Rex International H1 2022 net profit tanks 78% on production stoppages and tax expenses

REX International’s net profit for the first half of 2022 came in at US$6.04 million, plunging 78 per cent from its net profit of US$27.7 million a year ago.

Releasing its 6-month financial results ending Jun 30 after market closed on Friday (Aug 12), the oil company said that the decrease in profit after tax was mainly due to the addition of production costs in the Brage Field, an oil field off Norway, as well as continuing production costs amid production stoppages in the Yumna Field, an oil field off Oman.

Another factor weighing on net profit for the first half of 2022 was tax expenses amounting to US$12.83 million. These were mainly from an increase in deferred tax liabilities arising from the increase in oil and gas properties, as well as exploration and evaluation assets in Norway, which was partially offset by tax refunds of exploration costs incurred in Norway.

In comparison, Rex International recorded a tax credit of US$2.45 million in the first half of 2021 in relation to tax refunds of exploration costs incurred in Norway.

However, revenue for the group increased 31 per cent to US$99.5 million from US$75.8 million over the same period.

The increase in revenue was due to the inclusion of oil liftings from the Brage Field from January 2022, as well as an increase in the average realised oil price sold from US$62 per barrel in the first half of 2021, to US$83 per barrel over the same period this year for the sale of crude oil from the Yumna Field.

The increase in revenue was offset by a decrease in the volume of oil lifted and sold from the Yumna Field in the first half of 2022, due to production stoppages for the planned major change-outs and upgrades made to the production facilities from February 2022 to April 2022, and unforeseen operational issues in June 2022. 

Earnings before interest, taxes, depreciation and amortisation came in at US$41.3 million.

Dan Broström, executive chairman of Rex International, said that the group remained profitable despite a decrease in the number of oil liftings in Oman, as a result of unforeseen prolonged production stoppage in the Yumna Field, at which production has since resumed.

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“These developments underscore the importance of and affirm the group’s strategies on prudent capital management and the move to geographically diversify its portfolio of producing assets to mitigate risks, as well as to continue with new drilling campaigns with potential to add to the group’s reserves and resources.”

He added that Lime Petroleum has been actively looking for new acquisitions in Norway and is acquiring a 10 per cent interest in the producing Yme Field, another oil field in Norway.

Pantai Rhu Energy is also working on development plans for the two clusters in Malaysia, and a drilling campaign is planned for Oman in the last quarter of the year, after the monsoon season.