Var Energi : Earnings Report

June 24, 2024 at 11:23 pm IST

Corrected Transcript

25-Jul-2023

Vår Energi ASA (VAR.NO)

Q2 2023 Earnings Call

	Total Pages: 17
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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

CORPORATE PARTICIPANTS

Ida Marie Fjellheim	Stefano Pujatti
Head-Investor Relations, Vår Energi ASA	Chief Financial Officer, Vår Energi ASA
Torger Rød
Chief Executive Officer, Vår Energi ASA

......................................................................................................................................................................................................................................................

OTHER PARTICIPANTS

Matthew Smith	Sasikanth Chilukuru
Analyst, BofA Securities, Inc.	Analyst, Morgan Stanley & Co. International Plc
Teodor Sveen-Nilsen	Anders Rosenlund
Analyst, SpareBank 1 Markets AS	Analyst, Skandinaviska Enskilda Banken AB (Norway)

James Hosie

Analyst, Barclays Capital Securities Ltd.

MANAGEMENT DISCUSSION SECTION

Ida Marie Fjellheim

Head-Investor Relations, Vår Energi ASA

Good morning, everyone, and a warm welcome to Vår Energi's Second Quarter 2023 Results Webcast. The presentation today is as usual, given by our CEO, Torger Rød; and our CFO, Stefano Pujatti. Torger and Stefano will present the results and afterwards we will open up to Q&A.

I'll now give the word over to Torger.

Torger Rød

Chief Executive Officer, Vår Energi ASA

Thank you, Ida, and good morning, all. I'm pleased to report a quarter of strong safety performance, high uptime on operated assets, solid price realization, and good progress on our development projects. Q2 production was 202,000 barrels, driven by solid performance on operated assets, but with impact from seasonal maintenance.

Our operated fields have delivered a solid production efficiency in the quarter, and it also see a strong development within our drilling and well performance, seeing results from our enhanced improvement agenda.

We were for the quarter affected by some partner-operated turnarounds, which extended beyond plan, as well as irregular production from our new fields, Fenja, Bauge and Hyme, mainly due to issues at the Njord host. Our gas sales strategy continued to realize strong prices. The realized gas price of $98 per barrel was well above market average. This provided strong cash generation, although, reduced from the previous quarter due to lower revenues and higher tax payments.

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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

We also maintained a low leverage and have strengthened our balance sheet through issuance of €600 million in senior notes in April, and Stefano will cover this later in the financial review. The strong balance sheet supports attractive distributions, and we confirm the Q2 dividends of $270 million. Further, our plan is to distribute a dividend of $270 million also for Q3.

The main development projects are progressing per schedule. This includes the Balder X, where the Jotun FPSO was refloated out of dry-dock in June, followed by installation of the turret. And you can see the refloat on the picture with the water flowing into the dry-dock, an important milestone achieved for the project.

Overall, the project portfolio development supports our production growth of more than 50% by end 2025. And this target is excluding the acquisition of Neptune Energy Norwegian oil and gas assets, which we announced in June. We are delivering on our strategy and the transaction will accelerate growth and value creation for the company. By adding scale, robustness, diversification and longevity to our portfolio, they underpin our production growth and strengthen future dividend capacity. Neptune Norge is a perfect strategic fit for Vår Energi. So, bottom line, we maintained our overall guidance for 2023.

And just let me reiterate why Neptune Norge is a great transaction for Vår Energi. It is value, cash, performance, and capability accretive. We are acquiring Neptune's oil and gas activities on the NCS for cash consideration on an enterprise value of $2.275 billion. Neptune's portfolio consist of 12 high-quality NCS assets, which produced 67,000 barrels in Q1 and are located in our existing hub areas, as you see on the map. This makes them highly complementary and being the perfect fit to our portfolio. Through the acquisition, we are increasing our operatorships and amplifying the position in the Barents Sea with access to the Snøhvit field and Melkøya LNG facility. These asset are cost efficient with low emission and with limited near-term CapEx, making them highly cash accretive.

The closing of the transaction is now pending customary regulatory approvals and until expected completion in Q1, we will remain as two separate companies. We will come back to the targets and outlook for the combined company at a later stage. But I can reassure you, we will be a bigger and more profitable company. We will strengthen our cash flow and our future dividend capacity.

