Aker Bp Asa Ord

Good morning and welcome to this presentation of RKBP's first quarter in 2024. The presentation will be given by our CFO, David Turner, and myself. And after the presentation, there will be, as usual, a Q&A session. Let me start by briefly touching upon the highlights. RKBP delivered high operational performance in the first quarter. Our production of 448,000 barrels of oil equivalents per day was in line with our plans. Furthermore, we continue to demonstrate cost discipline and we maintain our position as a global industry leader within low emissions. I am pleased to report that our projects are on track. Fabrication and construction activities are underway at multiple sites in Norway and abroad, while CAPEX estimates remain stable. And some projects are getting close to the finish line. Tyvring is now accelerated into Q4 this year, and Hans started in fact production only three days ago. On the financial side, we maintain a strong financial position supported by robust cash flow from operations. This means that we are well equipped to invest in our profitable projects while simultaneously offering attractive dividends. The guidance for 2024 that we presented in February remains unchanged. AKBP delivered a high production performance this quarter with marginally higher volumes than the previous quarter. The main positive driver was Alfheim, where production increased by 24,000 barrels per day, recovering from a weak Q4 when we had a long unplanned shutdown, and also helped by contributions from the new wells at Cobreist and Gekko. At Johan Sverdrup, the P2 platform was shut in for two weeks in February for maintenance, which resulted in around 8,000 barrels per day lower production compared to previous quarter. At Kregåsen, production also dropped by a similar volume, mainly due to natural incline and in line with our expectations. In summary, the Q1 production was in line with our estimates, and we maintain our 2024 guidance unchanged at 410,000 to 440,000 barrels of oil equivalents per day. We also delivered strong performance on the cost side. Our production cost ended at $6.1 per barrel, well within our full year guidance of $7. The Q1 numbers was positively impacted by high volume, limited maintenance activity and currency effects, but still a very strong start of the year. When comparing this number to relevant industry peers, Akka BP holds a strong competitive position. As illustrated here based on data from Woodback, Akabipi boasts a lower production cost amongst a group of 20 comparable companies. Akabipi's greenhouse gas emissions were three kilograms of CO2 equivalents per barrel in the first quarter, representing a significant improvement over just a few years. This improvement is driven by enhanced energy efficiency and an increased share of production coming from fields powered from shore. This strong performance solidifies our position as a global industry leader in greenhouse gas emissions intensity, consistently demonstrated in the recent quarters. When benchmarked against the approximately 300 largest upstream oil and gas companies worldwide, RKBP stands out as one of the very best in emissions intensity, as illustrated in this chart. This position provides us with an excellent starting point for further reductions, and we are consistently working towards reducing our emissions from our operation, which is a crucial component of our strategy to achieve net zero emissions across our operations by 2030. Beyond that point, we will offset our remaining emissions through native-based carbon capture. Keeping people safe is a fundamental goal and a top priority for AKBP. And as I've said on numerous occasions, we firmly believe that high safety and operational excellence are two sides of the same coin. For the last 12 months, the total recordable injury frequency was 2.5, while the serious incident frequency was 0.4, both in line with previous quarters. The SIF was impacted by one serious incident in the quarter as the gas compressor systems on the Alfheim SPSO experienced pressure above the design level. Fortunately, the incident did not result in any harm to personnel or any hydrocarbon leakage. This video shows the loadout of three templates from Gdansk, Poland by our alliance partner One Subsea. The next stop is the offshore base in Sandersjön in northern parts of Norway, and the final destination is SKAV, specifically the SKAV satellites project. We are well underway with the development of a large portfolio of NCS projects. And alongside our Alliance partners, we eagerly anticipate delivering the significant project which will unlock approximately 800 million barrels of oil equivalents, boosting Al-Khabibi's future production to over 500,000 barrels per day. These projects demonstrate robust economics, maintaining profitability at oil prices as low as $35 to $40 per barrel and a speedy payback period of one to two years at an oil price level of $65 per barrel. The program consists of three main parts. First is the Yggdrasil project, previously known as Norka, which includes the Huginn, Fulla and Muninn license groups. Yggdrasil is estimated to contain around 450 million barrels, with investments totaling close to $11 billion net pre-tax to AKBP. The second largest project is Valhalla PVP and Fenris, with a company investing between 5.5 and 6 billion dollars net pre-tax to redevelop the Valhalla field and develop the Fenris field as a 50 kilometer tie back to Valhalla. The startup for both Yggdrasil and Valhalla Fenris is scheduled for 2027. The third category comprises several satellite projects being developed near the operated hubs of Alfheim, Skrigorsen and Skav. In the current program, there are nine different tie-in