Tax break lifts New Standard Energy

New Standard Energy has reported a profit of $1.2 million for the half financial year ended December 31, with an income tax benefit helping shift its performance back into the black.

Last half financial year the oil and gas explorer disposed of its shareholding in Buru Energy, which contributed to a taxable profit of $40.5 million.

In the half financial year just ended, New Standard made $776,201 in revenue and had a loss of $2.8 million before it received an income tax benefit of $3.9 million.

New Standard recently completed its largest transaction to buy 2,097 hectares of producing and prospective land in Eagle Ford in Texas, where the shale and tight gas sector is booming, and acquire farm-in rights in South Australia.

The Eagle Ford deal with US-based Magnum Hunter Resources was worth $US13,097/ha and made Magnum the company’s majority shareholder, after it received 65.6 million shares and an initial payment of $US15 million cash.

Its South Australian farm-in agreement with Ambassador Oil and Gas in the Cooper Basin, for which it paid $42.5 million for up to a 52.5 per cent stake, isn’t due to get its first well until 2015.

The company said the two deals had diversified its risk profile and asset base.

“New Standard now holds a diverse range of projects within the shale and tight gas space, each at different stages of the development cycle, with the US assets producing immediate cash flow for the company,” the company said in a statement.

New Standard also has a joint venture partnership with ConocoPhillips and PetroChina Company to explore its Southern Canning Project in Western Australia, and is in the process of obtaining an exploration permit for other land it has in the Canning Basin.

Five existing wells at Eagle Ford are producing revenue. One new well has been drilled and drilling at a second well has started.

New Standard said negotiations were continuing with several parties to secure debt funding for new wells at Eagle Ford, and it was in receipt of term sheets offering $US15 million-$US30 million debt funding to fund all or part of the first four wells.

It has paid about $20 million so far for the acquisition of the Eagle Ford and Cooper Basin assets and held $39 million in cash at December 31.

New Standard’s shares rose 2.9 per cent at 10.52WST to 17.5 cents following its half yearly report.