Kris Energy

Kris Energy: 3Q13 results. Revenue dropped 37% y/y to US$13.6m, as production and sales volumes slumped 41-42% to ~1.9m boepd. The decline was due to i) the anticipated closure of the Kambuna gas-condensate field where pdtn ceased on 11 Jul ’13, ii) unplanned production disruptions exacerbated by bad weather conditions at B8/32 and B9A in the Gulf of Thailand, and iii) interruption of gas sales for a week when the gas produced from the Benchamas field was below expectation. However mgt assuages that new devt wells began coming into pdtn in Sep and Oct and overall working interest pdtn from B8/32 and B9A returned to above 2,200 boepd in Oct. EBITDAX declined 41% to US$6.9m, as average lifting costs rose 14% to US$14.57/ boe. Capex surged 81% to US$13.5m. Mgt remains encouraged with progress in connection with the govt approval processes in relation to i) its agreement to acquire 30% working interest of G6/48, and ii) acquisition of TBL from Tullow Oil, which holds 30% working interest and operatorship of Block 9 onshore Bangladesh. If completed, the transactions will boost Kris Energy’s proved plus probable (2P) reserves to 31.66mmboe and contingent resources (2C) to 44.65mmboe. The group ended 3Q13 with NAV of US$0.45, which translates to valuation of 2.3x P/B based on the last close of $1.27.