Var Energi Asa U/Adr

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.

Of course, responsible operations are key to our license to operate, and our ambition is to be the safest operator. Overall, we have a good safety and environmental trend, which is generally getting better. However, we're having too many small low-level incidents, which is a strong focus in the organization. And you can see in the second quarter, we had a good outturn with zero material safety or environmental incidents. This performance takes strong focus every day. And our belief is that it's important to position the company for the energy transition to maintain relevance and investability long-term. And we're doing just that and are being recognized for it. We continue to make good progress on emissions reduction, and today we're already in the top quartile of industry performance. We have a clear path to over 50% operational emissions reduction from our portfolio by 2030. The three main levers to achieve this are electrification of our assets, energy management, and portfolio optimization, and we're making progress on all of these. Already, around 35% of our production is produced with power from shore. And we're involved in five electrification projects. So by 2030, our aim is that around 70% of our production will be electrified. And on methane emissions, we're doing really great with performance well below the near zero classification. And so our performance on ESG is being recognized. with the leading ratings that you can see listed here and our recent inclusion in the Oslo Stock Exchange Index, ESG Index, as the only oil and gas company included in that index. And so now on to production costs. We beat guidance with $12.2 per barrel in the first half of 2024 compared to our full year guidance of $13.5 to $14.5 per barrel. You can see we're currently running about $2 per barrel below 2023 levels, where two factors are the main contributors. One is the lower cost Neptune assets, which is bringing the overall company cost down as expected. And the rest is the increase in production compared to 2023 levels. Our improvement initiatives are also starting to deliver results. So as a result, for the full year 2024, we now expect the outturn to be at the bottom of the $13.5 to $14.5 per barrel guidance range. And looking forward, our target is to reduce unit OPEX to around $10 per barrel by the end of 2025, as you can see on the chart. With the main levers of this being, firstly, the new projects coming on stream, which have average OPEX of around $4 per barrel. Secondly, high grading the portfolio, which we're making progress on. And thirdly, delivering cost synergies and improvements, which is a strong focus across our organization. And so now, moving on to how we're going to deliver long-term growth and value creation. Poor Energy has an amazing portfolio with lots of optionality and growth opportunities. You can see here that our 2p reserves stand at 1.24 billion barrels. Seven projects come on stream over the next few years, which underpins our growth trajectory. You can also see our contingent resources stand at 750 million barrels, where we've already identified over 20 early phase projects to turn approximately 60% of this resource into value. And you should expect to see some project sanctions coming forward during 2025. with the more significant projects being Framsoor, a Yoa area development including Yoa North, Ophelia, Kiri and Serissa, and a Boulder phase six project. And there are others. On top of that, we have an exciting exploration portfolio of over 1 billion barrels of next risk resources, where we will drill around 60 wells over the next four years. And as we'll see later, this program is already adding value. And putting all this together, we have over 3 billion barrels of resource potential in the portfolio. And it is this that which will organically sustain our production towards 2030.

And so now, looking at our quality project portfolio, which is key to delivering our growth targets.

After the recent startups of Elphys North and Christian South, we have seven remaining projects in execution. which unlock more than 400 million barrels of net reserves. And we're well into execution with five of the seven projects more than 75% complete. So the risks are mostly behind us. And you can see this project portfolio creates significant value with break evens of around $35 per barrel.

And if we now then focus in a little bit on our two largest projects, I want to give an update on those.

