Earnings call transcript: BlueNord Q1 2025 reveals production growth

BlueNord ASA (BNOR), one of the largest oil and gas producers in the European Union, reported its financial results for the first quarter of 2025, highlighting significant developments in its production capabilities and strategic initiatives. Despite a decline in revenue and EBITDA compared to the previous quarter, the company remains optimistic about its future performance, buoyed by strong production growth at its Tyra Hub and a solid hedging strategy. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation, with analysts maintaining a strong buy consensus and projecting significant growth in both sales and net income for the current year.

Key Takeaways

• Q1 2025 revenue decreased to $171 million from $193 million in Q4 2024.
• Tyra Hub production reached 26,000 barrels of oil equivalent per day in early May.
• The company reduced its 2025 CapEx guidance by $50 million.
• BlueNord plans to distribute $253 million in one payment.

Company Performance

BlueNord’s performance in Q1 2025 was marked by a decrease in revenue and EBITDA, attributed in part to gas penalties totaling $11 million. While the company’s last twelve months showed challenging results with a negative return on equity of -9%, InvestingPro data indicates strong historical performance with impressive returns over both the last five and ten years. The company showed resilience by achieving substantial production growth at the Tyra Hub, which is now operating at 90% of its estimated plateau rate. The strategic delay of infill wells to 2026 allowed BlueNord to reduce its capital expenditure guidance for 2025, demonstrating prudent financial management with a healthy current ratio of 1.04.

Financial Highlights

• Revenue: $171 million, down from $193 million in Q4 2024.
• EBITDA: $80 million, compared to $109 million in the previous quarter.
• Net Profit: $19 million.
• Total Liquidity: $684 million (Cash:$414 million, Undrawn RBL: $270 million).
• Net Interest Bearing Debt: $1 billion.

Outlook & Guidance

BlueNord anticipates that the Tyra Hub will maintain its production plateau through 2025-2026, with a target of approximately 50,000 barrels per day by 2027. The company has also committed to distributing 50-70% of its operating cash flow through 2026, transitioning to a 20-30% distribution policy thereafter. The hedging strategy remains robust, with oil hedged at $73 per barrel for 2025 and a 38% increase in gas hedging for the remainder of the year. Analysts tracked by InvestingPro project substantial earnings growth, with EPS forecast at $9.78 for FY2025, supporting the company’s ambitious plans. For deeper insights into BlueNord’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Ewan emphasized the company’s robust business model, stating, "Tyra’s delivering. We have seen a steady ramp up in production with volumes increasing and the underlying reservoir continuing to exceed expectations." He also noted the company’s readiness to execute its distribution plans, highlighting, "We are close to executing on our distribution plans."

Risks and Challenges

• Market Volatility: Fluctuations in oil and gas prices could impact financial performance.
• Regulatory Changes: New policies in the European Union may affect operations.
• Operational Risks: Delays or issues in production facilities could hinder output.
• Debt Levels: With a net interest-bearing debt of $1 billion, managing leverage is critical.

BlueNord’s strategic focus on optimizing production and managing financial resources positions it well for future growth, even as it navigates the challenges of market volatility and regulatory changes.

Full transcript - Bluenord ASA (BNOR) Q1 2025:

Ewan, CEO, BlueNord: Good morning, and welcome to BlueNord’s results presentation for the first quarter of twenty twenty five. Over the next thirty minutes or so, we’ll walk through our performance for the quarter, share our outlook and explain why we continue to believe, well, BlueNord is well positioned both in today’s market and over the longer term. But before we get into the slides, I’d like to start by speaking a little bit about Tyra. So we have made real progress in 2025. More wells have been commissioned, more wells have come online and reservoir performance has been consistently strong, culminating in net production from Tyra exceeding 26,000 barrels of oil equivalent per day earlier in May.

However, it’s also fair to say that above ground performance has not yet met expectations. Several unplanned outages impacted uptime and as a result, Tyra has not yet reached a consistently steady operational state. Ramp up to plateau has therefore taken longer than expected. So where are we today? Up until last week, production was steadily increasing and we’d reached our highest daily output from Tyra yet.

Unfortunately, a short unplanned outage then temporarily shut down the facilities and we’re now back in the process of ramping production back up to those prior levels as quickly as possible. And where do we go from here? First, it’s important to acknowledge that some level of disruption was always expected when bringing a project of Tyros scale fully online. That said, it’s also clear and we are fully aligned with the operator on this, the facility performance needs to improve. Miriam will shortly outline the concrete steps we’re taking, but I also want to be clear.

Our shared priority is to stabilize operations and unlock the full potential of the Tyra hub. That’s critical because the subsurface continues to outperform. The reservoir is strong and that would have been a far more difficult thing to fix. These surface issues are of course frustrating, but they are solvable. And once they are, we’ll be in a strong position to deliver the long term value Tyra was designed to provide.

And with that context, let’s turn to the first slide and look at some of the key highlights for the quarter. So let’s begin with base production. Across Dan, Half Dan and Gorm, we averaged 20,900 barrels of oil equivalent per day in q one, fully in line with guidance. This continues the predictable low decline performance that we’ve seen for several years now. And looking ahead, we expect this to be further supported by ongoing optimization activity through 2025 and beyond.

