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LONDON (Alliance News) - Mosman Oil & Gas Ltd shares fell on Tuesday after it said its loss was wider in the first half of the current financial year thanks to one-off costs related to impairments and the termination of a deal to acquire a producing project in New Zealand.
Mosman Oil shares were trading down 13% to 0.677 pence per share on Tuesday morning.
The oil exploration and development company, which operates in New Zealand and Australia, said its net loss for the six months to the end of 2015 amounted to AUD3.7 million, widening from the AUD1.9 million loss booked a year before.
The loss widened on the back of a AUD1.5 million impairment booked against non-core assets and the AUD1.2 million cost associated with the STEP acquisition, both of which were not present a year ago.
Mosman was set to acquire the South Taranaki Energy Project in New Zealand from Origin Energy Ltd, but terminated the deal back in early February in light of lower oil prices.
Mosman was planning on acquiring the asset to get some production in its portfolio, but pulled out of the deal because of further falls in oil prices and because of difficulties in obtaining government approvals, it said.
Since terminating that deal, Mosman has undertaken further reviews which led the company to take "swift action" to minimise its short term expenditure, including job cuts. Mosman reaffirmed Tuesday that the company remains in a "sound financial position" as a result of its action.
"Going forward, given the ongoing uncertainties associated with the current oil price and the lack of clarity on how long oil prices may remain at current depressed levels, and the continuing volatility in equity capital markets, the board is also cognisant that it has a responsibility to continue to monitor and evaluate the effectiveness of its revised business strategy and plans over its current portfolio," said the company.
"The board has also determined that it is prudent to evaluate other suitable opportunities to enhance shareholder value and this process is underway," Mosman added.
Mosman said it is now disposing of surplus equipment and materials in New Zealand, but it is retaining long lead equipment which will be required for future drilling activities such as casing and mud chemicals, which will be stored for future use.
The company said it plans to keep the Kotuku property in New Zealand as an office and storage facility, but said it will plug and abandon three exploration wells that were drilled in the country during 2014 in order to meet permit requirements.
Mosman said it is also planning to seek approval to amalgamate the Petroleum Creek and Taramakau permits to improve exploration efficiency. At the Murchison permit in the country, Mosman said the results from the recent survey should be available in around three months time.
Mosman said it has applied to surrender the East Coast permit in the country due to "limited exploration potential."
In Australia, the company has already withdrawn from the the Otway Basin offshore licence and is now solely focused on onshore operations in the country where it believes it will benefit from lwoer costs in the current environment.
Mosman has two onshore Amadeus permits alongside one permit application in Australia.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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