Dana Petroleum shaved £64million off its lifting costs bill last year and narrowed its losses.
The South Korean-owned oil and gas explorer revealed that production was “better than planned” and outlined how its work with the UK oil and gas industry regulator was affecting the development of potential new North Sea projects, according to accounts filed at Companies House.
Dana confirmed it was on track to produce first oil from its flagship Western Isles project at the end of next year. At the start of the year it was revealed that the £1.4billion project had been “reset” at the end of 2014 with a longer timeline and a bigger budget.
The accounts also revealed the firm has exited its Norwegian business in February. Prior to this it had transferred its 45% stake in the Jotun field to operator Exxon. Dana said the asset had been “fully impaired” but that the sale meant it was able to book an £81.1million gain its books as a result of the transaction.
The company also took a £34.1million write down on its 18% shareholding in North Sea independent, Faroe Petroleum, which it said it was holding as an “available-for -sale” investment. It noted that it did not participate in a Faroe rights issue in 2014, which resulted in a dilution of its initial 22% stake.
The losses were also impacted by a £213million write down on the value of its assets due to the collapse in oil prices.
The company said the number of employees fell from 403 to 343 in the year, while it slashed 30% off its staff costs in the year to £35.4million.
Although the company made a £260million pre-tax loss – compared to a £446million loss the prior year – it said it was backed by a $1.5billion (£1.1billion) credit facility with a bank syndicate led by French lender BNP Paribas. A $300million loan from parent company Korea National Oil Corporation (Knoc) was doubled to $600million in February. This was extended to cover planned expenditure including a payment for the Western Isleas FPSO due in 2017, Dana said.
Revenues fell 20% to £549.2million.
The Dana-operated Great Guillemot field was among the assets which boosted production as well as new assets coming on stream across its portfolio in the UK, the Netherlands and Egypt.
The firm said it was making progress on three new North Sea gas field developments.
Dana is leading a project, at the behest of the Oil and Gas Authority (OGA), to develop a collaborative plan for three fields including the firm’s Arran gas discovery, the Columbus field operated by Serica Energy and Erskine, a producing field operated by Chevron.
Dana also said that a decision on Tolmount, thought to be one of the more significant discoveries in the North Sea in the past few years, was expected by the end of the year. Now operated by Premier Oil following its acquisitions of North Sea assets from Eon, the Southern North Sea gas field has “sufficient robustness” to be progressed despite the current low price environment, Dana said.
A Dana spokesman said: “Our operational results in 2015 were better than planned but the bottom line reflects the low oil price environment that we face as an industry.
“Dana produced over 50,000 boepd on average last year, 6,000 barrels over plan and was successful in reducing costs and improving efficiency. We are continuing that focus in 2016 and are currently ahead of our plan with higher production and lower operating costs.”