Energy News is making some of its most important coverage of the COVID-19
pandemic freely available to readers. For more coverage, please see our COVID-19 hub.
Of some 96 assets the Norway-headquartered company suggests that 40% which have produced at least 75% of their original resources will be costing money, not making it, by the end of 2020.
"A concern arising for operators is whether the profitability of producing fields will degrade to such an extent that prematurely shutting down ageing fields will prove to be the most rational decision," analyst Aleksander Erstad said.
There are further challenges than field economics, such as shutins over outbreaks of the virus while other FPSOs are the target of supply chain cuts, it says. All this could add to the chance of several late producing vessels being shut down for good.
Those fields using leased FPSOs are the worst off with 70% of late producing assets now valued at less than zero, squeezing both operators and suppliers.
Suppliers might see their leasees negotiate lower day rates in order to bring operating expenses down to improve the fields net present value.
The other option is to end the contracts early, and it is unlikley any of those vessels which do see contracts ended will be redeployed in this climate.
"This essentially forces suppliers to accept a day-rate reduction in order to keep their vessels working," Rystad thinks.
It estimates the NPV for late producing fields with leases FPSOs at around negative $2.90/bbl while the overall figure for all FPSOs is some $3/bbl.
"Given our base case oil price outlook, with prices recovering next year and into 2022, free cash flow will climb back to 2019 levels. However, as these mature fields see production stagnate, free cash flow will quickly return to a decline, ultimately threatening the profitability of many FPSO assets," it said.
