PETREL RESOURCES Annual Report 2001 CONTENTS CHAIRMAN’S STATEMENT MANAGING DIRECTOR’S REPORT REPORT OF THE DIRECTORS STATEMENT OF DIRECTORS’ RESPONSIBILITIES INDEPENDENT AUDITORS’ REPORT STATEMENT OF ACCOUNTING POLICIES CONSOLIDATED PROFIT AND LOSS ACCOUNT CONSOLIDATED AND COMPANY BALANCE SHEETS CONSOLIDATED CASH FLOW STATEMENT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTICE OF MEETING FORM OF PROXY PAGE 1 2 12 14 15 17 18 19 20 21 30 31 DIRECTOR’S AND OTHER INFORMATION Inside Back Cover PETREL RESOURCES Annual Report 2001 CHAIRMAN’S STATEMENT Petrel is an AIM listed oil explorer focused on Iraq. We have pursued oil exploration and development opportunities in Iraq for the past four years. We have reached the stage where commerical terms and a work programme have been agreed with the oil ministry and now await final approval from a higher authority. Despite the political uncertainty in the area we will continue to maintain our interest in Iraq for the simple reason that it is the best resource play in the world. No mineral has better economics than oil and no country has better oil economics than Iraq. Iraq is the world’s lowest cost oil explorer with costs less than $1 a barrel. Iraq may hold the biggest reserves of oil in the world. Though, largely unexplored there are already 115 billion barrels of proven oil reserves in place. Current daily output of 3 million barrels can be tripled in five years from known discoveries. Petrel will be a part of the inevitable development of Iraqi oil. We are aware of the high and growing political risk attaching to the area. Yet it has become easier to do business in Baghdad in recent months. There are now regular flights to Baghdad from Jordan and Syria. The refinement in the UN sanctions should improve the inflow of essential foodstuffs, medicines and spare parts thus helping the day to day lives of ordinary citizens. Petrel staff and consultants are frequent visitors to Iraq and have found it an easy country in which to operate. CORPORATE STRATEGY We are not immune to the events of 2001. It is possible that the development of Iraqi oil will be delayed. Petrel as a company must survive and develop so we have begun to look at alternatives. Given the expertise and skills developed in recent years we have concentrated our search in Arabic speaking areas seeking concessions which offer large scale oil potential. We are trading geological/technical risk against political risk. Parts of the Arabic speaking world are being ignored by most of the world’s oil supermajors. Sanctions restrict some US based companies while other companies see the political risk as too high and are reluctant to commit staff to an area. We operate using, where possible, local technical staff and always working with local contacts. Our search has thrown up some interesting possibilities but as yet we have not committed the company. The Managing Directors review below gives greater detail on our search. FUTURE We have money and prospects. While we are considering investing in other areas we continue to focus on Iraq where we intend to stay. John J. Teeling Chairman June 7, 2002 1 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT PETREL RESOURCES’ PRIMARY FOCUS IS ON OPPORTUNITIES IN THE IRAQI OIL INDUSTRY Last year we deepened our understanding of western desert exploration possibilities, analysing seismic in more detail and perfecting our play model. Recent exploration activity in neighbouring countries has shone fresh light on the area. The time is ripe for new thinking. We are optimistic that there are major Mesozoic and Paleozoic plays in the block under negotiation. Recent successful testing of the Akkas field in western Iraq by the Syrian Petroleum Company confirmed our geological model and approach to this regional play. Though SPC was interested in achieving high flow rates from gas-bearing strata, Petrel believes that similarly good results may be obtained from the oil-bearing formations. Successful testing of Akkas enhances the prospects and reduces risks for the western desert block we are negotiating. BUT THERE ARE ALSO NEGLECTED OPPORTUNITIES IN COMPATIBLE COUNTRIES Because of delays in relaxing or lifting the economic embargo on Iraq, and the danger of escalation in Middle Eastern conflicts, we expedited the study of additional opportunities in compatible countries. The most exciting options are oil-prone areas of Syria, Yemen and Sudan. Until recently, the best deals required up-front cash bonuses and large bank bonds to support minimum work programmes. In common with Libya and Iran, terms available did not yield an attractive return for international investors given the required investment, time necessary and risks. This is now changing. Increased regional tensions have reduced international competition for oil projects. Attractive deals can now be negotiated, though obtaining satisfactory terms requires careful explanation of the economics of junior exploration and production companies. While political uncertainties are substantial and have increased, the prize remains well worth the effort and risk. The long run likelihood is for accommodation. Middle Eastern nations need to develop and export oil and gas. World energy consumers need Arab supplies. No one knows how current tensions will be resolved, yet there is much commonality of interest between us. Irrespective of how events unfold, the Iraqi Ministry of Oil will remain as part of a ‘permanent government’. Iraq’s oil industry needs up to $50 billion investment to reach its 1989 Plan production target of 6 million barrels of oil daily and increased gas exports. This investment, together with updated technology and additional staff, must come from friendly countries. 