BlueNord ASA

Good morning and welcome to Blue Nord's earnings presentation for the third quarter of 2023. I'm pleased that you can join us this morning as we walk through our strong performance in the third quarter and also the positive outlook. As we go through, I'll hand over to Marianne, our COO, to provide you with some more operational detail, Catherine to talk you through the long-term outlook for our business in her new role as Chief Corporate Affairs Officer, and Jacqueline, who today moves from EVP Finance to become our Chief Financial Officer, who will cover our financial performance and capital structure. Before we go any further, I'd just like to take a moment to briefly note Jacqueline and Catherine's new roles, which very much recognises their strong contribution to our business so far, and something that I very much look forward to continuing as we move into the production phase on Tyra and beyond. If we move now to talk a little bit about where we are today, there are some key points that I'd like to highlight. We sit with a business that is on the cusp of significant production growth from the start of 2024. In that vein, we announced this morning that we believe there will be a significantly shorter ramp up on the Tyra project, which we expect to increase the production volumes delivered from the field during 2024. And this change also very much reflects where we are on the project. We're close to mechanical completion and now looking at how to best deliver what is most important for us, significant volumes of gas and oil. During the quarter, we've had the benefit of more clarity on the path from first gas to plateau, and with the expectation that we can now deliver significantly more of the required offshore work to reach plateau prior to the introduction of hydrocarbons to the system, it's clear that achieving first gas in early 2024 is what will enable us to deliver earlier plateau production in Q2 2024, and increase the tangible contribution that we received from the field in 2024. We'll open up for Q&A at the end, but before we do that, let's talk through some key highlights for the quarter in more detail. So starting with our base business, our production level of 24.6 thousand barrels of oil equivalent per day was at the upper end of our guidance. This is a consistent demonstration of our track record, one of consistent performance and marks the 11th consecutive quarter where we've either been at or above our projected figures for the relevant period. The strong performance reflects the meaningful success we've seen from ongoing maintenance and optimization programs. And we're also taking this strong trajectory into Q4, with production for October in the month to date on average over 26,000 barrels a day of oil equivalent. Well, we have one rig carrying out these optimization activities, the Noble Reacher. We also have a second rig supporting the longstanding growth focus of Blue Nord. We have a seven infill well programme in the DUC and earlier this year we spud the first of two infill wells to be drilled in 2023. While this first well is now expected on stream in early 2024, rather than the fourth quarter of this year, the overall theme remains that we are in the process of delivering short cycle investments with attractive economics that take advantage of a supportive market backdrop. As I've already talked about, and Marianne will walk you through in more detail, we're also making significant progress in delivering Tyra. Progress was good in Q3, with both those activities required to achieve first gas and those necessary to hit plateau production levels being completed. And as a result, while the focus remains on achieving first gas, we're also focused on ensuring that we do so in a way that ensures we're able to maximise our 2024 production and cash flow from Tyra. Finally, that strong operational performance that I've talked about has also translated into positive financial results. We recorded revenues of $200 million and EBITDA of $106 million during the quarter and generated $113 million of operational cash flow. As a result, we exit the period with liquidity of $506 million. Now let's briefly turn over to summarise our portfolio. So as most of you are probably aware, we hold the 36.8% non-operated working interest in the Total Energies operated Danish Underground Consortium, the DUC. Three of the four hubs in the DUC are currently on production and the fourth, Tyra, will restart shortly. These offshore fields are connected to the mainland through substantial offshore infrastructure and direct export routes to Denmark and continental Europe. The message that I have for you today regarding our long-term strategic plan for the DUC remains the same. We'll focus on doing what we can to support European energy security, and we do this by maximising production to the extent that it's economic to do so, with Tyre being a good example. It will turn Denmark from a net importer of gas to a net exporter. Then the other side of that equation is that Blue Nord then delivers volumes from within the EU that are more secure at a lower cost and with lower emissions intensity than comparable