Var Energi ASA

Good morning, everyone, and a warm welcome to Voida na Si's second quarter and first half 2024 results. The presentation today will be given by our CEO, Nick Walker, and our CFO, Stefano Piatti. Nick and Stefano will present the results, and we will open up for questions afterwards. I will now give the word to Nick. Go ahead.

Well, thank you, Ida, and good morning to you all. I do hope you're all enjoying the summer period. A warm welcome to our second quarter and first half 2024 results presentation. I'm really pleased to report another quarter of good delivery with strong operational and financial results in line or better than guidance. We're on track to deliver our 2025 growth target and unlock future value. And as a result, we continue to provide attractive and predictable dividend distributions. So let us now look at the highlights for the quarter. We delivered strong operational performance with production of 293,000 barrels of oil equivalent per day in the first half, which is the upper end of the guidance range for the period. This is driven by good production efficiency across the portfolio. And we've successfully executed our maintenance programs in the quarter. On the back of this strong operational performance, we continue to deliver good financial results with CFFO in the quarter of $711 million. Our gas sales strategy continues to realize above market prices. Production costs beat guidance at $12.4 per barrel in the quarter. And we extended two strategically important long-term gas sales agreements to mid 2036. Vore Energy is one of the fastest growing EMPs, and we're on track to deliver on our 2025 growth target and unlock future value. The BoulderX project target startup in Q4 remains, with a sail away decision to be made towards the end of August. At Johan Casper, the FPSO has left the yard, and the project is firmly on track to start up in the fourth quarter. And the Elphys North and Christian South projects came online recently. Portfolio optimization continued with sales announced for our non-core NORNA and boiler assets. And we announced close to infrastructure commercial exploration successes in the Boulder and Yowa areas. And lastly, we continue to deliver attractive and predictable shareholder distributions. We confirm a dividend for the second quarter of 11 US cents per share in line with guidance, which is to be distributed in August. and we're providing Q3 2024 dividend guidance of $270 million, the same as for Q2, and reconfirming our full-year dividend distribution guidance of approximately 30% of CFFO after-tax. So now stepping into some of the detail. We're one of the fastest-growing EMPs, the third largest oil and gas producer in Norway, and the second largest exporter of gas from Norway to Europe. A large diversified portfolio with interest in over 50% of all producing fields, and of course the associated infrastructure on the NCS, provides lots of optionality and growth opportunities, which we're working to move forward at pace. We completed the Neptune Energy Norga transaction in January, and already we've fully integrated the business into 4 Energy. We've aligned the two teams, and from the 1st of May we've been working as one team, pulling together to deliver on our strategy and goals. In the quarter, we completed the strategy merger of Neptune Energy Norga with Vore Energy, thus simplifying our business structure. And we're making great progress on delivering on the targeted synergies from the transaction of approximately $500 million post-tax over time, with about 25% of this target already realized. Now turning to production. The first half of the year came in at 293,000 barrels of oil equivalent per day, which is in the upper end of the guidance range for the period. Production in the second quarter of 287,000 barrels a day is down compared to the first quarter. This is due to planned maintenance activities that were successfully completed. We also saw strong production efficiency from our operated assets, averaging 93% in the quarter. As I've already said, the Elphys North project started up in May and the Christian South project in July. And both of these developments are producing strongly in line with expectations. And you can see that turnarounds will significantly impact the third quarter. We will see outages in most of our Norwegian Sea assets. And then you will see growth from our major projects, Johan Casberg and Boulder X, both targeted startup in the fourth quarter. We have one further project to start up during the year and also a significant portfolio of infill wells being completed. We also announced the sale of our non-core NORNA and boiler assets. These deals will close in the second half of the year and have minimal production impact in the period. We've had a great first half performance and are firmly on track to meet our full year guidance range of 280 to 300,000 barrels per day. So now looking at our longer term growth outlook, we're set for significant production growth from today's level of around 300,000 barrels per day. Five projects in development with the main ones, of course, being Boulder Eggs and Jorn Kassberg, will add around 130,000 barrels per day of new production. This means we'll grow to around 400,000 barrels per day by the end of 2025, which we're firmly on track to deliver. And with our quality portfolio that has significant upside, we can then organically sustain production at 350 to 400,000 barrels a day towards 2030. And we will achieve this through firstly, maximizing recovery and infill drilling in our high quality assets. This adds up to 45,000 barrels a day over the period. Secondly, by moving forward at pace, our portfolio of over 20 early phase projects towards sanctions. and also drilling out our exciting near-field and high-impact exploration program.

This will deliver sustainable production towards 2030.