Var Energi Asa · OSL:VAR
Var Energi Asa — Corporate Update (December 2021)
123 slides from Var Energi Asa's corporate update, Dec 9, 2021
Slide 1: We are Vår Energi
We are Vår Energi Corporate update 9 December 2021
Slide 2: Disclaimer
Disclaimer IMPORTANT: Please read the following before continuing. The following applies to the slides that follow (the “Materials”) which have been prepared by Vår Energi AS (the “Company”, and jointly, together with its subsidiaries, the “Group”). The Materials have been prepared by the Company fo
Slide 3: Disclaimer (cont’d)
Disclaimer (cont’d) The Materials may constitute or include forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “plans”, “targets”, “aims”, “believes”, “expects”, “projects”, “anticipates”, “intends”, “estimates”,
Slide 4: Highly attractive investment proposition
Highly attractive investment proposition Largest pure-play independent on the Scale attractive NCS 50+ years of successful operations with Track record heritage from world-class operators Diversified and robust portfolio with hub Excellence strategy positioned for value-adding growth Low-carbon barr
Slide 5: The largest pure-play independent on the NCS
Scale Track record Excellence Environment Returns The largest pure-play independent on the NCS1 Largest independent NCS producer1… …with the biggest reserves base and attractive R/P 2020FY production2 (kboepd) 2020YE reserves3 (mmboe) Based on 2020YE reserves R/P4 Vår Energi 265 Vår Energi 1 147 12
Slide 6: A 50-year success story continues
Scale Track record Excellence Environment Returns A 50-year success story continues Creation of the largest NCS pure-play independent Tier 1 operator heritage • Leading technology and exploration expertise Established in • A leader in executing low carbon strategies 1971: 2016: Norway since 1965 Eko
Slide 7: An excellent portfolio with a value-enhancing hub strategy
Scale Track record Excellence Environment Returns An excellent portfolio with a value-enhancing hub strategy Overview of key hubs Key metrics Total dividends Åsgard Area Barents Sea Area Latest production1 247 kboepd USD 3.0bn since 2019 Morvin Johan Åsgard Castberg 2P reserves2 Investment Grade rat
Slide 8: Diverse and robust portfolio positioned for value-adding growth
Scale Track record Excellence Environment Returns Diverse and robust portfolio positioned for value-adding growth Targeting strong and value-adding growth (kboepd)1 Vår Energi Pro Forma Vår Energi +50% >350 >350 265 247 2018 2019 2020 Q3 2021 2022E 2023E 2024E 2025E 2025+ Sustaining Delivering on pl
Slide 9: Oil and gas to remain an important energy source
Scale Track record Excellence Environment Returns Oil and gas to remain an important energy source Evolution of global energy mix, 2019 to 2050 STEPS1 (671 EJ Total) STEPS1 (744 EJ Total) AP2 (651 EJ Total) AP2 (674 EJ Total) SDS3 (599 EJ Total) SDS3 (578 EJ Total) 22 % 27 % 15 % 30 % 31% 28 % 28 %
Slide 10: Natural gas to benefit from energy transition dynamics
Scale Track record Excellence Environment Returns Natural gas to benefit from energy transition dynamics Constructive gas demand outlook in energy transition… … leading to attractive price dynamics Global Natural Gas Demand, Bcm Brent and TTF prices, $/boe 5 000 200 4 554 4 500 150 4 249 4 076 4 000
Slide 11: NCS is an ideal foundation for value creation…
Scale Track record Excellence Environment Returns NCS is an ideal foundation for value creation… Cost competitive Significant resources Positive long-term outlook for the NCS Opex per boe (USD) ~100bn boe1 ✓ Growing forecast production 18 17 100% Undiscovered ✓ Continued investment in developments 1
Slide 12: …and is leading the way on emissions
Scale Track record Excellence Environment Returns …and is leading the way on emissions One of the most reliable and low-emission O&G regions in the world Lowest CO2 footprint Provider of Stable Carbon intensity (kg/boe produced) 9.1.% of EU oil demand and political and operating environment 20.5% of
Slide 13: Focused on delivering attractive and sustainable returns
Scale Track record Excellence Environment Returns Focused on delivering attractive and sustainable returns Safe and sustainable operations High-value portfolio Attractive returns Target paying attractive minimum Safest operator Resilient FCF generation dividend1 of 0 injuries USD 1.6bn USD 700mm Ser
Slide 14: Company highlights
os, Var energi Company highlights
Slide 15: A strong foundation to deliver value to shareholders
A strong foundation to deliver value to shareholders 1. Material and diversified production base with world-class operators 2. Maximising value creation with hub-centred strategy 3. World-class capabilities, with tangible growth and track record of successful development and exploration 4. Material
Slide 16: Diversified across all NCS regions with balanced production
