Quarterly Report • Feb 13, 2020
Quarterly Report
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| Unit | Q4 2019 | Q3 2019 | Q4 2018* | Full year 2019 |
Full year 2018* |
|
|---|---|---|---|---|---|---|
| Revenue from crude oil and gas sales |
NOKm | 534 | 612 | 97 | 2 936 | 150 |
| EBITDA 1) | NOKm | 226 | 404 | 133 | 1 636 | 149 |
| EBITDAX 1) | NOKm | 378 | 505 | 169 | 1 936 | 224 |
| Profit/loss (-) before income tax | NOKm | -35 | 1 | -190 | 419 | -300 |
| Profit/loss (-) before tax per share | NOK/share | -0.34 | 0.01 | -3.22 | 4.52 | -7.67 |
| Net profit / loss (-) | NOKm | -2 | -77 | -59 | -71 | -156 |
| Cash flow from operations | NOKm | 238 | 723 | 220 | 2 111 | 235 |
| Cash flow from investments | NOKm | -244 | -216 | -798 | -847 | -2,257 |
| Net interest-bearing debt 1) | NOKm | 893 | 864 | 2 134 | 893 | 2 134 |
| Draugen | Boepd 2) | 8,835 | 9,648 | 10,898 3) | 9,092 | 10,898 3) |
| Gjøa | Boepd 2) | 7,842 | 8,135 | 11,108 3) | 9,230 | 11,108 3) |
| Ivar Aasen | Boepd 2) | 343 | 342 | 356 | 341 | 363 3) |
| Total net production | Boepd 2) | 17,020 | 18,125 | 22,362 | 18,663 | 22,369 3) |
| Over/underlift/inventory adjustments |
Boepd 2) | -3,185 | -1,429 | -12,263 | -818 | -13,590 |
| Net Sold volume | Boepd 2) | 13,835 | 16,696 | 10,099 | 19,481 | 8,779 |
| Production expense per boe 1) | NOK/boe | 120.7 | 79.7 | 125.4 | 95.7 | 118.7 |
| Realised Liquids price | USD/boe | 61.2 | 56.4 | 68.0 | 56.6 | 67.8 |
| Realised Gas price | USD/scm | 0.13 | 0.11 | 0.29 | 0.16 | 0.29 |
1) Definitions of Alternative Performance Measures refer to the last section of the Quarterly Report
2) Boepd is defined as barrels of oil equivalents per day
3) Production in 2018 for Draugen and Gjøa includes December figures only, Ivar Aasen is full year
* Restated
(Amounts in parentheses refer to corresponding period previous year)
Total operating income in the fourth quarter was NOK 564 (181) million. The increase from previous year was caused by the acquisition of the interests in the Draugen and Gjøa licences in November 2018.
Other operating income / loss (-) amounted to NOK 31 (84) million. In November 2019, NOK 19 million was recognised from the sale of shares in Grevling and Storskrymten licences to Chrysaor.
Production expenses amounted to NOK 205 (90) million, corresponding to NOK 120.7 (125.4) per boe. Net OKEA produced volumes were 17,020 boepd in Q4 2019 compared to 22,362 boepd in Q4 2018.
In Q4 2019, changes in over/underlift positions and production inventory amounted to NOK 42 (130) million. The effect was mainly caused by increased underlift position on Draugen after partner lifting late December. Produced volumes exceeded sold volumes by 3,185 boepd.
Exploration expenses amounted to NOK 152 (37) million in the quarter. This was mainly related to the dry exploration wells Skumnisse in the Draugen licence of NOK 68 million and Kathryn of NOK 29 million on PL910. This was offset by capitalisation of previously expensed cost of the dry well Infill Ø in the Draugen licence in Q3 with an amount of NOK 14 million, as the classification of the well has been changed to development well. In addition, purchase of seismic data of NOK 20 million on PL958 and NOK 11 million in the Grevling area, plus various field evaluation activities on PL974 (Storskrymten) and PL038D (Grevling) with a total of NOK 21 million were expensed in the quarter.
Impairments amounted to NOK 9 (0) million of technical goodwill on Gjøa which was mainly caused by lower gas prices.
Depreciation in the fourth quarter was NOK 163 (82) million. The increase compared to the fourth quarter last year is related to the acquisition of the Draugen and Gjøa assets in November 2018.
General and administrative expenses amounted to NOK 24 (53) million and which represent OKEA's share of costs after allocations to licence activities.
Net financial items amounted to NOK -90 (-241) million. The net cost in Q4 2019 was mainly explained by interest expenses on bond loans and effects of refinancing in December. Completing the refinancing in Q4 was an important milestone to secure long-term financing of OKEA's future development. The interest expense was partly offset by a net exchange rate gain of NOK 33 million driven by a decrease in the NOK/USD rate from 30 September to 31 December 2019 of around 3 per cent.
Profit / loss (-) before income tax amounted to NOK -35 (-190) million in the quarter.
Taxes (-) / tax income for the quarter amounted to NOK 33 (131) million. For 2019 the amount was NOK -491 million, of which NOK -431 million are tax payable. The main reasons for the 2019 effective tax rate of 117% are costs related to impairments and financial items which are tax deductible with 0% and approximately 33%, respectively. This is partly offset by the effect of uplift.
Net profit / loss (-) for the period was NOK -2 (-59) million and earnings per share were NOK -0.02 (-1.08).
Revenue from oil and gas sales was NOK 534 million in Q4 compared to NOK 612 million in Q3 2019. The reduction was mainly due to an unplanned shutdown at Gjøa in Q4 and continued restrictions in SEGAL, described in detail in the operational section below, contributing lower volumes of gas and natural gas liquids sold.
Production expenses in the fourth quarter 2019 equated to NOK 120.7 per boe while in Q3, production expenses were NOK 79.7 per boe. The increase was mainly caused by higher well maintenance cost and repair of a subsea pump on Draugen in November, in addition to lower production on Gjøa related to various production issues. Please refer to operational section below for details.
In Q4 2019 impairment was NOK 9 million compared to NOK 0 million in Q3 2019. This impairment of technical goodwill on Gjøa was mainly due to reduced gas prices.
Profit / loss (-) before income tax amounted to NOK -35 million in Q4 compared to NOK 1 million in Q3. A lower profit from operating activities in Q4 was partly offset by a net exchange rate gain compared to third quarter. Year to date Q4 2019 profit before tax amounted to NOK 419 million.
Taxes (-) / tax income (+) in Q4 2019 was NOK 33 million compared to NOK -79 million in Q3.
Net profit / loss (-) was NOK -2 million in Q4 compared to NOK -77 million in Q3.
(Amounts in parentheses refer to 31 December 2018 – restated as described in note 3)
Goodwill amounted to NOK 1 426 (1 531) million and the reduction was caused by impairment of technical goodwill in Q1, Q2 and Q4 as described in note 9. In December, an agreement was reached with A/S Norske Shell regarding the final completion statement. Refer to note 3 for effects of the final purchase price allocation on restated 2018 figures.
