Quarterly Report • Oct 26, 2022
Quarterly Report
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On 26 October OKEA announced dividend payment of NOK 103.9 million (NOK 1 per share) to be paid on or about 15 December. The board also announced its intention to distribute NOK 1 per share each quarter also in 2023. The 2023 dividends are subject to authorisation from the general meeting and may be revised due to changes in the market environment, company situation and/or value accretive opportunities available.
(Amounts in parentheses refer to previous quarter)
| Unit | Q3 2022 | Q2 2022 | Q3 2021 | Full year 2021 |
|
|---|---|---|---|---|---|
| Total operating income | MNOK | 2,143 | 1,332 | 1,026 | 3,882 |
| EBITDA 1) | MNOK | 1,636 | 928 | 797 | 2,607 |
| EBITDAX 1) | MNOK | 1,654 | 954 | 834 | 2,950 |
| Profit/loss (-) before income tax | MNOK | 738 | 532 | 526 | 2,106 |
| Net profit / loss (-) | MNOK | 104 | 28 | 97 | 603 |
| Net cash flow from operations | MNOK | 1,183 | 699 | 470 | 2,515 |
| Net cash flow used in investments | MNOK | -116 | -304 | -166 | -941 |
| Net cash flow used in financing activities | MNOK | -1,248 | -196 | -141 | -422 |
| Net interest-bearing debt (IBD) 1) | MNOK | -799 | -49 | 874 | 750 |
| Net IBD ex. other int. bearing liabilities1) | MNOK | -1,371 | -576 | 874 | 256 |
| Net production | Boepd 2) | 16,064 | 16,039 | 16,315 | 15,530 |
| Third-party volumes available for sale 3) | Boepd 2) | 431 | 849 | 165 | 147 |
| Over/underlift/inventory adjustments | Boepd 2) | 769 | -931 | 499 | 166 |
| Net sold volume | Boepd 2) | 17,264 | 15,957 | 16,979 | 15,843 |
| Production expense per boe 1) | NOK/boe | 253.1 | 234.7 | 108.2 | 133.5 |
| Realised liquids price | USD/boe | 106.6 | 100.3 | 67.4 | 65.3 |
| Realised gas price | USD/boe | 194.8 | 82.4 | 97.1 | 105.2 |
1) Definitions of alternative performance measures are available on page 34 of this report
2) Boepd is defined as barrels of oil equivalents per day
3) Compensation volumes received from Duva (tie-in to Gjøa) included in Net sold volumes
Total operating income in the third quarter was a record high NOK 2,143 (1,332) million, whereof NOK 2,114 (1,254) million related to revenue from oil and gas sales. The average realised liquids price was USD 106.6 (100.3) per boe while the average realised price for gas was USD 194.8 (82.4) per boe. Total sold volumes were 1,588 (1,452) thousand boe.
Other operating income/loss (-) was NOK 30 (78) million and comprises tariff income at Gjøa of NOK 42 (26) million, income from joint utilisation of logistic resources of NOK 9 (12) million, and a net loss from gas forward contracts of NOK -21 (gain of 40) million.
Production expenses amounted to NOK 425 (381) million, corresponding to NOK 253.1 (234.7) per boe. The production expense was high in the quarter mainly due completion of a planned scale squeeze campaign and high prices for gas import at Draugen in addition to continued high production expenses at Yme during rampup. The production expense per boe was additionally driven by low volumes from Yme.
Changes in over-/underlift positions and production inventory amounted to an expense of NOK -18 (income of 61) million. Sold volumes exceeded produced volumes by 769 (-931) boepd in the quarter. In addition, sold volumes from third-party compensation received from Duva and Nova (tie-ins to Gjøa) amounted to 431 (849) boepd.
Exploration and evaluation expenses amounted to NOK 19 (26) million and mainly related to cost for the APA 2022 of NOK 6 (7) million and various field evaluation activities of NOK 12 (19) million.
A non-cash impairment charge of NOK 609 (0) million was recognised on the Yme asset in the quarter. The impairment was mainly driven by a reserves revision which is further described in the Yme section below. Tax income relating to the impairment amounted to NOK 475 (0) million, resulting in a net after tax impact of NOK 134 (0) million.
General and administrative expenses amounted to NOK 45 (58) million and represent OKEA's share of costs after allocation to licence activities. The expense was high in the quarter mainly due to transition activities related to the transfer of operatorship of the Brage asset. Expense in the previous quarter included nonrecurring expenses relating to the acquisition of assets from Wintershall Dea.
Net financial items amounted to NOK -113 (-231) million, whereof NOK -52 (-51) million was expensed interest. and NOK -41 (-177) million was a net foreign exchange loss following a weakening of NOK against the USD by ~9% in the quarter. The foreign exchange loss relates to the USD nominated debt, partly offset by USD nominated cash. In addition, NOK -17 (-2) million in call premium was expensed in relation to the early redemption of OKEA02 in July. For further details on financial items, reference is made to note 14.
Profit / loss (-) before tax amounted to NOK 738 (532) million.
Tax expenses (-) / tax income (+) amounted to NOK -633 (-504) million and represents an effective tax rate of 86% (95%). The deviation from the expected 78% was mainly due to financial items which is deductible at a low tax rate.
Net profit / loss (-) for the quarter was NOK 104 (28) million. Earnings per share were NOK 1.01 (0.27).
Goodwill amounted to NOK 801 (801) million consisting of NOK 638 (638) million in technical goodwill and NOK 163 (163) million in ordinary goodwill.
Oil and gas properties amounted to NOK 4,718 (5,129) million at the end of the quarter. The decrease was due to the impairment of the Yme asset of NOK 609 (0) million and depreciation of producing assets of NOK 170 (159) million. This reduction was partly offset by investments in the Hasselmus development, Draugen modifications and Yme of a total of NOK 321 (192) million. In addition, asset retirement obligation assets increased by NOK 47 (-93) million following recognition of removal obligations relating to the production wells at Hasselmus and Yme Beta North.
Right-of-use assets amounted to NOK 217 (224) million and mainly relates to logistical resources on operated assets and lease of offices.
Non-current asset retirement reimbursement right amounted to NOK 2,486 (2,559) million which relates to Shell's obligation to cover decommissioning costs for Draugen and Gjøa. The reduction was mainly due to an increase in the discount rate following a general increase in market interest rates.
Trade and other receivables amounted to NOK 1,347 (1,060) million which mainly related to accrued revenue, working capital form joint venture licences, underlift of petroleum products and prepayments, including NOK 97 (97) million in prepaid consideration related to the acquisition of assets from Wintershall Dea.
Cash and cash equivalents amounted to NOK 2,668 (2,758) million. The strong cash generation from operations in the quarter was mainly used for early repayment of OKEA02 of NOK 1,102 (10) million and dividend payments to shareholders of NOK 104 (93) million.
Financial investments amounted to NOK 9 (210) million and relate to liquid investments in low-risk moneymarket funds and combination funds. NOK 201 (0) million was realised in the quarter and transferred to bank deposit.
Spare parts, equipment and inventory amounted to NOK 229 (253) million whereof NOK 85 (122) million related to oil inventory mainly at Draugen.
Equity amounted to NOK 1,857 (1,856) million, corresponding to an equity ratio of 15% (14%). The net increase from previous quarter was due net profit after tax exceeding the dividend payment of NOK 104 million.
Non-current provision for asset retirement obligations amounted to NOK 3,621 (3,645) million. The reduction was mainly due to an increase in the discount rate following a general increase in market interest rates. The obligation is largely offset by the asset retirement reimbursement right outlined above.
Interest-bearing bond loans amounted to NOK 1,298 (2,182) million. The reduction was mainly due to an early repayment of the remaining outstanding amount of OKEA02 (USD 100 million) in the quarter. Reference is made to note 22 for further details.
Total other interest-bearing liabilities amounted to NOK 572 (527) million, whereof the non-current portion was NOK 522 (482) million and the current portion was NOK 50 (44) million. The amount represents OKEA's share of the net present value of the future obligations under the bareboat charter (BBC) agreement for Yme on the Inspirer rig. Reference is made to note 23 for further details.
The lease liability relating to IFRS 16 is split into a non-current liability of NOK 202 (209) million and a current liability of NOK 44 (44) million and represents the liability of the right-of-use assets as described above. Trade and other payables amounted to NOK 1,193 (943) million and mainly relate to working capital from joint venture licences, prepayments from customers and accrued expenses.
Income tax payable was NOK 1,749 (1,298) million and mainly consists of the remaining tax payable for 2021 and accrued tax for 2022 partly offset by of taxes paid of NOK 509 (386) million.
Net cash flows from operating activities amounted to NOK 1,183 (699) million, including taxes paid of NOK - 509 (-386) million. The increase compared to previous quarter was mainly due to higher realised prices for both liquids and gas.
Net cash flows used in investment activities amounted to NOK -116 (-304) million of which investment in oil and gas properties amounted to NOK -312 (-186) million, mainly relating to the Hasselmus gas development, Draugen modifications and Yme. This was partly offset by cash realised on financial investments of NOK 201 (0) million.
