Results from Bula Resources have shown that accumulated losses have risen to £30.4 million at the end of 1997. A loss of £12.6 million for the year followed a loss of £10.7 million for 1996.

Bula is currently in dispute with its Russian partners over exploration licences, while aspects of its disastrous investment in the Salymskoye oil field in Siberia are the subject of an inquiry by a Government-appointed inspector Mr Lyndon McCann and legal action by the company.

The Salymskoye deal was identified by the former chairman and managing director, Mr Jim Stanley and involved a complex series of deals involving Mir Oil. Mr McCann has been seeking to meet Mr Stanley to discuss the deal.

The operating results for 1997 show that despite an increase in revenue from the sale of oil and gas - up from £393,000 to £463,000 - an increase in the cost of sales to £542,000 resulted in a loss on sales of £79,000. An exceptional provision of £12.3 million announced in April arising out of the Salymskoye investment in Russia and some £244,000 in exceptional legal costs for legal action the company is taking arising out of this investment, added to the 1997 operating losses. The company recorded a profit of £191,000 on the disposal of its investment in Tuskar.

Bula's results show a 38 per cent reduction in administrative costs to £163,000, and a 26 per cent reduction on the amount of administrative costs capitalised in oil and gas interests in 1997 to £318,000. The cash flow statement shows that net cash balances fell by £462,000, reducing net cash of £364,000 at the end of 1996 to net debt of £98,000 at the end of 1997.

Shareholders funds fell to £2 million at the end of 1997 from £14.3 million pulled back by the exceptional provisions while the working capital position was significantly worse with the reduction in cash balances, the sale of investments and a rise in the value of short-term creditors to £2.2 million from £1.5 million.

In a statement Bula said its difficult financial position has improved since the end of 1997. The improvements have resulted from the raising of £1.6 million in new equity through the placing of shares with the company's two largest institutional shareholders in February and May. This fund-raising has left the company in a position to fund all of its anticipated spending for the next year, the statement said.