Neptune's new upstream projects beat targets

Privately held Neptune is seeing its new upstream projects perform above plan, delivering near-term production growth, it said as it announced its Q2 financial results August 12, 

Like its peers it benefited from the surge in oil and particularly gas prices. It achieved higher quarterly average realised prices (including hedging) of $62.1/barrel for oil and $6.8/mn Btu for gas. It has access to $1.1bn liquidity to support further growth plans.

Pre-tax and exploration expense profits were $346.4mn, compared with $214.7mn in Q2 2020. Underlying operating profit was $147.3mn, compared with $86.9mn in Q2 2020. Its full-year guidance for post-tax operating cash flow (before working capital) has risen from about $1.4bn to over $1.6bn. It has also lowered its guidance for full-year operating costs, from $11,50/barrel of oil equivalent (boe) (midpoint) to $10.50/boe.

Production including insurance income was 136,300 boe/day, in line with guidance. But full-year guidance has been tightened to 130,000-135,000 boe/d, the lower end of the earlier 130,000-145,000 boe/d range, reflecting extended shutdowns at Snohvit offshore Norway and Touat in Algeria. Snohvit will be offline for about six months longer than expected after the fire last year.

Neptune expects to exit the year with materially higher daily production with Duva on stream and Touat at full. So although daily production is down this year from 142,000 boe/d in 2020, it says it is on track for its target of 185,000-200,000 boe/d in 2023.

Executive chairman Sam Laidlaw said Neptune "delivered a strong operational and financial performance in the first half of the year,.. We see good opportunities for growth from New Energy, particularly with carbon capture and storage, hydrogen and electrification, and continue to make progress with our projects, which would build on our existing lower carbon position."