Var Energi Asa · OSL:VAR

Var Energi Asa — Q1 2022 Earnings Presentation

31 slides from Var Energi Asa's earnings presentation, Apr 27, 2022

  1. Slide 1: First quarter 2022 Results presentation

    First quarter 2022 Results presentation | 27 April 2022

  2. 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

  3. 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

  4. Slide 4: Diversified portfolio with a hub strategy enabling long-term value creation

    Diversified portfolio with a hub strategy enabling long-term value creation Material and diversified production base with Åsgard Area Barents Sea Area longevity, in partnership with world-class operators Morvin Johan Åsgard Castberg Maximising value creation with hub-centred strategy Kristin Goliat

  5. Slide 5: Robust portfolio positioned for production growth

    Robust portfolio positioned for production growth Production target >350 kboepd by end 2025 Growth levers kboepd Material, long-lived resources ~1.1 bnboe 2P reserves and Existing production and sanctioned +50% 550 mmboe 2C resources, with developments R/P of ~13 years1 Unsanctioned developments >35

  6. Slide 6: Raising 2022 dividend guidance to USD 1 billion

    Raising 2022 dividend guidance to USD 1 billion 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 1 000 15 USD 60/bbl Free cash flow USD 50/bbl USD 40/bbl FCF BE Financing costs 10 ~30

  7. Slide 7: First quarter 2022 highlights

    First quarter 2022 highlights Robust operational performance  Production within the 2022 guided range  Cost of operations reduced due to seasonal lower maintenance  Subsea leak at the Balder field led to one actual serious incident Exceptional cash flow generation  Average volume-weighted realis

  8. Slide 8: Key performance indicators

    Key performance indicators Q1 2022 vs. Q4 2021 Actual serious incidents frequency1 Production Cash flow from operations 0.1 242 kboepd USD 2 182m (0.0) (2592) (923) CO2 emissions intensity Production cost Dividend for the quarter 7.6 kg/boe USD 12.1/boe USD 225m (8.1) (13.4) (262) 8 1 12 months roll

  9. Slide 9: Operational review

    Operational review fe, Var energi

  10. Slide 10: HSSE is the number one priority

    HSSE is the number one priority TRIF1 and SIF2 CO2 emission intensity for operated assets kg CO2/boe 12 4.6 11 10 9 8.5 8.7 8.1 3.2 3.2 8 7.6 7 2.5 6 5 1.6 1.3 1.3 4 1.2 3 2 1 0 Q1 2021 Q4 2021 Q1 2022 FY ’21 Q1 2021 Q4 2021 Q1 2022 FY ’21 TRIF SIF  One Actual SIF incident – subsea leak at the Bald

  11. Slide 11: Awarded carbon storage license in the Barents Sea

    Awarded carbon storage license in the Barents Sea  The awarded Polaris CO2 storage license is planned to be used to permanently store CO2 captured from the Barents Blue facility to be developed with partners Equinor and Horisont Energi  The planned facility will produce carbon neutral (blue) ammon

  12. Slide 12: Robust production performance in line with guiding

    Robust production performance in line with guiding Production, production efficiency operated assets and product mix kboepd 93% 1,0 92% 87% 87% 0,9  Reduced gas production of ~5 kboepd from previous 0,8 quarter due to technical 272 0,7 adjustment of gas conversion 259 259 242 246 242 factor 0,6  M

  13. Slide 13: Operational update on operated assets

    Operational update on operated assets Balder /Ringhorne Goliat Resumed full Balder production in April High operational efficiency  Balder production efficiency of 74% reflects a subsea leak causing  Operational efficiency increased from 94% to 96% shut-in of some production templates; production

  14. Slide 14: Declining unit production cost

    Declining unit production cost Production cost per boe produced1 USD/boe  Lower unit production cost mainly due to low 14 13.4 maintenance activities in the quarter 13 12.1 12.0  2022 opex per boe guidance maintained at USD 12.5 12 to 13.5 11 10 9.9  Opex and unit cost improvement programs 9 prog

  15. Slide 15: 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 major projects Balder 216 Ringhorne Phase III Balder X  Increased macro and supply chain uncertainties Grane 109 Breidablikk

  16. Slide 16: Balder X on track to support medium-term production target

    Balder X on track to support medium-term production target  Highly profitable project targeting 143 mmboe in net recoverable reserves – Leveraging existing Balder hub infrastructure – Field production expected to increase to >70 kboepd annual net at peak with attractive break-even – Significant add

  17. Slide 17: Johan Castberg FPSO arrived in Norway

    Johan Castberg FPSO arrived in Norway  Positioned to be a Barents Sea giant – Second oil field development with high perspectivity in the Barents Sea – Large additional potential through infill drilling, tie-back of discoveries and exploration drilling after project completion  On track for planne

