Zoltav Resources: H1 Results – Revenue Down 10% EDBITA Down 2%
Zoltav, the Russia-focused oil and gas exploration and production company, announces results for the six months ended 30 June 2018. The Company’s continued focus on operational efficiency enabled it to generate a 4% increase in net profit to RUB 72 million (USD 1.21 million).
Financial Highlights
· Revenues from production decreased, as anticipated, by 10% to RUB 831 million (USD 14 million) (H1 2017: RUB 924 million or USD 15.93 million)
· Operational efficiencies helped to restrict the negative impact on EBITDA to just 2% at RUB 411 million (USD 6.92 million) (H1 2017: RUB 420 million or USD 7.24 million)
· Operational and G&A costs decreased by 18% to RUB 88 million (USD 1.48 million) (H1 2017: RUB 108 million or USD 1.86 million)
· Total cost of sales decreased by 6% to RUB 547 million (USD 9.22 million) (H1 2017: RUB 585 million or USD 10.09 million)
· Operating profit decreased by 5% to RUB 191 million (USD 3.22 million) (H1 2017: RUB 202 million or USD 3.48 million)
· Profit before tax increased by 2% to RUB 101 million (USD 1.7 million) (H1 2017: RUB 99 million or USD 1.71 million)
· Cash generated from operating activities increased by 2% to RUB 377 million (USD 6.35 million) (H1 2017: RUB 370 or USD 6.38 million)
· Reduced credit facility with Sberbank by RUB 150 million (USD 2.39 million) of the principal amount (RUB 1,410 million or USD 22.47 million at 30 June 2018) – in line with all covenants
· Total cash at period end was RUB 315 million (USD 5.02 million) (at 31 December 2017: RUB 348 million or USD 6.04 million)
Operational Highlights – Bortovoy Licence
· Average net daily production decreased by 18% to 6,151 boe/d (829 toe/d) (H1 2017: 7,480 boe/d (1,021 toe/d))
· Overall in H1 2018, the Company produced:
– Natural gas: 6.3 bcf (179 mmcm) (H1 2017: 7.7 bcf (218 mmcm))
– Oil and condensate: 60,558 bbls (7,715 t) (H1 2017: 68,713 bbls (8,753 t))
· New geotechnical team, led by former Bashneft and TNK-BP technical executive Yuri Krasnevsky, appointed in May 2018
– Following the re-interpretation of existing seismic data, the geotechnical team is focused on delivering a low-risk strategy to reduce the production decline from Permian fields and, in due course, to bring the Western Gas Plant back up to capacity
Exploration Programme Update
· New geotechnical team has reviewed 3D seismic programme and concluded that 341 sq km of data acquired to date over Mokrousovskoye block will be sufficient to allow for the positioning of a Devonian exploration well towards the end of Q1 2019
– Final interpretation of 3D seismic now expected to be completed in mid-Q1 2019
– Long-term objectives to prove and commercialise potential of the Devonian structures on West Bortovoy and to develop East Bortovoy
Note: USD comparisons are provided in the above Financial Highlights for illustrative purposes only and are calculated using an exchange rate of:
As at 30 June 2018: 1 USD = 62.7565 RUB
H1 2018: 1 USD = 59.3536 RUB
As at 31 December 2017: 1 USD = 57.6002 RUB
H1 2017: 1 USD = 57.9862 RUB
Net production is the volume actually sold to customers. It comprises all extracted hydrocarbons, less own consumption and losses. The Company uses net production volumes throughout the half-year 2018 report instead of previously used total extracted volumes.
Lea Verny, Independent Non-executive Chairman, commented:
“I am pleased to report that Zoltav delivered a 4% increase in net profit for the first half of 2018 to RUB 72 million (USD 1.21 million). This performance was achieved as a result of our team’s continued dedication to operational efficiency and in spite of the anticipated decline in production revenues from the Permian fields on West Bortovoy.
“A new geotechnical team, led by former Bashneft and TNK-BP technical executive Yuri Krasnevsky, was appointed in May 2018. Their mandate is to execute an exploration programme targeting the deeper structures on West Bortovoy, to enhance output from existing and new well stock producing from the shallower Permian structures and, in the longer term, to devise a strategy to commercialise East Bortovoy. We are delighted as we believe we have been able to attract one of the best geotechnical teams in the country to the project.
“We look forward to sharing over the coming months insights from the seismic interpretation programme as we prepare for a busy work programme in 2019.”
