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
2007
Nautical Petroleum plc Report and Accounts 2007 Audit of Reserves and Resource Volumes for Annual Report and Accounts of Nautical Petroleum plc  
(“the Company”)
We have been asked to provide an updated comment on the resources and reserves estimates of the Company. The Company 
asserts that there have been no material technical changes to the inputs and methods that the Company would use in the 
estimation of these quantities. The Company has also stated that it will not re-run economic evaluations of the properties 
despite changes in commodity prices.
On this basis, we can repeat our opinion that the Company’s estimates of Proved plus Probable reserves and Best Estimate 
Contingent and Prospective Resources are, in 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.
Since 2006, the company has acquired new acreage. RPS has reviewed contingent and prospective resource estimates in the 
Tudor Rose discovery and Catcher prospect, respectively. The Company advises that the Catcher prospect in Block 28/9 will 
be drilled in 2008. 
We draw your attention to the following points, one of which is repeated from last year:
We advise you to report Contingent Resources and Reserves (of any class) separately and not to present them as additive 
quantities. We understand that you have accepted this recommendation.
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 which we take 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.
Furthermore, the ongoing corporate activity associated with the Mariner discovery, involving a change of Operator subject 
to certain approvals, will itself not affect your above mentioned assurance on the speed of development.
Estimates of reserves and resources are inherently imprecise and uncertain. Presentation of a single estimate does not 
illustrate the uncertainty.
Many of the Company’s projects remain relatively immature are the subject to 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 
becomes available.
• We have not reviewed the “risking” or “chance of success” associated with any of the Prospective or Contingent Resources 
in your portfolio.
Yours faithfully,
Roy Kelly
Director, Valuations
RPS Group Plc
27 September 2007
•
•
•
•
•
Supplementary information
57 REPORT AND ACCOUNTS 2007 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.
01 Highlights
02 Chairman’s statement
04 Heavy crude oil
06 Chief Executive’s review
08 Operational review –  
Our portfolio
10 Operational review –  
UK Continental Shelf
20 Financial Director’s review
22 Board of Directors
24 Shareholder information
25 Directors’ report
27 Remuneration report
28 Corporate governance
29 Directors’ responsibilities for the 
financial statements
30 Independent auditors’ report
31 Consolidated income statement
32 Consolidated balance sheet
33 Consolidated statement of  
changes in equity
34 Consolidated cash flow statement
35 Notes to the financial statements
51 Nautical Petroleum plc Company only 
accounts 2007
54 Notes to the Company financial 
statements
IBC Supplementary information/Glossary
API American Petroleum Institute
®
bbl barrels
bcf billion cubic feet
bn billion
bopd barrels of oil per day
cp centipoises 
D Darcy
DBERR Department of Business, Environment  
and Regulatory Reform
DST drill stem test
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
Contents 01 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Highlights
 97
mmbo
Prospective resources
 22
mmbo
Reserves
 56
mmbo
Contingent resources
Nautical is about to drill its first 3 wells.
Secured rig slots to drill 3 wells in Q4 
2007: The Kraken appraisal and Mermaid 
exploration wells, and the Grenade 
appraisal well in France.
Agreed to farmout 10% of Mermaid  
to Silverstone in September 2007.
Success in all 24th Round applications:  
4 licences (7 traditional, 1 promote) with 
2 discoveries and 1 firm well.
Nautical now has:
• 13 UK Licences (17 full and part time 
blocks) and 1 French licence. Nautical 
operates 9 of the UK licences.
• 8 discoveries in the portfolio.
• 22 mmbo probable reserves, 56 mmbo 
contingent resources; and a further  
97 mmbo prospective resources.
Courtesy of Dolphin Drilling Limited
 18
Blocks 02 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Chairman’s
statement
I am pleased to present this Report and Accounts for  
Nautical Petroleum for the year to 30 June 2007.
Introduction 
The Company has not deviated from the 
objectives set and strategies defined at 
the time of admission to AIM in 2005 as 
a very early mover in the heavy oil sector. 
Nautical has made remarkable progress 
over the past two years and now enjoys 
the recognition of our peers and industry 
at large as a leading player in our field.
The strategy was born of conviction 
which continues to guide our focus and 
disciplined approach.
World trends and developments in the oil 
and energy sectors have broadly followed 
the path anticipated and strongly endorse 
the role and value of heavy oil in the 
future international market mix. 
The combination of global acceptance of 
the structural change and the impact of 
declining mature field production has led 
to something of a scramble for heavy oil 
prospects, both conventional and non- 
conventional, with majors assuming 
enormous new exposures in both sectors. 
The Company, having secured a quality 
portfolio, shared risk with aligned 
partners and defined an optimum multi-
block appraisal programme, is now fully 
prepared to proceed with confidence  
to the drilling phase and thereafter 
to production development, oil flow  
and revenue. 
Financial results 
The benefits of the “outsourced services” 
model were again evident in the results 
for 2007. Overhead costs were contained 
at a very modest level despite the 
substantial increase in activity on licence 
work programme commitments and 
preparatory to the appraisal drilling 
scheduled for late 2007 onwards. 
The Farmout programme served to 
spread risk and reduce costs for Nautical. 
This combined with the funds raised in 
2006, eliminated the need for any new 
equity placing during the period.
Nautical closed the financial year with 
sufficient funds to cover overheads and 
the projected net share of all confirmed 
appraisal activity through to early 2008.
The Company policy of equity financing 
in the pre-revenue phase will continue to 
guide the funding programme until the 
balance of risk and certainty changes. 
Dependent on the results of the drilling 
activities reconsideration of policy may 
be appropriate in the coming year.
New share issue was very limited and 
was only used for part payment of the 
acquisition of the BlueBeard and Skipper 
assets from Engen Resources Limited.
Assets and interests
Selective acquisition continued over the 
period to extend the portfolio within our 
preferred sector. Our policy of selective 
application resulted in the award of all 
four of the blocks applied for with 
partners under UKCS 24th Seaward 
Licensing Round. Nautical has adopted a 
guideline of a maximum 50% exposure  
in new licence applications to further 
spread risk while securing opportunity. 
All of the resulting participations are 
considered both prospective and a sound 
strategic fit.
The multi block farmout with Celtic Oil 
Limited (a subsidiary of SK Corporation of 
South Korea) closed as planned late 2006 
marking the beginning of a close and 
constructive working relationship on 
activities preparatory to the associated 
licence commitment programmes. 
Nautical appreciate the basis on which 
Chevron elected to withdraw from the 
Mariner field in the context of their world 
wide activities. On balance, the Company 
view this as a positive development 
opening the opportunity for an operator 
more closely aligned with our view  
on timing and approach to field 
development.  03 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
By 30 June 2007, the Company had 
progressed from the two “promote” 
licences held on admission to AIM in 
March 2005, to participations on 13  
UK licences containing 8 discoveries. 
Nautical is designated Operator in  
9 blocks. 
The combination of an expanded asset 
base, substantial secured participations 
and continued industry interest, will 
enable Nautical to rationalise and “high 
grade” the portfolio in the next phase of 
our development towards production and 
revenue. While appraisal results will 
clearly guide decisions on retention and 
disposal, optimising the portfolio will 
become a key focus and is fully 
compatible with the policy of affordable 
appraisal exposure and judicious sharing 
of associated risk. The Company may 
even consider relinquishing low ranked 
assets on a selective basis to conserve 
resources. 
Directors, staff and associates 
The combination of sound counsel from 
the non-executive directors and the 
talent, capabilities and dedication of the 
executive management have resulted in  
a further year of remarkable progress for 
Nautical.
Despite major growth in the portfolio  
of interests and associated activity, the 
outsource policy has been applied with 
commendable discipline with a focus  
on high quality services from selective 
associates and suppliers. This has been 
achieved at a time when pressure on 
skilled resources and engineering and 
related facilities capacity is at an all  
time high. 
Nautical has a small in-house executive 
team who have been fully stretched by 
the expanding scope of interests. Their 
efforts, commitment and performance 
have been outstanding by any standard. 
It has, however, become clear that 
additional full time professional support 
will be required in both the technical 
and commercial areas to achieve a sound 
internal-external balance in the next 
phase of the Company’s development. 
Outlook 
Nautical was an “early mover” in  
the heavy oil sector and subsequent 
developments have fully vindicated 
the underlying concept and prospects. 
World oil outlook, best indicated by 
continuing high oil price, is one of high 
demand growth driven by developing 
Eastern economies combined with 
supply uncertainty due to declining 
production from mature sources. The 
average production barrel becomes 
heavier and production development 
focus moves in the same direction. 
Demand for scarce services has driven 
costs to all time highs but this may be 
expected to normalise and restore 
margin to an industry which will adjust 
to operating within new structural 
parameters. The demand driven 
structural price change has reduced the 
potential impact of OPEC policy while, 
in addition, OPEC itself has become 
more aligned to current values than 
past norms. 
These factors have driven a major 
reconsideration of the role of heavy oil in 
meeting the future supply call and we 
could, ourselves, hardly have scripted a 
more favourable scenario. 
 
The interest and pace of intrusion of 
majors and national oil companies into 
the heavy oil sector has increased 
dramatically – both in the conventional 
and the non-conventional (shale and tar 
sands) sectors where the exposures are 
enormous and the margins less certain. 
Nautical strategy has thus far been to 
secure discovered undeveloped heavy oil 
in the UKCS and Europe. The Company is 
squarely in the “conventional heavy oil” 
space and selects opportunity which  
has the potential for production using 
proven technologies. 
The combination of early mover 
advantage, low cost resource acquisition 
and selective participation in the 
conventional sector, positions the 
Company to significant advantage at the 
high value end of the burgeoning heavy 
oil sector with a large portfolio of quality 
prospective resources. 
Nautical appears to be very much in the 
right place, with the right opportunity, 
at the right time. 
The Company moves forward to a key 
phase with the first of several drilling 
commitments starting from October 
2007. We have great expectations for the 
future and a belief that the support of our 
shareholders, investors, and partners  
will be suitably rewarded as Nautical 
progresses towards first production  
and beyond. 
 
Ian Williams
Chairman
1 October 2007
“
The Company, having 
secured a quality portfolio, 
shared risk with aligned 
partners and defined an 
optimum multi-block 
appraisal programme, is now 
fully prepared to proceed 
with confidence to the 
drilling phase and thereafter 
to production development, 
oil flow and revenue.
”
Courtesy of Dolphin Drilling Limited 04 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
° °
For upgrading
Forpremium
transportfuels
Crackerfeed
Powerfuel
Light products
Heavy fractions
Light products
Heavy fractions
For upgrading
Brent
38 API
Heavyoil
10-15 API
Heavy crude oil
The Mariner 
discovery has
14.5 API oil
 270k 
bopd
UK production of <23˚ API
 20
%
of UK production is from <23˚ API oil
The world has been producing conventional oil and gas for more than 130 years. It is now 
becoming harder to find and reserves are no longer being replaced at the same rate as they 
are being used. This has caused the oil industry to look more closely at non-conventional 
resources such as heavy oil. The industry has tended to produce the more valuable and least 
costly reserves first, but now it is faced with developing these more challenging resources. 
The two main areas where heavy oil accumulations can be found are Canada and Venezuela, 
although there are sizable undeveloped resources in the USA, UK North Sea, Colombia, 
Central and West Africa, Madagascar and the Far East. At current consumption rates 
conventional oil reserves can meet demand for the next 40 years. However, conventional oil 
production will start to decline much earlier than that and the energy shortfall will have to  
be met from other sources. Heavy oil will be required to meet most of this gap.
What is heavy oil?
Crude Oil gravity is measured in degrees API (American Petroleum Institute).  
A conventional oil such as UK North Sea Brent is 38º API, whereas heavy oil is 
considered anything below 20º API. There is very little production of heavy oil 
below 10º API as it commands a lower price, is more expensive to produce and 
more costly to transport. The heavy crude oil that Nautical Petroleum will 
produce is mainly 14-16º API.
All crude oils are a complex combination of chemical elements, the make-up 
being determined by the source that generated the oil and what the oil has been 
exposed to since it was generated. Through refining, each oil can be divided 
into many fractions, ranging from the almost solid residue to light gas. 
Heavy oil is a substance that has lost most of the light fractions. This occurs 
due to two main reasons: either the oil has been biodegraded by bacteria which 
have consumed most of the light fractions or the light fractions have escaped 
into the atmosphere over time. 
The more valuable oils have a higher proportion of light fractions. The light 
fractions are used by refiners to make the more valuable products such as 
gasoline and diesel. The heavy oils have a higher proportion of heavy residue 
which is used to make low-priced fuel oils.  05 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
0
10
20
30
40
50
60
70
80 US$/bbl
07 est. 06 05 04 03
How is it produced?
As well as being heavy these oils also 
tend to be very viscous. It is this 
characteristic that makes it more difficult 
and costly to produce. In order to produce 
these viscous oils various techniques can 
be applied to get them to surface. 
By heating the oil in situ it will become 
less viscous. It will then flow and can be 
pumped to surface. The most effective 
method of heating subsurface heavy oil  
is by injecting steam into the oil-bearing 
reservoir. This can be a very effective and 
efficient production method and is mainly 
applied to onshore reserves because the 
associated facilities required to generate 
the steam would be too expensive to 
locate offshore. The amount of oil that 
can be extracted from the original oil in 
place is known as the recovery factor. 
With this type of production technique it 
is possible to have a recovery factor of up 
to 70%.
In areas where heavy oil accumulations 
are found at shallow depths of less than 
100 metres, it is possible to mine the 
heavy oil. Here the oil and sand mixture 
is excavated and processed to separate 
the oil from the sand. The recovery  
factor can be greater than 90%. This 
technique is not suitable for an offshore 
environment. 
A less viscous heavy oil in a high-quality 
reservoir with good water drive can 
produce heavy oil using conventional 
technology. These circumstances exist 
with heavy oil reserves in the UK North 
Sea. The expected recovery factors for 
these fields are between 15-30%. Steam 
is not required for these developments. 
The Mariner discovery produced on 
average of 10,000bopd on an extended 
well test from one well which compares 
to 300bopd from each well in a Canadian 
steam injection project.
The heavy oils in the UK North Sea all 
tend to be acidic and are suitable for 
specialist refiners. Acidity can be 
problematic for conventional refiners,  
but there is a demand for these oils from 
refiners in the specialist base oil 
(lubricants) and road bitumen markets. 
