Maersk Oil Cutting Capital Expenditures
In its latest cost-savings measure, Maersk Oil has announced that it will cut $1 billion off its annual budget for capital expenditures (capex). The company said it will have long-term capex in the range of $2 billion to $4 billion a year compared with the previous range of $3 billion to $5 billion. The new forecast does not include funds to be spent on acquisitions, which the company says it is still pursuing as a critical means of replacing reserves.
The reduction in capex comes after Maersk’s August 26 announcement that it was cutting about 200 employees and seeking approval from the U.K. Oil & Gas Authority to close operations at its Janice installation in the U.K. North Sea. The Janice installation produces about 7,000 barrels of oil per day.
Like the rest of the energy industry, the company has trimmed costs and lowered outlays as crude prices have fallen by more than 50 percent in the past year. The company says it has reduced unit costs by 33 percent in the past year and released about 600 employees in the first half of 2015.
But some of Maersk Oil’s moves may simply serve as a means of reshuffling its assets and investments.
On August 31, the U.K. Oil & Gas Authority cleared the company to develop the Culzean gas field in the U.K. North Sea. The field is the largest gas field sanctioned in the U.K. since East Brae in 1990 and will produce about five percent of the U.K.’s energy demand by 2021. The Culzean field is expected to produce about 90 thousand barrels of oil equivalent per day and create 400 jobs.
Maersk Oil is a unit of the A.P. Moller-Maersk Group and operates fields in the U.K., Denmark, Qatar, Kazakhstan, the U.S. Gulf of Mexico, Algeria and Brazil with total production of 550,000 barrels of oil per day.