Nautical Petroleum plc
Report and Accounts 
2006
Nautical Petroleum plc
Parnell House
25 Wilton Road
London 
SW1V 1YD
T: 020 7550 4890
F: 020 7550 4946
www.nauticalpetroleum.com
Nautical Petroleum plc Report and Accounts 2006 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
Nautical Petroleum plc is an independent 
hydrocarbon exploration and development 
company listed on the London AIM. The 
company’s mission is to acquire, develop 
and add value to discovered heavy oil,  
on the United Kingdom Continental Shelf 
and Europe.
 Contents
	 01	 Highlights
02	 Chairman’s	statement
03	 18	months	in	review
04	 Heavy	oil	–	an	overview
06	 Chief	Executive’s	review
08	 Operational	review	–	Our	portfolio
10	 Operational	review	–	UK	Continental	Shelf
16	 Operational	review	–	France
17	 Financial	review
18	 Board	of	Directors
20	 Shareholder	information
21	 Directors’	report
24	 Remuneration	report
25	 Corporate	governance
27	 Directors’	responsibilities	for	the	financial	statements
28	 Independent	auditors’	report
29	 Consolidated	profit	and	loss	account
30	 Consolidated	statement	of	total	recognised	gains	and	losses
30	 Reconciliation	of	movements	in	consolidated	shareholders’	funds
31	 Consolidated	balance	sheet
32	 Company	balance	sheet
33	 Consolidated	cash	flow	statement
33	 Reconciliation	of	net	cash/(debt)
34	 Notes	to	the	financial	statements
ibc	 Supplementary	information
ibc	 Glossary
Audit of Reserves and Resource Volumes for Annual Report and Accounts of Nautical Petroleum plc (“the Company”)
At	 your	 request,	 we	 have	 examined	 the	 estimates	 as	 of	 Reserves,	 Contingent	 and	 Prospective	 Resources	 set	 forth	 in	 the	 Company’s	 Annual	 Report	 and	 Accounts.	 Our	 examination	 included	 such	 tests	 and	 procedures	 as	 we	 considered	 necessary	 under	 the	 circumstances	 to	 render	 the	 opinion	 set	 forth	 herein.
We	 are	 independent	 with	 respect	 to	 the	 Company	 as	 provided	 in	 the	 Standards	 Pertaining	 to	 the	 Estimating	 and	 Auditing	 of	 Oil	 and	 Gas	 Reserve	 Information	 promulgated	 by	 the	 Society	 of	 Petroleum	 Engineers.
It	 should	 be	 understood	 that	 our	 above–described	 audit	 does	 not	 constitute	 a	 complete	 reserve	 and	 resource	 study	 of	 the	 oil	 and	 gas	 properties	 of	 the	 Company.	 In	 the	 conduct	 of	 our	 report,	 we	 have	 not	 independently	 verified	 the	 accuracy	 and	 completeness	 of	 information	 and	 data	 furnished	 by	 the	 Company	 with	 respect	 to	 ownership	 interests,	 agreements	 relating	 to	 current	 and	 future	 operations	 and	 sales	 of	 production,	 and	 likely	 development	 timing.	 We	 have,	 however,	 specifically	 identified	 to	 you	 the	 information	 and	 data	 upon	 which	 we	 so	 relied	 so	 that	 you	 may	 subject	 such	 to	 those	 procedures	 that	 you	 consider	 necessary.	 Furthermore,	 if	 in	 the	 course	 of	 our	 examination	 something	 came	 to	 our	 attention	 which	 brought	 into	 question	 the	 validity	 or	 sufficiency	 of	 any	 of	 such	 information	 or	 data,	 we	 did	 not	 rely	 on	 such	 information	 or	 data	 until	 we	 had	 satisfactorily	 resolved	 our	 questions	 relating	 thereto	 or	 independently	 verified	 such	 information	 or	 data.
Please	 be	 advised	 that,	 based	 upon	 the	 foregoing,	 in	 our	 opinion	 the	 above-described	 estimates	 of	 Company’s	 Proved	 plus	 Probable	 reserves	 and	 Best	 Estimate	 Contingent	 and	 Prospective	 Resources	 are,	 in	 the	 aggregate,	 reasonable	 and	 have	 been	 prepared	 in	 accordance	 with	 generally	 accepted	 petroleum	 engineering	 and	 evaluation	 principles	 as	 set	 forth	 in	 the	 Standards	 Pertaining	 to	 	 the	 Estimating	 and	 Auditing	 of	 Oil	 and	 Gas	 Reserve	 Information	 promulgated	 by	 the	 Society	 of	 Petroleum	 Engineers.	 We	 would,	 however,	 draw	 your	 attention	 to	 the	 following	 points:
The	 recoverable	 volumes	 in	 the	 Mariner	 field	 (Core	 and	 West	 areas)	 are	 classified	 as	 reserves	 based	 on	 your	 assurance	 that	 the	 field	 will	 be	 developed	 within	 a	 reasonable	 timeframe.	 The	 Society	 of	 Petroleum	 Engineers	 defines	 a	 reasonable	 timeframe	 to	 be	 a	 maximum	 of	 five	 years	 from	 the	 date	 of	 evaluation.	 Significant	 delays	 to	 development	 planning	 would	 require	 these	 volumes	 to	 be	 re-classified	 as	 contingent	 resources.
Estimates	 of	 reserves	 and	 resources	 are	 inherently	 imprecise	 and	 uncertain.	 Presentation	 of	 a	 single	 estimate	 does	 not	 illustrate	 this	 uncertainty.
Many	 of	 the	 Company’s	 projects	 are	 relatively	 immature	 and	 are	 the	 subject	 of	 ongoing	 technical	 evaluation	 by	 the	 Company.	 Although	 we	 deem	 the	 estimates	 to	 be	 reasonable,	 these	 estimates	 may	 be	 subject	 to	 significant	 change	 as	 new	 data	 	 become	 available.
We	 have	 not	 reviewed	 the	 “risking”	 or	 “chance	 of	 success”	 associated	 with	 any	 of	 the	 Prospective	 or	 Contingent	 Resources	 in	 your	 portfolio.
Francis Boundy
Director,	 Valuations	 RPS Energy Limited
18	 September	 2006
•
•
•
•
Supplementary information
API	 American	Petroleum	Institute
®
bbl	 barrels
bcf	 billion	cubic	feet
bn	 billion
bopd	 barrels	of	oil	per	day
cp	 centipoises	 DST	 drill	stem	test
DTI	 Department	of	Trade	&	Industry
EWT	 extended	well	test
FDP	 field	development	plan
km	 kilometres
K	 thousand
m	 million
mmbo	 million	barrels	of	oil
MWD	 measurement	while	drilling
OWC	 oil-water	contact
UKCS	 United	Kingdom	Continental	Shelf
Glossary 01 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
Highlights
Successfully listed on AIM.
Raised £18m. 
Two corporate acquisitions 
including significant stake  
in highly appraised Mariner 
discovery.
Nine blocks at June 2006  
(four discoveries) in the  
UK North Sea and France.
Agreed to farm-out interests  
in four blocks.
Net proven and probable 
reserves and best estimate 
contingent resources 71mmbo.
Agreed to acquire two  
further blocks in July 2006 
(both discoveries). 
1 07
mmbo
Prospective resources (post farm-out)
 71
mmbo
Reserves and contingent resources 
(post farm-out)
£
18 
m
Money raised
 9 
Number of blocks (as at June 2006) 02 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
The Company has made very substantial 
progress since listing on the Alternative 
Investment Market (AIM) in April 2005. 
In the process, Nautical has achieved 
widespread recognition as a focused and 
specialist heavy oil development and 
production company, which now holds  
a significant portfolio of reserves, 
contingent resources and prospects.
Nautical has rapidly achieved several of 
its key early-phase objectives, including 
recoverable reserve acquisition. 
Financial results 
The accounts reflect the pre-revenue 
phase with a very modest rate of 
spending, which is mainly associated 
with the technical programmes in 
support of licence applications, 
preparation for farm-out processes and 
prospective acquisition evaluation. 
During the period, two share placings 
were completed for a total of £18m. This 
funding covered the cash portion of 
corporate acquisitions including Alba 
Resources (Holdings) Group, through 
which the Company secured its 
participation in the Mariner heavy oil 
field. Funds raised have also assured that 
Nautical has the means to meet its share 
of projected costs of asset appraisal 
programmes, and licence work 
commitments. 
Nautical continues to apply its stated 
policy of equity financing during the 
pre-revenue phase, complemented by 
affordable reserve appraisal programmes 
with risk-sharing through selective  
farm-outs.
Licence activity 
The programme of selective corporate 
acquisition and licence applications has 
led to a greatly expanded portfolio of 
licence participations in the preferred 
area of the East Shetland platform. This 
area of the North Sea is a major heavy oil 
province and therefore a prime target for 
Nautical. The Company also announced 
its first licence participation in onshore 
Europe through a farm-in to the Grenade 
discovery in South West France, with 
completion awaiting French Government 
approval.
A major farm-out initiative was 
undertaken during the first half of 2006. 
The industry response (across the whole 
spectrum from specialists to oil majors) 
has underscored the rapidly growing 
interest in heavy oil prospects. The 
programme led to the announcement 
during June 2006 of a farm-out 
agreement with SK Corporation, of  
South Korea, covering four licence  
blocks, with completion expected  
in late September 2006. 
Operator approval 
A further early objective was to have 
Nautical approved as an Exploration 
Operator by the Department of Trade & 
Industry (DTI). Approval was officially 
confirmed in October 2005, and Nautical 
is now qualified to lead asset appraisal 
development projects on United Kingdom 
Continental Shelf (UKCS) licences where 
this complements the Company’s 
strategy. 
Directors, staff and associates 
By any measure, Nautical has achieved 
much during this period. This would not 
have been possible without the 
determination and dedication of the 
executive management, as well as  
the valued advice and support of the  
non-executive directors.
The Nautical strategy of outsourcing 
services has led to the creation of close 
relationships with professional associates 
and specialist suppliers, whose 
commitment and contribution have 
greatly assisted in the early development 
of the Company.
Outlook 
Nautical has established itself as a player 
in the heavy oil arena with an extended 
asset base, specialist focus and 
expertise, assured funding and 
advantageous market access. The 
Company is now well placed to progress 
to the production phase. 
Technological developments and market 
trends continue to favour the profitable 
development and production of heavier 
crude oil in most probable future oil 
market scenarios.
The opportunity to work closely with 
Chevron and SK Corporation on the 
appraisal and development phases of 
offshore fields will add to the capability 
and standing of the Company in the 
longer term. 
 
Nautical has the assets, expertise and 
funding to move forward with partners 
into the production phase when the focus 
will shift to the achievement of early 
production and revenue from the 
development of selected reserves.
Ian Williams
Chairman
22 September 2006
Chairman’s 
statement
I am pleased to present this Report and 
Accounts for Nautical Petroleum for the  
18 months to 30 June 2006. 03 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
18 months 
in review
APRIL 2005
Nautical Petroleum plc Reverse Takeover 
completion (9/2b and 3/27a plus processing 
equipment).
Nautical Petroleum plc listed on AIM. 
JULy 2005
Raised £8m through private placing.
AUg UsT 2005
Completion of purchase of Alba Resources 
(Holdings) Ltd and First Mariner Ltd (26.67% 
Mariner, blocks 9/11c and 8/25a).
OCTOBER 2005
Converted block 9/2b from Promote to 
Traditional Licence and approved as 
Exploration Operator by DTI.
DECEMBER 2005
Signed an agreement to farm-in to  
St Laurent licence onshore France in the 
undeveloped Grenade heavy oil field 
Partnership with Egdon and Sterling 
Resources.
Awarded blocks 9/1, 8/5 and 15/7 in the UKCS 
23rd Licensing Round.
JANUARy 2006
Raised £10m through private placing.
JUNE 2006
Signed an agreement to farm-out four blocks. 04 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Heavy oil 
an overview
The exploitation of heavy oil accumulations in the United 
Kingdom Continental Shelf (UKCS) is a specialist oil sector 
which is benefiting from a combination of continuing 
technological advances and the rise in crude oil prices. In  
the UK, the Department of Trade & Industry (DTI), is very 
supportive and is encouraging the industry to develop heavy 
oil discoveries and appraise prospective reserves as a potential 
means to mitigate the decline in North Sea crude production. 
Relatively recent advances in technology 
are the prime factors enabling more 
economic recovery from heavy oil 
reserves. Continuous improvements and 
related operating experiences have added 
to the attractiveness and value of heavy 
oil reserves not only at present crude oil 
prices in the US$60/bbl range, but also 
down to a mid US$20/bbl price. 
What is heavy oil?
There is no definite classification for 
heavy oil, but the industry generally 
considers it to be oil with a high density 
(>5 centipoises (cp)) and low (>10 < 22) 
API gravity (the specific gravity of crude 
at 60F). The oil is “heavy” due to its high 
proportion of heavy hydrocarbon 
fractions.
Although the API figure is the most  
often quoted oil classification, as it is 
more relevant to the refining yield value 
and not the economics of production. 
When considering production, the  
most significant factor is viscosity 
(“thickness“), with heavy oils generally 
being at greater than 5cp at reservoir 
conditions.
The producibility of heavy oil relates to 
the viscosity of the oil in the reservoir. 
This is often a function of the reservoir 
temperature and the gas-to-oil ratio.  
Oils with similar APIs can have very 
different viscosities.
Other factors which influence 
productivity include reservoir geometry, 
oil column thickness and continuity, and 
the permeability of the reservoir.
How much heavy oil is there?
There have been relatively few studies of 
global heavy oil reserves mainly due to 
problems associated with classification. 
