OKEA : Q4 2020 Presentation

Presentation of fourth quarter 2020

OKEA ASA

5 February 2021

Q4 Highlights

Operations

• No serious incidents at Draugen, Covid-19 situation managed
• High production reliability at Draugen and Gjøa
• Yme onshore work completed, and rig successfully installed at location
• Production 16 171 boepd

Financials

• Revenues from oil and gas NOK 581 million
• EBITDA NOK 229 million
• Net profit NOK 182 million
• Cash position NOK 871 million

Positioned for growth

• Significant organic growth potential without need for new equity o Two new wells Gjøa P1 planned onstream in February
  o Start-up of Yme H2-21
  o Final Investment Decision Hasselmus - first tie-in to Draugen
  o Vette acquisition - potential coordinated development with Grevling o Three firm exploration wells planned - Jerv, Ilder, Ginny
  o Expanding portfolio: Six new licenses in APA 2020 - four as operator

Picture by ESVAGT A/S

Financials

Oil and gas production, sales and revenues

Production (boepd)

20 000		17 020	19 099
15 000							8 922
		8 835
10 000							9 812
5 000		7 842
0			343			365
		Q4 19	Q1 20
Revenue (NOK million)
600		534		504
500
400		364		352
300
200
100		170		151
0
			0					1
		Q4 19	Q1 20

16 047

7 944

7 758

345

Q2 20

259

177

82

1

Q2 20

13 303

6 654

6 390

259

Q3 20

308

202

106

1

Q3 20

Draugen

16 171 Gjøa

Ivar Aasen

1. 592
2. 293

286

Q4 20

581

		Draugen
		Gjøa
326		Ivar Aasen

210

46

Q4 20

Sold volumes (boepd)

20 000					15 810	14 634				18 794
15 000		13 835				14 232
							9 272
					7 446	7 514
10 000		7 060				7 450
							8 360
5 000		6 724	8 303	7 050	6 728
0														1 162
		51			61			70			54
		Q4 19	Q1 20	Q2 20	Q3 20	Q4 20

Realised price (liquids and gas USD per boe)

70		61.2
60
		48.4
50
					39.0
40
				32.3	32.2
30		21.8	17.8	24.9
20
			14.4
10				8.0
0
	Q4 19	Q1 20	Q2 20	Q3 20	Q4 20

Draugen

Gjøa

Ivar Aasen

Liquids

Gas

5

Income statement

Figures in NOK million	Q4 '19	Q3 '20	Q4 '20	2020	2019
Total operating income	564	321	584	1 730	3 020
Production expenses	-205	-154	-189	-696	-709
Changes in over/underlift positions and inventory	42	-31	-74	17	-272
Depreciation	-163	-147	-179	-699	-704
Impairment	-9	-572	117	-1 387	-105
Exploration, general and adm. expenses	-176	-20	-91	-184	-402
Profit / loss (-) from operating activities	55	-603	167	-1 219	827
Net financial items	-90	76	243	-12	-408
Profit / loss (-) before income tax	-35	-527	410	-1 231	419
Income taxes	33	508	-227	628	-491
Net profit / loss (-)	-2	-19	182	-603	-71
EBITDA	226	116	229	867	1 636

Q4'20 comments

Operating income:

• Higher sold volumes partly offset by lower realized prices for liquids compared to Q4'19

Production expenses:

• NOK/boe of 110 compared to 121 Q4'19

Impairment:

• Reversal of impairment on Yme asset

Exploration, general and adm. expenses:

• Field evaluation activities mainly relating to Hasselmus and Grevling and seismic expenses
• Higher SG&A in Q4'20 due to effect of annual recalculation of cost allocation to licences including employee share-based incentive program

Financial items:

• Unrealised gain on USD nominated bond loans following strengthening of NOK against USD during the quarter, partly offset by interest expense

Income taxes:

• Effective tax rate of 55%; deviation from 78% due to financial items and uplift

6

Statement of financial position

Figures in NOK million

Assets

Goodwill

Oil and gas properties

Other non-current assets

Trade and other receivables

Tax refund, current

Cash and cash equivalents

Other assets

Total assets

Total equity

Liabilities Asset retirement obligations Deferred tax liabilities Interest-bearing loans and borrowings Trade and other payables Income tax payable Other liabilties

31.12.2019	30.09.2020	31.12.2020
1 426	769	769
3 886	3 509	3 758
2 969	3 031	3 029
622	452	514
0	573	296
1 663	883	871
421	518	540
10 986	9 735	9 776
1 681	900	1 083
4 024	4 089	4 200
830	742	941
2 557	2 688	2 400
1 372	988	890
295	146	14
227	181	248

Year-end 2020 comments

• Cash and cash equivalents NOK 871 million
• Current tax refund NOK 296 million
• • NOK 86 million from exploration expenditures
  • NOK 210 million remaining for tax losses in 2020
• Interest-bearingdebt of NOK 2 400 million
• Reversed asset impairment Yme NOK 117 million increases oil and gas properties
• Asset retirement obligation offset by non-current receivable from Shell

Total liabilities	9 305	8 834	8 694
Total equity and liabilties	10 986	9 735	9 776