1 Diversified across all NCS regions with balanced production >70% production from four Balanced commodity mix Robust portfolio with a material presence in all regions1 major hubs with substantial gas share Norwegian Sea Barents Sea Production split, Q3 2021 Production split, Q3 2021 Heidrun Skuld G
Slide 17: Unlocking value through a proven hub strategy
2 Core areas aimed at capturing significant Unlocking value through a proven identified upsides hub strategy Barents Sea Area Vår operated: Goliat Robust portfolio diversified across 4 large growth areas Equinor operated: Johan Castberg Reserves split (mmboe)1 Hubs in an underexplored area with sign
Slide 18: Resilient and low risk growth projects
3 Resilient and low risk growth projects Undeveloped discoveries planned as tie- Existing production and sanctioned developments backs to existing hubs 2P Key Areas Op. mmboe 2021 2022 2023 2024 2025 9 <USD 30 projects /boe Balder 216 Ringhorne Phase III Balder X Being matured towards Resilient proj
Slide 19: Best-in-class exploration capabilities
3 Best-in-class exploration capabilities World-class exploration capabilities Annual targeted exploration activity4 8–12 infrastructure lead (ILX) wells Strong Vår Exploration technical Unique screening process using a competencies and historical proprietary exploration database Extend production ex
Slide 20: A strong foundation to deliver value to shareholders
4 A strong foundation to deliver value to shareholders Significant production Low-cost barrels Diversified production base with High-margin barrels with numerous organic growth further OPEX reductions projects and upsides targeted Underpinned by an Investment Grade balance sheet Material dividends R
Slide 21: Our key strategic postulates
5 Our key strategic postulates ESG and climate are global and national priorities, a pathway to net zero will be required Oil & Gas will continue to be a part of the energy mix long term; gas to increase share of NCS production The NCS will continue to be attractive driven by cost competitiveness, l
Slide 22: Strategy
os, Var energi Strategy
Slide 23: Committed to deliver a better future
Clear strategic priorities Be the safest operator with leading ESG performance Cultivate a robust portfolio positioned for further growth Drive operational excellence across our portfolio Be the partner of choice in everything we do Committed to deliver Foster a high-performing organisation a better
Slide 24: Safety is the #1 priority for Vår
Be the safest operator Safety is the #1 priority for Vår Key initiatives • Cooperation with Equinor and AkerBP • Always safe program implemented across people, culture and processes • MARI1 tracking on all operated fields TRIF2 SIF3 Life-saving rules: 2,9 1,6 2019-2020 avg. 24 Source: Vår Energi 1.
Slide 25: Strong production outlook by investing in high return barrels
Robust portfolio Strong production outlook by investing in high return barrels De-risked volumes growth to >350 kboepd by 2025 Growth levers post 2025 kboepd +50% Exploration & Projects >350 >350 New commercial discoveries leveraging best-in-NCS exploration capability 265 247 Improved recovery Facil
Slide 26: Disciplined approach to field development
Robust portfolio Disciplined approach to field development Disciplined approach to field development… … ensuring that growth is capex-efficient Near-field drilling 80% Focused exploration on infrastructure- led wells to build on existing assets Targeted unit exploration cost Project portfolio <1 USD
Slide 27: Ambition to continue to drive down production cost per barrel
Operational excellence Ambition to continue to drive down production cost per barrel Production cost per barrel1 – mid-term ambition Comments • A Accretive M&A and cost reduction programs – Reduced opex per barrel by ~15% through portfolio optimisation & “Realising our Potential” program delivering
Slide 28: Goliat improvement program is tracking strongly
Operational excellence Goliat improvement program is tracking strongly Cost reduction Uptime improvement Goliat Gross OPEX (NOKm) 2021 opex increase from activities deferred due to Covid and higher energy prices 2689 75% 90% 95% 2162 1885 1715 1400 1200 2018 2019 2020 2021E 2025 2030 Target Target 2
Slide 29: Driving drilling performance towards best in industry
Operational excellence Driving drilling performance towards best in industry Ambition to establish leading drilling position on NCS Example: Goliat 2021 drilling performance vs. NCS • Goliat drilling performance constantly better than NCS average 30000 Goliat wells drilled by Vår Energi in 2021 with
Slide 30: We deliver value together with our partners
Partner of choice We deliver value together with our partners Equinor’s largest partner on NCS Partner collaboration examples Vår Energi production1 Decarbonisation Collaboration Drilling Improvements Hywind Tampen Offshore Wind, Proactive involvement with Balder/Grane Electrification, Vår Energi op
Slide 31: Access to Eni’s leading capabilities