Net cash flows used in financing activities amounted to NOK -1,248 (-196) million and mainly relates to the early redemption of OKEA02 of NOK -1,102 (-10) million and dividend payment of NOK -104 (-93) million.
OKEA uses derivative financial instruments and forward sales to manage exposures to fluctuations in commodity prices. At the end of the quarter, OKEA had sold forward approximately 30% of the estimated net after tax exposure for natural gas for the fourth quarter of 2022 at an average price of 349 GBp/th, 20% for the first quarter of 2023 at an average price of 417 GBp/th and 10% for the second quarter of 2023 at an average price of 505 GBp/th.
OKEA`s net production in the third quarter was 16,064 (16,039) boepd. Draugen, Gjøa and Ivar Aasen are producing according to plan. The lower production at Draugen compared to previous quarter was due to a planned scale squeeze and a wire-line campaign. Production from Yme is well below plan due to continuing startup challenges. In the third quarter, a leakage in the topsides piping system resulted in a shutdown of about six weeks. Yme was back in production in early October.
| Unit | Q3 2022 | Q2 2022 | Q3 2021 | Full year 2021 |
|
|---|---|---|---|---|---|
| Draugen – production reliability5)1 | % | 94 | 99 | 97 | 98 |
| Draugen – production availability6)2 | % | 89 | 98 | 87 | 93 |
| Gjøa – production reliability | % | 100 | 97 | 97 | 99 |
| Gjøa – production availability | % | 98 | 89 | 92 | 85 |
| Yme – production availability | % | N/A | N/A | N/A | N/A |
| Ivar Aasen – production availability | % | 98 | 99 | 98 | 97 |
| Draugen – production | Boepd | 6,338 | 7,060 | 6,735 | 7,084 |
| Gjøa – production | Boepd | 7,353 | 7,107 | 9,348 | 8,137 |
| Yme – production | Boepd | 1,354 | 1,322 | N/A | 54 |
| Ivar Aasen – production | Boepd | 1,019 | 550 | 233 | 255 |
| Total net production | Boepd | 16,064 | 16,039 | 16,315 | 15,530 |
| Draugen – sold volume | Boepd | 6,923 | 6,949 | 6,548 | 6,874 |
| Gjøa – sold volume | Boepd | 7,647 | 6,611 | 10,214 | 8,130 |
| Yme – sold volume | Boepd | 1,452 | 1,448 | N/A | 35 |
| Ivar Aasen – sold volume | Boepd | 811 | 100 | 52 | 656 |
| Third-party volumes available for sale* | Boepd | 431 | 849 | 165 | 147 |
| Total net sold volume | Boepd | 17,264 | 15,957 | 16,979 | 15,843 |
| Total over/underlift/inventory adj. | Boepd | 769 | -931 | 499 | 166 |
5) Production reliability = Actual Production / (Actual production + Unscheduled deferment)
6) Production availability = Actual Production / (Actual production + Scheduled deferment + Unscheduled deferment)
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.
* Compensation volumes from Duva and Nova received and sold (tie-in to Gjøa)
Net production to OKEA from Draugen was 6,338 (7,060) boepd in the quarter. Production availability was 89% (98%) and production reliability was 94% (99%).
The lower production compared to previous quarter was mainly due to planned activities for scale squeeze of subsea wells as well as a wireline logging campaign on the platform wells. The wireline campaign verified good barrier condition for life extension of gas-lifted platform wells at Draugen. In addition, reliability in July was low due to production trips following deluge testing and modification work. In the fourth quarter a three-day safety stop (ESD test) and scale squeeze of platform wells is planned which will impact the production from Draugen in the coming quarter.
The Hasselmus well was successfully drilled by COSLPromoter and is estimated to be in production from fourth quarter of 2023. Topside pre-fabrication and installation at Draugen has commenced. Production start is planned for Q4 23 with gross plateau gas production of more than 4,400 boepd.
Net production to OKEA from Gjøa was 7,353 (7,107) boepd in the quarter and production reliability was 100% (97%). Production in the third quarter was impacted by 2 days of planned maintenance in September.
Production from the tie-back Nova started in July. Delivered and sold compensation volumes from Duva and Nova was 431 (849) boepd in the quarter. The reduction in compensation volumes in the third quarter was due to delivery of compensation volumes from Duva completed by end of July and Nova still being in ramp-up.
Work to mature a potential development of Gjøa Nord, including the Hamlet discovery, as a tie-back to Gjøa is progressing as planned. Final investment decision is planned by the end of 2022 .
Net production to OKEA from Yme was 1,354 (1,322) boepd in the quarter.
Yme is now producing to the subsea storage tank, and the tank and offloading system are functioning as intended. The Mobile Offshore Drilling and Production Unit 'Inspirer' is currently producing from five production wells.
Production performance at Yme has been well below expectations with low plant availability throughout the year. Recompletion of production wells has taken more time than anticipated and an incident with leakage in the topsides piping system caused a shutdown of production for approximately six weeks during the quarter.
Water-cut from the producing wells has also been higher than expected. This effect has been increasing during the quarter which is further limiting the total production potential. Expected production from Yme in 2022 is therefore further reduced. Plateau production has been reduced to 6,600 boepd net OKEA and is expected to be reached in the first half of 2023.
The Beta North drilling campaign, employing the Valaris Viking drilling rig, is ongoing and expected to be finalized in the first quarter of 2023. Beta North is a subsea tie-back to Yme and includes two new production wells and one injector well.
Drilling of two new production wells and one injector well at Yme Gamma is expected to start in the fourth quarter of 2022 from Inspirer; the drilling campaign has been postponed due to delay of the recompletion program and is expected to be completed in the second quarter of 2023.
In 2023, the reduced oil production due to early water breakthrough and lower plant availability is expected to be partly compensated by production from the new wells. In the long-term, however, a reduction in reserves, in the order of 2 mmbbl net OKEA for the period 2022-2035, is expected. As a number of the planned production wells are yet to be drilled, an inherent uncertainty remains in the reserves estimate. It may, however, be possible to compensate for some of the reduction through infill drilling or similar measures in the future.
Net production to OKEA from Ivar Aasen was 1,019 (550) boepd and production availability was 98% (99%).
An Increased Oil Recovery (IOR) 2022 campaign to bring new wells on stream is ongoing, with a plan for a subsequent IOR 2024 in development.
Power from shore at Ivar Aasen is expected to start by year end 2022 which will provide reliable power supply at the field and significantly reduce the environmental footprint of the operations.
The transfer of operatorship of the Brage asset, and non-operated working interest in Nova and Ivar Aasen, from Wintershall Dea to OKEA is progressing as per schedule with a targeted completion on 1 November. OKEA has received an approval of the Application for Consent from the Petroleum Safety Authority as well as the final approval of the transaction from the Ministry of Petroleum and Energy and Ministry of Finance. A dedicated project organisation is working to complete all transition activities to secure a safe and efficient continuation of the Brage production and drilling operations under OKEA management from November onwards.
As operator of Draugen, OKEA is currently developing the Hasselmus field as a single subsea gas well with direct tie-back to the Draugen platform for further processing and export.
The Final Investment Decision (FID) was made in the Draugen licence in May 2021. Production start is planned for fourth quarter of 2023 with gross plateau gas production of more than 4,400 barrels boepd.
The project is progressing according to schedule. The production well and the pre-lay rock installation for the subsea infrastructure has been successfully completed. The first topside installations at Draugen have started and will continue until planned production start of Hasselmus.
OKEA is working to mature the opportunity to provide power from shore to the Draugen production platform. The project includes extension of power supply to the nearby Njord field which is operated by Equinor.
Concept selection (DG2) was passed in the fourth quarter of 2021 in both the Draugen and Njord licences. The project is planning for a Final Investment Decision and submission of a plan for development and operations (PDO) in the fourth quarter of 2022. FEED studies are completed for onshore, cable and topside facilities.
The public consultation process of the concession application and response to consultation has been provided to The Norwegian Water Resources and Energy Directorate (NVE). NVE is expected to deliver a recommendation to the Ministry of Petroleum and Energy (MPE) in the fourth quarter.
The Environmental Impact Assessment (EIA) as required by the Petroleum Act is completed, and a consultation response will be provided to the MPE as part of the PDO.
On 6 October, the Norwegian government presented the proposed national budget for 2023 which included a proposal to reduce the uplift for the temporary tax regime from 17.69% to 12.4% with effect from 1 January 2023. This change, if approved by the Norwegian parliament, will adversely impact the financial parameters on the power from shore project.
The power from shore project will reduce annual CO2 emissions from Draugen alone by approximately 200,000 tonnes which corresponds to a reduction of more than 90%.
OKEA as operator is currently evaluating the Aurora discovery and Selene prospect based on new seismic data acquired in the fourth quarter of 2021. The new seismic data has enabled improved interpretation and mapping of the reservoirs which has enhanced confidence in the modelled volume estimates. A decision on whether to drill an appraisal well to ascertain the commerciality of Aurora and Selene and acquire data for a tie-in development to Gjøa is under evaluation. The potential drilling of an appraisal well in 2023 will enable the project to mature a potential final investment decision in 2025 and a potential production start in 2027.
