Aker BP ASA (OSL:AKRBP)

CMD 2018

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Jan 15, 2018

Welcome to Varnbehutten, and welcome to Aker BP's Capital Markets Day for 2018. We're very pleased to see so many of you here to join us today. Before we start, we'll have a quick HSE brief. The emergency exits for this room can be found on your right hand side or the main entrance that you entered into this room. We do not have any planned fire drills today. So if the emergency alarm goes off, please evacuate the premises, and please turn off your mobile phones to avoid interruptions. Our goal today is to give you a better understanding of how we work in Aker BP to create the leading independent offshore E and P company. Today's presentation has been divided into five parts. We'll start off with going through our corporate strategy by our CEO, Karl Jani Hartrich. And then we've divided into our three strategic themes: Execute, Improve, Grow. Karl will go through Execute. And then improvement will be presented by Perharel Kommgren Elf, our SVP on Improvement. The growth section will be Carl Jomne Harsvik and Gru Hortvedt, our SVP of Exploration. And finally, Alexander Crane, our CFO, will try to tie everything together in our financial section. We'll conduct a Q and A session after each session, and there will be a coffee break between the two before we end our presentations at around 04:00 this afternoon. And with that, I'd like to introduce you to our CEO, Mr. Karl Hasrich. Can you hear me? Are we recording? Good. Then we should be okay. Usually, when I'm here, I'll say good morning, but since this is not a quarterly presentation. Good day, everybody. It's great to have so many of you here today. And as Jonas said, we'll try to run you through the highlights of our business model, but also try to provide some in-depth concrete examples of where we believe Aker BP has a competitive edge and also give you a little bit of flair for why we believe that the return to our investors, either in terms of growth of share price or dividend, has been superior to our competitors in the last three years. So my hope is that you leave today a bit wiser, a bit smarter and also with a better understanding for our overall strategy going forward. So 2017 has been a year marked by extremely high activity. The Hess acquisition allowed even deeper exposure to the Valhall field, which we'll come back to, but also provided another example of an extremely successful M and A track record originating back all the way to 2014 and demonstrating that the success we've had in the M and A market over the last three years has not been a coincidence. We have delivered on our promise to deliver three PDOs to market, all of them with increased volumes, reduced costs and, to a certain extent, substantially reduced execution time. The 2017 production, we guided towards the high end of the range. We ended up at 139,000 barrels, excluding Hess and 160,000 including Hess, whereas the high end of the guiding was 140,000. We are actually above about 6% above the guidance we gave at the previous Capital Market Days in terms of production if you exclude M and A activity. We've had a fantastic reserve replacement over this year. And this is a concrete example of the Aker BP strategy with very in-depth subsurface work, utilization of the full suite of data available to us and data acquisition and investment in data where we need to, but also our commitment to reserve utilization in the fields where we are operator. So in total, we've added about 2.3x the production. And if you include inorganic growth, we have about the reserve replacement rate of four, which is quite significant if you put that on top of our already growing production profile. The cash flow in 2017 has been high. The dividend coverage is about 3x from Q4 twenty sixteen to Q3 twenty seventeen. And we have paid out in that period thousand and 7 USD $250,000,000. And then finally, we are today increasing the dividend to USD $450,000,000 in 2018, which is up from USD $350,000,000 announced following the Hess transaction. But we're also dedicating our strong ambition to add another $100,000,000 to the dividend payment each year until 2021. And for those of you who have a quick head for those kind of calculations, should give us $750,000,000 in 2021. So all in all, a very a year with high activity, but also a very successful year in terms of economic results. Now I thought it could be interesting to review the investment case to give a little bit of a flair for why do we believe that it's still prudent to invest in Aker BP. Our strategic ambitions stand clear and have remained clear, at least for the last couple of years, and that's to create the leading independent offshore E and P company. While the strategic direction has remained clear, as you'll see, we have become even clearer on the activity set underlying those strategic ambition and our dedication and devotion to those activities. The overarching goal is always to increase shareholder value. And this, we need to be profitable across the market cycles. We are purely operating on the Norwegian continental shelf, which means low political risk and an attractive fiscal regime, which we have proved time and time again by both our investment activity and our M and A activity. We have a strong balance sheet and currently carry more than $2,900,000,000 in liquidity. We have a robust investment program, and this I'm extremely proud of, where the breakeven on our decided cases, that is decisions are and we have been made of $18 per barrel. All in, the breakeven in the forward program is around $24 And if at this point last year, that profile was around mid-30s. So a significant improvement in breakeven on forward programs. That has resulted in substantial generation and growing dividends to the shareholders. We have an extensive improvement programs. And today, you'll see concrete results, demonstratable results of that improvement program. I'm actually amazed by the speed of what this improvement program is generating improvements and how quickly we are able to turn more concepts such as lean into shorter execution time, higher cash generation and more reserves. We are reorganizing the value chain with strategic partnership and alliances to further capitalize on our lean initiatives. And we aim for digital project execution. Per Harald will take you through both these subjects in quite a lot of detail. We also believe that we have a strong profile platform for future growth. We're materially oil weighted. About 80% of our portfolio is liquids. And we carry more than 900,000,000 barrels of reserves in 2P and 2C. In addition, there's a potential to increase to roughly 330,000 barrels of oil production in 2023, which is about a 13% compound growth from where we are today. And then finally, we have a proven M and A track record, and we are targeting further selective growth where the key objective is to increase shareholder value and, if possible, increase dividend payment. We still believe that ERKBP is uniquely positioned to take benefit of the current market situation. So let's leave it at that, and then I'll go into the strategy and try to give you a few examples of how our overall strategic direction is manifesting itself in concrete actions. Before I start with that, there are some drivers. And it's always useful to have an overall macro perspective as a point of departure. We have seen a steady growth in oil demand also in 2017 and 2018, and we don't necessarily see a break in that trend in the next few years. But there is a lot of volatility in this game. So when we say cyclicity is the name of the game, the idea is to be able to handle the downturns and turn downturns into profitable opportunities to increase dividends by improving your business model, reducing cost and increasing execution time. And then, of course, when the tide turns, the benefit doubles or triples or whatever. So in total, we have demonstrated our ability from 2014 and all the way out to the 2017 to generate value through the cycles. When you have that kind of cyclicality, cost leading is the robust strategy, and you'll see that as a predominant topic throughout the presentations today. In addition, you want to have a robust balance sheet and a strong dividend capacity. You need an organization that's entrepreneurial and flexible to cope with challenging market conditions changes in our strategy. And you want to be driven on focused growth, not running after every single opportunity out there. And we have chosen to retain a focus on the Norwegian continental shelf. We still believe that the NCS is an extremely attractive place to be. More than half of the yet to be discovered resources are still out there. And they are growing as new areas hopefully are opened and more resources are to be utilized. We also see that in an age where carbon emission is challenged, the Norwegian continental shelf is significantly lower than the average in the global, And Aker BP is lower than the Norwegian continental shelf average. So again, I think we can conclude that we are well positioned to benefit from the Norwegian continental shelf attractiveness. This is a slide that we've used repeatedly now to provide a picture of the key components in our strategy, and I'll use it as a backdrop when I'm running through my presentation today. In the middle here, you will see maximized shareholder value, and I'll demonstrate that that's exactly what we have done over the last three years. But on top, you'll see safety, always prioritizing safety and quality in our operations in everything we do, even if we grow significantly in our activity program. We have defined as a primary goal to be cost and capital leading as an offshore independent E and P company. We believe this to be a robust strategy, both against simplicity but also against other changes in macros. Alexander will take you through the balance sheet. But as most of you know, we have reduced leverage significantly in the last couple of years. We have an entrepreneurial and a flexible organization that allows us to scale up and scale down, but also to keep on new business models and new opportunities quickly and with quality. We are still in a growth mode, both organically and inorganically, as will be demonstrated when we talk about the exploration portfolio, which is larger this year than in the previous years. And we have a focused portfolio on the Norwegian Continental shelf. This is the framework you'll see in the next few slides as I run through the strategy in more detail. The framework is very, very simple and tangible. We have defined three key activities: execute, improve or grow. If you can't put an activity into one of those boxes, we don't do it. So discipline operational discipline and adherence to strategy is a very strong driver for our performance. Now if you look at the performance on the improvement program, and as I said, I'm really surprised on the speed at which the results have been generated on this activity program, we've chosen to focus on four key elements. And as we reorganize the value chain, create alliances to reduce waste in execution models, increase quality and increase flow efficiency. We've taken an approach which is similar when it comes to our own operations by implementing lean and are on this journey of increased flow efficiency also in our own operations. So there's a consistency between our focus as alliance and our focus as on our own organizational development. We are convinced that the digital revolution now occurring will fundamentally change the E and P industry and are determined to be at the forefront of that development and one of its architects. And then finally, we are continuing to hone our own organization to meet the competency needs, the flexibility needs and the entrepreneurial spirit needed in the future. So let's start with safety. Safety is our number one priority in all our operations. And our ambition is zero HSSE incidents in operations. But you will also see that we've added cyber attacks to a part of the HSE again, which is focusing on safety. And the reason for that is that with a growing digital mindset, new threats are occurring, and one of them is cyberattacks. We've focused substantially on rollout of energy efficiency, trying to be even better at CO2 density in our emissions and even if we are below the NCS standard. And then finally, we have rolled out programs for managing barrier health to reduce the risk of high potential incidents and again capitalizing on new digital tools that allow us to keep more and even better watch over our barriers. We had an incident on the December 17 this year where one of our team members did not come home for work. I think as we end up the summary and the conclusion, we'll come to the conclusion that this incident was totally unnecessary. It's a reminder of the risk in our business, and I can assure you that Aker BP is determined to determine the course and then implement all actions and activities necessary to take benefit and learn from that tragic and unnecessary incident. This type of topic has the utmost attention at our top management. If we move from safety to improvement, I think the conclusion is, yes, great savings are important and possible, but they will require a new way of thinking. And they will require attention and innovation on a scale that's more higher than what we've seen so far. Our proven agenda is determined. We have already defined that we target a cost per barrel of $7 per barrel and a breakeven of $35 The key topics in our improvement agenda is defined: alliances, digitalization, lean operations and a flexible business model. We have already seen that we're able to reduce our breakeven cost on new productions down to SEK 35,000,000 or less. And I wouldn't be surprised if we, going forward, determine that the $25 breakeven target that we defined as a new continued improvement target turns out to be too the ambition level turns out to be too low. In reality, there's enormous amount of effort needed to be done in order to break down the cost levels, improve efficiency and remove waste, but they will require changes in our business model going forward. When we look at the achievements so far in the program, and here, I've taken the PDOs that we delivered this year. Arfugl, which is a Norwegian seabird Valhall Flankwest, which stands for itself and Skogul, which I'm told is some sort of Norren god. You can all see they follow the same trend. Volumes have gone up as a consequence of diligent subsurface work and data gathering. CapEx has gone down as result of Alliance work and improved flow efficiency, both in the execution and in the engineering phase. And as a result, the breakeven has been significantly reduced on these projects. One of them, the Skogul project, is a long tieback of 9,300,000 barrels of oil equivalent on a gross basis. That would not have been possible without the improvement program run by Aker BP. So this is tangible results. There are no changes to the scope. There are no changes to the way we decided to develop these fields. It's pure improvement on the same basis, equal for equal. When we come to the balance sheet. As you have seen on the slide here and also in the history, we have had a rapid deleveraging over the past two years. Currently, the net interest bearing debt over 2P is about $3.5 per BOE, which we believe is a really good level and a robust level to be on. The strategy in the recent years have been to retain strong liquidity position and ensure capital flexibility to be able to do transactions such as the Hess transaction on in a very expedient manner. And over the past four quarters, from Q4 twenty sixteen to Q4 Q3 twenty