15th Jan 2015 08:30
LONDON (Alliance News) - Petroceltic International PLC Thursday said production reached the top end of its guidance during 2014, but warned low commodity prices will restrict its exploration in 2015 and will likely cause impairment charges alongside non-cash write downs.
The company's production from its assets in Egypt and Bulgaria during 2014 reached the top of its guidance, averaging 22.6 million barrels of oil equivalent per day, with 11.9 million barrels of oil equivalent per day net to Petroceltic.
Production in 2014 benefited from a request from the Egyptian government to increase gas sales in the first three quarters of the year, providing an additional 1.9 million barrels of oil equivalent per day to production.
In the fourth quarter, production returned to normal to around 17.4 million barrels of oil equivalent per day.
In 2015, the company is expecting production to be between 16.5 million to 18.5 million barrels of oil equivalent, comprising of 85% gas and 15% liquids. Around 90% of production will come from its Egyptian assets with Bulgaria contributing the balance.
The company believes the focus on gas production will protect it from the low oil price. All of the company's gas is sold under fixed price contracts in Egypt or under Bulgarian contracts which are linked to the cross border price of gas into Bulgaria from Russia.
"The recent decrease in global commodity prices are expected to have a relatively limited impact on revenues for the first half of 2015," said Petroceltic.
Petroceltic said it reduced its net debt in 2014 to USD153 million from USD246 million. It also received receipts from the Egyptian government during the year after it improved the availability of external capital to oil and gas companies operating in the country. Total receivables in Egypt has now decreased to USD53 million from USD81 million in 2013, said Petroceltic.
"While the near term impact of global commodity prices on Petroceltic's assets is limited, the company is conscious of the potential longer term impact and accordingly will review the carrying value of its producing assets," said the company.
As a result, Petroceltic warned it is likely there will be impairment charges for 2014 alongside non-cash write downs caused by the decision to limit capital expenditure for exploration, it added.
Petroceltic said its exploration programme in 2015 will be restricted to the core areas of the business and to projects which can add near-term additions to its reserves and resources. The company said "no significant new venture activities are planned during the year."
In 2015, the company has budgeted USD174 million for capital expenditure, USD80 million of which will be paid by Sonatrach pursuant to the terms laid out in the Algerian farm out agreement in July 2014.
"Some of this planned exploration expenditure could be reduced if the farm-out initiatives currently under way are successfully concluded. It is also possible that some of the budgeted exploration activities may be deferred into 2016," said Petroceltic.
Petroceltic shares were up 3.2% to 120.75 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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