Var Energi Asa · OSL:VAR
Var Energi Asa — Q4 2021 Earnings Presentation
31 slides from Var Energi Asa's earnings presentation, Mar 1, 2022
Slide 1: Fourth quarter 2021 Results presentation
Fourth quarter 2021 Results presentation | 1 March 2022
Slide 2: Disclaimer
Disclaimer The Materials speak only as of their date, and the views expressed are subject to change based on a number of factors, including, without limitation, macroeconomic and equity market conditions, investor attitude and demand, the business prospects of the Group and other specific issues. Th
Slide 3: Today's Vår Energi presenters
Today’s Vår Energi presenters Torger Rød Stefano Pujatti Ida Marie Fjellheim CEO CFO Head of Investor Relations 3
Slide 4: Successfully completed IPO and listing on Oslo Børs
Successfully completed IPO and listing on Oslo Børs Natural next step in realising Vår Energi’s full potential as a leading oil and gas company on NCS • ~19 000 new shareholders: Institutional investors in Norway, rest of Nordics, Europe, the US and Asia, as well as retail investors in the Nordics •
Slide 5: Committed to deliver a better future and long-term value creation
Committed to deliver a better future and long-term value creation Material and diversified production base with longevity, in partnership with world-class operators Maximising value creation with hub-centred strategy on the NCS World-class capabilities, with tangible growth and track record of succe
Slide 6: Leading pure-play independent on the NCS with material gas production
Leading pure-play independent on the NCS with material gas production Diversified portfolio with a value-enhancing hub strategy Key metrics Åsgard Area Barents Sea Area Morvin Johan 246 kboepd ~35% gas Åsgard Castberg Total production FY’21 % of production FY’21 Kristin Goliat Lavrans Trestakk Tyrih
Slide 7: Highlights
Highlights Fourth quarter and full year 2021 Strong operational performance • Zero actual serious incidents in 2021 • Production increased from the third quarter driven by improved production efficiency Record cash flow generation and material distributions • Capturing higher oil and gas prices, res
Slide 8: Key performance indicators
Key performance indicators Q4 vs. Q3 2021 Actual serious incidents frequency Production Cash flow from operations 0.0 259 kboepd USD 923m (0.0) (247) (1 310) CO2 emissions intensity Production cost Dividend for the quarter 7.1 kg/boe USD 13.4/boe USD 262m (11.7) (11.6) (213) 8
Slide 9: Diverse and robust portfolio enabling production growth
Diverse and robust portfolio enabling production growth Ambition for >350 kboepd by 2025 Growth levers kboepd Material, long-lived resources Existing production and sanctioned +50% ~1.1 bnboe 2P reserves and developments 550 mmboe 2C resources, with Unsanctioned developments R/P of ~13 years1 >350 >
Slide 10: Outlook towards material cash flow generation and dividends
Outlook towards material cash flow generation and dividends Potential for strong cash flow generation ahead… …driving robust returns to shareholders1 USDbn USDm 20 Vår Energi cash flow generation 2022-26 (illustr.) FY’22 Minimum USD 70/bbl 800 15 USD 60/bbl Free cash flow 800 USD 50/bbl USD 40/bbl F
Slide 11: Operational review
om, Var energi Operational review
Slide 12: Safety is the number one priority
Safety is the number one priority Serious incident frequency (SIF) Ambition to be the safest operator on the NCS Health and working Avoid major environment Q4 Q1 accidents 1.2 0.8 1.5 1.7 1.3 Always Q4 2020 Q3 2021 Q4 2021 FY’20 FY’21 Safe work at height / safe Prevent Prevent falling objects Q3 Q2
Slide 13: Stable production with material gas share
Stable production with material gas share Production and production efficiency1 Production mix kboepd 95% 1,0 92% 91% 87% 90 0,9 73% 80 0,8 259 265 70 259 265 0,7 257 257 247 246 247 246 10% 8% 10% 60 10% 9% 0,6 50 0,5 37% 37% 37% 37% 35% 40 0,4 30 0,3 20 0,2 53% 53% 55% 53% 56% 10 0,1 0 0,0 Q4 2020
Slide 14: Production cost on track to improve in the medium term
Production cost on track to improve in the medium term Production and transportation cost per barrel1 USD/boe • Production cost of USD 12/boe for the full year • 2022 opex per boe guidance maintained at USD 12.5 to 13.5 • Medium term production cost ambition of 8 USD/boe – Continuous cost reduction
Slide 15: Clearly defined ESG agenda at the core of our strategy
Clearly defined ESG agenda at the core our strategy Strong ESG Assessment Long-term target of net zero emissions by 2030 Received in January 2022 Indicative chart illustrating potential contributions to reduction in Vår Energi Scope 1 GHG emissions (Scope 1 and 2) 400 Baseline (2005) Jotun/Ringhorne
