Aker Bp Asa Ord

Good morning and welcome to AKBP's first quarter 2025 presentation. As usual, I'll start with a brief update together with our CFO, David Turner, before we open for questions. But first, I want to take a moment to look at the bigger picture. We are operating in an alignment marked by increased uncertainty. Armed conflicts are ongoing and political tensions have created uncertainty around the framework for international trade. This, in turn, is fueling concerns about the global economy and the outlook for energy demand. At the same time, we are seeing significant currency swings and heightened financial market volatility. It is in the midst of this that AKBP remains in a strong position. We have a robust balance sheet with high financial flexibility, industry-leading low operating costs, and we are investing in projects that are highly profitable and resilient to low oil prices. We have secured most of our foreign exchange exposure for the next two to three years at attractive levels, and we are to a very limited degree impacted by the turmoil around tariffs and trade. This puts us in a position to stay focused on what really matters. Running our business efficiently, investing with discipline, and creating long-term value for shareholders, even in uncertain times. In February, we hosted our annual strategy update, where we focused on four key themes. The first were distinct capabilities. including a strong performance culture, digital leadership, and our alliance model, which fosters closer collaboration with our suppliers. In the first quarter, we continue to build on this foundation. A good example is the five-year extension of our Well Intervention Alliance with SLB and Stimwell Services. We are also seeing strong momentum in the rollout of artificial intelligence tools across the organization. The second was a world-class asset portfolio. As we'll show shortly, we have delivered yet another strong quarter, characterized by high efficiency, low cost, and low emissions. The third theme was growth. And as you know, we are progressing a series of field developments that will lift our production to more than 500,000 barrels per day by 2028. And we remain firmly on track. Since the strategy update, we have also made two new discoveries and we have several exciting exploration worlds coming up in the months ahead. And finally, we highlighted our financial framework built on a resilient balance sheet and strong cash flow generation. This gives us the flexibility to continue investing in high return projects while also delivering attractive returns to our shareholders. As I've mentioned earlier, that is especially important in today's uncertain environment. Now let's dive into the details. Production for the quarter reached 441,000 barrels of oil equivalents per day, significantly exceeding our full year guidance of 390 to 420,000 barrels. This performance was largely in line with our expectations for the quarter. A notable contribution this quarter came from Alvheim, particularly from Tørving, which commenced production in September last year. Despite a couple of brief power outages at Johan Sverdrup and some planned downtime at Valhall due to preparations for the PWP drilling campaign, we achieved an outstanding production efficiency of 97% across our portfolio. Looking ahead, we have scheduled maintenance for several fields in the coming quarters. And overall, our current forecast suggests that we will end up within the full year guidance range. Production costs for the quarter were $6.50 per barrel. Slightly higher than last quarter, but well within the full year guidance, around $7 per barrel. This remains a highly competitive level compared to industry pairs and reflects continued strong cost control across our operations. The same applies to our greenhouse gas emissions, where we continue to rank among the companies with the lowest CO2 emissions intensity in the industry. In the first quarter, we saw a slight uptick in intensity, mainly due to high drilling activity and somewhat lower production volumes. That said, we remain firmly committed to our long-term emissions strategy. We are working systematically to eliminate avoidable emissions across the portfolio, and our plan to offset residual emissions from 2030 through nature-based carbon capture remains unchanged. The Johan Svartal field is a key asset in our portfolio, so let me cover this in a bit more detail. The field delivered outstanding performance in the first quarter with high production efficiency, low operating costs, an excellent safety record and minimal emissions. Looking ahead, several activities are underway to unlock even more value. Drilling at the field center will continue with two new wells completed and brought online so far this year, bringing the total number of production wells to 41. A four-well retrofit multilateral campaign is scheduled for this summer. This involves adding new lateral branches to existing wells to boost production without adding new infrastructure. As a result of these efforts, we expect 2025 production to remain close to the levels seen in 2023 and 2024. Beyond 2025, there is more in the pipeline. The Johan Svalbard Phase T project, which includes two new subsidy templates and eight additional wells, is progressing towards a final investment decision this summer. In parallel, we are maturing new infill and exploration targets in the area. Altogether, this supports our ambition to increase the field's recovery factor to 75%, one of the highest in the industry. At the strategy update in February, we presented our plan to sustain production above 500,000 barrels per day beyond 2030 and to pursue further growth. So to briefly recap, the dark blue area represents our current business plan, including production from existing fields, ongoing field developments, and mature non-sanctioned projects, such as Eastfreg and Johan Svaderl Phase 3, along with regular IOR activities. This outlook supports our target of around 525,000 barrels of production per day by 2028. Beyond 2028, the light blue wedges illustrate our potential to sustain production above 500,000 barrels per day through additional infill drilling and