9th Mar 2015 11:12
LONDON (Alliance News) - Global Energy Development PLC Monday reported a significantly wider pretax loss after fully impairing its Bocachico area oil assets in Colombia, but reported a strong cash balance with no debt to put the company into a strong position to look for further opportunities.
For the year ended December 31, the petroleum exploration, development and production company focused on Latin America reported a significantly wider pretax loss of USD17.3 million, widened from a USD4.7 million loss in 2013, resulting from significant impairments against its Bocachico area oil assets in Colombia.
Global Energy said the decline in oil prices since the middle of 2014 and the "resulting uneconomic nature" led the company to fully impair the proved and probable reserves within the Bocachico area, totalling USD11.2 million.
The company achieved an average oil price of USD64 per barrel in the period, significantly lower than the USD90 a barrel achieved in 2013 and sold only 10,772 barrels of oil in 2014, down 19% from the 13,262 barrels sold in 2013.
This led to revenue halving during 2014 to USD689,000 compared to USD1.5 million a year earlier. All of the company's revenue in 2014 came from its producing Torcaz well in the Bocachico area, and the fall was caused by lower oil prices and the loss of production from the Olivo 1 well, which was shut in during 2013.
At the end of the year, Global Energy reported a cash balance of USD41.2 million, and said it had cleared all of its outstanding debt obligations during the period.
"In the current low oil price environment and capital-tight economy, the company has a robust cash position, a streamlined overhead structure and no mandatory contract or debt obligations," said Managing Director Stephen Voss.
"Low oil pricing and the resulting decrease in cash flow from operations coupled with lower oil reserve values can be difficult circumstances to survive during a prolonged amount of time. Our company is currently structured to allow us to seek alternatives and opportunities to create value for our shareholders during this precarious time in our industry," said Voss.
"While preserving our remaining oil reserves and acreage in Colombia until prices rebound, we are in a strong position to watch for and pursue strategic opportunities in this precarious sector," he added.
Global Energy shares were up 6.1% to 43.50 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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