Page 11 - Euroil Week 17 2020

EurOil PERFORMANCE EurOil
Aker BP warns of Q1 loss
BP
The part BP-owned producer warns of up to $700mn in impairments.
NORWAY’S Aker BP has warned it expects to book a pre-tax loss in the three months ending March 31, owing to $500-700mn in impairments as a result of the market crisis.
North Sea prices sunk to near 20-year lows at the start of last week, amid limited demand recov- ery and growing fears that storage will run out.
position, earning it an extra $80mn in the period. Aker BP offloaded its gas for roughly $140 per 1,000 cubic metres, versus $170 previously. Sec- ond-quarter prices for both oil and gas are very
likely to average even lower.
Besides impairments and low prices, the
company also expects to take a hit as a result of a decline in the Norwegian krone, weakening its overall finances despite reducing its production costs in dollar terms.
“Due to the sharp reduction in oil prices, the
company expects to make non-cash impairment
charges related to both tangible and intangible
assets,”AkerBPsaidinastatement. AkerBPhasalreadytakenstepstobraceitself
The company saw oil and gas production rise by 8.9% quarter on quarter in the three-month period, arriving at 208,100 barrels of oil equiva- lent per day (boepd). Around 86% of this volume was oil and other liquids, while the rest was gas.
Aker BP gained from surging output at the giant Johan Sverdrup oil project in the North Sea, in which it has a 11.6% stake.
However, offsetting higher volumes was a sharp decline in prices, especially for oil. Aker BP sold liquids at only $44.7 per barrel in the quar- ter, compared with $64.2 in the previous three months. The company benefited from a hedging
for the crisis, having announced in late March a 20% reduction in its capital spending to $1.2bn. It has also frozen all unsanctioned projects, including the Hod redevelopment scheme.
The good news for Aker BP is continuing growth at Sverdrup, which is predicted to flow at a rate of 440,000 bpd by next month. The field requires less than $20-per-barrel oil to break even.
Aker BP and other oil producers have also announced the launch this month of another cost-competitive field, Aerfugl, which is flowing gas three years ahead of schedule. ™
Serbia’s NIS swings to loss in Q1
SERBIA
NIS suffered from hefty liability payments for oil imports and to the state.
SERBIAN refining group NIS swung to a RSD1.1bn ($10.2mn) loss in the first quarter, from a RSD200mn net profit a year earlier, blam- ing the result on the coronavirus (COVID-19) pandemic.
Lockdowns imposed to slow the spread of the virus have caused oil prices to tumble and demand for petroleum products to plunge, and this had a decisive impact on NIS’ performance, the company said in a statement on April 27.
The company, which owns two refineries, a chain of filling stations and various other businesses, reported RSD5.2bn in EBITDA for the period, down from RSD6.3bn a year earlier. Revenues were down to RSD52.6bn, from RSD53.5bn. But operating cash flow came in at negative RSD1.6bn, versus a positive RSD11.3bn. NIS blamed the swing on higher liability payments for oil imports, which come from Russia, and liability payments to the state.
NIS invested RSD7.7bn in the three-month period, down 7% year on year. This sum was mostly spent on exploration and production activities and the modernisation of process- ing capacities. Specifically, this related to the construction of deep-processing facilities with delayed coking technology at the Pancevo oil refinery, NIS said.
Oil and gas output averaged 25,700 barrels of oil equivalent per day (boepd), which was stable
year on year. Petroleum product sales grew 7% to 778,000 tonnes.
“Our results this quarter are due to circum- stances that we could not influence. However, we are already making significant strides that will positively impact our performance over the course of the year,” NIS CEO Kirill Tyurdenev said in the statement. “We will focus on meas- ures to increase business efficiency and reduce costs in all areas that are not essential to the func- tioning of the business. Also, we will not give up investing in key development projects that will bring us the most benefit in the future.”
NIS is 56.2%-owned by Russia’s Gazprom and is one of the largest vertically integrated oil and gas companies in Southeast Europe. The Serbian government has a 29.9% stake in the company.™
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