Quarterly Report • Feb 8, 2024
Quarterly Report
Open in ViewerOpens in native device viewer
OKEA ASA Q4 quarterly report 2023
Following excellent performance from operated assets in particular, production in the fourth quarter increased by 27% and OKEA's full year production of 24.6 kboepd exceeded the latest guiding. The positive developments at Draugen and Brage continue, underlining the capabilities of the OKEA team to create value as operator of mid to late-life assets.
Production at Hasselmus commenced at the beginning of the quarter. This is OKEA's first development project as operator and was completed ahead of schedule and on budget. Hasselmus gross production was 4.8 kboepd in the quarter and export of associated gas and NGL from Draugen has recommenced.
On the more challenging side, closing of the Statfjord transaction with Equinor in December followed thorough assessments and was not a decision easily made. However, we still believe in the potential at Statfjord and I have confidence that, as a license partner, our team will be able to contribute to realise further value at the field.
A growth strategy with M&A as a key pillar carries inherent risks. Mitigating the risks and maximising the value potential of the assets are key tasks. Looking back over the last eight years, OKEA has completed four large and several smaller transactions which represent important building blocks towards becoming the company we are today. OKEA's growth ambition remains firm and we guide today for a 2024 production of 35-40 kboepd, an increase of 40-60% compared to 2023 production.
Svein J. Liknes, Chief Executive Officer
| Unit | Q4 2023 | Q3 2023 | Q4 2022 | Full year 2023 |
Full year 2022 4) |
|
|---|---|---|---|---|---|---|
| Total operating income | MNOK | 2,118 | 2,105 | 1,664 | 8,885 | 6,653 |
| EBITDA 1) | MNOK | 1,661 | 1,336 | 1,086 | 5,756 | 4,793 |
| EBITDAX 1) | MNOK | 1,683 | 1,370 | 1,277 | 5,959 | 5,121 |
| Profit/loss (-) before income tax | MNOK | -873 | 460 | 659 | 1,099 | 3,215 |
| Net profit / loss (-) | MNOK | -1,263 | 32 | 324 | -935 | 670 |
| Net cash flow from operations | MNOK | 1,720 | 748 | 390 | 5,188 | 3,344 |
| Net cash flow used in investments | MNOK | -1,450 | -534 | -1,729 | -3,206 | -2,434 |
| Net cash flow used in financing activities | MNOK | -136 | -187 | -190 | -649 | -1,969 |
| Net interest-bearing debt (IBD) 1) | MNOK | -578 | -535 | 583 | -578 | 583 |
| Net IBD ex. Other int. bearing liabilities1) | MNOK | -1,055 | -1,046 | 75 | -1,055 | 75 |
| Net production | Boepd 2)5) | 30,082 | 23,710 | 19,887 | 24,586 | 16,736 |
| Third-party volumes available for sale 3) | Boepd 2) | 292 | 210 | 633 | 567 | 596 |
| Over/underlift/inventory adjustments | Boepd 2) | -4,739 | 2,769 | -4,198 | 3,071 | -1,080 |
| Net sold volume | Boepd 2) | 25,635 | 26,689 | 16,322 | 28,224 | 16,252 |
| Production expense per boe 1) | NOK/boe | 206.2 | 195.1 | 258.4 | 215.2 | 236.8 |
| Realised liquids price | USD/boe | 83.4 | 89.0 | 95.2 | 80.1 | 98.4 |
| Realised gas price | USD/boe | 74.6 | 61.9 | 112.6 | 82.2 | 138.5 |
1) Definitions of alternative performance measures are available on page 36 of this report
2) Boepd is defined as barrels of oil equivalents per day
3) Sold volumes include net compensation volumes received from Duva and Nova (tie-in to Gjøa)
4) In 2022, activities from assets acquired from Wintershall Dea were included in the statement of comprehensive income and key figures for November and December only; volumes (boepd) were divided by 365 days in the year
5) In 2023, activities from the Statfjord 28% WI acquired from Equinor were not included in the statement of comprehensive income and key figures prior to closing on 29 December 2023. If volumes from Statfjord had been included from effective date on 1 January 2023, 2023 production for OKEA would have been 10,799 boepd higher; totalling 35,385 boepd.
The transaction with Equinor for 28% working interest (WI) in PL037 (Statfjord area) with effective date on 1 January 2023 was completed on 29 December. All transactions and activities prior to completion were accounted for in the purchase price allocation (PPA) and not included in the statement of comprehensive income and key figures. All identifiable assets and liabilities were recognised in the financial statements at fair value at completion date. The excess of consideration above the fair value of assets less liabilities was recognised as ordinary goodwill which was impaired at day 1. The goodwill impairment was mainly a result of a reduction in production and reserves estimates from RNB 2023 to RNB 2024. RNB 2024 indicated a 10-15% reduction in volumes over the lifetime of the acquired assets in addition to an increase in costs. The decrease in volumes was most significant in the near-term.
The PPA includes estimated fair value of the contingent consideration which will be revalued at each balance sheet date. Any changes in valuation will be recognised as other operating income.
For asset removal, an obligation estimated for the full working interest of OKEA was recognised. As the sales and purchase agreement stipulates that Equinor shall cover all costs for removal of Statfjord A, the fair value of the removal of Statfjord A was recognised as an asset retirement reimbursement right.
Technical goodwill was recognised as an offset to deferred tax on oil and gas properties and will be tested for impairment at each balance sheet date. Any impairment of technical goodwill may not be reversed. We recognised just above NOK 1 billion of technical goodwill from the transaction. Technical goodwill arises as an offset to deferred tax liabilities recognised in business combinations after IFRS 3. Technical goodwill will be impaired over the lifetime of the asset as the remaining recoverable amount from the assets gradually reduces below the book value of the fixed asset recognised as an oil & gas property. Reference is made to note 26 to the financial statements for further details on the PPA.
Total operating income in the quarter amounted to NOK 2,118 (2,105) million, whereof NOK 2,037 (2,131) million related to petroleum revenue. The average realised crude price was USD 85.6 (89.4) per boe. NGL discount amounted to USD 2.3 (0.4) per boe which resulted in an average realised liquids price of USD 83.4 (89.0) per boe. Average realised price for gas was USD 74.6 (61.9) per boe, of which USD 5.9 (0.7) per boe was attributable to realised gain on fixed price contracts.
Other operating income / loss (-) of NOK 81 (-26) million mainly consisted of a change in fair value of the contingent consideration to Wintershall Dea of NOK 26 (-39) million following a decrease (increase) in crude oil forward prices, tariff income at Gjøa of NOK 33 (26) million, and a net hedging gain (loss) from financial arrangements for oil, gas, and CO2 quotas of NOK 12 (-26) million.
Production expenses amounted to NOK 606 (465) million, corresponding to NOK 206 (195) per boe. The higher production expense follows from a higher level of maintenance activities and NOK 23 (0) million in cost of obsolete stock recognised in the quarter. The significant increase in production volumes offsets the increase in production expense per boe.
Changes in over-/underlift positions and production inventory amounted to an income of NOK 208 (expense of 224) million as produced volumes exceeded sold volumes by 4,739 (-2,769) boepd.
Sold volumes from third-party compensation received from Duva and Nova (tie-ins to Gjøa) amounted to 292 (210) boepd.
Exploration and evaluation expenses amounted to NOK 22 (34) million which mainly related to NOK 15 (21) million in area fees and various field evaluation activities and 7 (13) million in other exploration costs.
Depreciation of NOK 580 (426) million mainly consisted of unit of production deprecation of oil and gas properties of NOK 568 (414) million. The increase in depreciation was due to an increase in produced volumes.
An impairment charge of NOK 1,876 (475) million was recognised in the quarter. NOK 1,363 (0) million related to impairment of ordinary goodwill on the Statfjord transaction and was mainly a result of a reduction in production and reserves estimates. As a goodwill impairment, there are no associated tax income. NOK 513 (475) million related to an impairment on the Yme asset mainly a result of reduced forward prices for crude oil during the quarter. The related tax income amounted to NOK 400 (370) million, resulting in a net after tax impact on the Yme impairment of NOK 113 (104) million. At balance sheet date, both Statfjord and Yme are carried at fair value. Any adverse adjustments to asset performance and/or macro assumptions will result in future impairments. In the case of Yme, any potential positive adjustments will result in reversal of previous impairments.
General and administrative expenses amounted to NOK 37 (46) million and represent OKEA's share of costs after allocation to licence activities.
Net financial items amounted to an expense of NOK 78 (income of 24) million. Interest income amounted to NOK 30 (29) million. Expensed interest amounted to NOK 35 (37) million. Net foreign exchange gain / loss (-) amounted to NOK -61 (49). The foreign exchange loss was mainly a result of foreign exchange loss on bank deposits exceeding the gain on interest-bearing liabilities. The gain in the previous quarter mainly related to FX derivatives.
Profit / loss (-) before tax amounted to NOK -873 (460) million.
Tax expenses (-) / tax income (+) amounted to NOK -390 (-428) million. Impairment of goodwill is not taxdeductible which results in recognition of a tax expense despite a loss before tax in the quarter.
Net profit / loss (-) for the quarter was NOK -1,263 (32) million. Loss per share amounted to NOK 12.15 (earnings of 0.31).
Goodwill amounted to NOK 2,295 (1,292) million consisting of NOK 2,132 (1,129) million in technical goodwill and NOK 163 (163) million in ordinary goodwill. The increase in technical goodwill related to the PPA of Statfjord. Reference is made to note 26 for further information.
Oil and gas properties amounted to NOK 7,199 (6,001) million. NOK 1,619 (0) million related to the PPA of Statfjord, and NOK 522 (542) million mainly related to investments in Draugen power from shore and Brage production well drilling. These increases were partly offset by impairment of the Yme asset of NOK 513 million and depreciation of producing assets of NOK 568 million.
Right-of-use assets amounted to NOK 200 (208) million and mainly related to logistical resources on operated assets and lease of offices. The decrease was due to depreciation.
Non-current asset retirement reimbursement rights amounted to NOK 4,079 (3,339) million and related to Shell's and Wintershall Dea's obligations to cover part of OKEA's decommissioning costs for Draugen/Gjøa and Brage respectively. In addition, Equinor's obligations to cover decommissioning costs for Statfjord A was recognised by NOK 908 million in the PPA.
Trade and other receivables amounted to NOK 1,211 (1,689) million and comprise accrued revenue, working capital from joint venture licences and underlift of petroleum products. The decrease from previous quarter was mainly due to the oil lifting at Draugen taking place late in September with payment received in October.
Cash and cash equivalents amounted to NOK 2,301 (2,346) million.
Spare parts, equipment and inventory amounted to NOK 864 (604) million, whereof NOK 404 (295) million related to oil inventory at Statfjord, Draugen, Brage and Yme. The increase was mainly due to oil inventory and spare parts at Statfjord recognised in PPA, partly offset by obsolete stock recognised in the quarter.
Equity amounted to NOK 726 (2,094) million, corresponding to an equity ratio of 4% (13%). The decrease was due to impairments recognised in the quarter.
