Shares in Aminex receive double blow

Upstream oil and gas group Aminex (AEX) slashed its full-year losses in 2009, but failed to stave off a drop in revenues as lower oil and gas prices played havoc.

The UK-listed company posted a net loss of $2.9 million for the 12 months ended 31 December, considerably lower than the $9.7 million seen in the previous year.

However, revenue tumbled by 23% to $7.8 million, hurt by much lower average oil and gas prices, despite higher levels of production.

The results emerge on the same day the company reported disappointing results for its jointly owned Likonde-1 exploration well in Tanzania.

The well, which is operated by joint partnerTullow Oil(TLW), was drilled to depth of 3,647 metres, but failed to encounter a flowing, commercial discovery.

At midday, shares in the AIM-listed firm were down over 13% at 12.25p.

Production up, prices down

Gas production increased by 56% to 489,000 million cubic feet in 2009, driven by a full year's production from the Sunny Ernst-2 well at Alta Loma, the group said.

Production from Sunny Ernst-2 also helped increase oil production by 17% to 42,000 barrels of oil.

However, average oil and gas prices were markedly lower with the average oil price fetching just $55.25 a barrel, compared to $86.79 a barrel in 2008 and while the average gas price was just $3.91 versus $7.75 the previous year.

At the same time, Aminex, which holds concessions in the US, Pakistan, India, Tunisia, Africa and North Korea, upped its exploration costs by $5 million to cover costs at its renowned Likonde-1 well in Tanzania and the acquisition of an additional 10% interest in the Nyuni licence and ongoing exploration costs on the West Songo-Songo licence.

At the close of the year, the group's assets amounted to $14.2 million, comprising of $1.7 million in cash balances and $2.6 million in trade and other receivables.

The increase in cash balance for the year, up from 2008's more subdued £4.1 million, reflects the $15.3 million raised by Aminex through two share placings last summer and an open offer.
See what iBall TV made of the firm when it teamed up with Edmond Jackson to pick Aminex as one of his stocks to watch for 2010.

Well findings disappoint
It was Aminex's interest in thejointly owned Likonde-1 exploration well in Tanzania that was also rocking its shares today.

Aminex, which announced a farm-out of a 12.5% interest in the well to Solo Oil (SOLO) in Novemver 2009, said the well is the first of two commitment wells to be drilled in the Ruvama Basin.

Despite the disappointing results, chairman Brian Hall maintained that the Likonde-1 well "potentially opens up a new oil play in Tanzania", and said it provided important pointers and great encouragement for the continuing exploration programme.

The second well in the programme is likely to be spudded within 12 months.

Craig Howie, analyst at Astaire Securities, commented: "While Likonde-1 has failed to discover commercial quantities of hydrocarbons, this was the partners' first well in a frontier basin and important data has been acquired through drilling.

"A second well remains firmly on the agenda and the Ruvuma project is already known to contain other drillable prospects of equivalent size including Mikindani. Ruvuma forms part of a much wider portfolio for Aminex and, given our already aggressive view on risk, we reiterate our total NAV estimate of 26p/share."

Looking ahead, Aminex said its Shoats Creek project in the USA is gathering momentum and it is looking to charge ahead with its Korean Peninsula operations.

"We have several wells to drill in 2010 and have a busy year ahead. The current year promises to be very active with potential upside for the Aminex group," Hall concluded.