RH Petrogas Limited: 2Q & 1H 2025 Financial Results Analysis

RH Petrogas Limited, a Singapore-listed oil and gas exploration and production company, has released its condensed interim financial statements for the second quarter and half year ended 30 June 2025. This analysis summarizes the key financial metrics, performance trends, and notable events that may impact investor decisions.

Key Financial Metrics

^*Inferred by dividing 1H 2025 results by 2 and subtracting 2Q 2025 value.

Historical Performance Trends

The latest results show a significant year-over-year decline in revenue, gross profit, and net profit. The main factors for the downturn include:

• Lower average realized oil prices (down 20.5% YoY in 2Q, down 14.6% YoY in 1H).
• Reduced crude oil liftings, partly due to power outages affecting well productivity.
• Cost controls partly offsetting revenue declines, with cost of sales decreasing 8.2% in 2Q and 12.0% in 1H.
• Net asset value per share increased due to retained earnings and a small share issuance from exercised options.

Exceptional Items and Legal Developments

• In 2Q 2025, the Group reversed a US\$984,000 provision for legal compensation after winning a judicial review related to a historic land dispute. This boosted other income and reduced other expenses significantly in the quarter.
• No impairment losses were recognized in the half-year review of oil and gas properties or exploration assets.

Share Capital and Dilution

• During 1H 2025, 740,000 new shares were issued via option exercises, increasing total shares from 835.18m to 835.92m.
• There are 5.29m unexercised share options outstanding as at 30 June 2025, with exercise prices ranging from S\$0.15 to S\$0.22.
• No treasury shares or subsidiary holdings; no buybacks or placements.

Cash Flow and Liquidity

• Operating cash flows were positive, but decreased YoY: US\$11.98m in 1H 2025 vs US\$18.06m in 1H 2024.
• Cash and bank balances at period end: US\$62.71m (up from US\$48.95m in 1H 2024).
• Net cash used in investing activities was US\$0.57m in 2Q and net inflow of US\$3.29m in 1H, mainly due to withdrawal of short-term deposits offsetting capital expenditure.
• Net cash outflow from financing activities (lease payments) partly offset by share option proceeds.

Dividends

• No interim or final dividends were declared for the current or prior periods. The Group cites ongoing financial commitments under exploration work programs as the main reason for the absence of dividends.

Major Events and Outlook

• Oil prices in 2Q 2025 were volatile and generally lower due to macroeconomic pressures (U.S. tariffs, OPEC+ production increases, Middle East tensions).
• The Group is committed to significant exploration spending (~US\$40.2m remaining as of 30 Jun 2025) under new production sharing contracts.
• Plans for two new exploration wells in the Kepala Burung block in 2H 2025, supporting long-term production.
• No material related-party transactions or asset sales were recorded.
• No forecast or prospect statement was previously disclosed; actual results reflect the weaker oil price environment.
• No dividend is planned until major exploration commitments are fulfilled.

Errors, Audit Issues, and Internal Controls

• The previous year’s accounts received a disclaimer of opinion from auditors. An independent review (PwC) has been completed, with recommendations for internal controls and governance improvements pending implementation.
• The Board confirms that all outstanding audit issues with potential financial impact have been adequately disclosed.

Conclusion and Investment Recommendation

Overall Assessment: The Group’s financial performance for 2Q and 1H 2025 is weak compared to the previous year, driven by a significant drop in realized oil prices and lower production volumes. However, cash flows remain positive, liquidity is strong, and there are no new impairment losses. The company is actively investing in exploration, which may support future growth, but current profitability and returns to shareholders (i.e., dividends) are low.

Investor Recommendations

• If you currently hold RH Petrogas stock:
  • Consider holding if you are willing to wait for the outcome of new exploration wells and a potential recovery in oil prices, given the Group’s strong liquidity and ongoing investment in growth.
  • However, be aware of continued volatility in oil prices, absence of dividends, and historical audit issues.
• If you are not currently holding RH Petrogas stock:
  • Exercise caution before entering, as the Group faces substantial execution risk on exploration and remains exposed to oil price volatility.
  • Monitor for improvements in profitability and governance, as well as evidence of successful exploration before considering an investment.

Disclaimer: This analysis is based solely on information disclosed in RH Petrogas Limited’s interim financial report for 2Q and 1H 2025. It does not constitute financial advice. Investors should conduct their own due diligence and consult a professional advisor before making investment decisions.

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