14. July 2020
The first half of 2020 has been challenging for the entire oil industry due to the combination of the Covid-19 pandemic coupled with a dramatic fall in petroleum prices. OKEA’s financial statements for the second quarter reflects the market turmoil and are significantly impacted by the low petroleum prices as well as one-off and non-cash items.
OKEA delivered yet another quarter with no serious incidents at the operated asset, Draugen, where operation has continued without disturbances to production. Despite strong operational performance combined with high production regularity, total net production was reduced to 16,047 (20,045) boepd in the quarter due to planned shutdowns at both Draugen and Gjøa (non-operated asset). During the quarter, OKEA rescheduled the planned maintenance shutdown at Draugen to re-optimise the operation for the production restriction measures implemented by the Norwegian Government.
“By optimizing the timing of the maintenance turnaround at Draugen we have managed to stay within the reduced production permit for the asset and still maintain our production guiding for the year”, says Erik Haugane, CEO of OKEA.
Operating income for the quarter amounted to NOK 275 (1,039) million. The lower income was due to significantly lower market prices and lower sold volumes mainly due fewer liftings from Draugen. Delays in the Yme project, revised reserve estimates for the Gjøa P1 project and foreign exchange effects resulted in non-cash impairments of NOK 298 million. EBITDA for the quarter amounted to NOK 210 (594) million.
“Despite weak financial results for the quarter, I am pleased with how OKEA has managed a challenging situation and believe we are in a good position to further develop the company. We have been able to continue production without operational disturbances and have reached agreement to amend the bond terms to better suit the current outlook. I am also very satisfied with the temporary changes to the petroleum tax legislation implemented by the Norwegian Parliament, particularly the negative tax instalments which supports equal treatment of E&P companies on the Norwegian Continental Shelf (NCS). The new regulation improves the liquidity position of OKEA significantly and enables us to revisit the profitable projects that were put on hold earlier this year”, says Mr. Haugane.
The second quarter results will be presented by Erik Haugane (CEO) and Birte Norheim (CFO) today at 10:00 CET in a webcast on www.okea.no and as a conference call. Following the presentation there will be a Q&A session. To participate in the conference call please use the following dial-in numbers:
Norway: +47 2195 6342
UK: +44 203 769 6819
PIN Code: 681934
Full press release, report and presentation is available on this link:
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