Var Energi ASA

Hi everyone, and welcome to Vore Energy's Q2 presentation for 2025. This call is being recorded. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. To ask a question during the Q&A, please press 5-star on your telephone keypad. I would like to introduce Head of IR, Ida Maria Fjellheim. Ida, please go ahead.

Good morning, everyone, and a warm welcome to Orinashi's second quarter 2025 results. The presentation today will be given by our CEO, Nick Walker, and our CFO, Carlo Santopadre. Nick and Carlo will present the results, and afterwards we will open up for Q&A. I will now hand the word over to Nick.

Thank you, Ida, and good morning to you all, and I hope you're having a nice summer break, and thank you for taking time out to join us today for our second quarter 2025 results presentation. I'm pleased to report strong results for the quarter. Our key growth projects have been delivered as expected, which means we're on track to meet our plans for transformational growth in 2025. And we're moving forward a pipeline of quality new projects at pace that will sustain value creation in the longer term. And on the back of this strong performance and the resilience of the company to manage through the volatile markets, we continue to provide attractive and predictable dividend distributions. So now let us look at the highlights for the quarter. Production is on track to meet the midpoint of the full year guidance range. We deliver production of 288,000 barrels of oil equivalent per day in the second quarter. The Jotun FPSO at the Boulder Field is successfully on stream as expected and is ramping up. Johan Casberg is now producing at plateau levels. Our major turnarounds for the year will be behind us at the end of July and we're now producing above 350,000 barrels per day with more to come very soon. And we've strengthened our financial position. with CFFO post-tax in the quarter at $766 million. We maintain our strong focus on cost discipline, with reducing operating costs on track to be around $10 per barrel by the fourth quarter, as guided. And our gas sales strategy continues to create value, with 25% of volumes locked in for the second quarter at $92 per BOE. And during the first half of 2025, our financial position has been strengthened through the successful refinancing of credit facilities, issuance of senior notes, totalling $5.2 billion, reducing cost of debt and providing significant available liquidity. And to further improve the resilience and competitiveness of our business in a volatile market, we're reducing 2025-2026 spend by $500 million in total, while maintaining our long-term production outlook. And we're delivering on our transformational growth targets and plans to unlock future value. We're adding around 180,000 barrels of oil equivalent per day at peak for nine project startups this year. And with the key projects now online, we expect to reach around 430,000 barrels per day in the fourth quarter this year. We're on track to sustain production of 350 to 400,000 barrels per day towards 2030, which will be achieved by developing our portfolio of around 30 early phase projects. We sanctioned four projects so far this year and expect a total of over 10 project sanctions by the end of the year. And our leading exploration track record continues with three commercial discoveries so far this year, generating new projects. And lastly, we continue to provide attractive shareholder distributions. We confirm a dividend distribution for the second quarter of $300 million, which means we've paid stable or growing dividends for the last 14 quarters. And we're providing dividend guidance for 2025 full year of $1.2 billion. And now that our key new projects are online, we're also guiding $1.2 billion for the full year 2026. And given the resilient financial outlook and level of liquidity for the company, we're able to maintain this dividend guidance under any realistic price scenario. And we have a resilient and flexible business that provides competitive advantage in the current volatile market conditions. And we continue to improve this resilience, incrementally getting better and better all the time. And if you look back over the last few years, you'll see this thread running through how the company has performed. We have a cash flow break even around $40 per barrel, averaged over the period 2025 to 2030. This means that $40 per barrel, we're covering all our costs and funding our growth plans. So anything above $40 per barrel is available to fund dividends or debt repayments. And as I said, we've refinanced the business with $5.2 billion, reducing costs of financing and extending debt maturity profile. Our available liquidity today stands at $3.5 billion. I think this shows the strong confidence in the company's outlook. Around one-third of our production is gas, which provides a natural hedge to our financial outlook. And we're using our gas sales strategy to create additional value, with around 20% of our volumes this summer period locked in at $90 per barrel. And all of our major projects are now online, and what is ahead of us is a series of high-value tie-back projects. With around 65% of our future capital spend uncommitted, this provides us with flexibility to manage the business through the cycles. And we're taking this opportunity in the cycle to improve our business and use some of our flexibility. We're reducing spend by a total of around $500 million over 2025-26. This is being done without any impact on the long-term production outlook for the company. So now looking at some of the details. VoEnergy is one of the fastest growing EMPs globally and we're the third largest oil and gas producer in Norway. And we've built a business, built a high quality diversified asset base in all areas of the NCS with interest in around 50% of all producing fields and infrastructure and a large exploration footprint. And we're also one of the largest exporters of gas from Norway. This amazing portfolio, which provides lots of optionality, is driving our growth and sustained production. And we're stepping up the pace to realise this value. The mantra, as I've said before, is more faster, and you'll see some further examples of increased pace in our presentation today. And we're delivering transformational production growth in 2025. From 280,000 barrels of oil equivalent per day in 2024, we'll grow to around 430,000 barrels per day in the fourth quarter this year. That is double 2023 levels. This is driven by nine project startups during the year, adding around 180,000 barrels per day of new production at peak levels. And we're also guiding approximately 400,000 barrels per day in 