Melrose Romanian plans holed

SHARES in Melrose Resources fell sharply yesterday after Canadian-based Sterling Resources said it had ended an agreement for the Edinburgh company to take a stake in two exploration sites off the coast of Romania.

Sterling said it had decided to withdraw a request made to the Romanian authorities to assign a 32.5 per cent working interest in the Pelican and Midia blocks to Melrose. Under the deal Melrose was to have become the operator of two gas field development

David Thomas, chief executive of Melrose, which also has interests in Egypt, Bulgaria and Turkey , said the company was currently reviewing the implications of "this unforeseen event on its future business plans". "We understand that this recent development is in response to the protracted delay experienced securing the assignment approval, which has impeded development and exploration activity on the concessions," said Thomas.

"Whilst it is a disappointing outcome, we retain a positive outlook on our other western Black Sea initiatives and will be providing an operational update on these and other areas in the near future."

Analysts said the development was disappointing.

Richard Rose of Oriel Securities said : "This news is not good for Melrose, with the Romanian developments and exploration upside a key part of the company's forward growth strategy."

Shares in Melrose closed down 54.8p, or 16.8 per cent, at 270p.