Neptune Cuts Costs, Suffers from Upstream Woes

Privately held explorer Neptune cut its operating costs from $10.3/barrel of oil equivalent (boe) in 2019 to $9.5/boe in 2020, against a break-even crude oil price of $29.8/boe, it reported March 11. But it suffered from outages at non-operated assets in Algeria and Norway.

Full year production of 142,400 boe/d was within revised guidance range including production-equivalent insurance receipts, it said. Three-quarters of the production, and 72% of reserves, are gas, it said, putting it in good shape for the energy transition.

It expects to exit 2021 at "materially higher production rates" with new projects online in Norway and Indonesia and production restarts in Norway and Algeria. It is aiming for "close to" 200,000 boe/d in 2023, backed by 2C resources of 452mn boe and targeting medium-term 2P reserves of about 800mn boe, "supported by organic and inorganic growth."

Pre-tax profit (Ebitdax) was sharply down from $1.6bn in 2019 to $939.8mn while underlying profit fell from $951.0mn to $287.3mn; the earlier year also did not have the benefit of Touat production. The Algerian field started up in September 2019 but ran into problems last year.

Executive chairman Sam Laidlaw said: "Despite the significant challenges presented by the Covid-19 pandemic and lower commodity prices, Neptune delivered a resilient operational and financial performance in 2020, generating an underlying operating profit.... Our recent exploration results, together with a pipeline of near-term opportunities, provide strong growth for the future."

CEO Jim House, said: "The diversity of our portfolio, balanced commodity price exposure and active hedging programme helped de-risk Neptune's revenue streams in 2020 against volatile prices, while we also took the opportunity to increase liquidity that will provide additional headroom to support value-accretive growth opportunities."