  18. Slide 18: Breidablikk ready for Q2 drilling program

    Breidablikk ready for Q2 drilling program  One of the largest ongoing developments on the NCS – Highly attractive and cost-effective development leveraging on existing Grane infrastructure – Four subsea templates tied back to the Grane platform – Possibility to extend production plateau through ins

  19. Slide 19: 2022 campaign targeting more high-value barrels

    2022 campaign targeting more high-value barrels 2022 work programme Continued hub-focused exploration Pre-drill Snøfonn Vår Pre-drill 2022 campaign unrisked Adjacent to Johan License Prospect Operator Energi unrisked Timing Status mmboe Castberg share mmboe VE Statfjord Skavl Stø PL 057 Equinor 18.6

  20. Slide 20: Financial review

    Financial review SS °4 fe, Var energi

  21. Slide 21: Key financials

    Key financials USD million Q1 2022 Q4 2021 Q1 2021 FY 2021 Petroleum revenues 2 483 2 282 1 039 6 043 EBIT 1 674 1 235 553 2 910 Profit before taxes 1 651 1 124 499 2 498 Production cost (USD/boe) 12.1 13.4 9.9 12.0 Operating CF before tax 2 366 1 495 696 4 274 CFFO 2 182 923 930 4 438 CAPEX 622 710

  22. Slide 22: Average weighted realised price of USD 120/boe driving revenues

    Average weighted realised price of USD 120/boe driving revenues Total petroleum revenues Sold volumes USDm mmboe 21.1 22.1 20.7 85.2 6 043 11.6 12.3 12.4 49.0 7.6 8.0 7.1 28.0 2.0 1.8 1.2 8.2 Q1 2021 Q4 2021 Q1 2022 FY ’21 3 448 Realised prices USD/boe 2 483 200 2 282 2021 163 148 1 238 150 990 USD

  23. Slide 23: Lower cost of operations due to seasonal low maintenance

    Lower cost of operations due to seasonal low maintenance Production cost (sold volumes) USDm  Cost of operations down on low maintenance activities 342 77 341 (2.8)  Fourth quarter production cost 0.3 included one-off own (54) (22) restructuring costs, restructuring costs billed from partners and

  24. Slide 24: Record-high CFFO driven by higher prices and lower tax payments

    Record-high CFFO driven by higher prices and lower tax payments CFFO and CAPEX Income tax received / (paid) USDm USDm 1 000 4 438 900 3.5 3.5 800 700 3.0 3.0 600 500 2.5 2.5 400 300 234 2 584 200 164 2.0 2.0 100 2 182 0 1.5 1.5 -100 -200 (183) 1.0 1.0 -300 930 923 -400 ~(348) 710 622 -500 546 0.5 0.

  25. Slide 25: Exceptional cash flow generation

    Exceptional cash flow generation Cash flow development Q1 2022 Available liquidity USDm USDm 267 3 799 28 26 (183) 24 22 20 18 (650) 2 304 16 3 260 2 182 14 2 099 12 10 2 080 8 539 6 (1 215) (2) 4 224 539 2 224 0 Cash at end- CFFO before Working Taxes paid CFFO Cash flow Net cash FX Cash at end- Q4

  26. Slide 26: Strong cash flow generation supports continued deleveraging

    Strong cash flow generation supports continued deleveraging Net interest-bearing debt and leverage ratio1 USDbn 2.1x  Committed to maintaining an Investment Grade rating 1.1x  Through-the-cycle leverage target of 1.3x NIBD / EBITDAX 0.6x 5 942 5 308 4 928 4 672 3 415 2 536 BBB (Outlook Baa3 (Outlo

  27. Slide 27: Dividend guidance of USD 1 billion for 2022

    Dividend guidance of USD 1 billion for 2022 Dividend distribution USDm  Dividend for Q1 2022 of USD 0.09 per share to be paid 12 May 2022 – Dividend paid in NOK at exchange rate of NOK/USD 9.1758 USD 1 000m  Dividend guiding for Q2 of USD FY ‘22 260 million (0.10 USD per share)  Dividend policy o

  28. Slide 28: Outlook

    Outlook Production  Production target in 2022 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 cost savings are achieved  2022 capex guidance of USD 2.3 – USD 2.6 billion excludi

  29. Slide 29: Concluding remarks

    Concluding remarks foe Var energi

  30. Slide 30: Summary

    Summary  Robust operational performance  Exceptional cash flow generation  Strong financial position  On track to deliver on YE 2025 production target  Raising dividend guidance for 2022 to USD 1 billion 30

  31. Slide 31: First quarter 2022 Results presentation

    First quarter 2022 Results presentation | 27 April 2022

Vår Energi — Q1 2022 Earnings Presentation on 6ix