Aker Bp Asa Ord

Good morning everyone and welcome to Akka BP's second quarter presentation. It was a quarter of strong operational execution and robust financial results. Production averaged 384,000 barrels of oil equivalents per day and operating cash flow was $3.1 billion. And we have raised the lower end and narrowed our production guidance for the year. Our major projects remain on track, with important milestones across Yggdrasil, Valhalla PVP Femres, Skaaf Satellites and Johan Sverdrup Phase 3. At the same time, we continue to strengthen the portfolio for future growth, including through a new strategic collaboration with Equinor. We also maintain a robust financial position with $6 billion in available liquidity and an unchanged quarterly dividend. Operationally, this was a quarter shaped by seasonally high level of activity, with continued high efficiency across the portfolio. Production was lower than in the previous quarter, mainly due to planned maintenance at Edvard Grieg and Ivar Aasen, combined with normal quarter-to-quarter variations. Despite these planned impacts, production efficiency was 94%, a very strong performance by industry standards. Production cost increased to $8.8 per barrel, mainly reflecting planned seasonal activity across the portfolio, including maintenance at Edvard Grieg and Ivar Rosen, diving operations at Alfheim, and well intervention activity at Valhall. Lower production volumes also increased the reported unit cost. Emissions intensity was 3.1 kilos of CO2 per barrel, mainly reflecting lower volumes in the denominator. Our KBP remains among the global leaders in low-emissions oil and gas production. Johan Sverdrup is a world-class field, combining large scale with low operating costs, low emissions and excellent safety performance. In the second quarter, our share of production averaged 214,000 barrels per day, supported by high production efficiency and continued optimization of the field. It remains a key contributor to our cash flow. We are also investing to sustain and extend that production. The subsidy drilling campaign is progressing with new infill wells and water injectors, and we continue to mature the next phases of the field. Phase 3, sanctioned last year, is on plan. The subsidy templates are installed, drilling starts in the fourth quarter, and production is scheduled for the fourth quarter of 2027, while Phase 4 is being matured with potential start-up in 2029. We also recently concluded the redetermination process initiated in 2025 following an updated assessment of the field. This resulted in an increase in AKBP's ownership by 0.515 percentage points, resulting in a net participation of 31.72%. Let me now turn to our development projects. In December 2022, we sanctioned 10 PDO projects, of which 5 subsidiary banks have started production, and in total we are over two-thirds completed with the entire project portfolio. These projects are adding more than 800 million barrels of resources and will contribute to lifting our production above 500,000 barrels per day in 2028. Several visible milestones were delivered in the quarter, and before going into the details, I would like to show what that progress looks like in practice. Such pictures truly make me proud and happy, and we made great progress in the quarter. You just saw that the 2,500-tonne Hugin B topside was safely lifted from the barge and installed on its jacket last week. And with that, the first topside is now in place at Yggdrasil. Hugin B is a normally unmanned wellhead platform tied back to Hugin A. Also at Yggdrasil, another major milestone was achieved this quarter, with the completion of the Power From Shore system, clearing the path of the installation of Huguenot towards the end of the year. I would like to extend my gratitude to all our project teams, alliance partners and other suppliers who have contributed to making this happen. From engineering and construction to offshore execution and marine operations, these achievements reflect the dedication, expertise and teamwork of the entire One Team. At Valhalla PVP Fenris we are now preparing for the next offshore phase. Hook-up of the Fenris topside has commenced, and the Valhalla PVP topside will leave the yard at Stord and be installed offshore in late August. As Yggdrasil and Valhalla PVP Fenris move through the final construction phase and installation phase, we are actively managing the remaining scope to support safe and efficient completion. For Yggdrasil, we are investing more in the final onshore completion work to ensure that the Huguenet platform is as complete as possible before sail away. This reduces both execution risk and the remaining offshore work. For Valhalla PVP Fenris, the updated estimates mainly reflects a larger remaining offshore scope, including hog up and completion activity. The additional activity is reflected in our updated investment estimates, which are now around 6% above the previous estimates. But most importantly, Yggdrasil and Valat PVP Fenris remain on track for first production next summer. Skarv Satellite is our most advanced project this year, and is now approaching start-up. It ties three discoveries, Alvinor, Idunor and Ørn, back to the Skaaf FPSO, extending production from infrastructure we already operate. Drilling and completion of the wells is finished, the subsea installation is complete, while commissioning continues on the FPSO. Startup remains on track for late August. With Yggdrasil and Valval PVP vendors on stream, our production is set to increase by around 35% from 2026 to 2028 