Independent oil & gas company Afren Plc (AFR.L) Tuesday reported its first profit for the first half of the year, owing to higher realized oil prices and continued cost management on its Okoro field.
The company reported a profit of $50.72 million or 5.2 cents per share for the period, compared to a loss of $38.53 million or 7.3 cents per share in the six months of the prior year.
Normalised profit after tax, which excludes certain items, was $54.5 million, a surge from last year's $626 thousand. Pre-tax profit totaled $75.39 million for the six months, compared to a loss of $37.37 million in the prior year.
Turnover increased 38.4% to $214.75 million from $155.16 million in the previous year.
The company, in which oil firm BG Group is reportedly having an acquisition interest, operates in three geographical markets: Nigeria, Côte d'Ivoire and other West Africa. In Nigeria, from where most of the revenue originates, turnover was $197.10 million, up from $137.66 million in the prior year.
Cost of sales dropped to $117.76 million from $134.63 million, owing partly to lower depreciation charge as a result of the increased reserves estimate at the Okoro field.
Finance costs were lower at $6.19 million, compared to $21.92 million last year, owing to the repayment of debt and the effect of lower interest rates as USD Libor has fallen.
Fair value of financial liabilities and financial assets were $280 thousand, compared to a negative $1.66 million last year.
Realised oil price increased nearly 55% from last year to $77.8 per bbl, and realised gas price grew 13% to $5.2 per mmbtu. Net Working Interest production dropped about 11% to 20,397 boepd from the previous year.
According to the company, net debt fell to $12.2 million as at June 30 from $194.9 million as at June 30 2009.
Further, the company said the Ebok development is progressing, where first phase drilling is nearing completion and facilities upgrade is at an advanced stage.
Looking ahead, the oil explorer said, "The outlook for the remainder of 2010 and beyond is positive for Afren. Production performance has been in line with expectations for the period and is expected to rise sharply into the foreseeable future."
AFR.L is currently trading at 96 pence, down 5 pence or 4.95%, on 924,382 shares.
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