Falkland Islands' based Argos Resources Ltd said on Friday its interim loss widened on foreign exchange movements, but it has enough cash to continue for another year as some costs have been delayed.
Argos Resources which focuses on the North Falkland Basin, reported a US$192,000 total loss from operations for the six months ended June 30, widened slightly from a US$ 176,000 loss a year before.
This was due to US$ 45,000 of foreign exchange losses reported in the period, widened from such losses of US$ 3,000 the prior year. This more than offset a reduction in administrative expenses to US$ 148,000 from US$ 175,000.
Chair Ian Thomson noted the decline in the Brent crude oil price to a low of US$ 20 per barrel in April 2020 from US$ 65 a barrel at the end of 2019, and partial recovery to US$ 42 a barrel by June end. This resulted from, as he explained, competition from OPEC for market share and then exacerbated later in the period by the significant drop in global energy demand as a result of the Covid-19 pandemic suppressing oil and gas consumption globally.
Thomson also said the industry had been hit hard by the demand and price drop, with Argos now planning to request an extension to its PL001 license term, the second phase of which will expire May 2021, since more time will be required to recover from this downturn. PL001 covers around 1,126 square kilometers in the North Falkland Basin.
Despite the above, the company continues to seek partners to participate in drilling on its license and is currently engaged with a number of counterparties who have expressed interest. Given the current challenging environment the company believes it may be some time before any expressions of interest are translated into commitments, Thomson said.
He also noted that the slowdown has meant some costs expected in the current year have been delayed, with Argos having enough cash resources to continue for another 12 months. However, to continue as a going concern past that point will require raising further finance.