Wireline Issue 45 - Summer 2019

Martin also credits Zennor’s small technically focused team when it came to acquiring its early assets. Swift action and a detailed understanding of the Mungo/ Monan, Bacchus and Cormorant East fields allowed it to present a business case to Kerogen rapidly, leading to a deal in just six weeks. With its focus on size, diversity and scale, Neptune has larger ambitions in the UKCS and beyond. “We are trying to build a business for the long term,” Julian says. “We’re not trying to build it up and sell it on. We’re looking to build a business that is not just successful in the UK but has a much broader geographic footprint.” Nevertheless, it is also taking stock, moving now from a raft of acquisitions to an emphasis on value creation. With larger reserves, he notes, “We can be a bit more discerning about what we want to buy.” Moreover, with such a large (and valuable) portfolio acquired via the Engie transaction, “You don’t want to dilute that by paying over the odds for portfolios that inevitably have both good bits and bits that you like a little less.” In numerical terms, that has meant pushing UK lifting costs down to $7/bbl, nearly half the $13/bbl necessary a year ago. In terms of existing UK projects, the high-risk, high-reward Isabella leads the company’s priorities, and represents “a game-changing opportunity for us in the UK,” he says. “We like opportunities around our existing hubs, we don’t see the need to do frontier exploration or go into areas where we don’t have expertise or capabilities.” Realising value will also see greater production abroad – at least in the medium term. While 75-80% of the company’s portfolio is in Europe at present (11% in the UK), Indonesia is now its third-largest component, and new output is slated to come online in Algeria this year. New projects are set to bring on around 90,000

“We did not have multiple billions of equity to invest at the beginning, so it meant that our business model had to be different." Verus Petroleum chief executive Alan Curran

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