Northcote Energy 's (NCT) first-half results were preceded by a more important update in August, when production from Northcote's US onshore acreage reached 100 barrels of oil equivalent per day (boepd) - quadruple the rate in January 2013 and five months ahead of schedule. Northcote is now targeting 250 boepd by mid-2014.
Nevertheless, these half-year figures are a tad disappointing. Revenue was significantly lower than we expected, reflecting low levels of oil production at the beginning of the period, while administrative expenses of $1.13m (£0.7m) were higher than we anticipated. However, this included $366,000 of one-off charges relating to January's IPO and share-based payments of $64,000. Moreover, the top-line figures should improve dramatically in the second half because of much higher oil and gas production.
Operationally, fracking in the third well at the 51-per-cent-owned Horizon project should begin early next month. That's slightly later than first expected because further work is needed on the site's surface to comply with regulatory requirements. Moreover, and despite raising $5.2m during the period, Northcote's cash pile is looking thin. An unusual financial arrangement signed with some US investors in July should provide some non-dilutive capital to help with field development costs, but the unconventional structure of the partnership merits some caution.
NORTHCOTE ENERGY (NCT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1.45p | MARKET VALUE: | £12.6m | |
| TOUCH: | 1.4-1.5p | 12-MONTH HIGH: | 2p | LOW: 1.2p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 0.7¢* | NET CASH: | $1.03m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 0.36 | -2.18 | -0.20 | nil |
| % change | - | - | - | - |
£1=$1.62 *Includes intangible assets of $1.6m, or 0.2¢ a share | ||||