2026. And with our high quality portfolio with significant upside, we can organically sustain production at 350,000 to 400,000 barrels per day towards 2030. And now looking at 2025 production, where we're on track to meet the midpoint of the full year guidance range of 330,000 to 360,000 barrels of oil equivalent per day. First half 2025 production came in at 280,000 barrels per day, which was at a lower end of expectations. This is due to the later start-up and slower ramp-up to plateau at Johan Casberg than it initially anticipated. We continued with excellent performance at our operated assets, with production efficiency better than target at 95% for the first half of the year. Second quarter production was impacted by 30,000 barrels per day of reductions due to planned turnarounds. All of our major turnarounds for the year will be complete by the end of July, with reduced impact for the rest of the year. And our key growth projects have been delivered as expected, with four of the nine projects to come on stream this year already online. Johan Casberg is producing at full capacity. The Jotun FPSO at the Boulder Fields and Holton East are both ramping up. And Ormolanga Phase 3 has started ahead of plan. And the remaining five projects are on track to start up as planned in the second half of the year. Current production is above 350,000 barrels per day. This is before the restart of Snorvit following the completion of the turnaround at the end of July. and only includes low volumes from the start of Jotun FPSO. So there are more volumes to come very soon. And we expect to produce around 430,000 barrels per day in the fourth quarter ahead of our guidance, which means we're on track to meet the midpoint of the production guidance range for the year. Turning now to our two key project startups that are the main catalyst for our transformational growth this year. Production through the Yoten FPSO at the Boulder Field was successfully started in June, in line with expectations. And this marks the start of a new era for the Boulder Field, extending the life of the first production licence on the NCS to 2045 and beyond. Production will ramp up as the 14 completed new wells are brought on stream. Commissioning of these is currently running ahead of schedule. We now expect to reach peak production during September of around 80,000 barrels of oil per day gross. This is on top of the 30,000 barrels per day currently being produced through the Boulder FPU and Ringhorn facilities. And the project is developing gross recoverable reserves of around 150 million barrels with a further 45 to 50 million barrels coming from phases five and phase six. And this is produced with low operating costs of around $5 a barrel. Together with Boulder phase five, the project has a payback of around two years from production startup. we're making good progress on phase five the first dual lateral well has now been successfully drilled and we'll start to see the phase five wells come on stream from the fourth quarter this year and with the yoten fpso install as an area host we're actively working to bring new volumes through the facility to create additional value and you'll hear more on this later And Johan Casberg started up at the end of the first quarter, and in June reached plateau production levels of 220,000 barrels of oil per day gross, with Vore Energy's net share being 66,000 barrels per day. And these are large volumes in our portfolio, with an export tanker lifting from the field taking place every three to four days. Also, these are very high-quality volumes trading at material premium versus Brent. The initial field development is for gross recoverable reserves of between 450 and 650 million barrels of oil, which will be produced with low operating costs of around $4 a barrel. The field will be produced for more than 30 years, contributing to significant growth and value creation with a payback time of less than two years from start-up. And the Johan Casberg area is highly prospective, and several new discoveries made in recent years are being moved to development, including an extensive infill drilling programme planned to sanction this year. The Johan Casberg cluster 1 development, consisting of two phases, is targeting sanctions of the first phase, being the Isfrak discovery, by the end of the year. And we recently announced the Dremis Tobion discovery in the area, which is assessed to be commercial. In total, there are between 250 and 550 million barrels of additional gross unrisked recovery resources identified in the area, which we anticipate will enable us to keep the facilities full towards 2030. So we see Johan Casberg as a key driver for sustaining production long term. And now looking at operational performance, you can see that we have a strong trend of continuous improvement. Overall, we have a good safety record, which is generally getting better. In the first half of the year, with a good outturn, with zero actual serious incidents, this performance takes strong focus every single day. On production costs, we achieved $12.2 per barrel in the first half of the year, which is within expectations. And looking forward, we're on track to reduce production costs to around $10 a barrel in the fourth quarter this year. And we target to sustain at this level long term, which is around 30% reduction from 2023 levels. And this is driven by the new fields coming on stream that have OPEX of around $4 a barrel and continued high focus on realizing cost synergies and improvements. And you can also see we have a strong improving trend on production efficiency for our operation assets, which was 95% in the first half of the year and ahead of our target. And I think these elements go hand in hand. Strong safety focus drives good operational discipline and is a good example of the incremental improvements I talked about earlier. And we're positioning the company to adapt to the energy transition to ensure relevance and investability long term, and we're delivering on our decarbonisation plan. We're top quartile in the industry globally on carbon emissions intensity, and our methane emissions continue to be at the near zero level. So we're already doing very well, but we want to go further, and we're aiming to be carbon neutral in our net equity operational emissions by 2030. And we'll achieve this through further investments in electrification of our key assets and direct investment in natural carbon capture projects to offset what we can't reduce. We have a plan in place to achieve this objective. And I'm also pleased that we're getting recognition for our ESG leadership. Stainalytics continue to rank us as a top rated company. This