2 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) WHY IRAQ ? Iraq is the world’s best resource play, albeit with political risk. No mineral has better economics than oil. The tricky issues afflicting new mining projects rarely arise with conventional oil. Oil is effectively irreplaceable for many applications, especially transport, over the coming 20 years. Iraq and Saudi Arabia are the lowest cost oil exporters. Political difficulties and tensions raise the perceived risks, but also open opportunities for oil independents that would otherwise not be available. Other major oil provinces are also risky. Where there is not political uncertainty, there is geological or engineering risk or limited potential. The question is how, when and by whom the reserves are developed. IRAQ IS CRITICAL TO THE WORLD’S ENERGY FUTURE Iraq is the world’s second largest oil province, after Saudi Arabia. Comparisons are complicated by Iraq’s traditionally conservative reserve calculations compared to more aggressive treatment elsewhere. Iraq has about 115 (formerly 112) billion recoverable barrels proven and up to 300 billion probable barrels. The reason why probable reserves are so high is that there has been relatively few exploration wells: no drilling of the Paleozoic, or deeper horizons, and virtually no drilling of the Mesozoic, or middle horizons – in contrast to neighbouring Kuwait and Saudi Arabia. Exploration focused on shallow targets in the prolific Tigris and Euphrates river valleys. Only about 2,000 wells have been drilled, compared to over one million wells in similarly sized Texas. Whole regions of the country, with enormous potential, are virtually unexplored. The Tigris and Euphrates valleys offer vast potential. Petrel is excited by possibilities towards the source of the rivers in northwestern Iraq and northeastern Syria. Geology rarely stops at national frontiers. For various reasons, this Iraqi acreage is not currently open, though the Syrian acreage is now becoming available on reasonable terms. The Iraqi western desert is available for appropriate companies from friendly countries. Iraq’s oil industry has suffered severe under-investment for the past 20 years. Since 1989 they endured war disruption, economic embargo and sanctions. ECONOMIC EMBARGO Sanctions were originally introduced as a UN-sponsored response to the Kuwaiti crisis, and an alternative to hostilities. Following the Gulf War, sanctions were extended to enforce armistice terms, particularly destruction of military equipment. From 1996 there has been an ‘Oil-for-Food’ UN programme, which has had only limited effectiveness in maintaining oil production, despite diligent maintenance by local engineers. 3 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) The current legal position is mainly captured in UN Resolution 1284, providing for sanctions to be suspended following 120 days of compliance with UN inspectors. The resolution limited the list of ‘dual use’ items and expedited spare parts approval so as to streamline the Oil-for-Food’ programme. It also considered new export routes and provided for involvement of international exploration and production companies. The programme failed dismally: by April 2002, of the $4 billion of spares contracts signed, only $3 billion had been authorised and $1 billion delivered. Often spares delivered cannot be properly installed and maintained because Resolution 1330 authorising a €600 million training budget has not been implemented. An early 2001 attempt to reform the unravelling embargo by substituting ‘smart sanctions’ was vetoed in the UN. Following international tensions in late 2001, the Security Council unanimously adopted the more conciliatory Resolution 1409 in May 2002. Development funds have been strangled in the UN 661 Committee. Oil production fell, spares were cannibalised and export capacity constrained. Environmental damage is needlessly done by gas flaring, and leaks from corroding pipelines. Operators risk reservoir damage from lack of adequate controls. Many of the blocked items, such as stainless steel valves, are theoretically ‘dual use’ but essential to operate a modern oil industry. OIL FIELD DEVELOPMENT Iraq needs international technology, engineers and finance to update its industry to best international practice. Necessary funds are at least $30 billion and possibly up to $50 billion to realise Iraq’s potential. The original Ministry of Oil plan envisaged increasing production from Iraq’s former OPEC quota of 3.45 to 6 million barrels daily, though an ultimate target of 9 million barrels is possible. So far only major oil companies owned or controlled by friendly states have negotiated field development contacts on already discovered fields: Syria’s SPC on Akkas gas field in the west and Noor oil field in the east, state-sponsored Lukoil of Russia on the West Qurna field, as well as China’s CNPC, India’s ONGC, Algeria’s Sonatrach, Indonesia’s Pertamina, Tunisia and PetroVietnam. Petrel is interested in developing two existing oil fields near to existing infrastructure in the south of Iraq. To move to commercial negotiations juniors must show the ability and flexibility to operate under prevailing circumstances. EXPLORATION AND DEVELOPMENT PROJECTS Iraq’s Ministry of Oil has offered 9 exploration blocks each averaging one million hectares in the western desert to approved international companies. The acreage is world class, though more risky than the existing producing areas in the main river valleys. India’s state-owned ONGC signed an agreement to explore Block 8. The Indonesian state- owned Pertamina has signed an agreement to explore Block 3. Most observers expect other Asian state oil companies to sign two or more blocks. Approved Russian companies may also succeed. Private companies are in a different category to state-owned vehicles, yet we hope to be the first western company to sign and start work. 4 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) DRAFT EXPLORATION AND DEVELOPMENT CONTRACT Petrel, which is listed on the Alternative Investment Market of the London Stock Exchange, is an Irish company. Ireland, which is currently a member of the UN Security Council, has close links with the Arab world and supports the peaceful resolution of regional disputes. We aim to help develop hydrocarbon reserves in Iraq and compatible countries, in accordance with applicable laws, in the interests of our shareholders, the people of host nations and world energy consumers. During 2001 Petrel’s assessed and negotiated a draft contract with the Iraqi Ministry of Oil on exploration and development contract in the western desert. The terms are confidential, but satisfactory compared to arrangements available elsewhere and reflect the pro- business orientation of the Iraqi Ministry of Oil. The subject block is extensive (approximately one million hectares) including several large structures, which may host considerable reserves of oil and gas. Ministry of Oil terms take into account required economic returns as well as the impact of time, geological and other risks. The Iraqi model contract takes the best elements of international practice and seeks to marry the objectives of the partners. CONTRACTUAL TERMS The specific terms negotiated with the Ministry