seventeen, our free cash flow has been 3x the dividends. Today, we are introducing increased dividends, and let me go through in a bit more detail. In 2017, we paid USD 200,000,000 in dividends to our shareholders. And for 2018, we will increase this level to USD $450,000,000. And have a very strong and clear ambition to increase by another NOK 100,000,000 per year to 2025, which mean a cash level of USD $750,000,000. The primary driver for this decision is threefold. We have a robust balance sheet and a low leverage and high flexibility. We have robust cash generation in our operations. And going forward, we are going to invest in projects with low breakeven. And even if the cash even if the CapEx is a bit higher than many expected this year, that money is being spent to realize project with $18 breakeven on average. So in total, we are convinced that it's prudent to increase the dividend yields for 2018, and we see the same development in the years to come. Moving on to flexibility. Many companies have a tendency to overfocus on systems and structures. We truly believe that the individuals in the organization, the capability, the mindset and the drive is as important. And in our thinking, the Aker BP culture needs to be one of flexibility and entrepreneurial mindset and where decision powers are distributed as far as possible. So some of these some examples of what have been realized as a function of this strategy and this drive. It took us exactly one month from we decided to farm down on Valhall till we had signed the agreement with Bandion. And that one month included making redoing the profiles, management presentation, screening of candidates, etcetera, etcetera. It took us three months from the first indications of a leaking Christmas tree on Skarv to we had completed the first workover. Next couple of workovers will be done next year. And it took us eight months from we started looking at the Tamba field to we had a rig drilling at the Tamba field, now completed the first well. And this night, we cemented 12.25 inches section, and we'll drill the reservoir section, yes, probably already started. And we have nine months reduction in the Vorlund scope as a result of Alliance activities. I must say, if there is one achievement that I'm extremely proud of, it's the organization's ability to execute in 2017 with high quality and a high degree of flexibility. Going forward, Aker BP is a growth case in addition to offering attractive yield. I believe this is one of the key traits that make Aker BP stand out in the E and P universe. And we see vast opportunity for value creation from our existing portfolio, growing opportunities as our improvement programs continue to yield results. From a base of about 160,000 oil equivalents per day today, our efforts going forward is to maximize the resource utilization from existing hubs, leading to further profitable growth. We invest in data, have done so significantly in 2016 and 2017 and will continue to do so. We invest in new technology to enable this growth as well. Our current business plan has the potential to reach production of about 330,000 barrels of oil equivalent in 2023. And this, as I said previously, represent a compound annual growth rate of 13%. This graph shows how we've moved up from last year's CMD. If you remember back, we had only two colors. Now we have distributed in three colors. In fact, we have accelerated about 80,000,000 barrels into this time frame even when we adjust for the change in ownership share on Valhall. We currently have a portfolio of development projects where the sanctioned part has a breakeven of $18 per barrel and $24 in average for all our projects in the business plan. As I said last year, this same number was in the range of mid-30s. So that's if you divide those two numbers, that's a substantial reduction in breakeven driven by higher reserves and resources and lower cost and shorter execution time. In many ways, flow efficiency is key to this development as it generate more resources into the existing work program as a function of time. And again, you see that there is a connection, direct connection between our focus on the improvement program and the results that are being generated, this time in increased reserves and resources. So if we break down these figures. The preliminary 2017 year end results are nine thirty million barrels, which is up about 200,000,000 barrels from year end 2016. In part, this is, of course, driven by the increased ownership in Valhall Hold, but it's also organically, we see that we have converted more than 2x the production if you exclude the increase in ownership share in Valhall. And if we move to resources, we see the same picture with a significant volume growth. In this time, more than 300,000,000 barrels in total. Certain projects, amongst other than Gotha, have had negative revisions as a function of negative well results in the year. But we also see fantastic opportunities in the Valhall area, where we've been able to mature a number of new projects in 2017. In 2017, we converted 134,000,000 barrels from resources to reserves. So in many ways, you can see that this is also a function, both our focus on M and A activity, but also on our strategic focus on growth organically and in particular, from our initiatives in flow efficiency. So moving on. I think the tracker can speak for itself when it comes to M and A. And we expect more M and A to happen also in the future. We have been disciplined, and we are being disciplined. There is no need for new deals that are none doesn't add to the story. And we will continue to be disciplined and focus on shareholder value when we assess new M and A opportunities. The screening criteria are as they were last year, financially accretive, operated assets, predominantly liquids. And of course, we believe that assets where we could utilize our strategy and our competency is value accretive. The portfolio on the NCS is, of course, focused on the NCS. But even more importantly is our focus around our hubs. So as you can see on the map, we try to spend our resources where they can generate enough or more value. The portfolio currently consists of five production hubs. That proves diversification, but it also gives scale. It gives access to infrastructure, and it gives access to tie in acreage. We are operating approximately 100% of our production. That also means that we have an ability to apply our improvement agenda across the entire portfolio without delay. And as I said, about 80% is liquids, predominantly liquids. And then if you put the exploration program into 2018, which Gru is going to tell more about, over these assets, you'll see a trend. And that is a trend where we're predominantly focusing on exploration in the areas that we currently define as our core areas, while we're also committed to continuing development of the Barents Sea at the same point in time. Now we state that our primary driver is to maximize shareholder value. And when we compare ourselves to oil majors, European independent and U. S. Shale players, Aker BP has been awarded in the capital market for this strategy. We have delivered superior shareholder return over the past three years. I take this as a station that we've had the right strategy, at least historically. And going forward, we think that by focusing on each of these six strategic ambitions, we will continue to create shareholder value also going forward. I think this is actually quite an astonishing graph. So summing up the strategy. We still believe that the key framework is execute, improve or grow. We believe that the key ingredients to improvement is to reorganize the value chain, focus on flow efficiency, keep an entrepreneurial and flexible organization and make sure that we are in forefront of the digital agenda. We have demonstrated results in 2017 and even more rapid results than we planned for a year ago. We have demonstrated further that the same strategy is also enabling Alka BP to maximize resource utilization in the area that we operate and thereby increasing resources and opportunities in the years to come. We have increased our organic growth opportunities from Capital Market Day twenty seventeen to Capital Market Day twenty eighteen quite significantly. And as a result of this, we are able to pay out a dividend now increasing from USD $350,000,000 to USD $450,000,000 and with a clear ambition to increase a further USD 100,000,000 per year from now to 2021. So in many ways, I think you can say that our strategy has at least worked in our favor, and we are going to continue the same activity set also going forward. And then if you can bear with me a little bit, I'll also take you through our assets before I hand over to General. Now Alvheim is, in many way, the poster child and has been the, let's say, laboratory for the strategy development of Aker BP. It has yielded high production efficiency and production in 2017. And the business case has been to work relentlessly to maximize area recovery, balancing execution, data acquisition by seismic and pilots when we drill, high end utilization of downhole acquisition tools to better understand the subsurface and combine that with efficient tiebacks through the implementation of alliances. This is the first place where we implemented the subsea alliance. And in many ways, in 2017, this has resulted in great results. Waipa and Kubba yielded much higher reserves, much higher production than we expected. And it's a clear demonstration of the organization's ability to turn around and react to new data and create viable measurable results. The drilling of the Boua and Valen fields are other examples, and we'll come back to that. And we are maturing further infill opportunities to arrest decline and minimize unit production cost. Alvheim has been a fantastic field for Aker BP since we took over in the 2014 and has been a blueprint blueprint for what we are trying to achieve across the portfolio. And again, I think the result speaks for itself. From a steep decline from 2012 to 2014, we've been able to arrest that decline and not only arrest it, increase production again by putting new assets on stream. 2016 was the most active drilling year since Alvheim came on stream in 02/2008, and the activity level is continuing. We have successfully increased production both by new tie ins but also by higher and higher utilization of the asset in terms of high production efficiency. And for the area as a whole, the estimated ultimate recovery is now almost twice at what it was when we planned for at the time of the PDO. And the story is continuing. There are plans for several new developments in this area. Skogul, which is one of the PDOs we submitted last December, which is a tieback down to Ville and from Ville down to Alvheim, is an example of our commitment to resource utilization in developed areas. As Goggle is also an excellent example of a project that would probably not have been executed without the implementation of the Alliance model, reducing cost and execution time. We are maturing Gekko and Kubra East. Kubra East particularly as a result of the good results in Waipa and Kubra. And a project called Katerpillar is also being matured. We are currently drilling an exploration prospect near Bola on something called Frosk or Frog in English. And the results are expected shortly and may result in further exploration drilling in the same area. In addition, a number of new exploration targets are being matured. Some of them one of them is called Rumpetrol, which I don't know what is in English actually, and then Deep Alvheim, both will maybe drill in 2019. So it's actually quite amazing. And in this area, we have seen so much drilling activity by further analysis of new data, new seismic, and we gathered new seismic just a short time ago, you can see further opportunities. So the focus going forward, safe and reliable operations, of which Alvheim has been a hallmark. We are continuing to interpret the four d seismic, and we're also starting to look at infrastructure debottlenecking to increase further tie in opportunities, particularly of gas. Moving on to Valhall and Hodt. As I said, this is an asset that we took over operatorship in back 2016, asset that has surprised significantly in terms of available resources in the field. We produced about 35,000 barrels in 2017 and net to Aker BP, and that's at a 90% ownership rate. And the unit costs have remained stable despite lower production in 2016, proving that the improvement program does not only yield higher production but also lower unit costs against stable or declining production. The ongoing IP program is there's an ongoing drilling program at IP, which is this platform here. And now three wells are completed, and we are running the completion on number four as we speak, and more targets are being matured. The PDO for Valhall Funquest was submitted, and the development is underway. And also, we see increased opportunity scope in the area to increase recovery. When we move on to the Flank West, this is an unmanned wellhead platform. There are currently two unmanned wellhead platforms in operations at the Valhall field, this North Flank and the South Flank. So this will be number three. We have six well slots allocated to the scope, but another additional six slots to allow for further future expansion, again, demonstrating our commitment to maximizing resource utilization in the area. I'm very pleased with how Aker BP team has been able to escalate the start up from originally planned around 2021 to now late twenty nineteen with the resulting significantly improved economics. Volumes has also increased slightly from concept selection to currently residing around 60,000,000 barrels of oil equivalent on a gross basis. The CapEx on it is reduced by almost 25% to NOK 5,500,000,000.0. And the breakeven, as a result, is reduced by 16% to USD 28.5 per barrel. So another project that demonstrates that our improvement agenda is yielding tangible results. So why do we like Valhall and Hod? The resource in place is significant, almost SEK 4,000,000,000 originally or stock tank oil originally in place. And we have produced only 25% of that to date. That means that there is significant upside potential to be produced over time. So today, we are stating that our ambition is to produce another 1,000,000,000 barrels of oil equivalent of the Valhall area over time, which will raise the recovery to roughly 50%. What are the key ingredients? It's to continue drilling and drill out the area. We have significant drilling resources in place. First, the EIP rig as a stationary rig as a part of the field development, but also the Maersk Invincible, which is now carrying out P and A operations at a much more rapid pace than we thought possible. We started out that program at 120 per well, and now we're down to twenty days and see a possibility to get down to fourteen days per P and operation P and A operation, which means, again, you can transfer cost and resources by focusing on flow efficiency to value creation and drilling new targets. We see opportunities from new technology. In this kind, we have exemplified it by the Fishbones completion technology, which will allow us to deploy multilaterals in the chalk. We see improved restaurant monitoring and data acquisition, both by using high end measurement and drilling tools, so called three d tools, and also advanced modeling techniques to make faster and better decisions. We see opportunities to scale up water injection scale up the water injection project and thereby gain more pressure support and more volumes. And we see further opportunities to reduce cost and increase quality by digitalization. There's a large hopper of