Var Energi Asa · OSL:VAR
Var Energi Asa — Q4 2023 Earnings Presentation
28 slides from Var Energi Asa's earnings presentation, Feb 13, 2024
Slide 1: Fourth quarter 2023 Results presentation
Fourth quarter 2023 Results presentation 13 February 2024
Slide 2: Today’s presenters
Today’s presenters Nick Walker Stefano Pujatti Ida Marie Fjellheim CEO CFO Head of Investor Relations
Slide 3: Fourth quarter 2023 highlights
Fourth quarter Progressing towards ~400 kboepd by end-2025 • Breidablikk and Tommeliten Alpha successfully on stream 2023 highlights • December production of 233 kboepd • Neptune Energy Norge acquisition closed 31 January 2024 Production Production cost Strong financial performance 225 13.9 • Achiev
Slide 4: Delivering on 2023
Delivering on 2023 Guidance Actuals Production 210-220 kboepd 213 kboepd Production cost USD 14.5-15.5 per boe USD 14.1 per boe Capex USD 2.4-2.7 billion USD 2.6 billion Exploration USD 0.2 billion USD 0.17 billion Abandonment USD 50 million USD 41 million 4
Slide 5: Neptune acquisition completed
Neptune acquisition completed Hammerfest 203 licenses 47 assets ~2 billion boe 68 operated 7 operated¹ 2P reserves² and 2C resources³ Adds scale, diversification and longevity Cash-generative from day one Florø Synergies USD >300 million post-tax4 Oslo Stavanger 1. Producing assets 2. Annual Stateme
Slide 6: Production growth towards end 2024
Production Production guidance 2024 Gas share growth towards 280-300¹ kboepd 35% end 2024 kboepd Upper range • Average 280-300 kboepd Lower range • Neptune volumes included • Turnarounds impacting Q3 • Balder X and Johan Castberg on- stream Q4-2024 • Average annual decline of ~10% partially offset b
Slide 7: Set to double production by end-2025
Set to double production by end-2025 kboepd ~100% ~400¹ Sustaining value beyond 2025 • Improved recovery Neptune Norge • A high value project portfolio • World-class exploration 9 projects in execution • Value accretive M&A 213 A strong base portfolio FY 2023 End-2025E 7 1. After disposal of non-cor
Slide 8: Recognised ESG leadership
Recognised ESG leadership Strong safety performance Zero Actual SIF1, 2 Emissions intensity Clear path to 9.6 kg CO2/boe² 50% emission reduction by Methane emissions 2030³ near zero4 Sustainalytics Top Rated Top 5% in the industry 1 Serious Incident Frequency 2 Q4 2023 3 Net operational emissions –
Slide 9: Strong operational performance
Strong operational performance Full-year 2023 production Production kboepd 213 225 kboepd 214 210 30 43 31 20 18 13 December 2023 exit rate 83 71 73 233 kboepd 90 95 82 Gas share 2023 Q4 2022 Q3 2023 Q4 2023 35% Norwegian Sea North Sea Barents Sea Balder Area 9
Slide 10: Unit opex below full year guidance
Unit opex below full Production cost USD/boe year guidance 18 17 16 15.5 15 Full year 2023 14.0 13.9 14 13.1 14.1 USD/boe 13 12 11 2024 guidance 10 9 13.5-14.5 USD/boe 8 7 6 5 4 3 Integration of low-cost Neptune assets 2 1 Realising cost synergies across portfolio 0 Q1 2023 Q2 2023 Q3 2023 Q4 2023 1
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 2023 2024 2025 2026 >500 mmboe reserves in development portfolio Balder X Balder area Breidablikk 9 of 18 pro
Slide 12: Balder X nearing completion
Balder X nearing >150mmboe completion 2P reserves¹, gross ~78 kboepd at peak production¹, gross ~5 USD/bbl production cost Jotun FPSO >90% complete SPS/SURF² >80% complete Drilling ~75% complete High construction activity at yard All subsea equipment delivered; majority installed 10 of 14 producing
Slide 13: Johan Castberg on track
Johan Castberg on track 190 kboepd Progressing towards vessel capacity production¹,², gross first oil in Q4 2024 450-650 mmboe 2P reserves¹,², gross ~4 USD/bbl production cost 1. Operator’s estimate 13 2. Vår Energi 30% WI
Slide 14: Stepping up exploration activity
