Aker BP expects non-cash impairment of $400 million in first quarter

Aker BP expects to record non-cash impairment charges of about $400 million before tax ($300 million after tax) in first-quarter 2023 related to Edvard Grieg area work in the North Sea.

The impairment is mainly driven by the termination of the Troldhaugen project and by reduced forward prices leading to an impairment of technical goodwill allocated to the Edvard Grieg & Ivar Aasen CGU, the company said in a preliminary quarterly update Apr. 19. The company’s first-quarter 2023 financial report will be released Apr. 27.

In March, Aker BP discontinued plans for the Troldhaugen project in the Edvard Grieg area of the North Sea (OGJ Online, Mar. 21, 2023). Execution of the project was subject to results of an extended well test which has been producing since August 2021. The test showed less recoverable volume than expected, and the project is not economically viable, the operator said at the time.

Troldhaugen (formerly Rolvsnes) had been envisioned as the first development on the Norwegian Continental Shelf with reservoir mainly consisting of weathered and fractured basement rock (granite). In the original plan, the discovery would be developed as a tieback to the Edvard Grieg platform. It was expected to provide 30 MMboe of the total projects’ recoverable estimate at a cost of $500 million.

Aker BP expects to record production of 452,7000 boe/d in first-quarter 2023.