(Alliance News) - Argos Resources Ltd on Friday said its interim loss widened on foreign exchange movements, but it has enough cash to continue for another year as some costs have been delayed.
Shares in Argos were up 10% at 2.10 pence in London in morning trading.
The Falkland Islands-based company, which focuses on the North Falkland Basin, reported a USD192,000 total loss from operations for the six months ended June 30, widened slightly from a USD176,000 loss a year before.
This was due to USD45,000 of foreign exchange losses reported in the period, widened from such losses of USD3,000 the prior year. This more than offset a reduction in administrative expenses to USD148,000 from USD175,000.
Chair Ian Thomson noted the decline in the Brent crude oil price to a low of USD20 per barrel in April 2020 from USD65 a barrel at the end of 2019, and partial recovery to USD42 a barrel by June end. This resulted from, as he explained, "competition from OPEC for market share and then exacerbated later in the period by the significant drop in global energy demand as a result of the Covid-19 pandemic suppressing oil and gas consumption globally".
Thomson also said the industry had been "hit hard" by the demand and price drop, with Argos now planning to request an extension to its PL001 licence term, the second phase of which will expire May 2021, since "more time will be required to recover from this downturn". PL001 covers around 1,126 square kilometres in the North Falkland Basin.
"Despite the above, the company continues to seek partners to participate in drilling on its licence and is currently engaged with a number of counterparties who have expressed interest. Given the current challenging environment the company believes it may be some time before any expressions of interest are translated into commitments," Thomson said.
He also noted that the slowdown has meant some costs expected in the current year have been delayed, with Argos having enough cash resources to continue for another 12 months. However, to continue as a going concern past that point will require raising further finance.
By Anna Farley; annafarley@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.