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Is Petroceltic International PLC A Better Buy Than LGO Energy PLC, Enquest Plc And Ophir Energy Plc?

The outlook for the oil and gas industry continues to be highly challenging, with losses, write downs and a bleak outlook all being the major themes of 2015 for companies operating within the sector. The latest company to report disappointing results is oil and gas play, Petroceltic (LSE: PCI), which today saw profits fall from $19m in 2013 to $272m last year.

Of course, the lower oil price is a direct cause of an increase in the company’s loss. Petroceltic did not report any impairments to its asset base in 2013, but in 2014 it wrote off $83m in the value of its Egyptian and Bulgarian assets. In addition, exploration write-offs were also substantial last year and totalled $183m, up from $37m in the previous year.

Despite this, Petroceltic’s production figures were in-line with expectations. The company produced 22.5m barrels of oil equivalent per day in 2014 but, with the price received for each barrel being significantly lower than in the previous year, the company was fighting an uphill battle. And, while the outlook for the oil price moving forward is somewhat bearish, Petroceltic has decided to reign in production and is expected to produce just 15m boepd in the current year.

Clearly, lower production alongside a declining oil price is likely to mean even lower revenue and, potentially, greater losses in the current year, with Petroceltic announcing a three-year bond issue of up to $175m to provide it with additional funding over the medium term.

Of course Petroceltic is not the only oil and gas company enduring a challenging period. Enquest (LSE: ENQ), for example, also booked significant impairments in its most recent financial year, with its asset base being written down by $335m. Furthermore, with Enquest operating out of the North Sea, where costs can be higher than in other parts of the world, a depressed oil price may hurt it more than many of its sector peers, which could cause investor sentiment to further weaken.

Similarly, Ophir (LSE: OPH) is also enduring an uncertain period regarding its financial outlook. Even though it released an update to say that its reserves were still in-line with management’s previous estimates, its shares have fallen heavily in 2015 and are down by 20% year-to-date. This is at least partly because of the loss of a key financial backer, Kulczyk Investments, which recently announced the sale of its 8% stake, thereby creating additional uncertainty about the future prospects of the business at a time when inward investment is a key priority for oil and gas stocks.

However, the falling oil price has not hurt the prospects for LGO (LSE: LGO). It reported today that it is happy with the progress being made in its 2015 drilling programme and, despite a 20% fall in its share price since the turn of the year, seems to be worth buying at the present time. That’s because the company’s main asset, the Goudron field in Trinidad, remains economically viable even with the oil price being depressed.

And, with the potential for more positive news flow from its drilling programme and the prospect of increased production from next month, now could be a good time to buy a slice of LGO. Certainly, to me its prospects appear to be superior to those of Petroceltic, Ophir and Enquest at the present time.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.