Right-of-use assets amount to NOK 163 million at the end of fourth quarter 2019.
Cash and cash equivalents were NOK 1 663 (395) million. The increase in cash and cash equivalents is mainly due to positive cash flow from operations and proceeds from the share issue, offset by cash spending on investment and financing activities.
Spare parts, equipment and inventory amounted to NOK 142 (316) million. The reduction was mainly caused by realisation of oil inventory at Draugen in 2019 that was acquired and measured at fair market value as part of the Shell transaction in 2018.
Equity amounted to NOK 1 681 (1 456) million at the end of fourth quarter. The increase was mainly caused by the net proceeds after tax from the share issue of NOK 290 million in the second quarter offset by the net loss for 2019 of NOK 71 million.
Provisions for asset retirement obligations amounted to NOK 4 024 (3 859) million. The increase is caused by 2019 accretion and various changes in assumptions in calculation of estimates.
Interest-bearing loans and borrowings were NOK 2 557 (2 529) million. In December, OKEA refinanced the USD 120 million bond OKEA01 maturing in November 2020 and entered a USD 120 million senior secured bond loan OKEA03 maturing in December 2024.
The lease liability effect from IFRS 16 is split into a non-current liability of NOK 118 (0) million and a current liability of NOK 46 (0) million.
Trade and other payables amounted to NOK 1 372 (1 110) million, which mainly consisted of working capital from joint licences, trade creditors and prepayments from customers.
(All amounts in parentheses refer to corresponding period previous year)
Net cash flows from operating activities were NOK 238 (220) million in Q4 2019. In Q3 2019, the corresponding amount was NOK 723 million. One of the reasons for the reduction from Q3 2019 was the timing of payment from liftings on Draugen, where Q3 had two payments in July and September respectively while Q4 had one lifting and one payment in November. Furthermore, taxes paid in the quarter amounted to NOK 124 million compared to NOK 50 million in Q3. The remaining effect is related to various changes in working capital items.
Net cash flows from investment activities were NOK -244 (-798) million, of which investments in Oil & Gas properties amounted to NOK -269 (-183) million for the quarter, mainly related to the Yme New Development and capitalisation of the well, Infill Ø at Draugen at NOK 54 million. The net cash flow from investment activities in Q4 2018 was significantly impacted by the completion of the acquisition of Draugen and Gjøa, offset by release of restricted cash.
Net cash flow from financing activities amounted to NOK -129 (916) million, of which interest paid in Q4 2019 was NOK -84 million. The amount in Q4 2018 was mainly related to net proceeds from share issues.
OKEA produced 17,020 (22,362) boepd in the fourth quarter of 2019. The average realised liquid price was USD 61.2 (68.0) per barrel, while gas revenues were recognised at market value of USD 0.13 (0.29) per standard cubic metre (scm). The price fluctuation between quarters is mainly driven by reduced prices for gas in Europe over the last year.
Q4 production from Draugen was 8,835 boepd net to OKEA compared to 9,648 boepd net in Q3. This represents a decrease of approximately 8 per cent. Regularity in Q4 was 95% compared to 97% in Q3. The lower production this quarter is mainly due to the shut-in of well D2 caused by a failed downhole safety valve, general decline on the field and well intervention on three wells in the period. OKEA is planning for an efficient and safe well intervention campaign at the earliest convenience to secure continued production from well D2.
Drilling of two wells in the Draugen licence was completed in October and November. The Skumnisse appraisal well (6407/9-12) targeted a north-eastern extension of the Draugen field Rogn Formation reservoir. The reservoir encountered was of poor quality, and no traces of hydrocarbons were encountered. The Infill Ø observation well (6407/9-11) encountered a remaining 2.5 m oil column in the top of the reservoir, demonstrating efficient sweep in the local area of the field and no need for an extra producer well. Both wells were drilled with a cost-effective, slim design, with the top-hole sections being 'batch-drilled' to reduce costs. The Skumnisse well was drilled in 14 days and the Infill Ø well in seven days.
Net production to OKEA in Q4 was 7,842 boepd, compared to 8,135 boepd in Q3. Gjøa production regularity was 75% in Q4 compared to 86% in Q3. The main reason for lower production regularity in Q4 was an unplanned shutdown that occurred 13 November, caused by a malfunction of the power turbine. The malfunction ceased all export of oil and gas at Gjøa. The power turbine was replaced, and production and export resumed 30 November.
As disclosed in the Q3 report, OKEA's production from Gjøa was impacted by the restrictions in the SEGAL system. This has also been the case in Q4, but the restrictions ended 23 December. OKEA's strategy of buying additional capacity at fixed prices through Gassco proved to be successful in Q4, and OKEA has been able to lift between 80 and 100% of normal offtake in the period Gjøa produced.
In Q4, the semisubmersible drilling unit Deepsea Yantai commenced drilling operations on the nearby Duva field and the rig was moved to the P1 location late December according to plan to drill the P1 appraisal well in the Gjøa license. The P1 appraisal well was spudded early January 2020. Deepsea Yantai proved very good performance while drilling in the Duva reservoir.
Net production to OKEA in Q4 was 343 boepd, compared to 342 boepd in Q3. Production regularity on Ivar Aasen was 96% in Q4, up from 92% in Q3. The increase in production is mainly due to higher production regularity.
Drilling of D-15 Skagerak was completed in Q3, put in production early October and is producing steadily. Planning of 2020 IOR wells is ongoing.
Subsurface work and concept studies for the Grevling and Storskrymten licences have been matured to a concept level. The studies will be further matured towards concept selection, considering a newbuild of jackup Mobile Offshore Production Unit (MOPU) and a FPSO redevelopment.
The Yme New Development project is progressing with the upgrade of the jack-up rig Maersk Inspirer at Aker Solutions Yard in Egersund. Both lifetime extension scope and field specific scope is being executed at the yard. Despite somewhat slower progress than expected for the upgrade of the rig, the target for production start is summer 2020.
The Yme Wellhead Module was installed offshore in September 2019. An additional rig campaign, using Valaris JU-290, is ongoing to execute hook-up scope and carry-over work for the wellhead module. The rig campaign has had good progress and will enable reduced hook-up scope for the Maersk Inspirer when it arrives offshore.
The Submerged Loading System was successfully installed in October 2019 and the Yme wells will be ready for production after pulling of plugs.
Yme will at plateau add a production of 5,700 boepd net to OKEA.
As described above, the OKEA-operated 'Skumnisse' appraisal well (6407/9-12) was drilled to target a northeastern extension of the Draugen field Rogn Formation reservoir (within PL093 D). The reservoir encountered was of poor quality, with no traces of hydrocarbons. Analysis of data gathered from the well will be used to interpret the well results and to guide further exploration activities in the area around the Draugen field.
The licensees of the PL973 exploration licence (Chrysaor operator, OKEA 30%), south of the Grevling discovery, committed to drilling two wildcat exploration wells in the licence, with a third (appraisal) well conditional on the results of the first well. The well campaign is planned for Q3-Q4 2020 and has the potential to prove up oil volumes which can be tied in to a Grevling development in the future.