Partner of choice Access to Eni’s leading capabilities Globally recognised • Eni’s technical quality control group exploration capability • Rigorous screening process • Access to proprietary supercomputer Operational • Support in Drilling & Wells operations and subsurface expertise excellence • Cost
Slide 32: We work actively with our key suppliers
Partner of choice We work actively with our key suppliers Strategic supplier collaboration • Key areas for collaborations defined • SPS/SURF • Drilling services • Topside • Digitalisation & Innovation • Enabled through long term agreements, securing • Early supplier involvement • Suppliers prioritis
Slide 33: World-class operating capabilities
High performing organisation World-class operating capabilities People-centered organisation… …with strong technology innovation record 932 Low employee employees1 turnover Sleipner 1996 Midgard/Åsgard 2015 Balder 2021 40% gender diversity Strong focus on health More than 19m tonnes of World’s first
Slide 34: Key digital initiatives
High performing organisation Key digital initiatives Leveraging innovation with proven business value Mobile Field Worker Optimised Drilling Maintenance Digitalisation by Production Inventory Data Driven Safety Improve safety, Performance Optimisation & Design Optimisation Optimisation & Sustainabil
Slide 35: Capital allocation framework
Capital allocation framework
Slide 36: A strong foundation to deliver value to shareholders
A strong foundation to deliver value to shareholders Significant production Low-cost barrels Diversified production base with High-margin barrels with numerous organic growth further OPEX reductions projects and upsides targeted Underpinned by an Investment Grade balance sheet Material dividends Res
Slide 37: Material free cash flow generation
Material free cash flow generation Capex plans well covered by cash from operations Strong year-to-date free cash flow generation4,5 USDbn 1 1, 2 3 USDbn CFFO Capex Capex coverage (x) 4,1 1,8 2,3 1,8 1,8 3,4 1,4 1,5 1,3 1,1 0,8 1,6 2 2019 2020 LTM Q3 2021 CFFO Capex FCF Sanctioned developments and e
Slide 38: Balanced capital allocation framework
Balanced capital allocation framework Waterfall of capital allocation priorities Key criteria for capex and M&A decisions • Regular maintenance capex schedule and growth capex related to Sustain production of existing portfolio development projects Capex • Maintain flexibility on capex level policy
Slide 39: Committed to attractive and sustainable shareholder distributions
Committed to attractive and sustainable shareholder distributions Attractive combination of resilience, growth and distributions Long life, cash generative and low-cost portfolio Attractive combination of visible growth and material shareholder distributions, while maintaining an IG balance sheet St
Slide 40: 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.) USD 70/bbl 15 USD 60/bbl Free cash flow USD 50/bbl USD 40/bbl FCF BE Financing costs
Slide 41: Investment Grade balance sheet providing flexibility
Investment Grade balance sheet providing flexibility A solid capital structure with strong liquidity Net interest-bearing debt and leverage ratio1 USDbn • USD 6bn of senior unsecured multicurrency facilities 7,0 3,0x refinanced previous senior secured borrowing base facility 6,0 2,7x 2,5x 2,5x 5,3 •
Slide 42: Asset overview
Asset overview
Slide 43: Robust portfolio diversified across 4 large and robust hubs
Robust portfolio diversified across 4 large and robust hubs Production, kboepd 2P reserves, mmboe1,2 2 100 1 Balder/Grane Area 50 29% 325 Vår operated: Balder & Ringhorne mmboe Equinor operated: Grane, - Breidablikk 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Hammerfest Balder Area G
Slide 44: Core area with identified upsides and production for decades to come
1 Balder/Grane Area Core area with identified Vår Energi operated upsides and production for Equinor operated Ringhorne decades to come Discovery Ringhorne East King & Prince • High value assets with a material resource base – The first license on the NCS – PL001 – Grane and Balder are among the lar
Slide 45: Balder & Ringhorne is among the largest fields on the NCS
1 Balder/Grane Area Balder & Ringhorne is among the largest fields on the NCS Balder X redevelopment extending expected production beyond 2045 Balder & Ringhorne fields Area infrastructure following redevelopment Overview of fields Balder FPU Jotun FPSO Ringhorne platform Life extension 2030 approve
Slide 46: Vår Energi increasing Balder area recovery by >50%
1 Balder/Grane Area Vår Energi increasing Balder area recovery by >50% Recoverable volumes in the Balder & Ringhorne fields (net, mmboe) 134 952 818 >50% 56 66 677 20 697 143 534 ~480 mmboe produced1 Base + Ringhorne Balder X Sanctioned & Firm Balder Infill Planned Projects King & Prince Infill Targ
Slide 47: Balder & Ringhorne fields
1 Balder/Grane Area Balder & Ringhorne fields Asset description Field facts1 • Balder & Ringhorne is a high-value oil producer operated by Vår Licenses PL001, PL027, PL028, PL169E Ringhorne – Balder was the first license and discovery on the NCS and has been in Ringhorne 2P reserves (net) 216 mmboe
