Aker Bp Asa Ord

Good morning, everyone. With this intro from the successful installation and startup of the Tøvering Field, we welcome you to AKBP's third quarter in 2024. It will, as usual, be given by our CFO, David Tønne, and myself, followed by a Q&A session. The turbine project received government approval in June last year with an original plan to commence production in Q1 2025. However, through effective planning and execution together and alongside our alliance partners, we managed to start production in early September, five months ahead of schedule and below budget. This is a prime example of value creation here at AKBP. During the quarter, our operational performance has been excellent, marked by high production efficiency and effective execution despite maintenance activities at several assets. We have consistently demonstrated strong cost discipline and we maintain our position as a global industry leader in low emissions. I am also pleased to report that our projects are progressing well. Fabrication, installation and assembly activities are underway at multiple sites in Norway and abroad. Additionally, we have successfully drilled the first HTHP well at Thunris. As we continue to execute according to plan, the total CAPEX estimate for our project portfolio remains unchanged. We maintain a strong financial position supported by high cash flow from operation. This enables us to invest in our profitable projects while also providing attractive dividends to our shareholders. We are also continuously optimizing our capital structure. And in early October, we raised $1.5 billion in the bond market, securing both 10 and 30 years maturities at excellent terms. Now, let's dive into the details, starting with production. We produced 450,000 barrels per day in Q3, slightly above our own expectations. The production was down from the previous quarter due to planned maintenance which affected Skarv, Grieg-Årsten and Alvheim, reducing production efficiency across the portfolio to 88%, down from 95% last quarter. At Alvheim, the effect of maintenance was partially offset by the early startup of Tørving, which came on stream in September. Johan Sverdrup, which I will discuss shortly, delivered stable production, while Valhall saw an increase driven by approximately 10% improvement in production efficiency. Overall, our year-to-date production performance has exceeded our initial expectations. And given the strong performance and the outlook for the remainder of the year, we now anticipate that the full year production will land in the upper end of the previous guidance range of 420,000 to 540,000 barrels oil equivalents per day. As a result, we have updated our full year production forecast to 430,000 to 440,000 barrels per day. Now let's turn to Johan Sverdrup, which accounted for over half of our production in Q3. This giant field with nearly 3 billion barrels in initial reserves last year increased its gross oil capacity to 755,000 barrels per day. Including gas production, the field has a total capacity of nearly 800,000 barrels of oil equivalents per day. AnarchaBP holds a 31.6% stake in this exceptional asset, which is operated by Equinor in an excellent way. The third quarter production continued at elevated level, contributing 237,000 barrels of oil equivalents per day to AKBP. Operational performance at Johan Sverdrup has been outstanding, marked by consistently high production efficiency, exceptionally low production costs, and some of the lowest emissions intensity in the industry. This year our focus has been on optimising water management while adding new wells, which have successfully extended the production plateau, now expected to continue well into next year. And next year, we plan to drill additional laterals from existing wellbores to increase the reservoir exposure and mitigate water production. We are also approaching concept selection for phase three, which will involve subsea wells tied back to the Johan Svadrup Field Centre with production targeted from late 2027. Johan Svadrup is undoubtedly a remarkable asset and will remain a substantial contributor to AKBP's production for many years to come. At Akabipi, we believe that maintaining low cost is essential to securing a competitive edge in the oil and gas industry. And we work systematically to achieve this and I'm very pleased with both our efforts and the position we have established. For the third quarter, production costs per barrel averaged $6.6, with a marginal increase from Q2 primarily driven by maintenance activities. Our performance over the first nine months of the year have exceeded our expectations, enabling us to lower our full-year cost guidance to $6.5 per barrel, down from $7 per barrel. In comparison to relevant industry peers, RKBP's production costs remain highly competitive. And as shown in the chart to the right, data from Woodvac confirms that RKBP has the lowest production cost among a group of 20 comparable companies. By driving cost efficiency and consistently delivering on our target, Akka BP has not