These oils are also suitable for upgrading 
facilities where the heavy residue is 
processed to create more valuable 
products. There has been substantial 
investment in these facilities over  
recent years.
Nautical has concentrated on heavy  
oil resources because it was able to 
accumulate reserves at low prices, but 
anticipated that demand pressures would 
improve the value as the commodity 
prices increased. Nautical acquired its 
first licence in 2003 when the average 
spot price of Brent Crude was $28.83/bbl. 
Today Brent Crude is trading in excess  
of $70/bbl.
North Sea average Brent Crude oil spot price
“
The Mariner discovery produced on average of 10,000bopd  
on an extended well test from one well which compares to 
300bopd from each well in a Canadian steam injection 
project.
”
“ 
A less viscous heavy oil in a high-quality reservoir with good  
water drive can produce heavy oil using conventional  
technology.
” 06 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Chief Executive’s 
review
Your company has demonstrated that even smaller companies 
can be acknowledged experts in specific regions. We have an 
industry envied understanding of the hydrocarbon plays on 
the East Shetland Platform.
Nautical continues to build a broad base 
of heavy oil assets focused on the East 
Shetland Platform of the UKCS, 
augmented and complemented by 
carefully selected discoveries/blocks in 
the UKCS and Europe. Nautical remains 
the only UK listed company offering pure 
exposure to heavy oil development and 
near term, low risk exploration for 
considerable resources.
The current period has been one of 
preparation for Nautical’s first operated 
wells and seismic acquisition in the 
UKCS coupled with expansion of our 
extensive portfolio of appraisal 
opportunities and low risk, high impact 
exploration prospects. 
Highlights of the period have been 
securing drill slots for our operated wells, 
along with boats for seismic acquisition 
and our resounding success, in aligned 
partnerships in the 24th Seaward 
Licensing Round.
Expanding our portfolio
East Shetland platform – 
our core area
Your company has demonstrated  
that even smaller companies can be 
acknowledged experts in specific 
regions. We have an industry envied 
understanding of the hydrocarbon plays 
on the East Shetland Platform through 
the integrated interpretation of an 
extensive seismic and well database. 
Nautical has mapped the distribution  
of the Maureen formation across the 
platform, extending the play away from 
Mariner to Mermaid and to the north in 
Blocks 8/5 and 9/1. Similarly, with the 
Heimdal Formation, predictions of 
distribution will be tested in the Kraken 
well. Finally, the Dornoch Formation 
delta hydrocarbon distribution can now 
be confidently predicted. This knowledge 
reduces the risk on prospects and 
enables blocks to be selected for both 
licensing round applications (such as 
2/3a and 2/4b) and acquisition.
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, farmins 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.
• Farmout to mitigate portfolio risk.
Resulting in enhanced shareholder value. 07 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
“
By the end of 2007, your company will have drilled its first  
two operated wells, participated in a third well and acquired  
its first seismic survey.
”
West Central Platform and UKCS
Your Company has built up an extensive 
data base of the heavy oil plays which 
enabled the selection of blocks 28/9 and 
28/10b in the 24th Licensing Round. 
Similarly a regional study of the East 
Irish Sea basin identified the sleeper 
blocks of 113/29c and 113/30 enabling  
us to attract a partner and make a 
successful application.
Managing our growing portfolio
Nautical continues to follow a 
conservative policy, focusing on 
discovered oil, with minimal exposure  
to exploration risk, operating where 
appropriate and increasingly in ever more 
competitive licensing rounds, taking a 
smaller interest in Traditional licences 
offering firm or contingent well 
commitments. This proved successful in 
the 24th Licensing Round where Nautical 
operated its first Traditional award 
(Blocks 113/29c and 113/30) and 
participated in Joint ventures (ranging 
from 15% to 33.33%) in blocks 28/9, 
28/10b, 14/30a, 2/3a and 2/4b. Our 
success in the round and some small 
acquisitions has increased the UK 
portfolio to 13 licences, consisting of  
17 full and part blocks containing seven 
discoveries. Nautical is operator of nine 
licences and recognises the opportunity 
to share risk and cost through farmout 
and swaps, consequently we look 
forward to announcing further farmouts. 
Your company continuously high grades 
its portfolio by diligent analysis and 
realises that not all blocks will prove 
economically prospective/viable thus 
relinquishments will happen in  
the future. 
Meanwhile in France we hope to add to 
our current licence with two further 
applications as partner in an Egdon 
Resources led group.
Mariner – a new energised operator
Chevron announced that they were going 
to market their interest in Mariner in 
June 2007. Considerable industry interest 
endorsed Nautical’s heavy oil strategy. 
The process resulted in a Sale and 
Purchase Agreement being signed with 
Norsk Hydro ASA. We look forward to 
working with this new operator who has 
considerable experience in developing 
offshore heavy oil. Nautical hopes  
that development will be accelerated  
led by this new energised operator.
Unlocking potential – imminent 
drilling
By the end of 2007, your Company will 
have drilled its first two operated wells, 
participated in a third well and acquired 
its first seismic survey. The Kraken 
appraisal well will be drilled in October 
2007 on the crest of the structure, with 
the intention of confirming our model  
of thicker reservoir development, 
hydrocarbon column and best estimate 
contingent resources of 23.9 million 
barrels net to Nautical. 
Kraken will be followed by an exploration 
well on the Mermaid prospect (directly 
south of Mariner). We plan to intersect 
hydrocarbons in both the Maureen and 
Heimdal formations confirming net best 
estimate resources of 64.5 million barrels. 
Concurrently, an appraisal well is to be 
drilled on the Grenade discovery which, 
if the reservoir is as prognosed, will yield 
our first production in Spring 2008.
A well on the Catcher Prospect will be 
Nautical’s first in 2008, followed by an 
exploration well on the Selkie Prospect. 
Assuming that the seismic being 
acquired over block 3/27a firms up a 
prospect on the Hydra leads this will  
be our third well in 2008.
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 new technology could be used 
on the testing of the Kraken discovery  
as well as future Nautical development 
programmes, and when not in use there 
are opportunities to hire the equipment 
out to third parties. 
Oil portfolio audit
RPS Energy audited our oil portfolio held 
at 30 June 2007. 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.
High value barrels escalating costs
Your Company expects the oil price to 
remain high in the medium term and we 
have seen evidence of a narrowing of 
heavy crude oil discounts in the UKCS,  
as production from key fields declines. 
Higher prices are coupled with escalating 
costs which we will control by high 
grading the portfolio, farming down  
and reducing drill risk through diligent 
technical evaluations. Nautical will 
continue to lobby the UK Treasury  
for improved fiscal terms for heavy  
oil development.
Skill shortages continue to prevail, 
however Nautical has established 
relationships with contractors who 
provide support to the small core team 
across all disciplines. Our expertise  
has been further strengthened by a 
secondment of a Drilling Manager  
from our major partner Celtic Oil Ltd.
The future
We look forward to an extensive seismic 
and imminent drilling campaign through 
the remainder of 2007 and 2008, which 
will release the potential of the largest 
independent heavy oil portfolio in  
the UKCS.
 
Steve Jenkins
Chief Executive Officer
1 October 2007 3 2
8
9
15
28
14
113
UNITED
KINGDOM
UK NORTH SEA
THE ORKNEY
ISLANDS
THE SHETLAND
ISLANDS
8/5 & 9/1
2/3a & 2/4b
3/27a
9/2b
9/12b
9/21
MARINER (9/11a)
MERMAID (9/11c)
8/25a
14/30a
28/9 & 28/10a
113/29c
& 113/30
15/7
08 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
FRANCE
SPAIN
ST. LAURENT PERMIT
- 24TH ROUND BLOCK
KEY
Operational review
Our portfolio
as at 1 October 2007 09 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
FRANCE
SPAIN
ST. LAURENT PERMIT
- 24TH ROUND BLOCK
KEY
BLOCKS 2/3A & 2/4B Dragon (LICENCE P1492 –  
33.33% interest)
Awarded in February 2007 in the 24th round. The blocks 
are on the East Shetland Platform, west of the Heather oil 
field. A programme to purchase and reprocess 2D and 3D 
seismic is underway, mainly over two prospects, one with 
crestal oil.
BLOCK 3/27A Hydra (LICENCE 1203 – 45% interest)
50km of 2D seismic has been reprocessed and the data has 
been re-interpreted to confirm the leads. New high density 
2D seismic is being acquired in September 2007 to define 
prospects for drilling. 
BLOCK 8/5 AND BLOCK 9/1 Scylla (LICENCE P1277 –  
100% interest)
Located on the East Shetland Platform west of the North 
Viking Graben, contiguous with Block 9/2b.
Across Blocks 9/1 and 8/5, 484km of 2D seismic has been 
acquired and reprocessed leading to the delineation of two 
leads in the Tertiary. Up to 50km of new 2D high resolution 
seismic to be acquired September 2007.
BLOCK 8/25A Selkie (LICENCE P976 – 60% interest)
Selkie is mostly covered by recent 3D seismic and 2D 
seismic has been purchased. A four-way dip closure has 
been confirmed analogous to Skipper discovery. Together 
with the Kelpie prospect the block contains 35mmbo best 
estimate prospective resources.
BLOCK 9/2B Kraken (LICENCE P1077 – 45% interest)
Over 200km of 1998 3D seismic has been reprocessed and 
interpreted along with the 3D seismic over the nearby 
Bressay discovery to confirm the large structural closure.
An appraisal well will be drilled in October 2007.
BLOCK 9/11A Mariner (LICENCE P335 – 26.67% interest)
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. 
The shallower Heimdal sandstone member has flowed up  
to 1,800bopd on a vertical test.
BLOCK 9/11C Mermaid (LICENCE P979 – 50% interest)
The 3D seismic has been reprocessed, interpreted and has 
confirmed the robustness of the trap with around 129mmbo 
best estimate prospective resources.
A well will be drilled in November 2007.
•
•
•
•
•
•
•
•
•
•
•
BLOCK 9/12B (LICENCE P1079 – 98.5% interest)
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 9/21 Kelpie (LICENCE P1080 – 98.5% interest)
A discovery well on the block encountered a 16 metre  
oil column in excellent quality Palaeocene Dornoch 
Formation Sands.
BLOCK 14/30A ((LICENCE P1463 –20% interest)
Awarded in February 2007 in the 24th round. The block is 
in the Outer Moray Firth, 3D seismic is being processed 
and geochemical studies are ongoing.
The block contains the Tudor Rose discovery.
BLOCK 15/7 Seahorse (LICENCE P1296 – 50% interest) 
Initial mapping of 170km
2
 of 3D and 145km of 2D seismic 
data has confirmed a four-way dip-closed structure. Both 
3D and 2D seismic have subsequently been reprocessed.
BLOCKS 28/9 & 28/10B Catcher ((LICENCE P1430 – 
15% interest)
Awarded in February 2007 in the 24th round. The blocks 
are on the West Central Platform in the North Sea, with a 
well to be drilled in 12 months.
The block contains the Catcher prospect and numerous 
leads and prospects defined on 3D seismic.
BLOCKS 113/29C & 113/30 ((LICENCE P1475 – 
50% interest)
Offered and accepted in February 2007 in the 24th round. 
The blocks lie on the edge of the East Irish sea Basin. Over 
600km of 2D seismic are being reprocessed leading to a 
drill or drop decision. The block contains the large Merrow 
prospect which can be drilled from onshore.
ST. LAURENT PERMIT (22% interest)
Located in Aquitaine Basin, SW France, The Grenade-Sur-
Adour well produced 8000 barrels in a series of tests. 
A rig has been secured to drill a well in November 2007 
followed by a test in Spring 2008. 
Further gas prospectivity is present on the permit.
•
•
•
•
•
•
•
•
•
•
• 10 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Operational review
UK Continental Shelf
Block 9/2b (Licence P1077) 
(Nautical 45% Operator)
Nautical’s first awarded licence in 
the UKCS 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 
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).
Further detailed seismic mapping has 
identified a crestal, appraisal location 
which will be drilled in October 2007. 
The well is designed to confirm and core 
the predicted thicker reservoir and to 
prove and sample up-dip hydrocarbons. 
The farmout to Celtic Oil Limited at a 
premium means Nautical is exposed to 
significantly less of the cost than its 45% 
equity share of the well. Additional 
seismic is also being acquired in the 
northern part of the block at the same 
time as the 3/27a programme in 
September 2007.
 
The Department of Business Enterprise 
and Regulatory Reform (BERR) has 
extended the initial term of the licence by 
three months to enable the commitment 
well to be drilled. 
To comply with licence terms we will 
relinquish the non prospective eastern 
portion of the licence before entering the 
next licence term. The drilling of the well 
will fulfil all the initial term 
commitments. 
Nautical is to drill its first wells in the UK continental shelf in 
October/November 2007, to appraise the Kraken discovery 
and drill the Mermaid exploration well, which together may 
contain over 180mmbo (gross).
Key Stats
Kraken
Contains Kraken oil discovery
Reprocessed 3D seismic confirms 
large three-way dip-closure
15 API oil, no oil water contact 
encountered
Contingent resources of 53mmbo
Drilling October 2007
•
•
•
•
•
 53
mmbo
Kraken: Blocks 9/2b – Gross best  
estimate contingent resources
 Fields & Discoveries  Prospects & Leads 11 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Block 9/11c (Licence P979) 
(Nautical 50% 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. 
Furthermore a significant, thick 
northwest, southeast trending Maureen 
channel slope deposit (similar to Mariner) 
has been identified, leading to further 
confidence in a viable reservoir. 
In the shallower section seismic 
anomalies have been noted at various 
levels in the Lista Formation which may 
indicate significant hydrocarbon bearing 
Heimdal sand channels (in common with 
Mariner), which add further prospective 
resources, not included in the current 
estimates.
The resultant best estimate prospective 
resources are 129mmbo (65mmbo net to 
Nautical) in the Tertiary Maureen 
Formation. 
An exploration well will be drilled in the 
4th quarter 2007 (directly after Kraken) to 
intersect the prognosed thick Maureen 
Sandstone on a small four way dip closed 
high. If hydrocarbons are present they 
will be sampled. Additionally, if the oil 
column extends beyond structural 
closure a contingent sidetrack will be 
drilled towards a structurally lower area 
to determine the oil water contact, which 
will be used to calculate the resources in 
the Mermaid structure. The Farmout to 
Celtic Oil Limited and Silverstone Energy, 
at a premium, means Nautical is exposed 
to significantly less than its 50% equity 
share of the well.
