Hey everyone and welcome to And with me today, Witen Ure, Bill CFO, will present the financial details and some of the key data from this quarter. Highlights are and starting with what is the most important for us, of course, is our operations on Drogin. They have been run smoothly and quarter 16 thousand five hundred and fifty seven barrels per day. Financially, we had a good quarter. We revenues was $536,000,000.
Peter will go into the details why that is a bit different to last quarter. EBITDA was better than last quarter, EUR $240,000,000. We have a net profit of EUR 23,000,000, and we are still growing our cash position. With another EUR 100,000,000, we are now almost €1,000,000,000 in the accounts. We are positioned for further growth.
And most importantly, this year, the start up of EMA is expected later this year. The investment decision on Hasselmuss is expected within a few weeks. That will be the first tie in reserves resources to be produced on Djoggen. We are presently drilling a production exploration well at the Ilde prospect, I'll get back to that. And we also plan as a partner to drill the Gine prospect later this year.
And of course, we continue to look for this quarter. And you see we increased the production. However, we sold less petroleum than previous quarter, and that has to do with the lifting program, and the EBITDA will go into those figures in detail. That also means that we had less crude in particular to sell, which led actually to a bit smaller petroleum income, but with much less volume than in the fourth quarter. And then let me start with Droogen, our most important asset, which we operate and half of our income comes from Droogen.
We have, since we took over the operatorship, worked very hard to have high regularity and good operating performance, and we have been quite successful in that. We now have 97% reliability on the platform. We earlier this last this quarter started to import gas from the Oskar transport system rather than spending diesel to fuel the turbines to get the power on the field. That of course led to a reduction of the CO2 emissions from the field. And the planned investment now where we reach 70 recovery rate, and we are now working on the old formalities to extend the lifetime of the Durgin field to 2,040.
Succeeding in that, we would actually double the remaining reserves from the field. The announced higher CO2 taxes on the Norwegian shelf do, of course, incentivize us to see if we can have other power sources than gas. So we are together with Equinor looking at the possibility of bringing hydropower from shore to both Dogen and Njord. We expect to make a final decision whether that should be an investment or not in 2022. Jua is the other asset for income for the time being.
New production wells was put in on stream earlier this year. Presently, we have a thirty day shutdown, actually two more weeks on that, to tie in the Duva and the Nova field to Joa. We will be, as I will show later, also be compensated for the loss of production that we incur because of this. And in this area of Joao, we are already engaged in several exploration licenses to the West of Joao, and we operate ourselves the Rura discovery. We get better samples of gas from Rura in order to have a proper arrangement with Eula to produce that gas.
So an appraisal well on Aurora is a necessity. And then, of course, Ilme, which is the project that OKA has been involved in the longest, is finally now approaching production. We see production from the field later this year. And behind me here, you see pictures taken during the tow out of Maersk Inspire to the field. And to the left, see picture of that all the tubes and things have been hooked up between the welded platform and the MaschinSpire itself, preparing it for production.
And the remaining part of Grupo operation and everything that has to be done before production is on schedule for a production start later this year, hopefully not in a too long time. The net effect for OKIA when this is on plateau will be 7,005 barrels a day, which of course is quite significant for a company presently producing 16,005 We are also, as we speak, in a partner in drilling the Ilder prospect, just joining forces in using the same equipment, using the same production unit between wetter and graveling that actually make this in effect 100,000,000 barrel development, which looks promising. But of course, a discovery on Ilder will change the game a little bit here because sufficient amount to make graveling a standalone development will also impact the strategy between those fields. So we will see when we have the result of the yield. So then I leave the word to Bitte, who will explain and go into details with the financial data.
So thank you, and Bitte, please.
