Neptune Sees Q3-4 Production Drop

Privately backed Neptune Energy said its Q1-3 oil and gas production averaged 148,600 barrels of oil equivalent (boe)/day, which was up on the first nine months of 2019. But output in Q3 was lower than it had been in Q1-2 and it will be lower in Q4 too, it said November 18.

Neptune's Q3 production was 134,500 boe/day owing to planned shutdowns and operational issues at joint venture assets in Norway and Algeria, up from last year's 130,800 boe/d. And output this quarter will also be lower owing to repairs at Touat in Algeria and the Hammerfest liquefaction facility in Norway which exports gas from Snohvit. It caught fire at the close of Q3.

However, Neptune will be compensated for loss of revenues from Snohvit through business interruption insurance. On the positive side, next year sees new projects coming online in Norway and Indonesia and high value appraisal activities at Dugong in Norway and Isabella in the UK. 

Pre-tax earnings (Ebitdax) for Q3 were $172.1mn in Q3, half last year's $331.3mn reflecting weaker production and continued soft commodity prices, offset by realised hedging gains of $75mn. Year-to-date operating cash flows of $676mn gained from tax refunds in Norway.

Neptune expects full-year cash flow of around $900mn, reflecting lower cost base and tax refunds, offset by weaker production and it is on track to make $330mn savings this year. It is also eyeing growth funded by $1.3bn of liquidity.

CEO Jim House said that its "active hedging programme and tight cost control boosted cash flow and we took further steps to enhance liquidity." Average Q3 gas price including hedging was $4.3/'000 ft³, down from $4.6/'000 ft³ last year.