Var Energi ASA

Good morning, everyone. It's a real pleasure to welcome you all to Vodafone's third quarter 2025 presentation results. The presentation today will be given by our CEO, Nick Walker, and our CFO, Carlos Santapadre. I will hand the word over to Nick before we open up for questions.

Well, thank you, Ida, and good morning to all. Thank you for joining us today for our third quarter 25 results presentation. I'm pleased to report strong results for the quarter. We've delivered transformational growth ahead of schedule and a pipeline of new projects has been progressed for long-term value creation. With our major projects complete, the company has de-risked and has a strong resilience to a lower price environment. We also have significant flexibility. with the majority of our capital spend uncommitted to 2030. And we'll use this flexibility to optimise our investment programme through this lower price period. VoEnergy has never been in a stronger position to continue to deliver high value and attractive shareholder returns. So now let us look at the highlights for the quarter. Our production milestones have been met ahead of schedule. We delivered production of 370,000 barrels of oil equivalent per day in the third quarter. and the Jotun FPSO at the boulder field reached peak production ahead of expectations in September. We're adding around 180,000 barrels per day at peak for new projects in 2025, with seven out of nine projects on stream. We expect to average around 430,000 barrels per day in the fourth quarter. And the outlook for the company is de-risked with our key projects delivered. And we delivered solid financial performance, with CFFO post-tax in the quarter of $1.2 billion. We have a strong financial position with reduced net debt and $3.6 billion of available liquidity. We maintain our strong cost focus with reduced operating costs on track to be around $10 per barrel in the fourth quarter. And our gas sales strategy continues to create value with 18% of our volume sold in the third quarter at $90 per BOE. And with our portfolio of high value early phase projects, we're unlocking long-term future value creation. We will sustain production at 350,000 to 400,000 barrels per day towards 2030 and beyond, which will be achieved by delivering our portfolio of 30 early phase projects, with 10 of these projects set to be sanctioned by year end. And we increased our ownership in the EcoFist previously produced fields project, adding high value barrels at an attractive price. And lastly, we continue to provide predictable and attractive dividends. We confirm a dividend distribution for the third quarter of $300 million, which means we've paid stable or growing dividends for the last 15 quarters. And we reconfirm our dividend guidance of $1.2 billion for the full year 2025 and also the same level for 2026. And given our resilient financial outlook and strong level of liquidity, we're able to maintain this dividend guidance under any realistic price scenario. So now let us look at some of the details. For energy, the third largest oil and gas producer in Norway has a high-quality diversified asset base in all areas of the NCS, with interest in around 50% of all producing assets and a large exploration footprint. We've also balanced commodity mix, with gas making up around 30% of our production volumes, making us one of the largest exporters of gas from Norway. This tremendous portfolio, which provides lots of optionality, is driving our long-term sustained production and value creation. And as you will see, we're continuing to step up the pace to realise the value from our portfolio. And now with our major projects complete and now ramped up to full production, we've delivered transformational growth ahead of schedule. We're set to produce around 430,000 barrels of oil equivalent per day in the fourth quarter this year, which you can see is double 2023 levels. 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 beyond. Now looking at 2025 production where we're on track to meet around the midpoint of our full year guidance range of 330,000 to 360,000 barrels of oil equivalent per day. Third quarter production as you can see came in at 370,000 per day which was at the top end of our expectations due to the faster ramp up to peak production from the Jotun FPSO. We continue with excellent performance of our operators assets with strong production efficiency at 92% for the first nine months of the year, which is inclusive of planned turnarounds. The third quarter was impacted by around 15,000 barrels per day of reductions due to planned turnarounds. And entering the fourth quarter, all of our turnarounds are behind us for the year. Our current production potential is over 440,000 barrels per day, and this will grow towards the end of the year as new wells are brought on stream at Boulder, Ringhorn, Grana, Neward, Holton East and Sleipner. And so we expect to produce approximately 430,000 barrels per day in the fourth quarter, which means we're on track to meet around the midpoint of the production guidance range for the year. And as I said, we've de-risked the production outlook for the company. Our transformational growth this year is driven by nine project startups, adding around 180,000 barrels per day of new volumes at peak. Seven of the nine projects are on stream and are performing as to expectations. The remaining two