Key Stats
Mermaid
Contains large Mermaid prospect
Analogous to Mariner
Prospective resources of 129mmbo
Drilling November 2007
•
•
•
•
 129
mmbo
Mermaid: Block 9/11c – Gross best  
estimate prospective resources
 Fields & Discoveries  Prospects & Leads
Courtesy of Dolphin Drilling Limited 12 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Operational review
UK Continental Shelf
Mariner Block 9/11a  
(Licence P726) (Licence P335)
(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.
Mapping of the reprocessed merged  
3D seismic data has resulted in better 
imaging of the Maureen reservoir, thus 
reducing the range of hydrocarbon 
volumes, as well as the stratigraphic and 
structural uncertainty. The improved 
geological model and subsequent 
dynamic modelling of the main Maureen 
reservoir estimates 82mmbo proven and 
probable reserves within Block 9/11a 
(22mmbo net to Nautical).
During the period, the co-venturers, led 
by the operator Chevron, delineated three 
reservoir compartments and identified 
the optimal development scenario 
(establishing the well count for both  
oil producers and water injectors). 
Development facilities were designed 
and costed in anticipation of the 
submission of a Field Development Plan.
In 2007, Chevron determined that 
although an economic project, Mariner 
was not material in their global portfolio 
and decided to market the opportunity. 
Considerable interest was generated from 
majors to independents and in August 
2007 a Sale and Purchase Agreement 
was signed with Norsk Hydro ASA, a 
major developer of worldwide offshore 
heavy oil fields. Nautical anticipates an 
acceleration of Mariner’s development by 
the new operator.
In addition to Nautical’s 26.67%, Nautical 
is carrying a 6.67% interest in the 
Mariner block. Upon field development 
plan approval, Nautical may either be 
required to pay £1 to acquire this interest 
or will be reimbursed past costs through 
the development phase, being £8.3m at 
June 2007.
The highly appraised Mariner Field enters a new phase with 
change to a new energised operator.
Key Stats
Mariner
Gross 2P reserves in Maureen 
Sandstone 82mmbo
Highly appraised (16 well 
penetrations of reservoirs)
Extended well fest produced 
662,000 barrels at up to 14,991bopd 
of 14.5 API oil
Excellent reservoir characteristics  
(porosity = 31%, permeability = 5D)
Upside
Shallow Heimdal Sandstone with  
51mmbo contingent resources
Heimdal has flowed 1,800bopd  
on test
•
•
•
•
•
•
 51
mmbo
Gross best estimate  
contingent resources
 82
mmbo
Proven and probable reserves
 Fields & Discoveries  Prospects & Leads 13 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Block 9/12b (Licence P1079)
(Nautical 98.5% Operator)
Located directly east of the Mariner 
discovery, the block contains two small 
discoveries in the Maureen Formation 
and in the shallower Eocene, Mousa 
Formation. Detailed mapping of the 3D 
seismic has revealed a low relief lead to 
the north of the 9/12-3 which is very 
sensitive to depth conversion, made more 
complex by the presence of shallow 
Miocene channels.
The previewed farmout was not 
concluded and Nautical are reviewing the 
economic viability of the discoveries. 
Block 9/21 (Licence P1080) 
(Nautical 98.5% Operator)
Block 8/25a 
(Licence P976) 
(Nautical 60% Operator)
The block lies on the East  
Shetland Platform to the south 
of the Mariner discovery.
Interpretation of both our proprietary 3D 
seismic and an extensive grid of 
speculative 2D seismic has revealed a 
cluster of prospects and leads on a large 
south easterly plunging nose  
in the Dornoch formation. Two large,  
low risk, shallow four way dip closed 
prospects (Selkie and Kelpie) are located 
in Block 8/25a with Kelpie East in Block 
9/21. These prospects are all the more 
promising since the oil change of the 
Dornoch Formation reservoir is proved by 
the Skipper discovery to the north east, 
which also exhibits excellent reservoir 
characteristics. Further smaller leads 
have been mapped to the east of Skipper.
A more rigorous depth conversion over 
the blocks has enabled more robust 
delineation of the Skipper discovery 
leading to a reduction in hydrocarbon 
volumes. However, the mapped crest is 
25 metres up-dip from the discovery well 
(9/21-2) which encountered a 16 metres 
oil column, implying a substantially 
thicker column on the crest.
On Block 8/25a the combined best 
estimate prospective resources for Selkie 
and Kelpie are 35mmbo (21mmbo net to 
Nautical). A site survey will be acquired 
in September/October 2007 over the 
larger Selkie prospect, in anticipation of 
drilling in 2008. The farmout to Celtic Oil 
Limited at a premium means Nautical is 
exposed to significantly less than its 60% 
equity share of the well.
Key Stats
Selkie and Kelpie 
Two large, low risk prospects  
(Selkie and Kelpie)
Analogous to Skipper discovery
Prospective resource of 35mmbo
Site survey in 2007
Well planned in 2008
•
•
•
•
•
“
On Block 8/25a the combined best estimate prospective 
resources for Selkie and Kelpie are 35mmbo (21mmbo net  
to Nautical). A site survey will be acquired in September/
October 2007 over the larger Selkie prospect, in anticipation 
of drilling in 2008.
”
 35
mmbo
Gross best estimate  
prospective reserves
 Fields & Discoveries  Prospects & Leads 14 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Operational review
UK Continental Shelf
Block 3/27a (Licence P1203) 
(Nautical 45% Operator)
Located directly north of Block 
9/2b (Kraken discovery) on the East 
Shetland Platform, the licence was 
converted from promote to traditional  
in October 2006. Most recently the 
interpretation of the original 2D seismic 
(476km) 90km of reprocessed 2D seismic, 
Bressay 3D seismic and 100km
2
 of 
speculative 3D seismic has confirmed  
the prospectivity of the block. 
In the east the Hydra leads have been 
mapped at Heimdal, Dornoch and most 
interestingly at Jurassic levels. In the 
latter, the Jurassic sands encountered in 
3/28b-3 appear to thin and pinchout to 
the west across a terrace and shale out to 
the north and south. Encouragingly, gas 
chimneys can be interpreted on the 
seismic to coincide with the prognosed 
zero sand edge. To the west, Hydra West 
lead appears to be a continuation of the 
proven Heimdal play in the Kraken 
discovery further south.
To further delineate the Hydra leads  
and elevate them to prospect status  
1500km of close spaced, high resolution 
2D seismic will be acquired in 
September/October 2007. Although the 
survey is centred on Block 3/27a, seismic 
will also be acquired in blocks 9/2b and 
3/22. Our partner Celtic Oil Limited 
farmed into both the seismic and 
contingent well to be drilled in 2008, 
dependent on the mapping of a robust, 
economically viable prospect. The 
financial exposure to these programmes 
is as a result significantly less than 
Nautical’s 45% equity share.
Nautical is progressing to firm up leads into prospects, with 
seismic being shot on 3/27a and a well planned in 2008.
 Fields & Discoveries  Prospects & Leads
Key Stats
Hydra
Numerous leads at tertiary  
and jurassic
Gas chimneys seen on seismic
1,500km of 2D seismic being 
acquired September 2007
•
•
•
 1,500
kms
2D seismic being acquired 15 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
9/2b
3/27a
Blocks 2/3a and 2/4b  
(Licence P1492)
(Nautical 33.33%)
Awarded as a Promote Licence in the 
24th Seaward Licensing Round in 
February 2007, the blocks are located in 
the north of the East Shetland Platform 
directly west of the Heather and Broom 
oil fields and contain two oil discoveries. 
Well 2/4-1 encountered 16.6° API in the 
Triassic on a bald Brent high. 2D seismic 
interpretation indicates that the Brent 
sand thickens down-dip of the crest, 
forming the Unicorn prospect. A second 
prospect, Dragon, was mapped in the 
north, to the east of the oil bearing  
2/3-1 well.
Further 2D and 3D seismic will be 
purchased and reprocessed to define 
these shallow prospects and further 
Tertiary and Jurassic leads. A 
geochemical study is planned on the 
encountered oil to confirm API gravity 
and to estimate viscosity. 
Blocks 8/5 and 9/1 
(Licence P1277) 
(Nautical 100% Operator)
Blocks 8/5 and 9/1 are contiguous to  
the west of block 9/2b (containing the 
Kraken discovery). Initial mapping of  
an extensive 2D seismic database 
highlighted two culminations 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. The 
reprocessing of 231km of 2D seismic has 
significantly enhanced the character of 
the two reservoir horizons and the Base 
Tertiary. Up to 50km of new 2D high 
resolution seismic will be acquired in 
 Fields & Discoveries  Prospects & Leads
October 2007, contingent on weather. 
The expanded and enhanced seismic 
grid will be interpreted in anticipation of 
a farmout, before the licence is converted 
from promote to traditional at the end of 
December 2007.
“
2D seismic interpretation indicates that the Brent sand 
thickens down-dip of the crest, forming the Unicorn 
prospect.
” 16 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Operational review
UK Continental Shelf
Blocks 113/29c and 113/30  
(Licence P1475)
(Nautical 50% Operator)
Awarded as a Traditional licence in the 
24th Seaward Licensing Round in 2007, 
the blocks are located in the East Irish 
Sea Basin adjacent to Walney Island on 
the Cumbrian coast. There are numerous 
oil and gas shows in the offshore wells 
and hydrocarbon migration through the 
blocks are proven by heavy oil columns/
shows in the onshore wells to the east.
A large prospect (Merrow) has been 
mapped on a 2D seismic grid (of marine, 
transition and land seismic), at both 
Triassic (Ormskirk Sandstone) and the 
Permian (Collyhurst Sandstone). Both 
reservoirs are proven in the basin, the 
Ormskirk being a prolific gas producer in 
numerous fields (including Morecambe 
and the soon to be developed Ormonde 
North and South fields, immediately to 
the west of the blocks). Expected 
hydrocarbons are heavy oil or gas.
Nautical has committed to purchase and 
reprocess 2D seismic leading to a drill or 
drop decision within four years of licence 
award (by early 2011). Currently over 
600km of 2D seismic is being reprocessed 
(a significant proportion of which has 
been acquired since licence award). 
Additionally gravity and magnetic data 
will be purchased, then all data 
interpreted to hopefully further delineate 
the Merrow prospect at both reservoir 
levels. Preliminary investigations 
indicate that the prospect can be tested 
by an onshore well, deviated offshore.
 Fields & Discoveries  Prospects & Leads
Key Stats
Large Merrow prospect
Triassic and Permian reservoirs
Excellent extensive seismic grid 
being reprocessed
Merrow can be tested from onshore
•
•
•
•
A large prospect (Merrow) has been mapped on a 2D seismic 
grid (of marine, transition and land seismic), at both Triassic 
(Ormskirk Sandstone) and the Permian (Collyhurst Sandstone). 
Preliminary investigations indicate that the prospect can be 
tested by an onshore well, deviated offshore. 17 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Block 14/30a (Licence P1463)
(Nautical 20%)
Located in the Outer Moray Firth 
adjacent to Ivanhoe, Rob Roy and 
Goldeneye fields this traditional block, 
awarded in the 24th Licensing Round, 
contains one undeveloped discovery, 
14/30a-2 (Tudor Rose). The well 
encountered a 24 metre oil column 
beneath a 3 metre gas cap at around 1,000 
metres subsea within Tertiary, Dornoch 
Formation Sands. Further prospects have 
been mapped on 3D seismic within the 
Lower Cretaceous (Kopervik Sand) and 
the Jurassic Sgaith Sand.
The four year work programme for the 
block includes reprocessing 3D seismic 
data and a contingent well on the  
14/30a-2 discovery. Nautical attributes 
34.6mmbo best estimate contingent 
resources to Tudor Rose discovery and 
the operator is currently reprocessing 
208km
2
 of 3D seismic. Analysis of wet 
cuttings is aimed at determining the API 
gravity of the oil column.
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). 
“
The 24th Round success has introduced further prospects 
into the portfolio including the Tudor Rose discovery.
”
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 
structures along strike and to the north  
of Seahorse. Additional potential has 
been identified.
Recently reprocessed 2D and 3D has 
increased clarity at both reservoir 
horizons and the seal of the Dornoch 
Formation oil column can now be 
mapped. Interpretation of these new 
 data is currently under way with the 
 aim of further delineating the Seahorse 
discovery at both reservoir levels and 
elevating the other leads to prospects.
 Fields & Discoveries  Prospects & Leads 18 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Operational review
UK Continental Shelf
Blocks 28/9 and 28/10b  
(Licence P1430)
(Nautical 15%)
This traditional 24th Seaward Licensing 
Round Block is located on the West 
Central Platform, west of the Central 
Graben and the nearby Guillemot fields.
The blocks are undrilled but contain 
numerous structural/stratigraphic leads 
and prospects at both Eocene (Tay 
Sandstone) and two large Jurassic leads. 
Traps are defined on recent 3D seismic 
which is currently being reprocessed  
and the subject of detailed AVO  
studies. The main prospect Catcher  
is a structural trap with an observed 
direct hydrocarbon indicator.
Apart from reprocessing existing 
seismic, the work programme includes 
a firm well in Q1 2008 to test the Catcher 
prospect. In anticipation of drilling by 
a rig already contracted to the operator 
(Oilexco) a site survey will be acquired 
shortly. Nautical is carried for 20% of its 
costs of this well.
The 24th Round success has added near term drilling with 
the Catcher prospect in early 2008.
 21.8
mmbo
Catcher gross best estimate  
prospective resources
 Prospects & Leads
Key Stats
Catcher
Direct Hydrocarbon Indicators 
(DHI’s) on extensive 3D seismic
Gross best estimate of prospective 
resources – 21.8mmbo
Drilling Q1 2008
Numerous follow up. Tertiary leads 
and prospects
•
•
•
• 19 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Maurrin-1
Le Vignau-1
GAR-1
Grenadae
Sur Adour-2
Dax Play
Audignon
Ridge
Grenade
Oil Discovery
Albian
Gas Play
Grenade Oil
Discovery
• Discoveries/Fields
• Leads
St. Laurent Permit
†
 
(Nautical 22%)
The St. 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 International Energy Group AG in 
November 2005 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 pinchout 
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).