of Oil are confidential. Petrel believes that they are fair and reasonable, addressing all appropriate concerns. In general terms, development contracts for existing discoveries last for 12 years and are based on an Internal Rate of Return model. Half of production is ‘cost oil’ allocated to recovery of the contractor’s investment. An additional 10% is ‘profit oil’. There is also a facility to lift up to 25% of oil produced, and provide technical assistance, for a further 15 years. Exploration and development contracts include a two-phase exploration period of 5 years, which may be extended to 7 years. About half of the original large acreage (typically one million hectares) must be relinquished after phase one, or 3 to 4 years. If there have been no commercial discoveries, the entire block is relinquished after the exploration period. The focus is on carrying out an optimal work programme, rather than on a minimum spend, up-front bonuses or guarantees. This includes reprocessing of existing seismic, and acquisition of additional 2d, and possibly 3d seismic, where appropriate. Exploration wells are required in both phases. If exploration is successful, there is a buyback arrangement similar to that operating for the existing oil field developments. 5 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) ENERGY INDUSTRY BACKGROUND: SUPPLY / DEMAND BALANCE We believe that resolution of the standoff with Iraq should not be long delayed because a world energy crisis is now unavoidable. We are entering a perfect energy storm. We are at or near capacity constraints in most markets for most energy types. Conventional oil – the world’s most flexible energy – will hit capacity constraints within 2 years of strong economic growth. Western consumers require OPEC to increase capacity, while the capacity utilisation of OPEC facilities has risen steadily. It’s becoming harder to find oil in the western world. We now burn 5 barrels for every one found. New technology accelerates oil production but does not appreciably boost overall recoveries. Much apparent reserve increase in recent decades was merely an accounting exercise. Over-specialisation results in economists misunderstanding science or missing accounting sleights of hand. Under-investment has created an energy personnel and equipment shortage. Major new projects take years to develop. It will take a decade for new nuclear or hydropower facilities. Gas or non-conventional oil take longer and are more expensive to process than traditional fuels. Technical people produce reserve estimates without thinking through the economic implications of the higher prices these resources require. For example, heavy oil or stranded gas must be converted into usable liquids for transport to consumers. The world has plenty of coal but current techniques are dirty and we’re years away from clean burn. And coal is no longer cheap: in 2000, a 25-year coal price decline trend reversed. Conservation, though worthwhile, is basically tokenism and not a key part of the energy solution. Environmentalists will not welcome the rejuvenation of nuclear power, new coal- burning power stations and extra hydro projects. The west must accommodate those states possessing two-thirds of the world’s oil. Instead of sanctioning Iran, Iraq and Libya, we should be pressuring them to maximise production. The annual oil demand growth trend is about 1 million barrels daily. Given the supply- demand balance, we expect an energy crisis within 3 years. With Saudi Arabia, Kuwait and others close to their realistic full capacity, the only source of the required oil is Iraq. Given the minimum three-year development times, we need investment now to avoid a supply crunch. This underlying self-interest makes us optimistic that the standoff will be resolved sooner rather than later. 6 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) OIL & GAS FIELDS OF IRAQ INDEX TABLE OF OIL & FIELDS OF IRAQ (See Location Map) Tuba Demir Dagh Dujaila Rumaila N & S Chia Surkh 1. Qaiyarah 5. Sadid 9. Adaiyah 13. Ratawi 17. 21. Gusair 25. Makhul 29. 33. 37. 41. 45. West Qurna 49. Halfayah Raffan 53. 57. Rafidain 61. Majnoon Judaida 65. Ahdab 69. Amara 73. Jabal Kand 77. Diwan 81. Naft Khaneh 2. Khanuqah 6. Qalian 10. Ain Zalah 14. Bai Hassan 18. Atshan 22. Ibrahim 26. Samawa 30. Qara Chauq 34. Kifl 38. 42. Siba 46. West Luhais 50. 54. 58. 62. 66. 70. 74. 78. 82. Nasiriya Khabbaz Subba Noor Taq Taq Badra Huwaiza Nahrawan Akkas Kirkuk 3. Chemchemal 7. Qasab 11. Zubair 15. Jambur 19. Alan 23. Falluja 27. Gilabat 31. 35. Hamrin 39. 43. 47. 51. 55. 59. 63. 67. Nau Doman Qamar 71. Kumait 75. 79. Merjan 83. Rachi Buzurgan Sufaiyah Balad Jaria Pika East Baghdad Dhufriya Jabal Fauqi Jawan Sarjoon (Sasan) Injana Pulkhana Luhais Anfal (Kor Mor) Abu Ghirab 4. Khashm Al Ahmar 8. Najmah 12. 16. Bin ‘Umar (Nahr Umr) 20. Butmah 24. 28. 32. 36. 40. 44. 48. Gharraf Tikrit 52. Jraishan 56. Abu Khema 60. 64. Saddam 68. Mansuriyah 72. 76. Rifaee 80. West Kifl 84. Safwan (S. Zubair) Tel Ghazal 7 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) OTHER OPPORTUNITIES Syria Our detailed study of western Iraq encouraged scrutiny of similar plays in neighbouring countries. Petrel studied opportunities in Jordan, but believes these to be small to medium sized and gas-prone. There are some excellent opportunities in nearby Syria. Geology doesn’t end at political borders, though plays tend to be more gas-prone as you move westwards. In Syria, we believe that there are interesting oil plays in the east and especially north-east, and have been in discussions with the Syrian Petroleum Company, the Syrian Oil Ministry and potential partners since early 2002. In particular, we are assessing Carboniferous plays where the source rock is Silurian. SYRIAN PETROLEUM BLOCKS Apart from exploration acreage, there are also development opportunities: one is the Hamzah field in northeastern Syria, currently operated by the state owned Syrian Petroleum Company (SPC). The main part of the structure lies in Iraq, where it is known as Mushorah. The Hamzah field has estimated proven reserves of 136 million barrels of recoverable oil and 170 billion cubic feet of gas from three carbonate reservoirs. The currently producing shallow reservoir has proven oil in-place of 86 million barrels of oil and initial recoverable 8 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) reserves of 21 million barrels of oil and 50 billion cubic feet of gas. By end 2000, cumulative oil production from this