Fast-track data from the PGS 3D seismic survey covering the PL958 licence, north-east of Draugen, was received at the end of the quarter and interpretation work will now be initiated. The fully processed data set is expected to be delivered in the middle of 2020.
The technical evaluation of the Mistral prospects in PL1003 (OKEA operator 60%) was completed with the intention to take a drilling decision before the work program deadline in March 2020.
The 'Kathryn' exploration well in PL910, east of Yme (Repsol operator, OKEA 16.667%), was completed in October as a dry well, as no traces of hydrocarbons were encountered despite the presence of reservoir formation. Further prospectivity in the licence will be evaluated.
In January 2020, OKEA was awarded five new licences on the Norwegian Continental Shelf by the Ministry of Petroleum and Energy under the Award in Pre-Defined Areas (APA) for 2019, strengthening the company's position around the important Draugen and Grevling production and development hubs in the Norwegian Sea and North Sea, respectively.
There were no serious incidents during the fourth quarter, fully in line with OKEA's prioritised objective of securing an incident free environment. OKEA has during the fourth quarter performed drilling operations in the Draugen licence, as well as production activities at the Draugen platform. The drilling operations were OKEA's first drilling campaign as an operator. The campaign was planned and executed in a safe and efficient manner.
OKEA's environmental strategy and energy management system was developed in the quarter. The environmental strategy and energy management system is applicable to all of OKEA's activities, including the operations in the Draugen licence.
OKEA has in the fourth quarter also developed and approved a comprehensive QHSE activity plan for 2020. Among other, the QHSE activity plan contains several actions which addresses the Petroleum Safety Authority's main theme for 2020; "Never another major accident".
OKEA has during 2019 established a solid platform as operator on the Norwegian Continental Shelf. OKEA targets further growth through value enhancing mergers and acquisitions on the Norwegian Continental Shelf with portfolios suitable for enabling synergies. OKEA has the capacity and desire for more operatorships, both for producing assets and developments assets up to 100 mmboe. Through the Draugen transition project in 2018, OKEA has established a proven industry leading onboarding process of new assets.
Draugen will continue to be the backbone in OKEA's portfolio. OKEA has, together with the Draugen licence partners, moved away from harvest mode and to development mode. A new long-term plan for the licence is in place, covering several key projects which aim to extend the lifetime for the field, such as the development of the tie-in discovery, Hasselmus, expected in 2022.
The P1 project progress according to plan. First oil is scheduled for Q1 2021.
The Yme New Development project is based on OKEA's initiative and idea and getting Yme in production will be a major milestone for OKEA. Yme will at plateau add a production of 5,700 boepd net to OKEA. Scheduled production start is summer 2020.
| 01.01-31.12. | |||||
|---|---|---|---|---|---|
| Q4 2019 | Q4 2018 | 2019 | 2018 | ||
| Amounts in NOK `000 | Note | (unaudited) | Restated | (unaudited) | Restated ** |
| Revenues from crude oil and gas sales | 6 | 533 590 | 97 206 | 2 935 635 | 149 761 |
| YME compensation contract breach | 6 | - | - | 22 098 | 115 000 |
| Other operating income / loss (-) | 6 | 30 801 | 84 249 | 61 833 | 44 326 |
| Total operating income | 564 390 | 181 455 | 3 019 566 | 309 087 | |
| Production expenses | -205 009 | -89 625 | -708 649 | -96 714 | |
| Changes in over/underlift positions and production inventory | 42 357 | 130 441 | -272 472 | 133 318 | |
| Exploration expenses | -151 631 | -36 601 | -299 446 | -74 782 | |
| Depreciation, depletion and amortization | 8 | -162 536 | -82 130 | -703 883 | -100 066 |
| Impairment | 9 | -8 736 | - | -105 394 | - |
| General and administrative expenses | -24 153 | -52 821 | -102 562 | -122 082 | |
| Total operating expenses | -509 707 | -130 736 | -2 192 406 | -260 326 | |
| Profit / loss (-) from operating activities | 54 683 | 50 720 | 827 160 | 48 761 | |
| Finance income | 10 | 28 497 | 12 286 | 103 893 | 17 300 |
| Finance costs | 10 | -164 688 | -78 845 | -444 880 | -181 853 |
| Net exchange rate gain/loss (-) | 10 | 46 579 | -174 395 | -66 777 | -184 410 |
| Net financial items | -89 612 | -240 953 | -407 764 | -348 963 | |
| Profit / loss (-) before income tax | -34 929 | -190 234 | 419 396 | -300 202 | |
| Taxes (-) / tax income (+) | 7 | 32 637 | 131 481 | -490 527 | 144 488 |
| Net profit / loss (-) | -2 292 | -58 753 | -71 131 | -155 715 | |
Items that will not be reclassified to profit or loss in subsequent periods:
| Remeasurements pensions, actuarial gain/loss (-) | 418 | - | 418 | - |
|---|---|---|---|---|
| Total other comprehensive income, net of tax | 418 | - | 418 | - |
| Total comprehensive income / loss (-) | -1 873 | -58 753 | -70 712 | -155 715 |
| Weighted average no. of shares outstanding basic* | 102 022 474 | 59 164 793 | 92 848 011 | 39 144 548 |
| Weighted average no. of shares outstanding diluted* | 102 022 474 | 59 164 793 | 92 848 011 | 39 144 548 |
| * All periods are updated to reflect the split of shares 1/10 registered in Q2 2019 | ||||
