Argos Resources' loss narrows, awaits new Falkland drill schedule

19th Sep 2016 12:44

(ShareCast News) - AIM listed oil and gas explorer Argos Resources' half year losses narrowed due to a delay in a drilling programme over its part-owned licence in the Falkland Island basin.For the six months ended 30 June, losses before tax narrowed to a miniscule $4,000, compared to the previous year's $0.8m, as administrative expenses increased 57% to $300,000.At the period end it had $0.5m cash reserves, but no significant, imminent demands for its capital. In February Argos' operator of the PL001 licence, Noble Energy Falklands, which Argos holds a 5% overriding royalty interest, shelved the drilling contract planned for the Eirik Raude drilling rig in the North Falkland basin.Argos, which farmed out its ownership of PL001 to Noble and Edison in September last year, has now agreed a new participation agreement with the two operators that confirmed the continuation of Argos' overriding royalty interest.Noble and Edison International have agreed to make quarterly cash payments totalling £300,000 a year and agree to seek an extension of the second licence phase to allow more time for a well to be drilled to November 2019, after which a third phase of 10 years is available.In August a three-year extension to the PL001 licence, which Argos first won in 1996, was approved by the Executive Council of the Falkland Islands Government and by the UK Secretary of State for Foreign and Commonwealth Affairs.Chairman Ian Thomson, said: "It was very disappointing to have been so close to drilling commencing on our licence, only to suffer the delay which ensued from the cancellation of the rig contract."However, a new participation agreement was completed promptly and in a very co-operative way between the parties ensuring that our overriding royalty interest in the licence continues into the future and our ongoing running costs are covered, so we remain well positioned. Both Noble and the company continue to be very positive about the exploration potential of the licence area."Shares in Argos Resources were down 1.47% to 4.68p at 1244 BST.