Second quarter 2020 trading update
Aker BP will publish its financial report for the second quarter 2020 on Tuesday 14 July 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 second quarter 2020 was 209.8 thousand barrels of oil equivalents per day (mboepd). Net sold volumes, which are the basis for revenue recognition in the financial statement, were 232.0 mboepd due to overlift in the period.
| Volumes (mboepd) | Q2-20 | Q1-20 | Q4-19 | Q3-19 |
| Net production | 209.8 | 208.1 | 191.1 | 146.1 |
| Overlift/(underlift) | 22.2 | (0.6) | (6.6) | (2.9) |
| Net sold volume | 232.0 | 207.5 | 184.5 | 143.3 |
| Of which liquids | 198.2 | 174.3 | 151.4 | 113.4 |
| Of which natural gas | 33.8 | 33.2 | 33.1 | 29.8 |
| Realized prices | Q2-20 | Q1-20 | Q4-19 | Q3-19 |
| Liquids (USD/boe) | 29.9 | 44.7 | 64.2 | 62.0 |
| Natural gas (USD/scm) | 0.08 | 0.14 | 0.17 | 0.16 |
Oil price hedging
The company is using oil put options for protection of near-term cash flow against sharp drops in the oil price. In the second quarter, the company realized gains on these instruments of USD 56 million before tax (subject to ordinary corporate tax). This had a positive cash flow impact in the quarter, however the effect on the income statement will be slightly negative as the instruments were already recognized at fair value in the previous quarter. Adjusted for the differences in taxation, the average realized liquids price including hedging was equivalent to USD 40.9 per barrel in the second quarter.
Reversal of impairments
Following the partial recovery in oil prices observed in the second quarter, the company expects to reverse parts of the impairments from the first quarter, amounting to USD 100-150 million.
Financial items
The USDNOK exchange rate decreased from 10.4 to 9.6 during the second quarter. This had a positive effect on financial items. Net financial expenses are hence estimated to approximately USD 30 million for the quarter, including interest expenses and currency-related effects.
Taxes
The company expects to report a positive pre-tax result for the second quarter. Still, a minor tax credit is expected. This is mainly caused by increased uplift introduced with the temporary changes to Norwegian petroleum tax, and by a positive currency effect on the value of the company’s tax balances.
Cash tax payments in the second quarter amounted to USD 81 million.
Conference call and webcast
The company will host a conference call to present its second quarter 2020 results on 14 July 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 Aker BP’s quarterly presentation.
| Phone number Norway | +47 2350 0296 |
| Phone number United Kingdom | +44 (0)330 336 9411 |
| Confirmation code | 5804762 |
Disclaimer
The information in this statement is based on a preliminary assessment of the company’s second 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.