Production reliability continues at high levels both at Jura and Drauken also during the first quarter and production of 16,557 barrels per day represents an increase of 2% or nearly 300 barrels per day compared to last quarter, mainly due to the P1 wells, which came on stream in February. Sold volumes of 15,198 barrels per day is 19% lower than previous quarter, mainly due to an additionally large lifting allocated to OKEA in the previous quarter and only one lifting from Jura in the first quarter compared to two in the previous quarter. The previous quarter, OKA was also allocated about 100,000 barrels from Ivar Ossen, which occurs quite regularly given that OKA only holds about 05% working interest in the Ivar Ossen field. As for realized prices, we have observed quite significant improvement. Price of liquids was still 27% up compared to last quarter at $49.5 a barrel compared to $39 realized in the previous quarter.
The realized price for natural gas as the prices has continued to increase, we have realized the price 28% above what we realized in the previous quarter, which is more than a doubling of the prices in the first quarter last year. This brings the Petroleum revenue to SEK $536,000,000, a decrease of 8% compared to last quarter and an increase of 6% compared to previous year. And we have added a new slide to illustrate the impact of timing of the Drogon liftings. And in volatile markets, the timing can have quite a significant impact on the realized prices for the quarter. The recent OKEA allocated liftings from Drogin have occurred early in fourth quarter and early in the first quarter.
And when the market prices have continued to increase, this when we look at the quarter in isolation, this does not fully represent the average pricing for the month. And we have of course benefited from the recent price developments, but not to the full effect as the prices have continued to increase during the quarter. The graph outlines the differences in the average Brent price for the first quarter of $61 compared to the average realized liquids price to OKEA of just about $50 a barrel. And as can be seen, the key difference relates to the timing effect, which represents $7.6 a barrel of the difference and the NGL impact, which is about $3.3 a barrel of the difference. The quality and price adjustments can vary over time, but is quite insignificant in the quarter.
The OKEA allocated liftings in the last five quarters, the lifting that took place now in the second quarter in April, which happened at pricing market prices of about $65 a barrel. The next lifting from Jura is planned for May and the next lifting from Dogen is planned for third quarter. As for the income statement, we delivered an increase in EBITDA of SEK240 million compared to SEK229 million in the previous quarter. However, the high net profit of SEK182 million in the previous quarter has been reduced to SEK 23,000,000 in the current quarter. And this is mainly due to the very positive impact of the reversal of impairment on EMEA of SEK 117,000,000 as well as unrealized foreign exchange gains in the fourth quarter not being repeated in the current quarter.
In addition, in the current quarter, we are expensing the Yav well of 92,000,000 following concluding Yav, a non commercial discovery in March. The operating income of NOK $524,000,000 mainly consists of the NOK $536,000,000 in petroleum revenue and also tariff revenue from Jura or SEK 102 per barrel compared to SEK 110 in the previous quarter. And the lower cost per barrel was mainly due to continued stable production and reliability at both Jura and Droggen as well as the additional volumes from the P1 segment. Exploration and operating expense consists of million in exploration expense, mainly relating to the mentioned expensing of the Yarb well of NOK92 million as well as field evaluation activities on Aurora, Vethe and Gervling. SG and A cost of NOK 16,000,000 represents NOK 16,000,000 share of cost after allocation to license activities.
The net financial items of NOK 5,000,000 cost mainly relates to expensed interest partly offset by foreign exchange gain. And as the dollar NOK relationship has remained quite stable during the quarter, the impact of foreign exchange on our dollar nominated bond loans is quite limited in this quarter of NOK10 million. The tax expense for the quarter amounted to NOK40 million, an effective tax rate of 64%, which brings the net profit for the quarter to NOK23 million. As for the balance sheet, the cash and cash equivalents amounted to NOK978 million and as always, we will get into the further details of this. We have a current tax refund of NOK211 million, of which NOK86 million relates to a refund of exploration expense from 2020 and NOK113 million relates to the remaining tax installments for 2020.
The interest bearing debt amounted to NOK 2,400,000,000.0 or NOK 4,200,000,000.0 is partly offset by the NOK 3,000,000,000 in non current receivables due to Shell carrying the cost of removal from Joa and Drogin. And our cash position has increased by SEK107 million during the quarter ending at the closing balance of NOK98 million. The increase is mainly due to cash from operating activities of NOK224 million, which reflects a fairly good operating margin as the market prices have recovered and partly offset by the payment of the Jard exploration expense. Taxes received of NOK 97,000,000 is one of the three remaining tax installments for 2020 and we expect to receive two more in the second quarter and we have a payment estimated to NOK81 million, which is due in Q4. Cash to investment activities of NOK182 million mainly relates to EMA and the P1 wells, which was completed in February.
