Mr. Curry: Melrose started life in the early Nineties as a series of tax-driven drilling partnerships investing in the low-risk assets in the Permian Basin. Tax changes at the end of 1996 removed the tax breaks, which underpinned the partnerships, and really a way had to be found to unravel the direct investments of over 200 people in over 500 wells. All of this coincided with the time that the oil price started to fall away rapidly to its low in early ’99. The original founders (of Melrose) therefore had to make some structural and administrative changes. In early 1998 we (Munro Sutherland and I) came on board and the first objective was to roll up all the partnerships into Melrose Resources plc, which left the company with around about 230 shareholders. The strategy of the new company was then to use the cash flow from the existing US assets to underpin investment in a new asset portfolio, forming a new small exploration and production company.
TWST: Where are your assets located and what is their history?
Mr. Curry: The first deals we did through 1998 and going into 1999 were to pick up a small company called Petreco with a single license in Bulgaria, which has an existing gas discovery. Getting that license asset on board and starting to understand fully the Bulgarian business environment has been quite important for us over the past 18 months. We also bought a Canadian company called Odyssey Petroleum, which had three licenses in Egypt and an ethanol plant in Wyoming. We have seen through the initial investments in Egypt where we have bought an existing field on stream and drilled three exploration wells. The ethanol plant has also been quite an interesting asset. It is a manufacturing process, nothing to do with our industry really. Chris Thomas, one of our directors has researched the industry, researched the manufacturing process; and a plant that was a little bit short on investment and not doing too well has been upgraded and is now profitable.
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