29th Aug 2014 08:11
LONDON (Alliance News) - Afren PLC, the oil and gas explorer and producer embroiled in a probe into alleged unauthorised payments that potentially benefited company officials, Friday said it expects to come out stronger once the issues are cleared up, after it reported lower profit for the first half of the year and lowered its full-year production forecast due to the suspension of operations at a field in Kurdistan.
The company reported a pretax profit from continuing operations of USD133.1 million for the six months to June 30, down from USD260.4 million a year earlier, as revenue declined to USD565.4 million, from USD796.8 million.
Its working interest production from continuing operations fell to 33,488 barrels of oil a day, from 44,712 barrels a day a year earlier, mainly due to a reduced share of production and liftings from the Ebok field in Nigeria as it recovered costs. The decline was only partially offset by a 4% rise in the average realised oil price to USD107.6 a barrel.
However, it cut its full-year net production guidance to between 32,000 and 36,000 barrels of oil a day due to the suspension of operations at the Barda Rash field in the Kurdistan region of Iraq. It had previously forecast gross production of 62,000 barrels a day, or 40,000 barrels net.
It was forced to suspend operations at Barda Rash earlier this month due to the heightened security tensions in the area, and reiterated Friday that it doesn't expect the move to have a significant impact on its cashflow.
Its operating cash flow in the first half of the year, before the suspension, was USD354 million, down from USD564 million a year earlier.
Afren Thursday suspended associate directors Iain Wright and Galib Virani, as its probe into alleged unauthorised payments that potentially benefited company officials continued. The company suspended Chief Executive Osman Shahenshah and Chief Operating Officer Shahid Ullah in late July pending an investigation into alleged evidence of unauthorised payments that were potentially for the benefit of those executives.
The oil and gas explorer and producer said that during a review into the matter by law firm Willkie Farr & Gallagher (UK) LLP, Wright and Virani made the Afren board aware that they have received payments which are linked to the previously identified unauthorised payments for the benefit of the CEO and COO. The payments were not made by Afren, it said.
"We believe we will come out stronger from the ongoing issues and I would like to thank all our shareholders for their continued support," interim Chief Executive Toby Hayward said Friday.
Afren said it targeting double-digit production growth over five years, with the ramp up starting in the second half of this year.
It is planning six new producing wells on the Ebok field, three new producing wells on the OML 26 field in Nigeria, and to start fast-track development drilling at the Okwok field in the same country, among other measures.
"Despite recent challenges Afren is totally committed to delivering on our work programme across the portfolio. With numerous growth opportunities expected to drive a step-up in near-term production, cash flow and reserves, we remain in a strong position to deliver shareholder value in 2014 and beyond," Hayward said.
Still, the company's shares were down 8.2% at 91.35 pence early Friday, the second-biggest decline on the FTSE 250.
By Steve McGrath; [email protected]; @stevemcgrath1
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