Lower production levels, a disposal of several operations and an impairment charge knocked pre-tax profits at FTSE 250-listed upstream oil and gas producer Salamander Energy, full year results have shown.
In the year ended December 31st, the group reported a profit before tax of $10.8m (£7.23m), down 90% from the previous year following exploration expenses of $51.1m (£34.19) and impairment charges totalling $23.2m (£15.46).
Headline revenue contracted by 10% to $368m (£246.32) and this widened to 25% when adjusted for inventory movements.
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Production fell 42% to 10,800 barrels of oil equivalent per day during the year, down from the 18,600 boepd recorded in 2011. This was partly a result of Salamander's late 2011 disposal of its operations in Offhore Northwest Java and Southeast Sumatra combined with a continued decline in production from the Kambuna field.
The group said that the strategic repositioning focused capital towards areas of significantly higher-margin production within Thailand.
Pre-tax operating cash flow fell by only 14% to $255.6m, the figure being cushioned by a continuing trend of cash margin growth, with unit post-tax operating cash flow expanding by 40% to $40.22 per barrel.
Although revenue was down, it exceeded analysts' forecasts. Analysts had predicted revenue for the year would be recorded at £210.53m.
Key operational highlights included the group's Bualuang Bravo platform being installed, 16 well development drilling campaigns being on-going and current field production at 11,500 barrels of oil per day.
While much of the global macroeconomic agenda continued to be dominated by the fallout from the credit crisis and instability in the Eurozone, the group reported that Asian economies had fared better, largely continuing on their established growth trajectories.
Healthy levels of domestic growth were fuelling an increase in demand for power, supporting gas prices in Salamander's end user markets, the group reported.
In Indonesia, gas prices more than doubled over the past five years and data from the International Monetary Fund has indicated that GDP growth will be around 6% in 2013 in Thailand and Indonesia - Salamander's main countries of operation.
James Menzies, the Chief Executive Officer of Salamander Energy, said: "In 2012 the group successfully prepared the technical and operational ground for 2013. We raised new debt and equity that has enabled us to accelerate our work programmes, signed long-term rig contracts, installed the Bualuang Bravo platform and matured the prospect inventory ahead of an extensive exploration drilling programme.
"In 2013, we are looking forward to production growth, rising cash flows and a multi well-exploration programme that offers shareholders exposure to multiple catalysts across the full exploration and production cycle."
Salamander Energy's share price was up 0.90% to 201.20p at 08:35 on Thursday.
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