field was 15 million barrels. The remaining proven recoverable reserves of Hamzah field is 120 million barrels. The SPC is interested in new technology and investment to increase oil production by further development of producing and other reservoirs. Currently, the Hamzah field is producing 1,700 barrels daily of heavy 20-22º API crude. Deeper reservoirs contain lighter gravity oils. Syria now offers an opportunity for independent companies to explore, appraise and develop proven oil and gas reserves in only moderately explored areas. The areas under review are accessible by road. There is limited security hazard. Historically, terms available were relatively unattractive. Now we believe that reasonable terms can be negotiated. In April 2002 Syria offered 11 exploration blocks for tender by approved international oil companies. The acreage covers 63,300 square km of different petroleum basins with expected undiscovered potential that the Syrian Ministry of Petroleum and Mineral Resources describes as ‘very high’. Yemen We have studied several interesting Yemeni opportunities. The exploration success rate is good, at about one in three. Petrel is interested in maximising the upside while minimising up front expenses. Ideally we would like to acquire proven reserves with exploration potential. The historical barrier to large-scale investment by international oil independents has been security concerns and up front costs. There is some evidence that better terms may soon be available. If so, Petrel will seek Yemeni concessions. One possibility is Block 4, which has been relinquished by the previous operator and is now held by the state investment company. It covers an area of 2,000 square km. in west central Yemen. Reports show recent production of West Ayad field at 549 barrels of oil daily from 11 wells, and 3 million cubic feet of gas daily from 18 wells. Well production range is from 2 to 148 barrels daily. This indicates field problems. From data available it seems that of the oil-in-place of 42 million barrels, only 10 million could be recovered. This is low compared with estimates of 59 million initial recoverable reserves. There is either reservoir damage due to many shut-in periods, a mistake in the initial reserve estimates, or bad field management. The West Ayad field is still producing at about 600 barrels daily from few wells. Under certain assumptions, the field may be capable of producing 5,000 barrels daily. We estimate the likely required investment at $5 million. The other two fields in block 4, Ayad East and Amal are not yet fully developed. Estimated remaining oil reserves in this block are around 100 million barrels. If such projects can be acquired on reasonable terms, they represent a good balance of existing reserves and upside potential. 9 PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) Sudan Sudan is now an exciting location for oil independents. It may become a key swing producer, with producion rising from 250 thousand barrels daily to an expected 450 thousand. Sudan is no longer under UN or EU sanctions, though it remains under unilateral US sanctions. When these unilateral sanctions are relaxed, we expect US companies to invest. There is therefore an opportunity for oil independents active in compatible countries. We are studying onshore and offshore blocks. The geology is exciting. Past economic terms available have been difficult for oil independents but we are hopeful that it may soon be possible to negotiate an attractive arrangement. The blocks under scrutiny are far from the troubled area of southern Sudan. 10 SUDAN OIL & GAS CONCESSION MAP Source: Sudanese Ministry of Oil PETREL RESOURCES Annual Report 2001 MANAGING DIRECTOR’S REPORT (CONTINUED) GEOLOGICAL MAP OF SUDAN Source: Sudanese Ministry of Oil 11 PETREL RESOURCES Annual Report 2001 DIRECTORS’ REPORT The directors present their annual report and the audited financial statements for the year ended December 31, 2001. REVIEW OF ACTIVITIES AND FUTURE DEVELOPMENTS The company is engaged in oil and gas exploration. Further details of the group’s activities and future developments are given in the chairman’s statement and Managing Directors Report. RESULTS FOR THE YEAR The consolidated loss for the year after taxation was €276,821 (2000: profit after taxation €48,717). The directors do not recommend that a dividend be declared for the year ended December 31, 2001. SUBSEQUENT EVENT Subsequent to the balance sheet date the company raised Stg£340,000 through the issue of ordinary shares. BOOKS OF ACCOUNT To ensure that proper books and accounting records are kept for the company in accordance with Section 202 of the Companies Act, 1990, the directors have employed appropriately qualified accounting personnel and have maintained appropriate computerised accounting systems. The books of account are located at the company’s office at 162 Clontarf Road, Dublin 3. DIRECTORS The current directors are set out on the inside back cover. H. Wilson resigned as a director on 27 February 2002. DIRECTORS’ AND SECRETARY’S INTERESTS IN SHARES The directors and secretary at December 31, 2001 held the following beneficial interest in the shares of the company: 1/05/2002 Ordinary Shares of €0.0125 ‘000 2,500 1,600 — 140 600 1/05/2002 Options – Ordinary Shares of €0.0125 ‘000 2,700 2,400 100 100 970 31/12/2001 Ordinary Shares of €0.0125 ‘000 2,100 1,100 — — 100 31/12/2001 Options – Ordinary Shares of €0.0125 ‘000 2,200 2,200 100 100 770 1/01/2001 Ordinary Shares of IR£0.01 ‘000 2,100 1,100 — — 100 1/01/2001 Options – Ordinary Shares of IR£0.01 ‘000 2,200 2,200 100 100 770 J. Teeling D. Horgan H. Wilson G. Delbes J. Finn (Secretary) 12 PETREL RESOURCES Annual Report 2001 DIRECTORS REPORT (CONTINUED) SUBSTANTIAL SHAREHOLDINGS The share register records that the following shareholders apart from the directors held 3% or more of the issued share capital as at 30 April 2002: Number of Ordinary Shares Bank of Ireland Nominees Scoti Company Limited C06150 BNY Gil Client Account (Nominees) Limited (NWSC) BNY (OCS) Limited Yewpole Limited HEALTH AND SAFETY 3,250,000 2,315,000 1,960,000 4,340,000 1,986,694 % 7.1 5.1 4.3 9.5 4.3 The well-being of employees is safeguarded through strict adherence to health and safety standards and compliance with the requirements of the Safety, Health and Welfare at Work Act, 1989. GOING CONCERN The directors, having made the necessary enquiries, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The directors therefore propose the continued preparation of the financial statements on a going concern basis. EURO The directors have taken the necessary steps on the introduction of the Euro. The cost was not material. SUBSIDIARY Details of the company’s subsidiary are set out in Note 7 to the financial statements. AUDITORS Deloitte & Touche, Chartered Accountants, will continue in office as auditors in accordance with Section 160(2) of the Companies Act 1963. Signed on behalf of the Board : John Teeling David Horgan June 7, 2002 } Directors 13 PETREL RESOURCES Annual Report 2001 STATEMENT OF DIRECTORS’ RESPONSIBILITIES Irish company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to • • • select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland and comply with Irish statute comprising the Companies Acts, 1963 to 2001 and the European Communities (Companies: Group Accounts) Regulations, 1992. