2nd Jun 2016 07:43
LONDON (Alliance News) - Nighthawk Energy PLC Thursday said falls in oil production, sales and prices caused its revenue to plummet during 2015, leading the the company to report a huge USD70.2 million loss for the year.
Nighthawk shares were down 16% to 0.865 pence per share on Thursday morning.
The oil development and production company operating onshore the US said its net loss before tax amounted to USD70.2 million in 2015 compared to the USD5.7 million loss reported in 2014 as revenue declined by almost 38% year-on-year.
The average price that Nighthawk received for its oil in 2015 was less than half what it was paid per barrel in 2014 and the amount of oil sold was 6.7% lower year-on-year, causing revenue to plummet to USD29.6 million from USD47.5 million in 2014.
Operations still remained profitable, delivering a USD14.7 million gross profit in the year, but that is down from USD27.6 million last year.
The amount of exceptional items booked in 2015 also soared to USD72.5 million compared to USD20.3 million a year earlier. Of the total, USD38.5 million was booked against exploration costs with the remainder made against property, plant and equipment.
Gross oil sales in 2015 amounted to 653,431 barrels, of which 536,972 barrels were net to Nighthawk. That can be compared to 2014 when gross production amounted to 703,414 barrels, of which 575,275 was net to Nighthawk.
On a daily basis, gross sales averaged 1,791 barrels per day in 2015 compared to 1,927 barrels a day in 2014. Net daily sales fell year-on-year to 1,471 barrels a day from 1,576 barrels. Nighthawk said production was higher than projected despite being lower than the previous year.
Notably, although the average price per barrel paid to Nighthawk in the year was 51% lower than in 2014, the company's hedging programme helped cushion the blow slightly and contributed USD7.8 million of overall revenue in 2015, with those hedges priced within a range of USD49 to USD75 per barrel.
On the financing front, Nighthawk is continuing to negotiate with its lenders about its credit facilities, and currently has waivers in place until June 10.
Nighthawk is continuing to carry out a waterflood project on its existing assets, which aims to increase production and efficiency from existing wells.
"The water flood project is the kind of project oil and gas companies want to implement in a recovering oil market. As we have disclosed previously, production is expected to substantially increase and to remain higher than otherwise possible for most of the life of the project. One of the key drivers of this project is that it requires minimal capital to implement which based upon current estimates is expected to be less than USD3.0 million," said the company.
"In a related matter, we have been negotiating with our banking partner on an extension of terms. They have been supportive of the water flood project and see the upside that it can provide," Nighthawk added.
The company hopes the waterflood programme can be approved in early June and is hoping to strike a deal with its creditors to facilitate the programme.
"As we continue to work through arrangements with the bank, implement the water flood pilot project and hopefully enjoy better pricing in the next year, our future results should improve substantially. We exit the year with a good bit of cautious optimism," said Executive Chairman Rick McCullough.
Cash at the end of 2015 stood at USD6.0 million, up from USD5.0 million at the end of 2014 whilst net debt stood at USD45.1 million compared to USD35.1 million.
By Joshua Warner; [email protected]; @JoshAlliance
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