CHK OIL (00632) has announced that the group expects to record a net profit attributable to owners of the company of no less than HK$16.2 million for the year ending December 31, 2025. This compares to a net loss attributable to owners of approximately HK$21.5 million for the year ended December 31, 2024.
The anticipated shift from a net loss in the 2024 fiscal year to a net profit in the 2025 fiscal year is primarily attributed to several factors. A key reason is the reversal of an impairment loss on oil and gas assets and intangible assets related to the Utah oil and gas field, amounting to approximately HK$51.4 million (2024: HK$28.9 million). This reversal follows a preliminary reserve and resource evaluation report prepared by a qualified person. After review, drilling and production activities in the vicinity of the Utah field provided sufficient production data indicating that previous estimates should be adjusted, thereby increasing the field's recoverable natural gas reserves. Consequently, the carrying value of intangible assets in a preliminary valuation of the cash-generating unit for the oil and gas division, prepared by an independent valuer, has increased. The final amount of the impairment loss reversal for the Utah field assets is subject to adjustment upon final assessment, if necessary.
Additional contributing factors include a one-time penalty of HK$4.7 million incurred in the 2024 fiscal year related to a lease terminated by the Bureau of Land Management, an expense not repeated in 2025. Furthermore, the 2025 fiscal year saw a reversal of an impairment loss on trade and other receivables of HK$0.2 million, whereas a provision of HK$6 million for such impairments was made in the 2024 fiscal year.
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