26 June 2007 MERIDIAN PETROLEUM PLC ("Meridian" or the "Company") 2006 PRELIMINARY RESULTS Meridian Petroleum, (AIM: MRP) the independent oil and gas exploration and production company with key assets in the USA and Australia, today announces preliminary results for the year ended 31 December 2006. Highlights - Contingent and Prospective Resources of the Group independently assessed as 732 – 882 bcf (2005 434 bcf) - Deep gas rights acquired at Calvin Field adding 58 bcf contingent resources. 50/50 joint venture with Ensight signed - Prospective resources of the Alabama Coal Bed Methane prospect assessed as 240 – 390 bcf - Lease signed at Orion field, Michigan - Board strengthened in the year and early 2007 with Angelo Baskaran joining as Chief Financial Officer and Stephen Gutteridge joining as Non-executive Chairman Post-period highlights - Raised £1.78 million via a placing to continue development of the Company - Native Title Agreement finalised, allowing PEL grant in Australia - Production due to commence in second half of Q3 2007 Tony Mason, CEO of Meridian Petroleum, “We gained further progress in 2006 which I am pleased to confirm has continued into 2007. We expect these achievements to deliver production and cash flow in the second half of 2007 and mark a significant step in the growth of the Company.” For further information contact: Meridian Petroleum Plc Stephen Gutteridge, Chairman +44 (0) 20 7811 0140 Tony Mason, CEO +1 713 599 1611 Ambrian Partners Neil Maclachlan / Tim Goodman +44 (0) 20 7776 6400 Parkgreen Communications Clare Irvine / Erica Nelson +44 (0) 20 7851 7480
MERIDIAN PETROLEUM PLC 2006 PRELIMINARY RESULTS Chairman’s Statement Having joined Meridian Petroleum plc as Chairman in April 2007, I am happy to let Tony Mason, Chief Executive, update our shareholders on the events of 2006 in his Statement and Review of Operations. I am however delighted to have this early opportunity to put on record my own perspective on your Company’s potential. In terms of market capitalisation, Meridian Petroleum is currently a small company, but one which owns three potentially significant gas-producing assets – the Calvin Deep and Coal Bed Methane prospects in the USA and the Delores prospect in Australia. The Board of Meridian is committed to putting in place realistic and wellresourced plans to deliver value from these assets at the earliest opportunity. In order to achieve this we needed to strengthen our financial position by generating our own cashflow from production and raising further money from our shareholders. The latter we have achieved through the further placing of shares in June 2007, and we enter the second half of this year with three gas wells about to come on-stream. We now have the platform to move forward on our major assets, any one of which is capable of transforming the prospects and value of the company. The fact that each of these opportunities is different in terms of the challenges, risks and potential rewards, makes this a fascinating time for Meridian Petroleum and its shareholders.
Stephen Gutteridge Non-Executive Chairman 26 June 2007
MERIDIAN PETROLEUM PLC 2006 PRELIMINARY RESULTS Chief Executive Officer’s Statement and Review of Operations 2006 was a year of further progress for Meridian Petroleum, and I am pleased to confirm that progress has continued through into 2007. Indeed, we expect that the achievements of 2006 will deliver production and cash flow for the company in the second half of 2007. During 2006, despite some frustrating delays, we signed the lease on the Orion field and confirmed the commerciality of the Calvin 36 well. Both of these assets are expected to contribute to production in 2007. In May 2006 we received independent assessments from Scott Pickford (part of RPS Energy) on two of our potentially most significant assets. The Prospective Resources of our Delores prospect in Australia was confirmed to have a best estimate of 432 Bcf. For our Coal Bed Methane opportunity in Alabama, USA, they estimated prospective reserves at 240-390 Bcf. Through the second half of 2006, the Company continued to increase its assets and make progress with its plans to exploit existing opportunities. In July, the rights to exploit the deep gas potential in the Calvin field were acquired and in order to move the development programme forward, a 50/50 joint venture with Ensight Partners was signed in November. Ensight bring significant local expertise and experience to the asset and are located in Shreveport, Louisiana USA. Also in July 2006, the Company signed the Native Title Agreement for the PEL 132 Licence in Australia which contains the Delores prospect. This was followed by the official execution of the Agreement by the South Australian Government in April 2007. There were challenges in 2006. In a tight market it became increasingly difficult and costly to obtain the equipment and technical skills needed by the Company to sustain its development plans. We also experienced operator problems on some wells, principally Calvin 36#1 and together these caused significant delays to our plans. The Company is taking steps to ensure that the required level of resources is available for future needs. During the year the Company raised $4.7 million by way of 3 share placements and more recently in 2007 the Company raised a further $3.4 million. The Company’s priorities for 2007 are very clear: to bring production on line from the US gas operations as soon as practicable and to dedicate the resources necessary to move forward with the large opportunities of Calvin Deep, Coal Bed Methane and Delores in Australia. As part of this prioritisation, the Board decided in 2006 not to expend further resources on the Emery Hudson field. Consequently this asset has been fully written off in the 2006 accounts. The Company has strengthened its Board in 2006 and early 2007, and I am pleased to welcome Angelo Baskaran as Chief Financial Officer, Stephen Gutteridge as Non-Executive Chairman and David Wake-Walker as NonExecutive Director to the Board. I would like to record my thanks to Don Caldwell who has stepped down as Chairman but remains with us as a Non-Executive Director. My thanks also go to our Board, staff and contractors who have all contributed to our progress this year. In 2007 we are on track to join the small group of AIM-listed oil and gas companies with production and this will mark a significant step in the growth of Meridian. We will use that base to ensure effective and timely exploitation of our attractive assets in the US and Australia.
Tony Mason Chief Executive Officer 26 June 2007
MERIDIAN PETROLEUM PLC 2006 PRELIMINARY RESULTS Consolidated Income Statement
Year ended 31 December 2006 2006 Note Revenue Cost of sales Production costs Gross loss Administrative expenses Impairment charge Operating loss Investment Income – interest on bank deposits Loss before taxation Taxation Loss for the year attributable to equity shareholders US $000 8 2005 US $000 160
(63) (55) (1,845) (4,065) (5,965) 21 (5,944) -
(225) (65) (1,225) (390) (1,680) 32 (1,648) -
2
(5,944)
(1,648)
Loss per share – basic and diluted (cents)
3
(8.3)
(2.7)
MERIDIAN PETROLEUM PLC 2006 PRELIMINARY RESULTS
Statement of recognised income and expenditure Year ended 31 December 2006 2006 US $000 Total (expense)/income recognised direct in equity Currency translation differences- gain/(loss) Loss for year 2005 US $000
105 (5,944)
(118) (1,648)
Total recognised income and expense for the year
(5,893)
(1,766)
MERIDIAN PETROLEUM PLC 2006 PRELIMINARY RESULTS
Consolidated balance sheet 31 December 2006 Note 2006 US $000 Non-current assets Intangible assets Property, plant and equipment 646 2,020 2,666 Current assets Trade and other receivables Cash and cash equivalents 234 2,332 2,566 Total assets Current liabilities Trade and other payables Total liabilities Net assets 211 211 5,021 298 298 6,035 5,232 141 370 511 6,333 424 5,398 5,822 2005 US $000
2
Equity Called up share capital Share premium Retained earnings Translation reserve Other reserves Total equity attributable to the equity holders
7,362 6,565 (9,157) 112 139
5,925 3,316 (3,213) 7 -
5,021
6,035
MERIDIAN PETROLEUM PLC 2006 PRELIMINARY RESULTS
Consolidated Cash Flow Statement Year ended 31 December 2006 Note 2006 US $000 Cash flows from operating activities Cash consumed by operations Interest received 4 (1,953) 21 (1,932) Cash flows from investing activities Expenditure on exploration and evaluation assets Expenditure on development and production assets (1,036) 32 (1,004) 2005 US $000
(459)
(807)
(450)
(382)
(909) Cash flows from financing activities Proceeds from issue of shares 4,685
(1,189)
1,189
Net increase/(decrease) in cash and cash equivalents Opening cash and cash equivalents at beginning of year Exchange gains/(losses) on cash and cash equivalents
1,844
(1,004)
370
1,430
119
(56)
Closing cash and cash equivalents
2,332
370
MERIDIAN PETROLEUM PLC 2006 PRELIMINARY RESULTS
1. Accounting policies and basis of preparation The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2006 or 2005 but is derived from the 2006 accounts. Statutory accounts for 2005, which were prepared under UK Generally Accepted Accounting Practice (UK GAAP) and upon which the auditors issued a modified opinion, have been delivered to the Registrar of Companies. Statutory accounts for 2006, prepared under International Financial Reporting Standards (IFRS) as adopted for use in the EU, will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 237 (2) or (3) of the Companies Act 1985. The accounting policies adopted for use in the preparation of the 2006 Preliminary Results and the 2006 Annual Financial Statements were included in the Interim Results for the six months ended 30 June 2006 released on 26 June 2007. The disclosures and reconciliations for first time adoption of IFRS are included in those Interim Results and in the Annual Report for the year ended 31 December 2006. The Annual Report will be sent out to shareholders on 29 June 2007
2. Property, plant and equipment - Impairment charge The Directors commissioned a detailed review of the Group’s reserves by their consultants RPS Energy. On basis of consultation with RPS Energy, in conjunction with a review of other data available, they have taken view that the Emery Hudson field is impaired and that expending further resources on developing the field not be commercially viable. Accordingly an impairment charge of $4,065,000 has been made to reduce carrying value of the asset to nil. the the will the
MERIDIAN PETROLEUM PLC 2006 PRELIMINARY RESULTS
3. Loss per Share
2006 Loss Loss for the purposes of basic earnings per share being net loss attributable to equity holders of the parent US $000
2005 US $000
5,944
1,648
Number Number of shares Weighted average number of ordinary shares for the purposes of basic and diluted loss per share
Number
71,310,566
59,490,453
4. Notes to the cash flow statement 2006 US $000 Loss from operations Adjustments for: Depreciation and impairment of property, plant and equipment Amortisation of intangible assets Share based payment Foreign exchange difference (5,965) 2005 US $000 (1,680)
4,065 139 (13)
454 (142)
Operating cash flows before movements in working capital (Increase)/decrease in receivables (Decrease)/increase in payables
(1,774) (80) (100)
(1,368) 454 (122)
Net cash consumed by operating activities
(1,953)
(1,036)