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 14 PETREL RESOURCES Annual Report 2001 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PETREL RESOURCES PLC We have audited the financial statements of Petrel Resources Plc for the year ended December 31, 2001 which comprise the Consolidated Profit and Loss Account, the Consolidated and Company Balance Sheets, the Consolidated Cash Flow Statement, the Statement of Accounting Policies and the related notes 1 to 18. These financial statements have been prepared under the accounting policies set out in the Statement of Accounting Policies. Respective responsibilities of directors and auditors The directors are responsible for preparing the Annual Report, including as set out in the Statement of Directors’ Responsibilities, the preparation of the financial statements in accordance with applicable Irish law and accounting standards. Our responsibilities, as independent auditors, are established in Ireland by statute, Auditing Standards as promulgated by the Auditing Practices Board in Ireland and by our profession's ethical guidance. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with Irish statute comprising the Companies Acts, 1963 to 2001 and the European Communities (Companies: Group Accounts) Regulations, 1992. We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheet date, there exists a financial situation requiring the convening of an extraordinary general meeting of the company; and whether the information given in the directors' report is consistent with the financial statements. In addition, we state whether we have obtained all information and explanations necessary for the purposes of our audit and whether the company's balance sheet is in agreement with the books of account. We also report to you if, in our opinion, any information specified by law regarding directors' remuneration and directors' transactions is not given and, where practicable, include such information in our report. We read the Directors’ Report and the Chairman’s Statement and consider the implications for our report if we become aware of any apparent misstatement or material inconsistencies with the financial statements. Our responsibilities do not extend to other information. Basis of audit opinion We conducted our audit in accordance with the auditing standards issued by the Auditing Practices Board and generally accepted in Ireland. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the circumstances of the company, and the group, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we evaluated the overall adequacy of the presentation of information in the financial statements. 15 PETREL RESOURCES Annual Report 2001 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PETREL RESOURCES PLC (CONTINUED) Intangible fixed assets In forming our opinion we have considered the adequacy of the disclosures made in the financial statements concerning the valuation of intangible fixed assets. The realisation of the intangible fixed assets of €912,812, included in the consolidated and company balance sheets, is dependent on the successful development of economic reserves. We draw attention to further details given in Note 6. Our opinion is not qualified in this respect. Opinion In our opinion the financial statements give a true and fair view of the state of the affairs of the company and the group as at December 31, 2001 and of the loss of the group for the year then ended and have been properly prepared in accordance with the Companies Acts, 1963 to 2001 and the European Communities (Companies: Group Accounts) Regulations, 1992. We have obtained all the information and explanations we considered necessary for the purpose of our audit. In our opinion proper books of account have been kept by the company. The company’s balance sheet is in agreement with the books of account. In our opinion the information given in the directors' report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet of the company are more than half the amount of its called-up share capital and, in our opinion, on that basis there did not exist at December 31, 2001 a financial situation which, under Section 40(1) of the Companies (Amendment) Act, 1983, would require the convening of an extraordinary general meeting of the company. Deloitte & Touche Chartered Accountants and Registered Auditors Deloitte & Touche Earlsfort Terrace Dublin 2 June 7, 2002 16 PETREL RESOURCES Annual Report 2001 STATEMENT OF ACCOUNTING POLICIES The significant accounting policies adopted by the company are as follows: BASIS OF PREPARATION The financial statements are prepared in accordance with the historical cost convention and the relevant Statements of Recognised Practice for the oil and gas industry and other applicable accounting standards generally accepted in Ireland and Irish statute comprising the Companies Acts, 1963 to 2001 and the European Communities (Companies: Group Accounts) Regulations, 1992. CONSOLIDATION POLICY The consolidated financial statements include the financial statements of the parent company and its subsidiary made up to the end of the financial year. DEFERRED DEVELOPMENT EXPENDITURE Exploration costs are capitalised until the results of the projects, by geographical area, are known. Exploration costs include an allocation of administration and salary costs as determined by management. If the project is successful, then the related exploration costs are written off over the life of the estimated ore reserve on a unit of production basis. Where a project is terminated, the related exploration costs are written off immediately. TANGIBLE FIXED ASSETS Depreciation is provided to write-off the cost less the estimated residual value of tangible assets by equal instalments over their useful economic lives as follows: Office Equipment 5 years FOREIGN CURRENCY Monetary assets and liabilities denominated in foreign currencies are translated into Euro at the rate of exchange prevailing at the balance sheet date. Transactions in foreign currencies are recorded at the rate of exchange prevailing at the date of the transactions. 