Var Energi ASA

Good afternoon, everyone. It is a pleasure to welcome you all to the presentation of VAR Energy's fourth quarter 2024 and capital markets update. It's great to see so many people here in the room in Oslo and joining us also on the webcast. 2025 will be a transformational year for our energy, and today we will demonstrate how we will deliver growth, resilience, and value creation towards 2030 through sustained high production, strong cash regeneration, and increased dividends. Our CEO, Nick Walker, will lead the way, followed by presentations by several members of our leadership team. And with that, I'd like to invite Nick to the stage. The floor is yours.

Well, thank you, Ida, and good afternoon, everyone, and welcome to Vore Energy's 2025 Capital Markets Update, together, of course, with a review of our full-year 2024 results. It's really great to see so many friendly faces here in Oslo in such a beautiful day, and also to welcome all of you who are joining us online. I'm pleased to report that we delivered strong results in 2024, in line with guidance. And as one of the fastest growing EMPs globally, we're set for transformative growth in 2025. I'm really excited for the outlook of Vore Energy. We have amazing assets. We have a tremendous team and we'll show today we're delivering on our strategy for growth and value creation. And I think there are five key drivers for this success. Firstly, it's our high quality portfolio that can organically sustain or grow production. Secondly, I believe that we can incrementally improve the outlook, making it better and better over time. And thirdly, we're stepping up the pace. The mantra is more faster, and you're going to hear a lot about that from Torge. And fourth, we have significant flexibility in our capital program, combining to make the company resilient, which is important in an uncertain world. And lastly, perhaps more importantly, we have an amazing team with an entrepreneurial focus and the capability to deliver on our strategy. And I think these are the foundations for significant value creation and are a thread through everything that we will talk about today. I think the film at the start was a really great introduction to my first few slides, and I want to provide some context to the business environment, as I think it informs how we see our strategy. The energy transition is happening, but I'm increasingly of the view that it will take longer than expected. The world needs access to reliable and decarbonized affordable energy. And the recent years have demonstrated the need for the latter, as affordable energy is vital for economic growth and prosperity. And we're seeing the tensions in the world are balancing these objectives. And the charts here show the latest IEA oil and gas forecasts, and that you can see that the demand for oil remains strong under any scenario. But to meet this demand, the world needs significant new investment in oil developments. And gas is an important transition fuel, which has done more so far to decarbonize energy systems than anything else. And this together, increasing global electricity consumption, is driving growing world demand for gas. So in any scenario, oil and gas will be essential for world energy supply for decades. But it's also important that we decarbonize the supply. And so we believe that those who can produce hydrocarbons with the little emissions and low cost as possible will have competitive advantage. And we also believe that the Norwegian content shelf is one of the best places in the world to invest in oil and gas. And the reasons for this are really very clear. It's low cost, it's low emissions. In fact, it's world leading on this. There's large remaining resources and there's access to acreage and reliable framework conditions and a supportive fiscal regime. The NCS is a key supplier of energy to Europe. And as you can see, representing around 30% of supply. And oil and gas is also key to Norway, representing almost a quarter of GDP and is a major source of industrial activity and employment across the country. And so there's strong public support for the industry. And this is why we're a pure play NCS E&P company and we'll continue to stay so. So in summary, oil and gas has a long future. The winners will be those who produce with low cost and low carbon emissions, and Norway is one of the best places in the world to invest in oil and gas. So in this context, our strategy is really very simple. It is also consistent, and you'll see that this slide is the same as we used last year. Our strategy is to ensure growth and value creation for all our stakeholders over time. It's to be a pure-play Norwegian oil and gas company for the reasons that I've set out. It's to be a reliable and secure supplier of affordable energy to Europe. And importantly, it's to be safe and responsible about how we conduct our business. And we're delivering on our targets and strategy, as we'll demonstrate today. Anvor Energy is built on a strong heritage of putting four companies together. Since the company's inception six years ago, it has a strong track record of value creation, as you can see. Building the third largest producer on the NCS with significant production and reserves growth, whilst delivering strong financials and returns, and achieving a total shareholder return since the IPO three years ago of over 80%. all at