However, recent research indicates, 
estimates of 4,600bn barrels in place of 
heavy oils. If 15% of this were recovered, 
it would equal the current estimated 
lighter crude resources. The world’s 
major heavy oil deposits are located in 
Canada, Venezuela and the Former Soviet 
Union (FSU).
The majority of the heavy oil fields in the 
North Sea were discovered during the  
oil boom of the 1970s but technological 
limitations meant that the discoveries 
could not be commercially developed at 
the time. The subsequent focus on the 
development of lighter oil reserves in the 
FSU and West Africa in the 1980s, as well 
as the pattern of oil prices, left these 
heavy oil fields undeveloped.
Heavy oil and the North sea
The development of heavy oil production 
in the North Sea is not new. Existing 
producing heavy oil fields include 
Captain (88cp), Alba (7cp) and Clair 
(20cp). The activity and interest 
associated with the appraisal and 
development of UKCS heavy oil has 
accelerated recently. 
Future development of UKCS heavy oil 
fields will involve a phased development 
approach and application of enhanced 
recovery techniques, including extended 
horizontal wells designed to maximise 
rates of recovery.
Summary
• Heavy oil is oil with a high density 
and low API gravity. 
 
• Estimation of 4,600bn barrels in 
place of heavy oils, worldwide. 
 
• Acceleration of interest, appraisal 
and development of UKCS heavy oil. 
 
• Improvement of technology in well 
control and measurement. 
 
• Development cost comparable to  
light oil reservoirs. 05 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
For upgrading
For premium 
transport fuels
Cracker feed
Power fuel
Light products
Heavy fractions
Light products
Heavy fractions
For upgrading
Brent 
38° API
Heavy oil
10-15° API
UKCS heavy oil fields tend to be relatively 
shallow, have a relatively thick oil column 
with a large aquifer beneath and, in  
a number of cases, a substantial gas  
cap. Reservoir features often include 
favourable porosity and permeability 
features which support relatively high 
production flow rates per well. Most 
discovered heavy oil has relatively low 
sulphur content. 
New technology
Continuing technological advances in 
well control and measurement while 
drilling (MWD) have greatly assisted  
the long-term exploitation of heavy oil 
fields, as well as reduced the number  
of dry holes.
A key factor in the development of  
heavy oil fields was the introduction of 
horizontal well technology. Horizontal 
well completions permit minimal 
pressure reduction in the reservoir, but 
critically maximise the distance between 
the oil and water contact, the best 
position generally being near the top  
of the reservoir. Horizontal wells also 
increase the production rates as the 
length of the well in the producing 
section of a reservoir is much greater 
than that in a vertical well.
Significant advances in pump technology 
have probably provided the most 
important contribution to heavy oil 
production economics. Electrical and 
hydraulic submersible pumps are now 
achieving multiple year run-lives in 
heavy oil production service without 
requiring maintenance workovers, 
thereby step changing oil lifting costs. 
Economic viability
Heavy oil extraction may require longer 
lead times than lighter crudes, but it is no 
longer regarded as excessively complex 
or novel. Whilst more extensive appraisal 
work may be required in the process of 
developing feasible and economic field 
development plans, the associated wells 
are typically shallow and inexpensive 
when compared to deeper light oil 
reservoirs. 
The capital requirements for the actual 
field production development of heavy  
oil are similar to those for lighter crudes. 
Although the target depths of the 
reservoirs are lower, the requirement  
for horizontal drilling increases cost.  
The requirement for complex process 
equipment and extended well testing 
also adds to the scale of total costs. 
Marketing and transportation of heavy  
oil is, for many projects, similar to that  
of light oil. Although prices are lower 
(typically 10% to 15% less than Brent), 
there is a ready market. Transportation 
methods, in the North Sea, are typically 
the same as other types of oil, being 
predominantly by pipeline or tanker.
Although the economics of heavy oil are 
somewhat tighter than conventional oil, 
most projects are economically viable at 
US$30/bbl. Whilst the current high price 
of oil makes heavy oil more attractive, oil 
prices remain quite volatile. Therefore, 
the judicious use of forward market 
instruments can mitigate oil price related 
risks and underpin profitable operations 
to a considerable extent.
In the final analysis, with the correct 
technology and careful planning, the 
production of heavy oil can be very 
profitable. Nautical has access to its  
own specialist heavy oil processing 
equipment, as well as access to heavy  
oil marketing and end-users, through its 
relationship with the Masefield Group.
4,600 
bn barrels
There are 4,600bn barrels in place of heavy oil worldwide. 06 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Chief Executive’s
review
This first period has been particularly exciting with strong 
progress made by implementing our stated business strategy 
of acquiring, appraising and developing discovered heavy  
oil resources.
Nautical is developing rapidly having 
assembled a valuable and broad base  
of real assets, through enacting a sound 
business plan shaped for our specialist 
niche of heavy oil. Nautical Petroleum  
is the only UK listed company offering 
direct exposure to heavy oil development 
in the UKCS. With a mixture of near-term 
development, appraisal and exploration, 
the Company’s portfolio is balanced with 
significant resource upside.
This first period has been particularly 
exciting with strong progress made  
by implementing our stated business 
strategy of acquiring, appraising  
and developing discovered heavy oil 
resources and securing high impact 
exploration acreage with limited work 
commitments.
Key highlights of the period include the 
admission to AIM, the agreed acquisition 
of additional acreage both in the North  
Sea and South West France and the 
successful multi-licence farm-out 
agreement with SK Corporation of  
South Korea.
Review of activities
Creating a long-term business
The Company aims to retain significant 
stakes and operate its licences. To this 
end, Nautical was approved by the DTI as 
an Exploration Operator in October 2005 
and fulfilled all obligations on licence 
P1077 (Block 9/2b) entering the second 
two year term.
Licence P1077 was one of the Company’s 
two licences (Licence P1203 being the 
other) at the time that the Company was 
admitted to AIM. Since then, its portfolio 
has been increased with the acquisition 
of Alba Resources (Mariner discovery 
and two exploration licences), the award 
of two licences (three blocks) as operator 
in the 23rd Seaward Licensing Round, 
and the farm-in (awaiting French 
Governmant approval) to earn a 22% 
interest in the St Laurent Permit in South 
West France, which marks the 
Company’s first foothold on mainland 
Europe. Agreements were signed  
to acquire a further two blocks from 
Engen Resources Ltd in the post  
balance sheet period.
Nautical now has interests in 10 blocks 
(five discoveries) in the UKCS and one 
licence in France with Nautical operating 
eight blocks. The Company’s main aim 
during the period was to more tightly 
define the hydrocarbon volumes in place 
in both discoveries and exploration 
prospects. This has been achieved by  
the careful interpretation of reprocessed 
seismic data integrated with the 
petrophysical studies resulting in the 
reduction of risk. Nautical is further 
mitigating risk by farming down its 
interest in four blocks to a respected 
third party (Celtic Oil Limited, a wholly 
owned subsidiary of SK Corporation),  
as well as by accelerating its drilling 
activity, thereby furthering the 
Company’s exploration and appraisal 
ambitions.
Farm-out agreement
Spreading the risk
It is Nautical’s aim to mitigate exploration 
and appraisal risk by farming out the 
drilling of mature prospects and in  
June 2006 it successfully concluded a 
comprehensive multi-licence farm-out 
agreement with SK Corporation, Asia’s 
leading energy and petrochemical 
company. The agreements cover a 
selection of heavy oil prospects within 
the Company’s portfolio, as well as 
detailing where Celtic Oil Ltd will  
carry part of Nautical’s exploration 
expenditures on a two-for-one basis for 
the proposed work programme. The wells 
are to be drilled between 2007 and 2008 
as part of Nautical’s commitment to its 
licensing terms with the DTI.
The farm-out invitation process followed 
comprehensive technical preparation by 
Nautical and was conducted over a two 
Our strategy
Nautical Petroleum plc intends to 
become a significant producer of heavy 
oil, initially in the UKCS and in Europe. 
• Secure further heavy oil discoveries 
in UKCS and EU through 
acquisitions, farm-ins and licensing 
rounds.
• Achieve near term production on 
current assets. 
• Enhance crude value and mitigate 
risk through our relationships.
• Acquire heavy oil exploration blocks 
with low/moderate commitments.
• Farm-out to mitigate portfolio risk.
Resulting in enhanced  
shareholder value. 07 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
month period. The programme saw more 
than 10 companies assess the potential 
of Nautical’s assets on offer and 
represents independent confirmation  
of growing industry interest in North  
Sea heavy oil opportunities, effectively 
endorsing the business focus and 
strategy of the Company. Our strategy of 
thorough technical preparation provided 
a sound basis for the evaluation of the 
opportunities in our asset base and this 
transaction supports an acceleration and 
expansion of our immediate work 
programme. 
Technology
Nautical owns specialist process 
equipment suitable for use in the testing 
of heavy oils down to 10 API. The 
equipment can handle up to 40,000 
barrels per day (bopd) of liquid 
production of which 25,000bopd can  
be oil. This technology could be used  
on the testing of the 9/2b discovery as 
well as future Nautical development 
programmes, and when not in use there 
are opportunities to hire the equipment 
out to third parties. Ownership of this 
equipment provides commercial leverage 
and a competitive advantage. 
Oil portfolio audit
RPS Energy audited our oil portfolio  
held at 30th June 2006. Reserves and 
resources quoted in this report refer to 
the figures verified by this audit. All 
reserves are proven plus probable and all 
contingent resources and prospective 
resources are best estimates.
Post-year end
North Sea block acquisitions  
Resource additions in our core area
In July 2006, Nautical entered into an 
agreement to acquire a 98.5% operated 
interest in the Bluebeard (Block 9/12b, 
Licence P1079) and Skipper (Block 9/21, 
Licence P1080) discoveries on the East 
Shetland Platform from Engen Resources 
Ltd for a minimum of US$2.65m in shares.
This transaction secured significant 
reserves adjacent to our current portfolio. 
The Bluebeard discovery is located 
directly east of the Mariner discovery 
and is in close proximity to oil 
transportation facilities capable of 
accepting additional throughput. Three 
wells have been drilled (9/12-3 (in 1975), 
9/12b-6 (1985) and 9/12b-4 (1982)); the 
first two wells flowing 144 and 728bopd 
respectively from the Maureen 
Formation. This is the same reservoir as 
Mariner but the oil, with an 18 to 19API 
and a viscosity of less than 20cp, is of 
better quality. A further shallower 
reservoir, the Eocene Mousa Formation 
was oil bearing in 9/12–3 but the oil is 
more viscous and with a lower API (10) 
than the deeper formation. A Competent 
Persons Report commissioned by Engen 
assigns best estimate contingent 
resources of 16.9 million barrels of oil 
(mmbo) (16.6mmbo net to Nautical) to  
the Bluebeard discovery.
The Skipper discovery is located 
immediately east of the Selkie and Kelpie 
prospects (block 8/25a) and was tested 
by well 9/21-2 in 1990, encountering a 
16 metre oil column in excellent quality 
Paleocene Dornoch Formation sands. An 
FDP based on best estimate contingent 
resources of 33.1mmbo (32.6mmbo net  
to Nautical) and 2D seismic data 
interpretation was submitted to the DTI.
Both blocks are subject to a farm-in by  
a third party which, if concluded, would 
reduce Nautical’s financial exposure  
on an appraisal well on Bluebeard to a 
minimal level.
Market overview
Nautical expects international oil  
prices to remain relatively high for  
the foreseeable future. Additionally,  
a narrowing of the heavy crude oil 
discounts is also anticipated as demand 
rises and refineries are upgraded to 
process more complex crudes. 
Unfortunately, buoyancy in the 
commodity price has been accompanied 
by cost escalation for services, 
exacerbated by tightening availability, 
particularly with respect to drilling rigs. 
The Company has acquired site surveys 
over two structures so that it is drill-
ready and can take advantage of rig slots 
when they emerge. The challenge in the 
coming year, and beyond, will be to 
manage cost escalation, driven by 
industry-wide shortages of equipment 
and personnel. The increased call on 
resources in the upstream sector and 
attendant cost pressures present a 
challenge to the sector, but should not 
prejudice the viability of the Company’s 
business model and, furthermore, are 
significantly mitigated by our strategy.
The future
Nautical will continue to add shareholder 
value through effective management, 
fully evaluating our assets and further 
expanding our portfolio by diligent 
acquisition and licence round awards.
Nautical continues to look forward to  
first revenues from our high-quality 
discoveries both in the UKCS and 
onshore Europe with our focus shifting  
to the development and management  
of an extensive drilling programme 
across our asset portfolio.
steve Jenkins
Chief Executive Officer
22 September 2006
Nautical will continue to add shareholder value through 
effective management, fully evaluating our assets and further 
expanding our portfolio by diligent acquisition and licence 
round awards. 15
3
9
8
08 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Operational review
Our portfolio
as at September 2006
Nautical has a 60% interest in 
Block 8/25a. The Block was 
acquired through the acquisition 
of Alba Resources Holdings 
Limited in August 2005.
Selkie is mostly covered by 
recent 3D seismic and we have 
purchased 2D seismic. A four-
way dip closure has been 
confirmed.
We estimate that this 
substantial four-way dip closed 
trap and Kelpie contain 35mmbo 
best estimate prospective 
resources.
BLOCk 8/25A (LICENCE P976)*
Nautical has a 100% interest in 
these blocks, which were 
awarded in the 23rd Seaward 
Licencing Round.
Located on the East Shetland 
Platform west of the North 
Viking Graben, contiguous  
with Block 9/2b.
Across Blocks 9/1 and 8/5, we 
have acquired 484km of 2D 
seismic and identified two leads 
in the Tertiary. We intend to 
reprocess 250km of seismic  
to firm up these leads.
BLOCk 8/5 AND BLOCk 9/1 (LICENCE P1277)
Nautical acquired a 26.67% 
interest in the Mariner discovery 
through the acquisition of Alba 
Resources Holdings Limited in 
August 2005.