During the quarter, we also revised the timing of our next infill wells, which are now scheduled for 2026. This reflects two key factors. One, the sustained above expectation performance from the Harold East Middle Jurassic well and two, a clear focus on maintaining cost discipline and our disciplined approach to near term capital allocation. This action in itself will reduce Blue Nor’s twenty twenty five CapEx by roughly $50,000,000. And if we now turn again to Tyra.

So while q one production averaged 8,900 barrels of oil equivalent per day, by early May we had reached over 26,000 barrels of oil equivalent per day net to Blue Nord. And that’s within our steady state guidance for the hub, which is defined by gas export being constrained at approximately 250,000,000 standard cubic feet per day. So far for that 26,000 barrels a day of oil equivalent, that reflects only around 70% of the total gas export capacity. The strong production levels have been driven by better than expected liquid volumes, and that’s a clear signal that there’s more to come from Tyra as we optimize the production. Once at full production, we expect Tyra to remain at plateau throughout 2025 and well into 2026, supported in particular by the continued outperformance from Harold East Middle Jurassic, which continues to significantly outperform our original expectations.

On the financial side, q one performance was solid, although it was impacted by lower than expected Tyra production and one off penalties related to gas nominations. These gas nomination costs are one off in nature and once Tyra is steady state, we do not expect these to reoccur. Still, our outlook is strong. With Tyra ramping up, we expect material increases in cash flow going forward. During the quarter, we also released a hundred and 50,000,008 a hundred and $58,000,000 of cash from escrow and as a result, we’re ending q one with $684,000,000 in total liquidity, a combination of cash on hand and undrawn RBL capacity.

So that gives us a strong platform to deliver on our key objectives. And with that, let’s turn to the next slide and discuss objective number one, distributions. So while the cash flow we generate, particularly as Tyra reaches and maintains plateau, supports all our stakeholders, our near term focus is on returning meaningful value to shareholders through distributions. And the capital structure that we have in place gives us the flexibility and financial strength to deliver on this core commitment. Following our proposed 2024 distribution of $215,000,000, We’re today proposing an additional $38,000,000 for the first quarter of twenty twenty five.

Both of these distributions sit at the top end of our policy range, representing 70% of net operating cash flow for the relevant periods and that’s a clear signal of our intent. It reflects our confidence in the business, our operational progress and the strength of our cash flow. On the previous slide, we talked about what Tyra means from an operational standpoint, But TYRA is also the key that unlocks our distribution plan. It enables us to start making these returns a reality and the threshold here is meeting the TYRA RBL completion test. Based on continued stable operations, we now expect to satisfy satisfy this test in early June.

And once met, we’ll be able to formally declare and pay these distributions. The first of which will total 253,000,000 covering both 2024 and q one twenty twenty five. Now, if we turn to the next slide, I’d like to focus a little on the features that we believe position us particularly well in the current environment. Blue Nord is a business with a very clear and very focused strategy. Our objective is to maximize the cash flow from our producing asset base and then use this to underpin our material capital returns program.

We deliver on this through strong operational performance, through maintaining a conservative capital structure, and through being proactive in looking for opportunities to manage risk and our exposure to volatile markets. The first few months of 2025 have been marked by significant commodity price volatility, but that’s not new. It’s a fundamental feature of the industry we’re in, and that’s why it’s important to have a business model that thrives when prices are strong and remains resilient when they’re lower. We believe Blue Nord is positioned to do both and here’s why. First, we’re becoming a low cost producer.

Once tires at plateau, our lifting costs drop to below $13 a barrel. Second, we’re proactive. We took steps at the start of the year to adjust our cost base and lower our CapEx spend for the next twelve months. And third, we continually look to lock in future commodity prices when we think it’s attractive to do so. We’ve added hedges, particularly during q one, that will significantly improve our cash flow outlook.

These things combined give us the stability to maintain a consistent equity story, one that will see us return 50% to 70% of our net operating cash flow to shareholders until the end of twenty twenty six. Now I’d like to hand over to Miriam to provide some further details on our operations. Thank you.

Miriam, Operations Lead, BlueNord: Thank you, Johan. Today, I will take you through how we achieved the strong production for the base assets for the first quarter of twenty twenty five and share the outlook for the remainder of the year, along with the updated Blue Note production guidance for 2025. We have initiated a higher level of plant integrity work to ensure the facilities maintain high operational efficiency. This quarter, work has been carried out ongoing. As Jan mentioned, we have made strategic operational decisions to optimize the RUM workover and drilling programme.

I will provide more details in the presentation today. Then I will update you on the status for and the updated Blue Nord guidance for Tyra for 2025. Let us first look at the production performance for the base assets for Q1 and the activities for 2025 supporting the production. I’m pleased to share that the Q1 production from the base assets of 20.9 Mboe per day net to Blue Nord is meeting our guidance range of 20 to 22 Mboe per day net. The quarterly production was achieved despite a slower ramp up of GORM production after completing the planned integrity scope.

I want to highlight the fact that we now have consistently met or exceeded our guidance for the last seventeen quarters. In March, the installation of a flare recovery system was completed on GOM, resulting in a reduction in flare on GOM of approximately 30%. An evaluation of the performance of this project may enable flare recovery on The ROM campaign on Haftan commenced in January 2024 and was successfully completed in January 2025 with 21 interventions on 20 wells. The Noble Reacher rig is currently at the Hafta North East HCA platform, executing the gas lift project, which will enable stable production for longer from the Hafta North East gas field. Workovers were successfully completed from the shelf drilling winner on Haften in early twenty twenty five to safeguard production.

