WestSide Revenues Up 19 Pct (Australia)

WestSide Corporation announced that it expects to report a loss of $21.9 million for FY2013 after taking write downs totalling $8.9 million against the carrying values of the Company’s Galilee Basin exploration interests and its drilling rig.

The result compares to a loss of $7.8 million in the previous year which included a profit of $3.7 million from the divestment of the Company’s Indonesian assets.

WestSide Executive Chairman Mr Angus Karoll said despite the past year’s disappointments, the Company was poised to benefit from higher forecast gas prices within 18 months as global LNG pricing begins to influence Australia’s east coast gas market.

“The failed PetroChina transaction hindered the Company’s growth plans during the year, however, within a month of their withdrawal the Board had completed a strategic review of WestSide’s business and initiated an organisational restructure to cut costs and sharpen the Company’s development and production focus,” he said.

“This action has already started to deliver results, evident from a 14 per cent increase in average daily gas sales since June and commissioning of an external validation of the Meridian field development plan to underpin execution of new gas sale agreements.”

WestSide is currently pursuing new gas sales agreements to replace existing contracts which will phase-out by 2015. These new sales agreements are expected to be secured at gas prices significantly higher than current contracts.

“The emerging market dynamics strongly favour WestSide as an independent Coal Seam Gas producer, with its large uncontracted 2P (Proved and Probable) reserves position at Meridian, spare infrastructure capacity, and proximity and access to markets via our connection into the Queensland Gas Pipeline,” Mr Karoll said.

Total revenue in FY2013 was up 19 per cent at $10.5 million (2012: $8.8m) reflecting a 29 per cent increase in revenue from WestSide’s share of Meridian’s gas sales to $7.7 million from $5.9 million in 2012.

WestSide’s share of gas sales volume for FY2013 was up 7.2 per cent to 1,935 TJ from 1,805 TJ the previous year, driven by a 10 per cent improvement in gas production at Meridian. The increase in sales volumes was achieved despite a significant fall in available third party gas and the curtailment of production from 10 wells taken off line in November 2012 in preparation for the Advanced Treatment Trial.

Mr Karoll said a review of WestSide’s portfolio of assets had resulted in the Company making the decision to write-down the carrying value of its interests in the Galilee Basin by $4.5 million to nil and its drilling rig assets by $4.4 million to reflect market value.

The distance between the Galilee Basin tenements and commercial gas markets, when viewed in conjunction with the geological challenges and environmental restrictions of the region, raised sufficient uncertainty as to the likelihood of commercialising the resource. The recent slump in global coal prices had also resulted in a significant downturn in the local drilling market, impacting the value of the drilling rig.

A comparison of the Company’s underlying performance in FY2013 with FY2012 is useful in understanding the operational performance and shows an improvement in the operational result from 2012.

After stripping out the impacts of items such as the asset write-downs, the prior year gain on disposal of the Indonesian assets and takeover-associated costs, the Company’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) loss for FY2013 was actually $0.4 million less than that of FY2012 as shown in the table below.

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LNG World News Staff, August 28, 2013; Image: WestSide