Work to mature the Gjøa Nord project, including the Hamlet discovery, towards a final investment decision by the end of 2022 is ongoing. The development concept involves tie-back of production wells to the Gjøa platform via existing infrastructure with a targeted production start in 2025.
OKEA entered into a licence swap agreement with Equinor Energy AS (Equinor) to acquire a 20% working interest in the Equinor-operated PL1014 exploration licence, containing the Arkenstone prospect, in exchange for a 10% working interest in the OKEA-operated PL1119 licence, including the Mistral prospect. The licensees of PL1119 have also applied for transfer of the operatorship of the licence from OKEA to Equinor.
The transactions and transfer of operatorship are conditional upon governmental approval and are expected completed in the fourth quarter 2022. A decision to drill exploration wells in both licences is also expected to be taken in the fourth quarter.
Applications for the 2022 APA licensing round targets building OKEA's portfolio of exploration opportunities further and was submitted in the quarter.
Drilling of the Neptune-operated Calypso exploration well (PL938, WI 30%), is scheduled to start in November 2022.
There were no actual serious incidents and no serious discharges or emissions in OKEA's activities and operations in the third quarter.
As a response to the Nord Stream pipeline sabotage and a series of reported drone observations on the NCS, OKEA has increased its security level. A series of actions and activities according to the OKEA security management framework have consequently been implemented. The need for further response and actions is continuously assessed in collaboration with the industry, Norwegian Authorities and other relevant parties.
Continuous improvement is important in OKEA. In recent months, extensive work on further developing and improving the company's ESG processes and reporting has been carried out. Position Green Group (previously the Governance Group) has undertaken an external review and benchmarking of OKEA's sustainability reporting for 2021 where OKEA received the grade A, up from A- for the 2020 report.
On 26 October OKEA announced dividend payment of NOK 103.9 million (NOK 1 per share) to be paid on or about 15 December. The board also stated an intention to distribute NOK 1 per share each quarter in 2023. Dividend payments in 2023 is subject to an authorisation from the general meeting and may be revised due to changes in the market environment, company situation and/or value accretive opportunities available.
The invasion of Ukraine has impacted the petroleum prices in a tight energy market with significant volatility at relatively high price levels during the quarter and the year and unprecedented price differentials in the European gas market. This critical situation has resulted in record high revenues for OKEA; but also a significant and heightened focus on security measures.
The acquisition of a material portfolio of assets from Wintershall Dea, will increase production, reserves and resources by 30-40% and adds another operatorship to OKEA's portfolio. The transition is progressing according to plan and is expected completed on 1 November. The acquisition represents a step change in both asset base and cash flow and will be fully financed by existing cash resources.
In the third quarter, OKEA distributed a cash dividend of NOK 103.9 million (NOK 1.00 per share). On the date of this report, OKEA also announced a cash dividend of NOK 103.9 million (NOK 1.00 per share) to be distributed to shareholders in December, which brings the total dividend paid in 2022 to NOK 301.3 million (NOK 2.90 per share). The board also stated an intention to distribute NOK 1.00 per share each quarter also in 2023. In addition, OKEA reduced outstanding bond debt by USD 100 million during the quarter by a voluntary early redemption of the OKEA02 bond.
Performance at Yme has been well below expectations due to low plant availability as well as increasing watercut in the producing wells which has resulted in a reduction in the estimated reserves of 2 mmboe net to OKEA. Due to the challenges at Yme, an impairment loss of NOK 609 million was recognised in the quarter and the production guiding for 2022 is reduced from 16-17,000 boepd to 15-16,000 boepd (excluding the additional volumes from the Wintershall Dea transaction with effective date 1 January 2022). Production outlook for 2023 remains at 25-27,000 boepd as the reduced oil production from Yme due to early water breakthrough and lower plant availability is expected to be partly compensated by production from the new wells.
Capex guiding, excluding capitalised interest, for 2022 remains NOK 950 – 1,150 million (excluding capex relating to the Wintershall Dea transaction).
In the fourth quarter, 67 thousand boe net to OKEA was lifted from Yme in October. In addition, a planned lifting at Draugen of 652 thousand boe November and a planned lifting for Gjøa of 158 thousand boe net to is expected in November. Further guidance on lifting is not provided on Yme in the ramp up phase, nor on the assets acquired from Wintershall Dea prior to completion of the transaction.
In addition to pursuing inorganic growth opportunities, OKEA is also working to mature the portfolio of development projects. The Hasselmus gas project is progressing towards planned production start in the fourth quarter of 2023 and the power from shore project at Draugen is on schedule towards submission of a plan for development and operation in the fourth quarter of 2022.
OKEA has a clear ambition to deliver competitive shareholder returns driven by solid growth, value creation and capital discipline and the strategy will be centred around three growth levers:
actively pursue further value creation in current portfolio,
pursuing mergers and acquisitions to add new legs to the portfolio, and
considering organic projects either adjacent to existing hubs or pursuing new hubs, dependent on financial headroom and attractive risk-reward.
The current cash position is strong, the outstanding debt has been reduced, and the board considers that the company is well positioned to continue to execute on the growth strategy.
| 01.01-30.09 | 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|---|
| Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 | ||
| Amounts in NOK `000 | Note | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) |
| Revenues from crude oil and gas sales | 6 | 2 113 513 | 1 253 704 | 1 016 933 | 4 882 845 | 2 147 579 | 3 780 641 |
| Other operating income / loss (-) | 6, 25 | 29 944 | 78 021 | 9 463 | 105 331 | 9 602 | 101 232 |
| Total operating income | 2 143 458 | 1 331 726 | 1 026 396 | 4 988 176 | 2 157 181 | 3 881 873 | |
| Production expenses | 7 | -425 468 | -380 990 | -180 677 | -1 093 752 | -569 665 | -860 419 |
| Changes in over/underlift positions and production inventory | 7 | -18 721 | 61 063 | 8 650 | 74 935 | 63 669 | 23 087 |
| Exploration and evaluation expenses | 8 | -18 553 | -26 009 | -36 677 | -137 238 | -254 310 | -342 972 |
| Depreciation, depletion and amortisation | 10 | -176 185 | -165 151 | -179 335 | -499 116 | -495 450 | -672 450 |
| Impairment (-) / reversal of impairment | 10, 11, 12 | -609 030 | - | - | -246 433 | 730 397 | 363 765 |
| General and administrative expenses | 13 | -44 863 | -58 065 | -20 745 | -125 509 | -48 796 | -95 024 |
| Total operating expenses | -1 292 820 | -569 153 | -408 784 | -2 027 113 | -574 156 | -1 584 014 | |
| Profit / loss (-) from operating activities | 850 638 | 762 572 | 617 612 | 2 961 063 | 1 583 025 | 2 297 860 | |
| Finance income | 14 | 30 839 | 26 423 | 19 751 | 79 134 | 59 136 | 79 884 |
| Finance costs | 14 | -102 636 | -80 332 | -43 348 | -265 683 | -119 933 | -197 001 |
| Net exchange rate gain/loss (-) | 14 | -41 213 | -177 047 | -67 754 | -218 225 | -69 821 | -74 761 |
| Net financial items | -113 010 | -230 956 | -91 350 | -404 775 | -130 619 | -191 877 | |
| Profit / loss (-) before income tax | 737 628 | 531 616 | 526 262 | 2 556 288 | 1 452 406 | 2 105 982 | |
| Taxes (-) / tax income (+) | 9 | -633 170 | -503 836 | -429 214 | -2 210 798 | -1 132 251 | -1 502 673 |
| Net profit / loss (-) | 104 457 | 27 780 | 97 048 | 345 490 | 320 154 | 603 309 |
Items that will not be reclassified to profit or loss in subsequent periods:
| Remeasurements pensions, actuarial gain/loss (-) | - | - | - | - | - | -507 |
|---|---|---|---|---|---|---|
| Total other comprehensive income, net of tax | - | - | - | - | - | -507 |
|---|---|---|---|---|---|---|
| Total comprehensive income / loss (-) | 104 457 | 27 780 | 97 048 | 345 490 | 320 154 | 602 802 |
