Circle Oil reports 53% profits hike

Co Limerick-based international oil and gas exploration company Circle Oil has reported a 53% increase in profits in the first half of the year.

The profit after tax increased to $13.3m (€10.6m), up from $8.7m for the first six months of 2011.

Circle Oil chief executive Chris Green said the company was being rewarded for its efforts.

“Circle’s efforts in exploration and development activities have been rewarded with significantly improved profitability in H1 2012,” he said.

Profits are expected to continue to grow throughout the rest of the year with the completion of a 55km gas pipeline to Kenitra. “The commissioning of a new 55 km pipeline in Morocco has led to an initial doubling of our gas sales. Circle’s share of oil and gas production for the first half of 2012 was in the range of 3,500 to 4,000 boepd with 4,200 boepd on average entering the next period,” the company said in its interim statement.

The company has a number of promising exploration projects in the pipeline. In Morocco, it anticipates commencing drilling a five-well programme later this year.

The company said its Egyptian prospects were progressing and that it aimed to add production wells and repressurising the reservoirs and improving recovery efficiency. Egyptian production continues to provide a steady income for Circle Oil.

In Tunisia, two exploration wells are to be drilled with civil engineering works commenced on the first well. The company has also acquired seismic data from Oman.

Analysts agree that Circle Oil shares are undervalued. Liberium capital analyst Andrew Whittock said: “H1 results were good and activity levels in H2 will step up with ongoing drilling in Egypt, the next phase of drilling in Morocco, two exploration wells in Tunisia and seismic acquisition in Oman. We retain our 50p PT and believe the shares look very good value.”