projects to be defined in the coming years. One of them could also be the Hod redevelopment project, which is high on our agenda and where we will drill an appraisal well towards the back end of 2018. So from a field that was probably looked upon as one of the candidates for P and A and field decommissioning, this is now turning into an extremely attractive opportunity in terms of growth. Moving on to Skarv. The overall performance in 2017 has been strong despite challenges with two of the Christmas trees on the field. We have seen large increase in reserves due to the mostly due to the PDO submitted at Aful, but we also collected new seismic across the area, which is currently being evaluated. If we move on to Aful, this is also an extremely interesting project. The resource has gone up significantly from around 200,000,000 barrels to two seventy five million barrels, which is an increase of almost 40% since the time of concept selection. And then in turn, the CapEx has gone down 20% by from NOK10.6 billion NOK8.5 billion, which in result means that the breakeven is NOK18.5 billion on this project. Now this project is about twothree gas and onethree liquids, but it's still a significant effort carried out as we've developed the project. The first one of this project consists of three wells, which will be tied into the Skarv FPSO, and the start up is 2020. Phase two will consist of another three wells tied into basically the same infrastructure back to Skarv and start up in 2023. Now for a project that has this kind of reduction in CapEx, it's also interesting to note that there's a lot of new technology elements, electrical heated trays pipe in pipe hybrid vertical Christmas trees, which means that we will reduce the cost of future interventions since we can intervene directly through the Christmas tree. And in total, it also demonstrates that the alliance concept and this time directly challenged in a market to market concept proved itself again. Now looking at the Skarv area, we are not done with the Afur project. We are targeting an average production cost for Skarv below $7 in line with our overarching ambition. The step up there will be a step up in the exploration activity in the area. Kritong and Tumla, which is on our firm drilling program, will be drilled soon. Gur will talk more about this later. And we are maturing further exploration and follow-up on exploration activity in the area in 2019. We also have an extensive program in place to maximize area recovery. The processing of the four d seismic that we collected in 2017 is ongoing. Rest of our work for the Groasell discovery is ongoing and may turn into a field development project. And we are also assessing computation techniques to increase the recovery in the low perm Tilly formation based on early phase early data from the four d data set. In addition, we're, of course, working to reinstate production from the shut in wells. One was put online already, took three months from shutdown to back online. And we are firming up plans to recomplete the other two wells in 2018, probably as the first activity on Deep Sea Atlantic. So from Wohring Basin to the South to Ula. Production in Ula at in 2017 was 8,000 barrels of oil equivalent gave a high unit production cost, about $40 per barrel. Now you may feel that Ula is then uninteresting in the Aker BP portfolio. Quite the opposite. We consider this a huge opportunity. It's an underinvested asset with activities ongoing to improve productivity and cost. One of them, I've already talked about, is the Tambor redevelopment project. Another one is the Uda tieback and modification project. So if we look at this more closely, Tambor redevelopment is well underway. The Maersk interceptor has completed one well and has run the casing on Well Number 2 and are about to enter the reservoir. A gas lift model is being installed while we have Maersk interceptor in place due to the increased bed capacity. We expect first year oil later this year as soon as the wells can be put completed and the gas lift program completed. In addition, there's very strong synergies towards Ula from Tamba and the The Oda is a third party tieback operated by Centrica, where Aker BP own 15%. The increased volumes will, of course, drive down unit production costs. But even more importantly, the increased availability of injection gas will increase the numbers of wells we can run on so called VUG, which is water alternating gas, where we inject water and then alternate the gas to maximize efficiency, which in turn will yield increased production in the years to come. We expect increased production in the coming years to result in a further reduction of unit costs down to about $20 per barrel, about half of the $20.17 level. And in addition, we are maturing further opportunities. More infill drill wells to be drilled on the Ula Main Reservoir. To expand the use of VUG and injection to maximize drainage in the area, we are evaluating an appraisal of the Ula North prospect and also Ula Triassic, which is a reservoir at the Ula Main Field that is only being produced through one well. And we're also assessing further exploration. It also is worthwhile to note that we also on Ula gathered four d seismic this summer. All in all, I believe this also demonstrates our ability to turn around and put profitable projects on fields that may have been considered to be less attractive in the past. Moving on to Ivar Ausen and Hans. Ramp up of production on Ivar Ausen has been extremely expedient with high quality. We are about one year ahead of our plans, and the 2017 production ended up at about 18,000 barrels of oil equivalent net to Aker BP. The uptime and production performance has been excellent with a bit of challenges on the power supply from Edvard Grieg, resulting in some downtime, particularly on the high energy drives across The PDO scope is now completed, and the platform production was reached one year ahead of plan. I think we can conclude at this point in time that the Evaporsen has been a successful project for Aker BP. But we're not giving up there. There is a number of further activities planned '18 and 2019. We will drill two new water injectors and the Hansa Pressel well in 2018. We have already started planning on an IOR campaign in 2019, and we are maturing exploration opportunities that may result in new tiebacks in the area. Ivarossen is also quickly becoming Aker BP's laboratory for operational improvements, particularly as it pertains to digital tools. We are optimizing the use of the onshore control room, which will mean lower cost, better production, but more importantly, pose a real laboratory for how to digitalize our offshore operations. New technology, combined with digitalization and lean work processes, is going to lead the way to more efficient offshore operations. So in the same manner as the Alvheim field has been the role model for our focus on resource utilization and alliance work with the vendors. We believe will be the role model for efficient operations. Now this doesn't come without effort. So in 2017, we have increased the MNO budget significantly. Currently, there are more than 70 defined seven-zero defined projects ongoing across the portfolio. And we have increased the numbers of MNO or MMO spent by about 40%, four-zero percent since 2016. This is quite contrary to what you see across the Norwegian continental shelf. And you can ask why do we do so? And that's quite simple. We believe that it's consistent with our strategy to invest in these assets to make sure that we have lifetime to utilize the resources in the reservoir. And also, we believe that by implementing new ways of working with the vendors, we can increase flow efficiency in the maintenance operations and thereby reduce cost. When you move on to drilling. When we were at the Capital Market Day last year, there were two ongoing drilling operations in Aker BP. Now there are five. Musk Interceptor is currently drilling at Tambar. We'll move on to drill water injectors and Hans appraisal. And then we sublet to the Odda license to drill Odda production wells. Transocean Arctic is currently drilling the Frosk or Frog exploration well. We'll move on to drill the Ryvosn exploration well and then go back to drill the Hod appraisal well that I talked about, which is in this slide called the Pilot. The Valhall drilling platform will continue to produce wells on the Valhall Main field, and the Maersk Invinci Invincible is continuing its P and A program. Also note on this slide that we expect the P and A program on Valhall to be completed by Q4. This is a result of a continuous improvement effort by the Invincible team and Maersk, which have slashed the average P and A activity from a planned one hundred and twenty days to a current nineteen to twenty days and targeting down to fourteen days. And then Deep Sea Stavanger is coming on board. The first well it will drill is the Kvitung and Tumblr, then move on to do the Skarv workover before it moves up to the Barents Sea Sea and then comes back to drill Camellian South on the Alvheim Reservoir. So in total, I've gone through the strategy. I've demonstrated how strategy generate tangible results in terms of increased shareholder value, increased resources, increased dividend and an increased scope for further growth. As you can see now that I've run through the execution part and also demonstrating the work program in 2018, you'll see the same traits, the same strategy and the same activities also in 2018. I think the key elements of Aker BP's strategy also demonstrated by the execution can be summed up as follows. We believe that acting together with our vendors, we can reduce costs, increase flow efficiency and improve activity. Aker BP is committed to resource utilization on the Norwegian continental shelf by improving the flow efficiency in our operations, the data acquisition and the execution of our tie in projects. And last but not least, we have a significant hopper of increased production and increased activity going forward to support that dividend yield also in the future. And all of these projects have a breakeven of roughly $24 on average across the portfolio. And there's more to be done. The improvement journey has just started. And even if we are happy with the results, I can assure you that Per Haral feel every single day the need to improve a little bit more. So I'm pleased to introduce Berraal, Berraal Kronghelft, which is our Head of Improvement in Aker BP. The floor is yours. Thank you, Kola. Our business is constantly under attack from external forces, it being forces of nature, volatile markets, environmental concerns, technological developments, regulatory framework and not least competition both within the industry and from alternative energy sources. In order to stay ahead of the game, we believe the ability to adapt and improve is essential. Hence, improvement is a strategic imperative for Aker BP. Aker BP is running a comprehensive improvement program to maximize flow efficiency and remove waste in our value chain. Our improvement agenda currently covers four broad topics, which Karl already have introduced you to, improvement for business transformation, as shown on this slide, all of which are interlinked and intervened with all our improvement activities and initiatives. Today, I will cover two of these topics in more detail. Let me start with alliances, an area where Aker BP has chosen a different path from many of our peers. Our suppliers account for approximately 85% to 90% of our costs and this fact demonstrates the strong logic for how important our suppliers are for our competitiveness. At the same time, they also represent a large share of the opportunities and risk we face every day as an oil and gas company. Hence, they are in the core of our value creation. In such a context, we need to deal with our suppliers with a strategic mindset and approach. We believe that the present way of operating and managing our supply chain through traditional transactional procurement has over the last fifteen to twenty years demonstrated its inefficiency to deliver improved performance and value to the E and P industry and hence deserves to be challenged. In our view, this unsustainable relationship between operators and suppliers cannot continue if we want oil and gas to be a competitive energy resource in the future. So the question that we asked ourselves was, should we try to improve the traditional transactional approach with a large number of suppliers with little continuity in the relationship, with a lot of ineffective interfaces and with disaligned incentives and with a huge non value adding cost to facilitate this process like the bidding cost? Or should we look for inspiration from other industries like automotive and work with a few strategic suppliers in a much more collaborative manner in an end to end integrated, flow efficient and long term value chain with shared incentives. We are convinced that it is the time now to try to do what other industries have already been doing for decades. And we have established an alliance model, which aims at solving the problems we have observed with the traditional model. Through 2017, we have progressed significantly with reorganizing our value chain and have formed long term strategic alliances with some of the leading suppliers in our industry. And we intend to continue to explore the possibility for more alliances as well as systematically and continuously improve the alliance way of working to the best for our partners, the industry at Norwegian Continental Shelf and of course, for Aker BP. So what do we want to achieve with our alliances? The basic answer is that we want to remove waste from our value chain. We want to make each other good, leverage each other's capacity, technology, strengths and skills, ensure that the best employee does the job regardless of where we are employed, avoid duplication, avoid nonproductive bureaucracy and non value creating work. Simply work as one integrated and seamless organization with the same goals and incentives. We want to see the entire value chain in an end to end seamless way and to optimize the flow efficiency and productivity of such a chain together with our partners and also with the digital lenses on. As a result, we also expect quality and performance predictability to be at a much higher level, and we will become more flexible and scalable, and hence, able to address the expected cycles and volatility of our industry in a much more efficient way. To achieve this, we think the behavior and results we want. In short, we want our Alliance partners to be financially robust and earning money through a shared risk and reward mechanism. Alliance way of working is enabling very early involvement of our supplier chain in project and field developments, which gives us the opportunity to move faster and with higher quality directly to the realization phase of the project. We have already experienced this effect in several of our projects, which also Kalo already have pointed to. Said that the Alliance will only survive if it, in a transparent way, can prove that it provides continuous productivity and performance improvement beyond what the traditional transactional supply chain model can offer. Hence, we will benchmark our alliances with traditional models in our industry going forward. We need to prove to ourselves and our surroundings that we outperform the classical and transactional based supply chain. And remember, all our alliance partners are selected and will be selected after an open competitive bidding and evaluation process. Hence, the alliance starting point is always that the selected partners are competitive. We think the