Zoltav Resources: Half Year Report for the Six Months Ended 30 June 2021
Zoltav, the Russia-focused oil and gas exploration and production company, announces results for the six months ended 30 June 2021.
Financial Summary: Revenues increased by 37% to RUB 755 million (Н1 2020: RUB 552 million), due to the increase in production (21%) and the positive impact of gas prices. Total cost of sales increased by 10% to RUB 421 million (Н1 2020: RUB 381 million). Operational and G&A costs increased by 18% to RUB 125 million (Н1 2020: RUB 106 million), mainly due to increases in staff costs. Operating profit increased by 232% to RUB 289.1 million (Н1 2020: RUB 87.2 million), mainly due to the revenue increase, decreases in depreciation and lower impairment charge. Profit before tax increased by 1,131% to RUB 230.2 million (Н1 2020: RUB 18.7 million). Net cash generated from operating activities decreased by 16% to RUB 221 million (Н1 2020: RUB 262.5 million, mostly due to the impact of tax credits being received in 2020 in relation to COVID-19 and debts due in 2019 from Mezhregiongaz being received in 2020. Total cash at the end of the period was RUB 90 million (Н1 2020: RUB 31 million)
Shareholder Loan
· The Company has been unable to repay or refinance the shareholder loan (announced on 14 July 2020 and extended most recently on 21 June 2021) and therefore will convene a General Meeting to seek authority to issue new ordinary shares pursuant to the agreed conversion terms of 27 pence per share (if such conversion is requested)
Operational Summary
· Average net daily production (sold to customers) in Н1 2021 was:
o 29.7 mmcf/d (0.84 mmcm/d) of gas (Н1 2020: 24.3 mmcf/d (0.69 mmcm/d))
o 221.2 bbls/d (28.2 t/d) of oil and condensate (Н1 2020: 215 bbls/d (27.5 t/d))
· Programme of technical works on the West Bortovoy fields continued in H1 2021
· Further progress made on East Bortovoy project development including in contractor and equipment selection and technical planning
o Project final investment decision remains subject to financing
Lea Verny, Independent Non-executive Chairman, commented:
“Average production for sale from the Bortovoy Licence increased by 21% in H1 2021, as a result of the rolling programme of technical works on the West Bortovoy fields. This positive operational performance is reflected in the Company’s improved revenues.
The Company made further progress on the East Bortovoy project and is in the advanced stages of negotiations for project finance with two major Russian banks. The Board believes a development of the East Bortovoy fields is essential to ensuring the long-term financial security of the Company.
It should be noted that the terms of both project finance packages potentially available to the Company include conditions which are likely to restrict intra group transfers and cash outflows from the Group’s main operating subsidiary, Diall Alliance. As a consequence, the Company would be unable to maintain the listing of its ordinary shares on AIM on an ongoing basis. Further updates will be provided in due course.”