17 PETREL RESOURCES Annual Report 2001 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2001 ADMINISTRATIVE EXPENSES — Cost of admission to A.I.M. — Other EXCEPTIONAL ITEM Gain on disposal of asset (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST Interest income (LOSS)/PROFIT FOR THE YEAR BEFORE TAXATION Taxation (LOSS)/PROFIT FOR THE YEAR AFTER TAXATION Profit and loss account: opening — deficit Profit and loss account: closing — deficit (Loss)/profit per share — basic (Loss)/profit per share — fully diluted Notes 2001 € 2000 € 1a — (136,098) (197,721) –––––––– (284,338) –––––––– (284,338) (333,819) 1b — –––––––– 373,528 –––––––– (284,338) 39,709 7,517 –––––––– 11,260 –––––––– (276,821) 50,969 — –––––––– (2,252) –––––––– (276,821) 48,717 (1,341,523) –––––––– (1,618,344) –––––––– –––––––– (1,390,240) –––––––– (1,341,523) –––––––– –––––––– (0.71c) 0.12c (0.71c) –––––––– –––––––– 0.11c –––––––– –––––––– 2 3 4 4 All gains and losses are dealt with through the profit and loss account. Results derive from continuing operations. The financial statements were approved by the Board of Directors on June 7, 2002 and signed on its behalf by: John Teeling David Horgan } Directors 18 PETREL RESOURCES Annual Report 2001 BALANCE SHEETS AS AT DECEMBER 31, 2001 Group 2001 € Company 2001 € Group 2000 € Company 2000 € Notes FIXED ASSETS Tangible assets Intangible assets Financial assets CURRENT ASSET Debtors Cash at bank CREDITORS: (Amounts falling due within one year) NET CURRENT (LIABILITIES)/ ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES CAPITAL AND RESERVES Called-up share capital Capital conversion reserve fund Share premium Profit and loss account — (deficit) EQUITY SHAREHOLDERS’ FUNDS 5 6 7 8 9 10 11 12 13 6,576 912,812 — –––––––– 919,388 –––––––– 6,576 912,812 3 –––––––– 919,391 –––––––– 4,132 503,357 — –––––––– 507,489 –––––––– 4,132 503,357 3 –––––––– 507,492 –––––––– 4,952 13,762 –––––––– 18,714 4,952 13,762 –––––––– 18,714 16,555 658,669 –––––––– 675,224 16,555 658,669 –––––––– 675,224 (301,664) –––––––– (301,667) –––––––– (269,454) –––––––– (269,457) –––––––– (282,950) –––––––– (282,953) –––––––– 405,770 –––––––– 405,767 –––––––– 636,438 –––––––– –––––––– 636,438 –––––––– –––––––– 913,259 –––––––– –––––––– 913,259 –––––––– –––––––– 487,305 487,305 7,694 7,694 1,759,783 1,759,783 (1,618,344) (1,618,344) –––––––– –––––––– 494,999 — 1,759,783 (1,341,523) –––––––– 494,999 — 1,759,783 (1,341,523) –––––––– 636,438 –––––––– –––––––– 636,438 –––––––– –––––––– 913,259 –––––––– –––––––– 913,259 –––––––– –––––––– The financial statements were approved by the Board of Directors on June 7, 2002 and signed on its behalf by: John Teeling David Horgan } Directors 19 PETREL RESOURCES Annual Report 2001 CONSOLIDATED CASH FLOW STATEMENT AT DECEMBER 31, 2001 NET CASH OUTFLOW FROM OPERATING ACTIVITIES RETURNS ON INVESTMENT AND SERVICING OF FINANCE Interest received NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE TAXATION Corporation tax paid CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Disposal of intangible fixed asset Payments to acquire intangible fixed assets Payment to acquire tangible fixed asset NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING FINANCING Issue of ordinary share capital NET CASH INFLOW FROM FINANCING Notes 2001 € 2000 € 15(a) (238,363) –––––––– (165,594) –––––––– 7,517 –––––––– 11,260 –––––––– 7,517 –––––––– 11,260 –––––––– — –––––––– (1,025) –––––––– — (409,455) (4,606) –––––––– 682,784 (500,110) (1,364) –––––––– (644,907) –––––––– 25,951 –––––––– — –––––––– — –––––––– (644,907) –––––––– –––––––– 539,169 –––––––– 539,169 –––––––– 565,120 –––––––– –––––––– (DECREASE)/INCREASE IN CASH 15(b) 20 PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 1. EXCEPTIONAL ITEMS (a) (b) The exceptional charge in 2000 represents the costs of the company being listed on the Alternative Investment Market. The exceptional item in 2000 represents the gain on the sale of the company’s interest in a Ugandan oilfield. Sales proceeds Cost of interest Related selling costs Gain on disposal 2. (LOSS)/PROFIT BEFORE TAXATION The (loss)/profit before taxation is stated after charging the following items : Depreciation Directors’ remuneration — fees — salary Auditors’ remuneration Staff costs — salaries The company had two employees during the year. 3. TAXATION 2000 € 698,085 (310,960) (13,597) –––––––– 373,528 –––––––– –––––––– 2001 € 2000 € 2,162 1,105 31,740 28,142 4,200 35,166 –––––––– –––––––– 23,490 15,040 3,809 17,776 –––––––– –––––––– No charge to taxation arises in the current year. The company has availed of available loss relief. 21 PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 (CONTINUED) 4. (LOSS)/PROFIT PER SHARE Basic earnings per share is computed by dividing the profit or loss after taxation for the year available to ordinary shareholders by the sum of the weighted average number of ordinary shares in issue and ranking for dividend during the period. Diluted earnings per share is computed by dividing the profit or loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year. The following table sets forth the computation for basic and diluted earnings per share (EPS): Numerator Numerator for basic EPS retained loss Denominator Denominator for basic EPS Effect of diluted securities – options Denominator for diluted EPS Basic EPS Diluted EPS 2001 € 2000 € (276,821) –––––––– –––––––– 48,717 –––––––– –––––––– 38,984,388 38,984,388 — 4,593,033 –––––––– ––––––––– 38,984,388 43,577,421 –––––––– ––––––––– –––––––– ––––––––– (0.71c) (0.71c) –––––––– –––––––– 0.12c 0.11c –––––––– –––––––– Basic and diluted EPS are the same in respect of 2001 as the effect of outstanding options is anti-dilutive and therefore excluded. 