LONDON (Alliance News) - IGas Energy PLC Wednesday said it has firmly entered into the red during the first nine months of its financial year as revenue has more than halved and the volume of impairments has significantly increased as a result of the ongoing downturn in the market.
IGas said its net loss attributable to shareholders in the nine months to the end of 2015 amounted to GBP44.8 million, swinging from a GBP5.2 million profit a year earlier, whilst its pretax profit in the period widened to GBP64.5 million from GBP18.5 million.
That was the result of a collapse in revenue to only GBP25.1 million from the GBP58.2 million reported last year, pushing its gross profit down to only GBP3.6 million from GBP15.4 million.
Restructuring costs totalling GBP2.1 million and a GBP39.2 million goodwill impairment, both of which were not present a year earlier, were two of the main drivers of the losses. A rise in other impairments booked against assets to GBP17.7 million from GBP3.9 million also contributed.
Partly offsetting some of those huge costs, write-offs of exploration assets fell to GBP12.9 million from GBP15.4 million whilst administrative costs fell to GBP6.0 million from GBP9.4 million. IGas also booked a GBP4.0 million profit from the sale of assets in the period, something that was not booked a year earlier.
Revenue fell in the period mainly due to lower oil prices, which dropped to an average of only USD58.9 per barrel compared to USD94.0 a barrel a year ago, alongside a fall in net production to 2,570 barrels of oil equivalent per day from 2,737 barrels a day.
Reacting to the environment, IGas reduced its operating cost to USD24.6 per barrel in the period from the USD34.6 per barrel a year earlier.
IGas is expecting production to be in the region of 2,500 to 2,700 barrels of oil equivalent per day this year, and said it has 390,000 barrels hedged at USD62 per barrel, giving its hedges a mark-to-market value of around GBP6.6 million.
IGas said capital expenditure this year will only be around USD10.0 million, as most of its ongoing work is being paid for by its partners.
"2016 is likely to be another challenging year for the industry. With commodity prices still remaining at low levels, our focus remains on retaining balance sheet strength and preserving cash. Whilst the steps we have taken to manage costs and improve the strength of the balance sheet have helped the business in this environment, we must remain focused on cost effective, value adding activity both on the production and appraisal assets," said IGas.
IGas shares were down 3.1% to 15.75 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
