Aker BP ASA

OSE:AKRBP

Earnings Call Transcript 2018-Q4

[Karl Johnny Hersvik, Chief Executive Officer]

I'll start anew. Sorry about that. So welcome to the fourth quarter presentation here at Fornebuporten, and welcome to those of you who have selected to join us here. And as I can see, most people are joining us on the web, so a special welcome to you, too. Now 2018 was a really good year for Aker BP. I think on every single parameter that we could think of, we had strong growth throughout 2018. And I'll spend a little bit of this time to try to dig into some of these details and put the case why this growth is continuing also in 2019 and the years beyond.Now first of all, we had record-high production in 2018. But what makes me even prouder is that we had really high regularity, despite a lot of modification activities ongoing on pretty much all our installations.Second, we've seen industry-leading drilling performance that I'll come back to. We've seen all the field developments basically on track. Digitalization is gaining momentum. I'll share a couple of new examples with you here today. We see an expanding of the alliance model, and we see this alliance model gaining traction and producing real tangible improvements on our cost base. And we are continuing to apply new technology to our business. We'll share a couple of those examples today, too. And then finally, the organic growth story is very strong. Even this -- even in 2018 when we did not deliver a new PDO, we had reserve replacement of above 100%. And we increased our contingent resource base with 23% both from M&A, but also from organic growth opportunities. And 2018 was a good exploration year. And as you probably already noted, 2019 has not started too bad either.So fourth quarter 2018 basically compounds the growth story of the entire year of 2018. Production stood at 155,700 barrels of oil equivalents. We had a realized oil price of $64.3 and a gas price of about $0.30 per standard cubic meter. That left us with an EBITDA of $667 million, adjusted for an underlift that is impacted by the oil price change in the fourth quarter. We completed the acquisitions of King Lear and the portfolio we acquired from Total. And we finally got the Hess tax loss refunded, and thereby, reduced our net debt in the quarter.And then I cannot talk about 2018 with also mentioning a recent event after the quarter. We have just announced the discovery at Froskelår. And to me, this is a step on the road of a pretty long strategy of future field development at the Alvheim area that started back in 2014. This is the result of a tangible strategy with data acquisition and continued field development throughout the area where seismic activity, field development activity and a subsea alliance has compounded to a great story.The preliminary results, as they were reported, is that we have discovered an oil and gas discovery. We are initially within the predrill range, and there's a chance that this discovery straddles the U.K. border. Currently, we are doing coring and data acquisition activities, and we are going to drill 1 or 2 horizontal sidetracks to reduce the uncertainty range prior to commencing field development studies. Next well in this area will be the Frosk test producer. And as you may recall from the Capital Market day, we are also going to drill the Froskelår Northeast as an extension from the Frosk test well. And then after that, we'll drill the tadpole Rumpetroll exploration well. And following that, we'll make an assessment of the entire area.Then moving back to production in the quarter. As you can see, we recovered production from third quarter 2014. And as you can also see, the regularity is pretty high across our asset base. There are, of course, 2 assets that stand out. The first one is Ula. This is mainly due to well activity, but also to the fact that we are carrying out a lot of modification activities to prolong the lifetime at Ula, which impacts production across the Ula license. On Valhall, the main culprit is stimulation activity, which means fracking, which means that we have to shut down neighboring wells to avoid the frac breaking through to the wells. This has been pretty high in 2018 due to the high number of wells drilled in the field over that year.And talking about drilling, we continue to lead the market in terms of drilling performance. So this year in 2018, we have delivered just above 200 meters a day on average across our production drilling performance and are hence leading the field on the Norwegian Continental Shelves in terms of drilling performance. This is the reason I'm talking about productivity every single time I'm talking about the improvement. It's that the underlying productivity needs to continue to trend upwards. And the difference is even more clear when you look at the exploration wells drilled in 2018 where we're quite the significant gap to #2 in -- on the Norwegian Continental Shelf.We've, for a long time now, talked about the subsea alliance and the effects of the subsea alliance, and I thought I'd shared with you today the effects that we're starting to see on the Valhall West Flank. First of all, the project is on track. It will be loaded out and installed in the summer of 2018, and we've now run our first benchmark of the alliance effect across the portfolio, but also compared the Valhall West Flank project to the benchmark in terms of project on the Norwegian Continental Shelf. And of course, I'm happy to see facility cost reduced by 24% from the benchmark. But even more importantly is probably that we've been able to increase productivity by reducing the number of engineering hours with 14% and reducing the duration of the project with almost 30%. This means high value creation for Aker BP and our partners.And we continue to drive down cost throughout our portfolio. Another example of waste reduction is the activity we carried out to lower CO2 emissions in our operations. We recently announced the 2017 numbers, which stands at 7.2 kilograms per BOE, and 2018 showed a further reduction from the 7.2 down to 7.0 kilograms per BOE in CO2 emissions. The 2 main driver for this was increased energy efficiency and energy efficiency activities, but also that we, for the first time ever, electrified a jack-up operating at Valhall using the power from shore cable from Valhall out to the Valhall PH and then further out to the Maersk Invincible. And as another little bit of a technology demonstration but also something that actually creates real value, on the Valhall West Flank, the first-ever electric propulsion lifeboat will be installed. This -- the driver is actually very simple. On a normally not manned installation, you