the same time as positioning the company for material further growth and value creation. And I really believe the best is yet to come. And I firmly believe that creating value is driven by people working as a team with a consistent and clear strategy. It's about creating one team and fostering the entrepreneurial energy in the company where everyone can make a difference and contribute to value creation. and we're stepping up the pace, doing more faster. Our heritage means we have deep and unique NCS expertise, and we're leveraging this. As we'll discuss in a moment, we have a leading exploration track record. In fact, we're recognized as most successful explorer on the NCS last year. And this is driven by a highly experienced team, but we're also leveraging the expertise of E&I, our major shareholder, who are probably the most successful explorer amongst the majors. And our focus in everything we do is about value creation, and that's how we see technology implementation. It's about implementing technology to create value. And partnerships are also key to our success. We draw on the capabilities and expertise of our major shareholder, E&I. We have strong relationships with our licensed partners, in particular Equinor. And we rely strongly on key relationships with our suppliers amongst the best in their fields to help us deliver success. So this is how we will create value, and you'll see many examples of this from my colleagues through today. So now looking at the business. Vore Energy is one of the fastest growing EMP companies in the world, and we've built a high quality diversified asset base in all areas of the NCS, with interest in around 50% of producing fields and the associated infrastructure, and also a large exploration footprint. Only Equinor has a bigger and more diverse position than we do. And so, Vore Energy has an amazing portfolio, which is driving our growth and sustained production. And Norway is a key provider of gas to Europe, as we all know, and Vore Energy plays a significant role in this as the second largest exporter of gas from Norway. And with our production mix of 35% gas, this provides natural hedge to our financial outlook. And from our main producing assets, we deliver gas into all the key markets in Europe. We've deployed a flexible gas sales strategy to capture the upsides. Long-term off-take contracts cover around 70% of our volumes, and these offer different pricing mechanisms which we utilize. We can also arbitrage pricing between the key markets. And this gas sales strategy has achieved additional revenues of around $1.3 billion above spot prices over the last two years. So Vor Energy is a significant and predictable supplier of gas to Europe, and millions of people and many businesses rely on us to deliver every day. And so gas is a key element of our value creation. So now let us look at the highlights for 2024. I'm pleased to report strong operational performance in line with expectations. We delivered full year production of 280,000 barrels a day within guidance. This is significantly increased from the year before. This is supported by three new project startups in the year and inclusion of the Neptune assets and also strong production efficiency across our operated assets. We're also making good progress delivering on our growth plans and unlocking the potential of our portfolio. Our major projects, Johan Casberg and Boulder X, are nearing completion. We increased reserves with a reserve replacement ratio of 300% last year. And we continued our leading exploration track record with approximately 50% success rate for the year, and we're already turning this into value. And we're continuing to deliver efficiencies in our business. Production costs for the year were 12.8 US dollars per barrel, significantly better than the original guidance. And we see higher synergies from the NetTune transaction of around $600 million post-tax over time, double what we guided when the transaction was announced. And on the back of this strong operational performance, we continue to deliver good financial results. with cash flow from operations post-tax of $3.4 billion for the full year, and we maintain a strong investment-grade balance sheet. And lastly, we continue to provide attractive and predictable shareholder distributions. We confirm a dividend of 11 US cents per share in line with guidance for the fourth quarter to be distributed in February. And this means that the total 2024 dividend payout is approximately $1.1 billion, or around 30% of CFFO after tax. So in summary, we've delivered strong results in 2024 in line with expectations. So now looking forward to 2025, we're set for transformative production growth with Q4 2025 production guidance of over 400,000 barrels a day. This is driven by nine project startups adding around 180,000 barrels a day of new volumes at peak. And you'll see we're stepping up the pace of realizing the upside value from our high quality portfolio. with around eight project sanctions in the year targeting over 100 million barrels of net reserves. And we're increasing further the pace of exploration with around 20 wells in the year targeting approximately 125 million barrels of net risk resources. And we're continuing to drive efficiency, delivering incremental improvements, as I described earlier. In the fourth quarter 2025, production costs will be around $10 per