Firstly, Boulder X. The Yoten FPSO is a key enabler to continue to deliver future value in the Boulder area. This project unlocks gross production of 80,000 barrels a day and with low operating costs of around $5 per barrel. The status of the Yoten FPSO is that actions taken to increase the pace of the remaining construction and commissioning has yielded results. And the FPSO is now nearing completion. The FPSO mooring system has been redesigned, which reduces the weather constraints for installation, allowing installation into September and earlier in 2025 should installation not happen before the winter period. So startup in the fourth quarter of 2024 remains the target. And the decision on the installation this year will be made at the end of August. Our main consideration here is to ensure we do not carry too much work into the offshore hookup phase. And as previously communicated, risk therefore remains for the installation of the FPSO this year. In the scenario where installation slips to next year, the P90 startup is by the end of Q2 2025. And we've created flexibility with the FPSO installation arrangements, giving us full optionality on the timing of making the decision on when to install. If we look at the other elements of the project, they are largely complete. All subsea facilities are installed and all now that remains is to connect up the FPSO. All 14 planned production wells have been drilled and completed with results in line with expectations. The final well, a water injector, is just completing and the drilling will demobilize very shortly. If First Oil moves to 2025, it will have limited impact on the company's 2024 production. And as the project is nearing completion, this is principally a schedule issue and does not have a material impact on overall company-guarded costs. It would also not have have no impact on delivering the company's growth target of around 400,000 barrels a day by the end of 2025. So completion of the Boulder project is in sight, and all our efforts are focused on achieving first oil as soon as possible. Importantly, though, in a safe manner and with high quality. And we will communicate an update on the project at the end of August, once we've made a decision on the timing of installation of the FPSO. But this project's more than that. The FPSO also unlocks future growth opportunities. The Boulder Phase Pride project is being progressed. This involves the drilling of six production wells to utilize the remaining subsea template well slots to capture gross 2p reserves of over 30 million barrels. And the drilling of these wells will commence in the first half of 2025 and be completed in 2026. And Boulder Phase 6 is being assessed. to add new subsea facilities and wells with sanction of a project targeted in the first half of 2025. So the BoulderX project is nearing completion, and we can now look forward to many years of value creation ahead. And our other major project is Johan Carlsberg, which is progressing according to schedule and is firmly on track to target the startup in the fourth quarter. The FPSO is complete and has left the stored yard for an inshore location for final testing, as you can see in the photo on this slide. And in August, the FPSO is expected to be towed to the Owen Casper Field location. All subsidy installations are complete and the drilling activities are going to schedule with 12 wells already completed. Total of 30 development wells are planned with drilling activities continuing into 2026. And Johan Casberg is a key catalyst for our growth profile. The production capacity of the FPSO has been updated to 220,000 barrels per day gross compared to the original PDO capacity of 190,000 barrels per day. With Vore Energy's net share of the updated capacity being 66,000 barrels per day. And these are high-value barrels with OPEX of around $4 per barrel and with breakeven economics of $35 per barrel. And we see further upside from extending the plateau through both infill drilling and area tiebacks, where eight infill wells, five producers, and three injectors are being planned. And further phases of development are also being planned, being clusters one and cluster two. But on top of that, a series of exploration wells will be drilled over the next few years. We see that this will double the plateau period to four to five years and perhaps beyond. So after years of investment, the true Johan Casberg adventure starts at the end of the year and we see a bright future with significant upsides on long term value creation ahead. So now. I'd like to focus a little bit on our exciting exploration program. And to remind you, this year we're planning 16 exploration wells, targeting net risk resources of around 150 million barrels. As you can see, these wells are spread through our four hub areas, and all but three wells are close to infrastructure targets. And so far this year, we've had a good return from the six wells drilled, with two commercial successes at Sirisa, the yowa area and at ringhorn north in the boulder area so a 33 success rate to date due to these successful results multiple sidetracked wells were drilled to appraise the two discoveries resulting in increasing exploration spend for the year to around 350 million dollars pre-tax from the 300 million dollars previously guided We're ramping up activity with seven wells planned to be completed in the third quarter. And it's going to be exciting to see these results come in. And we're also well advanced on defining our exploration program for 2025, which I expect will be even more ambitious than this year's program. So I want to now focus on the two commercial successes at Sirisa and Ringhorn North. You can see the location of the CERISA discovery only five kilometers from the DUVA subsea template that is tied into Vore Energy's operated EOA platform. CERISA contains gross recoverable resources in the range of 18 to 39 million barrels. And we drill three sidetrack wells to fully appraise the discovery. So we're ready to move quickly to development studies. This discovery is the fourth in a row in the Yoa hub area, with the others being Yoa North, Ophelia and Kiri. Combined, these discoveries have estimated gross recovery resources of up to 110 million barrels. And a Yoa area development, including Yoa North, Ophelia, Kiri and Sirisa, is commercial as a tie back to Yoa, where importantly, there's spare capacity. And we're already progressing this on a fast track basis for a sanction of a project in 2025. Then moving now to the Ringhorn North discovery, which you can see is close to all the Boulder area infrastructure. Ringhorn North contains gross recovery resources in the range of 13 to 23 million barrels. We drilled two sidetrack wells to appraise the discovery, again, so we're ready to move quickly to development. In addition to unlocking new resources, improving the northern extension of the Ringhorn Field, the Ringhorn North Discovery also de-risks more drillable prospects in the area. For example, Ghost and Prince Up Dip, which are candidates for drilling in 2025. And opens up potential development synergies with other nearby Vore Energy operated discoveries, such as King and Prince and Everett Evening. Here there's potential to unlock around 100 million barrels of gross resources in this area. And we're progressing this opportunity on a fast track basis. So the Boulder area is much more than just the Boulder X project. And these two exploration successes I've talked about are a demonstration of our consistent and successful exploration strategy, targeting high value barrels close to existing infrastructure. So that now rounds off my operational updates, and I'll now hand over to Stefano to review the financials. Thank you.

