BlueNord ASA (FRA:CJ1) Q1 2025 Earnings Call Highlights: Strong Production and Strategic ...

GuruFocus News

Thu, May 15, 2025, 1:03 AM 4 min read

Net Production from Tyra: Exceeded 26,000 barrels of oil equivalent per day in early May 2025.
Base Production: Averaged 20,900 barrels of oil equivalent per day in Q1 2025.
Q1 Production from Tyra: Averaged 8,900 barrels of oil equivalent per day.
Cash Released from Escrow: $158 million.
Total Liquidity at End of Q1: $684 million.
Proposed Distribution for Q1 2025: $38 million.
Revenue for Q1 2025: $171 million.
Operating Cash Flow Before Tax: $70 million for Q1 2025.
Net Profit for Q1 2025: $19 million.
OpEx for Q1 2025: $89 million, with OpEx per boe at $33.
EBITDA for Q1 2025: $80 million.
Capital Spend for Q1 2025: $15 million.
Expected Capital Investment for 2025: $50 million to $60 million.
Average Hedged Oil Price for 2025: $73 per barrel.
Gas Hedging for 2025: Approximately 38% more volume added, averaging around EUR40 per megawatt hour.

Warning! GuruFocus has detected 3 Warning Signs with FRA:CJ1.

Release Date: May 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

BlueNord ASA (FRA:CJ1) achieved strong production from its base assets, meeting guidance with 20,900 barrels of oil equivalent per day in Q1 2025.
The Tyra project has shown better-than-expected reservoir performance, with production reaching 26,000 barrels of oil equivalent per day, indicating strong future potential.
The company has successfully reduced its 2025 CapEx by approximately $50 million through strategic operational decisions.
BlueNord ASA released $158 million of cash from escrow, ending Q1 with $684 million in total liquidity, providing a strong financial platform.
The company is proposing a significant distribution of $253 million, reflecting confidence in its operational progress and cash flow strength.

Negative Points

Tyra's above-ground performance has not met expectations due to several unplanned outages, impacting uptime and delaying the ramp-up to plateau.
Q1 financial performance was impacted by lower-than-expected Tyra production and one-off penalties related to gas nominations, totaling $11 million.
Operational issues at Tyra, such as damage to the IP compressor and breaker failure, have caused production delays and shutdowns.
The company faces challenges with gas price penalties due to instability in Tyra's production, which may continue to affect financials in the short term.
Lower commodity prices have impacted revenue, with Q1 revenue at $171 million compared to $193 million in the previous quarter.

Q & A Highlights

Q: How big will the dividend be in 2027 and beyond? Can you please be a little more specific and meaningful? A: Our focus is currently on the period until the end of 2026. From 2027 onwards, we expect our dividend policy to align more with industry peers, targeting 20% to 30% of operating cash flow, compared to the current 50% to 70%.

Q: How is the company planning to deal with the convertible bond, especially given that the convert will be restrike by the dividend payment? A: We are considering restructuring the convertible bond to address these factors. We aim to have a solution before the first distribution, but this will not delay the timing of the first payment.

Q: Will the $253 million distribution be in the form of dividends or a buyback? A: Our current intention is for the entire $253 million distribution to be a return of paid-in capital, but we will confirm this closer to the time once the completion test is met.

Q: Do you plan to make an extraordinary distribution from the $158 million cash received from the escrow release? A: While we focus on maximizing shareholder distributions, we also aim to maintain a conservative balance sheet. We will consider an extraordinary distribution once the RBL completion test is met.

Q: Should we expect 2025 dividends to be at the upper end of the 50% to 70% operating cash flow guidance? A: The first two proposed distributions at 70% signal our intent. We will continue to start from that place as long as our balance sheet supports it, but will refine the level as we progress.

Q: Will there be a higher dividend for the remaining quarters of 2025? A: Yes, with Tyra at plateau, we expect significantly higher operating cash flow, which will drive higher dividends based on our 50% to 70% distribution policy for the rest of 2025 and 2026.

Q: Can you provide details on the gas penalties in Q1, and are there any expected in Q2 or the rest of the year? A: In Q1, gas penalties amounted to $11 million due to production instability at Tyra. As stability improves, we expect these penalties to diminish and eventually cease.

Q: What is the expected CapEx for 2026 and 2027, given the low level in 2025? A: 2025 CapEx is low, with minimal maintenance. We expect higher CapEx in 2026 and 2027 due to infill wells and development projects, but specific guidance will be provided closer to the time.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info