BlueNord ASA

Good morning everyone and thank you for joining us today. We'll shortly present our fourth quarter and full year results for 2023, walking you through what's been a period of strong performance for Blue Nord, as well as giving you much more insight into what you should expect from us during the remainder of 2024. And on that point, before we start going through the slides, I want to spend a few moments on the outlook for Blue Nord. Completion of the tower redevelopment project is a pivotal moment for us. And in March of this year, we will achieve a milestone that we've been working towards since 2019. Of course, this is important in and of itself, as it will more than double our net production. But its contribution to Blue Nord goes way beyond the simple addition of volumes. With Tyra on stream, we can also deliver on one of our core commitments and start returning capital to our shareholders. In that vein, we have today for the first time communicated our proposed dividend policy for 2024 through 2026. There's more detail to come later in the presentation, but what I can tell you now is that the core principle is remarkably simple. from a base of significant free cash flow. Our objective is to distribute as much of this as we can while still maintaining a conservative balance sheet. Now, let me finish this introduction by noting that we will have Q&A at the end. So please feel free to submit your questions as we go through the presentation. And with that, let's turn to the first slide and walk through the highlights for Q4. Starting with production, our average rate for both Q4 2023 and the year as a whole was 24,900 barrels of oil equivalent per day. This was at the upper end of our guidance, which is particularly impressive considering it was achieved without additional volumes from the first Halfdan InfoWell that was originally planned to come in when we set that guidance during 2023. With this, we continue to build our track record of consistent performance, which is due in no small part to the meaningful success we've seen from our ongoing maintenance and optimisation programmes. While the Noble Reacher is carrying out these programmes, we also have a second rig, the Shelf Drilling Winner, targeting our portfolio of short cycle infill well opportunities. While the operator is continually optimising the drilling sequence, the first of these wells was spud on Halfdan in 2023 and is expected on stream in April of this year. The next well in the sequence will be HemJ, Harold East Middle Jurassic, which was sanctioned early in 2024 and is expected to be drilled in the middle of this year. Marianne will talk more about Tyra, but I will simply say that we are in the final stages of the project. First gas is expected next month, and once on stream, we expect a four-month ramp up to maximum technical capacity. In terms of track record, I'm also happy to report again today that the strong operational performance we have seen has translated into positive financial results. We recorded revenues of $184 million and EBITDA of $95 million during the quarter and generated $104 million of operational cash flow. As a result of this, we exit the period with liquidity from cash and undrawn RBL of $317 million. Now let's turn over to a brief summary of BlueNord's portfolio in a nutshell. Blue Nord holds a 36.8% non-operated working interest in the Danish Underground Consortium, which is operated by Total Energies. The DUC has four hubs, three of which are on production, and one of which, Tyra, is being redeveloped. Our portfolio has direct export routes to continental Europe through pipelines to Denmark and Holland. From this operational base, we have 2P reserves of roughly 180 million barrels and 2C resources of more than 200 million barrels. Of this 2C, roughly 40 million barrels is defined as what we call near-term 2C. That means that they are associated with projects that will be on stream by the end of 2030. This gives us a long-term profile that will see Blue Nord net production, which is expected to peak at more than 55,000 barrels per day in 2025, still be above 40,000 barrels a day in 2030. We can now turn over to talk through how our strategy is set and how that maximises what we can deliver from our underlying asset base. So you've already heard this morning some about the exciting developments that we have within our business in the near term. But there's also an important point here, which is that there are some things that you shouldn't expect to change. And one of those is that we remain focused. Focused on maximizing production, focused on maximizing our cash flow to all stakeholders, and focused on maximizing our distributions to our shareholders. How we go about delivering these also hasn't changed. We do this by delivering operationally with strong production driven by an active operator who is mitigating the near term natural decline supported by the execution of short cycle investment opportunities. And if you think about what we've already delivered here, we have now had 12 quarters in a row of production that has been either at or above guidance. We also do this by delivering TIRA, where the focus is now on making sure that the project is delivered in a way that maximizes its near-term and long-term contribution to BlueNord's portfolio by increasing our net production, by lowering our unit OPEX, and by lowering our emissions intensity. Finally, we do this by delivering our long-term potential. Our portfolio in the DUC contains a number of attractive organic growth opportunities that offer the potential to continue to mitigate the natural decline to the end of the 2020s and maximise the value of our operational exposure. And if we turn on to the next slide, we can start thinking