Shares in Renergen, South Africa’s first onshore helium and liquefied natural gas (LNG) production facility, plummeted by 5.24% on the Johannesburg Stock Exchange (JSE) on Friday.
This downturn follows the company’s announcement of anticipated interim earnings for the period ended August 2024, which are expected to be at least 43% weaker due to delays in production of helium and LNG.
With stocks closing at R9.95, Renergen's decline extends a troubling week, as the company recorded losses of 3.86% over the week and 7.87% over the month.
The company has indicated that they expect their half-year losses per share to range between 42.7 cents and 48.7 cents, representing a staggering 43% to 63% increase in losses from the previous period, where they reported a loss of 29.91 cents per share.
“The headline loss per share will be between 42.7 and 48.7 cents per share, being between 43% and 63% greater, compared to the headline loss per share of 29.87 for the prior reporting period,” said Renergen.
It blamed the widening in headline and per share losses “to the lack of production time on both helium and LNG during the commissioning period leading up to the end of the financial period” under review.
However, analysts said even after commencing production, costs will rise which would likely keep earnings lower.
“Increasing production won't produce profits as the more they produce the more costs go up and their cost of production will always be too high to produce profits,” said market watcher, Albie Cillies.
Renergen owns South Africa’s first onshore helium and LNG production facility in Virginia in the Free State. It said last month that it was restarting its plant following the completion of scheduled maintenance procedures.
Renergen believes that Africa's abundant gas reserves “are key to overcoming” regional energy challenges and driving sustainable growth.
“We are committed to harnessing these resources for a cleaner and greener future,” says the company.
Renergen recently said it was supportive of Mines and Energy Minister, Gwede Mantashe’s “reaffirmation of commitment to the oil and gas” sector.
“This vital industry is essential for economic growth and energy security in South Africa. Let’s harness our resources responsibly for a sustainable future,” it said.
Earlier this year, Renergen announced an investment boost from Italian firm Airsol, a wholly-owned subsidiary of SOL.
The SOL group has a significant presence in the industrial gases market, including helium, across the world. SOL had now subscribed for the remaining tranche of convertible debentures, bringing SOL’s total investment in Renergen to a value of $7 million (R131m).
The Italian firm had originally subscribed for convertible debentures in Renergen for an amount of $3m.
BUSINESS REPORT