        ended           ended    31 December
                                 30 June 2000    30 June 1999           1999
                                         £000            £000           £000

Operating profit                        6,105             139          2,787
Depletion and depreciation              2,614           2,195          4,899
(Increase)/decrease in working           (35)         (1,511)            648
(Decrease)/increase in                  (272)             (9)            481
Net cash flow from operating            8,412             814          8,815
Returns on investments and                                                  
servicing of finance                    (580)             398           167
Taxation                              (3,494)            (114)       (2,546)
Capital expenditure                   (5,866)          (3,776)      (10,737)
Acquisition of oil and gas            (2,500)               -       (35,030)
Proceeds from sale of oil and           2,612               -          6,058
gas interests
Net cash flow before financing         (1,416)         (2,678)       (33,273)
Bank loan borrowings                      660           1,232         13,223
Decrease in funds on short                  -             155         19,032
term deposit
Decrease in cash for the                (756)         (1,291)        (1,018)
Reconciliation of decrease in                                               
cash to movement in net debt
Decrease in cash in the period          (756)         (1,291)        (1,018)
Bank loan borrowings                    (660)         (1,232)       (13,223)
Decrease in funds held on                   -           (155)       (19,032)
short term deposit
Exchange differences                  (1,188)           (311)          (562)
Movement in net debt in the           (2,604)         (2,989)       (33,835)
Net (debt)/funds at the start        (16,419)          17,416         17,416
of the period
Net (debt)/funds at the end of       (19,023)          14,427       (16,419)
the period

Notes (forming part of the interim statement)

1.   Basis of preparation

The  financial  information contained herein does  not  constitute
statutory  accounts  within the meaning  of  Section  240  of  the
Companies  Act 1985.  The interim financial information  has  been
prepared  on the basis of the accounting policies set out  in  the
Group's accounts for the year ended 31 December 1999.  The figures
for  the year ended 31 December 1999 have been extracted from  the
accounts which have been filed with the Registrar of Companies and
which  contained  an unqualified report.  The Company's  auditors,
Ernst & Young, have reviewed the interim financial information for
the  six months ended 30 June 2000 and their report is set out  on
page 11.

2.   Exceptional item
The following amount has been charged to the profit and loss account:

                          Six months         Six months                   Year
                               ended              ended                  ended
                         30 June 2000      30 June 1999            31 December
                                £000               £000                   £000
Administration expenses                                                       
Abortive acquisition             642                  -                     -  

3.   Taxation

The provision for taxation is based upon the estimated effective tax
rate for the full year.

4.  Dividend

The Directors do not recommend the payment of a dividend.
Paladin Resources plc
               Independent Review Report by Ernst & Young

We  have  been  instructed by the Company to review the  financial
information  set out on pages 6 to 10 and we have read  the  other
information contained in the interim report and considered whether
it contains any apparent misstatements or material inconsistencies
with the financial information.

Directors' responsibilities
The  interim report, including the financial information contained
therein, is the responsibility of, and has been approved  by,  the
Directors.  The Listing Rules of the Financial Services  Authority
require  that the accounting policies and presentation applied  to
the  interim  figures should be consistent with those  applied  in
preparing the preceding annual accounts except where any  changes,
and the reasons for them, are disclosed.

Review work performed
We conducted our review in accordance with guidance contained in
Bulletin 1999/4 issued  by  the  Auditing  Practices  Board.   
A  review  consists principally  of making enquiries of group
management and  applying analytical  procedures to the financial 
information and underlying financial data and based thereon, 
assessing whether the accounting policies  and  presentation have been
consistently applied  unless otherwise disclosed.  A review excludes 
audit procedures  such  as tests  of  controls  and verification of 
assets,  liabilities  and transactions.   It is substantially less in 
scope  than  an  audit performed  in  accordance  with auditing 
standards and therefore provides a lower level of assurance than an 
audit.  Accordingly, we do not express an audit opinion on the financial

Review conclusion
On  the  basis  of  our review we are not aware  of  any  material
modifications that should be made to the financial information  as
presented for the six months ended 30 June 2000.

Ernst & Young
5 September 2000