| Weighted average no. of shares outstanding basic | 103 870 350 | 103 870 350 | 103 005 350 | 103 870 350 | 102 828 576 | 102 921 489 |
| Weighted average no. of shares outstanding diluted | 103 950 350 | 103 950 350 | 103 005 350 | 103 950 350 | 102 828 576 | 102 921 489 |
| Earnings per share (NOK per share) - Basic | 1,01 | 0,27 | 0,94 | 3,33 | 3,11 | 5,86 |
| Earnings per share (NOK per share) - Diluted | 1,00 | 0,27 | 0,94 | 3,32 | 3,11 | 5,86 |
| 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 | ||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Note | (unaudited) | (unaudited) | (audited) | (unaudited) |
| ASSETS | |||||
| Non-current assets | |||||
| Goodwill | 11, 12 | 801 011 | 801 011 | 768 946 | 768 946 |
| Exploration and evaluation assets | 11 | 80 496 | 78 654 | 10 759 | 19 794 |
| Oil and gas properties Buildings |
10 | 4 717 682 | 5 129 040 | 4 684 752 | 4 585 287 |
| Furniture, fixtures and office equipment | 10 | - | - | - | 79 782 |
| 10 | 12 471 | 10 986 | 11 143 | 11 831 | |
| Right-of-use assets Asset retirement reimbursement right |
10 | 216 880 | 224 136 | 234 199 | 161 824 |
| 15 | 2 486 121 | 2 558 574 | 3 024 562 | 3 088 440 | |
| Total non-current assets | 8 314 661 | 8 802 401 | 8 734 362 | 8 715 904 | |
| Current assets | |||||
| Trade and other receivables | 17, 25 | 1 347 063 | 1 060 052 | 1 053 338 | 714 455 |
| Financial investments | 26 | 9 100 | 210 126 | 209 961 | - |
| Spare parts, equipment and inventory | 20 | 228 735 | 253 220 | 253 318 | 227 327 |
| Tax refund, current | 9 | - | - | - | 9 368 |
| Asset retirement reimbursement right, current | 15 | - | 13 682 | 83 412 | - |
| Cash and cash equivalents | 18 | 2 668 452 | 2 758 124 | 2 038 745 | 1 504 336 |
| Total current assets | 4 253 350 | 4 295 204 | 3 638 774 | 2 455 487 | |
| TOTAL ASSETS | 12 568 011 | 13 097 605 | 12 373 136 | 11 171 391 | |
| EQUITY AND LIABILITIES | |||||
| Equity | |||||
| Share capital | 16 | 10 387 | 10 387 | 10 387 | 10 301 |
| Share premium | 1 730 505 | 1 834 376 | 1 927 859 | 1 912 462 | |
| Other paid in capital | 19 140 | 19 110 | 19 064 | 19 249 | |
| Retained earnings/loss (-) | 96 963 | -7 494 | -248 527 | -531 174 | |
| Total equity | 1 856 996 | 1 856 379 | 1 708 783 | 1 410 837 | |
| Non-current liabilities | |||||
| Asset retirement obligations | 19 | 3 621 192 | 3 644 780 | 4 133 177 | 4 252 714 |
| Pension liabilities | 42 114 | 41 104 | 37 311 | 34 478 | |
| Lease liability | 23 | 201 913 | 209 156 | 220 266 | 125 604 |
| Deferred tax liabilities | 9 | 1 961 657 | 2 288 515 | 1 735 720 | 1 685 649 |
| Interest bearing bond loans | 22, 27 | 1 297 576 | 1 187 330 | 2 294 873 | 2 378 676 |
| Other interest bearing liabilities | 23 | 522 256 | 482 150 | 454 853 | - |
| Total non-current liabilities | 7 646 709 | 7 853 034 | 8 876 200 | 8 477 122 | |
| Current liabilities | |||||
| Trade and other payables | 21, 25 | 1 192 660 | 942 644 | 786 535 | 803 824 |
| Interest bearing bond loans, current | 22, 27 | - | 994 835 | - | - |
| Other interest bearing liabilities, current | 23 | 49 874 | 44 380 | 38 593 | - |
| Income tax payable | 9 | 1 748 779 | 1 297 547 | 773 020 | 417 971 |
| Lease liability, current | 24 | 44 106 | 44 106 | 43 032 | 36 220 |
| Asset retirement obligations, current | 19 | - | 17 103 | 104 265 | - |
| Public dues payable | 28 888 | 47 578 | 42 708 | 25 417 | |
| Total current liabilities | 3 064 306 | 3 388 192 | 1 788 153 | 1 283 433 | |
| Total liabilities | 10 711 015 | 11 241 226 | 10 664 353 | 9 760 554 | |
| TOTAL EQUITY AND LIABILITIES | 12 568 011 | 13 097 605 | 12 373 136 | 11 171 391 |
| Other paid in | Retained | ||||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Share capital Share premium | capital | earnings/loss (-) | Total equity | |
| Equity at 1 January 2021 | 10 250 | 1 912 462 | 11 342 | -851 329 | 1 082 725 |
| Total comprehensive income/loss (-) for the period | - | - | - | 320 154 | 320 154 |
| Share issues, cash | 50 | - | - | - | 50 |
| Share based payment | - | - | 7 907 | - | 7 907 |
| Equity at 30 September 2021 | 10 301 | 1 912 462 | 19 249 | -531 174 | 1 410 837 |
| Equity at 1 October 2021 | 10 301 | 1 912 462 | 19 249 | -531 174 | 1 410 837 |
| Total comprehensive income/loss (-) for the period | - | - | - | 282 648 | 282 648 |
| Share issues, cash | 87 | 15 397 | - | - | 15 484 |
| Share based payment | - | - | - 185 |
- | -185 |
| Equity at 31 December 2021 | 10 387 | 1 927 859 | 19 064 | -248 527 | 1 708 783 |
| Equity at 1 January 2022 | 10 387 | 1 927 859 | 19 064 | -248 527 | 1 708 783 |
| Total comprehensive income/loss (-) for the period | - | - | - | 345 490 | 345 490 |
| Dividend paid | - | -197 354 | - | - | -197 354 |
| Share based payment | - | - | 76 | - | 76 |
| Equity at 30 September 2022 | 10 387 | 1 730 505 | 19 140 | 96 963 | 1 856 996 |
| 01.01-30.09 | 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|---|
| Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 | ||
| Amounts in NOK `000 | Note | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) |
| Cash flow from operating activities | |||||||
| Profit / loss (-) before income tax | 737 628 | 531 616 | 526 262 | 2 556 288 | 1 452 406 | 2 105 982 | |
| Income tax paid/received | 9 | -508 796 | -386 058 | 18 247 | -1 088 634 | 309 568 | 355 429 |
| Depreciation, depletion and amortization | 10 | 176 185 | 165 151 | 179 335 | 499 116 | 495 450 | 672 450 |
| Impairment / reversal of impairment | 10, 11, 12 | 609 030 | - | - | 246 433 | -730 397 | -363 765 |
| Expensed exploration expenditures temporary capitalised | 8, 11 | -1 | -1 462 | 1 328 | 63 401 | 168 015 | 184 855 |
| Accretion asset retirement obligations/reimbursement right | 14, 15, 19 | 3 549 | 2 174 | 1 258 | 6 662 | 3 775 | 5 034 |
| Asset retirement costs from billing (net after reimbursement) | 15, 19 | -5 140 | -12 849 | - | -22 572 | - | -3 770 |
| Interest expense | 14 | 50 920 | 48 287 | 17 886 | 149 705 | 47 900 | 94 256 |
| Gain / loss on financial investments | 237 | -800 | - | 71 | - | 39 | |
| Change in trade and other receivables, and inventory | -262 526 | 38 661 | -176 931 | -175 242 | -199 749 | -564 623 | |
| Change in trade and other payables | 298 931 | 56 338 | -174 619 | 363 277 | -123 086 | -94 307 | |
| Change in foreign exchange interest bearing debt and other non-current items |
82 933 | 258 197 | 77 606 | 355 685 | 88 429 | 123 823 | |
| Net cash flow from / used in (-) operating activities | 1 182 951 | 699 256 | 470 373 | 2 954 189 | 1 512 311 | 2 515 403 | |
| Cash flow from investment activities | |||||||
| Investment in exploration and evaluation assets | 11 | -1 841 | -25 086 | 915 | -133 138 | -158 867 | -166 671 |
| Business combinations, cash paid | 27, 17 | - | -90 697 | - | -136 612 | - | - |
| Investment in oil and gas properties | 10, 14 | -311 730 | -186 357 | -166 002 | -630 644 | -466 779 | -664 129 |
| Investment in furniture, fixtures and office machines | 10 | -3 037 | -2 114 | -1 055 | -5 951 | -7 217 | -8 705 |
| Cash used on (-)/received from financial investments | 26 | 200 789 | - | - | 200 789 | - | -210 000 |
| Proceeds from sales of buildings | 10, 24 | - | - | - | - | - | 109 000 |
| Net cash flow from / used in (-) investment activities | -115 819 | -304 255 | -166 142 | -705 556 | -632 863 | -940 504 | |
| Cash flow from financing activities | |||||||
| Repayment/buy-back of bond loans | 22 | -1 102 395 | -10 057 | -108 005 | -1 401 531 | -108 005 | -216 948 |
| Repayment of other interest bearing liabilities | 23 | -10 185 | -8 934 | - | -29 379 | - | - |
| Interest paid | -24 154 | -76 170 | -23 442 | -129 317 | -114 827 | -195 788 | |
| Payments of lease debt | 24 | -7 243 | -7 243 | -9 090 | -21 722 | -27 269 | -25 001 |
| Dividend payments | -103 870 | -93 483 | - | -197 354 | - | - | |
| Net proceeds from share issues | - | - | - | - | 50 | 15 534 | |
| Net cash flow from / used in (-) financing activities | -1 247 848 | -195 887 | -140 536 | -1 779 302 | -250 051 | -422 203 | |
| Net increase/ decrease (-) in cash and cash equivalents | -180 716 | 199 113 | 163 695 | 469 331 | 629 397 | 1 152 696 | |
| Cash and cash equivalents at the beginning of the period | 2 758 124 | 2 469 576 | 1 346 099 | 2 038 745 | 871 210 | 871 210 | |
| Effect of exchange rate fluctuation on cash held | 91 044 | 89 434 | -5 458 | 160 376 | 3 729 | 14 839 | |
| Cash and cash equivalents at the end of the period | 2 668 452 | 2 758 124 | 1 504 336 | 2 668 452 | 1 504 336 | 2 038 745 |
These financial statements are the unaudited interim condensed financial statements of OKEA ASA for the third quarter of 2022. 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 2021. The annual accounts for 2021 were prepared in accordance with EU`s approved International Financial Reporting Standards (IFRS).
