London — Norway's Aker BP said Oct. 29 it was progressing with a number of new oil and gas developments as it reported solid third-quarter financial results, helped by higher output, cost reductions and tax breaks.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The company, which is 40% owned by services giant Aker and 30% by BP, increased its production by 38% year-on-year to 202,000 b/d of oil equivalent, largely on the back of its 11.6% stake in the giant Johan Sverdrup field, which has been producing in excess of its official first-phase capacity.
An additional boost came from a satellite project in the Valhall area, which feeds into the Ekofisk crude stream. The Valhall Flank West satellite project came on stream last December, and Valhall oil and gas production was up 30% on the year in Q3, at 58,000 boe/d on a gross basis.
The company flagged a further modest reduction in capital spending this year, by $50 million to $1.3 billion, down from an original plan of $1.5 billion, and said it expected per barrel production costs of $8, down from a $10 projection at the start of the year.
It highlighted a number of projects it is working on, including another Valhall satellite project known as Hod, due on stream in Q1 2022, the next phase of the Aerfugl satellite project in the Skarv area, due on stream by year-end, and potential projects in the Alvheim area. It also said it was working closely with state-controlled Equinor to agree a development concept by Q3 2021 for the 500-million-boe Krafla, Fulla and North of Alvheim cluster, which it dubs NOAKA.
Aker BP submitted the development plan for Hod in June after Norway announced temporary tax breaks to help the industry weather the commodity price collapse. The tax breaks speed up reimbursement of capital spending in 2020 and 2021 and also cover projects approved for development into 2022.
"Third quarter 2020 was a strong quarter for Aker BP. We are well on track to deliver on our production guidance for the year, our development projects are progressing as planned, and we are keeping cost and emissions under control," CEO Karl Johnny Hersvik said. "The recent tax changes provides improved investment conditions in Norway and Aker BP is uniquely positioned to benefit from this opportunity through our large project hopper with low break-evens."
The company added it had strengthened its liquidity with a $1.25 billion bond issue during the quarter, alongside an early redemption of $400 million in senior notes due in 2022.