10 May 2005
Offshore Hydrocarbon Mapping plc announces interim
results for the half year ended 28 February 2005
[extract below]
Offshore Hydrocarbon Mapping plc (OHM), the electromagnetic remote sensing company, today announces its preliminary half year results for the period ended 28 February 2005.
Highlights
 Half year revenues of £1.5 million (2004 £2.3 million);
Half year pre tax losses of £1,688,000 (2004 profit £194,000);
Capacity increased with mobilisation of second crew
Significant progress in extending operating envelope into shallow water Operations
The Company continued to provide operations under a long term contract with a major international oil company through most of the half year, with this contract coming to a successful scheduled conclusion in January.
As reported in full year results in October, operations were impacted by the loss of the DASI III transmitter system in deep waters off Africa. Fortunately we were able to replace this rapidly with a new generation DASI IV system, limiting the impact on earnings which had been caused by lost time and the expenses of getting the replacement equipment to the vessel.
A second field crew comprising another DASI IV transmitter and a number of our latest generation electromagnetic receivers was mobilised and this crew was deployed on two research and development projects in the North Sea focused on extending the capabilities of the CSEMI technique into shallower water operating environments. Under our current accounting policy, the costs associated with these surveys have been largely expensed.
Demand for our data processing capabilities continues to grow and a number of orders for a range of oil companies were taken and begun within the reporting period. Our new receivers, now in their third generation, have successfully undergone field trials meeting their design objectives, and have subsequently proved to be reliable and to provide data of the highest quality on recent surveys.
Research and development – Shallow Water
The company’s research efforts have been heavily focused on applying the CSEMI technique to shallower water conditions with a view to increasing the potential market for the technique.
The application of the CSEMI technique to water depths shallower than a few hundred metres has historically been problematic. OHM has devoted a significant amount of research effort to solving this problem in conjunction with the ITF, a Norwegian oil company, and a consortium of international oil companies. In the first half of 2005, two research surveys were conducted by OHM to gather data to examine some of the theoretical solutions to the problems identified by OHM’s research work. Both surveys provided data that showed that it is possible, with amendments to our technique, to use the CSEMI technique to image resistivity structure in the earth in water depths of 100 metres or less. OHM now believes that with careful survey design and implementation, the CSEMI technique can be used as a hydrocarbon indicator in many shallow water situations. We anticipate that at least one major oil company will shortly be commissioning work in just such an area.
Financial
The results for the accounting period up to the 28 February show revenues of £ 1.5 million and a net loss of £ 1.7 million. Cash flow from operations was £ 1.3 million and cash outflow after capital expenditure was £ 3.0 million. The Company’s cash balance was £ 7.0 million.
No interim dividend is declared
The Company’s auditors, BDO Stoy Hayward LLP, have produced an independent review of the interim accounts and notes.
Prospects
As we stated in October’s full year results, much of our focus this year has been on encouraging industry adoption of the CSEMI technique, and these efforts are beginning to bear fruit. We have taken orders from a number of companies for work in the second half of the year, and are pleased to note that we have potential new clients showing interest in the technique.
Early in our second half year, OHM undertook a significant contract for Dana Petroleum in Mauritania. Field operations have now been completed and went extremely well. Early indications are that data quality is extremely high, and the data are currently undergoing advanced processing before being interpreted. It is extremely significant that successful, leading-edge exploration companies like Dana Petroleum are adopting the CSEMI technology and recognizing the value it can create for their businesses.
Industry interest in non-exclusive survey programs that we have proposed in Europe and Africa has been good and we expect to get good levels of support for at least one of these programs. As more and more CSEMI surveys are done and the scale of the value created by our services becomes fully appreciated, we expect there to be a strong growth in demand. Much of management’s current efforts are focused on ensuring that we are ready to supply this market and that we have the capacity to grow and the procedures to manage that growth.
In this period of transition towards wider adoption, forecasting of workflow can be difficult and equipment utilisation variable. We have also continued to invest significantly in research and development as we believe this is key to our future growth potential and competitive differentiation. With increasing industry interest and positive responses to our work from existing clients we are confident of a swift return to good levels of profitability as we move beyond this phase in our development.
Dr Pierre Jungels CBE
Chairman
9 May 2005
Ends
For further information, please contact:
Peter Reilly/Patrick d’Ancona, Aquila Financial 020 7849 3319/3326
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