The shelf drilling winner has been moved to DanfF, where several high opportunity workovers are being carried out until mid August twenty twenty five, adding volumes to 2025 production and beyond. We have updated our 2025 production guidance for base assets to reflect the following strategic operational decision based on ongoing efforts to reduce near term cost: first, to optimize run work by completing the scope from the platforms two, to delay the drilling of the Velma Abacutasis well due to the success of the Herald East Middle Jurassic well extending the Tyre Plateau and third, to delay the Haften EcoFisk infill wells to mid-twenty twenty six, providing direct learning opportunities to weld them on opportunities, reducing both time and cost. These decisions support the release of the two rigs. The deferral of 2025 production from the delayed infill wells is impacting Q3 and Q4 production guidance. However, there is an uplift from the DanFF workovers.

Round three on Gorm is planned to commence in Q3 from the platform. So in summary, production from Q1 was strong and we will maintain focus on keeping operational efficiency high despite production deferrals due to a higher level of plant and secretary work. Let me now take you through the rationale for the strategic operational decisions. In a strategic move to optimize operations and reduce near term costs, the decision has been made to release the self drilling winter rig and not extend the Noble Richter rig. These decisions build on the success of recent initiatives and focus on achieving significant near term cost savings with minimal impact on our operations.

The decision to release the rig is based on the success of the recently drilled Herald East Middle Jurassic well, which is estimated to have extended the production plateau for Tyra by at least ten months. This extension has consequently pushed the Valdemar Upper Cretaceous infill well out in time. Additionally, the two Haften EcoFisc infill wells are planned to be drilled in a campaign just before the Valdivar well, delaying this campaign to mid-twenty twenty six. Drilling these infill wells consecutively will provide direct learning opportunities, reducing both time and cost. In the five months leading up to the RIC’s release, a DanfF Workover campaign with several high opportunity wells has been included in the work programme to be completed by mid August twenty twenty five.

Letting the rig go positions us to capitalise on future opportunities in an open market where cost savings can be realised when a rig is required mid next year to commence the planned infill drilling program to support a low decline rate. The Noble Reader rig was initially contracted back in 2022 to address a backlog of maintenance that had accumulated over some years of reduced activity. Over the past two point five years, a combination of maintenance and RUM initiatives have significantly reduced its backlog and improved production performance. Several wells on Dan have been successfully brought back into production and the executed RUM work on Half Dan have shown promising results. One of the key advantages of transitioning maintenance and well intervention from rig based operations to platform based solutions is a substantial cost reduction.

By integrating new lightweight equipment, coiled tubing interventions can be executed directly from the platform, eliminating the need for additional rig mobilization costs and saving time. The first platform based run campaign is scheduled to commence on GORM in Q3 twenty twenty five. Deferring the Haften infill well from ’25 to ’26 is expected to generate a net positive cash flow of $13,000,000 for BlueNote. Additionally, transitioning from Brick to Platform based RUM could add $11,000,000 net to BlueNote. Jacqueline, our CFO, will give you more insights into CapEx spend for the year.

And now let us look at the status of Tara and an updated Tara guidance for 2025. Tyra is currently on stream and continues to ramp up, although the progress is slower than expected. We delivered Tyra production of 8.9 Mboe per day net, which is below guidance of 26 to 30 Mboe net for the quarter. The slower ramp up is mainly due to minor operational issues, like the one occurring May 8, but also a few incidents requiring longer shutdowns, like the damage to the mechanical seal on the IP compressor halting the production circa two weeks in January, and the breaker failure impacting the LP compressor for circa four weeks from early March, where it was not possible to commission wells during the repair period. It is important to mention here that a change in production mode enabled production from Herald during the breakup repair, resulting in a gas export of around 30% of plateau rate, supported by the successful Herald East Middle Jurassic well.

But despite the slower ramp up, I want to highlight that the recent peak production level from the Tyre asset was approximately 26 MBU per day net, which is around 90 of the Blue Note estimated plateau rate of 30 MBoe per day. Delivering 26 MBoe per day net with less than 50% of the wells being online is a significant achievement and due to better reservoir performance than estimated. The estimated oil plateau of 32,000 barrels per day gross was reached in early May after bringing Valdemar A wells online, which are wells that are more weighted towards liquids. At present, the gas export rates have headroom to increase by more than 30% before reaching the maximum capacity, which is driven by the gas processing on Tyra being constrained by the IP compressor. To achieve this, we need more gas weighted wells online and stable production.

The Tyra production guidance is based on reaching the plateau for both gas and liquids in May and maintaining stable production through 2025. The guidance for Q2 has been slightly revised based on April performance and reaching plateau in May. Now let us look at the stages for the Tyre wells and the work being undertaken to ensure stable production. Recently, the Tyre acid peak production was above the lower end of the Tyre guidance for stable plateau production. This was achieved with 91% of wells commissioned and less than 50% of the wells on production.

As mentioned earlier, this means that the reservoirs are delivering above expectation and we were already producing at our estimated oil plateau rate. However, to reach plateau production in May, we need: one, to increase the production potential of the Tyro asset and secondly, to achieve stable operations at high operational efficiency. In order to increase production potential, wells are being commissioned and subsequently put on production. We have almost completed the commissioning of the wells. The remaining wells to be put on production have minor issues, which is to be expected after more than five years of being shut in.

