Regal Petroleum shares suffer fresh collapse after warning on reserves

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The Independent Online

Shares in Regal Petroleum collapsed a further 30 per cent yesterday after it slashed its forecast for the amount of oil in its controversial Greek field and warned that it could also restate its likely reserves in other countries.

Shares in Regal Petroleum collapsed a further 30 per cent yesterday after it slashed its forecast for the amount of oil in its controversial Greek field and warned that it could also restate its likely reserves in other countries.

The company has been under fire since admitting, within weeks of a £35m equity fundraising, that drilling at its most promising Greek wells had shown oil could not be extracted in commercial quantities.

At its preliminary results yesterday, the company abandoned previous predictions that its Greek fields contained 80 million barrels of recoverable reserves. It said it would revert to the previous estimate by an independent oil consultancy, Troy Ikoda, that there are only 24 million barrels available.

The change takes Regal back to the situation when it bought its Greek assets, unwinding the supposed uplift to the reserves that had contributed to its strong share price performance last year, when it more than tripled in value.

The shares were off 33p to 73.5p yesterday, and investors, including the financier Robert Bonnier, who bought into the fundraising at 390p in April, have now lost 81 per cent of their investment.

Regal cancelled meetings with the news media yesterday and refused to answer further questions until the outcome of a review of its assets. The estimate of 24 million barrels in Greece is an interim estimate that may change, it said, while independent reserve auditors are examining its assets in Ukraine, Egypt and Romania.

Regal posted a much wider than expected loss of $13.7m (£7.5m) for 2004, because the downgrade to reserves increased the depreciation charge, while operational difficulties and hedging losses knocked the performance of its oil-producing assets in Greece. Frank Timis, the founder, is stepping back from day-to-day running of the company, which is now looking for a chief executive.

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