Danish oil company Maersk Oil made a loss of $2.1bn in 2015, compared to a loss of $861 million in the full year 2014. According to the oil firm, the result was negatively affected by impairments after tax of $2.6 billion due to the low oil price expectations.
The underlying profit was down to $435 milion, from $1 billion a year ago, negatively impacted by lower average oil prices but positively impacted by a higher average entitlement production and lower operating and exploration costs.
The impairments of $80 million in Q2 and USD 2.5bn in Q4 were primarily related to production assets with short lifetime such as Kazakhstan, Kurdistan and the UK as well as the company’s deepwater development assets in Angola and Brazil, where the current conditions do not allow for viable projects, Maersk oil said.
“While we have fully impaired the assets and significantly reduced our on-site activities in Angola and Brazil, we continue our efforts to seek solutions in Angola through concept changes and negotiations with authorities, partners and contractors, and in Brazil we are pursuing extensions of the Wahoo and Itaipu licences which expired in Q4 2015,” the company said in its statement on Wednesday.
In the first quarter of 2015, the unmanned Tyra South East platform in the Danish North Sea delivered first oil as planned. Qatar Petroleum initiated a tender process for the selection of a partner to undertake the future development of the Al Shaheen field, when the current agreement expires in mid-2017.
In Norway, the Norwegian Ministry of Petroleum and Energy approved the field development plan for the first phase in the Norwegian Johan Sverdrup field, where Maersk Oil is expected to invest around USD 1.8bn. First oil is expected in 2019.
Furthermore, in the UK, the Maersk Oil operated Culzean gas field was sanctioned by the UK government in Q3 with a total field development capex program of around $4.5bn. Maersk Oil is expected to contribute with USD 2.3bn of this. First gas from Culzean is expected in 2019. Elsewhere, in Africa, Maersk Oil agreed to acquire half of Africa Oil Corporation’s ownership in three onshore exploration licences in Kenya and two in Ethiopia. The transaction is expected to be completed in 2016.
For the fourth quarter of 2015, the oil company posted a net loss of $2.5 billion, a decline from a net loss $861 million a year ago.
Breakeven at $40-55 a barrel
Providing guidance for 2016, Maersk Oil expects a negative underlying result. The company has set its breakeven price with oil prices in the range $45-55 per barrel. The prices are currently lingering around $30 a barrel.
Maersk Oil’s entitlement production is expected to be around 315,000 boepd vs. 312,000 boepd in 2015. Exploration costs are expected to be in line with 2015, around $423 million.
Maersk Group as a whole, includin shipping, drilling and oil business, delivered a profit of $925 million, down from $5.2bn, and an underlying profit of $3.1 billion, down from $4.5 billion.
“We are satisfied with the good operational performance across our businesses in 2015. Despite the very challenging market conditions in our industries, all business units delivered positive underlying profits and the Maersk Group achieved an underlying result of USD 3.1bn. Given our expectation that the oil price will remain at a low level for a longer period, we have impaired the value of a number of Maersk Oil’s assets by USD 2.6bn after tax. We will continue to strengthen the Group’s position through strong operational performance and growth investments,” says Group CEO Nils S. Andersen.