SINGAPORE - Upstream oil and gas firm KrisEnergy posted on Friday (May 12) a first-quarter net profit of US$55.7 million (S$78.4 million), reversing a net loss of US$18.3 million in the same period a year ago, after cutting costs and accounting for a fair value gain, which the company said would be reversed in subsequent quarters .

Revenue for the three months to end-March 2017 slipped 3.9 per cent to US$31.80 million. KirsEnergy said a 124.6 per cent jump in realised oil prices year-on-year shored up revenue despite a 28.4 per cent drop in working interest production, which averaged 13,610 barrels of oil equivalent per day (boepd) in the quarter compared with a group record of 19,014 boepd in year-ago period.

Lower sales resulted in reduced operating costs - US$12.4 million in the quarter versus US$19.2 million in the year-ago quarter - and a near halving in depreciation, depletion and amortisation charges to US$15.3 million following asset impairments recognised in 2016.

During the quarter, it recognised a non-cash net fair value gain on financial instruments of US$73.90 million relating to the exchange of its 2017 and 2018 notes to the longer dated 2022 and 2023 notes following a debt restructuring.

" This net fair value gain of US$73.9 million will be reversed in subsequent quarters, recognised as accretion of bond discount expense under finance costs, as we progress towards the maturity date of the 2022 notes and 2023 notes," KrisEnergy said.

Said Mr Jeffrey S. MacDonald, the company' s interim chief executive officer: " The significant rise in oil prices in the first quarter versus last year is a positive outcome but there remains considerable uncertainty as evident by the drop in Brent crude below the US$50 per barrel mark in the first week of May.

" As a company, we remain focused on reining in operating and general and administrative costs, increasing production of our existing producing assets, maximising efficiencies in our operations and undertaking the next phase of the restructuring process, which combines portfolio management with progressing our developments."