26th Jan 2015 09:13
LONDON (Alliance News) - Global Energy Development PLC saw its shares slide to a 10-year low Monday morning after it said the recent slide in oil prices had cut its reserves valuation and it will have to write-down the value of its assets in the Bocachico Contract area because it had become uneconomic.
The oil producer and developer focused on Colombia said the oil price decline had made the heavy oil reserves in the Bocachico Contract area uneconomic, and it will write down the carrying value of its oil assets in the contract in its 2014 statements. It could reverse the writedown in the future were oil prices to improve.
It said it had used a benchmark price of USD57.33 a barrel in its 2014 reserve report, down from USD109.95 a barrel in the 2013 report.
It said the lower price had reduced the estimated quantity of proved and probable reserves and the estimated future net cash flows expected to be generated from its Colombian contract areas. It had also eliminated the improved recoveries it expected by fracture stimulating within the Simiti Formation in the Bolivar Contract area.
"The decrease in our proved and probable reserves and related write down of the company's oil assets on its statement of financial position at 31 December 2014 does not affect the company's cash balance," Managing Director Stephen Voss said in a statement.
"Given these sustained lower oil prices and the significant loss of value in our reserves combined with the recent sale of our Colombian producing properties, the company is reviewing options for creating value for shareholders in 2015," he added.
Global Energy Development shares were down 11.9% at 37.00 pence Monday morning, a 10-year low for the stock.
By Steve McGrath; [email protected]; @stevemcgrath1
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