And then back to the Q2 results, here is a summary of the key performance indicators in the quarter. Safe operations is our license to operate and we experienced no actual serious incidents for Q2. This is also the case for the last year of operations. Our target is always zero serious incidents and injuries. And our ambition is to be the safest operator on the NCS.

Estimated emission intensity of 11.5 kilo per barrel for operated field is a reduction from previous quarter. Production cost per barrel has increased from previous quarter, mainly due to turnarounds and seasonal maintenance. Cash flow from operation of $231 million reflects higher tax payments, and we confirm our distribution of $270 million in dividend for the second quarter.

Let us then go to the operational performance over the quarter. We start, as always, with safety and emission intensity. Vår Energi's highest priority is to operate without causing harm to people and the environment. We have a strong focus on implementation of safety initiatives and this continued through the second quarter with our particular drive to improve the trend for serious incident frequency, SIF, by preventing dropped objects.

The 12-month rolling average SIF rate was stable at 0.6 in the quarter and 0.4 for the first half of 2023. In the first six months of the year, we have recorded zero actual serious incidents, meaning all recorded SIF incidents were

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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

related to potential incidents. This means, we see a positive trend, which reflects significant improvements related to dropped objects compared to 2022.

We are also experiencing a positive trend on the total recordable injury frequency, with up 2.8 for the quarter compared to 3.8 for Q1. The improvements driven by consistent proactive safety work related to yard activities and on operated assets. On CO2 emission intensity, this improved to 11.5 per barrel - kilo per barrel driven by effects from emission improvement initiatives and lower exploration activity in the quarter. As part of the Oil and Gas Climate Initiative aiming for Zero Methane Emissions, the company has in the first half of 2023 also reduced its methane emission with 50% compared to last year. The reduction is achieved by actions to reduce flaring at Goliat and increased uptime of our gas compressors at Ringhorne.

So, in June, Vår Energi also achieved an updated ESG risk rating from Sustainalytics, placing the company in the lowest risk group in the industry, representing the top five percentile and ranking Vår Energi as 12th of the 300 rated oil and gas producers. We feel that this is really confirming our ambition of becoming an ESG leader.

Then an update on our operated assets, which has delivered solid performance in the quarter. On Goliat, we have actively worked over time to improve uptime and performance. We are pleased to see a very positive trend with production efficiency at 93% in the quarter. This being the third consecutive quarter above 90%.

For Balder/Ringhorne, we restarted the previous shut-in riser in May, ahead of plan. This riser was temporarily out of operations in the first quarter and will be permanently replaced during the planned turnaround and ongoing high activity period at Balder FPU in the third quarter. This also includes key maintenance and upgrades for the future production resilience at Balder FPU.

Overall, production efficiency was 83% for Balder/Ringhorne, up from 80% in Q1, including planned maintenance. We see a strong development within our drilling performance, particular in the Balder area. This proves the results from our relentless focus on improving our activities and strive for operational excellence.

The seasonal maintenance further impacted quarterly unit production cost, which ended at $15.5 per barrel. For the first half of the year, we are at $14.3 per barrel and we maintain the full year guidance of $14.5 to $15.5 per barrel. We also reiterate our end 2025 ambition of reducing OpEx to approximately $8 per barrel. The main drivers are the high value growth projects, with lower unit costs coming on stream and effects from the improvement program.

Turning to our development projects and more specifically to the Balder X, we are continuing to progress this complex project. The upgrade of the Jotun FPSO is ongoing with high construction and commissioning activity at the Rosenberg yard. And the project met key milestone as planned in the second quarter. This includes the refloat of the FPSO as planned in June. So, after almost three years in the dry-dock for refurbishment, the Jotun FPSO was out - was floating again, and also it includes the installation of the turret as you see on the picture. The turret weights about 1,000 tons and has less than 25 millimeters of total clearance to be installed. And I have to say that I am very pleased that the complex heavy-lift and installation was completed safely and with no technical issues.