improvement potential these alliances has got to work with is huge, given the fact that the waste in our E and P value chain and in our industry is so massive. And we have already started to see positive results from this work. This chart illustrates a project involving two new infill wells at the Worland field, which is the first project completed under the Alliance model. This project was delivered in 2017, nine months ahead of schedule and at a significantly lower cost than planned. As the chart shows, the Alliance contributed to a 30% cost reduction compared with the starting point. We are now rolling out the Alliance model in all our main projects, including the three projects that were sanctioned in December, and we expect to see more positive effects on cost and schedule as we move forward. On the subsea scope on Valhall, Flanky West and Skogul, we can already now see that the alliances contribute to deliver as shown on the waterfall of this slide. At Aker BP, we are convinced that the alliance will be key to be able to meet our breakeven target of USD 35 per barrel or less and not least also be able to deliver them according to cost, time and quality targets going forward. We also expect the alliances to deliver even greater improvement in the longer term, and we will systematically work with our partners to achieve this. These improvements will be harder to realize, but realize and will request innovation, but we believe they are critical for our long term competitiveness. My second improvement topic is data and digitalization of E and P, which by the way is an integrated and very important part of improvement and development work we will do with our alliance partners. Hence, a very important selection criteria when selecting alliance partners is how they tick the boxes for our digital evaluation criterias. Technological shifts offer completely new opportunities for applying digital solutions for effective data sharing and insight. In our view, there is no technological deficit in the world, but more a lack of ability to put it into use and to learn quickly from other professions, companies, industries and countries being in the lead. We are therefore actively seeking inspiration from others and try to be ahead of the pack. We are convinced that anything that can be solved by software should and will be solved by software in the future, that digital has the potential to radically transform our business and industry and further that this transformation will provide a competitive advantage for early movers. We believe the successful industrial companies of the future are truly digital enterprises with physical products and assets at the core, augmented by digital twins, digital interfaces and data based innovative insights and services. These digital enterprises will work together with customers and suppliers in a collaborative, industrial, highly efficient digital ecosystem. As a result, we will see changes in how we are organized, how many people we employ, what skills we need, operating models we apply, how we interact, what business models we use, what players we work with and not least, with what productivity, flexibility and quality we can run our business. In other words, it will provide radical improvement to this industry's productivity and disrupt all ways of working. And watch out, the journey has just started and it moves fast. The most important topic for us at Aker BP in digitalization of the company is data, the blob in the digitalization. We need to get control with and have access easy access to high volume and high quality data, which we can trust at all time. Industrial companies, including E and P companies like AkerPT, generate large amounts of data that we increasingly want to use systematically and commercially. We cannot overstate the value of ownership and access to high quality, reliable and evergreen data. This is priority number one in our digitalization efforts, get control of our data and make them easily available for everyone that can help us with giving insight and create value out of them. This also includes the importance of having good governance and structure around access control, security and quality of all data relating to our business at all time. And the key enabler in this process of removing the data silos and liberating our data is the heart, the high performing data platform. We further believe that a clear separation of data and algorithms is necessary to extract value in an industrial context. Hence, we focus our work on developing a data platform as well as developing numerous applications working on the top of the data platform, consuming data to create insight and value to Aker BP. While some companies establish large consultancy driven projects to deliver a custom closed and proprietary data platform, RTBP has decided that we will try to enable the birth of an open, shared, cloud based and commercial solution that continuously scales and improves independently and across companies, industries and countries. A data platform where Aker BP owns and controls its own data and at the same time enable data sharing with selected partners based on efficient right to use arrangements. We will through the data platform get a unified data architecture of operational data, where all relevant data will be easily available for the user all the time on any device with minimal latency from any location. We will require that all equipment and systems delivered to us have open APIs complying with our standards and specifications and deliver data on non proprietary and well defined data formats. Applications and algorithms will be connected to the data platform via open APIs. No customized silos with vertical integration or lock in or data capture in applications will be allowed. There are several interesting industrial data platform concepts in the market, including Siemens, MySphere and GE PredX, which on the PowerPoint format is meeting all our expectations and requirements. However, our view last spring was that these market alternatives were in their infancy. Hence, we decided to follow an alternative route. We have therefore, as you probably know, established a long term research and development cooperation with a software startup company, Cognite, led by Jun Markus Lehrvik, known as the founder of Fast Search and Transfer and Sense, a company where Aker BP also has a 10% shareholding. Cognite is a technology company with the ambition to develop and commercialize a state of the art data platform meeting all Aker BP's requirements. When the platform is developed, will it be delivered to Aker BP as a Software as a Service in the cloud? Cognite aims to recruit some of the best brains we have access to in Norway within the data science and have already signed a high quality team of approximately 50 people co located with Aker BP here at Fornebo. Already today, as we speak, all operational data from all our five Aker BP operating production hubs are available for ourselves and our selected partners on our Cognite Data Platform. We have uploaded all historical data back to 1986 and are now streaming live data from close to two hundred thousand sensors into the Cognite data platform. The is exciting the high speed and low cost at which this new technology can be put in operation. We started feeding data into the platform in August. In November, we were up and running and the backfill of historical data was performed in just a few weeks. Amazing. We have now started to combine the time series data with the from the sensors with contextual data like tag mapping towards three d asset models, P and ID process files, maintenance logs and data as well as ERP data. Hence, our first step towards the digital twin of the asset have started and these will be shared with our selected partners to create insight and value for Aker BP, but also for our partners. And the idea is very simple. It is that this industrial data platform will enable Aker BP together with our partners to make our data a strategic resource for accelerating performance, innovation and decision making and will enable efficient interaction and digitalization of our value chain the NCS value chain and the NCS E and P ecosystem, leading to a highly competitive business and industry. Aker BP has over the last year taken important steps and had the first positive learnings in its digital transformation. With strong support from our largest largest owner and a highly engaged top management team, led by an even more engaged CEO, we have formed a digital vision and road map for the company supported by a significant pipeline of digital use cases and a number of key digital initiatives to be solved in the months to come. And even more important, we have matured the vision and road map for digitalization together with the entire entire reinforced by us focusing our entire research and development efforts and funds on innovation and technology related to digitalization and subsurface. In 2018, estimated to be a spend of approximately $430,000,000. To deliver the specific use cases and digital initiatives we have identified, we combined the best domain competence from Aker BP, but also from our strategic partners with strong software competence in companies like Cognite or that it's likes in an integrated program combined with a test and learn approach to be able to move fast. In parallel, we're developing the Cognite Data Platform, are we also developing applications running on top of the data platform, working on the data in the platform to solve tasks defined by our use cases. This to test and verify that the platform and platform architecture and APIs is working, but also to get some early wins with regards to getting insight to and value out of our dataset. And now I would like to share some example of initiatives and use cases which we are working on with you. We have already started sharing operational data with our suppliers, with Framo being the first OEM to get access free of charge to live data from their own equipment on Ewairosen through the Cognite data platform. And I can tell you, it works and feedback is promising. This opens up opportunities for them to identify improvements and deliver better products and services to us, which they are working on at the moment. They are trying they are also trying to develop remote operational functionality and diagnostics as well as to identify further improvement on their equipment packages for future projects in our portfolio or on the NCS. Another initiative where I think we have come very far over the last months is on the use of tablets to support our offshore operators. Today, a tremendous amount of time is spent on searching for information and on manual workflows and tasks offshore, where relevant and trustworthy information and documentation is absent or very hard to find. By giving access to relevant data and information stored in the Cognite Data Platform and displayed on a tablet at the location based on the work to be done and looking at the equipment to work on, significant time can be saved and risk reduced. It might sound like something that will not be ready for years, but we have already tested a first version of this on Ewaldossen and Valhall and aim to deploy it in operation by the 2018. To kick start piloting and testing how digital how the digital oil field of the future should look like and how it could be operated, we are in 2018 also planning to use Ewald Ossen as an advanced test case as a laboratory. And examples of what we are planning to do is we plan to develop the first version of an Ewald Ossen digital twin on the Cognite platform, including real time data. We will test and develop digital tools and applications for operational support and data visualization working on the Cognite platform. And we will work closely and integrate it with our key OEMs in operations, for example, the Framo to improve performance of the plant and to do maintenance more efficiently based on using digital technology like predictive maintenance based on machine learning on top of Cognite platform. And also start testing, using and developing the remote operation functionality, which Ivar already are equipped with. By 2018, we hope to have a very clear understanding of what it takes to have a first version of a digital offshore operating model for the future. The last example I would like to draw your attention to is the Push program that we are running in joint collaboration between Aker Solutions and Aker BP, where the objective is to radically improve the way offshore projects are engineered. The objective of this program is to accelerate the transition to a fully automated and digital field development project, while developing a suite of software applications aiming at reducing execution time and reduce costs significantly from discovery to operation. The initial focus of Push has been on developing digital early phase topside engineering tools, enabling fast and advanced technical and economical concept selection. But we are currently also developing the first versions of solutions for detailed engineering and fabrication. Push will ultimately provide a digital red thread from engineering to operation and generate three d twins of the platform for use in all phases of the project. We have so far released five applications and have three more in the development, and three of these applications have already successfully been piloted on our Nuwaka field development project in the concept selection process and has contributed to improvement in the project. Also, this application will consume data from the Cognite platform. The progress we have had and the learnings we have gained on digitalization this last year makes me convinced that we are moving in the right direction and progressing much faster than we initially thought would be possible. But we need to fix one major issue, access to enough high quality data to take advantage of what the new technology will offer us. Hence, we need data liberation on the Norwegian continental shelf. The current state of affairs in the E and P business with regards to data is a world of data silos, low quality data and even lots of dead data. And lot of industry data are broadly inaccessible or stranded. An advanced oil service provider has at least 100 operational data systems with 4,800 active integrations and with 500 connections rebuilt every year. The typical large oil and gas operator can connect less than 60% of its 4,000,000 sensors sensor identifications to equipment and backfilling our historical data, which we just have done, is very often impossible at a reasonable scale. Data is strategically important and valuable and even more valuable if you are able to create good insight and value through the data, for example, applications for machine learning and artificial intelligence. But the latter will require that you also have enough data and of good enough quality and very few, if any of the operators will have that today. We believe a data liberation is needed. We need to transparently share. We need to have open standard IPIs and separate data and applications to unlock data and enable efficient insight and value creation from our data to the benefit of the whole ecosystem on Norwegian content itself. Also, the subsurface data related to seismic exploration and operations should, in our view, be shared and processed by using more open source software, we think we also need to move subsurface towards an open source logic. It has just started with three d MultiClient seismic, but it cannot and will not stop there. New and cheaper technology will enable workflows of processing and interpretation of data to be shared openly, and we hope that NCS sooner rather than later