NEPTUNE Energy published its half-year results today showing the business recorded pre-tax losses of £5m for the period, having made pre-tax profits of £290m last year.
But despite the on-going impact of Covid-19 production remains “stable” within the UK and “maintained at a high level”.
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The company said further appraisal studies for the Isabella discovery have commenced and it’s hoped results from the study will help plan for a potential appraisal well.
Neptune also said its Seagull project remains on schedule.
Non-cash, pre-tax net impairments of £94m and reorganisation costs of £26m were recognised in the second quarter.
First-half production rose to 155,800 barrels of oil equivalent (boe) per day, from 148,5000 boe last year.
But revenues dropped 35% year-on-year to £617m due to lower commodity prices, partly mitigated by Neptune’s hedging arrangements and low operating costs of fewer than $10 per barrel.
Net debt of £1.2 billion at the end of June, up from £755m a year ago. But Neptune said the resilience plan is “on track” to achieve full-year cost savings of £225-300m.
Jim House, chief executive officer, said: “Neptune delivered a solid safety, operational and financial performance in the second quarter. In response to the continued challenges of COVID-19 and weaker commodity prices, we have taken prudent measures to protect our people, maintain our operations and strengthen our balance sheet.
“Our strategy is to prioritise value over volume – and we continue to be disciplined about capital allocation. Longer-term, recent discoveries in Norway and in the UK provide us with material, value-creating growth opportunities that will strengthen our portfolio going forward.”
The company also revealed it plans to create a “New Energy” team to scale partnerships and investment in hydrogen, CCS and electrification.
Sam Laidlaw, executive chairman “As the world contends with the COVID-19 pandemic, global economic recovery is unlikely to be smooth or predictable. Concerns about a second wave of the pandemic will restrict the return to normal life and may therefore impact oil demand and price recovery.
“While we adapt to greater uncertainty and a more volatile price environment, society is looking to the energy sector to step up its efforts to provide lower carbon, more secure and affordable energy in a socially-conscious way.
“Neptune is well-positioned to be part of the solution. Our differentiated, long-life, low cost and lower carbon intensity portfolio enables us to generate value, even in a lower price environment, while we retain material opportunities for longer-term growth.”