projects, Boulder Phase 5 and the Asgard low pressure production facilities, are both expected to come on stream towards the end of the year. This has been a pivotal year for the company for new project startups and overall we've delivered what we said we would do. Hence the outlook for the company is de-risked and we've never been in a stronger position. Turning now to our two major projects that are the main catalyst for delivering our transformational growth. Production through the Yolton FPSO, which started up in June, achieved peak production of 80,000 barrels per day gross ahead of plan in September. The wells are performing on average as expected and we've already achieved high production efficiency from the FPSO with low operating costs of around $5 per barrel. This project together with Phases 5 and 6 is developing gross reserves of 200 million barrels. Two Phase 5 wells have been completed with results better than expectations and a third well is currently drilling. All three wells will come on stream towards the end of the year. Phase 6 of fast-track development is progressing and is on target to start up in the fourth quarter next year. And additionally, there are material further resource development opportunities in the Boulder area, and we're progressing what we're calling our Boulder Next Project towards sanction. The Boulder Next project consists of four elements. Firstly, decommissioning the Boulder FPU. It's about transferring selected FPU wells to the Yotam FPSO, accelerating production through de-bottomlaking the FPSO, and then drilling new production wells. And this rationalization of the facilities in the Boulder area will drive significant OPEX and carbon emissions reductions. We will sanction the de-bottlenecking element of this project at the end of this year, which involves increasing the capacity of the FPSO gas compression and water handling systems. And this will be implemented in 2026. And this is a key enabler to decommission the Boulder FPU. and we're progressing a plan to have a continuous infill well programme starting from 2027, following completion of the phases 5 and phase 6 drilling programmes. We've already committed to the subsidy production equipment and will shortly commit to the flowlines required to make this happen. The initial commitment will be for 6 multilateral wells, with the design to allow expansion up to a total of 15 wells. And so with the Jotun FPSO serving as a new area host, production from the Boulder area is expected to remain at 70,000 to 80,000 barrels a day gross towards 2030. And if we now look at Johan Casberg, we see very strong performance. with the field producing at plateau levels of 220,000 barrels of oil per day gross, with Fort Energy's net share being around 66,000 barrels per day. Production efficiency is already stable at 95%, and production costs in the third quarter were less than $3 per barrel. The reserves and resource potential of the area is around 1 billion barrels, and the full development of this, we anticipate, will keep the facilities full towards 2030. Drilling of the planned development wells will be complete at the end of 2026. And immediately following this, an infill well programme is being planned, which is targeted to sanction at the end of this year. And this programme will include the development of the recent Dreeves-Tuburn discovery. Additionally, the Isvlak tieback development is expected to also sanction at the end of 2025. So we see Johan Casberg as a key driver to sustain our production long term. And now looking at operational performance, you can see that we're incrementally improving how we run our business. Overall, we have a good safety record with zero actual serious incidents so far in 2025. However, we've recently had too many near-miss incidents where we have a strong improvement focus. On carbon emissions intensity, we're top quartile in the industry globally and our methane emissions continue at the near zero level. So we're already doing very well, but we want to decarbonise our operations further from three main levers. Firstly, electrification with Power From Shore. Secondly, portfolio optimisation. And lastly, through energy management. From further assessment of the Holton and Snora Power From Shore projects, these will be discontinued due to challenging economics. This will reduce our capital spend guidance by $500 million over the period to 2030. This shows our strong cost discipline. However, we will continue to mature the Grana Energy project prior to possible project concept select in the early part of next year, where our focus is on creating a project with sound economics. And in addition to emissions reductions, Vore Energy aims to become carbon neutral in our net equity operational emissions by 2030 through removals in the voluntary carbon market. And we continue to be recognised for our ESG leadership, with Sustainalytics ranking us as a top-rated company. This puts us in the top 15% of the global oil and gas industry. For production efficiency, our operated assets, as you can see, have a strong improving trend, which was 92% in the first nine months of the year and ahead of our target. On production costs, we achieved $10.6 per barrel in the third quarter. And for the full year, we expect to be at the lower end of the guidance range of $11 to $12 per barrel. This performance is driven by reduced costs. And