30th Sep 2014 11:42
LONDON (Alliance News) - Northcote Energy Ltd Tuesday reported a narrowed interim loss and increased revenue following below-target production at its newly acquired Shoats Creek project n the US state of Oklahoma, on which it plans to focus during the second-half.
Northcote's shares dropped 11% to 0.809 pence per share early Tuesday afternoon, following the release of the first-half results.
The company's pretax loss narrowed to USD1.8 million in the six months ended June 30, from USD2.2 million loss in the first half of 2013.
Revenue doubled to USD783,000 in the first half from USD360,000 in the comparable period in 2013, and administrative costs fell to USD1.7 million from USD2.4 million.
The increase in revenue only slightly contributed to the narrowed loss as cost of sales rose in lock-step to USD720,000 in the first half from USD234,000 in the first-half of 2013. Total net production at September 30, was 190.9 barrels of oil equivalent per day, which is "lower than hoped at this point in time", said Chairman Ross Warner.
All of the company's oil has come from the Shoats Creek project, where Northcote has reworked two of a possible five wells, Luther Moore #9 and Luther Moore #14, producing good initial flow rates, said the company.
The field does not have the infrastructure to permit gas sales straight away, but the company started producing and selling oil immediately using existing infrastructure. Northcote is currently testing its gas to evaluate the economic return associated with the future installation of natural gas production infrastructure, it said in a statement.
"Northcote has made some significant gains during the period under review including, most notably, the acquisition of the Shoat's Creek project, which we believe has the potential to be a major asset for us. However, we have also encountered various operational challenges and, accordingly, we have made further significant investments in our operational capacity," said Warner.
"We anticipate that Shoats Creek will be our core focus in the months ahead. During this time, we will continue to work our Oklahoma assets to maximise cashflows from existing production. However, in the near term, expenditure on new projects in Oklahoma will be reduced whilst we refine operations," he added.
"Thanks to an extensive inventory of workover and new drill opportunities, we believe Shoats Creek represents a very exciting opportunity and having only completed the acquisition a month ago, I am particularly pleased with our operational progress on the ground here," said Chief Executive Randall Connally in a separate statement.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
NCT.L