Chairman’s Overview

Last Updated on Tuesday, 13 October 2009 14:17 Written by Administrator Wednesday, 16 September 2009 11:39

The last year commenced with an unusually high oil price of above US$140 per barrel which then dipped below US$50 early this year and at the time of writing was above US$70. This volatility combined with the Global Financial Crisis (‘GFC’) proved a testing time for many companies. Pan Pacific Petroleum NL (‘PPP’) was fortunate to survive this period of uncertainty in a very strong position thanks to unexpectedly high revenue produced from the Tui oil fields which ensured that the Company retained a significant cash balance and no debt. In recognition of the exceptional performance of PPP’s main asset the Company paid a special dividend of three cents a share during the course of the year.

The Tui oil fields continued to produce strongly, but as predicted delivered lower revenues over the period owing to a combination of natural field decline and a falling oil price.

PPP viewed this turbulent period as an opportunity to add to its assets, with an increased deal flow of attractive exploration and development assets coming to the market. The Board’s focus remains on the addition of shareholder value through reinvestment of Tui returns in participation in successful exploration or by making quality acquisitions. However, quality assets have proved to be tightly held despite the down turn, and responsible growth remains a challenging task.

To broaden PPP’s investment horizons potential South East Asian ventures have been reviewed in addition to those located in the Company’s traditional Australia and New Zealand heartlands.

“OUR TEAM WILL CONTINUE TO LOOK FOR OPPORTUNITIES TO GROW THE COMPANY AND TO LEVERAGE OFF OUR STRONG FINANCIAL POSITION.”

The Company entered the GFC significantly undervalued in relation to our cash and asset position, but has enjoyed a significant rerating and recognition during the course of the year. This has been in part due to a return of confidence to the market and an increasing oil price; the entry onto the PPP share register of fellow Tui participant New Zealand Oil & Gas Ltd (NZOG) at the 15% level also had an obvious effect.

During the year the Tui joint venturers decided to carry out further near field drilling in the Tui area which is planned to commence early next year, and the Company entered into a farmin agreement with Premier Oil in Vietnam (subject to waiver of Pre-emption rights by Petro Vietnam, and approval by the Vietnam Government) which saw PPP participate in its first exploration venture outside Australasia. The area in question is extremely attractive and produced a discovery of oil and gas in the Company’s first farmin well. PPP is keen to increase its exposure to oil and gas exploration and production in Vietnam.

In December Mr R A Radford stepped down as Managing Director and Chairman following the appointment of Tom Prudence as Chief Executive Officer and the investment in the Company by NZOG of which he is the Chairman. Mr Radford has been a Director of the Company since 1979 and continues to play a valuable non executive role. The Board wishes to thank him on behalf of the shareholders for his stewardship of PPP over the last 30 years; Directors also acknowledge with thanks the contribution of our employees and consultants during the past year.

PPP has an exciting program in the coming year and our team will continue to look for opportunities to grow the Company and to leverage off our strong financial position.

Mr Neil Tomkinson
Chairman

25 September 2009