Neptune Energy announces Q3 2020 results

18/11/2020

Neptune Energy today announced its financial results for the three months ended 30 September 2020.

Good safety and underlying operational performance in Q3, with YTD production up
• Continued safety performance improvements, with reductions in Total Recordable Injury Rate and Process Safety Event Rate.
• Q3 production of 134.5 kboepd, due to planned shutdowns and operational issues at joint venture assets in Norway and Algeria. YTD production of 148.6 kboepd, up on corresponding period in 2019.
• Production restricted in Q4 due to repairs at Touat (Algeria) and outage at the Equinor-operated Hammerfest LNG facility (Norway), with loss of revenues from the Snøhvit Unit to be recovered through business interruption insurance. FY production guidance of 140-145 kboepd.

Robust financial performance, with hedging gains and tax refunds boosting cash flow
• EBITDAX of $172.1 million in Q3 reflecting weaker production and continued soft commodity prices, offset by realised hedging gains of $75 million. YTD operating cash flows of $676 million lifted by Norwegian tax refunds.
• Low operating costs of $10.2/boe in Q3. Full year opex expected to average around $9.5/boe.
• Repaid Touat vendor loan, saving ~$12 million per year and increasing available liquidity under the RBL by $275 million.

Strong balance sheet, disciplined capital allocation and healthy liquidity
• Expect FY operating cash flow of around $900 million, reflecting lower cost base and tax refunds, offset by weaker production.
• Resilience programme delivered $290 million of reductions YTD. On track to deliver FY 2020 reductions of ~$330 million.
• Liquidity of $1.3 billion, providing headroom to support value-accretive acquisitions and growth opportunities.

FINANCIAL SUMMARY

Neptune Energy	Q2 2020	Q3 2020	Q32019	9M 2020	9M 2019
Total daily production (kboepd) (note c)	149.6	134.5	130.8	148.6	142.6
Average realised oil price ($/bbl) (note a,c)	29.2	41.4	64.2	39.7	62.1
Average realised oil price including hedging ($/bbl) (note b,c)	41.5	46.7	64.2	46.0	61.3
Average realised gas price ($/mcf) (note a,c)	1.5	2.6	3.6	2.5	5.0
Average realised gas price including hedging ($/mcf) (note b,c)	3.3	4.3	4.6	4.2	5.5
EBITDAX ($m) (RBL basis) (note d)	227.8	172.1	331.3	732.0	1,213.2
Operating costs ($/boe)	8.5	10.2	11.2	9.1	10.6
Operating cash flow ($m)				675.9	947.2

Neptune Energy Chief Executive Officer, Jim House, said: 'Despite the ongoing restrictions of the COVID-19 pandemic, Neptune delivered a robust safety, operational and financial performance in the third quarter. Our active hedging programme and tight cost control boosted cash flow and we took further steps to enhance liquidity.

'While repairs at Touat and the outage at the Equinor-operated Hammerfest LNG facility at Melkøya will restrict production in the near-term, we head into next year with new projects coming online in Norway and Indonesia and high value appraisal activities at Dugong in Norway and Isabella in the UK, which will enhance cash flow and provide longer-term growth.'

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Notes to editors
a) Average realised prices are stated before the impact of hedging.
b) Average realised prices are stated after the impact of hedging.
c) Production and realised price figures are for wholly owned affiliates and equity accounted affiliates.
d) EBITDAX as defined by the RBL and shareholder agreement includes our share of net income from Touat in 2020 following the repayment of the Touat Vendor Loan in Q3 2020. EBITDAX for 2019 is excluding our share of net income from Touat. For more detail on the Touat loan and the RBL please see the Financing and Liquidity section on page 15 of the results statement.

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About Neptune Energy Group
Neptune Energy is an independent global E&P company with operations across the North Sea, North Africa and Asia Pacific. The business had production of 144,000 net barrels of oil equivalent per day in 2019 and 2P reserves at 31st December 2019 of 633 million barrels of oil equivalent. The Company, founded by Sam Laidlaw, is backed by CIC and funds advised by Carlyle Group and CVC Capital Partners.

More information: www.neptuneenergy.com