LONDON (Alliance News) - Ruspetro PLC Friday said it is focused on reducing costs in light of the sharp decline in oil prices after reporting a narrowed pretax loss in the first half of the year.
The Siberian oil producer reported a USD19.7 million pretax loss in the first half of 2015, narrowing from a USD35.9 million loss a year earlier as revenue fell to USD24.0 million from USD27.8 million.
Ruspetro reported cost of sales totalling USD26.4 million, which included USD12.3 million worth of depreciation costs, outstripping its revenue in the period leading to a USD2.4 million gross loss. A year earlier it made a USD4.8 million gross profit.
Earnings before interest, tax, depreciation and amortisation of USD2.7 million in the first half of 2015, dropping from USD4.2 million a year earlier
The fall in earnings and revenue is mainly due to realised oil prices falling by 46% year-on-year which could not be offset by an increase in production in the period to 3,914 barrels of oil per day from 3,366 barrels.
In response to lower oil prices, the company said it ensuring its drilling programme is flexible and efficient and said it is aiming to significantly reduce its costs, targeting a unit development cost of less than USD10 per barrel and cash production operating costs per barrel of oil produced of less than USD8 per barrel, compared to the current cost of USD12 per barrel.
Those reductions will be made as Ruspetro aims for production to skyrocket to 10,000 barrels of oil per day in late 2016.
Ruspetro drilled two multi-stage fractured horizontal wells in the first half of the year and one deviated well, which signalled the completion of the well campaign on Pad 23b, it said.
"The group has achieved major reductions in well costs while drilling longer horizontal reservoir sections. Well 210, the most recent multiple fractured horizontal well, was drilled and completed with 10 fracs for a total cost of approximately USD5.4 million," said the company.
Ruspetro will commence an appraisal and development campaign in October using two newly contracted rigs to build on the successful development well campaign in the area of Pad 23b on the Pottymsko-Inginsky licence block.
The Group also plans to construct additional processing and power facilities to accommodate anticipated production levels of 10,000 barrels of oil per day in late 2016, it said.
Ruspetro shares were untraded Friday morning. It last closed at 9.10 pence.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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