LONDON (Alliance News) - Roxi Petroleum PLC Tuesday said its pretax profit fell in the first half of 2015 following the sale of its stake in the Galaz contract area, leaving the company focused on progressing its flagship BNG flagship asset.
The oil and gas company in Kazakhstan reported a fall in pretax profit to USD18.7 million in the first six months of 2015 from a USD23.4 million profit made a year earlier. The company generates little in revenue, which totalled USD970,000 in the half compared to USD563,000.
The profit in the recent half was the result of a gain, also of USD18.7 million, made from the sale of its 58% of the equity in Galaz contract area. That sale was the result of its joint venture partner, Galaz Energy BV, striking a deal to sell the contract area to Netherlands Sinian Investment BV, part of consortium led by Xinjiang Zhundong Petroleum Technology Co, resulting in Roxi losing its share in the area.
Roxi also booked a USD2.2 million profit from the revaluation of its financial liabilities in the first half of 2015.
In the first six months of 2014, the company made the reported USD23.4 million profit as the result of the reversal of a USD25.0 million impairment.
Roxi is now solely focused on its flagship BNG flagship asset, in which it holds a 58.41% interest through its 59% holding of Eragon Petroleum Ltd. In June, Roxi secured a three-year extension to the licence which will now expire in June 2018.
"The main focus of activity during the period of the renewed licence will be to prove up the greatest amount of reserves consistent with avoiding unnecessary dilution to Roxi shareholders," it said.
Any oil produced before commercial operations begin will be sold to the local market, where it will be sold for domestic Kazakhstan prices, currently at around USD10 per barrel net to Roxi. Roxi intends to seek a full production licence at BNG, which will allow oil produced to be sold at international prices.
"The successful sale of Galaz together with income derived from BNG's shallow wells will provide the funding required to complete the existing drilling programme. Additional income is expected from the production hoped for from deep wells A5 and 801," said Roxi.
"We look forward to announcing before the end of the year drilling results at both deep wells and at Well 143. Success at any one of these should materially improve the outlook for your company," it added.
In a separate statement Tuesday, Roxi said current production from shallow wells 54, 805, 806, 807 and 143 at BNG is around 453 barrels of oil equivalent per day, of which 265 barrels are net to Roxi whilst production from the Munaily asset stands at 145 barrels of oil per day, of which 85 barrels are net to Roxi.
The company said if it makes a discovery at the Deep Well 801, it will be a separate discovery to the one made at the Deep Well A5 as it has intersected a separate reservoir.
The 801 well has been drilled to a total depth of 5,050 meters and five potential levels for production have been identified below the salt layer. Since the previous update the lowest two of these levels have been perforated, it said.
"Testing has commenced at the well at the perforated levels with gas detected and oil shows. The well has been closed to allow pressure to increase. We expect to reopen the well in the next few days and are hopeful that at that time oil will flow naturally to the surface," it said in a statement.
Roxi shares were up 6.3% to 8.64 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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