tiebacks from known discoveries across our portfolio. The progress we have seen in the early months of 2025 strengthen our confidence in this trajectory. Looking further ahead, we also see potential for growth beyond the current outlook. With continued exploration success and selective M&A opportunities, we believe that there is a clear path to further expand our production base into the next decade. This is our ambition, and we are well equipped to deliver it. We have the people, the assets, the suppliers, the digital ecosystem, the capital, and the track record. Let's now take a look at our major development projects and see how they are progressing. The activity level is very high across all sites. Fabrication and assembly of topside modules are continuing at full speed. Jackets will be installed offshore, and production drilling is ramping up across all our key development projects. At Valhalla PWP Fendres, construction activities are advancing steadily, while offshore modifications to the existing Valhalla facilities are ongoing. We are preparing for the installation of the PWP jacket and bridge later this summer. The second of the four planned wells on Fenris was completed in the first quarter, and we're preparing to start drilling production wells at PWP this summer. The SKAV satellite project covers three fields, Alvenor, Idunor and Ørn, all of which will be tied back to the SKAV FPSO. The 2025 subsea installation campaign is underway, and also here we are preparing for drilling of production wells later this year. At the Utseera Hive project, we have successfully completed testing of the subsea equipment, and the subsea installation campaign is well underway. Preparations for the 2025 drilling campaign are also on track. And to confirm, we are on track to deliver these projects on schedule and on budget. This is also the case for Yggdrasil. Yggdrasil, as you know, is a key pillar for AKBP's growth strategy. It stands out as our largest field development with first oil and gas planned for 2027. And I'm pleased to report that progress remains firmly on track. Construction and assembly of topsides and jackets are advancing at multiple locations, both in Norway and internationally. The Huguenot topside is taking shape at Stord, while the Munin topside is progressing well in Haugesund. Offshore, the installation of the subsea power cable has begun, and we are preparing for a major installation campaign in 2025. This summer, we will install the Hugin A and the Munin jackets offshore and commence the drilling campaign using the rig Deepsea Stavanger. We are also moving towards a final investment decision for the East Frigg Beta Epsilon Discovery, which will be integrated into the Yggdrasil development. With this addition, the estimated total recoverable volume has increased from 650 to around 700 million barrels. And we see further upside. At our strategy update, we launched the ambition of reaching 1 billion barrels for Yggdrasil, and we have some really exciting exploration activities coming up shortly. This illustration shows our next exploration well, which will test five separate prospects along the same play that we proved with the Ystfreg discovery in 2023. The combined pre-drilled resource estimate for these targets is in the range of 40 to 135 million barrels, and drilling is set to commence in the next few days. In parallel, we are maturing additional opportunities across the wider frig area. Following last year's APA round, we have added acreage around the old Frigg gas field. While the field was originally developed for gas, there are significant oil volumes in place across several Frigg structures and nearby discoveries. With modern technology and new geological insight, we see a large potential, and we expect more exploration drilling in this area in the coming years. And while we are on the topic of exploration, we have an ambitious program lined up for 2025, with plans to drill 15 to 20 wells. Of the six completed so far, two have resulted in commercial discoveries. The first one was called Chetkake, an oil and gas discovery operated by DNO, located northwest of the Troll Sea platform in the North Sea. The well-encountered sandstones of good reservoir quality, with preliminary recoverable resource estimates at 38 to 74 million barrels of oil equivalents. ArcaBP holds a 30% interest in the license, and we are working closely with our partners to find a swift and profitable development solution. The second and most recent discovery was made in the E-prospect in the Skarve area. The main target yielded a minor oil discovery, estimated at approximately five million barrels. And even though it's relatively small, we still believe it can be commercially developed as a tie back to Skav. One well that has attracted a lot of investor attention is Rondeslottet, where we plan to start drilling within the next few days. And due to the high interest, let me add some context to this important well. Ronde Slotte is a significant structure, and we know it contains oil. This was confirmed by the Elida well drilled by Equinor back in 2003. The challenge lies in the reservoir quality. It is classified as a tight reservoir with low permeability and limited natural flow. Since that discovery more than 20 years ago, technology has evolved considerably, particularly for the developments in the U.S. shale. At AKBP, we have successfully applied several of these techniques at our producing fields, especially at Valhalla. And we do believe that AKBP is among the global leaders in offshore fracking. According to the Norwegian Offshore Directorate, tight reservoirs on the NCS holds a substantial volume of oil and gas. And AKBP aims to play a leading role in unlocking this major untapped potential. Rønneslottet is an important step in that direction. While we certainly hope that this well will provide valuable answers, it is realistic to expect that appraisal drilling will be needed before firm conclusions can be drawn. That said, we are confident the insights gained will be highly valuable and help shape our approach, both to Rønneslottet in particular and to tight oil opportunities across the NCS in general in the years to come.