projects, three of which are already in production. And in total, this project will add approximately 170 million barrels to our reserve base with a pre-tax investment of around $4 billion net to AKBP. In total, between 2023 and 2028, these developments will require investments of approximately $20 billion, corresponding to roughly $3 billion of the tax. This CapEx estimate has remained unchanged since we submitted the PDOs to the Norwegian authorities a little more than a year ago. Here you can actually see the ship carrying the three templates bound for Skav arriving at Sandersjön Yard just eight days after departing from Gdansk. The entire process, from loadout to transportation and unloading, proceeded smoothly thanks to thorough planning and the diligent efforts of everyone involved. This serves as an example of the Alliance's ability to work effectively as one team. The activity level in all our projects is really gaining momentum, and as we previously communicated, key milestones have been achieved and contracts have been placed. Fabrication activities are now underway at most sites where the overall COPX estimates remain stable. Our focus is gradually shifting from engineering and procurement to ensuring productivity in construction. we are confidently on track to deliver these projects on time, on cost, and with the required quality. As one example, the Tivering tie-in project at Alfheim is progressing well and is ahead of schedule. The three-well drilling campaign for Tivering is currently ongoing and is expected to be completed this summer. The expected production start originally planned for the first quarter of 2025 has now been accelerated to the fourth quarter of 2024. And this week, we celebrate the start of production from Hans. In under two and a half years since the final investment decision, Hans began production on the 20th of April. Hans is developed as a subsidiary back to the Evorosum platform, approximately 15 kilometers to the south. Gross reserves are around 20 million barrels of oil equivalent, and gross capex came in approximately at $500 million. But in fact, Hans is a unique development in two ways. Firstly, it has been developed reusing subsidy production systems from the Jette field. This marks the first instance of production equipment being repurposed in a new field development on the NCS. This approach is both cost efficient and environmentally friendly. Additionally, production from Hans will be supported by a cross-flow well for water injection from an adjacent reservoir. This results in substantially reduction of power consumption, less use of chemicals and less seabed equipment. This innovative solution is more cost-efficient and has a smaller environmental footprint than traditional water injection systems. This fits perfectly with Akabibi's continuous quest for improvement, where the aim is to produce with low cost and low emissions. Now, a quick look at our exploration activities for the year. We have started the year at full speed and have already made several discoveries and successful appraisals. Of the four wells drilled so far, all have resulted in small but promising discoveries close to existing infrastructure. Currently we are drilling an appraisal well at Frigg Gamma Delta in the Yggdrasil area. This is NEA's last year successful well at East Frigg and will appraise the structure providing information that will be essential to optimizing drilling plans for the field. The rest of the year is also set to be busy, with the addition of two new prospects to the program, the Bounty and the E-prospect. We are having several exciting wells to watch in all major regions of the NCS. However, as always, the timing of each well is indicative and subject to rig arrival. So it is possible that some of these wells might be postponed until next year.

Thank you, Kalle, and good morning to all of you. Aker BP continued to deliver strong operational performance in the first quarter, with high production and low cost, in a market environment where the average liquids price remained at a relatively high level. In combination, this led to another quarter of strong underlying financial results. Although production per day increased, sold volumes were down as we went from an over lift in the last quarter of 2023 to an under lift in the first quarter of 2024. Together with an increase in working capital, this impacted the free cash flow generation in the quarter. Our financial position continues to remain very strong with high level of available liquidity, low leverage and low net debt. Overall, the performance in the first quarter was in line with our expectations and our full year guidance remains unchanged. Now let's have a closer look at the main drivers behind the financial results, starting with revenues. Our net oil and gas production per day increased slightly in the first quarter. However, as mentioned, we saw a reduction in sold volumes due to underlift in the quarter. Over time, such lifting differences will even out, but for the first quarter isolated, this gave a temporary negative effect on the top line. Average Brent prices were stable at $83 per barrel, only $1 lower than in the fourth quarter, while natural gas prices dropped 31% due to a weak European spot market. As gas only makes up around 15% of our production, the average realized hydrocarbon price only fell by 5%. The combination of underlift and slightly lower prices led to a reduction in revenues down to 3.1 billion for the quarter. Moving on to the other items of the income statement. In terms of cost, we continued the strong trend from the previous quarters with operating cost per barrel of only $6.1. This is the combination of several factors, including high