26th Jun 2019 09:47
(Alliance News) - Zoltav Resources Inc said Wednesday its revenue decreased in 2018, in line with expectations, on the natural production decline from its western Bortovoy fields.
Shares in the Russia-focused oil and gas exploration and production company were down 27% in morning trading in London at 50.50 pence each.
Zoltav's revenue decreased about 11% in 2018 to RUB1.60 billion, about USD25.8 million, from RUB1.79 billion, about USD30.7 million.
The company was able to swing to a pretax profit, however. In 2018 Zoltav posted a pretax profit of RUB156 million from a RUB1.43 billion loss in 2017. Zoltav attributed the significant swing to the RUB1.69 billion one-off impairments incurred in 2017 from the company's Koltogor licences in western Siberia. These didn't repeat in 2018.
In 2018, the company's average net daily production, sold to customers, decreased 18% to 33 million cubic feet of gas from 40.4 million in 2017.
Overall, Zoltav produced 12.0 billion cubic feet of gas in 2018, or 2.0 million barrels of oil equivalent in 2018. Which is 19% behind production levels seen in 2017.
The company produced 109,807 barrels of oil in 2018, down 11% on the 122,962 barrels produced in 2017.
"The natural production decline from existing well stock on the western Bortovoy fields continued at a slower rate in 2018 than predicted. The new geotechnical team has been developing geological and hydrodynamic models to efficiently plan for further development wells needed to increase production from the western fields again. A drilling programme has commenced, and management is aiming to reverse the production decline from the western fields by the first quarter of 2020," said Non-Executive Chair Lea Verny.
"Long-term plans are focused on connecting the eastern Bortovoy fields to the western gas plant. Preliminary evaluation indicates that connecting these fields and expanding the plant's capacity is the most favourable option. A technical and economic feasibility study is underway, and we look forward to reporting further progress in due course."
The western fields in the Bortovoy licence are tied into Russia's gas pipeline network via the western gas plant - a 22 kilometre pipeline that connects to a Gazprom trunkline which runs through the licence. Zoltav sell the gas from the licence to Gazprom.
Zoltav is hoping to connect its eastern fields in the Bortovoy licence to the same infrastructure. The eastern fields - home to Pavlovskoye, Kochkurovskoye, West Lipovskoye, Lipovskoye and Nepriyakhinskoye - are yet to be developed.
A final investment decision for connecting the fields is due by the end of 2019.
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