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Petroneft losses widen on currency hit

Friday, June 27 16:39:31

Irish-based, Siberia-focussed oil and gas explorer, Petroneft, has posted a wider full pre-tax loss of $11.5m, from a loss of $2.8m a year earlier largely due to currency fluctuations.

Revenue came in at $38.7m, compared to $34.6m the year before.

"The main focus in 2013 was the work to find a long-term funding solution for the Company which culminated in the agreement signed with Oil India Limited in April 2014," the company said.

"While there has been a short administrative delay in receiving the Russian Regulatory approval, we expect this to be issued imminently, enabling completion of the Farmout and repayment of all debt. We will re-commence drilling at Licence 61 this summer and I look forward to updating shareholders with the results of this exciting programme in due course."

Petroneft said that production was up 8pc to 870,965 barrels of oil.

It booked a net loss of $9m, driven by $6m foreign exchange loss on intra-group loans but Licence 61 Farmout will leave the company debt free and fund major a well drilling campaign.

PetroNeft said drilling at Licence 61 in Russia would re-commence this summer. The company recently entered into a farmout agreement with Oil India for a 50 per cent stake interest in the licence.

The agreement involves a total investment of up to $85million from Oil India, consisting of a $35 million upfront cash payment, a $45 million spend on exploration and development on Licence 61, and a $5 million performance bonus.

PetroNeft remains the operator of the licence.

"The Licence 61 Farmout materially strengthens PetroNeft both financially and strategically. We believe the transformation we will undergo as a result of the Licence 61 Farmout will be for the benefit of the shareholders in the company as a whole. The company will be debt-free and the jointly controlled entity will have a fully funded $45 million work programme,"said chairman David Golder.