Var Energi ASA

Hi, everyone, and welcome to Vore Energy's third quarter presentation of 2024. Today's call is being recorded. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there'll be a question and answer session. To ask a question, please press five star on your telephone keypad. I would like to introduce Head of Investor Relations, Ida Marie Fjellheim. Ida, you may now begin.

Thank you and good morning everyone. A warm welcome to Voronashi's third quarter 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 afterwards we will open up for Q&A. I will now give the word to Nick.

Thank you Ida and good morning to you all and a warm welcome to our third quarter 2024 results presentation. As we announced last week, Stefano Piatti is stepping down as CFO effective 1st of December to pursue a new opportunity within E&I. I would like to take this opportunity to recognize Stefano for his tremendous contribution to the growth of Vore Energy since its inception five years ago. He's played a leading role in steering the company through three defining acquisitions, delivering the third biggest ever IPO in Norway and building Vore Energy into the third largest Norwegian oil and gas company. But after five years in the role, it's quite natural for Stefano to move on to something new and bigger. On a personal note, he'll be missed and we wish him every success in the future. I'm also excited to welcome Carlos Santapadre as the new CFO and a member of 4 Energy's executive team. His extensive experience and proven track record will be invaluable as we continue to drive growth and value creation. And we'll be creating opportunities for Carlo to meet you all during the coming months. And so now onto our Q3 results. I'm really pleased to report another quarter of solid delivery with resilient operational and financial results in line with guidance. And the company is poised for significant production growth over the next three quarters. As a result, we continue to provide attractive and predictable dividend distributions. So now let us look at the highlights for the quarter. we delivered operational performance in line with expectations, with production of 281,000 barrels of oil equivalent per day in the first nine months, which is in line with expectations for the period. This is driven by continued strong operational performance on our operated assets. You'll see that production in the third quarter was impacted by a higher level of planned maintenance shutdowns. These have now successfully been completed and everything is now back producing normally. On the back of this continued solid operational performance, we continue to deliver strong financial results. You can see CFFO post tax in the quarter of $1.3 billion. Our gas sales strategy continues to realize above market prices. And we're showing strong cost discipline, lowering capital spend and production cost guidance for the year as we enter a more volatile price environment. Envol Energy is one of the fastest growing EMPs and we're on track to deliver on our 2025 growth targets and unlock future value. Over the next three quarters, we will add around 150,000 barrels of oil equivalent per day of new production. At Johan Casberg, the FPSO is now successfully anchored at the field location and the project is on track to start up towards the end of this year. And as we announced in August, the Boulder X project target startup is moved to Q2 2025. And we're on track to meet this revised schedule. And our exploration strategy continues to deliver results with two discoveries in the quarter, making us the most successful explorer in Norway so far this year. And lastly, we continue to deliver attractive and predictable shareholder distributions. We confirm a dividend for the third quarter of 11 US cents per share in line with guidance, which is to be distributed in November. And we're providing Q4 2024 dividend guidance of $270 million, the same as for Q3, and reconfirming our full year dividend distribution guidance of approximately 30% of CFFO after tax. 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. Our large diversified portfolio in all areas of the NCS, with interest in around 50% of all producing fields and associated infrastructure, provides lots of optionality and growth opportunities, which we're working to move forward at pace. We completed the NetTune Energy Norga transaction in January, Already, we fully integrated the business into Vore Energy. And we're making great progress on delivering on the targeted synergies from the transaction of approximately $500 million post-tax over time, with over 50% of this target already on track for delivery. And turning now to production. The first nine months of the year came in at 281,000 barrels of oil equivalent per day, which is in line with expectations for the period. Production in the third quarter, as you can see, was 256,000 barrels per day and is down compared to the second quarter due to planned maintenance activities at Asgard, Njord and the Sleipnir areas and associated fields. These maintenance shutdowns are all now complete and everything is back online and producing as normal. We also saw strong production efficiency from our operated assets, as you can see, averaging 92% year to date. And looking forward to the fourth quarter, the planned shutdowns are all behind us and we expect