April 23, 2025

CORRECTED TRANSCRIPT Var Energi ASAVAR NO Q1 2025 Earnings Call 23 April 2025 4 00 AM ET

VAR ENERGI · Q1 2025

Corrected Transcript

23-Apr-2025

Vår Energi ASA

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Q1 2025 Earnings Call

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Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025

CORPORATE PARTICIPANTS

Ida Marie Fjellheim Carlo Santopadre

Head-Investor Relations, Vår Energi ASA Chief Financial Officer, Vår Energi ASA

Nicholas Walker

Chief Executive Officer, Vår Energi ASA

OTHER PARTICIPANTS

Lydia Rainforth Victoria McCulloch

Analyst, Barclays Capital Securities Ltd. Analyst, RBC Europe Ltd.

Teodor Sveen-Nilsen Sasikanth Chilukuru

Analyst, SpareBank 1 Markets AS Analyst, Morgan Stanley & Co. International Plc

Mark Wilson John A. S. Olaisen

Analyst, Jefferies International Ltd. Analyst, ABG Sundal Collier Holding ASA

Matthew Smith

Analyst, Bank of America

MANAGEMENT DISCUSSION SECTION

Operator

At this time, I would like to welcome everyone to Vår Energi First Quarter Presentation of 2025.

Today's call is being recorded. If you have any objections, please disconnect at this time. All participants will be in a listen-only mode throughout the presentation and, afterwards, there'll be a question-and-answer session.

I would now like to introduce Head of IR, Ida Marie Fjellheim. Ida, over to you.

Ida Marie Fjellheim

Head-Investor Relations, Vår Energi ASA

Thank you.

Good morning, everyone, and a warm welcome to Vår Energi's first quarter 2025 results. The presentation today will be given by our CEO, Nick Walker, and our CFO, Carlo Santopadre. Nick and Carlo will present the results and, afterwards, we will open up for Q&A.

I will now give the word to Nick.

Nicholas Walker

Chief Executive Officer, Vår Energi ASA

Thank you, Ida, and good morning to you all. And a warm welcome to our first quarter 2025 results presentation.

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025

I'm pleased to report strong results in line with expectations and they were on track to deliver transformative growth in 2025. But once again, in a more uncertain market environment, Vår Energi's resilience and flexibility will allow us to navigate successfully through the cycles, which I'll come on to during my remarks this morning. And as a result of our resilience, we continue to provide attractive dividend distributions. Also today, you will see that we are launching a new company logo with a more modern feel and reflecting the rebranding of Eni, our major shareholder, a year or so ago. I think our rebranding highlights the significant benefits we get from being able to draw on the extensive capabilities and expertise of Eni that we do at multiple levels and which has material value for shareholders.

So, now, let us look at the highlights for the quarter. We delivered operational performance in line with expectations with production, as you can see, at 272,000 barrels of oil equivalent per day in the first quarter, supported by continued strong performance at our operated assets. And in March, we saw the successful start- ups of Halten East and Johan Castberg Projects, which are now both ramping up.

We continue to deliver strong financial results with CFFO post-tax in the quarter of $1.3 billion. We maintain our strong focus on cost discipline with reduced operating cost of $11.6 per barrel in the quarter, which is within guidance. Our gas sales strategy continues to create value and we've locked in around 20% of our gas volumes in the summer period at high prices. We increased liquidity through the recent issuance of €1 billion senior notes, which was significantly oversubscribed, and we reduced net debt at the end of the quarter with a leverage ratio of

0.8 times.

Vår Energi is one of the fastest growing E&Ps globally, and we're on track to deliver on our 2025 growth targets and unlock future value. We'll add around 180,000 barrels of oil equivalent per day at peak for nine project start- ups in 2025, and we're on track to deliver over 400,000 barrels per day in the fourth quarter this year. The Jotun

FPSO is now successfully moored at the field location, and the Balder X Project is on track to start up at the end of the second quarter. And our leading exploration track record continues, highlighted by the recent Zagato discovery, unlocking significant potential in the Goliat Area.

And lastly, we continued to provide attractive shareholder distributions. We confirm a dividend for the first quarter of approximately $0.12 per share, in line with guidance, which is to be distributed in May. And we're providing Q2

2025 dividend guidance of $300 million, the same as for Q1, which means we've paid stable or growing dividends for the last 13 quarters. And in the current uncertain market environment, Vår Energi's business remains resilient, with a low free cash flow breakeven of around $40 per barrel averaged over the period 2025 to 2030, and generating between $5 billion and $9 billion of free cash flow over the same period at an oil price range of $65 to

$85 per barrel, inclusive of a planned investment program to sustain production long-term. And with around 70% of our future capital spend uncommitted, this provides us with flexibility to manage the business through the cycles, giving us the option to slow down spend if these lower prices persist, demonstrating the resilience and flexibility of our company.

So, now, let us look at some of the detail. Vår Energi is one of the fastest-growing E&Ps globally, and we're the third-largest oil and gas producer in Norway. And we've built a high-quality diversified asset base in all areas of the NCS, with interests in around 50% of all producing fields and infrastructure and, as you can see, a large exploration footprint. We're also one of the largest exporters of gas from Norway, with gas making up a material share of our production mix, 35% in the first quarter. This provides a natural hedge to our financial outlook. And this amazing portfolio, which provides lots of optionality, is driving our growth and sustaining production. And we're stepping up the pace to realize this value and the mantra in the company is more faster. And I believe we will also incrementally improve the outlook, increasing resources, reducing costs. And you'll see examples today

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025 where the business has already moved on from what we outlined at our CMU just a few months ago. This incremental improvement will create significant value.

And we are firmly on track to deliver transformational production growth in 2025 from 280,000 barrels of oil equivalent per day in 2024, we'll grow to over 400,000 barrels per day in the fourth quarter this year. This is double 2023 levels. This is driven by nine project start-ups that will happen during the year, adding around

180,000 boe's per day of new production at peak levels. And we're also guiding approximately 400,000 barrels per day in 2026. And with our high-quality portfolio with significant upside, we can organically sustain production at 350,000 to 400,000 barrels per day towards 2030.