In 1997 an extended well test 
(EWT) produced 662,000 barrels 
of oil over 63 days at a maximum 
rate of 14,991bopd (14.5 API) 
from Maureen Formation Sands.
BLOCk 9/11A (LICENCE P729)
Nautical has a 60% interest in 
Block 9/11c. The Block was 
acquired through the acquisition 
of Alba Resources Holdings 
Limited in August 2005.
The 3D seismic has been 
reprocessed, interpreted and has 
confirmed the robustness of the 
trap with around 129mmbo best 
estimate prospective resources.
An exploration well is planned 
in the first half of 2007.
BLOCk 9/11C (LICENCE P979)*
Nautical has a 50% interest in 
Block 15/7 as a result of a 
successful joint application with 
Egdon Resources plc (50%) in 
the 23rd Seaward Licensing 
Round.
We intend to reprocess 160km
2
 
of 3D and 180km of 2D seismic 
to further define the Seahorse 
Prospect and firm up the 
mapped leads.
BLOCk 15/17 (LICENCE P1296) 
SCOTLAND
THE SHETLAND
ISLANDS 15
3
9
8
09 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
FRANCE
SPAIN
Nautical acquired a 98.5% 
interest in the block from Engen 
Resources Limited in July 2006.
The well encounterd a 16 metre 
oil column in excellent quality 
Palaeocene Dornoch Formation 
Sands.
An FDP, based on best estimate 
contingent resources of 
33.1mmbo (gross) and 2D 
seismic interpretation, was 
submitted to the DTI in  
October 2005.
BLOCk 9/21 (LICENCE P1080)
Block 3/27a was awarded by the 
DTI in 22nd Seaward Licencing 
Round with an effective date of 
1 December 2004.
We have reprocessed 50km of  
2D seismic and re-interpreted 
the data to confirm the leads.
Nautical has a 45% interest in 
the block.
BLOCk 3/27A (LICENCE 1203)*
Block 9/2b was awarded by the 
DTI on 1 October 2003, and 
converted to a traditional licence 
in October 2005.
We have reprocessed over 
200km of 1998 3D seismic and 
have interpreted this along with 
the 3D over the nearby Bressay 
discovery to confirm the large 
structural closure.
An appraisal well is planned  
in the first half of 2007, and a  
site survey was acquired in  
July 2006. 
Nautical has a 45% interest in 
the block.
BLOCk 9/2B (LICENCE P1077)*
Nautical acquired a 98.5% 
interest in the Bluebeard 
discovery from Engen Resources 
Limited in July 2006.
Three wells have been drilled 
9/12-3 (1975),9/12b-6 (1985) and 
9/12b-4 (1982), the first two 
wells flowing 144bopd and 
728bopd respectively from the 
Maureen Formation.
BLOCk 9/12B (LICENCE P1079)
Located in Aquitaine Basin,  
South West France.
Grenade-Sur-Adour produced 
8000 barrels in a series of tests 
12km
2
 3D and 40km 2D has been 
acquired.
Further gas prospectivity on the 
permit.
sT. LAURENT PERMIT
+
THE ORKNEy 
ISLANDS
* Percentage interests are post farm-out, which are expected to complete late 
September 2006.
+ Permit is awaiting French Government approval. 10 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Operational review
UK Continental Shelf
We are now in a strong position to exploit 
heavy oil reserves in the North Sea and are 
planning to participate in six exploration and 
appraisal wells in the next 12 to 18 months.
Key Stats
Mariner
Gross 2P reserves in  
Maureen Sand 82mmbo.
Highly appraised (16 well 
penetrations of reservoirs).
Excellent characteristics  
(Ø=31%, k=5D).
Proven well deliverability 0.66mmbo 
of oil produced up to 15,000bopd.
Upside:
Shallower Heimdal Sandstone  
could contains 51mmbo contingent 
resources. 
Block 9/2b
Contains Kraken oil discovery (1985).
Excellent Heimdal Sandstone 
reservoir.
15° API oil, no OWC encountered.
Contingent resources of 53mmbo.
Appraisal well planned for 2007.
•
•
•
•
•
•
•
•
•
•
Mariner Block 9/11a (Licence P726)
(Nautical 26.67%)
Located on the East Shetland Platform, 
west of the Viking Graben, block 9/11a 
contains the Mariner discovery drilled  
in 1981. Since then data from several 3D 
surveys have been acquired, nine vertical 
wells and six high-angle horizontal wells 
have been drilled. The vertical wells 
produced 1,000 to 1,595bopd.
In 1997, an extended well test (EWT) 
produced 662,000 barrels of oil over 63 
days at a maximum rate of 14,991bopd 
(14.5 API). The main reservoir is the 
Tertiary Paleocene Maureen Sandstone 
which has a gross thickness of up to 
122 metres and excellent reservoir 
characteristics. The trap is both 
structural and stratigraphic, with the 
reservoir pinching out to the west,  
north and south. A shallower reservoir, 
Heimdal Sandstone Member, could 
recover gross contingent resources  
of 51mmbo (14mmbo net to Nautical).  
This reservoir has flowed up to 1,800bopd 
on a vertical test.
Nautical is an active partner in this 
highly appraised discovery and is 
encouraging early development. The 
Group, led by Chevron, reprocessed the 
merged 3D seismic data, resulting in 
greater clarity to the imaging of the 
Maureen reservoir (a key factor in this 
pre-development stage). Mapping of the 
seismic data has reduced the range of 
hydrocarbon volumes, as well as the 
stratigraphic and structural uncertainty.
Progress towards the submission of the 
field development plan continues with 
the dynamic modelling of the Maureen 
reservoir, estimating 82mmbo proven 
and probable reserves for West and Core 
Area of Mariner (22mmbo net to 
Nautical). The favoured development 
concept will be selected by year end  
and well design is nearing completion. 
Current scheduling is for first oil in 2009.
Nautical is carrying a 6.67% interest  
in the Mariner block. Upon field 
development plan approval, Nautical will 
either be required to pay £1 to retain this 
interest or will be reimbursed past costs 
through the development phase, being 
£8 million at June 2006.
Block 9/2b (Licence P1077) 
(Nautical 45% post farm-out; 
Operator)
The licence is located on the East 
Shetland Platform, west of the North 
Viking Graben and contains the 9/2-1A 
discovery well drilled in 1985. The well 
tested 15 API oil on drill stem test (DST) 
from the Tertiary Palaeocene Heimdal 
Sandstone Member. Analysis to date has 
confirmed an oil column of at least 33 
metres (with no oil-water contact 
encountered in the well).
Interpretation of over 200km
2
 of 
reprocessed 3D seismic data has 
confirmed the large, three-way dip-
closed structure (Kraken Discovery)  
and revealed a crestal, high amplitude 
anomaly. Petrophysical studies and 
 82
mmbo
Mariner Block 9/11a – Maureen Gross  
2P reserves
 53
mmbo
Block 9/2b – Gross best estimate  
contingent resources 11 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
Mariner
9/11b-11
9/11a-10
10Z
9
9X
4
9Z
9Y
5 7 8Y
8Z
8
2
12
1
3
6
Bluebeard
Mermaid
East
Mariner
9/12b
9/11c
9/11a
Chev.
1
5
11,11A
10
9/12-3
9/12b-4
9/12b-7
9/12b-6
8
2
Mermaid
Lead South
Lead North
9/1 8/5
Kraken
Discovery
Bressay
Lead A
9/2b-1A
9/2b
3/27a
Mariner
9/11b-11
9/11a-10
10Z
9
9X
4
9Z
9Y
5 7 8Y
8Z
8
2
12
1
3
6
Bluebeard
Mermaid
East
Mariner
9/12b
9/11c
9/11a
Chev.
1
5
11,11A
10
9/12-3
9/12b-4
9/12b-7
9/12b-6
8
2
Mermaid
Lead South
Lead North
9/1 8/5
Kraken
Discovery
Bressay
Lead A
9/2b-1A
9/2b
3/27a
  Fields & Discoveries
  Prospects & Leads
   Fields & 
Discoveries
   Prospects  
& Leads
seismic modelling have indicated that 
the amplitude response is most likely  
to be a gas cap, up-dip from the oil  
leg encountered in well 9/2-1A. 
Encouragingly, the Heimdal reservoir, 
and its contained hydrocarbons, appear 
to thicken up-dip from the well towards 
the crest of this structure. The resultant 
best estimate contingent resources in 
the Kraken Discovery, discovery is 
53mmbo (24mmbo net to Nautical).
The licence was converted from a 
“promote” to a “traditional” licence in 
October 2005 with a commitment to  
drill a shallow well before the end of 
September 2007. As a result of the farm-
out to Celtic Oil Limited, Nautical’s 
financial exposure will be limited to 15% 
of a vertical and subsequent horizontal 
well. In order to be drill ready for 2007 a 
site survey was acquired in July 2006. 12 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Key Stats
Block 9/11c
Contains large robust Mermaid 
Prospect.
Analogous to Mariner discovery.
Prospective resources of 129mmbo.
Well planned in 2007.
Block 8/25
Contains two large, low risk  
prospects (Selkie and Kelpie).
Analogous to Skipper discovery.
Prospective resources of 35mmbo.
Well planned in 2007/08.
Block 15/7
Contains Seahorse discovery (1977) 
and four further leads.
Two reservoir horizons Dornoch  
and Forties sands.
Low viscosity (22cp) oil.
Contingent and prospective  
resources of 34mmbo.
•
•
•
•
•
•
•
•
•
•
•
•
Operational review
UK Continental Shelf
We have established a strong portfolio of 
exciting low risk exploration and appraisal 
projects.
Skipper
Discovery
9/21
9/21-1
9/21-2
8/20-1
8/25b
8/25a
Selkie
Kelpie
Skipper
Discovery
9/21
9/21-1
9/21-2
8/20-1
8/25b
8/25a
Selkie
Kelpie
Mariner
9/11b-11
9/11a-10
10Z
9
9X
4
9Z
9Y
5 7 8Y
8Z
8
2
12
1
3
6
Bluebeard
Mermaid
East
Mariner
9/12b
9/11c
9/11a
Chev.
1
5
11,11A
10
9/12-3
9/12b-4
9/12b-7
9/12b-6
8
2
Mermaid
Mariner
9/11b-11
9/11a-10
10Z
9
9X
4
9Z
9Y
5 7
8Y
8Z
8
2
12
1
3
6
Bluebeard
Mermaid
East
Mariner
9/12b
9/11c
9/11a
Chev.
1
5
11,11A
10
9/12-3
9/12b-4
9/12b-7
9/12b-6
8
2
Mermaid
  Fields & Discoveries
  Prospects & Leads
  Fields & Discoveries
  Prospects & Leads 13 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
Seahorse Discovery
15/7
Lead D
Lead B
Lead C
Lead A
15/6-1
15/7-1
Block 9/11c (Licence P979) 
(Nautical 60% post farm-out; 
Operator)
Located on the East Shetland Platform, 
directly south of the Mariner discovery, 
the block contains the low risk, large, 
undrilled Mermaid Prospect. Reservoir 
targets are analogous to Mariner 
(Palaeocene, Maureen and Heimdal 
Sands) and interpretation of the 
reprocessed 3D seismic data has 
increased the confidence of a Maureen 
pinchout to the north, south and west, 
and confirmed separation from Mariner. 
The resultant best estimate prospective 
resources are 129mmbo (77mmbo net  
to Nautical) in the Tertiary Maureen 
Formation. Further significant additional 
prospective resources are expected in 
the Heimdal Sandstone Member.
A site survey was acquired in July 2006 
to be drill-ready for early 2007. Nautical’s 
financial exposure in the well is 20% due 
to the farm-out to Celtic Oil Limited.
Block 8/25a (Licence P976) 
(Nautical 60% post farm-out; 
Operator)
The block lies on the East Shetland 
Platform and is contiguous with, and to 
the west of Block 9/21, which contains 
the Skipper discovery. Two large, low-
risk, shallow, four-way dip closed 
prospects (Selkie and Kelpie) have been 
confirmed by the interpretation of both 
our proprietary 3D seismic and newly 
purchased 2D seismic data. These 
prospects are all the more promising 
since the oil charge of the Dornoch 
Formation Reservoir target is proved  
by the Skipper discovery to the east. 
Additionally, the Dornoch Formation  
is proven to have excellent reservoir 
characteristics in the Skipper discovery.
The combined best estimate prospective 
resources are 35mmbo (21mmbo net  
to Nautical) with a well planned to be 
drilled in 2007/08 in which Nautical has  
a 20% financial exposure.
Block 15/7 (Licence P1296) 
(Nautical 50%; Operator)
Awarded in the 23rd Seaward Licensing 
Round in 2005, Block 15/7 is located in 
the Outer Moray Firth, north of the Witch 
Ground Graben and North Piper Basin 
and contains the Seahorse heavy oil 
discovery made by Texaco in 1977. Oil 
columns were encountered in both the 
Tertiary Forties and Dornoch sands.
Initial mapping of 170km
2
 of 3D seismic 
and 145km of 2D seismic data has 
confirmed a four-way dip-closed 
structure with best estimate contingent 
resources of 17mmbo (8.5mmbo net to 
Nautical) and 17mmbo prospective 
resources (8.5mmbo net to Nautical). 
Preliminary analysis of oil recovered from 
the discovery well 15/7-1 implies an API 
of 17 with a low viscosity of 22cp at 
reservoir temperature.
Additional potential has been identified 
in adjacent leads and a potential large 
pinch-out trap in the Forties Sandstone 
(Lead B). To further delineate the 
discovery and elevate the leads to 
prospects, the Company will reprocess 
and interpret 160km
2
 of 3D seismic and 
180km of 2D seismic data.