Slide 48: Balder X demonstrating hub strategy value creation
1 Balder/Grane Area Balder X demonstrating hub strategy value creation The proud history of license PL001 continues • Highly profitable project with a goal of extracting 143 mmboe in net recoverable reserves – Leveraging existing Balder hub infrastructure – Field production expected to increase to >
Slide 49: On track to deliver Balder X by Q4 2023
1 Balder/Grane Area On track to deliver Balder X by Q4 2023 2020 2021 2022 2023 2024 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Ongoing production Existing wells Approval of Balder FPU life extension 2 work- Drill Ringhorne Drilling overs Break 4 work-overs and 6 new wells Ringhorne phase
Slide 50: Safeguarding and enabling Balder X project progress
1 Balder/Grane Area Safeguarding and enabling Balder X project progress Key risk management areas Clear initiatives and actions intended to continuously secure execution Contain and • Safety and quality a prerequisite Lifetime manage scope Protecting • Integrated planning extension critical path • F
Slide 51: King & Prince – large recent discovery and tie-in candidate
1 Balder/Grane Area Crux to add new illustration from Artbox King & Prince – large recent discovery and tie-in candidate Project overview • The third largest discovery in the North Sea in the last five years – 57–132 mmboe in combined estimated recoverable volumes – Tie-in options to existing infras
Slide 52: Balder Area prospectivity
1 Balder/Grane Area Balder Area prospectivity 2021 drilling: Excellent 2021 drilling campaign results, with King & Prince resulting in PL1043 57–132 estimated gross recoverable resources mmboe1 of 57–1321 mmboe PL985 Jotun PL869 PL956 PL984 Inventory: Frosk Ringhorne 134 Large inventory of prospects
Slide 53: Grane Area
1 Balder/Grane Area Grane Area Exceptional recovery rate >70% Asset description Field facts1 • Outstanding oil recovery from heavy oil field enabled by gravity- Licenses PL001CS, PL169, PL169B1 stable gas injection and drilling technology application Ringhorne Ringhorne 2P reserves (net) 37 mmboe Ea
Slide 54: Breidablikk
1 Balder/Grane Area Breidablikk One of the largest ongoing developments on the NCS 2P reserves Peak production (gross) (gross) 207 62 mmboe kboepd OPEX1 CO2 intensity1 ~3 ~1 USD/boe kg/boe 54 Source: Vår Energi, 2P reserves, peak production and opex as per preliminary DeGolyer and MacNaughton CPR es
Slide 55: Breidablikk development
1 Balder/Grane Area Breidablikk development PDO approved and development underway Asset description Field facts1 • Highly attractive and cost-effective development leveraging existing Licenses PL001CS, PL001DS, PL027FS, PL169, PL169B2 Grane infrastructure Ringhorne Ringhorne 2P reserves (net) 71 mmb
Slide 56: Capturing value from prolific oil areas in the Barents Sea
2 Barents Sea Area Capturing value from prolific oil areas in the Barents Sea Johan Castberg Operated by Equinor Goliat Operated by Vår Energi Working interest: 30% Working interest: 65% • Attractive assets with significant value and upside potential Isflak discovery (2021) – Vår-operated Goliat del
Slide 57: Goliat
2 Barents Sea Area Goliat Strong base performance with ground-breaking technologies contributing to low costs and emissions Asset description Field facts1 • First oil field to come on stream in the Barents Sea Licenses PL229, PL229B – Approx. 100 mmboe produced to date (gross) – almost 100 mmboe of
Slide 58: Gas export solutions being evaluated
2 Barents Sea Area Gas export solutions being evaluated To increase overall area recovery and extend the lifetime of Goliat as an important production hub Project overview Unlocking synergies combining Alke and Goliat gas export • Commercializing gas that currently is reinjected into Goliat reservoi
Slide 59: Goliat area prospectivity
2 Barents Sea Area Goliat area prospectivity 55 km west of Goliat PL1075 2021 drilling: Alke Excellent 2021 drilling campaign results, PL489 9–12 with Rødhette resulting in estimated gross mmboe1 recoverable resources of 9-121 mmboe PL901 7122/6-3S (Rødhette) PL1131 PL229 Operated by Vår Inventory:
Slide 60: Castberg has strong exploration track-record and area prospectivity
2 Barents Sea Area Operated by Vår Castberg has strong exploration Vår partner track-record and area prospectivity Discovery Discovery in development PL1080 2021 drilling: Discovery of Isflak with 31-501 mmboe in estimated gross recoverable resources Prioritised 31–50 Supplementing Skavl (2013) and
Slide 61: Johan Castberg
2 Barents Sea Area Johan Castberg A Barents Sea giant 2P reserves Peak production (gross) (gross) 535 ~190 mmboe kboepd OPEX1 CO2 intensity1 ~3 ~5 USD/boe (real) kg/boe 61 Source: Vår Energi, 2P reserves, peak production and opex as per preliminary DeGolyer and MacNaughton CPR estimates; Equinor 1.
