A below-par performance from its key business, Afric Oil, resulted in “disappointing” financial results for JSE-listed oil and gas company Efora Energy for the year ended February 28.
The company on Monday reported a net loss of R579.9-million, a loss per share of 69.91c and a headline loss a share of 45.31c.
Efora interim CEO Damain Matroos said the performance of Afric Oil had been affected by several challenges, some of which were beyond its control.
“Unexpected external factors also negatively impacted on our other non-operating assets,” he added.
He stressed that the results were not a reflection of the efforts that had gone into moving the group forward.
“The coming months are absolutely critical and we remain focussed on initiatives to drive sales volumes growth and cost containment in order to improve the performance of the business to the levels expected at the time of its acquisition. We are confident that these initiatives will bear fruit in the coming months."
While the group's upstream assets benefited from the general improvement in oil prices during the year, this presented significant challenges for the South African market which experienced several price increases in the second half of the year.
The subsequent working capital constraints negatively affected Afric Oil’s volumes.
Initiatives are in place to improve the division’s volumes; however, in its impairment assessments of the business, Efora recognised impairments totalling R143.5-million attributable to goodwill, brands and customer relationships intangibles that arose on acquisition.
Efora noted that its shift in focus to downstream operations meant that its limited capital was deployed to the Afric Oil operations as a trade off to the further development of the Lagia oilfield.
“The intermittent suspension of the Lagia development programme, among other matters, had a negative impact on the valuation of the Lagia oilfield . . . which resulted in an impairment of R152.2-million of the Lagia oil and gas and intangible assets.”
Matroos said Efora continued to streamline the business to ensure it remains competitive, noting that it has reduced its fleet and terminated third-party transportation arrangements to optimise its internal logistics.
Additionally, the group signed two large customers during the year and remain “excited about ongoing engagement with prospective customers”.