Neptune Energy has declared its financial results for the six months ended 30 June 2023. The company half year operation and the financial report is coming barely months after Neptune announced the Signing of a sale and purchase agreement with Eni International BV to acquire Neptune Energy Group Limited, with Vår Energi ASA simultaneously signing an inter-conditional sale and purchase agreement to acquire Neptune Energy Norge AS for an aggregate enterprise value (subject to customary adjustments) of $4.9 billion.

Neptune’s business in Germany is not part of the transactions and will continue to be owned and operated by the ultimate existing Neptune shareholders as a standalone group.

Highlights of Neptune H1 results:

 Announced proposed acquisition of Neptune Energy by Eni and Vår Energi
•    SPAs signed for Eni to acquire Neptune Energy Group Limited, with Vår Energi to acquire Neptune Energy Norge AS.
•    Transactions have an aggregate enterprise value of $4.9 billion, expected to close by the end of Q1 2024.
•    Carve-out of German business, to be owned and operated by existing Neptune shareholders.

Continued improvement in safety, production expected to increase in H2 2023
•    Improved safety performance, with total recordable injury rate lower at 1.69 per million hours worked.
•    H1 production of 140.1 kboepd, reflecting a temporary outage at the non-operated Snøhvit Unit and planned maintenance in the UK and the Netherlands.
•    Seagull (UK) start-up in September, gas exports from Touat (Algeria) expected to restart in October.

Progress with low carbon strategy, awarded three CO2 storage licences in the UK
•    Awarded three CCS licences in the UK, licence applications submitted in Norway and the Netherlands.
•    Secured CO2 storage capacity to store the equivalent emissions from our entire 2P reserve portfolio.
•    Gudrun electrification project scheduled to come online by the end of the year.

Strong financial performance in H1, refinanced RBL maintaining high available liquidity
•    H1 2023 post-tax operating cash flow of $0.7 billion, EBITDAX of $1.9 billion, underlying operating profit of $1.1 billion.
•    Low leverage with net debt to EBITDAX of 0.35 times at 30 June 2023. Cash taxes of $1.1 billion paid in H1      2023.
•    Completion of RBL refinancing providing a $1.3 billion borrowing base, total available liquidity of $0.7 billion.

FY guidance revised for cash flow, cash taxes and investment, production guidance narrowed
•    FY 2023 guidance lowered for post-tax operating cash flow to ~$1.4 billion, cash taxes to ~$1.9 billion and adjusted development capex to $350-400 million.
•    Production guidance revised to ~150 kboepd, reflecting outages in non-operated assets in H1.
•    Carbon intensity guidance unchanged at 9 kg CO2/boe, well below industry peers.

Neptune Energy’s Chief Executive Officer, Pete Jones, said: “Neptune remains on track to deliver material year-on-year production growth, supported by project start-ups in Norway and the UK. In the first half, we hit a major milestone in our new energy strategy, with the award of three CO2 appraisal and storage licences, meaning we now have licensed storage capacity for the equivalent emissions from our reserves portfolio. 

“Commodity prices are likely to be increasingly volatile in the second half of the year, while the industry faces continued inflationary pressures in the supply chain. We remain focused on capital discipline and have re-phased some of our smaller development projects, our exploration programme and our decommissioning plans.”