will be based on an open access to subsurface data for all players as well as open sharing of workflows to process and interpret the data and open sharing of digital workflow recipes. Productivity gains from such data sharing and analytics on the Norwegian Continental shelf have a potential to significantly lower the cost per barrel. But even a company like RPVP does not have access to enough data, so we think it will be very important to share data across operators and companies in the future. The benefits of such sharing of data are so plentiful that they should obviously overshadow the challenges. Hence, our invitation to the industry is let's get started and share data. Improvement is a strategic imperative for Aker BP. In Aker BP, we are therefore running a comprehensive efficiency improvement program, working integrated with our strategic partners, looking at our shared value chain and work processes with both the lean and digital lenses on with the objective to get out as much waste as possible, create as high flow efficiency as possible and still be able to swiftly innovate the way we do our work and business. We are working with digital with the aim to be an industry reference point for digital project and execution. We have designed a structured and proactive approach to our improvement work to ensure continuous productivity and quality improvement in all parts of our business and to be able to measure that it actually is happening. All this to improve our joint productivity and margins, which will enable Aker BP to meet our targets of not sanction any project unless they meet a breakeven of US35 dollars per barrel or less, be able to operate our asset at US7 dollars per barrel including tariff as well as cut the time used from finding a resource we view interesting to be to we have oil on deck in half. Bottom line, will this ensure that Aker BP stays competitive and profitable also in a market with high uncertainty, high volatility with rather low oil prices? Many thanks for your attention. Thank you. Then we take questions from the audience, Olivier, in the auditorium or on the web. So who would like to start with the first question? The one just here. Teo Nielsen, Sparangwalm Markets. A couple of questions from me. First, on what color what you mentioned on the breakeven level of the sanctioned portfolio of $18 per barrel. And you also mentioned that, that's, of course, driven somewhat by lower market prices. But going forward, maybe we should not expect that much lower market prices. So further improvement to that breakeven level, Where should we expect that to come from? Excellent question. Well, first of all, I don't think a lot of the improvement you'll see is from lower market prices because a lot of these improvements happened from 2017 CMD or decisions made in 2015 and 2016. And the market at that point in time was not exactly optimistic. So a lot of this is actually driven by improvements in flow efficiency and other improvements by that has a net effect to increase productivity. And as you saw in the Wollund case, we've tried to be quite clear on what is market effects and what is actually improvement effect. Now it's easy to conclude that we've come to an end. And I would be happy to say that we were had a productivity that was extremely high and there was nothing more to gain. In reality, I don't think that's the reality. I think there is still a lot of productivity gains to be had. There are still a lot of interfaces that aren't exactly frictionless. Digitalization, as Beharal talked about, which just opened up that box, it's going to radically change how we're able to execute and how the swiftness and the quality and the cost, and it's happening far faster than we had imagined a year ago. And hence, my conclusion. I think you might quickly find that the target we set out with twenty first SEK 35,000,000 and then SEK 25,000,000 turns out to be not ambitious enough. So I believe that there's still a lot to be done in terms of increased efficiency on Norwegian Continental Shelf. Okay. And then while talking about digitalization, it looks like, at least this far, you used the Cognite platform mainly on your operated field, if I'm right. So how could like the Cognite platform impact Sverdrup in terms of breakeven levels, OpEx per barrel, Phase two CapEx? Yes. The Kogonar platform in itself is a data platform. It's commercial. Anybody can buy it. We are instrumental in developing it. But we have never had the intention nor do we actually have the right to limit Cognizant's use of that platform. Quite the contrary, we hope that there will be many users of that platform, and I would be extremely if it turned out to be Sverdrup as well. That is actually one of the key issues here is that we believe that proprietary solutions on a company by company basis is not going to drive sufficient speed, sufficient improvement and sufficient quality. I think what actually amazed us was this velocity it actually happened, right? As Berard said, it's we started up loading up in August, August, and now we're done. And this is actually we actually assume that, that would take a year, maybe one years. Point So there is something happening in this industry that is going to fundamentally change the way we think about it. Is Sattel a client of Cognite? I think Cognite should answer that, but I think they run a couple of projects for Sattel, but I'm not aware of the state of the discussions. Do we have further questions in the audience here? Questions from the web, Jonas? None? Yes, we have one question here. Hi, It's Nikky Kudmanov with Jefferies. Just maybe moving away from Cognite, just on your numbers for the growth to 330,000 barrels by 2023. Is there any risk number that you provide with that, not necessarily detailed list of what non sanctioned projects go into that? And then maybe just a question on the dividend and the recent increase. Has that been helped by the oil price rally? Do you see any risk if the oil price comes down that you won't be able to hit that €100,000,000 growth per year to 2021? And then as part of that, is the €750,000,000 sort of perceived ceiling at the moment given the current business plan? Thank you. Quarterly presentation, we usually have a rule. Alex Anikran, our CFO, he does the difficult ones, he should really be doing this. When it comes to this growth, we apply the same methodology that we used. That means that what you see is our expected numbers. So that means that it's not a kind of an unrisked optimistic. It is our plan assumption. Second, they're all named projects. So there's no exploration upside. There is no M and A possibility, etcetera, etcetera. So it is what is in our current business plan, what we call long range plan with the current economic planning assumptions. So that should give you a little bit of an idea of how that figure is being constructed. So what we've really done is to accelerate and increase the level of projects. And later in my presentation, when it comes to growth, I'll show you the list of projects. You can find it in the handout as well. When it comes to dividend, in addition to the increase in dividend yield, we also stated that we believe that this could be done without exceeding the 1.5x level of gearing, which is another illustration of how robust we believe this case actually is. And if you get back to your office and you put all these numbers together, you'll come to the conclusion that the oil price can actually drop quite significantly without us having to redo that policy based on oil price changes. So actually, as we sum up, we believe, again, that the balance of a robust and reduced leverage, high cash flow from existing operations, which you'll also see later today, and a breakeven portfolio breakeven from the current portfolio that is significantly below what anybody guesses going to be the forward oil price is a robust and good basis for a new dividend policy for the company. Then I think we have one more question. It's time for one more question before we go for break. Thijs Berkelder, ABN AMRO. You prefer to be operator on your fields. How should we see Johan Sverdrup in that perspective on the somewhat longer term? If we would love to be operator on Sarov, the answer is yes. But I'm guessing that's not your question. Sarov, of course, is an excellent field to be a part of. And Sattel is doing a really good job as the operator. So at this point in time, we're happy with the position we have on Satoly. Okay. And then we primarily have seen a lot of acquisitions. Do you also have a divestment strategy? That's a good one. Yes, we have just divested 10% in Valhall, not necessarily because we wanted to, but because we had to. So the way we think about this is as we're operating almost 100% of our portfolio, we feel that we have a very good control over the content of that portfolio, the upside and the downside and the opportunities therein. And it's almost implicit in our strategy that when we go in and acquire an operatorship, it's because we like the portfolio. That doesn't mean that we will not selectively divest if we believe that, that is value accretive to the shareholders. An example being on the Valhall case, we have said that as ultimately, we'd like to own about 65% or twothree of that asset. And yes, at some point in time, we may choose to act on that strategy, through cash or for a swap. But for the time being, we think that this asset is highly attractive and a good place to be. So it's the same type of we'll have the same type of approach to divestment as we'll have to acquisition. We have a very clear, very firm strategy, and then we are able to move swiftly if the opportunity arises. Finally, question on the Alliance model. You primarily bank on, let's say, key contracts or key suppliers to you. How do you more or less ensure against the risk of one of these suppliers failing for whatever reason? What kind of systems do you look at now? We're now still in an oversupply market, but let's assume that in five years' time when these framework agreements more or less end, that that Okay. So your question is what happens if one of these defaults or otherwise fail from a commercial standpoint, right? Okay. Well, that's a good question. So several points of departure to that answer. The first one is, of course, that we solidify the solidity of every contractor and partner in our partner universe. So it's, of course, a part of our assessment whether or not they have a chance of ending up where you are discussing it. And then, of course, you can't guarantee that there aren't off event events that will change that picture as we move into operation. And in this case, we try to, by being transparent and open, to be very early in identifying such solutions and, if necessary, participate in finding a solution. Now that being said, the partner universe that we have created so far, we don't really see a lot of risk. But it is a topic that is very core to our assessment early on. It's also interesting to note that we see that the application of these alliance models increased competitiveness to the partners on the alliance models and also allow them to identify ways, the nonproductive activities in their own business model, which, in line, helps them improve and accelerate their own improvement programs, which we see they then utilize in other contracts against other E and P companies, which do not necessarily run the Alliance model. So we actually believe that by running the Alliance model with our contractors, we are making them more robust than the opposite. We have one very final question at the front here. Thank you. It's Anders Holter from Danske Bank. Just reverting back to the M and A comments. It's been such an integral part of your success so far. So just wondering how you see the opportunity set out there on the NCS now compared to twelve months ago? And also, where what movements are you seeing on the seller side? Also, give it a reference compared to last year. Of course, you know, that's what you just said out there. You know? Is it on the increase? Is it coming more? Any thoughts be good. Thanks. We start with the M and A opportunity side. Well, it's quite clearly been a very active year, and a lot of players have done strategic moves in 2017. And that, of course, has had a certain impact on the set of opportunities. But we've also seen that there's been an influx of opportunities. We've seen that these strategic moves made by certain players have also impacted other players' view on the same situation. So in sum, I'll say that the activity set or the possibility set is maybe somewhat reduced, but not necessarily reduced by the number of transactions that we've seen in 2017. On the player side, I think it's quite clear that we see more PE backed entities. We've also done one of these transactions on the Norwegian continental shelf. And we also see that some of the strategic companies, such as the Maasque Total transaction, is also innovative in terms of nature. So you could elaborate from that, that there's more competition in the M and A space. And I think for Aker BP, this kind of sums up to being even more focused on what is value accretive, but also disciplined as to what kind of transactions we go into and what kind of pricing we accept on those transactions. On the vendor side, which I think was your second question, we see a possibility for consolidation, obviously, in the vendor space. But we see that our vendors are increasingly robust as they're getting their improvement programs to work. They seem to have come over the first kind of wave of or the last wave of cuts. And we see the quality rising on the deliveries, etcetera. So my assumption is that we as you move into 2018, you'll see an increasingly robust service sector, but I wouldn't exclude the possibility of consolidation in that sector either. Thank you. Concludes the Q and A session for this time. There will be an opportunity to ask further questions after the second session of the day. Now we do a quick stretch of legs, coffee refreshments next door, and we'll start again fifteen minutes past the hour, 03:15 local time. I suspect you might be a bit tired of hearing my voice. So I'll shortly lead over to Gur. But before I do so, I just want to a couple of the non FID projects in our portfolio. And first and foremost, starting with Johan Sverdrup project. It's a pleasure. Truly, it's a pleasure to see that project progressing. Massive construction activity carried across three continents, and now we are 80% complete on time, on schedule and on cost. The drilling platform has been integrated. This is a picture from the heavy lift at the Klosterfjord, where the drilling platform was put together. We've seen the riser platform being ready for transport. We assume that to happen in February. And we've seen nine water injectors now predrilled and completed with excellent results. It's always also a pleasure to see that the CapEx is continuing to come down following the trend that we've seen previously in this project. We're now estimating Phase one at a nominal of million with a breakeven oil price of a little less than $20 starting to almost compete with Afur. And then the full field CapEx in the range of NOK132 million to NOK147 million, which will yield an all in breakeven of about $25 per BOE. We're in the middle of the Phase two PDO run and assume that the PDO will be delivered in the second half, probably as the 2018. So this project is going well. And as previously said, we're really happy with Stottoll job they're doing as operator on Johan Sverdrup. Now moving to another important project for us. It's the Nauka project. So the Nauka project is the area between Usseberg and Alvheim. This is