And looking now at how we will deliver this production growth in 2025. First quarter production came in at 272,000 barrels of oil equivalent per day, which is in line with our expectations. This was supported by excellent production efficiency from our operated assets. As you can see, 97% production efficiency in the quarter. And the nine projects that will drive our production growth through the year are all on track to start up as scheduled. With the key projects being, firstly, Halten East, which started up in mid-March, this will ramp up as new wells are brought on stream through the year and is expected to reach peak net production of around 20,000 barrels per day in the fourth quarter. Johan Castberg started up at the end of March and is expected to ramp up to plateau levels at

66,000 barrels per day net during the second quarter. And the Balder X project where we're on track to commence production by the end of the second quarter and ramp up over three-to-four month period to peak rates of around 70,000 barrels per day net.

In addition, we have a significant infill drilling program of more than 30 wells planned to come online during the year, [indiscernible] (00:07:53) decline from existing productions. Around one-quarter of the wells were completed in the first quarter. And where we stand today, the company expects to reach the midpoint of the production guidance we've given of 330,000 to 360,000 barrels per day for the full-year 2025, dependent on the start-up timing and ramp-up profile of the new fields coming online through the year. And we're on track to produce over

400,000 barrels per day in the fourth quarter.

And now, looking at production costs. As you can see, we have a strong trend of reducing unit costs. Operating costs were $11.6 per barrel in the first quarter, within the guided range. This is around 20% reduction since 2023 levels. Looking forward, we expect to reduce unit OpEx to around $10 per barrel in the fourth quarter this year.

This is driven by the new fields coming onstream that have OpEx of around $4 per barrel and a continued high focus on realizing cost synergies and improvements. And we expect to be able to sustain at this level long-term. I think this performance demonstrates strong cost discipline within the organization and is a good example of the incremental improvements I talked about earlier.

And responsible operations are key to our license to operate, and our ambition is to be the safest operator.

Overall, we have a good safety and environmental trend which is generally getting better. In the first quarter, we had a good out-turn with zero actual serious incidents. This performance takes strong focus every single day.

Also, we continued to position the company to adapt to the energy transition to ensure relevance and investability long-term. We're top-quartile in the industry globally on carbon emissions intensity, and our methane emissions continues at the near-zero level. So, we're already doing very well, but we want to go further and we're targeting becoming carbon-neutral in our net equity operational emissions by 2030. And we'll achieve this through further investments in electrification of our key assets and direct investment in natural carbon capture projects to offset what we can't reduce. We have a plan in place to achieve this objective.

And I'm very pleased that we're getting recognition for our ESG leadership. Sustainalytics ranked us as a top- rated company. This puts us in the top 10% of the global oil and gas industry. And we continue to be included on

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025 the Oslo Stock Exchange ESG Index as the only oil and gas company. And I think this is leveraging to how the company is viewed.

And now, looking at our three major projects. Firstly, Halten East project in the Norwegian Sea, which is started up in mid-March, on time and on budget. Halten East is the development of several smaller fields tied back to the

Åsgård facilities. Initially, the production project is developing 100 million barrels of gross reserves and achieving gross peak production of 80,000 barrels of oil equivalent per day, and with significant unrisked upside in the area of 100 million to 200 million barrels. And the project is in the ramp-up phase and production will grow through the year as new wells are brought on stream, with the expectation of achieving peak production in the fourth quarter of around 20,000 barrels per day of Vår Energi net share. And I think Halten East is a great example of leveraging the value of existing infrastructure to provide high-value barrels with short time-to-market and low carbon emissions.

And then, Johan Castberg, which started up at the end of March, marking the start of a new era for the Barents

Sea region. The field is currently ramping up 15 of the 30 planned development wells have been completed, which is sufficient to achieve plateau production levels, and the drilling program is scheduled to continue until the end of 2026. This initial phase is developing 450 million to 650 million barrels gross. A plateau production levels of

220,000 barrels a day of oil are expected to be achieved within the second quarter, with Vår Energi's share being

66,000 barrels per day. So, this is an important catalyst for our growth target. The field will also be producing for more than 30 years, contributing to significant growth and value creation with an expected payback time of less than two years. And the Johan Castberg Area is highly prospective and several new discoveries made in recent years are already being moved to development, including an extensive infill drilling program planned to be sanctioned this year. Johan Castberg Cluster 1 development consisting of two phases is targeting sanction of the first phase being the Isflak discovery in the next year. And in total, there are between 250 million and 550 million barrels of additional gross unrisked recoverable resources identified in the area, which is we anticipate will enable us to keep the facilities full towards 2030. So, after years of investments, we see a bright future at Johan Castberg with significant upsides and long-term value creation ahead.

And then, turning to the Balder X Project, which is nearing completion. You can see that the Jotun FPSO is successfully being moored on schedule in the Balder Field. All that remains is to hook up the FPSO to the subsea facilities and to complete final commissioning of the vessel before expected start-up at the end of the second quarter. All 14 production wells are completed and we expect production will ramp up to peak levels of 80,000 barrels of oil per day gross within three to four months of production start. And this project will secure production from the Balder Area beyond 2045, unlocking gross 2P reserves of around 150 million barrels. And we have continued to grow our resource base through successful exploration in the area and are stepping up the pace, moving several tieback projects forward at speed to capitalize on the Jotun FPSO. This will sustain production longer-term and includes the Balder Phase V planned to come onstream later this year, and Balder Phase VI expected to sanction in 2025, together adding a further 45 million to 50 million barrels gross.

And also in the greater Balder Area, where several new early phase projects are being progressed towards sanction, including Ringhorne North, Balder future phases and the King discovery, targeting gross contingent resources of more than 70 million barrels. So, the Balder X Project with a payback time of around two years, including the sanction of Balder Phase V Project, marks the start-up of a new era in the North Sea, and we see many years of value creation ahead.

And Vår Energi has an amazing portfolio with lots of optionality and growth opportunities. Our 2P reserves stand at 1.2 billion barrels. This is either in production or under development and underpins our growth to over 400,000 barrels a day in Q4. And we will stay there a few years, but without investment would then decline. But we are

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025 much more than that. We have 2C contingent resources of around 900 million barrels, and we're moving forward around 30 early phase projects accounting for approximately 600 million barrels of resources. And we also have an exciting exploration portfolio of over 1 billion barrels of net resources where we expect to drill out about 50% of this opportunity in the next four years. And so, putting this together, we have over 3 billion barrels of resource potential, with 60% yet to be developed. That's how we will organically sustain production long-term, and we're working at pace to create value from this opportunity.