imports. Combined, this makes Blue Nord a strategically important player in the European energy landscape. Turning over to our strategic priorities, in terms of stability, our strategic goals remain very much the same. to deliver operationally. We have strong production driven by active reservoir management that's mitigating the natural decline. And this is an approach that, in conjunction with our infill well program, we expect to see continue with high operational performance going forward. we're also delivering Tyra. Tyra continues to significantly de-risk and it's also doing so in a way that is very supportive of our journey towards materially higher production, reduced operating costs and lower emissions intensity. Our focus is now on ensuring that we deliver Tyra in a way that maximises both its near and long-term contribution to the Blue Nord portfolio. Finally, we're delivering our long-term potential. Our long-term plan for maximising economic recovery from the DUC showcased our portfolio of attractive organic growth opportunities. Combined with TIRA, delivering this will enable us to meet our commitment to maximising shareholder value, but importantly also shareholder returns. And if we now turn to the next page, I'd like to walk you through how we think about capital discipline, particularly in the context of further investment and distributions. So a key part of delivering to shareholders the potential of our portfolio means establishing a substantial and sustainable dividend profile. Distributions to shareholders are the number one priority and our capital allocation framework is designed to ensure that these distributions mirror our cash generation potential while also ensuring that we keep the value of our portfolio as high as possible for as long as possible. With a material opportunity set, we're also clear that any future decisions that we take around investing must be evaluated based on how they could contribute to our overall distribution capacity, both in terms of timing and quantum. And with that, I'll hand you over to Marianne to talk through operational performance during the quarter and the outlook for Tyra. Thank you.

Thank you, Euan. big news on Tyra today, and I'm really pleased to be able to announce a shorter ramp up and that we will be able to increase our production from Tyra in 2024. We have continued good production from our base assets as well. And I will go into some more detail on optimization activity, which has been the enabler for the excellent production that we have seen this year. We are continuing the trend with good operational performance from last year and earlier this year. Q3 production was 24.7 MBOE per day, which is in the upper half of the guidance. We also have a very strong start of Q4 with October production to date of 26.5 MBOE per day, which was really helped by well interventions on DAN and good production regularity. I'm really pleased with the production during Q3 and that we managed to deliver the full Halfdan reroute project scope where Halfdan oil is now processed at Dan rather than Gorm with a minimum of production delayed during the shutdowns and that the process and production is now stable. Full year guidance for 2023 is now 24.5 to 25.0 MBOE per day. And in this number, we are not expecting any contribution from infill drilling. Optimisation activities have been crucial to delivering the production rate we have seen this year. So I think this topic deserves a little bit more attention. We got the Nobel Reacher on contract in June 22, and we saw an immediate positive impact on production. And we see potential to continue with optimisation activities into the 2030s. On the graph, you can see the contribution from the various types of optimisation projects that we're running. We have the standard WROM or well reservoir optimisation management, well interventions like shutting off water, re-perforating, and we have the well stimulation or scale squeeze jobs that we do at regular intervals, usually every year, depending on the need for each specific well. In 2024, we also have two more significant optimisation projects. Skjold is the main field on the GORM hub. For the Skjold gas acceleration project, we will reduce water injection. This will reduce the reservoir pressure and the result of this is that you produce more gas. The added benefit of this is that you reduce fuel consumption because you are injecting less water. And currently, we cannot export gas from Gorm, which means that we need to adjust gas production to how much we need for fuel. But with gas acceleration, we will establish a gas export route that gives us much more flexibility with respect to increased gas production from Gorm. The HCA gas lift project will boost production from Halfdan wells with low reservoir pressure or a high water cut. In total, we are looking at planned activities which will give us an additional 8 million barrels of oil in total at the cost of around $10 per barrel and an increased rate of 4,000 barrels of oil equivalents per day. I think This is a field that just keep on giving as long as you're willing to invest and keep a high level of activity, you will be able to identify