Tap Oil has posted a loss of $4.9 million in its half year results to June 30 after the explosion at Varanus Island impacted upon production levels and, in turn, affected sales.
Tap Oil has posted a loss of $4.9 million in its half year results to June 30 after the explosion at Varanus Island impacted upon production levels and, in turn, affected sales.
The oil and gas producer and explorer said production was strong at its Woollybutt facility up until April 28 this year when production was suspended for planned FPSO repairs.
Oil and gas production levels at its Harriet joint venture operation gradually increased during the past six months to levels that existed prior to the Varanus Island incident.
Production for the half-year was lower by 13,000 bbls (12 per cent) of oil and 570 TJ (26 per cent) of gas compared to the corresponding 2008 half-year period.
Managing director and chief executive, Peter Stickland said while the overall result was a loss, the operating result and cash flow for the half-year was very pleasing with strong oil sales from Woollybutt and the Harriet joint venture making a welcome return to pre-incident production levels.
"Tap ended the half-year with $54 million cash on hand," Mr Strickland said in a statement.
"Our existing cash, diversified production and cash generating interests and high potential exploration blocks mean that Tap is in an enviable position in the current business environment."
Full announcement below:
Tap Oil Limited Half Year Results to 30 June 2009
HIGHLIGHTS
- Sales of oil and gas increased 41% on the corresponding half year
- Operating profit of $20.0 million
- Cash flows from operations of $12.8 million
- Net loss after tax of $4.9 million - includes significant non-recurring items
- US$ 11 million received to date in interim insurance proceeds in relation to Varanus Island
- $54 million cash and no debt
Managing Director/CEO, Mr Peter Stickland's comments:
"While the overall result was a loss, the operating result and cash flow for the half-year is very pleasing with strong oil sales from Woollybutt and the Harriet Joint Venture making a welcome return to pre-incident production levels. Sales of third party gas also increased to full contracted daily volumes as the Varanus Island Repair Project neared finalisation.
At Woollybutt, the scheduled life extension work program on the FPSO is underway, with production anticipated to resume before the end of 2009.
In Block M, onshore Brunei, seismic acquisition is well underway over the Belait field, with drilling anticipated to follow in 2010. In WA-351-P, seismic processing has been completed and interpretation is underway. Tap views this block as having moderate to low risk exploration potential for LNG-scale gas.
Tap ended the half-year with $54 million cash on hand. Our existing cash, diversified production and cash generating interests and high potential exploration blocks mean that Tap is in an enviable position in the current business environment." Mr Peter Stickland, Managing Director/CEO.
Financial Performance
Tap's results for the half-year to 30 June 2009 were impacted by:
- Strong Woollybutt production up until 28 April 2009, when production was suspended for planned FPSO repairs.
- Oil and gas production levels at Harriet gradually increased during the period to production levels that existed prior to the Varanus Island incident. Production for the half-year was lower by 13,000 bbls (12%) of oil and 570 TJ (26%) of gas compared to the corresponding 2008 half-year period.
- Included in the production costs was an amount of $4.513 million relating to the Varanus Island repairs and $1.833 million relating to the Woollybutt FPSO dry-dock costs. Interim insurance proceeds received of US$11 million relating to the Varanus Island incident have not been recorded as income as liability has not yet been formally accepted by the insurers.
- Exploration write-offs and impairment losses of $7.651 million reflecting Tap's ongoing evaluation of its exploration portfolio.
- Foreign exchange losses of $3.386 million as the Australian dollar strengthened against the United States dollar during the half-year ended 30 June 2009.
- Administration costs were lower than the comparative half-year by 25.5% reflecting the Company's focus on cost management during the difficult business environment.
Tap's financial performance from its operations, excluding non-recurring and non-cash items, is set out below:
Jun-09 Jun-08
$'000 $'000 % change
Sales of oil and gas 33 ,191 23 ,473 41%
Other revenue - tolling fees 1,393 123 1033%
Operating Revenue 34,584 23,596 47%
Government royalties ( 217) (1 ,381) -84%
Production costs (excl. VI repairs & WBT dry dock) (14,352) (8,898) 61%
Cost of Sales (14,569) (10,279) 42%
Operating profit 20,015 13,317 50%
A 47% increase in operating revenue for the period led to a 50% increase in operating profit excluding non-recurring and non-cash items. This result reflects the strong performance from Woollybutt up until 28 April 2009 (when production was suspended for planned FPSO repairs) and the gradual increase in contribution from the Harriet Joint Venture over the period.
Cash generated from operations increased 91% to $12.80 million compared to the corresponding halfyear, also reflecting the strong operating performance of the company. Payments to suppliers and employees of $25.97 million in the cash flow statement includes payments of $8.60 million for Varanus Island repairs and Woollybutt dry dock.
Outlook
Tap continues to be in a strong position to grow and add value for shareholders through exploration and other new ventures and business development opportunities. Tap has a range of cash generating oil and gas assets, is in a robust financial position and has a flexible exploration portfolio with quality growth opportunities.
In particular, for the remainder of 2009 Tap expects:
a) Strong oil and gas production from the Harriet Joint Venture and continued recurring contributions from third party gas sales.
b) The dry dock program for the Woollybutt FPSO to progress with production to recommence before the end of the year.
c) Interpretation of the 3,500km2 Aragon 3D seismic survey in WA-351-P to be completed.
d) Completion of seismic acquisition and processing in Brunei Block M.
