Second Quarter 2018
Aker BP ASA
Karl Johnny Hersvik, CEO Alexander Krane, CFO 13 July 2018
Disclaimer
This Document includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Document are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Aker BP ASA's lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Aker BP ASA's businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Document. Although Aker BP ASA believes that its expectations and the Document are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Document. Aker BP ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Document, and neither Aker BP ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.
AKER BP ASA Highlights
Operations
- Stable production of 158 mboepd
- Field developments on track
- Strong P&A performance
Finance
- Q2 EBITDA USD 735 million, EPS USD 0.38
- Q2 free cash flow USD 211 million (0.59 per share)
- Quarterly dividend USD 0.3124 per share
Outlook
- Stepping up exploration activity
- Digitalisation roll-out
- Planning for Frosk test production
Oil & gas production, mboepd net
Financials
Second Quarter 2018
FINANCIALS Statement of income
| (USD million) |
Q2 2018 |
Q2 2017 |
H1 2018 |
H1 2017 |
FY 2017 |
| Total operating income |
975 |
595 |
1,864 |
1,241 |
2,563 |
| Production costs |
164 |
121 |
337 |
242 |
523 |
Other
operating expenses |
1 |
3 |
5 |
11 |
28 |
| EBITDAX |
810 |
470 |
1,522 |
988 |
2,012 |
| Exploration expenses |
75 |
75 |
130 |
106 |
226 |
| EBITDA |
735 |
395 |
1,392 |
882 |
1,786 |
| Depreciation |
183 |
184 |
368 |
368 |
727 |
| Impairment losses |
- |
- |
- |
30 |
52 |
| Operating profit/loss (EBIT) |
552 |
210 |
1,024 |
484 |
1,007 |
Net financial
items |
(22) |
(84) |
(69) |
(130) |
(196) |
| Profit/loss before taxes |
530 |
127 |
956 |
354 |
811 |
| Tax (+) / Tax income (-) |
394 |
67 |
658 |
225 |
536 |
| Net profit/loss |
136 |
60 |
297 |
129 |
275 |
| EPS (USD) |
0.38 |
0.18 |
0.83 |
0.38 |
0.81 |
Statement of financial position
Assets
| (USD million) |
30.06.18 |
31.03.18 |
30.06.17 |
| Goodwill |
1,860 |
1,860 |
1,817 |
Other intangible
assets |
1,986 |
1,992 |
1,627 |
Property, plant
and equipment |
5,835 |
5,665 |
4,725 |
| Receivables and other assets |
820 |
764 |
694 |
Calculated
tax receivables (short) |
1,596 |
1,666 |
402 |
Cash and
cash equivalents |
49 |
38 |
66 |
|
|
|
|
Total
Assets |
12,147 |
11,985 |
9,331 |
| Equity and liabilities |
|
|
|
| (USD million) |
30.06.18 |
31.03.18 |
30.06.17 |
| Equity |
3,064 |
3,110 |
2,453 |
Other provisions for liabilities incl.
P&A (long) |
2,992 |
2,955 |
2,330 |
Deferred
tax |
1,525 |
1,357 |
1,125 |
| Bonds |
1,119 |
1,128 |
554 |
| Bank debt |
1,898 |
1,958 |
1,814 |
| Other current liabilities incl. P&A |
861 |
923 |
831 |
| Tax payable |
687 |
554 |
225 |
Total
Equity and liabilities |
12,147 |
11,985 |
9,331 |
Second quarter cash flow and liquidity FINANCIALS
Cash flow (USDm)
Strong operating cash flow • Production on plan • Higher oil and gas prices • Production cost USD 11.4 per boe Capital spending within plan • Capex USD 276 million (ex. capitalized interest) • Expex USD 86 million • Abex USD 72 million Robust balance sheet • Net interest-bearing debt (book value) USD 3.0 billion • Leverage ratio of 1.1x • Hess tax loss expected to be disbursed in 2H-2018 • Cash and undrawn credit of USD 3.6 billion
| Item |
Actual YTD per 30 June 2018 |
Updated 2018 guidance |
| CAPEX* |
USD 512 million |
USD ~1.3 billion
(no change) |
| EXPEX |
USD 166
million |
USD ~425 million
(previous ~350) |
| Production |
158 mboepd |
155 –
160 mboepd
(no change) |
| Production cost |
USD 11.8 per boe |
USD ~12 per boe
(no change) |
| ABEX |
USD 154
million |
USD ~250 million
(previous ~350) |
Note: Guidance based on USD/NOK 8.0
Operations
Second Quarter 2018
ALVHEIM AREA (~65%) Keeping Alvheim busy
Alvheim FPSO – a high performer
- High production efficiency (95 percent in Q2)
- Main priority: Add resources to secure continued high capacity utilisation
Continued high field development activity
- Two new Boa wells contributed positively in Q2
- Appraisal drilling at Gekko and infilll drilling at Kameleon
- Skogul PDO approved in March project on track
Alvheim area production (mboepd net)
ALVHEIM AREA (~65%) Developing the Frosk discovery
A new chapter in the Alvheim story
