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Introduction & Market Context
Norwegian oil and gas producer OKEA ASA (OB:OKEA) reported a significant improvement in financial performance for the first quarter of 2025, with net profit more than tripling to $21 million despite lower production volumes. The company presented its Q1 2025 results on April 29, 2025, highlighting how strong gas prices and operational efficiency helped drive revenue and profitability growth.
OKEA, which focuses on the Norwegian Continental Shelf, saw its shares close at 17.06 NOK on April 28, 2025, up 0.95% ahead of the earnings announcement. The company’s stock has traded between 14.66 NOK and 26.40 NOK over the past 52 weeks.
Quarterly Performance Highlights
OKEA reported petroleum revenues of $266 million for Q1 2025, a substantial 34% increase from $198 million in the previous quarter. This revenue growth was primarily driven by higher sold volumes of 39.1 thousand barrels of oil equivalent per day (kboepd), compared to 29.2 kboepd in Q4 2024.
The company’s EBITDA rose to $183 million, up from $149 million in the previous quarter, while net profit after tax reached $21 million, more than tripling from $6 million in Q4 2024.
As shown in the following operational performance overview:
Production for the quarter stood at 34.2 kboepd, slightly down from 35.9 kboepd in Q4 2024. However, the company maintained strong production efficiency at 91%, while improving production expenses to $18.6 per barrel of oil equivalent (boe), down from $19.7/boe in the previous quarter.
The company’s production mix for Q1 2025 was heavily weighted toward gas, which accounted for 57% of total production, with oil at 31% and natural gas liquids (NGL) at 12%. This production breakdown is illustrated in the following chart:
Detailed Financial Analysis
OKEA’s financial performance was significantly boosted by strong gas price realization, which reached $84.4/boe in Q1 2025. The company’s income statement shows total operating income of $271 million, with production expenses of $62 million.
The following income statement provides a comprehensive view of the company’s financial performance:
The company strengthened its financial position during the quarter, ending with a net cash position of $120 million, up from $65 million in the previous quarter. Cash and cash equivalents stood at $343 million as of March 31, 2025.
The cash flow development during the quarter is visualized in this waterfall chart:
Operating activities generated $185 million in cash, while capital expenditures and exploration consumed $100 million. The company paid $50 million in taxes during the quarter.
Strategic Initiatives
OKEA continues to demonstrate value creation through active operatorship of its key assets, particularly the Brage and Draugen fields. The company has successfully extended the expected field life of both assets through improved production efficiency and strategic investments.
As illustrated in the following chart showing the impact of OKEA’s operatorship:
Since taking over operatorship, OKEA has increased production efficiency at Brage from 88% to 94%, with 2P+2C reserves of approximately 35 million barrels of oil equivalent (mmboe) and an expected production life until 2031. Similarly, at Draugen, production efficiency has improved from 83% to 90%, with 2P+2C reserves of approximately 75 mmboe and an expected production life until 2040.
The company is also progressing with key development projects, including the Draugen Power from Shore initiative, which aims to reduce CO2 emissions by approximately 95% compared to 2019 levels. Another significant project is Bestla, a subsea tie-back to the Brage platform with 24 mmboe of recoverable reserves and a breakeven price of approximately $40/boe.
Forward-Looking Statements
OKEA maintained its production guidance for 2025 at 28-32 kboepd and for 2026 at 26-30 kboepd, indicating a gradual decline in production over the coming years. Capital expenditure guidance also remained unchanged at $310-350 million for 2025 and $300-360 million for 2026.
The company noted that two tax installments of approximately $50 million each are due in Q2 2025. Regarding shareholder returns, the board indicated it would announce a dividend plan when it considers the company to be in a position to distribute.
OKEA’s exploration strategy includes an ambition to drill up to four exploration wells per year, with recent success at the Mistral discovery, which has preliminary resources estimated at 19-44 mmboe. The company has also completed drilling at Prince, with volume assessments expected in Q2 2025, and has farmed into the Tverrdal prospect with a 35% working interest.
Despite the projected decline in production, OKEA’s focus on operational efficiency, strategic development projects, and active portfolio management positions the company to continue generating value for shareholders in the medium term.
Full presentation:
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