Var Energi Asa · OSL:VAR
Var Energi Asa — Q2 2024 Earnings Presentation
28 slides from Var Energi Asa's earnings presentation, Jul 23, 2024
Slide 1: Second quarter and first half 2024 results presentation
Second quarter and first half 2024 Results presentation 23 July 2024
Slide 2: Today's presenters
Today’s presenters Nick Walker Stefano Pujatti Ida Marie Fjellheim CEO CFO Head of Investor Relations
Slide 3: Second quarter 2024 highlights
Second quarter Strong operational performance in first half 2024 • Production of 293 kboepd in first half in the upper end of guidance range for period 2024 highlights • Good production efficiency on operated fields • Maintenance program successfully executed in the quarter Production Production cos
Slide 4: Fastest growing E&P
Fastest growing E&P Barents Sea 3rd largest oil and gas producer in Norway Hammerfest Diversified asset base Interests in >50% of all producing assets on the NCS 2nd largest exporter of gas from Norway Norwegian Sea North Sea ~190 licenses 47 fields1 4 hub Florø 1/3 operated 7 operated areas Balder
Slide 5: Production in the upper end of guidance range
Production in the upper end of guidance range Production guidance 2024 Gas share Q2 Production Efficiency Q2 280-300 kboepd 36% 93%2 kboepd Upper range 2991 287 Lower range Production first half 2024 293 kboepd upper end of guided range for the period YTD February2 Q1 24 Q2 24 Q3 24 Q4 24 1. Includi
Slide 6: Growth towards 2025 and unlocking future value
Growth towards 2025 and unlocking future value kboepd ~400 New Sustaining 350-400 kboepd 280-300 projects 293 towards 2030 • Maximise recovery and infill drilling • High value early phase projects Base • Near field and high impact production exploration 1H 2024 2024 guiding End-2025E Gas share 37% 3
Slide 7: Safe and responsible
Safe and responsible Serious incident frequency1 Total recordable incident frequency2 1.0 3.2 2.8 1.9 0.4 0.3 2022 2023 1H 2024 2022 2023 1H 2024 Zero material safety or environmental incidents in Q2 6 1. SIF: Serious incident and near-misses per million worked hours . 12 months rolling average 2. T
Slide 8: Accelerated decarbonisation
Accelerated decarbonisation Carbon emission intensity kg CO2 /boe1 17 12 ~10 <6 Global average 2023 1H 2024 2030 target Methane emissions near zero Member of <0.02 % share of gas sales2 OGMP 2.03 Top 5% A+ B in the industry1 Top 100 Oslo Børs2 rating3 Inclusion in OSEBX ESG index 1. Equity share emi
Slide 9: Unit opex better than guidance
Unit opex better than guidance Full year unit opex expected at bottom of guidance range USD/boe 13.5-14.5 14.1 Reducing opex by end-2025 12.2 • Sanctioned projects averaging ~10 USD ~4 per boe • Integration of lower-cost Neptune assets • High-grading the portfolio • Realising cost synergies and impr
Slide 10: Creating value and growth
Creating value and growth Reserves1 Contingent resources2 Prospective resources3 1.24 billion boe 0.75 billion boe >1 billion boe >3 billion boe 7 projects coming on >20 early phase ~60 exploration stream and high projects wells next four years quality assets 1. 2023 Annual statement of reserves - P
Slide 11: Projects in execution
Delivering growth Projects in execution Barents Sea Johan Castberg Snøhvit Future 7 projects developing >400 mmboe1 Norwegian Sea² Smørbukk North Kristin South Halten East Ormen Lange Ph.3 Åsgard LPP3 USD ~35 per boe ~2 years Breakeven Pay-back Balder Area Balder X >25% >75% complete IRR across port
Slide 12: Balder X progressing towards completion
Balder X progressing towards completion Extending lifetime to 2045+ in the Balder area ~80 kboepd Targeted start-up at peak production¹, gross Q4 2024 Sail-away decision ~150 mmboe 2P reserves¹, gross end-August ~5 USD/bbl production cost Jotun FPSO nearing completion 14/14 production wells complete
Slide 13: Johan Castberg firmly on track
Capturing long term value Johan Castberg firmly on track from the prolific Barents Sea 220 kboepd Progressing towards Increased vessel capacity¹,², gross first oil in Q4 2024 450-650 mmboe recoverable resources¹,², gross ~4 USD/bbl production cost Image: Johan Castberg heading for sea trials 1. 1. O
Slide 14: Near-field exploration strategy yielding results
Near-field exploration strategy yielding results Barents Sea 5 wells Ringhorne North and Cerisa discoveries adding 31-62 mmboe Estimated gross recoverable resources Norwegian Sea 1 well Doubling number of wells in 2024 ~150 mmboe ~350 USD million 10 of 16 North Sea 7 wells net risked resources explo
