Circle Oil turns first profit but shares drop 5pc
SHARES in Circle Oil dropped nearly 5pc yesterday, despite the company recording its first underlying profits.
The Limerick-based oil and gas explorer reported annual net profits for 2010 of $10.36m (€7.23m) on revenue of $44.39m. That was far better than 2009's $13.5m loss on $15.09m revenue.
The company recorded a maiden operating profit of $12.58m.
Despite the move into the black, the stock plummeted after company chairman Thomas Anderson admitted that unrest in the Middle East had hampered the payment of its oil sales in Egypt.
"The recent political unrest in Egypt had little impact on the company's operational activities [but] the situation has, however, resulted in delays in receiving payment for our oil sales to EGPC (Egyptian General Petroleum Company).
"At year-end the amount past due was $10.78m and since year-end this has increased further.
"We are currently in discussions with EGPC with a view to resolving this matter and reducing these receivables to more normalised levels," he said.
Overall, the company, which has interests in Morocco, Tunisa and Oman as well as Egypt, said it had enjoyed a "successful" year.
For the year ahead, Circle would continue to "further its exploration and production programmes" across its interests.
"The company continues to seek out new projects to increase its exploration and production base by acquiring development, redevelopment projects or producing assets or fiscally and regionally attractive exploration assets," said Anderson.
"This is a difficult task but we are determined to uphold our stringent technical and commercial requirements, which we believe have evidenced themselves throughout our present portfolio," he added.
Davy Stockbrokers' Job Langbroek welcomed the results.
"The onset of material quantities of operating profits, allied to a successful funding of $66.4m, leaves the group well positioned financially -- net cash at the moment is $28.6m.
"The focus will now be on full conversion of its Moroccan gas resource to production. Higher impact exploration activity will consist of two wells onshore Tunisia in the second-half of the year with further ongoing assessment of the Oman licence package with a view to farm-out," he said.
Circle closed down 4.7pc at 32.875p on London's AIM exchange.