Slide 62: Johan Castberg
2 Barents Sea Area Johan Castberg Major development de-risked and on-track for first oil in 2024 Asset description Field facts1 • Second oil field development in the Barents Sea Licenses PL532 – Comprised of three large and high-quality discoveries – Skrugard (2011), 2P reserves (net) 160 mmboe Havi
Slide 63: Unique subsea area with high production and growth opportunities
3 Åsgard Area Unique subsea area with high production and growth opportunities • Among the largest subsea developments in Norway with +20 year track record of strong production performance – Producing fields Åsgard, Mikkel, Morvin, Trestakk, Kristin, Tyrihans – World’s first subsea gas compression f
Slide 64: Åsgard Area
3 Åsgard Area Åsgard Area A pioneer for subsea technology and transporting oil and gas from the Norwegian Sea Asset description Field facts2 • One of the largest developments on the NCS producing for more Licenses PL062, PL074, PL091/091B, PL092, PL094, PL094B, PL121, PL134B, PL237, PL479 than 20 ye
Slide 65: Trestakk, Mikkel and Morvin
3 Åsgard Area Trestakk, Mikkel and Morvin Three low-cost producing subsea tie-backs to Åsgard Asset description Trestakk tie-back illustration • Trestakk: Low-cost oil development located 20 km south of Åsgard – Discovered in 1986, PDO approved in 2017 and on-stream in 2019 – Consists of one subsea
Slide 66: Kristin, Tyrihans & Lavrans
3 Åsgard Area Kristin, Tyrihans & Lavrans Oil, gas and condensate fields adjacent to Åsgard Asset description Field facts1 • Kristin – HPHT gas and condensate field located south-east of Licenses PL073, PL073B, PL091, PL134D, PL199, PL1121 Åsgard 2P reserves (net) 41 mmboe Morvin 2C resources (net)
Slide 67: Mature area with high activity and life extension of key fields
4 Tampen Area Mature area with high activity and life extension of key fields • Core area of the Northern North sea with several giant fields – area operated by Equinor – High-potential area with remaining prospectivity and well defined geology Sygna Snorre • Major oil fields with mature resource ba
Slide 68: Statfjord Area
4 Tampen Area Statfjord Area Largest oil discovery in the North Sea with recent lifetime extensions – expected to produce for decades Asset description Field facts2 • Statfjord is a continuous NCS success story and the largest oil Licenses PL037, PL089, PL1041, PL2931 2P reserves (net) 43 mmboe disc
Slide 69: Snorre
4 Tampen Area Snorre One of the largest oil fields in Norway with key development projects and opportunities Asset description Field facts2 • North Sea producer of oil and gas since 1992 Licenses PL057, PL089 – unitised field4 – Snorre A was the first tension leg platform on the NCS (1992) and is 2P
Slide 70: Tordis & Vigdis
4 Tampen Area Tordis & Vigdis Subsea satellites in the Snorre area Asset description Field facts1 • Tordis producing oil since 1994 – tie-back to Gullfaks Licenses PL089 – The field is developed with seven single-well satellites and two four-slot 2P reserves (net) 15 mmboe subsea templates tied back
Slide 71: Tampen Area infill drilling and area prospectivity
4 Tampen Area Vår partner Tampen Area infill drilling and Discovery PL375 area prospectivity PL554 D Prioritised prospects PL554 Other prospects 34/6-5 S (Garantiana West) Statfjord Kile Garantiana 2021 drilling: ILX strategy resulted in several discoveries, 8–23 including Tordis Statfjord, Lomre, m
Slide 72: Exploration
Exploration
Slide 73: Best-in-class exploration capabilities with a proven track-record
Best-in-class exploration capabilities with a proven track-record World-class exploration capabilities Attractive exploration portfolio Annual targeted exploration activity3 Strong Vår Exploration technical Significant prospective resources 8–12 infrastructure lead (ILX) wells competences and histor
Slide 74: Building on our exceptional Eni exploration heritage
Building on our exceptional Eni exploration heritage Eni is an award-winning and world-leading explorer Resource additions (2011–2020)1 Conventional volumes (bn boe) 15 Discovered resources1 Unit exploration cost1 Discovery rate1 >15bn boe USD 0.5/bbl 49% 2011–2020 2011–2020 2011–2020 • Exploration
Slide 75: Enhanced by one of the world’s most powerful supercomputers
Enhanced by one of the world’s most powerful supercomputers HPC5 – The Eni supercomputer The Eni Green Datacenter – HPC5 highlights • Unique screening process using Eni’s proprietary Unique screening process using Eni’s proprietary exploration database and supercomputer cluster exploration database
Slide 76: World-class screening process focusing on quality over quantity
