Oil and Gas Support Services plc

February 29, 2008 06:49 ET

Oil and Gas Support Services plc: Final Results for the Period ended 30 September 2007

LONDON, UNITED KINGDOM--(Marketwire - Feb. 29, 2008) -



- Maiden pre tax loss of Pounds Sterling 177,308

- New Chief Executive and consultant appointed

I am pleased to deliver the maiden results for Oil and Gas Support Services Plc (PLUS:OGSP).

The Company was admitted to PLUS Markets ('PLUS') in January 2007 with the strategy of seeking to acquire businesses in the global oil and gas sector, focusing upon: the supply of specialist personnel; the procurement of goods and facilities; and the provision of logistics services. The Company raised a total of Pounds Sterling 615,250 gross prior to its admission to PLUS, and incurred costs of Pounds Sterling 76,398, leaving it with Pounds Sterling 538,852 working capital. The cash balance at the end of the period covered by these accounts was Pounds Sterling 448,294.

Since Introduction we have been actively involved in negotiations with three companies, all of which progressed to a late stage towards reaching heads of terms, and in which we have undertaken various stages of due diligence. However, in all three cases the negotiations stalled on the issue of purchase price.

We have identified a number of other companies that fit our initial criteria, which are set out below, and we are accordingly progressing them further.

To enable the Company to achieve its aims, we have now concluded the appointment of a consultant, James Wells, highly experienced in the oil and gas sector, with effect from 1 July 2007. We have also, effective 1 October 2007, appointed a new Chief Executive of the Company, Alastair Watson, a chartered accountant. Alastair is experienced in corporate finance, particularly in the funding of acquisitions and management buy-outs. Alastair and James will both be directly involved in introducing and seeking out potential acquisitions.

The Board remains persistent in seeking to achieve a significant acquisition this year.

Overview of the market

The price of oil has more than doubled over the last three years and gas prices have increased significantly over the same period. The Directors believe that the increase in price of, and demand for, oil and gas will lead to an increase in activity within the oil and gas sector as a whole and will in particular lead to renewed activity in both exploration of new sites and productivity of existing sites. The Directors also believe that such renewed activity in the oil and gas sector will in turn result in an increased demand for related support services and that this presents opportunities for the Company in a growth market sector. The support service areas that the Company will be considering for investment will include services to the oil and gas sector, including petrochemicals, liquefied natural gas, relating to the activities of exploration, production, refining, distribution, and research and development.It is estimated that oil and gas combined will continue to provide approximately 60 per cent. of the overall global energy needs to 2030. The leading oil and gas producing countries are Algeria, Canada, China, Indonesia, Iran, Kuwait, Mexico, Netherlands, Norway, Russia, Saudi Arabia, UK, US and Venezuela. The number of oil producing countries continues to grow and in recent years, new oil fields have been discovered in Turkmenistan, Vietnam, Azerbijan, Kazakhstan, Nigeria, China and Russia. Renewed exploration activity in the United Kingdom has been confirmed by The Department of Trade following the deadline for licensing applications in June 2006. Applications were received by 121 companies for new UK oil and gas exploration and production licenses, which represents a 35-year high. This points to a continuing strong interest in the North Sea by major companies including Amerada Hess, BP, Centrica, Chevron Texaco, Conoco Phillips, Exxon Mobil, National Grid Transco, Schlumberger and Shell.

The demand for support services within the oil and gas sector is expected to rise from renewed activity within the sector as a whole. As oil fields mature, the industry's focus has shifted from searching for new oil discoveries to raising the productivity of mature fields, as well as developing smaller fields that were not previously considered commercially viable.

Business opportunities

The Company is seeking out opportunities in the oil and gas support services sector, with a particular focus on: the supply of specialist personnel; the procurement of equipment and facilities; and the supply of logistics. The Directors will also review other opportunities that arise within support services, specific to the oil and gas sector.


In spring 2006 the upstream oil and gas sector provided employment for 260,000 people. Of these:

- 30,000 people were directly employed by the operators;

- 155,000 were employed by contractors and the supply chain; and

- 75,000 were employed in jobs that were created through the economic activity.

