Slide 1: Presentation of third quarter 2021 and strategy update
Presentation of third quarter 2021 and strategy update OKEA ASA 28 October 2021
Slide 2: General and disclaimer
General and disclaimer This presentation is prepared solely for information purposes, and does not constitute or form part of, and is not prepared or made in connection with, an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities. Investors and p
Slide 3: OKEA third quarter 2021 results: Highlights
OKEA third quarter 2021 results Highlights Third quarter 2021 highlights Mærsk Inspirer installed at the Yme field Operations • Production 16 315 boepd • High production reliability, no planned maintenance shutdowns • Yme New Development project completed - Yme first oil on 25 October Financials • O
Slide 4: Oil and gas markets significantly strengthened
Oil and gas markets significantly strengthened Brent oil prices above USD 85/bbl and European gas prices at record high levels Brent oil price and UK NBP gas price European gas, coal, power and CO2-prices Source: Refintiv 4
Slide 5: Production volumes and reliability
Production volumes and reliability No planned maintenance shutdowns in the current quarter; continued high reliability Production (boepd) Draugen platform 20 000 Inn med bilde Draugen 16 171 16 557 16 315 Gjøa 15 000 Ivar Aasen 13 303 13 210 7 592 7 246 6 735 Q3 21 10 000 6 654 7 128 Gas 30% 5 000 8
Slide 6: Safety and emissions
Safety and emissions No personnel injuries – serious potential incident on Draugen with outer railing loosened Serious incident frequency – per million work-hours Total recordable incident frequency – per million work-hours 6.2 5.3 5.3 5.0 4.8 4.8 4.7 4.5 4.2 3.4 3.6 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Slide 7: Draugen – WI 44.56%
Draugen – WI 44.56% Production Production 6 735 boepd reliability 97% • 2035+ ambition to increase remaining reserves by 50% • Increase recovery rate to > 70% • Hasselmus first gas Q4 23 adds > 4 mmboe net to OKEA • Plateau production of 2 000 boepd net • Enables restart of NGL exports • DG 2 Electr
Slide 8: Planning for 95% reduction in CO2-emissions from Draugen by 2025
Planning for 95% reduction in CO2-emissions from Draugen by 2025 Electrification Power from shore– Draugen and Njord Other initiatives to reduce emissions Operational improvements: • Joint project with Draugen and • Installation of battery package for Njord licences - OKEA operator hybrid energy gen
Slide 9: Gjøa – WI 12%
Gjøa – WI 12% Production Production 9 348 boepd reliability 97% • Two additional wells brought onstream in P1 segment in 2021 • Duva tie-in to Gjøa started production in August o OKEA compensated in H2-21 for deferred volumes from Duva tie-in work and production in addition to ordinary tie-in tariff
Slide 10: Yme New Development – WI 15%
Yme New Development – WI 15% Plateau Reserves production 9.4 mmboe* 8 400 boepd • Yme New Development completed – Yme first oil 25 October • Production 8 400 boepd net to OKEA at plateau - 5 600 boepd net to OKEA for the first 12 months of operation • Significant cost reductions and additional cash
Slide 11: Q4 21 deliveries
Q4 21 deliveries . Start-up of Yme – net average 5 600 boepd next 12 months . Development of Vette discovery halted Ginny exploration well operated by Equinor Operationalising new strategic direction Progressing ongoing projects incl. Hasselmus towards first gas Q4 23 and PfS to reduce CO2-emissio
Slide 12: Financials
Financials
Slide 13: Oil and gas production, sales and revenues - per asset
Oil and gas production, sales and revenues - per asset Production (boepd) Sold volumes (boepd) 20 000 20 000 18 794 Draugen Draugen 16 557 Gjøa 16 979 Gjøa - tie ins 16 171 16 315 Ivar Aasen 15 198 Gjøa 15 000 15 000 14 232 13 303 13 210 9 272 13 048 6 548 Ivar Aasen 7 592 7 246 6 735 Q3 21 7 055 Q3
Slide 14: Higher realised liquids prices in third quarter
Higher realised liquids prices in third quarter Lifted volumes vs Dated Brent - 2020/YTD 2021 Realised liquids prices vs Dated Brent – Q3 21 USD/bbl kbbl USD/bbl 100 950 100 Q1 Q3 Q1 Q3 95 900 95 850 850 90 90 800 85 85 750 80 80 75 73,4 682 700 75 2.3 70,3 640 70 0.9 0.0 67,4 632 635 632 650 2,8 70
Slide 15: Higher gas production and record gas prices in third quarter
Higher gas production and record gas prices in third quarter Sold volumes vs average gas market price - 2020/YTD 2021 Pence/therm kboe Q1 Q3 Q1 Q3 160 193 200 150 190 176 180 140 171 167 165 170 130 159 158 160 154 156 154 155 160 151 120 146 150 143 110 135 140 128 130 100 120 90 110 80 100 87 90 7
