Heritage's losses deepen

Oil and gas exploration and production company Heritage Oil saw losses from continuing operations widen in 2011 as it cranked up its capital expenditure programme.

The full year loss from continuing operations in 2011 was $63.0m versus $44.2m the year before, as cash capital expenditure rose to $134.9m from $119m in 2010.

The group still has plenty of cash, however, though by the end of 2011 it had diminished to $310.9m from $598.3m a year earlier.

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The cash total excludes $405m relating to the tax dispute the group is embroiled in with the Ugandan government following the sale of assets in that country. The group said that current cash levels are more than sufficient to cover the current work programmes for the rest of the year, and it is on the look-out for more value generating opportunities within its core areas of activity, namely Africa, the Middle East and Russia.

Petroleum revenue rose 80% to $9.0m in 2011 from $5.0m the year before, as sales volumes rose 25% to 671 barrels of oil per day (bopd) from 539 bopd in 2010. Production levels rose 24% to 673 bopd from 542 bopd the year before, while the average realised price per barrel surged 45% to $36.90 to $25.50.

"The price of Brent crude slipped in October to its lowest level for the year, as the debt crisis in Europe sapped confidence in the health of the global economy. Recent threats of supply disruption in the first quarter of 2012 have led to strengthening in the oil price again," noted Anthony Buckingham, Heritage's Chief Executive Officer.

"We are currently drilling a high-impact exploration well in Kurdistan and are reviewing results from seismic programmes that could provide direction for future growth in the portfolio. In addition to increasing our exposure to Tanzania, in blocks where we believe we have a technical and operational advantage, we acquired a controlling interest in Sahara Oil that has, we believe, made us extremely well positioned in Libya where we expect to play an important role in the oil industry," Buckingham added.

JH