First quarter 2020 trading update
Aker BP will publish its financial report for the first quarter 2020 on Wednesday 6 May 2020. The company issues this statement to summarize its production and sales volumes and certain accounting-related topics for the quarter.
Oil and gas production and sales
Aker BP’s net production in the first quarter 2020 was 208.1 thousand barrels of oil equivalents per day (“mboepd”). This represents a new all-time high for Aker BP, reflecting the continued ramp-up of production from the Johan Sverdrup field.
Net sold volumes, which are the basis for revenue recognition in the financial statement, were 207.5 mboepd, reflecting underlift of 0.6 mboepd in the quarter. The timing of the company’s liftings was tilted towards the second half of the quarter, negatively impacting the average realized oil price.
| Volumes (mboepd) | Q1-20 | Q4-19 | Q3-19 | 2019 |
| Net production | 208.1 | 191.1 | 146.1 | 155.9 |
| Overlift/(underlift) | (0.6) | (6.6) | (2.9) | 1.8 |
| Net sold volume | 207.5 | 184.5 | 143.3 | 157.6 |
| Of which liquids | 174.3 | 151.4 | 113.4 | 126.6 |
| Of which natural gas | 33.2 | 33.1 | 29.8 | 31.0 |
| Realized prices | Q1-20 | Q4-19 | Q3-19 | 2019 |
| Liquids (USD/boe) | 44.7 | 64.2 | 62.0 | 64.8 |
| Natural gas (USD/scm) | 0.14 | 0.17 | 0.16 | 0.18 |
Oil price hedging
The company has an oil price hedging program in place to mitigate the negative impact of sharp unexpected drops in the oil price. In the first quarter, gains from this program amounted to approximately USD 80 million, of which USD 14 million was realized in the quarter. The gains will be recognized as Other operating income in the income statement for the first quarter 2020 and are subject to ordinary corporate tax only. Adjusted for the differences in taxation, the average realized liquids price including hedging gains amounted to USD 47.9 per boe for the quarter.
Impairments
Due to the sharp reduction in oil prices, the company expects to make non-cash impairment charges related to both tangible and intangible assets. The impairments are preliminarily estimated to USD 500-700 million, with a corresponding tax rate of 50-60 percent.
Financial items
The USDNOK exchange rate increased from 8.8 to 10.4 during the quarter. While this contributes positively by reducing production costs in USD terms, it has had a negative effect on the company’s financial items. Including net interest expenses, the net financial items are hence estimated to approximately USD 150 million for the period.
Taxes
The company expects to report a negative pre-tax result for the first quarter mainly due to the impairments and currency effects. The effective tax rate for the quarter is estimated to approximately 20 percent, reflecting the limited deductibility for financial items and impairments, as well as a negative revaluation of the company’s tax balances driven by currency. The cash tax payments during the first quarter amounted to approximately USD 50 million, in line with previous guidance.
Conference call and webcast
The company will host a conference call to present its first quarter 2020 results on 6 May 2020 at 08:30 CEST. The conference call will be available as a webcast on the company’s website www.akerbp.com/en. To participate in the conference call, please contact the conference call operator at the telephone numbers listed below. Please join the event 10 minutes prior to scheduled start time and provide the confirmation code or ask for the Aker BP First Quarter 2020 Presentation.
|
Phone number Norway |
+47 23 50 02 96 |
| Phone number United Kingdom | +44 (0) 330 336 9411 |
| Confirmation code | 1771551 |
Disclaimer
The information in this statement is based on a preliminary assessment of the company’s first quarter 2020 financial results. The company has not completed its financial reporting and related review and control procedures. The estimates provided may therefore be subject to change and the financial statements finally approved and released by the company may deviate materially from the information herein.