Second quarter 2007 presentations – growth on track!

To view the presentation including the financial report for 2nd quarterplease visit this link.

The quarterly financial result is according to plan and shows that the Group is undertaking substantial exploration activities, primarily on the NCS, supported by a successful build-up in onshore production in the US. In the second quarter 2007 the average production has increased by 170% compared to average production in the first quarter of 2007.

Rocksource’s has during the quarter finalised the financing of the Group with the issue of NOK 200 million in a 5 year Senior secured Bond Loan. This follows the equity issue of NOK 78 million and the bank loan facility of NOK 150 million in first quarter, and enables the Group to follow its operational growth strategies.

Revenue from the oil and gas production totalled NOK 14.0 million in the 2nd quarter, compared to NOK 1.8 million 2nd quarter last year. The production in the 2nd quarter was 216.4 million cubic feet of gas considerably up from 2nd quarter 2006 of 29.1 million cubic feet of gas. The production of oil condensate was 8,844 barrels in the quarter, up from 1,270 barrels same quarter last year. The average barrels of oil equivalents per day (boepd) in 2nd quarter were 522, up from 67 boepd in the same period last year, and up from 193 boepd in Q1 2007, (5.61mcf equivalent to 1 boe) With the current drilling campaign Rocksource is on track to achieve its goals of a production of 1,000 boepd before the end of 2007 and 2,000 boepd before the end of 2008.

The total revenue for the 2nd quarter amounted to NOK 14.0 million, compared to NOK 3.0 million 2nd quarter last year.

The Group’s operating expenses in 2nd quarter of NOK 83.1 million is higher than 2nd quarter last year mainly due to the ongoing EM acquisition on the Norwegian Continental shelf (NOK 37.6 million) as well as purchases of seismic data (NOK 11.1 million). The payroll cost and other operating costs show the cost of establishing a uniquely skilled organisation. Costs related to the option program in the quarter was NOK 1.1 million, of which NOK 0.1 million had a cash effect.

Direct exploration costs relating to the NCS totalled NOK 49.3 million, of which 78% - equal to NOK 38.4 million - have been booked as a refundable taxable income in 2nd quarter.

The periodic result for the 2nd quarter was a loss of NOK -36.6 million, compared to a loss same quarter last year of NOK -19.0 million. This gives a basic and diluted earnings per share of NOK -0.064

The Group had a cash flow of NOK 133.2 million in 2nd quarter (NOK -32.7 million for 2nd quarter 2006). Investing activities, mainly relating to the US assets, accounted for NOK -34.3 million. The net capital increase from the bond issue amounted to NOK 194.3 million. The Group’s cash balance at the end of the quarter was NOK 255.0 million.

The Group ’s working capital at the end of this quarter is NOK 268.2 million (NOK 135.6 million in 1st quarter 2007) and the equity equalled NOK 352.5 million, down NOK 34.5 from NOK 387.0 in 1st quarter 2007, giving the Group an equity ratio of 57.3% down from 92.4% in first quarter. The Group had NOK 194.5 million related to the bond issue. There has been no withdrawal from the NOK 150 million credit facility.

Oslo, 15.8.2007
Rocksource ASA

Trygve Pedersen
CEO

Tel. +47 90 09 77 41

Published: 15.08.2007