want to avoid as much preventive maintenance and condition-based maintenance as you possibly can. By using an electric engine and batteries, we could remotely control both the battery, the state of the engine, and we can remotely run tests and analytics across it without putting people on the installation. And then it's, of course, fun to deliver our world's first even on this field.Digitalization is also gaining momentum, and we've talked a lot about the digital work and how we connected to the different data and the data sources in our universe through the Cognite data platform and up to tablets and users in the field. Today, I thought I'd share with you not a perspective on digitalization where we use machine learning to increase production in our assets. So I talked about the main culprit on the production efficiency in Valhall is the breakthrough of chalk into the wells. We've long searched for a solution on how to discover this chalk influx without it actually happening. And now we've actually seen and demonstrated that by the use of artificial intelligence across that dataset of data that are already gathered by sensors in the field, we're able to predict when this chalk influx is happening and mitigate without serious production impairment. So this is another effect of actually using the data from many different systems, putting them into the Cognite data platform and then putting, in this case, artificial intelligence or machine learning on top of that to create tangible information that are actionable in the field.A second example is very complex changes in flow requirements and processing requirements across the different installations. And in this case, illustrated by an Alvheim case. When we test the multiphase flow meters, we have to change the parameters in the process. And doing so, we introduced multiple variables to the process control, and it's hard to understand what will be the optimum at any given point in time as you run through the sequence of wells to be tested. We've gathered all these data. We've compressed it into a simulated set. We put machine learning on top, and now we're able to predict exactly the flow-through and the maximum production for each and every multiphase flow meters test. If this is only implemented at Alvheim, it will save us around NOK 40 million a year on this project alone. So as you can see, the digitalization agenda in Aker BP is gaining momentum, and we're focusing on tangible business cases that we can run out across the field to gain both experience, but most importantly, increase productivity and lower cost.And then finally, a word on alliances. We've currently implemented 7 alliances spanning from drilling and well all the way up to maintenance on our installations. From a pretty slow start back in 2016 when we had 2 projects ongoing in execution, we now have 10 projects ongoing in the subsea alliance alone. We have more than NOK 10 billion in the subsea and modification alliances within the scope, and we plan to execute about 1.2 million hours of work in the modification alliance. I'll put it to you that without the use of these alliances, we would not have seen the productivity and the increase in efficiency with the increase in scope that we have seen so far. So to me, this is a proof that this alliance model and the reorganization on [ Raudåsen ] is actually working.We have 2 more alliances to go. So the first one is the Intervention alliance, which is currently being processed, and then we are discussing what to do with logistics and how to shape that value chain as well. But already now, we're pretty much completed the project of reorganizing the value chain into alliances and Aker BP as operation, and we continue to take out benefit of this work that has been going on since 2016. And this is all well and good, but ultimately, oil and gas is about finding, realizing and producing oil. And this is probably what makes me the most proud in 2018 is that we've been able to replace every single barrel we produced in 2018. We went into the year with 940 million barrels in reserves, and we exited the year with 917 million barrels, having produced 56 million barrels and put back 59 million barrels. And we have also increased our resource base by a significant amount, and it's currently standing at 946 million barrels. Out of these, 174 million barrels are acquisitions. There is 44 million that are matured to reserves, which you can find on the left-hand side of the slide. And then, of course, there are some discoveries and upward revisions basically coming from the Gekko appraisal well drilled last year, which is a perfect segue over to the exploration year in 2018. So 2018 was quite a good year for in terms of exploration. We have generated value in the range of $120 million to $280 million on that exploration budget, dependent a bit on the parameters set, as you can see. The 2 key parameters is the Frosk discovery. This is, of course, the start of the story that is now continuing with frog leg and then continuing with frog leg Northeast and then tadpole ultimately. But it's also an effect of a larger-than-expected appraisal well on Gekko. And then ultimately, we have increased our number of licenses on the Norwegian Continental Shelf and are now the second biggest license holder with 159 licenses, 21 out of which was acquired in the last licensing round. As you can see, they are pretty much spread around the Norwegian Continental Shelf. But recently, we've been focusing on near field exploration close to our operated hubs. And this is a strategy that we'll continue also in 2019. 2019 in terms of exploration have started, I would say, yes, quite well, but there are lots of good wells to come. So the first one is going to be the frog leg Northeast, which we expect to see as an extension of one of the branches of the frog test producer. Then the tadpole next. Hod deep well, the west is ongoing. We're just above the reservoir right now, so I expect that to penetrate the reservoir within a week or so. And Gjøkåsen is also ongoing. So 2019 is going to be a really exciting exploration year for Aker BP.Now oil and gas is mostly about numbers and oil volumes and improvement project, but it's also about great people. And it gives me great pleasure to welcome 2 new members to the Aker BP management team. Lene Landøy, who is now responsible for Strategy & Business Development; and David Tønne, which you'll meet shortly, who is now the Chief Financial Officer in Aker BP. And then I think it's time for your debut. Alexander -- not Alexander, David. I've said this so many times now, it's going to take me a long time to actually get that right. But David, the floor is yours.

