It has been a horrendous two years since 3Legs Resources (3LEG) floated on London's Alternative Investment Market, having raised £62.5m to fund exploration of the group's shale gas concessions in Eastern Europe.
Drilling, fracking and subsequent testing of several wells in Poland have yet to yield commercial flow rates of shale gas - despite the best efforts of 3Legs and ConocoPhillips, its 70-per-cent equity partner in the western Baltic basin. Fresh testing results released in August were lacklustre. Accordingly, 3Legs' share price has plunged from the initial offer price of 190p to 27p following the release of these first-half financial results.
In the six months to 30 June, 3Legs' substantial cash pile decreased by a modest £3.5m from six months ago to £36m - equating to roughly 42p a share - even though foreign-exchange gains meant 3Legs turned a small net profit over the period. Management say it has "commenced discussions" with Conoco regarding the 2014 work programme and budget, and has already signed a contract with a services provider to drill two firm wells in 2014. Cost-cutting is also planned, targeting a 50 per cent reduction in cash administrative expenses.
3LEGS RESOURCES (3LEG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 27p | MARKET VALUE: | £22.9m | |
| TOUCH: | 27-28p | 12-MONTH HIGH: | 45p | LOW: 25p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 68p | NET CASH: | £36.0m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | nil | -1.97 | -2.00 | nil |
| 2013 | nil | 0.75 | 1.00 | nil |
| % change | - | - | - | - |