about how we look to balance further investments against returning cash to shareholders. I can safely say that this isn't the first time that I've stood here to tell you about how we will allocate capital when Tyra's on stream. But what it is, is the first time I've done so, we'll be able to talk with the benefit of a distribution policy that I firmly believe is consistent with what we've said throughout. The framework you can see here is designed to ensure we achieve three main things. One, we maximise the contribution from our underlying portfolio. This, in turn, helps us maintain a conservative balance sheet. And then we return as much of the remaining cash as possible to our shareholders. And that really is one of the core messages that you'll hear today. If we now return to point one on that list, which was maximising what we get from the DUC, on the basis of this, we expect that some measured reinvestment will be attractive. And what you can rest assured from our side is that the decisions that we take here will be taken through the lens of not only what impact do they have on all the factors I've just mentioned, but also predominantly whether or not they are accretive to our distribution profile. Before going into too much detail on that point though, let's turn to the next page and start at the beginning by looking at our expected cash flow generation. With Tyra on stream and taking account of factors like our attractive tax position, our cash flow generation potential to 2042 is significant. Our distribution policy is very much built upon this because it's the long-term nature of that cash flow that supports our objectives of prioritising near-term shareholder returns. That said, we don't want to look at shareholder returns in isolation. They also need to be considered alongside our objective of maintaining a conservative balance sheet. And one of the ways that you can do this is with an underlying portfolio that continues to be valuable for as long as possible. And that's what measured reinvestment helps to deliver. And we'll be focused on ensuring that this balance is correctly struck. Now let's talk about the distribution profile itself in some more detail. The distribution policy we're announcing today is a big step for us in delivering our commitment to material shareholder returns. It's what we've spoken about at length, and I'm happy today to be able to give some more detail on what we will deliver to our shareholders. For 2024 to 2026, we will target returning 50% to 70% of our operational cash flow, And while we're not guiding on the dollar value of this distribution explicitly, the chart you can see at the bottom of the page should give you some sense of the levels that we expect to be able to achieve. And 50 to 70% in this context should also be considered against our current equity value of roughly $1.2 billion. Looking beyond this introductory period and to 2026 and beyond, we will continue to manage our business in a way that's consistent with a desire to maintain a meaningful returns profile. We'll make all future investment and capital structure decisions accordingly. And our goal here will also be supported by the fact that from 2024 to 2026, we do intend already to return a significant portion of our current equity value to shareholders. Finally, we also anticipate that a proportion of these distributions will come in the form of share buybacks, with further detail to come prior to our first distribution. And now that you know what we intend to do, I'd like to turn over to the next page to walk you through, firstly, what steps are necessary from our side to achieve the policy that we're laying out today, and finally, when you can expect distributions to start. Blue Nord intends to reset its capital structure during 2024 in order to do three key things. One, optimize our access to secure debt capacity, which continues to be meaningful given the stage of the asset life cycle we are currently in with Tyra just starting up. Two, ensure that any distribution restrictions in our capital structure are consistent with BlueNord's cash generation outlook. And three, maintain a conservative balance sheet on a through cycle basis, which in the long term will support our desire to continue meaningful distributions in 2027 and beyond. To do this, we'll start by the refinancing of our existing RBL facility. This process is already underway and we're working towards a new facility that we expect will mature at the end of the decade and start to amortize from early 2027. Based on the positive discussions we've had to date, we expect to at least maintain our current US dollar 1.1 billion facility with the potential for it to be expanded further, supported by our secured borrowing capacity. And this is a process that we expect to be finalized during Q2 2024. Then, once the RBL has been completed, we intend to focus on addressing BNOR 14. Since it was issued in 2019, BNOR 14 has been an important part of our capital structure. However, as it came into existence significantly before Tyra was operational, its covenants are not reflective of the forward credit strength of our business today. And as a result, we intend to address this bond prior to making our first distribution. We'll come back to the market in due course, but what I can say today is that our current assumption is that we will repay this bond prior to making that first distribution. And bringing all of this together now, based on our current plan and subject to Tyra completion being achieved in line with the current timetable, we expect to make our first distribution to shareholders in the third quarter of 2024. With that, I'll now hand you over to Marianne to give you some more detail on our recent operational performance. Thank you.

