Lower crude prices continue to bite into North Sea oil and gas company profits and spending plans, with another two firms revealing impacts in their third quarter results yesterday.
Apache and Canadian Natural Resources (CNR) reported losses totalling billions of pounds and also highlighted cost-cutting on a scale being seen right across the industry.
Houston-based Apache, which this week celebrated 40 years of production from the Forties field in the UK North Sea, reported shareholder attributable net losses of more than £3.7billion for the three months to September 30.
Analysts had expected worse, however, and there was also cheery news for investors when Apache joined a growing list of US oil producers in raising full-year production forecasts – even as many of them cut spending.
Apache said its losses, which represent a widening of losses from £874million a year ago, included an after-tax write down of £2.4billion caused by lower oil prices. It also booked a £985million charge related to deferred tax assets.
Stripping out the charges and other one-off items, adjusted net losses for the latest period came in at £13.8million. Revenue more than halved to £985million.
Increased efficiencies, a drop in service costs and low break-even levels in core US shale fields are all helping North American oil companies increase production on reduced budgets.
Apache raised its full-year US onshore production forecast to 307,000-309,000 barrels of oil equivalent (boe) per day, from 305,000-308,000.
The company also increased its international and offshore production forecast to 172,000-174,000boe per day, from 164,000-168,000.
Chief executive John Christmann said: “As we turn to 2016, prudent capital allocation will continue to be our primary focus.”
Apache’s capital spending has significantly reduced from 2014 levels. Expenditure in Q3, 2015, totalled about £500million, down 16% from the second quarter.
The company, whose recent announcement of new discoveries near Forties has been hailed as a boost to morale in the UK North Sea, said it had invested £1.9billion this year and was “on track” to spend within its guidance range.
Oil producers are keeping a tight leash on spending to cope with a near-60 percent drop in global oil prices since June last year that has sapped profitability.
CNR cut its 2015 capital spending plan for a fifth time, and estimated a much lower 2016 budget as oil prices show no signs of recovery.
Canada’s largest independent oil producer reduced its 2015 budget by an additional £32.5million, to £2.7billion, and said it expected to spend £2.2billion-£2.5billion next year.
CNR said in September it would cut salaries by up to 10% for all its staff in Calgary, Canada, and Aberdeen.
The group reported third quarter net losses of £55.4million yesterday, compared with profits of £519.5million a year ago, and cut its 2015 crude production forecast before royalties to 555,000–591,000 barrels per day, from 562,000-602,000.
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