Johan Casberg will start up towards the end of the year. And given where we're at, we have narrowed the guidance range for the full year 2024 to between 280 to 290,000 barrels of oil equivalent per day, with the upside dependent upon the timing of the start-up of Johan Casberg. So we had a good performance year to date and we're poised for significant production growth starting with Johan Casberg before the end of the year. Looking now at our longer term growth outlook, we're set for significant production growth as you can see from today's level of around 300,000 barrels per day. Five projects in development with the main ones being Boulder X, Johan Casberg and Holton East. will add around 150,000 barrels per day of new production over the next three quarters. This means we'll grow to around 400,000 barrels a 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 per day towards 2030. We will achieve this through firstly maximising recovery and infill drilling and high quality assets, adding around 45,000 barrels per day over the period. Secondly, by moving forward at pace our portfolio of over 20 early phase projects towards sanction and also drilling out our exciting near field and high impact exploration programme. This will deliver sustainable production towards 2030. Responsible operations are key to our license to operate, and our ambition is to be the safest operator. I think overall, we've good safety and environmental trend, which is generally getting better. However, we continue to have too many low level incidents, which is a strong focus in the organization. In the third quarter, we had a good out with zero material safety or environmental incidents. This performance straight 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 being recognized for it. We continue to make good progress on emissions reduction. And today we're in the top quartile of the industry performance. And we have a clear path to over 50% operational emissions reduction from our portfolio by 2030. with the main lever of this being further electrification of our assets, which we're making progress on. Already around 30% of our net 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 it is my ambition to be net zero in operations by 2030, which we will achieve by direct investment in offset projects. which comes at relatively low cost, and we'll expand on how we're going to do this soon. And as you can see, our ESG ratings are listed here, which are industry leading. This is leveraging to how the company is perceived. And now on production costs, we beat guidance with $12.6 per barrel in the first nine months of 2024, compared to our full year guidance of $13.5 to $14.5 per barrel. We're currently running about one and a half dollars per barrel below the 2023 levels, where two factors are the main contributors. One is the lower cost of the Neptune assets, which is bringing the overall company cost down as expected. And the rest is the increase in production compared to 2023 levels. Also, our improvement initiatives are delivering results. So as a result, we're lowering our full year 2024 production cost guidance to below $13 per barrel. And looking forward, I think we have a good trend. Our target is to reduce unit OPEX to around $10 per barrel by the end of 2025. And with the main levers of this being, firstly, the new projects coming on stream, which have average OPEX around $4 a barrel. Secondly, high grading the portfolio, which we've taken some actions on. And thirdly, delivering cost synergies and improvements, which we're also making progress on. So now moving on to how we're going to deliver long-term growth and value creation. I continue to use this slide, which shows what an amazing portfolio Vore Energy has with lots of optionality and growth opportunities. Our two pre-reserves, as you can see, stand at 1.2 billion barrels. We have seven projects in development. This underpins our growth trajectory to around 400,000 barrels of oil equivalent per day by the end of 2025. But as a company, we're much more than that. Our contingent resources, as you can see, are 750 million barrels, where we've already identified over 20 early phase projects to turn approximately 60% of this into value. And you should expect to see up to eight new project sanctions coming by the end of 2025, with the first being the sanction of Boulder Phase 5, which we announced today. And during the next year, the more significant project sanctions being Framseur, a Yoa area development, and Boulder Phase 6. And there are others. We also have an exciting exploration portfolio of over 1 billion barrels of NEC risk resources, where we will drill around 60 wells over the next four years. And this program, as we'll see later, is already adding value. But doing all this together, we have over 3 billion barrels of resource potential in the portfolio. And it is that which will organically sustain our production long-term. It's just down to us to deliver what is in our hands. And so now looking at our quality project portfolio, which underpins our growth, we have seven remaining projects in execution, which unlock more than 400 million barrels of net reserves. We are well into execution with four of the seven projects, more than 80% complete. i would say the risks are mostly behind us this project portfolio as you can see creates significant value