22 PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 (CONTINUED) 5. TANGIBLE FIXED ASSETS Group and Company Cost : At January 1, 2001 Additions At December 31, 2001 Accumulated Depreciation: At January 1, 2001 Charge for year At December 31, 2001 Net book value : At December 31, 2001 At December 31, 2000 6. INTANGIBLE ASSETS Group and Company Deferred development expenditure: Cost : At January 1, 2001 Additions At December 31, 2001 Net book value : At December 31, 2001 At December 31, 2000 Office Equipment € 6,204 4,606 –––––––– 10,810 –––––––– 2,072 2,162 –––––––– 4,234 –––––––– 6,576 –––––––– –––––––– 4,132 –––––––– –––––––– 2001 € 503,357 409,455 –––––––– 912,812 –––––––– –––––––– 912,812 –––––––– –––––––– 503,357 –––––––– –––––––– 23 PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 (CONTINUED) Intangible assets: Deferred development expenditure at December 31, 2001 represents exploration and related expenditure in respect of projects in Iraq. The realisation of this intangible asset is dependent on the development of economic reserves, including the ability to raise finance to develop the project. Should this prove unsuccessful the value included in the balance sheet would be written off. The directors are aware that by its nature there is an inherent uncertainty in such development expenditure as to the value of the asset. Having reviewed the deferred development expenditure at December 31, 2001, the directors are satisfied that the value of the intangible asset is not less than net book value. 7. INVESTMENT IN SUBSIDIARY COMPANY Parent company Shares at cost - unlisted: Opening balance Closing balance 2001 € 2000 € 3 ––––––––– 3 –––––––– 3 ––––––––– ––––––––– 3 –––––––– –––––––– The group consisted of the parent company and the following wholly owned subsidiary as at December 31, 2001: Name Registered Office Group Share Nature of Business Petrel Industries Limited (formerly Ireland Iraqi Trading Company) 162 Clontarf Road, Dublin 3. 100% Dormant 8. DEBTORS Amounts falling due within one year VAT refund due Sundry 24 Group and Company 2000 € 2001 € 756 4,196 ––––––––– 4,952 ––––––––– ––––––––– 16,555 — –––––––– 16,555 –––––––– –––––––– PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 (CONTINUED) 9. CREDITORS: (Amounts falling due within one year) Group 2001 € 2000 € 2001 € 301,664 — — –––––––– 301,664 –––––––– –––––––– 267,201 — 2,253 –––––––– 269,454 –––––––– –––––––– 301,664 3 — –––––––– 301,667 –––––––– –––––––– Company 2000 € 267,201 3 2,253 –––––––– 269,457 –––––––– –––––––– Accruals Amount due to group company Corporation tax 10. SHARE CAPITAL Authorised : 200,000,000 ordinary shares of €0.0125 (2000: 200,000,000 ordinary shares of IR£0.01 each) Allotted, Called-Up and Fully Paid : Opening 38,984,388 shares of IR£0.01 each (2000: 35,410,388 shares of IR£0.01 each) Issued: Nil shares (2000: 3,574,000 shares) of IR£0.01 each Transfer to capital conversion reserve fund Closing 38,984,388 shares of €0.0125 each (2000: IR£0.01) 2001 € 2000 € 2,500,000 –––––––– –––––––– 2,539,476 –––––––– –––––––– 494,999 449,619 — 45,380 (7,694) –––––––– — –––––––– 487,305 –––––––– –––––––– 494,999 –––––––– –––––––– The total number of options outstanding at December 31, 2001, including to directors, was 5,990,000 (2000: 6,045,000) shares. The options are exercisable at price between € 0.0127 and € 0.16 in accordance with the option agreement. 25 PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 (CONTINUED) 11. REDENOMINATION AND RENOMINALISATION OF SHARE CAPITAL Due to the introduction of the Euro each of the issued and unissued ordinary shares of IR£0.01 per share was redenominated into an ordinary share of €0.0126774 following a resolution passed at the Annual General Meeting held on 21 July 2001. Every such share was then renominalised to be an ordinary share of €0.0125. An amount equal to the reduction in the issued share capital resulting from this renominalisation was transferred to a capital conversion reserve fund (see below). Capital Conversion Reserve Fund Opening Transfer from share capital Closing 12. SHARE PREMIUM Opening balance Arising on shares issued during the year Costs associated with shares issued during the year Closing balance Group and Company 2000 € 2001 € — 7,694 –––––––– 7,694 –––––––– –––––––– — — –––––––– — –––––––– –––––––– Group and Company 2000 € 2001 € 1,759,783 — — –––––––– 1,759,783 –––––––– –––––––– 1,265,995 525,443 (31,655) –––––––– 1,759,783 –––––––– –––––––– 13. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS Group and Company 2000 € 2001 € 913,259 (276,821) 325,374 48,717 — — –––––––– 636,438 –––––––– –––––––– 45,380 493,788 –––––––– 913,259 –––––––– –––––––– Opening shareholders’ funds (Loss)/profit for the year Issue of shares: — at par — share premium Closing shareholders’ funds 26 PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 (CONTINUED) 14. LOSS ATTRIBUTABLE TO PETREL RESOURCES PLC The loss after taxation in the parent company amounted to €276,821 (2000 profit: €48,717). A separate profit and loss account for Petrel Resources plc (the company) has not been prepared because the company has complied with the conditions laid down in Section 43(2) of the European Communities (Companies: Group Accounts) Regulations 1992. 15. CASH FLOW STATEMENT (a) Reconciliation of operating profit to net cash outflow from operating activities 2001 € 2000 € Operating (loss)/profit Increase in creditors Decrease/(increase) in debtors Depreciation Exceptional charge Exceptional item Sale of Ugandan interest Net cash outflow from operating activities (b) Analysis of net funds (284,338) 32,210 11,603 2,162 175,807 189,983 (9,264) 1,105 — (136,098) — (387,127) –––––––– (165,594) –––––––– –––––––– –––––––– (238,363) –––––––– –––––––– At 1 January 2001 Cash flow At 31 December 2001 Cash in bank and in hand 658,669 –––––––– –––––––– (644,907) –––––––– –––––––– 13,762 –––––––– –––––––– (c) Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash in the period Change in net funds resulting from cash flows Movement in net funds in the period Net funds at start of year Net funds at end of year 2001 € 2000 € (644,907) –––––––– (644,907) –––––––– (644,907) 565,120 –––––––– 565,120 –––––––– 565,120 658,669 –––––––– 13,762 –––––––– –––––––– 93,549 –––––––– 658,669 –––––––– –––––––– 27 PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 (CONTINUED) 16. RISK MANAGEMENT The group’s financial instruments comprise cash balances and various items such as trade debtors and trade creditors which arise directly from trading operations. The main purpose of these financial instruments is to provide working capital to finance group operations. The group does not enter into any derivative transactions, and it is the group's policy that no trading in financial instruments shall be undertaken. The