The interim financial statements were authorised for issue by the company's board of directors on 25 October 2022.
The accounting policies adopted in the preparation of the interim accounts are consistent with those followed in the preparation of the annual accounts for 2021. New standards, amendments and interpretations to existing standards effective from 1 January 2022 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 2021.
The company's only business segment is development and production of oil and gas on the Norwegian continental shelf.
| 01.01-30.09 | 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 | |
| Sale of liquids | 1 158 889 | 849 703 | 650 511 | 2 705 320 | 1 484 280 | 2 198 055 | |
| Sale of gas | 954 624 | 404 001 | 366 423 | 2 177 524 | 663 299 | 1 582 586 | |
| Total petroleum revenues | 2 113 513 | 1 253 704 | 1 016 933 | 4 882 845 | 2 147 579 | 3 780 641 | |
| Sale of liquids (boe*) | 1 101 992 | 902 412 | 1 100 827 | 2 874 191 | 2 865 568 | 3 935 445 | |
| Sale of gas (boe*) | 486 267 | 549 656 | 461 233 | 1 556 120 | 1 251 672 | 1 847 140 | |
| Total sale of petroleum in boe* | 1 588 260 | 1 452 068 | 1 562 060 | 4 430 312 | 4 117 240 | 5 782 585 |
*Barrels of oil equivalents
| 01.01-30.09 | 01.01-31.12 | |||||
|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 |
| Gain / loss (-) from put/call options, oil | - | - | - | - | -32 766 | -32 766 |
| Gain / loss (-) from forward contracts, gas | -20 793 | 39 773 | -5 312 | -13 744 | -5 312 | 49 002 |
| Tariff income Gjøa | 41 528 | 26 216 | 13 393 | 91 889 | 37 697 | 61 960 |
| Joint utilisation of logistics resources | 9 210 | 12 032 | 1 382 | 27 186 | 9 982 | 23 036 |
| Total other operating income/loss (-) | 29 944 | 78 021 | 9 463 | 105 331 | 9 602 | 101 232 |
| 01.01-30.09 | 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 | |
| From licence billings - producing assets | 380 805 | 339 058 | 167 767 | 969 352 | 501 858 | 753 181 | |
| From licence billings - assets under construction - various preparations for operation |
- | - | 3 483 | - | 16 487 | 17 884 | |
| Other production expenses (insurance, transport) | 41 446 | 38 983 | 9 426 | 114 889 | 51 320 | 89 354 | |
| G&A expenses allocated to production expenses | 3 217 | 2 950 | - | 9 511 | - | - | |
| Total production expenses | 425 468 | 380 990 | 180 677 | 1 093 752 | 569 665 | 860 419 |
| 01.01-30.09 | 01.01-31.12 | |||||
|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 |
| Changes in over/underlift positions | 17 807 | 66 629 | 17 761 | 113 967 | 77 707 | 15 852 |
| Changes in production inventory | -36 528 | -5 567 | -9 111 | -39 032 | -14 039 | 7 236 |
| Total changes income/loss (-) | -18 721 | 61 063 | 8 650 | 74 935 | 63 669 | 23 087 |
| 01.01-30.09 | 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 | |
| Share of exploration and evaluation expenses from participation in licences excluding dry well impairment, from billing |
12 145 | 19 413 | 26 620 | 52 368 | 74 774 | 95 278 | |
| Share of exploration expenses from participation in licences, dry well write off, from billing * |
-1 | -1 462 | 1 328 | 63 401 | 168 015 | 184 855 | |
| Seismic and other exploration and evaluation expenses, outside billing |
6 216 | 7 878 | 8 730 | 20 730 | 11 521 | 62 839 | |
| G&A expenses allocated to exploration expenses | 193 | 181 | - | 739 | - | - | |
| Total exploration and evaluation expenses | 18 553 | 26 009 | 36 677 | 137 238 | 254 310 | 342 972 |
* The drilling of exploration well Ginny in licence PL1060 was completed in Q1 2022 and the well was concluded dry.
| 01.01-30.09 | 01.01-31.12 | |||||
|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 |
| Change in deferred taxes current year | 326 858 | -189 382 | -57 703 | -196 468 | -745 092 | -796 958 |
| Taxes payable current year | -960 028 | -310 284 | -371 511 | -2 010 161 | -391 917 | -711 980 |
| Tax payable adjustment previous year | -0 | -4 170 | - | -4 170 | - | 1 508 |
| Tax refund current year | - | - | - | - | - | - |
| Tax refund adjustment previous year | - | - | - | - | 4 757 | 4 757 |
| Total taxes (-) / tax income (+) recognised in the income | ||||||
| statement | -633 170 | -503 836 | -429 214 | -2 210 798 | -1 132 251 | -1 502 673 |
| 01.01-30.09 | 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 | |
| Profit / loss (-) before income taxes | 737 628 | 531 616 | 526 262 | 2 556 288 | 1 452 406 | 2 105 982 | |
| Expected income tax at tax rate 78.004% (2021: 78%) | -575 379 | -414 661 | -410 484 | -1 994 007 | -1 132 876 | -1 642 666 | |
| Permanent differences, including impairment of goodwill | -19 581 | -13 990 | 2 437 | -69 884 | -4 136 | -2 419 | |
| Effect of sale and leaseback transaction | - | - | - | - | - | 39 839 | |
| Effect of uplift | 28 775 | 23 619 | 33 666 | 70 368 | 96 992 | 196 977 | |
| Financial and onshore items | -66 882 | -90 502 | -53 448 | -208 869 | -92 008 | -94 459 | |
| Effect of new tax rates | -104 | - | - | -104 | - | - | |
| Change valuation allowance | - | - | -1 384 | - | -6 116 | -4 887 | |
| Adjustments previous year and other | -0 | -8 302 | - | -8 302 | 5 893 | 4 941 | |
| Total income taxes recognised in the income statement | -633 170 | -503 836 | -429 214 | -2 210 798 | -1 132 251 | -1 502 673 | |
| Effective income tax rate | 86 % | 95 % | 82 % | 86 % | 78 % | 71 % |
| Amounts in NOK `000 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
|---|---|---|---|---|
| Tangible and intangible non-current assets | -3 159 941 | -3 426 655 | -2 939 348 | -2 865 570 |
| Provisions (net ARO), lease liability, pensions and gain/loss account | 1 298 279 | 1 272 106 | 1 352 475 | 1 297 484 |
| Interest bearing loans | -1 697 | -2 481 | -3 429 | -4 849 |
| Current items (spareparts and inventory) | -98 298 | -131 485 | -145 419 | -113 102 |
| Tax losses carried forward, onshore 22% | 4 887 | 4 887 | 4 887 | 6 116 |
| Uplift, offshore 56% | - | - | - | 387 |
| Valuation allowance (uncapitalised deferred tax asset) | -4 887 | -4 887 | -4 887 | -6 116 |
| Total deferred tax assets / liabilities (-) recognised | -1 961 657 | -2 288 515 | -1 735 720 | -1 685 649 |
The tax calculation is from Q2 2022 based on the new cash flow based petroleum tax legislation enacted by the the Norwegian Parliament in June 2022. The main feature of the legislation affecting the company is that investments in field facilities, production wells and pipelines incurred from 1 January 2022 can be expensed when incurred for Special petroleum tax (SPT) purposes. Such expensing will replace the previous 6 years depreciation for SPT and uplift.