Non-current provision for asset retirement obligations amounted to NOK 9,431 (5,484) million. The increase was mainly due to recognition of asset retirement obligations for the Statfjord area. The obligations are partly offset by the asset retirement reimbursement rights outlined above.
Interest-bearing bond loans amounted to NOK 1,246 (1,300) million and comprise the OKEA04 bond.
Total other interest-bearing liabilities amounted to NOK 477 (511) million, whereof the non-current portion was NOK 427 (459) million and the current portion was NOK 50 (52) million. The amount represented OKEA's share of the net present value of the future obligations under the bareboat charter agreement for Yme on the Inspirer rig. Reference is made to note 23 for further details.
Provisions amounted to NOK 230 (83) million and consisted of a non-current liability of NOK 102 (45) million classified as non-current liabilities and a current liability of NOK 128 (38) million classified as trade and other payables. The provisions comprised accruals for estimated contingent consideration payable in relation to the asset purchases from Wintershall Dea and Equinor. Reference is made to note 27 for further details.
The lease liability consisted of a non-current liability of NOK 178 (187) million and a current liability of NOK 50 (50) million and represents the liability of the right-of-use assets as described above.
Trade and other payables amounted to NOK 2,997 (1,777) million and mainly comprise payments received under payment quantity agreements, accrued expenses, and working capital from joint venture licences. The increase was mainly due to the deferred consideration payable to Equinor in connection with the acquisition of 28% WI in the Statfjord area of NOK 610 (0) million, as well as working capital from the purchase price allocation of NOK 390 (0) million.
Income tax payable of NOK 2,141 (1,748) million represent remaining tax payable for 2023. The increase in taxes payable was due to taxable profit in the quarter, partly offset by tax instalments paid.
Net cash flows from operating activities amounted to NOK 1,720 (748) million accounting for taxes paid of NOK 477 (276) million. The higher cash flows from operating activities were mainly due to payment from the Draugen cargo lifted late in the third quarter being received in the fourth quarter.
Net cash flows used in investment activities amounted to NOK 1,450 (534) million of which NOK 920 (0) million related to cash paid in business combinations (Statfjord area). Other investments in oil and gas properties in the quarter amounted to NOK 517 (507) million and mainly relate to Draugen power from shore and drilling of production wells at Brage.
Net cash flows used in financing activities amounted to NOK 136 (187) million and was mainly related to dividend payments of NOK 104 (104) million and financing fees paid of NOK 11 (42) million for interest paid in the quarter. The higher financing fees paid in the previous quarter was mainly due to refinancing fees and call premium following replacement of OKEA03 by OKEA04.
OKEA uses derivative financial instruments and fixed price contracts to manage exposures to fluctuations in commodity prices and foreign exchange rates. A net realised hedging gain (loss) of NOK 3 (-7) million was recognised as operating income and relate to a gain on fixed price contracts for gas of NOK 45 (4) million partly offset by a net realised loss on financial hedging positions on oil and FX of NOK -42 (-11) million.
As per reporting date, ~16% of the estimated net after tax exposure for natural gas for the first quarter of 2024 were sold forward at an average fixed price of 123 GBp/th, ~21% for the second quarter of 2024 were sold forward at an average fixed price of 125 GBp/th, and ~23% for the third quarter of 2024 were sold forward at an average fixed price 125 GBp/th.
In addition, ~41% of the estimated net after tax exposure for oil for the first quarter of 2024 was in part hedged by the use of collars with price floors around 72-75 USD/bbl and ceilings around 87-105 USD/bbl and in part by puts with strike price at 72 USD/bbl. Furthermore, ~23% of the estimated net after tax exposure for oil for the second quarter of 2024 were hedged by collars with price floors of 75 USD/bbl and ceilings of 87 USD/bbl. In addition, ~15% of the estimated net after tax exposure for oil for the second half of 2024 were hedged by collars with price floors of 75 USD/bbl and ceilings of 89 USD/bbl.
OKEA has also entered into currency swaps of 50 million GBP with exchange rates at approximately 13.5 NOK. These transactions were settled in early 2024, following completion of the Statfjord transaction.
OKEA has bought CO2-quotas for delivery in the first quarter of 2024 for OKEAs operated assets Brage and Draugen at an average price of 73 EUR/ton. OKEA has purchased these quotas to fulfil all EU ETS obligations for our emissions in 2023, and for approximately half of the estimated emissions in 2024.
Oil options, FX derivatives and CO2 quotas are recognised at market value each balance sheet date. The unrealised gain from financial hedging arrangements for the quarter was NOK 66 (35) million and mainly relate to FX derivatives.
OKEA's net production was 30,082 (23,710) boepd in the quarter. The increase of 27% compared to previous quarter mainly related to high production reliability and startup of the Hasselmus tie-back to Draugen in October, continued good performance from the Talisker East well in addition to two new wells commencing production at Brage, and successful recompletion of a production well at Yme. Production at Gjøa, Ivar Aasen and Nova were stable throughout the quarter. In addition to the volumes recognised in the key figures and the profit and loss statement, production at Statfjord was 10,862 (11,428) boepd net to OKEA in the quarter.
| Unit | Q4 2023 |
Q3 2023 |
Q4 2022 4) |
Full year 2023 |
Full year 4) 2022 |
|
|---|---|---|---|---|---|---|
| Draugen – production reliability1)1 | % | 97 | 88 | 96 | 94 | 96 |
| Draugen – production availability2)2 | % | 93 | 80 | 92 | 83 | 94 |
| Brage – production reliability3 | % | 97 | 98 | 99 | 96 | N/A |
| Brage – production availability4 | % | 90 | 96 | 95 | 93 | N/A |
| Gjøa – production reliability | % | 90 | 96 | 97 | 95 | 92 |
| Gjøa – production availability | % | 87 | 91 | 97 | 94 | 90 |
| Yme – production reliability | % | 81 | 80 | N/A | 83 | 28 |
| Yme – production availability | % | 75 | 73 | 25 | 73 | 21 |
| Ivar Aasen – production availability | % | 98 | 96 | 97 | 92 | 82 |
| Nova – production availability | % | 99 | 96 | 73 | 98 | 81 |
| Draugen – production | Boepd | 8,726 | 5,830 | 6,797 | 6,487 | 6,767 |
| Brage – Production | Boepd | 8,036 | 5,697 | 1,520 | 4,856 | 383 |
| Gjøa – production | Boepd | 5,096 | 5,126 | 6,783 | 5,812 | 6,932 |
| Yme – production | Boepd | 3,439 | 2,494 | 1,693 | 2,809 | 1,429 |
| Ivar Aasen – production | Boepd | 2,874 | 2,838 | 2,544 | 3,009 | 1,086 |
| Nova – production | Boepd | 1,911 | 1,725 | 550 | 1,612 | 139 |
| Total net production5) | Boepd | 30,082 | 23,710 | 19,887 | 24,586 | 16,736 |
| Draugen – sold volume | Boepd | 8,521 | 6,916 | 6,494 | 8,980 | 6,740 |
| Brage – sold volume | Boepd | 5,304 | 6,752 | 109 | 4,935 | 27 |
| Gjøa – sold volume | Boepd | 5,681 | 4,146 | 7,926 | 6,555 | 7,381 |
| Yme – sold volume | Boepd | 3,424 | 2,182 | 719 | 2,942 | 1,157 |
| Ivar Aasen – sold volume | Boepd | 803 | 4,211 | 441 | 3,530 | 351 |
| Nova – sold volume | Boepd | 1,902 | 2,272 | 0 | 1,282 | 0 |
| Third-party volumes available for sale3) | Boepd | 292 | 210 | 633 | 567 | 596 |
| Total net sold volume | Boepd | 25,635 | 26,689 | 16,322 | 28,224 | 16,252 |
| Total over/underlift/inventory adj. | Boepd | -4,739 | 2,769 | -4,198 | 3,071 | -1,080 |
1) Production reliability = Actual production / (Actual production + Unscheduled deferment)
2) Production availability = Actual production / (Actual production + Scheduled deferment + Unscheduled deferment)
3) Deferment is the reduction in production caused by a reduction in available production capacity due to an activity, an unscheduled event, poor equipment performance or sub-optimum settings
4) Net compensation volumes from Duva and Nova received and sold (tie-in to Gjøa)
5) In 2022, activities from assets acquired from Wintershall Dea were included in the statement of comprehensive income and key figures for November and December only; volumes (boepd) were divided by 365 days in the year
6) In 2023, activities from the Statfjord 28% WI acquired from Equinor were not included in the statement of comprehensive income and key figures prior to closing on 29 December 2023. If volumes from Statfjord had been included from effective date on 1 January 2023, 2023 production for OKEA would have been 10,799 boepd higher and totalling 35,385 boepd.
Net production to OKEA from Draugen was 8,726 (5,830) boepd in the quarter. Production availability was 93% (80%) and production reliability was 97% (88%). The 50% increase in production mainly related to startup of the Hasselmus well and the high production availability in the quarter.
Production from the Hasselmus gas field, a subsea tieback to Draugen, commenced on 1 October 2023. Gross production from Hasselmus was 4,839 boepd (2,156 boepd net to OKEA) in the quarter, which was above expectations. Hasselmus is expected to add a total of gross 10.4 mmboe of natural gas and has also enabled restarted export of associated gas and NGL from Draugen. Hasselmus was OKEA's first development project as operator. First gas was achieved ahead of schedule and on budget.
In December, the Ministry of Energy approved the PDO and plan for construction and operation to electrify the Draugen and Njord A platforms. Topside modifications and early scope installation work for the power from shore project are ongoing.
A planned production stop of six days in relation to modification of the Draugen gas export pig receiver was completed in January 2024.
Net production to OKEA from Brage was 8,036 (5,697) boepd in the quarter. Production availability was 90% (96%) and production reliability was 97% (98%). The 41% increase in production compared to previous quarter was driven by continued good performance from the Talisker East production well in addition to both the Cook and Fensfjord wells commencing production during the quarter.
Gas export infrastructure capacity was temporarily reduced to 0.8 MSm3/day by Gassco for a majority of the quarter which resulted in a production curtailment. The export capacity increased to 1.2 MSm3/day from the middle of December and a further increase is currently being evaluated.
Drilling is ongoing on a Talisker East water injector with scheduled start-up in the first quarter of 2024. A second producer in Talisker South-East has been sanctioned for drilling in the first quarter of 2024. A Fensfjord north infill well project is expected sanctioned in the first quarter with a target to commence production in the second quarter of 2024.
The newly established Sognefjord East project has been matured to consider the Kim discovery and further assess area potential and development options.
Define phase studies for Brage topside modifications for a potential tie-back of Brasse are progressing in line with plan. Project sanctioning will be considered in the first quarter of 2024.
Net production to OKEA from Gjøa was 5,096 (5,126) boepd in the quarter. Production reliability was 90% (96%). The lower production reliability was mainly a result of unplanned maintenance in the quarter related to cleaning of the 1 stage compressor Strainer - Cooler system for deposits.
Net delivered and sold compensation volumes from Duva and Nova amounted to 292 (210) boepd in the quarter.
