The New generation NCS operator - January 2020 - OKEA
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The New generation NCS operator January 2020
OKEA – an independent E&P company on the NCS
Production
HQ
Development (Trondheim)
Draugen
(44.56% WI, op.)
19,200 boepd
Gjøa Operations
NCS ONLY PRODUCTION1 (12% WI) (Kristiansund)
Ivar Aasen
(0.554% WI)
USD 11.1/boe 88 mmboe Grevling / Storskrymten
2P+2C (35% / 60% WI, op.)
OPEX1
Yme
(15% WI)
(1) 2019 year to date (Q1-Q3), offtake cost and insurance not included. Converted at the official Norges Bank USD-NOK exchange rate
2
5 licenses awarded in APA 2019 – strengthen OKEAs position in
core areas
Draugen/Mistral area Grevling Area
PL1003 B
Licence Block(s) Operator OKEA
share
PL1060 6407/8,9 Equinor Energy AS 40%
PL1034 15/12 Chrysaor Norge AS 40%
PL093 F 6407/9 OKEA ASA 44.56%
PL1060
PL1003 B 6406/3,6 OKEA ASA 60%
PL973 B
PL973 B 15/12 Chrysaor Norge AS 30%
PL1034
PL093 F
3
OKEA is a responsible and value focused E&P company
Safe and responsible Continuously improving Value driven M&A Financial flexibility and
operations operations robustness
$
A NCS focused E&P Improvement and Target value Prudent financial
company digitalization enhancing growth strategy
“The OKEA way” is a safe and responsible approach to all we do
4
Safe and responsible operations
Proven operational capabilities
on Draugen
• No incidents or leakages in 2019
• Strong production in 2019, 5% above target
• Average 90.8% reliability last 3 years, 94% in 2019
• Unique knowledge of Draugen upside potential
• Positive production outlook to 2040
• Several maintain integrity projects executed
• Operating cost reduced by more than 200 MNOK
(1) Draugen 100%
5
Improvement and digitalization
Improving Draugen operational
efficiency
• Optimised decision processes have reduced lead
time
• Mapping of governing documents, removing
redundancy
• Software applications down by 33%
• Using industry standards for development projects
• Revised roles and responsibilities
• Revitalising earlier stranded projects
• New digital platform in cooperation with ABB and
HP
6
Draugen drilling 2019
No major accidents
Fast and effective operation (finish the well in less
Drilling than 7 days)
targets and • Infill Ø drilled in 5.38 dry hole days
results • Skumnisse drilled in 7,17 days
Rate of penetration (ROP):
• 100 M/HR IN 12 ¼’’ SECTION: 200-300 M/HR
• 200 M/HR IN 8 ½’’ SECTION: 410 M/HR (peak)
Fit for purpose 2-strings well design
OKEA way with performance midset
Success
criteria Involvment of OKEA key personell
Good rig in Deapsea Nordkapp
Excellent mud, cement and drilling tools
7
OKEA is committed to operate safely and responsibly
Safety Environment
Safe and sustainable business with zero harm to people Energy efficient production with focus on reducing
environmental footprint
or assets
• Serious incident frequency (SIF) for Draugen on “0” for 2019 (as for 2018 and
2017) Draugen – Targeting lower emissions
Despite the “nature” working against late life producers – OKEA aim to
improve
‒ Liquid fuel will be replaced with gas in 2020
‒ Environmental strategy & management plan implemented
‒ New environmental projects initiated in 2019
‒ Lifetime extension
‒ Draugen as area hub
Gjøa – Industry leading low emission asset
‒ Gas supplier to UK – substituting coal
‒ Electrified with power from shore, reducing direct emissions
Ivar Aasen – Power from shore sanctioned
‒ Sanctioned investment to electrify in 2022 with renewable power from shore
8
Value driven M&A
Target the right deals
• Target value enhancing M&A on NCS
• Emphasising portfolio fit to enable synergies
• The right deals more important than timing
• Desire operatorships
‒ producing assets and developments up to 100 mmboe
• Funding through operating cash flow and owner
support
• Proven industry leading onboarding process of
new assets
9
Financial flexibility and robustness
Strong financial performance
Production (kboepd) EBITDA1 (NOKm) Cash position2 (NOKm)
Q3 2019 Q3 2019 Q3 2019
Previous Previous Previous
2
# of Draugen
liftings
1 1
1 799
594
22,4
19,5 20,0
18,1 1 329
413 404
586
133 395
0.4 42 57
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
120MUSD bond issue in Q4 2019 gives financial flexibility going forward
(1) APM: EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortisation and impairments. Net debt is defined as interest bearing debt less cash & cash equivalents
10
(2) Excluding restricted cashOutlook
High level of activity in coming years
Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21
Target further debottlenecking and cost reductions
Draugen Appraisal well
BOK/BOV1
Hasselmus Hasselmus FID
Progressing redevelopment of Gjøa P1 towards first oil late 2020 Gjøa P1 production start
Gjøa
Progress and de-risk Yme towards first oil mid 2020 1st oil Yme
Yme
IOR well programme – two wells per year 2020-21
Ivar Aasen
Progress Utsira High Area power grid project – Power from shore from 2022
Gjøa Hamlet prospect planned well in 2020
E&A and other
prospects
BOK/BOV1
Grevling/Storskrymten Mistral North appraisal and PL973 exploration drilling
Pursue further M&A – both bolt-on acquisitions and larger transformational deals
Business
development APA 2019 APA 2020 APA 2020
awards applications awards
Note: Indicative timeline. Milestones may be subject to approval by the Ministry of Petroleum and Energy and licence decisions
11
(1) BOK = Concretisation decision, BOV = Decision to continue, BOG = Decision to implementOKEA investment highlights
• NCS-focused E&P company with strong cash flow from ca. 20 000 boed in net production
Safe and responsible • A responsible operator focusing on safety and lowest possible environmental footprint
operations on NCS
• Proven value creation in 2019 as operator of the Draugen field
• Improvement programme utilize innovative tools to increase operational efficiency
Operational
improvement & • A step-wise approach to digitalization of operation on the operated Draugen field
digtialization
• Actively targeting value enhancing growth through M&A, across production and
developments up to 100 million boe
Value driven M&A
growth • Experienced operational organization suited for new operatorships and capturing synergies
• Financial flexibility through new bond issue (RBL can replace OKEA 03 if OKEA decides –
Prudent financial preapproved of bond holders)
strategy
12okea.no
Ståle Myhre
VP IR
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