[David Torvik Tønne, Chief Financial Officer]

Thank you, Karl. So good morning, everyone. I have the pleasure of summarizing the financials for 2018 for Aker BP, and with this, I will also take you through some of the key figures for the quarter.2018 was, as Karl has said, a record year for Aker BP. We increased revenues with 46%, and the key driver for this was an increase in production of around 12%, up to 155,700 barrels per day. At the same time, realized hydrocarbon prices increased in the period by 29% to approximately $65 per barrel. EBITDA for 2018 ended at $2.75 billion, this is up 54% from 2017. And net profit increased with 73% to $476 million.Now deep diving into the last quarter of the year. So the operational performance in the quarter was very good with production ending the year at 163,400 barrels per day on average throughout December. There were 2 specific noncash accounting effects impacting the P&L this quarter. One was the reevaluation of the underlift balance due to falling oil prices, and the second was the strengthening of the U.S. dollar versus NOK impacting the effective tax rate. And I will come back to those 2 points a bit more in detail later on.But now into the numbers. So we recorded a revenue of $886 million on a production of 155,700 barrels per day, same as the average throughout the year. The decrease in revenues compared to Q3 is driven by mainly lower prices as we realize an average oil price of $64.3 per barrel in the quarter. Income during the year -- sorry, during the quarter were also negatively impacted by large net underlift balance reevaluation. And in layman terms, these are the volumes that we have produced, but not yet sold. And we value this inventory at the estimated sales price on the balance sheet date and booked the related adjustment against revenue. At the end of Q3, we had a net underlift balance of 1.6 million barrels, which increased to about 2 million barrels at the end of Q4. This balance was valued at around $80 per barrel at the end of Q3 compared to around $50 per barrel at the end of Q4. The negative impact on income due to this reevaluation of the underlift was therefore around $48 million, but this was a noncash effect.Moving to costs. Production expenses was around $187 million, an increase of $21 million from the previous quarter. If you look across our 5 hubs, absolute OpEx was relatively stable for Alvheim, Ivar Aasen, Skarv and Ula/Tambar. The increase in production costs is mainly a result of increased plant maintenance at Valhall/Hod.On average, production costs per BOE was $13 during the quarter. And for 2018, we ended at $12.1 per barrel, which is in line with our previous guidance. Other OpEx amounted to $8 million for the quarter, roughly $0.60 per barrel. Talking about exploration. Exploration costs this quarter was $72 million. The main components of exploration costs was field evaluation of $28 million, mainly related to the NOAKA and seismic cost of $21 million. In addition, we also expensed $4 million of dry well cost related to the Cassidy well. In addition, we also have the usual area fees and other exploration expenses that makes up the balance. EBITDA was $619 million for the quarter. Depreciation. $196 million or $13.7 per BOE, roughly in line with last quarter and $0.50 above the average of 2018. We recorded impairment charges of $20 million, mainly related to the Gina Krog due to revised production and CapEx profiles. We have net financial expenses of USD 44 million during the quarter, and the overall currency result is close to 0 as the currency gain from the strengthening of U.S. dollars versus NOK during the quarter has been offset by the currency loss on the NOK-denominated tax refund related to Hess Norge, which was settled in November. The currency impact from this tax refund has previously been presented as other comprehensive income but has now been reclassified to profit and loss in Q4 as Hess Norge was liquidated during the quarter.Note that we recorded realized gains on derivatives of 72 million mainly related to the currency hedging of the same tax refund. Other financial items such as interest income, net interest expense and accretion were stable compared to the last quarter. A more detailed breakdown of the various financial items is shown on Note 6.So profit before tax was $359 million and taxes amounted to $305 million. This represents an effective tax rate of 85% in the quarter. As we clearly illustrated in the Capital Markets Day a couple of weeks back, our P&L tax is impacted by the changes in the U.S. dollar to NOK exchange rate. A key reason is that we have dollar as a functional currency, while our underappreciated tax balances are denominated in NOK. This means that a strengthening of the U.S. dollar versus NOK increases the effective tax rate, yes.The petroleum tax rate in Norway remains at 78%. And normally, our effective tax rate will be a bit lower due to the CapEx uplift. But from quarter-to-quarter, this may vary due to accounting effects due to currency movements. So of the 305 million in taxes, 133 million was the current tax arising in the quarter, 151 million was changed in deferred tax and 20 million was related to adjustments for prior periods. So when analyzing the effect of the currency changes on the effective tax rates, we observed that approximately 50 million is driven directly by the changing currency, and these are only mainly noncash effects as the same as the reevaluation of the underlift mentioned previously. Net profits then ended at 54 million for the quarter or 50 cents per share. For 2018 in total, earnings per share ended at $1.32. So let's look at the balance sheet. On the asset side, there were 3 main movements in Q4. Other intangible assets increased to $2.4 billion, and that reflects the acquisitions of licenses from Total and the King Lear acquisition from Equinor, which was completed during the quarter. Key PNE decreased in Q4, and normally one would expect an increase as our investments exceed both depreciation and impairments. In Q4, the net CapEx amounted to $380 million, excluding capitalized interests, while depreciation and impairment amounted to $197 million. However, PP&E also includes the estimated future abandonment cost, which was reduced by $492 million in the quarter. Hence, the net effect on