Loss widened by 21.0%. 3.540M Pounds 2015 vs 2.925M Pounds in 2014.
Loss mainly due to:
1) Finance charges of 1.327M Pounds in H1 2015 vs 0.148M Pounds in H1 2014, of which 0.730M Pounds was due to the unrealised fair value loss pertaining to the BNP loan facility.
2) Forex loss of 0.848M Pounds in H1 2015 vs 0.406M Pounds in H1 2014.
Excluding these two amounts, Loss was 1.912M Pounds in H1 2015 vs 2.519M Pounds in H1 2014.
EPS of (0.09) Pence in H1 2015 vs (0.11) Pence in H1 2014. The lower loss per share was due to the dilution of shares which negate the impact of a wider Net Loss.
On the plus side, Admin Expenses fell 23.4% from 3.233M Pound sin H1 2014 to 2.475M Pounds in H1 2015. This may signify that LGO is cutting costs in view of the lower oil price.
Current Ratio 1.50. However its Trade Payables were more than its Trade Receivables by a ratio of 2.1 to 1.0. This could impact upon LGO's current cash position.
Debt to Equity Ratio 0.65
Gearing 0.20. I've added in Gearing to further gauge the extent of Borrowings vs the Total Assets.
Important notes:
1) In view of the low oil price environment management to ensure that an optimum management strategy is implemented based on the extensive well testing undertaken.
2) Medium term guidance of 1,500 bopd from 2,000 bopd due to the low oil price.
3) Company has no intention to further draw down the loan facility from BNP as it is not beneficial in a low oil price environment.
4) In Q3, submitted application to extend LGO's licence in the Ayoluengo Field to Spanish authorities.
5) Well GY678 encountered obstruction at 1,800 feet which prevented the well from being completed. Company will assess options to do a side track.
6) In order to provide data on the Goudron Sandstone Well GY672 has been recompleted at the Goudron Sandstone delivering 60 bopd.
7) 10 locations had been identified to commence drilling, targeting the Goudron Sandstone.
Key Targets for H2 201
1) Complete and bring on to production all seven 2015 C-sand wells at the Goudron Field.
2) Manage Goudron production for maximum long-term value, by preserving reservoir integrity and developing the necessary infrastructure to facilitate growth as needed.
3) Managing the business with low operating costs to provide a platform for economic growth despite continued low oil price.
4) Progress the Cedros Peninsular interests in Trinidad to ensure medium-term growth is maintained and long-term value is created
5) Maintain the Spanish assets for value in advance of the granting of the extension of the La Lora Concession
6) Seek further opportunities to expand the portfolio within the existing strategy, to provide longer-term diversified growth
LGO's share succumbed to heavy short selling upon the release of the H1 2015 results, mainly because of the obstruction encountered in GY678 where many had placed hope that it would boost production.
In the meantime, it is best to abstain from any purchase or averaging down as it would mean locking in your capital for a longer duration due to the low oil price environment.
My disclosure: I own shares of LGO.
No comments:
Post a Comment