Revenues more than halve at Cork-based Circle Oil

The Cork-based oil and gas exploration company Circle Oil has reported first-half pretax profits of $2.8 million (€2.49m) as against $9.4 million (€8.3m) for the same period a year earlier and $14.7 million for the first six months of 2013.

Circle, which is quoted on the Alternative Investment Market in London, recorded an operating profit of $5.5 million,

The North Africa and Middle East-focused explorer said first-half revenues more than halved to $22.3 million as against $47.8 million for the same period a year ago due to a fall in oil prices and lower production volumes at its assets in Egypt.

The company said it introduced a number of initiatives during the first half of the year to reduce operating costs, particularly with its Moroccan operated assets. The move led to an improvement in gross margin, which account for 43.4 per cent of revenues, compared to 34.4 per cent for the same period last year.

Working capital, trade and other receivables fell to $25.3 million at the end of June from $48.1 million a year earlier. Trade and other payables reduced to $17.4 million from $36.3 million.

Net cashflow from operations totalled $17.8 million compared to $25.1 million for the same period last year reflecting the reduced operating profit for the period. Cash and cash equivalents at the end of June was $17.1 million. This includes substantial cash balances in Morocco, a portion of which the group is currently repatriating.

Net debt at the end of June was $64.4 million

Earlier this year the company announced it had signed an agreement to amend and extend a convertible loan agreement, under which $30 million was due for redemption in mid-July. It also said it had drawn down a further $12.5 million on the reserve based lending facility it has and reached agreement in principle to extend that facility by one year to June 2019.

"Both of Circle's producing assets continue to generate good cashflow and are profitable even in today's low oil price environment. However, management efforts remain strongly focused on delivering further cost and operational efficiency improvements, particularly with our operated Morocco assets," said chairman Stephen Jenkins.