And we have a resilient and flexible portfolio of around 30 early phase projects that we're progressing towards development. These are all subsea tiebacks to existing infrastructure with low cost and short time-to-market. And we're creating a subsea factory with standardization, pre-commitments and contract alliances to reduce cost, improve predictability, and speed up time to first production. And we've created real momentum here and are targeting sanction of up to 14 projects by the end of 2025, as indicated on the chart. This is a progression from what we detailed at our CMU. We'll probably not meet all of these dates, but we're confident on achieving the eight project sanctions we guided for this year. With some examples being the Balder Phase VI, Fram South

Project and the Gjøa Area subsea projects. And this portfolio has strong economics with average breakevens of around $35 per barrel with good rates of return. And with 70% of our future capital uncommitted, we have the flexibility to slow down some activity if the lower price environment continues without impacting near-term production. This could also create the opportunity to drive down costs and make the projects even better. And as we move forward, we'll consider each project on a case-by-case basis.

And now, moving to exploration. And as you know, Vår Energi energy has a leading NCS exploration track record with around 50% commercial success rate over the last six years. And this performance continues into 2025 with the Zagato oil discovery, the third successful well in a row at the Goliat Ridge. Estimated gross resources discovered on the trend are now up to 100 million barrels of oil, with estimated discovered plus prospective resource increased to above 200 million barrels. This is potentially as big as the original Goliat Project. And the

Goliat Ridge consists of a series of adjacent bounded prospects next to the Goliat Field with the same good quality reservoirs as those producing at Goliat. The three wells drilled so far have successfully discovered oil in separate fault blocks. We've significantly de-risked the prospectivity in the undrilled areas. And so far, water has not been encountered in any of the wells so it is possible that the whole area is filled with hydrocarbons. And so, to delineate this exciting discovery, we'll acquire new seismic this summer and drill two further appraisal wells commencing in the third quarter this year, with the aim that we have all the subsurface data in our hands by the end of the year required to progress a development. And you can see this is in close proximity to the existing infrastructure and this provides the opportunity for a fast-track, low-emissions, cost-efficient development using the available capacity at the Goliat FPSO, which adds high-value barrels. And this discovery is significant with the resources in the area to be developed as being potentially upwards of 350 million barrels of oil equivalent gross, as you can see on the chart, including upside in the Goliat Field, development of the gas resources and the resources on the Goliat Ridge. And Vår Energi – with Vår Energi's 65% interest in the area, if the full potential could be realized, this could add over 15% to the company's book 2P reserves. So, this is a material opportunity and we will de-risk it at pace.

Now, as we previously announced, we've stepped up the pace of exploration with around 20 wells planned this year. That will make us the second most active explorer on the NCS. We'll seek some key wells to be drilled in the next two quarters, and so it's going to be exciting to see these results come in.

So, that rounds off my operational updates, and I'll now hand over to Carlo to review the financials. Thank you.

Carlo Santopadre

Chief Financial Officer, Vår Energi ASA

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025

Thank you, Nick, and good morning to all.

I would like to start by summarizing the key financial highlights of the first quarter. We generated strong revenues and an operating cash flow after tax of $1.3 billion in Q1. We maintain a strong and resilient balance sheet with a leverage ratio at 0.8x and net debt to EBITDAX and $2.7 billion in available liquidity. In the quarter, we successfully issued €1 billion of senior notes, which was more than 4 times oversubscribed. We confirm the first quarter dividend of $300 million and confidence in our business by planning to pay another $300 million for the second quarter of 2025. All in all, we have a strong and resilient financial position and we are successfully progressing in what will be a transformational year for Vår Energi.

I will now get into more details of our first quarter financial performance. We continue to realize strong prices. In the quarter, we generated more than $1.8 billion of revenue, up versus previous quarter, mainly due to higher sales volumes and higher prices in the quarter. Realized oil price in the quarter was $76 per boe, in line with the brand. The realized gas price were $87 per boe, also in line with the reference spot prices. Going forward, we have used our flexible gas sales contracts to lock in high prices in the summer months. We have already executed fixed price transaction with customers, resulting in approximately 20% of our gas production from Q2 and Q3 being sold at approximately $90 per boe. We continue to have a robust sales portfolio with access to several markets, and we have flexibility in the contracts to decide the split between month ahead, day ahead and fixed contracts. I also would like to mention that our oil production is fully hedged on a post-tax basis for the remaining of 2025, with monthly put options at a strike price of $50 per boe.

On the back of a solid operational performance and stronger prices, we have high cash flow generation in the quarter compared to last quarter and the same quarter last year. Cash flow from operation after tax in the quarter was $1.3 billion, an increase from the previous quarters mainly due to lower tax payment, higher sold volumes and higher prices.

Our CapEx for the quarter, including exploration, was $595 million, with Balder X and Johan Castberg remain the largest contributor of the total spend. The 2025 development CapEx guidance of $2.3 billion to $2.5 billion given at our CMU is maintained.

Our resilient and strong liquidity position improved in the quarter. Here, we see the development in our cash position from Q4 2024 to the end of Q1 2025. We generated approximately $1.5 billion CFFO before tax and working capital movements. Working capital contributed positively, with around $50 million mainly as a result of a decrease in trade receivable. We paid one tax installment in the quarter amounting to $213 million, down from almost $800 million in the previous quarter. Further ahead, the cash outflow of $628 million in investments in our high-value growth projects. We distributed as planned $270 million in dividend related to the fourth quarter 2024.

In summary, we have a solid liquidity position and a diversified long-term capital structure aligned with our business needs. At the end of the quarter, we have a cash balance of $660 million and an overall available liquidity of around $2.7 billion.

During the quarter, we have reduced our net debt by approximately $180 million, with a leverage ratio and net interest-bearing debt on EBITDAX at 0.8x, which is stable from the previous quarter and continues to be well below our over-the-cycle target of below 1.3x. In the quarter, we successfully issued €1 billion senior notes, attractively priced with being more than 4 times oversubscribed. Our debt portfolio is well-diversified with a weighted average time to maturity of five years when excluding [indiscernible] (00:25:15) hybrid bond. This is supporting the execution of our growth strategy towards 2030 and beyond. We have a Baa3 rating from Moody's and a BBB rating from Standard and Poor's, both with a stable outlook. And we are committed to maintain our investment-grade rating. Our strong financial position and our resilient and flexible project portfolio lay a solid

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025 foundation for continued material shareholder distribution and growth. And this is a unique investment proposition that Vår Energi offers.

