The interim pre-tax operating loss in JSE-listed natural gas producer, Renergen worsened by 9.9% to R30-million for the half year period to the end of August, dragging down its share performance by nearly 5% to R25 on Friday despite its transition from an explorer to a producer of Liquified Natural Gas (LNG).
The higher operating loss for Renergen for the period under review came against the backdrop of flat revenue generation at R1.2-billion. The interim headline loss per share for the period widened by 8.3% to 19.31 cents per share.
Investors on the JSE responded to this negatively, with shares in Renergen shedding off 4.89% to close Friday trade session at R25.6 per share.
Although higher cash balances and higher interest rates during the period under review had resulted in an increase in interest income by R1m, the increase in the loss before taxation by R2.7m resulted in an increase of the deferred tax credit by R3.3m.
For the half year period under review, Renergen’s net asset value increased by 115% or R330m to R616.3m, aided by “a decrease in smaller net liabilities by R0.4m, an increase in restricted cash of R30.6m and a net increase of R364m in property, plant and equipment (PPE) and intangible assets due to the final stages to commission” the project.
Earlier in October, Renergen sought to assure investors on the status of its plant, highlighting that the Liquefied Natural Gas (LNG) system was complete and that preliminary performance data showing robust performance beyond specifications.
Renergen was looking forward to pressurising the plant pipeline, priming the utilities and “turning on the plant for steady state production, with LNG commencing first, and liquid helium turning on” thereafter.
However, investors on the JSE appeared more concerned by the worsening of the company’s operating loss, which also meant that it did not declare a dividend for the period.
Renergen reported that after significant investment, Ivanhoe Mines Limited was now a 4.35% shareholder in in the company while the Central Energy Fund had also completed due for an R1bn investment into the project to give it a 10% ownership stake.
An additional $500m (R8.7bn) debt retainer letter had also been signed with the US International Development Finance Corporation (DFC) for the funding of a second phase of its renewable energy project.
The company is eyeing broader opportunities emanating from the “shortfalls in the global helium and energy markets which provide it with significant competitive advantage mainly derived from its exceptionally high helium concentrations and relatively low extraction” costs, it said.
After restarting the LNG system in October, Renergen has produced approximately 190 tons of LNG, with its onsite storage and mobile storage tanks are full. It is anticipating to kick-start commercial deliveries to customers in November this year.
Although the helium system had been tested, the company’s plant has been adjudged not “ready to produce liquid helium without risk as the conduction oil system, supplying heat to various sections of the plant showed signs of not being stable” as it lost temperature and pressure.
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