Mr Phillips conceded that while shareholder return and sales revenue were both down, AWE was in a strong position of growth with its Waitsia gas project in Western Australia’s Perth Basin providing promising flow test results, and a number of 2C projects on the cusp of becoming 2P projects.
However, the absolute total shareholder return was down by 33 per cent, sales revenue was 2 per cent below guidance at AU$284 million, and the company recorded a statutory loss of AU$230 million which Mr Phillips said was largely due to non”?cash impairments associated with the decline in oil prices.
Mr Phillips said “While it’s true that market conditions have been difficult over the last 18 months, AWE’s story is much more positive.”?
AWE recorded a full year production of 5.1 MMboe – a figure at the very top of the company’s market guidance range – and recent expenditure in the Perth Basin looks like it is about to pay dividends. The company believes that its Waitsia project looks like it will deliver on its potential to be the biggest onshore conventional gas field discovery in Australia in over 30 years.
Mr Phillips said “AWE has made this project a clear priority and we are focused on achieving first”?stage gas production in mid”?2016. The excellent flow test results from Waitsia”?1 imply greater productivity per well and, as a result, full field development could potentially be achieved with less wells and lower capex.”?
He added “We have a very strong and diverse reserves and resources position. Monetising these reserves and converting our resources into reserves is our high priority.”?
The company has managed to stay well within its guidelines this year for both development and exploration while still spending over AU$100 million more than the previous year, reinforcing the company’s position of confidence for the future.
On the back of this, Mr Phillips indicated that AWE would likely be reducing expenditure on development and exploration, partly because of the strong flow test results from Waitsia and partly to exercise financial discipline. Further frugalness will also be applied to reducing operating costs and the company will look to sell off some assets.
Mr Phillips continued to say that the company’s cash flow through the year was solid and that AWE remains in a sound financial position. At the end of the September quarter of the 2015″?16 financial year, AWE held cash of $54 million, net debt of $156 million and undrawn facilities of $190 million.
He concluded “There is significant value in AWE’s people, projects, reserves and resources “? much more than the market currently gives us credit for “? and we will continue to work diligently to deliver this value to our shareholders.”?
In the next 18 months both AWE’s Otway and Bass basin gas sales agreements are to be recontracted, which in a turbulent market environment will provide for interesting results. The company also has assets away from Australia, based in Indonesia and USA in varying stages of development and contract negotiation.