with break-evens of around 35 dollars a barrel and rates of return over 25 percent i'm turning now to our three largest projects which together add around 150 000 barrels per day of new production over the next three quarters firstly boulder x This project unlocks gross 2p reserves around 150 million barrels with peak production of 80,000 barrels per day. And as you can see, low operating costs of around $5 a barrel. As we communicated in August, the target production startup has been moved to the second quarter 2025. Revised plan has limited impact on the company's 2024 production and no material impact on guided capital costs. And the status of the project is all development wells have been drilled and completed and all subsea facilities are installed. And all that remains is to moor and connect up the Jotun FPSO. And the FPSO is nearing completion and the additional time will allow us to fully complete the vessel inshore before installing in the spring next year, which will enable a fast and efficient startup. For the first time, I see contingency in the schedule. The ozone FPSO is also a key enabler to unlock over 100 million barrels of additional contingent resources in the Boulder area. Today, we've announced the sanction of the Boulder Phase 5 project. This involves the drilling of up to six production wells to utilize the remaining subsea template well slots to capture 2P reserves, gross reserves of 33 million barrels. This is a highly valuable project with breakeven price of $30 per barrel and a rate of return of around 50%. Already, we're working on a Boulder Phase 5 project to add new subsea facilities and wells with sanction targeted in 2025. And we're advancing development studies on the Ringhorn North discovery we made earlier this year. So we see significant upsides in the Boulder area and many years of value creation ahead. And at Yowen Casberg, the project is progressing according to schedule and is on track for targeted startup towards the end of this year. The FPSO is now securely anchored at the field in the Barents Sea, as you can see in this photo. All subsidy installations are completed and are now being hooked up to the FPSO, followed by final commissioning before startup. And drilling activities are going to schedule with 14 wells already completed. which are enough to reach plateau production levels. There are a total of 30 development wells planned, with drilling activities continuing into 2026. And Johan Casberg is a key catalyst for Vore Energy's growth profile, with our net share of production being over 60,000 barrels per day when plateau production levels are reached, which is expected to take three to four months from startup. These are high-value barrels with OPEX around $4 per barrel, and with Brae, Keefe and Eff economics of around $35 per barrel. And we see further value upside from extending the plateau through infill drilling and area tiebacks. Eight infill wells and further phases of development are planned, being clusters one and cluster two, and we'll also drill a series of exploration wells over the next few years. And so we anticipate this will double the plateau period to four to five years and perhaps beyond. And so after years of investment, we see a bright future at Johan Casper with significant upsides and long-term value creation ahead. And to the Holton East project in the Norwegian Sea, which is now anticipated to come on stream earlier than planned in the first quarter of 2025. Holton East is the development of several smaller fields tied back to the Asgard facilities with five subsea templates. You can see initially the project is developing 100 million barrels of gross reserves and achieving gross peak production of 80,000 barrels per day, with significant additional unrisked upside in the area of 100 to 200 million barrels. For Energy's net share of the peak production level is just under 20,000 barrels of oil equivalent per day. And I think Colton East is a great example of leveraging the value of existing infrastructure to provide high value barrels with low carbon emissions. And now focusing on our exciting exploration programme, we've had a great return for the nine exploration wells we've drilled so far this year, with the programme yielding four discoveries, so a 44% success rate to date. Adding, as you can see, net recoverable resources in the range of 29 to 57 million barrels of oil equivalent. And three of these discoveries, Ringhorn North, Syrisa and Lavrons, which you can see noted on the map there, are commercial to develop through existing infrastructure. And development and thinking is already being progressed. And the Hayden result in the Norwegian Sea is possibly the most significant, as it's a play opener where we see multiple additional prospects and the partnership are already assessing follow-on drilling plans. And we have six remaining wells to be drilled before the end of this year, covering some important prospects with four of these wells currently drilling. So I think it's going to be exciting to see these results come in. And looking forward, we're already well advanced on defining our exploration programme for 2025, which will be more ambitious than this year's programme, with about 20 wells being planned. So that rounds off my operational update, and I'll now hand over to Stefano to review the financials. Thank you.