Var Energi Asa · OSL:VAR
Var Energi Asa — Q2 2022 Earnings Presentation
27 slides from Var Energi Asa's earnings presentation, Jul 26, 2022
Slide 1: Second quarter 2022 results presentation
Second quarter 2022 Results presentation | 26 July 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
Slide 4: Second quarter 2022 highlights
Second quarter 2022 highlights Operating performance impacted by maintenance activities Successfully executed maintenance on operated fields according to plan Full-year production guidance of 230-245 kboepd maintained Strengthened gas position Secured flexible long-term gas sales agreements in
Slide 5: Key performance indicators
Key performance indicators Q2 2022 vs. Q1 2022 Actual serious incidents frequency1 Production Cash flow from operations 0.1 210 kboepd USD 1 535m (0.1) (242) (2 201) CO2 emissions intensity Production cost Dividend for the quarter 8.6 kg/boe USD 14.7/boe USD 260m (7.6) (12.1) (225) 5 1 12 months rol
Slide 6: A new organisation preparing for future value-driven growth
A new organisation preparing for future value-driven growth Strengthened management team Simplified structure for enhanced collaboration and productivity High-performing organisation to realise full potential 6
Slide 7: Operational review
Operational Operationalreview review
Slide 8: Key focus on safe and efficient operations
Key focus on safe and efficient operations TRIF1 and SIF2 CO2 emission intensity for operated assets kg CO2/boe 18 16 14 3.2 12 2.7 10 2.5 8.7 8.6 8 7.6 1.6 1.4 6 1.3 4 2 0 FY 2021 Q1 2022 Q2 2022 FY 2021 Q1 2022 Q2 2022 TRIF SIF No serious incidents in the quarter Increase in CO2 intensity due
Slide 9: Seasonally high maintenance impacting production
Seasonally high maintenance impacting production Production, production efficiency operated assets and product mix kboepd 1,0 91% 87% 85% 0,9 Turnaround activities on operated assets executed according to plan 0,8 Increase in production year-on-year 0,7 242 242 Reduced NGL recovery to increase
Slide 10: Operational update on operated assets
Operational update on operated assets Goliat Successful completion of turnaround Q2 production efficiency of 75% reflecting planned maintenance Successful turnaround executed safely on plan and budget 1H 2022 production of 23 kboepd, ahead of 1H 2021 driven by additional volumes from wells dri
Slide 11: Production cost impacted by seasonal maintenance activities
Production cost impacted by seasonal maintenance activities Production cost per boe produced1 USD/boe Full year 2022 opex per boe guidance maintained at USD 12.5 to 13.5 16 14.7 15 Opex and unit cost improvement programs 13.3 13.5 14 13.5 progressing according to plan 13 12.1 Guidance 12 11.5 12
Slide 12: On track to deliver on end-2025 production target
On track to deliver on end-2025 production target Existing production and sanctioned developments Key Areas Op. 2P mmboe 2021 2022 2023 2024 2025 Generally good progress on project portfolio Balder 216 Ringhorne Phase III Balder X Macro uncertainties and supply chain disturbances remain Grane 10
Slide 13: Major projects progressing according to schedule
Major projects progressing according to schedule Balder X External factors and increased scope affecting the project Progressing towards targeted first oil in Q4 2023 Johan Castberg Heavy lift, subsea and marine campaigns progressing to plan Phase one drilling campaign completed On track f
Slide 14: Successful exploration with two discoveries in key hubs
Successful exploration with two discoveries in key hubs 2022 work programme Continued hub-focused exploration Pre-drill Snøfonn Vår Pre-drill 2022 campaign unrisked Adjacent to Johan 30-50 License Prospect Operator Energi unrisked Timing Status mmboe Discovery Castberg share mmboe VE Dry well Skavl
