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Investing.com -- Shares of Vår Energi (OSLO:VAR) dropped 5% following the release of their fourth-quarter trading update, indicating a production volume that fell short of market expectations.
The Norwegian oil and gas company reported that its fourth-quarter production was slightly below the consensus forecast, which led to full-year 2024 production hitting the lower end of its guidance range.
Vår Energi's production for the fourth quarter stood at 278 thousand barrels of oil equivalent per day (mboe/d), missing analysts' predictions of 292 mboe/d and the consensus estimate of 294 mboe/d. Consequently, the full-year production averaged 280 mboe/d, aligning with the bottom of the company's 280-290 mboe/d guidance for FY24. This shortfall was attributed to the delayed start-up at the Johan Castberg field, which was confirmed back in December.
Despite the production miss, Vår Energi's realized prices for the quarter were in line with expectations, with liquids fetching an average of $73 per barrel and natural gas at $78 per barrel of oil equivalent. The company also noted that fixed price contracts accounted for approximately 6% of the fourth-quarter gas volumes sold at an average price of around $73/boe.
In a positive turn, Vår Energi announced an increase in its reserves, with 2P reserves plus 2C contingent resources now estimated at around 2.1 billion barrels of oil equivalent (bnboe). The updated 2P reserves figure of 1.19 bnboe is a significant rise from the 0.99 bnboe reported a year earlier, representing around 300% reserves replacement. This increase is largely due to developments such as Fram South, life extensions at Snorre, and production at Trestakk and Tyrihans.
Other notable items from the fourth-quarter report included a net non-cash foreign exchange loss of approximately $300 million due to the weakening Norwegian krone, a non-cash impairment reversal of about $410 million related to the production profile at Balder field, and impairments of around $100 million for the Njord and Snøhvit areas.
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