Thank you, Nick, and good morning, everyone. Now let's deep dive into the key financials for the second quarter and see why VOR Energy is a unique combination of value creation, growth, predictable, and attractive shareholder distribution underpinned by an investment-grade balance sheet. We generated solid revenues and operating cash flow after tax of $711 million in Q2 on the back of strong operational performance, unit cost below guidance, and good realized prices. Our balance sheet remains solid with a leverage ratio at 0.8 times net debt to EBITDAX and $1.8 billion in available liquidity. We confirmed the second quarter dividend of $270 million and plan to pay another $270 million for the third quarter of 2024. During the capital markets update in March, we presented an upward revised target of about $500 million identified synergies from the Neptune deal. I'm pleased to say that we have already realized around 25% of this. only five months after closing of the transaction. Some concrete examples of this is the accelerated recovery on EUR using VOR energy contracted vessel. We have been realizing onshore tax benefits and also incorporating Neptune assets in the more competitive VOR energy insurance package with lower rates due to increased size of the portfolio. And another example is eliminating external centralized services from the holding in the UK and manage them in-house. For the remainder of 2024, we expect to continue realizing further synergies, mainly in the areas of accelerating project developments, harmonizing rig line plans, and integrating Neptune gas volumes in our gas sales strategy. This demonstrates the scale, diversity, and robustness the transaction adds, making us an even stronger pure play EMP. I will now go into more details of our second quarter financial performance. We generated more than $1.9 billion of revenues in line with previous quarter. We are up from Q2 of 2023, mainly due to higher volumes. We also continue to deliver good price realizations and in particular realized natural gas price where we had a price realization of around $70 per barrel, which represent a premium of $10 per barrel compared to spot. Realizing above spot pricing has given us additional gas revenues of around $250 million year to date. The realized price for oil in the quarter was $85 per barrel in line with Brent. Taking a closer look at the gas sales in Q2, around 52% of the sales were on day ahead basis at $60 per barrel. Around 28% was sold on a month ahead basis at $52 per barrel. Remaining 20% were delivered under contracts with fixed pricing, realizing an average of $127 per barrel. Going forward, we will continue to have robust sales portfolio with access to several markets and we will have the flexibility in the contracts to decide the split between month ahead, day ahead, quarter ahead and fixed contracts. For the third quarter, we will continue to have fixed price sales representing around 19% of the gas sales for around $132 per barrel. Starting from the fourth quarter, the fixed price exposure will decrease to around 5%. And this is because upon time of nomination for the gas year ahead, we assessed the forward curve to be undervalued. We have therefore chosen to keep our position open and plan to, when time is right, to use other instruments like fixed price or quarter ahead to catch window of opportunities when they arise. We target to keep maintaining robust pricing for our volumes also for the coming gas year. From Q4 going forward, we will also be able to include the Neptune gas in our short and long-term contracts, which will offer increased flexibility and opportunities to realize additional value. I would also like to mention that our oil production is fully edged on a post-tax basis for 2024, including Neptune volumes, with monthly put options at a strike price of $50 Brent. And we plan to continue the program going forward also in 2025, where actually we have already covered 100% of post-tax production until end of Q2 2025. Cashflow from operations in the quarter was $711 million, a decrease from the previous quarter, mainly due to the two tax payments we made in April and June compared to only one in the first quarter. For the first half of the year, we generated more than $1.7 billion of cashflow from operations after tax. Our capex including exploration for the quarter was $773 million, where Balder and Johan Casberg remain the largest contributor of the total spend and will be the main contributors to reach 400,000 barrels a day by end of 2025. Year-to-date, CAPEX spent, including exploration, is roughly $1.3 billion, and we expect to be within the lower end of guidance for the full year of $2.7 to $2.9 billion, main reason being the weakening of the NOC and also the sale of assets, NORNE in particular, which reduces the associated CAPEX in the second half of the year. Our resilient and strong liquidity position continued in the quarter. Here we see the development in our cash position from Q1 to the end of the second quarter. We generated $1.5 billion before tax and working capital movements aligned with previous quarter. Working capital contributed positively, with more than $100 million as a result of a favorable lifting distribution in the quarter, which allowed a substantial reduction of the trade receivable at the end of the quarter. Tax payments were almost $1 billion, double versus the previous quarter, due to the two tax payments. We further had a cash outflow of $784 million in investment in our high value growth projects. And we also distributed, as planned, $270 million in dividends to our shareholders. In summary, Despite paying in just this quarter $2 billion in tax, dividends, and investments, the cash position at the end of the quarter stood at $315 million, and our available liquidity was at $1.8 billion at the end of Q2, compared to $2.3 billion in the previous quarter. The leverage ratio net interest being debt on EBITDAX ended at 0.8, at the end of the quarter. This is up 0.1 from previous quarter, but we are expecting Q2 to represent a peak in terms of leverage ratio level in the year, assuming current market conditions and still well below our over the cycle target of 1.3. Our debt portfolio is strong and diversified with a weighted average time to maturity at 5.2 years when excluding the 60 year hybrid. And this is supporting the execution of our growth strategy towards end of 2025 and beyond. We are maintaining our PAA3 rating from Moody's and our BBB rating from S&P, both with a stable outlook, and we are committed to maintain our investment grade ratings. The strong financial position lays a solid foundation for continued material shareholder distribution and growth, and this is a unique investment proposition that Vore Energy offers. Now let's look at the tax guidance for the 2024 estimated profits, where 50% will be paid this year and 50% next year. For the second half of 2024, we expect to pay around 14 billion NOC one installment in the third quarter and two in the fourth quarter. We have included a tax sensitivity for the first half of 2025, which is giving the cash tax estimates at different price scenarios, where the middle case is giving around 13 billion NOC in total payment. Vorenergy has a strong record of delivering attractive and predictable dividends, and since the IPO, we have returned around $2.5 billion in dividend, and we have paid a stable dividend over the last nine quarters. We confer $270 million in dividend for the second quarter, which is equal to $0.11 per share to be paid the 6th of August. And the dividend guidance for the third quarter is $270 million, showing the commitment and resilience of the company to attractive shareholder distribution. And we maintain our dividend policy between 20% to 30% of the CFFO after tax going forward, but with 2024 being in the higher range at approximately 30% of the CFFO post-tax. To sum up, we are well positioned to deliver on our growth and sustained value creation, and we will continue to pay attractive and predictable dividends in the years to come. Finally, I would like to summarize our key 2024 and long-term guidance. For 2024, we are on track to meet our production guidance of 280,000-300,000 barrels a day, which will increase to 400,000 barrels a day by end of 2025. Further, we have a tangible plan to sustain 350 to 400,000 barrels a day until 2030. Production cost between $13.5 and $14.5 per barrel, and we expect to come in at the bottom of the guided range this year as a result of earlier completion of Neptune, which has a lower cost per barrel compared to VOR standalone, knock the valuation and cost reductions. And this brings us well on track toward our long-term target to bring it down toward 10 by end of 2025. We expect to be in the lower end of our capex guidance of $2.7, $2.9 billion in 2024. And from 2025 onward, we expect the capex to reduce to around $1.5 and $2.5 billion. Exploration CAPEX guidance is revised upward to around $350 million due to the successful discoveries and additional sidetracks on Ringhorne and Ceresa. We will continue to have high exploration activity in the years to come, and we can expect to be in the upper end of the guided range from 2025 onwards. But we will revert with more precise guiding once the drilling schedule is finalized for next year. We are expecting cash tax payments of approximately $1.3 billion in the second half of this year. And we will pay dividend of $270 million relating to Q2. And we guide for $270 million also for Q3. And for the year, we expect to pay out approximately 30% of the CFFO after tax in dividends. And with that, I hand it back to Nick for concluding remarks.

