28th Sep 2015 10:21
LONDON (Alliance News) - Amedeo Resources PLC shares fell on Monday after it said its primary investment has struggled to gain new orders to build new drilling rigs due to the downturn in oil prices and said its mining investment has scaled back on activities due to the drop in iron ore prices.
Amedeo shares were down 9.8% to 23.0 pence per share on Monday morning.
The natural resource and energy investment company, which generates very little in revenue, reported a USD683,000 pretax loss in the first six months of 2015, narrowing from the USD815,000 loss a year earlier.
That was the result of administrative costs falling to USD338,000 from USD453,000 and from its share of losses dropped to USD582,000 from USD624,000 a year ago. Finance income also rose to USD165,000 from USD146,000 in the period.
Amedeo's primary investment is in Jiangsu Yangzijiang Offshore Engineering Co Ltd, an offshore fabrication company. Amedeo has an indirect 19% stake in YZJ Offshore which it holds through its 47.5% stake in the joint venture company, YZJ Offshore Engineering Pte Ltd
Jiangsu has secured its first order to deliver a Le Tourneau Super 116E Class design self-elevating mobile offshore jack up drilling rig, which is expected to be completed before the end of 2015. Following completion, the rig will be commissioned, which will take several months, before it is then delivered to the customer.
"With the fall in the oil price, the rig market remains difficult and while discussions with several potential purchasers are on-going, no new orders have been obtained. While this is disappointing, YZJ offshore has the capability to build many different vessels and blocks. In addition, we do not expect the weakness in the rig market to continue in the medium term," it said in a statement.
Its other investment is in MGR Resources PTE Ltd, which has had a "difficult first half" after it cut back on its activities. Amedeo has a 49.0% stake in MGR.
"With the reduced demand for iron ore and depressed iron ore prices, MGR scaled back its iron ore operations, and focused on monitoring that market and exploring opportunities for broking other, including soft, commodities, along the East and South East Asia, South Asia, Middle East and Africa corridors," it said.
By Joshua Warner; [email protected]; @JoshAlliance
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