Oil and gas explorer Melrose resources should continue to rise this year. Its main focus is in Egypt and Bulgaria. Seismic tests in the Oligocene gas field in the black sea suggest it holds 1 trc (trillion cubic feet) worth $1 billion. Melrose has a 100% working interest there. Exploration will begin in Q3 of 2004 with a further well being planned for 2005. The current development in the Galata gas field in the Black sea is worth at least $100 million or 250p per share. According to chairman Robert Adair there will be "a significant increase in revenues this year.. with the first production in Galata later in Q1"

Recent institutional buying with Caledonia investments Plc increasing its holding on the 11th feb 04 with the purchase of a further 1,725,000 shares taking its stake to 6.72% and the recent share placing to raise 10.9m at 175p to develop the sites in Bugaria and Egypt is good news.

In Egypt Melrose is also drilling for gas, and hopes that the 12 wells that will be in use by 2005 will also discover a much larger structure, as in the Black sea.

The shares have risen significantly since feb 03 (51p) and are now 201p, but the upside potential is still enormous.