By FIONA ROTHERHAM
Fletcher Challenge Energy has beaten analysts' forecasts by $30 million with a $261 million net profit, 375 per cent up on the $55 million made the previous year.
It is the exploration company's best financial result since 1997, and its second-best year.
Fletcher Energy's share price has leaped 94 per cent in the past six months to 871c because of a potential sale and a string of good news. This includes larger than expected reserves in the Pohokura discovery, a favourable High Court ruling on its ECNZ gas supply contract and a dramatic rise in the value of its 11 per cent stake in US-based Capstone Turbine.
The Capstone investment is non-core, but cannot be sold until at least the end of the year.
The full-year result contained abnormal items of $99 million, including a surprise $61 million gain on the sale of its marketing rights to Capstone Turbine products.
Exploration costs were lower than expected, and total capital expenditure was $360 million, down 17 per cent on the previous year. Among the core exploration portfolio, $73 million was invested in New Zealand, $188 million in Canada and Argentina, and $35 million in Brunei.
Most of the NZ development spending was on the Maui B oil project, which has been substantially modified after drilling problems hampered success.
Fletcher Energy's share of costs have reached $54 million compared with the budgeted $45 million.
Overall production was up 6 per cent on the previous year, and oil and North American gas prices were exceptionally strong.
But Fletcher Energy failed to reap the full benefit of the better prices because of its significant hedging.
It realised an average oil price of $US17.96 ($42) a barrel against the average market price of $US$25.93 a barrel.
Fletcher Energy has sold non-core assets and released debt in the past 18 months of just under $500 million - leaving it with a strong balance sheet and a debt to equity ratio of less than 10 per cent.
With a maturing oil and gas portfolio, reserves and production replacement is a priority. But the company says growth through acquisition or merger is essential.
Its bid for a 33.7 per cent stake in listed Australian explorer Petroz NL is expected to cost between $81 million and $128 million.
Under-performing assets include parts of the Canadian business and the Challenge petrol retailing group where intense competition and rising oil prices have hit margins.
Fletcher's energy arm beats forecasters
AdvertisementAdvertise with NZME.