Unplanned outages and impairments took a £100 million bite out of Korean-owned Dana Petroleum’s profits last year, new documents show.
The Aberdeen-headquartered firm’s output dropped to 57,000 barrels of oil equivalent (boe) per day in 2019 from 65,000 boe the previous year.
Dana’s Western Isles vessel, which came on stream in November 2017, pumped out 6,000 boe per day fewer last year due to unplanned, extended shutdowns and natural field decline.
Its Triton FPSO also took time to achieve stable production following the tie-in of Tailwind Energy’s redeveloped Gannet E field in late 2018.
Dana is planning a life extension project at Triton with a view to keeping the vessel producing beyond 2030.
Tailwind revealed in May that Dana could opt for an extended shutdown in 2022 to carry out upgrades and modifications.
Lower production and a drop in oil and gas prices pushed Dana’s revenues down 15.4% year-on-year to £858m in 2019, while pre-tax profits dropped to £87m from £186m, according to its latest accounts, published today on Companies House.
Dana’s figures were also dented by net impairment charges of £60m recognised against its production assets in UK and Egypt.
But the company managed to paid off its debts in 2019 and had cash of £143m at year end.
A new chief executive was selected for the company in early 2019 by its owner, Korea National Oil Corporation, with Yongwoo Kang stepping in to replace Roy Elliot.
Dana continued to make progress with its key North Sea projects in 2019, but this year’s Covid-19 outbreak and crude price rout have led to delays.
Alongside project partner Parkmead Group, it handed in a draft field development plan for the Platypus field in March 2020 and hoped to make a final investment decision in the second quarter of this year.
They intended to develop Platypus as a two-well, subsea tie-back to the Perenco-operated Cleeton platform in the southern North Sea.
But the latest downturn convinced the company to press pause on the project.
Director Laura Hutchison said in her strategic report — contained in the accounts, which were signed off in late September — that it would not be “prudent” to commit funds for an FID at that time.
The Oil and Gas Authority granted the firm a 12-month licence extension in June, giving it breathing room to reassess the project.
Dana said in August that it would “reengage” with the supply chain “to understand the viability of sanctioning the project in mid-2021”.
First gas from the Premier Oil-operated Tolmount field is on track for the second quarter of 2021, following the arrival of the platform from Rosetti Marino’s yard in Italy in October.
The partners were initially hoping for first gas at the end of 2020. Dana said the cost impact from the delay was “minimal”.
In an innovative infrastructure agreement, Dana, which has a 50% stake in the 90m boe project, agreed to own and pay for the platform and export pipeline in partnership with Kellas Midstream.
At the start of 2020, Dana struck a deal to sell 25% of its stake in the Tolmount project to Premier for £152m, but the sale was later scrapped as the prospective buyer tried to protect its balance sheet amid the oil and gas price crash.
Premier and Dana also hoped to make an FID on the Tolmount East expansion project by the end of 2020, but a decision has yet to be announced.
Tolmount East was announced as a commercial discovery in October 2019 by Premier, which is being acquired by Chrysaor in a reverse takeover.
Dana’s spokesman said: “We generated strong positive cash flow in 2019 thanks to solid production and good operational performance.
“The business continues to effectively manage the impact of the Covid situation and lower oil price environment in 2020.”