Second Quarter 2023 Production Update

Source Press Release
Company Var Energi ASA 
Tags Production/Development, Upstream Activities
Date July 13, 2023

Vår Energi ASA (OSE: VAR, the "Company") will publish its financial report for the second quarter 2023 on Tuesday 25 July. Today, the Company provides an update on production, sales volumes and other relevant items.

Vår Energi’s net production of oil, liquids and natural gas averaged 202 kboepd in the second quarter of 2023, down 6% from the first quarter of 2023 and a decrease of 3% compared to the second quarter of 2022. The production decline is due to planned seasonal maintenance, turnarounds and unplanned downtime on partner-operated assets. Contribution from the Bauge, Hyme and Fenja fields, which started production in the period, was impacted by start-up issues at the Njord host platform. The Company maintains its production guidance for 2023 of 210-230 kboepd.

The production split in the second quarter was stable from the previous quarter with 64% oil and NGLs (liquids) and 36% gas. During the quarter, the Company continued to reduce NGL recovery to increase gas sales, representing approximately a reduction of 2 kboepd on an annual basis. Total volumes produced in the second quarter were 18.4 mmboe whereas volumes sold in the quarter amounted to 17.5 mmboe. The underlift position is a result of a higher number of cargoes slipping into the first week of July.

Vår Energi obtained a strong average realised price (volume-weighted) of USD ~82 per boe in the quarter. The robust sales mix of crude oil qualities resulted in a realised crude price of USD 78.5 per boe. The realised gas price of USD 98.5 per boe is a result of fixed price contracts and flexible gas sales agreements, allowing for optimisation of indices. The fixed price contracts represented approximately 21% of second quarter gas volumes sold at an average price of approximately USD 190 per boe, substantially above spot market reference price.

  Q2 2023  Q1 2023  Q2 2022 
Production (kboepd)       
Crude oil  114.7  119.0  113.3 
Gas  73.1  82.0  84.6 
NGL  14.7  13.4  11.9 
Total  202.5  214.4  209.8 
Realised prices (USD/boe)       
Crude oil price  78.5  83.6  116.0 
Gas price  98.5  175.5  151.3 
NGL price  37.5  54.1  70.9 
Average (volume-weighted)  81.9  115.9  124.1 
Volumes sold/lifted (mmboe)       
Crude oil  10.0  10.5  10.7 
Gas  6.0  6.6  6.9 
NGL  1.5  0.9  1.9 
Total  17.5  18.0  19.5 
Total production (mmboe)  18.4  19.3  19.1 
Over/(Underlift) (mmboe)  -0.9  -1.3  0.4 

Other items

Vår Energi’s functional currency is NOK, whilst interest-bearing loans are in USD. The further weakening of the NOK in the second quarter 2023 led to a net exchange rate loss of approximately USD 47 million.

As previously communicated, the following items impacted the free cash flow in the second quarter: Cash tax payments of NOK 11.3 billion (USD ~1.1 billion) and a dividend payment for the first quarter of USD 270 million, paid in May 2023.

The information above is based on a preliminary assessment of the Company's second quarter 2023 financial results and may be subject to change until the financial statements have been finally approved and published by the Company.

Second quarter webcast and conference call

Vår Energi will release its quarterly results on 25 July at 07:00 CEST. A webcast and conference call followed by Q&A will be held at 10:00 CEST, hosted by CEO Torger Rød and CFO Stefano Pujatti.

You can follow the webcast with supporting slides, available on:

Source: EvaluateEnergy® ©2023 EvaluateEnergy Ltd