Ukraine focused oil and gas group Regal Petroleum (LON:RPT) managed to slash its losses by 81% to $9.8 million last year as improved gas prices and higher sales volumes bolstered the company’s finances.

Reporting on its performance in the year to December 31, 2009, Regal said that revenues had grown by 74% to $19.9 million and that gross profit had increased by 136%.

Looking ahead, the company said it was redoubling efforts to bring in additional cashflow by focusing on producing oil from shallower depths in the four new generation wells that it drilled in Ukraine during 2009. As a result, it will postpone efforts to appraise the potential of the T and D-sands in the wells and instead concentrate on securing easier production from the B-sands

Regal’s chairman, Keith Henry, said: “Our current strategy of focusing in the near term on developing the shallower B-sands to increase our gas production bodes well in a market that is heavily dependent on imported gas and where the Ukrainian Government is keen to encourage the growth of domestic production.”

Regal managed to boost production from below 500 barrels of oil equivalent (boepd) in the fourth quarter of 2008 to over 2,000 boepd in January 2010. Last year it saw average gas equivalent prices rise by 31% to $244 per thousand cubic feet, although average condensate prices fell by 32% to $57 per barrel.

Overall, gas sales volumes were up 64% on 2008, contributing to a 120% rise in gas revenue over the previous year. Condensate sales volumes rose 45%.

Elsewhere, Regal has acquired a further 104.7km of 2D seismic over its Barlad concession in Romania and is planning to drill a shallow gas exploration well later in 2010. Likewise, at Suceava, also in Romania, 2D seismic data picked up a gas prospect and a gas exploration well is being planned there for later in 2010.

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