Abridged Chairman’s Statement
Chairman's Statement for year to 31 December 2007
Business Review
The Company’s turnover in 2007 was $2.7m, an increase on 2006 of $800k. The Justin drilling programme expanded and gas production from the field increased 23% on 2006. The oil price remained strong, averaging just above 2006 levels, while the gas price was steady, if unspectacular around the 2006 average. Cost of sales increased to $1.1m, largely due to an increased Justin amortisation charge
The Company’s profit before tax broke the $1m barrier for the first time at $1.06m against $736k in 2006. The post tax profit came in at an impressive $821k compared to a profit of $635k in the previous year.
The dollar continued to weaken against sterling, however realised and unrealised exchange losses were modest.
Shareholders funds increased to $4.1m at the end of 2007 ($3.3m in 2006 and $2.7m in 2005).
United Kingdom Assets
Block 13/22b
Licence P635 in this Block in which your company had a 1% interest was relinquished as the Department for Business Enterprise and Regulatory Reform (BERR) was not willing to accept the proposed work programme by the operator BG International (NSW) Ltd.
25th Seaward Licensing Round
Since the year end, your company, as part of a consortium, has submitted an Application to BERR for licenses in 2 Blocks in this UK offshore licensing Round.
Proposed purchase of producing assets
The same consortium has been investigating the purchase of UK onshore production opportunities.
United States of America Assets
Justin
 The Justin Project is an ongoing Barnett shale gas development project in Denton County, Texas approximately 20 miles west of Dallas. J W Operating’s affiliate company Cohort Energy Company became operator in 2004. Our interest was acquired in 2001.
An Engineering Report was commissioned from Hass Petroleum Engineering Services to obtain an estimate of the natural gas reserves owned by your company in the Justin field as at 31 December 2007.
At the year end the number of wells in which FPC had an interest had increased to 46 some of which were in the process of being drilled at the year end. As at 28 May 2008 the number of wells had increased to 50.
There are estimated to be up to 30 locations to be drilled by 2010.
Green Canyon
2007 production was 962k barrels of oil (4,812 net to FPC) and 1.16m mcf of gas (5,818 net to FPC) compared with 1.39m barrels of oil (6,991 net to FPC) and 1.42m mcf of gas (7,140 net to FPC) in 2006. Green Canyon continues to be a major source of income for the company - $330k in 2007 compared to $390k in 2006. The high oil price is compensating for the reduced production.
Vernon
The Company originally owned an ORRI in 20 wells in Jackson Parish, Louisiana operated by Anadarko. Current well count has increased from the original 20 to 64 with a further 20 wells projected. 2007 revenue was $44k. Vernon has recently had 4 new well proposals with an additional 4 to 6 anticipated for the rest of 2008 .
Other producing assets
- Kleckner: The Company holds a 20% working interest in oil and gas wells in South East Seward, Logan County, Oklahoma. Kleckner is being evaluated for an additional development well which we expect to be proposed later in the year.
- Harrison : The Company holds a 15% interest in gas wells in Pittsburgh County, Oklahoma.
LBJ
The Company sold its interest in this prospect in February 2007. The prospect is in the northern extension of the Barnett Shale play north of our Justin development project. The purchaser was Barnett Exploration Inc, Allen Texas which has drilled 7 wells. That company is unlikely to drill again until the technology improves for this play.
Conclusion
The Company’s turnover was once again very healthy mainly due to increased Justin revenues from new wells. The expertise of the current operator continues to be a major factor in continuing to realise the true value of this asset.
Within Justin, there are still an estimated 30 wells to be drilled but that may increase as technology develops and infill drilling on leases is undertaken. The strong oil and steady gas prices experienced in 2007, coupled with the strong performance of the new Justin wells, has significantly improved the company’s cash flow and the board is presently confident that if field development continues at a similar pace to recent years sufficient funding is available to develop our full working interest in the remaining wells.
As is well-documented, energy prices have increased sharply this year and your Board is looking forward with considerable confidence to the continuation of the progressive improvement in your company’s fortunes during 2008. Thank you for your continued support.
Alexander West
Chairman
28 May 2008
Click here for Chairmans Statement December 2006
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