With oil prices still half the level one year ago, production boost by Mart Resources has not been able the salvage the company from financial woes as losses jump by nearly 400 percent. Reports have it that Mart Resources lost, in second quarter 2015, almost four times what it lost in the second quarter of 2014, despite a surge in oil output. The development comes as the company is finalising its take-over by indigenous partner, Midwestern Oil and Gas. Apart from lower crude oil prices, Mart Resources is said not to be realizing any cost oil recovery during the second quarter.
The Canadian junior said its share of average daily oil produced and sold for 2Q 2015 from the Umusadege field, per calendar day was 5,785 bpd compared to 5,213 bpd for the three months ended June 30, 2014 During the period under review, the Umusadege field was shut down for approximately 17 days against 27 days in the same period in 2014 due primarily to various disruptions, and repairs and maintenance to the export pipelines and export facility. The compsny reported net loss of $6.8 million or $0.019 loss per share compared to net loss of $1.4 million or $0.004 per share for second quarter 2014.
The increase in 2015 compared to 2014, the company said, “was primarily due to lower oil prices, higher depletion costs, and inclusion of a share of losses of associates, which were offset, in part, by lower production costs, general and administrative expenses and business development and corporate costs and taxes on venture production.” Mart’s percentage share of total Umusadege oil produced and sold during the second quater was 50.0% as against 82.5 Percent in the same period in 2014.
“The decrease was due to no cost oil recovery being realized during the three month period ended June 30, 2015 in line with the terms of the revised facility agreement entered into in April 2015 with Guaranty Trust Bank Limited (“GTB”) that provides for a 12-month deferral of principal loan repayments effective March 4, 2015 (“moratorium period”).” Under the arrangement, there will be no recovery of Mart’s capital expenditures incurred and not recovered before the start and during the moratorium period, it declared.
Mart’s estimated share of Umusadege field oil produced and sold for second quarter of 2015 was 526,445 barrels of oil (“bbls”) compared to 474,343 bbls for second quarter of 2014. “The average price received by Mart for oil sales for Q2 2015 was $58.01 per barrel of oil (“bbl”) compared to $111.18 per bbl for Q2 2014.” Mart’s estimated share of Umusadege field pipeline and export facility losses (“pipeline losses”) for the period in 2015 was 83,395 bbls compared to 164,973 bbls in the same period in 2014, or approximately 13.7% as against 25.8% in the same period in 2014:) of Mart’s share of total crude deliveries from the Umusadege field.
“The actual pipeline losses have not yet been allocated by the pipeline operators and as a result, Mart was paid its full share of total crude deliveries from the Umusadege field during the reporting period.” Meanwhile representatives of Mart Resources and Midwester Oil and Gas Limited will meet in United Arab Emirates later in the month to discuss possible acquisition of Mar by Midwestern. The meeting will determine the next step in the transaction which has lingered for several months. The transaction was expected to complete on June 16, 2015 but on June 15, 2015, Mart and Midwestern entered into an amending agreement that provided for the Midwestern Financing to be completed on or before July 26, 2015.