In-depth subsurface, facilities 
engineering and marketing studies have 
shown the field to have potential for 
commercial development. In light of 
these conclusions a horizontal well will 
be drilled in November 2007. A start 
access road has been constructed and 
site preparation is well under way in 
anticipation of a November spud. Initially 
a vertical pilot hole will be drilled and 
cored. Then a horizontal well will be 
drilled and suspended for testing in 
Spring 2008. 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.
Further French applications
As a co-venturer of an Egdon Resources 
led group, two licence applications  
have been submitted to strengthen 
our French portfolio.
 12.6
mmbo
Best estimate gross  
contingent resources
Key Stats
Contains Grenade discovery (1975)
97 meter oil column.
New seismic acquired end 2005.
Large stratigraphic trap confirmed.
Horizontal appraisal well to be 
drilled in 2007.
Further exploration upside.
•
•
•
•
•
•
 Fields & Discoveries
† Permit is awaiting French Government approval.
“
In-depth subsurface, facilities engineering and marketing 
studies have shown the field to have potential for commercial 
development. In light of these conclusions a horizontal well 
will be drilled in November 2007.
” 20 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Finance Director’s
review
Introduction
The prime focus for the Group and its 
management during the year was to 
develop a better understanding of its 
assets and prepare itself for its first 
exploration and appraisal drilling 
programme which is scheduled for the 
last quarter of 2007. At the same time, 
the Group was successful in its 24th 
Round licence applications, securing 
interest in four new licences, and also 
managed to acquire an interest in the 
Bluebeard and Skipper discoveries from 
Engen Resources Ltd. All this has been 
attained without putting excessive 
demand on the Group’s existing 
resources or taking unmanageable risks.
Results for the year
The Group is still in a pre-revenue stage 
but posted a modest after-tax loss for the 
year of £0.4m through careful utilisation 
of resources. The general and 
administrative expenses amounted to 
£1.3m, including a charge for the share 
options of £0.4m. The only revenue 
generated in the year was bank deposit 
interest of £0.5m. There was also a tax 
credit of £0.5m relating to the deferred 
tax liability arising from changes in UK 
tax rates from 30% to 28%.
Loss per share was 0.05p.
Cash flow and capital expenditure
The Group had cash resources of £8.9m 
as at 30 June 2007, down from £12.3m at 
the beginning of the year. Apart from 
covering the normal operating expenses, 
£0.4m was applied to cover the cash 
portion of the acquisition cost of the 
Bluebeard and Skipper discoveries from 
Engen Resources Ltd and £2.7m was 
utilised for further development 
expenditure on the Group’s portfolio of 
North Sea and French assets.
“
We continue to place a strong emphasis on our financial 
strategy and risk management strategy in order to ensure  
that it not only complements and supports the business 
development plan but also provides for a rapid but carefully 
managed progression to revenue.
” 21 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
The current planned exploration and 
appraisal drilling programme on Kraken, 
Mermaid and Grenade discoveries should 
be adequately covered by the Group’s 
existing resources for its share of the 
costs. Beyond that, the Board will 
consider several funding alternatives, as 
and when appropriate, and implement an 
effective funding programme to take the 
business forward.
Capital structure
The Group currently has 1,077,689,619 
Ordinary Shares in issue out of its 
authorised share capital of 1,600,000,000 
Ordinary Shares. Taking into 
consideration the outstanding options, 
warrants and committed shares, the 
Board presently has a remaining 
authority to issue 445,868,159 Ordinary 
Shares under section 80 and 259,782,470 
Ordinary Shares under section 89 of the 
Companies Act 1985. These authorities 
will be reviewed at the next AGM,  
as appropriate.
Treasury and financial risk 
management
Control over treasury and risk 
management is exercised by the Board 
and its Audit Committee through the 
setting of policy and the regular review 
of forecasts and financial exposures. 
Presently, the Group’s financial 
instruments comprise principally of cash 
and liquid resources and other items, 
such as accounts receivable and payable, 
which arise directly from its operations. It 
is still the Group’s policy not to undertake 
any trading activity in financial 
instruments, including derivatives.
The principal risks arising from the 
Group’s financial instruments are interest 
risk, liquidity risk and foreign exchange 
risk. The Board reviews and establishes 
appropriate policies for the management 
of such risks and monitors them on a 
regular basis.
Taxation
The Group’s current and brought forward 
losses give rise to material deferred tax 
assets. These amount to approximately 
£1.1m as at 30 June 2007 but have not 
been recognised in the financial 
statements as a result of the 
uncertainties of their realisation 
in the foreseeable future. 
On conversion to IFRS a deferred tax 
liability of £6.6m has been recognised  
in the financial statements on the 
acquisition of a subsidiary company prior 
to the transition date for IFRS (1 January 
2005). The tax rate applicable for the 
periods after April 2007 has, however, 
been reduced from 30% to 28% in line 
with the latest UK Budget changes.
Transition to International Financial 
Reporting Standards
The Group has successfully transitioned 
to International Financial Reporting 
Standards (IFRS) from UK GAAP during 
the year under review. This involved 
restating prior periods’ results and 
updating the Group’s accounting policies 
as necessary. Details of these are covered 
by the notes accompanying the Group 
financial statements. 
Outlook
The objective of building up a carefully 
selected portfolio of heavy oil assets in 
the UK and Europe and taking them 
through to development remains our core 
business strategy. At the same time, we 
continue to place a strong emphasis on 
our financial strategy and risk 
management strategy in order to ensure 
that it not only complements and 
supports the business development plan 
but also provides for a rapid but carefully 
managed progression to revenue. 
The next period has already started off 
with a great deal of activity in respect of 
our current exploration and appraisal 
drilling programme and we remain 
hopeful of its successful outcome. This, 
we believe, will not only have a material 
positive impact on our hydrocarbons 
reserve base but also enhance 
shareholder values further. 
Hemant Thanawala
Finance Director
1 October 2007 22 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Board of
Directors
2
5 6
7
1
3 4 23 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
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.
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 responsibility 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 and is 
currently chief operating officer of 
Equator Exploration Ltd. 
Philip 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 Gill 
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, secretary of Antony Gibbs & 
Sons plc and of Harrisons & Crosfield plc.  24 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Shareholder  
information
Registered and Corporate Office
Parnell House
25 Wilton Road
London
SW1V 1YD
+44 (0)20 7550 4890
+44 (0)20 7550 4946
www.nauticalpetroleum.com
Nominated Adviser and Broker
KBC Peel Hunt
111 Old Broad Street
London
EC2N 1PH
+44 (0)20 7418 8900
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 25 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
The Directors present their report together with the Group and Company financial statements for the year ended 30 June 2007.
Business review and future activities
The principal activity of the Company is heavy oil exploration, development and production in the UK and Europe. The Company 
is a public limited company incorporated in England and Wales and is listed in London on AIM. A discussion of the business and 
future developments are set out in the Chairman’s and Chief Executive’s reviews and the Operational review.
Results and dividends
The Group’s loss for the year was £0.39m (18 months to June 2006: £7.18m), including a foreign exchange gain of £0.27m 
(18 months to June 2006 £0.05m) and a £0.39m charge for share option costs (18 months to June 2006: £1.21m). The directors 
do not recommend the payment of a dividend.
Events since the balance sheet date
On 19 September 2007 the Company signed an agreement with Silverstone Energy Limited to Farmout 10% of block 9/11c 
(Mermaid). Silverstone are to pay 20% of the costs of drilling the imminent vertical exploration well on the Mermaid prospect, 
scheduled to be spudded in late October 2007.
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 2007 were:
Number of ordinary shares and options held:
 At 30 June 2007  At 30 June 2006
    Ordinary Share Ordinary  Share 
    shares options shares options 
    Number Number Number Number
I Williams (Chairman)    25,631,286 9,500,000 25,631,286 8,000,000
S Jenkins (Chief Executive)    17,521,929 13,500,000 17,521,929 11,000,000
H Thanawala (Finance Director)    15,773,043 8,000,000 15,773,043 7,000,000
P Jennings (Commercial Director)    17,521,929 9,500,000 17,521,929 8,000,000
P Dimmock (Non-Executive Director)    Nil 3,500,000 Nil 3,000,000
P Kennedy (Non-Executive Director)    1,500,000 3,500,000 1,500,000 3,000,000
The above directors have been directors throughout the year. 
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. S Jenkins and P Jennings hold 
part of their shareholding with OMX Securities Nominees Limited.
Retirement of directors
S Jenkins and P Dimmock retire in accordance with section 108 of the Company’s articles of association and offer themselves 
for re-election.
Directors’ third party indemnity provisions
The Company maintains indemnity insurance for its Directors and Officers against liability in respect of proceedings brought 
by third parties, subject to the terms and conditions of the Companies Act 1985.
Substantial shareholders
At 12 September 2007 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
International Energy Group AG      475,736,755 44.1%
Goldman Sachs Securities (Nominees) Ltd (SEG acct.)     100,553,738 9.3%
Goldman Sachs Securities (Nominees) Ltd (ILSEG acct.)     73,941,442 6.9%
OMX Securities Nominees Limited      35,452,896 3.3%
Mellon Nominees (UK) Ltd      34,041,587 3.2%
Directors’ report 26 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
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 8 June 2007 the Company announced the change of the Nominated Adviser and Broker to KBC Peel Hunt 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 2007 amount to 36 days of purchases made 
in the period (2006: 39 days).
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 17. The financial risk management objectives and policies are 
discussed in the Finance Director’s Review and note 17.
Principal business risks
As a participant in the upstream oil & gas industry, Nautical encounters and has to manage several business risks of varying 
degrees. These include:
Loss of key employees
Taxation – legislative changes
Delays and cost over-run on major projects
Lack of operational resources
Poor reservoir performance
Commercial misalignment with co-venturers
Oil price movements and fluctuations in discounts for heavy oil
Exploration and appraisal well failures
These risks are considered typical for an upstream group of Nautical’s size and stage of development. The Board conducts 
an annual review of the Group’s system of risk management for the specific risks it faces.
Board committees
Information on the Audit Committee and the Remuneration Committee is included in the Corporate Governance section of  
the Annual Report. The report of the Remuneration Committee will be the subject of an ordinary resolution at the Annual  
General Meeting.
Disclosure of information to the auditors
Having made enquiries of fellow Directors and of the Company’s auditors, each of the Directors confirms that, to the best of  
each Director’s knowledge and belief, there is no information relevant to the preparation of their report of which the Company’s 
auditors are unaware; and each Director has taken all the steps a Director might reasonably be expected to have taken to be 
aware of the relevant audit information and to establish that the Company’s auditors are aware of that information.
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 11 December 2007 as stated in the Notice of Meeting, which accompanies this 
Annual Report.
By Order of the Board.
Christopher Gill
Company Secretary
1 October 2007
•
•
•
•
•
•
•
•
Directors’ report continued 27 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
Directors’ emoluments
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 12 months 
are as follows:
       Total  
      Total 18 months to  
  Salary Fees Bonus Pension June 2007 June 2006 
Name   £’000 £’000 £’000 £’000 £’000 £’000
S Jenkins   139 – 87 10 236 191
I Williams   – 88 – – 88 60
H Thanawala   – 71 – – 71 50
P Jennings   – 107 – – 107 68
P Dimmock   – 12 – – 12 15
P Kennedy   – 12 – – 12 15
Total  139 290 87 10 526 399
I Williams, H Thanawala and P Jennings provide services to the Company through a service agreement with International Energy 
Services Limited, which is a related party.
S Jenkins has entered into a loan agreement with the Company for £3,592 with an outstanding balance at 30 June 2007 of £1,496. 
The pension is a defined contribution scheme.
Share options granted to directors
 Year to June 2007  18 months to June 2006 
 Issued 18 January 2007  Issued 26 September 2005  Issued 7 March 2005
  Number Exercise price Number Exercise price Number Exercise price 
  of shares per share of shares per share of shares per share
I Williams  1,500,000 8.85p 4,000,000 11.0p 4,000,000 4.0p
S Jenkins  2,500,000 8.85p 6,000,000 11.0p 5,000,000 4.0p
H Thanawala  1,000,000 8.85p 3,000,000 11.0p 4,000,000 4.0p
P Jennings  1,500,000 8.85p 4,000,000 11.0p 4,000,000 4.0p
P Dimmock  500,000 8.85p 1,500,000 11.0p 1,500,000 4.0p
P Kennedy  500,000 8.85p 1,500,000 11.0p 1,500,000 4.0p
For the options granted in the year, 25% are exercisable after 17 July 2007, 25% after 17 January 2008, 25% after 17 July 2008  
and 25% after 17 January 2009. The options must be exercised by 18 January 2015. None of the directors exercised options  
during the year.
Philip Dimmock
Chairman of the Remuneration Committee
1 October 2007
Remuneration report 28 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
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 smaller companies should have at least two 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. Mr Kennedy is 
also a partner in PK Partners LLP which has provided consultancy services to the Group and the services of Mr C Gill, the 
Company Secretary.
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 International 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. Each of the non-executives 
could not attend one meeting during the year. There was full attendance at all other meetings 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 Audit Committee 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. 
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 Remuneration Committee 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.
Corporate governance 29 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
Group financial statements
The directors are responsible for preparing the annual report and the Group financial statements in accordance with applicable 
United Kingdom law and those International Financial Reporting Standards (IFRS) as adopted by the European Union.
The directors are required to prepare Group financial statements for each financial year, which present fairly the financial position 
of the Group and the financial performance and cash flows of the Group for that period. In preparing those financial statements, 
the directors are required to:
select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and 
Errors and then apply them consistently;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and 
understandable information;
provide additional disclosures when compliance with specific requirements in IFRS’s is insufficient to enable users to 
understand the impact of particular transactions, other events and conditions on the Group’s financial position and financial 
performance; and 
state that the Group has complied with IFRS, subject to any material departures disclosed and explained in the financial 
statements.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the 
financial position of the Group and enable them to ensure that the Group financial statements comply with the Companies Act 
1985 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking 
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the 
company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements 
may differ from legislation in other jurisdictions.
•
•
•
•
Directors’ responsibilities for the  
financial statements 30 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
We have audited the Group financial statements of Nautical Petroleum plc for the year ended 30 June 2007 which comprise the 
Consolidated Income Statement, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity and the 
Consolidated Cash Flow Statement and the related notes 1 to 28. These Group financial statements have been prepared under  
the accounting policies set out therein.
