Falcon Energy's full-year net loss widens to US$121.2m from US$5m

MAINBOARD-LISTED offshore oil and gas contractor Falcon Energy Group's net loss widened to US$121.18 million for the year ended June 30, 2017 from a net loss of US$4.96 million in the preceding year.

Revenue slumped 56 per cent to US$106.82 million due mainly to a lower volume of works at the group's oilfield and drilling services division in FY2017, and lower deployment rate of vessels and drop in charter rates at its marine division.

Another factor for the worse bottom line was a US$133.15 million jump in allowance for impairment of assets to US$153.09 million in FY2017 from US$19.94 million in FY2016.

This was mainly because of higher provision for allowance for impairment of property, plant and equipment of US$86.81 million (mostly relating to vessels), and higher provision for allowance for doubtful receivables of US$58.48 million (of which US$48.63 million was related to the rigs business and US$9.85 million was related to other receivables write-off).

"Such provisions (were) made in view of the prolonged depressed oil and gas industry and long outstanding receivables," Falcon said in its results statement issued on Sunday.

Also dragging the bottom line was a US$3.82 million share of loss from associates and joint ventures in FY2017, contrasting with a US$3.47 million profit in the previous year.

Shareholders will not be receiving any dividend for FY2017, the same situation as the previous year.

Falcon's loss per share widened to 15.02 US cents in FY2017 from 0.61 US cent in FY2016. Net asset value per share fell to 16.24 US cents as at June 30, 2017 from 34.94 US cents as at June 30, 2016. The counter closed 0.3 Singapore cent lower at 6.9 Singapore cents on Friday (see amendment note).

The group said that the macro business environment remains challenging. "Crude oil prices have not shown indicative upward trend, and are still subject to the evolving dynamics between traditional production and US shale oil production," it added.

"Margins for vessel charter rates and fees for oilfield services are slim due to intensified competition and the increased bargaining power of clients."

Amendment Note: An earlier version of this story incorrectly stated that Falcon Energy closed 3 Singapore cents lower at 69 Singapore cents on Friday. In fact, the counter ended 0.3 Singapore cent lower at 6.9 Singapore cents on Friday. The article has been amended to reflect this.