Release Date: July 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aker BP ASA (AKRBF, Financial) reported a strong operational performance in Q2 2025, maintaining a high production efficiency of 95% despite a planned maintenance shutdown.
- The company sanctioned two new expansion projects at Johan Sverdrup and achieved significant milestones in its field development portfolio, including the successful installation of the Valhall PWP jacket.
- Aker BP ASA (AKRBF) discovered additional oil at the Ivar Aasen exploration site, contributing to its growth potential.
- The company maintained a competitive unit cost of $7.3 per barrel, with a full-year guidance of $7 per barrel, despite currency fluctuations and lower production volumes.
- Aker BP ASA (AKRBF) continues to lead the industry with a low CO2 emissions intensity of 2.8 kilograms per barrel, setting a global benchmark.
Negative Points
- Production in Q2 2025 averaged 415,000 barrels per day, down 26,000 barrels from the previous quarter due to maintenance shutdowns.
- The company expects lower production in the second half of the year due to scheduled maintenance and natural decline.
- Aker BP ASA (AKRBF) projected a 6% increase in investments for ongoing projects, driven by macroeconomic conditions, currency fluctuations, and increased sailing distances.
- The company's net financial items were impacted by currency losses, particularly from the revaluation of EUR denominated bonds.
- Impairments totaled $717 million in Q2 2025, mainly due to lower forward prices for oil and gas, leading to a high reported tax rate of 138%.
Q & A Highlights
Q: Can you provide insights into the capital increases for ongoing projects and how much of the project costs are still exposed to price inflation?
A: Karl Hersvik, CEO, explained that as projects progress through phases, clarity on scope and costs improves. Most engineering and procurement are complete, with construction underway. The recent cost increase is due to external factors like security issues affecting shipping routes and FX movements. The remaining phases are more controllable, and the overall plan remains on track despite a 3-4% price variation since sanctioning in 2022.
Q: Why hasn't Aker BP increased its hedging strategy like its US peers, especially given the current market volatility?
A: David Torvik Tonne, CFO, noted that Aker BP's hedging is influenced by the Norwegian tax system, which reduces the need to hedge for liquidity protection. While they have hedged 18% of after-tax exposure for the second half of the year, they are continuously evaluating their positions in light of market volatility.
Q: With recent exploration results, will there be a shift in Aker BP's frontier exploration strategy?
A: Karl Hersvik, CEO, stated that the strategy remains balanced, with 80% of the budget on near-field exploration and 20% on frontier exploration. Despite some dry wells, the approach will not fundamentally change, as high-risk, high-reward exploration is part of their strategy.
Q: What is the contingency plan for the increased CapEx in ongoing projects?
A: Karl Hersvik, CEO, clarified that a 10% contingency is applied to the new estimate for future expenditures. Some contingency from past expenditures has been consumed, but the remaining CapEx has a 10% contingency to manage unforeseen costs.
Q: How does the recent exploration success at Yggdrasil impact the project's NPV break-even?
A: Karl Hersvik, CEO, mentioned that the break-even remains sub-$25 per barrel, potentially even sub-$20, despite increased CapEx. The recent discoveries add to the project's profitability, with a full life cycle break-even still between $35-$40 per barrel, excluding the latest discoveries.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