PP&E was a reduction of around $300 million to $5.7 billion. The tax receivable have been reduced to practically 0, and that's, as previously mentioned, due to the tax loss from Hess Norge being paid out in November. This contributed to a reduction in total assets to USD 10.8 billion at year-end.When turning to the other side of the balance sheet, we note the following: Equity was reduced by $93 million; the USD 54 million in net income was partly offset by negative effect of $34 million in other comprehensive income; and we paid out 112.5 million in dividends in the quarter. Other provision for liabilities decreased by $442 million, mainly due to reduced estimates for future abandonment costs, which is mirroring the management reduction in the PP&E on the asset side. The book value of our interest-bearing debt consists of bonds and bank debt. This was reduced from $3 billion to $2 billion during Q4. The $1.5 billion bridge facility obtained in relations to the acquisition of Hess Norge, which we paid in November when the tax losses were refunded. We increased our drawing on the RBL of $550 million during the quarter mainly to finance the acquisitions from Total and Equinor. Looking at tax payable, our accrual was $552 million at the end of Q4. This consists of $317 million in remaining taxes payable for 2018, which will be paid during the first half of 2019. The remaining $232 million represents accruals for various uncertain tax cases. So while we're looking at the balance sheet, it's worth noting that the accounting standard IFRS 16 leases is effective from the 1st of January 2019, and is therefore not reflected in the accounts for 2018. The main impact of the standard is that lease contracts should be recognized in the balance sheet as lease asset and lease obligation. The overall key message related to this for Aker BP is that the implementation of this standard will have limited impact in 2019 as it will only increase our total assets with around 4% or $400 million. We also expect minor impact on the income statement as most material leases are typically rigs and are mainly used for CapEx activity.Moving to cash flow. So I think the cash flow for Q4 summarizes most of the items discussed so far, but I'll briefly walk you through them. So the tax refund was used to repay the bridge loan. The acquisitions were fully financed by drawing on the RBL, and cash flow from operations was $717 million before the tax payments of $304 million. Then cash flow to investments, excluding the acquisitions, was $447 million, of which the main contributors were Valhall/Hod with $208 million; Johan Sverdrup with $91 million; and then Alvheim with $42 million. Dividends again amounted to $112.5 million and then resulting in a total dividend for 2018 of $450 million. Then at the end of the quarter, our cash balance was $45 million. The book value of net interest-bearing debt was $2 billion. We had $3 billion of committed undrawn capacity on our $4 billion bank facility. And our leverage ratio, defined as net debt over EBITDAX, was lowered again and is now around 100 -- 0.65.Okay. So I also would like to give some comments related to tax and tax payments. Under the Norwegian fiscal regime, taxes are paid in 6 installments. For each fiscal year, the installment starts in August the same year and end in June the following year. Hence, the 3 first installments are based on estimate of the taxable income for the full year. And after year-end, the last 3 installments can be adjusted to reflect the actual taxable income. So looking at the chart, Q1 and Q3 each have 1 installment while Q2 and Q4 each have 2 installments. And for 2018, we initially overestimated the taxes. Hence, we have reduced the remaining installments accordingly. So the 2 bars in magenta on the slide add up to the equivalent of $317 million that is included in the tax payable in the balance sheet. And then also as an extra service to you who want to understand the cash flow implications further out in time, we have provided an outlook for the cash tax payments for 2019 under various oil price scenarios. So we recognize that tax is very important, but also a bit complex. So -- and we typically receive quite a lot of questions related to tax. So we are, therefore, planning to publish a tax information pack during the next couple of days on our Investor pages on the web.Okay. Finally for sake of good order and in good tradition, I will also revisit our guidance summary. Key message here is that the only thing that has changed since the Capital Markets Day is that we now have the accurate 2018 figures. Again, 2018 production ended within our guidance range. And for 2019, we expect to stay within the same bracket. And the next step change in production for Aker BP will be when Johan Sverdrup starts up, which is expected in November. Total cash spend on CapEx in 2018 ended at $1.2 billion, slightly below the last guidance. For 2019, we're planning to spend $1.6 billion, of which the main drivers are Valhall and Johan Sverdrup. Exploration spend came in at $359 million for the year, and this was quite in line with our original estimate at the Capital Markets Day last year. And then we increased the estimate during the year as we contracted the rig to drill more wells in the Frosk area. However, this rig was delayed which took us back to square one. For 2019, we plan to spend around $500 million, and this is driven, of course, by the very exciting exploration program that Karl just presented. And as you know, there are several wells already ongoing.Abandonment spend for 2018 ended at $243 million, in line with our latest guidance, but significantly lower than what we said at the Capital Markets Day last year. This -- the main reason for this, of course, was that the Valhall P&A program were executed much more efficiently than originally planned. Production cost per barrel, $12.1, again, in line with our guidance of around $12. And then for 2019, we expect a slight increase to $12.5, which is mainly reflecting planned high maintenance activity on Valhall and Ula. And of course, last but not least, we are very pleased to offer attractive dividends. And for 2019, we plan to pay $750 million, equivalent to around $2.1 per share.Okay, thank you. That concludes my part of the presentation. I'll hand back to Karl.

