Oil production volumes dip hits Melrose shares

Melrose Resources, the Edinburgh-based oil producer and explorer, saw its share price slump further after it revealed production volumes fell below forecast in the first half of the year due to technical problems in Egypt.

However, the firm's production rose 23 per cent to 20,200 barrels a day which resulted in a boost in profits after tax to $33.2 million (20m) in the six months to June, up from $4.1m a year earlier.

Melrose said its problems in Egypt were not related to the recent turmoil which saw president Hosni Mubarak quit following a period of civil unrest.

Last month, the firm announced it would boost its exploration activities by allocating 40 per cent of its budget to drilling and seismic work programmes. Yesterday, it confirmed it would spend about $40m a year over the next three years exploring prospects in Bulgaria, Romania, France and Egypt. Melrose, whose shares fell 10 per cent, has also cut its debt.