only strengthened its resilience, but also positioned itself to deliver enhanced value for the stakeholders in any market environment. Akka BP has also established itself as a leader in low greenhouse gas emissions. In the third quarter, our greenhouse gas emissions averaged 2.4 kilograms of CO2 equivalents per barrel, a marked improvement over the recent years. This progress is driven by enhanced energy efficiency and an increased share of production from fields powered from shore. The Q3 figure was positively impacted by changed production mix related to maintenance activities in the quarter. This strong performance cements our standing as a global industry leader in greenhouse gas emissions intensity. Among approximately 300 of the largest E&P companies worldwide, E&P consistently ranks among the best in emissions intensity, as illustrated in the chart. This leadership position gives us a solid foundation for further emission reductions, and we are committed to continually reducing emissions from our operations. This is a core part of our strategy to achieve net zero emissions across our operations by 2030. Beyond that point, we plan to offset the remaining emissions for native-based carbon capture solutions. You've just had a chance to see some of the recent project activities across our company. Instead of only describing our ongoing initiatives, I thought it would be more insightful for you to view the different activities and progress we're making firsthand. And let me assure you, we are well underway in executing our extensive project portfolio, developing close to 800 million barrels of new reserves. This new ambitious program includes major developments like Yggdrasil and the Val Alfandres, along with several tieback projects that strengthen our existing hubs at Alfheim, Griegåsen and Skarp. And notably, four of these tiebacks are already in production. Altogether, these projects will expand our production to over 500,000 barrels of oil equivalent per day in 2028. The financial metrics are equally compelling, with an average breakeven oil price of $35 to $40 per barrel on an NPV 10 basis and an IRR of roughly 25% and a swift one to two year payback at $65 oil price. Our projects are advancing on schedule with a strong focus on fabrication, installation and assembly activities. But drilling operations are also progressing well, particularly at the Fendres field in the Valhall area. This high-pressure, high-temperature reservoir presents more complex challenges than usual. However, we successfully batch drilled the upper sections of all four wells in July. In September, we achieved a key milestone by drilling through the reservoir in the first well, and I'm pleased to report that the reservoir is meeting our expectations. We are now making good progress on drilling the second well, and this is exceptional work by the team in challenging conditions. As I mentioned earlier, production at the Tørving field in Alvemeria began in early September, five months ahead of schedule and below budget. Again, a remarkable achievement by our team and alliance partners. Tørving is expected to contribute around 8,000 barrels per day net to AKBP in 2025. In conclusion, we remain firmly on track to deliver our project on time, on cost and with the right quality. Now, in addition to our ongoing project, we remain firmly focused on long-term growth. Over the past years, we have prioritized strengthening our capabilities in operations, drilling, technology and project execution, all backed by robust alliances with our partners across the value chain. These core competencies not only support the successful delivery of our current project, but will also serve as a competitive advantage as we unlock new growth opportunities and drive substantial value creation on the NCS over the next decade. Our strategy for expanding our resource base rests on three main pillars. Increasing recovery from existing fields, acquiring resources and successful exploration. And we are actively pursuing each of these paths. First, regarding increased recovery, we have established a strong track record with assets like Alfheim, Skarv and Valhall. By leveraging advanced technology, sophisticated reservoir management and continuous improvement in drilling and operations, we have significantly expanded our resource base, consistently exceeding initial expectations. This approach remains a key value driver for RKBP as we continue to mature the substantial opportunities in our 2C and 3P resource base. Second, M&A has been instrumental in shaping AKBP into the company it is today. Transformative deals with Marathon, BP and London have each played a pivotal role in our growth and we continue to view M&A as an essential strategic tool for us in the future. And thirdly, exploration is central to our future growth. Very few activities can compete with the value creation potential of successful explorations. And we are convinced that the NCS still holds significant untapped oil and gas resources. We have identified approximately one billion barrels