NOW one of the UK's largest onshore acreage holders, Edinburgh Oil &

Gas filed its first-ever loss of #60,000 yesterday. The shares never

flickered and quite right too, because such reverses are the lot of

explorers.

In this instance, too, the fall could fairly be attributed to a 21%

drop in oil prices in the six months to June 30, compared with the same

period last year. An average of $13.38 a barrel instead of $16.95 cut

turnover from #1.1m to #886,000.

What really mattered to the market was confirmation from managing

director Alf Bissett that two promising new gas field projects were on

schedule and within budget. They should be producing for the fourth

quarter, which could make a difference to full-year returns.

Thanks to a successful placing and open offer last March, which raised

#3.88m net, the company has no debt and a stronger balance sheet. It

also helped fund Hatfield Moors' gas field being set up to fill a

contract for ScottishPower. Another significant development is in North

Yorkshire, with a power generation plant nearing completion.

When both projects come on stream production should increase eightfold

to 2,400,000 cubic feet a day. It is reckoned this will account for

about half total production by the year-end.

Further onshore properties acquired have included stakes in two

oilfields and an undeveloped discovery, all for #200,000 cash.

In the current half, Mr Bissett expects higher production from

development drilling on the Humbly Grove and Horndean oilfields, in

addition to the gas developments. And crude rates have already recovered

to around $18 a barrel, promising a return to profit and a large rise in

turnover.

Awaiting the gushers, Edinburgh's management has been practising tight

control of operating and overhead costs, mitigating the impact of the

lower turnover. Even so it is disappointed that last year's #103,000

interim profit was turned to loss.