Pancontinental posts Sh4.3 billion net loss after Kenya exit

Oil and natural gas exploration machinery at an oil rig. Pancontinental Oil & Gas, an Australian exploration company, has announced its exit from block L10B located within the Lamu Basin. PHOTO | FILE  

In Summary

• Pancontinental recorded a Sh2 billion net loss last year.
• Pancontinental’s financial results come at a time when locally operating international oil and gas exploration companies have reduced operations with some announcing exit plans following a sharp decline in global oil prices that affected their cash flows.
• In April, pancontinental issued a notice to the Australian Securities Exchange (ASX) saying that it had exited the joint operating agreement with Britain’s BG Group and the production sharing contract signed with the government.
• Last year, BG Group drilled the Sunbird-1 well on block L10A that led to the discovery of 29.6 metres of natural gas deposit and 14 metres of oil, making it the first oil discovery in the coastal region.

By IMMACULATE KARAMBU
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Australian exploration company Pancontinental Oil & Gas posted a Sh43 billion ($41.9 million) net loss for the year ended June 30 after exiting Kenya.

The company attributed the loss to increased expenditure for writing off exploration licences following its exit from Kenya’s block L10A and L10B located in the Lamu Basin.

Pancontinental recorded a Sh2 billion($19.1 million) net loss last year. Its exploration expenditure and write off rose from Sh1.8 billion ($17.8 million) last year to Sh4.2 billion ($40.5 million) this year.

Earnings per share increased from negative Sh171.7 ($1.66) to negative Sh376.43 ($3.64) during the period under review.

“The main contributing factor to the earnings per share result this financial year was the write off of exploration licences Kenya L10A, Kenya L10B and the company’s former non-core Australian assets,” said Pancontinental in a statement.

BRITAIN'S BG GROUP

In April, pancontinental issued a notice to the Australian Securities Exchange (ASX) saying that it had exited the joint operating agreement with Britain’s BG Group and the production sharing contract signed with the government.

Its exit left BG Group, which held 75 per cent in block L10B through its subsidiary BG Kenya Limited, as the sole operator.

“The company considers that the withdrawal is in the interest of prudent financial management whilst maintaining a manageable and prospective exploration portfolio,” said Pancontinental’s Chief Executive Officer Barry Rushworth in a statement to ASX.

Block L10B lies south of block L10A that was operated under a joint venture by BG Group (50 per cent), Pancontinental (18.75 per cent) and PTTEP of Thailand (31.25 per cent).

NATURAL GAS DEPOSITS

Last year, BG Group drilled the Sunbird-1 well on block L10A that led to the discovery of 29.6 metres of natural gas deposit and 14 metres of oil, making it the first oil discovery in the coastal region.

Pancontinental’s financial results come at a time when locally operating international oil and gas exploration companies have reduced operations with some announcing exit plans following a sharp decline in global oil prices that affected their cash flows.