Regal reports USD 13 mln adjusted net profit, meets expectations

Regal Petroleum (RPT LN) gained USD 13.0 mln profit from continuing operations in 2012 vs. a loss of USD 3.3 mln in 2011, according to full-year results released on April 25. The company’s comprehensive profit for the year came in at USD 11.6 mln, or 3.6 cents/share, including a USD 1.4 mln loss from discontinued operations in Romania. Revenue grew 2.1x yoy to USD 41.1 mln in 2012 with an EBITDA margin of 52% vs. LBITDA of USD 3.0 mln in 2011. The company’s net cash stood at USD 28.5 mln as of end-2012.

On the operational side, the company’s hydrocarbon output year-to-date averaged at 1,553 boepd, flat compared to 1,539 boepd in 2012. Its MEX-105 well is currently being hooked up to the gas processing facility and production testing will commence in June. The SV-53 well demonstrated significant flow declines over the testing period and is being assessed as a potential candidate for fracking.

Roman Dmytrenko: Though the company’s full-year results came broadly in line with our expectations, we are concerned about Regal’s ability to demonstrate production growth for 2013 as its SV-53 well has shown an insufficient flow rate. With only one more new well to be completed in 2013, we see a strong chance that Regal will fail to meet our 2,050 boepd production estimate for 2013, not to mention the company’s own optimistic guidance that it will double output in 2013.