Slide 15: Financial review
Financial review
Slide 16: Key financials
Key financials USD million Q2 2022 Q1 2022 Q2 2021 YtD 2022 YtD 2021 Petroleum revenues 2 423 2 483 1 108 4 906 2 147 EBIT 1 674 1 718 361 3 392 937 Profit before taxes 1 214 1 695 299 2 910 821 Production cost 14.7 12.1 13.5 13.3 11.5 (USD/boe) Operating CF before tax 1 864 2 384 826 4 248 1 561 CF
Slide 17: Revenues driven by average weighted realised price
Revenues driven by average weighted realised price of USD 124/boe Total petroleum revenues Sold volumes Over-/(underlift) USDm mmboe 4 906 19.2 20.7 19.5 40.2 40.3 0.5 0.4 (1.1) (0.6) (2.9) 2 484 Q2 2021 Q1 2022 Q2 2022 YtD 2022 YtD 2021 2 483 2 423 Realised prices 2 147 USD/boe 200 YtD YtD 1 238 1
Slide 18: Robust gas sales portfolio with flexible contracts
Robust gas sales portfolio with flexible contracts ~9% of Q2 production sold at favourable fixed prices Optimised gas sales creating additional value USD/boe 280 ~9% of produced gas sold at average fixed price of 160 USD/boe – 65 USD/boe above the average UK spot price 240 200 Flexible gas sales agr
Slide 19: Overlift position impacting production costs
Overlift position impacting production costs Production cost (sold volumes) USDm High level of turnaround and maintenance activities 58 3 378 in the quarter 328 297 20 Over/underlift impacted by change in calculation methodology for NGL volumes at Kårstø Production Production Cost of operations
Slide 20: Strong cash flow from operations in the quarter
Strong cash flow from operations in the quarter CFFO and CAPEX Income tax received / (paid) USDm USDm 1 000 3.5 3.5 718 3 736 485 3.0 500 3.0 2 201 2.5 2.5 0 2 279 2.0 2.0 1 535 (183) 1 310 (329) 1.5-500 1.5 (530) (512) 1.0 1 147 1 195 1.0 600 622 573 -1 000 0.5 0.5 (1 260) 0.0 -1 500 0.0 Q2 2021 Q1
Slide 21: CFFO impacted by tax payments and working capital changes
CFFO impacted by tax payments and working capital changes Cash flow development Q2 2022 Available liquidity USDm USDm 4 492 28 26 3 799 24 22 (146) 20 (329) 18 3 600 16 2 010 14 3 260 1 535 (596) 12 22 892 10 (382) 8 539 (225) 6 4 892 2 539 0 Cash at CFFO Working Taxes paid CFFO Cash flow Net Divide
Slide 22: Strengthened financial position with continued deleveraging
Strengthened financial position with continued deleveraging Net interest-bearing debt and leverage ratio1 USDbn 1.5x Raised USD 500 million in senior notes maturing 18 May 2027 for partial refinancing of bridge-to-bond facility 0.6x – Coupon of 5.00% paid semi-annually 0.4x 7 336 Repayment of re
Slide 23: Dividend guidance raised to USD 290 million for Q3
Dividend guidance raised to USD 290 million for Q3 Dividend distribution USDm Dividend for Q2 2022 of USD ~0.10 per share to be paid 11 August 2022 – Paid in NOK at exchange rate of NOK/USD 9.8382 Minimum USD Dividend guiding for Q3 of USD 1 000m 290 million (~0.12 USD per FY ‘22 share) Divide
Slide 24: Outlook
Outlook Production Production target in 2022 at the lower end of 230-245 kboepd Targeting USD 12.5 - USD 13.5 in 2022 Production cost Expected to improve over the medium term towards USD 8/boe as new projects come onstream and improvement program is progressing 2022 capex guidance of USD 2.3
Slide 25: Concluding remarks
Concluding remarks fe, Var energi
Slide 26: Summary
Summary Operating performance impacted by maintenance activities Strengthened gas position Continued strong cash flow generation Financial position further improved Delivering on the growth strategy 26
Slide 27: Second quarter 2022 results presentation
Second quarter 2022 Results presentation | 26 July 2022