BlueNord ASA

Good morning, everyone, and thank you for joining us as we present our results for the first quarter of 2024. Together with Marianne, Catherine and Jacqueline, we'll shortly walk you through our recent performance and also share our outlook for the remainder of the year. We'll follow our usual process with a Q&A session at the end, so feel free to submit any questions you may have throughout. But I want to begin with a major milestone that we achieved in Q1. After a decade-long journey, which started in 2013 with a concept that then went through FID and led to the removal of the old facilities and the installation of the new, before finally culminating with the execution of a successful hookup and commissioning campaign, we were delighted to announce the restart of Tyra 2 on the 22nd of March. And so before we talk more about the project's current status, I want to be clear upfront about what Tyra represents for us. This is a project that fundamentally transforms our operational profile. It more than doubles our daily production through 2024, it significantly reduces unit OPEX, and it substantially lowers our emissions intensity. All while also unlocking future activities to sustain our production for years to come. Of equal importance, it will markedly increase our free cash flow, enabling us to deliver on our commitment to substantial shareholder distributions at the same time as we maintain a conservative capital structure. While the ramp up of a project of Tyra's scale was never expected to go in an entirely straight line, the transformer issue identified with the IP compressor has been understandably disappointing. Nevertheless, the impact here is fundamentally one of timing and we benefit from having Total Energies as our motivated and focused operator. They are dedicating all the necessary resources to implementing both a permanent solution that we expect to be in place by Q4 and a temporary reconfiguration of the gas processing facilities to allow the restart of gas export in the near term. And with that said, to focus in on all these topics and more, let's turn to the presentation itself. So starting with production, our net rate in Q1 was 23,500 barrels of oil equivalent per day, which exceeded our guidance for the period and reflects a continuation of the strong track record that we've built. For those counting, that's now 13 consecutive quarters where our performance has been at or above guidance. By the end of March, production had also started from the first half-dan infill well, which was in line with our pre-drill expectation at an initial rate of 3,000 barrels of oil equivalent per day, net to Blue Nord. This, combined with the ongoing optimisation campaign, provides strong support and a positive outlook for the production levels from our base assets during the rest of 2024 and beyond. At the same time, the shelf drilling winner is focused on near-term growth and executing a programme of infill drilling opportunities in the DUC. The next well in that sequence is Harold East Middle Jurassic, which was sanctioned in early 2024 and will be drilled this summer. We also expect further near-term sanctioning activity that will ensure that the rig remains active throughout the rest of 2024 and into 2025. In March, we announced our 2p reserves at the end of 2023 were 186 million barrels of oil equivalent, which represents an excellent 135% reserves replacement ratio. When you consider that alongside our portfolio of near-term 2C resources, we have 213 million barrels of oil equivalent that will support our near-term growth, the stability of our medium-term profile, and ensure that we have material production levels out to 2042 when our current DUC licence expires. We'll cover Tyra specifically on the next page, but one point to note here is that our overall approach very much remains the same. we intend to utilise the material near-term free cash flow we will generate to both make significant capital returns to our shareholders and maintain a conservative capital structure. These distributions will be set based on the policy we announced last quarter, with 50 to 70% of net operating cash flow expected to be paid out over the 2024 to 2026 period. Today, we're also reporting that the strong operational performance just discussed has driven positive financial results. During the quarter, we recorded revenues of $169 million and EBITDA of $88 million, while also generating $88 million of operational cash flow. As a result of this, we exit the period with liquidity from cash and the undrawn portion of our existing RBL facility of $308 million. Last quarter, we also told you of our plan to refinance this RBL facility. And today, I'm pleased to be able to tell you that we currently have more than $1.5 billion of commitments for the new facility. And as a result, we expect to close a facility of at least $1.3 billion with a maturity in 2029 by the end of May. Jacqueline will provide more detail, but let me just say that given the backdrop for bank lending to the oil and gas industry, the position we're in today is a testament to the strength of our business and its credit story, our growing gas exposure, and finally, our lower forward emissions profile. Now, having given that overview, let's turn to the next page to focus on Tyra in some more detail. So let's start with a few facts. The Tyra facilities were successfully restarted in the second half of March with the first export of band gas. And this was quickly followed by the first export of new gas from Harold in early April. Shortly thereafter, an issue was discovered with the IP compressors transformer. And while this has been investigated, we've seen a temporary cessation of the export of this new Tyra gas. However, the export of gas production from our other three hubs remains unaffected. The investigation that's been underway has been focused on both identifying the root cause of the issue as well as developing permanent repair