Well, thank you, Stefano. I've just got one final slide to summarize. I think the key point is we're delivering on our strategy for growth and value creation. In the first half of 2024, we've continued to deliver strong operational performance in line with or better than guidance. And on the back of this operational performance and supported by strong realized prices, we continue to deliver good financial results. We're also delivering on our growth target to around 400,000 barrels a day by the end of 2025. And we should be there well before then, as our key projects are nearing completion. And on top of that, we're also unlocking future value with our high quality portfolio with significant growth opportunities. We have a pipeline of early phase projects, which we're moving forward now at pace. And our exploration program is already delivering results. And this will allow us to sustain production of 350 to 400,000 barrels a day towards 2030. We're doing all of this with industry leading ESG performance, which we're getting recognized for. And lastly, we continue to provide attractive and predictable shareholder returns. So these are our second quarter results and other reasons to be invested in Bore Energy. I'd like to thank you for your time and we'd now like to open up the call for your questions.

We will now start the question and answer session. If you do wish to ask questions, please press five star on your telephone keypad. If you wish to withdraw it, you may do so by pressing five star again. There'll be a brief pause while questions are being registered. The first question will be from the line of Matthew Smith from Bank of America. Please go ahead. Your line will be unmuted.

Hi there. Good morning. Good morning, Stefano. A couple of questions from me, if I could. The first one was on BoulderX. It sounds like sort of some good progress there. Just looking to really understand sort of how the confidence intervals have changed since the last quarter, please? Because I think sort of at last quarter, some improvements to the schedule had been made, but ultimately your comment at the time was that you were tracking behind the schedule. So I just want to be clear in terms of has there been any improvement on where you're tracking compared to the prior quarter? So it'd be the first on Boulder X, And then the second question on the dividend, if I could. It's really around, could you remind us, you know, you've got a 20% to 30% range of CFFO for the dividend. Could you perhaps just remind us sort of what has given you the confidence on going towards the 30%, the higher end of that range this year? And I suppose the question really is, is there any reason to you would caution us on expecting a similar outturn in 2025, of course, when your absolute quantum of cash flows should also be higher as a result of the production ramp. So I'll leave it there. Thanks.

