KrisEnergy logs US$31.6 million net loss in Q3; announces restructuring plans

Oil and gas producer KrisEnergy sank into the red in the third quarter, recording a net loss of US$31.6 million, from net profit of US$9.5 million in the same period last year.
Oil and gas producer KrisEnergy sank into the red in the third quarter, recording a net loss of US$31.6 million, from net profit of US$9.5 million in the same period last year. PHOTO: : KRISENERGY LTD

SINGAPORE - Oil and gas producer KrisEnergy sank into the red in the third quarter, recording a net loss of US$31.6 million, from net profit of US$9.5 million in the same period last year.

Revenue for the three months ended Sept 30 more than tripled toUS$44.4 million from a year ago as production in the period increased 68.4 per cent.

However, this was accompanied by a surge in operating costs to US$33.6 million, from US$6.6 million in the corresponding period a year ago, partly due to the full-quarter contributions to production from the Wassana and Nong Yao fields.

Higher production also resulted in a jump of 87.2 per cent in depreciation, depletion and amortisation charges.

Loss per share was 2.1 US cents for the quarter, from 0.8 US cents a year ago. Net asset value per share was 28 US cents as at Sept 30, from 33 US cents as at Dec 31.

The company also announced on Thursday that it is restructuring its finances and operations in light of lacklustre industry conditions. It had said in August that its debt covenants may come under stress amid deepening oil industry woes, and that it is exploring equity issuance, refinancing and asset sales to strengthen its capital structure.

"Although we saw a slight improvement in market conditions in the third quarter from the first half of 2016, the oil and gas environment remains challenging. Oil prices in the fourth quarter to date have been on a slightly firmer footing but sentiment is uncertain," said interim chief executive officer Jeffrey MacDonald.

Firstly, the company said it will increase its focus on development and production in the Gulf of Thailand, an area of particular expertise for the group. It operates three concessions in the Gulf of Thailand containing near-term oil developments, giving it more control in terms of timing, development concept and allocation of capital.

It will still retain some high-impact exploration assets for future development when oil prices have stabilised and recovered from today's levels, said interim chief executive officer Jeffrey MacDonald.

The company will also seek the approval of bondholders to exchange their existing notes for new senior unsecured notes. These new notes will have maturity dates five years longer than the existing notes being exchanged, and a fixed interest rate of 4 per cent per year. They will also include terms which restrict the company from incurring debt unless certain conditions are satisfied.

If successful, these moves will stabilise the company's capital structure, reduce short-term cash debt service obligations and give it greater liquidity, KrisEnergy said in its statement.

The company will be convening an informal meeting with bondholders on Nov 9 to discuss these plans.