| Amounts in NOK `000 | Total |
|---|---|
| Tax payable at 1 January 2022 | 773 020 |
| Tax paid | -1 088 634 |
| Tax payable adjustment previous year | 4 170 |
| Tax payable current year recognised in the income statement | 2 010 161 |
| Tax payable recognised in business combination (see note 27) | 50 063 |
| Tax payable at 30 September 2022 | 1 748 779 |
| Amounts in NOK `000 | Oil and gas properties in production |
Oil and gas properties under development |
Buildings | Furniture, fixtures and office machines |
Right-of-use assets |
Total |
|---|---|---|---|---|---|---|
| Cost at 1 January 2022 | 7 165 077 | - | - | 20 512 | 329 404 | 7 514 993 |
| Additions | 327 389 | - | - | 2 914 | 4 442 | 334 745 |
| Additions through business combination (see note 27) | 166 116 | - | - | - | - | 166 116 |
| Reclassification from inventory | 3 033 | - | - | - | - | 3 033 |
| Removal and decommissioning asset | -104 490 | - | - | - | - | -104 490 |
| Disposals | - | - | - | -4 284 | - | -4 284 |
| Cost at 30 June 2022 | 7 557 124 | - | - | 19 142 | 333 846 | 7 910 113 |
| Accumulated depreciation and impairment | ||||||
| at 1 January 2022 | -2 480 324 | - | - | -9 370 | -95 205 | -2 584 899 |
| Depreciation | -310 357 | - | - | -3 071 | -9 503 | -322 931 |
| Impairment (-) / reversal of impairment | 362 597 | - | - | - | - | 362 597 |
| Disposals Additional depreciation of IFRS 16 Right-of use assets presented gross related to leasing contracts entered into as licence |
- | - | - | 4 284 | - | 4 284 |
| operator | - | - | - | - | -5 001 | -5 001 |
| Accumulated depreciation and impairment at 30 June 2022 |
-2 428 084 | - | - | -8 157 | -109 710 | -2 545 950 |
| Carrying amount at 30 June 2022 | 5 129 040 | - | - | 10 986 | 224 136 | 5 364 162 |
| Cost at 1 July 2022 | 7 557 124 | - | - | 19 142 | 333 846 | 7 910 113 |
| Additions | 320 514 | - | - | 3 037 | - | 323 551 |
| Additions through business combination (see note 27) | - | - | - | - | - | - |
| Reclassification from inventory | - | - | - | - | - | - |
| Removal and decommissioning asset Disposals |
47 036 - |
- - |
- - |
- - |
- - |
47 036 - |
| Cost at 30 September 2022 | 7 924 674 | - | - | 22 179 | 333 846 | 8 280 699 |
| Accumulated depreciation and impairment | ||||||
| at 1 July 2022 Depreciation |
-2 428 084 -169 878 |
- - |
- - |
-8 157 -1 552 |
-109 710 -4 755 |
-2 545 950 -176 185 |
| Impairment (-) / reversal of impairment | -609 030 | - | - | - | - | -609 030 |
| Disposals | - | - | - | - | - | - |
| 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 |
||||||
| 30 September 2022 | -3 206 992 | - | - | -9 708 | -116 966 | -3 333 666 |
| Carrying amount at 30 September 2022 | 4 717 682 | - | - | 12 471 | 216 880 | 4 947 033 |
| Exploration | ||||
|---|---|---|---|---|
| Amounts in NOK `000 | and evaluation assets |
Technical goodwill |
Ordinary goodwill |
Total goodwill |
| Cost at 1 January 2022 | 10 759 | 1 114 547 | 416 415 | 1 530 962 |
| Additions | 131 297 | - | - | - |
| Additions through business combination (see note 27) | - | 32 065 | - | 32 065 |
| Reclassification to oil and gas properties under development | - | - | - | - |
| Expensed exploration expenditures temporarily capitalised | -63 402 | - | - | - |
| Cost at 30 June 2022 | 78 654 | 1 146 612 | 416 415 | 1 563 027 |
| Accumulated impairment at 1 January 2022 | - | -508 818 | -253 198 | -762 016 |
| Impairment | - | - | - | - |
| Accumulated impairment at 30 June 2022 | - | -508 818 | -253 198 | -762 016 |
| Carrying amount at 30 June 2022 | 78 654 | 637 794 | 163 217 | 801 011 |
| Cost at 1 July 2022 | 78 654 | 1 146 612 | 416 415 | 1 563 027 |
| Additions | 1 841 | - | - | - |
| Additions through business combination (see note 27) | - | - | - | - |
| Reclassification to oil and gas properties under development | - | - | - | - |
| Expensed exploration expenditures temporarily capitalised | 1 | - | - | - |
| Cost at 30 September 2022 | 80 496 | 1 146 612 | 416 415 | 1 563 027 |
| Accumulated impairment at 1 July 2022 | - | -508 818 | -253 198 | -762 016 |
| Impairment | - | - | - | - |
| Accumulated impairment at 30 September 2022 | - | -508 818 | -253 198 | -762 016 |
| Carrying amount at 30 September 2022 | 80 496 | 637 794 | 163 217 | 801 011 |
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 30 September 2022:
| Year | Oil USD/BOE* |
Gas GBP/therm* |
Currency rates USD/NOK |
|---|---|---|---|
| 2022 | 101.3 | 2.56 | 9.8 |
| 2023 | 77.0 | 4.48 | 10.8 |
| 2024 | 70.0 | 2.93 | 10.6 |
| 2025 | 67.9 | 1.15 | 9.4 |
| From 2026 | 67.6 | 0.70 | 9.0 |
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 increased from 9.0% applied in the Q2 test mainly due to increased long term interest rates.
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 1 150 per tonne in 2022 towards a long term price of NOK 2 000 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 609 millinon in impairment of the Yme asset was recognised in the third quarter. The impairment was mainly driven by reduced reserves estimate.
No impairment of technical and ordinary goodwill or ROU assets was required in the three month period ending on 30 September 2022.
The table below shows what the impairment pre-tax would have been in the third quarter under various alternative assumptions, assuming all other assumptions remaining constant. The total figures shown are combined impairment for CGUs Gjøa, Draugen, Ivar Aasen and Yme.
| Alternative calculations of pre-tax impairment/reversal (-) Q3 2022 (NOK '000) |
Increase / decrease (-) of pre tax impairment Q3 2022 (NOK '000) |
||||
|---|---|---|---|---|---|
| Assumptions | Change | Increase in assumption |
Decrease in assumption |
Increase in assumption |
Decrease in assumption |
| Oil and gas price | +/- 10% | 88 984 | 1 129 076 | -520 046 | 520 046 |
| Currency rate USD/NOK | +/- 1.0 NOK | 86 256 | 1 131 804 | -522 774 | 522 774 |
| Discount rate | +/- 1% point | 661 341 | 555 027 | 52 311 | -54 003 |
| Environmental cost (CO2 and NOx) | +/- 20% | 681 521 | 536 539 | 72 491 | -72 491 |
| 01.01-30.09 | 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 | |
| Salary and other employee benefits expenses | 123 034 | 143 375 | 111 867 | 394 306 | 348 276 | 484 758 | |
| Consultants and other operating expenses | 67 420 | 75 268 | 50 685 | 196 685 | 133 406 | 196 276 | |
| Allocated to operated licences | -142 157 | -157 140 | -140 853 | -454 612 | -429 927 | -581 578 | |
| Allocated to exploration and production expenses | -3 434 | -3 438 | - | -10 870 | - | - | |
| Reclassified to oil and gas properties under development |
- | - | -954 | - | -2 959 | -4 432 | |
| Total general and administrative expenses | 44 863 | 58 065 | 20 745 | 125 509 | 48 796 | 95 024 |
| 01.01-30.09 | 01.01-31.12 | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK `000 | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 | |
| Interest income | 6 246 | 3 244 | 60 | 11 160 | 63 | 1 120 | |
| Unwinding of discount asset retirement reimbursement right | |||||||
| (indemnification asset) | 24 758 | 23 014 | 19 691 | 67 974 | 59 073 | 78 764 | |
| Gain on financial investments | -165 | 165 | - | - | - | - | |
| Finance income | 30 839 | 26 423 | 19 751 | 79 134 | 59 136 | 79 884 | |
| Interest expense and fees from loans and borrowings | -59 705 | -53 824 | -51 100 | -166 964 | -150 209 | -210 907 | |
| Capitalised borrowing cost, development projects | 8 785 | 5 537 | 33 214 | 17 259 | 102 309 | 116 709 | |
| Interest expense shareholder loan | - | - | - | - | - | -57 | |
| Other interest expense | -744 | -2 339 | -42 | -4 724 | -615 | -3 986 | |
| Unwinding of discount asset retirement obligations | -28 307 | -25 188 | -20 949 | -74 636 | -62 848 | -83 797 | |
| Loss on buy-back/early redemption bond | |||||||
| loan | -17 127 | -2 046 | -2 608 | -23 535 | -2 608 | -6 364 | |
| Loss on financial investments | -71 | 634 | - | -71 | - | -39 | |
| Other financial expense | -5 465 | -3 107 | -1 862 | -13 013 | -5 962 | -8 558 | |
| Finance costs | -102 636 | -80 332 | -43 348 | -265 683 | -119 933 | -197 001 | |
| Exchange rate gain/loss (-), interest-bearing loans and borrowings |
-149 566 | -338 302 | -63 370 | -468 918 | -71 040 | -107 918 | |
| Net exchange rate gain/loss (-), other | 108 353 | 161 255 | -4 383 | 250 693 | 1 219 | 33 158 | |
| Net exchange rate gain/loss (-) | -41 213 | -177 047 | -67 754 | -218 225 | -69 821 | -74 761 | |
| Net financial items | -113 010 | -230 956 | -91 350 | -404 775 | -130 619 | -191 877 |
| Amounts in NOK `000 | |
|---|---|
| Asset retirement reimbursement right at 1 January 2022 (indemnification asset) | 3 107 974 |
| Changes in estimates | - |
| Effect of change in the discount rate | -599 538 |
| Asset retirement costs from billing, reimbursement from Shell | -90 290 |
| Unwinding of discount | 67 974 |
| Asset retirement reimbursement right at 30 September 2022 (indemnification asset) | 2 486 121 |
| Of this: | |
| Asset retirement reimbursement right, non-current | 2 486 121 |
| Asset retirement reimbursement right, current | - |
| Asset retirement reimbursement right at 30 September 2022 (indemnification asset) | 2 486 121 |
Asset retirement reimbursement right consists of a 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 the actual abandonment expenses for the Draugen and Gjøa fields up to a predefined after-tax cap amount of NOK 716 million (2021 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 421 million (2021 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 4.10% (year end 2021: 2.6%).
