RHEP Rheochem

 

TIDMRHEP 
 
RNS Number : 8718Q 
Rheochem PLC 
11 August 2010 
 

11 August 2010 
                                  Rheochem Plc 
 
                          ("Rheochem" or the "Company") 
 
                                 Trading Update 
 
Rheochem Plc, the oil and gas business with oil services, production, 
development and exploration assets, is pleased to provide the following Trading 
Update. 
 
Results 
 
As previously outlined, most recently at the interims results, the year to 30th 
June 2010 has been one of significant strategic progress balanced by a weaker 
short term trading performance. 
 
The year to 30th June 2010 has been characterised by a reduction in traditional 
exploration & development activity onshore Australia.  In addition, widespread 
flooding in Queensland, in the second half of the year also had the effect of 
delaying a variety of projects.  Despite that, Rheochem does not believe it is 
has suffered any reduction in market share and activity levels have already 
begun to improve. 
 
The Company's full year results are due to be published at the end of August and 
we expect to report revenues in the region of A$20 and EBITDA of between 
A$3m-$3.5m for Oilfield Services, ex-central costs.  Group EBITDA is expected to 
be around break-even. 
 
Oilfield Services 
Australia - Rheochem has a contract to provide services offshore North West 
Shelf valid until end of December 2010 and an onshore services contract valid 
until May 2011.  The Company has tendered to replace the existing contract for a 
three year term onshore contract, with an option for a further two years, and 
expects a decision on this tender within 30 days. 
 
India - Oil and Natural Gas Company India ("ONGC"), a new customer for Rheochem, 
has successfully completed its first well on its Tripura onshore asset in 
Agartala, India and additional work is expected to develop from this.  Work has 
also completed on HOEC's work on the appraisal well at HOEC's Dirok gas 
discovery onshore on Block AAP-ON-94/1 in the state of Assam India.  The 
existing contract has an option for further extension at HOEC's discretion. 
 
Non Traditional Drilling 
Geothermal - Rheochem has been an active participant in the geothermal drilling 
industry for a number of years and has provided services to some of the hottest 
and deepest wells in Australia.  Rheochem has two current contracts in New 
Zealand to provide drilling fluids and services.  Activity and market acceptance 
is now becoming widespread and Australia is set to become a major player in this 
market.  Rheochem has tendered on a significant project where it has been able 
to showcase its ultra-high temperature drilling fluid range. 
 
Coal Bed Methane - Whilst the long term prospects for Coal Bed Methane in 
Eastern Australia are highly positive, the recent flooding in Queensland and 
initial uncertainty in relation to proposed taxation changes has delayed some 
projects.  Rheochem already has a number of contracts in place and tenders 
underway and is well placed to capitalise on the large drilling programmes that 
these projects will require. 
 
Overall, our expectation remains that 2010/2011 revenues will be approximately 
50% higher than 2009/10. 
 
Strategy 
 
As well as developing its Oilfield Services (Drilling Fluids) business 
internationally, Rheochem has an interest in three potentially high impact E&P 
assets in the UK North Sea.  A 10% interest in Block 14/18b which contains the 
Athena discovery; a 100% interest in Block 14/11 containing the large Metis 
prospect; and a 90% interest in Block 14/26b containing the Thunderball gas 
discovery. 
 
The Company continues to review funding options for the Athena Project which 
include but are not limited to project development funding; other debt 
instruments; farm out or trade sale of E&P assets; trade sale of the services 
business, equity raising, and the demerger of the E&P subsidiary with 
independent funding. Rheochem expects to be in a position to report on progress 
later this month. 
 
North Sea Block 14/11 - following the extension to the North Sea Block 14/11 to 
21st December 2010, Rheochem continues to actively market the asset with a view 
to bringing in a farm out partner. 
 
Commenting on the announcement Haydn Gardner, CEO of Rheochem, said: 
 
"The 2010 financial year has been one of strategic development for Rheochem. 
Although the Company has witnessed somewhat weaker short term trading, the Board 
remains confident with a substantial future pipeline and looks forward to 
updating shareholders on the progress with its E&P assets." 
 
In accordance with AIM guidelines, Haydn Gardner, B.App.Sc and CEO of Rheochem 
is the qualified person that has reviewed the technical information contained in 
this press release.  Haydn Gardner has 20 years of experience in the oil and gas 
industry. 
 
                                    - Ends - 
 
Enquiries: 
 
+------------------------------------+--------------------------+ 
| Rheochem Plc                       | +61 (8) 9410 8200        | 
| Haydn Gardner, CEO                 |                          | 
|                                    |                          | 
+------------------------------------+--------------------------+ 
| Financial Dynamics                 | +44 (0) 20 7269 7207     | 
| Edward Westropp / Alex Beagley     |                          | 
|                                    |                          | 
+------------------------------------+--------------------------+ 
| Astaire Securities Plc             | +44 (0) 20 7492 4750     | 
| Shane Gallwey                      |                          | 
|                                    |                          | 
+------------------------------------+--------------------------+ 
| McCall, Aitken, McKenzie           | +44 (0) 20 7464 4062     | 
| Andy Yeo                           |                          | 
+------------------------------------+--------------------------+ 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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