AIM listed oil and gas explorer Petrel has reported a widening of pre-tax losses for 2008 as the company waits for the Iraqi government to pay what it owes it.
Petrel, which focuses on oil exploration in Iraq, said its pre-tax losses came in at €761,637 for the year ending December compared to losses of €518,935 the previous year. Revenues also declined, falling to €8.233m from a figure of €29.95m in 2007.
The company said that it is seeking oil rights on its Subba and Luhais Iraqi joint venture project after the government's failure to honour an agreed payment schedule.
Since signing a $197m contact in 2005 and getting a $20m advance from the Iraqi authorities, Petrel has completed about 50% of the project work. The work has been approved by the authorities but the $57m now owed to Petrel has not been paid.
Petrel put the Subba and Luhais project on care and maintenance last October and temporarily disbanded the technical team on site. It has proposed to the Iraqi government that Petrel take over operatorship of the field, complete the development and take payment in the form of oil.
It said a placing by 'long standing' institutional shareholders recently raised $3m to keep Petrel operational for the next 18 months.
'Not only has Petrel faced ongoing civil strife in Iraq, continued legal uncertainty in the country, world markets where investors totally deserted small capital stocks, but we have not been paid for the work done on our large Subba and Luhais contract,' commented Chairman John Teeling.
He said that Petrel want to stay in Iraq as the opportunities in Iraqi oil have not changed. He points out that oil costs $2 a barrel to produce there and there are over 70 known fields waiting to be developed.
'It makes absolutely no sense that oil production in Iraq is falling to less than 2.4 million barrels a day when it can rise to 10 million barrels a day. Iraq badly needs the revenue and the world needs the oil,' he said.
He said it is the potential which keeps Petrel in Iraq. 'The political, legal administrative and banking uncertainty will, and must, clarify. We believe that we can work through the labyrinth of Baghdad, get paid, and deliver a 200,000 barrel a day oil field to the people of Iraq,' Mr Teeling added.