The interest paid of NOK24 million relates to the quarterly payment of the OKR02 interest. On that note, I'll give the word back to Erik. Thank you.
Thank you, Bitte. I will wrap up this presentation by going through some of the outlook for the future. And as we have already guided is that we expect a slightly higher production about the same as we did last year. But in 2022, we will have a significantly higher production for two reasons. One is, of course, that EMEA will be in production, and you see here that we have added another 1.2 to 1.5 compensation to us because of the tie in of the fields, Nova and Duva into the Jura field.
That is a compensation for the lost production in 2020 and 2021, but that will be repaid in a way in time during the remaining part of the field. So this is just a time effect of production that we otherwise would have had in 2020 and 2021, which we now get in 2022. And also looking at the CapEx, we have had two field developments ongoing for a while. And in 2020, we both had heavy investments on EMEA and the development on the Euro P1 segment. That will be finished, so or are finished in for The U.
S. Case. So the investment in 2021 will be significantly lower than it was last year. These are figures based on a project that is ongoing or approved. And what we promise you to deliver are basically listed here.
I am sure and confident that Repsol will get in on stream later this year. Hopefully earlier than later. We will submit to the partnership and we expect an approval of investment for the Hasselmooth development, which we will present when this is finally approved, but it's a very lucrative development, has a breakeven price well below $30 a barrel, and that looks like a very good project to be handled by OKEA and be in production already in '23. Ildere, I mentioned, is currently being drilled. So we are excited to see if we have a positive result on that or not within a few days.
Gini will be drilled later. Whether Aurora will be drilled this year or later depends very much on whether we get a partner into that project. And we expect to make the concept selection for Vete Graveling both with or without success on Ilded later this year. And we are, of course, maturing our portfolio around the assets we are operating and with our partners. And there are several decisions for appraisal and exploration wells lined up during this year and next year.
So that will be really exciting. We received eight new discoveries in the portfolio that we had in the last April round and a lot of additional prospects that will be interesting to pursue. The overall costs are also looking for other opportunities on the Norwegian shelf and being the only smaller oil company that is a prudent operator of actually fields, physically fields on the Norwegian shelf, we think that the business opportunities for mergers and acquisitions is quite good for OKEA and there's not much competition in that segment where we have positioned ourselves besides the bigger companies of course. So that is also something that you may expect some movements during the next couple of years. Finally, this is also my final quarterly presentations to you.
Since we started this in in in 2015, I've been running OKEA. And since we listed the company, I've also had numerous of presentations like this. But the June 1, I will step down, and Svein Lichtnes will take over my position as CEO of the company. The company look really forward to seeing him on board and all the employees are really excited what he can contribute to the further growth of the company. I will still be with the company for a couple of years as adviser, but it's now run by by Svein from the June June 1.
So I will thank you all for not only listening to this presentation, but having listened to me on several occasions before. So thank you very much, and then we will continue with questions where both Bette, myself, and Tron Lundal will be available. Thank you very much.
The first question comes from the line of Theodor Svein Nielsen from Sberbank. Please go ahead. Your line will now be unmuted.
Good morning. Thanks for taking my questions. And also thanks to you, Erik, for good effort and good luck with you at Luxurus. So three questions from me. First, on EMEA, it looks like you expect first oil pretty soon.
So I just wonder what are the key milestones remaining on to first order? And is it fair to assume that actually we'll see first order this summer and not late in second half as last year guided for a So couple of quarters that's my first question. Second question is on this U. S. Compensation.
How much will actually that be in $200? And how is that compensation cost structure? Is it a dollar per barrel or any other kind of mechanism? And my final question is related to cash refund EBITDA. Did you say $64,000,000 for Q2 expected?
