4th Mar 2015 10:35
LONDON (Alliance News) - Edge Resources Inc Wednesday said it achieved production increases in the third quarter, without additional capital expenditure on drilling wells, although its pretax loss widened significantly as oil prices dropped materially.
The company said that despite the headwinds facing the industry at the moment, it generated significant cash from its operations in the quarter and kept a tight rein on costs and operational efficiencies.
Edge recorded a pretax loss of USD4.1 million in the three months to end-December 2014, compared with only USD949,068 the year before, as the level of total expenses increased significantly to USD6.7 million from USD2.3 million.
It said average production in the third quarter increased 20% over the previous quarter to 569 barrels of oil equivalent per day from 474 barrels in the third quarter last year. It said the production increase was despite temporarily shutting-in some heavy oil wells during the construction of the water disposal facility in Eye Hill.
Revenue, net of royalties, increased to USD2.1 million, from USD1.6 million, as oil and natural gas sales increased.
During the quarter, Edge noted that world oil prices dropped materially.
"These downturns in our industry allow our team to demonstrate our specialty, which is running a tight, efficient business no matter how hard the wind is blowing in our faces," said Chief Executive Brad Nichols in a statement.
"With WTI (crude oil) prices hovering around USD50/bbl, we are unlikely to consume our existing inventory of drilling locations; however, we are keen to acquire production, reserves, land and additional drilling locations when the cost of those acquisitions are expected to be at their lowest in a generation," said Nichols.
Nichols said it expects the competition for assets to be less intense in the heavy and medium oil regimes, where operational expertise is a significant barrier to entry. The company said it therefore intends to remain focused on its heavy and medium oil sandbox where it has already established a clear competitive operational advantage over other potential consolidators.
Edge reported a pretax loss of USD3.9 million for the nine months to end-December, compared with a USD1.2 million loss over the same period last year.
Edge Resources shares were untraded mid-morning Wednesday at 3.75 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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