Neptune Energy today
announced its financial results for the 12 months ended 31 December 2022.
Strong
operating performance in 2022, materially higher production in 2023
- Good HSE performance,
with lower total recordable injury rate and process safety event rate.
Targeting further improvements in personal and process safety in 2023.
- Carbon intensity
from operated production stable at 6.5 kg CO2/boe, methane intensity
of 0.02%. On track to hit 2030 targets.
- FY 2022 production
increased to 135.0 kboepd, reflecting restart of Snøhvit and a full-year’s
contribution from Duva. Njord successfully brought onstream in December.
Further improvement in production efficiency to 85%.
- Production guidance
of 150-165 kboepd in 2023, supported by Njord ramp-up, start-up of Fenja
(April) and Seagull (Q2) projects, and the restart of gas exports from
Touat.
Lower
carbon portfolio, low carbon developments
- Total investment
since 2018 of more than $4 billion, delivering a material increase in total
reserves and resources and production, and supporting energy security in
Europe.
- 2P reserves of 552
mmboe at 31 December 2022, with a higher proportion of reserves developed.
2C resources increased to 468 mmboe, reflecting new licences and exploration
success, and providing future growth opportunities.
- Reducing operational
emissions through electrification. Gudrun project to be brought online
in mid-2023. Submitted plans in December 2022 to electrify Snøhvit and
Njord, increasing proportion of production electrified in Norway to 100%
in 2028.
- Continuing to advance
CCS opportunities in Norway, the Netherlands and the UK. FEED expected
to commence at L10 CCS project in 2023, submitted CO2 storage
licence applications in the UK and Norway.
Growing
cash flow, strong balance sheet
- Post-tax operating
cash flow of $2.4 billion, EBITDAX of $3.9 billion and operating profit
of $3.2 billion. Strong performance enabled dividend and capital distributions
totalling $1.1 billion by Neptune Energy Group Limited.
- Total tax charge
for 2022 of $2.2 billion, representing an effective tax rate of 70%.
- Net debt to EBITDAX
of 0.44 times at 31 December 2022. RBL refinancing expected to be completed
in the first half of 2023. Credit rating upgrades in 2022 from Fitch, Moody’s
and S&P.
- Guidance for post-tax
operating cash flow of ~$2.0 billion in 2023 as higher production is offset
by lower expected oil and gas prices and higher cash taxes.
Disciplined
capital allocation, near-term growth
- Disciplined investment
in 2023, guidance for development capex of ~$450 million and exploration
and pre-development spend of ~$200 million. Further increase in spend on
lower carbon projects.
- Focus on shorter
cycle projects and near-term returns. Maturing new growth projects in Norway,
the Netherlands and Indonesia.
- Exploration wells
to be drilled at Cerisa, Yakoot and Geng North in 2023. Successful completion
of Isabella appraisal well, evaluating results to establish commerciality.
- Higher cash taxes
of ~$2.0 billion in 2023, reflecting the timing of our tax payments and
impact of windfall taxes. Cash windfall taxes and royalties in the UK,
the Netherlands and Germany are expected to total $105 million in 2023.
Leading
ESG performance, socio-economic impact
- Strong ESG ratings
received in 2022 from Sustainalytics and EcoVadis.
- New three-year roadmap
to 2025 includes actions to meet our 2030 climate targets, along with actions
to support a just energy transition.
- Estimated $4.8 billion
of gross value added to GDPs in our European countries of operation, underlining
the positive economic contribution from our investments, supporting jobs,
supply chains and national tax revenues.
- Focus on delivering
on our ambitious plans to store more carbon than is emitted through our
operations and the use of our sold products by 2030.
FINANCIAL
SUMMARY
| Neptune
Energy
|
2022
|
2021
|
| Revenue
($m)
|
4,640.1
|
2,490.1
|
| Operating
profit before financial items ($m)
|
3,180.6
|
1,514.7
|
| Profit
before tax ($m)
|
3,095.9
|
1,392.4
|
| Net
profit after tax ($m)
|
924.4
|
387.2
|
| Net
cash flows from operating activities ($m)
|
2,373.2
|
1,696.8
|
| Non-GAAP
measures
|
|
|
| Total
daily production (kboepd) (note a)
|
135.0
|
130.0
|
| Total
daily production (kboepd) including production-equivalent insurance income
(note a, b)
|
135.6
|
148.3
|
| Operating
costs ($/boe) (note c)
|
12.3
|
11.3
|
| EBITDAX
($m) (RBL basis) (note d)
|
3,854.0
|
2,109.3
|
| Underlying
operating profit ($m)
(note e)
|
3,151.2
|
1,368.3
|
| Adjusted
development cash capital expenditure ($m) (note f)
|
537.2
|
635.8
|
| Free
cash flow ($m) (note g)
|
1,685.1
|
862.7
|
| Net
debt ($m) (book value) (RBL basis) (note h)
|
1,690.8
|
2,103.9
|
| Net
debt/EBITDAX (RBL basis) (note h)
|
0.44x
|
1.00x |
Neptune
Energy’s Executive Chairman, Sam Laidlaw, said: “The last 12 months have
seen a dramatic shift in the geopolitical environment that shapes how energy
is produced and used. After Russia’s war in Europe it is inevitable that
there is a generational redrawing of political and economic allegiances.
“Against
a backdrop of underinvestment, lower commodity prices of the last decade
have been replaced by surging prices and marked volatility. This is particularly
the case with natural gas, due not only to the war, but also increased
awareness of its importance in the energy transition. Having invested more
than $7 billion to transform Neptune over the past five years, we are well
positioned for these changes, with a portfolio that now has greater production
capacity, more lower carbon development opportunities and a stronger balance
sheet.”
Neptune’s
Chief Executive Officer, Pete Jones, said: “Neptune delivered a strong
operational performance in 2022, with further improvements in production
efficiency and health and safety. Production increased as we supported
energy security in Europe and brought Snøhvit back online. We expect production
to increase materially in 2023 as we start-up new projects in Norway and
the UK, with output expected to reach around 180 kboepd in the second half
of the year.
“The
imposition of windfall taxes in 2022 has created significant fiscal and
political uncertainty in the Netherlands, Germany and, in particular, the
UK, undermining investment in these countries and longer-term energy security
in Europe. We continue to progress our new energy strategy and are prioritising
electrification and CCS, which will help us achieve our ambitious 2030
climate targets.”