Neptune Energy today announced its financial results for the 12 months ended 31 December 2022.

• Strong operating performance in 2022, materially higher production in 2023
• Good HSE performance, with lower total recordable injury rate and process safety event rate. Targeting further improvements in personal and process safety in 2023.
• Carbon intensity from operated production stable at 6.5 kg CO2/boe, methane intensity of 0.02%. On track to hit 2030 targets. 
• FY 2022 production increased to 135.0 kboepd, reflecting restart of Snøhvit and a full-year’s contribution from Duva. Njord successfully brought onstream in December. Further improvement in production efficiency to 85%.
• Production guidance of 150-165 kboepd in 2023, supported by Njord ramp-up, start-up of Fenja (April) and Seagull (Q2) projects, and the restart of gas exports from Touat. 

Lower carbon portfolio, low carbon developments

• Total investment since 2018 of more than $4 billion, delivering a material increase in total reserves and resources and production, and supporting energy security in Europe.
• 2P reserves of 552 mmboe at 31 December 2022, with a higher proportion of reserves developed. 2C resources increased to 468 mmboe, reflecting new licences and exploration success, and providing future growth opportunities. 
• Reducing operational emissions through electrification. Gudrun project to be brought online in mid-2023. Submitted plans in December 2022 to electrify Snøhvit and Njord, increasing proportion of production electrified in Norway to 100% in 2028.
• Continuing to advance CCS opportunities in Norway, the Netherlands and the UK. FEED expected to commence at L10 CCS project in 2023, submitted CO2 storage licence applications in the UK and Norway. 

Growing cash flow, strong balance sheet

• Post-tax operating cash flow of $2.4 billion, EBITDAX of $3.9 billion and operating profit of $3.2 billion. Strong performance enabled dividend and capital distributions totalling $1.1 billion by Neptune Energy Group Limited.
• Total tax charge for 2022 of $2.2 billion, representing an effective tax rate of 70%.
• Net debt to EBITDAX of 0.44 times at 31 December 2022. RBL refinancing expected to be completed in the first half of 2023. Credit rating upgrades in 2022 from Fitch, Moody’s and S&P. 
• Guidance for post-tax operating cash flow of ~$2.0 billion in 2023 as higher production is offset by lower expected oil and gas prices and higher cash taxes.  

Disciplined capital allocation, near-term growth

• Disciplined investment in 2023, guidance for development capex of ~$450 million and exploration and pre-development spend of ~$200 million. Further increase in spend on lower carbon projects.
• Focus on shorter cycle projects and near-term returns. Maturing new growth projects in Norway, the Netherlands and Indonesia.
• Exploration wells to be drilled at Cerisa, Yakoot and Geng North in 2023. Successful completion of Isabella appraisal well, evaluating results to establish commerciality.
• Higher cash taxes of ~$2.0 billion in 2023, reflecting the timing of our tax payments and impact of windfall taxes. Cash windfall taxes and royalties in the UK, the Netherlands and Germany are expected to total $105 million in 2023.

Leading ESG performance, socio-economic impact

• Strong ESG ratings received in 2022 from Sustainalytics and EcoVadis.
• New three-year roadmap to 2025 includes actions to meet our 2030 climate targets, along with actions to support a just energy transition.
• Estimated $4.8 billion of gross value added to GDPs in our European countries of operation, underlining the positive economic contribution from our investments, supporting jobs, supply chains and national tax revenues.
• Focus on delivering on our ambitious plans to store more carbon than is emitted through our operations and the use of our sold products by 2030.

Neptune Energy’s Executive Chairman, Sam Laidlaw, said: 
“The last 12 months have seen a dramatic shift in the geopolitical environment that shapes how energy is produced and used. After Russia’s war in Europe it is inevitable that there is a generational redrawing of political and economic allegiances. 

“Against a backdrop of underinvestment, lower commodity prices of the last decade have been replaced by surging prices and marked volatility. This is particularly the case with natural gas, due not only to the war, but also increased awareness of its importance in the energy transition.

“Having invested more than $7 billion to transform Neptune over the past five years, we are well positioned for these changes, with a portfolio that now has greater production capacity, more lower carbon development opportunities and a stronger balance sheet.”

Neptune’s Chief Executive Officer, Pete Jones, said: 
“Neptune delivered a strong operational performance in 2022, with further improvements in production efficiency and health and safety.

“Production increased as we supported energy security in Europe and brought Snøhvit back online. We expect production to increase materially in 2023 as we start-up new projects in Norway and the UK, with output expected to reach around 180 kboepd in the second half of the year.

“The imposition of windfall taxes in 2022 has created significant fiscal and political uncertainty in the Netherlands, Germany and, in particular, the UK, undermining investment in these countries and longer-term energy security in Europe.

“We continue to progress our new energy strategy and are prioritising electrification and CCS, which will help us achieve our ambitious 2030 climate targets.”

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