Now, let's look at the tax guidance for this year. In the first quarter, we paid a NOK 2.4 billion in cash taxes. And for the next quarter, we have two tax installment amounting to around NOK 5 billion. These are all related to 2024 results. At mid-year, we will update the tax estimate for 2025, and tax payments in the second half of this year will be based on 2025 estimated profits. Half of the taxes are paid this year and half will be paid the next year. We have included a tax sensitivity for the second half of 2025 which is giving the cash tax estimated at different price scenarios. The [indiscernible] (00:26:32) is giving around $1.6 billion in total payments for the second half of the year, while the sensitivity is between $1.1 billion and $2.1 billion according to the indicated price ranges. Note that from the second half of this year, we will move from paying six installments per year to 10 installments per year.

Vår Energi has a strong track record of delivering value to our shareholders. Since the IPO, we have returned more than $3.5 billion in dividend, maintaining stable payments over the last 13 quarters. With a strong financial performance in the first quarter of 2025, a solid operational outlook and a resilient and flexible project portfolio, we can continue to support attractive and predictable dividends going forward. We confirm $300 million in dividend for the first quarter, which is equivalent to $0.12 per share to be paid on the 8th of May.

The dividend guidance for the second quarter is $300 million, supported by the planned production growth.

Looking forward, our dividend policy remains unchanged, with 25% to 30% of the CFFO after tax allocated to shareholder distribution over the cycle. We will continue guiding on a quarterly basis considering the macroenvironment and operational performance. 2025 will be a transformative year for the company in terms of production growth, resulting in a significant profit and cash flow generation, ample to cover the guided dividends for the year.

Finally, I will summarize our full-year 2025 and long-term guidance. For 2025, our production guidance is 330,000 to 360,000 barrels per day, reaching more than 400,000 barrels per day by Q4 2025. We will maintain approximately 400,000 barrels per day in 2026. And further, we will sustain 350,000 to 400,000 barrels per day until 2030. 2025 production cost will be $11 to $12 per barrel, down to around $10 per barrel by Q4 as we ramp up production.

CapEx will be at $2.3 billion to $2.5 billion in 2025, going down to $2 billion to $2.5 billion thereafter. Exploration expenses and AbEx will be in the range of $200 million to $300 million and $150 million, respectively. For this year, we plan to invest around $350 million in exploration activities. We are guiding on $300 million in dividends for Q2 2025, and we are maintaining the dividend guidance at 25% to 30% on the CFFO post-tax for the longer term.

With that, I hand it back to Nick for the concluding remarks. Thank you.

Nicholas Walker

Chief Executive Officer, Vår Energi ASA

Thank you, Carlo.

And I have just one final slide to summarize the first quarter results. We achieved strong financial results and performance in the quarter, and this is supported by operational performance in line with the expectations. We're once again in a more volatile price environment, and our resilient business with low cash flow breakeven and capital flexibility will allow us to navigate successfully through the cycles. As you've heard, we've reduced net debt and of a high available liquidity. And we're on track with our major projects to deliver transformational growth to

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025 over 400,000 barrels per day in the fourth quarter this year. And so, we're delivering on our strategy for growth and value creation. And as a result of our strong performance and resilience, we continue to provide attractive dividend distributions.

These are our first quarter 2025 results, another reasons to be invested in Vår Energi. So, thank you for your time, and we'd now like to open up the call for your questions.

QUESTION AND ANSWER SECTION

Operator

[Operator Instructions] Our first question comes from the line of Lydia Rainforth from Barclays.

Please, go ahead. Your line now will be unmuted.

Lydia Rainforth Q

Analyst, Barclays Capital Securities Ltd.

Thank you and good morning. And thank you as ever for the presentation and the results. Two questions, if I could. The first one, just in terms of the production side of the Balder X [indiscernible] (00:31:14), in terms of production guidance, what takes you to the top of that production guidance range now, or is this really kind of a case of we can just consolidate around the middle of the range?

And then secondly, on the dividend side, clearly, the yield is high at the moment and quite a lot of the questions that I've had this morning say how sustainable is the dividend as we get into basically at the end of this year and next year. So, if you could just kind of reflect a little bit on the dividend sustainability, that'd be very helpful. Thank you.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Good, Lydia. Good morning and good questions. In terms of the production guidance, we guided at the Capital

Markets Day 330,000 to 360,000 barrels a day and we guided that we'd be over 400,000 barrels a day in Q4. And this is a progression through the year. And first quarter came in with in line with our expectations. We've now brought on the Halten East and the Johan Castberg project. We have, the other major project is the Balder project to come online in the end of Q2. But we have another six projects, obviously smaller. And the exact timing of the start-up of all of these and the ramp-up that provides – and the pace of ramp-up that provides the range. And we still believe that we can deliver within the range that we've set out. We're guiding the midpoint, but there is an upside case that we do better than that. And where we stand now at the end of April, we're in a good place to deliver all of this.

I think on the dividend outlook, maybe I'll provide my reflections, and then if Carlo wants to add something. We will grow to production of over 400,000 barrels a day this year. We've set out that we can – we've also guided production next year of 400,000 barrels a day and we've guided 350,000 to 400,000 barrels a day out towards

2030. And what drives that is a continuous investment into the subsurface opportunity near to our fields. And in a way, what I said is and what we've set out on numerous occasions is that we're moving forward a portfolio of projects. These are now around 30 subsea projects that develop around 600 million barrels.

And we continue to explore and we're having success, which will create new projects. And it's that stream of projects that we're investing into that will sustain our production long-term. And the investment metrics of these are $35 breakeven and 25% rate of return or more. And so, these create a lot of value over time. And so, we

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025 believe we can sustain our production long-term at 350,000 to 400,000 barrels a day, maybe even grow longer- term. And if we deliver on that program, we deliver sustainable cash flow over long period of time. And as we set out at our Capital Markets Day, we'd generate free cash flow of between $5 billion and $9 billion between now and 2030 at a oil price range of $65 to $85 per barrel and a gas price range that steps down over time. So, when you put that together in the context of paying just over $1 billion of dividend per year, you can see that we can easily sustain this long-term.

