Teodor Sveen Nilsen: Teodor Nilsen, Sparebank1 Markets. So congrats on very strong results this year. Positive also to see how specific you are on dividends and buybacks. So more specifically on those $17 billion you promise as shareholder returns this year. How sensitive is that to oil and gas prices. We all know that this is a very cyclical and volatile industry. So in a scenario where you see much lower oil and gas prices this year, we’ll still stick to the $17 billion? Or is it some kind of sensitive to oil and gas prices?
Anders Opedal: As I said in my speech, is that this is the number we’re setting out for this year. This board’s clear intention to keep the same dividend level for the next three quarters. And as you see, we have a very, very strong balance sheet with cash and cash equivalents around $45 billion. So this is also about putting us closer to the long-term guiding of the 15% to 30% net debt range.
Torgrim Reitan: Can I begin you Anders. I think the ordinary cash dividend and ordinary share buyback program, that is linked to outlook for the future, the $20 billion cash flow from operations and the return on capital employed. The extraordinary part is related to money already earned, and that is actually sitting on our balance sheet currently. So that is $45 billion in cash and cash equivalents. So that is linked to the extraordinary part and it is not linked to earnings this year or future earnings.
BÃ¥rd Glad Pedersen: Let’s take one from the phone and then I give the microphone to Biraj in the middle of the room for the next one after that.
Operator: John Olaisen, ABG.
John Olaisen: Good afternoon gentlemen. You have changed your guidance for renewable volumes from gigawatt hours. The gigawatt or installed capacity terawatt hours of production. And I’m wondering a little bit about this. Firstly, is the terawatt hour guidance net number to you? Is it a gross number? Secondly, why did you change the guidance? And then thirdly, this chart of power generation of terawatt hours between now and 2030. Is that based on the assets you have today? Or is it assuming that you win acreage also in the future license rounds or do acquisitions.
Anders Opedal: Yes. I’ll start on this one. And I know PÃ¥l is also eager to jump in on this one. But first of all, the 12 to 16 ambition for renewables of 12 to 16 gigawatt remains firm. We have already accessed the 14 of this. So we are on the path to deliver on this. But gigawatts is just a potential, power and terawatt hours is really the power we will produce, which is a basis for future cash flow. And when we discuss to develop the renewable business further, we say that now we want to really measure ourselves on how we develop as in power generation. Remembering that different sources of renewables have different capacity to produce a different amount of power. So PÃ¥l might be allude a little bit how you have developed portfolio as well over the last year.
PÃ¥lEitrheim: Yes, thank you. So I don’t think we have made a deliberate choice of changing our guidance. I think we’ve actually been providing more information on what we’ve been doing in the past. And our starting point is that we have built a very strong position in offshore wind. But during very heated markets over the last few years, what we have been doing is actually being a net seller of shares and offshore wind and monetizing in that market. We have also seen that we have a portfolio that was in need of a bit of diversification. So that is why you have seen us make bolt-on acquisitions into onshore platforms in Poland with Wento with a 1.6 gigawatt pipeline and with BeGreen in Denmark that closed only last week. So we have been diversifying our portfolio.
So what you see in the installed capacity numbers is a higher element of onshore volumes and solar PV, in particular, than what you have seen in the past that comes on top of that strong offshore wind portfolio. So the 14 gigawatts of installed capacity roughly corresponds to the lower end of the production range that we have given today. But given that we now have a portfolio, we also see quite a bit of upside in bringing merchant onshore volumes where we can trade and market these volumes in the market compared to locked-in long-term PPAs that we have on the offshore wind side. So to me, it is a way of demonstrating that we are putting value over volume in the way that we are prioritizing our portfolio.
Operator: Yes, please. Can I get the microphone?
Biraj Borkhataria: Hi, thanks. It’s Biraj Borkhataria, RBC. I wanted to ask about free cash flow deployment. So Torgrim, you were very clear that the CapEx increase was back-end loaded. And you’re in somewhat of a unique position as a company given the strong macro environment last year. You’re sitting on $20 billion of net cash and so on. But could you just talk about why you’re choosing to make that CapEx profile back end loaded? Is it that you’re concerned about supply chain inflation and so on? Is it they maturing the projects? And maybe you could also touch on policy because there is a narrative that the U.S. is obviously pushing ahead with the IRA and so on, and your carbon capture profile and options are largely European focused. I just wanted to get your thoughts on the regulatory environment there as well. So it’s two questions. Thank you.
Anders Opedal: Yes, I’ll start a little bit on CapEx, Torgrim, and you can follow-up. So we have a CapEx guiding, which is very much in line with previous guidance. And with some smaller adjustments, which is from year-to-year and project phasing, we are fairly stable on the oil and gas. So the increase you’re seeing and the increase with 13% on average, which is back-end loaded is really the increase in renewables and is also a potential increase where we will finance renewals over the balance sheet. Regarding — we will not never sanction projects before they are good enough. And that’s why also we will see that there are some flexibility to when we will sanction these projects, and there can be small adjustments, and that’s why we’re guiding in our range here going forward.