Good. Thanks, Matt. Nick here, I'll take the first one and maybe Stefan will do the second one. And good to have you online and good questions. I think Boulder X, I mean, we've put huge effort into this is a difficult project. We put huge effort into moving it forward and getting the remaining construction commissioning done. And, you know, we've been we've we've created some results out of that. And we're now nearing completion on the FPSO. And we also created some flexibility for ourselves by redesigning the mooring system, which means that we can install it a bit later towards the winter period and a bit earlier in the spring if it goes to next year. So that's also a good thing to have done and create some optionality. And on top of that, we've put flexibility in all the installation arrangements, vessels and things, so that we can choose to do it when we want. So we've got the complete flexibility. You know, our target is firmly to get it done this year. And we're going to make a decision as late as possible at the end of August. And the key consideration here is to ensure that we don't carry too much work into the offshore phase. And, you know, as previously completed communicators, of course, you know, then therefore there's some risk that we choose to put it into next year. And I think we're going to leave that decision as late as possible and we'll make the decision at the end of August. Now, if it does go into next year, I think we're very confident of getting this done. It'll get installed in the early part of the spring or maybe in early March and we'll see first oil at the end of Q2. As I say, we're getting there. The key focus is to just get the remaining work done and What we're not willing to do is obviously compromise on quality and compromise on getting it complete because what we don't want to do is to take a lot of work offshore. So those are the considerations. And as I say, we're going to make the decision as late as we possibly can at the end of August. And then maybe Stefano, you want to cover the dividend question?

Yes, sure. And, you know, on dividend, I think of our energy capital allocation priorities, I think, provide quite an attractive combination of resilience, growth and shareholder distribution. And maybe this year, the 30 percent is a sign of resilience. We are still in quite a capex peak phase where we are funding, especially for the major part of the year, Kasberg and Balder, which are due to start up in Q4. But then we are entering a new cycle in 2025 with high production and declining investments, which provides headroom for CFO growth, and VOR dividend being the dividend, the function of the CFFO. I think the framework we have allows for a balanced approach to capital allocation. There is an holistic approach when we need to prioritize. And overall, I think the strengths that you can see in VOR is exactly the fact that we have been able in the past, and also now, and we will do so also in the future, to really combine funding the investments, paying dividends in accordance with the policy, and the leveraging at the same time. So, yeah.

Hopefully, Matt, thanks very much for your time.

Thanks. Thank you, Matthew. The next question will be from the line of Theodor Sven Nielsen from SB1 Markets. Please go ahead, Johan, I'll be unmuted.

Good morning, all, and thanks for taking my questions. Three questions for me. First, following up on the Baobab question, it looks like you've changed the world slightly since the first quarter report around how you talk about the project and now talk more about the second quarter 2025 than the fourth quarter 2024. Just wondering, over the past quarter, have your conviction on the first oil interview changed anything? That's the first question. Second question is on the investment program you previously announced. Do you have the best bailout in the past quarter? I just wonder, are you now done with the investment program? Third question is on slide four on the production indication you gave there. I just wonder on...

in the upper range you you show for q4 how much production have you included from boulder and cost that in that scenario thanks so good good morning uh tido and uh good questions uh you know i think our messaging obviously evolves a little bit from uh from q1 to now for q2 around boulder x but not materially i mean the key focus here is to get the the FPS will complete. I'm pretty confident we're going to have it mechanically complete very soon. And the question for us is, do we get enough of the commissioning done? And what we're not prepared to do is to take a vessel offshore incomplete. And so that's what the considerations are. We've created more flexibility for ourselves to make the decision later. And if it does go into next year to get it installed earlier. So all of that is good. And we're just going to make that decision as late as possible so that we make the right decision. And that's really where it stands. And as I say, this is a schedule issue, not really a cost issue, because we're almost complete on the project. And it also doesn't impact us long-term guidance for the company, as I said. So that's sort of how we see BoulderX. On the divestment program, you'll know that in the quarter we, uh, divested the boiler and Nona assets and, uh, and we continue to look at opportunities to do further things. And, uh, of course we'll let the market know when, when, if we do something else, uh, you know, we have, uh, some other assets perhaps in the portfolio that we might, uh, look at, uh, divesting in time, but, uh, uh, you know, we'll, we'll, we'll advise when, when we get to that point, if we do and, uh, uh, and we'll do it at the right time. Uh, In terms of production outlook for this year, we have not guided the details around what's in the range for Q4. I mean, where we are today, year to date, is we're at 293,000 barrels a day for the first half. We're in the upper end of the range that we sort of set out for that period. We see strong underlying production from our assets. Uh, and we have a range of outcomes in here for different, uh, amounts of, uh, of production in for, for, you know, and Casper gun for, for Boulder in the outlook. And, uh, uh, you know, as both projects come in towards the end of the year, they don't actually have a huge impact on the overall outcome for the year. It's really, how do we look into next year? Uh, and, uh, uh, and so, so there is a component in for, for those in, in the outlook and, uh, from the way I see this, is that we're firmly on track to deliver our 280,000 to 300,000 browsers a day for this year, even if we see little contribution from the two big projects. Hopefully that covers your questions.

Yes, just on my follow-up on the last question there. Should we interpret the small increase in production from Q3 to Q4, that is more an issue of less seasonal maintenance than it's an issue of, uh, of adding barrels from, from Boulder and Costa. Is that correct?

Well, we show you a range there. So, uh, and, uh, we show an upside and a downside. And of course, when we get into Q4, we're through all of the, uh, turnaround season. So we should have a good production. We have, Of course, the benefit of the infill wells that we've completed during the year, we'll have brought on three new projects by that stage. So we'll be getting the contribution from those. And then we've got, you know, what level of contribution do we get from Casberg and Boulder X? So they represent the range of outcomes that we show. And I feel, you know, we've got strong performance actually in our underlying assets. So I think we're really in good shape to deliver on our guidance for the year, regardless of where the project is coming, I think.