Plans are in place to fix these issues, including gas lift valves, chokes and hydraulic issues. Regarding achieving stable operations, the operator Total Energies are undertaking a reliability study to identify and address key factors impacting the facilities and thereby the operational efficiency. The study and subsequent actions are supported by specialist vendors. To conclude the operations piece today, I can confirm that the continued focus on tire progress, our strong Q1 based assets production and the optimization of big activities to save near term costs with minimal impact to operations are all key components of our strategy for 2025. Together with the operator, we are committed to achieving these operational objectives.

I will now hand over to Catherine, our Chief Corporate Affairs Officer, who will present the long term outlook for BlueNord. Thank you.

Catherine, Chief Corporate Affairs Officer, BlueNord: Thank you, Miriam, and good morning to everyone. I will now take you through the role of BlueNord in Denmark, the wider EU, and also how we will deliver into the energy needs and contribute to security of supply. With Tyrone Stream, we are one of the largest oil and gas producers in the EU. And Denmark is a net importer of natural gas, having been a net importer since 2019. From an emissions intensity perspective, piped gas is undefeatable considering the alternative energy source of imported LNG.

You can see this clearly demonstrated on this slide. And from a security of supply perspective, last week the European Commission published their Repower EU roadmap, with an intent to ensure EU’s full energy dependence from Russia. As regard to gas, the upcoming proposal will improve the transparency, monitoring and traceability of Russian gas across the EU markets. New contracts with suppliers of Russian gas, both piped and LNG, will be prevented and existing spot contracts will be stopped by the end of this year. This measure will ensure that already by the end of this year, the EU will have slashed supplies of Russian gas by one third.

The Commission will further propose to stop all remaining imports of Russian gas by the end of twenty twenty seven, all of which will impact the European gas markets in the future. This further underpins the strategic importance of the underground assets in the DUC and its current and future contribution in an EU context. Our license expires in 02/1942, and an extension of this can be key to further enable a full utilization of existing and future projects. For example, TYRA is only constrained by the license expiry. Maximizing the economic recovery during the next twenty five years is not only important from an energy security perspective, it’s also very important to Denmark.

The oil and gas industry is one of the biggest contributors to Danish welfare, and the Danish think tank, Arvaryslivystenkitank, recently estimated the industry to deliver state revenues of circa DKK55 billion during the next twenty five years. This has an upside of an additional DKK11 billion if further known resources are developed and utilized. And this takes me to the next page, where we show the resources that sit in our portfolio. As Miriam mentioned, we have re phased the drilling program of infill wells. This was a result of cost optimization and a reduced need of near term additional volumes due to the success of the Hemje well, which will increase Tyra plateau significantly.

Despite this, the infill well opportunities are still in the plan to be drilled with three wells matured to a 2P stage, two on Hofdan and one on Valdemar. These three wells have strong economics, with a unit development cost of less than $13 per barrel. And with the additional potential of infill wells, both on Svend and especially around the Tyra hub, we have more than 21,000,000 barrels in 2P reserves and 2P resources from infill drilling opportunities. In addition, we have three impactful development projects: Tyra North, Halfdan North and Valdemarbu South. These require simple infrastructure with unmanned platforms and all three can be tied back to existing processing facilities.

This allows us to utilize our infrastructure and it also supports the projects being competitive from a price point, especially with unit technical costs below $20 per barrel. Tayron North and Halfta North have already been progressed sufficiently to be partially included in our 2P reserves and together the three projects add significantly to our reserves and resources by circa 45,000,000 barrels. And with the optimized drilling schedule mentioned and the expected contribution from the Hemje well, the production profile we show every quarter has some changes to it. We start at the bottom in blue, where we have the base assets continuing to deliver a stable production. Production from Tayra in dark blue was limited last year and this year will be the first meaningful year of production, followed by an even more impactful contribution next year.

As you can see in 2027, output from Tyra is also very high and this is partially driven by the significant contribution from the Hemje well. In green and especially from 2027 and onwards, we see the re phasing of 2P projects and these will be significant contributors to maintaining Blue Nord’s output high from the year of 2027. During the same time, the near term projects currently 2C resources in dark grey supports an above 50,000 barrels per day production for the company. And finally, we have less matured 2C projects in light gray, which have the potential to lift production closer to 60,000 barrels per day in 2029 and 02/1930. So, the revised production profile, which previously had us exiting the decade at around 40,000 barrels per day, will now maintain a circa 50,000 barrels per day production.

This will further support cash flow generation and distributions to shareholders, while at the same time deliver into the energy needs of Denmark and Europe. And I will now leave the word to our CFO, Jacqueline, who will take you through

Jacqueline, CFO, BlueNord: Thank you, Kathleen. So Ewen shared reflections on the quarter and the key highlights including our path to plateau on Tyra, despite some challenges this quarter. He also shared our proposed distribution for Q1 twenty twenty five of $38,000,000 which is at the upper end of our policy. The strong base asset portfolio continues to deliver and Miriam outlined some sensible cost effective adjustments to our work program for 2025, which makes sense in the current commodity environment. I will share more on the outlook for spend in 2025.

And beyond Tyra, we have our portfolio of opportunities that Kathleen presented, which are critical to Danish and European security of energy supply. So with that in mind, I will now take you through the financial results for the first quarter underpinned by the operational highlights you’ve just heard about. So Q1 twenty twenty five underlying financial performance shifted down when compared to the fourth quarter. As Miriam outlined, underlying asset operating performance continues to be stable and Tyra volumes are increasing and this can be seen in the revenue mix as well. However, due to some operational issues that were discussed earlier during the ramp up of Tyra, we have been affected by penalties on gas sales.

