Maersk Oil lifts profit on higher oil price, lower costs

Maersk OIl-operated Culzean development in the UK North Sea

Danish oil company Maersk Oil increased its profit and revenues for the second quarter of 2017 helped by higher oil prices and lower costs. 

According to a financial report on Wednesday by Maersk Oil’s parent company, A.P. Moller – Maersk, Maersk Oil recorded an underlying profit of $184 million in the second quarter of 2017, compared to $130 million in the prior-year period.

This result was driven by a higher average oil price of $50 per barrel versus $46 per barrel in 2Q 2016, lower costs and one-off income totaling $66 million related to tax and provisions. The result was partly offset by the lower entitlement production.

The company’s revenues also increased totaling $1.37 billion in the second quarter of this year compared to $1.29 billion in the prior-year period.

Maersk Oil reduced operating expenses excluding exploration costs and costs related to purchase of oil and gas for resale, by 3%, to $452m versus $468m in 2Q 2016.

Cash flow used for capital expenditure was $259m, versus $330m in 2Q 2016, primarily directed at the Culzean, UK and Johan Sverdrup, Norway developments.

The reduced entitlement production of 284,000 boepd, versus 331,000 boepd in 2Q 2016, was due to Qatar, where cost reduction and higher oil price led to fewer entitlement barrels for cost recovery in addition to unplanned production losses lowering the gross production.

Maersk Oil exited Qatar in July after 25 years, having produced more than 1.75bn barrels of oil from the Al Shaheen field. The company said the exit from Qatar by mid-July progressed as planned. The economic finalization of the exit is still subject to review; however, Maersk Oil does not expect any adverse impact from this.

Lower year-on-year production from mature assets in the UK also contributed. In Denmark, Kazakhstan, US, Algeria and Iraqi Kurdistan, production was in line with or slightly higher than same period last year due to good operational performance offsetting natural decline.

The oil price is impacted by the prolonged OPEC production cuts agreed in May 2017 and was within a range of $44-55 per barrel in 2Q 2017 compared to $40-50 in the same period last year. Global supply surplus appears to extend also into 2018, however, significant uncertainty remains in the oil price outlook, the company concluded.

Offshore Energy Today Staff

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