an area that's been marked by several operators who have tried to make the small or the smallish accumulations in the area economic on a stand alone basis, but has so far failed to find a solution. During the years between starting with the acquisition of Sanska in 2015, Aker BP has cleaned up the area such that it's now two three oil companies that are owning the licenses in the area, the Stato, Lutos and Aker BP. And we have established an area forum to evaluate the joint the area development of this north of Alvheim, Ashokrafla short Noaka area. Currently, concept selection concepts are being evaluated: a PQ, which is a hub on solid legs with a processing platform in the middle of the area and then tiebacks either from subsea installations or normally not manned installations, similar to the Valhall West Flank on each of these accumulations. Even if the accumulations themselves is smallish in nature, the entire area add up to a resource base in the range of 500,000,000 barrels of oil equivalent plus, which is a quite substantial amount of reserves. This include this number include tie in from Frig and Rind, and we believe concept selection will be targeted in Q1 twenty eighteen. Our assessment is, first and foremost, that the concept selection will have to be done based on what facilitates the highest recovery in the area. As you've heard before the break, in Aker BP, we have a very strong belief that resource utilization and maximization of oil exploration potential is the primary drive for a high economic yield in an area. Second, we believe that the NOAK area is still prospective with a lot of possible future tie ins from exploration projects. And we have mapped the area and identified an unrisk potential in the range of another 400,000,000 barrels. And we believe that the PQ of those two currently being assessed is the most robust one in terms of future tie ins as well. So in conclusion, we believe that the PQ alternative will have an acceptable breakeven price and a high value creation. We believe that it is relatively low risk with PQ platform based on conventional design and proven technology. And as you've seen, we already started working with digital delivery models to make sure that we can shorten the execution time, increase the quality and also make this project water what do you call it, a watermark project for the involved parties execution model with much higher productivity than previous ones. We believe that the area fields should be developed either as subsea or as unmanned well platforms. That's dependent on the specific requirements on that specific field, and we believe power should be supplied from shore. We're working this project with Statoil, and we're very clear on our ambition to get to a concept selection within Q1 twenty eighteen. And really, for the first time, we see an economic we see a possibility to develop this area economically, which is a quite interesting case, particularly as it's been tested several times in the past. There was a question regarding the project inventory. So I'm not going to run through the list. I'm sure you can find a way to do that yourself. But as you will see, if you compare it to the Capital Market Day presentation last year, this list is expanding in nature. It's expanding in volumes, and it's expanding in the number of projects included on the list. And you can also see that the predominant part of these are operated. That means that we'll be able to utilize our improvement agenda to do what we have done on Wollern, on Skogul and on Wallal Front Rest to continue to drive down the breakeven costs and up the reserve estimates. So with that, I'll leave the word to Gru to take you through program for Aker BP as well as the exploration strategy. Gro? Thank you, Karl, and good afternoon. Exploration also contribute to long term growth to the company and our agenda and also value creation. During the two last years, we have discovered about 100,000,000 barrels net to Aker BP. We have also, during the last four years, high graded our exploration portfolio and built a strong position from south to north on the shelf. And we have, in fact, done that by actively seeking and access new licenses through the APAs and the Baiele licenses round and through strategic BD activities. Some of the new licenses areas have a potential even to build new core areas with production. We have invested in more than US50 million dollars in new high quality seismic data, both around producing assets and in growth area, but also in frontier areas. This gives us, in fact, also a unique position to move fast with the barrels along the value chain if successful exploration. So we are in good positions in a good position when it comes to data. We also have to admit that the most easy oil and gas in Norway have been discovered. And this really means that we have to be more innovative. We are building a strong organization where continuous learning is key, in fact, to reveal the full potential in our asset and to create also new core areas with potential production. So we prioritize some key areas. Play innovation means to improve our understanding of the subsurface potential in already proven plays and secondly, to look into not explored plays just to understand those better and to work them more out on the shelf. This is all about people having the competence and the experience needed digitalization, including integration of all types of petroleum technical data and machine learning analytics will be a part and an important part of this. However, I also say that we need access to much more data to really significantly improve our prediction and thereby also reduce the geological risk to define new drilling targets. In addition, we are building an internal competence center on seismic processing and imaging capacity, creating a competitive edge to increase value creation in the company. This way of working gives us a better chance, picking the best opportunities simply because we have the best data sets. The price can be high when finding more resourcing, being feeded into the company's producing assets or finding high impact discoveries, creating stand alone developments. So we have also established a collaboration with the academia and discussed with vendor to establish an alliance working together, sharing data, software, competence and technology. The production on the NCS is quite interesting to see this figure. It's declining fast after 2025. And to keep the production at this level, we have to prove up significantly higher volume to establish new infrastructure on the shelf. And I can also be honest, but except from Johan Sverdrup and Ormilange discoveries, there haven't been added much more resources from impact discoveries since 1994 and up till now. And after 2025, we are also much more dependent on yet to find resources to keep that production. The NPD confirmed that yet to find and the understanding are that about twothree of these resources are in the Barents Sea and most in the Barents Sea North and Northeast, which are yet not yet opened up for petroleum activity. The industry have, however, collaborated to actively reduce the cost, and we have also worked it within our alliances in project and drilling in well. And new projects are being sanctioned now far away breakeven of 35 per barrel. So the NCS is very competitive on cost compared to U. S. Shale oil and also deepwater. NCS is also, when you look at this perspective, less hit by global peak oil demand than U. S. Shale oil compared to the different Paris also climate scenarios. However, the NCS is not so competitive on finding new high impact volumes based upon the last twenty years' exploration. There were, in addition, fewer companies applying in the 24 licenses round than in the previous round when the Barents Sea Southeast was opened up for the industry. So in fact and I'm aware of that it's a new government and there is a new agreement platform of agreement for new government and it also comes to open up new areas to say that it's postponed at least until 2021. But I believe that the time is now to start this process because to open up new areas for the petroleum industry and for exploration takes time because of different democratic processes to be clarified before making the final decision by the parliament. And if Norway want to be a strong energy provider into a global energy mix in a long term perspective, it is important, in fact, to have this on the agenda as long as we have the competence and the capacity and also the infrastructure to further develop the petroleum industry. The company today are well positioned in all three basins on the NCS, and approximately twothree of our licenses are in the North Sea, where we have four producing assets. In the Barents Sea, we have exploration licenses and our activities are mainly on the Lokbo High, North and South and in the Barents Sea Southeast. We have, in addition, secured a solid exploration position position in the Norwegian Sea around the Skalp producing assets and along the Nulan Ridge. And this year, our exploration program is skewed towards frontier wells. More than half of the wells will be drilled in the northern areas, one in the Norwegian Sea and six wells in the Barents Sea. The remaining wells will be drilled in the North Sea. We have also seen a positive development as also have been shown you earlier today, on the cost level in the industry during the last couple of years. Exploration cost is also significantly reduced, and average well cost was last year USD $240,000,000, half the price of an exploration well in 2013 and 2014. Further, the company, that's us, our sanctions development project with a breakeven at a breakeven price lower than US24 dollars per barrel. In the areas being largely unexplored, the accumulation of hydrocarbons are not always big enough. And now I'm thinking about Barents Sea and part of the Norwegian Sea, and they are not enough for standard stand alone development. However, we are working on concept which can also increase the influence of development of smaller discoveries in more remote areas to create commercial production and production hubs. And this approach will also reduce lead time from discovery to production and create higher value. Last year, there was an exploration drilling record in the Barents Sea with 17 wells, which was half of the total wells drilled on the shelf. 11 discoveries total in Norway. Over six discoveries were made in the Barents Sea. Two of the discovery, Filikudi, the largest one, where we were participated and the Kayak discovery, both smaller discoveries. None of them represent stand alone development, but both are close to infrastructure, at least when Johan Castberg is on stream. In spite of few commercial discoveries last year in the Barents Sea, we also see here that the Barents Sea is still above global exploration average, both on success rates and volume per well. The resource addition totally on the NCS was last year between 157,000,000 barrels of oil equivalent to three seventy seven million barrel equivalents. None of these represent stand alone developments. My view is that it would also have been crucial for us as an industry and a company to get access to the data gathered by the NPD the last years from the Barents Sea North and Northeast, this shows significant volume potential in the F2F numbers. All this data and information could also be of interest to enhance our understanding really of the remaining potential in the Barents Sea. And then, I mean, the Barents Sea, which has already been opened. And also, especially since the last year's drilling campaign was so disappointing. And we can also ask ourselves if we really also have understood how what the code we should use to further explore the Barents Sea. However, we are excited about our drilling campaign in the northern area this year. Kvitung and Thumbre in the South, close to Skarv area, have an upside of 200,000,000 barrels of oil equivalent. Anyway, given a discovery, it will be commercial because it's so close to Skal. In the Barents Sea, a high impact well on the Swan Fjellet prospect with a shallow reservoir, which which is driven by geophysical observation will be drilled. The hydrocarbon phase is a question. Given oil and success, this could open up for a new development East of the Lokpahi South. There are in addition more prospects in the vicinity, which could make a development even more robust. Stangnestin and then we move to the Barents Sea Southeast, will be drilled second half of the year. The targets where we are exploring for are within a mega closure and a new petroleum province where there still many questions, after also some disappointing result on Kordfjell last year. The well will, however, give important information about the potential within such a mega closure, both on the petroleum system, reservoir presence and qualities and volumes. Two licenses have also been awarded on the other side of the borderline within the same mega closure. And that license at least postulates really high volumes. The main enclosure is called the Fiedinski High, whereas Rosneft and ENI are partners with a common exploration program. I think we should not forget where we are partner either. We are a partner in four other exciting wells in the Barents Sea concentrated on Lokba North and also in the Barents Sea Southeast. We are the one company participating in all new plays to be tested this year, which will give us valuable information to deeper understand the potential for making also more discoveries in this region. All the partner operated wells are on the high impact side opportunities, but also with high risk. Jorgosn in the Barents Sea Southeast, South of Stavnestin, where Stavnestin operator has the highest volume potential upside. Exploration, then we're going to the South and the North Sea. We contribute strongly also to increase the value of existing fields by finding smaller accumulation around assets. We have invested in high quality seismic data both in Valhall, Ula and Holland area as well as we have in Alvheim, where we have reprocessed approximately 4,000 square kilometer of three d seismic data of different vintages to enhance the data quality. One of the drilling candidates based upon this data is the Throsk well being drilled now. These inactites have shown to deliver excellent production with Viper and Cobra and payback of investment in a very short time. Cassidy in the Ula area has been matured and approved as a drilling candidate, and HOD appraisal will be of importance for the HOD redevelopment project. In addition, we are exploring also for creating new potential production hubs in the Northern part of the North Sea with also the Ragorsen well. If this well is a success, there are a follow-up potential in the area. In the Sleipner area, we have defined some prospects yes, sorry. We have defined some prospects and made one drilling decision on Hone, which with an interesting upside volume potential, and this is most likely a tie in to Ivar Ossen given success. I'm also proud of the organization, which have enhanced the understanding of hydrocarbon migration based on certain type of data and observations. This is a possible new API 2017 license, which we have applied for. They have done some detailed interpretation to define also the trapping mechanism. This prospect has still, of course, a geological risk, but given success, it has a potential standalone in a very mature province. We are planning to drill this prospect this year if you become the operator of the new license. And I think we will know tomorrow evening because there is an award session of the APA twenty seventeen at the Sandvik Conference. And I'm really excited to start