We have reported separately on the parent company financial statements of Nautical Petroleum plc for the year ended  
30 June 2007.
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’ responsibilities for preparing the Annual Report and the Group financial statements in accordance with applicable 
United Kingdom law and International Financial Reporting Standards (IFRS) as adopted by the European Union are set out in the 
Statement of Directors’ Responsibilities.
Our responsibility is to audit the Group 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 Group financial statements give a true and fair view and whether the Group 
financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS 
Regulation. We also report to you whether in our opinion the information given in the Directors’ report is consistent with the 
financial statements. 
In addition we report to you if, in our opinion, we have not received all the information and explanations we require for our audit, 
or if information specified by law regarding director’s 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 group financial 
statements. The other information comprises only the highlights, the chairman’s statement, the explanation of heavy crude oil, 
the chief executives review, the operational review, the finance director’s review, the 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 group 
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  
Group financial statements. It also includes an assessment of the significant estimates and judgments made by the directors 
in the preparation of the Group financial statements, and of whether the accounting policies are appropriate to the Group’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 Group 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 Group financial statements.
Opinion
In our opinion:
the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, 
of the state of the Group’s affairs as at 30 June 2007 and of its loss for the year then ended; 
the Group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 
of the IAS Regulation; and
the information given in the directors’ report is consistent with the group financial statements.
Ernst & Young LLP
Registered auditor
Aberdeen
1 October 2007
•
•
•
Independent auditors’ report to the members  
of Nautical Petroleum plc 31 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
        18 months 
        ended 
      2007 30 June 2006 
     Notes £’000 £’000
Cost of sales      (161) (79)
Gross loss      (161) (79)
Administrative expenses       (1,269) (2,237)
       (1,430) (2,316)
Goodwill on reverse acquisition      – (5,077)
Operating loss     5 (1,430) (7,393)
Finance income     10 741 432
Finance costs     10 (174) (222)
Loss before tax       (863) (7,183)
Tax     11 472 –
Loss for the period       (391) (7,183)
Attributable to:
Equity holders of the Company      (490) (7,172)
Minority interests      99 (11)
       (391) (7,183)
      Pence Pence
Basic and diluted loss per share     12 (0.05) (0.78)
The results above were entirely derived from continuing operations.
Consolidated income statement 
For the year ended 30 June 2007 32 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
      At At 
      30 June 2007 30 June 2006 
     Notes £’000 £’000
Non-current assets
Intangible assets     13 49,768 49,279
Property, plant and equipment     13 2,588 2,732
      52,356 52,011
Current assets
Trade and other receivables     14 290 733
Cash and cash equivalents     15 8,943 12,300
      9,233 13,033
Total assets      61,589 65,044
Current liabilities     
Trade and other payables     16 (1,386) (1,902)
Non-current liabilities
Deferred tax     16 (6,609) (7,830)
Other payables     16 (2,974) (3,388)
      (10,969) (11,218)
Net assets      50,620 51,924
Equity attributable to equity holders
Called up share capital     18 9,683 9,627
Share premium      20,491 20,116
Other reserves      29,169 29,169
Cumulative translation reserve      (1,330) (12)
Accumulated losses      (11,612) (11,513)
Equity attributable to equity holders      46,401 47,387
Minority interests      4,219 4,537
Total equity      50,620 51,924
The financial statements were approved by the Board on 1 October 2007 and were signed on its behalf by:
I Williams H Thanawala
Chairman Finance Director
Consolidated balance sheet 
As at 30 June 2007 33 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
    Cumulative 
 Share  Share Other translation Retained Minority Total 
 capital premium reserves reserve earnings interests equity 
 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2005 100 5,189 16,733 – (843) 6,162 27,341 
Transitional adjustment on first time 
 adoption of IFRS – – – (822) (4,713) (1,845) (7,380)
Equity at 1 January 2005  
 as restated 100 5,189 16,733 (822) (5,556) 4,317 19,961
Currency translation adjustments – – – 810 – 231 1,041
Total expense recognised directly  
 in equity – – – 810 – 231 1,041
Loss for the period – – – – (7,172) (11) (7,183)
Total recognised income and expense 
 for the period – – – 810 (7,172) 220 (6,142)
Share-based payments – – – – 1,215 – 1,215
Reverse acquisition capital adjustment 6,556 – – – – – 6,556
Proceeds from issue of ordinary shares 
 and warrants for cash 1,865 – 263 – – – 2,128
Premium on ordinary shares issued  
 for cash – 15,874 – – – – 15,874
Cost associated with issuance of shares – (947) – – – – (947)
Shares issued for the acquisition of 
 Alba Resources (Holdings) Group 845 – 9,306 – – – 10,151
Shares issued for the acquisition of  
 First Mariner Limited 261 – 2,867 – – – 3,128
At 30 June 2006 9,627 20,116 29,169 (12) (11,513) 4,537 51,924
Currency translation adjustments – – – (1,318) – (417) (1,735)
Total expenses recognised directly  
 in equity – – – (1,318) – (417) (1,735)
Loss for the period – – – – (490) 99 (391)
Total recognised income and expense 
 for the period – – – (1,318) (490) (318) (2,126)
Share-based payments – – – – 391 – 391
New shares issued 56 375 – – – – 431
At 30 June 2007 9,683 20,491 29,169 (1,330) (11,612) 4,219 50,620
At 30 June 2007 equity attributable to equity holders of the parent company is £46,401,000 (2006: £47,387,000).
Consolidated statement of changes in equity 
For the year ended 30 June 2007 34 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
       18 months 
       ended  
      2007 30 June 2006 
     Notes £’000 £’000
Operating activities   
Cash generated outflow from operating activities    20 (677) (1,380)
Finance income      493 302
Net cash flow from operating activities      (184) (1,078) 
Cash flows from investing activities
Expenditure on intangible assets      (2,695) (2,302)
Purchase of property, plant and equipment      – (99)
Acquisition of Alba Resources (Holdings) Group     – (3,475)
Net cash received on acquisition of Bullion Resources plc     – 1,545
Net cash flow from investing activities      (2,695) (4,331) 
Financing activities
Proceeds from issue of ordinary shares      – 18,002
Costs associated with share issues      – (947)
Repayment of loans      (360) –
(Decrease)/increase in balances due to related undertaking s    (118) 646
Net cash flow from financing activities      (478) 17,701
(Decrease)/increase in cash and cash equivalents     (3,357) 12,292
Cash and cash equivalents at beginning of period     12,300 8
Cash and cash equivalents at end of period    15 8,943 12,300
Consolidated cash flow statement
For the period ended 30 June 2007 35 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
1. Authorisation of Financial Statements and Statement of Compliance with IFRS
The Group’s financial statements of Nautical Petroleum plc for the year ended 30 June 2007 were authorised for issue by the Board 
of Directors on 1 October 2007 and the balance sheet was signed on the Board’s behalf by Ian Williams and Hemant Thanawala. 
Nautical Petroleum plc is a public limited company incorporated in England and Wales. The Company’s ordinary shares are 
traded on AIM on the London Stock Exchange.
2. Accounting policies for the Consolidated Financial Statements
(2.1) Basis of preparation
The consolidated financial information presented has been prepared on a historical cost basis. The consolidated financial 
statements are presented in UK sterling, (“£”), due to the nature of the Group’s activities and the fact that the Group is expected 
to transact more of its business in UK sterling than any other currency. All values are rounded to thousands of pounds except 
when otherwise indicated. 
These financial statements have been prepared in accordance with the requirements of International Financial Reporting 
Standard 1 (First-time adoption of International Financial Reporting Standards), and other IFRSs (International Financial 
Reporting Standards) and IFRIC (International Financial Reporting Interpretations Committee) announcements which have 
been issued, and effective, or issued and early adopted, as at the date of these statements. The effect of implementing IFRS 
is set out in note 28.
The preparation of financial statements in conformity with IFRS accounting principles requires the use of estimates and 
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported 
amounts of expenses during the reporting period. Although these estimates are based on management’s best knowledge of the 
amount, event or actions, actual results ultimately may differ from those estimates. The Board has reviewed the accounting 
policies set out below and considers them to be the most appropriate to the Group’s business activities. 
(2.2) Basis of consolidation 
These consolidated financial statements of the Group comprise the financial statements of Nautical Petroleum plc (“Nautical”) 
and its subsidiaries as at 30 June 2007, including the results of the subsidiaries are prepared for the same reporting period as the 
parent company using consistent accounting policies. 
All intercompany balances, transactions, income and expenses and profits and losses resulting from intra-group transactions 
are eliminated in full. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains 
control, and continue to be consolidated until the date that such control ceases. Control is normally evident when Nautical, or a 
company which it controls, owns more than 50% of the voting rights of a company’s share capital. 
(2.3) Changes in accounting principles
The accounting policies adopted are consistent with those of the previous financial period except for:
a) Adoption of IFRS
Previously the Group prepared its financial statements in accordance with UK GAAP. The Group has elected to publish its first 
consolidated financial statements to 30 June 2007 under IFRS with its transition date to IFRS being 1 January 2005. Accordingly 
these financial statements are prepared under IFRS.
b) Exploration and evaluation assets
The Company has amended its exploration and evaluation policy to the policy set out in 2.9 below. The effects of this change are 
shown in note 28 and more closely align the Company’s policy with that of its peer group.
c) Introduction of IFRS – First time adoption
The rules for first time adoption of IFRS are set out in IFRS 1, First-time Adoption of International Financial Reporting Standards. 
In general, selected accounting policies must be applied retrospectively in determining the opening balance sheet under IFRS. 
However, IFRS 1 allows a number of exemptions to this general principle. Exemptions which the Group have taken advantage of 
are noted below:
Business combinations
Under the transitional arrangements of IFRS 1, there is the option of applying IFRS 3, Business Combinations, prospectively  
from the date of transition. The Group has exercised this option and has not restated past business combinations prior to the 
transition date. 
Notes to the financial statements 36 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Notes to the financial statements continued
2. Accounting policies for the Consolidated Financial Statements continued
(2.4) Significant accounting judgements and estimates
In the process of applying the Group’s accounting policies, management make judgements and estimates. The key assumptions 
concerning the future, and other sources of estimation uncertainty at the balance sheet date, that have a significant risk of 
causing a material adjustment to the carrying amounts of assets and liabilities in the financial period are:
– The Group determines whether the exploration and evaluation assets are impaired in accordance with policy 2.9.
– The estimates determining the unwinding of the discount on long-term payables, being the expected timings of field 
development approval and first oil on the Mariner field.
(2.5) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenues 
can be reliably measured. To date the Group is in a pre-revenue generating phase. 
(2.6) Foreign currency translation
The consolidated financial statements are presented in UK sterling, which is the Company’s functional and presentation  
currency. Each entity in the Group determines its own functional currency and items included in the financial statements  
of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the 
functional currency using the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign 
currencies are re-translated at the functional currency rate of exchange ruling at the balance sheet date. All differences are  
taken to the income statement. 
The functional currency of the foreign operation, Nautical Petroleum AG, is US dollars. As at the reporting date, the assets and 
liabilities of this subsidiary are translated into UK sterling at the rate of exchange ruling at the balance sheet date and its income 
statement is translated at the weighted average rates for the period. The exchange differences arising on the translation are taken 
directly to a separate component of equity (“Cumulative Translation Adjustment”). On disposal of a foreign entity, the deferred 
cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement as 
part of the gain or loss on sale. 
(2.7) Business combinations
The results of businesses acquired are consolidated from the effective date of acquisition, whereby upon the acquisition 
of a business, assets and liabilities are restated at fair value in accordance with IFRS.
(2.8) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business 
combination over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities. Following 
initial recognition, goodwill is measured at cost less any accumulated impairment loss. Goodwill is reviewed annually or more 
frequently if events or changes in circumstances indicate that the carrying value may be impaired. 
The treatment of Goodwill arising on the reverse acquisition is set out in note 3.
(2.9) Intangible assets
Intangible assets – exploration and evaluation assets capitalisation
Certain costs (other than payments to acquire the legal right to explore) incurred prior to acquiring the rights to explore are 
charged directly to the income statement. All costs incurred after the rights to explore an area have been obtained, such as 
geological and geophysical costs and other direct costs of exploration (drilling, trenching, sampling and technical feasibility  
and commercial viability activities) and appraisal are accumulated and capitalised as intangible exploration and evaluation 
(“E&E”) assets. 
E&E costs are not amortised prior to the conclusion of appraisal activities. At completion of appraisal activities, if technical 
feasibility is demonstrated and commercial reserves are discovered, then, following development sanction, the carrying value of 
the relevant E&E asset will be reclassified as a development and production asset, but only after the carrying value of the relevant 
E&E asset has been assessed for impairment, and where appropriate, its carrying value adjusted. If, after completion of appraisal 
activities in an area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore 
expires or if the Company decides not to continue exploration and evaluation activity, then the costs of such unsuccessful 
exploration and evaluation is written off to the income statement in the period the relevant events occur.  37 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
2. Accounting policies for the Consolidated Financial Statements continued
Impairment 
If and when facts and circumstances indicate that the carrying value of an E&E asset may exceed its recoverable amount an 
impairment review is performed. For E&E assets when there are such indications, an impairment test is carried out by grouping 
the E&E assets with the development and production assets belonging to the same geographic segment to form the Cash-
Generating Unit (“CGU”) for impairment testing. The equivalent combined carrying value of the CGU is compared against the 
CGU’s recoverable amount and any resulting impairment loss is written off to the income statement. The recoverable amount 
of the CGU is determined as the higher of its fair value less costs to sell and its value in use. 
(2.10) Development and Production assets
Development and Production (D&P) assets are accumulated into single field cost centres and represent the cost of developing 
the commercial reserves and bringing them into production together with the E&E expenditures incurred in finding commercial 
reserves previously transferred from E&E assets as outlined in the policy above. 
Depreciation 
Costs relating to each single field cost centre are depleted on a unit of production method based on the commercial proven and 
probable reserves for that cost centre. Development assets are not depreciated until production commences. The amortisation 
calculation takes account of the estimated future costs of development of recognised proven and probable reserves, based on 
current price levels. Changes in reserve quantities and cost estimates are recognised prospectively from the last reporting date. 
Impairment
A review is performed for any indication that the value of the Group’s D&P assets may be impaired. For D&P assets when there 
are such indications, an impairment test is carried out on the cash-generating unit. Each cash-generating unit is identified in 
accordance with IAS 36. Nautical’s cash-generating units are those assets which generate largely independent cash flows and  
are normally, but not always, single development or production areas. If necessary, additional depletion is charged through the 
income statement if the capitalised costs of the cash-generating unit exceed the associated estimated future discounted cash 
flows of the related commercial oil and gas reserves.