of oil equivalent in net risk exploration potential near existing infrastructure. Our goal is to ensure that new discoveries become a profitable and foundational pillar for Akka BP's future, and I'm confident in our ability to achieve it. And, as always, our exploration strategy is pretty straightforward. It's about securing access to high-quality acreage. We primarily achieve this through licensing grant, where we are consistently ranked second in terms of number of licenses awarded. Additionally, we are actively engaged in the secondary market, optimizing our portfolio by trading licenses in and out of the portfolio. In addition, we are continually refining our skills, improving processes, advancing technology and advancing competency. These efforts are aimed at increasing efficiency and success rates. One notable innovation is our AI-driven exploration robot, which has significantly enhanced our capabilities of analyzing complex data, inclusive of seismic data. We are also advancing our use of ocean bottom node seismic technology, which we have successfully used for SRO monitoring in produced fields. By collaborating with suppliers to make this technology more cost-effective, we aim to extend its application to exploration, enabling sharper subsurface imaging to identify exploration prospects more quickly and more cost-effectively. And lastly, we prioritize which wells to drill. We have set an annual target of drilling 10 to 15 wells with a roughly 80-20 split between near field and standalone opportunities. By continually improving our exploration skills and driving technology improvements, we see a potential for significant value creation from exploration on NCS for many years to come. We here highlight our planned exploration activities from now through mid next year, alongside some context around the programme structure. One primary focus in the recent years has been the SCARV area. The SCARV FPSO is a state-of-the-art production facility, and our goal is to maximize its utilization by continually adding new tiebacks to the field. This began with the Alfvill development a few years ago, followed by the ongoing SCARV satellite project, which incorporates several smaller discoveries. In September, we completed an exploration well in the area named Storjo, which yielded a discovery with a potential of up to 50 million barrels. We have three additional wells planned here in the coming quarters, alongside the maturation of new targets. We are also intensifying our activity in the Northern North Sea, an area with promising prospectivity confirmed by recent discoveries. We have expanded our exposure through licensing rounds and farm-ins with one well ongoing and five well scheduled with a considerable follow-up potential. And early next year, we are set to drill back-to-back two of the most exciting wells on the NCS in the recent years, Bounty and Rondeslottet. Bounty was originally on our 2024 plan, but has moved to Q1 2025 due to the rig schedule. This well will revisit an earlier discovery classified as non-commercial, testing a significant uptick potential from the original well. Rondeslottet is, interestingly enough, also based on an older discovery and aims to assess whether reservoir quality improves as you move towards the crest of the structure. This well was initially planned for 2023, but operations had to be halted before reaching the target. And on the Yggdrasil area, we have four wells lined up, three of which will build on last year's successful East Frigg drilling. Altogether, we actually see a substantial upside potential of several hundred million barrels in this area.

Good morning. Aaker BP's strong operational performance in the third quarter is also reflected in our financials. In the third quarter, we deliver a record high cash flow from operations of $2.8 billion, underscoring our ability to generate significant returns for our shareholders. We are also pleased to report that our development program continues at full speed with investments in line with plan. As a result, we generated a free cash flow of $2.15 per share in the quarter, which can be compared to our quarterly dividend of $0.60 per share, and represent a free cash flow yield of around 10% for the quarter alone at the current share price. Moreover, we have further strengthened our financial position with low leverage and enhanced flexibility, ending the quarter with $4.1 billion in cash on account. In October, we also capitalized on a favorable market environment by issuing new 10 and 30 year bonds while repurchasing shorter maturities. This has further reinforced our liquidity position and extended our average debt maturity by three years. And finally, after another quarter of strong operational results, we not only raise our full year production guidance to 430 to 440,000 barrels of oil equivalents per day, but we also lower our OPEX estimate to $6.5 per barrel, reinforcing our position as an industry leader in low cost production. Now, let's look into the key drivers behind the performance in the quarter. Starting