Pancontinental Oil and Gas, which is prospecting for oil in the Lamu basin, made a loss as a result of exiting exploration in two blocks in Kenya.
Pancontinental Oil’s results for the year that ended on June 20 show the company sank into a S.12 billion loss following the withdrawals.
Consequently the firm reported a negative earnings per share (EPS) of Sh227 (Australian $3.64), an increase from Sh124 (Australian $1.66) reported a year earlier.
“The main contributing factor to the earnings per share result this financial year was the write-off of exploration licences Kenya L10A, Kenya L10B and the company’s former non-core Australian assets,” said the firm.
The explorer withdrew from Block L10B, where it had a 25 per cent interest, in April and in June exited Block L10A where it had an 18.75 per cent interest.
READ: Australian explorer pulls out of second Lamu oil block
“The company is committed to the prudent deployment of its resources and as such it has decided to withdraw from the L10A project, given the project’s cost and potential benefit profile with respect to the company,” said Pancontinental Oil chief executive Barry Rushworth at the time.
This leaves the Australian explorer with interests in Block L6 and its other assets in Namibia. The fall in the international price of oil has seen explorers cut back on their plans in most markets until prices recover.
The price of oil on the international market is hovering at the Sh5,200 ($50) per barrel level, which is lower than the Sh9,900 ($96) estimated to make local production commercially viable.
In Kenya, explorers have reacted by either continuing with plans, cutting back on activities or entirely exiting the market.
UK-based Tullow Oil has said that it will focus in areas where the chances of finding oil are highest but other firms such as Tower Resources of the UK have exited the Kenyan market.
Tower Resources has decided to focus on areas that have greater potential. It had a 15 per cent interest in the Block 2B located in the Mandera region.
“We have now refocussed our portfolio and resources to areas predominantly on the Atlantic Margin where we are confident we can add value even in this difficult market. Accordingly, we have withdrawn from areas where we feel there is no medium-term likelihood of commercially worthwhile success,” said Tower Resources chief executive Jeremy Asher late last month.
Other explorers are, however, going ahead with their plans and are raising cash to fund operations.
Canada’s Africa Oil recently announced that it had raised $50 million (Sh5 billion) from the International Finance Corporation to fund work on its Turkana-based blocks.
Earlier, Africa Oil had announced that it had raised Sh10 billion ($100 million) from London-based private equity firm Helios.