Loss dents Drillsearch's final days

DRILLSEARCH Energy has gone out with a whimper, posting what will be its last ever half year report before it is absorbed into rival Beach Energy, with a stunning 621% blow out in the size of its loss.

Haydn Black


The loss was no surprise given the prevailing oil price environment, but the size of the drop was impressive, from a loss of $3.6 million in the second half of 2014 to $26 million after tax.

Its underlying net profit after tax was $20.6 million, even though revenue was down 32.6% to $98.88 million, with the real hit being an impairment on its assets.

Drillsearch, which will complete its friendly merger with Beach on March 1, wrote down of $69.1 million (before tax) on its exploration assets, which is within the range of its warning last week of $65-75 million, and also wrote down exploration and evaluation costs of $5.5 million on unsuccessful drilling.

The company described the back half of 2015 has "a period of contrasts" with weakening market conditions coming at a time when production was ahead of expectations, and more successful wells drilled across the oil and wet gas business.

Production of 1.63 million barrels of oil equivalent during the first half of 2015-16 saw Drillsearch increase its guidance for the full-year to be at or above the top end of the 2.8-3.2MMboe.

The increase includes production from the company's wet gas joint venture with Santos, one of the few producing properties Drillsearch has that is not operated by Beach.

The Cadenza-1 and Yarowinnie South-1 wells came online during December, and the Varanus South-1 well was brought online by the joint venture in early February, as Drillsearch started commercialising its wet gas discoveries.

Further connections planned in the second half, along with connection of discoveries in our Wet Gas joint ventures with Beach and Senex.

In the western flank oil play Drillsearch and Beach produced at an average daily rate of 12,437 barrels, up 10% from 11,304bbl in the prior corresponding period, with thanks to the newly connected Pennington, Balgowan and Stunsail fields.

The company has around $165.4 million in cash of which of $80-110 million will be spent in the current year. Based on spending to date of around $22 million, that number is likely to come in at the lower end of the range for the full fiscal year.

Drillsearch shares are suspended on the ASX at $0.69/share pending its merger with Beach.

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