And so, I think that is the message. And to believe that, you have to believe that we're going to deliver the major projects this year to over 400,000 barrels a day and we're in a good place to do that. And you have to believe that we're going to sanction all of these new projects and we're going to sanction quite a number of them. As I said, we gave a guidance of eight sanctions this year. Actually, we're working on 14 potential sanctions this year. I think we'd may not get them all but they will come very soon, and that's half of the portfolio. And so, I believe that we're going to be able to deliver this. And that's how we can sustain dividends long-term.

Hopefully, that covers your question...

Lydia Rainforth Q

Analyst, Barclays Capital Securities Ltd.

That's super helpful. Thank you.

[indiscernible] (00:35:43)

Lydia Rainforth Q

Analyst, Barclays Capital Securities Ltd.

Thank you very much, Nick.

Operator

Thank you, Lydia. The next question will be from the line of Teodor Nilsen from SB1 Markets. Please, go ahead. Your line now will be unmuted.

Teodor Sveen-Nilsen Q

Analyst, SpareBank 1 Markets AS

Good morning, Nick and Carlo, and thanks for taking my questions. A few questions from me. First of all, Nick, you talk about the Balder Phase V and VI. Are those two phases sufficient to arrest decline, or should we still expect some decline on the entire Balder Area when both do comes onstream?

Second question I had on is on [indiscernible] (00:36:20) because there is comment on the performance on

[indiscernible] (00:36:25) the first few weeks of production.

And finally, just following up on the dividend question. But now, in the short-term, of course, there's a highly uncertain macro environment now demand estimates for oil will probably come down over the next few months.

Just wonder in the short term, dividend for Q3 and Q4, how much lower oil price could we see and you will still maintain the $300 million dividend per quarter? Thank you.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Okay. Thanks, Teodor, and good morning. Good questions. And Balder Phase V, well, this is a series of six infill wells using the remaining slots. These already started drilling and start producing at the end of this year, and

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025 they'll come online during next year. And then, for Phase VI actually, we intend to sanction around the middle of the year, and we expect that to start producing at the end of next year. So, that shows the speed and that we're moving forward. We also, as I mentioned in my remarks, so that's about 45 million to 50 million barrels, those two projects. And then, we have a series of other projects, Ringhorne North, a King development, and also a further infill or sort of phases of Balder which added around another 70 million barrels. And we're working to move those forward. And we haven't set it out so far but, actually, we can see keeping flat production in here towards 2030.

That's what we're working towards, and we have a series of projects to be able to make that happen. So, that's sort of how we see it. We just have to deliver some a bit quicker than have been contemplated and that's what we're doing.

Then, moving on to Johan Castberg, we're really – it's only started up a few weeks ago. And in the early phase, you bring on some wells and then they have to get the gas compression system working. And they're in – so just because we can't flare large amounts of gas. So, until the gas compression system's running stably, you can't ramp up many more wells. So, at the moment, just a few wells producing and it's at low rates and that gas compression commissioning is ongoing. So – but I expect once that's sort of stable operations that we'll see the ramp-up going very quickly. And as we say, we're expecting to achieve plateau production within Q2 there.

And then, on the dividend question, I'll ask Carlo to answer that.

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

Sure. So, when it come to dividends, it's clearly we're not seeing a lot of volatility up and down in the price. But our dividend guidance for the quarter and our plan for 2025 is really related to the production growth and the plan which is going as per expectation. So, this is where we are confident about the sustainability of the dividend level because it's really based on our production growth and production ramp-up. What we see in the macro is really moving very fast up and down. But technically and operationally speaking, we are moving in the right direction.

So, yeah, we maintain confidence about stability of the dividend even in the short-term considering our portfolio production performance and the flexibility in our portfolio.

Teodor Sveen-Nilsen Q

Analyst, SpareBank 1 Markets AS

Okay. Understood. Thank you.

Operator

Thank you, Teodor. The next question will be from Mark Wilson from Jefferies. Your line now will be unmuted.

Mark Wilson Q

Analyst, Jefferies International Ltd.

Okay. Thank you for taking my question. I'd like to ask a bit more about the Goliat potential, please, Nick.

Excellent to see the exploration success there. But can we just get an idea of what sort of spare capacity we're looking at across that facility? I imagine, there is quite some spare oil capacity for what's it producing now versus what it could be. And I think the discoveries to-date have mainly been gas, and I see Goliat gas as one of your potential 14 sanctions this year. So, what would you be envisaging a potential gas development there? Thank you.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Vår Energi ASA

(VAR.NO) Corrected Transcript

Q1 2025 Earnings Call 23-Apr-2025

Yeah. That's a good question, Mark. I mean, Goliat was on plateau for a short period of time, few years, and then it's declined and we're producing around 30,000 barrels a day gross there. So, actually, we got – we're about a third full, so we've got lots of spare capacity. It's a fantastic facility, very high uptime. I think it was close to 100% in the first quarter. So, it's a great facility. And what you'll see is that this Goliat Ridge discovery is just a few kilometers away. So, actually the Countach is 15 kilometers, Zagato is 7 kilometers, and Goliat North is almost on the same edge of the field. So, this is in real tieback, a quick pace, and bring it on. And this Goliat Ridge is on oil.

What we're quoting here is the oil resources. There are some gas here as well so – and actually, there's a lot of upside here. And so, it's a very exciting prospect. And I would – we call these different names, but actually it's one discovery. So, it's an appraisal program, in my view. And the question is actually how big is this, 100 million barrels. Is it somewhere over 200 million barrels? And we'll find that out during this year. So, that's one component to this.