looking forward, we're on track to reduce production costs to around $10 per barrel in the fourth quarter this year. And we'll target to sustain at this level long term. And I think these elements go hand in hand. Strong safety and environmental focus drives good operational discipline, creating significant value. And you've seen this chart before. Vore Energy has an amazing portfolio with lots of optionality and growth opportunities. And our 2P reserves, you can see, stand at 1.2 billion barrels. This is either in production or under development. But we are 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 650 million barrels of this. And we also have an exciting exploration portfolio of around 1 billion barrels of net risk resources, where we expect to drill out about 50% over the next four years. And so putting this together, we have around 3 billion barrels of resource potential, But we're 60% yet to be developed. I repeat that 60% is yet to be developed. And that is how we will organically sustain production long term. And we're working at pace to create value from this opportunity. So looking now at how we will do that. We have a flexible and resilient portfolio of around 30 early phase projects that we're progressing towards development. Delivering on this programme will achieve our production target of 350,000 to 400,000 barrels per day towards 2030. And these are mostly subsidy tiebacks to existing infrastructure with low cost, short time to market and strong economics. And you can see average break evens of around $35 per barrel. And we've built significant momentum with four project sanctions so far this year and we expect to sanction in total 10 projects by year end. As we announced a few weeks ago, we've increased our ownership in the Ecofis previously produced fields project, adding high value barrels from 2028 and an attractive purchase price of below $4 per barrel. This transaction does not close until the project is sanctioned, which is expected at the end of the year. And with around 65% of our capital spent to 2030 uncommitted, we have significant flexibility to optimise our investment programme through the current lower price period. And now turning to our exploration program where we have a leading track record. Since 2019, we've added around 300 million barrels of contingent resources with a success rate of 50% and a finding cost of less than $1 per barrel post-tax. Over 70% of these volumes are already in production or in the development process demonstrating we are turning discoveries into value. This success has continued with five commercial discoveries so far this year. adding 40 to 70 million barrels of net resources. And as we announced earlier in the year, we continue to build on the Goliath Ridge success in the Barents Sea, where we're the operator with a material 65% interest. With estimated gross discovered plus prospective resources above 200 million barrels, the Goliath Ridge is potentially as big as the original Goliath development. And to assess this exciting opportunity, we're currently drilling a two-well appraisal program where we'll see results before the end of the year. We're then able to think about how we go forward with a tieback development to the Goliath FPSO where there's plenty of available capacity. And the VidSyn Ridge discovery is also significant, with potential to hold gross recoverable resources of up to 100 million barrels of oil equivalent. And where Vore Energy is again the operator with a material 75% interest. We're progressing plans to appraise VidSyn in 2026. And we've drilled three successful infrastructure-led exploration wells this year in the Johan Casberg, Fram and Asgard areas. These have short time to development and the Asgard area well is already in production, contributing over 6,000 barrels per day net. This is good value creation. 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. I'll now hand over to Carlo to review the financials. Thank you.

Thank you, Nick, and good morning to all. I would like to start by summarizing the key financial highlights of the third quarter. We have achieved robust realized price compared to spot, with a weighted average price of $68 per B.O. in the quarter. We generated strong revenues on the back of transformational production in the quarter, and strong operating cash flow after tax of $1.2 billion. We maintained a strong and resilient balance sheet, reducing net debt and increasing available liquidity at $3.6 billion. The leverage ratio at 0.9 net debt to EBITDAX is flat from previous quarter, remaining well below our target. We confirm the third quarter dividend of $300 million and we are showing confidence in our business in the planning to pay the same level for the remaining of 2025 and 2026. In summary, we have a strong and resilient financial position and we are successfully progressing in what is a transformational year for VoEnergy. I'll now go into more details on our third quarter financial performance. We obtained robust pricing for our products in the quarter, both relative to spot and to our peers. In the quarter, we generated more than $2.1 million of revenues, up compared to the previous quarter, driven by production increase. The realized oil price in the quarter was $69 per B.O.E. The realized gas price was $72 per B.O.E., $6 above spot pricing as a result of fixed price contracts and flexible gas