and support cash generation well into the 2030s. At the same time, we continue to build a next set of opportunities through increased recovery, maturation of discoveries, targeted exploration and active portfolio management. The transaction package agreed with Equinor and May is a good example of how we are going to do this in practice. Let me take you through some of the key elements. The first element is Ringvej Vest, in the Troll-Fram area of the North Sea. This is a subsea cluster development, planned as a tie-back to the existing Troll infrastructure. It brings together several discoveries in the area, including Croatia, where all Arka BP already has a 19% interest. Through the transaction with Equinor, we established a 90% ownership position across most of the Ringvær Vest-area, giving us a strong foothold in a development expected to contain around 240 million barrels of gross resources. The strategic logic is very much in line with how we think about value creation at NCS. Discovered resources, nearby infrastructure, and a coordinated development concept that can turn smaller discoveries into a larger, more efficient project. The second piece of the puzzle is the wider frig area around Yggdrasil. Last year, the Omega Alpha Discovery confirmed oil in the eastern part of the old frig area. We are now preparing further exploration drilling next year to better understand the full potential of the structure, with a clear objective of finding additional oil volumes that can be developed at Yggdrasil. Through the transaction, we will acquire a position in the UK license adjacent to the Norwegian acreage. This gives us exposure to a larger part of the structure and creates a more balanced ownership position on both sides of the border. This matters because any future development will need to be evaluated across license boundaries and across the border. For AKBP, the strategic logic is clear. Y Drasil is not only a major project, but a new hub in an area with significant remaining potential. The third element is visiting. Visiting is one of the largest undeveloped discoveries on the NCS, with around 500 million barrels in recoverable resources. It is a long-term opportunity, and the project has made good progress through the recent rematuration phase, moving towards a concept select. As a part of the transaction with Equinor, we reduce our ownership to 27.5% from 35%. For AKBP, this is a disciplined portfolio move. We retain meaningful exposure to a major resource while reducing our capital commitment ahead of the next decision points. Before I hand over to David, let me share a few thoughts on exploration. Exploration remains an important part of how we build future growth, and our approach is targeted and disciplined. Over time, we aim for around 80% of our activity to be near existing infrastructure, either as single tiebacks or as a part of future cluster developments. The remaining 20% is typically high-impact exploration with stand-alone potential in new areas. This year's program is particularly weighted towards infrastructure near targets. These barrels can often be developed faster, with lower incremental costs, because they build on infrastructure and operating positions we already know well. In the second quarter, we completed Tonjør and Karmen. Tonjør is an attractive addition in the Johan Sverdrup area, while Karmen is promising, but will require further appraisal. The third quarter will be our most active exploration quarter this year. Looking ahead into next year, we are preparing for an even more active program, including the frigge area around Yggdrasil. With that, let me hand over to David, who will go through the financial results in more detail.

Thank you, Karle, and good morning, everyone. The second quarter was another strong financial quarter for Aker Bp. High realized prices, all-time high operating cash flow, and the transaction package with Equinor supporting more profitable growth in the years to come. Production, operating costs, and project schedules are tracking our full year plan. And cash generation in the first half of the year strengthened materially compared with recent periods. Now let me start off with our achieved oil prices. The quarter was characterized by a strong physical oil market, particularly in the early period, before prices somewhat normalized towards the end. Front month Brent, which is the benchmark most often referenced in the media, averaged around $97 per barrel, while Brent Dated, which is more relevant for our realized prices, averaged around $104 per barrel. As shown in the bridge on the right hand side, we also achieved strong premiums on our crude qualities. Combined with some negative timing effects, this lifted our realized oil price to $110 per barrel. Including NGLs and condensate, our realized liquid price was $108 per barrel. In the second quarter, production averaged 384,000 barrels of oil equivalents per day, bringing first half production to 391,000, well within our full year guidance. Due to underlift in the quarter, sold volumes were slightly lower, averaging around 376,000. Together with the strong realized prices, this resulted in a total income of $3.7 billion for the quarter. Oil and liquids represented 86%, while gas and other income was 14%. Looking briefly at the income statement, total income was 22% higher than in the first quarter. Unit production cost was $8.8 per barrel, and as Kalle mentioned, the increase mainly reflects the phasing of planned activities in the summer months. We expect lower unit costs in the second half, and