Shelton Petroleum: Significantly Strengthened Reserves Base in Russia
January – September 2014
Total revenue for the period: SEK 93 (72) million
Write-down of exploration assets affects the operating result by SEK -7 (0) million
Operating result for the period: SEK 16 (19) million
Operating result and margin excluding write-down: SEK 23 (19) million, 24% (26%)
Basic and diluted earnings per share: SEK 0.71 (0.14)
July – September 2014
Revenue during the quarter: SEK 29 (26) million
Write-down of exploration assets affects the operating result by SEK -7 (0) million
Operating result during the quarter: SEK 1 (8) million
Operating result and margin excluding write-down: SEK 8 (8) million, 27% (32%)
Basic earnings per share: SEK 0.05 (0.53), Diluted earnings per share: SEK 0.05 (0.30)
Statement from CEO Robert Karlsson
Production during the third quarter amounted to 860 barrels per day. Excluding a one-off item related to exploration assets, the underlying oil and gas business generated an operating result of SEK 8 million and operating margin of 27 per cent. In order to reflect the increased risk regarding future financial benefit from our interests located offshore Crimea, an adjustment has been made of the carrying value of these exploration assets. Although not affecting cash flow, it reduced the quarter’s operating results by SEK 7 million. Shelton Petroleum’s production in central Ukraine, on the other hand, is stable and unaffected by the recent events in the country.
Step by step Shelton Petroleum is demonstrating that it holds high quality assets in Russia. The cumulative production from the Rustamovskoye field of 400,000 barrels clearly shows that the oil can be produced under high profitability. On the back of the demonstrated commercial value of the field, the recently published reserves update, where total reserves increased from 6 to 41 million barrels, manifests the impact future drillings will have on production and cash flows. In the reserves auditor’s financial model, a peak production of over 7,000 barrels per day could be reached on the Rustamovskoye field alone when the development plan is implemented.
On the adjacent Suyanovskoye license, a recent seismic program has identified three promising structures with estimated recoverable resources of 47 million barrels. Given further success in our exploration efforts, Suyanovskoye may become equally if not more important for us than the successful Rustamovskoye field. Increased oil reserves and resources provide stability and predictability in the planning of further drillings. In addition, they provide better support for investors and lenders, which in turn facilitates financing of field development.
Although the geopolitical events and development of the oil price has affected the oil sector in many ways, I am encouraged by the recent positive results in Russia and committed to further developing Shelton Petroleum.
