November 27, 2021

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Kjell Inge Røkke's Aker BP oil company with a new record score - increases dividend

Kjell Inge Røkke’s Aker BP oil company with a new record score – increases dividend

Kjell Inge Røkke’s oil company Aker BP reported EBITDA of US$1.25 billion in the third quarter, or approximately NOK 11 billion. This is more than double from the previous year, supported by higher oil prices.

It appears in the company’s earnings report on Thursday morning.

This is the result of the company’s “net” operation, the highest ever for the company. In advance, analysts who track the company calculated a profit of $1.24 billion, according to a survey by TDN Direkt.

Now the company will increase its quarterly profit by 33 percent to $150 million in the fourth quarter.

I am pleased to report another record quarter for Aker BP, in which the combination of good operating performance and higher oil and gas prices contributed to the strong financial result, says Karl-Johnny Hirsvik, CEO of Aker BP in a press release.

Aker BP is in a very strong financial position. It gives us a unique starting point for our important investment program for the coming years, while increasing profits for our shareholders.

Aker BP’s change means annual profit for 2021 will be $487.5 million, up from the previous plan of $450 million. With the new quarterly dividend level, total payments to shareholders next year will be $600 million, up 23 percent from this year.

high prices

Like all competitors on the Norwegian shelf, Aker BP benefits from higher commodity prices. The company is particularly exposed to the price of oil, which ranged between 65 and 80 dollars per barrel in the third quarter, and has now reached about 85 dollars. This is the highest level in three years.

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But the company also profits from daytime onshore gas prices in Europe, although it accounts for a smaller share of production than its big brother Equinor, for example.

On Wednesday, Equinor provided an all-time result, at least measured in Norwegian krone, thanks in large part to gas prices. However, Equinor delayed the dividend, deciding instead to increase its share buybacks.

Careful with the return

Aker BP has also been very cautious about touching the dividend, despite the significant improvement in commodity markets since the coronavirus pandemic. One reason for this is that Røkke’s Aker regime was one of the biggest drivers of the establishment of favorable and temporary tax rules for the oil industry last year.

Hersvik has previously said he believes the industry should show moderation in shareholder payments, as he sees it as some sort of deal with political Norway. In February, he took the unusual step of saying he was “surprised” that rival Lundin Energy had increased profits by 80%.

At the same time, Aker BP itself increased its total dividend for 2021 by just six percent, and laid out a plan to increase it by five percent annually as oil prices remained above $40 a barrel. Aker BP indicated that at levels above $50, there could be potential for more. but hursvik Said earlier this year That the company will prioritize investments and debt repayment before they become relevant.

“As I see it today, the priorities regarding the capital allocation have not changed, and there is no discussion at Aker BP at least about increasing its dividend in 2021,” he said late last month, although he added that it “could” do so. . Discussions were ongoing about the dividend for 2022.

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The change that will happen now actually means that the total dividend increase for 2021 goes from six percent to 15 percent.

But there is still a long way to go from what the company’s plan was before it was radically changed due to the Corona epidemic. Initially, it was to pay shareholders $850 million in 2020 and continue to increase dividends by $100 million annually through 2023.

“We had an aggressive dividend policy – it was probably too aggressive,” Hirsvik admitted earlier this year.

Decides on Noaka

Aker BP also said in Thursday’s announcement that the company has made a conceptual decision on the Noaka field, the largest in the portfolio.

The resource estimate has been raised to 600 million barrels from just over 500 million previously, but the investment estimate is also increasing, to nearly ten billion dollars, or 84 billion crowns. Previously, Aker BP and partner Equinor had broadcast estimates of up to NOK 60 billion.

In short, the field is nonetheless becoming more profitable, Hersvik says in a Teams session with reporters early Thursday morning.

– Decline in the balance sheet price. We’re now strong on the $30 per barrel benchmark, says Hersvik, without having to delve into exact numbers.

Aker BP and Equinor have long differed over how to develop this group of oil and gas fields in the North Sea. But last year’s oil tax package helped them bury the hatchet. A final investment decision is due next year, in time to meet the deadline for interim tax schemes, which in short lead to a deferral of corporate tax payments.

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