Afren PLC has announced that declining oil price has led to a pretax loss in 2014, and said itexpects a year-on-year reduction of 32 percent due to cost recovery at Ebok and delays with bringing new wells on stream across its producing asset base in Nigeria.
Afren earlier said that one of its partners has tried to terminate the production sharing and technical service contract covering the Okoro field offshore Nigeria, but said operations continue as normal.
It said it had received a notice of breach of the contract from partner AMNI Petroleum Develpment Co after Afren said it was reviewing the group’s capital structure and funding requirements.
Afren said it will prioritise capital allocation in 2015 for its existing producing asset base in Nigeria and sets production guidance at 23,000 to 32,000 barrels of oil per day, reflecting lower production from Ebok following the end of cost recovery.
It said it is targeting a broad programme of cost reductions and operational measures which will lead to efficiencies and significant cost savings in 2015, but said that lower oil prices have significantly impacted the business at the start of 2015 resulting in a review of the company’s capital structure, liquidity, funding requirements and business plan.
The oil producer reported a pretax loss of $2 billion in 2014, compared with a pretax profit of $140 million in 2013, as revenue dropped to $946 million from $1.6 billion and it booked an impairment charge of $1.1 billion due to the fall in oil prices as well as curtailment of capital expenditure and $0.9 billion in respect of a write-off of Barda Rash reserves.
In a separate statement, Afren confirmed that it has appointed Alan Linn as chief executive, following the dismissal of Osman Shahenshah last year after the discovery of an unauthorised payments issue.
Afren still has an attractive portfolio of assets, which will provide a suitable platform for the company to move forward with in 2015 and beyond.