Prospex operating loss widens as development continues

Investment company Prospex Oil and Gas announced its final results for the year ended 31 December on Wednesday - another year in which it recorded nil revenue, and widened its operating loss to £0.78m from £0.6m in the prior year.

The AIM-traded firm still made a profit before tax of £1.57m, however, after accounting for financial assets at fair value through profit and loss, swinging from a loss of £0.5m in the 2015 year.

Its board said it spent the period delivering on its strategy to build a “leading oil and gas investment company” focused on high impact European opportunities with short timelines to production.

During the year, the company acquired a 49% stake in Hutton Poland, which owns 100% of the 1,150 sq km Kolo Licence, onshore Poland.

A $4.8m (£3.9m) valuation was assigned to its investment in Hutton Poland as at the year end, which compared to the overall cost of investment including Prospex's share of dry hole drilling costs of approximately £1.6m.

The company identified a number of prospective targets on the Kolo licence, including the Boleslaw Prospect which was drilled in Q4 2016.

It retained a “strong” cash position of £0.4m, with £2.52m raised during the period and £0.85 since period end.

The board reported a continued focus on corporate overheads to ensure as much of the company's funds as possible were invested in value adding activities, and said it was evaluating multiple investment opportunities that met the management's investment criteria.

“Prospex is led by a management team focused on replicating the success it has had in generating value within the oil and gas sector,” said managing director Edward Dawson.

“We have a tried and tested strategy of identifying and acquiring overlooked assets; using advanced technologies and techniques to define new prospects; and taking part in well executed drilling operations.”

Dawson said the key was investing in the right assets on the right terms in proven and accommodating hydrocarbon jurisdictions.

“We are currently assessing a number of highly prospective projects which fit this bill and are hopeful that we will secure at least one of these in time to deliver on our target to drill a well later this year.”