Costs linked to the upcoming Balder development cut down profits at Var Energi (OSLO: VAR), Norway’s second-largest independent operator.
The firm, controlled by Italian oil major Eni, booked $526m of impairments on the delayed North Sea project in its Q4 results, which it said was linked to higher costs and reduced commodity prices.
Var Energi profits for the period were $129m, down 73% year-on-year from 2022’s Q4 of $488m.
Balder X, in the Norwegian section of the North Sea, has faced a series of delays with the firm announcing in September that costs had gone up by around $300m.
It had been due for start-up in the first quarter of this year, but it has since been moved to Q4.
The sailaway of the Jotun FPSO, which will be used for the development, is scheduled for August following upgrades at the Rosenberg yard.
Var Energi said the work is now 90% complete.
Balder X is expected to unlock an estimated 143 million barrels of recoverable reserves, with further barrels from nearby tie-back projects.
“Solid progress has been achieved in increasing pace of construction work on the FPSO, with overall progress only slightly behind the revised plan and completion of the project is in sight,” said Var Energi.
Var Energi has bolstered its offering completing its acquisition Neptune Energy Norge at the end of January.
It takes the firm’s combined reserves plus resources to two billion barrels of oil equivalent, and makes Var the second-largest independent operator in the Norwegian sector.
CEO Nick Walker said: “As one of the fastest growing E&P companies in the world, we are on track to nearly double production to around 400 thousand barrels of oil equivalent per day by end 2025.
“We are pleased to see that the quarter delivered solid operational performance within guidance. Strong realised prices and financial results underpin our commitment to provide stable and predictable dividends to our shareholders, and our growth trajectory will give increased capacity to sustain this.”