4th Nov 2014 15:21
LONDON (Alliance News) - SacOil Holdings Ltd said Tuesday that its funding situation remains "a top priority" as it posted a drop in pretax profit in the half year to end-August.
The African oil and gas company posted a pretax profit of ZAR30.4 million, down from ZAR68.7 million a year earlier, as foreign exchange losses and higher operating costs more than offset a rise in investment income. The higher investment income was due to the compounding effect of the interest accruals on the loan it advanced to Energy Equity Resources Ltd.
The company posted an impairment on its financial assets of ZAR19.7 million.
SacOil said that it will continue to work on retrieving the loan it is owed from Energy Equity Resources, which it hopes to resolve before the end of the year, and is also actively looking at other options including rebalancing its portfolio. It is exploring funding and other alternatives to ensure it has adequate resources to continue operating for the next year.
The company recently appointed Ernst & Young Inc to carry out a forensic investigation on some historical transactions by the company between August 1, 2011 and November 30, 2011, relating to its unsuccessful attempt to buy interests in Block I and II in the Democratic Republic of Congo. Ernst & Young reported that they have reason to believe "reportable irregularities" were committed by previous members of management.
However, SacOil said these irregularities "do no affect" its current interim financial statements, and it does not expect future losses will arise from this.
"The forensic investigation represents a key step taken by the board to address historical governance issues," SacOil said.
The company said it has made good progress across its existing portfolio during the half year, completing its acquisition of the Lagia Oil Field in Egypt last October.
"This transformational transaction also provides us with greater access to the capital markets as we roll out our strategy to build a substantial pan-African exploration and production business," said Chief Executive Thabo Kgogo in a statement.
Shares in SacOil are trading down 0.4% at 2.24 pence Tuesday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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