This is driven mainly by unexpected changes in production when compared with our gas nominations. Now as also mentioned by Ewan earlier, this is non recurring and once TYRA is stable, these penalties will diminish. So the impact on revenue of the penalties in the first quarter was approximately $11,000,000 Excluding this impact, we have lower overall sales volumes due to lower oil sales with the reversal of the overlift from Q4 and higher inventory and this has been partially offset by higher gas volumes with Tyra ramping up. The over lift and inventory movements are timing related. So the effective oil and gas sales prices are consistent quarter on quarter.

However, if we exclude the penalties, the gas pricing is actually closer to €45 per megawatt hour. Revenue for the first quarter is 171,000,000 compared with $193,000,000 last quarter. Underlying operating costs are consistent, however, partly due to the change in the work program that Miriam took us through, we have higher costs related to workovers during this quarter and that was approximately $14,000,000 There were no workovers in the fourth quarter and we expect to now have workovers during Q2 as well and part of Q3 until the end of the rig contract. These are also adding to production as Miriam mentioned in the production guidance for base assets. This higher OpEx is more than offset by the lower CapEx cost as you heard earlier, where we have delayed the infill wells that were scheduled to be drilled in 2025.

I will cover more on CapEx when we discuss cash flow shortly. OpEx for the quarter is $89,000,000 and OpEx per BOE on average is $33 per BOE. As a result, the overall contribution margin has narrowed in the first quarter, but continues to be positive. Reported EBITDA is $80,000,000 in the quarter compared with $109,000,000 in the fourth quarter. If we exclude the full year adjustment to ROM of $19,000,000 from Q4, this brings the comparison to $90,000,000 in the fourth quarter.

So turning to the summary income statement, you can see the full earnings position now. And as outlined on the previous slide, EBITDA has decreased with lower revenue and higher OpEx when compared with the prior quarter. Again, if we exclude that full year adjustment from ROM and do that comparison, it is $80,000,000 of EBITDA versus $90,000,000 The positive other production expenses, just to note, is mainly due to the reduction in overlift of oil as mentioned as a part of revenue. So when adjusting primarily for the penalties on gas, our adjusted EBITDA as reported is $92,000,000 Below EBITDA, depreciation continues to increase as we now have Tyra volumes. We then have net financial items, which are affected primarily by the non cash fair value movement of the embedded derivative in the BNOR fifteen convertible bond.

In contrast to the last quarter, this went from a loss of $54,000,000 to a gain of $13,000,000 As you can see the valuation, it is very sensitive to the share price. And finally, a further non cash volatility on the income statement is on tax expense. As with the last quarter, this is mainly driven by the foreign exchange movement on the tax losses, which are denominated in Danish kroner and this must be revalued each period end. This quarter, there is a positive effect of $17,000,000 compared with a negative of $58,000,000 in the previous quarter. Due to the size of the balance, movements in the Danish kroner to U.

S. Dollar do have a large effect. However, the underlying current tax expense is as expected. Overall, we ended the quarter with a net profit of $19,000,000 If we now consider the balance sheet, the main items to highlight relate to cash, working capital and derivatives. On cash, we are pleased to report a significant increase connected with the release of $158,000,000 from restricted cash in relation to the CashCall security with Total Energies.

This cash security has been replaced with a $100,000,000 letter of credit under the RBL facility. Regarding working capital, the higher receivables and payables are due to higher volumes of gas sold. This quarter, we also made our annual prepayment of insurance for the year and have higher oil inventory at the quarter end. Derivatives have moved in the opposite direction to last quarter with lower liabilities and higher assets. This is again tracking the trend of commodity prices by the end of the quarter.

This reflects the downward movement in oil and gas prices since the end of the fourth quarter and compared with the prices we have contracted. So now turning to cash. We report an operating cash flow before tax of $70,000,000 this quarter compared with $146,000,000 last quarter. Operating cash flow is down since the last quarter due to the underlying business performance with lower oil sales volumes and higher costs as well as working capital impacts. We paid $15,000,000 of tax this quarter and have finance costs of $35,000,000 related to the RBL facility and the BNOR sixteen bond.

In addition, there is a significant inflow from the release of restricted cash giving $178,000,000 of cash inflow before capital spend. And as mentioned earlier, with the change in the work program and the plans for the rest of 2025, the capital spend for the quarter is significantly lower at $15,000,000 compared with $63,000,000 in the previous quarter. We now expect the capital investment will be around 50,000,000 to $60,000,000 for the full year 2025, which comprises mainly of maintenance CapEx, the revised ROM work plan and some other small projects. Overall, we finished the quarter with a net cash inflow of $164,000,000 This supports our liquidity position, which is strengthened to $414,000,000 of cash available and $270,000,000 of undrawn RBL facility, bringing our total closing liquidity to an increased position of $684,000,000 We did not have any changes to the capital structure this quarter and we maintain a slightly lower net interest bearing debt balance of $1,000,000,000 Moving to the commodity price environment and how we are managing exposure now. So we continue to use hedging as a way to provide visibility over future cash flows and we add volumes where it makes sense to do so.

