LONDON (Alliance News) - Magnolia Petroleum PLC on Monday said it swung to a pretax loss in 2015, due to a fall in revenue, hit by significant impairments.
Magnolia Petroleum reported a pretax loss USD9.8 million, swung from a pretax profit of USD1.7 million in 2014, as revenue fell to USD2.0 million, down from USD3.9 million. This was primarily as a result of USD8.5 million in non-cash impairments.
The company said that the sharp fall in the price of oil hit revenues, both directly by lowering sales prices, and indirectly, through operators shutting in wells to curtail production.
Magnolia reduced its operating costs by 31% in the year, and said that its focus on outgoings has not stopped it from continuing the roll-out of its strategy to drill new wells in proven US onshore formations, alongside established operators.
"Even with oil trading at sub USD50 per barrel, Magnolia Petroleum remains a cashflow generative, low cost, oil and gas producer focused on proven US onshore formations. Thanks to the action we have taken over the course of the year, specifically a 31% and 25% reduction in operating costs and net debt respectively, the company's significantly lower outgoings allow a higher proportion of our production based revenues to be reinvested into further drilling activity," said Chief Executive Steven Snead in a statement.
"We are therefore confident that despite the current downturn, the year ahead will continue to see Magnolia participate with leading operators such as Continental Resources in drilling new wells where it makes commercial sense to do so," Snead added.
Shares in Magnolia Petroleum were up to 6.1% at 0.175 pence Monday.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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