News

March 17, 2009

Elixir Petroleum Brings High Island Back Onstream While It Continues All-Important Farm-Out Talks In The North Sea

Investors, when scanning a company’s results, are increasingly focused not on the headline profit or loss figure but the amount of cash on hand to see the company through difficult times. Current market conditions are unforgiving for those E&Ps with few cash resources, no production and a mountain of debt. For investors in Elixir Petroleum there is, therefore, some comfort to be had in the news that the ASX-listed firm has almost A$10 million in cash, no debt and is bringing its US production back online after hurricane-related disruption.

Even so, the company, which is canceling its secondary AIM listing in order to trim costs, is not out of the woods. Cash flows in the December quarter were sharply down at A$1.9 million due to production shut-ins in and falling commodity prices. For the second half of 2008 the company reported a post-tax loss of A$21 million on sales of A$4 million. The consolidated post-tax loss includes a number of non-cash, non-recurring items totalling A$25 million, including an A$13 million impairment in the value of its oil and gas properties related to the dramatic fall in commodity prices and A$7.8 million of depreciation, depletion and amortization expenses.

Investors will be keen to see production and cashflows from the Gulf of Mexico properties resume their upward trend in order to shore up the financial foundations of the company. In the December quarter the High Island field was shut-in to allow repairs to third party operated export pipelines following the destructive passage of Hurricane Ike in September 2008. Elixir has a 30 per cent working interest in the High Island project, which lies 65 km southeast of Houston and was first...