13th Jun 2007 07:01
Sefton Resources Inc13 June 2007 Sefton Resources, Inc. ("Sefton" or "The Company") Final results for the year ended 31 December 2006 Chairman's statement I became Chairman of Sefton Resources, Inc. at the start of 2007 at the sametime as the appointment of our new British auditors. 2006 was a year oftransition with Group trading profitable at the operating level. The Boardbelieves that we are now in a stronger position to grow this company by amixture of additional financial investment, joint ventures and cash flow. When we sold TEG Oil & Gas Canada, Inc. we received $300,000, which has beenreinvested in E. Kansas and surface equipment at Tapia. The balance of monieswas held in escrow by the Canadian Government and has been released since theyear end. At the time we were able to maximize commodity and currency pricesand reinvest the proceeds in an area where the Board believes the Group hasgreater opportunities and returns. We have, however, continued to movecautiously in E. Kansas and have now built up a position to make the most of theprospects for gas production in this area. Discussions are underway with severalindustry partners to develop these assets by way of joint ventures. On the oil side, Tapia surface facilities were upgraded and production remainedsteady. At Eureka Canyon a geochemical survey of our oil and gas bearing assetswas encouraging and follow up work is planned. The Operations Reports that willbe announced shortly will outline in more detail the significant work that hasbeen carried out during the year. FINANCIALS Oil and gas sales increased to $2,696,180 from $1,809,693 as a result ofsustained production from the new wells drilled at Tapia during 2005. Oil andgas production costs increased to $833,716 from $281,682 primarily as a resultof increased costs associated with permitting, surface facilities and restoringwells. General administrative costs decreased to $1,478,696 from $1,713,289resulting in the overall loss reducing to $592,777 from $732,464. Non-cash expenses from depletion, depreciation, foreign currency transactions,portions of interest expense and share based compensation total $937,795. GENERAL We continue to look at the various opportunities to raise additional funds. Toassist us in this process we decided to appoint an independent engineer, (ReidW. Ferrill & Associates) who are well known for the conservative nature of theirassessments to estimate our reserves. They have estimated lower proved developedreserves and the proved undeveloped reserves down from $74m to $64m includingprobable and possible undeveloped gas. But we believe that we are now in astronger position to negotiate with financial institutions and we are confidentof being able to raise the necessary funds to take Sefton Resources, Inc. on tothe next level of development. BOARD During the year we decided to split the responsibilities of the Chairman andChief Executive along the lines of best practice. I have assumed the position ofChairman and Jim Ellerton will continue as CEO. In addition, Norm Thachuk hashad to retire due to ill health and his place on the board has been taken byBruce Mackay, who is CEO of TEG MidContinent, Inc. OUTLOOK The past year has been one of building facilities, negotiation andadministrative change. The current year has started and with the disposition ofTEG Canada, the previous litigation settled and the complete replacement andupdating of surface equipment at Tapia Canyon Field. With discussions welladvanced with Banking institutions and potential joint venture partners, we areconfident that we will be able to develop the business in the coming year andmaximise shareholder value.The Board would like to thank shareholders and stafffor your continued support and look forward to a rewarding 2007. Jeremy Delmar-Morgan ChairmanJune 12, 2007 SEFTON RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005 December 31, 2006 December 31, 2005 $ $ASSETSCURRENT ASSETS:Cash and cash equivalents 68,923 126,109Accounts receivable 372,174 347,710Other receivables - related party 90,577 22,517Prepaid expenses and other assets 19,849 47,287 Total current assets 551,523 543,623 OIL and GAS PROPERTIES FULL COSTMETHOD, net 7,517,673 7,524,772 EQUIPMENT AND VEHICLES, net 47,957 50,126 TOTAL ASSETS 8,117,153 8,118,521 LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable 484,443 774,276Accrued expenses 35,581 23,685Accrued expenses - related parties 25,000 79,058Note payable, current portion 128,810 18,000 Total current liabilities 673,834 895,019 NOTES PAYABLE:Note payable 705,056 653,227Note payable - related party - 270,160 705,056 923,387Less discount - (119,000) Total notes payable 705,056 804,387 ASSET RETIREMENT OBLIGATION 134,440 163,111 Total liabilities 1,513,330 1,862,517 MINORITY INTEREST - 722,072 STOCKHOLDERS EQUITY:Common stock, no par value,200,000,000 shares authorized,115,109,527 (December 31, 2006),1,493,369,500 (December 31, 2005,shares issued and outstanding 