with total income, sales volumes were lower quarter on quarter due to two key factors. reduced production caused by planned maintenance at the gas export terminals at Sage and Korslø, and an underlift, which temporarily impacted sales. It's important to note that over- and underlift can fluctuate between periods, but these effects balance out over time. Realized liquid prices experienced a slight decline of 3%, driven by a 5% drop in Brent oil prices in the quarter, somewhat mitigated by stronger NGL prices and strong trading performance. For gas, NBP and TTF day ahead prices rose by an average of 11%. However, gas revenues decreased as we in the quarter had reduced production at Skarve and injected more gas at Grieg, Alvheim and Sverdrup to maintain oil production during the mentioned planned shutdowns of the gas export facilities. Overall, total income for the quarter amounted to $2.9 billion. Moving on to the full income statement, production cost for the volume sold dropped to $186 million, though this figure is impacted by the underlift. On a normalized basis, production cost for the barrel produced amounted to $250 million, or $6.6 per barrel. I see this as particularly strong in a quarter with reduced production due to maintenance. Expiration expenses amounted to 40 million, down from 108 in the previous quarter. Underlying activity remained relatively stable, and the reduction reflects lower drywall costs in the quarter as the studio discovery has been capitalized. In total, we achieved an EBITDA of $2.6 billion, which corresponds to a margin of 91%. Depreciation increased to 614 million, equating to $16 per barrel, up from $14.5 per barrel in the previous quarter. The increase was related to ULA, where reduced discount rates led to increased valuation of the abandonment provisions, which in ULA's case are directly charged to depreciation. Impairment totalled $304 million and was related to technical goodwill on Grieg Aasen, Johan Sverdrup and Valhalla. After tax, our net profit ended at $173 million for the quarter. Note that as in previous quarters with impairment of technical goodwill, we incurred an artificially high accounting tax rate since the impairment of technical goodwill is not tax deductible. And remember, technical goodwill is an accounting mechanism that allocates goodwill to the asset level in M&A transactions, bridging the gap between the fair value and the tax value of assets. Impairment of technical goodwill is non-cash, and we expect to fully impair all technical goodwill over the field lifetimes. For those less familiar with this topic, we've included an illustration in the presentation materials and a video on our webpage, which we encourage you to review. Moving on to cash flows. Operating cash flow before tax and working capital was $2.6 billion in the quarter. Net taxes paid amounted to $424 million, significantly lower than in the previous quarter. In addition to only paying one tax installment in the third quarter, we also now see the benefits of our increased investment levels in 2024 in conjunction with the tax regime in Norway. Additionally, we saw a decrease in working capital, mainly due to the lower trade receivables. This is, among other things, driven by the change from overlift to underlift in the quarter. In total, this resulted in a record high cash flow from operations of $2.8 billion. Total investments were stable quarter on quarter at $1.4 billion, resulting in free cash flow of almost $1.4 billion as well, or $2.15 per share. Net cash flow ended at $864 million, representing a 30% increase in our cash position to $4.1 billion. Note that our recent bond issuance was settled in October and will hence appear in the Q4 cash flow statement and balance sheet. Now move on to the expected cash tax payments for the next three quarters. And as usual, we have included sensitivities regarding upcoming tax payments. Note that the range is narrow as we have already completed over nine months of the fiscal year. Hence, the oil price sensitivity applies to Q4 only. In October, we have made one additional voluntary tax payment, as you can see on the chart. And this is done to smooth out the tax payments between the second half of 2024 and the first half of 2025, which is basically a pure cash management decision to optimize interest costs. And for those of you who want to do your own estimates, I can recommend the Excel based tax model, which is available on our investor web pages. Regarding our balance sheet, I'll focus on the key items related to our financial position. And thanks to the strong cash flow, our net debt decreased to $2.5 billion with total bond debt standing at $6.7 billion. One of the parameters we use to monitor our financial strength is the leverage ratio, which is calculated as net debt divided by the last 12 months EBITDAX. And with an EBITDAX of nearly $12 billion, our leverage ratio stands at 0.2. And this is well within our internal target to stay below 1.5, providing us with substantial headroom and a lot of financial flexibility. Finally, our