Zoltav (AIM: ZOL), the Russia-focused oil and gas exploration and production company, announces final results for the year ended 31 December 2018.
Financial Summary
- Revenues declined, in line with expectations as a result of the natural production decline of the West Bortovoy fields, by 10% to RUB 1.6 billion (USD 25.75 million) (2017: RUB 1.79 billion (USD 30.68 million))
- Total cost of sales was 2% lower at RUB 1.12 billion (USD 17.86 million) (2017: RUB 1.15 billion (USD 19.71 million))
- Gross profit decreased by 23% to RUB 496 million (USD 7.91 million) (2017: RUB 644 million (USD 11.04 million))
- Operational and G&A costs increased by 12% to RUB 208 million (USD 3.32 million) (2017: RUB 185 million (USD 3.17 million)), mostly driven by hiring experienced senior geotechnical personnel and equipment
- Operating profit decreased by 30% to RUB 313 million (USD 4.99 million) (2017: RUB 450 million (USD 7.71 million))
- Profit before tax was significantly improved at RUB 156 million (USD 2.49 million) (2017: unadjusted loss of RUB 1.43 billion (USD 24.51 million) including the RUB 1.69 billion (USD 29.34 million) one-off impairment allowance for the Koltogor Licences in 2017 (“Koltogor Impairment”))
- Net profit was significantly improved at RUB 90 million (USD 1.44 million) (2017: net loss of RUB 1.27 billion (USD 21.76 million) including the Koltogor Impairment
- EBITDA decreased by 15% to RUB 751 million (USD 11.98 million) (2017: RUB 888 million (USD 15.22 million))
- Net cash generated from operating activities decreased by 16% to RUB 613 million (USD 8.83 million) (2017: RUB 728 million (USD 12.64 million))
- Total cash at 31 December 2018 was RUB 261 million (USD 3.76 million) (31 December 2017: RUB 287 million (USD 4.98 million))
Note: USD comparisons are provided in the above Financial Summary for illustrative purposes only and are calculated using an exchange rate of:
2018: 1 USD = 62.7078 RUB
As at 31 December 2018: 1 USD = 69.4706 RUB
2017: 1 USD = 58.3529 RUB
As at 31 December 2017: 1 USD = 57.6002 RUB
Operational Summary
- Average net daily production (sold to customers) in 2018 was:
– 33 mmcf/d (0.94 mmcm/d) of gas (2017: 40.4 mmcf/d (1.1 mmcm/d))
– 301 bbls/d (38 t/d) of oil and condensate (2017: 337 bbls/d (43 t/d)) - Overall in 2018, Zoltav produced:
– 12.0 bcf (341 mmcm) of gas or 2.0 mmboe (274 mtoe) (2017: 14.8 bcf (418 mmcm) or 2.5 mmboe (335 mtoe))
– 109,807 bbls (13,988 t) of oil and condensate: (2017: 122,962 bbls (15,663 t)) - Western Gas Plant continued to be operated efficiently with only one, scheduled, 48-hour maintenance shutdown
- New well-head compressor installed on the Karpenskoye field, offsetting production decline on three wells
- Reprocessing and reinterpretation of historic seismic in 2018-19 has resulted in improved view of level of reserve depletion in currently producing West Bortovoy fields – drilling programme commenced in May 2019 to reverse production decline
- Long-term plans focused on connecting East Bortovoy fields to Western Gas Plant – technical and economic feasibility study commenced in 2018 – final investment decision anticipated by end-2019
- Strengthening of technical team with appointments of former Bashneft and TNK-BP technical executives, Yuri Krasnevsky, as Director for Geology and Field Development, Andrei Zabolotnov, as Deputy Director for Field Development, and Vasily Fomichev, as Deputy Director for Geology
Lea Verny, Independent Non-executive Chairman, commented:as
“Long-term plans are focused on connecting the eastern Bortovoy fields to the Western Gas Plant. Preliminary evaluation indicates that connecting these fields and expanding the plant’s capacity is the most favourable option. A technical and economic feasibility study is underway, and we look forward to reporting further progress in due course.
The natural production decline from existing well stock on the western Bortovoy fields continued at a slower rate in 2018 than predicted. The new geotechnical team has been developing geological and hydrodynamic models to efficiently plan for further development wells needed to increase production from the western fields again. A drilling programme has commenced, and management is aiming to reverse the production decline from the western fields by Q1 2020.”
The full annual report is available to download from the Investor Relations section of the Company’s website at www.zoltav.com.
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