Canadian oil and gas company Niko Resources Ltd (NKO.TO) reported a quarterly loss, partly hurt by continued losses from its short-term investments, and forecast significantly higher sales volumes for 2010 on start up of its major project in India.
Niko, which has major oil and gas investments in India and Bangladesh, owns a stake in KG-D6 block in the Krishna Godavari Basin, off eastern India.
“They (the Q4 results) were below because production was worse than expected. We thought they would have ramped up a couple of months on the D-6. The fact that D-6 was delayed impacted production and impacted profitability,” said Josef Schachter, an analyst with Maison Placements.
The company, which also has significant investments in Kurdistan and Indonesia, said it expects its fiscal 2010 sales volumes to average over 269 million cubic feet of natural gas equivalent per day, which is a 217 percent improvement over its fiscal 2009 production.
Josef Schachter, who has a “buy” rating on the stock with a price target of C$80, said that gas and oil production from D-6 block would form a significant part of Niko’s 2010 forecast.
Niko also raised its exploration expenditure for 2010 to $121 million and said it will spend about $63 million in India, compared with $46.2 million, a year ago.
However, it plans to cut its development spending by about 35 percent to $236 million and will spend lesser funds for development in India and Bangladesh.
“We will also actively explore in the coming year. Seismic and drilling activity is planned in multiple blocks. It will be the largest program in the company’s history,” the company said in a statement.
“On exploration side, next 12-18 months are going to be very significant. They are drilling big wells in Kurdistan, which is a high impact well, a high impact well in D-4 block (located in the Mahanadi Basin offshore the east coast of India) and they are currently drilling in the Cauvery block in India, which is a 100 percent owned block,” said Haywood Securities analyst Alan Knowles. For the fourth quarter, the company posted a loss of $4.3 million, or 9 cents a share, compared to a profit of $1.4 million, or 3 cents a share, a year ago.
Oil and natural gas revenue was $28.5 million.
Analysts on average expected earnings of 15 cents a share, excluding items, on a revenue of $23.2 million, according to Reuters Estimates.
Shares of the Calgary, Alberta-based company were down 28 Canadian cents at C$73.91 Tuesday afternoon on the Toronto Stock Exchange.