World-class screening process focusing on quality over quantity Portfolio ranking system Unbiased approach to project evaluation • Technical and economic assurance performed before investment Portfolio potential and divestment proposals 887 mmboe net risked resources1 – Verify and confirm project po
Slide 77: Proven track-record of identifying top prospects
Proven track-record of identifying top prospects Structured approach to identifying top prospects Prioritising high-value exploration near existing hubs ILX Vår-operated hubs 137 Licenses ILX high-value partner-operated hubs High-risk/high-reward Leads 175 Barents Sea Area and prospects Goliat Johan
Slide 78: 2021 campaign delivering outstanding results
2021 campaign delivering outstanding results Strong results in 2021 campaign1 High-value exploration near existing hubs 2021 discoveries Isflak Discovery rate Contingent resources2 Unit exploration cost3 Adjacent to Johan Castberg YTG 20214 and 2022 Operator: Equinor 75% 135 USD 0.2 Net volume2: 12
Slide 79: 2022 campaign targeting wells near existing infrastructure
2022 campaign targeting 8 wells near existing infrastructure 2022 work programme High-value exploration near existing hubs Risked resources1,2 2022 campaign Snøfonn APA 2022 Adjacent to Johan Castberg 8 wells 48 2021 discoveries Operator: Equinor process participation Rig: Transocean Enabler mmboe (
Slide 80: ESG
ESG
Slide 81: Clearly defined ESG agenda at the core of our strategy
Clearly defined ESG agenda at the core of our strategy Climate & emissions Health & safety Local community Workforce diversity Business • Targeting net zero greenhouse gas • Targets to become the • Engage local • 40 per cent gender Sustainability emissions across scope 1 and 2 by 2030 safest operato
Slide 82: Comprehensive CO2 emission reduction targets
Comprehensive CO2 emission reduction targets Ambitious reductions across Scope 1, 2 and 3 NCS leading the way on reducing emissions intensity Vår Energi GHG emission intensity operated assets4 (kg CO2 eq. per boe) Emission category Reduction ambitions Target year 18,0 Operated assets Scope 1 (direct
Slide 83: Vår Energi’s approach to decarbonisation
Vår Energi’s approach to decarbonisation Scope 1, 2 and 3 decarbonisation strategy Organisational awareness and mind-set • Optimising oil and gas production to be as climate efficient as • Electrification • Cold venting and fugitive emissions possible through different emission reduction initiatives
Slide 84: Hywind Tampen: developing the world’s first floating offshore wind farm
Hywind Tampen: developing the world’s first floating offshore wind farm Project overview Technical features • 11 WTGs of 8MW, set to produce 219 11 Generated power to the GWh/year turbines Snorre and Gullfaks fields • Standard WTGs mounted onto floating concrete structures World’s first floating win
Slide 85: Balder-Grane Electrification Project
Balder-Grane Electrification Project Electrical power from shore to reduce CO2 emissions on the Balder, Ringhorne and Grane fields Project overview • Joint study with Equinor Objectives and Scope • Reduce CO2 emissions with electrical power from shore • New ambitious Vår Energi emission targets Back
Slide 86: Actively engaging to create local and regional ripple effects
Actively engaging to create local and regional ripple effects Industrial development at local level Education and competence Culture and recreation 2000 - 2010 2010 - 2020 Regional recruitment and Funding of scholarships and Local collaboration with supplier strategy to ensure local educational inst
Slide 87: Commercial and Financials
os, Var energi Commercial and Financials
Slide 88: Flexible commercial model to optimise for market conditions
Commercial Key Financials Policies & Guidance Flexible commercial model to optimise for market conditions Gas prices have spiked in recent months… …and Vår has flexibility to capture cycle benefits Brent Brent Futures TTF TTF Futures Incremental revenues from maximisation of gas 200 output to exploi
Slide 89: Vår Energi benefits from having a robust sales portfolio
Commercial Key Financials Policies & Guidance Vår Energi benefits from having a robust sales portfolio Positioned to capitalise on strong gas market… … with optimised sales contracts • Selling c.60% of the gas linked to daily spot market • 70% of gas sold into longer term agreements and 30% in the •
Slide 90: Material free cash flow generation supporting distributions and deleveraging
Commercial Key Financials Policies & Guidance Material free cash flow generation supporting distributions and deleveraging Material and resilient free cash flow generation underpinned by strong unit economics Ongoing capex plans well covered by cash flow from operations Portfolio growth to further u
Slide 91: Material and stable revenue generation