Drilling is also progressing well with 7 out of 15 wells completed. The last drilled well at the Balder future - or Balder X project is actually the longest reservoir section drilled in the Balder area ever, with a total reservoir length of above 1.1 kilometer or 1,100 meters. The SPS and SURF activities are substantially complete and the installation campaign for this season are progressing according to plan. We are as well frontloading activities to 2023 to optimize the project schedule and safeguard the startup.

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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

We are maintaining planned startup in Q3 2024, but still, overall, the Jotun FPSO is on a critical path and our key focus areas are to execute the remaining construction and commissioning scope to optimize schedule towards planned sail away in Q2 2024, and then ultimately the production startup in Q3 2024. We are here working very close - in close collaboration and integration with the contractors to achieve good productivity and progress for the final phase of the project.

Then zooming out, and as you know, we have a robust development portfolio of projects well into execution, which overall are progressing according to schedule. These projects will unlock more than 500 million barrels and support our high-value growth to more than 350,000 barrels by end 2025. With a portfolio average breakeven of around $30 per barrel, they are very robust and resilient. Let me also remind you that most of the projects are subsea tieback. This means more standardized execution, including standard concepts and building blocks and thereby less complex.

On progress of the specific projects, we are pleased that Åsgard [ph] A Low Wellhead Project (00:13:35) Frosk, Bauge, Hyme and Fenja developments started up in Q1 and Q2, respectively, providing approximately 12,000 barrels for 2023. For Equinor operated Breidablikk and Johan Castberg, these are reaching milestones towards planned start-up. Breidablikk that tie back to Grane platform is progressing per plan. The high activity period on Grane topside has been completed and floatel demobilized. Drilling remains ahead of plan and planned start-up is Q1 2024.

Johan Castberg, construction and commissioning activities are progressing at Aker Stord with planned start-up in Q4 2024. And then for Hywind Tampen, the first production of power to Snorre was achieved in May with a gradual phase-in to fulfill - full available capacity expected in Q3. As you can see, the activity level is high in Vår Energi and the same is true for the NCS overall.

We see that supply chain is moving towards full capacity utilization driven by the many PDOs submitted during 2022. This is driving increased prices and rates for certain products and services across the industry. We also see this as a risk for future capacity constraints and potentially reduced productivity. This may lead to additional cost pressure for ongoing and future projects. However, I think it's important to stress this, Vår Energi's portfolio is well-progressed, with five projects recently started production and seven of the remaining projects are more than 50% complete. And actually, we have a total of 10 projects with planned start-up before end 2024, meaning that we have a very well advanced and mature project portfolio. This reduces the risk on material impact from supply chain constraints, resource constraints, and inflation.

So, to summarize, we are on track to our unprecedented high value growth to above 350,000 barrels per day by end 2025, and we are confirming our CapEx guidance for 2023 of $2.4 billion to $2.7 billion.

In Vår Energi, we have a strong exploration capability and an active exploration campaign for 2023. There have been some updates to our campaign for the year since Q1 and you see here the updated exploration campaign for 2023, and some events to highlight. The Aker BP-operated Rondeslottet well was spudded in June, but due to technical challenges, the well has been temporarily suspended and has, therefore, been plugged and abandoned. Drilling will commence at a later stage. Vår Energi support the decision and refers to the operator for further information. Equinor has also spudded the Crino well, and results here is expected in Q3. And in Q4, we look forward to drilling the two King 2 exploration wells related to the King and [ph] Prince (00:17:03) discoveries from 2021.

During Q2, we also acquired stakes in the Kaldafjell well, which will be drilled in 2024. Following the drilling sequence and rig utilization, the operator Venus well in the Barents Sea and the Ringhorne North in the Balder

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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

Area have both been shifted into 2024. Overall, we are active in exploration and target high-value barrels in existing hub areas to maximize value creation.

I will then round off my operational review and I will pass on the word to Stefano which will cover the financials for the quarter. Thank you so far, and Stefano, your turn.

Stefano Pujatti

Chief Financial Officer, Vår Energi ASA

Thank you, Torger, and good morning, everyone. Let's start with a high level view of some key financials for the quarter. We achieved solid revenue, EBIT and cash flow generation on the back of strong realized prices in the quarter, although impacted by lower commodity prices, higher tax payments and lower sold volumes in the quarter.