| Ordinary | |
|---|---|
| Number of shares | shares |
| Outstanding shares at 1 January 2022 | 103 870 350 |
| New shares issued during 2022 | - |
| Number of outstanding shares at 30 September 2022 | 103 870 350 |
| Nominal value NOK per share at 30 September 2022 | 0,1 |
| Share capital NOK at 30 September 2022 | 10 387 035 |
As per 30 September 2022, 80,000 equity-settled warrants are still outstanding. 40,000 of these warrants were exercised in October 2022 and the remaining 40,000 expired in October 2022. Reference is made to note 10 in the 2021 annual financial statements for further details.
| Amounts in NOK `000 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
|---|---|---|---|---|
| Accounts receivable and receivables from operated licences* | 346 353 | 55 674 | 68 275 | 81 463 |
| Accrued revenue | 268 844 | 347 228 | 487 424 | 201 213 |
| Prepayments | 140 483 | 129 488 | 48 300 | 19 310 |
| Working capital and overcall, joint operations/licences | 255 383 | 197 581 | 164 226 | 130 316 |
| Underlift of petroleum products | 322 071 | 301 621 | 225 079 | 278 126 |
| VAT receivable | 12 239 | 5 928 | 7 317 | 3 967 |
| Accrued interest income | 1 690 | 1 518 | 830 | 60 |
| Other receivables | - | 21 014 | - | - |
| Fair value forward contracts, gas | - | - | 51 885 | - |
| Total trade and other receivables | 1 347 063 | 1 060 052 | 1 053 338 | 714 455 |
* There is no provision for bad debt on receivables.
A prepaid consideration of USD 10 million paid in Q2 2022 in connection with the acquisition of interests in Brage, Ivar Aasen and Nova from Wintershall Dea Norge AS is included in prepayments at 30 September 2022. The transaction is conditional upon Norwegian governmental approval and is expected to be completed in Q4 2022.
| Amounts in NOK `000 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
|---|---|---|---|---|
| Bank deposits, unrestricted | 1 994 781 | 1 641 192 | 1 035 711 | 1 093 807 |
| Bank deposit, time deposit | 617 148 | 1 047 960 | 980 000 | 400 000 |
| Bank deposit, restricted, employee taxes | 12 578 | 25 135 | 18 033 | 10 529 |
| Bank deposit, restricted, deposit office leases | 14 810 | 14 810 | - | - |
| Bank deposit, restricted, other | 29 136 | 29 028 | 5 001 | - |
| Total cash and cash equivalents | 2 668 452 | 2 758 124 | 2 038 745 | 1 504 336 |
See note 26 for information about liquid assets not categorised as cash and cash equivalents.
| Amounts in NOK `000 | |
|---|---|
| Provision at 1 January 2022 | 4 237 442 |
| Additions | 83 443 |
| Additions through business combination (see note 27) | 78 968 |
| Changes in estimates | - |
| Effects of change in the discount rate | -740 434 |
| Asset retirement costs from billing | -112 862 |
| Unwinding of discount | 74 636 |
| Asset retirement obligations at 30 September 2022 | 3 621 192 |
| Of this: | |
| Asset retirement obligations, non-current | 3 621 192 |
| Asset retirement obligations, current | - |
| Asset retirement obligations at 30 September 2022 | 3 621 192 |
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 3.35% (year end 2021: 2%). 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, reference is made to note 15.
| Amounts in NOK `000 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
|---|---|---|---|---|
| Inventory of petroleum products | 85 226 | 121 754 | 124 258 | 102 983 |
| Spare parts and equipment | 143 509 | 131 466 | 129 061 | 124 344 |
| Total spare parts, equipment and inventory | 228 735 | 253 220 | 253 318 | 227 327 |
| Amounts in NOK `000 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
|---|---|---|---|---|
| Trade creditors | 20 618 | 28 537 | 117 721 | 18 824 |
| Accrued holiday pay and other employee benefits | 83 501 | 71 849 | 110 947 | 77 600 |
| Working capital, joint operations/licences | 761 291 | 565 618 | 430 608 | 472 605 |
| Overlift of petroleum products | - | 11 435 | 24 555 | 15 747 |
| Accrued interest bond loans | 34 201 | 5 231 | 5 096 | 27 653 |
| Prepayments from customers | 77 259 | 23 093 | 17 | 111 160 |
| Fair value forward contracts, gas | 24 510 | 4 170 | - | 5 312 |
| Loan from shareholder OKEA Holdings Ltd | 1 371 | 1 371 | 1 371 | 1 314 |
| Accrued consideration from acquisitions of interests in licences | - | - | 10 000 | 10 000 |
| Other accrued expenses | 189 909 | 231 340 | 86 220 | 63 609 |
| Total trade and other payables | 1 192 660 | 942 644 | 786 535 | 803 824 |
| Bond loan | Bond loan | ||
|---|---|---|---|
| Amounts in NOK `000 | OKEA02 | OKEA03 | Total |
| Interest bearing bond loans at 1 January 2022 | 1 249 257 | 1 045 616 | 2 294 873 |
| Amortisation of transaction costs | 14 889 | 4 955 | 19 844 |
| Bond buy-back/early redemption | -1 377 996 | - | -1 377 996 |
| Foreign exchange movement | 113 850 | 247 006 | 360 855 |
| Interest bearing bond loans at 30 September 2022 | 0 | 1 297 576 | 1 297 576 |
| Of this: | |||
| Interest bearing bond loans, non-current | - | 1 297 576 | 1 297 576 |
| Interest bearing bond loans, current | 0 | - | 0 |
| Interest bearing bond loans at 30 September 2022 | 0 | 1 297 576 | 1 297 576 |
| Bond loan | Bond loan | ||
|---|---|---|---|
| Amounts in NOK `000 | OKEA02 | OKEA03 | Total |
| Interest bearing bond loans at 1 January 2022 | 1 249 257 | 1 045 616 | 2 294 873 |
| Cash flows: | |||
| Gross proceeds from borrowings | - | - | - |
| Transaction costs | - | - | - |
| Repayment/buy-back of borrowings | -1 401 531 | - | -1 401 531 |
| Total cash flows: | -1 401 531 | - | -1 401 531 |
| Non-cash changes: | |||
| Amortisation of transaction costs | 14 889 | 4 955 | 19 844 |
| Foreign exchange movement | 113 850 | 247 006 | 360 855 |
| Loss / gain (-) on buy-back | 23 535 | - | 23 535 |
| Interest bearing bond loans at 30 September 2022 | 0 | 1 297 576 | 1 297 576 |
During 2022 the company has been in full compliance with the covenants under the bond agreements.
From 01.01.2022 the covenants comprise of:
(i) Leverage ratio shall not exceed 2:1
(ii) Capital employment ratio above 35%
(iii) Minimum free liquidity of USD 10 million
Maturity date of OKEA03 is 11 December 2024.
In July 2022 OKEA completed a voluntarily redemption of all remaining OKEA02 bonds. The remaining net outstanding of USD 100 million was called at a premium of 102.75. The bonds were settled on 27 July 2022.
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 2022 | 493 445 | 493 445 |
| Repayments | -29 379 | -29 379 |
| Foreign exchange movement | 108 063 | 108 063 |
| Other interest bearing liabilities at 30 September 2022 | 572 129 | 572 129 |
| Of this: | ||
| Other interest bearing liabilities, non-current | 522 256 | 522 256 |
| Other interest bearing liabilities, current | 49 874 | 49 874 |
| Other interest bearing liabilities at 30 September 2022 | 572 129 | 572 129 |
| Liability | ||
| Amounts in NOK `000 | Yme rig | Total |
| Other interest bearing liabilities at 1 January 2022 | 493 445 | 493 445 |
| Cash flows: | ||
| Gross proceeds from borrowings | - | - |
| Repayment of borrowings | -29 379 | -29 379 |
| Total cash flows: | -29 379 | -29 379 |
| Non-cash changes: | ||
| Financing Yme Rig | - | - |
| Foreign exchange movement | 108 063 | 108 063 |
| Other interest bearing liabilities at 30 September 2022 | 572 129 | 572 129 |
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.
