Phoenix Global Resources Revenue Up On Pricing But Expenses Keep Pace
LONDON (Alliance News) - Phoenix Global Resources PLC said its revenue increased 25% in 2018 on strong oil prices, but expenses rose at the same pace as it continued to develop its Argentinian projects.
Shares in Phoenix Global were up 5.9% at 27.00 pence on Wednesday.
The Argentina-focused upstream oil and gas company said its revenue for the year was USD177.0 million, 25% higher than USD141.8 million in 2017.
Its realised price per barrel of oil equivalent before hedging was USD50.24. Within this figure, oil was USD59.2 per barrel. This compares to a realised oil price in 2017 of USD55.88 per barrel.
In January 2018, Phoenix Global entered a swap agreement with Mercuria Group to protect a portion of its production at a price of USD65.97 per barrel. This hedge was intended to underpin Phoenix Global's 2018 capital expenditure programmes as well as renewed funding arrangements with Mercuria.
The swap contract expired in December 2018, and Phoenix Global does not currently have any hedging instruments.
Capital expenditure rose significantly in 2018, up 57% to USD130.2 million from USD82.8 million as it progressed its projects. For example, in the second half of 2018, the company drilled eight wells at its Puesto Rojas block in Argentina. Phoenix Global is seeking to add up to eight additional unconventional vertical wells in 2019.
Phoenix Global also plans to complete the initial horizontal wells at the Argentinian Mata Mora project within the first half of 2019, plus a further four possible extra wells in the second half depending on well test results.
It also increased its convertible revolving credit facility by USD25.0 million in December. Post year-end, in February, the loan was increased by another USD50.0 million and now stands at USD235 million.
Phoenix Global Chief Executive Anuj Sharma said: "After the successful initial results from our completions campaign at Puesto Rojas, the company now plans to move towards the development of the folded Agrio formation using unconventional vertical wells. At Mata Mora, evaluation of the Vaca Muerta formation continues with further horizontal wells planned for H2 2019 pending the outcome of the initial two wells and based on the success that other operators have experienced on neighbouring blocks."
Sharma Added: "As we now move to appraisal and development plans in multiple unconventional targets, including the Vaca Muerta and Agrio formations, we look forward to updating shareholders on results of the horizontal wells at Mata Mora when the completions phase has concluded, and the production potential of the wells has been determined."
By Anna Farley