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Zoltav Resources shares rise after maiden first-half profit

Russian gas group reported a maiden pre-tax profit of US$1.6mln
Oil & gas flare
Zoltav believes the eastern fields of its Bortovoy licence hold considerable resources

Shares in Arkadiy Abramovich's Zoltav Resources Inc (LON:ZOL) soared more than a quarter after the Russian oil & gas group made its first profit.

The stock ticked up 2.5p, or 10.2%, to 27p after Zoltav reported a maiden pre-tax profit of US$1.6mln versus a loss of US$2.5mln a year ago.

Zoltav attributed the progress to good operational performance, cost-cutting and a higher gas sale price.

Arkadiy Abramovich is the son of Russian oligarch and Chelsea Football Club owner Roman Abramovich.

He is Zoltav's joint largest shareholder along with a vehicle of Russian coal magnate Valentin Bukhtoyarov called Bandbear Limited.

Pre-tax earnings before interest, depreciation and amortisation (EBITDA) more than doubled to US$6.2mln from US$2.7mln last time.

The group reported a 4.4% increase in first-half production from its Bortovoy licence in the Saratov region to nearly 1.6 billion barrels of oil equivalent.

Operating cash flow increased to US$4.8mln from US$2.9mln a year ago and borrowings fell 8%.

Chairman Marcus Rhodes said the success came despite the increased weakness of the rouble against the US dollar.

He said the company was working to better understand the feasibility and economic viability of the development options for the “considerable resource” in the eastern fields of Bortovoy.

“The board believes this strategy will not only result in our transition into an attractive and profitable junior oil company - a path on which we are already well advanced - but also position the company very well should the rouble regain strength and as the oil and gas sector continues to improve," he said.

House broker Shore Capital described the results as very robust, adding: "Local gas pricing has been strong and we remain impressed by operational delivery from this high-quality Russian operator."

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