 129
mmbo
Block 9/11c – Best estimate prospective 
resources
 34
mmbo
Block 15/7 – Best estimate contingent  
and prospective resources
 35
mmbo
Block 8/25a – Combined best estimate 
prospective resources
Seahorse Discovery
15/7
Lead D
Lead B
Lead C
Lead A
15/6-1
15/7-1
  Fields & Discoveries
  Prospects & Leads 14 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Block 3/27a (Licence P1203) 
(Nautical 45% post farm-out; 
Operator)
Located directly north of Block 9/2b 
(Kraken discovery) on the East Shetland 
Platform, Block 3/27a was awarded in the 
22nd Seaward Licensing Round. Well 
data and the mapping of 476km of 2D 
seismic has confirmed that the Heimdal 
Play, successful in Kraken, continues 
northward into the Block with three leads 
being identified (leads A, B and D); lead A 
being analogous to the Kraken discovery. 
To the east of the Block a lead has  
been mapped at Paleocene, Dornoch 
Formation, (lead E). Deeper in the section 
there is scope for Jurassic sands thinning 
to the west in Lead C. Encouragingly, gas 
chimneys can be interpreted on the 
seismic to coincide with the prognosed 
sand zero edge.
The geochemical analysis of samples 
from the local wells and integration of 
interpretation of 90km of reprocessed 
seismic data has confirmed the 
prospectivity of the Block. Nautical (with 
our new partner Celtic Oil Limited) 
intends to convert this licence from 
promote to traditional, and plans to 
acquire 150km
2
 of new 3D seismic data 
prior to drilling a well before the end  
of 2008.
Blocks 8/5 and 9/1 (Licence P1277) 
(Nautical 100%; Operator)
Nautical was awarded a 100% interest in 
23rd Seaward Licensing Round in 2005 of 
Blocks 8/5 and 9/1, which are contiguous 
with block 9/2b (containing the Kraken 
discovery). The mapping of an extensive 
2D seismic database highlighted two 
cukminations on a north west, south east 
trending channel like feature at both the 
Heimdal and Maureen levels. The seismic 
signature is analogous to sand rich 
channels elsewhere on the platform. 
Nautical will reprocess around 250km  
of 2D seismic data to better delineate  
the mapped traps.
Key Stats
Block 3/27a
Multiple leads mapped.
Prospective at both Tertiary 
(Dornoch and Heimdal Sands) and 
deeper Jurassic. 
Gas chimneys on seismic.
Proven oil migration into the block.
Blocks 8/5 and 9/1
Two large culminations mapped  
on potential sand rich channel.
Reservoirs at two levels: Heimdal  
and Maureen Sands.
Seismic to be reprocessed.
•
•
•
•
•
•
•
Operational review
UK Continental Shelf
Our balanced portfolio includes significant 
leads analogous to our discoveries. 15 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
Bressay
3/27a
Lead A
Lead C
Lead B
Lead D
Lead E
Gas Chimneys
3/27-2
Kraken
Discovery
Lead A
9/2b-1A
9/2b 9/1
Bressay
3/27a
Lead A
Lead C
Lead B
Lead D
Lead E
Gas Chimneys
3/27-2
Kraken
Discovery
Lead A
9/2b-1A
9/2b 9/1
Lead South
Lead North
9/1 8/5
Kraken
Discovery
Bressay
Lead A
9/2b-1A
9/2b
Lead South
Lead North
9/1 8/5
Kraken
Discovery
Bressay
Lead A
9/2b-1A
9/2b
  Fields & Discoveries
  Prospects & Leads
  Fields & Discoveries
  Prospects & Leads 16 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Maurrin-1
Le Vignau-1
Grenadae
Sur Adour-1
Grenadae
Sur Adour-2
Dax Play
Audignon
Ridge
Grenade
Oil Discovery
Albian
Gas Play
Grenade Oil
Discovery
•
 Discoveries/Fields
•
 Leads
Operational review
France
We have made our first acquisition  
in Europe.
Key Stats
Contains Grenade discovery (1975)
97 m oil column.
New seismic acquired end 2005.
Large stratigraphic trap confirmed.
Horizontal appraisal well planned  
for 2007.
Further exploration upside.
•
•
•
•
•
•
st Laurent Permit 
(Nautical 22%)
The Saint Laurent Permit in South  
West France contains the undeveloped 
Grenade heavy oil accumulation and 
several further hydrocarbon exploration 
plays. Nautical purchased a 22% interest 
from Masefield Energy Holdings AG in 
December 2005 (awaiting French 
Government approval) with the primary 
focus on the development of the Grenade 
discovery. The discovery well, Grenade-
Sur-Adour-1 was drilled by SNEAP (Elf) 
in 1975 and encountered a 97 metre oil 
column of 10 API oil in Cretaceous Albian 
carbonates. Between 1976 and 1985 
around 8,000 barrels of oil were recovered 
from intermittent tests, the well being 
finally plugged and abandoned during  
a period of low oil prices in 1985.
At the end of 2005, the Company 
acquired 40km of 2D seismic and 12km
2
 
of 3D seismic data over Grenade, and by 
integrating the new data with both 
existing reprocessed 2D seismic data  
and the results of an extensive core study 
on the Grenade-Sur-Adour 1 and 2 and 
Maurrin-1 reservoirs, were able to  
better define the trap. The resultant 
mapped trap is a large three-way up-dip 
pinch-out of the reservoirs on a low 
energy carbonate platform. Best estimate 
oil in place is with best estimate 
contingent resources of 12.6mmbo 
(2.8mmbo net to Nautical).
Extensive subsurface, facilities 
engineering and marketing studies have 
shown the field to have the potential for 
commercial development. To this end, a 
horizontal well is planned for 2007, which 
will be placed on long-term test. During 
this period the remaining, highly 
prospective exploration plays will be 
matured through the integration of 
extensive well data and interpretation  
of reprocessed 2D seismic data.
  Fields & Discoveries
  Prospects & Leads 17 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
The equity capital raisings in July 2005 
and January 2006, as well as the farm-out 
agreement reached with SK Corporation 
of South Korea, have assured the financial 
resources required for a comprehensive 
exploration and appraisal programme  
on several of the Group’s assets, with  
the aim of accelerating the production 
phase. At the same time, the agreed 
farm-out with SK Corporation helps to 
mitigate some of the exploration risks  
for the Group.
Results for the period
The Group recorded a loss of £7.3m  
for the period ended 30 June 2006, which 
included a charge of £5.1m for the write-
off of goodwill arising from the adoption 
of reverse acquisition accounting for 
consolidation purposes. The general  
and administrative expenses amounted 
to £1.9m, including a charge for the  
share options, and the exploration 
expenditure written-off in the period 
amounted to £0.7m.
Loss per share was 0.89p.
Cash flow and capital expenditure
As a result of the two equity capital 
raisings in the period totalling £18m,  
the Group closed the period with a 
healthy cash balance of £12.3m. This  
is after covering the cash consideration  
of the Alba Resources (Holdings)  
Group acquisition of £3.4m, the 
capitalised exploration expenditure of 
£2.7m and the cash portion of the general 
and administrative expenditure 
mentioned above.
Other capital expenditure amounted to 
£0.1m for the period, most of which was 
on the extended well test equipment. 
Balance sheet and financing
The balance sheet was considerably 
strengthened by the £18m of equity 
finance raised during the period, and  
the acquisition of the Alba Resources 
(Holdings) Group. Shareholders’ funds 
amounted to £53.2m as at 30 June 2006.
The Group is well funded for its 
forthcoming exploration and appraisal 
programme in 2007, having cash 
resources of £12.3m as at 30 June 2006, 
and the provision of the agreed farm-out 
with SK Corporation.
Financial instruments
The Group’s financial instruments 
comprise cash and liquid resources and 
various other items, such as trade debtors 
and creditors, which arise directly from 
its operations. It is, and has been 
throughout the period under review, 
Nautical’s policy that there is no trading 
in financial instruments.
The main risks currently arising from  
the Group’s financial instruments are 
foreign exchange risk, interest risk and 
liquidity risk. The Board reviews and 
establishes policies for managing each  
of these risks and monitors them on a 
regular basis.
No derivatives or hedges were entered 
into during the period under review.
Transition to International Financial 
Reporting standards
The Group has commenced the transition 
to International Financial Reporting 
Standards (IFRS) since 30 June 2006,  
and plans to issue the 31 December 2006 
interim and the 30 June 2007 final 
financial statements in accordance with 
IFRS. This will involve restating prior 
periods’ results and updating the Group’s 
accounting policies as necessary.
The future
Nautical Petroleum strategy is to focus on 
organic growth opportunities in our core 
markets, whilst making complementary 
“bolt-on” acquisitions. The financial 
performance of the Group during the last 
18 months reflects the actions to complete 
the transitional phase into a focused 
heavy oil production and development 
company with a clear objective, secured 
assets and the resources to move forward. 
We continue to place cash management 
at the forefront of our financial strategy 
and we are focused on minimising the 
Group’s working capital requirements. 
We intend to continue with niche 
acquisitions where they supplement  
our existing businesses.
Hemant Thanawala
Finance Director
22 September 2006
Financial  
review
I am pleased to report a healthy  
financial position of the Group  
as at 30 June 2006. 18 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
1. Ian Williams 
Chairman
Ian’s wide-ranging industry experience 
encompasses 27 years with the  
Royal Dutch/Shell Group including 
appointments as Managing Director and 
Deputy Chairman, Shell South Africa, 
Vice President (Downstream), Shell 
Philippines and Head of Strategy & 
Consultancy (Downstream) at Shell 
International Petroleum Company.
 
Ian became Chairman of Nautical on 
1 April 2005. Ian joined the Masefield 
Group in 1999 and holds directorships  
in several Group companies.
2. steve Jenkins 
Chief Executive 
Stephen has an MSc in Petroleum 
Geology and DIC from Imperial College  
of Science and Technology (University of 
London), a BSc Hons in Geology from  
the Queen’s University Belfast, and is  
a Fellow of the Geological Society  
of London.
As part of a 20 year career in oil and  
gas, Stephen spent the 11 years prior to 
joining Masefield at Nimir Petroleum  
as Business Development and HSE 
Manager, where he was responsible  
for acquisition strategy and technical 
dimensions of strategic planning. 
 
Stephen became Chief Executive of 
Nautical on 1 April 2005, having joined 
the Masefield Group in 2003 to be 
responsible for all upstream technical 
management prior to floating the 
Masefield assets through Nautical.
Board of  
Directors
1 2
3 4
5 6
7 19 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
3. Hemant Thanawala
Finance Director 
Hemant is a Chartered Accountant  
with over 25 years’ professional and 
commercial experience, qualifying in 
1981 with KMG Thomson McLintock 
(now KPMG). Post qualification, he  
was in professional practice for eight 
years before serving as Chief Financial 
Officer of Rostel Holdings Group for  
nine years and Premier Telesports  
Group for three years.
 
Hemant became Finance Director of 
Nautical on 1 April 2005. Having joined 
the Masefield Group in 2001, Hemant 
holds directorships in several Group 
companies.
4. Paul Jennings
Commercial Director
Paul has over 25 years’ experience in  
the oil and gas sector spanning the  
roles of accountant, economist and 
commercial and business development 
director. He has worked with BP and 
acted as adviser to the Russian and 
Chinese Governments.
Paul became Commercial Director of 
Nautical on 1 April 2005. Paul joined  
the Masefield Group in 2000, assuming 
responsibilty for exploration and 
production finance and business 
development.
5. Philip Dimmock 
Non-Executive Director
Philip has over 30 years’ experience in 
the upstream oil and gas business, both 
in the UK and internationally. He spent a 
significant part of his career at BP in a 
wide variety of senior positions, and at 
Ranger Oil where he held the post of Vice 
President of the International Division, 
and served as Chairman. He has also 
been an Executive Officer of the UK 
Offshore Operators Association.
6. Patrick kennedy
Non-Executive Director
Patrick is a Chartered Accountant  
with bachelors and masters degrees  
in Economics and has over 20 years 
experience in business development  
and strategy, working with corporate 
leaders and high net worth individuals  
in the UK and overseas. He is CEO of  
PK Group, the London based financial 
services group and serves on the  
Boards of both publicly listed and  
private companies.
 
A director since 30 May 2002, Patrick is 
Chairman of Nautical’s Audit Committee. 
7. Christopher g ill 
Company Secretary
Christopher is Fellow of the Institute of 
Chartered Accountants in England and 
Wales with an Honours degree in Law 
and with over 30 years’ experience  
of working as a company secretary. 
During that time, he has been assistant 
secretary with the Institute of Advanced 
Motorists, secetary of Anthony Gibbs & 
Sons plc and of Harrisons & Crosfield plc. 
Christopher now manages company 
secretarial matters for clients of  
PK Partners LLP and is also company 
secretary of CCH International Plc. 20 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Shareholder
information
Registered Office
Northumberland House
15 Petersham Road
Richmond, Surrey
TW10 6TP
Corporate Office
Parnell House
25 Wilton Road
London
SW1V 1y D
+44 20 7550 4890
+44 20 7550 4946
www.nauticalpetroleum.com
Nominated Adviser and Broker
As from 13 October 2005
Bridgewell Limited
Old Change House
128 Queen Victoria Street
London 
EC4V 4BJ
solicitors
Stringer Saul
17 Hanover Square
London
W1S 1HU
Financial Public Relations
Buchanan Communications Limited
45 Moorfields
London
EC2y 9AE
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Auditors 
Ernst & Young
Blenheim House
Fountainhall Road
Aberdeen
AB15 4DT 21 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
Directors’ report
The Directors present their report and the Group financial statements for the 18 months ended 30 June 2006.
Principal activities
The principal activity of the Company is heavy oil exploration, development and production in the UK and Europe. 
