Orrön Energy AB (publ)

Hello and welcome to the London Energy AB Q2 Report 2021 call. Throughout the call all participants will be in a listen only mode and afterwards there will be a question and answer session. Today I am pleased to present Edward Westrop, Vice President, Investor Relations. Please go ahead with your meeting.

Thanks very much Keith. Welcome everyone, thank you for joining the call. So this is the two Q results call for London Energy. Thanks for joining. We're going to follow the normal course of events. Nick Walker, the CEO, will take you through the operations and highlights. And then Taita Bolson will take you through the financials. We'll then have a Q&A at the end, first of all, from the conference call line, and then we'll be taking questions from the web afterwards. So I'll hand over to Nick, who will kick the meeting off.

Good 12. Thanks Ed and good afternoon or good morning if you're joining us from North America and welcome to our second quarter 2021 results discussion. I'll cover off the operations updates and then title will talk us through the Q2 financials. Then as usual, as Ed says, will open up for questions. First of all, the key highlights, we delivered record production and financial results in the second quarter, that's backed by strong operating performance and further strengthening of oil prices. You can see Q2 production was per day. And as we've previously announced, we increased our guidance in the second quarter for the year. You can see that phase two of Jans Fedrup is on schedule and we've just completed some key installations on schedule offshore. And you'll see later that the project is bang on schedule. We also announced an increase in June to the full field capacity when phase two comes online up to 750,000 barrels of oil per day gross. And on top of that, all of our key projects are on track, providing growth to over 200,000 buoys per day by 2023. Our resilience cash generative business delivered record financial results, 2.8 US dollars per BOE, which is better than guidance. We delivered also record free cash flow of $949 million for the first six months. That's almost two times our annual dividends, but in only half the year. Resulting in deleveraging of the business with net debt reduced to below $3.2 billion at the end of the period. And if we look forward and assume a $70 per barrel oil price for the rest of the year, we estimate that annual free cash flow is set to be around $1.5 billion. And at year end, our net debt will reduce to below $3 billion. I think as many of you know, we also completed a very successful $2 billion inaugural investment grade bond issuance during the quarter, raising long-term money on very attractive rates with the proceeds used to pay down existing corporate credit facilities. And we continue to make good progress on decarbonizing our operations with everything in place to achieve carbon neutrality from 2025. Already around 60% of our production is independently certified as carbon neutrally produced. We've already made several certified carbon-neutrally produced crude sales, which I believe will become a key differentiator for the company. And we're also on track with our renewable projects. So in summary, we've delivered record results in the first half of the year, and all of our key business priorities are on track. I will now step through the details supporting this. Firstly, looking at production, our world-class assets continue to outperform, delivering production in Q2 of 190,000 BOEs per day, which is above the top of the guidance range. That's now 24 quarters running that we've met or exceeded guidance. And this performance is driven by, I think, three things. First of all, excellent production efficiency across all of our assets. Second, an earlier ramp up of Johans Federer phase one to the new increased plateau levels. And third, additional facilities capacity at Edvard Grieg due to declines at Iveraussa. And looking forward, we expect production around the current levels for the rest of the year. And this strong performance caused us in June to increase the full year production guidance range to between 180 to 195,000 BOEs per day. as you can see from the original guidance range of 170 to 190,000 barrels of oil equivalent per day. This delivery is backed by continued top tier operating performance, which you can see shown here with excellent production efficiency metrics of 95 to 98% across all assets. Operating costs were $2.82 per barrel, which is better than guidance, and these are industry leading levels. and also really good performance on carbon emissions, 2.9 kilograms of CO2 per BOE. And putting this in context, that's about one sixth of the world average. And on top of that, we delivered safe operations in the quarter. Turning now to our decarbonization plan, we're making good progress on our plans with everything in place to achieve carbon neutrality from 2025, which is a first for the upstream industry. To recap, the plan is supported by real action around three key pillars. Firstly, reducing emissions with electrification of our assets or with power from shore. Secondly, replacing and offsetting our power usage with investments in renewables. And thirdly, what we can't reduce, commitment to nature-based carbon capture to neutralise the balance. Which means that from 2025, every barrel delivered by Lundin Energy will be carbon neutrally produced. As a result of the performance of the UN's federal electrification in reducing emissions, we've reduced further the emissions intensity target for the company.