LONDON (Alliance News) - Regal Petroleum PLC Wednesday said its profit declined in 2015 as revenue was negatively impacted by lower production, lower prices and the ongoing uncertainty in Ukraine and said it will only carry out a limited work programme during this year as a result.
The oil and gas producer operating in the Ukraine said revenue in 2015 declined to USD23.4 million from USD34.6 million in 2014 thanks to a drop in production and lower prices, pushing its pretax profit down to USD1.6 million in 2015 from the USD8.1 million profit booked the year before.
Operations remained profitable during the year, producing a USD3.7 million gross profit, but that was significantly down from the USD11.9 million gross profit reported in 2014.
Regal managed to lower its administrative costs to USD4.0 million from USD5.5 million, but it was not enough to avoid swinging to an operating loss of USD281,000 in the year from the USD6.5 million operating profit in 2014.
Interest income of USD2.0 million, broadly flat from the previous year, helped Regal report a pretax profit in the year, albeit 80% lower than the year before.
Regal said it will only carry out a "limited development programme" during this year due to the ongoing uncertainty caused by the geopolitical situation in Ukraine, the devaluation of the hryvnia, the fall in hydrocarbon prices and the uncertainty of gas sales prices.
Regal is the operator of two gas and condensate fields in the country, MEX-GOL and SV, which will remain the focus this year as Regal aims to improve its understanding of the sub-suface of both fields. The limited programme this year, which will be funded from existing resources, will also include the drilling of the MEX-109 well.
Regal reported cash totalling USD22.2 million at the end of May 2016, rising from USD19.9 million at the end of 2015.
"Despite ongoing geopolitical events in Ukraine, the group's production operations have continued relatively normally, although such events have resulted in volatility and weakening of the Ukrainian Hryvnia exchange rates, disruption to the gas sales market and gas sales price, and the imposition of significant increases in subsoil taxes, which in turn, have adversely affected the group's financial results," said Regal.
Production in the year averaged 1,274 barrels of oil equivalent per day compared to the 1,370 barrels of oil equivalent being produced daily in 2014. Regal said it also purchased wet gas in the second half of the year which allowed it to produce a total of 49,473 barrels of oil equivalent once processed.
Regal shares were trading down 3.5% to 2.80 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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