Page 8 - FSUOGM Week 34 2019

FSUOGM PERFORMANCE FSUOGM
Cadogan returns to profit despite weaker prices
UKRAINE
Cadogan had to hold back gas volumes to avoid losses.
LONDON-LISTED Cadogan Petroleum, active in north-eastern Ukraine, moved back into the black in the rst half of 2019 as an increase in the value of a loan it issued more than o set weaker prices and a drastic cut in gas sales.
Net income reached $2.56mn in the six months, the company said on August 27, contrasting with a $315,000 loss in the same period last year. e return to pro t was owing to a €4.21mn ($4.7mn) rise in the value of a €13.4mn convertible loan it had provided in February to Italy’s Proger Managers & Part- ners (PMP). In return for lending the funds, Cadogan secured an option to buy 22% of PMP’s oil and gas engineering division Proger Ingegneria.
e loan rose in value “as a result of a compet- itive conversion price and of Proger’s growth in Ebitda over the last year,” the company explained.
Revenues slumped 38% to $3.32mn, however,
as a result of a 15.6% decline in oil prices and an even greater fall in gas prices.
“Gas prices witnessed an unprecedented nosedive, with prices in January and February dipping below the level seen the previous sum- mer,” the company said. “In this scenario, Cado- gan sold in January some of its stored gas with a small loss and kept the remaining balance in storage.”
Cadogan su ered a $0.65mn loss by keeping these gas volumes back, but justi ed its decision, saying it forecasted a recovery in gas prices over the rest of the year. From a high of $369 per 1,000 cubic metres in October, Ukrainian gas prices tumbled to just $168 by the end of June, accord- ing to the company.
e drop in revenues came despite a rise in production of 27% year on year to 297 barrels of oil equivalent per day (boepd), marking Cado- gan’s sixth consecutive half-year of growth.™
Greenfields sees losses widen in Azerbaijan
AZERBAIJAN
Green elds Petroleum saw sales slide, despite its ambitious growth plans.
AZERBAIJAN-FOCUSED Green elds Petro- leum su ered greater losses for the second quar- ter, as a result of weaker sales and lower oil prices.
Net losses stood at $2mn in the three-month period, the Texas-registered operator reported on August 26, versus $0.9mn a year earlier. Ebitda sank 13.5% year on year to $2.48mn, as revenues fell 11% to $8.08mn.
Green elds is developing a pair of mature Caspian Sea oil and gas fields, Gum Deniz and Bahar, where output peaked decades ago. By revamping existing wells and tapping into deeper reservoirs, the company is hoping to li production to back above 10,000 barrels per day of oil and 1bn cubic metres per year of gas over the next few years.
e drop in earnings in April to June came as Green elds’ oil sales slumped 9% y/y to 686 bpd, while gas sales slid 6% to 488,000 cubic metres per day. On the upside, the company noted that gross output at its Gum Deniz was up 22% quar- ter on quarter at 813 bpd, while gas production was up 11% at 583,200 cubic metres per day.
“We continue to build momentum in improving our operating performance in the second quarter and remain focused on realising
the core value attributable to our operations and substantial proven reserves,” CEO John Harkins said in a statement. “Production dur- ing the quarter showed a positive growth trend compared to the rst quarter and we have a clear growth strategy to materially enhance that trend in future periods.”
Green elds was also stung by a 9% y/y decline in the price it sells its oil at to $60.8 per barrel. Its gas price is xed at $2.69 per 1,000 cubic metres, under a sales contract agreed with Azerbaijan’s SOCAR in April 2017. Operating expenses crept up 3% y/y to $5.03mn in April to June, but this was more than o set by a 36% drop in capital costs to $1mn. ™
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Week 34 28•August•2019