options. And as we announced yesterday, the operator has concluded that a replacement transformer is required. This is planned to be installed during the early part of the fourth quarter and we expect to reach plateau production during the same period. Until this permanent solution is in place, the operator is focused on enabling a near-term restart of gas export, and this will be done through the temporary reconfiguration of Tyra's gas processing facilities. Our current expectation is that this will allow for the restart of gas export in July, with volumes increasing through the third quarter. And while the IP compressor matter is being resolved, the commissioning work necessary to reach plateau production continues unaffected. The final work on the Tyro facilities and the reinstatement of the satellite fields is progressing well. And further, from a subsurface perspective, we've observed reservoir pressure that is higher than Blue Nord has assumed when building its production forecasts. And before handing over to Marianne to provide some more insight, I'd like to finish here by spending just a couple of moments discussing what this means for us. So firstly, what we have here is a facilities issue. A transformer is neither a complex nor a particularly expensive piece of equipment, and it is a relatively simple fix. While we still hope that the timeline to deliver this fix can be brought down, when it is implemented, we'll be able to quickly reach maximum technical capacity and plateau production. Secondly, the change that we've seen here when compared to our initial plan is a longer ramp up rather than the loss of volumes or cash flow. In fact, the positive below ground results that I mentioned earlier support our expectation of strong performance once the above ground issue is addressed and we're at plateau production. Thirdly, and this is to re-emphasize a point I also made earlier, Blue Nord's approach to its capital structure and distributions, which will see us return a significant portion of Blue Nord's equity value to our shareholders over the next two and a half years, does not change. And with that, I'd like to hand over to Marianne to run through the operations section. Thank you.

Thank you, Jo. Good morning, all. In my presentation today, I'll focus on Tyra and give you the information that we have available on the IP transformer incident, which is what is holding us back from ramping up the export from Tyra. I will start with the production performance and I'm pleased to announce that we have another quarter where we exceeded our guidance. 2024 is the year where BlueNor will double our production rate. With Tyra ramping up to full production and BlueNor will reach a daily rate of more than 50,000 barrels of oil equivalents per day. Q1 production was very strong and we delivered an average rate of 23,500, which was just above our guidance of 22 to 23,000 barrels of oil equivalents per day. We had a continued benefit from well optimisation work on Dan, and we have now started optimisation work on Halfdan. The highlight of the quarter was the Halfdan Tor Nor'East infill well, HBA 27B, on stream just at the end of the quarter, which delivered production as expected and 3,000 barrels net to Blue Nord, and we saw a significant hike in production overnight. which contributed to our exit rate in Q1 of 27,000 barrels of oil per day. What also contributed to the positive result for Q1 was a delay of some maintenance and associated shutdown on GORM. However, this means a few days of GORM shutdown in April, so a deferment of losses from Q1 to Q2. We have also announced our April production at 25.5, where underlying performance is strong, with good performance from HBA 27 continuing. Our guidance for the base assets is unchanged with a range between 23 and 25 for the remainder of the year. Second quarter, we are slightly higher due to the production boost from the HBA 27b level. Drilling operations on the first Halfdan infill well were completed in January and after stimulating the well we started production on the 26th of March with initial production rates spot on what we had expected. Currently we're doing critical P&A work on Dan with the shelf drilling winner. The next well in the infill drilling sequence is the Harald East Middle Jurassic Well. This is a well with a large subsurface uncertainty and will give a significant gas production contribution from the Harald field, producing into Tyra if successful. The infill well sequence is dynamic and we will always use all technical information available, whether it's production data, reservoir pressure data, 4D seismic, to ensure we pick the highest value targets to invest in. This means that FID and on-stream dates will be shifted around, but it also means that we maximize the production from our investment in wells, and our infill drilling portfolio has an expected unit development cost below $13 per barrel. In addition to the shelf drilling winner, we also use the Noble Reacher for well optimization. And we are now working on Halvdan, where we have planned to do 28 different well interventions, which will contribute with additional production this year. I will now move on to Tyra. And again, on the 21st of March we restarted Tyra and we exported Tyra gas from Harald to Nybro in Denmark on the 10th of April. The Tyra redevelopment is of strategic importance and will provide necessary gas to Denmark and Europe and will transform BlueNor 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 Tyra facility will reduce with 30% compared with the old facilities. The increased production from Tyra also means that we will reduce our unit operating cost to $13 per barrel. I think it's worth taking a look back to see what we have achieved so far. The Tyra redevelopment project has been ongoing for more than 10 years. In 2017, the DUC partners made a decision to invest in continued production from Tyra. In 2019, production was temporarily stopped and the old Tyra