barrel, down from $12.8 last year. And we aim to sustain it around $10 long term. And we're targeting to be carbon neutral in our operations by 2030. And on the back of our transformational production growth, we're raising dividends. We're providing Q1 2025 dividend guidance of $300 million, an increase from the $270 million per quarter that we paid out last year. And we're also raising the long-term dividend guidance to between 25% and 30% of cash flow from operations after tax from previously 20% to 30% of CFFO. So 2025 will be a transformational for energy. And Voo Energy has an amazing portfolio with lots of optionality and growth opportunities. And we're working at pace to create value from this. Our 2P reserves stand at 1.2 billion barrels. This is either in production or under development. And this underpins our growth to over 400,000 barrels a day in Q4 this year. And we can stay there a few years. And without investment, we'll then start to decline. But we are much more than that. We recently announced our 2C contingent resources are increased to around 900 million barrels, almost a 50% increase from the end of 2023. And we've defined over 25 early phase projects that are moving forward, counting for around 500 million barrels of this volume. This is a significant progression from what we presented a year ago. And during 2025, we're targeting sanction around eight of these projects, accounting for over 100 million barrels of net reserves. And on top of this, we also have an exciting exploration portfolio of over one billion barrels of net risk resources, where we expect to drill out about 50 percent of this over the next four years. And when you put this all together, you can see we have over three billion barrels of resource potential with 60 percent, 60 percent yet to be developed. That is how we will organically sustain production long term. And we're accelerating the pace of realizing this activity as you're here. And we're also set to deliver significant production growth in 2025. From 280,000 barrels a day in 2024, we'll grow to over 400,000 barrels a day in the fourth quarter this year. This is double 2023 levels. This significant growth is driven by nine project startups that will happen during the year, adding around 180,000 barrels a day of new production at peak levels. And this will see around 85 new production wells coming on stream during the year, including infill wells. This is a huge number in an offshore context. And with the key projects being Johan Casberg, which will come online imminently, Holton East, which is on track for startup at Q1, end Q1 this year, and Boulder X, where the FPSO is now mechanically complete and will sail away from shore in March with expected startup at end Q2. And so we're guiding 2025 full-year production of between 330,000 and 360,000 barrels a day, with the range reflecting the uncertainty around the startup timing and ramp-up profile for the new projects. And you can see that we're also providing guidance for 2026 for the first time of around 400,000 barrels a day for the full year. This growth will now come very quickly, and we're confident that we're on track to deliver it. And with our high-quality portfolio with significant upside, when we reach 400,000 barrels a day in Q4 this year, we can sustain it organically at 350,000 to 400,000 barrels a day towards 2030. And we're stepping up the pace of activity significantly to deliver on this. Firstly, by maximizing recovery from our producing assets, and these are the best barrels that you can develop. We'll drill around 130 infill wells over the next four years, adding net reserves of 160 million barrels and production of over 40,000 barrels a day. The economics are highly attractive with break-evens of around $30 per barrel. Secondly, we're progressing over 25 early phase projects, targeting net resources of over 500 million barrels. These are all tieback developments with short time to market. And the portfolio is high value with average break-evens of around $35 per barrel. And finally, we're increasing our pace of exploration. Last year, we drilled 13 wells, yielding six discoveries, with a number of these already in the development hopper. And this year, we're planning on 20 wells, with the program over the next four years targeting net risk prospective resources around 500 million barrels. And I think with around 70% of our future capital spent uncommitted, we have high flexibility to manage the business through the cycles, allowing us to slow down or speed up depending on the macro environment. And this put together is a big program of activity in an offshore context. And we have the people, equipment and contracts in place to deliver. I think additionally, we continue to take an opportunistic approach to further M&A. Where there's a strategic fit and we can create value, we have the track record and financial capacity to do more. But importantly, we don't need to do deals as we can sustain production organically long term. We just need to deliver what we have in our hands today. And how we do our business is just as important. So safe and responsible operations are key to our license to operate, and our ambition is to be the safest operator. And you can see that overall, we have a good safety and environmental trend, which is generally getting better. However, we recognize we're having to have too many low-level