Reverse acquisition and admission to AIM
On 1 April 2005 following the reverse takeover of Bullion Resources Plc, the Group began to trade on AIM and the Company 
changed its name to Nautical Petroleum plc.
Results and dividends
The Group’s loss for the period was £7.3m, including the write-off of goodwill of £5.1m arising on the adoption of reverse 
acquisition accounting and a £1.3m charge for share option costs. The directors do not recommend the payment of a dividend  
for the period.
Share capital
During the period the Company issued the following ordinary 1p shares:
      Ordinary  
Date  Issued share capital   Issue price 1p shares
1 April 2005  Shares issued on AIM listing   8.46p 697,500,000
4 July 2005  Private Equity Placing   9.00p 88,888,889
16 August 2005  Alba Resources (Holdings) Group Acquisition  12.00p 84,591,328
16 August 2005  First Mariner Limited Acquisition  12.00p 26,064,292
3 January 2006  Private Equity Placing   10.25p 97,585,371
30 June 2006      994,629,880
In addition, the Group issued 41.5 million share options and 26.3 million share warrants, details of which are set out in note 18  
to the financial statements. As at the balance sheet date there were 127,870,012 unissued ordinary shares of 1p each. 
Significant events
Following the reverse acquisition of Bullion Resources Plc, the Group commenced trading on AIM on 1 April 2005.
Two private equity placings were made in the period under review. On 4 July 2005, the Company raised £8.0m and on  
3 January 2006 the Company raised £10.0m. 
Two acquisitions were made on 16 August 2005. 100% of Alba Resources (Holdings) Group was acquired for £13.6m. The 
consideration being £3.4m in cash and 84,591,328 shares at 12.0p per share. At the same time, 100% of First Mariner Limited was 
acquired from Masefield Energy Holdings AG for a consideration of £3.1m, discharged by the issue of 26,064,292 shares at 12.0p 
per share. The principal asset of Alba Resources (Holdings) Group is a 26.67% interest in the Mariner field. First Mariner Limited 
had acquired certain rights to this field. By acquiring First Mariner Limited at the same time as the Alba Resources (Holdings) 
Group, the Company took control over all aspects of its 26.67% share of the Mariner field. 
On 9 June 2006 the Company announced that it had farmed out four blocks to SK Corporation of South Korea, details of which are 
in the Chief Executive’s review on pages 6 and 7. The arrangements are expected to be concluded in late September 2006.
Review of business and future developments
A discussion of the business and future developments are set out in the Chief Executive’s review on pages 6 and 7. 22 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Directors and their interests
The beneficial and other interests of the directors and their families in the shares of the Company for the directors holding office 
at 30 June 2006 were:
Number of ordinary shares and options held: 
 At date of appointment  
 or 1 January 2005  At 30 June 2006
  Ordinary Share  Ordinary Share 
  shares options  shares options 
  Number Number  Number Number
I Williams (Chairman)  25,110,000 4,000,000  25,631,286 8,000,000
S Jenkins (Chief Executive)  16,740,000 5,000,000  17,521,929 11,000,000
H Thanawala (Finance Director)  15,512,400 4,000,000  15,773,043 7,000,000
P Jennings (Commercial Director)  16,740,000 4,000,000  17,521,929 8,000,000
P Dimmock (Non-Executive Director)  Nil 1,500,000  Nil 3,000,000
P Kennedy (Non-Executive Director)  1,500,000 Nil  1,500,000 3,000,000
The above directors were appointed on 1 April 2005, with the exception of P Kennedy, who has been a director throughout the 
period. The other directors of Bullion Resources Plc, prior to the reverse acquisition, C Bird, M Burne and J Meiring, resigned  
on 1 April 2005.
The interests of I Williams are held through Tile House Limited, a Jersey registered company whose ultimate beneficiaries are 
members of I Williams’ family.
The interests of H Thanawala are held through Foscote International Limited, a British Virgin Islands registered company whose 
ultimate beneficiaries are members of H Thanawala’s family.
Retirement of directors
P Jennings and H Thanawala retire in accordance with section 108 of the Company’s articles of association and offer themselves 
for re-election.
Events subsequent to the balance sheet date
On 25 July 2006 the Company announced that it had entered into an agreement to acquire a 98.5% interest in the Bluebeard 
(9/12B) and Skipper (9/21) discoveries in the East of Shetland Platform from Engen Resources Limited, details of which are in  
the Chief Executive’s review.
On 11 September 2006 the Company held an EGM to increase the authorised share capital of the Company from £12m to £16m.
Substantial shareholders
At 30 June 2006 the following had a disclosable interest in 3% or more of the nominal value of the ordinary share capital  
of the Company:
     Number of shares Percentage
Masefield Energy Holdings AG     534,730,134 49.9%
Morstan Nominees Ltd     73,933,942 6.9%
MHR Limited     63,347,561 5.9% 
Goldman Sachs Securities     56,030,488 5.2%
Mariner Expro Ltd     45,523,250 4.2%
Mellon Nominees Ltd     44,521,100 4.2%
Subsequent to the balance sheet date Masefield Energy Holdings AG reduced its shareholding to 45.3%.
Directors’ report continued 23 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
Employees
The success of the business depends upon maintaining a highly qualified and well-motivated workforce and every effort is  
made to achieve a common awareness of the financial and economic factors affecting the performance of the Group. Nautical 
Petroleum, despite being a young company, is committed to being an equal opportunity employer and plans to engage employees 
with broad backgrounds and skills. 
Status
The Company is not a close company as defined in the Income and Corporation Taxes Act 1988.
Nominated adviser and broker
On 13 October 2005 the Company announced the change of the Nominated Adviser and Broker to Bridgewell Securities Limited.
Supplier payment policy and practice
It is the Group’s policy to settle the terms of payment with suppliers when agreeing the terms of the transaction, to ensure that 
suppliers are aware of these terms and to abide by them. Trade creditors at 30 June 2006, amount to 39 days of purchases made  
in the period.
Financial instruments
The Group’s principal financial instruments comprise cash balances, balances with related parties, and other debtors or creditors 
that arise through the normal course of business as set out in note 25. The Group’s financial risk management objectives and 
policies are set out in the Financial Review on page 17.
Board committees
Information on the Audit Committee and the Remuneration Committee is included in the Corporate Governance section of the 
Annual Report on pages 25 and 26. The report of the Remuneration Committee will be the subject of an ordinary resolution at  
the Annual General Meeting.
Director’s liabilities
Subject to the conditions set out in the Companies Act 1985, the Company has arranged appropriate directors and officers 
insurance to idemnify the directors against liability in respect of proceedings brought by third parties. Such provision remains  
in force at the date of this report.
Auditors
A resolution to reappoint Ernst & Young LLP as auditors will be proposed at the forthcoming Annual General Meeting at a fee  
to be agreed in due course by the Audit Committee and the directors.
Annual General Meeting
The Annual General Meeting will be held on 20 October 2006 as stated in the Notice of Meeting, which accompanies this  
Annual Report.
By Order of the Board.
Christopher Gill
Company Secretary
22 September 2006 24 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Directors’ emoluments
The details set out below need not and do not comply with Sch7A of the Companies Act 1985.
The Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements 
for all executive directors and the Executive Team. The Remuneration Committee assesses the appropriateness of the nature  
and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the 
overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.
To assist in achieving these objectives, the Remuneration Committee links the nature and amount of executive directors’ and 
officers’ emoluments to the Company’s financial and operational performance. 
Details of the nature and amount of each element of the emoluments of each director of the Company for the previous 18 months 
are as follows:
      Total 
 Salary Fees Bonus Pension Other June 2006 
Name  £’000 £’000 £’000 £’000 £’000 £’000
S Jenkins  132 – 47 9 3 191
I Williams  – 60 – – – 60
H Thanawala  – 50 – – – 50
P Jennings  – 68 – – – 68
P Dimmock  – 15 – – – 15
P Kennedy  – 15 – – – 15
Total 132 208 47 9 3 399
I Williams, H Thanawala and P Jennings provide services to the Company through a service agreement with Masefield Energy 
Services Limited, which is a related party.
Share options granted to directors
 7 March 2005  26 September 2005
  Number Exercise price   Number Exercise price 
  of shares per share  of shares per share
I Williams  4,000,000 4.0p  4,000,000 11.0p
S Jenkins  5,000,000 4.0p  6,000,000 11.0p
H Thanawala  4,000,000 4.0p  3,000,000 11.0p
P Jennings  4,000,000 4.0p  4,000,000 11.0p
P Dimmock  1,500,000 4.0p  1,500,000 11.0p
P Kennedy  1,500,000 4.0p  1,500,000 11.0p
For the share options granted on 7 March 2005, each share option may be exercised in respect of 50% of the number of ordinary 
shares at any time after 1 April 2006 and in respect of the balance at any time after 1 April 2007. All share options must be 
exercised before 1 April 2008. For the share options granted on 26 September 2005, each share option may be exercised in respect 
of 50% during the period 27 September 2006 to 26 September 2010 and in respect of the remainder, the period 27 September 2007 
to 26 September 2010.
Philip Dimmock
Chairman of the Remuneration Committee
22 September 2006
Remuneration report 25 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
As the Company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange, it is not required to comply 
with the provisions of the Combined Code. However, the Board is committed to the high standards of good corporate governance 
embodied in the Combined Code on Corporate Governance and seeks to apply the principles of the Combined Code where 
practicable for a company of Nautical’s size and complexity.
Board of directors
The Board is responsible for the direction and overall performance of the Group with emphasis on policy and strategy, financial 
results and major operational issues. 
The Code recommends that at least one-third of Board members should be non-executive directors. The Board comprises four 
executive and two non-executive directors who are independent of management and do not participate in the Group’s bonus  
or pension schemes although both non-executive directors have share options and Mr P Kennedy is a shareholder. 
The roles of the Chairman and Chief Executive, both of which are executive, are separate, thus ensuring a division of 
responsibility at the head of the Group. 
The Chief Executive is employed under a service contract with the Company but the services of the other executive directors  
are secured through a contract for services with Masefield Energy Services Limited, a related party. 
All directors are subject to re-election by shareholders every three years and, on appointment, at the first Annual General 
Meeting after appointment.
Appropriate directors and officers’ liability insurance has been arranged by the Company.
Meetings of the Board of Directors
The Board meets at least four times a year after all relevant information has been circulated in good time, to discuss a formal 
scheduled agenda covering key areas of the Group’s affairs including operational and financial performance and quarterly 
management accounts. 
All members of the Board are expected to attend Board Meetings which are scheduled in advance and full attendance was 
achieved throughout the period.
Audit Committee
The Audit Committee comprises the two non-executive directors and is chaired by P Kennedy. Executive directors may attend  
by invitation. The minutes of every meeting are taken by the Chairman and circulated to the Board at the next Board Meeting  
at which the Chairman provides a verbal report of meetings of the Committee.
The Audit Committee, which meets at least twice a year, is responsible for keeping under review the scope and results of the 
audit, its cost effectiveness and the independence and objectivity of the auditors. It also has oversight responsibility for public 
reporting and the Company’s internal controls. 
Corporate governance 26 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
Remuneration Committee
The Remuneration Committee is chaired by P Dimmock and its other member is P Kennedy. The minutes of every meeting are 
taken by the Chairman and circulated to the Board at the next Board Meeting at which the Chairman provides a verbal report  
of meetings of the Committee.
The Remuneration Committee, which meets at least twice a year, is responsible for considering the remuneration packages for 
executive directors and the bonus and share option strategy for the Group and making recommendations as appropriate.
The Remuneration Committee is also responsible for reviewing the performance of the executive directors and ensuring that they 
are fairly and responsibly rewarded for their individual contributions to the Group’s overall performance. The Committee’s scope 
extends to all remuneration of directors including bonus and share options.
None of the Committee has any day-to-day involvement in running the Company and no director participates in discussions 
about his own remuneration.
Internal control
The Board is responsible for the effectiveness of the Group’s internal control and is supplied with information to enable it to 
discharge its duties. Internal control systems are designed to meet the particular needs of the Group and to manage rather than 
eliminate the risk of failure to meet business objectives and can only provide reasonable and not absolute assurance against 
material misstatement or loss.
Patrick Kennedy
Chairman of the Audit Committee
22 September 2006
Corporate governance continued 27 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
The directors are responsible for preparing the report and financial statements in accordance with applicable UK law and UK 
Generally Accepted Accounting Practice.
The directors are required to prepare financial statements for each financial period, which give a true and fair view of the state of 
affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing those financial statements, the 
directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and 
explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will  
continue in business.
The directors are responsible for maintaining and keeping proper accounting records which disclose with reasonable accuracy  
at any time the financial position of the Company and the Group and to enable them to ensure that the accounts comply with the 
Companies Act 1985. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking 
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are also responsible for the maintenance and integrity of the Group’s website on the internet. However, information 
is accessible in many different countries where legislation governing the preparation and dissemination of financial statements 
may differ from that applicable in the United Kingdom. 
•
•
•
•
Directors’ responsibilities for the  
financial statements 28 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
We have audited the Group and parent company financial statements (the “financial statements”) of Nautical Petroleum PLC for 
the 18 month period ended 30 June 2006 which comprise the Consolidated profit and loss account, the Consolidated statement  
of total recognised gains and losses, Reconciliation of movements in consolidated shareholders’ funds, the Consolidated and 
Company balance sheets, the Consolidated cash flow statement, and the related notes 1 to 28. These financial statements have 
been prepared under the accounting policies set out therein.
This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985.  
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state  
to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume 
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report,  
or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United 
Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) as set out in the Statement 
of directors’ responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and 
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in 
accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ report is not consistent with  
the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and 
explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other transactions 
is not disclosed.
