LONDON (Alliance News) - PetroNeft Resources PLC Tuesday said steep drops in production, sales and oil prices severely hampered revenue in the first half of 2015 but the company still managed to narrow its pretax loss after cutting costs.
The oil and gas producer reported a USD1.0 million pretax loss in the first six months of 2015, narrowing from the USD2.7 million loss a year earlier despite revenue plummeting to only USD1.2 million from USD17.5 million.
Despite the severe drop in revenue, the company still booked a tiny USD14,000 gross profit compared to USD4.1 million a year ago. The loss narrowed after administrative expenses dropped to USD572,000 from USD3.1 million and finance revenue rising to USD1.5 million from USD27,000.
The steep drop in revenue was caused by lower levels of production, sales and oil prices.
Production in the half averaged 1,744 barrels of oil per day, down 19% from the 2,163 barrels being produced per day a year earlier as the result of the natural decline and the fact that the new production wells at Tungolskoye and West Lineynoye did not come online until the third quarter of 2015.
However, gross production has grown by 46% in the year-to-date and is currently approximately 2,700 barrels of oil per day. Most of the production growth in 2015 came from the T-503 and T-502 wells at Tungolskoye which came online in July and September 2015 respectively.
Following suit, oil sales fell to 329,733 barrels in the period from 391,379 barrels which was compounded by the average oil price of only USD29.87 per barrel in the half, compared to USD44.79 per barrel a year earlier.
"Whilst we have had an exceptionally busy year so far, with good success in growing production and our understanding of the Licence, market conditions are very challenging and there is little sign of improvement in oil prices in the near term. We still expect further growth in production this year from the remaining wells to be drilled at Tungolskoye and next year from the addition of new wells at south Arbuzovskoye," said Chairman David Golder.
"Our focus is on growing production, managing costs and positioning the Company for any improvement in the market conditions. We look forward to updating shareholders of our results over the coming year," he added.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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