| Earnings per share (NOK per share) - Basic | -0,02 | -1,08 | -0,77 | -4,11 |
| Earnings per share (NOK per share) - Diluted | -0,02 | -1,08 | -0,77 | -4,11 |
** Restatements see note 3.
| 31.12.2019 | 31.12.2018 | ||
|---|---|---|---|
| Amounts in NOK `000 | Note | (unaudited) | Restated * |
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 9 | 1 425 568 | 1 530 962 |
| Exploration and evaluation assets Oil and gas properties |
15 927 | 6 324 | |
| Buildings | 8 | 3 885 889 | 3 777 130 |
| Furniture, fixtures and office equipment | 8 8 |
87 875 11 250 |
92 501 3 407 |
| Right-of-use assets | 3, 8 | 163 398 | - |
| Other non-current assets | 11 | 2 968 502 | 2 754 237 |
| Total non-current assets | 8 558 409 | 8 164 561 | |
| Current assets | |||
| Trade and other receivables | 13 | 621 913 | 882 361 |
| Spareparts, equipment and inventory | 16 | 142 291 | 315 500 |
| Restricted cash | 14 | - | 48 327 |
| Cash and cash equivalents | 14 | 1 663 478 | 394 670 |
| Total current assets | 2 427 682 | 1 640 858 | |
| TOTAL ASSETS | 10 986 091 | 9 805 419 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 12 | 10 206 | 8 220 |
| Share premium | 1 912 462 | 1 624 104 | |
| Other paid in capital | 6 855 | 1 361 | |
| Accumulated loss | -248 094 | -177 381 | |
| Total equity | 1 681 430 | 1 456 304 | |
| Non-current liabilities | |||
| Provisions | 15 | 4 024 420 | 3 859 308 |
| Pension liabilities | 3 | 26 857 | 25 701 |
| Lease liability | 3, 19 | 117 996 | - |
| Deferred tax liabilities | 7 | 830 417 | 650 341 |
| Interest-bearing loans and borrowings | 18 | 2 556 570 | 2 528 589 |
| Total non-current liabilities | 7 556 259 | 7 063 939 | |
| Current liabilities | |||
| Trade and other payables | 17 | 1 371 587 | 1 109 725 |
| Income tax payable | 7 | 294 704 | 162 200 |
| Lease liability - current | 3, 19 | 45 544 | - |
| Public dues payable | 32 798 | 9 840 | |
| Provisions, current | 3 769 | 3 410 | |
| Total current liabilities | 1 748 402 | 1 285 176 | |
| Total liabilities | 9 304 661 | 8 349 115 | |
| TOTAL EQUITY AND LIABILITIES | 10 986 091 | 9 805 419 |
* Restatements see note 3.
| Share | Other paid | Accumulated | |||
|---|---|---|---|---|---|
| Amounts in NOK `000 | Share capital | premium | in capital | loss | Total equity |
| Equity at 1 January 2018 | 24 738 | 470 755 | -21 667 | 473 827 | |
| Total comprehensive income/loss (-) for the period | -155 715 | -155 715 | |||
| Capital reduction (equity restructuring) | -23 300 | -452 590 | -475 890 | ||
| Share issues, conversion of debt (equity restructuring) | 1 687 | 474 203 | 475 890 | ||
| Net proceeds from share issues in cash | 5 095 | 1 131 736 | 1 136 831 | ||
| Share based payment | 1 361 | 1 361 | |||
| Equity at 31 December 2018 | 8 220 | 1 624 104 | 1 361 | -177 381 | 1 456 304 |
| Equity at 1 January 2019 | 8 220 | 1 624 104 | 1 361 | -177 381 | 1 456 304 |
| Total comprehensive income/loss (-) for the period | -70 712 | -70 712 | |||
| Net proceeds from share issues in cash | 1 986 | 288 358 | 290 344 | ||
| Share based payment | 5 494 | 5 494 | |||
| Equity at 31 December 2019 | 10 206 | 1 912 462 | 6 855 | -248 094 | 1 681 430 |
| 01.01-31.12. | |||||
|---|---|---|---|---|---|
| Q4 2019 | Q4 2018 | 2019 | 2018 | ||
| Amounts in NOK `000 | Note | (unaudited) | Restated | (unaudited) | Restated * |
| Cash flow from operating activities | |||||
| Profit / loss (-) before income tax | -34 929 | -190 234 | 419 396 | -300 202 | |
| Income tax paid/received | 7 | -123 597 | 20 885 | -171 671 | 20 885 |
| Depreciation, depletion and amortization | 8 | 162 536 | 82 130 | 703 883 | 100 066 |
| Impairment goodwill | 9 | 8 736 | - | 105 394 | - |
| Accretion ARO | 10 | 4 066 | 5 577 | 16 088 | 10 078 |
| Gain from sales of licenses | 6 | -19 063 | - | -19 063 | - |
| Interest expense | 10 | 115 261 | 56 970 | 297 998 | 145 082 |
| Change in trade and other receivables, and | |||||
| inventory | -101 894 | -474 472 | 434 004 | -602 224 | |
| Change in trade and other payables | 344 554 | 545 854 | 335 354 | 693 180 | |
| Change in other non-current items | -117 453 | 173 006 | -10 267 | 168 563 | |
| Net cash flow from / used in (-) operating activities |
238 217 | 219 717 | 2 111 116 | 235 428 | |
| Cash flow from investment activities | |||||
| Investment in exploration and evaluation assets | 8 880 | 44 | -10 195 | -573 | |
| Business combination, cash paid | - | -2 725 220 | -40 000 | -2 725 220 | |
| Investment in oil and gas properties | -269 185 | -182 646 | -852 611 | -386 526 | |
| Investment in buildings | - | -1 001 | - | -1 001 | |
| Investment in furniture, fixtures and office | |||||
| machines | -3 185 | -3 196 | -11 628 | -3 196 | |
| Investment in (-)/release of restricted cash | 651 | 2 114 161 | 48 327 | 859 472 | |
| Proceeds from sales of licenses | 18 716 | - | 18 716 | - | |
| Net cash flow from / used in (-) investment activities |
-244 122 | -797 857 | -847 391 | -2 257 043 | |
| Cash flow from financing activities | |||||
| Net proceeds from borrowings, bond loan | 1 062 157 | - | 1 062 157 | 1 399 065 | |
| Net proceeds from borrowings, exploration loan | - | - | - | 37 650 | |
| Repayment of borrowings, bond loan | -1 107 839 | - | -1 107 839 | - | |
| Repayment of borrowings, exploration loan | - | -40 000 | - | -40 000 | |
| Interest paid | -83 775 | -73 676 | -232 412 | -143 403 | |
| Net proceeds from share issues | - | 1 029 578 | 283 177 | 1 133 365 | |
| Net cash flow from / used in (-) financing | |||||
| activities | -129 457 | 915 902 | 5 083 | 2 386 677 | |
| Net increase/ decrease (-) in cash and cash | |||||
| equivalents | -135 362 | 337 762 | 1 268 807 | 365 062 | |
| Cash and cash equivalents at the beginning of the period |
1 798 839 | 56 909 | 394 670 | 29 609 | |
| Cash and cash equivalents at the end of the | |||||
| period | 1 663 478 | 394 670 | 1 663 478 | 394 670 | |
| Restricted cash at the end of the period Restricted and unrestricted cash at the end of |
0 | 48 327 | 0 | 48 327 | |
| the period | 1 663 478 | 442 997 | 1 663 478 | 442 997 | |
* Restatements see note 3.
These financial statements are the unaudited interim condensed financial statements of OKEA ASA for the fourth quarter of 2019. OKEA ASA ("OKEA" or "the Company") is a public limited liability company incorporated and domiciled in Norway, with its main office located in Trondheim. OKEA ASA's shares were listed on the Oslo Stock Exchange on 18 June 2019. The Company's ticker is OKEA.
The Company's overall vision is to be the leading company on the Norwegian Continental Shelf in terms of delivering safe and costeffective field developments and operational excellence, while maintaining a competent organisation with direct management engagement in all projects and activities.
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 2018. The annual accounts for 2018 were prepared in accordance with EU`s approved International Financial Reporting Standards (IFRS).
The interim financial statements were approved for issue by the company's Board of Directors on 12 February 2020.
The accounting policies adopted in the preparation of the interim accounts are consistent with those followed in the preparation of the annual accounts for 2018, except for the implementation of IFRS 16 and change in accounting principle for over-/underlift described below.