During 2023, 83% of the produced volumes was replaced by maturing of resources and improved reservoir performance. Contingent resources have also increased significantly during the year. IOR (Increased Oil Recovery) targets are under evaluation utilising new reprocessed seismic data.
Located 23 kilometres north of Gjøa, Ofelia will be considered for development as a tie-back to Gjøa. OKEA, together with the other license owners will also evaluate if the oil and gas discovery Gjøa North (Hamlet) can be developed jointly with Ofelia to optimise cost synergies.
Options to appraise the Aurora discovery and drill the Selene prospect in PL195 west of Gjøa are still under review.
Net production to OKEA from Yme was 3,439 (2,494) boepd in the quarter. Production reliability was 81% (80%) and production availability was 75% (73%). The 38% increase in volumes compared to previous quarter was mainly driven by successful recompletion of a production well in November. The effect of the recompleted well was somewhat offset by offloading constraints due to weather which temporarily reduced production.
Following some challenges in the drilling operations, drilling of the C-7 injector is currently expected completed in the first quarter of 2024.
The license is assessing a multilateral well solution for the planned C-3 sidetrack. An investment decision is expected in the first quarter of 2024.
Net estimated production to OKEA from Ivar Aasen was 2,874 (2,838) boepd in the quarter. Production availability was 98% (96%).
Successful well intervention campaigns completed in 2023 reduced production decline by 2-300 boepd net to OKEA in the fourth quarter. Additional campaigns are planned in 2024 aiming to reduce production decline. Recompletion of the D-8 well to a water injection was successfully completed in the quarter. The D-9 well produces above expectations and the recompletion to a water injection well has therefore been postponed.
Preparations for the IOR 2026 campaign started during the quarter with potential new wells being considered.
Net production to OKEA from Nova was 1,911 (1,725) boepd in the quarter. Production availability was 99% (96%).
A side-track drilling operation to improve location of one of the injector wells was successfully completed in the second quarter which resulted in improved water injection and increased production. Production at Nova remains somewhat limited by reduced effectiveness of the water injectors. A rig has been secured to drill a fourth water injector well in the second half of 2024 which will enable the operator to target the best location for the fourth water injector and further improve the water injection at the field.
Development of a new well for production is currently being evaluated by the licence.
On 29 December 2023, OKEA announced completion of the Statfjord transaction with Equinor Energy AS, acquiring 28% WI in PL037 (Statfjord area) with effective date 1 January 2023.
The acquired portfolio comprises 23.93123% WI in Statfjord Unit, 28% WI in Statfjord Nord, 14% WI in Statfjord Øst Unit and 15.4% WI in Sygna Unit. The Statfjord assets provide a significant increase in total production and reserves to OKEA and enhances diversification and portfolio robustness. Net production to OKEA from Statfjord area was 10,862 boepd in the fourth quarter.
RNB 2024 indicated a 10-15% reduction in volumes over the lifetime of the acquired assets in addition to an increase in costs compared to RNB 2023. The decrease in volumes was most significant in the near-term. Equinor, as operator, has initiated a project focused on increasing production reliability, maturing well targets and drilling performance, and revisiting the drainage strategy to increase liquid offtake and maximise recoverable reserves.
OKEA and Equinor in collaboration with respective license partners have established a joint project to electrify the Draugen and Njord A platforms.
OKEA is responsible for developing the power infrastructure from shore to Draugen including modifications on Draugen. Equinor is responsible for the cable from Draugen to Njord including modifications on Njord A. Draugen and Njord will be connected to the power grid at Tensio's transformer station at Straum in Åfjord municipality, where Statnett assesses the connection as operationally sound without a need for reinforcement of the power grid.
The PDO and PIO were approved by the Ministry of Energy in December. The Ministry of Energy also awarded OKEA and Tensio TS concession to build, own and operate facilities to provide the Draugen and Njord installations with power from shore.
The project will result in average annual reductions of CO2 emissions of 200,000 tonnes from Draugen and 130,000 tonnes from Njord as well as average annual reductions of NOX emissions of 1,250 tonnes from Draugen and 520 tonnes from Njord. In addition, the project will result in reduced production expense and extend the economic lifetime of the Draugen field.
Completion of the project is expected in 2027.
In December 2022, OKEA entered into an SPA with DNO Norge AS for 50% WI in the Brasse licence (PL740) with effective date 1 January 2023. The transaction was concluded at zero cost to OKEA.
To reduce cost and maximise the synergies with Brage, the operatorship of Brasse was transferred from DNO to OKEA on 1 September 2023. Commercial terms for the tie-in of Brasse to Brage are being negotiated with the Brage licence where OKEA is the operator and holds a 35.2% WI.
In order to improve alignment of ownership in the Brage and Brasse licences, OKEA entered into an SPA with M Vest Energy AS to divest 4.4424% WI in Brasse with effective date 1 January 2023. OKEA also entered into an SPA with Lime Petroleum AS to divest 6.2792 % WI in Brasse with effective date 1 July 2023. Both transactions were completed in the fourth quarter.
The target for the new partnership is to undertake a fast-track, low-cost review to assess whether a value accretive development concept can be established for the estimated 27.64 mmboe gross recoverable Brasse volumes. The project is currently being matured as a tie-in to Brage concept with a final investment decision (DG3) planned in the first quarter of 2024.
OKEA was awarded three new exploration licences by the Norwegian authorities in the APA 2023 licencing round announced in January 2024. PL 1223 in the Norwegian Sea is OKEA operated and holds the Galtvort discovery which will be considered developed towards the Draugen hub. The other two licences are located east of Statfjord East (PL1214) and south of Njord and Draugen hubs (PL1222).
OKEA is working with the operator Neptune Energy and partners in the PL938 Calypso license, which is located in the greater Draugen area, to mature the discovery further towards a feasible development option.
The PL1014 Arkenstone and PL1119 Mistral exploration wells are currently in the planning phase. Both licenses are operated by Equinor, and drilling is planned for both wells in the third quarter of 2024.
The 2023 annual statement of reserves will be published in April 2024. A preliminary update is provided in this report.
2P reserves increased by 38% from 60.2 million boe to 83.2 million boe during 2023. The main driver was the acquisition of interests in the Statfjord area from Equinor, which contributed with 32 million boe. The positive contributions of 4.4 million boe from organic maturation (Gjøa, Brage and Draugen) were offset by downward revision on Yme of 4.6 million boe.
Contingent resources (2C) have increased by 50% from 43.2 million boe to 64.6 million boe during 2023, mainly due to the acquisition of working interests in the Statfjord area and Brasse.
A serious HSE incident occurred on the OKEA-operated Brage platform in November when a person sustained injuries related to testing of the wellhead integrity. In line with standard routines, the incident is currently being investigated by the Norwegian Ocean Industry Authority. In line with company policy, the incident is also investigated internally. Establishing the facts and gaining knowledge is key, particularly for serious incidents. Defined focus areas with corresponding actions will target to convert insights gained to organisational learning and improvements.
An important basis for continuous improvement of QHSSE and ESG performance is ensuring that there is a toolbox in place for reviewing key prerequisites, relevant data and information as basis for defining and adjusting the corporate improvement agenda. In OKEA, the Annual Senior Management Review is an important part of this toolbox, and the 2023 review was carried out in December. In this meeting, senior management in OKEA as well as other key members of the organisation review and assess the overall status and conditions for key QHSSE pillars including company structures and systems, organisational capability and corporate culture. The review was based on both quantitative and qualitative considerations. Output from the review is included as basis for preparation of the annual OKEA QHSSE Activity Plan for 2024.
Production for 2023 ended at 24.6 kboepd, exceeding the latest production guidance of 23 - 24 kboepd. In addition, production from Statfjord ended at 10.8 kboepd, somewhat lower than the forecast of 11 - 12 kboepd. Capex in 2023 ended at NOK 1,911 million, slightly below the guidance of NOK 1,950 - 2,100 million.
Production guidance for 2024 is 35 - 40 kboepd for the current portfolio of assets. Major turnarounds scheduled include one week at Draugen in Q1, three weeks at Statfjord in Q2, three weeks at Brage in Q3 and three weeks at Ivar Aasen in Q3.
Capex guidance for 2024 is NOK 2,800 - 3,300 million and comprises drilling of new wells and lifetime extension program at Statfjord, Draugen Power from Shore, Brage infill drilling and other investments. The capex guidance does not include capitalised interest, exploration capex and investments for projects not yet sanctioned.
Three cash tax instalments are payable in the first half of 2024. Each instalment amounts to NOK 715 million and are payable in the first of the month in February, April, and June respectively.
No dividend is proposed for distribution in 2024.
Volumes already lifted in January include 203 kbbl from Brage, 384 kbbl from Ivar Aasen, 133 kbbl from Yme, and 199 kbbl from Statfjord. Volumes scheduled to be lifted in February include 132 kbbl from Yme, 406 kbbl from Brage,190 kbbl from Statfjord, and 630 kbbl from Draugen. Volumes scheduled to be lifted in March include 383 kbbl from Brage, 66 kbbl from Yme, and 268 kbbl from Statfjord.
On 16 January OKEA was offered interest in three new production licenses on the Norwegian continental shelf through APA 2023. PL 1223 in the Norwegian Sea is OKEA operated and holds the Galtvort discovery which will be considered developed towards the Draugen hub. The other two licences are located east of Statfjord East (PL1214) and south of Njord and Draugen hubs (PL1222).
OKEA has a clear ambition to deliver competitive shareholder returns driven by solid growth, value creation and capital discipline and the strategy continues to focus on three growth levers:
Despite the challenges with the Statfjord transaction, the board considers that the company is well positioned to continue to execute on its growth strategy.
