20th May 2014 09:04
LONDON (Alliance News) - Shares in Afren PLC dropped Tuesday after the oil and gas production company reported a drop in profits for the first quarter as revenue fell by 30%.
The oil and gas exploration and production company, which operates in Africa and the Middle East, reported a pretax profit of USD55.8 million for the three months ended March 31, down from GBP138.8 million a year earlier, on the back of a 30% drop in revenues and higher finance costs.
Its profit after tax however was USD73 million, compared with only USD28 million the prior year, primarily due to a tax income credit in the period, compared with a USD111 million charge last year.
Revenue in the quarter fell 30% to USD269 million, down from USD386 million a year earlier, which it said was due to a reduced share of production and liftings from the Ebok field following cost recovery.
The company has a 50% working interest in the Ebok field, but was also booking additional barrels to recover costs of capital investment funded by Afren.
Afren said that during the period it realised a lower average oil price from continuing operations of USD106.5 per oil barrel, compared with USD107.8 per oil barrel in the same period last year.
Net production from its Nigerian assets in the quarter was 35,465 barrels of oil per day. The Okoro field, in which it holds a 50% working interest, continued to perform well with net production at the field averaging 7,824 barrels of oil per day in the period, while the Ebok field produced 25,971 barrels of oil per day.
Afren said it spent USD127 million in capital expenditure in the first quarter, and said it still plans around USD845 million in capital expenditure for the full year, focussed on both high cash return projects and further exploration drilling.
"We are moving forward with the play opening Ogo discovery and elsewhere development drilling is on track. Our focus remains on allocating our capital to the highest return projects, which we expect to provide significant production and cash flow growth," said Chief Executive Osman Shahenshah in a statement.
Afren said that installation of the Central Fault Block extension platform has started on Ebok and is expected to be completed by the end of the second quarter, with development drilling planned for the third quarter.
Afren shares dropped 5% Tuesday morning, trading at 146.20 pence, the biggest decline on the FTSE 250.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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