Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Okea ASA (STU:3SX, Financial) reported strong operational performance with an average production of 37,300 barrels per day, despite planned maintenance.
- The company improved its financial performance, with increased revenue and EBITDA, and a strong net liquidity position.
- Okea ASA successfully sold its non-core EMA asset for USD 15.65 million, resulting in a net impairment income of NOK 871 million.
- The company increased reserves by 2.1 million barrels of oil equivalent due to higher energy content in the Hustle Mills gas.
- Development projects like the Bestla tie-back and the power cable to Draugen are progressing well, with the cable expected to be completed by year-end.
Negative Points
- Production efficiency decreased by 2% due to planned maintenance and a 23-day shutdown of the Costa gas evacuation route.
- The start-up of the Draugen electrification project has been delayed from 2027 to 2028 due to offshore work complexities.
- Okea ASA's production guidance for 2025 and 2026 indicates a decline, with expected production between 28,000 and 32,000 barrels per day in 2025 and 26,000 to 30,000 barrels per day in 2026.
- The company faces challenges with water injection and pressure support at the Nova field, requiring further assessment and potential changes.
- High NGL discount impacted the average realized liquid price, bringing it down to $74.9 per barrel.
Q & A Highlights
Q: Could you elaborate on the nonsanctioned projects related to the 2026 CapEx?
A: Birte Norheim, CFO: These are less mature projects, including activities around DGEN, the spring project, and unsanctioned drilling around Staf. More details will be provided as investment decisions are made.
Q: Will the new production drilling strategy at Staf increase production or just combat decline?
A: Svein Liknes, CEO: The new wells at Staf aim to lower reservoir pressures to liberate more gas, which will increase production, particularly in gas.
Q: Can you provide more details on the exploration potential for the Prince prospect?
A: Svein Liknes, CEO: We can't quantify the potential as we don't guide on it, but the Sogni East area is exciting, and we will explore it further.
Q: Could you provide some color on taxes in the first half of next year related to the IMA sale?
A: Birte Norheim, CFO: The tax reduction will occur in the first half of next year, following the transaction's closing and settlement, which includes the fixed consideration and pre-tax cash flows.
Q: What is holding you back from confirming the dividend policy?
A: Birte Norheim, CFO: Our capital allocation prioritizes a solid balance sheet and balancing shareholder distributions with growth. We are in a growth phase with several projects, and dividends remain a priority, with the board planning to resume payments when feasible.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
