Neptune Energy announces Full Year 2021 results
Neptune Energy announced its financial results for the 12 months ended 31 December 2021.
Strong operating environment in 2021, with production to increase in 2022
- Good HSE performance with lower process safety event rate. Targeting further improvements in personal and technical safety in 2022.
- FY 2021 production of 130.0 kboepd (148.3 kboepd including production-equivalent insurance income), reflecting outages at Touat and Snøhvit.
- Guidance of 135-145 kboepd for 2022 (140-150 kboepd including production-equivalent insurance income), dependent upon Snøhvit restart timing and Touat performance.
- All sanctioned projects expected online before the end of 2023, increasing production to ~170 kboepd.
Acceleration of lower carbon projects, aim to store more carbon than we emit
- Aim to store more carbon than is emitted from our operations and the use of our sold products by 2030, through accelerating plans for integrated energy hubs, including CCS where we can store carbon at scale.
- Focus on reducing operational emissions through electrification, with more than 35 kboepd of net production electrified by the end of 2022, before increasing to around 50 kboepd by 2027.
- Target L10 CCS project (NL) to be FEED-ready by the end of 2022, with FID due in 2023. Gudrun electrification project on track for completion by the end of 2022.
Long life, low cost and lower carbon portfolio
- 2P reserves increased to 604 mmboe, with a higher proportion of reserves developed. Four-year reserves replacement ratio of 123%. 2C resources of 433 mmboe, providing material future growth potential.
- Carbon intensity from managed production stable at 6.4 kg CO2/boe, methane intensity from managed production of 0.02%. On track to hit 2030 targets.
- Project pipeline to deliver medium-term reduction in opex to <$11/boe.
Growing cash flow, strong balance sheet
- Operating cash flow of $1.7 billion, EBITDAX of $2.1 billion and underlying operating profit of $1.4 billion. Strong earnings and cash flow enabled dividends and capital distributions totalling $1.0 billion by Neptune Energy Group Limited.
- Total available liquidity of $1.1 billion at end of the period. RBL borrowing base of $2.3 billion reconfirmed in March 2022.
- Net debt to EBITDAX of 1.0 times at 31 December 2021. Aim to maintain a ratio of <1.5 times through the cycle.
- Expect to generate further strong cash flow in 2022, notwithstanding higher taxes. Development projects fully funded from operating cash flow.
Disciplined capital allocation, focused on near-term growth
- Continued restraint on capital expenditure, with development capex of ~$600 million in 2022. Focus on shorter cycle projects and near-term returns.
- Lower exploration spend of ~$130 million in 2022, in line with focused strategy targeting lower risk exploration and appraisal opportunities close to existing infrastructure.
- Total tax charge for 2021 of $1.0 billion, representing an effective tax rate of 72%.
FINANCIAL SUMMARY
|
Neptune Energy |
2021 |
2020 |
|
Revenue ($m) |
2,490.1 |
1,560.1 |
|
Operating profit/(loss) before financial items ($m) |
1,514.7 |
(95.4) |
|
Profit/(loss) before tax ($m) |
1,392.4 |
(333.1) |
|
Net profit/(loss) after tax ($m) |
387.2 |
(399.0) |
|
Net cash flows from operating activities ($m) |
1,696.8 |
915.4 |
|
Non-GAAP measures |
|
|
|
Total daily production (kboepd) (note a) |
130.0 |
142.4 |
|
Total daily production (kboepd) including production-equivalent insurance income (note a, b) |
148.3 |
143.8 |
|
Operating costs ($/boe) (note c) |
11.3 |
9.5 |
|
EBITDAX ($m) (RBL basis) (note d) |
2,109.3 |
939.8 |
|
Underlying operating profit ($m) (note e) |
1,368.3 |
287.3 |
|
Adjusted development cash capital expenditure ($m) (note f) |
635.8 |
741.4 |
|
Free cash flow ($m) (note g) |
862.7 |
70.9 |
|
Net debt ($m) (book value) (RBL basis) (note h) |
2,103.9 |
1,821.4 |
|
Net debt/EBITDAX (RBL basis) (note h) |
1.00x |
1.94x |
Neptune’s Executive Chairman, Sam Laidlaw, said: “Neptune delivered a strong financial performance in 2021, driven by higher economic production and stronger commodity prices, particularly towards the end of the year. Our natural gas-weighted and OECD-focused business continues to position us well for current macro trends, including the energy transition.
“We have strengthened our commitment to lowering carbon emissions and have reshaped areas of the business to reflect our investment priorities and to accelerate our lower carbon projects, including the electrification of more of our production. We now aim to store more carbon than is emitted from our operations and the use of our sold products by 2030.”
Neptune’s Chief Executive Officer, Pete Jones, said: “Neptune delivered a robust operational performance in 2021, with improved production efficiency, a good health and safety performance and stable carbon intensity from our operated production.
“In 2021, we successfully brought onstream three new developments, which have continued to perform well. Our remaining development projects are progressing and expected to deliver further production growth to around 170 kboepd in 2023. Our revised strategy capitalises on our strengths, as we target near term returns from investment in lower carbon production , balanced with our low carbon developments at our integrated energy hubs.”
