Maersk Oil going up

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Maersk2The Danish company, which on Wednesday revealed it is to exit the Repsol-operated ultra-deepwater Buckskin project in the US Gulf of Mexico, returned a positive underlying result for the third quarter, despite production dropping slightly.

The underlying result for the three months to the end of September was $146 million as against $32 million a year earlier, despite revenues slipping from $1.32 billion to $1.23 billion on lower oil and gas prices.

Entitlement production came off slightly from an average of 300,000 barrels of oil equivalent per day in last year’s third quarter to 295,000 boepd in the latest period.

Exploration costs were chopped 30% from $82 million to $57 million, with Maersk targeting total cost savings for the year of 25%.

For the full year the company is still expecting a positive underlying result, with a breakeven now below $40 per barrel of Brent crude. Full-year production is set to come at between 320,000 and 330,000 boepd, up from 312,000 boepd seen last year.

Full-year exploration expenses are seen coming in “significantly below” the $423 million in 2015.

The company also intends to kick off a four-well exploration and appraisal well drilling campaign in Kenya and Ethiopia before the end of the year, while discussions are ongoing over commencement of test production and development of a crude pipeline in Kenya.

“Maersk Oil will adjust its current strategy to focus its portfolio on fewer geographies to gain scale in basins, particularly in the North Sea, and will aim to strengthen its portfolio through mergers and acquisitions,” the company said of future plans.

“Maersk Oil will mature existing key development projects, while keeping exploration activities and expenses at a low level.”

Related company Maersk Drilling also turned in a positive underlying performance in the third quarter, mainly due to payments for rig charter terminations and cost controls. The underlying result for the quarter was $340 million as compared with $172 million a year earlier, with the full-year underlying result seen as coming in broadly in line with 2015’s $732 million.

“Maersk Drilling will limit further investments to maintenance capital expenditures for the current rig fleet, while seeking structural solutions for Maersk Drilling consistent with the update of the recently completed strategic review for the Maersk Group,” the parent company said.

The Maersk Group itself saw net profit tumble in the third quarter from $778 million to $438 million as revenues slipped from $10.11 billion to $9.18 billion, primarily due to lower pricing in the liner shipping sector.

Full-year guidance for the group is still seen at “significantly below” the $3.1 billion taken last year – with below $1 billion envisaged.

Source: Steve Marshall / Upstream Online

By Newsroom

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