Oil explorer cashes in on price rises

OIL explorer Burren Energy upgraded its reserves estimates for a key field today after making 'substantial' progress in its first year as a listed company.

The London-based firm unveiled a 163% hike in pre-tax profits to £48.5m for 2004, ahead of analysts' expectations, as it benefited from sky-high oil prices.

Reserve estimates for oilfields in Congo, including the key M'Boundi site in which Burren has a 35% stake, were upgraded to 64.5m barrels from 23m previously.

This helped increase the group's proven and probable reserves by 26m barrels to 146m barrels, although this would have been higher if it was not for Burren's use of a higher oil price forecast.

Burren, which started operating in 1994, has its core producing assets in the Caspian state of Turkmenistan and the Republic of Congo, West Africa.

It employs some 20 people at its London headquarters, 750 in Turkmenistan and contracts out work in Congo to another company.

The group produced an average of 14,200 barrels of oil per day in the year to 31 December, 74% higher than last year.This hike in production, together with 'substantially higher' oil prices, helped the group more than double net profits for the third consecutive year to £38.8,, despite the weakening of the US dollar.

Sales rose to £87.1m, up from £47.1m last time. The company also announced a maiden dividend of 3p a share.Chief executive Finian O'Sullivan said: 'During 2004, Burren has made substantial strides forward.'

Burren said the outlook for 2005 was good and that it would continue to rapidly develop its assets in order to speed up production and make the most of another year of high oil prices.

The cost of crude oil has soared significantly over the past year, and both New York light crude and London's Brent oil hit fresh highs today.

The firm said it planned to lift net production from its present level of 20,400 barrels a day to at least 24,000 by the end of the year.

Analyst Richard Slape at stockbroker Seymour Pierce said the results looked 'highly impressive'. The upgrading of the Congo reserves beat his expectations and was likely to lead Seymour Pierce to raise its estimates of Burren's net asset value. The shares were up 13p at 533p in mid-afternoon trading.