12,742,521 11,079,853Stock subscription receivable (30,047) (30,047)Treasury stock (58,602) (58,602)Accumulated (deficit) (6,050,049) (5,521,799)Accumulated other comprehensive loss - 64,527 Total stockholders equity 6,603,823 5,533,932 TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY 8,117,153 8,118,521 CONSOLIDATED STATEMENT OF OPERATIONS For the years ended December 31 2006 2005 $ $ OPERATING REVENUE:Oil and gas sales 2,696,180 1,809,693 OPERATING COSTS AND EXPENSES:Oil and gas production 833,716 281,682Depletion and depreciation 314,145 112,111General and administrative 1,478,696 1,713,289Share based compensation 447,957 -Loss on fair value of guarantee - 266,735 Total costs and expenses 3,074,514 2,373,817 PROFIT/(LOSS) FROM OPERATIONS (378,334) (564,124) OTHER INCOME (EXPENSE)Interest income 6,738 15,421Interest expense (186,247) (84,193)Foreign currency transaction losses (56,693) (11,163) Total other income expense (236,202) (79,935) Loss from continuing operations (614,536) (644,059) DISCONTINUED OPERATIONSIncome/(loss) from operations of TEG Canada,Inc 6,894 (88,405)Gain on disposal of TEG Canada, Inc 14,865 - 21,759 (88,405) Net loss (592,777) (732,464) LOSS PER SHARELoss from continuing operations per shareBasic and diluted (0.00583) (0.00647) Income/(loss) from discontinued operations pershareBasic and diluted 0.00021 (0.00089) Net loss per shareBasic and diluted (0.00562) (0.00736) CONSOLIDATED STATEMENT OF CASH FLOWS For the years ended December 31 2006 2005 $ $ CASH FLOWS FROM OPERATING ACTIVITES:Net loss (592,777) (732,464)Adjustments to reconcile net loss to nest cash used inoperating activities:Depletion and depreciation 314,145 199,713Amortization of discount on convertiblenotes payable 119,000 38,000Loss on fair value - 266,735Forgiveness of accounts receivable torelated parties - 148,000Share based compensation 447,957 -Gain on disposal of subsidiary (14,866) - Changes in operating assets and liabilities:Accounts receivable 96,324 (288,510)Prepaid expenses 27,438 (5,373)Other assets - related party (68,060) (12,544)Accounts payable (241,344) 335,894Accrued expenses - related party (54,058) 32,187Accrued expenses 11,893 20,988 Net cash provided by (used in) operatingactivities 45,652 2,626 Cash flows from investing activities:Purchase of oil and gas properties (738,790) (3,314,760)Purchase of property and equipment (27,492) (25,951)Proceeds on account from disposal ofsubsidiary 284,728 -Net cash transferred with subsidiary (18,060) - Net cash used in investing activities (499,614) (3,340,711) Cash flows from financing activities:Proceeds from sale of Minority interest insubsidiary - 722,071Proceeds from notes payable - related party - 270,160Proceeds from notes payable 376,315 90,820Payments on notes payable (75,176) (93,484)Proceeds from sale of common stock 38,944 - Net cash provided by financing activities 340,083 989,567 Effect of exchange rate changes on cash 56,693 (10,886) Net increase/(decrease)in cash and cashequivalents (57,186) (2,359,404) Cash and cash equivalents at beginning ofyear 126,109 2,485,513 Cash and cash equivalents at end of year 68,923 126,109 Notes1. Financial StatementsThe summary financial statements set out above have been extracted from theCompany's audited financial statements for the year ended 3 1 December 2006,(not presented herein).Those financial statements were prepared in accordancewith United States Generally Accepted Accounting Principles. These summaryfinancial statements do not constitute financial statements in accordance withUnited States Generally Accepted Accounting Principles as they omitsubstantially all the disclosures required by United States Generally AcceptedAccounting Principles. A full set of accounts can be viewed atwww.seftonresources.com. The annual report of accounts will be posted to shareholders by 20 June, 2007,copies of which will be available from the Company Secretary, Pinsent MasonsSecretarial Services Limited, City Point, 1 Ropemaker St, London EC2Y 9AH or atwww.seftonresources.com.The Annual General Meeting of the company will be held09 July, 2007 at Nominated Advisors (NOMAD) London Offices; Seymour Pierce, 20Old Bailey, London EC4M 7EN. 2. Net Loss Per ShareThe Company applies the provisions of Statement of Financial Accounting StandardNo. 128, Earnings per Share" (FAS 128). All dilutive potential common shareshave an antidilutive effect on diluted per share amounts and therefore have beenexcluded in determining net loss per share.The Company's basic and diluted lossper share are equivalent and accordingly only basic loss per share has beenpresented. 3. DividendsThe Directors are not recommending the payment of a dividend. For further information, contact:Jeremy Delmar-Morgan, Chairman Telephone: 020 874 84066John James (Jim) Ellerton, CEO Telephone: 01 303 759 2700David Millham, Investor Relations Telephone: 020 779 69999 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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