Norwegian offshore E&P firm Aker BP has suspended non-sanctioned field development projects including the Hod redevelopment project in the Valhall area in response to the high uncertainty caused by the coronavirus.
Aker BP said the suspension represents a capex reduction of 20% compared to previous guidance and it estimates a reduction in capital spend of $1-2bn during 2021-2022. The company also reduced exploration spending by 20 percent, with further significant reductions planned.
Aker BP’s original exploration plans for 2020 consisted of 10 exploration wells and the company and its partners have already resolved to postpone two of these wells.
Additionally, the company’s production costs are reduced to $7-8/boe, down around 20% as all non-critical activities are being postponed and the weaker NOK favourably impacts the cost level.
“Our industry is currently facing an extremely challenging situation. In Aker BP, we have been working systematically over many years to improve efficiency and reduce costs, to build a significant portfolio of profitable investment opportunities, and to strengthen our financial capacity. With the measures we are now undertaking, Aker BP is well prepared to face the challenging market situation, and we have the financial resources to pursue value accretive growth opportunities ahead,” said Karl Johnny Hersvik, CEO of Aker BP.
“The key priorities for Aker BP are the safety of our personnel, the integrity of our operations and the financial robustness of the company, and we are doing what we can to support the society’s efforts to combat the spread of COVID-19,” Hersvik added.
Aker BP said it has mobilised significant resources to monitor, manage and normalise the coronavirus situation, and is also updating its contingency plans to be prepared in case of an escalation of the situation.