Key parameters of the company's financial plan for 2024 include the following:
| 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|
| Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 | ||
| Amounts in NOK `000 | Note | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) |
| Revenues from crude oil and gas sales | 6 | 2 037 425 | 2 130 596 | 1 515 809 | 8 738 903 | 6 398 654 |
| Other operating income / loss (-) | 6, 25 | 80 699 | -25 579 | 148 644 | 145 631 | 253 975 |
| Total operating income | 2 118 124 | 2 105 018 | 1 664 453 | 8 884 534 | 6 652 629 | |
| Production expenses | 7 | -606 119 | -464 899 | -522 268 | -2 083 788 | -1 616 020 |
| Changes in over/underlift positions and production inventory | 7 | 207 578 | -224 494 | 221 588 | -684 204 | 296 523 |
| Exploration and evaluation expenses | 8 | -21 861 | -34 220 | -190 268 | -203 398 | -327 506 |
| Depreciation, depletion and amortisation | 10 | -580 464 | -425 497 | -270 243 | -1 695 088 | -769 359 |
| Impairment (-) / reversal of impairment | 10, 11, 12 | -1 875 978 | -474 618 | -251 152 | -2 744 808 | -497 584 |
| General and administrative expenses | 13 | -36 507 | -45 529 | -87 093 | -157 066 | -212 602 |
| Total operating expenses | -2 913 351 | -1 669 256 | -1 099 436 | -7 568 352 | -3 126 549 | |
| Profit / loss (-) from operating activities | -795 227 | 435 761 | 565 017 | 1 316 182 | 3 526 080 | |
| Finance income | 14 | 75 317 | 73 020 | 46 908 | 264 295 | 126 041 |
| Finance costs | 14 | -92 449 | -97 875 | -68 373 | -330 006 | -334 055 |
| Net exchange rate gain/loss (-) | 14 | -60 528 | 49 306 | 115 124 | -151 494 | -103 101 |
| Net financial items | -77 660 | 24 450 | 93 660 | -217 205 | -311 115 | |
| Profit / loss (-) before income tax | -872 887 | 460 212 | 658 677 | 1 098 977 | 3 214 965 | |
| Taxes (-) / tax income (+) | 9 | -389 865 | -427 821 | -334 559 | -2 034 335 | -2 545 357 |
| Net profit / loss (-) | -1 262 753 | 32 391 | 324 118 | -935 358 | 669 608 | |
Items that will not be reclassified to profit or loss in subsequent periods:
| Remeasurements pensions, actuarial gain/loss (-) | -1 389 | - | 110 | -1 389 | 110 |
|---|---|---|---|---|---|
| Total other comprehensive income, net of tax | -1 389 | 110 | -1 389 | 110 | |
| Total comprehensive income / loss (-) | -1 264 142 | 32 391 | 324 228 | -936 747 | 669 718 |
| Weighted average no. of shares outstanding basic | 103 910 350 | 103 910 350 | 103 881 220 | 103 910 350 | 103 873 090 |
| Weighted average no. of shares outstanding diluted | 103 910 350 | 103 910 350 | 103 939 480 | 103 910 350 | 103 947 610 |
| Earnings per share (NOK per share) - Basic | -12.15 | 0.31 | 3.12 | -9.00 | 6.45 |
| Earnings per share (NOK per share) - Diluted | -12.15 | 0.31 | 3.12 | -9.00 | 6.44 |
| 31.12.2023 | 30.09.2023 | 31.12.2022 | ||
|---|---|---|---|---|
| Amounts in NOK `000 | Note | (unaudited) | (unaudited) | (audited) |
| ASSETS | ||||
| Non-current assets | ||||
| Goodwill | 11, 12 | 2 295 470 | 1 292 206 | 1 296 591 |
| Exploration and evaluation assets | 11 | 210 481 | 206 871 | 184 317 |
| Oil and gas properties | 10 | 7 198 586 | 6 000 947 | 6 556 314 |
| Furniture, fixtures and office equipment | 10 | 56 667 | 54 228 | 40 622 |
| Right-of-use assets | 10 | 199 652 | 207 964 | 232 901 |
| Asset retirement reimbursement right | 15 | 4 079 318 | 3 339 001 | 3 662 122 |
| Total non-current assets | 14 040 173 | 11 101 217 | 11 972 868 | |
| Current assets | ||||
| Trade and other receivables | 17, 25 | 1 210 790 | 1 688 971 | 1 743 901 |
| Spare parts, equipment and inventory | 20 | 864 248 | 604 051 | 800 333 |
| Asset retirement reimbursement right, current | 15 | 83 229 | 55 737 | - |
| Cash and cash equivalents | 18 | 2 301 181 | 2 345 637 | 1 104 026 |
| Total current assets | 4 459 448 | 4 694 395 | 3 648 261 | |
| TOTAL ASSETS | 18 499 621 | 15 795 612 | 15 621 128 | |
| EQUITY AND LIABILITIES | ||||
| Equity Share capital |
16 | 10 391 | 10 391 | 10 391 |
| Share premium | 1 419 486 | 1 419 486 | 1 627 307 | |
| Other paid in capital | 19 140 | 19 140 | 19 140 | |
| Retained earnings/loss (-) | -723 376 | 644 676 | 421 191 | |
| Total equity | 725 642 | 2 093 694 | 2 078 030 | |
| Non-current liabilities | ||||
| Asset retirement obligations | 19 | 9 431 431 | 5 484 350 | 5 915 084 |
| Pension liabilities | 60 570 | 52 066 | 43 255 | |
| Lease liability | 23 | 178 537 | 187 415 | 212 409 |
| Deferred tax liabilities | 9 | 888 183 | 2 415 435 | 2 835 089 |
| Other provisions | 26, 27 | 102 115 | 45 019 | 39 107 |
| Interest bearing bond loans | 22 | 1 245 860 | 1 300 055 | 1 178 610 |
| Other interest bearing liabilities | 23 | 427 128 | 459 400 | 462 078 |
| Total non-current liabilities | 12 333 823 | 9 943 740 | 10 685 633 | |
| Current liabilities | ||||
| Trade and other payables | 21, 25 | 2 997 001 | 1 776 777 | 2 219 658 |
| Other interest bearing liabilities, current | 23 | 49 995 | 51 530 | 45 874 |
| Income tax payable | 9 | 2 141 182 | 1 747 740 | 476 850 |
| Lease liability, current | 24 | 50 190 | 49 643 | 49 643 |
| Asset retirement obligations, current | 19 | 104 036 | 69 671 | - |
| Public dues payable | 97 753 | 62 818 | 65 440 | |
| Total current liabilities | 5 440 156 | 3 758 178 | 2 857 465 | |
| Total liabilities | 17 773 980 | 13 701 918 | 13 543 099 | |
| TOTAL EQUITY AND LIABILITIES | 18 499 621 | 15 795 612 | 15 621 128 |
| Other paid in | Retained | ||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Share capital Share premium | capital | earnings/loss (-) | Total equity | |
| Equity at 1 January 2022 | 10 387 | 1 927 859 | 19 064 | -248 527 | 1 708 783 |
| Total comprehensive income/loss (-) for the period | - | - | - | 669 718 | 669 718 |
| Dividend paid | - | -301 264 | - | - | -301 264 |
| Share issues, cash | 4 | 712 | - | - | 716 |
| Share based payment | - | - | 76 | - | 76 |
| Equity at 31 December 2022 | 10 391 | 1 627 307 | 19 140 | 421 191 | 2 078 030 |
| Equity at 1 January 2023 | 10 391 | 1 627 307 | 19 140 | 421 191 | 2 078 030 |
| Total comprehensive income/loss (-) for the period | - | - | - | -936 747 | -936 747 |
| Dividend paid | - | -207 821 | - | -207 821 | -415 641 |
| Equity at 31 December 2023 | 10 391 | 1 419 486 | 19 140 | -723 376 | 725 642 |
| 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|
| Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 | ||
| Amounts in NOK `000 | Note | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) |
| Cash flow from operating activities | ||||||
| Profit / loss (-) before income tax | -872 888 | 460 212 | 658 677 | 1 098 977 | 3 214 965 | |
| Income tax paid/received | 9 | -477 156 | -276 100 | -1 200 739 | -1 252 743 | -2 289 373 |
| Depreciation, depletion and amortization | 10 | 580 464 | 425 497 | 270 243 | 1 695 088 | 769 359 |
| Impairment / reversal of impairment | 10, 11, 12 | 1 875 978 | 474 618 | 251 152 | 2 744 808 | 497 584 |
| Expensed exploration expenditures temporary capitalised | 8, 11 | -6 | 27 | 78 491 | 4 703 | 141 892 |
| Accretion asset retirement obligations/reimbursement right - net | 14, 15, 19 | 8 938 | 6 038 | 5 106 | 21 905 | 11 768 |
| Asset retirement costs from billing (net after reimbursement) | 15, 19 | -1 691 | -5 648 | 48 | -25 455 | -22 525 |
| Interest expense | 14 | 33 135 | 13 485 | 22 664 | 86 161 | 172 369 |
| Gain / loss on financial investments | 14 | - | - | -7 | - | 64 |
| Change in fair value contingent consideration | 6, 27 | -25 621 | 38 851 | -12 376 | 10 934 | -12 376 |
| Change in trade and other receivables, and inventory | -45 238 | -213 307 | -623 966 | 467 963 | -799 208 | |
| Change in trade and other payables | 525 865 | -204 441 | 1 062 709 | 71 084 | 1 425 986 | |
| Change in foreign exchange interest bearing debt and other non-current items | 118 530 | 28 959 | -122 118 | 264 662 | 233 567 | |
| Net cash flow from / used in (-) operating activities | 1 720 310 | 748 190 | 389 884 | 5 188 087 | 3 344 073 | |
| Cash flow from investment activities | ||||||
| Investment in exploration and evaluation assets | 11 | -3 603 | -21 817 | -182 695 | -31 939 | -315 833 |
| Business combinations, cash paid | 26, 27, 17 | -920 507 | - | -1 103 109 | -1 217 107 | -1 239 721 |
| Investment in oil and gas properties | 10, 14 | -517 369 | -506 846 | -421 709 | -1 918 704 | -1 052 354 |
| Investment in furniture, fixtures and office machines | 10 | -8 636 | -5 496 | -30 470 | -37 826 | -36 422 |
| Cash used on (-)/received from financial investments | - | - | 9 107 | - | 209 896 | |
| Net cash flow from / used in (-) investment activities | -1 450 115 | -534 159 | -1 728 876 | -3 205 575 | -2 434 433 | |
| Cash flow from financing activities | ||||||
| Net proceeds from borrowings | 22 | - | 1 308 025 | - | 1 308 025 | - |
| Repayment/buy-back of bond loans | 22 | - | -1 328 211 | - | -1 328 211 | -1 401 531 |
| Repayment of other interest bearing liabilities | 23 | -13 141 | -12 520 | -13 352 | -48 793 | -42 730 |
| Interest paid | -10 665 | -41 864 | -64 412 | -131 435 | -193 729 | |
| Payments of lease debt | 24 | -8 331 | -8 331 | -8 823 | -33 325 | -30 544 |
| Dividend payments | 16 | -103 910 | -103 910 | -103 910 | -415 641 | -301 264 |
| Net proceeds from share issues | - | - | 716 | - | 716 | |
| Net cash flow from / used in (-) financing activities | -136 047 | -186 812 | -189 780 | -649 381 | -1 969 082 | |
| Net increase/ decrease (-) in cash and cash equivalents | 134 147 | 27 219 | -1 528 773 | 1 333 131 | -1 059 442 | |
| Cash and cash equivalents at the beginning of the period | 2 345 637 | 2 334 876 | 2 668 452 | 1 104 026 | 2 038 745 | |
| Effect of exchange rate fluctuation on cash held | -178 604 | -16 458 | -35 653 | -135 976 | 124 723 | |
| Cash and cash equivalents at the end of the period | 2 301 181 | 2 345 637 | 1 104 026 | 2 301 181 | 1 104 026 |
These financial statements are the unaudited interim condensed financial statements of OKEA ASA for the fourth quarter of 2023. OKEA ASA ("OKEA" or the "company") is a public limited liability company incorporated and domiciled in Norway, with its main office located in Trondheim. The company's shares are listed on the Oslo Stock Exchange under the ticker OKEA.
