Corrib gas partner sees losses grow to €30m

Losses at Vermilion Energy, one of the Corrib gas field partners, last year rose by 50% to €30.8m.

The Canadian-owned firm has an 18.5% share in the gas field and figures lodged with the Companies Office by Vermilion Energy Ireland Ltd show that losses increased from €20m to €30.8m in the 12 months to the end of last December. Accumulated losses were €203.4m.

According to a note with the accounts, the nature of oil and gas field exploration means substantial costs and expenditure are incurred before revenues can be generated from the resources found.

The note states that the “the directors consider that revenue from the development of the field will be sufficient to make the company profitable in future”.

The Corrib partners are anticipating that gas will finally come ashore in late 2014 or early 2015.

Work on the tunnel to bring gas ashore was this week suspended following the death of German worker Lars Wagner.

The losses incurred by Vermilion are largely owing to €34.3m in bank interest charges, with pre-tax losses totalling €40.3m. An impairment charge of €4.1m added to the pre-tax losses.

A tax credit of €9.5m reduced the firm’s losses to €30.8m.

Vermilion shareholder funds stood at €85.3m after a share premium of €255.7m and called up share capital of €33m are taken into account.

The accounts disclose that Vermilion’s capital commitments on the Corrib gas project in 2013 total €65.8m.

Its annual report states: “Vermilion expects to continue to make significant capital investment on this project over the next two years and currently expects to achieve initial gas production from this field in late 2014 to reach peak production levels in mid-2015.”

The report states that Vermilion purchased its interest in the field from Marathon Oil for an initial $136.8m (€103m) and paid over an additional $134m at the end of 2012.

Vermilion has spent $302.6m primarily related to the completion of a natural gas processing facility and work related to the onshore pipeline.

Production from Corrib is expected to hike Vermilion’s volumes by about 55m cubic feet per day once the field reaches peak production, the report states.

It is 10 years since the Corrib gas project was approved by the government, but it has been mired in controversy since, including the jailing of the Rossport Five in 2005 and a number of confrontations between gardaí and protesters.