11th Nov 2014 08:47
LONDON (Alliance News) - Egdon Resources PLC Tuesday said its pretax loss narrowed during the year following deals with oil major Total SA signed in January, despite revenue falling after being hit by weaker oil and gas prices.
The company reported a pretax loss for the year ended July 31, of GBP456,405, narrower than the GBP717,592 loss reported in 2013. Despite revenue falling and costs increasing during the period, the narrowed loss is attributable to a GBP1.1 million exceptional item of profit from license transactions from Total signed in January.
Revenue fell to GBP3.0 million during the year compared to GBP3.3 million in 2013. Although revenue declined, the company saw production increase, reflecting weaker forward gas and oil prices. Despite the fall in revenue, the company's total cost of sales increased to GBP3.7 million, from GBP3.6 million.
Production for the year totalled 86,870 barrels of oil equivalent, an increase from the 79,947 barrels of oil equivalent. This equates to a daily production rate of 238 barrels of oil equivalent per day compared to 219 barrels of oil equivalent per day in 2013. Egdon said its daily production was above its target of 200 barrels of oil per day.
However, the company has set a lower guidance for 2015 of 195 barrels of oil equivalent per day, but this could increase dependent on further testing on its producing wells and its conventional exploration programme during the year, it said in a statement.
Egdon improved its cash position after raising GBP10 million through two placings, which increased its cash position at the end of the year to GBP9.7 million, from GBP2.0 million in 2013.
In line with last year, the company does not intend to pay a dividend for the year, it said.
In January, Egdon signed two significant deals with major Total in regards to two shale gas licenses in the UK. The GBP1.1 million exceptional item was from cash received in relation to the two licenses.
"We are delivering on our strategy of building value in our UK shale-gas assets; this includes the landmark introduction of the first major, Total, into the UK shale-gas arena in three of our Gainsborough Trough licences where drilling is anticipated in 2015," said Chairman Philip Stevens.
Following the deals with Total for the Gainsborough Trough licenses, Egdon acquired 10 further licenses in the area from Alkane Energy in June. Egdon are currently considering introducing a partner for the additional licenses to advance exploration.
"Given the continued high level of interest, recent transactions and likely 14th UK Onshore Licensing Round activity, we expect our UK shale-gas assets to be a key near-term value driver for the business. We have submitted applications in the 14th Round which closed on October 28, and now await the results which are expected in early 2015," said Egdon.
In the first quarter of 2015, Egdon intends to begin drilling a further four wells in the UK and is currently preparing an application for a campaign to target 150 billion cubic feet of gas in North Yorkshire, which it is also seeking a partner for.
Egdon shares were up 1.8% to 14.50 pence per share Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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