As described in the company's annual financial statements for 2018, IFRS 16 Leases entered into force from 1 January 2019. The implementation resulted in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
The Company adopted the standard using the modified retrospective approach. The implementation had no impact on net equity and resulted in an increase of NOK 198.4 million in property, plant and equipment with a corresponding increase in liabilities, of which NOK 152.9 million is classified as non-current liabilities and NOK 45.5 million is classified as current liabilities.
The Company has applied a gross presentation related to lease contracts entered into as licence operator.
The company has previously used a variant of the sales method where changes in overlift and underlift balances have been valued at its net realisable value and the change in over/underlift has been included as "other income". Due to development in IFRIC discussions, the Company has decided to change to the traditional sales method from 1 January 2019. This means that changes in over/underlift balances are measured at production cost including depreciation and presented as an adjustment to cost. The table below shows the effects of the restatement due to change in the accounting principle for the YTD 2018 figures, with all these effects impacting the Q4 2018 figures.
In second quarter of 2019, the company identified items that required adjustment to the preliminary Purchase Price Allocation (PPA) for the Shell transaction as of 30 November 2018. The estimates for petroleum reserves related to the new P1 project on Gjøa were reduced by the operator prior to the project being sanctioned in February 2019, without corresponding update of the PPA. In addition, there was an error in the calculation of gas processing tariffs. These adjustments were treated as errors and retroactively adjusted in the PPA. These adjustments resulted in a reduction in the net book value allocated to Gjøa of NOK 245.2 million, with a corresponding increase in goodwill of NOK 53.9 million and a decrease in deferred tax liability of NOK 191.2 million compared with the preliminary PPA presented for this transaction in the 2018 annual financial statements.
OKEA has in December 2019 reached a final agreement with Shell regarding the final completion statement for the Draugen and Gjøa transaction. The effects on the updated PPA is presented below.
The following table shows the abovementioned effects for YTD 2018 figures:
| Change in accounting principle 1) |
Effect of preliminary updated PPA (Gjøa) Q2 2019 |
Effect Final PPA Q4 2019 |
Restated 2018 |
|---|---|---|---|
| -44 421 | 44 326 | ||
| -78 366 | -96 714 | ||
| 133 318 | 133 318 | ||
| -42 769 | -100 066 | ||
| 25 146 | 144 488 | ||
| 53 942 | 4 592 | 1 530 962 | |
| -245 191 | 3 777 130 | ||
| -32 238 | -29 798 | 882 361 | |
| 25 701 | 25 701 | ||
| -25 146 | -191 249 | -20 046 | 650 341 |
| -37 339 | 1 109 725 | ||
| 6 479 | 162 200 | ||
| -7 092 | -177 381 | ||
| Audited 2018 Accounting line in Statement of Comprehensive Income 88 747 -18 347 -57 297 119 342 1 472 428 4 022 321 944 397 886 782 1 147 064 155 722 -170 289 |
1) Relates to change in principle for valuation and presentation of over/underlift affecting Q4 2018 figures.
In fourth quarter of 2019, the accounting lines "Employee benefit expenses" and "Other operating expenses" are merged and presented in one line as "General and administrative expenses". Previous periods are reclassified to conform presentation to the current quarter's presentation.
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 2018.
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 2019 | Q4 2018 | 2019 | 2018 |
| Sale of liquids | 447 432 | 12 531 | 2 486 165 | 58 550 |
| Sale of gas | 86 157 | 84 675 | 449 470 | 91 211 |
| Total petroleum revenues | 533 590 | 97 206 | 2 935 635 | 149 761 |
| Sale of liquids (boe*) | 917 537 | 79 688 | 5 024 339 | 171 939 |
| Sale of gas (boe) | 512 879 | 212 396 | 2 086 178 | 232 701 |
| Total Sale of petroleum in boe | 1 430 416 | 292 084 | 7 110 517 | 404 640 |
*Barrels of oil equivalents
| Total other operating income/loss (-) | 30 801 | 84 249 | 83 931 | 159 326 |
|---|---|---|---|---|
| Sale of licenses** | 19 971 | 7 114 | 19 971 | 7 114 |
| Tariff income Gjøa | 15 953 | - | 56 681 | - |
| Gain / loss (-) from put options, oil | -5 123 | 77 136 | -14 819 | 37 212 |
| Yme compensation contract breach* | - | - | 22 098 | 115 000 |
* The compensation recognised in 2019 is based on the final amount received in Q1 2019. For further information refer to the 2018 Annual Report.
** During fourth quarter of 2019 OKEA completed the sale of a 20% interest in PL038D Grevling and a 18.57% interest in PL974 Storskrymten to Chrysaor. Effective date for the transactions were 1 January 2019 and 1 March 2019, respectively.
| 01.01-31.12. | ||||
|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2019 | Q4 2018 | 2019 | 2018 |
| Change in deferred taxes current year | 60 208 | -478 763 | -72 117 | -494 048 |
| Taxes payable current year | -38 347 | 638 370 | -430 778 | 638 370 |
| Tax refund current year | - | -28 292 | - | - |
| Tax payable adjustment previous year * | 117 251 | - | 117 251 | - |
| Change in deferred taxes previous year * | -106 476 | - | -106 476 | - |
| Tax refund adjustment previous year | - | 166 | 1 592 | 166 |
| Total taxes (-) / tax income (+) recognised | ||||
| in the income statement | 32 637 | 131 481 | -490 527 | 144 488 |
* The adjustments to current and deferred taxes previous year mainly relate to underlift and physical inventory balances acquired in the Shell transaction in 2018.
| 01.01-31.12. | ||||
|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2019 | Q4 2018 | 2019 | 2018 |
| Profit / loss (-) before income taxes | -34 929 | -190 234 | 419 396 | -300 202 |
| Expected income tax at nominal tax rate, 22% (2018: 23%) |
7 684 | 43 754 | -92 267 | 69 047 |
| Expected petroleum tax, 56% (2018: 55%) Permanent differences, including impairment |
19 560 | 104 628 | -234 862 | 165 111 |
| of goodwill | 17 278 | 96 | -61 583 | -965 |
| Effect of uplift | 19 809 | 11 651 | 47 993 | 24 699 |
| Financial and onshore items | -42 470 | -40 033 | -162 177 | -115 606 |
| Effect of new tax rates | - | 1 138 | - | 1 138 |
| Change valuation allowance | - | 9 182 | - | - |
| Adjustments previous year and other | 10 776 | 1 064 | 12 368 | 1 064 |
| Total income taxes recognised in the | ||||
| income statement | 32 637 | 131 481 | -490 527 | 144 488 |
| Effective income tax rate | 93 % | 69 % | 117 % | 48 % |
| Amounts in NOK `000 | 31.12.2019 | 31.12.2018 |
|---|---|---|
| Tangible and intangible non-current assets | -1 945 367 | -1 586 466 |
| Provisions (net ARO), lease liability, pensions and gain/loss account | 1 163 869 | 1 040 741 |
| Interest-bearing loans and borrowings | -14 661 | -39 409 |
| Current items | -47 346 | -116 307 |
| Tax losses carried forward, onshore 22% | 1 190 | - |
| Tax losses carried forward, offshore 22% | - | - |
| Tax losses carried forward, offshore 56% | - | - |
| Uplift, offshore 56% | 11 898 | 51 100 |
| Valuation allowance (uncapitalised deferred tax asset) | - | - |
| Total deferred tax assets / liabilities (-) recognised | -830 417 | -650 341 |
Deferred tax is calculated based on tax rates applicable on the balance sheet date. Ordinary income tax is 22%, to which is added a special tax for oil and gas companies at the rate of 56%, giving a total tax rate of 78%.
