WITH the prospect of discovering new commercial fields of natural oil and gas in Irish waters about as probable as tracking down the crock of gold at the end of the rainbow, Irish exploration companies are ploughing resources further afield. Results this week from Tullow Oil and Dana Exploration prove the point.
Tullow is involved in projects in Senegal and Pakistan and is participating in an exploration bidding round in India where it expects to secure an allocation of five blocks. Dana has interests in two oil field development projects in western Siberia.
Both companies are struggling to make an adequate return on shareholders funds in an increasingly costly and high risk business. Tullow, which expected to quadruple annual profits, only managed a marginal increase in the pre-tax total to £1.19 million. The company is confident of good cash flows in the future but the latest results do not justify a dividend.
Although Dana Exploration doubled pre-tax losses to £678,006 last year the outcome was said to be in line with expectations". There is a substantial increase in activity on the two Siberian oil fields and the company hopes to move into profit as oil revenues "build up sharply". Shareholders in both will need patience and a degree of optimism to stay the course.
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