Dome Energy AB (publ) (“Dome Energy” or “The Company”) (Ticker: DOME) has due to the questions that have been raised after the publishing of the Q2 report yesterday the 31st of August, 2015, decided to publish some comments about the result.
Paul Morch, CEO, comments: ”EBITDA was affected negatively by unrealized change in value of derivatives portfolio. This is a non-cash event and the value of the portfolio is changing daily. As of Q2 until Friday 28th of August the value had increased by 12 MSEK (1.4 MUSD) and in addition 3 MSEK (0.36 MUSD) had been received as realized for July. During Q2 extraordinary expenses related to the Pedevco transaction amounted to 8.4 MSEK (1 MUSD). We have seen a strong cash flow from our oil and gas operations and we reinvest that in our assets to increase future cash flow.”
Result from derivatives portfolio
The Company’s hedge portfolio consist of oil and gas instruments with maturity from now until 2017. As of 28th of August, 2015 the portfolio was valued to 50 MSEK (5.9 MUSD). The portfolio is valued every day and the changes in the value is reported as unrealized profit/loss. The table below shows the realized and unrealized result from the hedges this year
With a volatile oil and gas price the changes in value related to the production hedges for 2-3 years will affect every quarterly report. During July and August the value of the portfolio increased by 12 MSEK (1.4 MUSD) and in addition 3 MSEK (0.36 MUSD) has been received for July hedges.
Extraordinary expenses related to Pedevco transaction
The ongoing merger with Pedevco has resulted in large one off expenses amounting to 8.4 MSEK (1 MUSD) in Q2 and that will also affect Q3 and to some extent Q4. Several of the Company’ employees are working more or less full time with the transaction and in addition to that expenses for 4-5 consults and the expense for the US auditors affects the EBITDA negatively. The work is to a large extent focused on the audit in order for the Company to meet the requirements for public listed companies in US. The audit is extensive and goes back one decennium. As the private company that the US subsidiary still is the requirements for documentation and accounting have not been required until now and that explains the lengthy process.