Companies operating on the Norwegian Continental Shelf under the offshore tax regime can claim the tax value of any unused tax losses or other tax credits related to its offshore activities to be paid in cash (including interest) from the tax authorities when operations cease. Deferred tax assets that are based on offshore tax losses carried forward are therefore normally recognised in full.
There is no time limit on the right to carry tax losses forward in Norway.
| 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 2019 | 2 972 297 | 923 081 | 92 501 | 3 428 | - | 3 991 307 |
| Additions | 175 152 | 408 274 | - | 8 442 | 199 051 | 790 920 |
| Removal and decommissioning asset |
- | - | - | - | - | |
| Cost at 30 September 2019 | 3 147 449 | 1 331 355 | 92 501 | 11 871 | 199 051 | 4 782 227 |
| Accumulated depreciation and impairment at 1 January 2019 |
-118 249 | - | - | -22 | - | -118 270 |
| Depreciation YTD Q3 | -522 897 | - | -3 469 | -2 389 | -12 592 | -541 347 |
| Additional depreciation of IFRS 16 Right-of-use assets presented gross related to leasing contracts entered into |
||||||
| as licence operator | - | - | - | - | -14 093 | -14 093 |
| Accumulated depreciation and impairment at 30 September 2019 |
-641 145 | - | -3 469 | -2 411 | -26 686 | -673 711 |
| Carrying amount at 30 September 2019 |
2 506 304 | 1 331 355 | 89 032 | 9 460 | 172 366 | 4 108 516 |
| Cost at 1 October 2019 | 3 147 449 | 1 331 355 | 92 501 | 11 871 | 199 051 | 4 782 227 |
| Additions fourth quarter | 150 105 | 119 080 | - | 3 186 | - | 272 370 |
| Removal and | ||||||
| decommissioning asset | -120 718 | 55 478 | - | - | - | -65 241 |
| Cost at 31 December 2019 | 3 176 835 | 1 505 913 | 92 501 | 15 056 | 199 051 | 4 989 357 |
| Accumulated depreciation and impairment at 1 October 2019 |
-641 145 | - | -3 469 | -2 411 | -26 686 | -673 711 |
| Depreciation fourth quarter | -155 714 | - | -1 156 | -1 395 | -4 270 | -162 536 |
| Additional depreciation of IFRS 16 Right-of-use assets presented gross related to leasing contracts entered into |
||||||
| as licence operator | - | - | - | - | -4 698 | -4 698 |
| Accumulated depreciation and impairment at 31 December 2019 |
-796 860 | - | -4 625 | -3 806 | -35 653 | -840 944 |
| Carrying amount at 31 December 2019 |
2 379 976 | 1 505 913 | 87 875 | 11 250 | 163 398 | 4 148 413 |
Tangible and intangible assets are tested for impairment whenever impairment 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.
Below is an overview of the key assumptions applied in the impairment test as of 31 December 2019:
| Year | Oil USD/BOE* |
Gas GBP/therm* |
Currency rates USD/NOK |
|---|---|---|---|
| 2020 | 62.5 | 0.33 | 8.76 |
| 2021 | 57.3 | 0.41 | 8.74 |
| 2022 | 54.5 | 0.42 | 8.72 |
| 2023 | 53.0 | 0.42 | 8.68 |
| From 2024 | 65.0 | 0.47 | 8.00 |
* 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. As the company expects a desicion gate for the Hasselmus project to decide on development concept (DG2) in due time, it has been decided to include a 50% risked profile in the impairment test for Draugen CGU.
Future capex, opex and abandonment cost are calculated based on the expected production profiles and the best estimate of the related cost. For fair value testing the discount rate applied is 10.0% post tax.
The long-term inflation rate is assumed to be 2.0%.
Based on impairment test NOK 9 million in impairment charge has been recognised during the fourth quarter.
For the CGU Gjøa the following impairment has been charged in 2019:
| Amounts in NOK `000 | Gjøa |
|---|---|
| Impairment Q1 2019 | -53 648 |
| Impairment Q2 2019 | -43 010 |
| Impairment Q3 2019 | - |
| Impairment Q4 2019 | -8 736 |
| Impairment YTD Q4 2019 | -105 394 |
The impairment loss has been recognised to reduce the carrying amount of "technical" goodwill related to the Gjøa acquisition in November 2018. In Q4 the main reason for the impairment on Gjøa was lower gas prices.
The table below shows what impairment of goodwill would have been in Q4 2019 changing various assumptions, based on all other assumptions remaining constant. The total figures shown are combined impairment for CGUs Gjøa, Draugen, Ivar Aasen and Yme.
| Alternative calculations of impairment in Q4 2019 (NOK '000) |
|||
|---|---|---|---|
| Assumptions | Change | Increase in assumption |
Decrease in assumption |
| Oil and gas price | +/- 10% | - | 235 567 |
| Currency rate USD/NOK | +/- 1.0 NOK | - | 169 961 |
| Discount rate | +/- 1% point | 24 551 | - |
| Inflation rate | +/- 1% point | - | 28 374 |
| 01.01-31.12. | ||||
|---|---|---|---|---|
| Amounts in NOK `000 | Q4 2019 | Q4 2018 | 2019 | 2018 |
| Interest income | 3 783 | 4 048 | 5 037 | 9 062 |
| Unwinding of discount asset retirement | ||||
| receivable (indemnification asset) | 24 714 | 8 238 | 98 856 | 8 238 |
| Finance income | 28 497 | 12 286 | 103 893 | 17 300 |
| Interest expense bond loans | -115 145 | -61 180 | -297 882 | -157 088 |
| Interest expense shareholder loan | -116 | - | -116 | - |
| Other interest expense | -10 795 | -2 104 | -12 300 | -3 844 |
| Unwinding of discount asset retirement obligations | -28 780 | -13 815 | -114 944 | -18 316 |
| Other financial expense | -9 851 | -1 746 | -19 639 | -2 605 |
| Finance costs | -164 688 | -78 845 | -444 880 | -181 853 |
| Put/call options, foreign exchange* | -9 331 | -16 121 | -42 171 | -28 164 |
| Exchange rate gain/loss (-), bond loans | 116 274 | -167 274 | -3 396 | -153 732 |
| Net exchange rate gain/loss (-), other | -60 364 | 9 000 | -21 210 | -2 514 |
| Net exchange rate gain/loss (-) | 46 579 | -174 395 | -66 777 | -184 410 |
| Net financial items | -89 612 | -240 953 | -407 764 | -348 963 |
*Refer to note 20 for more information about derivatives.