[Karl Johnny Hersvik, Chief Executive Officer]

Thank you, David. Got that right, that's good. So finally, the priorities ahead. The strategy for Aker BP will remain the same also in next quarter and the quarters to come. We will keep focusing on the 3 main strategic pillars: to execute, to improve and to grow. We'll keep focus on safe and efficient operations throughout the 5 operated hubs, and we'll keep driving excellent project execution as I think I've shown you an example of here today. You can trust that Aker BP will continue to lead the digital transformation of the E&P industry as we're completely convinced that this will be the main value driver in the years to come. We have talked about alliances. We continue now to expand this across the next 2 value chains that are in process, but probably even more importantly, to deepen and improve the improvement programs going on within the alliances themselves. There's an extreme amount of activity and enthusiasm inside this alliance, which really makes me certain that this is the way to go.And then finally, as new technology come to the market and as we've discussed in the Capital Market Day, we will be aggressive in applying that technology to reduce cost, increase quality and increase productivity. In terms of exploration, we have demonstrated a high capacity to realize value, and we continue to do so in 2019 while we're also maturing new infield resources to reserves throughout the year.And then finally, at the Capital Markets Day, we were fortunate enough or happy to put out a new dividend guidance. And I reiterate that because that is the -- to me, that's the most important thing we, as a management team, can do, and that's to increase value to our shareholders. So as David said, this year, we plan for $850 million, increasing $100 million each year up to 2023.So with that, I think we'll conclude the quarterly presentation and then open for questions. I think we'll do it as normally. So David, if you join me here, and we'll open here at Fornebuporten and then go to the web.