And are you in a position to provide any guidance for Q3 and forecast refund? Thank you.
Yeah. Thank you, Theodor. First, on the email timing, most of the physical hookup operations are finished, but there's some work remaining. All that is is done by by Arcade Solutions. In addition, Arcade Solutions also have the contract on their commissioning.
And the commissioning if it if it if it is run, I think Repsol has been out in the market saying that the the startup will be during March. But commissioning is is always something that partly weather dependent, even though we are approaching the summer. But just to take a height for if commissioning discovers anything, that has to be of course amended, etcetera. The purpose of the of the commissioning is that you when you when you when you push a button, it's actually next the expected there is a response of that must be correct. And if it's not, you have to to a lot of electrical computer data programs that needs to to to be checked before we can start production.
But if it goes smoothly, we expect production in in in the mid mid third quarter just after summer. If if there are hiccups, then they need the necessary time. But we are we are very confident that the production will start during this year. And with respect to to to the the compensation regarding the delays, it because of tie in, That that's a normal thing in Norway that you get paid in kind. So so all the the the oil that that were kind of pushed out in time because we have to stop because of this tie in of the other field, which accumulate to 650,000 barrels, that will be kind of delivered, subtracted from the the the the owners of the tie in fields when production starts in so that will mainly happen in 2022.
But then it will be leveled out throughout the rest of the lifetime on the on the field so that the the end result would basically be as as was expected. If this time have not never happened. And and then in addition, of course, we on the mother from mother platform, do get a tariff for for the the work of producing a third party gas in this case. Perhaps, Peter, do you answer the last questions?
Yes. I can, Theodore. So for the 2020 tax refund, we expect two installments in q two, which is equal to the one we received in the first quarter, so two times 97,000,000 expected to be received. And we have estimated a residual tax to be paid in fourth quarter of 81,000,000. That's for the 2020 tax return.
And on top of that, we have an exploration refund of €86,000,000 which we also expect to receive in the fourth quarter.
Okay. Thank you. So you don't expect any tax return in third quarter?
No, not in third quarter.
Okay. Thanks. That's clear. That's all for me. Thank you.
The next question comes from the line of Anders Holte from Kepler Cheuvreux. Please go ahead. Your line will now be unmuted.
Yes. Good morning, guys.
First of all, I'd like to thank the opportunity to thank Eric for your true interest in service over a number of years. I guess as you leave, okay, it would be good to hear your thoughts on where you see the company heading in terms of a bit of a longer view. I'd also like to just pick up on your comments when it comes to the M and A front. Like, do you see any larger movements? I mean, are they is the asset between the sets is it widening, or do you see any kind of shakeouts in terms of any divestment programs coming from the larger holders of assets from the Norwegian Continental Chao?
Thank you.
Yes. We see the movements already, of course, as you all know, that, some companies are are in the process of of pulling out from the vision shelves because of, changing their strategies. There are companies who have announced that they are changing their strategy away from from fossil fuels, and they are still in Norway, so they will eventually go out. And so we see an opportunity three three along three columns. Those those companies is actually divesting.
And then there are the bigger companies, I think they will they need to continue to prioritize because of their their internal resources. Hence, there will be some assets that they they will either relinquish or or sell out. And and thirdly is that there is still a a group of pure exploration companies that that will have financially and perhaps organizationally difficulties to also engage in field development and production because their funding is based on the kind of annual refund of the exploration expenses, which will not happen when they invest in developments. So successful exploration this company will, of course, also give us access to fields and discoveries that that we can develop with with our capacity. So so I think the and and and also, of course, with the expected good cash flow we see in in OKEA, I expect that also OKEA will grow organically with doing more both appraisal drillings, exploration drillings, and eventually also field developments.
And then as we also explained now in the presentation, we go ahead with the Asselmoost development, which we will present the details of soon as the licenses approved the development plan. But, that's also, not only an investment, but, also a project where, Nokia can kind of demonstrate, our cap capabilities in in in various various new ways. So, I think, OKSA is very well positioned for a significant growth, going forward.
Thank you.