Commercial Key Financials Policies & Guidance Material and stable revenue generation Revenues1,2 evolution (USDbn) Commentary on 2021 performance 155 265 242 • 242 kboepd in production 3,8 – 2021 production impacted by planned turnaround and maintenance activities shifted from 2020 to 2021 due to th
Slide 92: Low operating costs underpinning resilience
Commercial Key Financials Policies & Guidance Low operating costs underpinning resilience Production costs evolution1,2 (USDbn) Commentary on 2021 cost evolution • Increase in production cost YTD per boe between 2020 and 2021, mostly due 1.4 18 to FX and the shift of turnaround and maintenance costs
Slide 93: Resilient EBITDAX underpinned by production growth and low costs
Commercial Key Financials Policies & Guidance Resilient EBITDAX underpinned by production growth and low costs EBITDAX1,2 evolution (USDbn) Commentary on 2021 EBITDAX 64 433 69 • Significant EBITDAX increase for the first nine months of 2021 38 26 93 – Increase is mainly due to higher revenues drive
Slide 94: Production growth supported by continued investment
Commercial Key Financials Policies & Guidance Production growth supported by continued investment Capex spending1,2 (USDbn) Commentary on 2021 capex • Strong portfolio of resilient and low risk projects to deliver sustainable growth 1,7 1,7 0,1 and value 0,2 0,1 • Key sanctioned projects include Bal
Slide 95: Limited near-term decommissioning expenditures
Commercial Key Financials Policies & Guidance Limited near-term decommissioning expenditures Abandonment spending (USDm) Commentary • Limited near term cash outflow given the long production / reserve tail 51 – c.USD70m decommissioning expenditures spent in Ekofisk since 2019 • Var Energi’s life ext
Slide 96: Cash taxes adjust to investment profile and commodity prices
Commercial Key Financials Policies & Guidance Cash taxes adjust to investment profile and commodity prices Income tax received / (paid) 1 (USDbn) Tax evolution • The positive tax in 2021 is a result of the favourable and temporary Norwegian tax regime enacted as per June 2020 and benefiting companie
Slide 97: NCS petroleum tax changes expected to be implemented in 2022
Commercial Key Financials Policies & Guidance NCS petroleum tax changes expected to be implemented in 2022 Boosting near-term liquidity Comparison of key fiscal regime terms • Proposed changes to the petroleum tax Current regular regime Temporary rules Proposed new rules system announced in August 2
Slide 98: Proposed fiscal changes accelerate tax recovery of investments
Commercial Key Financials Policies & Guidance Proposed fiscal changes accelerate tax recovery of investments compared to existing permanent regime Current regular regime Temporary rules 2020-21 Proposed new rules from 2022 percent percent percent NPV @ 2/5/8% = 84.7/78.2/72.5 NPV @ 2/5/8% = 89.5/86.
Slide 99: Strong balance sheet targeting Investment Grade rating
Commercial Key Financials Policies & Guidance Strong balance sheet targeting Investment Grade rating Balance sheet key items and ratios Refinanced capital structure USDbn USDbn 2019 2020 Q3 2021 Cash & Equivalents 0.2 0.3 0.3 0,6 Bridge to Bond Total Assets 15.2 15.4 14.6 Total Debt 4.8 5.5 4.7 1,5
Slide 100: Extensive hedging and risk mitigation policies
Commercial Key Financials Policies & Guidance Extensive hedging and risk mitigation policies Hedging policies and financial risk management Current oil hedges in place for 2022 • Derivatives, such as Brent put options, for downside protection of the oil price risk whilst maintaining upside potential
Slide 101: Forward looking guidance
Commercial Key Financials Policies & Guidance Forward looking guidance 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 savi
Slide 102: Concluding Remarks
os, Var energi Concluding Remarks
Slide 103: A strong foundation to deliver value to shareholders
A strong foundation to deliver value to shareholders Material and diversified production base with world-class operators Maximising value creation with hub-centred strategy World-class capabilities, with tangible growth and track record of successful development and exploration Material cash flow ge
Slide 104: Appendix
os, Var energi Appendix
Slide 105: Appendix: Other information
Appendix: Other information
Slide 106: Overview of net reserves and resources per 30.09.2021
Overview of net reserves and resources per 30.09.2021 Assets in CPR scope Assets outside CPR scope Asset WI Area 2P 2C Asset WI Area 2P 2C mmboe mmboe mmboe mmboe Alke 40.0% Barents - 28 Albuskjell 12.4% Other - 6 Balder 90.0% Balder & Grane 210 56 Alpha Horst 7.0% Other 0 - Bauge 17.5% Other 10 - B
Slide 107: Glossary
