Caspian Sunrise PLC on Monday posted a higher loss for 2021 as it paid an impairment cost it did not have in 2020, but touted prospects of future dividends.
Caspian Sunrise shares were 14% lower at 4.41 pence each in London on Monday morning.
Pretax loss widened to $4.8 million from $1.7 million in 2020. Revenue rose to $25.0 million from $14.3 million but was countered by an impairment cost of unproven oil & gas assets of $12.5 million versus nothing in 2020. Selling expenses grew 94% to $7.6 million from $3.9 million.
Despite this, Chair Clive Carver said the London-based Kazakhstan-focused oil & gas exploration and production company expects to declare its first dividend later this year. On June 22, the company cancelled its share premiums and deferred shares to ‘create positive distributable reserves and remove the last technical block to the future declaration of dividends’.
The company is impacted by the sanctions on Russia: ‘As with much of Kazakh oil production our oil is transported to international markets via the Russian pipeline network, emerging as ’Urals oil’ as our oil was until very recently termed once mixed with Russian oil. While we have not experienced any significant issues in delivering our oil, recent prices for Urals oil have been some $25 to $35 per barrel below Brent prices.’
It added: ‘We firmly believe the Russian pipeline network will remain available to transport our Kazakh oil, however if that were not to be the case, or if the discount to Brent of our oil significantly widens, we would seek alternative distribution options avoiding Russia.’
However, as the Kazakh economy is closely linked to Russia’s economy, Caspian says if Kazakhstan’s currency tenge weakens against the US dollar, it would lower operating costs as the firm reports in US dollars. They account for about 50% of the company’s total costs, Caspian explained.
‘We do not expect the current discount for Urals oil to apply to our oil for much longer,’ Chair Clive Carver said. Regarding alternative energy, he said: ‘The economics of alternative energy are now markedly better. We are therefore looking over time to become a diversified energy group rather than one focused solely on oil. In particular we are looking at wind energy projects.’
‘A drilling charter for the Caspian Explorer in 2023 would also make a material difference to the group’s trading. However, the greatest impact on the value of our company would be success at our BNG deep structures,’ Carver added.
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