Rex International to record 'significantly bigger' loss for 2014 from impairment

SINGAPORE - Catalist-listed oil exploration and production firm Rex International said on Wednesday (Jan 21) that it will record a "significantly bigger loss" for its financial year ended December 31, 2014, results which will be announced by March 1.

This is due to a lower implied valuation of Fram Exploration, a Norwegian company with rights to explore and develop oil in Colorado and North Dakota in the US.

Rex said the impairment decision was made "notwithstanding the potentially strong return" in Fram's US assets after considering the lower implied valuation of FRAM in this fund-raising round, the effect of the current downward trend of oil prices on the pay-back of the concessions, as well as the increased difficulty in getting further investments in the short term, when a full drilling programme is being developed

It added that the impairment of the carrying value of FRAM will have no effect on the company's cash flow or current operations.

Rex said that it will subscribe for about half of Fram's latest US$3.7 million fund-raising round, and its stake in Fram will increase to an estimated 30.3 per cent from 22.3 per cent previously.

In a separate release on Wednesday, Rex said that it has completed drilling three wells in Trinidad & Tobago and found two to be commercially viable. Drilling costs per well were below US$1 million, 40 per cent below what was budgeted.