News Column

Sefton Swings To Pretax Loss On Impairments

June 30, 2014

Tom McIvor

LONDON (Alliance News) - Sefton Resources Inc Monday said it swung to a major pretax loss in 2013 as increases in revenue were hit by significant impairment charges as part of its financing deal with Hawker Energy LLC.

The oil and gas explorer, with operations in California and Kansas, posted a pretax loss of USD12.7 million from a pretax profit of USD963,000 the previous year.

The company said its revenues increased to USD4.7 million from USD4.3 million as the company achieved higher production from its Californian assets and production started from its Kansas assets.

However, Sefton was hit by a USD1.9 million impairment charge on its Kansas assets and a USD11.0 million impairment charge on its California assets as constrained financial circumstances meant the company had to accept a deal with Hawker Energy LLC for funding in return for a major loss of its assets.

As part of the deal, Hawker would advance loans to Sefton so that it can pay back part of its existing borrowing facilities in return for an 80% stake in Sefton's operating subsidiary in California, TEG USA.

The company also noted that general and administrative expenses have significantly increased due to legal expenses as part of a case against the bloggers Tom Winnifrith and Dan Levi during the period.

The litigation, which was settled outside of court, led to the stepping down of Sefton's Chief Executive Jim Ellerton and an internal investigation during 2013.

The company brought the libel case against Winnifrith and Levi after they alleged Fox Davies Capital resigned as Sefton's advisers because it felt the company was misleading investors.

Sefton Resources shares were up 7.9% to 0.184 pence on Monday.

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Source: Alliance News

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