OKEA is a leading mid to late-life operator on the Norwegian continental shelf (NCS). OKEA finds value where others divest and has an ambitious growth strategy built on accretive M&A activities, value creation and capital discipline.
The interim accounts have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim accounts do not include all the information required in the annual accounts and should therefore be read in conjunction with the annual accounts for 2022. The financial statements for 2022 were prepared in accordance with IFRS Accounting Standards (IFRS) as adopted by the European Union (EU) and in accordance with the additional requirements following the Norwegian Accounting Act.
The interim financial statements were authorised for issue by the company's board of directors on 7 February 2024.
The accounting policies adopted in the preparation of the interim accounts are consistent with those followed in the preparation of the annual accounts for 2022. New standards, amendments and interpretations to existing standards effective from 1 January 2023 did not have any significant impact on the financial statements.
The preparation of the interim accounts entails the use of judgements, estimates and assumptions that affect the application of accounting policies and the amounts recognised as assets and liabilities, income and expenses. The estimates, and associated assumptions, are based on historical experience and other factors that are considered as reasonable under the circumstances. The actual results may deviate from these estimates. The material assessments underlying the application of the company's accounting policies, and the main sources of uncertainty, are the same for the interim accounts as for the annual accounts for 2022.
The company's only business segment is development and production of oil and gas on the Norwegian continental shelf.
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| Sale of liquids | 1 454 019 | 1 759 380 | 916 152 | 6 672 215 | 3 621 472 |
| Sale of gas | 583 406 | 371 217 | 599 657 | 2 066 688 | 2 777 182 |
| Total petroleum revenues | 2 037 425 | 2 130 596 | 1 515 809 | 8 738 903 | 6 398 654 |
| Sale of liquids (boe*) | 1 624 346 | 1 882 788 | 967 625 | 7 920 985 | 3 841 817 |
| Sale of gas (boe*) | 734 062 | 572 571 | 534 008 | 2 380 613 | 2 090 128 |
| Total sale of petroleum in boe* | 2 358 407 | 2 455 359 | 1 501 633 | 10 301 598 | 5 931 945 |
*Barrels of oil equivalents
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| Gain / loss (-) from put/call options, oil | 8 600 | -24 986 | - | -11 476 | - |
| Gain / loss (-) from forward contracts, gas | - | - | 86 236 | 5 648 | 72 492 |
| Gain / loss (-) from forward contracts, CO2 quotas | 3 312 | -926 | - | 2 386 | - |
| Change in fair value contingent consideration (see note 27) | 25 621 | -38 851 | 12 376 | -10 934 | 12 376 |
| Tariff income Gjøa and NOx refund Brage | 32 659 | 30 494 | 39 707 | 130 656 | 131 596 |
| Sale of licenses | 7 566 | - | - | 7 566 | - |
| Joint utilisation of logistics resources | 2 941 | 8 690 | 10 326 | 21 783 | 37 512 |
| Total other operating income/loss (-) | 80 699 | -25 579 | 148 644 | 145 631 | 253 975 |
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| From licence billings - producing assets | 538 403 | 384 923 | 451 451 | 1 780 685 | 1 420 803 |
| Other production expenses (insurance, transport) | 60 981 | 72 340 | 64 407 | 272 067 | 179 295 |
| G&A expenses allocated to production expenses | 6 735 | 7 636 | 6 410 | 31 036 | 15 922 |
| Total production expenses | 606 119 | 464 899 | 522 268 | 2 083 788 | 1 616 020 |
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| Changes in over/underlift positions | 192 210 | -95 752 | 82 405 | -483 505 | 196 372 |
| Changes in production inventory | 15 367 | -128 741 | 139 182 | -200 699 | 100 151 |
| Total changes income/loss (-) | 207 578 | -224 494 | 221 588 | -684 204 | 296 523 |
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| Share of exploration and evaluation expenses from participation in licences excluding dry well impairment, from billing |
11 063 | 25 609 | 22 936 | 91 183 | 75 304 |
| Share of exploration expenses from participation in licences, dry well write off, from billing |
-6 | 27 | 78 491 | 4 703 | 141 892 |
| Seismic and other exploration and evaluation expenses, outside billing |
8 642 | 7 813 | 87 794 | 102 441 | 108 525 |
| G&A expenses allocated to exploration expenses | 2 163 | 771 | 1 047 | 5 070 | 1 786 |
| Total exploration and evaluation expenses | 21 861 | 34 220 | 190 268 | 203 398 | 327 506 |
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| Change in deferred taxes current year | 360 834 | 358 758 | -239 559 | 780 489 | -436 027 |
| Taxes payable current year | -750 700 | -786 579 | -94 996 | -2 853 024 | -2 105 157 |
| Tax payable adjustment previous year | - | - | -4 | 38 201 | -4 173 |
| Total taxes (-) / tax income (+) recognised in the income | |||||
| statement | -389 865 | -427 821 | -334 559 | -2 034 335 | -2 545 357 |
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| Profit / loss (-) before income taxes | -872 887 | 460 212 | 658 677 | 1 098 977 | 3 214 965 |
| Expected income tax at tax rate 78.004% | 680 887 | -358 984 | -513 794 | -857 246 | -2 507 802 |
| Permanent differences, including impairment of goodwill | -1 054 260 | -67 346 | 44 272 | -1 155 423 | -25 612 |
| Effect of uplift | 26 937 | 17 733 | 31 676 | 83 158 | 102 044 |
| Financial and onshore items | -43 430 | -19 224 | 103 250 | -150 077 | -105 620 |
| Effect of new tax rates | - | - | - | - | -104 |
| Adjustments previous year and other | - | - | 38 | 45 253 | -8 264 |
| Total income taxes recognised in the income statement | -389 865 | -427 821 | -334 559 | -2 034 335 | -2 545 357 |
| Effective income tax rate | -45 % | 93 % | 51 % | 185 % | 79 % |
Specification of tax effects on temporary differences, tax losses and uplift carried forward
| Amounts in NOK `000 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
|---|---|---|---|
| Tangible and intangible non-current assets | -4 907 112 | -4 165 306 | -4 372 336 |
| Provisions (net ARO), lease liability, pensions and gain/loss account | 4 524 553 | 2 091 030 | 2 102 801 |
| Interest bearing loans | -6 434 | -6 977 | -1 466 |
| Current items (spareparts and inventory) | -499 191 | -334 182 | -564 088 |
| Tax losses carried forward, onshore 22% | 4 887 | 4 887 | 4 887 |
| Valuation allowance (uncapitalised deferred tax asset) | -4 887 | -4 887 | -4 887 |
| Total deferred tax assets / liabilities (-) recognised | -888 183 | -2 415 435 | -2 835 089 |
| Amounts in NOK `000 | Total |
|---|---|
| Tax payable at 1 January 2023 | 476 850 |
| Tax paid | -1 252 743 |
| Tax payable adjustment previous year | -38 201 |
| Tax payable current year recognised in the income statement | 2 853 024 |
| Tax payable recognised in business combination (see note 26) | 103 324 |
| Taxes recognised on acquisition, sale and swap of licences | -1 072 |
| Tax payable at 31 December 2023 | 2 141 182 |
| Furniture, | ||||
|---|---|---|---|---|
| fixtures and | ||||
| Amounts in NOK `000 | Oil and gas properties |
office machines |
Right-of-use assets |
Total |
| Cost at 1 January 2023 | 10 276 046 | 52 650 | 358 702 | 10 687 398 |
| Additions | 1 473 302 | 29 189 | - | 1 502 492 |
| Reclassification from inventory | 4 648 | - | - | 4 648 |
| Removal and decommissioning asset | -82 881 | - | - | -82 881 |
| Disposals | - | -2 464 | - | -2 464 |
| Cost at 30 September 2023 | 11 671 115 | 79 375 | 358 702 | 12 109 192 |
| Accumulated depreciation and impairment at 1 January 2023 |
-3 719 732 | -12 027 | -125 802 | -3 857 561 |
| Depreciation | -1 081 606 | -15 584 | -17 434 | -1 114 624 |
| Impairment (-) / reversal of impairment | -868 830 | - | - | -868 830 |
| Disposals | - | 2 464 | - | 2 464 |
| Additional depreciation of IFRS 16 Right-of | ||||
| use assets presented gross related to | ||||
| leasing contracts entered into as licence | ||||
| operator | - | - | -7 502 | -7 502 |
| Accumulated depreciation and impairment at |
||||
| 30 September 2023 | -5 670 168 | -25 147 | -150 738 | -5 846 054 |
| Carrying amount at 30 September 2023 | 6 000 947 | 54 228 | 207 964 | 6 263 139 |
| Cost at 1 October 2023 | 11 671 115 | 79 375 | 358 702 | 12 109 192 |
| Additions | 522 914 | 8 636 | - | 531 551 |
| Additions through business combination (see note 26) | 1 619 488 | - | - | 1 619 488 |
| Reclassification from inventory | 139 | - | - | 139 |
| Removal and decommissioning asset | 136 855 | - | - | 136 855 |
| Disposals | - | - | - | - |
| Cost at 31 December 2023 | 13 950 512 | 88 011 | 358 702 | 14 397 226 |
| Accumulated depreciation and impairment | ||||
| at 1 October 2023 | -5 670 168 | -25 147 | -150 738 | -5 846 054 |
| Depreciation Impairment (-) / reversal of impairment |
-568 455 | -6 197 | -5 811 | -580 464 |
| Disposals | -513 303 - |
- - |
- - |
-513 303 - |
| Additional depreciation of IFRS 16 Right-of | ||||
| use assets presented gross related to | ||||
| leasing contracts entered into as licence | ||||
| operator | - | - | -2 501 | -2 501 |
| Accumulated depreciation and | ||||
| impairment at | ||||
| 31 December 2023 | -6 751 926 | -31 345 | -159 050 | -6 942 321 |
| Carrying amount at 31 December 2023 | 7 198 586 | 56 667 | 199 652 | 7 454 905 |
| Exploration | ||||
|---|---|---|---|---|
| and evaluation | Technical | Ordinary | ||
| Amounts in NOK `000 | assets | goodwill | goodwill | Total goodwill |
| Cost at 1 January 2023 | 184 317 | 1 642 191 | 416 415 | 2 058 607 |
| Additions | 27 263 | - | - | - |
| Additions through business combination (see note 26) | - | -4 385 | - | -4 385 |
| Expensed exploration expenditures temporarily capitalised | -4 710 | - | - | - |
| Cost at 30 September 2023 | 206 871 | 1 637 806 | 416 415 | 2 054 221 |
| Accumulated impairment at 1 January 2023 | - | -508 818 | -253 198 | -762 016 |
| Impairment | - | - | - | - |
| Accumulated impairment at 30 September 2023 | - | -508 818 | -253 198 | -762 016 |
| Carrying amount at 30 September 2023 | 206 871 | 1 128 988 | 163 217 | 1 292 206 |
| Cost at 1 October 2023 | 206 871 | 1 637 806 | 416 415 | 2 054 221 |
| Additions | 3 603 | - | - | - |
| Additions through business combination (see note 26) | - | 1 003 264 | 1 362 675 | 2 365 939 |
| Expensed exploration expenditures temporarily capitalised | 6 | - | - | - |
| Cost at 31 December 2023 | 210 481 | 2 641 070 | 1 779 090 | 4 420 161 |
| Accumulated impairment at 1 October 2023 | - | -508 818 | -253 198 | -762 016 |
| Impairment | - | - | -1 362 675 | -1 362 675 |
| Accumulated impairment at 31 December 2023 | - | -508 818 | -1 615 873 | -2 124 691 |
| Carrying amount at 31 December 2023 | 210 481 | 2 132 253 | 163 217 | 2 295 470 |
Tangible and intangible assets are tested for impairment / reversal of impairment whenever indicators are identified and at least on an annual basis. Impairment is recognised when the book value of an asset or cash generating unit exceeds the recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. The recoverable amount is estimated based on discounted future after tax cash flows. The expected future cash flows are discounted to net present value by applying a discount rate after tax that reflects the weighted average cost of capital (WACC).