more and more optimisation projects like this. On infill drilling, we have the shelf drilling winner on contract and in June we started infill drilling after a four year drilling break. The wells we are drilling on Halvdan are long horizontal wells around 22,000 feet or 7,000 meters in total and a horizontal section of 12,000 feet. We have more than 50 of these long horizontal wells drilled already on the Halfdan field. For this first well, we encountered issues with the drilling equipment, which has led to a delay. We've taken the lessons learned adjusting the drilling practices for the upcoming drilling operations to make sure that we're doing it the right way the next time, and the operator is also drawing on their global expertise. With respect to production contribution from the first two Halfdan infill wells, We expect the first well to be on stream in the first quarter and we will then move to some critical P&A and come back to the next Halfdan infield well which will then come on stream in the summer. We also have an upcoming FRD on the next three infill wells. The first one, Harald East Middel Jurassic, which we expect to be taken this year, and then the two Halftan Ecofisk wells, which we expect around year end. For the Ecofisk wells, we are going to use the 4D seismic that we acquired in the spring this year to optimize the well locations. As you've already heard from Johan, we have some big news on Tyra today. As we are getting closer to Tyra production, we are able to narrow down the range for first gas and more importantly, to be able to accelerate the production and cash generation by accelerating the plateau production. The Tyra redevelopment is of strategic importance and will provide necessary gas to Denmark and Europe and will transform our business in the DUC. We will be able to unlock significant volumes from Tyra and the satellites with modern and efficient processing facilities. CO2 intensity from the Blue Nord operations will reduce with around 30%. We will also almost double the Blue Nord production and expect to produce 55,000 BOE per day net in 2025 with the gas share of 45%. The increased production from Tyra also means that we will reduce our unit operating cost to $13 per BOE. So we have the last summer season prior to first gas behind us. And I'm pleased to say that we have completed all the weather critical structural work, despite having had quite a rough summer from a weather perspective. The highlight of the quarter is that the subsea work reconnecting the satellite fields to the Tyra East hub is now complete. We also had excellent progress on Tara West and also on the reinstatement of the satellite fields which are now required to reach PLATO and well reinstatement on both Tara East and Tara West. On Tyra East, we are in the middle of leak testing, which is how we test each system to ensure that it is safe to operate. I'm really impressed with the total energy safety performance on Tyra, and we're also seeing improvement in offshore productivity compared with the initial phase of offshore hookup and commissioning. So let's go into some more detail on how we will manage Tyra until we are on plateau. We have adjusted our approach to startup. Previous strategy was to have a minimum of the facilities ready for first gas at the end of the year and then having a long ramp-up period where you were doing testing and commissioning in parallel with producing and exporting gas. We have now changed the approach for startup and we will now complete commissioning and testing on a much larger part of the process plant ahead of exporting gas. This will lead to a delay in the first gas from December 23 to early first quarter 24, but a significant acceleration of ramp up of production, which will have a positive impact on over 24 production from Tyra. Another advantage of this new approach is that you can do more work prior to introducing gas, which is safer and much more efficient. To achieve the plateau production, you need the following four factors to be in place. All the TEG processing equipment with two export trains, gas lift compressor, three G2G, turbine generators and the high pressure, intermediate pressure and low pressure compressors need to be in place. You then also need all the Tyra satellites to be up and running and connected. the major part of the Tyra production is actually coming from the satellites and not from Tyra East and Tyra West. And the Tyra satellites, they were shut off prior to construction work starting, but they have now been reinstated by the Total team. You then need the Tara East wells to be reinstated and you need Tara West to be ready to produce and to also have the Tara West wells reinstated. What I would say is that we are in very good shape on all of these four elements with work progressing either ahead of plan or according to plan. So today we don't see any showstoppers in reaching a plateau in second quarter this year. With respect to cost, we have no change to the overall cost estimate and remaining capex for the entire project is now 142 million dollars with the Q3 expenditure of 56 million dollars. So with this, I'm handing over to Cathrine Torgersen.