sales agreement. allowing for optimization of index. Starting 1st of October, we have locked in around 15% of volumes, we are pricing at around $78 per BOE until third quarter 2026. We continue to have a robust sales portfolio with access to several markets, and we will have flexibility in the contracts to decide the split between month ahead, day ahead and fees contracts. I would like also to mention that our oil production is fully hedged on a post-tax basis for the remaining of 2025, with a monthly put options at a strike price of $50 per B.O.E. Borenergy generated solid cash flow in the quarter. Cash flow from operation after tax in the quarter was $1.2 billion, an increase from the previous quarter, mainly due to higher production and lower OPEX. Our capex for the quarter, including exploration, was $726 million, while Balder X and Young Casper continues to be the largest contributor of the total spent. The 2025 development capex is expected to be in the upper end of the $2.3 to $2.5 billion US dollar guidance. Our resilient and strong liquidity position continued to improve in the quarter. Here we see the development of our cash position from Q2 2025 to the end of Q3 2025. We generated approximately $1.8 billion in CFFO before tax and working capital movements. We paid taxes in the quarter amounting to around $530 million. We had a cash outflow of $740 million in investment in our high-value growth projects. We distributed a splendid $300 million in dividends related to the second quarter 2025. In summary, we have a solid liquidity position and a diversified long-term capital structure aligned with our business needs. At the end of the quarter, we have a cash balance of $840 million and an overall liquidity of around $3.6 billion. Earlier in 2025, we strengthened our financial position through the successful refinancing of credit facilities and issuance of senior notes. By doing that, we reduce the cost of debt, increase our available liquidity, extend the maturity profile, and strengthen our core bank group. Our leverage ratio net interest bearing debt on EBITDAX ended at 0.9, which is flat from the previous quarter, but continues to be well below our over-the-cycle target of below 1.3, and we expect to reduce this further. Our debt portfolio is well diversified. with a weighted average time to maturity of 5 years when excluding the 60 years hybrid. This is supporting the execution of our growth strategy towards 2030 and beyond. We have a BAA3 rating from Moody's and a BBB rating from Standard & Poor's, both with a stable outlook, and we are committed to maintain our investment grade rating. Our strong financial position and our resilient, flexible project portfolio lay a solid foundation for continued material shareholder distribution and growth, and it is a unique investment proposition that Power Energy offers. Now let's look at the tax guidance for 2025 estimated profits, where half is paid this year and half will be paid the next year. Note that from third quarter this year, we went from paying 6 installments per year to 10 installments per year. The third quarter, we paid 5.4 billion NOC in cash taxes. For the fourth quarter of 2025, we expect to pay around 8 billion NOC. We have included a tax sensitivity for the first half of 2026, which is giving the cash tax estimates a different price scenario, where the middle case is giving around 1.6 billion dollars, while the sensitivity is between 1 and 2.1 billion dollars, according to the indicated price ranges. Vorenergy has a strong track record of delivering value to our shareholders. Since the IPO, we have paid more than $4.1 billion in dividend, maintaining stable payments over the last 15 quarters. With transformative growth delivered in the third quarter of 2025, strong financials, a solid operational outlook with a resilient and flexible project portfolio, we can continue to support attractive and predictable dividends going forward. On the back of this, I'm pleased to confirm a dividend of $300 million for the third quarter and a total dividend distribution of $1.2 billion for the full year 2025 and $1.2 billion for the full year 2026. Finally, I will summarize our full year 2025 and long-term guidance. For 2025, our production guidance is 330,000 to 360,000 barrels per day, reaching around 430,000 barrels per day by Q4 2025. we expect to reach around the midpoint of the guidance for the full year. We will maintain approximately 400,000 barrels per day in 2026, and further we will sustain 350 to 400,000 barrels per day until 2030. 2025 production cost is expected to come at in 11 to 12 barrels, down to around $10 per barrel by Q4 as we ramp up production. CAPEX is estimated to be in the upper range of our $2.3 to $2.5 billion guidance in 2025. Going forward, we are expecting to be in the range of $2 to $2.5 billion thereafter. Exploration expenses and ABEX will be in the range of $200 to $300 million and $150 million respectively in the medium to long term. For this year, we plan to invest around $400 million in exploration activities and we expect abandonment expenditures to be around $100 million. we are guiding $300 million in dividend for Q4 2025, resulting in a full-year dividend of $1.2 billion. Demonstrating strength, we are also guiding dividend for 2026 at $1.2 billion to be paid quarterly. With that, I hand it back to Nick for concluding remarks. Thank you.