In addition, profit before taxes is also reduced from the previous quarter due to a net foreign exchange loss of approximately $47 million, as the NOK has continued to weaken compared to the dollar. With operating cash flow before tax at nearly $1.3 billion, we have maintained a solid leverage ratio of 0.4, slightly up from the previous quarter.

At the end of June, our available liquidity stands slightly above $3.1 billion. Production cost is at $15.5 per barrel compared to $13.1 in the previous quarter, driven by lower volumes and high maintenance activity in the quarter.

I will now go into more detail of our second quarter financial performance. We generated more than $1.4 billion of revenues for the quarter. Compared to the previous quarter, revenues were down $657 million, mainly due to lower volumes and lower prices. The spot prices on gas came significantly down in Q2 due to reduced demand from industries and high availability of LNG. However, gas continued to be a strong contributor to revenues, accounting for 41% of revenues and 36% of total production.

The average weighted realized price in the quarter was $82 per barrel. We continue our strong gas price realization of $98 per barrel, which was significantly above the average of the different trading hubs for the quarter. In fact, comparing our realized gas price to the average spot price for TTF during Q2, we have realized $180 million in extra revenues.

Taking a closer look at the gas sales in Q2, around 42% of the sales were on day-ahead basis at $67 per barrel. Around 36% was sold on a month-ahead basis at $74 per barrel. And both month-ahead and day-ahead were weighted toward the French and German market. The remaining 22% were delivered under contracts with fixed pricing, realizing an average of $193 per barrel. Overall, strong results from our gas sales strategy for two consecutive quarters in a row.

Going forward, we continue to have a robust sale portfolio with access to several markets and we will have the flexibility in the contract to decide the split between month-ahead,day-ahead and fixed contracts. We will continue to have fixed price sales representing around 20% of the gas sales. The prices for these sales are approximately $189 per barrel in Q3, while the pricing for Q4 and Q1 2024 is not fully known before the beginning of October. However, current estimates indicate a price of $130 per barrel. I would also like to mention that our oil production is fully hedged on a post-tax basis, including Q2 of 2024, with put options at a strike price of $50 per barrel.

Cash generation from operations in the quarter amounted to $231 million, a decrease from the previous quarter, mainly due to high cash tax payments we made in April and June. For the first half of the year, we have generated nearly $1.6 billion of cash flow from operations after tax. CapEx for the quarter stood at $687 million, up from

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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

$642 million in the previous quarter. The three largest development projects, Balder X, Johan Castberg and Breidablikk, represented around 70% of investments in the quarter. Year-to-date, CapEx spend is at roughly $1.3 billion, and as Torger mentioned, we expect to be within the guidance for the full year at between $2.4 billion and $2.7 billion.

Tax payments for the second quarter were around $1 billion, up from $577 million in the previous quarter due to the two tax installments paid in Q2. These payments relate to the very strong 2022 results. For Q3, we have one planned tax payment estimated to be around $250 million and two additional planned payments for Q4 at roughly $500 million, bringing the total cash tax payment estimate for second half of this year to just below $800 million.

Here, we see the development in our cash position from Q1 to the end of the second quarter. As you see, we have generated nearly $1.1 billion in cash flow from operations before taxes and working capital. This is largely the same amount as we have paid in taxes in the quarter. We further had cash outflow related to investment in our high-value growth project and we had net cash inflow of $73 million from financing activities as we completed in April the refinancing of the dollar bridge to bond, which I will soon come back to. We have distributed, as planned, $270 million in dividends to our shareholders. In summary, the cash position at the end of the quarter stood at $111 million and our available liquidity was at $3.1 billion at the end of Q2, meaning we are maintaining a strong liquidity position.

We are also maintaining a strong financial position. The leverage ratio, net interest-bearing debt on EBITDAX ended at 0.4 at the end of the quarter, slightly up from 0.3 at the end of Q1, but well below our over-the-cycle target of 1.3. As early mentioned, we have further optimized the capital structure in the quarter with the successful issuance of €600 million senior notes in April. This was issued under the recently established Euro Medium Term Note program and marks our debut access in the Eurobond market. The proceeds were used to fully complete the refinancing of the short-term debt, that being to repay the remaining $500 million of the bridge to bond. This means we have a solid debt financing structure with diversification of maturities, instruments, currencies and debt providers. And the average time to maturity for our bond portfolio is now six years, supporting the execution of our growth strategy towards end of 2025.

