AGM Notice of Meeting, Proxy and Annual Report
AGM Notice of Meeting, Proxy and Annual Report

Brisbane, April 26, 2012 AEST (ABN Newswire) - The directors present their report together with the financial report of Texon Petroleum Ltd (googlechartASX:TXN) and of the Group, being the Company and its subsidiaries, for the financial year ended 31 December 2011 and the auditor's report thereon.

The principal activities during the financial year were: to continue to prove up the presence of the Eagle Ford on the Company's leases by the successful drilling of the third and fourth horizontal wells in the Leighton and Mosman Rockingham leases; the drilling of a further four (4) wells in the Leighton Olmos field (making a total of 11 successful wells), the drilling of the Company's first Wilcox well on the Mosman Rockingham leases and the identification and acquisition of additional Eagle Ford leases and the identification of new opportunities for the Company.

Corporate

The Company raised $39.4 million and issued 60.7 million new fully paid shares between February and April 2011. The raising was achieved from a placement in February of 24.2 million shares at A$0.65 and from a Share Purchase Plan in April where 74% of shareholders subscribed for 36.5 million shares. The funds were primarily directed to the drilling of the third and fourth Eagle Ford wells and four Olmos wells during the year and for other capital projects.

Outstanding unlisted options of 13.58 million as at 31 December 2010 expired on 8 May 2011. Exercise prices between A$0.50 and A$0.75 cents were paid before the expiry date for 6.65 million options and 6.93 million options were not exercised and were allowed to lapse. New fully paid ordinary shares were issued following payment of the exercise prices which raised A$3.89 million.

Options totalling 7.9 million options were granted to newly appointed CEO Mr Clifford Foss for 7 million, to Company Secretary Mr Des Olling for 600,000 and to three specialist prospect mappers contracted to Wandoo Energy for 100,000 options each. A further 6.6 million incentive options were approved for issue to Chairman Dr John Armstrong for 6 million options and Director Mr Bernard Rowley for 600,000 subject to shareholder approval.

During the year a program of restructure of the group companies began in preparation for a potential sale of the Olmos and the Eagle Ford assets. The corporate structure of the Group provides a flexible structure for the Company and to a potential buyer of the Eagle Ford assets.

Oil and gas prices during the year

Average market oil prices increased from $79/bbl in 2010 to $95/bbl in 2011 whilst average gas prices have fallen slightly from $4.39/mmbtu in 2010 to $4.00/mmbtu in 2011. However, for its Olmos and EFS gas the Company receives an uplift of approximately 70% from the gas price because of the high calorific value of the gas produced and the associated natural gas liquids.

Projections using the third and fourth Eagle Ford wells suggest that future Eagle Ford production can be expected to contain some 80% oil and gas liquids. Financial forecasts using forward Nymex oil and gas prices indicate that about 90% of the revenue from an Eagle Ford project will be oil price driven with gas amounting to only 10% of such revenue.

Financial

The Group's consolidated profit after tax for the year ended 31 December 2011 was A$1,994,514 (2010: A$5,972,517). The 2011 result includes a non-cash share-based payment expense of A$2.1 million. The 2010 result included a profit of A$6.0 million from the sale of the Company's 20%WI in the Leighton Olmos.

The 2011 result reflects an improved operating profitability as a result of the higher production flowing from investment in the Company's Eagle Ford wells.

The Company's beneficial production for the year was 295.0 mboe (2010: 145.3 mboe). The rate of production increased by 103% from 398boepd to 808boepd. During the year there were 20 producing wells including four Eagle Ford wells.

Revenue earned during the year increased 164% to A$20.87 million (2010: $7.91 million). Increased oil production drove the increase, representing 65% of production and 80% of revenue (up from 37% and 55% respectively in 2010) and with an increase in the average price of oil received, this boosted revenue significantly.

Lifting cost of production was US$3.5million or US$11.75/boe (2010: US$1.4 million or US$9.60/boe). These costs are lease operating expenditure and production taxes, excluding overheads, corporate costs and capital expenditure.

At year end the 2011 the Group cash was A$13.37 million (2010: A$13.66 million).

To view the complete Texon Petroleum Annual Report and AGM Notice of Meeting, please refer to the following link below:
http://media.abnnewswire.net/media/en/docs/ASX-TXN-241386.pdf


Contact

Texon Petroleum Ltd
T: +61-7-3211-1122
F: +61-7-3211-0133
E: texon.info@texonpetroleum.com.au
WWW: www.texonpetroleum.com.au



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