Good morning. As Carla just described, Aker BP delivered strong operational performance in the first quarter, marked by high production, low cost and good price realisation in a turbulent market. This combination resulted in another quarter of robust financial results. Our financial position is further strengthened with ample available liquidity, low leverage and low net debt. At the same time, we are maintaining strong momentum across our project portfolio and investment program. And altogether, the first quarter marks another step forward on our value creation plan, where we focus on maximizing shareholder returns by maintaining financial flexibility, investing in profitable growth and delivering a resilient dividend that grows in line with value creation. Let's now take a closer look at the main drivers behind the financial results. Net production declined slightly in the first quarter, but sold volumes increased from 439 to 458,000 barrels of oil equivalents per day, mainly due to overlift. Over time, lifting imbalances tend to even out, and the positive impact in this quarter has largely offset previous underlifts. On the cost side, operating costs rose to $6.5 per barrel from low levels in Q4 last year. This was mainly driven by more normal levels of well maintenance activity at Valhall, and higher power prices in Q1. Despite the increase, our unit cost remains industry leading, and below our full year guidance of $7 per barrel. Cash flow from operations reached $2.1 billion in the quarter, a significant increase from the previous quarter. The improvement was driven by higher revenues, lower tax payments, and a stable working capital. Cash flow to investments also remained stable at $1.4 billion, reflecting the continued high level of construction activity across our project portfolio. As a result, free cash flow totaled $685 million for the quarter, equivalent to $1.1 per share. Within financing cash flows, the main item was the dividend, which increased to 63 cents per share in the first quarter. Zooming in on another few items in the income statement. With both sold volumes and realized average hydrocarbon prices slightly up, revenues increased quarter-on-quarter by 4% to $3.2 billion. Production cost of sold barrels increased slightly more than the cost per produced barrel would indicate, due to valuation of over-lifted barrels. Depreciation increased both in absolute terms and on a per barrel basis compared to the previous quarter. This was primarily driven by drilling activity in the Ula area, where investments are immediately depreciated due to the short remaining lifetime of the field. Net financials contributed with a gain of 14 million in the quarter. The strengthening of the Norwegian kroner led to currency losses, mainly tied to the re-evaluation of tax payables. However, these were more than offset by positive movements in the fair value of derivatives used for FX hedging. These derivatives are designed both to neutralize FX risk on tax payables once revenue is realized, and to manage the Norwegian kroner exposure related to our investment program the next two to three years. We also recorded 189 million in impairments of technical goodwill during the quarter, which led to an increase in the tax rate of 84%. This goodwill is not tax deductible, and the adjustment is an accounting technicality. For more information on technical goodwill, including a short video, is available on our investor website at akerbp.com. In total, net profit for the quarter ended at $316 million, or equivalent to 50 cents per share. With the strong operational performance flowing through to the financial performance, we exit the first quarter with our financial position further strengthened. Net interest-bearing debt is down to $3.2 billion, and our leverage ratio remains stable at 0.3 times net debt to EBITDAX. Total available liquidity increased to $7.7 billion, of which $4.3 billion is cash and cash equivalents. This can then be compared with the estimated remaining after-tax commitment of our ongoing investment program of less than $2.5 billion. As Kalle has already covered, our portfolio of development projects is progressing according to plan. The CAPEX outlook is virtually unchanged from when the program was launched in 2023. Only minor adjustments to the phasing have been made, while the total capital expenditure estimate in dollars remain the same. Since the sanctioning of the projects, we have worked systematically to manage the Norwegian kroner exposure related to our investment program. We have now largely completed this effort with 75 to 100 percent of planned NOC expenditures for the next three years, hedged at an average dollar NOC rate between 10.5 and 11. This effectively reduces our exposure to the risk of a weakening of the dollar in the coming years. In Aker BP, we do not invest in growth for the sake of growing. We do it to create value, and we continue to