incidents, which is a strong focus within our organization. And we don't normally talk about this, but we're showing here our sick leave trend, which is going in the right direction. And it's significantly below the levels of our peers and the Norwegian industry average level of 7%. And the reason I put this in is I think it speaks to the strong positive culture in Vore Energy, which, amongst other things, drives safety performance. For the full year 2024, we had a good outturn with zero material safety or environmental incidents. And this takes hard work, a strong safety culture and focus every single day by the team. And I know they're committed to deliver this. And we continue to position the company to adapt to the energy transition, to ensure relevance and investability long term. We're top quartile in the world on emissions intensity. And our methane emissions are already near zero level. So we're already doing very well. But we want to go further. We're targeting becoming carbon neutral in our net equity operational missions by 2030. This will come from further investments in electrification of key assets, energy efficiency and portfolio optimisation, which will reduce emissions by more than 50% by 2030. And then we will invest directly in natural carbon capture projects to achieve carbon neutrality. And we have the contracts in place to achieve this, which comes at relatively low cost. Our Scope 2 emissions, which are purchased electricity, is already certified to come from renewable sources. And for our own use, Scope 3 emissions, this is the use of our product, we already provide high-quality offsets. And I'm pleased and very proud that we're getting recognition for our ESG leadership. Sustainalytics rank us as a top-rated company. This puts us in the top 10% of world oil and gas industry, and we're the only Norwegian energy company with this rating. And also, we're including the OBX ESG index as the only oil and gas company. This index includes the top 40 companies on the Oslo Exchange with the best ESG ratings. I think all of this is leveraging to how the company is viewed. And how do we create value? Vore Energy has a high-quality business, and this provides strong foundation to deliver sustained value to shareholders over time. as Outline will sustain production of 350,000 to 400,000 barrels a day towards 2030. Our high-margin barrels mean that business is free cash flow neutral at around $40 per barrel, which means we generate strong free cash flow, as you can see in the range of $5 billion to $9 billion over the period 2025 to 2030, with an oil price range of $65 to $85 per barrel. And we have a strong investment-grade balance sheet with stable outlook. And with 70% of our capital spend uncommitted, we also have high flexibility to manage through the commodity price cycles. This combines to allow us to pay attractive and predictable dividends with a raised dividend guidance of 25% to 30% of cash flow from operations after tax in the long term. I think we have the flexibility to do it all, to provide attractive dividends, to maintain an investment-grade balance sheet, and fund our growth profile. And this is my final slide, and I want to summarize, leaving you with the following messages. Vore Energy is positioned to deliver significant growth, value, and strong shareholder returns. We're one of the fastest growing EMP companies globally. We're on track to produce over 400,000 barrels a day in Q4 this year. Our high quality portfolio will organically sustain production of 350 to 400,000 barrels a day towards 2030. and this is supported by high-value investments with break-evens of around $35 per barrel. We're stepping up the pace to deliver these, and we're doing more faster. And I believe that we will incrementally improve the outlook, increasing the resources and production, reducing costs and emissions, adding significant value for our shareholders. And we'll continue to reduce emissions, becoming carbon neutral by 2030, making us relevant and investable long-term. Putting this together, we have a resilient business with high capex flexibility, delivering strong free cash flow of $5 to $9 billion towards 2030. This supports attractive and predictable dividends with a raised payout guidance of the 25% to 30% of CFFO to tax. Our share price trend over the last year has been strong. But however, with us trading at a very attractive dividend yield of 14%, I still see further price upside. I think all of these are the reasons to be invested in Vore Energy. And with that, I'm now going to hand over to my colleagues who are going to provide further details on how we will deliver on all of this. And first up is going to be Torga after a short movie. So thank you very much.

The Balder X project is a new beginning in one of the most prolific areas on the Norwegian continental shelf. By extending the life of the very first discovery on the Norwegian continental shelf and where it all started in 1967, the foundation for new growth and value creation has been set. Through competence, new technology and hard work, the Balder field will live on well beyond 2045. With all drilling and subsea work finalized and the Jotunn FBSO mechanically complete at the yard, we are preparing for offshore installation during spring. As the Jotunn FBSO comes on stream in second quarter of 2025, adding 80,000 barrels of oil per day, a new era begins.