Yep. Thank you.
The next question comes from the line of Karl Pedersen from DVD. Please go ahead. Your line will now be unmuted.
Hi, guys. This is Kartrzyg Szopeterson with ABD Sundal Colliers. Two questions from me, if I may. The first question relates to the compensation. Is it fair to view this as a kind of a cash flow boost in the near term and then you'll have the interest component that you'll have to repay over time?
And the second question is, can you elaborate on the work streams that is required in order to extend the life of Derivent? What are the main hurdles as you see
it? Thank you. Yes.
Yes. I I would look at it as a cash flow boost. It's basically we're getting volumes now that we have to repay later. So it's like a contribution in kind and on in in addition to the interest element. So that we will get additional volumes for sale on top of what we produce in 2022 mainly, and we will repay those volumes over the remaining life of of year.
So I think it's the correct way of of looking at it. And I assume you meant email your second question? No. No.
No. Just to follow-up on
on that question, before we go to Draugen. So that means that the net volumes will be approximately the same. It's only the interest component. That will be the difference between the yard used in 2021, 2022 and what you have to repay over the following set of years?
Yes. That is correctly understood.
Perfect. I wouldn't call it I wouldn't call it interest, but you you you basically because you get the same volumes in time, you don't pay any anything, but you you get you get the actual effect of it.
Yeah. But you get an interest paid in volumes on top of the actual
Yeah. Okay. Yep. Regarding, drug and extension, the I think the formal extension is very straightforward. It is just a lot of documentation about the the the fields infrastructure actually are capable of of staying there and and and the way it's maintained for the next twenty years.
With respect to the production, I think we are home free to for a production with the present plan in into the 02/1934. And we are working on and one of the projects that we will embark on probably next year is some sidetrack from from existing wells. And we do plan for for a more extensive water injection program pretty fast, and then also later new infill infill wells on So to to enhance the production on Drogan is is basically a a question of of investments in in additional wells if we shall reach 70% recovery as I mentioned in the presentation. But there is no kind of specific obstacle that has to be
passed. Okay. So essentially, it's an investment decision that will trigger more drilling and consequently increased reserve base.
Thank
you so much for your efforts. Good luck with your new endeavors.
Thank you. Thank you. And I'm not planning to start a new oil company, that's for sure. As
there are no further questions, I'll hand the word back to the speakers.
Okay. There is one quest a couple of questions from the the web. First one is, after Guinea, what's next when it comes to drilling campaign? How many wells does Okia plan to drill or explore in 2022?
Yeah. There there are two groups of of, wells. One is, is the exploration, wealth, where the Calypso prospect West Of Drogan where where Neptune is operator gonna be drilled next year. We'll probably also drill Mistral, which is a gas actually, there's a more like an appraisal well because of the gas discovery South Of Tirjans. And then we have Hurura, which we also like to drill an appraisal exploration well on as soon as we get the partner.
It may happen this year, but definitely next year. And then, of course, production, well, and we are planning one sidetrack in from an existing well on Drogin also also next year. But depending on how that well produces this, and, we will do that sidetrack when when existing production, in in that particular well is is dropping between, below a specific level. So that may be delayed if if if it produces too too well. So so we, see, like, four to five well operations, in 2022, And which one of them is is a is a pure exploration well, actually.
Okay.
Thank you. And one other question, from the web. Your CapEx, you you maintained the CapEx guiding of six to seven hundred million. Does that not include the post
FID investments in customers, or will that change your and you update your your CapEx estimates after the FID? That that includes the the investment this year that is on Alzheimer's. We are we are we assume that that will be be approved, so that's why we have it in our cash forecast.
Okay. That's all. Thank you again for to the analysts and for the the questions and those who have followed on the web. If there are any requests, you can contact Eric Hoeghana, or myself, and the contact details are, on our web page, and also if any investors want one on one meetings. And and next time, it will be our new CEO, Svein Lichtness, who will will head the the the q two presentation.
Look forward to seeing and hearing you then, hopefully,
post COVID. Yeah. Thank you very much, everyone.