The Dublin-headquartered company — whose operational activity is solely focused on the Tomsk region of Russia — saw an average production level of 2,000 barrels per day, all of which was sold on the Russian domestic market at an average price of $41.60 per barrel.
Total group losses amounted to $8.78m, well up on analyst expectations of closer to $2.3m.
The difference was explained by currency losses relating to PetroNeft’s sale of a 50% equity stake in its Licence 61 asset to Oil India.
“The major variation between the actual out-turn and our expectation was a $5.6m loss, resulting from accounting changes arising from the Oil India transaction [this was a currency loss following a movement in balance sheet reserves which is required to pass through the profit and loss].
“However, the acquisition also resulted in the year being effectively split in two, with the group performance in each half accounted for differently,” explained Job Langbroek of Davy Stockbrokers.
“In the first half of 2014, the group’s financial performance was recorded using the consolidated method.
“However, the second half was recorded using the equity method, as a consequence of which the Russian performance is recorded as a single-line entry.
"In 2015, the financial performance of the entire group Russian activity will be reported using the equity method for the full year,” he added.
Despite the complex accounting procedures for 2014, PetroNeft is viewed as being in a much-improved position than it was before Oil India invested.
The company, itself, saw 2014 as a “turnaround year”.
Management noted that the company is currently producing from less than 15% of its reserve base and that recent substantial investment leaves it well-placed to deliver “significant and profitable growth”, after dealing with funding challenges in recent years.
“The farm-out gave us a strong industry partner seeking to build a strategic position in Russia, as well as the financial resources to develop the significant potential of Licence 61,” said CEO Dennis Francis.