Maersk Earnings Slip, Lundin Rallies
Denmark’s family-controlled AP Moller-Maersk shipping and oil conglomerate, which two months ago said it would split in two by 2017, reported 3Q 2016 profits of $438mn, down 44% from $778mn a year ago; underlying earnings were down 36% at $426mn.
Its Maersk Oil division reported an underlying profit of $146mn (3Q 2015: $32mn). Cost reductions were “ahead of plan” while its two key developments, the $4.5bn Culzean gasfield off UK and the Johan Sverdrup oil project off Norway, continued to make “good progress” with drilling begun at the first Culzean production. Johan Sverdrup phase 1 would reach break-even if crude were below $25/barrel, it added.
On stalled projects, Maersk said it was exiting the Buckskin oil and gas project in the US Gulf, but was continuing to assess possible development of its Chissonga oilfield offshore Angola with partners. In September, it announced a planned restructuring of its portfolio on fewer geographies to gain scale in basins, particularly in the North Sea, including possibly through mergers and acquisitions. Maersk said work continues on its newly acquired licences in northern Kenya and southern Ethiopia, with a four-well exploration and appraisal well programme planned to start drilling by end-2016.
Africa Oil Corporation sold those east African licences to Maersk in November 2015 for up to $845mn. Sweden's Lundin family has stakes in AOC as well as much larger independent Lundin Petroleum which reported its 3Q earnings on November 2.
The Edvard Grieg oil, and gas processing platform in the North Sea offshore Norway began producing late last year (Source: Lundin Petroleum)
The latter, also a Johan Sverdrup stakeholder, reversed a 3Q 2015 net loss of $200.4mn into a net profit this year of $174.9mn, while earnings before tax, depreciation and amortisation were 157% higher at $253.8mn, as its net production more than doubled to 80,400 boe/d (from 36,000 boe/d) thanks to a ramp-up of the Edvard Grieg oil field in which it has a 65% interest and which only started up in last year’s 4Q. The field’s platform can also process oil and gas from nearby fields. Norway accounts for five-sixths of its production, with minor production also in France, Netherlands and Malaysia.
Mark Smedley