facilities were removed in 2020. In 2021, we started the huge offshore construction phase of Tyra 2, and again in March, we restarted Tyra. On the 16th of April, while ramping up export of Hyral gas, we encountered an incident where the transformer that is providing power for the intermediate pressure or IP compressor short circuited and this transformer will need to be replaced. I will give a bit of detail on how gas is processed on a Tyra so you can also appreciate the importance of this IP compressor. The first stage gas compression is referred to as the low pressure or LP and takes gas from the separator where gas and liquids have been separated. with inlet pressure of 12 bar and compress this to 30 bar. The second stage is referred to as the IP or intermediate pressure compressor, where gas is entering at 30 bar and is then compressed to 65 bar. All gas on Tyra is passing through the IP compressor. And it is also the IP compressor that supplies gas for fuel consumption as well as lift gas to boost the production from the low pressure wells. The third stage of the gas processing is the high pressure stage. We refer to this as the export stage, where we take gas at 65 bars from the IP compressor and pressure it up to 138 bar, so we can reach the terminals in Denmark or Netherlands. So the operator, they are working very hard on several fronts to manage this incident with the IP transformer. One team is working on the investigation and how to reinstate the IP transformer. A second team is working on developing solutions to still export volumes from Tyra in the interim period. They are making good progress and we expect to resume export in July. In parallel with this, the operator is working full speed ahead on completing the hookup and commissioning. The reinstatement of wells and reinstatement of satellite fields so that we are ready for a quick ramp up when we start production in July. We're also optimistic about initial production rates from the wells, as observed reservoir pressure during the reinstatement is higher than what we assumed when we developed our production forecasts. So I'll now move on to our outlook for Tyra for the rest of the year. As I said, the operator Total Energies is making very good progress in understanding the causes of the incident with the ITP transformer. They have to do some additional verification work before they can close the investigation. The operator have mapped out the way forward both to replace the IP transformer which we need to reach plateau production and to resume gas production and export from Tyra through an interim solution. The Tyra production for the rest of the year will be characterized by a ramp up during Q3 while Q4 is getting close to full capacity and similar contribution from Tyra as the base assets. The 2024 exit rate will be above 50,000 barrels of oil per day, more than double of what we started the year with. I will now hand over to Cathrine, Chief Corporate Officer, and she will talk about the long-term outlook for Bluenor.

Thank you, Marianne, and good morning to everyone. I will not spend too much time on this slide as our key objective 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. One focus area for us is CCS through our ownership in CarbonCuts. In CarbonCuts, we're assessing what we think can be a fantastic onshore storage project called Project Ruby. And in the beginning of the quarter, CarbonCuts submitted a license application to the Danish Energy Agency, the DEA, where the vision is to store about 1 million tonnes of CO2 per year from 2030 in the area 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 for opportunities for several cooperations with countries located around the Baltic Sea. The award of the storage license from the DEA is expected later 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. In Blue Nord, the long-term plan, we have both infill wells and development projects. This plan is reflective of what is the objective of the partnership to maximize economic recovery from the DUC. The infill wells are expected to increase gas production over the next years. And the first well, which was spotted last year, we saw first production from late March with an initial rate of 3,000 barrels per day, which was in line with our expectations. The next one up is the Hem J well, which will be spread during this summer. And given this is an exploration well, the potential volumes are not included in our production estimates. It's also worth mentioning that the infill opportunities, which have been unlocked by Tyra, where we have six wells under maturation. The three development projects on the right hand side will ensure that a high level of production is sustained over time and beyond the end of this decade. These are cash generative projects, which will come with very 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 a very good way of utilizing the new facility on Tyra and also backfill the process capacity. The long-term plan also shows how we intend to mitigate decline and maintain significant production levels following the Tyre Plateau later this year. We expect to exit 2024 above 50,000 barrels per day and for the next year above 55,000 barrels per day. And from 2025 to 2030, we expect to produce about 50,000 barrels per day plus minus. This is based on our base production, optimization work and our in-plan projects. In addition, we also see an opportunity to surpass this by adding identified projects that are currently out of plan, but which we will progress if deemed attractive from an economic perspective. And as a closing key takeaway, This long-term plan is going to support a dividend stream to our shareholders such that it is not only kept high for a few years as a result of Tyra, but it also allows us to sustain a robust capacity longer term. And with that, I say thank you for listening and we'll pass over the word to our CFO, Jacqueline, who will take you through our financials. Thank you, Kathleen.