planning for this well, testing this opportunity with a high potential. It is important to continue to keep the exploration cost low and explore around the producing assets since exploration successes contribute to keep the production level or at least arrest the decline for a longer time. The timing for finding more volumes is now in also the Ula Valhall area. That is why we also have invested in new high quality three d seismic data to make a unified data set available for evaluation and also try to vacuum for new opportunities and drilling candidates. Our experience is that even minor discoveries create high values in such an area, and we are working this area in close cooperation with the asset owner and the subsurface people in the asset. Finally, this shows the 12 wells with the volume potential and ownership share where we are operator and partner this year. It shows a tentative drilling schedule. MTD anticipated approximately the same number of exploration well this year as last year, 34 last year, which means that we are part of approximately onethree of all the exploration wells being drilled this year in Norway. It is a really exciting drilling program with the potential to deliver significant resources net to Akebipi. If some of the infrastructure wells deliver, it will also create high value barrels and the impact wells have the potential to create new producing hubs, but also have higher geological risk. 2018 is another exciting exploration year. Thank you for the attention, and then I give the floor to Alexander. Thank you, Gru. Good afternoon, everyone. Thanks for everyone for still sticking around. You are on the final stretch now. In my section, I will initially give some perspectives on how we think about funding of our business. Then in the second part of my presentation, I will provide some guidance on some of our key 2018 figures. Our funding strategy has remained firm for a couple of years now, in which we seek to diversify our capital structure to attract both banks and bond investors to have as low cost of capital as possible, while at the same time to have a structure and a liquidity buffer that allows the company flexibility to grow further. As expected, 2017 was an active year for for us at Aker BP, also on the financing side. We put in place an amended bank facility that very much increases flexibility and predictability and at the same time reduced our cost of debt. Then also during the warmer months of the year, we obtained credit ratings from Standard and Poor's and Moody's. And subsequently, we raised $400,000,000 in the international bond markets. These credit reports are readily available on our website. And thirdly, we raised $500,000,000 and $1,500,000,000 in the new bank facility upon acquiring Hess Norge. 2017 was a year where we, again, saw fantastic support from our banks, bond investors and shareholders. We kick off 2017 with a really robust balance sheet and strong cash flow generation that allows us to increase the dividend level. Our debt structure consists of a mix of bank and bond debt, both secured and unsecured. The main source of debt funding for the last few years has been our reserve based facility. Today, it stands at $4,000,000,000 Availability under the RBL is calculated on a dollar per barrel multiple, and it's based on our certified reserves. The full $4,000,000,000 was available at the end of the third quarter. And now with the additional Valhall reserves stemming from the Hess acquisition, we would have a calculated borrowing base far in excess of this billion currently committed capacity. At the 2017, we had drawn less than onethree of that available amount. After the acquisition of Hess Norge AS last year, we signed a bank term loan agreement of $1,500,000,000 which has a pledge in the shares in The loan matures in 2019, but as we expect to settle the tax losses in Hess Hess Norge during 2018, this loan will be repaid at such settlement. In addition to the bank financing, we had two unsecured bond loans. It's the 1,900,000,000.0 debtor two bond that matures in 2020, and it's the $400,000,000 bond that was placed using U. S. Documentation last year. Based on these drawn amounts, we have a pretax cost of debt of 4% and post tax of around 2%. Now as you might expect, we will continue to actively manage this debt portfolio going forward. Many, if not all of you, will have heard me talk about the tax system on the Norwegian continental shelf before. It is a unique fiscal system, and I keep reiterating the key features because it's fundamental to how we think about funding of our business, and we believe it's equally important for investors to understand the downside protection in this system. We only operate in Norway, and we are happy to see that the fiscal regime in Norway continues to be predictable and supportive to companies like Aker BP that are willing to invest capital into new projects. Our preliminary year end 2017 net interest bearing debt was $3,200,000,000 However, when we compare this to the tax value of the non depreciated tax balances of 2,000,000,000 and the tax loss that we acquired with the Hess transaction of GBP 1,500,000,000.0 and we add back the estimated tax payable related to our 2017 activities, we have a tax adjusted net cash position of 200 policies are unchanged, and we continue to closely monitor the company's financial risk profile, and we utilize various hedging mechanisms to protect downside. We've hedged about 20% of our 2018 oil production by acquiring $50 then $55 and now $60 puts. And we may acquire another 10% within our hedging policy. We will likely start to acquire 2019 puts soon as well. Following the merger with BP Norge, we have renewed all insurance policies. Due to favorable market conditions, we were able to achieve improved terms while reducing premiums. Among several improvements, our loss of production insurance will now kick in after forty five days instead of sixty days. All right. So let's move to the 2018 guidance. I will cover the 2017 actuals in our Q4 presentation in just a couple of weeks. We are expecting 2018 production to be between one hundred and fifty five and one hundred and sixty thousand barrels of oil equivalent per day, which should also this year be around 80% in liquids. Production cost is expected to be around $12 per barrel. This is higher than the revised guidance for 2017, mainly as a result of volumes from the Valhall area representing a higher share of total production following increased ownership in Valhall and Holt. 2018 CapEx is expected to be 1,300,000,000.0. Cash spent on exploration and decommissioning costs, both are expected to be around $350,000,000 Thus, we expect investments of about $2,000,000,000 in 2018, a significant increase from 2017 as we have a number of projects that are moving into the execution phase. I'll now spend a bit of time to go through each of these in some detail. As mentioned, we're estimating a production in 2018 between 155,160 barrels of oil equivalent per day. Production from the Alvheim area is expected to amount to about onethree of total production at a production cost just below $6 per barrel. The unit cost is expected to increase from 2017 as the production last year was very strong once Viper and Cobra commenced production. Ivan Rosen and Skarv combined is expected to account for about onethree of 2018 production with a production cost of about $9 and $12 respectively. Production costs for the Valhall area is expected to be in line with the levels seen in 2017 at around $18 per barrel, but volumes net to Aker BP will increase significantly, reflecting the new ownership share. Production cost at Ula is still the highest across our portfolio in 2018, but I am pleased to see that we expect around $30 per barrel in OpEx improved from the $40 per barrel we saw last year. Main reason here being that the new Tambar wells are coming on stream this year. So with the current portfolio, our long term target is to have a production cost across this portfolio of less than $7 per barrel. We believe this can be achieved by delivering on the improvement agenda that Peralu walked you through, but also by bringing new profitable fields onstream. We are increasing our CapEx spend year on year with about 40% to 1,300,000,000.0. In 2018, we have numerous projects ongoing, and the largest part of the spend is related to Valhall, where we now have 90% of the equity and Johan Sverdrup for 2017 last year and 2018 this year will be the peak investment years at Sverdrup. We'll continue the drilling program from the IP platform that Karl talked about, and we expect to drill three wells in 2018 as part of this. We'll also plan to drill one well at the Valhall Flank North water injection late in the year. And the Valhall Flank West project, which was sanctioned in December 2017, the twenty eighteen activities here, they include the detailed engineering and startup of construction. In the Alvheim area, the investments in 2018 mainly relate to drilling of the Chameleon Infill South well should be around Q3. The Woolhund sidetrack north should commence after that in Q4. And then we'll have the construction of subsea systems, flow lines for the Skogul project that was also sanctioned in December 2017. In the Ula area, we continue the Tambar and Uda developments, which make up the bulk of this investments in this area. And in addition, we have a power project going on at Ula as well as several smaller projects in order to prolong the field life there. In the Skarv area, the Arful development is underway. And the 2018 activities here, they include fabrication of subsea production systems, control cables and flow lines. CapEx for this project is going to increase in 2019 when we get closer to first gas. Finally, at Ivarosn, there's going to be drilling of two water injectors and the Hans appraisal well. Those will be the main activities next year, while the other category here includes IT and other corporate costs. So moving on to exploration and decommissioning. As Gru alluded to earlier, we have an extensive exploration program lined up for 2018. We're budgeting for a pretax exploration spend of about $350,000,000. Almost half of this spend is related to wells and testing for our 12 well drilling program. Other exploration spend is related to field evaluation costs, primarily for the Nuaka area and Hud redevelopment and seismic acquisition on and near our existing acreage. In addition, we have, as always, other G and G costs and area fees for our existing license portfolio. As for decommissioning spend in 2018, our full year pretax guidance is also around $350,000,000 This is almost entirely related to the P and A campaign going on at Valhall, where the Masjk Invincible rig will run continuously throughout the year compared to just eight months in 2017. So when we put all of these estimates together, we get a picture of how operational cash flow will look like in 2018. The table here is based on the midpoint of our guiding ranges on production, on CapEx, on exports and decommissioning costs. 2018 cash cost before taxes is estimated at around $16 per barrel. This is made up of production costs of $12 other OpEx, a little less than $1 and then finance costs of around $3 per barrel. That is assuming the net debt levels at the 2017. This means that we generate positive cash flow operating cash flow, excluding any working capital changes, as low as $16 per barrel. Tax payments this year is expected to be net positive due to the Hess Norge tax loss. We plan total investments in CapEx, exploration and decommissioning expenses of about NOK2 billion. This amount to $35 per barrel if you compare that to the estimated 2018 production. Free cash flow before breakeven thus before dividends thus breakeven in 2018 at a realized hydrocarbon price of $29 per barrel. This concludes my finance section. I will leave you with Carla for some concluding remarks. Thank you. Thank you. Good. Hope you saw a little bit of our exploration program. And I'm really happy that I was able to demonstrate my point that the cash flow generation in the company is extremely strong even in a low oil price environment. If we go back to the investment case, I think you'll see that there is consistency across our set of activities, whether they're linked to execution of existing programs, wells or projects. They're linked to our activity program, as Per Haral demonstrated, but with a focus on digital and a focus on alliances or they're linked to quite an exciting exploration program in twenty seventeen-twenty eighteen. It's a stretch if you had told me a couple of years ago that we would be onethree of the activity on exploration in 2018. But I think in summary, it consistently demonstrates that this company has built superior shareholder value in the last three years. The strategy is firm. So what has worked as a success case in the previous three years, will continue to be the guidelines of this management in the years to come. I still believe there's a lot of upside to be had in the improvement program. Even if the have been surprised by the effect we've had so far, we still haven't been even close to realizing the full potential. And then finally, we've, over the last couple of years, and particularly last year, been able to build an even stronger platform for further organic growth across the entire portfolio. So what is going to be our priorities going forward? We are going to continue to focus on safe and efficient operation, the same manner of relentless focus that we've had so far. We are going to focus on excellent project delivery, making sure that we connect all the dots and really put a lot of energy behind that. I think so far, we've demonstrated that Aker BP is able to execute large complex projects with high quality and high flow efficiency. We are going to keep on focusing on our improvement program with even more energy and even more focus, particularly on digitalization and reorganization of the value chains as we see those as interlinked and primary drivers to our value creation, but without forgetting that you cannot digitalize on flow efficient operation, so continued also on the lean program. And we are also very proud of our colleagues that are able to execute these projects in a flexible and efficient manner. We are going to continue to mature and feed in projects into the hopper, and the benchmark of 35% still is there. Although we see that this benchmark may have to be pushed down as more of the improvement programs takes effect. And then finally, we have been really strong on maximizing the resource base in our existing assets. We are continuing to put that as a high priority going forward as we see it create significant value both in terms of unit cost but also in terms of growth potential. And of course, last but not least, we are going to selectively pursue inorganic growth opportunities as they appear, and we feel that they are value accretive to our shareholders. So in sum, I hope you get some more insight. It's a long day, I know, but some more insight into Aker BP, what we are about and how we are generating value. So we'll round off the day by Q and A session. And I'll ask my colleagues back on stage, that includes you, Peral, as well, to answer any questions that you may have. There might also be some questions on the net. Low tech is It's Amy Wong from UBS. A question on your target to achieve the US7 dollars per barrel production in cost. Could you put a bit of timing on when you expect to achieve that? And a follow on to that would be, if you were to slip that achieve reduction between the different buckets, which is digitalization, lean operations, strategic alliances, how much do you think would you allocate to various