Sprott Resource Corp. (TSX:SCP) said Friday that it swung to a profit during the first quarter, on strength in its oil and gas segment.
For the first three months of the year, the Toronto-based firm, which invests in natural resource companies, reported net earnings of $16.1 million, or 14 cents per share, compared to a net loss of $7.5 million, or 8 cents per share, in the year-ago period.
"We are pleased with the continued progress of our investee companies and the transactions we have been able to complete to date this year," said president and CEO Kevin Bambrough.
"This is a difficult investment environment, full of economic and monetary uncertainty.
"We continue to examine numerous investment opportunities in the resource space, but will have the discipline to wait for attractively priced acquisitions that will be accretive to our shareholders."
Among the top performers during the period was the company's Orion Oil & Gas Corp (TSE:OIP) holding, whose average rate of production during the quarter increased 60% to 5,300 barrels of oil equivalent per day. The company also recorded $22.3 million in net oil and gas and sulphur revenue, an increase of 70% compared to the first quarter of 2010.
Recently, WestFire Energy (TSE:WFE) agreed to acquire Orion, a deal expected to close in early July. Sprott is expected to own roughly 34% of WestFire after the merger, becoming the largest shareholder.
"Our oil and gas segment showed strong growth year-over-year and is well positioned for additional growth and value creation," said COO of Sprott Resource, Paul Dimitriadis, also the director of Orion.
"The proposed merger between Orion and WestFire Energy will create a uniquely positioned, intermediate-sized producer focusing on the world class Viking oil resource play in Alberta and west central Saskatchewan."
Waseca, another oil and gas holding for Sprott, boosted its average rate of production by 187% during the quarter, to 1,250 barrels of oil per day. The company is advancing its 62 well program for this year, which Sprott expects will increase Waseca's production to between 2,800 and 3,300 barrels per day by year-end.
Meanwhile, Sprott's One Earth Farms, which recorded $1.5 million in revenue during the period, increased its crop and pasture land under management to 191,000 acres, positioning it to become the largest crop and cattle farm in Canada this year.
"One Earth Farms has raised nearly $40 million of outside capital this year through a number of private placements at a 40% premium to SRC's investment cost," said CFO of Sprott Resource, Stephen Yuzpe.
Sprott said it also benefited during the quarter from the near $50 million profit it realized through the sale of shares in Stonegate Agricom (TSE:ST) in March.
At quarter-end, Sprott Resource's current assets, including cash and gold bullion, totaled $187.78 million, compared to $166.59 million at the end of 2010, representing a 13% increase.
However, its portfolio, including private and public investments, totaled $57.09 million, a decline of 14% from $66.06 million at year-end 2010.