We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial 
statements. This other information comprises only the Highlights, Chairman’s Statement, Our period in review, Heavy oil 
overview, Chief Executive’s review, Operational review, Financial review, Board of Directors, Shareholder information, the 
Remuneration report, the Corporate governance statement, the Supplementary information and the Glossary. We consider the 
implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial 
statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing 
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the 
financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the 
preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s and Company’s 
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in  
order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material 
misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall 
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted 
Accounting Practice, of the state of the Group’s and the parent company’s affairs as at 30 June 2006 and of the Group’s loss for  
the year then ended; and the financial statements have been properly prepared in accordance with the Companies Act 1985.
Ernst & Young LLP
Registered auditor
Aberdeen
22 September 2006
Independent auditors’ report to the members  
of Nautical Petroleum plc 29 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
     18 months  12 months 
     ended  ended 
   Ongoing Acquisitions 30 June 2006 31 December 2004 
  Notes £’000 £’000 £’000 £’000
Turnover  3 – – – –
Cost of sales   (79) – (79) –
Gross (loss)   (79) – (79) –
Exploration costs written off  4 (123) (561) (684) –
Administrative expenses  4,6 (45) (1,838) (1,883) (19)
   (247) (2,399) (2,646) (19)
Goodwill on reverse acquisition  22 – (5,077) (5,077) –
Operating (loss)  4 (247) (7,476) (7,723) (19)
Interest income  8 – 432 432 –
(Loss) on ordinary activities before taxation   (247) (7,044) (7,291) (19)
Tax on loss on ordinary activities  9 – – – –
(Loss) on ordinary activities after taxation   (247) (7,044) (7,291) (19)
Minority interests   11 – 11 (2)
Retained (loss) attributable to shareholders   (236) (7,044) (7,280) (21)
     Pence Pence
Basic and diluted loss per share  10   (0.89) (0.03)
Basic and diluted loss per share from continuing operations 10   (0.89) (0.03)
Consolidated profit and loss account 
for the 18 months ended 30 June 2006 30 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
     18 months  12 months 
     ended  ended 
     30 June 2006 31 December 2004 
     £’000 £’000
(Loss) for the financial period attributable to shareholders    (7,280) (21)
Exchange difference on re-translation of net investments    1,147 (822)
Total recognised (losses) for the period     (6,133) (843)
Reconciliation of movements in  
consolidated shareholders’ funds
For the period ending 30 June 2006
     18 months  12 months 
     ended  ended 
     30 June 2006 31 December 2004 
    Notes £’000 £’000
Total recognised (losses)     (6,133) (843)
Proceeds of ordinary shares issued for cash    19 1,865 –
Premium on ordinary shares issued for cash    19 16,137 –
Cost associated with issuance of shares    19 (947) –
Reverse acquisition capital adjustment    22 6,556 –
Shares issued for acquisition of Nautical Petroleum AG    – 5,289
Capital reserve on acquisition of Nautical Petroleum AG    – 14,031
Capital contribution of assets to Nautical Holdings Limited    – 2,702
Shares issued for the acquisition of Alba Resources (Holdings) Group  22 10,151 –
Shares issued for the acquisition of First Mariner Limited   22 3,128 –
Share option charges    19 1,251 –
Net change in shareholders’ funds     32,008 21,179
Shareholders’ funds brought forward     21,179 –
Shareholders’ funds at end of the period      53,187 21,179
Consolidated statement of total recognised  
gains and losses
For the period ended 30 June 2006 31 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
     At At 
     30 June 2006 31 December 2004 
    Notes £’000 £’000
Fixed assets
Intangible assets    12 49,551 25,097
Tangible assets    13 2,732 2,702
Total fixed assets     52,283 27,799
Current assets
Trade debtors and other receivables    15 733 –
Cash at bank and in hand     12,300 8
Total current assets     13,033 –
Creditors: amounts falling due within one year    16 (1,902) (466)
Net current assets/(liabilities)     11,131 (458)
Total assets less current liabilities     63,414 27,341
Non-current liabilities
Creditors    17 (3,732) –
Total net assets     59,682 27,341
Capital and reserves
Called up share capital    18 9,627 100
Share premium    19 20,116 5,189
Merger reserve    19 12,173 –
Warrant reserve    19 263 –
Capital reserve    19 14,031 14,031
Capital contribution    19 2,702 2,702
Profit and loss reserves    19 (5,725) (843)
Shareholders’ funds     53,187 21,179
Minority interests     6,495 6,162
Total equity     59,682 27,341
The financial statements, accompanying accounting policies, and notes 1 to 28 (forming an integral part of these financial 
statements), were approved by the Board on 22 September 2006 and were signed on its behalf by:
I Williams H Thanawala
Chairman Finance Director
Consolidated balance sheet 
As at 30 June 2006 32 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
     At At 
     30 June 2006 31 December 2004 
    Notes £’000 £’000
Fixed assets
Intangible assets    12 221 –
Tangible assets    13 4 –
Investments    14 11,884 –
Total fixed assets     12,109 –
Current assets
Trade debtors and other receivables    15 2,716 34
Cash at bank and in hand     12,228 1,886
Total current assets     14,944 1,920
Creditors: amounts falling due within one year    16 (659) (64)
Net current assets     14,285 1,856
Total net assets     26,394 1,856
Capital and reserves
Called up share capital    18 10,721 775
Share premium    19 19,383 4,456
Warrant reserve    19 263 –
Profit and loss reserves    19 (3,973) (3,375)
Shareholders’ funds     26,394 1,856
The financial statements, accompanying accounting policies, and notes 1 to 28 (forming an integral part of these financial 
statements), were approved by the Board on 22 September 2006 and were signed on its behalf by:
I Williams H Thanawala
Chairman Finance Director
Company balance sheet 
As at 30 June 2006 33 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
     18 months 12 months 
     ended  ended 
     30 June 2006 31 December 2004 
    Notes £’000 £’000
Net cash flow from operating activities    20 (995) (19)
Returns on investments and servicing of finance
Interest income     302 –
Capital expenditure and financial investment
Purchase of tangible fixed assets     (99) –
Purchase of intangible fixed assets     (2,687) (135)
Disposal of intangible fixed assets     – 278
     (2,786) 143
Acquisitions and disposals
Purchase of the Alba Resources (Holdings) Group    22 (3,514) –
Net cash received on acquisition of Bullion Resources Plc   22 1,545 –
Net cash received on acquisition of the Alba Resources (Holdings) Group  22 39 –
     (1,930) –
Net cash inflow/(outflow) before financing     (5,409) 124
Financing
(Repayment)/drawn down under facility from related undertaking  21 646 (116)
Proceeds from issue of ordinary shares    18 18,002 –
Costs associated with share issues    19 (947) –
Net cash inflow/(outflow) from financing     17,701 (116)
Increase in cash     12,292 8 
Reconciliation of net cash/(debt)
     18 months 12  months 
     ended  ended 
     30 June 2006 31 December 2004 
    Notes £’000 £’000
Increase in cash in the period     12,292 8
Cash (inflow)/outflow from (increase)/decrease in loans   21 (646) 116
Amount due to related undertakings acquired with subsidiary    – (576)
Loan acquired with subsidiary     (363) –
Effect of exchange rate differences     16 –
Movement in net cash/debt     11,299 (452)
Net (debt) at start of period     (452) –
Net cash/(debt) at end of period     10,847 (452)
Consolidated cash flow statement
For the period ended 30 June 2006 34 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
1. Accounting policies
Basis of preparation
The financial statements have been prepared under the historic cost convention and in accordance with applicable United 
Kingdom accounting standards. With regard to accounting for the reverse acquisition, the true and fair view override has been 
applied as set out in note 2. 
In addition to the requirements of UK accounting standards, the accounting for oil and gas exploration and production activities 
is guided by the Statement of Recommended Practice (“SORP”) “Accounting for Oil and Gas Exploration, Production and 
Decommissioning Activities” issued by the UK Oil Industry Accounting Committee on 7 June 2001. The financial information  
has been prepared in accordance with the provisions of the SORP.
Basis of consolidation 
The financial statements for the 18 months ended 30 June 2006 represent the results and assets of the Company and its 
subsidiary undertakings. The Group has adopted reverse acquisition accounting as set out in note 2.
Foreign currencies
Non-sterling transactions are translated into sterling, or where the functional currency of a Group company is not sterling  
into that functional currency, at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities are 
translated at the rate of exchange ruling at the balance sheet date. Realised exchange differences and unrealised translation 
differences are taken to the profit and loss account.
The financial statements of subsidiaries with non-sterling functional currencies are translated at the rate of exchange ruling at 
the balance sheet date. Exchange differences arising on retranslation of the opening net assets are taken directly to reserves.
Goodwill
Goodwill arising on consolidation, representing the excess of the fair value of the consideration given over the fair values of the 
identifiable net assets acquired, is capitalised and amortised, using an appropriate method with regard to the type of assets 
acquired, over its estimated useful economic life. It is reviewed for impairment at the end of the first full financial year following 
the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be 
recoverable.
The goodwill arising on the reverse acquisition of Bullion Resources Plc has been written off in the first financial period for the 
reasons explained in note 2.
Exploration, appraisal and development expenditure
The Company accounts for exploration and development costs on “the successful efforts” basis whereby all licence acquisition, 
exploration drilling and appraisal costs are initially capitalised as intangible assets in cost centres by well, field or exploration 
area, as appropriate, pending determination of commercial reserves. These costs are then written off, unless commercial reserves 
have been established or the determination process has not been completed. Following the establishment of commerciality, the 
attributable costs are transferred to tangible fixed assets, in a single field cost centre. Other pre-licence and exploration costs are 
initially capitalised and then written off in the period incurred. All development costs are capitalised on a field-by-field basis.
Commercial reserves
Commercial reserves are proven and probable oil and gas reserves, as defined in the UK SORP.
Depreciation of tangible fixed assets
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided to write  
off the costs less estimated residual values of each asset over its expected useful life on a straight line basis, as follows:
Extended well test equipment      20 years
Computers, fixtures and fittings      3 years
Impairment
The Group undertakes a review of impairment of a fixed asset or intangible asset, on a field-by-field basis, if events or changes in 
circumstance indicate that the carrying amount of the fixed asset or intangible asset may not be recoverable. To the extent that 
the carrying amount exceeds the recoverable amount (being the higher of the net realisable value and the value in use), the fixed 
asset or intangible asset is written down to its recoverable amount.
Exploration and appraisal costs capitalised pending determination of whether or not they have found commercial reserves are 
specifically exempt from the detailed rules for assessing impairment set out in FRS 11.
Notes to the financial statements 35 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
1. Accounting policies continued
Joint arrangements
Exploration, development and production activities are generally conducted jointly with other companies. Since these 
arrangements do not constitute entities in their own right, the financial statements reflect the relevant proportions of costs, 
revenues, assets and liabilities applicable to the Group.
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from  
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or 
substantially enacted by the balance sheet date.
Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, 
where transactions or events have occurred at that date, will result in an obligation to pay more, or a right to pay less or receive 
more, tax.
Pension costs
The Company contributes to a defined contribution scheme. Contributions are charged to the profit and loss account as they 
become payable.
Share option costs
The costs of share options are calculated as the difference between the exercise price and the price prevailing on the date of 
award. Where the share options are based on future performance criteria, the cost is charged to the profit and loss account over 
the period from when the share options come into effect and the date(s) when they can be exercised. Where the share options are 
granted for past performance, the cost is charged to the profit and loss account on the date the share options come into effect.
Cash and liquid resources
Cash for the purposes of the cash flow statement, comprises cash at bank and on short term deposit.
2. Reverse acquisition accounting
On 1 April 2005 the Company became the legal parent company of Nautical Holdings Limited in a share-for-share transaction  
and changed its name from Bullion Resources Plc to Nautical Petroleum plc. Due to the relative size of the companies, Nautical 
Holdings Limited shareholders became the majority holders of the enlarged share capital. Further, the Company’s continuing 
operations and executive management became those of Nautical Holdings Limited. Accordingly, the substance of the 
combination was that Nautical Holdings Limited acquired Nautical Petroleum plc in a reverse acquisition.
Under the requirements of the Companies Act 1985 it would normally be necessary for the Company’s consolidated accounts to 
follow the legal form of the business combination. In that case, the pre-combination results would be those of Nautical Petroleum 
plc and Nautical Holdings Limited would be included only in relation to its performance from 1 April 2005. However, this would 
portray the combination as the acquisition of Nautical Holdings Limited by Nautical Petroleum plc and would, in the opinion of 
the directors, fail to give a true and fair view of the substance of the business combination. Accordingly, the directors have 
adopted reverse acquisition accounting as the basis of consolidation in order to give a true and fair view.
In invoking the true and fair override the directors note that reverse acquisition accounting is endorsed under IFRS 3 and that the 
Urgent Issues Task Force (UITF) of the UK’s Accounting Standards Board has considered the subject and concluded that there 
are instances where it is right and proper to invoke the true and fair override in such a way (UITF Information Sheet 17).
By adopting reverse acquisition accounting for consolidation purposes, goodwill on acquisition arises, which has been fully 
written off to the profit and loss account because Bullion Resources Plc had no continuing business and therefore no intrinsic 
value. The goodwill is £5,077k, as set out in note 22.
Given that Nautical Holdings Limited was incorporated on 18 August 2004, the comparative figures for the prior year under 
reverse acquisition accounting are for the Nautical Holdings Group for the period from this date to 31 December 2004. The 
Company information presented is for the legal parent, Nautical Petroleum plc. 36 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
2. Reverse acquisition accounting continued
The effect on the consolidated financial statements of adopting reverse acquisition accounting, rather than following the legal 
form, are widespread. However, the following table indicates the principal effect on the composition of the reserves.
