Rex International Holding Limited: 1H FY2025 Financial Analysis

Rex International Holding Limited (“Rex” or “the Group”) released its condensed interim financial statements for the six months ended 30 June 2025. This review highlights the Group’s key financial performance, operational developments, and significant business events as disclosed in the report.

Key Financial Metrics and Performance

Note: The Company only reports on a half-yearly basis. “NM” denotes “Not meaningful” due to the loss position. QoQ comparisons are not available as quarterly breakdowns are not provided.

Historical Performance Trends

• Revenue from crude oil and gas declined slightly YoY, despite higher production volumes, due to weaker average selling prices.
• Gross profit margin weakened significantly, impacted by rising production costs and higher depletion charges.
• The Group swung to a larger net loss in 1H FY2025, mainly due to increased impairment charges, higher operating expenses, and lower finance income.
• Net asset value per share fell by more than 50% compared to December 2024, reflecting accumulated losses and weaker balance sheet position.

Exceptional Earnings and Expenses

• Impairment Charges: The Group recognized an impairment loss of \$8.73 million relating to the relinquishment of a licence (PL1190) in Norway due to limited prospectivity and drilling a dry well. This compares to only \$0.15 million in similar impairments in the prior year.
• Depletion of Oil & Gas Properties: Depletion expenses increased to \$50.7 million, driven by higher production volumes.
• Foreign Exchange Loss: A \$4.0 million FX loss was recorded, mainly due to USD weakening against NOK, impacting USD-denominated receivables in NOK-based subsidiaries.
• Bargain Purchase: In FY2024, the Group recorded a \$2.13 million gain on the acquisition of an additional 15% interest in the Yme Field (Norway) after accounting for positive interim cashflows.

Chairman’s Statement and Management Tone

The Chairman’s statement is focused on operational outlook and macroeconomic trends. The tone is neutral to slightly cautious:

• Brent crude prices remained range-bound, averaging \$65-76 per barrel in 1H 2025.
• Oil market is described as “well supplied” with OPEC+ raising output, and global demand expected to grow modestly.
• The Group outlines a busy operational schedule for 2H 2025, including major drilling campaigns in Benin, Norway, and Germany, and ongoing financing efforts in Oman.
• No interim dividend is recommended due to the absence of net profits.

Overall, the statement signals a focus on execution and cost control amid ongoing market volatility, with no overt optimism or pessimism.

Directors’ Remuneration

Significant Events and Developments

• Asset Acquisition: In 2024, the Group’s subsidiary acquired an additional 15% stake in the Yme Field (Norway), increasing its share to 25%. The deal was cash positive due to strong interim cashflows from the asset.
• Fundraising: The Group’s subsidiary raised NOK 100 million (~\$9.17 million) in 1H FY2025 via a tap on its senior secured bonds. Total outstanding bonds reached NOK 1,750 million (~\$173.54 million).
• Operational Capex: Heavy investments continue across the portfolio, with \$66 million spent on oil and gas properties and \$7.7 million on exploration and evaluation in 1H FY2025.
• Working Capital and Cash Flows: Cash and equivalents fell to \$96.6 million (from \$117.2 million at end-2024), while quoted investments dropped to \$11.1 million. Net cash was used mainly to fund capex and working capital.
• No Dividends: No interim dividend for 1H FY2025 due to net loss.
• Share Capital: No rights issue, share buyback, or dilution occurred in 1H FY2025.
• Related-Party Transactions: Notable consultancy fees (\$0.5 million) were paid to companies linked to controlling shareholders and directors.
• Tax Expense: Tax expense declined to \$27.3 million (from \$49.1 million YoY), reflecting lower taxable income in Norway but higher taxes recognized for Oman crude sales.

Outlook and Events That May Affect Performance

• Oil price volatility remains a key external risk, with Brent trading between \$65-\$76/bbl and OPEC+ maintaining ample supply.
• Operational focus in 2H 2025 is on major drilling campaigns in Benin, Norway, and Germany. Successful execution could boost production and future revenue.
• In Oman, the Group is exploring debt financing to fund ongoing development and general corporate needs.
• No natural disasters, legal disputes, or policy changes are disclosed as affecting the Group in the reporting period.

Conclusion: Assessment of Performance and Outlook

Rex International reported a challenging first half of 2025, with a widened net loss reflecting higher impairment charges, increased production costs, and declining oil prices. The balance sheet weakened, with NAV per share halving over six months. The Group is proactively investing in its asset base, with several major drilling campaigns underway or planned, but the operating environment remains volatile due to oil price uncertainty and rising costs. Management’s tone is measured, emphasizing operational execution and cost discipline.

The outlook is neutral to slightly negative in the short term, pending successful delivery of operational milestones and a potential recovery in oil prices. Investors should monitor ongoing developments in Benin, Norway, Germany, and Oman, as these have the potential to drive future performance improvements. No dividend is expected until profitability returns.

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