2016 Half Year Results
20 September 2016
Urals Energy PCL ("Urals Energy" or the "Company")
2016 Half Year Results
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).
Urals Energy PCL (AIM: UEN), the independent exploration and production company with operations in Russia, is pleased to announce its half-year results for the six months ended 30 June 2016.
- Gross profit increased by 15% to US$2.3 million (H1-2015: US$2.0 million)
- Operating profit of US$0.6 million for the period (H1-2015: operating loss US$0.1 million)
- Net profit before income tax of US$3.3 million (H1-2015: US$0.3 million). Underlying net profit before income tax of US$0.3 million (H1-2015: loss of US$0.2 million). Largely caused by exchange rate movements during both periods
- EBITDA* increased to US$2.2 million from US$1.3 million for the first six months of 2015, an increase of 69%, with simultaneous growth in EBITDA margins to 30.1% from 18.3%
- US$6.0 million loan provided by Petraco Oil Company Limited repaid in full, including accrued interest, post the successful completion of the annual tanker shipment from Arcticneft
- New 18 month 300 million Russian Roubles (approximately US$4.6 million) revolving working capital credit facility with OJSC Sberbank of Russia
*Earnings before interest, taxation, depreciation and amortisation ("EBITDA") is a non IFRS measure which the Group uses to assess its performance.
Operational highlights for the year to date
- Total production during the period increased by 13% to 362,634 barrels (H1-2015: 321,587 barrels)
- Total daily production remained broadly flat, as expected, at 1,930 BOPD (average H1-2015: 2,004)
- Awarded the South Dagi development licence on Sakhalin Island in June 2016 following a State auction. The South Dagi licence has Russian State Registered reserves C1 plus C2, equivalent to 2P (proven and probable) approximately 17.7 million barrels
- Completed acquisition of Artic Oil Company Limited ("ANK"), in August, including production of 340bbls/day, 2P equivalent reserves of 16mmbbls and substantial future production economies for the Group
- Successful completion of the annual tanker shipment from Arcticneft of 28,441 tons of crude oil (an equivalent of 225,283 barrels)
- RK-Oil Limited and BVN Oil Limited successfully integrated into the Group's wider business and operations
Mr Shrager, Chairman commented: "The Company performed well in the first six months of the year, improving profitability and cash flow, which supports the Board's strategy.
On Kolguev Island, we have achieved a rapid integration of the recent acquisition of Artic Oil with AKN. This has led to increased daily production of 325 bbl/day and we expect a reduction in lifting costs as well. Through the acquisition, we now have a modern drilling rig and associated equipment sufficient for three years of operation, to add to our existing workover rig. We will now be able to make two rather than one shipment per year - the first in May and a second in September. This half year should therefore be the last in which our operations on the Island have accumulated large stock levels by the end of June, with the associated working capital requirements.
Over the last 12 months, taking advantage of our financial position, we have transformed the Company's reserve base through licence extensions and acquisitions of further licenses, from 50 million bbl 2P to approximately 100 million bbl 2P equivalent. The average cost of acquisitions have been approximately 9 cents US /bbl. We will commission a Competent Persons Report before the end of the year to update and confirm the numbers. We are preparing development plans for the new licenses for State Regulatory Approval, and anticipate that we will be able to increase overall production substantially. The pace of increase will depend on market conditions and thus our own cash generation, but in coming months we will investigate additional funding sources, aimed at potentially advancing the rate of production at individual operations. However, we remain cautious in the current environment."
For further information, please contact:
Urals Energy Public Company Limited
Andrew Shrager, Chairman
Leonid Dyachenko, Interim Chief Executive Officer
Sergey Uzornikov, Chief Financial Officer
Tel: +7 495 795 0300, www.uralsenergy.com
Allenby Capital Limited, Nominated Adviser and Broker
Nick Naylor / Alex Brearley
Tel: +44 (0) 20 3328 5656, www.allenbycapital.com
Copies of this announcement and the accounts for the six months ended 30 June 2016 will shortly be available from the Company's website www.uralsenergy.com in accordance with AIM Rule 26.