Frosk proved 30-60 mmboe oil
- Located near Bøyla which is tied back to Alvheim
- Provides an ideal basis for profitable expansions
Three more wells planned
• Targeting net unrisked resources of ~ 40-140 mmboe
Aiming for Frosk test production from 2019
- Oil one year after discovery
- Determine scale and find the most optimal concept
VALHALL AREA (90%) Full speed ahead at Valhall
Valhall Flank West under construction
- Engineering near complete
- Valhall field centre modifications well underway
P&A program ahead of schedule
- Rig to be released earlier than plan
- Reduced time = reduced cost
Valhall Flank North Water Injection on track
- Contracts awarded for riser, pipelines and modifications
- Drilling in Q4 injection from Q2-19
Hod redevelopment moving ahead
• Appraisal well and concept selection planned in 2019
Valhall area production (mboepd net)
12 Morning sunrise at Valhall 7 May 2018 Photo: Graham Garden, Aker BP
Turning around Ula for the future ULA (80%) / TAMBAR (55%)
Revitalise Ula as an area oil hub
Preparing for new growth
- Several new drilling targets identified
- Converting Ula DP to add capacity and flexibility
- Tambar development project on track
- Two new wells on production
- Gas lift scheduled to start in Q4
- Oda will start production in 2019
- Will enable increased WAG injection at Ula
Ula area production (mboepd net)
Simon Stevin performing rock dumping at Ula 2 July 2018 Photo: Glenn Kristoffersen, Aker BP
13
IVAR AASEN (34.8%) Water injectors completed
Two new water injectors successfully completed
- Supporting the longer term production profile
- Hanz appraisal well commenced 30 June
- The well will also test the Slengfehøgda exploration prospect
- Onshoring the Ivar Aasen control room
- Aker BP is onshoring the control room to Trondheim
- Piloting digital operations with Cognite's data platform
Ivar Aasen production (mboepd net)
14 Maersk Interceptor sail away after completing two water injectors Photo: Stein Nordvik, Aker BP
SKARV AREA (23.8%) Skarv continues to deliver
Solid production despite technical challenges
- Restarted second well after Xmas tree replacement
- Two wells currently shut in
- Efficient maintenance after equipment failures
Ærfugl progressing as planned
- Contracts awarded
- Fabrication activities started
- Potential to accelerate phase 2
Skarv production (mboepd net)
15 Skarv FPSO Photo: Ståle Dahle, Aker BP
Second topside successfully installed at Johan Sverdrup JOHAN SVERDRUP (11.6%)
Photo: Bo Randulff / Equinor 16
NORTH OF ALVHEIM / ASKJA / KRAFLA NOAKA – field of the future
- Common area development is the preferred solution
- Aker BP recommends a central processing hub
- Aker BP's ambition is to make NOAKA the first energy positive field development on the NCS
- Targeting concept selection in 2018
DIGITAL TRANSFORMATION The future is now
Digital technologies are changing the way we work
Cognite's Industrial Data Platform
- Digital twins of Aker BP assets
- Live and historical sensor data instantly available
- Enabling new and improved business models
Digital tools in place at Ivar Aasen
- Data access through Cognite APIs
- Tablets with computer vision to read equipment tags
- Improves safety and productivity
Roll out across portfolio over next 12 months
EXPLORATION Exploration is back
Targeting new organic growth
Stepping up drilling activity
- Cost-effective access to new resources
- Near-field discoveries increase value of existing assets
- Frontier exploration to create new growth opportunities
Focused license portfolio
- Success in licensing rounds and M&A
- Second largest license holder on the NCS
- 124 licenses covering 31,000 km2 (avg 36% interest)
Building on a solid asset base
- Five operated hubs
- Robust infrastructure
- Competence and data
- Lean and flexible execution model
- Efficient decision process supported by big data
- Flexible organisation and strategic alliances to minimize lead times and maximize drilling efficiency
AKER BP ASA Priorities going forward
Improve Grow Execute Safety
- Safe and efficient operations
-
Excellent project delivery
-
Relentless focus on cost reductions and productivity gains
-
Mature projects to below 35 USD/boe break-even
-
Maximize recovery from existing resource base
- Pursue organic and inorganic growth opportunities