Revenues from natural gas sales by Corrib gas field operator Vermilion slumped 44 per cent last year to Can$58.44 million (€38.86 million).
The company recorded the decline due to a significant reduction in the price of gas as a consequence of the Covid-19 pandemic, noted its annual report. The Overall revenues fell despite sales rebounding slightly in the final quarter where Vermilion recorded sales of Can$23.1 million compared to Can$21.8 million for the same quarter in 2019.
The report states that production volumes from the Corrib gas field reached plant capacity at the end of 2016 and plateaued until decline started at the beginning of 2018. Vermilion has a 20 per cent share in Corrib gas.
Due to the Opec+ price war in the first quarter of 2020, and the pandemic, global natural gas and crude oil prices “have significantly declined”, the report notes.This had an adverse effect on company finances for 2020 and is expected to result in continued pressure on cash flow and earnings.
In 2018 former field operator Shell Ireland disposed of its shareholding to the Canadian Pension Plan Investment Board in a partnership with Vermilion.
Gas price and production
The deal with Shell included an initial payment of €840 million, interest of €47 million and additional remittances of up to €250 million to 2025, subject to gas price and production.
Vermilion, as a consequence of the Shell Ireland deal, increased its stake in the field to 20 per cent. The Corrib Partners, which also include Statoil – renamed Equinor Energy and has a 36.5 per cent share – invested more than €3.6 billion in the project before gas started to flow which is more than four times the original estimate of €800 million.
In their most recent accounts for 2019, Equinor Energy directors indicate a significant decline in gas and oil prices since the beginning of 2020. Equinor generated its revenues from Corrib gas sales and in 2019 these fell from €353.35 million to €195.1 million. The company recorded a post-tax loss of €105 million after a corporate tax charge of €88.5 million.