our full year guidance of around $8 per barrel remains unchanged. After expiration expenses of $47 million, EBITDA for the quarter was just shy of $3.4 billion. In the quarter, we recognized an impairment of $625 million, related to other intangible assets at Valhall. The impairment was driven by lower short-term oil and gas prices and updated cost profiles, and is offsetting the large impairment reversal we had on Valhall in the first quarter. The methodology and assumptions are described in note 7 to the report. As a result, net profit was $521 million, or 82 cents per share. Excluding impairment charges, earnings per share was $1.15. Moving from earnings to cash. The second quarter was very strong. Operating cash flow amounted to $3.1 billion, an all-time high for Aker Bp. This primarily reflected higher income and positive working capital movements, partly offset by higher tax payments. After cash flow to investments of almost $1.8 billion, free cash flow was $2.10 per share in Q2, up from 30 cents in the previous quarter. This strong cash flow generation supports our financial flexibility and is a natural bridge to talk about how we allocate capital. and the framework is unchanged. A strong balance sheet comes first. It gives us flexibility through the cycle and is the foundation for long-term value creation. At the end of the quarter, we had $6 billion of available liquidity, up from $5.4 billion three months ago, while our leverage ratio improved to 0.55 times, down from 0.69 at the end of the first quarter. From this foundation, we invest in high-quality projects that drive future cash flow and dividend capacity. This includes Yggdrasil, Vallar PVP Fenris, and the High Return Tieback portfolio. Over the next 2-3 years, we expect production to grow by around 35% from projects that have an expected payback time of 1-2 years. And lastly, we return capital to shareholders through a predictable growing dividend, currently at 66.15 cents per share per quarter, or $2.65 for the full year, up 5% from 2025. Zooming in on our investment plan. All our projects are making good progress with several very important milestones confirmed this quarter. And we are particularly glad to see that both Yggdrasil and PVP Fenris remain on track for first production next summer. As Kalle explained, we have updated our investment estimates to reflect the remaining scope required to complete the projects, including offshore hookup and completion work. For Yggdrasil we now expect total investments, net to Aker Bp, of 12.5-13 billion dollars pre-tax, compared to our previous estimate of approximately 12.1 billion. The increase mainly reflects additional activity to complete more work on shore before sail away and support efficient project execution. For PVP Fenris, the updated estimate is $7.3 to $7.6 billion pre-tax, compared with approximately $7 billion previously. This mainly reflects a larger remaining offshore scope, including hookup and completion activity. At the midpoint of these ranges, the increase is around $1.1 billion pre-tax, or approximately 6%, compared with our previously communicated estimates for the ongoing PDO projects. We expect roughly half of the latest increase to materialize in 2026, with the remainder spread over the completion period. The majority of the investments are eligible under the 2020 tax regime, and as a result, the after-tax cash flow impact is estimated at around $200 million over the next two to three years. Let me then bring this together in our updated full year guidance. As mentioned, production averaged 391,000 barrels of oil equivalents per day in the first half of the year. In line with our expectations. With half of the year now behind us with strong performance, we lift the low end of our guidance range and update the full year production guidance to 380 to 400,000 barrels per day. Production cost was $8.2 per barrel in the first half of the year, impacted by maintenance activity in the second quarter. This is in line with our plans, and we still expect around $8 per barrel for the full year. 2026 remains our peak investment year. We invested $3.5 billion in the first half, and reflecting the updated estimates for Yggdrasil and Valhall PVP Fenris, we now expect full-year capex of approximately $6.8 to $7.2 billion pre-tax. Exploration spend is $161 million year-to-date. The program is somewhat back-end loaded in 2026, with several exciting wells coming up. We still expect expiration spend of around $400 million pre-tax for the full year and abandonment around $100 million. With that, let me hand back to Kalle for some concluding remarks.

Thank you, David. To conclude, this was a strong quarter for AKBP, with robust production, high efficiency, strong realized prices, and record operating cash flow. Our major projects Yggdrasil and Varlal PVP Fendres remain on track for first production next summer. The updated investment estimates reflect active final phase execution, with additional onshore completion work at Yggdrasil and a larger remaining option scope at Varlal PVP Fenris. At the same time, we are strengthening the portfolio through exploration, increased recovery and selective transactions. In short, we are delivering today, progressing the projects that will lift production from 2027 and building the portfolio for profitable growth into the 2030s. We will now take a short pause before opening the Q&A session. And as usual, to participate, please use the Teams link on the webcast page. And if you prefer to listen only, please stay tuned and we'll resume in one minute.