Our focus for hedging has been mainly in gas this quarter, particularly when prices peaked with the Tyra volumes picking up and our focus has been across the twenty five and ’26 seasons. However, if we take oil first, the average hedged oil price in the outlook for ’25 is $73 per barrel, which provides good downside protection for this year. Positions for 2026 and 2027 will slowly be contracted as we monitor the market direction for good opportunities to hedge. For gas hedging, this period we have been able to secure a significant level of hedging whilst prices were attractive, adding approximately 38% more volume for the rest of 2025 and the prices averaged around €40 per megawatt hour. This has increased the average price per season as shown in the chart and remains consistently above the spot price at in the year ahead.

So we will continue to take advantage of the market and add hedges when it looks attractive to do so, and of course, within our policy. So to summarize the first quarter of twenty twenty five from a financial perspective, Our performance reflects a stable underlying asset base that supports our balance sheet. Tyra is ramping up and beginning to contribute to our earnings and cash flow. And once Tyra is stable with the revised work program for 2025 and underpinned by our excellent base hedging position, we expect a strong cash flow and earnings year. This underpins our ability to continue to deliver on our priorities.

And with that, I will hand back to Ewan for closing remarks.

Ewan, CEO, BlueNord: Thank you, Jacqueline. So to wrap up, you’ve now heard how the business has performed over the first three months of 2025. And before we move to q and a, I want to leave you with three key takeaways. So firstly, Tyra’s delivering. We have seen a steady ramp up in production with volumes increasing and the underlying reservoir continuing to exceed expectations.

This performance gives us confidence not only in the asset, but in the momentum it provides for the business as a whole. Second, we’re close to to executing on our distribution plans. With improved Tiara performance, we’re approaching the point where we can formally declare and pay the $253,000,000 in distributions proposed for 2024 and q one twenty twenty five. That’s a major milestone for the company and our shareholders. And third, our business remains robust.

We’re well positioned to manage through any near term commodity price volatility. Our cost structure, proactive approach and hedging strategy all support resilience. And our commitment to returning value through our stated distribution policy remains firm. So thank you all for joining us this morning. We’ll now pause briefly to allow any additional questions to come through and then we’ll return shortly to continue the discussion.

Thank you.

Catherine, Chief Corporate Affairs Officer, BlueNord: First question, how big will the dividend be in 2027 and beyond? Can you please be a little little more specific than meaningful?

Ewan, CEO, BlueNord: So our focus at the moment is on the period to the end of twenty twenty six. And what our dividend policy looks like from 2027 onwards will obviously be subject to a number of factors that we’ll know more about closer to the time. However, what I can say is that we would expect this policy to move to be more in line with where, frankly, some of our peers are. So if our policy is 50% to 70% of operating cash flow to the end of twenty twenty six, from 2027 onwards, we’d more likely be targeting something like 20% to 30% of operating cash flow.

Catherine, Chief Corporate Affairs Officer, BlueNord: And how is the company planning to deal with the convertible bond and when? Before or after the proposed dividend payment, especially given that the convert will be re striked by that dividend payment? And what is the company’s intention regarding this?

Ewan, CEO, BlueNord: So we are actively considering how we may be able to restructure the the convertible bond in a way that addresses the factors that, have been outlined. I think it’s fair to say from a company perspective, we would like to, come up with a new structure and a new solution. We’ll, of course, look to have a solution in place prior to the first distribution, But equally, achieving something here is not going to impact the timing of the first payment. So we’re still going to declare and pay the distribution at the first opportunity irrespective of whether we have a solution for BNOR fifteen by that point.

Catherine, Chief Corporate Affairs Officer, BlueNord: Can you please clarify if the company intends to pay the $250,000,000 and the 38,000,000 all in the form of dividends? Or is there an intention for part of this to be a buyback?

Ewan, CEO, BlueNord: So we will finally confirm this closer to the time and once the completion test is met. However, our current intention is that the entire distribution, the $253,000,000 will take the form of a return of paid in capital.

Catherine, Chief Corporate Affairs Officer, BlueNord: And then we have several questions about the same topic. Do you plan to make an extraordinary distribution outside the policy to distribute the $158,000,000 of cash received from the escrow release?

Ewan, CEO, BlueNord: So I guess I’m going to start answering that question by kind of reemphasizing something that hopefully has come across not just this morning, but in our our story throughout, which is that our focus is very much on maximizing distributions to shareholders. However, we do also want to make sure that we maintain a conservative balance sheet. And as part of that, we need to be conscious of our leverage position while we are still in the tower ramp up phase. That said, our starting point is that we don’t require a liquidity position of close to $700,000,000 And of course, we will consider the potential for an extraordinary distribution going forward and at the time when the RBL completion test has been met.

Catherine, Chief Corporate Affairs Officer, BlueNord: And should we expect 2025 dividend in the upper end of the 50% to 70% of the operating cash flow guidance?

Ewan, CEO, BlueNord: So the first two proposed distributions that we’ve announced at 70%, I think, pretty clearly signal our intent. We’re going to continue to start from that place so long as our balance sheet supports it. But as we go forward, obviously, we’ll have more definition around what the right level is.

Catherine, Chief Corporate Affairs Officer, BlueNord: Will we be seeing a higher dividend for the remaining quarters in the year of 2025?

Ewan, CEO, BlueNord: Yes, that’s what we’d expect. With Tyra at plateau, we will have significantly higher operating cash flow, and that will drive, based on our 50% to 70% distribution policy, higher dividends on an absolute basis for the rest of 2025 and 2026.

