Record results for Enterprise blemished by output projections

Darius Snieckus
OGJ Online

LONDON, Mar. 8�The announcement Thursday by Enterprise Oil PLC, the UK's largest independent oil and gas company, of record turnover, profits, production, and reserves for 2000 lost some of its gloss when the company revealed that its production forecast for 2001 was down 9% from original expectations.

Enterprise, benefiting from high oil prices and record oil and gas output, chalked up a turnover of �1.841 billion in 2000, as compared to �850 million the year before. Post-tax profits were �529 million, nearly triple the 1999 result of �177.2 million, reported Chief Executive Pierre Jungels.

Production climbed to 280,563 boe/d in 2000, up 31% from the year before, while the independent's reserves ended the year at 1.412 billion boe, thanks to additions from the Skarv area off Norway and the purchase of US Gulf of Mexico assets�including Boomvang�from R&B Falcon Corp.

"With production up 31% on 1999 and a realized oil price of �19.05/bbl, we strengthened the balance sheet significantly during 2000," said Jungels. "However, we continue to test our potential developments against oil price assumptions of $15-$18/bbl."

Jungels acknowledged that production gains from four new UK and Norwegian North Sea fields�Cook, Bell, Bittern, and Sygna�along with higher than expected output from its producing UK Pierce and Norwegian Jotun developments would be paid for this year, as output falls to 250,000-260,000 boe/d.

"Debottlenecking of the Piece facilities and the outstanding performance of Jotun led to a degree of accelerated production in 2000, meaning that 2001 is likely to feel the effects of additional depletion," he admitted.

Jungels said notwithstanding that decline, along with delays to production build at Tempa Rossa field in Italy and "underperformance" at the UK North Sea Banff development, Enterprise aims to meet the 5%/year production growth target set last year "through organic growth, acquisitions, and portfolio management."

By 2005, he noted, Enterprise expects to shift its production spread from 40% non-UK/Norway production to 60%, adding some 150,000 b/d to its total output from fields such as Brazil's Bijupira-Salema, and the giant South Pars stages 6, 7, and 8 gas development off Iran.

"We will continue to rebalance our portfolio, and that means we will have no sacred cows," stressed Jungels. "Our asset base is not frozen."

Enterprise's exploration and appraisal budget for 2001 is �135 million, up from �102.9 million in 2000. Some �50 million will go for US Gulf of Mexico projects while the UK/Ireland and Norway will split another �60 million in E&A spending.

The company's production and development expenditure is expected to be �450 million, with the bulk going toward the Val D'Agri fields in Italy, the Enterprise-operated Corrib gas field off Ireland, the Bijupira-Salema development in Brazil, and Boomvang field in the Gulf of Mexico.

Jungels dismissed suggestions that the company, viewed as a prime candidate for takeover or merger during the last wave of industry consolidation, will be acquired. He said, "there have been stories about (Enterprise) being taken over for 18 years" but the company would remain independent.

"What we believe is we manage the asset base so effectively that there is little room for somebody to manage it better," said Jungels.

"We fully expect to be independent in a year's time," he added, "and in 5 years' time we fully expect to be twice the size."

Contact Darius Snieckus at [email protected]