Yes, IRA. And we do have projects both in Europe where we kind of have a very, very good, and I think Irene said it very clearly, where we have a strong position, which is with higher barriers to enter. And then we have also projects in U.S., but quite fierce competition. So maybe you want to say a little bit of what we’re doing in the U.S. And if you have anything to add on CapEx to, please let me know.
Irene Rummelhoff: I can do that. I think we always trace where we have opportunities, where we have a competitive advantage. And clearly, in Europe, we have the infrastructure, we have the customer relationships, et cetera. The other place where we see some synergies with the existing business is in the U.S. And for some time, we’ve been chasing couple of opportunities, bigger ones in Tri-State area in the U.S. and also on ammonia export projects. These projects overnight with the IRA became much more attractive, and we continue to mature those. But Europe was way ahead of the U.S. when it came to incentives for a while. And then the U.S. moved ahead. You saw on the lane out there saying, we’re going to up our game. So I think this is not going to be a static picture. You’re going to see the supportive — support machines change over time. So stick to where we really have a competitive advantage, but clearly quite excited about what goes on in the U.S. right now.
BÃ¥rd Glad Pedersen: Torgrim?
Torgrim Reitan: Yes, on CapEx, a very important question. So — it all starts with that we are driven by maximizing the value creation out of that investment program. So we have deliberately taken some decision to say, okay, these projects need to be worked more and they will come later. And I think this thing, as I mentioned, is sort of one example of that. The other one is that in a big portfolio where we are an operator, clearly, we need to manage execution capability and inflation as such. And we have seen inflation last year, quite significant, but we really, really need to manage that, meaning that we need to see to that we have a good portfolio over years to manage that. And you saw from our presentation, $35 breakeven of the upstream project portfolio, that has remained rather constant over the years despite that we have had inflation in the period.
So that’s sort of KPI or matrix to follow. That is really where we see that we can create value by actually profiling the investments in the way that we do. So we’re not driven by volume targets, but driven by value. I think I’ve said it 10 times now. So that’s for sure.
BÃ¥rd Glad Pedersen: That’s good. One in the back there, and then we’ll take one more on the phone and continue here in the room.
Christopher Kuplent: Thank you. It’s Chris Kuplent from Bank of America. I really welcome the clarity you’ve given on the capital distribution front. But maybe Torgrim, I’ll challenge you here a little bit because you’re presenting a $50 breakeven after CapEx and I think on your 2023 cash flow outlook, the $17 billion of cash returns are going to be covered roughly where we are right now in $80 plus/minus gas prices where we are right now. So it looks like you’re giving yourself quite some time redistributing your balance sheet strength to pick up your comment earlier. So just wonder whether you can give us a bit more color in terms of how much time you have to reallocate that balance sheet strength that you’ve accumulated. And of course, my second question is the least popular one because I know you’re not going to want to answer it, but I’ll ask it anyway.
What role does your M&A team play here in having a claim on that balance sheet strength? And maybe Anders if you or Irene if you want to give us a little bit of your view on what the market currently looks like. This is no longer a zero interest world. What does the M&A market look like to you? Thanks.
Anders Opedal: Yes, I can start with that a little bit. As we have said many times, M&A is always in our toolbox. And you have seen what we have done in the past. You have seen how we have been optimizing our oil and gas portfolio both by acquiring some and divesting some, always constantly driving to make sure that the robustness of the company will increase by doing so. Of course — and then also for the renewables with Wento and BeGreen, as PÃ¥l said, it was a time we felt it was very, very expensive, but then with increased inflations and interest rates we have made some acquisition and also with Tritan, a bolt-on acquisition there. Going forward, I’m not going to comment on it, but we follow this market very closely. But to follow my CFO, we will value over volume driven also when we use the M&A market. And then Torgrim, he challenged you and you want to comment as well.
Torgrim Reitan: Thanks. A very important question and a great question. And I thought you actually had two because you talked about $50 breakeven on the slide. I just want to explain that a little bit to you because we are building a company that will function from A2C in a $50 environment, meaning that sort of the capital distribution that we have committed to, the ordinary part of it is going to work in a lower price environment assets. So that is very, very important. And again, we have significant flexibility in managing lower prices as we are a large operator, and we are the captain of our own investment program, if you like. So I think that is sort of very important to understand. The second one today or this year, we are planning on a negative net cash flow.
And I’m glad for that. And it’s probably strange to hear as CFO saying that. But with a $17 billion the cash distribution, we clearly planned for a negative net cash, and then moving towards a more optimal capital distribution. So we will — we aim 15 to 30, and that’s what will happen this year is on its way to that. And then clearly, the balance sheet will remain very robust and solid. And clearly, we will be careful as always. And I think you might want to look at the past and see the capital discipline under the CEO over the last few years. And clearly, we want to keep that intact.
