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Chagala Group fighting low oil prices and other battles

Svetlana Mendesh, Chief Financial Officer, said 2016 results were in line with its projections and local market trends.
picture of oilfield
Chagala is battling a tough backdrop

Kazakhstan-based accommodation group Chagala Group Limited (LON:CGLO) has cut back on costs as low oil prices and a devaluation of the local currency curb oil company spending.

The company provides residential accommodation, on-site offices, catering, leisure, transport, warehousing and logistics support to all major companies involved in Kazakhstan’s oil and gas industry

Tough backdrop

Interim profits to June 2017 rose to US$1.69mln (US$1.49mln) although revenues dipped to US$9.6mln from US$10mln.

Highlight of the half year was a hotel agreement for long-term accommodation in Uralsk with one of the largest companies involved in the development of gas condensate fields in Kazakhstan, said Chagala.  

Svetlana Mendesh, chief financial officer added: “At a time when global uncertainty, economic slowdown in the region and low oil prices continue to challenge the industry we operate in, we see the stable results and expect the second half of the year to build on the first and deliver improved results.”

Kazakhstan has major oil potential

Rich in natural resources, the country boasts some of the world’s largest oil fields, including the massive Kashagan discovery.

The field, in the Kazakh sector of the Caspian Sea, ranks as the largest commercial discovery in the last 40 years.

Like Kashagan, most of Kazakhstan’s major oil reserves and projects are found in the western part of the country, which is also the focus of Chagala’s development.

In seven years, oil production in the country has more than doubled to 1.71mln barrels per day in 2010.

By 2020, output from the country’s three major fields alone – Karachaganak and Tengiz fields and the off-shore Kashagan – is expected to grow to 3-3.5mln barrels per day.

Kazakhstan president Nursultan Nazarbayev has announced ambitious plans to double the country’s annual oil production to more than 1.2bn barrels, joining the world’s top five oil producers.

Court battle

Chagala is also involved in a court battle with a group of investors that has been ongoing for over a year.

Originally seemingly a dispute over plans to raise more equity funds it has resulted in a claim against the company and three directors.

In the last annual report, chairman Michael Carter gave this update.

“It was not an easy year – we faced a shareholder dispute related that has ended in litigation between one shareholder and the directors of the company.

“The outcome of the litigation is always uncertain, and depending on the outcome, the losing party could be required to pay an estimated two-thirds of the total incurred legal costs of the winning party, in addition to its own legal costs.”

The board acted in the best interest of all shareholders, he added.

 

 

 

 

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Chagala Group Timeline

Newswire
December 06 2017
Newswire
August 31 2017

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