(Alliance News) - Russia-focused oil & gas firm PetroNeft Resources PLC said Friday it was considering selling one or more of its licences as annual losses deepened amid falling production and challenging economic conditions.
Shares in PetroNeft were 28% lower at 0.86 in London on Friday.
In 2018, pretax loss widened to USD7.3 million from USD2.3 million the year prior. This was despite revenue edging marginally higher to USD1.8 million from USD1.7 million the year before.
Results were primarily hurt by a sharp rise in losses associated with its joint ventures, USD6.8 million from USD4.7 million the year before.
During the year, production from its Licence 61 area in the Tomsk Oblast stood at 713,603 barrels of oil. This is equivalent to 1,955 barrels of oil per day.
"While this represents a reduction in production it is ahead of expectations due to continued good performance of horizontal wells at South Arbuzovskoye," PetroNeft explained in a statement.
PetroNeft continued to have 64.2 million barrels of proved and proabble - or 2P - reserves net associated with the firm. The C-4 well at Cheremshanskoye also produced around 450 barrels of oil per day following tests.
"The geo-political and investment climate for Russia, as with other emerging markets, remains challenging," PertroNeft Chair David Golder said. "This has resulted in a significant difference between the market capitalization of the company and the long-term value of its assets and reserves. We are committed to narrowing that gap and are actively examining all available options to do so."
"The company, in conjunction with its 50/50 Joint Venture partners, Oil India and Arawak Energy has engaged financial advisers to evaluate the possible sale of Licence 61 and/or Licence 67<" Golder added. "While there is no certainty that any transaction will be completed, we have seen an encouraging level of interest from a range of well-financed industry players."
"We continue to evaluate the exploration, appraisal and development potential for both licence areas to ensure that, if we receive bids for either licence area which appropriately value the asset, we will be able to make an informed decision on whether or not to sell," Golder emphasised.