(Alliance News) - Soco International PLC on Wednesday said its profit dropped dramatically in the first half of 2019 due to lower crude oil prices and exceptional charges.
The oil & gas exploration and production company reported a USD100,000 pretax profit for the six months to the end of June compared to USD28.2 million posted a year earlier, as revenue slipped by 1.5% to USD91.8 million from USD93.2 million.
Finance costs jumped to USD5.5 million from USD800,000 a year prior, while administrative expenses were USD11.7 million, up 11% from USD10.5 million. A further USD3.0 million expense was incurred on redundancies in the London office.
In addition, Soco said a fee of USD13.6 million was paid following the acquisition of Merlon Petroleum El Fayum Co for regulatory approvals in Egypt.
Back in April, Soco completed the purchase of Merlon for USD136 million, paid in cash and shares. Also, debt of USD19.4 million due by Merlon was repaid. Merlon holds entire onshore El Fayum concession in Egypt, which covers an area of 1,826 square kilometres and is located 80 kilometres south west of Cairo.
"The acquisition significantly increases group reserves, resources and production, and importantly gives Soco the diversified base to grow production further. The Egyptian assets complement our Vietnamese portfolio and allow us to invest cash flow into activities focused on increasing reserves and production," explained President & Chief Executive Ed Story.
Turning back to results, total working-interest production was 12,541 barrels of oil equivalent a day in the first half of 2019 compared to 7,748 barrels of oil equivalent daily reported a year ago.
The average realised crude oil price in the period in Egypt was USD64 a barrel, Soco said, while in Vietnam, the average realised crude oil price was USD69 per barrel. Last year, the average realised oil price in both regions was USD74.08 a barrel.
Looking ahead, Story added: "We look forward to a busy second half of the year as we implement our increased drilling programme in Egypt and continue to focus on meeting production guidance in Vietnam."
Soco maintained its annual production guidance for Egypt and Vietnam at 6,500 barrels of oil per day and between 6,500 and 7,500 barrels of oil daily, respectively.
The stock was trading 0.9% lower in London on Wednesday at 63.40 pence a share.