NEPTUNE Energy has reported a “strong” operational performance in the first quarter of 2020, despite the “challenges” posed by Covid-19.
But Jim House, chief executive officer, has warned the second quarter of the year is likely to be “more challenging”.
The impact of Covid-19 has led to a delay on a number of developments.
First oil from the Seagull development was expected by the end of this year but it’s now been pushed back a further 12-15 months with it deferred until late 2022.
The Etap topside strengthening and installation programme is expected to start early next year, according to Neptune.
The report revealed production averaged 162,000 barrels of oil equivalent (boe) per day at Neptune, which has operated the huge Cygnus gas field in the southern North Sea since completing its acquisition of Engie’s exploration and production business in early 2018.
Neptune is sticking to its full-year guidance of 145-160,000 boe per day. Group operating costs for the period were lean, at just $8.9 per barrel.
First-quarter, pre-tax profits totalled £96m, down 43% year-on-year, on revenues of £390m, 23% lower. Ebitdax came in at £262m.
Jim House, Neptune chief executive officer, said: “Despite the challenges posed by the COVID-19 pandemic, Neptune’s operational performance in the first quarter of the year was strong. Our resilience plan and hedging activity mitigated weaker commodity prices, resulting in a robust financial performance.
“We have taken decisive action across the business to increase liquidity and reduce cost, while preserving long-term value. We continue to review our business to identify opportunities to reduce operating expenditure further and focus on value over volume.
“The second quarter of the year is likely to be more challenging and we expect production to be lower, reflecting planned maintenance and development-related shutdowns and weaker commodity prices.
“We remain mindful of the impact of the pandemic and have put in place measures to support our people, our suppliers and the communities in which we operate.”
Mr House also said Neptune had taken “decisive action” by identifying £240-325 million worth of full-year cost reductions, which it is “on target” to deliver.