Catherine, Chief Corporate Affairs Officer, BlueNord: Then a few questions related to the gas penalties. Some color on the extent of gas price penalties in Q1 and are there any in Q2 or the rest of the year?

Jacqueline, CFO, BlueNord: Yeah. So I think I mentioned in the presentation, so for Q1, it was $11,000,000 that was impacted with gas penalties. So I guess maybe for context first, we do have some of these challenges with stability on Tyra. So when there are changes in the production expected, that does have an impact then depending on what we’ve nominated for gas. So there is some flow on effect.

Obviously, you’ve seen some of these changes or these stability issues arising in this early part of Q2. So that will have some impact. Again, as things stabilize, I do expect the level of penalties to diminish, of course, and once we’re stable that we shouldn’t see that at all. So in that respect, it’s clearly non recurring as a part of our underlying business performance.

Catherine, Chief Corporate Affairs Officer, BlueNord: And how do you think around gas hedging when Tyrol now is very close to plateau?

Jacqueline, CFO, BlueNord: Yes, so we continue to manage and monitor hedging with Tyra volumes in mind and looking forward. So that is obviously a part of how we do that. So it’s a part of the planning of the hedging portfolio.

Catherine, Chief Corporate Affairs Officer, BlueNord: 2025 CapEx corresponds to around $3 per barrel. Is that a level where we should expect 2026 and 2027 CapEx?

Jacqueline, CFO, BlueNord: Mean, 2025 is quite a low level of CapEx. There’s very minimal maintenance CapEx in there. So I think in principle, we would expect it to be higher in 2026 and 2027 when you consider the infill wells then being drilled and of course, the work on the development projects picking up. So I would expect a higher level, but currently not guiding specifically on the CapEx for ’26 and beyond.

Ewan, CEO, BlueNord: I think on that one, I think it’s just worth also saying that as you’ve seen this quarter, we’ve taken decisions where we’ve looked at the outlook and decided to reduce CapEx. So I think that’s the intention for sure. But I think as we get closer to the time, obviously, we’ll be able to make a more informed decision around what the right level of spending is.

Catherine, Chief Corporate Affairs Officer, BlueNord: And Miriam, should we expect any revision of peak rate expectations given the CEO says TYRA beating performance expectations? And is this performance a temporary flush production effect or something more permanent?

Miriam, Operations Lead, BlueNord: So there is an element of flush, and this may lead to slightly higher peak rates. And we also have more than 50% more wells to bring online. So this gives us confidence that we can deliver at our plateau level. And as highlighted, it’s good to see vessel performance significantly above expectations. The gas export will be constrained by the IP compressor capacity, so if we get more gas in, we will just extend the plateau production.

Catherine, Chief Corporate Affairs Officer, BlueNord: You have yet another penalty of gas as you had for some quarters ago. Is this so complicated that you cannot mitigate this?

Jacqueline, CFO, BlueNord: It certainly has some complexity and it’s mainly driven by the way nominations have to work. So they are done six weeks in advance, so I guess just to give that context, it does mean you have to take a little bit of an estimate on what the future holds and as you could see, we did have some instability on Tyra with the volumes. But of course, that is something we then work on how we can mitigate that and more actively managing it as a part of our nomination process. So that’s what we’re doing going forward to mitigate.

Catherine, Chief Corporate Affairs Officer, BlueNord: Congrats on the strong results. Five questions from me. Based on production last days and weeks, what is the best case for when the completion test could be met?

Miriam, Operations Lead, BlueNord: So looking at where we are right now and also seeing the different issues that we have, we’re looking into June to be able to meet the completion tests.

Catherine, Chief Corporate Affairs Officer, BlueNord: When do you expect 100% of tire wells to be commissioned? Can you elaborate what kind of issues you’re seeing on the remaining wells?

Miriam, Operations Lead, BlueNord: So we can say just splitting this out, so we have the commissioning of wells, so getting them ready to flow. We are almost there, so we said 91%, so basically seven wells to be commissioned, yes. That is going to happen in a very short time. And then we have, like I said, we have around half of the wells or less than half of the wells on production. So the rest of them, after being shut in for five point five years, they have different issues with the chokes, with the valves and other things.

And these are operational things that they will fix as soon as they meet them. So we are talking quite short time, but they won’t see the issues before they try and flow the wells.

Catherine, Chief Corporate Affairs Officer, BlueNord: And which of the three subsea tiebacks could be the first natural candidate to reach FID?

Miriam, Operations Lead, BlueNord: That is absolutely the Tyre North project.

Catherine, Chief Corporate Affairs Officer, BlueNord: Do you expect to pay the proposed $215,000,000 and $38,000,000 separately or all in one go once the completion test is met?

Ewan, CEO, BlueNord: All in one go.

Catherine, Chief Corporate Affairs Officer, BlueNord: Was the requirements for the escrow release materially different from the Tyreno completion test? Can you elaborate on the requirements for the escrow release?

Jacqueline, CFO, BlueNord: Yes. They are different tests. There were certain requirements around the completion of TYRA as a project for the escrow release, it’s not linked to the production that is then delivered from Tayra. That’s the main difference there.

Catherine, Chief Corporate Affairs Officer, BlueNord: As lower commodity prices impacted the dividend capacity under the RBL facility, I. E, has the banks revised its price deck to a level where dividend payments will be restricted at some level?