Nautical currently does not have any D&P assets.
(2.11) Plant and equipment
All equipment is stated at cost less depreciation unless otherwise shown. Cost includes all relevant external expenditure 
incurred in acquiring the asset. No property assets are held within the Group.
The initial cost of equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any 
directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred 
after the equipment has been placed into operation, such as repairs and maintenance and overhaul costs, are normally charged 
to the income statement in the period in which the costs are incurred. In situations where it can be clearly demonstrated that 
the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item 
of equipment beyond its original assessed standard of performance, the expenditures are capitalised as an additional cost 
of equipment. 
Depreciation
The Group selects its depreciation rates carefully and reviews them regularly to take account of any changes in circumstances. 
When determining expected economic lives, the Group considers the expected rate of technological developments and the 
intensity at which the assets are expected to be used. Depreciation is calculated on a straight-line basis over the useful life. 
Useful lives of major classes of depreciable assets are:
Extended well test equipment       20 Years
Computer equipment       3 Years
The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are 
consistent with the expected pattern of economic benefits from items of equipment. 
An item of equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. 
Any gain or loss on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying 
amount of the asset) is included in the income statement in the year the asset is derecognised.  38 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Notes to the financial statements continued
2. Accounting policies for the Consolidated Financial Statements continued
Impairment
At each balance sheet date, reviews are carried out of the carrying amounts of the assets to determine whether there is any 
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset  
is estimated in order to determine the extent if any, of the impairment loss. Where the asset does not generate cash flows that  
are independent from the other assets, estimates are made of the cash-generating unit to which the asset belongs. 
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, estimated future 
cash flows are discounted to their present value using a discount rate appropriate to the specific asset or cash-generating unit. If 
the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount 
of the asset or cash-generating unit is reduced to its recoverable amount. Impairment losses are recognised immediately in the 
income statement. 
(2.12) Other financial assets
Financial assets are classified as either financial assets at fair value through the income statement, loans and receivables, held to 
maturity investments and available-for-sale financial assets, as appropriate. When financial assets are recognised initially, they 
are at fair value plus, in the case of investments not at fair value through the income statement, directly attributable transaction 
costs. The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, 
re-evaluates this designation at each financial year end. 
Loans and receivables
Trade and other receivables and trade and other payables are initially recognised at fair value. Fair value is considered to be the 
original invoice amount, discounted where material, for short-term receivables and payables. Long-term receivables and payables 
are measured at amortised cost using the effective interest rate method, with the unwinding of the discount passing though 
income statement as a finance cost. At each balance sheet, the estimates used to determine the discount period and discount 
rates are assessed and changes made as appropriate, with the effect of the change being recorded in the current period. Where 
amounts are denominated in a foreign currency, retranslation is made in accordance with the foreign currency accounting policy 
previously stated. 
(2.13) Taxation
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 tax authorities. The tax rates and the tax laws used are those that are enacted, or substantively enacted, by the 
balance sheet date. 
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases 
of assets and liabilities and their carrying amounts for financial reporting purposes. 
Deferred tax liabilities are recognised for all taxable temporary differences except:
(a) where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is 
not a business combination and, at the time of the transaction, affects neither the accounting profit or loss; and
(b) in respect of taxable temporary differences associated with investment in subsidiaries and associates where the timing of the 
reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the 
foreseeable future. 
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and 
unused tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary 
differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except:
(a) where the deferred income tax asset relating to the deductible temporary differences arise from the initial recognition of an 
asset or liability; 
(b) in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax 
assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable 
future; and
(c) deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against 
which deductible temporary differences, carried forward tax credits or tax losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no 
longer probable that sufficient taxable profits will be available to allow all or part of the deferred income tax asset to be utilised. 
Unrecognisable deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has 
become probable that future taxable profits will allow the deferred tax asset to be recovered.  39 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
2. Accounting policies for the Consolidated Financial Statements continued
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset 
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the 
balance sheet date.
Income tax relating to items recognised directly in equity is recognised in equity and not in the income statement.
(2.14) Employee benefits
The Group operates a defined contribution pension scheme. Contributions payable for the period are charged to the income 
statement. 
(2.15) Share-based payments
Employees (including directors and senior executives) of the Group receive remuneration in the form of share-based payment 
transactions, whereby these individuals render services as consideration for equity instruments (“equity-settled transactions”). 
These individuals are granted share option rights as approved by the Board, which can only be settled in shares of the respective 
companies that award the equity-settled transactions. No cash settled awards have been made or are planned. 
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which 
the performance and/or service conditions are fulfilled, ending on the date on which the relevant individuals become fully entitled 
to the award (“vesting point”). The cumulative expense recognised for equity-settled transactions at each reporting date until the 
vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity 
instruments and value that will ultimately vest. The income statement charge for the period represents the movement in 
cumulative expense recognised as at the beginning and end of that period. No equity-settled awards have been modified or 
cancelled during the period.
The fair value of share-based remuneration is determined at the date of grant and recognised as an expense in the income 
statement on a straight-line basis over the vesting period, taking account of the estimated number of shares that will vest. 
The fair value is determined by use of an actuarial model.
(2.16) Separately disclosable items
Items that are both material in size and unusual and infrequent in nature are presented as separately disclosable items in the 
income statement or separately disclosed in the notes to the financial statements. The directors are of the opinion that the 
separate disclosure of these items provides helpful information about the Group’s underlying business performance.
(2.17) Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash-in-hand bank balances, call money and 
unrestricted time deposit balances with an original maturity of 90 days or less. 
(2.18) Interest bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received less directly 
attributable transaction costs. After initial recognition, interest bearing loans and borrowings, are subsequently measured at 
amortised cost using the effective interest rate method. Interest payable is accounted for on the accruals basis in the income 
statement using the effective interest rate method. No interest or borrowing costs have been capitalised. 
(2.19) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it 
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable 
estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the 
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to 
any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, 
provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where 
discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost. 
(2.20) Commitments and contingencies
Commitments and contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility 
of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial 
statements but disclosed when an inflow of economic benefits is probable. 40 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Notes to the financial statements continued
3. 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.
By adopting reverse acquisition accounting for consolidation purposes, goodwill of £5,077k arose on acquisition, which has been 
fully written off to the income statement (in the 18 month period to June 2006) because Bullion Resources plc had no continuing 
business and therefore no intrinsic value. In addition, the share capital of the Group is determined using reverse acquisition rules 
as set out in the note on share capital.
4. Turnover and segmental information
No turnover has arisen to date.
For the purposes of segmental information the primary segment reporting format is determined to be the business segment.  
The Group has one class of business segment, the exploration for and production of hydrocarbon liquids. No further disclosure  
is required in relation to primary segment reporting in this note as all the relevant disclosure is already detailed throughout the 
Group financial statements.
The secondary segment information is reported geographically. The Group’s geographical segments are the United Kingdom 
and Europe. The following tables present certain asset information regarding the Group’s geographical segments for the periods 
ended 30 June 2007 and 2006.
       18 months  
       ended 
      2007 30 June 2006 
Segment assets      £’000 £’000
United Kingdom      52,427 52,585
Europe      219 159
Assets held centrally      8,943 12,300
      61,589 65,044
       18 months  
       ended 
      2007 30 June 2006 
Capital expenditure      £’000 £’000
United Kingdom      3,065 22,642
Europe      60 159
      3,125 22,801
5. Operating loss
       18 months  
       ended  
      2007 30 June 2006 
     Note £’000 £’000
Operating loss is stated after charging:
Goodwill on reverse acquisition     3 – 5,077
Depreciation of property, plant and equipment     144 71
Foreign exchange (gains)      (267) (50)
Operating lease payments      – 24 41 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
6. Auditors’ remuneration
New requirements for the detailed disclosure of remuneration paid by the Company to the auditors of its individual and Group 
accounts were introduced in the Companies (Disclosure of Auditor Remuneration) Regulations 2005 (Statutory Instrument 
2005/2417) (the “Regulations”). These requirements replace those that applied for periods commencing prior to 1 October 2005. 
The disclosures for 2007 below comply with the Regulations and the comparatives for 2006 have been restated to conform to the 
new requirements.
       18 months  
       ended  
      2007 30 June 2006 
      £’000 £’000
Audit of the Group accounts      50 30
Audit of the Company’s accounts      6 5
       56 35
Other fees to auditors:
Audit of the Company’s subsidiaries pursuant to legislation     14 22
Other services pursuant to legislation      62 34
Taxation services      43 30
Corporate finance services – transaction costs     40 22
      159 108
7. Information regarding directors’ emoluments
Aggregate directors emoluments, which exclude pensions, are £516k (2006: £390k). The emoluments of the highest paid director 
were £226k (2006: £182k). In addition he received contributions to a defined contribution pension scheme of £10k (2006: £9k). 
Further information is included in the Remuneration report.
8. Employees
Headcount
       18 months  
       ended  
      2007 30 June 2006 
      Number Number
Average number of employees of the Group (including executive directors) during the year was:
Management      4 4
Technical staff/support/other      2 2
Three directors provide services to the Company through a service agreement with International Energy Services Limited, which 
is a related party.
Staff costs
       18 months  
       ended  
      2007 30 June 2006 
      £’000 £’000
Wage and salaries      469 356
Bonuses      97 47
Social security costs      39 20
Other pension costs      17 12
      622 435
Equity settled share-based payments      391 1,215
      1,013 1,650
Wages and salaries include fees for three executive directors through a service agreement with International Energy Services 
Limited. 42 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Notes to the financial statements continued
9. Pension commitments 
For direct employees of Nautical Petroleum plc, the Company contributes 7% of salary to a defined contribution pension scheme. 
£17k has been charged to the income statement for the year (2006: £12k).
10. Interest and similar items 
       18 months  
       ended  
      2007 30 June 2006 
Finance income      £’000 £’000
Bank interest      493 432
Effect of changes in estimates to discounts on long-term payables    248 –
      741 432
       18 months  
       ended  
      2007 30 June 2006 
Finance costs      £’000 £’000
Unwinding of discount on long-term payable      174 222
11. Tax on loss on ordinary activities
       18 months  
       ended  
      2007 30 June 2006 
Current and deferred taxation      £’000 £’000
Loss before tax      (863) (7,183)
Loss before tax at the standard UK corporation tax rate of 30% (2006: 30%)   (259) (2,155)
Effects of:
Disallowed (income) and expenses      (34) 1,594
Change in tax rates on deferred tax liability      (472) –
Increase in deferred tax asset not recognised      293 561
Total tax credit on loss on ordinary activities      (472) –
Movement on the deferred tax liability representing changes in exchange rates is accounted for through reserves whilst  
the movement attributable to tax rate changes is reflected through the income statement. The Group has tax losses of 
approximately £2.9m (2006: £2.5m) arising in the UK that are available indefinitely against future taxable profits. Deferred  
tax assets of approximately £1.1m at 28% (2006: £1.1m at 30%) have not been recognised as a result of existing uncertainties  
of their realisation. 
12. Loss per share
       18 months  
       ended  
      2007 30 June 2006
Loss for the period attributable to equity holders (£’000)     (490) (7,172)
Basic weighted average number of shares in issue in the period (thousands)   1,075,450 917,802
Basic loss per ordinary share (pence)      (0.05) (0.78)
In addition at 30 June 2007 there were a total of 49.75 million options (2006: 41.5 million) and 26.3 million warrants (2006: 26.3 
million) in issue, which have not been included in the above calculations. 43 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
13. Goodwill, Intangible assets and property, plant and equipment
Movements during the year were as follows:   
 Intangible   Property, plant 
 assets  and equipment
    Exploration Extended  
    and evaluation well test  
   Goodwill assets equipment Other Total 
Cost   £’000 £’000 £’000 £’000 £’000
At 1 January 2005   – 25,097 2,702 – 27,799
Reverse acquisition (note 3)   5,077 – – – 5,077
Additions   – 22,688 94 19 22,801
Exchange adjustments   – 1,494 – – 1,494
Written off   (5,077) – – (12) (5,089)
At 30 June 2006   – 49,279 2,796 7 52,082
Additions   – 3,125 – – 3,125
Exchange adjustments   – (2,636) – – (2,636)
At 30 June 2007   – 49,768 2,796 7 52,571
Depletion and Depreciation 
At 1 January 2005   – – – – –
Provided in period   – – 70 1 71
At 30 June 2006   – – 70 1 71
Provided in year   – – 140 4 144
At 30 June 2007   – – 210 5 215
Net book value
At 30 June 2007   – 49,768 2,586 2 52,356
At 30 June 2006   – 49,279 2,726 6 52,011
At 1 January 2005   – 25,097 2,702 – 27,799
The exploration and evaluation balance represents 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.
Two acquisitions made in August 2005 have been treated as asset acquisitions.
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 £8.3m as at June 2007. If the party declines to take up its 
option, the Company retains the 6.67% interest upon payment of £1.
14. Trade and other receivables
      30 June 2007  30 June 2006 
      £’000 £’000
Other debtors      160 583
Prepayments and accrued interest      130 150
      290 733
15. Cash and cash equivalents
      30 June 2007  30 June 2006 
      £’000 £’000
Cash at bank and in hand      556 573
Short-term deposits      8,387 11,727
      8,943 12,300
Further disclosure is made in note 17. 44 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Notes to the financial statements continued
16. Trade and other payables
      30 June 2007  30 June 2006 
Current liabilities      £’000 £’000
Trade creditors      383 416
Amounts owed to related companies      896 1,079
Taxation and Social Security      – 18
Accruals      107 29
Loan payable      – 360
      1,386 1,902
Amounts owed to related parties are due on demand and are treated as creditors.
      Deferred Conditional 
      tax payments 
Non-current liabilities      £’000 £’000
At 1 July 2006      7,830 3,388
Exchange adjustments      (749) (340)
Effect of tax rate change      (472) –
Effect of change in estimates      – (248)
Unwinding of discount      – 174
At 30 June 2007      6,609 2,974
The deferred tax balance relates entirely to exploration assets which were acquired prior to the transition date for IFRS (1 January 
2005). Hence the income statement movement was booked to reserves on transition. The transaction was based in US dollars. 