Technical goodwill arises as an offsetting account to the deferred tax recognised in business combinations and is allocated to each Cash Generating Unit (CGU). When deferred tax from the initial recognition decreases, more goodwill is as such exposed for impairments.
Fair value assessment of the company's right-of-use (ROU) assets portfolio are included in the impairment test.
Below is an overview of the key assumptions applied in the impairment test as of 31 December 2023:
| Year | Oil USD/BOE* |
Gas GBP/therm* |
Currency rates USD/NOK |
|---|---|---|---|
| 2024 | 73.6 | 0.81 | 10.1 |
| 2025 | 69.1 | 0.85 | 10.0 |
| 2026 | 69.7 | 0.82 | 9.8 |
| From 2027 | 72.1 | 0.8 | 9.5 |
* Prices in real terms
For oil and gas reserves future cash flows are calculated on the basis of expected production profiles and estimated proven and probable remaining reserves.
Future capex, opex and abandonment cost are calculated based on the expected production profiles and the best estimate of related cost. For fair value testing the discount rate applied is 10.0% post tax unchanged from the Q3 test.
The long-term inflation rate is assumed to be 2.0%.
The valuation of oil and gas properties and goodwill are inherently uncertain due to the judgemental nature of the underlying estimates. This risk has increased due to the current market conditions with rapid fluctuation in supply and demand of oil and gas causing more volatility in prices.
Total cost for CO2 comprises Norwegian CO2 tax and cost of the EU Emission Trading System and is estimated to gradually increase from NOK 1,523 per tonne in 2022 towards a long term price of NOK 2,000 (real 2020) per tonne from 2030 in line with price estimates presented by the Norwegian authorities in late 2021. NOx prices are estimated to increase from approximately NOK 17 per kg in 2022 to a level of approximately 28 NOK per kg from 2030. A future change in how the world will react in light of the goals set in the Paris Agreement could have adverse effects on the value of OKEA's oil and gas assets. Sensitivities on changes to environmental cost is reflected in the table below.
Based on the company's impairment assessments NOK 513 million in impairment of the Yme asset was recognised in the fourth quarter. The impairment was mainly driven by reduced forward prices for oil. In addition to this, an impairment of NOK 1,363 million was recognised in relation to the acqusition of Statfjord Area assets, as the goodwill could not be substantiated.
No impairment of technical goodwill or ROU assets was required in the three month period ending on 31 December 2023.
The table below shows what the impairment pre-tax would have been in the fourth quarter under various alternative assumptions, assuming all other assumptions remaining constant. The total figures shown are combined impairment for CGUs Gjøa, Draugen, Ivar Aasen, Yme, Brage, Nova and Statfjord.
| Alternative calculations of pre-tax impairment/reversal (-) Q4 2023 (NOK '000) |
Increase / decrease (-) of pre tax impairment Q4 2023 (NOK '000) |
||||
|---|---|---|---|---|---|
| Increase in | Decrease in | Increase in | Decrease in | ||
| Assumptions | Change | assumption | assumption | assumption | assumption |
| Oil and gas price | +/- 10% | 1 632 823 | 2 634 369 | -243 155 | 758 392 |
| Currency rate USD/NOK | +/- 1.0 NOK | 1 630 793 | 2 586 420 | -245 185 | 710 442 |
| Discount rate | +/- 1% point | 1 924 100 | 1 864 213 | 48 122 | -11 765 |
| Environmental cost (CO2 and NOx) |
+/- 20% | 1 904 124 | 1 850 241 | 28 146 | -25 737 |
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| Salary and other employee benefits expenses | 295 157 | 249 862 | 225 766 | 1 018 511 | 620 072 |
| Consultants and other operating expenses | 151 416 | 124 676 | 139 524 | 579 711 | 336 209 |
| Allocated to operated licences | -401 168 | -320 602 | -270 731 | -1 405 049 | -725 343 |
| Allocated to exploration and production expenses | -8 898 | -8 407 | -7 466 | -36 107 | -18 336 |
| Total general and administrative expenses | 36 507 | 45 529 | 87 093 | 157 066 | 212 602 |
| 01.01-31.12 | |||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
| Interest income | 30 110 | 28 652 | 11 005 | 91 380 | 22 165 |
| Unwinding of discount asset retirement reimbursement right | |||||
| (indemnification asset) | 45 208 | 44 368 | 35 903 | 172 915 | 103 876 |
| Gain on financial investments | - | - | - | - | - |
| Finance income | 75 317 | 73 020 | 46 908 | 264 295 | 126 041 |
| Interest expense and fees from loans and borrowings | -38 624 | -50 610 | -33 407 | -163 617 | -200 371 |
| Capitalised borrowing cost, development projects | 5 545 | 37 125 | 10 800 | 77 513 | 28 059 |
| Interest expense shareholder loan | -57 | - | -57 | -57 | -57 |
| Other interest expense | -162 | -61 | -544 | -283 | -5 268 |
| Unwinding of discount asset retirement obligations | -54 146 | -50 406 | -41 009 | -194 820 | -115 645 |
| Loss on buy-back/early redemption bond loan | - | -28 315 | - | -28 315 | -23 535 |
| Loss on financial investments | - | - | 7 | - | -64 |
| Other financial expense | -5 006 | -5 608 | -4 162 | -20 428 | -17 174 |
| Finance costs | -92 449 | -97 875 | -68 373 | -330 006 | -334 055 |
| Exchange rate gain/loss (-), interest-bearing loans and | |||||
| borrowings | 76 929 | 25 467 | 172 037 | -54 555 | -296 881 |
| Net exchange rate gain/loss (-), other | -137 457 | 23 839 | -56 913 | -96 939 | 193 780 |
| Net exchange rate gain/loss (-) | -60 528 | 49 306 | 115 124 | -151 494 | -103 101 |
| Net financial items | -77 660 | 24 450 | 93 660 | -217 205 | -311 115 |
Amounts in NOK `000
| Asset retirement reimbursement right at 1 January 2023 (indemnification asset) | 3 662 122 |
|---|---|
| Additions through business combination (see note 26) | 908 214 |
| Changes in estimates | -396 312 |
| Effect of change in the discount rate | -80 303 |
| Asset retirement costs from billing, reimbursement from Shell and Wintershall Dea | -104 089 |
| Unwinding of discount | 172 915 |
| Asset retirement reimbursement right at 31 December 2023 (indemnification asset) | 4 162 547 |
| Of this: | |
| Asset retirement reimbursement right, non-current | 4 079 318 |
| Asset retirement reimbursement right, current | 83 229 |
| Asset retirement reimbursement right at 31 December 2023 (indemnification asset) | 4 162 547 |
Asset retirement reimbursement right consists of a receivable from the seller Shell from OKEA's acquisition of Draugen and Gjøa assets in 2018, a receivable from the seller Wintershall Dea from OKEA's acquisition of the Brage asset in 2022, and a receivable from the seller Equinor from OKEA's acquisition of the Statfjord asset in 2023 (see note 26).
Receivable from the seller Shell from OKEA's acquisition of Draugen and Gjøa assets in 2018:
The parties agreed that the seller Shell will cover 80% of OKEA's share of total decommissioning costs for the Draugen and Gjøa fields up to a predefined after-tax cap amount of NOK 757 million (2022 value) subject to Consumer Price Index (CPI) adjustment. The present value of the expected payments is recognised as a pre-tax receivable from the seller.
In addition, the seller has agreed to pay OKEA an amount of NOK 441 million (2022 value) subject to a CPI adjustment according to a schedule based on the percentage of completion of the decommissioning of the Draugen and Gjøa fields.
The net present value of the receivable is calculated using a discount rate of 4.4% (year end 2022: 3.9%).
The parties have agreed that Wintershall Dea will retain responsibility for 80% of OKEA's share of total decommissioning costs related to the Brage Unit, limited to an agreed pre-tax cap of NOK 1520.6 million subject to index regulation.
The net present value of the receivable is calculated using a discount rate of 5.2% (year end 2022: 6.4%).
Receivable from the seller Equinor from OKEA's acquisition of the Statfjord asset in 2023 (see note 26): The parties have agreed that Equinor will retain responsibility for 100% of OKEA's share of total decommissioning costs related to Statfjord A.
The net present value of the receivable is calculated using a discount rate of 4.2%.
| Ordinary | |
|---|---|
| Number of shares | shares |
| Outstanding shares at 1 January 2023 | 103 910 350 |
| New shares issued during 2023 | - |
| Number of outstanding shares at 31 December 2023 | 103 910 350 |
| Nominal value NOK per share at 31 December 2023 | 0.1 |
| Share capital NOK at 31 December 2023 | 10 391 035 |
Dividend paid in Q1 2023, Q2 2023, Q3 2023 and Q4 2023 is NOK 103.9 million, in total NOK 415,6 million.
| Amounts in NOK `000 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
|---|---|---|---|
| Accounts receivable and receivables from operated licences* | 265 711 | 131 632 | 234 811 |
| Accrued revenue | 340 848 | 943 822 | 422 885 |
| Prepayments | 100 901 | 336 852 | 79 009 |
| Working capital and overcall, joint operations/licences | 306 891 | 210 253 | 386 637 |
| Underlift of petroleum products | 141 269 | 43 769 | 588 934 |
| VAT receivable | 16 582 | 11 951 | 21 049 |
| Accrued interest income | - | 10 691 | - |
| Other receivables | 3 354 | - | - |
| Fair value forward contracts, gas | - | - | 10 578 |
| Fair value put/call options, oil | 3 748 | - | - |
| Fair value forward contracts, foreign exchange** | 29 101 | - | - |
| Fair value forward contracts, CO2 quotas | 2 386 | - | - |
| Total trade and other receivables | 1 210 790 | 1 688 971 | 1 743 901 |
* There is no provision for bad debt on receivables.