progress on our 2023 to 2028 value creation plan. By 2028, we estimate to have generated between $9 and $14 billion in free cash flow, depending on oil prices, equivalent to 65 to 100% of ARCA BP's market cap. In turbulent and volatile times, the focus of many external stakeholders turns to resilience. In Aker BP, we have prepared by systematically building the necessary resilience to withstand the volatility of the commodity markets through the cycles. On the right hand side of this slide, we illustrate this with an estimate of how our leverage ratio develops across different oil price scenarios. Assuming a continued 5% annual dividend increase, we stay comfortably below our internal 1.5x leverage threshold in most scenarios, and way below the bank covenant of 3.5x. And even in a prolonged $50 oil price environment, we only see a brief exceedance above 1.5x, followed by deleveraging from 2027. In summary, our value creation plan is on track and we have the capacity and resilience for attractive shareholder distributions in the years to come. Now on the topic of shareholder distributions, let me briefly revisit our distribution policy. Our guiding principle is to maintain a resilient dividend that reflects our financial strength and outlook. Our ambition to grow the dividend by at least 5% annually through this investment cycle remains firm. And for 2025, we plan to distribute a total dividend of $2.52 per share, paid in four quarterly installments of 63 cents. Let me also briefly comment on our projected cash tax payments for 2025. As usual, we paid one tax installment in the first quarter and two will be paid in the second quarter. As we move deeper into the investment program, annual tax payments are declining, which is clearly reflected in this chart. Taxes paid in the first half of 2025 are roughly half of what we paid over the same period in 2023. Tax payments due in the third and the fourth quarters will be set in June, in line with a new payment schedule that increases the number of installments from 6 to 10 per year. This illustration shows a range of possible outcomes based on different oil price scenarios for the year 2025. Thanks to the tax deductions associated with our investment program, we expect to pay very limited tax for the 2025 fiscal year at oil prices below $60. This is a key feature of the Norwegian tax system. It provides added resilience to market volatility when investing in profitable growth. Let me now conclude with a few comments on our 2025 guidance. The short version is simple, no changes, but let me add some context to each of the items. Production averaged 441,000 barrels of oil equivalents per day in the first quarter, above the top end of our full year guidance range, but in line with our expectations for the quarter. We anticipate some natural decline from certain fields as the year progresses, along with planned maintenance activities in the summer months. Consequently, we continue to view the full year range of 390 to 420 as a fair estimate, but with Q1 now de-risked. Production cost came in at $6.5 per barrel in the first quarter, supported by strong operational performance, and we still expect $7 per barrel for the full year given mid-range production. CAPEX is approaching peak levels, with construction activity at full speed and drilling campaigns ramping up across several assets this summer. we invested $1.3 billion in the first quarter and maintain our full year guidance of $5.5 to $6 billion. Expiration is progressing in line with plan. The program is somewhat front loaded in 2025, and with only minor adjustments, we continue to expect total expiration spend around $450 million for the full year. Abandonment activities are also on track, and we maintain our guidance of $150 million. And with that, I'll leave the word back to Kalle for some concluding remarks. Thank you, David.

We have had a strong start of 2025 with high operational efficiency, low cost and low emissions. Our development projects are progressing as planned, and we are approaching a final investment decision for Johan Svalbard Phase 3 and East Freak. We have made two new discoveries so far this year and we have an exciting exploration program ahead. The financial position remains robust and our value creation plan is firmly on track. With continued discipline, strong execution and a resilient balance sheet, we are well positioned to deliver attractive and growing returns to our shareholders in the years ahead. We will now take a short pause before opening the Q&A session. And as usual, to participate, please use the Teams link provided on the webpage. And if you prefer to listen only, please stay tuned and we'll resume in just one minute. So thank you for listening in and welcome back after that short break. And then we'll start with the Q&A session. And as usual, Kjetil Bakken, our eminent head of IR, is running the show. Kjetil, who's the first to ask questions?