The Press and Journal (Inverness, Highlands, and Islands)
Weak wholesale gas price hits profit but revenue up
● Chrysaor owes expected £1.5bn but expects debt to fall this year
Weak gas prices have eaten into annual profits at the largest net producer of hydrocarbons in the UK North Sea.
Accounts show Chrysaor made pre-tax profits of £364.5 million last year, which was a drop of more than 21% on earnings of £462.7m in 2018.
But revenue surged nearly 20% to £1.87bn, boosted by three months of production from the ConocoPhillips’ UK business acquired in a £2 billion-plus deal last autumn.
Chrysaor – whose total production is split equally between oil and gas – said its bottom line was hit by a wholesale gas price averaging 36p per therm, compared to 43p in 2018.
The company employs about 1,200 people in the UK and Norway, up from 460 in 2018, prior to the Conoco deal, with its main operational base in Aberdeen.
It has its head office in London but is registered in the Cayman Islands – a common tax haven now blacklisted by the EU.
The company grew to 137,000 barrels of oil equivalent (boe) last year, from 105,000 boe in 2018.
Production costs reduced to $11.5 (£9.13) a barrel in 2019 from $12.6 (£10) .
Commodity prices remained “weak” in 2020 due to Covid-19 but the firm still expects “positive free cashflow after interest and tax” this year.
Chrysaor, which now has a “material interest” in 11 production hubs in the UK North Sea, including 100% stakes in Everest, Lomond and Armada, had to increase its net debt by more than £1bn to complete the Conoco deal.
But the company “does not foresee” any need for future borrowings beyond its current £1.5bn, and expects the debt to fall.
In its accounts, it also said it would “continue to look at growth and valuedriven opportunities”, mainly in the UK and Norway, to create a “market-leading north European exploration and production company”.
Capital investment in 2020 is expected to fall by 30%, compared to previous plans, due to the downturn.