** Outstanding contracts at 31 December 2023: The company has entered into currency swaps with a total value of GBP 50 million against NOK. The swaps were done at GBPNOK rates of 13.49 with expiry dates early Q1 2024
| Amounts in NOK `000 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
|---|---|---|---|
| Bank deposits, unrestricted | 2 191 256 | 1 505 603 | 1 010 492 |
| Bank deposit, time deposit | - | 743 575 | - |
| Bank deposit, restricted, employee taxes | 40 691 | 27 900 | 31 224 |
| Bank deposit, restricted, deposit office leases | 14 930 | 14 824 | 14 824 |
| Bank deposit, restricted, other | 54 304 | 53 736 | 47 486 |
| Total cash and cash equivalents | 2 301 181 | 2 345 637 | 1 104 026 |
| Amounts in NOK `000 | |
|---|---|
| Provision at 1 January 2023 | 5 915 084 |
| Additions | 118 145 |
| Additions through business combination (see note 26) | 3 969 801 |
| Changes in estimates | -391 938 |
| Effects of change in the discount rate | -140 901 |
| Asset retirement costs from billing | -129 544 |
| Unwinding of discount | 194 820 |
| Asset retirement obligations at 31 December 2023 | 9 535 467 |
| Of this: | |
| Asset retirement obligations, non-current | 9 431 431 |
| Asset retirement obligations, current | 104 036 |
| Asset retirement obligations at 31 December 2023 | 9 535 467 |
Provisions for asset retirement obligations represent the future expected costs for close-down and removal of oil equipment and production facilities. The provision is based on the company's best estimate. The net present value of the estimated obligation is calculated using a discount rate of 3.3% (year end 2022: 3.1%). The assumptions are based on the economic environment at balance sheet date. Actual asset retirement costs will ultimately depend upon future market prices for the necessary works which will reflect market conditions at the relevant time. Furthermore, the timing of the close-down is likely to depend on when the field ceases to produce at economically viable rates. This in turn will depend upon future oil and gas prices, which are inherently uncertain.
For recovery of costs of decommissioning related to assets acquired from Shell, Wintershall Dea and Equinor, reference is made to note 15.
| Amounts in NOK `000 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
|---|---|---|---|
| Inventory of petroleum products | 404 495 | 295 443 | 511 509 |
| Spare parts and equipment | 459 753 | 308 608 | 288 824 |
| Total spare parts, equipment and inventory | 864 248 | 604 051 | 800 333 |
| Amounts in NOK `000 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
|---|---|---|---|
| Trade creditors | 197 028 | 78 015 | 126 044 |
| Accrued holiday pay and other employee benefits | 213 911 | 156 692 | 146 858 |
| Working capital, joint operations/licences | 1 310 913 | 1 050 763 | 1 061 014 |
| Overlift of petroleum products | 121 526 | 178 503 | 47 952 |
| Accrued interest bond loans | 34 164 | 5 385 | 5 175 |
| Other provisions, current (see note 27) | 128 167 | 38 722 | 29 810 |
| Prepayments from customers | 275 620 | 106 739 | 506 637 |
| Fair value put/call options, oil | - | 14 134 | - |
| Fair value forward contracts, foreign exchange | - | 17 302 | - |
| Fair value forward contracts, CO2 quotas | - | 926 | - |
| Loan from shareholder OKEA Holdings Ltd | 1 485 | 1 428 | 1 428 |
| Accrued consideration from acquisitions of interests in licences* | 544 809 | - | - |
| Other accrued expenses | 169 378 | 128 168 | 294 740 |
| Total trade and other payables | 2 997 001 | 1 776 777 | 2 219 658 |
* The liability at 31 December 2023 consist of an accrual for deferred consideration and adjustments in the pro&contra settlement payable to Equinor in connection with OKEA's acquisition of the Statfjord asset in 2023 (see note 26).
| Bond loan | Bond loan | ||
|---|---|---|---|
| Amounts in NOK `000 | OKEA04 | OKEA03 | Total |
| Interest bearing bond loans at 1 January 2023 | - | 1 178 610 | 1 178 610 |
| Bond issue OKEA04 * | 1 340 150 | 1 340 150 | |
| Capitalised transaction costs OKEA04 | -28 102 | -28 102 | |
| Amortisation of transaction costs | 2 412 | 16 095 | 18 506 |
| Bond buy-back/early redemption * | -1 299 896 | -1 299 896 | |
| Foreign exchange movement | -68 600 | 105 192 | 36 592 |
| Interest bearing bond loans at 31 December 2023 | 1 245 860 | - | 1 245 860 |
| Of this: | |||
| Interest bearing bond loans, non-current | 1 245 860 | - | 1 245 860 |
| Interest bearing bond loans, current | - | - | - |
| Interest bearing bond loans at 31 December 2023 | 1 245 860 | - | 1 245 860 |
| Bond loan | Bond loan | ||
|---|---|---|---|
| Amounts in NOK `000 | OKEA04 | OKEA03 | Total |
| Interest bearing bond loans at 1 January 2023 | - | 1 178 610 | 1 178 610 |
| Cash flows: | |||
| Gross proceeds from borrowings | 1 340 150 | - | 1 340 150 |
| Transaction costs | -28 102 | - | -28 102 |
| Repayment/buy-back of borrowings | -1 328 211 | -1 328 211 | |
| Total cash flows: | 1 312 048 | -1 328 211 | -16 163 |
| Non-cash changes: | |||
| Amortisation of transaction costs | 2 412 | 16 095 | 18 506 |
| Foreign exchange movement | -68 600 | 105 192 | 36 592 |
| Loss / gain (-) on buy-back/early redemption | 28 315 | 28 315 | |
| Interest bearing bond loans at 31 December 2023 | 1 245 860 | - | 1 245 860 |
* In September 2023 the company completed a refinancing of the OKEA03 bond loan maturing in December 2024. The company has issued a USD 125 million secured bond loan, OKEA04. Maturity date for OKEA04 is September 2026, and interest rate is fixed at 9.125% p.a. with half-yearly interest payments. OKEA04 was issued at par value USD 125 million. The USD 120 million bond loan OKEA03 was settled in September 2023 by way of voluntary early redemption and was called at a premium of 103.2.
During 2023 the company has been in full compliance with the covenants under the bond agreements.
The OKEA04 covenants comprise of:
(i) Leverage Ratio (Total Debt – Liquid Assets) / 12-mth rolling EBITDA of no more than 1.75x
(ii) Minimum Liquidity of USD 25 million
In September 2023 the company completed the establishment of a USD 25 million Revolving Credit Facility with a tenor of 2.5 years. The Revolving Credit Facility will be available for working capital purposes and will enhance financial flexibility for the company. At 31 December 2023 there are no draw downs on the facility.
In October 2021 the Yme licence completed acquisition of the Inspirer jack-up rig through a bareboat charter (BBC) agreement with Havila Sirius AS (Havila). The part of the lease payments to Havila corresponding to the purchase price paid by Havila to Maersk is considered as an investment in a rig with a corresponding liability, while the remaining amount of the total payments is treated as interest expenses. This treatment is based on the underlying assessment that the reality of the transaction is that it is an investment in a rig financed with a interest bearing liability, rather than a lease. OKEA's proportionate share of the investment and corresponding liability is USD 55.95 million.
The Yme licence has the right and the obligation to purchase the rig at the end of the lease period for NOK 1. In addition the Yme licence has the unconditional obligation to purchase the rig from Havila in case of any termination event during the lease period. The purchase price will then be the remaining amount paid by Havila to Maersk plus interest and other costs. The Yme licence also has the option to purchase the rig at any time during the lease period for the same price.
The liability carries a implicit interest rate of 5.21% p.a., and will be repaid with the lease payments to Havila with the last lease payment in October 2031. Repsol S.A. (RSA) is the parent company of the Yme licence operator Repsol Norge AS. On behalf of Yme, RSA has issued a parent company guarantee for the future lease payments to Havila.
| Liability | ||
|---|---|---|
| Amounts in NOK `000 | Yme rig | Total |
| Other interest bearing liabilities at 1 January 2023 | 507 952 | 507 952 |
| Repayments | -48 793 | -48 793 |
| Foreign exchange movement | 17 963 | 17 963 |
| Other interest bearing liabilities at 31 December 2023 | 477 123 | 477 123 |
| Of this: | ||
| Other interest bearing liabilities, non-current | 427 128 | 427 128 |
| Other interest bearing liabilities, current | 49 995 | 49 995 |
| Other interest bearing liabilities at 31 December 2023 | 477 123 | 477 123 |
| Liability | ||
| Amounts in NOK `000 | Yme rig | Total |
| Other interest bearing liabilities at 1 January 2023 | 507 952 | 507 952 |
| Cash flows: | ||
| Gross proceeds from borrowings | - | - |
| Repayment of borrowings | -48 793 | -48 793 |
| Total cash flows: | -48 793 | -48 793 |
| Non-cash changes: | ||
| Financing Yme Rig | - | - |
| Foreign exchange movement | 17 963 | 17 963 |
| Other interest bearing liabilities at 31 December 2023 | 477 123 | 477 123 |
The company has entered into operating leases for office facilities. In addition, as operator of the Draugen field, the company has on behalf of the licence entered into operating leases for logistic resources such as supply vessel with associated remote operated vehicle (ROV), base and warehouse for spare parts and hence gross basis of these lease debts are recognised.
| Amounts in NOK `000 | |
|---|---|
| Lease liability 1 January 2023 | 262 052 |
| Additions lease contracts | - |
| Accretion lease liability | 16 865 |
| Payments of lease debt and interest | -50 190 |
| Total lease debt at 31 December 2023 | 228 727 |
| Break down of lease liability | |
|---|---|
| Short-term (within 1 year) | 50 190 |
| Long-term | 178 537 |
| Total lease liability | 228 727 |
| Amounts in NOK `000 | 31.12.2023 |
|---|---|
| Within 1 year | 50 190 |
| 1 to 5 years | 150 367 |
| After 5 years | 134 062 |
| Total | 334 619 |
Future lease payments related to leasing contracts entered into as an operator of the Draugen field are presented on a gross basis.
| Amounts in NOK `000 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
|---|---|---|---|
| Premium commodity contracts | 1 101 | - | - |
| Accumulated unrealised gain/loss (-) commodity contracts included in other operating income / loss(-) |
2 647 | -14 134 | 10 578 |
| Short-term derivatives included in assets/liabilities (-) | 3 748 | -14 134 | 10 578 |
The company uses derivative financial instruments (put and call options) to manage exposures to fluctuations in commodity prices. Put options are purchased to establish a price floor for a portion of future production of petroleum products. In addition a price ceiling is established by selling call options, which reduces the net premium paid for hedging.
At 31 December 2023 there are no outstanding financial forward contracts gas (without physical delivery of gas). All outstanding contracts at 31 December 2022 expired in Q1 2023.
In addition OKEA has entered into non-financial contracts with physical delivery of gas in 2024 at fixed price. At 31 December 2023 the outstanding contracts are 37 000 000 therms of gas with delivery in Q1 2024 - Q3 2024 at fixed prices in the range of 103 - 144.5 GBp/therm. Revenue from these contracts will be recognised at delivery of the gas.
On 29 December 2023 OKEA completed the acquisition of a 28% working interest in PL037 (Statfjord Area) from Equinor Energy AS, comprising a 23.93123% working interest in Statfjord Unit, a 28% working interest in Statfjord Nord, a 14% working interest in Statfjord Øst Unit and a 15.4% working interest in Sygna Unit.
