Regulatory News:
Maurel & Prom (Paris:MAU):
- Strong operational and financial resilience in a challenging
economic context; back to positive net income in H2 2020
- Sales of $330 million, down sharply (35%) mainly as a result of
the 40% year-on-year drop in the average sale price of oil to
$40.1/bbl and production reductions in Gabon due to OPEC
quotas
- Decline in production and collapse in crude prices partly
offset by the swift implementation of the adaptation plan starting
in March 2020: free cash flow positive at $16 million
- Net income deeply negative in FY 2020 after taking asset
impairment in H1 into account, but positive in H2 thanks to cost
reduction initiatives and lower depreciation and amortisation
charges
- Robust capital structure and preserved liquidity
- Debt repayment of $77 million in 2020, with net debt of $455
million at 31 December 2020, down $14 million from year-end
2019
- Cash position of $168 million at 31 December 2020, and $100
million available via the undrawn tranche of the Shareholder
Loan
- Debt maturities in 2021: $88 million
- Continuation of efforts and preparation for the resumption
of development
- Maintaining financial discipline and cost-reduction initiatives
introduced in 2020: free cash flow breakeven before debt servicing
reduced to below $30/bbl
- Resumption of development drilling in Gabon planned in summer
2021
Audio
conference for analysts and investors
Maurel & Prom will hold an
analyst/investor conference via an audio webcast in French and
English, followed by a Q&A session.
To attend
this webcast live or listen to the recording, click the following
link:
https://www.maureletprom.fr/en/article/audio-webcast-resultats-annuels-2020
Key financial indicators
in $mm
2020
2019
Change
Income statement
Sales
330
504
-35%
Opex and G&A
-164
-180
Royalties and production taxes
-50
-80
Change in overlift/underlift position
-27
34
Other
6
9
EBITDA
95
286
-67%
Depreciation, amortisation and provisions
and impairment of production assets
-592
-163
Expenses on exploration assets
-31
-48
Other
-6
-4
Operating income
-534
70
N/A
Net financial expenses
-11
-31
Income tax
-29
-62
Share of income/loss of associates
-18
59
Net income
-592
35
N/A
O/w net income before non-recurring
items1
-54
19
N/A
Cash flows
Cash flow before income tax
91
298
Income tax paid
-35
-35
Operating cash flow before change in
working capital
56
263
-79%
Change in working capital
53
-102
Operating cash flow
109
162
-33%
Development capex
-46
-104
Exploration capex
-47
-43
M&A
–
-35
Free cash flow
16
-21
N/A
Net cost of debt
-95
-24
Dividends received
12
12
Dividends paid
–
-9
Other
5
-7
Change in cash position
-63
-49
N/A
Opening cash
231
280
Closing cash
168
231
At its meeting of 9 March 2021, chaired by John Anis, the Board
of Directors of the Maurel & Prom Group (“M&P” or “the
Group”) approved the financial statements for the year ended 31
December 2020.
Olivier de Langavant, Chief Executive Officer of M&P,
stated: “In a highly challenging economic environment, Maurel &
Prom was able to quickly adapt and introduce appropriate measures
to protect its cash position. We managed to generate positive free
cash flow and reduce the Group’s net debt for the 2020 fiscal year,
demonstrating the robustness of our economic model and the
resilience of our assets. While we are observing a relative
improvement in the oil markets in the first quarter of 2021, we
will not be relaxing our efforts and remain committed to continue
financial discipline while preparing for the resumption of our
development capex.”
Financial position
- Comments on fiscal year 2020
The Group posted sales of $330 million, down 35% from 2019. This
drop was driven by the sharp downturn in oil prices related to the
COVID-19 pandemic and the application of the production reduction
quotas established by OPEC, which Gabon joined in March 2020. The
average oil price fell by 40% to $40.1/bbl versus $67.2/bbl in
2019.
The swift implementation of the adaptation plan in March 2020
significantly reduced the Group’s opex and G&A. These amounted
to $164 million in 2020, versus $180 million in 2019. It should
however be noted that there was a change in perimeter, since fiscal
2019 only included activities in Angola from August onwards.
