🕐08.03.10 - 00:35 Uhr

Mosaic Oil [ASX: MOS] - First Half FY10 Results and Outlook



Company Announcement
1
Mosaic Oil (ASX MOS) First Half FY10 Results and Outlook
8 March 2010
Highlights
• 11.3% increase in total production to 255,329 BOE for the half
• Strong balance sheet with cash of $21.4m and no debt
• Focused efforts on development of Churchie and Waggamba fields with
fracture stimulation operation planned for Churchie-1 well in March 2010
• 1H FY 2010 year net loss after tax of $4.358m after exploration write downs
of $4.696m
• Production is forecast to exceed 500,000 BOE for FY2010
Australian oil and gas producer, Mosaic Oil NL (ASX: MOS) today announced first
half FY 2010 net loss after tax of $4,358,000 after impairment charges consisting of
exploration write downs of $4,696,000.
The second quarter financial performance was a significant improvement on the first
quarter and overall the Company is in a strong financial position with over $21 million in
cash.

Production was slightly higher than the previous two half year periods despite the
customer related interruption to production in the September quarter.

During the rest of
the financial year, the company plans to focus on development drilling in the Surat-
Bowen Basin to increase revenue and profits in the 2H FY 2010 and beyond.
Mosaic Oil CEO Mr Alex Parks said that "The Company had delivered higher overall
production and sales of natural gas in the half but lower oil/condensate
production/revenue compared to the two previous half years.

We believe we can
continue to increase our production in the current year with further increases in FY
2011."
"In its Surat-Bowen acreage, Mosaic Oil has significant quantities of gas and
condensate discovered but yet to be fully appraised and developed, in particular in the
Churchie and Waggamba fields.

The company"s immediate term focus will be on
commercialising these fields before further exploration is undertaken in the area."
Mr Parks said "The first operation will be the fracture stimulation of the Churchie-1 well
in March after the current heavy flooding around Roma and Surat has subsided.

Once
the initial results of the frac" stimulation are known, which we expect to be positive, our
2010 drilling plans will be finalised and development will be fast-tracked."
Company Announcement
2
Mr Parks said that the exploration write downs are a reflection of this adjusted strategy
and the amount relates largely to the decision to withdraw from block ATP608P, and
significantly write down the carrying value of block ATP 709P and the well costs from
Freneau-1 and Rockhampton High-1.
Exploration write downs
The exploration write downs are the result of a major asset review initiated by CEO Alex
Parks after joining the company in August, 2009.

Mr Parks said that the exploration
write downs are a reflection of a new strategy and direction for the Company and the
amount relates largely to the decision to withdraw from block ATP608P, and
significantly write down the carrying value of block ATP 709P and the well costs from
Freneau-1 and Rockhampton High-1.
"Between seismic and drilling, Mosaic Oil could have been required to invest well over
$1 million more into ATP608P, a project that no longer meets our strategic objectives or
fits within a risk profile we are comfortable with for the region," Mr Parks said.

"The other
exploration block ATP709P is contiguous with our other acreage and whilst it is
potentially still prospective, we recognise that unless we are going to actively spend
money on exploring these prospects, we are not going to discover any oil or gas there,
so we will not be recovering the carrying value on our books.

The Board therefore
determined that the appropriate decision was to take a write down."
The Company regularly reviews the carrying value of its exploration and development
assets but anticipates that additional exploration write downs for its Surat-Bowen
exploration assets will be minimal for the second half.
Results
The Results for the half and proceeding periods are summarised in the table below:
Mosaic Oil NL
for the six months ended 31-Dec-08 30-Jun-09 31-Dec-09
Production BOE 229,229 251,725 255,329

000

 

000

 

000
Total revenue 13,117 12,712 11,305
EBITDAX1 5,304 3,317 1,473
Depreciation & Amortisation 741 1,077 1,108
Impairment write downs 1,446 1,048 4,696
NPAT 3,117 (507) (4,358)
Cash 15,270 13,754 21,424
Debtors 3,211 5,170 4,518
1.

Earnings before interest, income tax, depreciation and amortisation and impairment
Company Announcement
3
Revenue
Revenue was down in the current half by comparison to the same period in FY2009
when oil prices were significantly higher.

The 1H FY2010 result reflects the higher
overall production and sales of natural gas in the half but lower oil/condensate
production compared to the two previous half years.

The new Taylor 22 well contributed
strongly to the higher gas production, but no new oil wells were drilled in 2009 to
maintain the oil production rate.
Cash - $21.4m and Debtors - $4.5m
The Company has a strong balance sheet with $21.4 million cash and no debt apart
from some minor field vehicle finance leases.

Debtors and other receivables totalled
$4.5 million at 31st December 2009.
Outlook
Mosaic Oil expects that total production for FY2010 is likely to be higher than FY2009.
Overall production is anticipated to exceed 500,000 BOE for FY2010, although with a
slightly higher proportion of gas to oil than was achieved in FY2009.
Mosaic Oil also anticipates higher revenue in the second half of FY2010, assuming the
price of oil and LPG stays at or above current levels.
For further information:
Mosaic Oil: Alex Parks - Chief Executive Officer (02) 9247 9324
Media: Bill Kemmery - Fortbridge on (02) 9331 0655, mob +61 0400 122 449

 




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