Company chairman David Newman said the bulk of that loss reflected increased exploration activity.
The accounting policy used during 2006 was the “full cost” method where exploration expenditure was capitalised but not written off unless wells or permits were abandoned.
However, Austral started 2007 by changing the manner in which it accounted for exploration activities by adopting the “successful efforts” basis of accounting, Newman said.
This meant all exploration costs were written off unless that expenditure resulted in the recognition of proven reserves within 12 months.
He added that during 2006 an independent assessment assigned total proven undeveloped (PUD) reserves of 1.643 million barrels oil equivalent, a 3.4% increase on 2005 levels, to the small onshore Taranaki Cheal oil field.
This meant the pre-tax value, at a 10% discount factor, of Cheal’s proven and probable (2P) reserves now stood at $US38 million.
Austral operates Cheal, in licence PMP 38156, with a 69.5% interest, while Canadian-listed junior explorer TAG Oil holds 30.5%.
The two companies are spending about $NZ25 million ($A22 million) developing Cheal, with commissioning of production facilities scheduled for late this quarter and commercial production of about 1900 barrels of oil per day due to be achieved by the last quarter of 2007.
Newman said that as well as completing the Cheal development during 2007, Austral and its respective partners also planned to drill Kahili-2 and conduct further testing of the problematic Cardiff field – also in onshore Taranaki.
Meanwhile in Papua New Guinea, Austral and its British partner Rift Oil last month signed a memorandum of understanding with Alcan South Pacific to investigate the supply of natural gas to the Gove Refinery in the Northern Territory.
Newman said Rift, which operates Douglas with a 65% stake, and Austral (35%) planned to prove up the Douglas-1 discovery by drilling the Douglas-2 and Puk Puk-1 appraisal wells this year.
“Last year marked a number of significant changes for the company as we advanced towards our near-term goal of sustainable oil and gas production,” he said.
“We now have a solid understanding of our asset base and have focused on increasing our interests in strategic properties while looking for complementary acquisitions.”
The company must also recruit senior management.
Last month, Austral chief executive Rick Webber unexpectedly announced his resignation after only 13 months in the top job, effective April 30, while former chief financial officer Bruce McGregor left for L&M Petroleum earlier this year.
