Var Energi Asa · OSL:VAR
Var Energi Asa — Q3 2023 Earnings Presentation
27 slides from Var Energi Asa's earnings presentation, Oct 24, 2023
Slide 1: Third quarter 2023 results presentation
Third quarter 2023 Results presentation | 24 Oct 2023
Slide 2: Today's Vår Energi presenters
Today’s Vår Energi presenters Nicholas Walker Stefano Pujatti Ida Marie Fjellheim CEO CFO Head of Investor Relations 2
Slide 3: Third quarter 2023 highlights
Third quarter 2023 highlights Accelerating growth target to ~400 kboepd by end-2025 ▪ Set for ~100% production growth from Q3 2023 ▪ Breidablikk and Tommeliten A successfully on stream ▪ Remaining project portfolio progressing to schedule, five more than 50% complete ▪ 80% exploration success in 202
Slide 4: Neptune acquisition progressing towards completion
Neptune acquisition progressing Neptune Norway’s high-quality NCS assets located near existing hub areas towards completion The Barents Sea Operator of Goliat and partner in the Johan Castberg development Snøhvit Perfect strategic fit Highly strategic long-life LNG asset Hammerfest ▪ 12 producing as
Slide 5: Set to double production by end-2025
Set to double production by end-2025 Production target including Neptune Energy Norge Sustaining value creation beyond 2025 kboepd ~100% Infill drilling, improved recovery and extended lifetime ~400¹ Neptune Norge Acquisition Maturing a high value project portfolio 11 development projects.: Johan Ca
Slide 6: Key performance indicators
Key performance indicators Q3 2023 vs. Q2 2023 Production Cash flow from operations Capex 210 kboepd USD 975m USD 650m (202) (231) (687) Production cost per boe Dividend for the quarter NIDB/EBITDAX USD 14.0 USD 270m 0.5x (15.5) (270) (0.4) 6
Slide 7: Major turnarounds completed
Major turnarounds completed Production, production efficiency1 and product mix kboepd 89% 88% 89% 210-220 kboepd 214 202 210 Full-year 2023 guidance 28 31 27 6% 18 18 18 83 73 71 34% > 230 kboepd 60% Exit rate 2023² 85 84 90 • Breidablikk and Tommeliten A successful start up Q3 2022 Q2 2023 Q3 2023
Slide 8: Solid delivery on operated assets
Solid delivery on operated assets Goliat ▪ Strong performance with 99% production efficiency ▪ Secured rig capacity for a two-year drilling program in the Barents sea together with Equinor Balder/Ringhorne ▪ Production efficiency of 79% due to turnaround in the quarter ▪ Riser at Ringhorne successfu
Slide 9: On target to beat full year opex guidance
On target to beat full year opex guidance Production cost per boe produced1 USD per boe 18 17 ▪ Quarterly production cost impacted by seasonal 16 15.5 maintenance 15 14.0 14 13.1 13 ▪ Full-year 2023 opex per boe guidance of USD 14.5 to 15.5 12 11 ~8 2 10 9 ▪ Medium-term ambition of ~8 USD2 per boe 8
Slide 10: Recognised ESG leadership through responsible operations
Recognised ESG leadership through responsible operations Clear path to 50% emission reduction by 2030¹ tCO2-eg 400 11.1 kg/boe 2005 Baseline CO2 emission intensity Q3 2023² -50% 0.0 Actual SIF Q3 2023³ Jotun FPSO & Ringhorne Jotun FPSO electrification Energy Top 5% Sustainalytics on field Balder FPU
Slide 11: Quality project portfolio delivering on growth strategy
Quality project portfolio delivering on growth strategy Existing production and sanctioned developments First oil field extension First oil new field development Started production Hub areas Operator 2P >500 mmboe (mmboe) 2023 2024 2025 reserves in development portfolio Balder X Balder area 312 Brei
Slide 12: Extending production from the Balder area towards 2045
Extending production from the Discovery (oil and gas, operated) Discovery (gas and condensate, partner-operated) Balder area towards 2045 Exploration targets (to be drilled) Ringhorne N Producing asset Q1 2024 Strong historic growth utilising hub strategy... Ringhorne King & Prince Ringhorne >500 mm
Slide 13: Breidablikk on stream ahead of schedule and on budget
Breidablikk on stream ahead of schedule and on budget Cost-effective subsea tie-back to Grane First oil achieved October 2023 188 mmboe ~58 kboepd 2P reserves¹, gross at peak production¹, gross <2 years ~3 USD/bbl payback time after start up production cost 13 1. Vår Energi 34.4% WI
