Losses rise at Regal

01/05/2009 Robert Tyerman

Ukraine-focused Regal Petroleum forecasts a production recovery after increasing annual losses 145 per cent to US$48.7 million (£33 million).

Turnover fell 19 per cent to $11.5 million, reflecting a sharp decline in gas production. But a 32 per cent increase in the London-based company’s realised gas price meant that operating losses increased by only 18 per cent to $15.7 million.

However, a hefty foreign exchange loss of $29 million, even though $23.3 million of it was unrealised, sent AIM-quoted Regal’s pre-tax deficit soaring. The company, steered by chief executive officer and Shell veteran David Greer, stemmed the output decline in November – increasing daily production from 490 barrels of oil equivalent to a peak of more than 2,000 – and says it is now producing at a rate of 1,200 barrels of oil equivalent a day.

The company argues that production and revenues should both continue to rise, with two new wells expected to come on stream later this year and more to follow. Striving to erase memories of the company’s lurid past under charismatic but controversial ex-boss Frank Timis, Greer has brought in a new team at the top, including chief operating officer Harry Verkuil and finance director Robert Wilde.

Regal raised $206 million (£139 million) of equity capital during the year, including £80 million at 150p in January and £20.5 million at 245p in July, and says it now has no debt outstanding. The shares, which traded at £5 four years ago before a dry well precipitated Timis’s departure and sent them down to 35p and which fell again from 298p last June to 26.5p last March, have rallied to 50p, valuing the company at £106 million. They should now hold up relatively well.

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