13th Apr 2016 09:02
LONDON (Alliance News) - Rockhopper Exploration PLC Wednesday said production rose in 2015 and exited the year at a substantially higher rate, but is still nowhere near enough to generate the kind of revenue needed to prevent the company from reporting a huge pretax loss.
Although still in the red, Rockhopper Chairman Pierre Jungels said he now believes it is time to retire from the company following a transformational 2015, as he predicted revenue will be at least double this year.
Rockhopper managed to generate USD4.0 million in revenue in 2015, rising from USD1.9 million the year before following a rise in production. However, that was not enough to stop the company from reporting a USD44.7 million pretax loss in 2015 compared to the USD7.6 million loss a year ago.
Notably, Rockhopper's operations remained profitable by generating a USD1.0 million margin compared to a USD1.4 million margin in 2014. However, taking depreciation costs into account, the gross loss in 2015 widened to USD11.0 million from USD4.0 million.
A substantial lift in exploration costs to USD22.9 million from USD1.8 million was a major driver of the wider loss in the year, as were higher financing costs of USD4.8 million from only USD209,000.
Production in the year averaged 322 barrels of oil equivalent from 272 barrels in 2014, which is solely from natural gas production in Italy. The increased production volumes achieved at Guendalina and the commencement of production from Civita despite lower realised commodity prices.
The average realised price in 2015 was only 20.0 euro cents per standard cubic metre, equal to around USD38 per barrel of oil equivalent, compared to the 27.0 cents achieved in 2014.
Importantly, production at the end of 2015 was running at a rate over 700 barrels of oil equivalent per day.
Although Italy is currently the driver of production, Rockhopper is focused on its huge Sea Lion development that is offshore the Falkland Islands and in partnership with fellow London-listed Premier Oil PLC. Rockhopper is currently carried on costs at the project.
"Going forward, we anticipate additional cost reduction opportunities being pursued during front-end engineering and design to further enhance the economics of the Sea Lion project as we move towards a project sanction decision point in mid-2017. Premier Oil has confirmed its intention to seek an additional partner ahead of taking project sanction and Rockhopper will support Premier Oil in this initiative," said Rockhopper.
The Italian portfolio is expected to produce revenue of around USD8.0 to USD10.0 million in 2016 based on the current gas price, foreign exchange rate and production projections, but said it will not have to invest a substantial amount into the portfolio during the year.
Rockhopper is forecasting its cash balance at the end of 2016 will be in the region of USD70.0 to USD80.0 million, compared to the USD110.0 million balance at the end of 2015, which in turn was broadly flat from the USD99.7 million balance at the end of 2014.
"With the company having made such significant achievements this year, it now seems appropriate to announce my intention to retire from the Board following the company's forthcoming annual general meeting on May 17. I am delighted that current Non-Executive Director David McManus will succeed me as non-executive chairman," said the outgoing Pierre Jungels.
Rockhopper shares were trading flat on Wednesday morning at 30.25 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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