Aker BP

Earnings Release • May 6, 2020

First quarter 2020 results

First quarter 2020 results

The first quarter of 2020 was an extraordinary quarter. Aker BP delivered strong

operational performance and set a new production record. This was however

overshadowed by the COVID-19 pandemic and the sharp drop in global oil prices.

The company's key priorities in this challenging situation are to safeguard its

people, its production and its financial capacity.

Responding to COVID-19

Aker BP early on established a dedicated team to handle the company's

operational response to the COVID-19 pandemic. In close cooperation with

employees, suppliers and authorities, this team has implemented measures to

minimize the risk of infection and business interruption both onshore and

offshore. This includes a wide range of practical measures like reduced offshore

manning, physical distancing, travel restrictions and working from home.

Supported by these measures, the company has maintained its production at full

capacity.

First quarter results

In the first quarter, Aker BP's net production was 208.1 (191.1) thousand

barrels of oil equivalents per day (mboepd), and net sold volume was 207.5

(184.5) mboepd. These volumes represent a new all-time high for Aker BP,

reflecting the continued ramp-up of production from the Johan Sverdrup field.

Petroleum revenues did however decline by approximately 20 percent due to

significantly lower realized oil and gas prices. This decline was partly

mitigated by gains from the company's oil price hedging program. Total income

for the first quarter amounted to USD 872 (1,003) million.

Production costs for the oil and gas sold in the quarter amounted to USD 156

(154) million. Per produced boe, production cost was reduced to USD 8.7 (9.1).

Exploration expenses amounted to USD 50 (85) million and included costs of the

Nidhogg well which was concluded as a non-commercial gas discovery. Depreciation

amounted to USD 277 (255) million, equivalent to USD 14.6 (14.5) per boe.

Impairments amounted to USD 654 (0) million and were mainly caused by the sharp

reduction in oil prices and the corresponding effect on investment plans and

asset valuations.

Net financial expenses were USD 149 (67) million in the quarter, negatively

impacted by the weaker NOK versus USD. Loss before taxes amounted to USD 414

million, compared to a profit of USD 424 million in the fourth quarter 2019. Tax

income was USD 80 million, compared to a tax expense of USD 312 million in the

previous quarter. The low effective tax rate for the first quarter mainly

reflects the limited deductibility towards the special petroleum tax for

financial items and impairments, as well as the currency-driven revaluation of

the company's tax balances. Overall, the company reported a net loss of USD 335

million for the quarter, compared to a net profit of USD 112 million in the

previous quarter.

Investments in fixed assets amounted to USD 343 (490) million in the quarter,

driven by field development activities across the company's portfolio. First oil

from Skogul was achieved during the quarter. Skogul is the subsea production

well number 36 in the Alvheim area and has been delivered safely, efficiently

and on schedule.

Updated investment program

In order to secure its financial optionality in response to the uncertainty

caused by the COVID-19 situation and the sharp reduction in oil prices, Aker BP

has made significant changes to its investment program which was presented at

the company's Capital Markets Update in February 2020. All non-sanctioned field

development projects are put on hold, and several exploration wells are

postponed. For 2020, this represents a 20 percent reduction in capital spend

compared to previous guidance, with potential for further reductions in coming

years. Production costs are also expected to be reduced by around 20 percent

from previous guidance, as all non-critical activities are being postponed and

the weaker NOK favourably impacts the cost level. The production guidance for

2020 remains unchanged at 205-220 mboepd. The longer-term production outlook

will obviously be impacted by the company's investment level.

Liquidity and financial position

Maintaining a strong financial position is a key strategic priority for Aker BP,

and the company is continuously managing its capital structure and exposures to

enhance flexibility and reduce cost and risk. During the first quarter, the

company strengthened its liquidity by issuing USD 1.5 billion in new long-dated

bonds at attractive terms. Furthermore, the maturity for USD 2 billion of the

company's bank facility (RCF) was in April extended by one year from 2024 to

2025. The company's oil price hedging program has also been expanded. At the end

of the first quarter Aker BP had USD 4.0 billion in available liquidity, with no

significant debt maturities until 2022.

Dividends

Aker BP's ambition is to return a significant part of its value creation to

shareholders through attractive cash dividends. However, given the weak oil

market and the high uncertainty in the global economy, the Board has decided to

retract the current dividend plan in order to retain financial flexibility and

position the company for future value accretive organic and inorganic growth

opportunities.

The Board has decided to pay USD 70.8 million (USD 0.1967 per share) in

dividends in May 2020, representing one third of the previously guided amount.

It is the Board's ambition to maintain this level for the remaining quarters of

2020, implying total dividend payments of USD 425 million for the full year.

Each quarterly dividend decision will however be subject to a holistic

assessment of all relevant factors, including oil prices, the COVID-19 situation

and the company's financial position.

The company will revert with a new long-term dividend policy when market

conditions allow.

AkerBP Q1 2020

Report.pdf (https://mb.cision.com/Public/1629/3104859/8af4a1d78a41c159.pdf)

AkerBP Q1 2020

Presentation.pdf (https://mb.cision.com/Public/1629/3104859/9a27e1559bcd1bd8.pdf)

Presentation and conference call details

The full report and presentation can be found on www.akerbp.com.

A conference call will be hosted at 08:30 (CEST). The conference call will be

available as a webcast on the company's website www.akerbp.com/en.

To participate in the conference call, please contact the conference call

operator at the telephone numbers listed below. Please join the event 10 minutes

prior to scheduled start time and provide the confirmation code or ask for the

Aker BP First Quarter 2020 Presentation.

Phone number Norway +47 2350 0296

Phone number United Kingdom +44 (0) 330 336 9411

Confirmation code 1771551

Investor contact:

Kjetil Bakken, VP Investor Relations, tel.: +47 91 889 889

Lars Mattis Hanssen, Senior IR Professional, tel.: +47 99 459 460

Media contact:

Tore Langballe, VP Communications, tel.: +47 907 77 841

Ole-Johan Faret, Press Spokesman, tel.: +47 402 24 217

About Aker BP:

Aker BP is a fully-fledged E&P company with exploration, development and

production activities on the Norwegian Continental Shelf. Aker BP is the

operator of Alvheim, Ivar Aasen, Skarv, Valhall, Hod, Ula and Tambar. The

company is also a partner in the Johan Sverdrup field. Aker BP is headquartered

at Fornebu, Norway, and is listed on the Oslo Stock Exchange under the ticker

'AKERBP'. More about Aker BP at www.akerbp.com.

This information is subject to disclosure requirements pursuant to section 5-12

of the Norwegian Securities Trading Act.