Excluding non-operated assets, opex and G&A were down by $28
million, a 23% decrease from 2019.
EBITDA stood at $95 million, down 67% compared to the previous
fiscal year ($286 million). Depreciation, amortisation and charges
to provisions were down significantly, mainly due to the asset
impairments recorded during the first half of 2020, and stood at
$114 million in 2020 versus $163 million the previous year. Current
operating income came in at negative $19 million, versus $123
million in 2019.
A total of $514 million in other non-current operating income
was recorded for the year, including:
- An impairment charge of $477 million (net of deferred tax
effects) on production assets in Gabon, France and Angola, and on
drilling rigs;
- $31 million in exploration expenses related to the completion
of drilling operations that began in 2019 on the Kari permit and a
seismic data acquisition campaign in Sicily;
- $3 million in expenses related to termination payments.
Net financial expenses on the income statement amounted to $11
million for 2020, a sharp drop from the $31 million recorded in
2019. This was due to lower interest rates during the period and a
foreign exchange effect in the revaluation of receivables in
Gabon.
M&P’s share of income from equity associates was negative
$18 million, mainly due to negative net income of $17 million
recognised on the 20.46% stake in Seplat.
Consequently, net income for the year 2020 stood at negative
$592 million, while net income before non-recurring items was
negative $54 million. Note that net income before non-recurring
items in the second half of 2020 was positive at $7 million. This
was due to cost-reduction measures introduced in March 2020 under
the adaptation plan and lower depreciation and amortisation
expenses following the asset impairments recorded in the first
half.
Reconciliation of recurring and
non-recurring items for fiscal year 2020
in $mm
Recurring items
Non-recurring
items
Total
Sales
330
–
330
Operating income and expenses
-235
–
-235
EBITDA
95
–
95
Depreciation, amortisation and provisions
and impairment of production assets
-114
-477
-592
Expenses on exploration assets
–
-31
-31
Other
–
-6
-6
Operating income
-19
-514
-534
Net financial expenses
-11
–
-11
Income tax
-29
–
-29
Share of income/loss of associates
6
-23
-18
Net income
-54
-537
-592
Cash flow from operating activities before change in working
capital was $56 million (versus $263 million in 2019). After change
in working capital (positive impact of $53 million), cash flow from
operating activities was $109 million.
Development capex was down significantly year-on-year due to the
suspension of development drilling in Gabon. It stood at $46
million for fiscal 2020. Exploration capex amounted to $47 million,
most of which was spent on drilling the Kama-1 well.
Thanks to the swift implementation of its adaptation plan, the
Group posted positive free cash flow in fiscal 2020 of $16
million.
In terms of financing flows, the debt expense amounted to $95
million, of which $77 million was for loan repayments ($75 million
in bank borrowings and $2 million in shareholder loan) and $18
million for cost of debt. M&P also received $12 million in
dividends from its 20.46% stake in Seplat, the same amount as in
2019.
As at 31 December 2020, M&P’s cash position stood at $168
million, a year-on-year decline of $63 million. Debt at 31 December
2020 amounted to $623 million (nominal value), i.e. a net debt of
$455 million (versus $469 million at 31 December 2019).
In March 2020, M&P announced the signature of two amendments
to re-profile the repayment of its two debt facilities, the
$600-million term loan with a syndicate of lenders (the “Term
Loan”) and the $200-million loan ($100 million drawn and $100
million undrawn) from M&P’s controlling shareholder PT
Pertamina International Eksplorasi Dan Produksi (“PIEP”) (the
“Shareholder Loan”).
Under the terms of these amendments, the maturities of the two
loans were reduced in 2020 and 2021, allowing M&P to maintain
sufficient liquidity and better adapt debt repayments to cash flow
generation. The amendment to the Shareholder Loan also demonstrates
PIEP’s continued support of M&P, as a significant amount of its
repayment has now been pushed to 2024, beyond the final maturity
date for the Term Loan.
In fiscal 2020, M&P therefore repaid $77 million in debt,
which included $75 million for the Term Loan ($525 million
remaining at 31 December 2020) and $2 million for the Shareholder
Loan ($98 million drawn at 31 December 2020). The amount to be
repaid in 2021 is $88 million.
