EPS: -0.56 US Cents (first half of 2014)
NTA: 15.65 US Cents
Business Review
No revenue was recorded in both 2Q FY2014 and 2Q FY2013 as the Group was primarily involved in exploration and drilling activities. The share of loss in relation to Caribbean Rex, HiRex and Rexonic in 2Q FY2014 were predominantly due to expenses incurred in relation to well stimulation, exploration and
drilling activities.
Non-current assets increased to US$98.54 million as at 30 June 2014, from US$82.50 million as at 31 December 2013. The increase was largely due to 1) capital injections into Lime and Caribbean Rex of US$12.74 million and US$2.57 million respectively over the six-month period, partially offset by share of loss in the jointly controlled entities of US$3.68 million, and 2) purchase of an available-for-sale investment in North Energy ASA of US$3.84 million, which was subsequently marked to market at US$4.41 million as at 30 June 2014.
The Group had working capital of US$72.85 million as at 30 June 2014, as compared to working capital of US$94.33 million as at 31 December 2013, a decrease of US$21.48 million. The decrease in working capital was largely due to capital injections into jointly controlled entities of US$15.31 million, purchase of available-for-sale investment of US$3.84 million and general working capital of US$3.18 million.
Company Outlook Comment
Barclay’s “Global 2014 E&P Spending Update” report said that oil and gas companies will increase exploration and production (E&P) spending by 6 per cent to US$712 billion in 2014, despite a slight pullback in spending by industry majors. Barclays said it expected higher spending in Africa and Asia this year, but lower capital budgets in Europe and Latin America would limit the overall increase. The report is based on a survey of more than 300 oil and gas companies in May 2014.
The Group is continuing its five-well onshore drilling programme in Trinidad into the third and fourth quarters of 2014. It is also on track with its plans to undertake extended well testing and early production in the Block 50 Oman concession in the first half of 2015. Active discussions on other business opportunities continue to be in progress and the Company will make the necessary announcements as and when there are material developments.
My Notes
This is high risk investment as the company is still in the growing stage (drilling stage before production stage). I would need to do more homework to understand the business model of this company.
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