Melrose optimistic despite drop in profits

MELROSE Resources' full-year pre-tax profits have fallen sharply after being hit by low oil prices, but the Edinburgh-based oil and gas explorer expects profit and revenue to grow significantly in 2010 as commodity prices pick up.

The company – which has operations in Egypt, Bulgaria, Romania and the United States – said it would dedicate about 30 per cent of its $142 million (95m) capital budget for exploration.

Melrose expects two gas fields to come on stream in Bulgaria this year, and forecasts the country will contribute about 40 per cent of its total revenue, up from less than 10 per cent and returning to historic levels for the country.

Chief executive David Thomas said: "They'll have a fairly major impact because the gas prices in Bulgaria are very strong. The developments are also low-cost, so we've got a very strong margin."

For the year to 31 December, the company posted a pre-tax profit of $30.9m, compared with $143.3m a year earlier. Revenue fell 40 per cent to $224.4m.

Melrose raised its full-year dividend by 10 per cent to 3.1p.