 
      Impact of 
    Reverse  Normal reverse 
    acquisition  acquisition acquisition 
    (as disclosed) accounting accounting 
    £’000 £’000 £’000
Called up share capital    9,627 10,721 1,094
Share premium    32,552 35,306 2,754
Capital reserve    14,031 14,031 –
Capital contribution    2,702 2,702 –
Profit and loss reserves    (5,725) (3,446) 2,279
Total shareholders’ funds    53,187 59,314 6,127
3. Turnover and segmental information
The Group is engaged in oil exploration, development and production in one geographical area, the UK and Europe. In the opinion 
of the directors, the Group’s activities comprise one class of business. As the Group’s activities are at the pre-revenue phase, no 
turnover has arisen to date.
4. Operating loss
     18 months 
     ended  
     30 June 2006 2004 
     £’000 £’000
Operating loss is stated after charging:
Auditors’ remuneration – audit services – Ernst & Young    58 –
                  – other     7 –
           – non-audit services      85 –
Goodwill on reverse acquisition     5,077 –
Exploration costs written off     684 –
Depreciation of fixed assets     71 –
Foreign exchange (gains)     (55) –
Share option charges     1,251 –
Operating lease payments     24 –
Staff costs including executive directors’ fees     435 –
Details of share options are set out in note 18.
Administration expenses relating to acquisitions in the period to June 2006 were £1,820k for Nautical Petroleum plc and £18k for 
the Alba Resources (Holdings) Group.
5. Information regarding directors’ emoluments
Aggregate directors emoluments, which exclude pensions, are £390k. The emoluments of the highest paid director were £182K. 
Contributions to his pension were £9K. One director was a member of a money purchase scheme. Further information is included 
in the Remuneration report.
6. Employees
Headcount
     Period ended  
     30 June 2006 2004 
     Number Number
Average number of employees of the Group (including executive directors) during the year was:
Management     4 –
Technical staff/support/other     2 –
Three directors provide services to the Company through a service agreement with Masefield Energy Services Limited, which  
is a related party.
Notes to the financial statements continued 37 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
6. Employees continued
Staff costs 
     18 months 
     ended  
     30 June 2006 2004 
     £’000 £’000
Wage and salaries     403 –
Social Security costs     20 –
Other pension costs     12 –
     435 –
Wages and salaries include fees for three executive directors through a service agreement with Masefield Energy Services Limited.
7. Pension commitments 
For direct employees of Nautical Petroleum plc, the Company contributes 7% of salary to a defined contribution pension scheme.
8. Interest and similar items 
     18 months 
     ended  
     30 June 2006 2004 
     £’000 £’000
Interest income     432 –
9. Tax on loss on ordinary activities
     18 months 
     ended  
     30 June 2006 2004 
     £’000 £’000
Loss on ordinary activities before tax     (7,291) (19)
Loss on ordinary activities before tax at the standard UK corporation tax rate of 30% (2004: 30%) (2,187) (6)
Effects of:
Disallowed expenses     1,512 –
Timing differences     605 –
Utilisation of prior years’ tax losses     (14) –
Current period UK tax losses not utilised     84 6
Total current tax on loss on ordinary activities     – –
The Group has tax losses of approximately £1.47m (2004: £1.17m) arising in the UK that are available indefinitely against future 
taxable profits. Deferred tax assets of approximately £692k (at 30%) have not been recognised as a result of existing uncertainties 
of their realisation. 
10. Loss per share
     18 months 
     ended  
     30 June 2006 2004
Operating loss for the period (£’000)     (7,280) (21)
Basic weighted average number of shares in issue in the period (000)   815,604 77,500
Basic loss per ordinary share (pence)     (0.89) (0.03)
Operating loss of continuing operations for the period (£’000)    (7,280) (21)
Basic weighted average number of shares in issue in the period (000)   815,604 77,500
Basic loss per ordinary share of continuing operations (pence)   (0.89) (0.03)
The calculation of basic loss per share is based on the loss for the period divided by the weighted average number of shares in the 
period. Potential ordinary shares resulting from the exercise of share options and warrants have an anti-dilutive effect. Therefore 
no diluted loss per share is presented.
11. Losses attributable to Nautical Petroleum plc
The loss for the period dealt with in the accounts of Nautical Petroleum plc was £1,820k (12 months to December 2004: loss  
of £115k). As provided by s230 of the Companies Act 1985, no profit and loss account is presented in respect of Nautical  
Petroleum plc. 38 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
12. Intangible assets
Goodwill 
     Group Company 
     £’000 £’000
At 1 January 2005     – –
Additions     5,077 –
Written off     (5,077) –
At 30 June 2006     – –
Exploration and appraisal  
     Group Company 
     £’000 £’000
At 1 January 2005     25,097 –
Additions     23,644 581
Exchange adjustments     1,494 –
Written off     (684) (360)
At 30 June 2006     49,551 221
The balance represents primarily the costs related to the fields currently being evaluated and appraised. No amounts have been 
charged to amortisation or impairment in respect of these intangible assets.
The above balances include amounts relating to a 6.67% interest in the Mariner Field, being carried by the Company. Upon field 
development approval, the party to the carry agreement has the option to earn back its 6.67% interest by reimbursement of costs 
during the development phase. These costs amount to approximately £8m as at June 2006. If the party declines to take up its 
option, the Company retains the 6.67% interest upon payment of £1.
13. Tangible assets
Group 
    Computers,  Extended 
    fixtures  well test 
    and fittings equipment Total 
    £’000 £’000 £’000
Cost
At 1 January 2005    – 2,702 2,702
Additions    19 94 113
Disposals/writeoffs    (12) –  (12)
At 30 June 2006    7 2,796 2,803
Depreciation:
At 1 January 2005    – – –
Charge for the period    1 70 71
At 30 June 2006    1 70 71
Net book value at 30 June 2006    6 2,726 2,732
Net book value at 31 December 2004    – 2,702 2,702
Company
      Computers,  
      fixtures  
      and fittings 
      £’000
Cost
At 1 January 2005      –
Additions      5
Disposals/writeoffs      –
At 30 June 2006      5
Depreciation:
At 1 January 2005      –
Charge for the period      1
At 30 June 2006      1
Net book value at 30 June 2006      4
Net book value at 31 December 2004      –
Notes to the financial statements continued 39 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
14. Investments
Company
      Total 
      £’000
Cost
At 1 January 2005      –
Additions in the period      11,884
At 30 June 2006      11,884
Details of subsidiary companies are shown in note 28. 
In accounting for the acquisitions of Nautical Holdings Limited, the Alba Resources (Holdings) Group and First Mariner  
Limited the Company has taken advantage of section 131 of the Companies Act 1985 and accounted for the transactions  
using merger relief.
15. Debtors
   Group  Company Group Company 
   30 June 2006  30 June 2006 31 December 2004 31 December 2004 
   £’000 £’000 £’000 £’000
Amounts owed by subsidiaries   – 2,470 – –
Other debtors   583 96 – 8
Prepayments and accrued interest   150 150 – 26
   733 2,716 – 34
16. Creditors – amounts falling due within one year
   Group  Company Group Company 
   30 June 2006  30 June 2006 31 December 2004 31 December 2004 
   £’000 £’000 £’000 £’000
Trade creditors   416 74 6 22
Amounts owed to related companies   1,079 538 460 –
Taxation and Social Security   18 18 – 1
Accruals   29 29 – 41
Loan payable   360 – – –
   1,902 659 466 64
The loan payable was due on 16 August 2006 and is settlement of amounts outstanding following the purchase of Alba Resources 
(Holdings) Group. Amounts owed to related parties are due on demand and are treated as creditors.
17. Creditors – amounts falling due after one year
   Group  Company Group Company 
   30 June 2006  30 June 2006 31 December 2004 31 December 2004 
   £’000 £’000 £’000 £’000
Creditors – amounts falling due after more than one year  3,732 – – –
The above comprise two amounts relating to the Mariner Field of: (1) US$4.0m due on field development plan (FDP) approval by 
the Department of Trade and Industry; and (2) US$2.8m due on first oil. 40 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
18. Share capital 
Group 
 At 30 June 2006  At 31 December 2004
  Number £’000  Number £’000
Authorised
Ordinary shares of £1 each  100,000  100  100,000 100
Ordinary shares of 1p each  1,200,000,000 12,000  – –
Allotted, called up and fully paid
Ordinary shares of £1 each  100,000  100  100,000 100
Reverse acquisition capital adjustment  697,500,000 6,556  – –
Ordinary shares of 1p each  297,129,880 2,971  – –
  994,729,880 9,627  100,000 100
Under reverse acquisition accounting, the legal parent is Nautical Petroleum plc, but the Group results are as if Nautical Holdings 
Limited were the parent. The 100,000 £1 shares are those of Nautical Holdings Limited and pre-date the reverse acquisition. 
Following the reverse acquisition, in order to give a true reflection of the changes in share capital, the Group shows the additions 
made for both Nautical Holdings Limited and Nautical Petroleum plc. The reverse acquisition capital adjustment is the deemed 
value of capital acquired on the reverse takeover and the associated number of shares is the share capital issued for the takeover.
Company 
 At 30 June 2006  At 31 December 2004
  Number £’000  Number £’000
Authorised
Ordinary shares of 1p each  1,200,000,000 12,000  400,000,000 4,000
Allotted, called up and fully paid
Ordinary shares of 1p each  1,072,129,880 10,721  77,500,000 775
During the period the Company issued the following ordinary 1p shares:
      Ordinary  
Date  Issued share capital   Issue price 1p shares
1 April 2005  Shares issued on AIM listing   8.46p 697,500,000
4 July 2005  Private Equity Placing   9.00p 88,888,889
16 August 2005  Alba Resources (Holdings) Group Acquisition  12.00p 84,591,328
16 August 2005  First Mariner Limited Acquisition  12.00p 26,064,292
3 January 2006  Private equity placing   10.25p 97,585,371
30 June 2006      994,629,880
The Group agreed in December 2005 the acquisition of 22% of the St Laurent Permit onshore France field for £47,500 with the 
consideration to be satisfied by the issuance of 387,755 new ordinary shares of 1p each subject to approval from the Ministere de 
l’Economie, des Finances et de I’Industrie, France. At the financial statements reporting date, Ministry approval is still pending 
and accordingly the shares have not yet been issued.
On 4 July 2005 the Group announced the issuance of 11,666,667 warrants to subscribe for new ordinary shares at 20p per share 
exercisable up to 3 July 2009. The Company has the right to require warrant holders to exercise their warrants should the closing 
price of the Company’s ordinary shares remain above 40p per share for 90 consecutive trading days in the period to 3 July 2009.
On 3 January 2006 the Group announced the issuance of 14,637,800 warrants to subscribe for new ordinary shares at 20p per 
share exercisable up to 3 January 2010. The Company has the right to require warrant holders to exercise their warrants should 
the closing price of the Company’s ordinary shares remain above 40p per share for 90 consecutive trading days in the period to 
3 January 2010.
Notes to the financial statements continued 41 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
18. Share capital continued
Share options
At the balance sheet date and at the date of this report, the following share options are outstanding:
Share options to subscribe for 20 million ordinary shares exercisable at 4p per share on or before 1 April 2008. Of these,  
10 million are not exercisable until 1 April 2007. All of these share options are held by directors as set out in the Directors’ report.
A further 20.5 million ordinary shares exercisable at 11p per share on or before 26 April 2010. Of these, 10.25 million are not 
exercisable until 27 September 2006 and 10.25 million are not exercisable until 27 September 2008. 20 million of these share 
options are held by directors as set out in the Directors’ report.
One million ordinary shares exercisable at 12.5375p were awarded on 23 September 2005 in association with the acquisition  
of the Alba Resources (Holdings) Group.
19. Reserves
Group
 Share Merger Warrant Capital Capital Profit and 
 premium reserve reserve reserve contribution loss reserve 
 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2005 5,189 – – 14,031 2,702 (843)
Shares issued in the period 15,874 12,173 263 – – –
Less cost of issues (947) – – – – –
Exchange gain – – – – – 1,147
Share option charges added back – – – – – 1,251
Loss for the period – – – – – (7,280)
At 30 June 2006 20,116 12,173 263 14,031 2,702 (5,725)
Company
     Share Warrant Profit and 
    premium reserve loss reserve 
    £’000 £’000 £’000
At 1 January 2005    4,456 – (3,375)
Shares issued in the period     15,874 263 –
Less costs of issue    (947) – –
Share option charges added back    – – 1,251
Loss for the period    – – (1,849)
At 30 June 2006    19,383 263 (3,973)
In accounting for the acquisitions of Nautical Holdings Limited, the Alba Resources (Holdings) Group and First Mariner  
Limited the Company has taken advantage of section 131 of the Companies Act 1985 and accounted for the transactions  
using merger relief.
20. Cash flow from operating activities
     18 months 
     ended  
     30 June 2006 2004 
     £’000 £’000
Reconciliation of operating loss to net cash inflow from operating activities
Operating (loss)     (7,723) (19)
Goodwill     5,077 –
Share options charges     1,251 –
Depreciation, depletion and amortisation (including intangible writeoff)   767 –
Foreign exchange losses     (55) –
(Increase) in accounts receivable     (146) –
(Decrease) in creditors     (166) –
Net cash (outflow) from operating activities     (995) (19) 42 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
21. Analysis of net cash/(debt)
  At    Exchange At 
  1 January 2005 Cash flow Acquisition differences 30 June 2006 
  £’000 £’000 £’000 £’000 £’000
Cash at bank and in hand  8 12,292 – – 12,300
Amounts due to related party undertakings  (460) (646) – 13 (1,093)
Short term loan  – – (363) 3 (360)
Net cash/(debt)  (452) 11,646 (363) 16 10,847
22. Acquisitions
Reverse acquisition of Bullion Resources Plc
On 1 April 2005 Bullion Resources Plc acquired 100% of Nautical Holdings Limited. The nature of the acquisition was a reverse 
takeover as set out in note 2.
