LONDON (Alliance News) - Jupiter Energy Ltd Wednesday said its pretax loss was substantially wider in the last financial year following a torrid period which saw the company shut in production following the collapse in oil prices.
However, the company believes it has adjusted its operating model which should allow it to return to production on a cashflow positive basis "as soon as possible".
The company reported a USD11.0 million pretax loss in the year ended June 30, ballooning from the USD2.5 million loss a year earlier as revenue plummeted to USD3.9 million from USD7.6 million.
The fall in revenue was compounded by a USD4.5 million foreign exchange loss compared to a USD809,868 gain a year ago and a USD787,046 impairment. It did not book any impairments in the last financial year. Administrative costs rose in the period despite the company downsizing its headcount to 21 members of staff compared to 37 a year ago.
Jupiter's gross profit fell to only USD417,408 in the year from a USD2.0 million profit as a result of the steep decline in revenue, which was caused by lower domestic oil prices in Kazakhstan making some of its operations uneconomic, leading to Jupiter suspending production altogether.
The company said the financial year had been "one of two halves" as the first half provided steady progress with the development of the Block 31 licence area supported by the ongoing trial production from the J-50, 51 and 52 wells and progress towards the granting of Trial Production Licences for the J-58 and J-59 wells located on the West Zhetybai field.
However, its eighth well on the field could not be completed because the company ran out money, which was frustrating for Jupiter as it found oil in the well similar to oil found in its previous wells. That was followed by lower oil prices which began falling in June 2014, piling pressure on the company's already strained operations.
"The second six months saw production halted in February 2015 when the falling world oil price meant that the sales price being achieved for domestic oil in Kazakhstan fell to levels that made oil production from Block 31 uneconomic," it said.
That caused the company to focus on slashing its costs and decided to purchase topside equipment, rather than rent it, to carry out its trial production period which should allow the company to "to return to selling into the domestic market on a cashflow positive basis".
"Looking forward, the company plans to return to domestic oil production as soon as possible and, assuming funding is in place, focus on both exploration and appraisal drilling as well as to start the building of the requisite infrastructure to allow the Akkar East oilfield to move into its Full Field Development phase - a key step in the Company achieving the first sale of export oil,2 it said.
Jupiter Energy shares were up 5.3% to 10.0 pence per share on Wednesday afternoon.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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