We remain committed to maintaining our investment grade credit rating, whilst we are heavily investing in developments, which are fueling our growth, continue strong shareholder distribution, and optimizing our balance sheet.

Now, on dividends, Vår Energi strong cash flow generation supports attractive and resilient distributions. In the last four quarters, we have distributed more than $1.1 billion. We confirm $270 million in dividend for the second quarter, which is equal to $0.11 per share to be paid on 14 of August. For the third quarter, the dividend guidance is $270 million, maintained on the same level as Q2 and Q1. For the full year, we confirm our dividend policy with an expected dividend of approximately 30% of the cash flow from operations after tax.

Lastly, let me revisit our full year 2023 guidance, which is unchanged. We maintain our production guidance in the range of 210,000, 230,000 barrel per day. Production cost is expected to come in in a range between $14.5 and $15.5 per barrel, CapEx between $2.4 billion, $2.7 billion, excluding exploration and abandonment costs, which are expected at $250 million in total. Cash tax payments, approximately $800 million in the second half of 2023, dividends of $270 million for Q3 of 2023, and the plan is to distribute approximately 30% of the CFFO after tax for this year.

That concludes the financial section, and I give the word back to Torger for some concluding remarks. Thank you.

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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

Torger Rød

Chief Executive Officer, Vår Energi ASA

Thanks a lot, Stefano. And to summarize, Vår Energi saw solid performance on operated assets in the quarter. We continued realizing strong prices on the back of our gas sales strategy and our main development projects are progressing according to schedule, confirming an unprecedented 50% high value growth by end 2025. We are walking the talk through the Neptune acquisition, a perfect strategic fit, which will accelerate growth and value creation for the company.

So, by that, I thank you all for listening in and give the word back to the operator for the Q&A. Thanks.

QUESTION AND ANSWER SECTION

Operator: Thank you. [Operator Instructions] The first question will be from the line of Matthew Smith from Bank of America. Please go ahead, your line will now be unmuted.

Matthew Smith

Analyst, BofA Securities, Inc.

[indiscernible] (00:29:24) morning, guys. I'm sorry. Hope you can hear me now, and thank you for taking my questions. Just wanted to focus on the dividend, really. I think last quarter you said the ambition was to maintain the $270 million quarterly dividend, but subject to any surprises on the commodity side, and whatever else [indiscernible] (00:29:44) this quarter. And I guess sort of my question is, should we think about the fourth quarter through the same lens all through the 30% CFFO policy. Perhaps I'll come back on the second one.

Torger Rød

Chief Executive Officer, Vår Energi ASA

Yeah. Good morning, Matthew, and thanks for your question. I think let's say, a quickly answer given that the commodity market and performance stays as is, I think you can expect quite a similar policy also for Q4 going forward.

Matthew Smith

Analyst, BofA Securities, Inc.

Okay. And then perhaps just following up on the same topic. It's my second and final question really then. How important the stability and the resilience of the dividend sort of is to the company because I suppose it's apparent in the recent history three quarters now [indiscernible] (00:30:44) $270 million? And if we look at the totality of last year's dividend and this year's dividend, about the same amount, actually just over $1 billion in total. So, yeah, I guess that's sort of focus of my follow-on, sort of where - what priority [indiscernible] (00:31:02) stability of the current dividend levels versus the policy of 20% to 30% of CFFO which arguably leaves quite a wide range of outcomes. So, your philosophy around that sort of policy, and the communications would also be useful. Thanks.

Torger Rød

Chief Executive Officer, Vår Energi ASA

Yeah. I will stop there, and I'm sure Stefano might fill me in as well on this. But you know we have a solid track record in Vår Energi when it comes to distribution to our shareholders. And that is something we will continue

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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

with. And we have a clear dividends policy and we are saying that through the cycle, we are going to have a 20% to 30% distribution of the cash flow from operation post-tax.