Stepping up exploration activity Barents Sea 5 wells Doubling number of wells in 2024 ~150 mmboe ~300 USD million 16 wells net risked resources exploration spend1 Norwegian Sea 1 well Building on a strong track record >150 mmboe <1 USD/boe >50% North Sea 7 wells last 5 years2 finding cost2 success r
Slide 15: Creating value and growth
Creating value and growth Significant reserves plus resources ~2 billion boe1 Delivering Sustaining Creating growth production future value Reserves2 Contingent Resources3 Prospective Resources4 ~3 1.24 billion boe 0.75 billion boe >1 billion boe billion boe High quality De-risking Increasing explor
Slide 16: Financial highlights
1 Financial highlights 84 USD/boe USD 857 million weighted average realised price CFFO after tax 0.5x USD 3.7 billion NIBD / EBITDAX Available liquidity2 USD 270 million Dividend Q4 2023 and Q1 2024 guidance 1. Financial results from 2023 are excluding Neptune 16 2. Cash, cash equivalents and undraw
Slide 17: Continued high realised gas price
Continued high realised gas price Additional sales revenue generated in 20231 Total petroleum revenues USD ~1 billion USD million 2 354 1 092 1 616 1 679 Indicative gas sales portfolio2 Gas sales split (%) 1 035 1 078 1 192 100% 522 543 UK Q4 2022 Q3 2023 Q4 2023 75% Oil Gas NGL France 50% Realised
Slide 18: High cash flow generation
High cash flow CFFO and capex generation USD million 3.5 3.5 5 682 3.0 3.0 USD 3.4 billion 2.5 2023 Cash flow from operations (CFFO) 2.5 3 420 2.0 2.0 1.3x 975 857 2 593 2 641 1.5 800 1.5 Q4 2023 capex coverage 661 650 1.0 1.0 443 0.5 0.5 USD 2.6 billion 0.0 0.0 2023 Capex within guidance Q4 2022 Q3
Slide 19: Cash taxes
Cash taxes Tax payments – sensitivities for 2H 20241 USD million 1 200 1 000 NOK ~15 billion 1H 2024 tax payments (USD ~1.5 billion)1 800 $90/80 boe oil/gas price Taxes paid in 1H 2024 related 600 $80/70 boe oil/gas price to 2023 results $70/60 boe oil/gas price 400 200 0 Q1 2024 Q2 2024 Q3 2024 Q4
Slide 20: Continued strong liquidity position
Continued strong liquidity position Cash flow development Q4 2023 Available liquidity USD million USD million 74 28 3 735 26 24 3 095 22 (568) 20 1 351 18 857 199 3 000 16 14 2 500 23 735 12 (670) 595 (270) 10 8 6 4 595 735 2 0 Cash at end- CFFO Working Taxes paid CFFO Cash flow Net financing Divide
Slide 21: Successful debut hybrid issue
Successful debut hybrid issue Net interest-bearing debt and leverage ratio1 Maturity profile USD billion USD million 13 1,0 12 0,8 0,5x 0,5x 0,6 First Reset Date 15 11 0,3x February 2029 0,4 10 0,2 0,0 9 8.5 -0,2 1 500 8 -0,4 7 -0,6 6.2 -0,8 6 5.6 -1,0 5 -1,2 -1,4 1 000 1 000 4 3.1 -1,6 3 2.7 2.5 ~8
Slide 22: Attractive and predictable dividends
Attractive and predictable dividends Dividends declared • Dividend guiding for Q1 2024 of USD 270 USD million million (~0.11 USD per share) • Dividend for 2024 of approximately 30% of 270 270 270 270 20-30% of CFFO (after tax) CFFO after tax (illustrative) • Dividend for Q4 2023 of USD ~0.11 per sha
Slide 23: 2024 guidance
2024 guidance Production 280-300 kboepd Production cost USD 13.5-14.5 per boe USD 2.7-2.9 billion excl. exploration and abandonment Capex Exploration USD ~300 million Abandonment USD ~100 million Other Cash tax payments of USD ~1.5¹ billion in 1H 2024 Q1 dividend of USD 270 million (~0.11 USD per sh
Slide 24: One of the fastest growing E&P companies in the world
One of the fastest growing E&P companies in the world Doubling production to ~400 kboepd by end-2025 Closing Neptune acquisition Strong financial results Continued attractive and predictable dividends
Slide 25: Q&A
Q&A Q4 Results presentation 13 February 2024
Slide 26: Appendix
Appendix Q4 Results presentation 13 February 2024
Slide 27: Exploration program 2024
Exploration program 2024 Barents Sea Vår Pre-drill Energi Unrisked License Prospect Operator Status share resources mmboe1 PL 917 Hubert Vår Energi 40 % Dry PL 917 Magellan Vår Energi 40 % Dry PL 636 Cerisa Vår Energi 30 % 30 Q1 PL 1110 Njargasas Aker BP 30 % 52 Q1 PL 956 Ringhorne North Vår Energi
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