| Amounts in NOK `000 | |
|---|---|
| Other non-current assets at 1 January 2018 | - |
| Additions through business combination | 2 745 999 |
| Unwinding of discount | 8 238 |
| Total other non-current assets at 31 December 2018 | 2 754 237 |
| Other non-current assets at 1 January 2019 (Indemnification asset) | 2 754 237 |
| Changes in estimates | (327 243) |
| Effect of change in the discount rate | 442 651 |
| Unwinding of discount | 98 856 |
| Total other non-current assets at 31 December 2019 | 2 968 502 |
The amount consists of a receivable from seller Shell from the acquisition of Draugen and Gjøa assets in 2018. The parties have 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 638 million (2018 value) subject to Consumer Price Index adjustment. The present value of the expected payments is recognised as a pre-tax receivable on seller.
In addition, the seller has agreed to pay OKEA an amount of NOK 375 million (2018 value) subject to 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 2.6% (2018: 3.6%) and recognised in the financial statements.
| A ordinary | |||
|---|---|---|---|
| Number of shares | Ordinary shares | shares | Total shares |
| Outstanding shares at 1.1.2019 | 7 319 389 | 901 061 | 8 220 450 |
| Conversion | 901 061 | -901 061 | - |
| Share split (1:10) | 73 984 050 | 73 984 050 | |
| New shares issued during 2019 | 19 859 550 | - | 19 859 550 |
| Number of outstanding shares at 31 December 2019 | 102 064 050 | - | 102 064 050 |
Nominal value NOK per share at 31 December 2019 0,1 Share capital NOK at 31 December 2019 10 206 405
All A ordinary shares were converted to ordinary shares prior to the initial public offering (IPO) and listing on Oslo Stock Exchange in June 2019. The total number of new shares issued was 19,634,550 and consisted of 15,000,000 new shares and 4,634,550 warrants converted to shares in connection with the IPO.
As per 31 December 2019 1,235,000 equity-settled warrants are still outstanding. See note 4 to the 2018 Annual Statements for further description.
| Amounts in NOK `000 | 31.12.2019 | 31.12.2018 |
|---|---|---|
| Accounts receivable and receivables from operated licences | 254 626 | 125 072 |
| Accrued Yme compensation | - | 115 000 |
| Accrued revenue | 73 211 | 89 960 |
| Prepayments | 9 883 | 10 127 |
| Working capital and overcall, joint operations/licences | 17 249 | 156 306 |
| Escrow receivable, Yme removal | - | 901 |
| Underlift of petroleum products* | 262 095 | 368 728 |
| VAT receivable | 4 063 | 16 266 |
| Fair value put options, oil | 786 | - |
| Total trade and other receivables | 621 913 | 882 361 |
* Underlift of petroleum products at 31.12.2018 is high mainly due to Draugen volumes valued at market price (purchase price) in relation to the Shell transaction. The balance at 31.12.2019 consists of Draugen (219), Ivar Aasen (45) and other (-2). At Ivar Aasen there has been no volumes lifted in 2019, and as such building underlift position.
| Amounts in NOK `000 | 31.12.2019 | 31.12.2018 |
|---|---|---|
| Bank deposit, restricted, escrow account | - | 48 327 |
| Total restricted cash | - | 48 327 |
The amount in escrow per 31 December 2018 were released in June 2019 as the equity requirements under OKEA01 and OKEA02 bond agreements were fulfilled after the share issue in connection with the Initial Public Offering.
| Amounts in NOK `000 | 31.12.2019 | 31.12.2018 |
|---|---|---|
| Bank deposits, unrestricted | 1 647 436 | 388 887 |
| Bank deposit, employee taxes | 16 041 | 5 784 |
| Total cash and cash equivalents | 1 663 478 | 394 670 |
| Total non | |
|---|---|
| Amounts in NOK `000 | current |
| Provision at 1 January 2018 | 319 668 |
| Additions through business combination | 3 512 231 |
| Changes in Operator's estimate | 9 094 |
| Unwinding of discount | 18 316 |
| Total provisions at 31 December 2018 | 3 859 308 |
| Provision at 1 January 2019 | 3 859 308 |
| Additions and adjustments | - |
| Changes in estimates | (536 803) |
| Effects of change in the discount rate | 586 971 |
| Unwinding of discount | 114 944 |
| Total provisions at 31 December 2019 | 4 024 420 |
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 Operator's best estimate. The net present value of the estimated obligation is calculated using a discount rate of 2% (2018: 3%). The assumptions are based on the economic environment around the 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, see note 11.
| Amounts in NOK `000 | 31.12.2019 | 31.12.2018 |
|---|---|---|
| Inventory of petroleum products | 22 909 | 188 748 |
| Spare parts and equipment | 119 381 | 126 752 |
| Total spareparts, equipment and inventory | 142 291 | 315 500 |
| Amounts in NOK `000 | 31.12.2019 | 31.12.2018 |
|---|---|---|
| Trade creditors | 339 909 | 76 871 |
| Accrued holiday pay and other employee benefits | 69 294 | 18 965 |
| Working capital, joint operations/licences | 613 329 | 446 961 |
| Accrued interest bond loans | 6 120 | 10 917 |
| Accrued consideration from acquisitions of interests in licenses | -0 | 174 490 |
| Prepayments from customers | 174 324 | 96 353 |
| Fair value put options, foreign exchange | - | 15 564 |
| Loan from shareholder OKEA Holdings Ltd | 1 257 | 1 141 |
| Other accrued expenses | 167 354 | 268 462 |
| Total trade and other payables | 1 371 587 | 1 109 725 |
| Amounts in NOK `000 | OKEA01 | OKEA02 | OKEA03 | Total |
|---|---|---|---|---|
| Bond loans at 1 January 2019 | 1 027 645 | 1 500 944 | - | 2 528 589 |
| Amortisation of transaction costs | 14 975 | 22 684 | 340 | 37 999 |
| Foreign exchange movement | 32 952 | 16 524 | -46 080 | 3 396 |
| Repayment OKEA01 * | -1 075 572 | - | - | -1 075 572 |
| Bond issue OKEA03 * | - | - | 1 099 716 | 1 099 716 |
| Capitalised transaction costs OKEA03 | - | - | -37 559 | -37 559 |
| Capitalised transaction costs OKEA02 | - | - | - | - |
| Bond loans at 31 December 2019 | - | 1 540 153 | 1 016 417 | 2 556 570 |
* In December 2019 the Company completed a refinancing of the USD 120 million bond loan OKEA01 maturing in November 2020. The Company has entered into a USD 120 million secured bond loan OKEA03. Maturity date for the entire loan is in December 2024. Interest rate is fixed at 8.75% p.a. with half-yearly interest payment. The issue price for OKEA03 was 99% of the nominal value. OKEA01 was settled at a price of 103% of the nominal value.
