BlueNord ASA (FRA:CJ1) Q4 2024 Earnings Call Highlights: Strong Production and Strategic ...

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Thu, Feb 13, 2025, 12:04 AM 5 min read

Proposed Distribution for 2024: $215 million, representing 70% of operating cash flow.
Q4 2024 Production: 25.9 thousand barrels of oil equivalent per day.
Tyra Production: 19,000 barrels of oil equivalent per day net to BlueNord as of February 2025.
HEMJ Exploration Success: Estimated gross reserves at 33 million barrels, over 60% higher than initially expected.
Revenue for Q4 2024: $193 million.
EBITDA for Q4 2024: $109 million.
Operating Cash Flow for Q4 2024: $146 million.
Liquidity Position at End of 2024: $521 million.
Net Loss for Q4 2024: $76 million.
Net Debt at End of Q4 2024: $1.2 billion.
Average OpEx per boe for Q4 2024: $30 per boe.
Capital Spend for Q4 2024: $63 million.
Gas Price Environment: Forward curve averaging $15 per MCF to the end of 2026.
Hedging Position for 2025: Approximately 42% on oil and 39% on gas.

Warning! GuruFocus has detected 5 Warning Sign with FRA:CJ1.

Release Date: February 12, 2025

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

Positive Points

BlueNord ASA (FRA:CJ1) announced its first distribution to shareholders for 2024, proposing a payout of $215 million, which is at the top end of their stated policy.
The company reported strong production in Q4 2024, averaging 25.9 thousand barrels of oil equivalent per day, with significant contributions from both base assets and the Tyra hub.
Successful restart and ramp-up of the Tyra hub, with production expected to reach maximum capacity and remain stable throughout 2025.
The HEMJ exploration success exceeded expectations, with estimated gross reserves of 33 million barrels, significantly enhancing the company's production outlook.
BlueNord ASA maintains a robust liquidity position with $521 million, supporting its financial stability and future growth plans.

Negative Points

The Tyra hub faced operational challenges, including mechanical issues and weather-related delays, impacting the ramp-up process.
The company reported a net loss of $76 million for Q4 2024, influenced by non-cash fair value movements and foreign exchange impacts on tax losses.
Operational issues on the Dan and Gorm fields affected production, although these have been resolved.
The company's hedging strategy, while providing some protection, reflects volatility in commodity prices, particularly affecting derivative valuations.
The timing of the proposed distribution is contingent on meeting the RBL completion test for Tyra, introducing uncertainty in the payout schedule.

Q & A Highlights

Q: When will be the earliest date for dividend? A: As stated in the presentation, our expectations on the Tyra completion test being reached should be around the end of February to early March. So, we will take it from there. - Jacqueline Boye, Chief Financial Officer

Q: Do you have to wait for stable plateau production before you can hedge gas production, or can you already hedge the future plateau production now? A: We certainly look forward at what our expectations on the profiles of gas are, and we do then add hedges through the forward-looking position, so yes. - Jacqueline Boye, Chief Financial Officer

Q: What is your guiding for total return of capital for 2025? A: Our policy is to distribute 50% to 70% of net operating cash flow. The specific number will depend on the outlook on the cash flow that we generate. - Jacqueline Boye, Chief Financial Officer

Q: When the operator Total Energies had their Q4 presentation, they said full capacity at 70,000 barrels per day. You say on slide 11, 80,000. What is the difference? A: The difference in the plateau level is mainly driven by different gas absorptions. We have included 60 million squats per day based on historical levels, and Total is using 100 million squats per day with a possibility to optimize. This difference equates to around 8 mboe per day. - Miriam Lykke, Chief Operating Officer

Q: Given the plateau of production to 2030 and slow decline in free cash flow after 2030, what is the right level of debt? A: We look at a level of 1.5 times as the right level of leverage. With our outlook and access to capital, that is where we target, but of course, this is something that we do monitor as we move forward. - Jacqueline Boye, Chief Financial Officer

Q: How do you think about the convertible bond, given that it will be re-strike by the dividend payment? Any plans to tender for the bonds in the market? A: We have been very proactive in the past when we look at our capital structure. It is something that we are considering, and the instrument does have an option to settle in cash. - Jacqueline Boye, Chief Financial Officer

Q: Regarding hedging gas volumes on the current gas restraint in Europe, do you intend to hedge more of the 2025 or 2026 volumes? A: The gas price is very constructive at the moment, so that is something we are looking at and seeing what the best instruments are to put in place and how much we can hedge going forward. - Jacqueline Boye, Chief Financial Officer

Q: Will the dividends be paid in quarterly installments for 2025 and 2026? A: We will come back with more detail on that in one of our future quarterly reports. We are looking at being able to pay in quarterly installments, but we will look at that more closely. - Jacqueline Boye, Chief Financial Officer

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

This article first appeared on GuruFocus.

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