      Book and  
      fair value of  
      Bullion assets  
      acquired 
      £’000
Net assets acquired of:
Debtors      36
Cash       1,545
Creditors      (102)
Net assets acquired      1,479
Goodwill      5,077
Consideration      6,556
In the absence of a reliable valuation of Nautical Holdings Limited, the cost of the business combination was calculated using  
the average price for the 10 dealing days prior to acquisition of 8.459p for the 77,500,000 shares in issue in Bullion Resources Plc 
at the date of acquisition.
In its last financial year to 31 December 2004 Bullion Resources Plc made a loss after tax of £115k. The summarised profit and  
loss for the period 1 January 2005 to 31 March 2005 is as follows:
      £’000
Operating loss      (46)
Interest income      17
Loss for the three months ended 31 March 2005     (29)
There were no recognised gains and losses in the three months ended 31 March 2005 other than the £314k loss above. Bullion 
Resources Plc, which changed its name to Nautical Petroleum plc on 1 April 2005 utilised £912k of the Group’s operating cash 
flow, contributed £302k of interest income and utilised £600k for capital expenditure.
Acquisition of Alba Resources (Holdings) Group
On 16 August 2005 the Group acquired 100% of the Alba Resources (Holdings) Group.
    Book value  
    of assets  Fair value 
    acquired adjustment 16 August 2005 
    £’000 £’000 £’000
Net assets acquired of:
Fair value of intangible assets     6,056 12,869 18,925
Computer equipment    7 – 7
Debtors    29 – 29
Cash     39 – 39
Creditors    (192) – (192)
Loans    (363) – (363)
Long term liabilities    (4,780) – (4,780)
Net assets acquired    796 12,869 13,665
Satisfied by:
Cash consideration on completion      3,432
Shares consideration  84,591,328 shares at 12.0p/share  10,151
Transaction costs    82
Total consideration      13,665
Notes to the financial statements continued 43 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
22. Acquisitions continued
Alba Resources (Holdings) Limited was incorporated 27 October 2004. The loss for the Company and its subsidiaries for the 
period to 30 June 2005 was £379k. The summarised profit and loss for the two months from 1 July 2005 to the acquisition is  
as follows:
      £’000
Operating loss      (287)
Loss for the two months ended August 2005      (287)
There were no recognised gains and losses in the two months ended August 2005 other than the £287k loss above.
The Alba Resources (Holdings) Group utilised £68k of the groups operating cash flow, contributed £2k of interest income and 
utilised £1,148k for capital expenditure.
Acquisition of First Mariner Limited
On 16 August 2005 the Group acquired a 100% interest in First Mariner Limited from Masefield Energy Holdings AG and  
minority parties. By virtue of Masefield Energy Holdings AG being a substantial shareholder in Nautical Petroleum Plc, then  
this transaction is deemed a related party transaction.
    Book value  
    of assets  Fair value 16 August 
    acquired adjustment 2005 
    £’000 £’000 £’000
Net assets acquired of:
Fair value of Intangible Assets     – 2,159 2,159
Receivable    969 – 969
    969 2,159 3,128
Satisfied by:
Shares consideration  26,064,292 shares at 12.0p/share  3,128
Total consideration      3,128
There have been no transactions since the acquisition.
23. Commitments
The Group has satisfied the minimum expenditure obligations on all licences.
24. Related party transactions
Executive directors, I Williams, H Thanawala and P Jennings provide services under a service agreement with Masefield Energy 
Services Limited. The charges in the period were £178k. 
Masefield Energy Services Limited is a 100% subsidiary of Masefield Energy Holdings AG, the parent company of Nautical 
Petroleum plc and provides services to companies within the Masefield Energy Holdings Group. Such shared services include the 
occupation of shared office space and facilities and some administrative functions and amounted to £181k, which was in addition 
to the services of the directors. At the period end an amount of £446k was due to Masefield Energy Services Limited.
Non-executive director P Kennedy is also a partner in PK Partners LLP which has provided accounting and consulting services  
to the Group and for the services of C Gill, the Company Secretary, for the amount of £103k. 
At the period end there was £538k due to Masefield Energy Holdings AG and £95k to UAH Limited, a subsidiary of Masefield 
Energy Holdings AG.
The acquisition of First Mariner Limited for £3.1m described in note 22 was a related party transaction with Masefield Energy 
Holdings AG. In addition the executive directors of Nautical Petroleum plc held 9.0% of the shares of First Mariner Limited at the 
date of the acquisition. 44 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006
25. Derivatives and other financial instruments
The Group’s principal financial instruments comprise cash balances, accounts payable and accounts receivable arising  
in the ordinary course of its operations. In accordance with FRS 13, the Group has taken advantage of the exemption  
permitting the exclusion of short term debtors and creditors from the following disclosures except for the currency  
risk disclosures.
Foreign currency risk
The Group does not generally undertake foreign currency hedging. The Group’s significant service and procurement contracts  
are denominated in British pounds.
The net monetary liabilities in currencies other than British pounds at the balance sheet date were US$7.4m. This included  
US$18,054 cash at bank held at the balance sheet date for Nautical Petroleum AG.
 
Commodity price risk
The Group currently has no production. When production commences, the Group may undertake commodity price hedging  
as appropriate.
Interest rate risk
The Group had a fixed rate financial liability at the year-end of US$580,576 with an interest rate of 5% relating to loans acquired  
with the Alba Resources (Holdings) Group. The Group has floating rate financial assets in the form of deposit accounts with  
major banking institutions.
Fair values of financial assets and liabilities
There are no material differences between the fair value of the Group’s financial assets and liabilities and their carrying values  
in the financial information.
Borrowing facilities
The Group had no external borrowing facilities.
26. Events subsequent to balance sheet date
On 25 July 2006 the Company announced that it had entered into an agreement to acquire a 98.5% interest in the Bluebeard 
(9/12B) and Skipper (9/21) discoveries in the East of Shetland Platform from Engen Resources Limited, details of which are  
in the Chief Executive’s review.
On 11 September 2006 the Company held an EGM to increase the authorised share capital of the Company from £12m to £16m.
27. Ultimate parent undertaking and controlling party
The directors consider Masefield Energy Holdings AG, a company registered in Switzerland, to be the ultimate controlling  
party by virtue of its 49.9% direct shareholding and 5.3% indirect shareholdings. The Nautical Group is included in the  
Masefield Energy Holdings AG consolidation, the accounts of which are not publicly available.
28. Subsidiary undertakings
  Country of  
  incorporation/ 
Subsidiary % interest held registration Activity
Nautical Holdings Limited 100% England Investment and oil equipment
Nautical Petroleum AG 75% Switzerland Exploration, development and production
Alba Resources (Holdings) Limited 100% Scotland Investment
Alba Resources Limited 100% Scotland Exploration, development and production
Mountwest 560 Limited 100% Scotland Exploration, development and production
Mountwest 561 Limited 100% Scotland Exploration, development and production
Mountwest 562 Limited 100% Scotland Dormant
First Mariner Limited 100% England Exploration, development and production
Nautical Petroleum AG carries out its activities through a UK Branch.
Notes to the financial statements continued NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2006 REPORT AND ACCOUNTS 2006 NAUTICAL PETROLEUM PLC
Nautical Petroleum plc is an independent 
hydrocarbon exploration and development 
company listed on the London AIM. The 
company’s mission is to acquire, develop 
and add value to discovered heavy oil,  
on the United Kingdom Continental Shelf 
and Europe.
 Contents
	 01	 Highlights
02	 Chairman’s	statement
03	 18	months	in	review
04	 Heavy	oil	–	an	overview
06	 Chief	Executive’s	review
08	 Operational	review	–	Our	portfolio
10	 Operational	review	–	UK	Continental	Shelf
16	 Operational	review	–	France
17	 Financial	review
18	 Board	of	Directors
20	 Shareholder	information
21	 Directors’	report
24	 Remuneration	report
25	 Corporate	governance
27	 Directors’	responsibilities	for	the	financial	statements
28	 Independent	auditors’	report
29	 Consolidated	profit	and	loss	account
30	 Consolidated	statement	of	total	recognised	gains	and	losses
30	 Reconciliation	of	movements	in	consolidated	shareholders’	funds
31	 Consolidated	balance	sheet
32	 Company	balance	sheet
33	 Consolidated	cash	flow	statement
33	 Reconciliation	of	net	cash/(debt)
34	 Notes	to	the	financial	statements
ibc	 Supplementary	information
ibc	 Glossary
Audit of Reserves and Resource Volumes for Annual Report and Accounts of Nautical Petroleum plc (“the Company”)
At	 your	 request,	 we	 have	 examined	 the	 estimates	 as	 of	 Reserves,	 Contingent	 and	 Prospective	 Resources	 set	 forth	 in	 the	 Company’s	 Annual	 Report	 and	 Accounts.	 Our	 examination	 included	 such	 tests	 and	 procedures	 as	 we	 considered	 necessary	 under	 the	 circumstances	 to	 render	 the	 opinion	 set	 forth	 herein.
We	 are	 independent	 with	 respect	 to	 the	 Company	 as	 provided	 in	 the	 Standards	 Pertaining	 to	 the	 Estimating	 and	 Auditing	 of	 Oil	 and	 Gas	 Reserve	 Information	 promulgated	 by	 the	 Society	 of	 Petroleum	 Engineers.
It	 should	 be	 understood	 that	 our	 above–described	 audit	 does	 not	 constitute	 a	 complete	 reserve	 and	 resource	 study	 of	 the	 oil	 and	 gas	 properties	 of	 the	 Company.	 In	 the	 conduct	 of	 our	 report,	 we	 have	 not	 independently	 verified	 the	 accuracy	 and	 completeness	 of	 information	 and	 data	 furnished	 by	 the	 Company	 with	 respect	 to	 ownership	 interests,	 agreements	 relating	 to	 current	 and	 future	 operations	 and	 sales	 of	 production,	 and	 likely	 development	 timing.	 We	 have,	 however,	 specifically	 identified	 to	 you	 the	 information	 and	 data	 upon	 which	 we	 so	 relied	 so	 that	 you	 may	 subject	 such	 to	 those	 procedures	 that	 you	 consider	 necessary.	 Furthermore,	 if	 in	 the	 course	 of	 our	 examination	 something	 came	 to	 our	 attention	 which	 brought	 into	 question	 the	 validity	 or	 sufficiency	 of	 any	 of	 such	 information	 or	 data,	 we	 did	 not	 rely	 on	 such	 information	 or	 data	 until	 we	 had	 satisfactorily	 resolved	 our	 questions	 relating	 thereto	 or	 independently	 verified	 such	 information	 or	 data.
Please	 be	 advised	 that,	 based	 upon	 the	 foregoing,	 in	 our	 opinion	 the	 above-described	 estimates	 of	 Company’s	 Proved	 plus	 Probable	 reserves	 and	 Best	 Estimate	 Contingent	 and	 Prospective	 Resources	 are,	 in	 the	 aggregate,	 reasonable	 and	 have	 been	 prepared	 in	 accordance	 with	 generally	 accepted	 petroleum	 engineering	 and	 evaluation	 principles	 as	 set	 forth	 in	 the	 Standards	 Pertaining	 to	 	 the	 Estimating	 and	 Auditing	 of	 Oil	 and	 Gas	 Reserve	 Information	 promulgated	 by	 the	 Society	 of	 Petroleum	 Engineers.	 We	 would,	 however,	 draw	 your	 attention	 to	 the	 following	 points:
The	 recoverable	 volumes	 in	 the	 Mariner	 field	 (Core	 and	 West	 areas)	 are	 classified	 as	 reserves	 based	 on	 your	 assurance	 that	 the	 field	 will	 be	 developed	 within	 a	 reasonable	 timeframe.	 The	 Society	 of	 Petroleum	 Engineers	 defines	 a	 reasonable	 timeframe	 to	 be	 a	 maximum	 of	 five	 years	 from	 the	 date	 of	 evaluation.	 Significant	 delays	 to	 development	 planning	 would	 require	 these	 volumes	 to	 be	 re-classified	 as	 contingent	 resources.
Estimates	 of	 reserves	 and	 resources	 are	 inherently	 imprecise	 and	 uncertain.	 Presentation	 of	 a	 single	 estimate	 does	 not	 illustrate	 this	 uncertainty.
Many	 of	 the	 Company’s	 projects	 are	 relatively	 immature	 and	 are	 the	 subject	 of	 ongoing	 technical	 evaluation	 by	 the	 Company.	 Although	 we	 deem	 the	 estimates	 to	 be	 reasonable,	 these	 estimates	 may	 be	 subject	 to	 significant	 change	 as	 new	 data	 	 become	 available.
We	 have	 not	 reviewed	 the	 “risking”	 or	 “chance	 of	 success”	 associated	 with	 any	 of	 the	 Prospective	 or	 Contingent	 Resources	 in	 your	 portfolio.
Francis Boundy
Director,	 Valuations	 RPS Energy Limited
18	 September	 2006
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Supplementary information
API	 American	Petroleum	Institute
®
bbl	 barrels
bcf	 billion	cubic	feet
bn	 billion
bopd	 barrels	of	oil	per	day
cp	 centipoises	 DST	 drill	stem	test
DTI	 Department	of	Trade	&	Industry
EWT	 extended	well	test
FDP	 field	development	plan
km	 kilometres
K	 thousand
m	 million
mmbo	 million	barrels	of	oil
MWD	 measurement	while	drilling
OWC	 oil-water	contact
UKCS	 United	Kingdom	Continental	Shelf
Glossary Nautical Petroleum plc
Report and Accounts 
2006
Nautical Petroleum plc
Parnell House
25 Wilton Road
London 
SW1V 1YD
T: 020 7550 4890
F: 020 7550 4946
www.nauticalpetroleum.com
Nautical Petroleum plc Report and Accounts 2006