LONDON (Alliance News) - Circle Oil PLC on Tuesday reported a steep drop in pretax profit in the first half of 2015 due to lower oil prices and lower production levels, as the company undertakes a well workover programme in Egypt in an attempt to lift production going forward.
The oil and gas company said pretax profit in the first six months of 2015 fell to USD2.8 million from the USD9.4 million booked a year earlier, as revenue more than halved to USD22.3 million from USD47.8 million.
That led to gross profit dropping to USD9.7 million from USD16.4 million, which when combined with the higher administrative costs, exploration write-offs and finance costs led to the fall in profit.
The main reason for the fall in revenue was primarily lower oil prices and reduced production volumes in Egypt and a small reduction in Morocco gas sales due to the cessation of one customer contract.
Production from Moroccan operations averaged 6.2 million cubic feet of gas per day in the first half, totalling 8.59 billion cubic feet in total. Negotiations are under way for further off-take to increase the supplies to, and revenue from, both existing customers and new industrial partners, Circle said.
"Demand in-country remains buoyant and whilst Circle has been somewhat shielded from falling commodity prices due to attractive fiscal terms and fixed price gas contracts," it said. "There is potential for a further improvement on current pricing levels as new contracts are negotiated."
In Egypt, production averaged 9,648 barrels of oil equivalent per day, and the company said it will perform workovers on up to eight wells in the second half of 2015, which will also be used to influence the design of the next planned drilling programme of two or three production wells.
Circle shares were down 0.3% to 4.61 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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