Thank you, Johan. Exciting news and underpinning our distributions are, of course, the startup of Tyra, continued strong production from our base assets and continued drilling activity, which is what I will cover today. So in 2023, we had another year of excellent production performance, where we delivered a net production of 24,900 barrels with 25% gas and 75% oil. As you can see from the plot, we have managed to mitigate decline from our mature assets through well activities and also the high operational efficiency. Between 2021 and 2023, we have only seen a 4% annual decline, which is excellent performance and demonstrates why it is so important to maintain this high level of well activity. Some of the highlights for 2023 were, as Johan also mentioned, that we did manage to achieve our production budget without the planned contribution from new wells. We had a high number of well interventions, in particular on Dan, where we used the Maersk Reacher for ROM activity, and which led to an increase in Dan production in 2023 compared with 2022. We had a significant amount of work planned for 2023. TotalEnergies, the operator, managed to reduce the duration of shutdowns and hence the impact on production was reduced. One of the projects we executed was the Halfdan reroute, which eliminated routine flaring in the DUC from the middle of 2023. And I will now take you through 2024 and we have a really exciting year ahead. So 2024 is the year where BlueNor will double its production rate with Tyra coming on stream next month during the month of March. For 2024, we have elected to give some more details on our guidance. We have a lot of movement and a stable increase throughout the year. So we are starting relatively low in Q1 at 22 to 23 MBOV per day. We have a cyclic effect from well stimulations and right now we are on a low with respect to remaining effect from simulations performed previously on Dan and Gorm. Second quarter will have the HPA27 well on stream, as well as initial effects from well interventions on Halftan. From Tyra, we expect a modest volume contribution due to low operational efficiency early in the ramp-up. Third quarter, we are maintaining our base production and we then expect a significant production from Tyra. However, we do see some uncertainty with respect to the Tyra operational efficiency. Fourth quarter, we do expect Tyra to provide more than 50% of the Blue Nord production with a good operational efficiency. In the fourth quarter, we also have an upside if we are successful on the Harald East Middle Jurassic Well. Our exit rate in 2024 will be above 50,000 barrels of oil equivalents to Blue Nord. I will now go into some more detail on infill drilling, which is still key to maximise value and reduce decline from the DUC fields. Drilling operations on the first Halfdan infill well were completed in January and we are now waiting on the stimulation vessel, which has been delayed due to bad weather. Production will commence in April. Currently, we are doing critical P&A work on Dan with the Shell drilling winner. And next well in the infill drilling sequence to be spotted is the Harald East Middle Jurassic well. This is a well with a large subsurface uncertainty, but also a really high potential being drilled into a sandstone and to a higher pressure Jurassic reservoir. And it will produce through the Harald field, producing into Tyra if The infill well sequence is dynamic, and we will always use all technical information available, whether it's production data, reservoir pressure, 4D seismic, to ensure that we pick the highest value targets to invest in. And our infill drilling portfolio has an expected unit development cost below $13 per barrel. Tyra on stream will also open up a lot of targets. The Total Energies team are doing subsurface work on a wide range of future wells, both on Dalen and Halvdan, as well as the Tyra fields. A lot is happening on Tyra right now. What we hear from the operator is that we have a very motivated offshore team who are working very hard to ensure a safe and efficient startup of Tyra in March. We have now had 75 days without any recordable incidents, which is excellent performance at this stage of the project. The Tyra redevelopment is of strategic importance and will provide necessary gas to Denmark and Europe and will transform Blue Nord as a company. 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 double the Blue Nord production and expect to produce 55,000 BOV per day net in 2025 with a gas share of 45%. The increased production from Tyra also means that we will reduce our unit operating cost to $13 per BOV. So we are getting ready for first gas export from Tyra. The Total Energies team have been working very hard to finalize the safety and emergency systems and that is going well with the critical deluge or fire water test successfully passed around a week ago. The team is now focused on punchless closure, which is correcting smaller issues that has been discovered through testing. As of 1st of February, the project handed over the overall responsibility for Tyra to the TotalEnergies Denmark operations team, which is also an important milestone and indication of how close we are to first gas. On the satellite and wells area, unplugging is progressing well on Tyra West and we now have seven wells reinstated. We are also ready