- Operating and financial forecasts for 2021
The Group expects M&P’s working interest production to reach
26,400 boepd in 2021, including:
- 16,800 bopd in Gabon (equivalent to gross production of 21,000
bopd at Ezanga)
- 34 mmcfd (equivalent to gross production of 70 mmcfd at Mnazi
Bay)
- 4,000 bopd in Angola (equivalent to gross production of 20,000
bopd on Block 3/05)
The figure announced for Gabon assumes OPEC quotas being in
place until summer (gross production on the Ezanga permit limited
to 19,000 bopd), followed by a resumption in development drilling
based on crude prices staying above $45/bbl.
Under these production assumptions, the forecasts for cash flow
from operations2 in 2021 according to various Brent price
assumptions are as follows:
- $50/bbl: $175 million
- $60/bbl: $225 million
- $70/bbl: $275 million
Other significant cash outflows budgeted for the year:
- Development capex: $90 million
- $50 million in Gabon, based on a resumption of drilling
activities in summer 2021
- $20 million in Angola (non-operated), including in particular a
workover campaign
- Financing: $105 million
- $88 million in debt repayment
- $17 million in net cost of debt
M&P’s internal forecasts for the next 12 months indicate
that the Group will be in a position to carry on with its business
activities and maintain sufficient liquidity. In addition to its
cash on hand ($168 million at 31 December 2020), and assuming a
less sustained price environment, M&P has access if necessary
to $100 million in immediate liquidity via the undrawn portion of
its Shareholder Loan.
2020 activity
- Impact of the COVID-19 outbreak on M&P’s
operations
M&P is taking all necessary measures to ensure business
continuity, in full compliance with all recommendations from
relevant health authorities. Working from home is the preferred
option whenever possible, and strict measures to minimise
contamination risks have been enforced in offices when working from
home is not possible. Those initiatives include entry controls,
distancing measures, and reinforced hygiene and disinfection
practices.
At operational sites, measures exceeding recommendations have
been implemented to ensure business continuity, which so far has
not been in question since the outbreak began.
- Environment, Health, Safety and Security (EHS-S)
performance
The Lost Time Injury Frequency (“LTIF”) rate was 1.83 in 2020,
versus 0.45 in 2019. The Total Recordable Incident Rate (“TRIR”)
fell from 2.70 in 2019 to 2.56 in 2020. As at 1 March 2021 and over
a 12-month rolling period, these indicators fell to 0.83 and 1.67
respectively, as shown in the chart below.
Q1
2020
Q2
2020
Q3
2020
Q4
2020
12 months
2020
12 months
2019
2020 vs 2019
M&P working interest
production
Gabon (oil)
bopd
19,594
16,675
16,245
15,096
16,896
19,828
-15%
Angola (oil)
bopd
4,213
4,003
3,793
3,725
3,933
1,879¹
109%
Tanzania (gas)
mmcfd
30.7
25.4
33.1
36.7
31.5
33.8
-7%
Total
boepd
28,916
24,919
25,549
24,937
26,076
27,340
-5%
Average sale price
Oil
$/bbl
56.5
23.0
46.6
45.0
40.1
67.2
-40%
Gas
$/BTU
3.32
3.33
3.31
3.31
3.32
3.26
2%
Sales
Gabon
$mm
83
37
65
57
242
454
-47%
Angola
$mm
13
7
10
10
40
31
30%
Tanzania
$mm
8
9
11
16
43
34
26%
Valued production
$mm
103
52
85
83
324
519
-37%
Drilling activities
$mm
5
1
0
0
6
12
Trading of third-party oil
$mm
0
0
0
0
0
7
Restatement for lifting imbalances and
inventory revaluation
$mm
-28
8
-15
34
-1
-34
Consolidated sales
$mm
80
62
70
117
330
504
-35%
¹ 4,484 bopd for M&P working interest during the
asset-holding period (1 August to 31 December 2019).
