Cluff Natural Resources' shares rise as it finds gas prospects in North Sea

The AIM listed company said it identified prospects on its P2248 licence in the southern North Sea in the Carboniferous and Triassic, which could increase prospective resources estimates to about 3trn cubic feet of natural gas.

In the six months ended 30 June, the company incurred a reduced loss of £662,473 in the period, compared to a loss of £74,668 in 2015, which reflected efforts to reduce costs. The loss includes a non-cash share based payment charge of £62,240.

Cash used in operations fell to £665,836 from £807,972 last year. In addition, £174,189 of expenditure incurred was capitalised, due to costs directly related to the development of its six southern North Sea licences.

On 6 April 2016 the Company raised £727,000, before expenses, through placing and subscription of about 58m new ordinary shares of 0.5p each at 1.25 pence per share.

Cash balance was £955,000 down 51% from in the same period last year. The company said its funding position remains unchanged from it last announcement in December 2015 and it has adequate financial resources to cover its exploration and development programme at least until the end of 2016. Further funding will be required to fully implement its strategy most likely raised by way of equity.

Cluff expects the carboniferous cadence prospect and the potential advantages associated with the bunter prospects on the P2248 licence to generate interest from companies operating in the region to attract farm out partners.

In February the company extended its memorandum of understanding with Halliburton, an oilfield services company, for two years to February 2018 to accelerate the development of its assets.

Chairman and chief executive Algy Cluff, said: “While many larger oil and gas companies are faced with levels of debt and work commitments which are unsustainable, our company remains debt free and without onerous work commitments.

“The UK gas price has been encouragingly stable recently. The southern North Sea geology is highly prospective and in the southern North Sea there exists infrastructure together with access to market. I believe that these factors, combined with a benevolent government attitude, would render the UK's southern North Sea one of the most prospective offshore gas areas in the world.”

Shares in Cluff Natural Resources were up 15.74% to 1.36p at 1415 BST.