liquidity at the end of Q3 is exceptionally strong. In addition to our 4.1 billion cash position, our undrawn bank facilities bring our total available liquidity to $7.5 billion. As already mentioned, the Q3 accounts do not reflect the latest transactions we have done in the bond market. But I still want to provide some more details on this today. In late September, we launched a $1.5 billion bond offering split evenly between 10 year and 30 year maturities. We also offered to repurchase bonds maturing in 2025 and 2026 with a combined take up of close to 700 million. These transactions were completed in early October and will be reflected in our next financial report. And there are several reasons why I believe these transactions are worth highlighting. First, they represent a further improvement in our capital structure, increasing liquidity and aligning our maturities with our business profile. We now have less than $300 million in debt maturing before 2028. The average maturity of outstanding debt has been extended from six to nine years and hold an average coupon rate of around 4%. Second, we are very pleased with the investor demand and thereby also the pricing of the bonds. In terms of credit spreads, this was the best result in Aker BP's history, demonstrating the value of having a high quality asset portfolio, prudent financial policies and stable investment grade credit ratings. And third, issuing a 30-year bond is a milestone for a Norwegian pure-play E&P company. It shows that the US bond market, with its high-quality institutional investors, shares our confidence in the long-term demand for oil and gas, the high attractiveness of the Norwegian continental shelf, and confidence in Akro BP's long-term strategy and value creation. And talking about value creation, this chart is one of my favorites. It encapsulates Aaker BP's value creation plan from 2023 to 2028. And the left bar represents the accumulated post-tax cash flow from our low-cost operations over this period, shown across various oil price scenarios. The next bar illustrates our uses of cash. with investments, including expiration and abandonment costs, depicted in black on an after-tax basis, covered at an oil price of less than $40 over the period. The pink bar then shows the cash flow available for debt service and dividends. An Aker BP's distribution policy is founded on resilience, and it reflects our financial capacity through the cycle. The ambition to increase the distribution by at least five percent annually through the current investment cycle remains firm. And with strong cash flow from low cost operations and a solid financial position, we are confident in our ability to deliver on this ambition. Now, before concluding the financial section, I will end by summarizing the updates to our full year guidance. 2024 has so far been a year with excellent operational performance across both our operated assets and Johan Sverdrup. Now, with just two months remaining of the year, we are making some adjustments to our guidance. Production in the first nine months of the year averaged 436,000 barrels per day, well within the previous range of 420 to 440. With the maintenance season behind us in the third quarter, production is expected to recover in the fourth quarter, and we raise the lower end of our guidance to 430 while maintaining the upper end at 440. Production costs have also benefited from the strong operational performance. In the first nine months, we have achieved a cost of $6.3 per barrel, leading us to lower the full year guidance to $6.5 per barrel, down from $7. Investments, expiration and abandonment spend remains in line with our original expectations and we keep the guidance unchanged. Now that concludes the financial review for what has been another strong quarter for Aker BP, marked by record high operating cash flow, improved financial flexibility and positive adjustments to our full year guidance metrics.

Thank you, David. And before we begin the Q&A sessions, I'd like to round off by summarizing our performance within the context of the ARCA BP strategy. We continue to generate value for operational excellence, strategic investment in profitable growth and disciplined financial management. We are executing on our growth project as planned, and we have lifted the bar for full year guidance parameters. RKBP remains fully committed to delivering value to our shareholders through consistent dividends and long-term growth. We will now take a short pause before opening the Q&A session. And to participate, please use the Teams link provided on the webpage. If you prefer to listen only, please stay tuned and we will resume in approximately one minute. okay everybody welcome back here in studio david i have uh got myself a cup of coffee and managed to find a bit of paper so we could take notes of your excellent questions and i'm assuming kettle that there are quite a lot of questions so let's just keep going that's right and the first question today comes from matt smith from bank of america matt please go ahead