Urals Energy: 2013 Half Year Results – Working Capital Turns to Black
Urals Energy PCL, the independent exploration and production company with operations in Russia, is pleased to announce its half-year results for the six months ended 30 June 2013.
Operational Hghlights
– Total production at Arcticneft reached 125,651 barrels (H1-2012: 128,249 barrels).
– Total production at Petrosakh reached 240,533 barrels (H1-2012: 233,484).
– Current daily production at Arcticneft is 702 BOPD – slightly higher than an average of 694 BOPD for the six months ended 30 June 2013.
– Current daily level of production at Petrosakh is 1,315 BOPD slightly down from an average of 1,330 BOPD for the six months ended 30 June 2013.
– Well # 53 was spudded at Petrosakh.
– Measures to halt natural decline at Petrosakh including the completion of successful workovers have stabilised production.
– New well drilling and existing well optimisation programs in place and being implemented on both fields.
Financial Highlights
– In H1-2013 gross profit improved by 60% to US$4.9 million (H1-2012: US$3.0 million), as a result the Company achieved a net profit of US$1.0 million for the period (H1-2012: US$0.6 million loss).
– For the first time since 2006, positive net working capital on 30 June 2013 at US$0.7 million (2012: US$1.0 million negative working capital).
– Net loss of US$2.5 million (H1 2012: net loss of US$2.0 million) caused by exchange rate movements during both H1-2012 and H1-2013.
– Successful implementation of cost reduction program in 2012 resulting in 10% decrease in cost of sales.
– In June 2013, the Company entered into a short-term loan agreement with Petraco Oil Company Limited (“Petraco”) under which Petraco has advanced US$7.0 million. The Loan is being used by the Company to both progress its 2013 drilling plan and working capital financing.
Post-period end and outlook
– Initial production testing on Well #53 on the Petrosakh Field will be completed during October 2013.
– The annual planned tanker shipment for export from Arcticneft is expected in late October 2013.
– Repayment of all loans from Petraco by year end.
– Expected release of charge over the Company’s Arcticneft assets by Petraco.
– Drilling of a new well # 112 will start shortly after Well # 53 commences production.
– Initial reports from the AKN seismic survey appears positive with an improvement in production anticipated along with encouraging data on deeper targets.
– Seeking possible M&A and joint venture targets with a view to expanding and optimising the Company’s asset portfolio, including producing assets, as well as earlier stage exploration plays predominantly in the European, and Western Siberia regions.
Alexei Maximov, Chief Executive, commented:
“The Board is pleased with the progress that Urals Energy has made since the start of 2013 and considers that the Company has finally turned the corner. During the period under review, the Company improved its production and cash generation at both Arcticneft and Petrosakh. In addition, our balance sheet was strengthened and for the first time since 2006 net working capital became positive.
“Well #53 has now been spudded, and the measures taken to halt the natural decline at Petrosakh, including the completion of successful workovers, has stabilised production. New well drilling and existing well optimisation programmes are in place and being implemented on both fields. Initial reports from the seismic survey appear extremely positive and provide a strong base for the improvement in anticipated production as well as encouraging data on deeper targets. More details on the seismic survey will be announced at the appropriate time.
“With the expected repayment of the loans from Petraco and the associated release of their charges, the Board believes that Urals Energy is now well positioned for growth. The Board continues to seek possible M&A and joint venture opportunities with a view to expanding and optimising the Company’s portfolio.”