And what we are doing when we are - and that it will continue, and having a good distribution to our shareholders is important for Vår Energi. That is part of our, let's say, DNA, and the value proposition here. And how we do this, we are assessing it on a quarterly basis and then through the cycle and given where we are both on the liquidity side, on the leverage side, that is really the assessments we are doing when we are deciding the distribution.

And then, of course, the - we - our focus is of course to ensure good production, then to fuel our high value growth at our projects, and then to reduce debt and share with our - and distribute to our shareholders. And I think if you are reflecting a little bit on last year, we - as we said, we had $2.5 billion in investment. We reduced our debt by $2 billion and we had a good distribution of one - about $1.1 billion to our shareholders. So, that is really the policy also going forward here. So, that is important. Of course, all this combined with our investment grade balance sheet.

So, Stefano, anything to add here?

Stefano Pujatti

Chief Financial Officer, Vår Energi ASA

Yes. Maybe just to confirm along the lines you are confirming, Torger, the capital allocation from a company perspective is unchanged. So, let's say investing for our growth and sustaining the future production and being, let's say, a company that then can, let's say, share the cash flow between operational investments and debt reduction, and, let's say, dividends is really - it's really what we are looking after, and we successfully did so, as Torger mentioned, in the last year. And to some extent, this goes really to why Vår Energi is a unique investment proposition. We can combine big growth and big cash flow generation.

Matthew Smith

Analyst, BofA Securities, Inc.

Perfect. Well, thanks very much, guys. Much appreciated. I'll hand it over.

Operator: Thank you, Matthew. The next question will be from the line of Teodor Nilsen from SB1 Markets. Please go ahead, your line will now be unmuted.

Teodor Sveen-Nilsen

Analyst, SpareBank 1 Markets AS

Morning and thanks for taking my questions. So, a couple of questions from me. You repeated your 2025 additional 350,000 barrels per day. Just wondering, following the Neptune acquisition, what should we expect that new number to be?

Second question is also on the Neptune acquisition. I expect you will go through the portfolio, maybe identify some non-core assets, can you please just discuss around what kind of characteristics you're looking for the assets that you potentially will divest? Thanks.

Torger Rød

Chief Executive Officer, Vår Energi ASA

Good morning, Teodor, and thanks for your question. Yes, we are confirming our above 350 kboepd by end 2025. And that is, as we also expressed excluding the Neptune acquisition. And here the answer is a little bit the same

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Vår Energi ASA (VAR.NO)	Corrected Transcript
Q2 2023 Earnings Call	25-Jul-2023

as we gave when we announced the deal. We will come back to the combined numbers, but we'll do that at a later stage. And that will really be when the post-closing because now you know that we are now going through the, let's say, application process and approval processes and we are expecting a closing in Q1, and that will be the prudent time also to, I will say, present the updated numbers.

But as I said in my presentation, Teodor, is that we are going to be a bigger and more profitable company, that is clear, and also - and that takes me to your second question. We've also been saying that we're going to be not only a bigger, but we are also going to be a - we see this as an opportunity to also be a fitter company. So, as part of that, we might do portfolio optimization. And what have we done looking at is, of course, as we said, the Neptune deal is really [indiscernible] (00:36:25) is value accretive, is cash accretive, and is performance accretive. But, of course, the combined portfolio may give some assets that is, will say, not that important or not fitting that well with the strategy that we might then assess. And, of course, that might be both when it comes to the size, the longevity, the - also in accordance to our ESG strategy, also it might - we will assess the total equity in the various assets and so on. So, that will be the assumption that we will be doing very much in accordance to our, let's say, set strategic priorities. And then, there might be some assets that we would like to either dispose or adjust the equity stake in. So - but that also we will come back to later, because this is, of course, will be work in progress going forward. But, of course, again, we are working to close - do the closing as described. But, again, just to reiterate [indiscernible] (00:37:38) perfect fit.

Teodor Sveen-Nilsen

Analyst, SpareBank 1 Markets AS

Okay. Thank you. And just one final question from me on your comments around the supply chain and the tightness you observed there. How does that impact your ambition of $8 [indiscernible] (00:38:00) per barrel in the long term?

