Maurel & Prom Gains in Tanzania, Lose Elsewhere

Indonesia-owned Maurel & Prom earned 4% more from gas sales in Tanzania in the first half of the year than in the same period last year, despite a 12% decline in equity production to 28mn ft³/d. This increase was due not only to the slightly higher sale price (up 2%) but also to the technical effect of additional rights corresponding to corporate income tax being charged to the state-owned partner TPDC under the production-sharing contract, it said.

“In addition to the usual decline in demand for gas for power generation during the rainy season, there was a drop in industrial demand this year due to the economic downturn caused by the Covid-19 pandemic,” it said.

Total output, which also includes Angolan and Gabonese oil, was up 6% year on year, at 26,917 barrels of oil equivalent/day but the total value of sales was down 37% at $156mn. The average sale price of oil in first-half 2020 was $34.6/b, down sharply from the $68.4/b and $66.3/b in first-half and second-half 2019 respectively.

The company also wrote down assets following impairment tests based on an average Brent price of $37/b in 2020 and $43/b from 2021 and other factors. “This review of the assets should lead to the recognition of an impairment charge of between $460mn and $500mn (after impact on deferred taxes) for consolidated operations,” it said.

Given its 20.46% interest in Nigerian producer Seplat, M&P will also recognise a first-half charge of $29mn, corresponding to Seplat's impairment in the first quarter. These one-time, non-cash charges will significantly reduce depreciation and amortisation expenses and result in higher net income in future fiscal years, it said.

As at June 30, M&P’s cash position stood at $212mn, down from $231mn six months earlier. The second quarterly instalment of the $600mn loan was paid in June, taking the amount repaid during the first half of the year to $37.5mn. It rescheduled the loan repayments in March, foreseeing a big drop in cashflow.