Volga Gas revenues fall as its reserves shrink

The AIM-traded firm said its gross revenues fell 5.3% to $37.1m, while netback revenues after export taxes and transport costs were off 1.5% at $34.8m.

EBITDA was down 9.1% to $8.8m, while EBITDA per barrel of oil equivalent sold improved 26.7% to $5.13.

Profit before tax was $0.17m, down significantly from the $1.2m reported a year ago.

Volga’s operating cash flow before working capital movements slipped to $9.1m from $10.4m, in line with EBITDA.

Total cash stood at $8.6m as at 31 December, falling from $19.7m at the start of the year, after the company utilised $12.6m for capital expenditure and paid $5m in equity dividends.

Total borrowings comprising bank debt at year-end were unchanged at $4m.

“We are pleased to have delivered on the two key projects - Redox gas sweetening and LPG - that are expected to enhance the profitability of our gas and condensate production in the medium and long term,” commented Volga executive chairman Andrey Zozulya.

“Management looks forward to achieving the targets to improve the profitability and sustainability of the business for the longer term and to delivering returns to our shareholders.”

Zozulya said that it was “disappointing” to report a decrease in the group's recoverable reserves.

“Management is looking into technical and operational solutions including conducting well interventions on the VM field, workovers and reperforations of the well bores to mitigate future formation water production and restore maximum gas production and the extraction of reserves in place.

“We will provide further updates as this work progresses.”

The company remained “excited” about the group's assets, Zozulya added, and reportedly remained positive about the potential for production from its fields and the potential to discover additional fields in its licences.

“We will also continue to seek value accretive opportunities, beyond our existing licence areas, building a focused exploration and production business.”