Torger Rød

Chief Executive Officer, Vår Energi ASA

Yeah. We feel that - well, the activity level is today and heading - I think we - Vår Energi is in a very good position given the maturity of our project portfolio. Then, when it comes to the OpEx and the production costs which is $8 real 2021 terms I think we said. Here, Teodor, our focus is really to focus on what we can impact and influence, and that is - the big building block is to bring these very competitive barrels on stream, as we talked about, then further to optimize and streamline our operations. And here, we are working to really improve the cost basis through economy of scale, through new technology, digitalization and so on. So, that is really our focus and to bring that on and, of course, then we also have to assess what the inflation in the market is doing really. But we still believe that we - and of course also here when the Neptune asset is being incorporated, that will also contribute to bring this number down towards the $8 we have set as our target. So, we are relentlessly working towards that going forward.

Teodor Sveen-Nilsen

Analyst, SpareBank 1 Markets AS

Okay. Thank you. That's all from me.

Operator: Thank you, Teodor. The next question will be from the line of James Hosie from Barclays. Please go ahead, your line will now be unmuted.

James Hosie

Analyst, Barclays Capital Securities Ltd.

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Var Energi AS published this content on 24 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 June 2024 17:52:21 UTC.

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Vår Energi, Partners Granted Iroko Carbon Storage License in North Sea	20/06	MT
Vår Energi: license for CO2 storage in the North Sea	20/06	CF
Vår Energi Extends Natural Gas Supply Deal with VNG Handel & Vertrieb	18/06	MT
Norway's Vaar extends gas deal with Germany's VNG by 12 years	18/06	RE
Var Energi ASA Extends Gas Sales Agreement with VNG Handel & Vertrieb GmbH for an Additional 12 Years	18/06	CI
Vår Energi Closes Intra-group Merger With Vår Energi Norge	10/06	MT
Vår Energi Joins UN-led Methane Emissions Reporting Initiative	27/05	MT
Norway’s Vår Energi Divests 20% Stake in Bøyla Oil Field	24/05	MT
Concedo ASA signed an agreement to acquire 20% stake in Bøyla Asset from Vår Energi AS (OB:VAR) for $24 million.	24/05	CI
Eni eyes new oil and gas spin-offs in energy transition satellite strategy	13/05	RE
TotalEnergies, ConocoPhillips' Eldfisk North Project Produces First Oil	08/05	MT
DNO to Buy Stakes in Vår Energi’s Oil, Gas Fields	08/05	MT
Norway oil workers agree to wage deal, averting strike	08/05	RE
DNO Norge AS entered into an agreement to acquire unknown minority stake in five oil and gas fields in the Norne area in the Norwegian Sea of Vår Energi ASA.	08/05	CI
Eni strengthens in UK through deal with Ithaca Energy	23/04	AN
Vår Energi AS Reports Earnings Results for the First Quarter Ended March 31, 2024	23/04	CI
Transcript : Vår Energi AS, Q1 2024 Earnings Call, Apr 23, 2024	23/04
Vaar Energi Q4 operating profit in line, dividend maintained	23/04	RE
Vår Energi AS Resolves to Pay Dividend to Fourth Quarter of 2024, Payable on May 8, 2024	23/04	CI

	1st Jan change	Capi.
VAR ENERGI	+17.29%	8.77B
OIL AND NATURAL GAS CORPORATION LIMITED	+33.72%	40.33B
AKER ASA	-7.66%	4.28B
ENERGEAN PLC	-6.23%	2.31B
ISRAMCO NEGEV 2 LIMITED PARTNERSHIP	-2.06%	1.02B
SABLE OFFSHORE CORP.	+30.82%	879M
SINO GEOPHYSICAL CO., LTD	-12.54%	596M
MERMAID MARITIME	+103.16%	204M
COHEN DEVELOPMENT GAS & OIL LTD.	-6.56%	180M
AFRICA ENERGY CORP.	-5.26%	92.51M

Var Energi

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VAR

NO0011202772

Oil & Gas Exploration and Production

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Sector Oil Exploration & Production - Offshore