2nd Sep 2015 07:42
LONDON (Alliance News) - Edge Resources Inc Wednesday said its cashflow is dwindling because of the decline in oil prices and lower production volumes from its Eye Hill project in Canada, which caused it to swing to a loss in the first quarter of the new financial year.
The Canadian gas producer said sales in the first financial quarter of 2015 ended June 30 averaged 446 barrels of oil equivalent per day, which was down from 612 barrels in the previous quarter and down from 613 barrels in the same period a year earlier.
Edge said production dropped because of "operational issues" experienced during the quarter at Eye Hill, most of which have been remedied.
That resulted in revenue dropping to USD1.3 million in the quarter, compared to USD2.8 million a year earlier, leading to a USD799,600 loss compared to a USD288,431 profit.
The company said cashflow "continued to decline" due to lower oil prices and the lower production volumes, but said average oil prices rose 35% quarter-on-quarter to USD46.21 and gas prices rose to USD2.64 per million cubic feet from USD2.51.
That caused the company to dive deeper into its bank overdraft, which stood USD230,803 overdrawn at the end of June compared to USD26,367 overdrawn at the start of the quarter.
"In the midst of falling WTI oil prices, Edge's received heavy oil price has had some reprieve, as the "heavy oil discount" to WTI has dramatically improved during the same period. Additionally, the Canadian dollar has weakened versus the US dollar during this time resulting in a lower oil pricing impact for Canadian producers. Both of these factors have lessened the impact of falling light oil prices on Canadian heavy oil producers," said President and Chief Executive Brad Nichol.
WTI was trading at around USD44.50 per barrel on Wednesday morning.
"There is no denying it has been a difficult year for all oil and gas operators, big and small," he added.
Edge shares were up 0.8% to 3.15 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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