Bula adds to its Libyan investments

Bula Resources (Holdings), which increased its operating loss from £79,000 to £221,000 in the first half of 1997, is increasing its exploration presence in Libya. The development is taking place despite the problems associated with its previous investment in Russian oil exploration. The problems with the Russian investment has led to Bula taking action against Gouldens, the London solicitors who advised Bula on its investment in Aki-Otyr in Russia, and the appointment of a Government inspector to investigate the ownership of the Bula shares previously held by Mir Oil Development and now owned by Chamonix Nominees.

The discussion with Gouldens is "on-going", according to a spokesman for Bula. The claim is for recoverable costs of £9.1 million "together with interest in costs and/or the substantially larger lost value of the Aki-Otyr option, the amount of which is yet to be quantified", yesterday's interim statement confirmed.

The spokesman said he could not talk about the "lost value" in the Aki-Otyr option. Following a review of its operations, Bula has pursued a strategy of forming joint ventures with other larger groups. It has already agreed a farm-out arrangement with a subsidiary of Canadian Occidental Petroleum which will "ensure that the extensive exploration programme" on two blocks in Libya "without the requirement of any financial contribution from Bula".

Bula also said that negotiations on a second Libyan farm-out production sharing agreement are progressing satisfactorily. And the company has also applied for additional acreage in Libya.

Bula has increased oil and gas production volumes in its North American operation. This higher level is expected to be maintained in the second half when the benefits from higher gas prices for natural gas sales come through. The group said it would continue with its present strategy of acquiring attractive exploration and development opportunities in Libya and elsewhere. These developments will involve farm-outs "so as to minimise the financial exposure of Bula to these exploration and development programmes". The latest results show a rise in sales from £196,000 to £231,000. The operating loss was reduced following the sale of investment, due to a currency translation adjustment. This led to a fall in the loss before tax from £84,000 to £36,000.

Bula confirmed that its investigation into the circumstances relating to the acquisition of its interest in the Salymskoye oilfield has focused on establishing ownership of Mir Oil and the shares which that company held in Bula. This formed part of the consideration paid by Bula on the acquisition of this interest. This investigation led to a High Court order prohibiting the transfer of 73.7 million shares in Bula owned by Mir Oil. Counsel for Bula told the court that there had been suggestions that Bula's former managing director, Mr Jim Stanley, may have had an interest in Mir. Bula said it is taking legal advice on other aspects of the Salymskoye project and "will take whatever further action is believed to be in the best interest of the company and its shareholders". And Bula added that it looks forward to "working fully" with the Government inspector in the pursuit of his investigation into the ownership of the Bula shares held by Mir.