Petroneft losses widen in first half

Irish listed exploration firm Petroneft Resources widened its losses in the first half of the year to almost $5.3 million (€4.17 million), mainly as a result of fluctuating exchange rates.

The company, which is the owner and operator of Licences 61 and 67 at Tomsk Oblast in the Russian Federation, booked a net loss of $5.29 million in the six months to June 30th 2010, compared to $2.39 million a year earlier.

Petroneft said the increase primarily due to a foreign exchange loss of $1.39 million on loans in US dollars, Russian roubles and euro from PetroNeft to Russian subsidiaries Stimul-T and Lineynoye.

The company also incurred a $1.15 million charge in respect of warrants granted to Macquarie as part of the refinancing of Petroneft’s $5 million short-term loan facility earlier this year. The company agreed a $30 million loan facility with the bank in May.

The company said its year-round production commenced on schedule, and it had drilled eight of nine development wells, with the ninth close to target depth over the six month period.

Chief executive Dennis Francis said 2010 had been a “transformational year” for Petroneft.

“The commencement of oil production has established the Company as a producer with significant cashflows expected to be generated in the coming years,” he said. “With exploration activities at Licence 61 due to re-start in October 2010 and the expected work programme at Licence 67 in 2011, we have the potential to generate significant additional shareholder value in the coming years."

Petroneft also announced this morning that Gerry Fagan has been appointed to the board as an independent non-executive director. Mr Fagan was previously group financial controller of Smurfit Kappa group.