M&P’s working interest production for 2020 stood at 26,076
boepd, down by 5% from 2019 (27,340 boepd). This decline was
largely due to production reductions on the Ezanga permit in Gabon
(16,896 bopd for M&P working interest in 2020 versus 19,828
bopd in 2019) after OPEC established new quotas.
The average sale price of oil was $40.1/bbl versus $67.2/bbl in
2019, a drop of 40%.
Group valued production (revenue from production activities,
excluding lifting imbalances) stood at $324 million, down 37% from
2019. The restatement of lifting imbalances net of inventory
revaluation had a neutral effect overall and resulted in a
downwards adjustment of $1 million. After inclusion of the $6
million earned from activities at the drilling subsidiary Caroil,
Group consolidated sales for the year came in at $330 million.
In Gabon, M&P’s working interest oil production (80%) on the
Ezanga permit was 16,896 bopd (total production: 21,120 bopd) for
2020, down 15% from 2019. The drop in crude prices and production
cuts under OPEC quotas led M&P to limit its production on the
Ezanga permit (gross production still limited to 19,000 bopd in the
first quarter of 2021).
M&P’s working interest gas production (48.06%) on the Mnazi
Bay permit in Tanzania stood at 31.5 mmcfd (total production: 65.5
mmcfd) for 2020, down 7% from 2019. This decline was offset at the
sales level by the allocation of additional rights to M&P.
These rights related to corporate income tax now being charged to
the partner TPDC, pursuant to the production sharing contract.
Consequently, M&P sales in Tanzania rose by 26% to $43 million,
versus $34 million in 2019.
In Angola, M&P’s working interest production (20%) in Block
3/05 in 2020 was 3,933 bopd (total production: 19,663 bopd).
Despite the drop in crude oil prices, valued production was up by
30% ($40 million versus $31 million in 2019) due to the asset being
included over the entire period (versus just five months in
2019).
- Exploration and appraisal activities
Due to the COVID-19 outbreak and resulting economic context, the
Group’s exploration activities were reduced pursuant to the
adaptation and cost reduction plan introduced in March 2020. These
activities were essentially limited to the completion of operations
that began in 2019, namely the drilling of the Kama-1 well on the
Kari permit in Gabon and the seismic data acquisition campaign in
Sicily.
The Kama-1 exploration well in southern Gabon encountered
several series of oil shows, and an oil sample was collected.
However, the mediocre quality of the encountered reservoirs meant
that commercial testing was not viable. The Kama-1 well also
produced data that led to a better understanding of the region’s
oil system.
In France, a long-term production test began at the end of
September 2020 on the Mios permit. Production has been
significantly lower than expected, hovering at around 50 bopd for
the two wells, CDN-1 and CDN-2, at end-2020.
Drilling activities at Caroil (the Group’s wholly owned
subsidiary) were heavily impacted by the sharp reduction in its
customers’ investments. Following the suspension of development
drilling by Maurel & Prom on the Ezanga permit in March and
Assala’s decision to end its Caroil-led drilling campaign in the
first quarter of 2020, all Caroil operating teams were demobilised
and the C3, C7, and C16 drilling rigs were stacked in Gabon.
Caroil’s management functions have been relocated to France, in
readiness for the resumption of activity, planned for 2021.
Oil markets were severely disrupted in 2020 by the economic
slowdown triggered by the COVID-19 outbreak. Crude oil prices
plummeted in the first half of the year, with Brent dropping below
$20/bbl in April 2020, before gradually stabilising between $40 and
$45/bbl in the second half.
M&P reacted immediately to this drop in prices by drawing up
and deploying an adaptation and cost reduction plan in March 2020
aimed at protecting the Group’s cash position. The plan’s targets
were as follows:
- For operated assets, a reduction in operating expenses of more
than 20% and in G&A of more than 15% (equivalent to $25 million
to $30 million in savings on an annualised basis); and
- More than 60% reduction in development capex compared to the
2020 budget (from $130 million to $50 million).
These targets were achieved during the year, with opex and
G&A on operated assets down by $38 million, which was a
year-on-year reduction of 23%. Development capex amounted to $47
million for the year. Thanks to this plan, the Group was able to
maintain a positive free cash flow of $16 million for fiscal
2020.
