M&S Resources slides into loss

A REASSESSMENT of the oil reserves likely to be recoverable from the Emerald field in the North Sea pushed Midland & Scottish Resources into a pounds 46.4m loss in the 1991 calendar year compared with profits of pounds 7.8m last time.

The group has written pounds 37.5m off the expenditure capitalised on the field, cutting the remaining balance sheet value to pounds 56m.

Jim Murray, the finance director, would not reveal the number of barrels which the group now estimates can be extracted from the field, but said it was higher than 21m. Four years ago, the reserves were estimated at 43m barrels.

The level of reserves has been a key factor in the dispute between MSR and Trafalgar House over payment for the Emerald rig, built by Davy Construction, which was acquired by Trafalgar last year. Payment of the second instalment of the takeover depends on MSR obtaining a new letter of credit to pay for the rig, which looks increasingly unlikely, partly because of the reduction in reserves estimates.

Mr Murray said the group is still in discussions with its bank about revalidating the letter of credit, which expired at the end of June. He said it would be 'difficult' to obtain. MSR has, however, chartered the rig from Trafalgar and it is expected to start producing oil shortly.

The loss per share was 22p, compared with 5p of earnings last time. There is again no dividend.