News and Press Releases
Final results for the year ended 31 December 2006
June 13, 2007
Chairman's statement
I became Chairman of Sefton Resources, Inc. at the start
of 2007 at the same time as the appointment of our new British auditors. 2006
was a year of
transition with Group trading profitable at the operating level. The Board
believes that we are now in a stronger position to grow this company by a
mixture of additional financial investment, joint ventures and cash flow.
When we sold TEG Oil & Gas Canada, Inc. we received
$300,000, which has been
reinvested in E. Kansas and surface equipment at Tapia. The balance of monies
was held in escrow by the Canadian Government and has been released since the
year end. At the time we were able to maximize commodity and currency prices
and reinvest the proceeds in an area where the Board believes the Group has
greater opportunities and returns. We have, however, continued to move
cautiously in E. Kansas and have now built up a position to make the most of
the
prospects for gas production in this area. Discussions are underway with several
industry partners to develop these assets by way of joint ventures.
On the oil side, Tapia surface facilities were upgraded and
production remained steady. At Eureka Canyon a geochemical survey of our oil
and gas bearing assets
was encouraging and follow up work is planned. The Operations Reports that
will
be announced shortly will outline in more detail the significant work that
has
been carried out during the year.
FINANCIALS
Oil and gas sales increased to $2,696,180 from $1,809,693
as a result of sustained production from the new wells drilled at Tapia during
2005. Oil and
gas production costs increased to $833,716 from $281,682 primarily as a result
of increased costs associated with permitting, surface facilities and restoring
wells. General administrative costs decreased to $1,478,696 from $1,713,289
resulting 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. To
assist us in this process we decided to appoint an independent engineer, (Reid
W. Ferrill & Associates) who are well known for the conservative nature
of their
assessments to estimate our reserves. They have estimated lower proved developed
reserves and the proved undeveloped reserves down from $74m to $64m including
probable and possible undeveloped gas. But we believe that we are now in a
stronger position to negotiate with financial institutions and we are confident
of being able to raise the necessary funds to take Sefton Resources, Inc. on
to
the next level of development.
BOARD
During the year we decided to split the responsibilities
of the Chairman and Chief Executive along the lines of best practice. I have
assumed the position of
Chairman and Jim Ellerton will continue as CEO. In addition, Norm Thachuk has
had to retire due to ill health and his place on the board has been taken by
Bruce Mackay, who is CEO of TEG MidContinent, Inc.
OUTLOOK
The past year has been one of building facilities, negotiation
and administrative change. The current year has started and with the disposition
of
TEG Canada, the previous litigation settled and the complete replacement and
updating of surface equipment at Tapia Canyon Field. With discussions well
advanced with Banking institutions and potential joint venture partners, we
are
confident that we will be able to develop the business in the coming year and
maximise shareholder value.The Board would like to thank shareholders and staff
for your continued support and look orward to a rewarding 2007.
Jeremy Delmar-Morgan Chairman
June 12, 2007
SEFTON RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND 2005
December 31, 2006 December 31, 2005
$ $
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 68,923 126,109
Accounts receivable 372,174 347,710
Other receivables - related party 90,577 22,517
Prepaid expenses and other assets 19,849 47,287
Total current assets 551,523 543,623
OIL and GAS PROPERTIES FULL COST
METHOD, 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 EQUITY
CURRENT LIABILITIES:
Accounts payable 484,443 774,276
Accrued expenses 35,581 23,685
Accrued expenses - related parties 25,000 79,058
Note payable, current portion 128,810 18,000
Total current liabilities 673,834 895,019
NOTES PAYABLE:
Note payable 705,056 653,227
Note payable - related party - 270,160
705,056 923,387
Less 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 11,079,853
Stock 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 833,716 281,682
Depletion and depreciation 314,145 112,111
General and administrative 1,478,696 1,713,289
Share 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 15,421
Interest 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 OPERATIONS
Income/(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 SHARE
Loss from continuing operations per share
Basic and diluted (0.00583) (0.00647)
Income/(loss) from discontinued operations per
share
Basic and diluted 0.00021 (0.00089)
Net loss per share
Basic 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 in
operating activities:
Depletion and depreciation 314,145 199,713
Amortization of discount on convertible
notes payable 119,000 38,000
Loss on fair value - 266,735
Forgiveness of accounts receivable to
related parties - 148,000
Share 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) 335,894
Accrued expenses - related party (54,058) 32,187
Accrued expenses 11,893 20,988
Net cash provided by (used in) operating
activities 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 of
subsidiary 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 in
subsidiary - 722,071
Proceeds from notes payable - related party - 270,160
Proceeds from notes payable 376,315 90,820
Payments 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 cash
equivalents (57,186) (2,359,404)
Cash and cash equivalents at beginning of
year 126,109 2,485,513
Cash and cash equivalents at end of year 68,923 126,109
Notes
- Financial Statements
The summary financial statements set out above have been extracted from the
Company's audited financial statements for the year ended 31 December 2006,
(not presented herein). Those financial statements were prepared in accordance
with United States Generally Accepted Accounting Principles. These summary
financial statements do not constitute financial statements in accordance
with United States Generally Accepted Accounting Principles as they omit
substantially all the disclosures required by United States Generally Accepted
Accounting Principles. A full set of accounts can be viewed at www.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 Masons
Secretarial Services Limited, City Point, 1 Ropemaker St, London EC2Y 9AH
or at
www.seftonresources.com. The Annual General Meeting of the company will be
held 09 July, 2007 at Nominated Advisors (NOMAD) London Offices; Seymour
Pierce, 20
Old Bailey, London EC4M 7EN.
- Net Loss Per Share
The Company applies the provisions of Statement of Financial Accounting Standard
No. 128, Earnings per Share" (FAS 128). All dilutive potential common
shares
have an antidilutive effect on diluted per share amounts and therefore have
been
excluded in determining net loss per share. The Company's basic and diluted
loss
per share are equivalent and accordingly only basic loss per share has been
presented.
- Dividends
The Directors are not recommending the payment of a dividend.
For further information, contact:
Jeremy Delmar-Morgan, Chairman Telephone: 020 874 84066
John James (Jim) Ellerton, CEO Telephone: 01 303 759 2700
David Millham, Investor Relations Telephone: 020 779 69999