Regal Petroleum writedown leads to losses but confidence remains

1st Apr 2014 13:11

Although it said it has been able to "operate normally" in spite of the political turmoil, Ukraine gas producer Regal Petroleum sank into losses in 2013 due to mixed results from new wells and warned of continued risk and volatility in the region.Mixed results from its wells led the AIM-listed company to revise its field development plan to reduce the number of new wells and to slow the phasing of its drilling programme. The revision of the field development plan resulted in a material reduction in the proved and proved and probable categories of remaining reserves from the previous independent estimates.This begat impairment losses of $159.2m and a loss before tax of $127.2m. However, Executive Chairman Keith Henry pointed out that cash generated from operations was positive at $26.5m, down from $33.1m year-on-year.He said the focus during 2014 will be to continue the geophysical studies to improve understanding its gas field, as well as beginning new drilling and fracking projects. "Successful completion of these activities, together with continuing analysis of our geological and geophysical data to provide a better understanding of the MEX-GOL and SV reservoirs and their performance, is expected to ultimately help enable us to improve our daily production." The board are confident that, based on current production and the resultant revenue for gas, condensate and LPG sales, the planned 2014 development programme will be funded from existing cash and cash equivalents and operational revenues.Shares in Regal were down 6.6% to 10.5p at 14:30 on Tuesday.OH