London, 3 April 2019– Neptune Energy, the global independent oil and gas E&P company, today announces its first financial results for the period ending 31 December 2018.
Strong financial and operating results for 2018, laying the foundations for 2019 and beyond
- Production up to 161.8 kboepd, largely as a result of a full year’s contribution from Jangkrik, as well as more rigorous production management across the portfolio. Significant improvement in HSSE metrics.
- Continued strong operating cash flow of $1,156 million and costs down to $10.2/boe. Realised oil price of $69.6/bbl and dry gas sales price of $7.9/mcf before hedging.
- Pro forma leverage remains modest and net debt to EBITDAX is 0.84. Liquidity in excess of $1,100 million provides significant financial headroom to support our organic and inorganic growth strategy.
- First year dividend of $380m paid in December.
- Good strategic progress with the acquisitions and integration of VNG Norge and the Seagull and Isabella assets completed.
Focused on organic growth and project delivery in 2019
- Exploration spend of $125m in 2019, with seven wells to be drilled, focused on Indonesia, Norway and the UK. Awarded nine new exploration licences in Norway and one in Egypt, of which five with operatorships.
- Projects progressing on time and on budget, with our four operated North Sea developments, Duva (formerly Cara), Gjøa P1 and Seagull sanctioned and Fenja on track. First gas out from our operated Touat project in Algeria is expected by the end of H1.
- Upgraded proved plus probable reserves (2P) to 638 mmboe after full appraisal and addition of VNG Norge portfolio. Reserves replacement ratio of 244 per cent, 11 years reserves over production ratio.
- Production guidance of 155-160 kboepd for the full year, with record production expected in Q4 2019, due to start-up of Touat and infill wells expected to be drilled earlier in the period.
Building a business for the long-term, based on Neptune’s key founding principles
- Geographically diverse at scale: portfolio focused on Europe, North Africa and Asia Pacific. 84 per cent of production and 78 per cent of 2P reserves in OECD countries.
- Gas-weighted portfolio: gas accounts for 72 per cent of production and 65per cent of revenue, providing protection from lower oil prices, while able to capture value in higher price environments. Gas weighting supports the transition to a low carbon future.
- Strong project pipeline of low cost developments provides good medium term production growth.
- Organic and inorganic growth opportunities: proven acquisition and integration capability. Strong cash flow and balance sheet supports dividend and further bolt-on value-accretive acquisitions.
|Neptune Energy||Pro forma Information|
|December 2018 (period 15 February to 31 December)||12 months to December 2018||12 months to December 2017|
|Total daily production (kboepd)||161.8||159.1||154.3|
|Total annual production (mmboe)||50.9||58.1||56.3|
|Average realised oil price ($/bbl)||69.6||70.0||56.0|
|Average realised gas price ($/mcf)||7.9||8.1||6.4|
|Development capital expenditure ($m)||441.0||643.7||779.0|
|Operating costs ($/boe)||10.2||10.5|
|Operating cash flow ($m)||1,156.0|
|Net debt (book value) ($m)||1,590.9|
Sam Laidlaw, Executive Chairman
“We are delighted with the strategic progress Neptune has made during 2018. We have completed three important acquisitions in the period and have made significant strides towards our ambition of establishing Neptune as a leading international independent exploration and production company.
“As part of the ENGIE E&P acquisition we welcomed China Investment Corporation as a major new shareholder in Neptune and, along with our founding shareholders, The Carlyle Group and CVC, we have supportive investors who are fully aligned with our vision. We also welcome the highly capable teams and individuals who have joined Neptune in the past year.
“Our high-quality, long life diversified portfolio provides us with a strong foundation for future growth. Our gas weighting offers a good balance at a time of oil price volatility and positions us well for the low carbon transition. We are excited by the high quality opportunities available to us and look forward to delivering further growth in 2019.”
Jim House, Chief Executive Officer
“We have made excellent operational progress in 2018 and have achieved strong financial results for the period. Our robust balance sheet and high cash generation leaves us well equipped to develop our internal resources, pay a dividend and capture value enhancing acquisitions.
“Integrating EPI and VNG Norge and implementing important organisational and management changes has been a significant achievement for Neptune. While there is more hard work ahead of us, we have a dynamic and highly capable team, operating with shared values. Our approach is already delivering positive results, and in time will help us establish a reputation as a partner and employer of choice.
“In 2018, we delivered higher production, a substantial reserves upgrade, lower operating costs and most importantly a materially improved HSSE record. Having sanctioned two new material operated North Sea projects, we have made a strong start and remain on course to exit the year with record production.”
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About Neptune Energy
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 162,000 net barrels of oil equivalent per day in 2018 and 2P reserves at 31st December 2018 of 638 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.
For further information – please see all 2018 results documents here.