Due to the low-price environment, and following impairment tests
carried out on assets in production and development at the end of
the half-year reporting period in June 2020, the Group recognised a
one-time impairment charge of $477 million mainly relating to its
assets in Gabon and Angola.
The cost-cutting initiatives and asset impairments recorded
during the first half of 2020 significantly lowered the Group’s
breakeven in terms of net income. At the start of 2021, the net
income breakeven was below $45/bbl (excluding exceptional items and
share of Seplat’s earnings), while the cash breakeven was $30/bbl
before debt servicing.
Financially, the $43 million Gabon Oil Company (GOC) liability
related to GOC’s entry on the Ezanga permit in 2019 and
corresponding to the amount due to M&P for carrying costs prior
to 2018 was validated during expertise proceedings before the ICC.
Proceedings are ongoing as of the first quarter of 2021 to obtain
the release of this $43 million, which was not included in the
$168-million cash position as at 31 December 2020.
In Venezuela, due to international sanctions against PDVSA,
operations conducted locally by the Group are strictly limited to
maintenance related to the safety of staff and assets, and to
environmental protection. Consequently, no contribution to
M&P’s net income has been recognised, despite the fact that the
asset is still in production (total production of 8,581 bopd in
2020, or 3,432 theoretical bopd for the 40% consolidated stake held
by the Group) and still has development potential. It should also
be noted that in December 2020, the mixed company, Petroregional
del Lago, in which the Group holds a 40% consolidated stake,
obtained a 15-year extension of its licence. Its rights on the
Urdaneta West oil field now expire in 2041, instead of 2026.
Consolidated financial statements accounts for
the year ended 31 December 2020, as approved by the Board of
Directors on 9 March 2021, are available on the website of the
Company (www.maureletprom.fr/en/) The audit procedures on the
consolidated accounts have been completed. The report by the
auditors will be issued after completion of the annual report.
Français
Anglais
pieds cubes
pc
cf
cubic feet
millions de pieds cubes par
jour
Mpc/j
mmcfd
million cubic feet per day
milliards de pieds cubes
Gpc
bcf
billion cubic feet
baril
B
bbl
barrel
barils d’huile par jour
b/j
bopd
barrels of oil per day
millions de barils
Mb
mmbbls
million barrels
barils équivalent pétrole
bep
boe
barrels of oil equivalent
barils équivalent pétrole par
jour
bep/j
boepd
barrels of oil equivalent per day
millions de barils équivalent
pétrole
Mbep
mmboe
million barrels of oil equivalent
For more information, visit www.maureletprom.fr
This document may contain forward-looking
statements regarding the financial position, results, business and
industrial strategy of Maurel & Prom. By nature,
forward-looking statements contain risks and uncertainties to the
extent that they are based on events or circumstances that may or
may not happen in the future. These projections are based on
assumptions we believe to be reasonable, but which may prove to be
incorrect and which depend on a number of risk factors, such as
fluctuations in crude oil prices, changes in exchange rates,
uncertainties related to the valuation of our oil reserves, actual
rates of oil production and the related costs, operational
problems, political stability, legislative or regulatory reforms,
or even wars, terrorism and sabotage.
Maurel & Prom is listed for trading on
Euronext Paris CAC All-Tradable – CAC Small – CAC Mid & Small –
Eligible PEA-PME and SRD Isin FR0000051070/Bloomberg MAU.FP/Reuters
MAUP.PA
1 Reconciliation of net income before non-recurring items can be
found on page 4. 2 Include $43 million paid by GOC and currently on
escrow account (proceedings ongoing as of Q1 2021 to obtain release
of the funds)
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version on businesswire.com: https://www.businesswire.com/news/home/20210309006058/en/
Maurel & Prom Press, shareholder and investor
relations Tel: +33 (0)1 53 83 16 45 ir@maureletprom.fr
NewCap Financial communication and investor relations/Media
relations Louis-Victor Delouvrier/Nicolas Merigeau Tel: +33 (0)1 44
71 98 53/+33 (0)1 44 71 94 98 maureletprom@newcap.eu
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