The other aspect around Goliat is we'll inject all the gas into the reservoir and there's 100 million barrels of boe of gas resources here. And at some point, we have to develop this and the discussion we've got is that we would develop this into Snøhvit and receive revenue from this when Snøhvit has capacity available. So, it may be some time before we see it, but it's an enabler project. It's relatively low-cost because it's a short time from the facility to the Snøhvit Gas Pipeline. And so, that's part of it. And then, we also have further – we continue to drill infill wells at Goliat, too. The recovery factor here is about 35%. Our ambition's to get it to 50%. And we're using – we're sidetracking existing wells, but we've run out of well slots on the subsea templates. So, there's another 40 million or 50 million barrels of upside resources here which we're looking to develop oil reserves. And as part of this overall development of the area that we were looking at putting more facilities in there, too. So, that's why I say there's upwards of 350 million barrels of potential here and that is something that we're going to spend the effort to de-risk very quickly over the next six months or so to be in a place that we can start to think about moving forward the development in the early part of next year.

So, hopefully that answers your question, Mark.

Mark Wilson Q

Analyst, Jefferies International Ltd.

Okay, [indiscernible] (00:43:48) you're looking to divert the existing gas you're injecting to Snøhvit, but the discoveries would be oil tiebacks granted that you need more slots?

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Yeah. Well, so oil tiebacks with some pipelines, so Goliat North is just a few kilometers from the FPSO, but

Countach is 15 kilometers. These are all short tiebacks so we would be putting in place subsea templates tied into the facility. And the question is how many templates and how many wells, and that's the question we need to answer.

Mark Wilson Q

Analyst, Jefferies International Ltd.

Great. Okay. Thank you very much. I'll hand it over.

Operator

Thank you, Mark. The next question will be from the line of Matthew Smith from Bank of America.

Your line now will be unmuted.

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025

Matthew Smith Q

Analyst, Bank of America

Hi there. Morning, Nick. Morning, Carlo. Thanks for taking my question. I just had one really, I think, touching on some of the similar themes around sort of capital allocation, dividend sustainability. And it's really because we've talked a lot about doing more faster, investing in new projects, new FIDs to sort of sustain levels of production as after you grow it this year. But I suppose today, you're also keen to have highlights of the flexibility that you have in your CapEx budget, the amount of uncommitted CapEx that you have. So, I guess, I just really wanted to test what oil prices do you think you need to see before you start to actually utilize some of that CapEx flexibility? And perhaps, I could sort of attach to that, and to what end do you really manage it, the sort of investment-grade credit rating here? Is this about the debt maturities or is it about protecting the dividend itself? Thank you.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

No, it's a good question and it covers quite a few things, Matt. I mean, long-term, we want to – we intend to maintain an investment-grade credit rating. We intend to maintain resilience and flexibility. I think those are three things that we want to maintain as a company long-term. And I think this resilience and flexibility, I mean, before even the oil prices came down, we've been highlighting the resilience and flexibility of the company. And what I know is in this business, it goes through cycles and you need to be prepared for the good times and the bad times, and that's what we are so – as a company. So, this resilience and flexibility and we will use it. We've set out at Capital Markets Day the $2.3 billion to $2.5 billion of capital on investments in developments this year and a range of $2 billion to $2.5 billion out to 2030 per annum. And that range still stands. But as I mentioned, we have the choices here. Our big projects have come to an end. And what we have is a whole series of subsea tieback projects into existing infrastructure and a series of infill drilling opportunities. And the infill drilling opportunities come at a $30 breakeven and the subsea tiebacks at an average of about $35 breakeven. So, these projects make money, good returns even at $65. So, they are good things to invest into.

But we will also take the opportunity to potentially use the flexibility. And so, for example, a project that we might invest, subsea tieback development that we might invest into and commit to this year might not start production until 2028 or 2029. So, spend now doesn't have an impact on production for quite – for some years in some cases. And so, delaying that six months or a year doesn't really make a lot of difference in the outlook for the company but – in terms of production. But it does have an impact in reducing our capital usage. And we will make

– as I pointed out in my speaking notes that we will look at each of these commitments on a case-by-case basis and make a judgment as to how critical it is to move that forward, what the time criticality is, what the other constraints are. With a thought in our mind about, if this price level continues, perhaps we want to take down our capital spend a bit and slow down the pace. But we're going to drive as fast as we can to get these projects going and then we will make that decision.

The message is keep going fast and then we will make a decision on a case-by-case basis. And I think, I've been through these cycles before and I think this creates opportunity. It makes opportunity for us to make some of these projects better, maybe more efficient, maybe take down the costs, and we need to use that opportunity. It also creates acquisition opportunity potentially in the market for strong companies like us.

So, your question is multi-faceted. The answer is multi-faceted. And it's about maintaining that resilience, that flexibility, and using it to optimize the company continuously.

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

Vår Energi ASA

(VAR.NO) Corrected Transcript

Q1 2025 Earnings Call 23-Apr-2025

If I...

[indiscernible] (00:48:58)

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

I can just – just wanted to complement on what Nick was mentioning. During the CMU, we indicated a free cash flow generation of $5 billion to $9 billion between $65 and $85 per barrel, and that was based on spending our full

CapEx plan without touching, as you mentioned, the flexibility that we have. So, this gives a bit also the sense of the possibility and the opportunity we have in our portfolio as well as the resilience of our balance sheet when it comes to finance our projects throughout the CFFO and not really touching our leverage. So, I believe also, this gives you the sense of the strength of our financials, of our balance sheet and the flexibility we have in adapting quickly to a possible low macroenvironment or lower than what we might imagined.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Hopefully that answers...

[indiscernible] (00:49:58)

Operator

Thank you, Matt. The next question will be from the line of Victoria McCulloch from RBC. Your line now will be unmuted.

Victoria McCulloch Q

Analyst, RBC Europe Ltd.

Hi, thanks very much. So, just a quick follow-on from that previous question. Could you give us an idea of how much CapEx is committed for 2026 relative to the projects sanctioned?

And then, maybe a bigger picture on the portfolio of projects. What are the biggest challenges in accelerating towards FID between now and over the next couple of years? Is it the geology, then you better understanding it on or are there more complexities in adding these tiebacks?

And then, just a final one that I might have missed. What's the ramp-up – as already expected the ramp up for

Halten East? That'd be great. Thanks very much.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

I'll capture Halten East to start with. And that is a series of fields developed into Åsgård and these subsea tiebacks. And it's started up. Currently, two wells are producing and it's going to step up to 80,000 barrels a day, boes per day gross by Q4. So, I think there are eight wells to come online so it'll – but it doesn't need eight to get there. So, it'll step up to the peak rates in Q4. So, we should expect it to gradually step up through the year. We're producing just a little over half actually our peak rates at the moment so.

