Aker BP cuts oil output target after North Sea field delay

Aker BP expects daily output in 2019 to average 155,000 barrels of oil equivalents (boepd), down from a July forecast of 155,000-160,000 boepd. (Shutterstock)
Updated 22 October 2019

Aker BP cuts oil output target after North Sea field delay

  • Company blames lower forecast on delay in starting new wells at North Sea field

OSLO: Aker BP cut its full-year oil output target on Tuesday as production problems at the oil explorer’s Valhall field in the North Sea offset a boost from the early opening of its Johan Sverdrup field in Norway.

The company, jointly controlled by oil major BP Plc and Norwegian holding company Aker ASA, now expects daily output in 2019 to average 155,000 barrels of oil equivalents (boepd), down from a July forecast of 155,000-160,000 boepd.

The company blamed the lower forecast on a delay in starting new wells at the North Sea Valhall field, following maintenance in June, adding that there was no impact on reserves.

Aker BP’s average output stood at only 144,000 boepd for the first nine months of the year, but the Sverdrup field, brought on stream by operator Equinor on Oct. 5, a month ahead of schedule, will give a significant fourth-quarter boost.

With reserves of 2.7 billion barrels of oil and expected to reach production of some 440,000 boepd by mid-2020, the field — in which Aker BP owns 11.57 percent — is the largest Norwegian oil development in more than 30 years.

Meanwhile, Aker BP’s earnings before interest, tax, depreciation and amortization (EBITDA) fell to $480 million in the third quarter from $698 million a year ago, in line with a $478 million forecast in a Refinitiv poll of analysts.

The company had warned on Oct. 14 that third-quarter output was weaker than expected as seasonal maintenance at some fields had taken longer than expected.

It had also warned in advance of $80 million goodwill impairments and additional costs from repairs of some $14 million, which helped push its third-quarter net result to a loss of $43 million.

The company repeated its plan to pay $750 million in dividends in 2019 and to raise the annual payout by another $100 million each year to 2023.

Aker BP’s shares have risen 13.4 percent year-to-date, outperforming an average 3.3 percent rise in European oil and gas stocks. 


Oil retreats in face of renewed coronavirus uncertainty

Updated 22 February 2020

Oil retreats in face of renewed coronavirus uncertainty

  • G20 finance leaders to meet in Saudi Arabia at the weekend to discuss risks to the global economy
  • OPEC+ has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs

LONDON: Oil prices fell on Friday as weak Asian data and a rise in new coronavirus cases fuelled uncertainty about the economic outlook while leading crude producers appeared to be in no rush to curb output.

Brent crude was down $1.56, or 2.6 percent, at $57.75 in afternoon trade, while U.S. crude dropped $1.25, or 2.3 percent, to $52.63.

"With Brent failing to breach the $60 level on Thursday despite better than expected U.S. oil inventory data, rising market uncertainty is dragging down oil prices on Friday," said UBS analyst Giovanni Staunovo.

"Market participants who benefited from the price rise in recent days might prefer not to go into the weekend with a long position."

 

China reports rise in coronavirus cases.

Japan factory activity shrinks at fastest pace since 2012.

Russia says early OPEC+ meeting no longer makes sense.

Finance leaders from the Group of 20 major economies meet in Saudi Arabia at the weekend to discuss risks to the global economy after new Asian economic and health data kept investors on guard.

Beijing reported an uptick in coronavirus cases on Friday and South Korea reported 100 new cases, doubling its infections. In Japan, meanwhile, more than 80 people have tested positive for the virus.

Factory activity in Japan registered its steepest contraction in seven years in February, hurt by fallout from the outbreak. 

"We still believe that the market is likely to trade lower from current levels, given the scale of the surplus over the first half of this year, and the need for the market to send a signal to OPEC+ that they must take further action at their meeting in early March," said ING analyst Warren Patterson.

Russian Energy Minister Alexander Novak said on Thursday that global oil producers understood it would no longer make sense for the Organization of the Petroleum Exporting Countries and its allies to meet before the planned gathering.

The group, known as OPEC+, has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs.