CanArgo Energy Corporation's operating revenues from continuing operations for 2007 increased by approximately 10% over 2006 to $7.2 million. The increase in revenue was attributable to an increase in the realized price for its oil produced at the Ninotsminda Field in Georgia.
The company reported a net loss for 2007 of $53.8 million compared to a net loss for 2006 of $60.5 million. During the year, the company disposed of its entire interest in its project in Kazakhstan and used the proceeds generated from the sale to significantly reduce its long term debt. Gains recorded in net income from discontinued operations partially offset by loss/cost recorded on debt extinguishment contributed to the overall reduced net loss for 2007.
Operating loss from continuing operations for 2007 also improved to $46.6 million for 2007 compared to $48.5 million in 2006. This was due to improvements in operating revenues from continuing operations, field operating expenses, direct project costs, selling, general and administrative expenses and depreciation, depletion and amortization, however, this was partially offset by an increased impairment of oil and gas properties, ventures and other assets of $42.0 million compared to $39.0 million in 2006.
CanArgo performed its annual assessment of its costs classified as unproved property to determine if they should be transferred to the cost pool. After evaluating a number of factors including the length of time that these costs remained classified as unproved property, the company determined that approximately $49.1 million of costs principally relating to the drilling of exploration wells should be moved to the cost pool. The quarterly "ceiling test" determined that the net capitalized costs in the cost pool exceeded the 10% net present value of cash flows generated from the company's proved reserves resulting in an impairment of oil and gas properties, ventures and other assets of $42.0 million in the last quarter of 2007.
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