Okay, understood. Thank you. I'll leave it there. Thanks.

Thank you, Theodore. The next question will be from Delana Victoria-McCulloch from ABC. Your line will be unmuted.

Morning. Thanks very much. A few questions for me. So could you provide us with a reminder of the Johan Casberg ramp-up expectations? Not necessarily just for this year, as the last question alluded to, but looking into next year and where we should see it reach the new increased capacity levels. Secondly, in terms of sanctioning the next phase of projects, it was interesting to hear that we should possibly expect some of these in 2025. What are the biggest challenges in accelerating these projects from where they have been previously? And then finally, hopefully not too stupid a question, what is the implication of taking the Boulder X vessel offshore before commissioning is complete to the level that you're trying to get it to? Would that be a cost implication or an operational risk? Thanks very much.

Hi, Victoria, and good questions. On you and Kasper, I don't think we've specifically provided guidance on the ramp-up, but, you know, the project's firmly on track to start up in Q4 this year, and that's what we expect. And, of course, there's a range of outcomes. And then it takes some time to start up all the wells and clean them up and then get stability in the facility. And these things normally take a number of months. So, you know, I think you can expect, you know, Sometime in the, you know, three to six months, you will see a level of stability in the facility, perhaps earlier. And, you know, we, of course, have a range of outcomes in the way we look at our production outlook. So that's sort of how we see that. But, you know, the facility's of a high degree of completion. It's very well designed and, you know, I think all being well, you'd expect a pretty quick ramp up, but obviously we're cautious around that. Regarding the new projects, it's about just getting them going, actually. I mean, none of these are complicated. They're all tied back into facilities we have. The project's activities are ongoing, and it's really about just getting moving and getting these projects sanctioned and All the ones I talked about, I think there's a good opportunity to make them happen and sanction them in the timeframe. There's a lot of predictability around doing subsea tidebacks, and the industry here in Norway has got a lot of capability to do them on time, on cost, and I think we just have to get it done. And then in the Boulder question about the level of commissioning, what What we do want to do is to take a lot of work offshore. Obviously, completing work offshore is more costly and takes more time. And it's more difficult. Today, we have about 1,300 people working on the vessel. And we can't put near that number to work offshore. And then every person offshore costs a lot more money. And then you get weather downtime. So what we don't want to do is to take a material amount of work offshore. And that's the criteria which we'll make as far as making a decision at the end of August. I mean, we're basically mechanically complete or very close to mechanically complete now. And the question is, how much extra work can we get done between now and the end of August? And that's what the criteria will be for making a decision. So hopefully that covers your questions, Victoria.

Thank you very much.

Thank you, Victoria. The next question will be from Tulana Sasi Khan Chilukuru from Morgan Stanley. You'll now be unmuted.

Hi, thanks for taking my questions. I had three, please. The first one was on gas sales. Of course, the proportion of gas sales in fixed prices is falling in 4Q, and now these low levels are extended to 2Q25. You highlighted the forward price at that time was not necessarily attractive. I was just wondering, touch upon your outlook for the European natural gas market over the next 12 months in terms of, and kind of relate to that, to this decision that you have taken on fixed prices, that would be useful. The second one was on On the development CapEx, we'll be coming at the lower end of that range. I was just wondering if you could clarify how much FX kind of contributed to this, if there are any CapEx differences, or is this related to the optimization that you've been highlighting about as well? Finally, I'm afraid the last one is also a clarification on BalderX. The sale of a decision at the end of August, Previously, we kind of talked about weather conditions being one of the key factors. I was just wondering if that is still the primary reason or is it the FPSO getting up for that installation or getting ready for that installation the key factor now? If that has kind of changed in terms of how you're kind of looking for this uncertainty.

Okay, thanks. Maybe, Stefano, do you want to take the first two? And then after that, I can talk about bolder.

Sure. Yes, absolutely. In terms of gas, we are seeing that the gas is trading to around €35 MW for the summer and is increasing to €40 MW for the winter. And there is a tightening in general of the global LNG markets with higher spreads between Asian and TTF. There are concerns about Gazprom stopping deliveries to OMV in Austria due to legal dispute. And there are also supply outages, such as maintenance and operational issues at the NCS and the LNG supply, and also in the US. So what we are seeing is definitely, and mostly a new winter will arrive, would be a mild winter, would be a cold winter. Going forward towards the winter, there is a lot of uncertainty and for sure a lot of volatility. So as you correctly said, we didn't opt to lock in at that point in time, fix the price gas year ahead or fixed pricing for Q4. And that's the reason why the percentage is 5%, as we showed in the presentation. But this doesn't mean that we don't have the right instruments to address this volatility, because as a matter of fact, we can still opt to nominate quarter ahead or fixed pricing if we see that there are interesting level that will come and that we will judge at that point in time that are attractive to lock in. So to some extent, I think we have hopefully done the right thing not to lock in interest that we're not looking particularly interesting and be ready if the window of opportunity comes to lock in if we see those opportunities coming to the market. And hopefully this will help us to also have robust gas sales pricing in 2025. In terms of development capex, I think you are right. We are guiding on the low range. I would say the weakening of the NOC is the major reason. Let me say we used an assumption of 10 NOC per dollar. Today we are at 11 NOC. So that is quite an impact. And also, I think it's important to state that our capex are 70% NOC-based and 30% dollar-based. You can appreciate that this weakening of the NOC is definitely contributing. Then I would say the rest is like the asset sale of Norne. In the second half of the year, you won't have capex associated to that one, but I think it's contributing, but in definitely a lower portion of the total.