Glossary Abbreviation Abbreviation AUM Assets under management MARI Major accident risk indicator tool bbl Barrel of oil NCS Norwegian Continental Shelf bn Billion NIBD Net interest-bearing debt boe Barrel of oil equivalent NOK Norwegian Krone Capex Capital expenditure NPD Norwegian Petroleum Direct
Slide 108: Appendix: Corporate
fo, Var energi Appendix: Corporate
Slide 109: Highly experienced leadership team
Highly experienced leadership team • Joined Vår Energi from the position • Joined Vår Energi from Eni, where he • Joined Vår Energi from ExxonMobil as Head of Safety and Security at served as VP Planning & Control of in 2018 Equinor African sub-Saharan region • 20+ years of experience in O&G • 20+ y
Slide 110: Highly experienced leadership team (cont’d)
Highly experienced leadership team (cont’d) • Annethe Gjerde has 20+ years of • Joined Vår from Aker Energy, where • Aksel Luhr has 40+ years of experience in the O&G industry in he served as SVP Drilling & Wells experience in O&G industry Norway • 25+ years of experience in • Previously held variou
Slide 111: Board of Directors
Board of Directors Thorhild Widvey Ove Gusevik Francesco Gattei Guido Brusco Chairperson Director Director Director Former Minister HitecVision Eni Eni of Petroleum and Senior Partner Chief Financial Upstream Director Energy Officer Clara Andreoletti Marica Calabrese Fabio Romeo Liv Monica Stubholt
Slide 112: Director Biographies
Director Biographies Thorhild Widvey Ove Gusevik Chairperson Director • Over 15 years of experience in the Norwegian public and • Senior Partner at HitecVision, which he joined in 2021 private sectors, with a focus on the energy industry from his role as Head of Investment Banking at SpareBank1 Mark
Slide 113: Director Biographies (Cont’d)
Director Biographies (Cont’d) Clara Andreoletti Fabio Romeo Director Director • Over 15 years of experience in the Oil & Gas exploration • Chairman for Oman Cables and development sector at Eni • Holds an undergraduate degree from Politecnico di • Head of Geosciences and Subsurface Operations Data M
Slide 114: Supportive Norwegian tax regime
Supportive Norwegian tax regime Vår Energi Norway tax value Material tax value from historic capex1 NOKm 1,072 17,707 c. USD 2.1 bn2 9,521 Total tax value Supportive Norwegian fiscal regime allowing for tax offset of capex, opex 7,114 and exploration costs Norway remains committed to its oil and gas
Slide 115: Group legal structure
Group legal structure Vår Energi AS 100% 6.34% 0.48% 6.52% 100% Vår Energi Marine Tjeldbergodden Point Resources AS Utvikling AS FPSO Holding AS 100% Ormen Lange Point Resources Norpipe Oil AS 5% Eiendom DA FPSO AS 95% PR Jotun DA 115 Source: Vår Energi
Slide 116: Appendix: Assets
fo, Var energi Appendix: Assets
Slide 117: Fram
5 Other assets Fram Highly prospective license with field development tied back to Troll C Asset description Field facts1 • Fram East and West subsea tie-backs to Troll C Licenses PL090 – Both fields developed with two subsea templates each 2P reserves (net) 30 mmboe – New Fram gas module on Troll C
Slide 118: Fram area infill drilling and prospectivity
5 Other assets Fram area infill drilling and Vår partner Grossbeak prospectivity Discovery Discovery in development Discovery of Blasto with 75-1201 mmboe Prioritised 2021 drilling: estimated gross recoverable resources prospects 75–120 Other prospects mmboe1 Supplementing 2019 Echino Sør, Dermata a
Slide 119: Greater Ekofisk Area
5 Other assets Greater Ekofisk Area Among the top 5 producers on the NCS – preparing for another 30 years of operations Asset description Field facts3 • After 50 years in production, the giant Ekofisk field is still going Tor Licenses PL018 strong Vest 2P reserves (net) 102 mmboe Ekofisk Ekofisk – E
Slide 120: Ormen Lange Unit
5 Other assets Ormen Lange Unit One of the largest industrial projects ever carried out in Norway – fully electrified from shore Asset description Field facts1 • Second largest gas field in Norway – subsea tie-back to onshore Licenses PL209, PL208, PL250 processing plant 2P reserves (net) 44 mmboe –
Slide 121: Fenja & Bauge-Hyme
5 Other assets Fenja & Bauge-Hyme Ongoing development utilising cutting edge technology Asset description Field facts1 • Subsea tie-back utilising existing infrastructure Bauge/Hyme Licenses PL348 & PL586 – New subsea templates at Bauge (via Hyme) and Fenja tied back to the Fenja 2P reserves (net) 3
Slide 122: Other selected producing assets
5 Other assets Other selected producing assets Proven producers with low risk and infill drilling opportunities Field map Net production (kboepd)1 Comments2 20 Sleipner E&W (15.4/17.2%) • Group of gas and condensate fields located in the North Sea 10 • Discovered in 1974 - • Operated by Equinor 2019
Slide 123: www.varenergi.no
fe, var energi www.varenergi.no