30th Mar 2015 09:18
LONDON (Alliance News) - Volga Gas PLC Monday reported a rise in 2014 earnings as revenue grew on the back of increased production and sales, and it said it plans to increase production by around 7,500 barrels of oil equivalent per day in 2015 by drilling three wells.
The Russian oil and gas producer reported a pretax profit of USD16.3 million, up from USD9.6 million in 2013, as revenue rose to USD39.4 million from USD34.6 million.
The company spent nothing on exploration during 2014, which reduced costs by USD2.5 million from 2013, while it had also booked a USD1.4 million write off of assets in 2013 that wasn't repeated. It also recorded a USD3.3 million gain on foreign exchange in 2014.
Earnings before interest, tax, depreciation and amortisation rose to USD17.4 million from USD14.8 million.
As a result of increased profit and earnings, Volga proposed an final dividend of USD0.0125 per share, leading to a total dividend payment for 2014 of USD0.05 per share. Volga did not pay a dividend in 2013.
Revenue rose as production significantly increased to 603,950 barrels of oil and condensate from 547,257 barrels in 2013, representing the third consecutive year of production growth, whilst Volga produced 5,671 million cubic feet of gas in 2014, also up from 3,128 million cubic feet in 2013.
Sales in 2014 totalled USD27.2 million from oil and condensate and USD12.2 million from gas, compared with USD26.1 million and USD8.6 million, respectively, in 2013.
The increase in production and sales offset lower prices, which fell to USD45.07 per barrel from USD47.63 per barrel in 2013 and gas prices dropped to USD2.15 per million cubic feet from USD2.73. This was partially offset by production costs falling to USD5.04 per barrel of oil equivalent in 2014 from USD5.56 per barrel.
In 2014, Volga spent a total of USD5.9 million in capital expenditure, flat from 2013, and said all of its expenditure was on producing or development assets, explaining the fall in exploration expenditure during the period. However, the company said it plans to return to exploration "later" in 2015.
In 2015, Volga is planning on drilling the VM3 well in the first half, sidetrack the VM4 well and drill the VM5 well later on in 2015, which would lead to production reaching over 5,000 barrels of oil equivalent per day. It is currently producing around 4,244 barrels of oil equivalent per day.
Capital expenditure in 2015 will total around USD14 million, nearly treble its 2014 budget, but the company said that capital expenditure can be deferred or cancelled if necessary and will be funded from existing resources and cash generated from existing operations.
At the end of the period, Volga had a cash balance of USD15.8 million.
Volga Gas shares were up 0.5% to 74.85 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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