And then maybe I'll just capture the Boulder projects. I mean, what we've done is one of the things we did is we invested some money to redesign the mooring system and the way it's hooked up. And what that does is it moves work inshore and we had to spend some money on the mooring system offshore, which we've done. And what it does is it means that previously we were able to install towards the end of August and, you know, the winter, the weather, period sort of ramps up quite quickly. And we needed quite a long period to install the vessel of flat calm weather. And what this redesign means is that we need less of a flat calm weather period. So it creates the opportunity to do it later and earlier in spring. So we can now install in September as opposed to in all the sort of end stop being August. Of course, you can get periods in the winter where you get flat calm long enough, but the frequency and chance of that is very low. And so we invested that money and we get the opportunity that that offers. And the other criteria is, do we believe we're complete enough to not take a lot of risk offshore on the vessel? And those are the two criteria that sort of drive this. So That's how I look at this.

Hopefully that answers your question. Thank you very much.

Thank you, Sachikan. The next question will be from the line of Lydia Rainford from Barclays. You will now be unmuted.

Thank you, and good morning, and thanks, as always, for the presentation. A couple of questions, actually. On the safety stats of the TIRF, It increased very slightly. I'm just wondering if you can just talk about that and then possibly link that a little bit to what you're seeing in terms of the Neptune culture and structure you brought those people and assets in. And then I'm actually going to be very boring and come back to Bolter X. If it doesn't go, what are we actually looking at in terms of startups? You said it can be done quickly and early in the summer window, but when are we actually looking at, say, the way is the next option and when do they actually get on the streams? Again, it feels like the ramp-up of this, instead of timing, is minimal. But then linked to that is other incentive payments for the workforce to actually get it done and sail away in early September. Thanks.

Good, Lydia, and hi, and good questions. You know, on the safety statistics, what you'll see from the chart is that we had, I mean, first of all, zero material damage safety or environmental incidents in q2 and and in fact uh when you look back uh you know you can see a very good strong trend on serious incident performance over time and uh and actually we're below uh sort of industry average somewhat below there what you see on the triff which is uh is is smaller recordable injuries these are slips trips and falls people cutting fingers or things in eyes and that type of thing that we record and of course we record all of these things and we're having too many of these and you can see an uptick in that and uh and i uh you know there's no specific uh thing to point at and we are focused on it hard to try and reduce it and uh but but it's the nature we've got quite a lot of activity going on and things like uh construction activity shutdowns and things. So I think this is where it comes from. It's not good enough. We're working to improve it. But having said that, we're about an industry average, actually, in this measure. But for us, it doesn't feel good enough. So we're working on that. And then, you know, you asked a question about culture. I have to say what I see from the Neptune organization is an extremely strong safety... culture and uh and and and we have that in our own organization and uh but today we're working as one organization we've got everyone together in one place we've uh we've we've mixed the teams up the new leadership teams in in place and from first of may we were working on that and uh uh you know i think it it feels good already i think the culture feels good there's uh There's a lot of strong support in the organization for it. And actually, if you look at it from a people perspective, there's lots more opportunities in a bigger company for doing different things. And we've got lots of exciting work to do. And I feel a lot of energy and focus on delivery. And I think actually you see that in the results from the company. I mean, we, again, deliver strong results. You know, everything's. either in line or better than what we've guided. And, you know, as we sit here just past the middle of the year, I feel really good for the delivery that we've set out. So I think the culture is very strong. And then, you know, on Boulder X, what we're saying here is that we're nearing completion. We are not going to take the vessel offshore if there's still quite a lot of work to do and the risk offshore. And What I'm saying is that we're nearing mechanical completion and it's really going to be about how much of the commissioning that we have completed and we'll make a judgment as late as we possibly can on that. And, you know, we've got, as I say, a lot of people working to get this done. We have definitely incentivized everyone around this and not just the individuals, but also the contractors. to get this done and hopefully that will help. And if we make the decision that we have to move it to next year, I think we will come out at the end of August and clarify what that looks like. But I think you can expect us to be able to install this around the beginning of March. I don't know whether it possibly could be done earlier. And what I'm saying is the P90 startups by the end of Q2 next year. The reality is if we end up going to next year, we can guarantee 100% of the work is complete. So we don't carry anything offshore. And that should mean that we end up with a quicker completion when we get there. So those are the considerations. And as I said, we'll come out at the end of August and give some color on on how we looked at this.