production efficiency on our assets, a weak Norwegian kronor, and continued cost discipline and some phasing of activity. Expiration expenses remained stable at 68 million, but in total we spent 104 million on exploration-related activities. The difference represents the net change in capitalized exploration, mainly driven by the discovery wells at Amethyst and Ringhorne North. Depreciation was marginally down quarter on quarter, both in absolute terms and per unit, due to normal variation in the production mix. Net financial expenses amounted to 104 million, We saw a weakening of the Norwegian kroner in the quarter and currency gains mainly related to reevaluation of tax payables, more than offset by an opposite change in the fair value of derivatives used for FX hedging. These derivatives are used both for neutralizing the FX risk on tax payables once revenue is realized, but also to hedge part of the Norwegian kroner exposure of our capex programs in the years ahead. With no impairments in the quarter, the tax rate was back at the more normal level of 75%. This is below the statutory tax rate of 78% due to the additional tax deductions for capex under the temporary fiscal regime. The net profit for the quarter then ended at $531 million. Now let's have a look at the movements in cash flows. Cashflow from operations totaled 1.5 billion in the quarter. And this is in line with the previous quarter as lower revenues and the increase in working capital were offset by only having to pay one tax installment in the first quarter versus two in the fourth quarter. The build in working capital of almost 500 million is mainly driven by receivables. In the fourth quarter, we received early payments for some December cargoes and we had a similar drop in working capital. But in the first quarter, we had the opposite occurring. The current level of working capital is now in line with the three year average. Cash to investments increased to 1.1 billion in line with the ramp up of construction activity across our development projects. And overall, this gives a free cash flow of $339 million for the quarter. The primary contributor in the cash flow from financing was the dividend, which increased from 55 cents in the fourth quarter to 60 cents per share in the first quarter. As a result, this gave a net change in cash of $150 million, and we ended the quarter with a cash position of $3.2 billion. When we add the available bank facilities to our cash position of 3.2 billion, total liquidity available at the end of the first quarter was 6.6 billion. Our net interest-bearing debt was 2.6 billion, and our leverage ratio remained stable at 0.2 times net debt to EBITDAX for seven quarters in a row. Maintaining a strong balance sheet and financial flexibility is a top financial priority for Aker BP, and we continuously work to optimize the capital structure. This is essential to ensure that we can execute our field development projects and at the same time pay an attractive dividend through the investment period. And while we're on the topic, let me briefly revisit our dividend policy. When establishing the dividend level, a key principle for Aker BP is that the dividend should be resilient and reflect the financial capacity through the cycle, considering our financial outlook and the credit profile. Our ambition of growing the dividend by at least 5% per year over the coming investment cycle remains firm. For 2024, the plan is to pay a total dividend of $2.4 per share, divided into four quarterly payments of 60 cents. The next dividend will be paid on the 8th of May. Now, let's round off with a quick status on our outlook for the rest of this year. In short, as mentioned, we reiterate our full year guidance on all items for 2024, as the development so far this year has been as expected, but let me add some color to the different items. Production for the first quarter of 448,000 barrels of oil equivalents per day was above the top end of the guidance range for the full year, but in line with plan. We do expect to see some natural decline on some fields through the year, and we will also have planned maintenance on some installations in the second half of 2024. Hence, we still think that the range of 410 to 440,000 barrels of oil equivalents per day represents a fair estimate. On OPEX, we've also had a good start in 2024 with $6.1 per barrel in the first quarter. This is impacted by strong operations together with currency tailwind and some phasing of activity. On CAPEX, we are still gaining momentum as construction activities continue to ramp up. We spent $1 billion in the first quarter and we still expect to end up around $5 billion for the full year. On expiration, there are some minor movements in the planned activity, with the bounty well entering the rig schedule late in the year. But we see this as having limited impact on total spend, and we maintain the guidance at around 500 million. On abandonment, the short version is that we are on plan, and we maintain the guidance at around 250 million. So to sum up, the message is hopefully clear. We progressed according to plan in the first quarter and make no changes to the full year guidance. And that concludes our presentation for the first quarter performance. And as normal, we will now take a short break before opening the Q&A session. If you wish to participate, please join via the Teams link provided on our webpage. And if you prefer to listen only, please stay tuned and we will resume shortly.

okay uh welcome back and uh so already announced we are now doing a q a and i hope people is in the team's meeting room and if we are ready guys let's do the first question yes then the first question today comes from uh john olison from abg