LONDON (Alliance News) - Regal Petroleum PLC Tuesday said the devaluation of the Ukranian hryvnia and lower gas prices caused by the geopolitical situation in Ukraine lowered production and revenue in its recent half year, and subsequently pretax profit.
Pretax profit dipped to USD4.5 million in the six months ended June 30, compared to USD4.6 million in the comparable period in 2013.
Revenue for the first-half of 2014 was USD17.5 million, down from USD19.7 million in the first-half of 2013. All of Regal's revenue is derived from the sale of its Ukranian gas, condensate and liquified petroleum gas.
The reduction is due to a combination of lower production volumes and the devaluation of the Ukrainian hryvnia against the dollar, resulting in lower average gas prices in dollar terms, it said.
At June 30, the Ukranian hryvnia was trading at 43% lower against the dollar than at January 1. This has reduced both revenue and costs, as well as reducing the carrying value of the group's assets, said Regal.
"Despite ongoing geopolitical events in Ukraine, the group has been able to operate normally, although such events have resulted in volatility in the Ukrainian hryvnia exchange rates, uncertainty in the gas sales price and the recent imposition of significant temporary increases in subsoil taxes," said Regal.
The average prices for gas and condensate in the first half of 2014 were USD361 per thousand cubic metres and USD94 per barrel, respectively. During the first-half of 2013, average prices for gas and condensate were USD419 per thousand cubic metres and USD91 per barrel, said Regal.
Regal's production of condensate increased slightly to 54 cubic metres per day in the first six months of 2014, from 44 cubic metres per day in 2013, whilst gas production decreased to 155,520 cubic metres per day, from 199,984 cubic metres per day in 2013.
Operations planned in second half of 2014 include completing the workover of SV-61 well and undertake hydraulic fracturing of MEX-120 and MEX-105 wells, Regal said, with plans to drill an additional well in early 2015, subject to the geopolitical status.
Funding of remaining 2014 development programme is to be from existing cash and operational revenues, it said. Regal reported cash and cash equivalents of USD30.1 million at June 30.
Regal's shares were up 5.9% to 9.00 pence per share Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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