main financial risk arising from the group’s financial instruments is currency risk. Interest Rate Risk The group finances its operations through the issue of equity shares, and has no fixed interest rate agreements. The group has no significant exposures to interest rate risk. Liquidity Risk As regards liquidity, the group’s exposure is confined to meeting obligations under short term trade creditor agreements. This exposure is not considered to be significant, and is fully financed from operating cashflow, or where this is insufficient during the development stage, through additional issues of ordinary equity shares. Foreign Currency Risk Although the group is based in the Republic of Ireland, amounts held as deferred development expenditure were originally expended in currencies other than Euro aligned currencies. However, this expenditure is not considered to be a monetary asset, and has been translated to the reporting currency at the rates of exchange ruling at the dates of the original transactions. The group at present does not hold significant foreign currency monetary assets or liabilities. The group also has transactional currency exposures. Such exposures arise from expenses incurred by the group in currencies other than the functional currency. It is expected that almost all future revenue will arise in US dollars. The group seeks to minimise its exposure to currency risk by closely monitoring exchange rates, and restricting the buying and selling of currencies to predetermined exchange rates within specified bands. The group does not presently utilise swaps or forward contracts to manage its currency exposures, although such facilities are considered and be may used where appropriate in the future. 28 PETREL RESOURCES Annual Report 2001 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 (CONTINUED) 17. RELATED PARTY TRANSACTIONS During the year the company paid consultancy fees to Guy Delbes amounting to €37,856. Guy Delbes is a director of the company. 18. SUBSEQUENT EVENT Subsequent to the balance sheet date the company raised Stg£340,000 through the issue of ordinary shares at Stg£0.05 each. 29 PETREL RESOURCES Annual Report 2001 PETREL NOTICE OF MEETING Notice is hereby given that the annual general meeting of the members of Petrel Resources plc will be held on Friday, 12 July, 2002 in the Shelbourne Hotel, St. Stephens Green, Dublin 2 at 11.30 a.m. for the following purposes: 1. 2. 3. 4. To receive the report of the directors and audited financial statements for the year ended December 31, 2001. To re-appoint director: J. Teeling retires in accordance with article 95 and seeks re- election. To authorise the directors to fix the remuneration of the auditors. To transact any other ordinary business of an annual general meeting. By order of the Board James Finn Secretary June 7, 2002 30 PETREL RESOURCES Annual Report 2001 PETREL FORM OF PROXY I/We.............................................................................................................................................. (BLOCK LETTERS) of.................................................................................................................................................. being (an) ordinary shareholder(s) of Petrel Resources plc, hereby appoint the Chairman of the Meeting# ..................................................................................................................................................... of.................................................................................................................................................. as my / our proxy to vote for me / us and on my / our behalf at the Annual General Meeting of the Company to be held on Friday, 12 July, 2002 in the Shelbourne Hotel, Dublin 2 at 11.30 a.m. and at any adjournment thereof. I/We direct my / our proxy to vote on the resolutions set out in the Notice convening the Meeting as follows: For * Against * Reports and Accounts Re-election of Director J. Teeling Remuneration of Auditors Signature ..................................................................................................................................... Dated the.......................................................day of ............................................................2002 # * If it is desire to appoint another person as proxy other than the Chairman of the Meeting the name and address of the proxy, who need not be a member of the Company, should be inserted, the words “the Chairman of the meeting” deleted and the alterations initialled. The manner in which the proxy is to vote should be indicated by inserting an “X” in the boxes provided. Proxies not marked as for or against will be regarded as giving the proxy authority to vote, or to abstain at his/her discretion. NOTES 1. 2. 3. In the case of a corporation this proxy must be under its common seal or under the hand of an officer or attorney duly authorised in writing. To be effective this proxy must reach the address on the reverse hereof not less than 48 hours before the time of the meeting. In the case of joint holders, the vote of the senior who tenders a vote whether in person of by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of member in respect of such holding. 31 (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) ✂ FOLD 1 3 3 D L O F ) n i n r u t n e h t ( n i l b u D d n a l e r I 2 D L O F c l P s e c r u o s e R l e r t e P d a o R f r a t n o C 2 6 1 l y r a t e r c e S e h T DIRECTORS AND OTHER INFORMATION CURRENT DIRECTORS J.Teeling (Chairman) D. Horgan (Managing) G. Delbes SECRETARY J. Finn REGISTERED OFFICE AUDITORS BANKERS SOLICITORS NOMINATED ADVISOR CORPORATE BROKER STOCKBROKERS REGISTRARS 162 Clontarf Road, Dublin 3. Telephone 353-1-8332833 353-1-8333505 Fax petrel@iol.ie E-Mail www.petrelresources.com Website Deloitte & Touche, Chartered Accountants, Deloitte & Touche House, Earlsfort Terrace, Dublin 2. Allied Irish Banks plc., Annesley Bridge, North Strand Road, Dublin 3. Ivor Fitzpatrick & Co., 44-45 St. Stephen’s Green Dublin 2. Rowan Dartington 6th Floor, Colston Tower, Colston Street Bristol BSI 4RD Keith Bayley Rodgers & Co. Ltd. Sophia House, 76 – 80 City Road, London EC1 Y2EQ Computershare Services (Ireland) Ltd. Heron House, Corrig Road, Sandyford Industrail Estate, Dublin 18. REGISTRATION NUMBER 92622 AUTHORISED CAPITAL 200,000,000 1.25c Shares ISSUED CAPITAL 45,784,388 MARKET Alternative Investment Market (AIM) NUMBER OF SHAREHOLDERS 1100