Volga Gas plc reported unaudited preliminary group earnings and production results for the year ended December 31, 2016. For the year, the company reported revenue of USD 39,412,000 against USD 17,827,000 a year ago. Operating profit was USD 2,511,000 against operating loss of USD 5,043,000 a year ago. Profit before tax was USD 1,928,000 against loss before tax of USD 4,620,000 a year ago. Profit for the year was USD 1,187,000 against loss for the year of USD 4,064,000 a year ago. Basic and diluted profit per share was USD 0.0146 against basic and diluted loss per ordinary share of USD 0.050 a year ago. Profit for the year attributable to equity shareholders of the company was USD 1,187,000 against loss for the year attributable to equity shareholders of the company of USD 4,064,000 a year ago. Net cash flow generated from operating activities was USD 13,283,000 against USD 1,160,000 a year ago. Purchase of property, plant and equipment was USD 4,534,000 against USD 8,117,000 a year ago. Expenditure on exploration and evaluation was USD 499,000 against USD 554,000 a year ago. EBITDA was USD 9,634,000 against USD 911,000 a year ago. During 2016 capital expenditure of USD 4.2 million was incurred, of which USD 3.9 million was incurred on development and producing assets and USD 0.3 million incurred on exploration. Capital expenditure in 2016 includes final payments for drilling on the VM field, drilling and workovers on the Uzen oil field and upgrades to the gas processing plant. For the year 2015, the company announced capital expenditure of USD 10.4 million.

The Group production in 2016, at an average daily rate of 6,507 boepd, was 99% higher than the 3,278 boepd achieved in 2015.  Three were three reasons for this: higher production capacity from the VM field on which the new wells were put on production at the end of 2015, commencement of condensate exports which allowed production to remain uninterrupted during periods when the local domestic market was disrupted and, less materially but also positive, the recovery in oil production from the Uzen oil field. Production during 2016 averaged 25.5 mmcf/d of gas and 1,557 bpd of condensate and overall increase of 103% in equivalent barrels of oil terms.  Nevertheless, this production rate is below the full capacity of the existing wells as the gas processing plant's operations continue to be fine-tuned.  This is covered in more detail below.   However, during December 2016, the output averaged 32.2 mmcf/d of gas and 1,799 bpd of condensate, a total of 7,167 boepd, more closely reflecting management's estimate of the actual capabilities of the wells.

In the current environment, and at current production rates, management expects the Group's financial performance in 2017 to improve further on that of 2016.  Meanwhile, new capital expenditure commitments remain within projected cash generation, permitting a resumption of a sustainable distribution policy for shareholders.