German independent gas and oil producer Wintershall Dea reported this week a 9% increase on its output in 2019 and a 20% reduction on its production costs, Kallanish Energy reports.
The company produced 642,000 barrels of oil equivalent per day (Boe/d) last year. Meanwhile, its production costs were reduced to $4.30/Boe, almost half the industry average of around $8/Boe, said CEO Mario Mehren in a press conference on Wednesday.
The record production was 70% gas and 30% oil, reflecting the company’s portfolio focus. This year, output (excluding Libyan onshore) is expected at around 600,000-630,000 Boe/d, compared to 617,000 Boe/d in 2019.
Mehren said the Covid-19 pandemic has not had a direct impact on Wintershall Dea’s operations yet, but there could be effects of force majeure by service companies in Norway later this year. To minimize the spread of the coronavirus, the company has sent administrative staff to work from home across the globe.
The CEO said there’s no doubt 2020 will be “an extremely challenging year for the industry,” and the company’s initial public offering originally planned for the second half of the year, is likely to be delayed due to current circumstances.
He said Wintershall Dea took the “decisive measure” to cut its development capex by 20% to around $1.2-1.5 billion this year. It’s also trimming its exploration budget to $150-250 million, from $340 million previously planned.
The producer needs an average oil price of $35-$40 a barrel this year and an average gas price of $4 per thousand cubic feet to be able to have positive free cash flow and fully fund its development and exploration capex.
A “stable” source of cash flow for the company is its midstream business, which includes the Nord Stream gas pipeline and onshore gas lines in Germany.
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