Neptune Posts Strong H1 Figures Backed by High Commodity Prices

Neptune Posts Strong H1 Figures Backed by High Commodity Prices
Neptune Energy reported revenues for the half year at $2.06 billion and a net income of $761.7 million, rising significantly from the respective 2021 figures.

Neptune Energy boasted good operational and financial performance in the first half of the year. The company’s revenues climbed from $874.2 million in H1 2021 to $2.06 billion for the first six months of 2022.

The higher revenue in the half year of 2022 is supported by strong commodity prices and higher production compared to the same period in 2021. The Brent crude price averaged $107.9 per barrel for the half year and Neptune’s average realized oil price (pre hedging) was $106.1 per barrel for the same period. Including hedging, Neptune’s average realized oil price was $102.9 per barrel for the half year.

The average realized gas price was $22.7 per MMBtu (pre hedging) and $14.1 per MMBtu (post hedging) for the half year. In the first half of 2022, commodity prices remained high with the supply of energy-constrained following structural under-investment and the war in Ukraine.

Neptune’s net income for the period reached $761.7 million, up from $100.3 million reported in the first half of 2021. Group production in the first half of 2022 increased to 132.2 kboepd, from 119.6 kboepd in the first half of 2021, reflecting the start-up of the Duva (Norway) and Merakes (Indonesia) fields and improved production efficiency.

Neptune Energy said it is continuing to trade in line with full-year guidance. During the period, the company worked on optimizing production from existing assets and has brought Snøhvit back online, supporting energy security priorities in the UK and Europe.

As energy supply remains constrained following structural under-investment and the war in Ukraine, Neptune continued to focus investment on completing projects in Norway and the UK, which is expected to increase its production by around 47 kboepd in 2023.

“As we mature new development options, we will favor shorter-cycle projects in countries with supportive and stable fiscal and regulatory regimes. This includes our lower carbon projects, which we continue to progress,” the company’s report reads.

“We continued to make good progress with our growth projects in the first half of the year as we look to increase supply by 47 kboepd into the UK and Europe in 2023,” Neptune said in its report.

In Norway, the Njord redevelopment project is in the final stages of completion, with the Njord A FPU having been anchored on location and the risers pulled in. Final offshore activities and commissioning are underway, ahead of the start-up in late 2022. At the Fenja project, which is being developed as a tie-back to Njord, the second development drilling campaign has been completed and the field is ready for production start-up.

In the UK, the Seagull project also continues to progress, with the first of two subsea campaigns planned for 2022 completed in May and topside operations moving forward. The first well has been perforated and clean-up operations are expected to be completed in August.

“As countries around the world prioritize energy security, energy policy must support a stable and predictable investment climate to encourage new investment in additional sources of supply,” said Sam Laidlaw, Executive Chairman of Neptune Energy. “Neptune continues to deliver its strategy of increasing production of lower carbon energy while progressing plans to go beyond net zero through electrification and carbon capture and storage.”

Despite potential risks from further COVID-19 restrictions and slower economic growth as inflationary pressures and the war in Ukraine impact the global economy, the outlook for commodity markets is expected to remain strong in the second half of the year.

In the third quarter, Neptune’s production is expected to increase as a result of a full quarter of production from Snøhvit. These gains will be offset partially by planned maintenance activities in the UK, Germany, and the Netherlands.

With Touat remaining shut-in throughout the first half of 2022, Neptune now expects full-year production to average towards the lower end of our 135-145 kboepd guidance range. The company continues to work with Sonatrach on repairs and restart plans and expects exports to recommence shortly.

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