In December 2021, OKEA completed a sale and leaseback (SLB) transaction for OKEA's regional headquarter Råket 2 in Kristiansund. The SLB agreement is based on OKEA leasing the property for 20 years with additional extension options for OKEA for up to 10 years. The sale price amounted to NOK 109 million. The buyer is Råket 2 AS, a fully owned subsidiary of Asset Buyout Partners AS (ABP). No gain from the transaction has been recognised, OKEA has recognised a lease liability equal to the net sales proceeds of NOK 107.7 million, and the book value of the sold property of NOK 78.6 million is recognied as right-of-use asset. This is based on the assessment that OKEA will be utilising the property over the entire remaining economic lifetime.
| Amounts in NOK `000 | |
|---|---|
| Lease liability 1 January 2022 | 263 298 |
| Additions lease contracts | 4 442 |
| Accretion lease liability | 11 302 |
| Payments of lease debt and interest | -33 024 |
| Total lease debt at 30 September 2022 | 246 018 |
| Short-term (within 1 year) | 44 106 |
|---|---|
| Long-term | 201 913 |
| Total lease liability | 246 018 |
| Amounts in NOK `000 | 30.09.2022 |
|---|---|
| Within 1 year | 43 835 |
| 1 to 5 years | 147 970 |
| After 5 years | 163 077 |
| Total | 354 881 |
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 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
|---|---|---|---|---|
| Premium commodity contracts | - | - | - | - |
| Accumulated unrealised gain/loss (-) commodity contracts included in other operating income / | ||||
| loss(-) | -24 510 | -4 170 | 51 885 | -5 312 |
| Short-term derivatives included in assets/liabilities (-) | -24 510 | -4 170 | 51 885 | -5 312 |
OKEA uses derivative financial instruments to manage exposures to fluctuations in commodity prices. At 30 September 2022, OKEA had outstanding financial forward contracts (without physical delivery of gas) for;
| Fixed price GBp | ||
|---|---|---|
| Quantity - therms of gas | per therm | Expiration |
| 710 000 | 329,507 | Oct 2022 |
| 820 000 | 353,872 | Nov 2022 |
| 825 000 | 361,000 | Dec 2022 |
| 235 000 | 341,000 | Jan 2023 |
| 230 000 | 319,000 | Feb 2023 |
| 235 000 | 291,000 | March 2023 |
In addition OKEA has in Q3 2022 entered into the following non-financial contracts with physical delivery of gas at fixed price;
2 409 660 therms of gas in Q1 2023 at fixed price 519.5 GBp/therm
2 438 800 therms of gas in Q2 2023 at fixed price 504.5 GBp/therm
Revenue from these contracts will be recognised at delivery of the gas.
| Amounts in NOK `000 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
|---|---|---|---|---|
| Investments in money-market funds and combination funds | 9 100 | 210 126 | 209 961 | - |
| Total financial investments | 9 100 | 210 126 | 209 961 | - |
On 31 March 2022 OKEA completed the acquisition of a 2.223% working interest in the Ivar Aasen field from Neptune Energy Norge AS. The acquisition adds to OKEA's current holding of 0.554% interest in Ivar Aasen and increases the ownership share to 2.777%.
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 2022. The acquisition date for accounting purposes (transfer of control) has been determined to be 31 March 2022.
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 12 million, equivalent with NOK 105.2 million. Adjusted for interim period adjustments and working capital, the total cash consideration is estimated to NOK 39.6 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 PPA presented below is based on a updated completion statement from Q2 2022 compared to the PPA presented in Q1 2022. There are no changes in Q3 2022.
The fair values of the identifiable assets and liabilities in the transaction as at the date of the acquisition have been estimated as follows:
| PPA Q2/Q3 | |||
|---|---|---|---|
| Amounts in NOK `000 | PPA Q1 2022 | Changes | 2022 |
| Assets | |||
| Oil and gas properties | 167 860 | -1 744 | 166 116 |
| Net working capital | 1 581 | -1 670 | -89 |
| Total assets | 169 441 | -3 414 | 166 027 |
| Liabilities | |||
| Deferred tax liabilities | 21 488 | 7 981 | 29 469 |
| Asset retirement obligations | 92 506 | -13 538 | 78 968 |
| Income tax payable | 45 243 | 4 820 | 50 063 |
| Total liabilities | 159 237 | -736 | 158 501 |
| Total identifiable net assets at fair value | 10 204 | -2 679 | 7 525 |
| Total consideration | 45 915 | -6 325 | 39 590 |
| Goodwill | 35 711 | -3 646 | 32 065 |
| Goodwill consist of: | |||
| Negative ordinary goodwill | -61 338 | -2 218 | -63 556 |
| Technical goodwill | 97 049 | -1 428 | 95 621 |
| Total goodwill | 35 711 | -3 646 | 32 065 |
The negative ordinary goodwill is mainly caused by the increase in the oil price in the period between the agreement date and the acquisition date. 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 posttax market for such transactions) and the tax basis of assets acquired. The negative ordinary goodwill and the technical goodwill is recognised net as technical goodwill with NOK 32.1 million. 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 85 million higher and profit before tax would have been approximately NOK 66.3 million higher.
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 OKEA03, the fair value is estimated to be NOK 1 315 917 thousand at 30 September 2022. The OKEA03 bond loan is listed on the Oslo Stock Exchange and the fair value is based on the latest quoted market price (level 1 in the fair value hierarchy according to IFRS 13) as per balance sheet date.
Fair value of financial forward contracts gas (without physical delivery) is based on quoted market prices at the balance sheet date (level 2 in the fair value hierarchy). The financial forward contracts gas (without physical delivery) are carried in the statement of financial position at fair value.
In October 2022 40,000 new shares were issued in connection with exercise of warrants. The company's new share capital is NOK 10,391,035 divided into 103,910,350 shares, each with a par value of NOK 0.10.
There are no subsequent events with significant impacts that have occured between the end of the reporting period and the date of this report that are not already reflected or discloused in these financial statements.
| EBITDA | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 |
|---|---|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 3 months | 9 months | 9 months | 12 months |
| Profit / loss (-) from operating activities | 850 638 | 762 572 | 617 612 | 2 961 063 | 1 583 025 | 2 297 860 |
| Add: depreciation, depletion and amortisation | 176 185 | 165 151 | 179 335 | 499 116 | 495 450 | 672 450 |
| Add: impairment | 609 030 | - | - | 246 433 | -730 397 | -363 765 |
| EBITDA | 1 635 853 | 927 723 | 796 947 | 3 706 612 | 1 348 078 | 2 606 545 |
| EBITDAX | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 |
|---|---|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 3 months | 9 months | 9 months | 12 months |
| Profit / loss (-) from operating activities | 850 638 | 762 572 | 617 612 | 2 961 063 | 1 583 025 | 2 297 860 |
| Add: depreciation, depletion and amortisation | 176 185 | 165 151 | 179 335 | 499 116 | 495 450 | 672 450 |
| Add: impairment / reversal of impairment | 609 030 | - | - | 246 433 | -730 397 | -363 765 |
| Add: exploration and evaluation expenses | 18 553 | 26 009 | 36 677 | 137 238 | 254 310 | 342 972 |
| EBITDAX | 1 654 406 | 953 733 | 833 625 | 3 843 850 | 1 602 388 | 2 949 517 |
| Production expense per boe | Q3 2022 | Q2 2022 | Q3 2021 | 2022 | 2021 | 2021 |
|---|---|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 3 months | 9 months | 9 months | 12 months |
| Productions expense | 425 468 | 380 990 | 180 677 | 1 093 752 | 569 665 | 860 419 |
| Less: processing tariff income | -41 528 | -26 216 | -13 393 | -91 889 | -37 697 | -61 960 |
| Less: joint utilisation of resources | -9 360 | -12 032 | -1 382 | -27 186 | -9 982 | -23 036 |
| Less: preparation for operation asset under construction | - | - | -3 483 | - | -16 487 | -17 884 |
| Divided by: produced volumes (boe) | 1 477 922 | 1 459 581 | 1 500 961 | 4 279 176 | 4 193 131 | 5 668 579 |
| Production expense NOK per boe | 253,1 | 234,7 | 108,2 | 227,8 | 120,6 | 133,6 |
| Net interest-bearing debt | ||||
|---|---|---|---|---|
| Amounts in NOK `000 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
| Interest bearing bond loans | 1 297 576 | 1 187 330 | 2 294 873 | 2 378 676 |
| Other interest bearing liabilities | 522 256 | 482 150 | 454 853 | - |
| Interest bearing bond loans, current | - | 994 835 | - | - |
| Other interest bearing liabilities, current | 49 874 | 44 380 | 38 593 | - |
| Less: Cash and cash equivalents | -2 668 452 | -2 758 124 | -2 038 745 | -1 504 336 |
| Net interest-bearing debt | -798 746 | -49 429 | 749 574 | 874 340 |
| Net interest-bearing debt excl. other interest bearing liabilities |
||||
|---|---|---|---|---|
| Amounts in NOK `000 | 30.09.2022 | 30.06.2022 | 31.12.2021 | 30.09.2021 |
| Interest bearing bond loans | 1 297 576 | 1 187 330 | 2 294 873 | 2 378 676 |
| Interest bearing bond loans, current | - | 994 835 | - | - |
| Less: Cash and cash equivalents | -2 668 452 | -2 758 124 | -2 038 745 | -1 504 336 |
| Net interest-bearing debt excl. other interest bearing | ||||
| liabilities | -1 370 875 | -575 959 | 256 128 | 874 340 |
ilt
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 loans, bonds less cash and cash
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 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 disipline.
Kongens gate 8 7011 Trondheim
www.okea.no
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