Slide 15: Gjøa area: Unlocking value
Gjøa area Unlocking value Licenses Ofelia (WI 40%) 16-33 mmboe Fields Cerisa oil discovery Discoveries Njargasas (WI 20%) 18-39 Kyrre (WI 40%) Prospects mmboe1 52 mmboe 11-19 mmboe Platform Subsea template To be drilled Q4 2024 Gjøa North (WI 30%) 8-24 mmboe Gjøa North, Ofelia, Kyrre and Cerisa pote
Slide 16: Balder area: Production for decades
Licenses Balder area Fields Discoveries Production for decades Iving (WI 30%) 5-13 mmboe Ringhorne North (WI 30%) 13-23 mmboe Prospects Infrastructure Ringhorne North discovered resources Ghost (WI 90%) King (WI 90%) 13-23 mmboe 1 8 - 40 mmboe Prince (WI 90%) 17 mmboe² Ringhorne East 8- 15 mmboe Pri
Slide 17: Financial highlights
Financial highlights 77 USD/boe USD 711 million weighted average realised price CFFO after tax 0.8x USD 1.8 billion NIBD / EBITDAX Available liquidity1 USD 270 million ~25% Dividend Q2 2024 and Q3 2024 of USD ~500 million of synergy potential guidance from Neptune transaction realised 16 1. Cash, ca
Slide 18: Strong realised prices
Strong realised prices Additional gas revenues above spot prices of Total petroleum revenues USD million USD ~250 million year-to-date 1 949 1 933 Indicative gas sales portfolio2 1 432 1 222 Gas sales split (%) 1 282 788 100% 1 589 6161 560 UK Q2 2023 Q1 2024 Q2 2024 75% Oil Gas NGL France 50% Reali
Slide 19: High cash flow generation
High cash flow generation CFFO and Capex 3.5 USD million 1 718 3.0 1 588 1 467 2.5 USD 711 million 1 330 Q2 2024 Cash flow from operations (CFFO) 2.0 1 009 1.5 773 687 694 711 Development capex 1.0 at lower end of 0.5 231 guidance range 0.0 Q2 2023 Q1 2024 Q2 2024 1H 2023 1H 2024 USD 2.7-2.9 billion
Slide 20: Continued strong liquidity position
Continued strong liquidity position Cash flow development Q2 2024 Available liquidity USD million USD million 2 322 28 111 26 24 1 840 22 20 1 600 18 1 558 16 (958) 14 1 525 12 711 10 722 8 (784) 6 (57) 315 722 4 (270) (7) 2 315 0 Cash at end- CFFO before Working Taxes paid CFFO Cash flow Net Divide
Slide 21: Continued strong financial position
Continued strong financial position Net interest-bearing debt and leverage ratio1 Maturity profile USD billion 0.8x 1.0 USD million 13 0.7x 0.8 0.4x 0.6 12 0.4 First Reset Date 15 11 0.2 February 2029 10 0.0 -0.2 9 -0.4 8.1 1 500 8 -0.6 7 5.8 -0.8 5.3 -1.0 6 4.3 -1.2 3.9 -1.4 5 2.4 -1.6 4 1 000 1 00
Slide 22: Cash tax sensitivities
Cash tax sensitivities Tax payments – sensitivities for 1H 20251 USD million² 1 400 1 200 NOK ~14 billion 1 000 2H 2024 tax payments (USD ~1.3 billion)2 800 $95/80 boe oil/gas price $85/70 boe oil/gas price $75/60 boe oil/gas price 600 400 200 0 Q3 2024 Q4 20243 Q1 2025 Q2 2025 1. Price assumptions
Slide 23: Attractive and predictable dividends
Attractive and predictable dividends Dividends USD million Dividend guidance Planned dividend Q3 2024 for 2024 270 270 270 270 270 20-30% of CFFO (after tax)1 270 ~30% USD million of CFFO after tax Dividend for Q2 2024 of USD ~0.11 per share to be paid 6 August 2024 Paid in NOK at exchange rate of U
Slide 24: Guidance and outlook
Guidance and outlook 2024 Longer-term End-2025: ~400 kboepd Production 280-300 kboepd 2025-2030: 350-400 kboepd Production cost USD 13.5-14.5 per boe End-2025: USD ~10 per boe2 2025-28: USD 2.7-2.9 billion excl. exploration and abandonment USD 1.5-2.5 billion excl. exploration and abandonment p.a. C
Slide 25: Continued strong delivery in-line or better than guidance
Continued strong delivery in-line or better than guidance Strong operational performance in first half 2024 Good financial results Delivery on growth towards 2025 and unlocking future value Industry leading ESG performance Continued attractive and predictable dividends
Slide 26: Appendix
Appendix 25
Slide 27: Exploration program 2024
Exploration program 2024 Barents Sea Vår Pre-drill Estimated Energi unrisked recoverable License Prospect Operator Status share resources resources mmboe1 mmboe1 PL 917 Hubert Vår Energi 40 % Dry PL 917 Magellan Vår Energi 40 % Dry PL 956 Ringhorne North Vår Energi 50 % 13-23 Discovery PL 1025S Venu
Slide 28: 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 market conditions, investor attitude and demand, the business prospects of the Group and other issues. The Materials and