Aker BP Postpones Offshore Projects Due to Coronavirus

Valhall Field - Image Credit: Aker BP
Valhall Field - Image Credit: Aker BP

Norwegian independent oil firm Aker BP will postpone non-sanctioned projects to cut its planned 2020 capital and exploration spending by 20% due to the coronavirus but maintains its production guidance, it said on Monday.

Capital spending for this year would be reduced to $1.2 billion and exploration spending to $400 million, while in 2021-2022 it expects capital spending to be "well below" $1 billion.

It also aimed to cut production costs by around 20% to $7-8 per barrel of oil equivalent by postponing all non-critical activities, such as maintenance, it added.

"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," Aker BP's Chief Executive Karl Johnny Hersvik said.

The planned measures, which include postponement of the Hod and Valhall field redevelopment projects, are not expected to have a material impact on the company's production capacity in 2020, and its guidance of 205,000-220,000 barrels of oil equivalent (boe) per day remained unchanged, Aker BP said.

The company said its ambition to continue paying dividends "remained firm", but the board still had to assess the impact on its balance sheet and liquidity from the coronavirus and oil price fall.

Aker BP had previously planned to pay $850 million in dividends in 2020, increasing payouts by $100 million each year until 2023.

Norway's largest oil and gas firm Equinor said on Sunday it had suspended its ongoing $5 billion share buyback program due to the coronavirus and the fall in oil prices.

Oslo-traded shares of Aker BP, 30% owned by BP, were down 4.6% at 0833 GMT, underperforming a European oil and gas index down 3.65%. 

(Reporting by Nerijus Adomaitis; Editing by Gwladys Fouche and Andrew Cawthorne)

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