After posting a loss of R11.8-million for the first six months of 2012, dual-listed SacOil has swung to a profit of R27-million for the six months ended August 31, 2013, attributed chiefly to an increase in investment income and decreases in finance and operating costs.
The Africa-focused oil and gas company’s balance sheet was further boosted by income of R43.7-million in foreign exchange gains, which arose on the remeasurement of dollar balances.
A 50% decline in operating costs from R23.2-million in the first half of the 2012 fiscal year to R11.5-million in the period under review, on the back of decreased corporate, remuneration, consulting, legal and travel and accommodation costs, also bolstered margins.
In contrast, a 21% overall decrease in “other” income was primarily attributable to the once-off profit on disposal of the 6.67% interest in its Democratic Republic of Congo-based Block III operation, as well as a once-off break fee received from a third party in the corresponding prior period.
In addition, investment income for the period under review comprised interest income from loans of R34.2-million, interest earned on cash and cash equivalents of R200 000 and imputed interest income of R12.5-million, arising from the unwinding of the time-value discount applied to the contingent consideration for Block III.
“Investment income increased by R19.7-million relative to the corresponding prior period, reflective of an increase in the amounts advanced to Energy Equity Resources, the compounding effect of the interest accruals and the impact of the weak rand,” SacOil CEO Roger Rees said in a statement on Friday.
The group's finance costs of R10.5-million, an increase on the R21.5-million posted in the first six months of the 2012 fiscal period, related to interest on the two $1-million loans, acquired in September and October last year, to fund working capital requirements and work programme commitments for the company’s Nigerian assets, which the company said would start producing revenue in 18 to 24 months.
During the period under review, the group incurred further interest charges of R32.6-million on the loan, which had been capitalised to the exploration and evaluation asset, as it related to a qualifying asset.
Meanwhile, taxation decreased by 13% to R41.7-million, as taxation in the corresponding prior period was comparatively higher as a result of the once-off capital gains tax incurred on the disposal of the interest in Block III.
Exploration and evaluation assets increased by R43.8-million to R206.7-million during the period under review as a result of the group capitalising exploration expenditures, which amounted to R11.2-million, and borrowing costs totalling R32.6-million in relation to the Nigerian operation.
“The overall increase of 20% in other financial assets, under noncurrent assets, is primarily a result of foreign exchange gains and interest amounting to R70.4-million on the contingent consideration and on the loan due from Energy Equity Resources,” commented Rees.
SacOil, which also had operations in Malawi and Botswana, said it would continue to evaluate opportunities to secure high-impact acreage in other established and prolific hydrocarbon basins in Africa.