LONDON (Alliance News) - Shares in Sefton Resources Inc plummeted almost 33% Friday after it said it widened its losses in the first half of the year, after revenue was hit by "significantly" lower production and sales volumes, and a slight drop in oil prices.
The company's stock was down 32.7% Friday morning, trading at 0.111 pence per share - the biggest faller on London's AIM All-Share market.
The oil and gas exploitation and production company, which has interests in California and Kansas, posted a net loss of USD959,000 for the six months to June 30, compared with a loss of USD253,000 last year.
This was as revenue fell to USD1.4 million, from USD2.2 million in the first half of 2013, which it said was largely on the back of lower production and sales volumes.
The company said oil production fell significantly in the first-half, down to 15,178 barrels, compared with 22,699 barrels a year earlier. It said it sold a total of 15,024 barrels in the first half.
Oil prices also fell slightly in the period, with realised oil price per barrel at USD96, compared with USD97 a year earlier.
"Sefton has been, and continues to deal with a series of events which have constricted cash flows and operational flexibility during the period. Principally among them has been the drain on cash flows needed to meet commitments on the company's banking facilities," the company said in a statement.
Sefton said that bank repayments drained cash that would normally have been re-investing in its operational activities.
"An agreement with Hawker Energy to acquire an 80% interest in the heavy oil operations in California has provided vital cashflow to Sefton during the period... and is a key step in getting to a stable viable ongoing company," the company said.
The company said the Hawker transaction is proceeding with a prospective close most likely in the fourth quarter, but said it is subject to a replacement debt financing package being put in place and continuing financial support by Hawker and its affiliates in dealing with the current bank, expanding operations in TEG USA and freeing other cash for investment in Kansas.
Sefton said it is currently evaluating a production linked financing for the Kansas exploration and production assets, and said it is also in very early stage discussion with third parties interested in joint venture participation in co-owning and utilising the Kansas pipeline facilities.
The company's subsidiary, TEG MidContinent Inc, has 60 well bores in Kansas, of which 7 are currently in production and 10 are awaiting maintenance and workovers to get back into production. Average production meanwhile has been declining due to the deferral of maintenance as a result of Sefton's recent cashflow difficulties.
In a separate statement Friday, Sefton said that while current production revenues meet day-to-day operating needs but do not provide capital to fund repairs, maintenance and to acquire low cost, easy to achieve production increases.
"Under consideration is a proposal to finance a recompletion program that would add new production from up to 10 of the 53 well bores not in production. The proposed financing remains at an early stage," it said.
The company said been operating without any executive directors and has been relying on non-executive directors, which have taken up leading roles managing the external side of the business. The company had a difficult 2013, after swinging to a loss on the back of impairment charges and higher administrative costs following a case against bloggers Tom Winnifrith and Dan Levi, which was settled out of court, but led to the departure of Sefton's former chief executive, Jim Ellerton, and an internal investigation during 2013.
Sefton said that whilst the appointment of a CEO and additional directors is a near term goal, it is unlikely to do so before the Hawker transaction closes.
"Whilst uncertainties continue, a platform is in place to get the company through to the next phase of opportunity and development of the company's remaining assets. The short term strategic goals are to complete the Hawker transaction, secure additional finance for Kansas and add directors knowledgeable in the areas of business of interest to the company. Longer term direction will come from that new leadership team," the company said.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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