25th Aug 2015 07:14
LONDON (Alliance News) - Nostrum Oil and Gas PLC Tuesday reported a dramatic drop in profit in the first half of 2015 due to the combination of lower production and the decline in oil prices.
The FTSE 250-listed oil and gas company reported a huge fall in pretax profit to USD51.8 million in the first half of 2015, from a USD179.8 million profit a year earlier as revenue plummeted to USD274.1 million from USD445.0 million, compounded by a rise in cost of sales.
Revenue mainly fell because of lower oil prices, which averaged USD59.4 per barrel in the half compared to USD108.8 per barrel a year earlier, but was also hampered by lower production.
Production in the period averaged 8.0 million barrels of oil equivalent per day in the first half compared to 8.4 million barrels of oil equivalent per day. Production guidance for the full year remains unchanged at 45,000 barrels of oil equivalent per day.
Earnings before interest, tax, depreciation and amortisation more than halved to USD152.6 million from USD312.7 million, but the company said its Ebitda margin "remains strong" at 55.7% despite this falling from a 70.3% margin a year earlier.
Net debt stood at USD710.1 million at the end of June, almost double the USD483.6 million at the end of June 2014.
"Through the sustained period of low oil prices, Nostrum has maintained a strong financial position, with USD238.1 million of cash and equivalents on its balance sheet. With our low operating costs, strong cash generation and financial flexibility, Nostrum remains in a good position to continue delivering shareholder value," said Chief Executive Kai-Uwe Kessel.
Operationally, Nostrum drilled 18 oil wells and 17 gas condensate wells in the first half which are all now producing, with a further two gas condensate wells and one oil well still due to come online shortly.
In the remainder of 2015, Nostrum plans to drill a further two gas condensate wells, one oil well and two appraisal wells. The ongoing drilling programme is part of the company's plan to have production rise to 70,000 barrels per day in 2017 and 100,000 barrels in 2018.
Earlier in August, Nostrum made an approach to Tethys Petroleum Ltd as it made a CAD0.2185 per share takeover offer. Nostrum still has to make the offer firm, and the company said Tuesday that it will release an update as appropriate.
Nostrum shares were up 2.0% to 476.00 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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