Vår Energi (VAR) Q2 2024 earnings summary

Executive summary

• Achieved strong operational and financial results in H1 and Q2 2024, with production at the upper end of guidance and high efficiency on operated fields.

• Major projects (Balder X, Johan Castberg) are on track for Q4 2024 start-up, supporting the 2025 growth target of 400,000 boe/d.

• Integrated Neptune Energy Norge, making the company the second largest independent E&P on the NCS and realizing 25% of targeted $500M post-tax synergies.

• Maintained attractive and predictable dividends, confirming $0.11/share for Q2 and guiding $270M for Q3, with a policy to distribute ~30% of CFFO after tax for 2024.

• Portfolio optimization included asset disposals, increased stake in Ringhorne East, and successful near-field exploration.

Financial highlights

• Q2 2024 cash flow from operations (CFFO) after tax: $711M; Q2 total income: $1.94B; net profit: $222M.

• Production averaged 293,000 boe/d in H1 2024, with Q2 at 287,000 boe/d.

• Production costs beat guidance at $12.4/boe in Q2 and H1 2024.

• Dividend of $270M confirmed for Q2 and Q3 2024.

• End-Q2 cash position: $350M; available liquidity: $1.8B; leverage ratio: 0.8x NIBD/EBITDAX.

Outlook and guidance

• 2024 production guidance: 280,000–300,000 boe/d; H1 delivered at upper end.

• 2025 production target: 400,000 boe/d, with 350,000–400,000 boe/d sustained to 2030.

• Production cost expected at bottom of $13.5–$14.5/boe range for 2024; targeting ~$10/boe by end-2025.

• CapEx expected at lower end of $2.7B–$2.9B in 2024, with exploration CapEx revised up to ~$350M.

• Dividend payout policy: 20–30% of CFFO after tax, with 2024 at ~30%.