Neptune Energy sets out exciting vision for North Sea future

Neptune Energy today underlined its long-term commitment to the UK North Sea and to progressing with major exploration and gas production developments in 2020.

The UK business’s strong operational performance, excellent project progress and good reserves replacement were also highlighted as the global group’s Full Year Results for 2019 were released for the period ending December 31 2019.

For the UK, production in 2019 averaged 16.5 kboepd, slightly down than planned due to third-party constraints, though short-term production records were achieved by its Southern North Sea operated asset, Cygnus, when capacity issues eased.

UK’s operating costs rose slightly to $7.5 per boe in 2019 and are expected to remain below the industry average for the UK North Sea in 2020.

The company invested $24.3m in development activities in the UK including the sanction of its operated Seagull project and completion of the Cygnus A5 development well, brought onstream in June.

Neptune anticipates 2020 to see produced volumes increase, reflecting production from Cygnus and an additional 3 kboepd from assets to be acquired from Energean Oil & Gas, subject to the transaction closing this year. This includes a 25% working interest in the hugely exciting Glengorm gas condensate prospect, recognised as the largest North Sea discovery in more than a decade, which adds significant contingent resources for the long term.

The company made five applications in the 32nd Licensing Round for three operated and two partner-operated opportunities, including exploration acreage around Seagull and Isabella with the potential to develop new hub areas.

Evaluation of the recently announced Isabella discovery in the Central North Sea continues, in partnership with the well operator, Total. Hydrocarbons were encountered in Upper Jurassic and Triassic sandstone reservoirs, with total net pay estimated at 64 meters. Initial findings show significant promise and further analysis will determine future appraisal activity and recoverable resources estimates.

Neptune’s significant contribution to the UK economy was also underlined following a report by Oxford Economics, a leader in economic impact analysis, which revealed the company contributed $438m gross value added (GVA), mainly due to the company’s spend on UK goods and services.

Neptune’s UK managing director, Alexandra Thomas, said: “We have a robust, resilient business with an exciting, long-term future of growth ahead of us in the UK North Sea. We recognise strong opportunities to maximise economic recovery of resources with a particular focus on gas which remains enormously important to the UK as a low cost, lower carbon and sustainable energy source.

“Our operated production facility, Cygnus, is a cornerstone asset for the company and the UK, while the Cygnus field holds significant potential to be further developed as a major hub area in the Southern North Sea. We continue to discuss preparations to drill a 10th well next year as per our field development plan with our JV partner, Spirit Energy.

“As shown by the latest economic impact research, Neptune plays an important role in the UK economy, contributing millions of pounds through our spend on goods and services.”

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