And then, in terms of committed capital...

[indiscernible] (00:51:50)

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

Yeah, sure. Committed capital, as you mentioned, we have over the plan of 2026-2030, 70% [indiscernible]

(00:51:57) specifically from 2026, if I got your question right. This is a bit less than 70%. It's probably closer to

50%, 60% because, clearly speaking, the commitment goes unwinding through the time. As soon as we move projects forward, then we are already moving projects forward. And yes, this is the range you can consider for

2026, specifically, over the 70% average for the longer period.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Victoria, does that capture your questions?

Victoria McCulloch Q

Analyst, RBC Europe Ltd.

Yeah. And just – and then, maybe the bigger picture, the biggest challenge in accelerating the project? Not specifically one project but broadly.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

I would say the challenge is getting the momentum into this, and we now have it. And so, the challenge is sort of behind us. It's about now delivering on this. And we've got the people. We've got the projects. And each one of these is a bit – they're all different, the complexity associated with them. There's commercial activity. There's subsurface work to do. There's engineering work. Then, you have to time the topside element with other activities.

So, each of these is a little complex. But I mean, there's fundamentally the same type of projects. We're trying to move these forward as a subsea project factory with some standardization of equipment and engineering design, which would shorten the time cycle. And so, I think we're in a good place to do this. I mean, we sanctioned Balder

Phase V in October last year. It's going to come online, first wells in Q4 this year. We're going to sanction Balder

Phase VI in the middle of this year and it should start up at the end of next year. And we've got a similar momentum through many of our other projects. So, I feel in a good place. I mean, we highlighted eight projects at our Capital Markets Update; and now, we're saying we potentially have 14 projects for sanction this year. So, I think that gives you a sense that we're moving this forward at pace.

Victoria McCulloch Q

Analyst, RBC Europe Ltd.

Great. Thanks very much for your time.

Operator

Thank you, Victoria. The next question will be from the line of Sasikanth Chilukuru from Morgan

Stanley. Your line now will be unmuted.

Sasikanth Chilukuru Q

Analyst, Morgan Stanley & Co. International Plc

Hi. Thanks for taking my questions. I have two left, actually. The first one was on the Balder X start-up, which was

[indiscernible] (00:54:23) by end of 2Q. Now, with the Jotun FPSO now moored at the field location, I was just wondering if there are any other milestones that we can actually look for or monitor before the start-up? Anything that would provide the market more confidence on the start-up timeline? Also, if you could talk about any contingencies that you have already have in this start-up, that would be helpful.

Vår Energi ASA

(VAR.NO) Corrected Transcript

Q1 2025 Earnings Call 23-Apr-2025

The second was on near-term working capital and the underlift positions. We've seen an underlift position in

[indiscernible] (00:54:56) this quarter – in 1Q and as well as 4Q. Just wondering if that has any potential to reverse on that front? Also, on working capital, have you seen working capital inflow this year or this quarter? Is there any potential for that to reverse over the next couple of quarters?

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Okay. So, I'll capture the first question on Balder, and then Carlo will do the second. And we set out a revised schedule for Balder. I think it was last September, October time. And we've met every date that we set out in that.

And first of all, was a sail away in March which achieved on I think the 15th of March. The vessel is now moored, fully moored in the field, long-term. Successfully done on time. And we're currently in the process of what's left to do now is to hook up the vessel to the subsea facility. So, pulling the risers and we're in the process of doing that.

And then, it's to tie in the risers into the vessel and the critical path runs through that activity actually. The other activities running in parallel is to finally commission the vessel, and we have a flotel connected with a significant

[indiscernible] (00:56:30) and I think 275 people working on the vessel every day. And we're frontend-loading that activity. And so, I would say, there aren't any real milestones that you can pin on it except for first oil, which we're saying is going to be in the end of June. And we've taken a lot of the risk out at the time as we've met the schedule that we set out, and we've obviously taken a lot of risk out with that. And so, it's just about meeting those activities that we need to complete before we get to first oil. So, I would say, we're in good place and, hopefully, we can come back and I'm expecting that we come back and say in June that we've achieved it.

Then, Carlo, you're going to cover working capital...

[indiscernible] (00:57:21)

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

...working capital [indiscernible] (00:57:22) from the working capital, as you mentioned, with an overall positive movement in working capital of $49 million. This is a mix, of course, of small movements when it comes to all the payables and the receivable, although nothing really unusual. More specifically, when it comes to the underlifting position, we have overlifted oil in Q1. And if you recall during the Q4 2024, we actually were in a higher underlifting position, so we are recovering. The underlifting position is not yet fully recovered but is unwinding. At the same time, we build up a bit of underlifting position for NGL [indiscernible] (00:58:04) starting from April. All in all, I will say really operational movement and nothing unusual. Hopefully, we answered your question.

Sasikanth Chilukuru Q

Analyst, Morgan Stanley & Co. International Plc

Thank you. Indeed. Thank you very much.

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

Thank you.

Operator

Thank you, Sasikanth. The next question will be from the line of John Olaisen from ABG. Please, go ahead. Your line now will be unmuted.

Vår Energi ASA

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Q1 2025 Earnings Call 23-Apr-2025

John A. S. Olaisen Q

Analyst, ABG Sundal Collier Holding ASA

Yeah. Good morning, everybody, and thanks for taking my question. Sorry about another question posted about the dividend and the sustainability, but I get a lot of questions about the free cash flow that's referred to, $5 billion to $9 billion over the six-year period on average – sorry, in total over the average over the 2025 to 2030 period, assuming, as you mentioned, $65 to $85 oil price. But if you assume a midpoint which is oil price of $75 in that guidance range and $7 billion in free cash flow per year, and if you divide that by six years, you get about $1.1 billion which is slightly below your current dividend – of run rate on the dividend $1.2 billion. And I presume from the free cash flow of $5 billion to $9 billion that you guide – that the range that you're indicating, I presume we also have to use that to lower the debt level, isn't that correct? So, two questions. Is that like a fair calculation that you need $75 oil price roughly to keep the current dividend over the next – flat over the next six years, assuming that your CapEx plan, of course? And how about the debt level? Is that assuming if – so basically, it looks like you need $75 oil price to have to sustain the current dividend without reducing debt. Is that completely off or is that the right calculation? Is that how we should look at it?