Jacqueline, CFO, BlueNord: We don’t see that as causing an issue at this point in time. We obviously do a liquidity test ahead of being able to pay the distributions, but that is a combination of the price deck as well as the forward prices and of course our hedging that’s in place that is taken into account.

Catherine, Chief Corporate Affairs Officer, BlueNord: Regarding the capital structure, as the monetary conversion in December approaches, could you please share your views on the CB and also outline your targeted leverage ratio?

Ewan, CEO, BlueNord: So I think on the CB, I think I’ve given a kind of our thoughts on that, which is that we would, of course, like to like to address it and do so as soon as possible. I think on the targeted leverage ratio, I think there’s almost two two stages to this. I think at the moment, while we are still in the period where we don’t yet have twelve months of full tire production, I think we’re very, very focused on the covenant level within our instruments, which is three times net debt to EBITDA. As we go forward, our targeted leverage ratio is more in the region of one and a half times on a through cycle basis net debt to EBITDA.

Catherine, Chief Corporate Affairs Officer, BlueNord: On CapEx, how much have you reduced CapEx from your initial 2025 estimate now that you’re guiding 50,000,000 to 60,000,000?

Jacqueline, CFO, BlueNord: Yeah. Overall, at start of the year, we probably expected it’s dropped probably around 80,000,000 to 100,000,000. There’s been a few things, obviously, the infill wells and the ROM program we’ve talked about here. There’s also some reductions around the timing for other CapEx projects.

Catherine, Chief Corporate Affairs Officer, BlueNord: Have you added any additional hedges so far in Q2?

Jacqueline, CFO, BlueNord: Pretty minimal. We’re monitoring the market. We have put a few on for oil, but that’s been a bit more limited at the start of this quarter.

Catherine, Chief Corporate Affairs Officer, BlueNord: Regarding your lifting cost expectation of $13 per barrel for 2025, what is the split between Tayra and base assets?

Ewan, CEO, BlueNord: I think that’s a it it it $13 a barrel is is not necessarily a split where you can say some, you know, $6 comes from one and $7 comes from the other. I think what we can say though is that the kind of the levels of OpEx that we’ve seen to date reflected by Dan, Halfdan, and Gorm, that kind of overall level would be expected to remain the same. So it’s the addition of very low cost Tyra volumes that brings you down to the to the 13. So I think you can say that, you know, the majority of the cost decrease is is driven by Tyra.

Catherine, Chief Corporate Affairs Officer, BlueNord: Regarding the Tiara facilities, can you give some color on why this has turned out to be so complicated to maintain at a high performance level so so that we can understand what type of fix is needed and gain confidence in the whole plan.

Miriam, Operations Lead, BlueNord: Yes. So like we said in the presentation, so there’s so one thing when you start up this big project after so long time, There are smaller issues are expected, so we did expect that there would be something that we had to figure out how to run. And then we’ve had some other incidents that has impacted quite a lot more than we had hoped for. So combined, that has given us the lower uptime and the difficulties you’ve seen. What we do see is that the operator is now doing this reliability study, so they’re going into all the different issues that they’ve seen and finding out why that happened and what’s the best way to make sure that it doesn’t happen again.

And that work is ongoing right now, and they get specialist vendor support to do that. So we have a good confidence in that they will be able to do that. And we do see less of the smaller incidents lately.

Catherine, Chief Corporate Affairs Officer, BlueNord: When does Bluenard expect to commence meaningful cash tax payments to the Danish government?

Ewan, CEO, BlueNord: So so Blue Nord is already a meaningful taxpayer in Denmark. We are consistently in the top 20 corporate taxpayers in Denmark and that’s just Blue Nord on a standalone basis. If you bring together Blue Nord, TETTK and then also the or Total Energies and then also the North Sea Fund, actually the DUC becomes one of the largest corporate taxpayers in Denmark. From a Blue Nord perspective, we are one of the largest taxpayers while also being in a position where we have significant chapter three a tax losses. So we’re effectively only paying 25% cash taxes.

And then also my, point around us being one of the largest taxpayers is also prior to Tyra having ramped up and reached plateau production. So we are contributing significantly to Denmark. From our perspective though, one other point just to note here is that we are expecting that our chapter three a tax losses will likely be used up by around about 2027, so the end of twenty six, twenty seven. And from that point onwards, we’ll be paying both corporate tax and the hydrocarbon tax.

Catherine, Chief Corporate Affairs Officer, BlueNord: Has Blue Nord any plans for buyback of shares?

Ewan, CEO, BlueNord: So the distribution policy that we’ve announced is one that is framed based on distributions and that includes dividends and the potential for share buybacks. As I mentioned earlier on, for the first payments, which will cover 2024 and Q1 twenty twenty five, our intention is that this is structured as a return of paid in capital. However, going forward, we’ll continue to assess the potential for including buybacks as part of those distributions.

Catherine, Chief Corporate Affairs Officer, BlueNord: And final question. Shell has historically held the rights to market DOC oil and gas. What is the status of your offtake today? Is there any trader holding the rights?

Jacqueline, CFO, BlueNord: Yes. That’s right. Obviously, Shell held historically. They they continue to hold 75% of the volume rights over the next four years or so. The other 25% is more open.

Currently, it is contracted with BP and yeah, all % is also then up in a few years time and can be open to marketing.

Catherine, Chief Corporate Affairs Officer, BlueNord: And that concludes the Q and A session. Thank you.

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