The National Petroleum Corporation’s (NAMCOR’s) annual results for 2014-2015 released yesterday show that the State-owned enterprise produced a gross profit of about N$68 million after generating N$696 million in revenue.
However, gross profit is down by 16 percent from 2013 and by 29 percent between 2014 and 2015. According to NAMCOR chairman, Johannes !Gawaxab, the decline in gross profit is mainly as a result of the slate variable, which reduced from a surplus of N$5 million to a deficit of N$17 million in 2015.
Meanwhile, operating expenditure fell by 37 percent from 2013 to 2014 and increased by 44 percent to N$73.6 million between 2014 and 2015.
!Gawaxab explained that the increase in operating expenditure was attributed to employee costs that increased by 87 percent between 2013 and 2015, as the corporation filled executive and managerial vacancies. Staff numbers also increased by over 50 percent as NAMCOR’s corporate structure took shape. Another notable factor on the balance sheets were professional fees, which increased by 125 percent between 2013 and 2014 and by 119 percent between 2014 and 2015. This was mainly as a result of the drive to negotiate and conclude as many Joint Operating Agreements as possible, advisory work on the Kudu Gas project, and phase one of the FUGRO data-loading project.
!Gawaxab also pointed out that impairment of receivables decreased between 2013 and 2014, mainly as a result of the write-off of the receivables from industry players under dispute. The chairman noted that 80 percent of the 2015 write-offs relate to debt owed by the Roads Contractor Company and TransNamib. Inventory write-offs consist mainly of N$5 million written off at the Otjiwarongo depot. This amount is currently under investigation.
Commenting that NAMCOR has the potential to become one of the largest parastatals in the country, !Gawaxab remarked that the corporation has achieved a significant turnaround during the last three years that its only stakeholder, government, can be proud of. However, he cautioned that the corporation is operating in a particularly subdued industry, specifically regarding oil prices.
“The operating environment remains challenging, as in August 2015 Brent crude tumbled through US$45 a barrel and oil in New York traded below US$40. I also expect oil prices to remain range-bound for longer and I would not be surprised if prices hover around the US$50 to US$70 per barrel for years to come,” said !Gawaxab.
He added that the decline in crude prices is driven by continued growth in global inventories, weakening global economic activity and volatility in exchange rates and will be exacerbated by Iran’s entry into the global oil supply market.
Regarding data sales, NAMCOR generated a total income of N$44.7 million in 2014/15, compared to a budgeted N$40 million. The data sold to mostly exploration and prospecting companies includes 2D seismic, 3D seismic, well data, gravity & magnetic data and technical reports.
Oil and gas companies wishing to invest in the hydrocarbon exploration sector buy this data to evaluate the prospectivity of exploration blocks. Data sales revenue generated from April 2015 to date totals just over N$ 8 million, while data sales budgeted for the current financial year is just over N$35 million.
“Due to a dramatic drop in oil prices, low data sales are expected this year as a result of dramatic falls in oil prices since mid-June 2014. Since most international oil and gas companies have either deferred their exploration activities, or totally cancelled their exploration activities, the licensing of data will be adversely affected,” !Gawaxab noted.