7

Cash development

NOK million

1 200
1 100	164	188
1 000
900	108		71	16
			9
800
700
600
500
883						871
400
300
200
100
0
Cash 30.09.20	Operating activities Net taxes received	Investment	Interest paid	Buy-back bond loan	Payments of	Cash 31.12.20
		activities			lease debt

8

Outlook: Guiding on production & capex

Production - thousand boepd			Capex - NOK million
	17-18		1 000 - 1 100
16.1	15.5-16.5	980
14-15

600 - 700

2020 latest guiding

2020 actuals

2021 guiding

2022 outlook

2020 latest guiding

2020 actuals

2021 guiding

Note: For guiding purposes, capex figures do not include capitalised interest

9

Operations and assets

Production volumes and highlights

High production reliability from both Draugen and Gjøa

Daily average production (boepd)

25 000

20 00019 099

17 020

15 000

9 812

7 842

10 000

5 000

8 835

8 922

0

2020 Average: 16 147

16 047	16 171
	13 303
7 758	8 293
	6 390

7 944	6 654	7 592

Draugen (OKEA operated)

• No serious incidents
• High production reliability (99%)
• Started fuel gas import that secures the power supply at Draugen and contributes to maintaining a high production reliability

Gjøa (Neptune operated)

• No serious incidents

• High production reliability (99%)

• Higher production in Q4 despite strike in

October mainly due to high production

reliability

• Full year production 27% ahead of plan

Q4 19

Q1 20

Q2 20

Q3 20

Q4 20

• P1 project on plan, startup Q1 2021

11

Hasselmus - Tie-back to Draugen

• Final Investment Decision in 2021 on Hasselmus as first tie- back to Draugen with first gas planned for 2023
• Maintaining high reliability and availability on Draugen field
• Power-from-shoreFinal Investment Decision planned 2022
• Ambition to increase oil recovery on Draugen to 70% and extend lifetime of field to 2040+

12

Gjøa - Two new wells in the P1 segment onstream in February

• Two new wells in the P1 segment planned onstream in February
• Tie-inof Nova and Duva in Q2-21 - OKEA compensated for deferred production when tie-in projects come onstream as well as tariff payments
• Potential tie-in of the OKEA-operated Aurora discovery
• Awarded license between Gjøa and Aurora in APA 2020

13

Yme New Development Project

• Onshore work completed and jack-up rig installed at the field
• Hook-up,commissioning and preparation for production start up ongoing
• Planned production start in 2021 well within reach
• Production 7 500 boepd net to OKEA at plateau - the first-year average 4 900 boepd net to OKEA

Pictures by Repsol/Bitmap

14

Vette and Grevling - Potential coordinated development

• Acquisition of Repsol's 40% share in PL972, which includes the Vette oil discovery
• OKEA estimates recoverable volumes in the Vette discovery of 30-50 mmboe
• A coordinated serial development of the Vette and Grevling fields could potentially reduce breakeven cost for both fields
• Exploration wells on Jerv and Ilder prospects near Grevling planned for H1-21

15

Six new licences awarded in APA 2020

The new licences contain 8 discoveries

• OKEA operator for four licences

• Exploration & field development opportunities near

Draugen & Gjøa

• Entry into Norne area with Falk	Production	Block(s)	Operator	Partners	OKEA	Initial work
discovery	licence				WI	programme
	PL1125	6608/10,11	OKEA ASA	Lime Petroleum AS	50%	2 year Drill or Drop*
	PL1119	6406/2,3,5,6	OKEA ASA	Equinor Energy AS, Pandion Energy AS	40%	1 year Drill or Drop
	PL1117	6406/6, 6407/4	OKEA ASA	Vår Energi AS, ONE-Dyas Norge AS	50%	2 year Drill or Drop
	PL1116	6407/5,6	OKEA ASA	M Vest Energy AS	60%	1 year Drill or Drop
	PL1115	6407/5,8	Wintershall Dea Norge AS	OKEA ASA	40%	2 year Drill or Drop
	PL1108	35/9	DNO Norge AS	OKEA ASA, Pandion Energy AS	30%	2 year Drill or Drop

* or BoV = decision to continue field development

16

Outlook & concluding remarks

A dramatic year petroleum markets - Outlook significantly improved

Oil

Gas

Source: Bloomberg, Refinitiv

18

Outlook

• Targeting substantial production growth from existing portfolio without new equity

• Continuing to seek inorganic growth opportunities

• Production guiding 2021:

• 15 500-16 500 boepd

• Production outlook 2022:

• 17 000-18 000 boepd

19

Significant growth in activities

Multiple milestones ahead in 2021

▪

▪

▪

▪

▪

▪

▪

Two new production wells from P1 segment in Gjøa New production from Yme

Final Investment Decision on Hasselmus

Three firm exploration wells planned; Jerv, Ilder and Ginny Possible appraisal well at Aurora

Concept selection on Vette and Grevling

Maturing a significantly larger license portfolio following successful APA 2020 awards

• 100% growth in number of operatorships
• 8 new discoveries added to portfolio
• 15+ additional exploration prospects added to portfolio

20