21st Mar 2016 08:20
LONDON (Alliance News) - JKX Oil & Gas PLC Monday said its loss was wider in 2015 after reporting a substantial fall in revenue as a result of lower oil prices and a fall in production, as the new board tries to address several issues facing the company.
The oil producer operating in India said its pretax loss in 2015 widened to USD82.7 million from USD53.7 million after revenue dropped to USD88.5 million from USD146.2 million.
Exceptional charges in the year amounted to USD64.9 million, but that was still less than the USD72.5 million of charges booked in the previous year.
The fall in revenue was mainly due to the drop in oil prices, which was exacerbated by a drop in production to 8,996 barrels of oil equivalent per day from the 9,919 barrels a day being produced in 2014.
JKX did not undertake any development drilling in 2015 due to "cash constraints," spending a total of USD8.7 million in capital expenditure compared to the USD42.3 million spent in 2014.
The board of JKX Oil was replaced at the end of January after shareholders voted in favour of a shuffle, and the new board are reviewing all development projects and opportunities as it establishes a future strategy for the company.
"Since the appointment of the new board on 28 January 2016, we have visited all the main assets of the group and identified significant scope for operational improvements and cost savings across JKX," said Chief Executive Tom Reed.
"Areas of legacy risk exist primarily related to production tax litigation in Ukraine, which we are confident that we can continue to manage," he added.
JKX reported a cash balance of USD25.9 million at the end of 2015, but said this has fallen in early 2016 and now only stands at USD11.4 million following a large redemption payment due under its convertible bond and because of some severance costs.
The company further warned that cash balance will drop further as it has to pay USD3.0 million in legal costs that arose from the legal case launched against the company by two of its shareholders.
"There remain risks noted above in respect of the USD30.1 million bond payment which may become due in February 2017, the contingent liabilities in respect of Ukrainian production taxes, the Ukrainian production licence compliance issues and the continued low oil and gas prices, which, if realised, may impact the going concern status of the company," said JKX.
"The directors believe that there is a reasonable basis to mitigate the effects of such eventualities through negotiation with the Ukrainian government, further operational and cash management measures and other restructuring or refinancing options, which are currently being assessed," the company added.
JKX Oil shares were up 0.8% to 26.47 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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