Hence there are exchange fluctuations. These movements are recorded in the cumulative translation reserve. The tax rate 
applying for periods after April 2007 has been reduced from 30% to 28%. Hence the deferred tax balance has been adjusted 
accordingly.
The conditional payments comprise two amounts relating to the Mariner Field of: (1) $4.0m due on Field Development Plan (FDP) 
approval by the Department of Business, Environment and Regulatory Reform; and (2) $2.8m due on first oil which are not 
anticipated to be paid before end 2008. The Company believes these events to be sufficiently probable as to provide for their 
payment. The liabilities were acquired as part of the acquisition of the Alba Resources (Holdings) Group in August 2005. At this 
date they were fair valued. The movement in the year includes both exchange movements and also unwinding of the discount, 
which are shown in the income statement. The change in estimates applies to both a revision of the estimated trigger dates and 
the discount rate used.
17. Financial instruments
Exposure to price, credit, liquidity and cash flow risk
Price risk arises on financial instruments because of changes in, for example commodity prices or equity prices. The Group does 
not hold investments and does not yet have a need for commodity hedging.
Credit risk is the risk of financial assets not realising their value. The primary financial assets are cash and receivables from Joint 
Venture partners, the risk to which are not significant.
Liquidity risk is the risk that obligations associated with financial liabilities will not be met. The Group aims to mitigate liquidity 
risk by managing cash requirements. The group has to date been funded by equity placings.
Cash flow risk is the risk of variable cash flows from its assets or liabilities. The Group is currently exposed to changes in interest 
rates on its cash deposits.
Interest rate risk profile of financial assets and liabilities
      30 June 2007  30 June 2006 
Financial assets: Cash and short-term deposits     £’000 £’000
Floating rate financial assets < 1 year       556 573
Fixed rate financial assets < 1 year       8,387 11,727
      8,943 12,300
At 30 June 2007, short-term deposits were earning interest at a weighted average fixed deposit rate of 5.45%. Cash at bank earns 
interest at floating rates based on a discount to GBP/US$ LIBOR. Other financial assets are non-interest bearing. 45 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
17. Financial instruments continued
Financial liabilities
There are no interest bearing financial liabilities in the Group at June 2007. At June 2006 there was one loan for £360,000 with an 
interest rate of 5.00%.
Fair values of financial assets and liabilities
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial assets and liabilities.
 
    30 June 2007 30 June 2006 30 June 2007  30 June 2006 
    Book value Book value Fair value Fair value 
    £’000 £’000 £’000 £’000
Financial assets
Cash and cash equivalents    8,943 12,300 8,943 12,300
Trade and other receivables    290 733 290 733
Financial liabilities
Trade and other payables – current    1,386 1,902 1,386 1,902
Trade and other payables – non-current    2,974 3,388 2,974 3,388
18. Share capital 
 At 30 June 2007 
 
At 30 June 2006
   Number £’000  Number £’000
Authorised
Ordinary shares of 1p each  1,600,000,000 16,000  1,200,000,000 12,000
Allotted, called up and fully paid
Ordinary shares of 1p each  77,500,000  100  77,500,000 100
Reverse acquisition capital adjustment  697,500,000 6,556  697,500,000 6,556
Ordinary shares of 1p each  302,689,619 3,027  297,129,880 2,971
  1,077,689,619 9,683  1,072,129,880 9,627
Under reverse acquisition accounting, the legal parent is Nautical Petroleum plc, but the Group results at the date of acquisition 
are as if Nautical Holdings Limited were the parent. The value of the shares at the date of acquisition is based on the value of the 
share capital of Nautical Holdings Limited at the date of acquisition (1st April 2005). Following the reverse acquisition, the Group 
shows the additions made for Nautical Petroleum plc only. 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.
The movement on issued shares is set out in the following table. All movements are for ordinary 1p shares.
    Number of 
  Date issued Issue price  shares issued
At 1 January 2005    77,500,000
Shares issued on AIM listing  1 April 2005 8.46p 697,500,000
Private equity placing  4 July 2005 9.00p 88,888,889
Alba Resources (Holdings) Group acquisition  16 August 2005 12.00p 84,591,328
First Mariner Limited acquisition  16 August 2005 12.00p 26,064,292
Private equity placing  3 January 2006 10.25p 97,585,371
At 30 June 2006    1,072,129,880
Purchase of Bluebeard & Skipper  24 November 2006 7.75p 5,559,739
At 30 June 2007    1,077,689,619
The Group announced on 24 November 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 the Ministry approval has not 
been received and 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. 46 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Notes to the financial statements continued
18. Share capital continued
Equity settled 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 were granted on 7 March 2005, exercisable at 4p per share on or before 
1 April 2008. 10 million were exercisable from 1 April 2006 and 10 million from 1 April 2007. None of the options have been 
exercised. They are all held by directors as set out in the Directors’ report. 
Share options to subscribe for 20.5 million ordinary shares were granted on 26 September 2005, exercisable at 11p per share on or 
before 26 April 2010. 10.25 million were exercisable from 27 September 2006 and 10.25 million from 27 September 2007. None of 
the options have been exercised. 20 million are held by directors as set out in the Directors’ report. 
Share options to subscribe for 1.0 million ordinary shares were granted on 23 September 2005 in association with the acquisition 
of the Alba Resources (Holdings) Group, exercisable at 12.5375p per share at any time on or before 23 September 2010. None of 
the options have been exercised. 
Share options to subscribe for 8.25 million ordinary shares were granted on 18 January 2007, exercisable at 8.85p per share on or 
before 18 January 2015. 2,062,500 options are exercisable after 17 July 2007, 2,062,500 options are exercisable after 17 January 
2008, 2,062,500 options are exercisable after 17 July 2008 and 2,062,500 options are exercisable after 17 January 2009. None of 
the options have been exercised. 7.5 million are held by directors as set out in the Directors’ report. 
The weighted average share price in the year was 8.95p (15 months to June 2006: 12.06p, being the period the shares were on 
AIM as Nautical Petroleum plc). The weighted average remaining contract life at 30 June 2007 was 2.79 years (30 June 2006: 2.84 
years). The weighted average fair value of options granted in the year was 3.97p (18 months to June 2006: 3.62p). The expense 
recognised for share-based payments in the year to 30 June 2007 was £391k (18 months to June 2006: £1,215k).
The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options 
during the year.
    2007 2007 2006 2006 
    Number WAEP Number WAEP
Outstanding at beginning of period    41,500,000 7.66 – –
Granted during the period    8,250,000 8.85 41,500,000 7.66
At 30 June    49,750,000 7.86 41,500,000 7.66
At 30 June 2007, 31.25 million options are exercisable (2006: 11 million).
The fair value of the share options granted is estimated using a Binomial model. The following table lists the inputs and 
assumptions used in the model. 
      2007 2006
Dividend yield      – –
Expected share price volatility       52% 70%
Risk free interest rate      5.46% 4.78%
Leaver rate      5% 5%
Volatility has been based on a weighted average of Nautical’s and its peer group’s share prices.  47 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
19. Reconciliation of movements in equity
The reconciliation of movements in equity is detailed in the consolidated statement of changes in equity. The following is a 
description of the nature and purpose of each reserve.
Share capital and share premium
The Group’s share capital and share premium are explained in note 18.
Cumulative translation reserve
The cumulative translation reserve is used to record exchange differences arising from the translation of the financial statements 
of subsidiaries whose functional currency is not pounds sterling and any fair value adjustments associated with their acquisition.
Other reserves
Other reserves comprise the following:
      30 June 2007  30 June 2006 
      £’000 £’000
Capital contribution      2,702 2,702
Merger reserve      12,173 12,173
Warrant reserve      263 263
Capital reserve      14,031 14,031
      29,169 29,169
The capital contribution arose on the formation of Nautical Holdings Limited (see note 18 for explanation of reverse acquisition 
accounting) when equipment was contributed to the Company.
The merger reserve arises from UK law for merger relief, which sets out rules for subsidiaries acquired in whole or in part for 
shares, where at least 90% of the company is acquired. In such circumstances, where the Company prepares accounts under UK 
GAAP, the investment in the company’s financial statements is at the nominal value of the shares issued. In the Group’s financial 
statements, the premium is recorded in the merger reserve.
The warrant reserve shows the value of share warrants issued.
The capital reserve arose from the fair value exercise on acquisition of Nautical Petroleum AG.
20. Net cash flows from operating activities
       18 months  
       ended  
      2007 30 June 2006 
      £’000 £’000
Loss for the period      (391) (7,183)
Finance income      (741) (432)
Finance costs      174 222
Taxation      (472) –
Goodwill      – 5,077
Share-based payment charges      391 1,215
Depreciation      144 71
Foreign exchange movements      (267) (50)
Operating cash flow before working capital movements     (1,162) (1,080)
Decrease/(increase) in trade and other receivables     443 (146)
Increase/(decrease) in trade and other payables     42 (154)
Net cash outflow from operating activities      (677) (1,380) 48 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Notes to the financial statements continued
21. Analysis of net cash/(debt)
   At    Exchange At 
   1 July 2006 Cash flow Acquisition differences 30 June 2007 
   £’000 £’000 £’000 £’000 £’000
Cash at bank and in hand   12,300 (3,357) – – 8,943
Amounts due to related party undertakings   (1,079) 118 – 65 (896)
Short-term loan   (360) 360 – – –
Net cash/(debt)   10,861 (2,879) – 65 8,047
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 3.
       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
       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       (331)
Interest income       17
Loss for the three months ended 31 March 2005      (314)
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.
23. Commitments
The Group has satisfied the minimum expenditure obligations on all licences. The Group has capital commitments of £5.8m 
(2006: Nil) representing the Group’s share of drilling and seismic programmes contracted to on its blocks.
24. Related party transactions
Executive directors, I Williams, H Thanawala and P Jennings provide services under a service agreement with International 
Energy Services Limited. The charges in the period were £266k (2006: £178k).
International Energy Services Limited is a 100% subsidiary of International Energy Group AG, the parent company of Nautical 
Petroleum plc and provides services to companies within the International Energy Group. Such shared services include the 
occupation of shared office space and facilities and some administrative functions and amounted to £257k (2006: £181k), which 
was in addition to the services of the directors. At the period end an amount of £302k (2006: £446k) was due to International 
Energy Services Limited.
Non-executive director P Kennedy is also a partner in PK Partners LLP which has provided consulting services to the Group  
and for the services of C Gill, the Company Secretary, for the amount of £14k (2006: £103k). 
At the period end there was £401k (2006: £538k) due to International Energy Group and £193k (2006: £95k) to UAH Limited,  
a subsidiary of International Energy Group AG. 49 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
25. Events since the balance sheet date
On 19 September 2007 the Company signed an agreement with Silverstone Energy Limited to Farmout 10% of block 9/11c 
(Mermaid). Silverstone are to pay 20% of the costs of drilling the imminent vertical exploration well on the Mermaid prospect, 
scheduled to be spudded in late October 2007.
26. Ultimate parent undertaking and controlling party
The directors consider International Energy Group AG, a company registered in Switzerland, to be the ultimate controlling party 
by virtue of its 44.1% direct shareholding a 5.5% indirect shareholdings (7.1% including share options which could be exercisable 
at 30 June 2007), controlled by three executive directors, who are employed by International Energy Group AG. The Nautical 
Group is included in the International Energy Group AG consolidation, the accounts of which are not publicly available.
27. 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.
28. Transition to International Financial Reporting Standards
The differences resulting from the transition to IFRS are summarised in the following tables. Also included is the effect of 
changing the accounting policy for exploration and evaluation assets. The reasons for the changes and their impact on the results 
are explained below:
Change in Exploration and Evaluation policy.
In order to better align the policy with its peer group, previously expensed exploration costs have been capitalised as set out in 
note 2.9. In addition, pre-licence costs previously capitalised and written off have been expensed immediately and reclassified as 
administration expenses. The effect of the changes on the previous period are to increase intangibles by £299k and to reduce 
costs by £299k, thereby reducing the loss for the period and retained earnings by £299k. The effect on the cash flow is to reduce 
the loss by £299k and to increase the intangible spend by £299k.
Discount on long-term payables
The accounting treatment for long-term payables has been revisited. The application of the effective interest method is 
considered appropriate and a retrospective restatement has been made to discount the long-term payable (note 16). Since the 
payables were acquired as part of the Alba Resources (Holdings) Limited purchase in August 2005, the impact of this reduction 
in the cost of purchase has been on the fair value of the assets acquired (as an adjustment to the UK GAAP numbers previously 
reported), with an adjustment to intangible assets, and subsequently to the income statement as unwinding of discount and 
foreign exchange, as the payables are dollar denominated.
Share-based payments
Under UK GAAP, the Group recognised only the intrinsic value or cost of the potential awards for the equity-settled share-based 
payments as an expense. The cost of these awards were accrued over the vesting period of each award based on the intrinsic 
value of the equity settled awards.
IFRS requires the fair value of value of options and share awards which ultimately vest to be charged to the income statement 
over the vesting or performance period. The fair value is determined at the date of grant using an appropriate model. If an award 
fails to vest as the result of certain types of performance condition not being satisfied, the charge to the income statement will  
be adjusted to reflect this. Consequently the loss for period 30 June 2006 in both the Group and the Company has been reduced 
by £36k. 
Deferred tax liabilities
The balance arises on the fair values ascribed to assets acquired as part of a business combination, which arose prior to the date 
of transition. As such the group has not restated the transaction. Under UK GAAP no deferred tax liability arose, whereas under 
IFRS a deferred tax liability needs to be recognised. The balance is dollar denominated and hence foreign exchange movements 
occur. The initial impact is to create a deferred tax liability, increase losses brought forward and to decrease minority interest. 