Slide 14: Jotun FPSO the key Balder hub enabler
Jotun FPSO the key Balder hub enabler First oil Q3 2024 Material future value Revised capex estimate, schedule maintained >85% Major heavy-lift installations completed 9 of 14 producing wells completed ~78 kboepd <5 USD/bbl complete1 at peak production², gross production cost 3 of 5 subsea campaigns
Slide 15: Johan Castberg on schedule
Johan Castberg on schedule 190 kboepd ~4 USD/bbl vessel capacity production¹,², gross production cost Revised capex estimate, schedule maintained Progressing towards first oil in Q4 2024 450-650 mmboe 2P reserves¹,², gross 15 1. Operator’s estimate 2. Vår Energi 30% WI © Equinor
Slide 16: 2023 exploration campaign
2023 exploration campaign Venus – (2024) Est. Pre-drill Countach - Discovery License Prospect Operator Vår Energi share Recoverable Unrisked resources mmboe1 resources mmboe1 Status >80% PL 229 Countach Vår Energi 65 % 482 Discovery exploration success rate 2023 PL 554 Angulata Equinor 30 % - Dry PL
Slide 17: Financial highlights
Financial highlights 85 USD/boe weighted average realised price USD 975 million CFFO after tax 0.5x NIBD / EBITDAX USD 3.1 billon Available liquidity¹ USD 270 million Q3 dividend payment 17 1. Cash, cash equivalents and undrawn facilities
Slide 18: Continued high realised gas price
Continued high realised gas price Total petroleum revenues Realised gas price above spot price USD million year-to-date1 2 520 1 092 ~47 USD/boe 1 616 1 432 788 1 035 1 339 589 522 Indicative gas sales portfolio2 Q3 2022 Q2 2023 Q3 2023 Gas sales split (%) Oil Gas NGL 100% UK Realised prices 75% Fra
Slide 19: High cash flow generation
High cash flow generation CFFO and capex USD million 3.5 5 239 1.5x 3.0 Q3 2023 capex coverage 2.5 2.0 2 563 USD 2.4 – 2.7bn 1.5 1 980 1 794 Capex guidance for 2023 1.0 975 687 0.5 599 650 524 231 0.0 Q3 2022 Q2 2023 Q3 2023 YTD 2022 YTD 2023 CFFO Capex 19
Slide 20: Cash taxes
Cash taxes Tax payments – sensitivities for 1H 20241 USD million 1 000 NOK ~6.1bn Q4 2023 tax payments (USD ~600m)1,2 800 600 $90/120 boe oil/gas price $85/115 boe oil/gas price $80/110 boe oil/gas price Taxes paid in 1H 2024 related to 2023 results 400 200 0 Q3 2023 Q4 2023 Q1 2024E Q2 2024E 20 1.
Slide 21: Continued strong liquidity position
Continued strong liquidity position Cash flow development Q3 2023 Available liquidity USD million USD million 3 111 3 095 28 (22) 26 24 22 (264) 20 426 18 2 500 16 1 261 3 000 14 6 595 975 12 (270) 10 (653) 8 6 4 111 595 2 111 0 Cash at end- CFFO Working Taxes paid CFFO after tax Cash flow Net finan
Slide 22: Optimising the long-term financing structure
Optimising the long-term financing structure Net interest-bearing debt and leverage ratio1 Maturity profile USD billion USD million Working Capital revolving credit facility extended 13 1.0 until 2026 12 0.8 0.4x 0.5x 0.6 11 0.2x 0.4 10 0.2 0.0 9 8.5 -0.2 1 500 8 7.2 -0.4 7 -0.6 6.2 -0.8 6 -1.0 1 50
Slide 23: Attractive and predictable dividends
Attractive and predictable dividends Dividends declared USD million ▪ Dividend guiding for Q4 2023 of USD 270 million (~0.11 USD per share) 270 270 270 270 20-30% of CFFO (after tax) (illustrative) ▪ Expected total dividend for 2023 of USD 1.080 million, approximately 30% of CFFO after tax ▪ Dividen
Slide 24: 2023 guidance
2023 guidance Production 210-220 kboepd Production cost USD 14.5-15.5 per boe USD 2.4-2.7 billion excl. exploration and abandonment Capex Exploration USD ~200 million Abandonment USD ~50 million Other Cash tax payments of USD ~600¹ million in Q4 2023 Q4 dividend of USD 270 million (~0.11 USD per sha
Slide 25: One of the fastest growing E&P companies in the world
One of the fastest growing E&P companies in the world Accelerating growth target to ~400 kboepd by end-2025 Delivering production and improved opex Strong financial performance Attractive and predictable shareholder distribution 25
Slide 26: Q&A
A var energi Q&A
Slide 27: 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