Oil and gas explorer Dragon Oil said it was hopeful of progress on a gas sales deal in Turkmenistan this year but would also diversify into other areas as lower oil prices led to a 30 per cent fall in 2009 profit.
Turkmenistan-focused Dragon said todayit would use its cash balance of more than $1 billion to help it commercialise its gas resources and make acquisitions to diversify its asset base away from Turkmenistan.
Chief executive Abdul Jaleel Al Khalifa said Dragon had tried to start talks last year with the Turkmen government to sell its gas in the country but problems with the logistics of meeting had held up progress.
"We have proposals that we are trying to put on the table to start the discussion on this," hetold Reuters in an interview with Reuters. "Hopefully within the first half of 2010 we can make significant progress in this area."
Evolution Securities analyst David Farrell said given that Dragon's portfolio contained no material exploration, upside was focused on the monetisation of gas and leverage to the oil price.
Dragon shares were up 1.14 per cent to 467.5 pence at 11.14am, valuing the company at £2.4 billion.
In its preliminary results today, the company said its 2009 results were "solid", as oil prices recovered throughout the year.
Pretax profit fell to to $259 million in 2009 from $369 million the previous year. Although sales of crude oil rose by 40 per cent over the year, a lower comparative oil price hit revenue.
Meanwhile, average daily production was up, increasing 9 per cent to 44,765 barrels of oil per day (bopd) from 40,992 in 2008. The company is hoping to reach annual output growth of 15 per cent in 2010, and a further 10 and 15 per cent on average up to 2012.
"We delivered another solid set of results driven by strong operational performance and a 40% increase in sales volumes. This was achieved against a backdrop of challenging economic conditions and a steady recovery in the oil price during the year from a five year low in December 2008," said Mr Al Khalifa said.
"Going forward we have a strong balance sheet with a net cash position of more than US$1 billion and no debt which provides us with significant financial flexibility as we look to diversify our asset base and commercialise our gas resources. Looking ahead we will continue to invest for growth and are working hard to translate this strategy into value for the business for the benefit of our shareholders, our employees and our hosts."
Additional reporting - Reuters