Latest forecasts project that this would have risen to 380,000 jobs, driven by expected growth in operating expenditure and some growth in spending on exploration, although this will depend on rig and labour availability. The Directors also consider that an increase in demand for services in the oil and gas sector will result in a shortage of skilled personnel. Supply of personnel to the oil and gas industry is becoming increasingly challenging, where 50 per cent. of industry employees are estimated to become eligible to retire within the next 13 years. The Directors believe that an increase in activity in the sector will result in an increased demand for workforce skills. The Company intends to actively seek the acquisition of an established specialist personnel supplier for the industry.


The Directors believe that there will be a strategic benefit in consolidating a procurement company, which can manage the supply-chain for projects in the oil and gas sector. Activities in this area would typically involve the competitive sourcing, procurement and supply of oil and gas related facilities, equipment and services.

Logistics management services

The Directors believe that the acquisition of a logistics management services company to the oil and gas sector would fulfil the Company's strategy of becoming a provider of support services to the sector in areas such as transportation of project freight which, due to its size, often requires specialised expertise and sophisticated logistics capabilities to co-ordinate cargo movements from origin to destination.

Acquisition criteria

The Company's criteria are that target businesses for acquisition would typically:

- be in the business of providing support services to the global oil and gas sector;

- be profitable or have significant asset value and should have opportunities for consolidation or further development; and

- be acquired on the basis that a large part of the consideration for any acquisition would be settled by the issue of new Ordinary Shares or other securities in the Company.

On an exceptional basis the Directors will also consider loss-making targets where, in the Directors' opinion, there is a clear opportunity to develop a profitable and attractive business.

Principal business risks

The Company's business is to acquire or buy stakes in companies operating in the oil and gas sector. In this process the Company may well acquire shares in quoted companies where the market price may prove to be volatile, thereby making it difficult for the company to realise its investment due to a potentially illiquid market. Investments in private companies may also be difficult to realise.

Post balance sheet event

In December 2007 the Company bought 250,000 ordinary shares in Africa Oil Exploration Plc, quoted on PLUS, for a total consideration including costs of Pounds Sterling 40,350. On 22 February 2008, at the bid price quoted, this holding was valued at Pounds Sterling 42,500.

Mark Watson-Mitchell

Executive Chairman

The Directors of the Issuer accept responsibility for this announcement.

Notes to editors

Oil and Gas Support Services plc (PLUS:OGSP) was established to acquire and invest in companies operating in the oil and gas support services sector.


For the period from 25 September 2006 to 30 September 2007

Notes 2007

Turnover -
Administrative expenses (189,080)

Operating loss (189,080)
Interest received 11,772

Loss on ordinary activities before taxation (177,308)
Tax on loss on ordinary activities -

Loss for the financial period (177,308)
Loss per share
Basic and diluted 6 (0.43)p

All of the Company's operations are classed as continuing. There were no gains or losses in the period other than those included in the above profit and loss account.


As at 30 September 2007

Current assets
Debtors 3,551
Cash at bank 448,294


Creditors: amounts falling due within one year (14,490)

Net assets


Capital and reserves
Called up share capital 266,313
Share premium account 348,350

Profit and loss account

Shareholders' funds




1. The above audited results cover the period from incorporation on 25 September 2006 to 30 September 2007.

2. The directors do not recommend the payment of a dividend.

3. The financial information in this release has been extracted from the audited accounts.

4. The financial information set out above does not constitute the Company's statutory accounts for the period ended 30 September 2007, but it is derived from those accounts. Statutory accounts for 2007 will be delivered to the Registrar of Companies following the Company's Annual General Meeting, which is due to be held on 28 March 2007.The auditors have reported on these accounts, their report was unqualified and did not contain statements under section 237(2) or 237(3) of the Companies Act

5. Copies of the full accounts will be filed on the Company's website and mailed to shareholders as soon as they are produced.

6. Loss per share:

The basic loss per share is based upon a loss of Pounds Sterling 177,308 and the weighted average number of shares of 40,772,266 in issue during the period. There are no potential dilutive instruments in issue.

7. Post balance sheet event:

In December 2007 the Company bought 250,000 ordinary shares in Africa Oil Exploration Plc, quoted on PLUS, for a total consideration including costs of Pounds Sterling 40,350. On 22 February 2008, at the bid price quoted, this holding was valued at Pounds Sterling 42,500.

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