Neptune Energy today announced its financial results for the first half of 2021:

New projects performing above plan, delivering near-term production growth

• Robust health and safety performance, with total recordable injury rate of 1.6 per million hours worked, in line with target.

• Q2 production of 115.4 kboepd (136.3 kboepd including production-equivalent insurance income), in line with guidance.

• New projects in Norway and Indonesia delivered on time, performing above plan. Our Duva project is expected onstream in August. FY guidance tightened to 130-135 kboepd, within initial 130-145 kboepd range, reflecting extended shutdowns at Snøhvit and Touat.

• Further exploration and appraisal success with a gas discovery at the Turkoois prospect and positive results from the Maha-2 appraisal well.

Significant cash flows supported by higher prices

• Higher quarterly average realised prices (including hedging) of $62.1/bbl for oil and $6.8/MMbtu for gas.

• EBITDAX of $670 million and post-tax operating cash flow (after working capital) of $530 million in H1. FY guidance for post-tax operating cash flow (before working capital) increased to more than $1.6 billion from ~$1.4 billion.

• H1 adjusted development capex of $336 million, exploration and pre-development spend of $87 million.

• Operating costs of $10.6/boe in H1, below $11-12/boe guidance range for the full year.

Strong balance sheet and available liquidity, with deleveraging on target

• Total available liquidity of $1.1 billion as at 30 June 2021 to support growth plans.

• Leverage lower at 1.95 net debt/EBITDAX for H1, on track to decline to less than 1.5x by year end 2021.

• 60% hedged for 2021, providing downside protection, whilst retaining exposure to improvements in the commodity price cycle.

• Moody’s credit rating outlook changed to ‘positive’.

Sector-leading low emissions intensity, continued progress on New Energy projects

• Carbon intensity remained low at 7 kg CO2/boe, significantly lower than the industry average of 17 kg CO2/boe. Methane intensity remained low at a 0.02%, monitoring study to commence at Cygnus in H2.

• EcoVadis upgraded ESG rating, placing Group in top 25% of 75,000 global companies assessed.

• Feasibility study underway for Dutch CCS project – potential to store 5-8 mtpa of CO2, many times Group annual emissions.

• Awarded €3.6 million subsidy for PosHYdon green hydrogen project and finalised consortium agreement in July

Sam Laidlaw, Neptune Energy’s executive chairman, said: “As COVID-19 vaccination programmes continue to be rolled out across the world, energy demand in key markets is recovering. However, the recovery remains uneven and, with concerns around new variants, we remain vigilant and focused on managing the risks to our people, our operations and our business.

“Neptune continues to navigate this environment well and we delivered a strong operational and financial performance in the first half of the year, laying the foundations for growth towards our production target of 185-200 kboepd in 2023.

“We see good opportunities for growth from New Energy, particularly with CCS, hydrogen and electrification, and continue to make progress with our projects, which would build on our existing lower carbon position.”

Jim House, Neptune Energy’s chief executive officer, added: “Neptune continued to deliver on plan in the second quarter of the year, with a good safety performance, new projects delivered and further positive results from our drilling activities.

“Our strong financial performance was underpinned by higher commodity prices and supported by robust production and continued tight cost control across the Group.

“In the second half of the year, we expect to deliver materially higher production, driven by our investment in new projects and the Touat Gas Plant reaching full export capacity, leading to higher cash flow and decreasing leverage.”

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