The transaction has been determined to constitute a business combination and has been accounted for using the acquisition method of accounting as required by IFRS 3. The economic date of the transaction, which will be used for tax purposes, is 1 January 2023. The acquisition date for accounting purposes (transfer of control) has been determined to be 29 December 2023.
A preliminary purchase price allocation (PPA) has been performed and all identified assets and liabilities have been measured at their acquisition date fair values in accordance with the requirements of IFRS 3. The agreed purchase price is USD 220 million, equivalent with NOK 2,237.9 million. Adjusted for interim period adjustments and working capital, the total cash consideration is estimated to NOK 1,726.7 million.
At this stage, the purchase price allocation is preliminary. As a result, the final PPA and the impact on the financial statements from the transaction may differ. The final PPA will be completed within 12 months of the acquisition at the latest.
The fair values of the identifiable assets and liabilities in the transaction as at the date of the acquisition have been estimated as follows:
| Assets | |
|---|---|
| Oil and gas properties | 1 619 488 |
| Deferred tax assets (reduced deferred tax liabilities) | 1 161 492 |
| Receivables on seller* | 908 214 |
| Total assets | 3 689 195 |
| Liabilities | |
| Net working capital | 65 277 |
| Asset retirement obligations | 3 969 801 |
| Income tax payable | 119 898 |
| Contingent consideration** | 173 467 |
| Total liabilities | 4 328 443 |
| Total identifiable net assets at fair value | -639 249 |
| Total consideration | 1 726 691 |
| Goodwill | 2 365 939 |
| Goodwill consist of: | |
| Ordinary goodwill | 1 362 675 |
| Technical goodwill | 1 003 264 |
| Total goodwill | 2 365 939 |
* The parties have agreed that Equinor will retain responsibility for 100% of OKEA's share of total decommissioning costs related to Statfjord A.
** In addition to the fixed consideration, OKEA shall pay to Equinor an additional contingent consideration with contingent payment terms applicable for 2023-2025 for certain thresholds of realised oil and gas prices.
The ordinary goodwill is mainly caused by the reduction in estimated reserves combined with an increase in estimated cost in the period between the agreement date and the acquisition date. The ordinary goodwill has been impaired at 31 December 2023 (see note 11 and 12). The technical goodwill arises as a consequence of the requirement to recognise deferred tax for the differences between the assigned fair values (which have been based on a post-tax market for such transactions) and the tax basis of assets acquired. None of the goodwill recognised will be deductible for income tax purposes.
A preliminary estimation of the impact from the transaction indicates that if the acquisition had taken place at the beginning of the year, total revenues for the year would have been approximately NOK 3,200 million higher and profit before tax would have been approximately NOK 1 400 million higher.
On 1 November 2022 OKEA completed the acquisition of a 35.2% working interest in the Brage field, a 6.4615% working interest in the Ivar Aasen field and a 6% working interest in the Nova field from Wintershall Dea Norge AS.
The purchase price allocation (PPA) presented below is based on a updated completion statement from Q1 2023 compared to the PPA presented in Q4 2022.
| PPA | Changes | Updated PPA | |
|---|---|---|---|
| Amounts in NOK `000 | Q4 2022 | Q1 2023 | |
| Assets | |||
| Oil and gas properties | 1 791 614 | - | 1 791 614 |
| Receivables on seller* | 947 255 | - | 947 255 |
| Net working capital | 441 429 | - | 441 429 |
| Income tax receivable (reduced tax payable) | 165 808 | 16 574 | 182 382 |
| Right-of-use assets | 17 315 | - | 17 315 |
| Total assets | 3 363 421 | 16 574 | 3 379 996 |
| Liabilities | |||
| Deferred tax liabilities | 633 483 | - | 633 483 |
| Asset retirement obligations | 1 926 780 | - | 1 926 780 |
| Contingent consideration | 116 041 | - | 116 041 |
| Lease liability | 17 315 | - | 17 315 |
| Total liabilities | 2 693 618 | - | 2 693 618 |
| Total identifiable net assets at fair value | 669 803 | 16 574 | 686 377 |
| Total consideration | 1 165 383 | 12 189 | 1 177 572 |
| Goodwill | 495 580 | -4 385 | 491 194 |
| Goodwill consist of: | |||
| Negative ordinary goodwill | -500 811 | - | -500 811 |
| Technical goodwill | 996 390 | -4 385 | 992 005 |
| Total goodwill | 495 580 | -4 385 | 491 194 |
* No changes to the PPA was made in Q2, Q3 or Q4 2023.
| Amounts in NOK `000 | |
|---|---|
| Provision at 1 January 2023 | 68 917 |
| Additions through business combination (see note 26) | 173 467 |
| Settlements/payments to Wintershall Dea | -23 035 |
| Changes in fair value | 10 934 |
| Other provisions at 31 December 2023 | 230 282 |
| Of this: | |
| Other provisions, non-current | 102 115 |
| Other provisions, current (classified within trade and other payables) | 128 167 |
| Other provisions at 31 December 2023 | 230 282 |
Other provisions consists of provisions for additional contingent consideration from OKEA's acquisition of the Brage, Ivar Aasen and Nova assets in 2022, and from OKEA's acquisition of the Statfjord asset in 2023 (see note 26).
The provisions for contingent consideration is measured at fair value with changes in fair value recognised in the income statement. The fair value is estimated using an option pricing methodology, where the expected option payoff is calculated at each future payment date and discounted back to the balance date.
Additional contingent consideration from OKEA's acquisition of the Brage, Ivar Aasen and Nova assets in 2022: OKEA shall pay to Wintershall Dea an additional contingent consideration based on an upside sharing arrangement subject to oil price level during the period 2022-2024.
Additional contingent consideration from OKEA's acquisition of the Statfjord asset in 2023 (see note 26): OKEA shall pay to Equinor an additional contingent consideration with contingent payment terms applicable for 2023-2025 for certain thresholds of realised oil and gas prices.
It is assessed that the carrying amounts of financial assets and liabilities, except for interest bearing bond loans, is approximately equal to its fair values.
For interest bearing bond loan OKEA04, the fair value is estimated to be NOK 1,289 million at 31 December 2023. The OKEA04 bond loan is planned to be listed on the Oslo Stock Exchange and the fair value is based on the latest quoted market price (level 2 in the fair value hierarchy according to IFRS 13) as per balance sheet date.
Fair values of put/call options oil, forward contracts foreign exchange and forward contracts CO2 quotas are based on quoted market prices at the balance sheet date (level 2 in the fair value hierarchy). The put/call options oil, the forward contracts foreign exchange and the forward contracts CO2 quotas are carried in the statement of financial position at fair value.
In January 2024, OKEA was offered interests in three new production licences on the Norwegian continental shelf, through the Awards in Pre-Defined Areas (APA) for 2023.
| EBITDA | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
|---|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 3 months | 12 months | 12 months |
| Profit / loss (-) from operating activities | -795 227 | 435 761 | 565 017 | 1 316 182 | 3 526 080 |
| Add: depreciation, depletion and amortisation | 580 464 | 425 497 | 270 243 | 1 695 088 | 769 359 |
| Add: impairment | 1 875 978 | 474 618 | 251 152 | 2 744 808 | 497 584 |
| EBITDA | 1 661 214 | 1 335 876 | 1 086 412 | 5 756 078 | 4 793 024 |
| Q3 2023 | Q4 2022 | 2023 | |||
|---|---|---|---|---|---|
| EBITDAX | Q4 2023 | 2022 | |||
| Amounts in NOK `000 | 3 months | 3 months | 3 months | 12 months | 12 months |
| Profit / loss (-) from operating activities | -795 227 | 435 761 | 565 017 | 1 316 182 | 3 526 080 |
| Add: depreciation, depletion and amortisation | 580 464 | 425 497 | 270 243 | 1 695 088 | 769 359 |
| Add: impairment / reversal of impairment | 1 875 978 | 474 618 | 251 152 | 2 744 808 | 497 584 |
| Add: exploration and evaluation expenses | 21 861 | 34 220 | 190 268 | 203 398 | 327 506 |
| EBITDAX | 1 683 076 | 1 370 096 | 1 276 680 | 5 959 476 | 5 120 530 |
| Production expense per boe | Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 |
|---|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 3 months | 12 months | 12 months |
| Productions expense | 606 119 | 464 899 | 522 268 | 2 083 788 | 1 616 020 |
| Less: processing tariff income | -32 659 | -30 494 | -39 707 | -130 656 | -131 596 |
| Less: joint utilisation of resources | -2 941 | -8 690 | -10 326 | -21 783 | -37 512 |
| Less: preparation for operation asset under construction | - | - | - | - | - |
| Divided by: produced volumes (boe) | 2 767 518 | 2 181 346 | 1 829 621 | 8 973 727 | 6 108 800 |
| Production expense NOK per boe | 206.1 | 195.1 | 258.4 | 215.2 | 236.8 |
| Net interest-bearing debt | |||
|---|---|---|---|
| Amounts in NOK `000 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
| Interest bearing bond loans | 1 245 860 | 1 300 055 | 1 178 610 |
| Other interest bearing liabilities | 427 128 | 459 400 | 462 078 |
| Interest bearing bond loans, current | - | - | - |
| Other interest bearing liabilities, current | 49 995 | 51 530 | 45 874 |
| Less: Cash and cash equivalents | -2 301 181 | -2 345 637 | -1 104 026 |
| Net interest-bearing debt | -578 199 | -534 652 | 582 537 |
| Net interest-bearing debt excl. other interest bearing liabilities | |||
|---|---|---|---|
| Amounts in NOK `000 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
| Interest bearing bond loans | 1 245 860 | 1 300 055 | 1 178 610 |
| Interest bearing bond loans, current | - | - | - |
| Less: Cash and cash equivalents | -2 301 181 | -2 345 637 | -1 104 026 |
| Net interest-bearing debt excl. other interest bearing liabilities | -1 055 321 | -1 045 582 | 74 584 |
EBITDA is defined as earnings before interest and other financial items, taxes, depreciation, depletion, amortisation and impairments.
EBITDAX is defined as earnings before interest and other financial items, taxes, depreciation, depletion, amortisation, impairments and exploration and evaluation expenses.
Net interest-bearing debt is book value of current and non-current interest-bearing loans, bonds and other interest-bearing liabilities excluding lease liability (IFRS 16) less cash and cash equivalents.
Net interest-bearing debt excl. other interest bearing liabilities is book value of interest-bearing bond loans less cash and cash equivalents.
Production expense per boe is defined as production expense less processing tariff income and joint utilisation of resources income for assets in production divided by produced volumes. Expenses classified as production expenses related to various preparation for operations on assets under development are excluded.
OKEA ASA is a leading mid- to late-life operator on the Norwegian continental shelf (NCS).
OKEA finds value where others divest and has an ambitious strategy built on growth, value creation and capital discipline.
OKEA ASA Kongens gate 8 7011 Trondheim
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.