Neptune Energy Announces H1 2020 Results

Source: 8/27/2020, Location: Europe

Neptune Energy announced its financial results for the first half of 2020.

Good safety and operational performance despite challenges posed by COVID-19 pandemic
• Improved safety performance, with LTIF rate of 0.6, TRIR of 2.1 and PSER of 2.1, with no impact from COVID-19 on operations
• Q2 production of 149.6 kboepd, reflecting planned shutdowns and prioritisation of value over volume
• H1 production of 155.8 kboepd; full year production guidance unchanged at 145-160 kboepd
• Operational handover of Touat gas facility completed, with improved performance achieved since April

Robust financial performance, supported by hedging and lower operating costs
• EBITDAX of $537.6 million and cash flow of $417.3 million in H1 2020, reflecting weaker commodity prices, partially offset by hedging gains and cost reductions; tax refunds to increase cash flows in H2
• Lower operating costs of $8.5/boe in Q2, further reduced FY guidance to <$9.5/boe
• Better than expected net debt of $1.6 billion and leverage of 1.31x at 30 June 2020
• Non-cash pre-tax net impairments of $125 million and reorganisation costs of $34 million recognised in Q2

Resilience plan on track to achieve FY 2020 cost savings of $300-400 million
• Operating and G&A cost savings of $50 million achieved in H1. On track for FY savings of $85 million in 2020
• Revised capex guidance for 2020 of $700-800 million on track
• Expected exploration spend increased marginally to $135 million, reflecting positive drilling results and a further appraisal study at Isabella
• Reduced exploration and development drilling activity in H2

Decisive action taken to reflect more focused activity set, while preserving long-term value
• Reduced costs – announced proposals in June to reduce the organisation by 400 roles in 2020/21
• Sharpened strategic focus – tighter capital plan focused on low-cost near-term projects
• High-graded exploration – Dugong discovery in Norway a potential material new operated growth project
• New Energy – formation of New Energy team to scale partnerships and investment in low carbon technologies; increased focus on ESG

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