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Viaro Energy North Sea Assets overview

North Sea oil and gas independent founded in 2015
  • North Sea oil and gas independent founded in 2015
Rapid growth
  • Built through a series of acquisitions
  • Pro forma 2019 production ~19,356 boepd
  • End-2019 2P reserves of 60.8 Mmboe plus estimated 2C resources of 21.2 MMboe
  • Acquisition of the Cotton gas field in 2020 increased estimated 2C resources to 34.9 Mmboe
Cash generative
  • Pro forma adjusted EBITDA US$162m in FY 2019
  • Reported cash generated from operating activities of $100.6m in 2019, up from $77.4m in 2018
  • Remained EBITDA positive in H1 2020 despite Covid-19 / the commodity price downturn

Viaro Energy responds to the current environment

  • Viaro Energy is working with its partners to defer certain operations into 2021.
  • Capital expenditure in 2020 is forecast to be at ~45% below previous guidance of ~$200 million as a result.
  • Abandonment expenditure is likely to be ~$5 million lower.
  • To help protect our CAPEX programme, we have hedged 63 million therms at €0.53/therm in 2020, 54 million therms at €0.41 in 2021, and 54 million therms at €0.45 in 2022. These prices are significantly ahead of the current forward curve.

Investing in production growth

  • CAPEX postponements in 2020 will lead to slower production growth in 2021
  • The revised expenditure profile is not expected to result in any material changes to reserves or resources estimates
  • Blake infill wells, Tain, Central Brae infill well, and Arran are all likely to come onstream later than previously anticipated

Managing operating costs

Improved outlook for 2020
  • One-off events resulted in a higher than anticipated unit OPEX for oil in 2019
  • The largest factor was a planned maintenance shutdown at the BP operated Foinaven field lasting 34 days longer than anticipated
  • Production efficiency has improved across our portfolio and is expected to lead to lower unit OPEX costs in 2020
  • An extensive cost review has been conducted for 2020 to identify work scopes that may be deferred.
  • Unit OPEX in 2020 is now forecast to be ~$30/boe.
  • The combined reduction in OPEX, CAPEX, and ABEX due to actions taken since mid-March is anticipated to be in excess of $100 million

Field life extension strategy

Half-life extended to 2030
  • Due to life extensions at East Brae and Brae Alpha, Cessation of Production (CoP) is being deferred by 2 years to 2023 and 3 years to 2030 respectively.
  • Focus on optimising decommissioning strategies – e.g. by plugging and abandoning wells prior to CoP.
  • Cost saving initiatives implemented through lessons learnt on Brae Bravo.
UK tax paid history
  • Significant asset in over £2bn of CT and PRT tax paid history in the UK
  • UK abandonment expenditure covered by tax paid history, meaning Viaro Energy expects to get a ~60% rebate on spending in the Greater Brae Area and a ~40% rebate elsewhere.

Governance – new owner, consistent approach

  • Governance – new owner, consistent approach
  • Viaro Energy maintains a Framework for Continuous Improvement
    • Guided by our Responsible Operations Management System (ROMS) framework
    • Each ROMS element overseen by a relevant member of our Operational Leadership team
    • Health, environment, safety and security (HES&S) activities overseen by a Board-level HES&S Committee and ROMS Steering Committee
    • Code of Conduct: holding employees, officers, directors and external parties to the same ethical standards
ROMS Elements
01 Leadership and Accountability 02 Regulatory Compliance
03 Risk Assessment and Management 04 Management of Change
05 Design and Construction 06 Safe Work Practices
07 Training and Competency 08 Operations, Maintenance and Integrity Management
09 Operational Readiness 10 Emergency Preparedness and Communications Awareness
11 Event Management 12 Third-Party Services
13 Governance and Document Control 14 Audit and Improvement

Environmental focus

Safeguarding the Environment
  • Reduced GHG emissions offshore by 20% and unnecessary hydrocarbon flaring
  • Establishing our Net Zero Emissions Target in line with the Oil and Gas UK (OGUK) framework
  • Cut operational waste to landfill by 40% and chemical discharge by 33%
  • Robust plans and protocols in place to prevent oil spills

Social responsibility

Supporting Our People
  • Improved offshore working conditions
  • Introduced the offshore promotion assessment panels
  • New Process Safety Training Matrix developed
  • Offered training and ensured equal opportunities for all
Building Strong Communities
  • Supported local charities such as Absafe, Techfest, Maggie’s, and Crisis
  • Matched funds raised through employee-raised charitable activities
  • Trained employees of the future through the Offshore Petroleum Industry Training Organization (OPITO) apprenticeship program
  • Sponsored prize for Chemical Engineers at the University of Aberdeen

HS&E commitment

Committed to meeting and exceeding H&S requirements
  • Viaro Energy’s commitment to not only meeting industry and legal standards for H&S but going beyond what is required is a highly attractive part of the company’s culture
  • Viaro is committed to building on this to deliver exceptional H&S performance throughout its group companies