23rd Sep 2014 12:28
LONDON (Alliance News) - Roxi Petroleum PLC Tuesday said it swung to a pretax profit in the first half of the year as it wrote back some of the previous impairments it had booked for its BNG contract area in the west of Kazakhstan.
The company said it had written back USD25 million of the USD75 million it had previously written off at BNG, after it made recent progress at the site. It said it had found oil as it drilled its first deep well at the site.
"By any conventional measure the six months under review and the subsequent period have been successful, with a deep discovery at BNG contract area and further drilling successes in the shallow well complex at BNG," Chairman Clive Carver said in a statement.
Roxi took core samples at the first deep well at BNG at depths of between 4,332 and 4,383 meters, and said last last month that the samples revealed the gross oil-bearing interval was at least 51 meters. Earlier this month, it said the thickness of the gross oil-bearing interval was at least 105 meters after it conducted further drilling and mud logging. It intends to start a 30-day flow test at the well in early October.
The drilling of the first deep well at BNG had been delayed by extreme weather.
Roxi swung to a pretax profit of USD17.7 million in the six months ended June 30, from a USD3.6 million loss in the first-half of 2013, thanks to the write back of a third of the BNG impairment.
Revenue decreased to USD563,000 in the first-half of 2014, from USD748,000 a year earlier, as production fluctuated and it had to account for its interest in Galaz assets differently in its accounts.
It said it had benefited from the 20% devaluation of the Kazakh Tenge against the US dollar in February, as this reduced its Tenge-based costs. However, the underlying accounting records for its Kaazakh assets are also maintained in Tenge, meaning its has had to reuce the value of those assets by 20% to meet International Financial Reporting Standards accounting rules.
Roxi also reduced administrative expenses by 15% in the first-half of 2014 compared with a year earlier.
The BNG drilling programme for the rest of 2014 and the first half of 2015 includes a further five
shallow wells. It will be starting a second deep well at the site in November. It wants to quantify the extent of the discovery in the discovery in the first deep well, as well as the shallow well complex at BNG, and continue with the development plan at the Galaz site, in the short term.
Still, Roxi shares were down 3.9% to 17.17 pence per share Tuesday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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