(Alliance News) - Russia-focused oil & gas firm Volga Gas PLC said Monday it swung to a loss in the first half of 2019 on the write off of development assets and impairments, despite growth in revenue on higher production.
For the six months to the end of June, Volga reported a pretax loss of USD3.0 million, compared to a profit of USD4.2 million the year before.
This was mainly due to a write off of development costs and and impairment charge totalling USD5.1 million, relating to adverse operational results on the Uzen number 4 well sidetrack and the Vostochny Makarovskoye field.
There were also impairment charges relating to the holding value of the property, plant and equipment related with these assets.
Revenue however, increased by 22% to USD26.3 million from USD21.5 million the year before, as oil, gas and condensate production increased by 19% to an average of 5,634 barrels of oil equivalent per day from 4,727 boepd.
Due to recent operational developments and the need to preserve its financial position, Volga will not be declaring an interim dividend.
Looking ahead, Volga now has a 2019 production guidance of 4,000 barrels of oil equivalent per day.
"Notwithstanding the recent, solid underlying production performance of the group, adverse drilling and other operational issues have impacted overall financial results and future management production guidance," said Chief Executive Officer Andrey Zozulya.
"Management is determined to mitigate the expected future lower production guidance. This includes the application of low-cost, slim hole drilling techniques, which have already been successfully deployed on the Uzen field, and apply to up to six attractive exploration targets," Zozulya added.
Shares in Volga Gas were down 9.1% at 35.00 pence on Monday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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