Melrose Resources, the oil and gas company active in Egypt, Bulgaria and the US, made a $63.2m (£31.2m) loss last year, after taking a write-off of $60.9m for unsuccessful exploration costs, mostly in Bulgaria, writes Ed Crooks .

The loss compared with a $41,000 profit for 2006, the Financial Times reports.

Melrose has now abandoned its costly program of deepwater exploration in Bulgaria to focus on onshore Egypt, but does not plan to scale back its investment. Capital spending of $250m is planned for this year, up from $161m last year.

David Thomas, the chief executive who took over last July, said he expected Melrose's net debt to rise from $360m at the end of last year to a peak of $480m-$500m by the third quarter of this year, at which point the company's investment program would become self-sustaining thanks to the cash flow from its production.

Average production was 15,015 barrels of oil equivalent a day last year, up 18 per cent from 2006, and is expected to rise to about 20,000 boe/d this year, thanks to a full year of output from two newly producing fields in Egypt. More than two-thirds of Melrose's production is gas.

Proved and probable reserves fell 12 per cent to 322bn cubic feet of gas equivalent, with downward revisions to reserves estimates at the Egyptian fields outweighing additions from new discoveries.

The shares were unchanged at 330p.