to produce both from Harald and the Tyra Southeast satellite fields. On the next slide, I'll go into some more details on the sequence of events between now and when we have first gas export. Prior to First Gas, approvals need to be secured from the various Danish governmental bodies and also from DNV over an independent verification body on the Tyra project. The operator is doing a good job in this area and is keeping us up to date on the status. When the approvals are in place, methanol will be filled. Methanol is needed to ensure a stable flow from the satellite fields, in particular during startup. Filling of methanol will trigger the hot platform safety protocol. And when methanol is filled, gas will be started to be introduced into the process. The next step is then firing up one of the gas export trains for export of gas to Nybro in Denmark. It will take around three days from your start gas export to the gas reaches Nybro because we need to pressure up the pipeline. We do have an adjusted cost estimate for Tyra. We have seen some increased costs due to a recent increase in offshore overs and also in the cost of offshore overs. Per year end 23, we have an expected remaining cost of $128 million to be spent during 2024. With respect to external communication ahead of first gas, this will be closely coordinated with the operator Total Energies. I expect the next external communication to be around the time of methanol filling, which could be approximately two weeks ahead of first gas export. So with this status update, I'm handing you over to Chief Corporate Officer, Katrine, who will talk you through ESG and growth.

Thank you very much Marianne and good morning to everyone. I will not spend too much time on this slide as our key objectives to contribute to energy security to Europe while at the same time do what we can as a company to support the energy transition remains the same. We have however taken one important step within our involvement in CCS through our ownership in carbon cuts. In CarbonCuts, we're assessing what we think can be a fantastic onshore storage project called Project Ruby. And in January this year, CarbonCuts submitted a license application to the DEA, where the vision is to store about one million ton of CO2 per year from 2030 in the geological Rødby structure on Lolland. This is located at the south tip of Denmark and very close to the German borders. The location of the potential storage site opens up opportunities for several cooperations with countries around the Baltic Sea, which themselves have limited options for CO2 storage. The award of storage license from the DEA is expected sometime this year. And our view remains that CCS will be an important solution on a global scale, as it is the one true emissions removing activity, which does not compromise the security of supply. Moving on to our long-term plan, you can see that we both have infill wells and development projects. This plan is reflective of what the objective of the partnership is, to maximise economic recovery from the DUC. The infill wells are expected to increase gas production over the next few years, and the first well, which was spotted last year, we expect to have first production from in April this year. In January, we also announced that we had taken FID on the very promising Hemj well, which will be sped during this summer. In addition to the other planned infill wells, and as also mentioned by Marianne, Taira unlocks further infill drilling opportunities with six wells under maturation. In the second bucket in the long-term plan, which you can see far right on the page, we have the three development projects, Voldemarbo South, Adda and Halfdan North. The projects will ensure that the high level of production in Blue Nord is sustained over time and beyond the end of this decade. These are very cash-generative projects, which will come with robust IRRs that can tackle even the most challenging commodity price environments. Production from the two first projects can also be tied back to Tyra 2, which is an excellent way of utilizing the new facility on Tyra and backfill its process capacity. Our revised production profile underpins the significant step change our business will face this year, with Tyrone Stream and also infill volumes bringing our production to well above net 40,000 barrels per day. Next year, with a full year of Tyra production and further infill volumes, we expect our production to be just north of 55,000 barrels per day. After 2025, in the following five years, we expect to produce circa 50,000 barrels per day based on our base production, optimization work and our in-plant projects. However, we also see an opportunity to maintain the peak rate we will be seeing next year until the end of this decade. We will do so by adding identified projects that are currently out of plan, but which we will progress if deemed attractive from an economic perspective. As we have today finally announced our distributions policy, this long-term production profile will support a stream to our shareholders such that it is not only kept high for a few years following the delivery of Tyra, but it also allows us to sustain a robust capacity longer term. And with that, I will say thank you for listening and pass over the word to our CFO, Jacqueline, who will take you through the financials.