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Vår Energi reports healthy profit in first results since Oslo listing

© Jan Arne Wold / Roar Lindefjeld / WoldcamThe Johan Castberg FPSO hull arrives in Norway. Stord.
The Johan Castberg FPSO hull arrives in Norway. Stord.

Norwegian E&P Vår Energi (VAR:NO) has reported pre-tax profits of $1.65 billion for Q1 2022, in its first quarterly results posting since its February 2022 listing.

The firm was launched in 2018 through the merger of Eni Norge, which owns 69.85%, and Point Resources, a HitecVision company, with 30.15%, and completed its long-mooted initial public offering (IPO) on the Oslo Bors in February.

Profits rode on the back of $2.49bn in revenue for the quarter – up 10% on the previous quarter – while EBIT rose to $1.67bn, primarily driven by higher oil and gas prices, Vår said.

Combined oil and gas production for the quarter was 241,900 barrels of oil equivalent per day (boepd), down from the previous quarter but at the upper end of its 2022 guidance of between 230–245,000 boepd.

Looking to its operations, Var said its main development projects including Johan Castberg, Balder X, and Breidablikk and Fenja had progressed roughly in line with plans during the period.

The first of 15 new wells at Balder has been completed, and final equipment orders will be placed in the second quarter. A subsea installation campaign is also ongoing, with the vessel now mobilised to the field.

Vår also noted a minor hydrocarbon leak from the existing Balder asset, due to failure of a clamp connection fixing a subsea flow base to a subsea site 130m below the surface.

Meanwhile, the Johan Castberg floating production storage and offload (FPSO) hull and living quarters left Singapore in February and arrived in Stord, Norway, earlier this month.

The 650-million-barrel field, in which Vår holds a 30% stake alongside operator Equinor, was originally approved in 2018 with a first oil date of 2022, however COVID-related delays and issues concerning welding on the ship’s hull have pushed back its timeline.

A Phase 1 drilling campaign at the development has also been completed “ahead of time and below budget” while a second phase will commence in mid-2024, with a view to first oil the Q4 of that year.

Four subsea templates were also installed at Breidablikk during the quarter, ahead of a drilling program beginning in May 2022 with the Deepsea Aberdeen drilling rig.

Looking to upcoming projects, Vår noted that Conoco Phillips make a final investment decision (FID) on its Eldfisk North field in Q1 2022, ahead of plan for development and operation (PDO) submission planned for the end of April.

Vår also expects and FID on the 100 million boe Halten East gas project some time in Q2 2022.

Key exploration priorities for 2022 include the drilling of the Vår-operated Lupa and Countach wells near the Goliat field in the Barents Sea, and the potential high-impact well Ormen Lange Deep, among others.

The company’s board approved a dividend of $0.09 per share for the first quarter, totalling $225m, to be distributed in May, and upped its dividend guidance for the year by $200m to $1bn, based on current market conditions.

“The current commodity price environment reflects the significant uncertainties created by Russia’s invasion of Ukraine in February. The war comes on top of already tight energy markets as global demand recovers from the Covid-19 pandemic. Combined with increased inflation and disturbances in global supply chains, this adds uncertainty with regards to the future global economic development, noted chief executive Torger Rød.

“Against this backdrop, Vår Energi leveraged its leading position on the NCS and maintained a solid operational performance with material gas volumes delivered to customers in Europe. This is reflected in exceptional cash flow generation for the quarter and in our raised dividend guidance for 2022 of $1 billion.”

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