factors in terms of achieving that cost reduction, please? Thank you. Sounds like I have to answer that. Well, first of all, we haven't really set a line. And it's also quite interesting because, as I said, we are increasing significantly the MMO scope in our operations as we're pushing down scope, right? So I said that we had increased the number number of hours since 2016 by 40%. So a lot of this is actually entered into the OpEx. So the underlying OpEx, if you remove the scope increase, would probably show a much better trend than what Alexander has demonstrated. But we still feel it's fair to show the real value as you can observe them in the finances. I think what the I think on a different track on different fields. Skar will probably come there in the, I would guess, 2019, 2020 on the current path that they have now. For some of these other fields, it's much more difficult, like Ula and parts of Valhall, which would have a huge fixed cost base and will need massive amounts of production injection to generate that. So the reason we've set that out is predominantly to provide a very, very hard target. Now if you asked how are we going to attain that, I would probably put fifty-fifty between alliances thirty third onethree between alliances, lean and digitalization. But they're actually all connected, right? So you probably won't be able to achieve your targeted digitalization if you haven't been able to create flow efficient work procedures. And at the same time, you probably won't be able to get full benefit out of the alliance mechanisms without a digital way of collaboration in a flow efficient manner. So that's and that will change from asset to asset, right? Valhall will have more effect of lean simply because the number of hours that goes across that platform is bigger, while Eva Rorsen, for example, with a lower number of hours would have probably have bigger effect of digitalization. Sorry for the bit unprecise answer. David Merzow, Deutsche Bank. I suppose first on exploration. Talked a lot about what you'll be doing next year and how this year was disappointing. But I suppose specifically on your South Loppel wells this year, there was a lot of expectation on Hurri and Hoofsa. We were told they were on trend, analogous. Just give us an idea of what went wrong and how you think you can improve on that next year. Secondly, on the CapEx, suppose. Thanks for the 2018 guidance. Can you give us a bit of guidance on run rate going forward? At your current equity positions under your current PDOs, should I expect $2,000,000,000 for the next few years? You said you'll be finishing up on your Valhall abandonment expenses about Q4. Does that mean the ABEX is going down in 2019? And I suppose just lastly on the cash taxes. I suppose it's just the way they seem to go up by $4 each, CHF60 to 70 to 80 that I don't quite understand. Why, if you're earning $10 more revenue and you're paying tax at 70, are you not paying $7 tax for the differential? Okay. Good. I think, Gori, you can answer the exploration one. I'll start with the Hyfsah and Hari, those prospects. Of course, they are very interesting, high volumes, but also have high risk. And I believe that for the Hyfta, which is to the South, it's more in the migration shadow than what we expected. And when it comes to Hari, also large volumes and could really do a difference to a development in that area if it has succeeded. It's more about the leakage. So that is, in a way, a short explanation of why we failed on those two wells. But of course, they had to be drilled. There's so high volume potential. So I think the only thing was to drill them and to test out what the potential could be. When it came to Gotha and the appraisal well, Gotha is a carbonate resource. It's kind of difficult. We have two types of reservoirs there, conglomerates and which can deliver well. Here, we were in the carbonates, and we had some challenges with the reservoir quality. It could be, to be honest, if we had been, yes, evaluated it even deeper because we saw we had some loss in the well. It could be that we could have tried to test it. But this is in a way, it's a kind of learning, and we still have something to learn when it comes to carbonates and operate those on the Norwegian continental shelf. CapEx and tax? Suppose I have to start with tax because that's my favorite. I think it's a bit of a coincidence, David, but the starting point it's a mix of various factors. The starting point is that I think it's $4 will be payable whatever the oil price is because it's based off of this is cash taxes for this year. So it's from the taxable result from 2017. So no, that's the floor in any case, so it doesn't matter. Then it's a mix between the tax regimes. So we have two tax regimes, and it depends on how much is taxed in each and how much how each of the CapEx is deductible in both of them. So it's a bit of a that skews the picture on that as well. So I think if we had a higher oil price, you'd see it wouldn't be $4 on each of them. Then on CapEx, you should probably expect abandonment to go a bit down from this year's $350,000,000 Exploration budget, it's a bit hard to tell. It depends on which wells are mature enough and which are approved. So the $350,000,000 whether it's higher or lower, it's a bit difficult to judge. On the CapEx, that would obviously depend a bit on some of the solutions and timing of the now PDL approved projects. But I wouldn't it's hard to put a specific number on that, David, but perhaps not too far away from where we are in 2018. So certainly, with the higher production going forward, it just means a slightly higher run rate in CapEx. Yes. But do keep in mind that this is the peak year for Johan Sverdrup, right? So last year and this year. So that tailors off. But then some of the other projects, in order to get to $330,000,000 if you want to get there, it will be some years with higher CapEx. It depends a bit on timing on, say, projects like Nauaka, for instance. That's going to impact whether it's 2019 or 2020 where that CapEx will kick in severely. I think it's actually also interesting when you assess the CapEx run rate going forward is to assess the economic effect that CapEx will have on your business case. Because what we've seen is, yes, the CapEx has gone up, but the breakeven has gone down. So the cash flow generation from the investment of that capital has gone up significantly. And as Alexander also demonstrated, one of the unique features with the Norwegian fiscal regime is the downside protection. And this is exactly what you want to see of an oil and gas company in Norway. You want to see increasing production. You want to see high cash flow out of existing production, and you want to see an investment in low breakeven projects that increase the resource base. So in many ways, we've been able to generate an investment case that is almost ideally suited to the Norwegian fiscal issue. How do we work from SEB? When in 2018 are you expecting the Hess tax to be settled? Is that during summer or during winter? Second half of next year, whether it's during the warmer months again, like we saw with the BP or and if it will be in the fourth quarter, it's a bit too early to say, but second half of next year. And on the dividend, both the level and the growth ambition of $100 a year, what should it take for you to change that, either up or down, in terms of the market that you expect? What should it take? Well, you know, as Alvaro, there's just so many things going into that equation. And you may be naturally thinking about oil price. So what does that take? It's hard to I think we have many levers to pull, if it's CapEx or if it's other, if it's ensuring a lot through buying put options. So for us, it's more the totality and the robustness that we see, which I'm sure we will evaluate going forward. But we believe, given where the portfolio is sitting today, how we see the outlook today, putting that number and putting that ambition in, we feel that's a robust case the way we see it. So not the precise answer you were looking for, I suppose, but it really is a view of the robustness of the totality here. Lastly, on exploration, Das Tungsten prospect, it's a mega closure. Can you say something about the prospective resources? I think also they have the resources back in the overview there. I think it's a big uncertainty there, to be honest, because it's an explored area. What we see and what we know from the Russian side is that they have 18,000,000,000 barrels of oil equivalent on the Russian side. Now the high is a bit smaller on the Norwegian side. But and we have also thought about where to place the well, so that it could be a simple way also to commercialize the volumes in Norway. So of course, if we deliver on this deepest target, then it could have a big much bigger upside there. But there is so it's high risk. From ABG Sundal Collier. First of all, last year, you exceeded your production guidance by a healthy margin. I was just wondering, would you say that there is upside or downside to your guidance this year? And then following last year, we saw that you were partnering with London Petroleum on quite a few wells where they were operating. Is there any reason why you've taken more wells as operator this year? When it comes to the production guidance, I think the effect that you see on the production guidance is basically almost the same effect as we've seen on breakeven, right? It's an effect of the continuous improvement program that's been running in the organization. So of course, it's easy to extrapolate and say, well, we'll have the same kind of improvement program also in 2018, and therefore, the guidance is conservative. What we've done this year is we've made an assessment of what is a likely effect of that improvement program in 2018. And as you can see, it's quite a narrow margin from 155,000,000 to 160,000,000 And that should give you a little bit of confidence that at least from a management perspective, we believe this to be an expectancy correct estimate. And then of course, I can promise you, we're going to work as hard as we possibly can to make sure that, that is the low end of the spectrum. So that's the kind of the balance. We'd love to give you a good answer, but we'd also love to make sure that we continually improve and beat our own expectations. Then when it comes to the exploration program, this is more probably more an effect of the work that we've been doing the last three years, where we've been high grading the portfolio, both by aggressive application in the ARPA and license rounds, but also by a series of BD transactions. So it's kind of a little bit of a coincidence that we end up with 12 wells this year and the distribution we do. But then that being said, when we put that into the business plan and the long range, this is a pretty much an optimal portfolio for us to drill in 2018 in terms of capacity across the hubs, drilling capability and timing in related to early phase projects. So there's been a little bit of an adjustment, but it's not a I should say, it's not a there wasn't a conscious strategy last year to end up with that many Lundin operated wells. And this year, it's much more driven by the ability to generate value across our hubs. And then one more quick question. Are you you've been talking now M and A. Are you looking to do any asset transactions for, for example, rig or other types of assets that you would use in your operations? Or would you rely on vendors for doing those or being the asset owners? Well, we're always looking for the most efficient way of generating the necessary services. And so far, we've come to the conclusion that the most efficient way is to enter into alliance with service companies who have done this repeatedly rather than trying to replicate it as a one off. I'll say that, that will probably be the main strategy also in 2018 and 2019 and going forward, but I won't exclude that there won't be singular events where we see an opportunity or a need to change that strategy. Yes. A few follow ups from myself. Anders Holte at Danske Bank. First, on Nwaka, as it's now known as. Did I hear you writing saying that you're aiming for concept selection by Q1 twenty eighteen? Right. And then Stathol has previously been talking of this project and saying this will be one of the first real digitized projects, and they see probably substantial cost savings. Do you share that kind of view that this will be one of the first new projects, to call it, that way from the industry? And lastly, on Valhall, just when we look if we just exclude the West Flank, the IP drilling and the North Water injection project, will that keep on going now for a couple of years? Or is this the last year where that will run? Okay. Well, if you just start with the Norco project, I think there's several possibilities that are assessed. It's Norco stand alone, it's Asher Kafla stand alone and it's an area solution. And my statement is and our stand is that we need to put in place a solution that maximizes resource utilization in the area. And yes, I believe that an OAKA development solution, such as proposed by AKA BP, will create a lot of competitiveness in the vendor industry by introducing new project execution methods, new digital ways of working together. The Push project that Peral talked about has demonstrated that it's possible to improve these processes significantly. And of course, we'll love to to invite the industry into such a project as we believe that will increase the competitiveness of the Norwegian vendor industry at large. And then your last question on remind me again, Anders. It's just on Valhall, on the IP drilling program and the water injection north. Those two projects, will they run its course later this year or? Yes. The way I see that currently, they will run its course. We're currently also working hard to add additional infill targets on Valhall to the existing drilling program to avoid the start and stop that you often see on these kind of installations. And as you also probably acknowledge from the presentation, following the stop of the P and A program in the back end of 2018, we'll have a lot of available drilling capacity from the Melsk Invincible, which will then be utilized on the North Flank, but we're also maturing targets in the South Flank as we learned that these improvement programs accelerate faster than we plan, so to have more drilling targets planned so that we avoid white space in the drilling schedule. Thank you. We'll take a question from the web. It's from Alvin Thomas at Exane BNP. Do you believe the efficiencies and cost improvements are deflationary for the oil price in the medium term? And as a result, what oil price assumptions do you plan out of? Well, to the first question, the short answer is no. I believe that it's hard to see a lot of other companies driving the same kind of changes that you've seen in Aker BP. But as a market as a whole, there's, of course, a reduction. But you don't really see a necessary uptick in investment as a cause of that reduction in input factors. So I don't believe that you'll have a deflation deflation drive on the oil price. As it comes to the planning, we haven't really been out there communicating that, but We haven't communicated that. But looking at other industry sources and company disclosing oil price assumptions, I wouldn't say we're very much different from others. I don't think that's what differentiating us is our aggressiveness on oil price planning assumptions. Okay. No more questions. Then we'll conclude with the Q and A session and today's program. So thank you, everyone, for showing up. Thank you.

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