Maersk Oil profit hurt by low oil prices and output

Danish oil company Maersk Oil reported a 58 per cent drop in its full year net profit for 2013.

Last year, the company earned $1 billion, compared to $2.4 billion earned in 2012. The company said that the profit was negatively affected by lower average entitlement production of 235,000 boepd (257,000 boepd in 2012) and lower average oil prices of USD 109 per barrel (USD 112 per barrel in 2012). The 2012 result included one-off income of USD 1 .0 bn from the Algerian tax dispute and divestment gains.

A focus in 2013 was to mature the portfolio of major developments, including submission of development plan for Chissonga in Angola also covering the Cubal discovery made during the year. The reinstatement of the Gryphon FPSO, UK and the continued ramp up of El Merk Algeria returned Maersk Oil’s entitlement production to growth from late 2013. 

Exploration costs continued at a high level of USD 1.1 bn (USD 1.1 bn in 2012) with the completion of 25 exploration and appraisal wells. The wells included two successful Cubal wells in Angola and six successful appraisal wells at Johan Sverdrup in Norway.

Cash flow from operating activities was USD 3.2bn (USD 3.9bn) and cash flow used for capital expenditure was USD 1.8bn (USD 2.0bn).

Outlook

Maersk Oil expects a result below 2013 based on an oil price of USD 104 per barrel. Maersk Oil’s entitlement production is expected to be above 240,000 boepd. Production will be higher in Q1 and Q4, whereas planned shut downs will result in lower production in Q2 and Q3. The entitlement production increase from 235,000 boepd in 2013 is mainly based on higher contributions from Algeria and UK.

Exploration costs are expected to be around USD 1 .0bn.

In a video below, Maersk Group CEO provides overview of the 2013 achievements for the whole AP Maersk Group