KrisEnergy widens FY16 losses on higher expenses, impairment on Thai assets, write-off of assets

UPSTREAM oil and gas company KrisEnergy on Thursday morning reported that its financials swung further into the red for the full year, even as revenue more than doubled.

For the full year, net loss came in at US$235.3 million, compared with FY15's loss of US$41.6 million, due largely to higher costs, as well as the impairment on certain Thai producing assets and the write-off of exploration assets in Indonesia and Vietnam amounting to US$121 million and US$77.9 million, respectively.

The impairment expense was necessary as the group's exploration and evaluation assets and oil and gas properties will be continually subject to impairment in a low oil price environment, KrisEnergy said in filings to the Singapore Exchange.

It added: "In line with the group's financial and operational restructuring strategy, the board agreed to relinquishment (of) the East Muriah production sharing contract (PSC) and the Kutai PSC, both in Indonesia, and Block 105-110/04 offshore Vietnam, which led to a US$77.9 million write-off. The relinquishments of all three concessions are pending government approval."

Revenue came in at US$142.8 million, up from US$60.2 million a year ago, due to the increase in crude oil sales from the Nong Yao and Wassana fields, and increase in gas sales from Bangora field and B8/32 & B9A complex, despite the fall in average realised sales prices.

Operating costs more than doubled to US$81.8 million in FY16, from US$30.5 million in FY15, in line with full-year revenue from the Nong Yao and Wassana fields. This was also because depreciation, depletion and amortisation (DD&A) charges rose to US$104.5 million in FY16 from US$42.4 million in FY15 as a result of higher production compared to the 2015 period.

Loss per share grew to 15.7 US cents, up from 3.4 US cents a year ago.

Finance costs went up to US$33.3 million in FY16 from US$19.5 million in FY15 due to higher bank loan interest, the extension and transfer of the company's revolving credit facility (RCF) and various advisory and legal fees. Total borrowings as at end-December 2016 were US$416.96 million, comprising the US$148.3 million RCF and the RCF bridge upsize drawn at US$40 million, the S$130 million notes due in 2017 and the S$200 million notes due in 2018.

The group said in January 2017 that it completed the restructuring of the 2017 and 2018 unsecured notes and extended the note maturities by five years to 2022 and 2023, respectively.

"In addition, the company completed a preferential offering whereby 139.5 million senior secured seven-year zero coupon notes and 1.26 billion detachable equity warrants were issued and allotted by the company on Jan 31, 2017, raising gross proceeds of S$139.5 million. Following the preferential offering, as previously disclosed as the use of proceeds, the company repaid the outstanding drawn amounts of US$40 million and cancelled the US$50 million RCF bridge upsize, as well as repaid US$25 million of the RCF."