Slide 16: Income statement
Income statement Q3 21 comments Operating income: • Increase in sold volumes and higher realised prices Figures in NOK million Q3 21 Q2 21 Q3 20 YTD 2021 YTD 2020 Total operating income 1 026 607 321 2 157 1 146 Production expenses: Production expenses -181 -213 -154 -570 -507 • NOK/boe of 108 compa
Slide 17: Statement of financial position
Statement of financial position Figures in NOK million Assets 30.09.2021 30.06.2021 31.12.2020 30.09.2020 Q3 21 comments Goodwill 769 769 769 769 Oil and gas properties 4 585 4 558 3 758 3 509 Other non-current assets 3 088 3 069 3 029 3 031 • Cash and cash equivalents NOK 1 504 million Trade and ot
Slide 18: Cash development Q3 21
Cash development Q3 21 NOK million 2 500 2 000 18 166 452 108 +158 1 500 23 9 5 1 000 1 504 1 346 500 0 Cash 30.06.21 Operating Net taxes received Investment Bond buy-back Interest paid Payments of FX effect on Cash 30.09.21 activities activities lease debt cash held 18
Slide 19: Cash development YTD 21
Cash development YTD 21 NOK million 2 500 310 633 2 000 108 115 1 500 27 4 1 203 +633 1 000 1 504 500 871 0 Cash 31.12.20 Operating Net taxes received Investment Bond buy-back Interest paid Payments of FX effect on Cash 30.09.21 activities activities lease debt cash held 19
Slide 20: No change in guiding on production & capex
No change in guiding on production & capex Commencement of Yme production on 25 October supports guiding on volumes Production – thousand boepd Capex* – NOK million Gjøa accelerated compensation 1.2-1.8 0-0.4 16.1 15.5-16.5 17-18 980 600 - 700 2020 actuals 2021 guiding 2022 outlook 2020 actuals 2021
Slide 21: Strategy update
Strategy update
Slide 22: Solid platform for further growth
Solid platform for further growth First class track-record as operator of Draugen Strong balance sheet and robust cash flow Yme start-up in October – adding production and cash flow Financial flexibility to support M&A strategy ESG central to all operational activities
Slide 23: Strategic direction based on three pillars
Strategic direction based on three pillars Growth Value creation Capital discipline
Slide 24: Market fundamentals and opportunities are in place
Market fundamentals and opportunities are in place Attractive energy market M&A opportunities Edge in mid to late-life operatorships
Slide 25: Three growth levers to deliver continued shareholder value
Three growth levers to deliver continued shareholder value Current portfolio Actively pursue further value creation in current portfolio + Inorganic path Mergers and acquisitions to add new portfolio legs + Organic path Organic projects as complementary growth lever Current asset base represents a C
Slide 26: ESG embedded in the business and all operational activities
ESG embedded in the business and all operational activities Environment Social Governance Minimising our impact on the Ensuring safe and responsible Maintaining the highest standards natural environment operations while generating value of corporate governance and for the Norwegian society business
Slide 27: Ambition to initiate dividend plan in 2022
Ambition to initiate dividend plan in 2022 Dividends – a key strategic priority Current bond loan terms allow for distributions to shareholders from 2022 subject to customary restrictions Clear aim to deliver competitive shareholder return through capital discipline Dividend plan to be balance
Slide 28: Creating value where others divest
Creating value where others divest 2015 | Marginal field specialist 2021 | Mid to late-life champion Key learnings OKEA opportunity Marginal field specialisation required OKEA to build Becoming a leading mid- to late-life operator on the unique set of key competencies also relevant in NCS, with key
Slide 29: OKEA - The leading mid to late-life operator on the NCS
OKEA - The leading mid to late-life operator on the NCS
Slide 30: Summary and outlook
Summary and outlook
Slide 31: Summary and outlook
Summary and outlook Growth, value creation and capital discipline Market • Attractive market fundamentals support value creation on the NCS for the next decade, driven by an conducive for energy demand surplus that the NCS is competitively positioned to meet growth Attractive deal • We expect increa
Slide 32: Growth Value creation Capital discipline
Growth Value creation Capital discipline 32