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

No. I think I mean, maybe Carlo can answer in a second. But I mean, the way to look at this is that, first of all, we're investing through this period for long-term and we only show production out to 2030. And we're investing now for many of the investments come online towards this 2029-2030 and, obviously, provide value beyond that period of time. So, I think you need to look at it longer-term than that. We are not guiding longer than that. But much of our investment in this period of time is to provide cash flow outside of that period of time. So, the point being is that we can continue to sustain debt long-term as a company. And it gets down to the fact that we've only got 1.2 billion barrels of 3 billion barrels developed. That is what the value opportunity is, and we're continuing to invest into it.

Secondly, you think you need to look at our dividend guidance of 25% to 30% of is a – there's two aspects here.

One is it's a formula which is based on CFFO which, obviously, has the potential to adjust over time, depending on what cash flow is, which has a lot of aspects that drive it. But we've also have a track record of trying to sustain sustaining dividend over the period. So, for the last 13 quarters, sustained or growing the dividend level. And we feel that with all the factors that we've got at play and the opportunities to optimize the portfolio that we can continue to maintain dividend payments in the longer-term. And there's a lot of flexibility in the portfolio to adjust and optimize as we go. And I think we've got a track record of doing that and I think we can continue to do that.

John A. S. Olaisen Q

Analyst, ABG Sundal Collier Holding ASA

I think it's just pure math. The low-end of the free cash flow, $5 billion to $9 billion, $5 billion divided by six years is

$800 million per year, which compares to rate of $1.2 billion at $65 oil price. It seems like you needed – $65 is not enough just from that math. You referred to that math, so I'm just saying [indiscernible] (01:02:23).

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Yeah, yeah. But I think there's a number of aspects in here. First of all, if we continue at $65, the cost base is going to go down. We do not do that. If we continue at $65, maybe we'll spend less money on exploration, maybe we'll slow down some of the developments and the cost of doing things will reduce. None of that is reflected in the basis on which we show the cash flow outlook. So, we just take the same cost base that we had when the oil price was $80 and we run forward with a lower oil price. I think if you want to get – if you want to look at a $65

Vår Energi ASA

(VAR.NO) Corrected Transcript

Q1 2025 Earnings Call 23-Apr-2025 case, we have to take down the cost. Long-term, we have to take down the costs and we perhaps have to take down the activity levels. We also assume in our cash flow outlook that we spend a lot of money on exploration with zero success. That is in the basis of what we've said. And that's – we're not going to continue to spend $350 million a year on exploration with zero success year- after-year. And the reality is we are having success, always creating more projects and value. So, I think you have to look at our cash flow outlooks in a slightly more sophisticated way than just running them at different oil prices and assuming. And unfortunately, it's not that easy for us to demonstrate it in a different way because working out what the optimizations are if you have a period of lower prices are not that easy to do and...

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

[indiscernible] (01:03:57)

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

The reality is we're not hooked into spending a lot of capital over a long period of time. We have a sort of series of small decisions to make that we can optimize. And if we're if we're doing projects that break even at $35 and infill wells at $30, we're going to make a lot of money out of doing it. And we've shown that we're reducing our cost base over time. Last year, we showed a free cash flow breakeven of $45 on the portfolio; and now, it's down at

$40. We continue to invest in better projects. We continue to drive down operating costs. And as I said, I think we can progressively make the company better over time. So, we feel when we look at this in a range of different scenarios that we can continue to support long-term dividend payments.

John A. S. Olaisen Q

Analyst, ABG Sundal Collier Holding ASA

And finally, just a housekeeping question. You write that the Snøhvit Field will be shut down for three months – or sorry, will have a three-month turnaround just wonder, will your production completely shut down for three months for Snøhvit now in Q2?

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

It will be, yeah.

John A. S. Olaisen Q

Analyst, ABG Sundal Collier Holding ASA

Right. Right. Thanks a lot for taking my questions.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

Thank you.

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

Thank you.

Vår Energi ASA

(VAR.NO) Corrected Transcript

Q1 2025 Earnings Call 23-Apr-2025

Operator

Thank you, John. As no one else is lined up for questions in this call, I'll now hand it over to Ida for any written questions.

Ida Marie Fjellheim A

Head-Investor Relations, Vår Energi ASA

Thank you. We have a couple of questions towards the end here. One question from Vidar Lyngvær at Danske

Bank. Regarding the 70% uncommitted CapEx, can you please provide a split between operated and non- operated share of this uncommitted CapEx?

Carlo Santopadre A

Chief Financial Officer, Vår Energi ASA

And yes. We can consider that is roughly 60% not operated and 40% operated.

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

But I think it's also worth noting that we have some control over a lot of the operated spend. So, our vote is mostly required to move most of it forward. So, it's not like we're sort of pushed into doing things.

Ida Marie Fjellheim A

Head-Investor Relations, Vår Energi ASA

And last question. On capital distribution, is share buyback something that Vår Energi could consider doing in the future?

Nicholas Walker A

Chief Executive Officer, Vår Energi ASA

We get this question quite a lot. And I think the pushback here is that we only have – we have a big shareholder in Eni with 63%, and there's a relatively low free float for the company and 37%. And so, I think we have to – I think our job as leadership is to demonstrate to the market that we're undervalued and to continue to pay strong dividends and deliver on the growth and sustainment strategy, and I think that will drive through to the share price.

And if in a year or two, we're still struggling to demonstrate that, I think maybe we have to think about it slightly differently. But the challenge we have is, with such small free float, a lot of bigger investors we meet say, we like the story, but actually there's not enough flexibility for us to come into to the liquidity to come in to be an investor.

And that puts people off. So, I struggle with the notion buying back shares, actually. I think the strategy we've got is good and I think we just need to keep just delivering on it. And people will see what a great opportunity is to invest into something that yields 17%.

Ida Marie Fjellheim

Head-Investor Relations, Vår Energi ASA

Great. Thank you very much. That concludes the Q&A session and the Q1 2025 Presentation. Thank you all for dialing in and we wish you a good rest of the day.

Vår Energi ASA

(VAR.NO) Corrected Transcript

Q1 2025 Earnings Call 23-Apr-2025

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