Thank you Mariana and good morning to everyone. I appreciate you all taking the time to be here. So one of our key objectives is the contribution to energy security in Europe. We all know the importance of stable energy supply while at the same time combating the climate crisis. In Blue Nord we believe we have a balanced approach to both and I will now go through how we deliver into each. So first of all, we will deliver into the energy needs of Denmark and Europe. We are doing this today on our producing assets where proactive optimization work has mitigated natural decline for the past two years. We also do it by drilling valuable infill wells to increase the gas output. But more importantly, we do this by delivering Tyra 2 early Q1 next year. Tyra will take Denmark from being a net importer of gas to being a net exporter of gas. This is very important, especially as a member of the European Union. And during the past two years, we unfortunately, due to very sad backdrops, have kept seeing evidence of just how fragile the European energy market is. Gas produced within the EU, which you can transport by pipelines, is not only more secure, but it also comes with a lower emissions footprint than, for example, imported LNG. And then there are the activities we do to support the energy transition. With natural gas being an important transition fuel, it is important to do what we can to ensure that the development and production of that gas is done efficiently and with as low as possible emissions intensity. This is something that Tyra achieves. It's a very high tech and efficient, and once producing, it will do so with a 30% lower emissions intensity. We also do this by reducing emissions across the entire portfolio. And one very important achievement this quarter has been the completion of the Halfdan reroute. And by routing Halfdan oil to Dan, we have now eliminated routine flaring completely in the DUC. And then looking at the energy transition through longer-term lenses, we have positioned ourselves within CCS, which we believe will be a critical solution on a more global scale. It's the one true emissions-removing activity which does not compromise security of supply. And in Project Bifrost, we're together with the DUC partners Örsted and DTU investigating the potential for offshore storage of CO2. And through our involvement in carbon cuts, we're assessing what we think can be a fantastic onshore storage project. So to summarize, we have a realistic and balanced approach where we will support Europe's energy security while at the same time, lower the emissions and invest in solutions, which will be important for the future. Moving over to next slide. As a continuation of the ambition to deliver into the energy needs of Denmark and Europe, in Blue Nord's long-term plan, we have both infill wells and also development projects. This plan is reflective of what is actually the original objective of the partnership in the DUC, to maximise economic recovery from the DUC. As mentioned, the infill wells are a very important part of the plan to increase gas production over the next few years. The seven wells are divided into four projects. They're low cost and represent incremental volumes of circa 19 million barrels of oil equivalents. The Jakob Rigg shelf drilling winner has spotted the first well, did it back in June, and we expect to see valuable volumes from the two first wells early next year. Together with production from Halfdan, Gorm, Dan and Taira, these infill wells will lift our production to somewhere above 55,000 barrels a day by 2025. This corresponds to an increase in gas production for Blue Nord by 250%. The second bucket in the long-term plan, which you can see on the far right on the page, consists of the three development projects Valdemarbo South, Adda and Halfdan North. These are identified and highly attractive projects where the gas-weighted ones will be prioritized first. The projects will ensure that a high level of production in Blue Nord is sustained over time, such that we in 2030, and despite the overall natural decline, are able to have a daily production above 40,000 barrels per day. These three projects will add approximately 43 million barrels based on the latest 2C numbers. And with unit capex below $15 per barrel, These are highly cash generative projects which will come with robust IRRs that can tackle most commodity price environments. Production from the two first projects can also be tied back to Tyra 2, which is a great way of getting more value from what is a new and state-of-the-art facility. And it will also ensure that the process capacity on Tyra is fully utilised. And then moving over to my final slide, which is normally where I present the production profile over a 10-year period, lifting our net production above 55,000 barrels per day by 2025. However, this quarter, our long-term profile is under revision for a couple of reasons. First of all, we have infill volumes being shifted from this year to early next year. But more importantly, due to what we expect will be an accelerated ramp-up of Tyra, we now believe that the Tyra volumes will be greater for next year. Also, remember that the old production profile did not include the significant potential for additional infill drilling, which Tyra will unlock for us. And as a conclusion, you can expect us to update the long-term plan somewhere near future, and you can also expect us to revise it upwards at least for the year of 2024. And as a closing remark, remember that any investment decision in Blue Nord will need to support our long-term cash flow generation potential. And with a substantial dividend capacity, which is unlocked by Tyra, and a new and updated long-term plan, we have an even greater start to a vehicle, which can sustain a robust capacity over time. And with that, I will say thank you for listening and pass over the word to our CFO, Jacqueline, who will take you through our financials.