Vår Energi (VAR) Q3 2024 earnings summary

Executive summary

• Delivered resilient operational and financial results in Q3 2024, in line with guidance, with production growth expected over the next three quarters and strong cost discipline.

• Average production for the first nine months was 281 kboepd, with Q3 at 256 kboepd due to planned maintenance, now completed; full-year guidance narrowed to 280–290 kboepd.

• Significant production growth expected, targeting 400 kboepd by end of 2025, with Johan Castberg and Balder X projects on track for Q4 2024 and Q2 2025 start-ups.

• Completed acquisition and integration of Neptune Energy Norge, making Vår Energi the second largest independent E&P on the NCS.

• Confirmed Q3 dividend of $0.11/share ($270 million), with similar guidance for Q4 and a full-year payout of ~30% of CFFO after tax.

Financial highlights

• Q3 2024 revenues exceeded $1.8 billion, with total income at USD 1,871 million, down sequentially but up year-over-year on higher volumes.

• Q3 CFFO after tax was $1.3 billion, with available liquidity of $2.1 billion and net interest-bearing debt at $4.1 billion.

• Leverage ratio improved to 0.7x net debt/EBITDAX, well below the 1.3x target.

• CapEx for Q3 was $718 million; full-year 2024 CapEx guidance reduced to ~$2.6 billion.

• Weighted average realised price was $76/boe, with $322 million additional gas revenue YTD.

Outlook and guidance

• 2024 production guidance narrowed to 280,000–290,000 boe/d, with upside tied to Johan Castberg startup.

• Production expected to reach 400,000 boe/d by end of 2025, with sustainable 350,000–400,000 boe/d through 2030.

• CapEx expected to decline to $1.5–$2.5 billion annually from 2025 onward; 2024 exploration CapEx guided at ~$350 million.

• Full-year unit opex guidance reduced to below $13/boe; end-2025 target is ~$10/boe.

• Dividend policy maintained at 20–30% of CFFO after tax, with 2024 at the upper end.