Circle Oil Swings to Net Loss On Writeoffs, Lower Oil Price

By Alex MacDonald

LONDON--Circle Oil PLC (COP.LN) said Monday it swung to a net loss last year due to exploration writeoffs and a significantly lower oil price, which prompted the company to review its cost base and consider selling stakes in assets to fund operations.

The U.K.-listed oil and gas explorer, which has interests in Morocco, Tunisia, and Egypt, reported a net loss of $54 million for the year ending Dec 31, 2014 compared with a net profit of $29 million in the same period a year earlier. This reflected a 9% drop in revenue to $85 million largely due to lower oil prices and exploration write offs of $57 million largely focused in Oman and Tunsia. It also recorded a $14 million impairment charge on its NW Gemsa permit in Egypt.

In Morocco, gross gas production was 6.46 million cubic feet per day, broadly similar to last year, although gross oil production declined to 10,026 barrels of oil per day from 10,443 barrels of oil per day due to the maturing NW Gemsa fields in Egypt.

"Cost overruns on both the Mahdia Block and on Block 49 in Oman, have resulted in Circle undertaking a thorough review of its cost base and capital expenditure commitments," Chairman Stephen Jenkins said.

The company will continue to grow its portfolio of assets this year and has plans to drill three new wells in Egypt in order to maintain production, Mr. Jenkins said. It also plans to drill at least another three wells in Morocco this year.

The company had net debt of $59 million at the end of May, up from $38.69 million at the end of the year.

Circle's shares are up 10% since the beginning of the year at 13.25 pence a share, resulting in a market capitalization of 75 million pounds ($114 million).

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