Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aker BP ASA (AKRBF, Financial) successfully started production at the Titering field five months ahead of schedule and below budget, showcasing effective planning and execution.
- The company maintained a strong financial position with high cash flow from operations, enabling investment in profitable projects and attractive dividends for shareholders.
- Aker BP ASA achieved a record high cash flow from operations of $2.8 billion in Q3, highlighting its ability to generate significant returns.
- The company has established itself as a leader in low greenhouse gas emissions, with Q3 emissions averaging 2.4 kg of CO2 equivalent per barrel.
- Aker BP ASA's production costs remain highly competitive, with a reduction in full-year cost guidance to $6.5 per barrel, down from $7 per barrel.
Negative Points
- Production efficiency decreased to 88% in Q3 from 95% in the previous quarter due to planned maintenance activities.
- Sales volumes were lower quarter-on-quarter due to reduced production caused by planned maintenance at gas export terminals.
- Realized liquid prices experienced a slight decline of 3%, driven by a 5% drop in Brent oil prices.
- The company faced challenges in the supply chain environment, particularly in securing resources for electric installation, cables, and transformers.
- Aker BP ASA's net profit for the quarter was $173 million, impacted by impairment of technical goodwill, which is non-cash and not tax-deductible.
Q & A Highlights
Q: Can you provide insights on the supply chain environment and your confidence in delivering projects on budget and schedule?
A: Karl Johnny Hersvik, CEO: The projects are on schedule and on budget. We've moved from contract setting to execution and preassembly, reducing market uncertainty. Tightness in the market is not a current issue for us, but if entering the market now, electrical installations could be a concern.
Q: Why maintain a high level of liquidity, and does it relate to M&A opportunities?
A: David Tønne, CFO: We maintain a prudent balance sheet to support our investment program and navigate volatile markets. Karl Johnny Hersvik, CEO: We are not overloaded with projects and are focusing on post-2027 opportunities, indicating readiness for M&A activities.
Q: Could you elaborate on the Phase 3 development and its impact on reserves?
A: David Tønne, CFO: Phase 3 involves subsea infrastructure to drill additional wells tied back to existing platforms, adding reserves and maximizing production. The final investment decision is expected by the end of next year.
Q: What are your thoughts on the Barents Sea exploration program?
A: Karl Johnny Hersvik, CEO: We focus on concept selection at Wisting and increasing gas volumes to justify new infrastructure. Success in upcoming wells will determine further exploration in the western margin.
Q: How do you view the impact of geopolitical and macro volatility on your operations?
A: Karl Johnny Hersvik, CEO: We focus on operational excellence and low costs to remain resilient. While volatility is challenging, it also presents opportunities for countercyclical actions, and we are well-positioned to navigate such environments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