During 2019 and at 31 December 2019, the company was in compliance with the covenants under the bond agreements for both OKEA02 and OKEA03. Covenants for OKEA03 are the same as for OKEA02.
The Company has entered into operating leases for office facilities. In addition, the Company has entered into operating leases as an operator of the Draugen field for platform supply vessel and associated Remote Operated Vehicle (ROV) upgrade, together with office and warehouse Draugen.
| Amounts in NOK `000 | |
|---|---|
| Lease debt 1 January 2019 | 198 400 |
| Additions lease contracts | 652 |
| Accretion lease liability | 9 988 |
| Payments of lease debt | -45 500 |
| Total lease debt at 31 December 2019 | 163 540 |
| Break down of lease debt | |
|---|---|
| Short-term | 45 544 |
| Long-term | 117 996 |
| Total lease debt | 163 540 |
| Amounts in NOK `000 | 31.12.2019 |
|---|---|
| Within 1 year | 46 030 |
| 1 to 5 years | 114 527 |
| After 5 years | 78 838 |
| Total | 239 395 |
Future lease payments related to leasing contracts entered into as an operator of the Draugen field are presented gross.
| Amounts in NOK `000 | 31.12.2019 | 31.12.2018 |
|---|---|---|
| Premium commodity contracts | 4 785 | - |
| Unrealised gain/loss (-) commodity contracts | -4 000 | - |
| Short-term derivatives included in assets | 786 | - |
| Premium currency contracts | - | - |
| Unrealised gain/loss (-) currency contracts | - | -15 564 |
| Short-term derivatives included in assets/liabilities (-) | - | -15 564 |
It is assessed that the carrying amounts of financial assets and liabilities, except for interest-bearing loans and borrowings, is approximately equal to its fair values. For interest-bearing loans and borrowings, the fair value is estimated to be NOK 2 672 548 thousand at 31 December 2019. The OKEA02 bond loan is listed on the Oslo Stock Exchange and the fair value is based on quoted market prices (level 1 in the fair value hierarchy according to IFRS 13). The OKEA03 bond loan is not yet listed on the Oslo Stock Exchange and the fair value is based on the issue price of 99% from December 2019.
Fair values of put options oil are based on quoted market prices at the balance sheet date (level 2 in the fair value hierarchy). The fair values of the put options are equal to their carrying amounts.
In January 2020 OKEA was awarded five new licenses in the 2019 Awards in Predefined Areas (APA). Two of the awarded areas are new licences where OKEA will be a partner, the three others are areal extensions of existing licences, two of them operated by OKEA.
There are no other subsequent events with significant accounting impacts that have occurred between the end of the reporting period and the date of this report.
| EBITDA | Q4 2019 | Q4 2018 | 2019 | 2018 |
|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 12 months | 12 months |
| Profit / loss (-) from operating activities | 54 683 | 50 720 | 827 160 | 48 761 |
| Add: depreciation, depletion and amortization | 162 536 | 82 130 | 703 883 | 100 066 |
| Add: impairment | 8 736 | - | 105 394 | - |
| EBITDA | 225 955 | 132 849 | 1 636 437 | 148 827 |
| EBITDAX | Q4 2019 | Q4 2018 | 2019 | 2018 |
|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 12 months | 12 months |
| Profit / loss (-) from operating activities | 54 683 | 50 720 | 827 160 | 48 761 |
| Add: depreciation, depletion and amortization | 162 536 | 82 130 | 703 883 | 100 066 |
| Add: impairment | 8 736 | - | 105 394 | - |
| Add: exploration expenses | 151 631 | 36 601 | 299 446 | 74 782 |
| EBITDAX | 377 585 | 169 450 | 1 935 883 | 223 608 |
| Production expense per boe | Q4 2019 | Q4 2018 | 2019 | 2018 |
|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 12 months | 12 months |
| Productions expense | 205 009 | 89 625 | 708 649 | 96 714 |
| Minus: tariff income | -15 953 | - | -56 681 | - |
| Divided by: produced volumes (boe) | 1 565 840 | 714 938 | 6 811 995 | 815 110 |
| Production expense NOK per boe | 120,7 | 125,4 | 95,7 | 118,7 |
| Profit/loss (-) before tax per share | Q4 2019 | Q4 2018 | 2019 | 2018 |
|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 12 months | 12 months |
| Profit / loss (-) before income tax | -34 929 | -190 234 | 419 396 | -300 202 |
| Divided by: weigh. average no. of shares | 102 022 474 | 59 164 793 | 92 848 011 | 39 144 548 |
| Result before tax per share (NOK per share) | -0,34 | -3,22 | 4,52 | -7,67 |
| Earnings per share | Q4 2019 | Q4 2018 | 2019 | 2018 |
|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 12 months | 12 months |
| Net profit / loss (-) | -2 292 | -58 753 | -71 131 | -155 715 |
| Calculated interest on preference capital (8%) | - | -5 011 | - | -5 011 |
| Calculated net profit / loss (-) attributable to ordinary shares | -2 292 | -63 764 | -71 131 | -160 726 |
| Divided by: weigh. ave. no. of shares - Basic | 102 022 474 | 59 164 793 | 92 848 011 | 39 144 548 |
| or. Div. by: weigh. average no. of shares - Diluted | 102 022 474 | 59 164 793 | 92 848 011 | 39 144 548 |
| Earnings per share (NOK per share) - Basic | -0,02 | -1,08 | -0,77 | -4,11 |
| Earnings per share (NOK per share) - Diluted | -0,02 | -1,08 | -0,77 | -4,11 |
| Net interest-bearing debt | Q4 2019 | Q4 2018 | 2019 | 2018 |
|---|---|---|---|---|
| Amounts in NOK `000 | 3 months | 3 months | 12 months | 12 months |
| Interest-bearing loans and borrowings | 2 556 570 | 2 528 589 | 2 556 570 | 2 528 589 |
| Minus: Cash and cash equivalents | 1 663 478 | 394 670 | 1 663 478 | 394 670 |
| Net interest-bearing debt | 893 092 | 2 133 919 | 893 092 | 2 133 919 |
EBITDA is defined as earnings before interest and other financial items, taxes, depreciation, depletion, amortization and impairments
EBITDAX is defined as earnings before interest and other financial items, taxes, depreciation, depletion, amortization, impairments and exploration expenses
Net interest-bearing debt is book value of current and non-current interest-bearing debt excluding lease liability (IFRS 16) less cash and cash equivalents
Production expense per boe is defined as production expense less tariff income divided by produced volumes
Profit/loss (-) before tax per share is profit/loss (-) before income tax divided by weighted average number of shares outstanding
OKEA is an oil company contributing to the value creation on the Norwegian Continental Shelf with cost effective development and operation systems.
Ferjemannsveien 10 7042 Trondheim
www.okea.no
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