Wintershall Dea tightens 2021 oil, gas production outlook

Published on : 2021-07-27

Germany's Wintershall Dea has tightened its production guidance for 2021 into a more narrow range of 630-640,000 b/d of oil equivalent after a strong first half, it said July 27.

Wintershall Dea -- whose production is focused on assets in Northwest Europe, Russia, North Africa, and South America -- had said previously it was guiding for 620,000-640,000 boe/d of average output in 2021.

"Despite the fact that we have a large number of planned turnarounds to get through in the third quarter, in particular in Russia, we have seen robust production delivery in the first half," CFO Paul Smith said on an earnings call.

"As a result, we've tightened our production guidance range for the year," Smith said.

In Q2, Wintershall Dea's production averaged 613,000 boe/d, up by 1% year on year.

The company had signaled production would be impacted during the quarter by heavier than usual maintenance, especially in Norway.

CEO Mario Mehren said its two most recent startups -- the BP-operated Raven gas field in Egypt and the Achimov 4A/5A gas project in Russia -- were "performing well."

He said Raven production was now at 650 MMcf/d gross as it moves toward its plateau output of 900 MMcf/d.

He added that since the start of commissioning, Achimov 4A/5A had already produced 1 Bcm of gas in the first five months of operations. "These fields will offset natural decline in our other fields in Russia and extend our production plateau in the country," Mehren said.

In Norway, Mehren said the company continued to progress its major development projects, Nova, Dvalin and Njord. "We expect first production from these fields in the second half of 2022," he said.

First gas flows from Dvalin were achieved in late 2020, but commercial startup has been pushed back into 2022 after production tests showed excessive mercury content in the gas.

Market environment

Wintershall Dea was buoyed in Q2 by the stronger oil and gas prices, posting pre-tax profit of Eur636 million ($749 million), up by 140% year on year.

Mehren said gas prices in Europe in particular were driven by the demand recovery in the industrial sector.

"European gas prices were also impacted by a colder than usual spring in Europe, the recent heatwave, and lower levels of electricity from wind, leaving storage levels significantly below the norms for this time of year," Mehren said.

"LNG cargoes that usually supported European gas supply were diverted to Asia where the industrial recovery took hold earlier than in Europe, driving demand for gas and increased prices," he said.

"It can be expected that oil and gas prices will remain firm in the coming quarters, providing us with strong tailwinds to end the year in a very strong position."

Wintershall Dea said its capex guidance for 2021 was unchanged at Eur1 billion-1.1 billion for development and production capex, and Eur200 million-250 million for exploration spend.

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