puts us in the top 15% of global oil and gas industry. And we continue to be, including the Oslo Stock Exchange ESG Index, as the only oil and gas company. I think this is leveraging to how the company is viewed. And Vol Energy has an amazing portfolio with lots of optionality and growth opportunities. Our 2P reserves stand, as you can see, at 1.2 billion barrels. This is either in production or under development and underpins our transformational growth. But we're much more than that. We have 2C contingent resources of around 900 million barrels, and we're moving forward around 30 early phase projects accounting for approximately 600 million barrels. We also have an exciting exploration portfolio of over 1 billion barrels of net risk resources, where we expect to drill out about 50% of this over the next four years. And so putting this together, we have over 3 billion barrels of resource potential, with 60% yet to be developed. And that is how we will organically sustain production long term. And we're working at pace to create value for this opportunity. And we have a resilient and flexible portfolio of around 30 early phase projects that we're progressing towards development. These are mostly subsidy tiebacks to existing infrastructure with low costs and short time to market. And we're creating a subsea factory with standardisation, pre-commitments and strategic partnerships to reduce costs, improve predictability and speed up time to first production. And we've created real momentum here with four project sanctions so far this year, including the recent commitments to the Fram Soor and Boulder Phase 6 subsea tieback projects. In total, we're expecting to sanction over 10 projects by year end, as indicated on the chart. The portfolio has strong economics with average break-evens of around $35 a barrel and good rates of return. And we're using the opportunity of the lower prices to rework some projects to make them even better and improve economics. And we're having success at this. And we've just announced the sanction of the Fram Soor subsea tieback project delivering high-value barrels. This is the next phase of development in the prolific Fram licence, where Vore Energy has a 40% interest. FramShore is a combined development of several discoveries that will export oil and gas via the Troll Sea platform. And the project will develop net reserves around 50 million barrels of oil equivalent and contribute with around 20,000 barrels per day net to Vore Energy at peak once the project starts up at the end of 2029. Project economics are strong and fulfilled for energy's investment criteria for new developments. And building on recent exploration success, a series of foreign exploration targets in the Fram licence are set to be drilled in the coming years, unlocking potential further upside. For energy estimates that the remaining prospective unreached resources in the area are more than 200 million barrels gross, so there's lots more to come from this prolific licence. And we've also recently sanctioned the Boulder Phase 6 project, a fast-track development that will be an important contributor to sustaining long-term, high-value production through the newly installed Yoten FPSO. The project consists of one multilateral production well, installation of new subsea templates and a flowline that will be tied into the Yoten FPSO and is developing gross reserves of 15 million barrels. By using equipment held in inventory, we're able to fast track this project, which will start up by the end of 2026, only 18 months from sanction. And this project has strong economics with a break even well below $35 per barrel and an IRR above 35%. In addition, the Boulder has several early phase projects that are also being progressed. including what we're calling Boulder Next, which is targeting gross resources of up to 50 million barrels and consists of four elements. First of all, decommissioning the Boulder FPU, transferring selected FPU wells to the Yoten FPSO, accelerating production stream, de-boltonizing the Yoten FPSO, and then also drilling new production wells. And this rationalisation of the facilities in the Boulder area will drive significant OPEX and carbon emissions reductions. With the Oton FPSO serving as a new area host, production from the Boulder field is expected to remain at 70,000 to 80,000 barrels per day gross towards 2030. now turning to our exploration program our leading exploration track record continues with three commercial discoveries so far this year generating new projects yesterday we announced the commercial gas condensate discovery at the vision ridge very close to war energies operated fenya field in the norwegian sea the vision ridge has the potential to hold gross recoverable resources of up to 100 million barrels of oil equivalent where more energy is the operator with a material 75% interest. The vision discovery well confirmed growth to recover resources of 25 to 40 million barrels of oil equivalent in high quality reservoirs. The remaining potential of the ridge will be assessed through an appraisal programme to facilitate a subsea tieback development. And as I've already mentioned, we made another discovery Drives to burn close to young Casper, which is commercial to tie back to the facilities. And as we announced earlier in the year, we continue to build on the Goliath rich success in the Barents Sea, where we're operator with a material 65% interest with estimated growth discovered plus prospective recovery resources above 200 million barrels. This potentially is as big as the Goliath development. To assess the exciting Goliath Ridge discovery further, we've recently finished shooting a new 3D seismic survey, and we'll follow that with two further appraisal wells in the second half of this year, with the aim to progress the fast-track development of the Goliath Ridge through the Goliath FPSO, where there is plenty of available capacity. Pulling this together, so far this year we've confirmed 40 to 60 million barrels of net discovered commercial resources from our exploration programme. but the upside is significantly higher from the further appraisal of these discoveries. And we continue with an active exploration programme for the remainder of the year, with nine further wells to drill, targeting over 110 million barrels of net unrisked resources. It's going to be exciting to see these results come in. And so we're making significant progress, maturing our upside resource potential into value through committing to new projects and making new commercial discoveries. So that rounds off my operational update, and I'll now hand over to Carlo to review the financials. Thank you.