Neo Energy, the UK North Sea’s fifth largest producer, has reported a huge boost to its production and profits.
The Aberdeen-headquartered firm, owned by Norwegian private equity house HitecVision, gave a glimpse of its finances in consolidated group accounts just published by Companies House.
Profits surged more than five-fold during 2022, while revenue also skyrocketed.
It came after a spate of portfolio-boosting acquisitions and a year of high oil and gas prices.
Neo’s 2022 profits surged by more than five times before hefty tax take
Neo’s pre-tax profits totalled £2.3 billion, up from £445.1 million the year before.
But tax of nearly £1.6bn significantly impacted the end-of-year balance sheet. Neo’s tax figure includes the energy profits levy, or “windfall tax”.
Revenue totalled nearly £3bn last year, more than four times the £723.8m posted for 2021.
Production soared to 80,999 barrels of oil equivalent (boe) per day in the latest period, from 32,359boe previously. Output in 2022 was boosted by acquisitions from ExxonMobil and Zennor Petroleum the year before.
It also included several months of production assets acquired from JX Nippon in March 2022.
Based in the Silver Fin building on Union Street, Aberdeen, Neo employed 204 people, on average, last year.
Neo’s net debt has mushroomed, due to borrowing. It stood at £1.4bn at the end of 2022, up from about £823m a year earlier, amid major spending by the firm in the UK.
Capital expenditure surged to £321m last year, from £75.9m in 2021.
Significant activity last year included work to develop the Shell-operated Penguins project, in which Neo has a 50% interest.
Neo’s hopes dashed for Penguins project start-up this year
In the accounts, published last week but signed off in March, Neo said it expected the Penguins redevelopment, north-east of Shetland, to reach first production during 2023.
Shell said in July the floating production storage and offloading vessel (FPSO) for the project was unlikely to head to the North Sea before 2024.
It later emerged Penguins had faced issues with legacy infrastructure for the redevelopment.
Other spending by Neo has gone on projects including work on the Quad 15 area, extending its lifespan to 2026, and the sanctioning of a third well on the Finlaggan field.
Golden Eagle and Western Isles
CNOOC’s Golden Eagle asset, in which Neo holds a 31.56% stake, had two more subsea wells sanctioned in 2022.
Neo’s accounts revealed an impairment charge of £63.7m for the Dana Petroleum-operated Western Isles project, in which it has a 23.08% interest.
“This was driven primarily by a reduction to the expected life of the field,” Neo said.
Aberdeen-based Dana has set a production end date “on or around” March 21 2024 for the east of Shetland Western Isles development. This is despite the project launching in 2017 with an expectation of 15 years of production from its two fields, Harris and Barra.
There may be a reuse option for the FPSO, which has a 20-year design life.
Meanwhile, Neo recently received the go-ahead for its Affleck North Sea redevelopment in the central North Sea.