Slide 16: Main development projects progressing to plan and budget
Main development projects progressing to plan and budget Existing production and sanctioned developments Key Areas Op. 2P 2021 2022 2023 2024 2025 • Development projects supports mid-term mmboe production targets Balder 216 Ringhorne Phase III Balder X • Main development projects Johan Castberg, Gra
Slide 17: Industry-leading exploration results with 75% discovery rate in 2021
Industry-leading exploration results with 75% discovery rate in 2021 2021 campaign highlights Successful exploration close to existing infrastructure 2021 discoveries Discovery rate Contingent resources1 Unit exploration cost2 Isflak Net volume1: 12 mmboe 75% 135 USD 0.2 6/8 wells mmboe (net) /boe R
Slide 18: 2022 campaign targeting more high-value barrels
2022 campaign targeting more high-value barrels 2022 work programme Continued hub-focused exploration Pre-drill Pre-drill 2022 campaign Snøfonn Vår Energi License Prospect Operator unrisked unrisked Timing Adjacent to Johan Castberg share mmboe mmboe VE Skavl Stø PL 532 Snøfonn Equinor 30% 44 13 Q1/
Slide 19: Financial review
om, Var energi Financial review
Slide 20: Key financials
Key financials USD million Q4 2021 Q3 2021 Q4 2020 FY 2021 FY 2020 Petroleum revenues 2 282 1 615 791 6 043 2 869 EBIT 1 235 786 (748) 2 910 (2 253) Profit before taxes 1 124 602 (180) 2 498 (2 204) Production cost (USD/boe) 13.4 11.6 9.3 12.0 9.9 Operating CF before tax 1 495 1 292 595 4 274 2 087
Slide 21: Capturing higher prices, gas 37% of production and 52% of revenues
Capturing higher prices, gas 37% of production and 52% of revenues Total petroleum revenues Sold volumes USDm Oil Gas NGL mmboe 21 23 22 92 85 8 7 8 31 28 6 043 368 12 13 12 51 49 Q4 2020 Q3 2021 Q4 2021 FY’20 FY’21 2 227 Realised prices 2 700 USD/boe 148 214 150 2021 2020 2 282 541 1 615 3 448 100
Slide 22: Several factors driving increased production cost
Several factors driving increased production cost Production cost (sold volumes) USDm • Total production costs decreased due 44 15 16 (127) to overlift position in Q3 versus 398 (4) 342 underlift position in Q4 • Cost of operations in Q4 increased due to restructuring costs and revised bonus provisi
Slide 23: CFFO impacted by tax payments and working capital tied to higher sales
CFFO impacted by tax payments and working capital tied to higher sales CFFO and CAPEX Income tax paid / (received) USDm USDm 1 000 1 000 1 400 4 500 4 438 3.5 3.5 1 310 800 800 1 300 4 000 1 200 3.0 3.0 600 572 600 1 100 3 500 1 000 923 2.5 2.5 400 400 342 3 000 900 787 2 584 200 200 800 729 2.0 2 5
Slide 24: Record high project investments in 2021
Record high project investments in 2021 CAPEX split per asset USDm • Full-year project investments of USD 2.6 billion 2 584 with main development projects progressing to plan • Q4 capex USD 710 million excluding 1 227 decommissioning capex, asset sales and investments in intangibles • 2022 guidance
Slide 25: Strong cash flow supporting capex and material dividends
Strong cash flow supporting capex and material dividends Cash flow development Q4 2021 Available liquidity USDm USDm Cash and cash equvivalents RBL RCF (399) 2 304 28 26 24 (572) 22 1 659 20 1 893 18 600 16 2 080 14 (722) 12 923 10 795 8 6 264 (262) 224 4 44 (22) 264 2 224 0 Cash at end- CFFO before
Slide 26: Significant deleveraging on refinancing and strong cashflow, investment grade balance sheet
Significant deleveraging on refinancing and strong cashflow, investment grade balance sheet Net interest-bearing debt and leverage ratio1 USDbn NIBD/EBITDAX EBITDAX NIBD • Obtained investment grade credit ratings from S&P 22 3.5 and Moody’s 20 3.2x 18 3.0 • USD 6bn of senior unsecured multicurrency
Slide 27: Dividend guidance of minimum USD 800 million for 2022
Dividend guidance of minimum USD 800 million for 2022 Dividend distribution USDm • USD 225m Q1 2022 dividend guidance • Dividend for Q1 expected to be paid in May 2022 • Dividend policy of 20%-30% of cashflow from operations after tax Minimum USD 800m from 2023 onwards FY’21 262 Q1 213 225 75 Q4 202
Slide 28: Outlook
Outlook Production • Production target in 2022 of 230-245 kboepd • Targeting opex/boe of USD 12.5-USD 13.5/boe in 2022 Opex • Opex/boe expected to decline over the medium term towards USD 8/boe as new projects come onstream and cost savings are achieved • 2022 capex guidance of USD2.3 billion – USD2
Slide 29: Concluding remarks
om, Var energi Concluding remarks
Slide 30: Summary
Summary • Strong operational performance • Record cash flow generation and material distributions • Solid financial position • Delivering on the growth strategy
Slide 31: Fourth quarter 2021 Results presentation
Fourth quarter 2021 Results presentation | 1 March 2022