Brilliant, thank you. Thank you, Lydia. The next question will be from the line of John Olesen from ABG. Your line will be unmuted.

Good morning, and thanks for taking my question. Most of my questions have been answered, but maybe just for curiosity, what, in rough terms, are the changes you have made to the usual mooring system, please? And I've got one more follow-up, please. If you could answer that first, please. Yeah.

So what we've done when the original design, you know, because this is an FPSO that have been installed. So if you were to build it today, you would build it in a slightly different way and and it would have less weather impact on on installation because the design has moved forward. So so we have what we have and But what we've done is we've changed the mooring system so that we have to do less offshore. And actually we move all of the diving work that's required into the inshore period. And so we've invested into some tensioners on the anchor system so we can tension the anchor systems offshore and do the diving work inshore while it's in the fjord. So what this does is it reduces the period of time we need flat carnal shore to a much smaller period. And then obviously we had to spend, it's a relatively small amount of money, but we had to spend some money on the tensioning system on the anchor systems offshore. But that's all installed and ready to go. Hopefully that's clear, simple. Yeah, probably.

And a follow-up on that is, if you can remind us of the Baldrix CapEx guidance, and if it confirmed that it's unchanged, even with all the extra efforts now in the latter part of the development. And also, if it confirmed that Baldrix CapEx guidance is unchanged, even if Spark CapEx delayed to 3.2 next year, please.

Yeah, I don't have in my mind the exact guidance that we've given. So, but, but maybe Stefano has that as we, as we talk. And, uh, but what I will say is that, look, you know, we're getting to the end. Uh, and so this isn't really a cost issue. It's a schedule issue. And, you know, it does not going to have a material impact on guided costs on the overall project. Um, and, uh, You know, I think if we do go to next year, there's possibly a little bit of extra cost, but it's not material in the overall scheme of the project is the way I see this. And again, we will update on this at the end of August when we come out with a status on the project.

Can I have your update on the latest guidance, please? It's not that important at the time of the project.

John, do you have the total number?

We have not given specific guidance per project as such. Okay.

All right. Well, thanks a lot to everybody and have a nice summer. Thank you.

Thank you, John. The next question will be from the line of Ruben Diva from Jefferies. Please go ahead. Your line will be unmuted.

Good morning, Nick. Good morning, Stefano. Thank you very much for taking my questions. I think most of them have been answered, so I hope you can do just two quick ones. Just a question on your leverage on the dividend. So the last few quarters, you've seen a bit of a tick up in the leverage while you've been able to keep your dividends flat in a negative sense and towards a 30% post-tax CFO payout. I was wondering with the correct interpretation there for the, are you happy to maintain the flat divvy and leverage to take up as long as it's below your long-term net debt to end the ex-cargo 1.3 lines? And then there's a second one was on the Boulder 6. Jake, I think you mentioned that it could sanction in 2025. I was wondering if you could give any color on the impact of this project in terms of potentially extending Flaxo or additional production. Thank you.

So, Stefano, do you want to try the first one?

Yes, probably it goes a little bit to what we said earlier and, you know, about the fact of having, currently we have a leverage which is at 0.8 and is expected to be a bit, let's say, the highest point given the current market conditions within the year. And this specifically was due to the tax payment installments. Now, the dividend level is assessed on quarterly basis, also taking into consideration the commodity environment, the company performance, So it's a factor that comes into the equation. Of course, an important one. But I think what is really important for us when we look at the leverage is that we are able to maintain 1.3 over the cycle. This means that in a specific year, we might be well below. like it happened, we were at 0.3 not long ago. We might be above, but for us, what is really the important thing is that then we maintain this 1.3 over the cycle. I don't know if this, hopefully this answer to your question.

That was very helpful. Thank you. Good. And then Boulder Phase 6, So we're in the sort of concept select phase for this project. And, you know, where we're at on the boulder phase five, which I talked about is six wells, which we'll start drilling in the first half of next year. That will utilize all of the remaining subsea slots, template slots. So any future developments, what we need to do is install some more subsea infrastructure. So templates and some connections. into the facility and we're at the stage, we have lots of subsurface opportunity here and we're in the stage of defining what phase six looks like as a project. So is it how many wells, how many subsea templates? I envisage that we will have multiple phases of development here and we'll be rolling over new templates over a period of time while we continue to exploit the subsurface opportunity. It's actually perhaps a bit early to talk about what this looks like. When we've defined the project more, I think we'll be able to talk about it. As I say, our aim is to come forward with a sanction during next year.

Thank you very much. Very helpful. Okay. Thank you, Ruben. As no one else has lined up for questions in this call, I'll now hand it over to Ida.

Thank you very much. We've now run out of time and Investor Relations will follow up with the questions that have come in in writing by email. And that concludes the Q2 results presentation. Thank you all for listening in. And we would like to take the opportunity to wish everyone a good summer. Thank you very much.