Kris Energy’s quarterly loss deepens

KrisEnergy Ltd., an independent upstream oil and gas company, recorded a rise in revenue for the first quarter of 2014, but its net loss increased too.

Revenues in the first three months of 2014 rose 5.5% to US$21.2 million compared with the three months ended 31 March 2013 (“1Q2013”) as a result of a near tripling in working interest production to 8,097 barrels of oil equivalent per day (“boepd”) following the addition of the Bangora gas field in Bangladesh for which KrisEnergy completed the acquisition in December 2013.

Gas sales revenues increased 82.2% to US$7.6 million due to the higher Bangora gas volumes from Block 9, but revenues from sales of oil and liquids decreased 14.2% to US$13.7 million.

Average realised selling prices for oil and liquids in the first quarter from the B8/32 and B9A fields in the Gulf of Thailand and Block 9 were slightly lower at US$108.04/barrel (1Q2013: US$112.03/barrel) in line with trends on the global commodity markets. The gas price realised from the Thai fields was also softer at US$6.19/mcf (1Q2013: US$6.25/mcf), while the sales price for Bangora gas remained fixed at US$2.32/mcf.

Higher production and lower operating costs (1Q2014:US$3.6 million vs 1Q2013:US$3.9 million) led to a significant reduction in lifting costs at US$4.96 per barrel of oil equivalent (“boe”) in 1Q2014from US$14.52/boe in 1Q2013. Cost of sales rose 14.8% in the first quarter compared to 1Q2013 as a result of higher depreciation, depletion and amortisation (“DDA”) charges, which were largely attributed to Block 9 where the Company recorded US$1.5 million in DDA expense from a full quarter of operations in Bangladesh.

Earnings before interest, taxation, depreciation, amortisation, geological and geophysical expenses and exploration expenses (“EBITDAX”) amounted to US$9.8 million, a decline of 9.3% from 1Q2013 but up from US$5.5 million in the fourth quarter 2013, in line with higher general and administrative expenses from the cost of the newly integrated operations in Bangladesh as well as increases in headcount in Indonesia and Thailand as the Company ramps up development activities.

Net loss

KrisEnergy recognised a net loss after tax of US$18.0 million in 1Q2014 primarily as a result of a one-off recognition of adjustments and costs associated with the full redemption on 30 January 2014 of  the 10.5% US$120 million senior guaranteed secured bonds due July 2016, which amounted to a non-recurring non-cash adjustment loss of US$6.1 million and finance costs of US$5.9 million.

In March, KrisEnergy secured a US$100 million revolving credit facility (“RCF”) maturing in March 2016 with an option to extend for one year and to increase to a maximum US$140 million as proved plus probable (“2P”) reserves are added into the portfolio.

Keith Cameron, Chief Executive officer, said: “We continue to maintain a high level of activity across our asset portfolio and in all countries in which we are an operator. Our production so far this year has surpassed expectations and it is particularly pleasing that Bangora is performing so well at about 110 mmcfd. We are building our teams in Thailand and Indonesia as we progress our development projects with significant attention to health and safety, and we continue our organic growth with the addition of three exploration blocks, two as operator, at the start of the year. Although the net loss after tax deepened in the first quarter period, this was entirely expected as balance sheet management remains core to our strategy and the redemption of the senior secured bonds and securing the new RCF has reduced our financing costs and hence our cost of debt and leaves us far more flexibility going forward to manage and optimise our capital structure for growth.”