Johannesburg - SacOil reported on Wednesday that its earnings fell as much as 2202 percent in the six months to August, blaming a combination of outstanding legal claims, foreign exchange losses and underperformance of the Lagia oil field in Egypt.
Despite the loss, SacOil’s share price remained unchanged at 19 cents a share.
SacOil reported a loss after tax of R221.4 million compared with a profit of R2.8 million in the previous comparable period.
It recorded a basic loss per share of 6.77c, compared with basic earnings of 0.32c in the same period last year, while basic headline loss per share was 6.77c, compared with the previous basic headline earnings per share of 0.25c.
“Key contributing factors were the strengthening of the rand against the dollar, which resulted in foreign exchange losses totalling R61.4 million arising from the revaluation of the group’s dollar-denominated assets, the provision for impairment of R164 million with respect to other financial assets and the underperformance of the Lagia asset,” SacOil said.
SacOil said a significant portion of its asset base was denominated in dollars.
Developments
It said future developments within the currency markets would continue to impact the group’s assets.
SacOil said it was pursing the recovery of R277.4 million from Transnational Corporation of Nigeria (Transcorp) in relation to the termination of SacOil’s participation in OPL281, an onshore block covering an area of 138km² in the western delta region of Nigeria. Transcorp is the operator of OPL 281.
“Inherently litigation is a protracted process which often leads to delays in the resolution of outstanding matters. Our legal counsel has estimated that the matter will likely be resolved during the first half of 2018. This delay has affected the valuation of the receivable and a provision for impairment of R48.1 million has been recognised to take into account the impact of the time value of money,” SacOil said.
The company said low oil prices affected the financial performance of the Lagia Oil Field in Egypt, thus contributing lower-than-expected revenue of R3.2 million, despite a R2.7 million rise in operating costs associated with steaming operations.
CEO Thabo Kgogo, said the company’s key focus in the six months included the expansion of business development activities, optimisation of production from the Lagia Oil Field, improvement in the cost structure and the recovery of funds.
“We are satisfied with the progress we have made in each of these initiatives with the limited resources at the group’s disposal,” Kgogo said.
He said, in line with the company’s long-term strategy to become a leading sustainable, profitable and independent African energy company, SacOil was evaluating multiple projects “in our quest to acquire additional cash-generative assets to grow the business”.
He said in the six-month period, SacOil considered a number of potential target upstream and downstream assets in Nigeria, Egypt, Tanzania and South Africa.