Neptune Energy announced its financial results for the three months ended 31 March
Strong operational performance, with production for the period above full year guidance
• Strong operational performance with limited disruption from COVID-19 on operations
• Production averaged 162.1 kboepd for the first quarter with high production efficiency; Touat reached plateau in April
• Maintaining full year production guidance of 145-160 kboepd
• Exploration success with discoveries in Norway, the UK and Germany
Robust financial performance, low operating costs and increased liquidity
• Robust cash flow of $355 million for the period; resilience plan and hedging mitigate weaker commodity prices
• Lower operating costs of $8.9/boe for the period, full year guidance reduced to <$10/boe
• Completed redetermination of RBL borrowing base to $2.3 billion and upsizing to $2.6 billion, increasing total available liquidity to $1.7 billion
• Agreed to terminate the agreement to acquire Edison E&P’s UK and Norwegian subsidiaries from Energean Oil & Gas
• Net debt to EBITDAX of 0.99 times at the end of the period
Resilience plan delivering efficiencies, on target for full year cost reductions of $300-400 million
• 2020 operating cost and G&A cost savings of $50 million identified and being delivered
• Project development schedules have been deferred. 2020 capex reductions expected to be in excess of $300 million; full year development capex guidance lowered to $700-800 million. Near-term exploration activity reduced
• Norwegian government curtailments, shut-ins of some higher cost production and extended maintenance programs have modest impact on near-term production volumes
HSE performance stable, introduced COVID-19 response plan to support employees, suppliers and communities
• Safety performance stable, with 0.7 for LTIF, 2.3 for TRIR and 1.95 for PSER
• Introduced a process safety dashboard, reporting on 10 leading process safety indicators on monthly basis for operated activities
• Targeted COVID-19 response plan put in place: increased screening capability and introduced employee counselling service; targeted support for key supply chain partners and provided access to global medical provider; support for international relief fund and employee social initiatives across the business
Neptune Chief Executive Officer, Jim House 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.”