HKN, Inc. reported its annual financial results for the year ended December 31, 2007. During 2007, HKN continued to actively invest in energy industry assets as well as develop its crude oil, natural gas and coalbed methane assets. Consistent with HKN's strategy to invest in energy-based opportunities, during 2007 HKN increased the assets invested in its trading activities and also increased its level of ownership in Spitfire Energy Ltd., a junior oil and gas exploration company in Canada. HKN's ownership interest in Spitfire increased from approximately 9% to 25% during the year.
HKN reported net income of $3.2 million during 2007 as compared to a net loss of $855 thousand during 2006.
During 2007, HKN's domestic oil revenues increased 16%, due to higher commodity pricing and increased volumes from its Main Pass 35 field as compared to 2006. Gas revenues decreased approximately 36%; even though 2007 pricing was higher than 2006 gas pricing, significant production losses on several non-operated fields due to lack of workover and maintenance projects by the operators caused the significant reduction in HKN's gas revenues.
HKN's domestic oil and gas operating expenses decreased 11%, falling from $9.7 million in 2006 to $8.6 million in 2007. The decrease in workover activity in HKN's fields is the primary reason for the overall decrease in the operating expenses. Rising oilfield costs and lower production during 2007 resulted in higher costs per mcfe, however.
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