Salamander Energy may have swung into the blue on the pre-tax profit level in 2011, but the production rates fell as the oil and gas group reorganised its portfolio during the year to focus more of its core geographic areas.
The group recorded a pre-tax profit of $112.6m in the 12 months ended December 31st, much better than the $113.7m loss reported the year before, but well under consensus estimates of a round $159m.
Meanwhile, revenues jumped from $323.4m to a record $408m, but this also missed consensus forecasts of $464m.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Average daily output in 2011 fell to 18,600 barrels of oil equivalents per day (boepd), compared with 20,300 boepd in 2010. This is expected to fall further in the current year, to 12,000-13,000 boepd, due to the sale of the ONWJ and SES production sharing contracts (PSCs). Salamander assured that volume disposals were of low margin, high tax, high cost, and produced from fields in long-term decline.
The group assured that production rates should exceed the 20,000 boepd mark once again in 2014 due to increased volumes from the Bualuang field and the start of production from the Kerendan and South Sembakung developments.
During 2011, 2P reserves (proven plus probable) increased by 13.6% from 66.3m barrels of oil equivalents (MMboe) to 75.3MMboe.
"2011 was an important year for high-grading the portfolio and refining our strategy. We have also materially grown our reserve base through both successful exploration and commercialising gas resources, and are now reporting record levels of revenue, cash flow and pre-tax profit," said Chief Executive James Menzies.
No dividend was paid in respect of 2011 and the company said that it does not intend to pay one for the "foreseeable future".
In a separate statement, Salamander announced that it has spud the Tuting Alpha-3 appraisal well at the Bontang PSC, Indonesia. The Tutung discovery is a gas-condensate accumulation with a mean resource volume estimated at 60 Bsf. Flow rates of 10-15m standard cubic feet per day have been tested at other wells on the structure.
BC
