LONDON (Alliance News) - US-focused oil and gas exploration company Magnolia Petroleum PLC said it swung to a pretax profit in its first half, after having reduced its cost base by 31%.
Magnolia reported revenue of USD633,585 for the six months ended June 30, down from USD1.1 million a year earlier, due to the sharp fall in the oil price which it said both hit the sales prices achieved and caused operators to shut in wells to curtail production.
Magnolia noted its disposal of uneconomic wells and said it high-graded its leasehold position, to ensure it can "hit the ground running" when prices recover and sentiment returns.
Administrative expenses declined to USD374,371 from USD518,425 the prior year, and operating expenses dropped to USD613,915 from USD1.4 million.
Magnolia said it recognised an impairment charge to the cost of mineral leases of USD8,334 for the first half, compared to the USD379,354 recognised a year earlier.
In light of this, Magnolia swung to a pretax profit of USD1.5 million from a loss of USD1.4 million the prior year.
"Combined with proven developed reserves of 133.31 thousand barrels of oil and condensate and 580.67 million cubic feet of gas as at July 1 which have been assigned a value of USD3.4 million, Magnolia is an asset backed, low cost cash flow generative business with a diversified portfolio of 151 producing wells," said Chief Executive Steven Snead.
"As a result we are confident that when a sustainable recovery in the oil price takes hold, we are well placed to take advantage of opportunities which may present themselves and in the process kick-start our strategy to build a leading US onshore focused oil and gas company," Snead added.
Shares in Magnolia were up 1.9% at 0.107 pence on Wednesday.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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