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    Neptune Hits Output Target Despite Outages


The company is expecting a sharp rise in output in the coming few years.

by: William Powell

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Neptune Hits Output Target Despite Outages

Private producer Neptune was bang in the middle of its production guidance last year, with an average of 142,400 barrels of oil equivalent (boe)/day despite two outages, it said February 26.

Its guidance for the year had been 140,000-145,000 boe/d, and it expects this to reach 200,000 boe/d in 2023 as fields in its "low cost, low carbon" portfolio come onstream.

CEO Jim House said: "With these higher production volumes and lower capital expenditure on sanctioned projects, we expect to generate higher cash flows that will support our longer term growth opportunities."

A fire at the Norwegian Hammerfest LNG plant led to production at the related Snohvit gasfield being halted, while its activities at the Algerian Touat field have also stopped. Including production-equivalent loss of production insurance payments, production was 143,8000 boe/d, which was unchanged on 2019. Output in Q1-3 had averaged 148,600 boe/d.

"Based on the expected restart of Touat at the end of Q1 2021 and Snohvit in early Q4 2021, along with scheduled start-up dates for our projects at Gjoa P1 (Norway), Duva (Norway) and Merakes (Indonesia), we expect Group production to average 130,000-145,000 boe/d in 2021. Including production-equivalent loss of production insurance payments, production is expected to be 140,00o-155,000 boe/d," it said.

Development capital expenditure including Touat is expected to be around $700mn and will be weighted towards the first half of the year, leading to higher expected free cash flow in the second half of 2021 as production also increases. Development capex at Neptune's sanctioned projects will decline further in 2022 and 2023 as projects are completed and brought onstream.

Exploration and appraisal spend is expected to remain around $150mn in 2021, with up to 11 wells to be drilled. Neptune's drilling programme in 2021 includes important appraisal wells on the Dugong and Maha discoveries and an exploration well targeting the Dugong Tail prospect.

Given the improving commodity markets and economic outlook, Neptune paid shareholders a $200mn interim dividend for the financial year 2021, having made no payment last year. It publishes its financial results next month.