Subsequent foreign exchange movements are recorded in the cumulative translation reserve. 50 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
28. Transition to International Financial Reporting Standards continued
       18 months  
       ended  
       30 June 2006 
Income statement impact       £’000
(Loss) for the period under UK GAAP previously reported     (7,291)
Changes in policy for accounting for exploration and evaluation assets:
 Exploration costs written off       684
 Administrative expenses       (385)
Retrospective restatement of discount on long-term payables:
 Administrative expenses (foreign exchange effects)      (5)
 Finance costs       (222)
Revised (Loss) for the period under UK GAAP previously reported     (7,219)
Share-based payment charges       36
(Loss) for the period under IFRS       (7,183)
      As at As at 
      30 June 1 January  
      2006 2005 
Balance sheet impact      £’000 £’000
Intangible assets:
Under UK GAAP previously reported      49,551 25,097
Changes in policy for accounting for exploration and evaluation assets    299 –
Discount on long-term payables      (571) –
Revised UK GAAP and IFRS Balance      49,279 25,097
Deferred tax liabilities:
Under UK GAAP previously reported      – –
Deferred tax on transition balances (including foreign exchange)    (7,830) (7,380)
IFRS balance      (7,830) (7,830)
Non-current liabilities: conditional payments:
Under UK GAAP previously reported      (3,732) –
Discount on long-term payables      344 –
Revised UK GAAP and IFRS balance      (3,388) –
Net assets:
Under UK GAAP previously reported      59,682 27,341
Changes in policy for accounting for exploration and evaluation assets    299 –
Discount on long-term payables       (227) –
Revised UK GAAP Balance      59,754 27,341
Effects of IFRS      (7,830) (7,380)
IFRS Net assets      51,924 19,961
Equity:
Under UK GAAP previously reported      59,682 27,341
Changes in policy for accounting for exploration and evaluation assets    299 –
Discount on long-term payables      (227) –
Revised UK GAAP Balance      59,754 27,341
Income statement impact of share-based payment charges     36 –
Equity impact of share-based payment charges     (36) –
Deferred tax on transition balances:
 Attributable to equity holders      (5,872) (5,535)
 Attributable to minority interests      (1,958) –
IFRS equity      51,924 19,961
Notes to the financial statements continued 51 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
Nautical Petroleum plc Company only 
accounts 2007
Directors’ responsibilities for the parent company financial statements
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law 
and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have 
elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United 
Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of 
the state of affairs of the 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 UK Accounting Standards have been followed, subject to any material departures disclosed and 
explained in the financial statements;
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will 
continue in business. 
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the 
financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 
1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the 
company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may 
differ from legislation in other jurisdictions.
•
•
•
• 52 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
Nautical Petroleum plc Company only 
accounts 2007 continued
Independent auditor’s report to the members of Nautical Petroleum plc
We have audited the parent company financial statements of Nautical Petroleum plc for the year ended 30 June 2007 which 
comprise the Company Balance Sheet and the related notes 29 to 38. These parent company financial statements have been 
prepared under the accounting policies set out therein. 
We have reported separately on the group financial statements of Nautical Petroleum plc for the year ended 30 June 2007.
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’ responsibilities for preparing the Annual Report and the parent company financial statements in accordance with 
applicable United Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out 
in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the parent company 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 parent company financial statements give a true and fair view and whether the 
parent company financial statements have been properly prepared in accordance with the Companies Act 1985. We also report  
to you whether in our opinion the information given in the parent company directors’ report is consistent with the financial 
statements. 
In addition we report to you if, in our opinion, 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 parent company 
financial statements. The other information comprises only the Highlights, the chairman’s statement, the explanation of heavy 
crude oil, the chief executive’s review, the operational review, the finance directors review, the 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 
parent company 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 parent 
company financial statements. It also includes an assessment of the significant estimates and judgments made by the directors  
in the preparation of the parent company financial statements, and of whether the accounting policies are appropriate to the 
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 parent company 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 parent company financial statements.
Opinion
In our opinion:
the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted 
Accounting Practice, of the state of the company’s affairs as at 30 June 2007; 
the parent company financial statements have been properly prepared in accordance with the Companies Act 1985; and
the information given in the directors’ report is consistent with the parent company financial statements.
Ernst & Young LLP
Registered auditor
Aberdeen
1 October 2007
•
•
• 53 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
Company balance sheet 
As at 30 June 2007
       2006 
      2007 (restated) 
     Notes £’000 £’000
Fixed assets
Intangible assets     31 1,482 254
Tangible assets     32 2 4
Investments     33 11,884 11,884
Total fixed assets      13,368 12,142
Current assets
Trade debtors and other receivables     34 4,603 2,716
Cash at bank and in hand      8,921 12,228
Total current assets      13,524 14,944
Creditors: amounts falling due within one year    35 (729) (659)
Net current assets      12,795 14,285
Net assets      26,163 26,427
Capital and reserves     36
Called up share capital      10,777 10,721
Share premium      19,758 19,383
Warrant reserve      263 263
Profit and loss reserve      (4,635) (3,940)
Total shareholders’ funds      26,163 26,427
The financial statements were approved by the Board on 1 October 2007 and were signed on its behalf by:
I Williams H Thanawala
Chairman Finance Director 54 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
29. Accounting policies
(a) Basis of accounts preparation
The financial statements have been prepared under the historic cost convention and in accordance with applicable United 
Kingdom accounting standards. 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.
(b) Exploration, evaluation and development expenditure
All costs incurred after the rights to explore an area have been obtained are accumulated and capitalised as intangible 
exploration and evaluation (E&E) assets. If facts and circumstances indicate that the carrying value of the E&E asset may exceed 
its recoverable amount an impairment review is performed.
Development and Production (D&P) assets are accumulated into single field cost centres and represent the costs of developing 
the commercial reserves and bringing them into production together with the E&E expenditures incurred in finding commercial 
reserves.
When production commences the capital costs incurred plus an estimate of future costs of development are depleted on the unit 
of production method based on proven and probable reserves for the cost centre. Changes in reserve quantities are recognised 
prospectively from the last reporting date.
(c) Depreciation
The cost of fixed assets is written off over their expected useful lives as follows:
Computer equipment       3 years
(d) Foreign currencies
Assets, liabilities, revenues and costs denominated in foreign currencies are recorded at the rates of exchange ruling at the date 
of the transactions; monetary assets and liabilities at the balance sheet date are translated at the year end rate of exchange. The 
resulting profits or losses are dealt with in the profit and loss account.
(e) Share-based payments
Employees (including directors and senior executives) of the Company receive remuneration in the form of share-based payment 
transactions, whereby these individuals render services as consideration for equity instruments (“equity-settled transactions”).
The Company adopted FRS 20 for the first time during the current year. The impact was to reduce the loss for the prior period by 
£36k. There is no impact on equity.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which 
the performance and/or service conditions are fulfilled, ending on the date on which the relevant individuals become fully entitled 
to the award (“vesting point”). The cumulative expense recognised for equity-settled transactions at each reporting date until  
the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of 
equity instruments and value that will ultimately vest. The income statement charge for the period represents the movement in 
cumulative expense recognised as at the beginning and end of that period. No equity-settled awards have been modified or 
cancelled during the period.
The fair value of share-based remuneration is determined at the date of grant and recognised as an expense in the income 
statement on a straight-line basis over the vesting period, taking account of the estimated number of shares that will vest.  
The fair value is determined by use of an actuarial model.
(f) Investments in subsidiaries
The Company records investments in subsidiaries at cost less provision for impairment. Where subsidiaries have been acquired 
in part for shares and at least 90% of the Company has been acquired the Company applies section 131 of the Companies Act 
1985 and accounting for the transactions using merger relief. The share element of the transaction is recorded at the nominal 
value of the shares issued.
(g) Change in accounting policy
The policy for exploration, evaluation and development assets has been changed in the year, following a change by the Nautical 
Petroleum plc group to align its policy more closely with that of its peers. The effect of the changes on the previous period are to 
increase intangibles by £33k and to reduce costs by £33k, thereby reducing the loss for the year and retained earnings by £33k.
Notes to the Company financial statements continued 55 REPORT AND ACCOUNTS 2007 NAUTICAL PETROLEUM PLC
30. Losses attributable to Nautical Petroleum plc
The loss for the period dealt with in the accounts of Nautical Petroleum plc was £1,086k (18 months to June 2006: loss of £1,817k, 
which includes £33k of losses as a result of the restatement with regard to the exploration and evaluation policy and £36k for the 
adoptional FRS 20). As provided by s230 of the Companies Act 1985, no profit and loss account is presented in respect of Nautical 
Petroleum plc.
31. Employees
Headcount
       18 months ended 
      2007 30 June 2006 
      Number Number
Average number of employees of the Company (including executive directors) during the year was:
Management      4 4
Technical staff/support/other      2 2
Three directors provide services to the Company through a service agreement with International Energy Services Limited, which 
is a related party.
Staff costs 
       18 months ended 
      2007 30 June 2006 
      £000 £000
Wage and salaries      466 356
Bonuses      97 47
Social Security costs      39 20
Other Pension costs      17 12
      619 435
Wages and salaries include fees for three executive directors through a service agreement with International Energy 
Services Limited.
       18 months ended 
      2007 30 June 2006 
      £000 £000
Equity settled share-based payments      391 1,215
32. Intangible assets
       Total 
Exploration and evaluation assets       £’000
At 1 July 2006       221
Adjustment from change in accounting policy      33
Restated balance at 1 July 2006       254
Additions in the period       1,228
At 30 June 2007       1,482
33. Tangible assets
       Total 
Computer equipment       £’000
Cost:
At 1 July 2006       5
Additions in the period       –
At 30 June 2007       5
Depreciation:
At 1 July 2006       1
Additions in the period       2
At 30 June 2007       3
Net book value
At 30 June 2007       2
At 30 June 2006       4 56 NAUTICAL PETROLEUM PLC REPORT AND ACCOUNTS 2007
34. Investments
       Total 
Investments in subsidiary companies       £’000
Cost
At 1 July 2006       11,884
Additions in the period       –
At 30 June 2007       11,884
Details of subsidiary companies are shown in note 27. 
In accounting for the acquisitions of Nautical Holdings Limited, the Alba Resources (Holdings) Group and First Mariner Limited 
the Company has applied section 131 of the Companies Act 1985 and has accounted for the transactions using merger relief.
35. Trade debtors and other receivables
      2007 2006 
      £’000 £’000
Amounts owed by subsidiaries      4,270 2,470
Other debtors      202 96
Prepayments and accrued interest      137 150
      4,609 2,716
36. Creditors: amounts falling due to within one year
      2007 2006 
      £’000 £’000
Trade creditors      225 74
Amounts owed to related companies      397 538
Taxation and social security      – 18
Accruals      107 29
      729 659
37. Share capital and reserves
   Share  Share Warrant Profit and 
   capital premium reserve loss reserve Total equity 
   £’000 £’000 £’000 £’000 £’000
At 1 July 2006   10,721 19,383 263 (3,973) 26,394
Adjustment from changes in accounting policy  – – – 69 69
Share option charges added back   – – – (36) (36)
Restated balance at 1 July 2006   10,721 19,383 263 (3,940) 26,427
Shares issued in the period    56 375 – – 431
Share option charges added back   – – – 391 391
Loss for the period   – – – (1,086) (1,086)
At 30 June 2007   10,777 19,758 263 (4,635) 26,163
Details of share capital and share-based payments are set out in note 18.
38. Related party transactions
Executive directors, I Williams, H Thanawala and P Jennings provide services under a service agreement with International 
Energy Services Limited. The charges in the period were £266k (2006: £178k).
International Energy Services Limited is a 100% subsidiary of International Energy Group AG, the parent company of Nautical 
Petroleum plc and provides services to companies within the International Energy Group. Such shared services include the 
occupation of shared office space and facilities and some administrative functions and amounted to £257k (2006: £181k), which 
was in addition to the services of the directors. At the period end an amount of £292k (2006: £436k) was due to International 
Energy Services Limited.
Non-Executive Director P Kennedy is also a partner in PK Partners LLP which has provided consulting services to the Group and 
for the services of C Gill, the Company Secretary, for the amount of £14k (2006: £103k). 
At the period end there was £25k (2006: £96k) due to International Energy Group and £155k (2006: £Nil) from UAH Limited, 
a subsidiary of International Energy Group AG.
Notes to the Company financial statements continued Audit of Reserves and Resource Volumes for Annual Report and Accounts of Nautical Petroleum plc  
(“the Company”)
We have been asked to provide an updated comment on the resources and reserves estimates of the Company. The Company 
asserts that there have been no material technical changes to the inputs and methods that the Company would use in the 
estimation of these quantities. The Company has also stated that it will not re-run economic evaluations of the properties 
despite changes in commodity prices.
On this basis, we can repeat our opinion that the Company’s estimates of Proved plus Probable reserves and Best Estimate 
Contingent and Prospective Resources are, in 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.
Since 2006, the company has acquired new acreage. RPS has reviewed contingent and prospective resource estimates in the 
Tudor Rose discovery and Catcher prospect, respectively. The Company advises that the Catcher prospect in Block 28/9 will 
be drilled in 2008. 
We draw your attention to the following points, one of which is repeated from last year:
We advise you to report Contingent Resources and Reserves (of any class) separately and not to present them as additive 
quantities. We understand that you have accepted this recommendation.
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 which we take 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.
Furthermore, the ongoing corporate activity associated with the Mariner discovery, involving a change of Operator subject 
to certain approvals, will itself not affect your above mentioned assurance on the speed of development.
Estimates of reserves and resources are inherently imprecise and uncertain. Presentation of a single estimate does not 
illustrate the uncertainty.
Many of the Company’s projects remain relatively immature are the subject to 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 
becomes available.
• We have not reviewed the “risking” or “chance of success” associated with any of the Prospective or Contingent Resources 
in your portfolio.
Yours faithfully,
Roy Kelly
Director, Valuations
RPS Group Plc
27 September 2007
•
•
•
•
•
Supplementary information
57 REPORT AND ACCOUNTS 2007 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.
01 Highlights
02 Chairman’s statement
04 Heavy crude oil
06 Chief Executive’s review
08 Operational review –  
Our portfolio
10 Operational review –  
UK Continental Shelf
20 Financial Director’s review
22 Board of Directors
24 Shareholder information
25 Directors’ report
27 Remuneration report
28 Corporate governance
29 Directors’ responsibilities for the 
financial statements
30 Independent auditors’ report
31 Consolidated income statement
32 Consolidated balance sheet
33 Consolidated statement of  
changes in equity
34 Consolidated cash flow statement
35 Notes to the financial statements
51 Nautical Petroleum plc Company only 
accounts 2007
54 Notes to the Company financial 
statements
IBC Supplementary information/Glossary
API American Petroleum Institute
®
bbl barrels
bcf billion cubic feet
bn billion
bopd barrels of oil per day
cp centipoises 
D Darcy
DBERR Department of Business, Environment  
and Regulatory Reform
DST drill stem test
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
Contents 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
2007
Nautical Petroleum plc Report and Accounts 2007