Volga Gas' profits leap after sales volumes improve

Volga Gas' shares climbed after the company said the construction of a new unit and higher annual sales volumes drove revenues and profits higher.

For 2018, the oil and gas exploration and production group reported a 6% increase in sales volumes compared to the year before, rising from 4,667 boepd to 4,956 boepd, which sent revenue up by 24% to £45.9m and profit before tax up from £0.2m to £10.3m.

The AIM traded company also completed the construction of a new unit at the Dobrinskoye gas plant to capture liquid petroleum gases (LPG) from the gas and condensate stream, with the project reaching completion in April of last year and production commencing the following month.

Andrey Zozulya, chief executive of Volga, said: "We are pleased to have delivered on the two key aims; improvement in operational reliability of the Redox gas sweetening and construction of the LPG extraction plant. These have already delivered a higher level of production that is expected be sustainable in the medium to long term. The improvement in profitability achieved in 2018 exceeded management's expectations and, in a stable oil price environment, would be sustainable."

Average production increased 4% to 5,144 boepd as average production from the VM and Dobrinskoye fields was 4.4% higher than the year before at 4,537 boepd.

Volga finished the year with cash and cash equivalents of £15.2m, up from £8.6m at the same point the year beforehand, while the board recommended a final dividend of $0.09 per share on top of the $0.06 per share interim dividend, up from a total dividend of $0.062 the year before.

Between January and March of the current year, production averaged 6,117 boepd, though this is expected to drop slightly in the coming months due to maintenance works.

"We remain excited about the group's assets and remain positive about the potential for production from our fields and the potential to discover additional fields in our licences. We will also continue to seek value accretive opportunities, beyond our existing licence areas, building a focused exploration and production business," said Zozulya

Volga Gas' shares were up 5.05% at 52.00p at 0911 BST.