Exploration group Petroneft’s first profit could boost reserves by 50%

PETRONEFT has reported its first pre-tax profit, adding that recent exploration success could boost group reserves by at least 50%.

The company’s financial results for the first half of 2011, published yesterday, show a pre-tax profit of just under $3.8 million (€2.8m) and a revenue of $15.97m. Petroneft — whose interests cover two licences in the Tomsk region of Russia — had a pre-tax loss of nearly $5m for the first half of 2010.

“The first part of 2011 has been very busy with the highlights being the major discovery at Sibkrayevskaya (the source of the 50% reserve boost potential) and the extension of the Lineynoye field to the north,” said chief executive Dennis Francis.

“The coming months will see results from the remaining high impact exploration wells, together with increasing production as the hydraulic fracturing programme proceeds.”

Petroneft’s first half performance also included an operating profit of $4.91m; up from an operating loss of $3.76m for the corresponding period last year. Basic earnings per share amounted to 74c; as opposed to a loss per share of $1.51 for the first half of last year.

First half production came in at 399,327 barrels of oil and the company also improved its debt facility — for up to $75m — with Macquarie Bank. Market reaction was low-key.

“Overall, the results are positive — with healthy profits to be seen as a positive. Investors, however, will be more focused on the drilling updates at the end of this month, especially the well on Licence 61 which was spudded in August,” said Bloxham Stockbrokers.

Gerry Hennigan of Goodbody Stockbrokers added: “While the extension of the Macquarie debt facility is welcome news in that it eases pressure on the availability of funding, the current low production base and the ability to increase that remain a key focus, answers to which are unlikely to be divulged until after the current fraccing programme in the fourth quarter. There is little in the latest statement to provide upside for the share price.”