[Karl Johnny Hersvik, Chief Executive Officer]

So there are no questions here at Fornebuporten. Are there any questions on the web, Kjetil?

[Kjetil Bakken, Vice President of Investor Relations]

Actually, there seems to be no questions on the web at the moment. There has been a technical hiccup during the presentation. So parts of the presentation did not broadcast as expected. So that's probably the reason. So we -- I guess, we should invite those who have questions to post them directly to us after the presentation.

[Karl Johnny Hersvik, Chief Executive Officer]

Sure. That's great. So if any of you have questions, you could either post it or you can send it directly to Investor Relations at Aker BP.

[Kjetil Bakken, Vice President of Investor Relations]

Actually, I've got a question now.

[Karl Johnny Hersvik, Chief Executive Officer]

Fantastic.

[Kjetil Bakken, Vice President of Investor Relations]

From Alwyn Thomas of Exane BNP Paribas. He asks, is there a way that higher resources in the Alvheim, Frosk area could help the commercialization of the north of Alvheim fields, particularly in the event the Krafla-Askja is developed using Equinor's concept.

[Karl Johnny Hersvik, Chief Executive Officer]

Okay. So first of all, the Frosk area is in the south, about 20-odd kilometers away from the Alvheim area, while the NOAKA area is, of course, in the north of Alvheim, some 30-odd kilometers north. So you could, of course, imagine that there was some caught of shift in terms of resources that allowed Alvheim FPSO to expand its grid south, and thereby, releasing reserves to the north. Currently, I must say that our main hypothesis is that these resources will be developed up to Alvheim, and that means that the NOAKA area will remain untouched from the exploration activity in the south.

[Kjetil Bakken, Vice President of Investor Relations]

And the second question from Alwyn is, how much does the Froskelår discovery derisk the Rumpetroll and other prospects in that area?

[Karl Johnny Hersvik, Chief Executive Officer]

Yes. I won't go into too much detail as the acquisition is ongoing. But there are indications that the Frosk system and the Froskelår system is not identical in terms of oil quality, but also in terms of oil-water contact. That means that there are at least 2 hydrocarbon systems in the area. So with that kind of assessment in the background, I'll be quite cautious to go into talking about derisking of Rumpetroll until we've actually made the final technical data acquisition and drill the sidetracks to gather more data to get a better understanding of this system. Well, at least, it makes us more enthusiastic of the whole area, that's for sure.

[Kjetil Bakken, Vice President of Investor Relations]

Final question from Alwyn is how quickly could you produce Froskelår volumes and what would be required to develop this area if Rumpetroll comes in as well?

[Karl Johnny Hersvik, Chief Executive Officer]

Well, if the Froskelår produces the benchmark, it will take us roughly a year from discovery to putting the first producer in the ground. Remember, Alvheim is a very standardized area when it comes to subsea production system. So we're basically using the same toolkit for every single well, and we got a lot of this toolkit already in stock. So we're not hampered by long-lead items or other discussions. So I think the key discussion as it comes to timing is basically the total volume and development solution in the area. So this basically boils down to 3 different concepts. One is a relatively simple tieback using a manifold of Bøyla type of installation, or [ Bøyla ] type actually, tying it directly back to Alvheim and using the current infrastructure. Second is to do some sort of partial processing if the volume is a bit higher, but also if there are more gas as gas is a main constraint of Alvheim currently. And then finally, of course, if there are significant volumes and we end up in the upside case, there is a discussion around the stand-alone or redeployment of an existing FPSO, some sort of extra new processing capacity in the area. So those are the 3 main considerations, and we'll revisit that discussion when we have drilled Rumpetroll.

[Kjetil Bakken, Vice President of Investor Relations]

Good. And now we have a question also from Yoann Charenton in Societe Generale. On taxation, we are looking forward to publication of the tax-focused leaflet, which I have promised him, so sorry for that. How much of upcoming tax payments are hedged in dollar terms? That's the first question.

[David Torvik Tønne, Chief Financial Officer]

Yes, I don't expect to give an answer to that specifically. But I think mostly, there are. So more or less everything.

[Kjetil Bakken, Vice President of Investor Relations]

Then his second question on tax is, it appears that accrual for uncertain tax positions rose slightly in the quarter. Can you please provide further color on such items?

[David Torvik Tønne, Chief Financial Officer]

Could you repeat that question again?

[Kjetil Bakken, Vice President of Investor Relations]

Accruals for uncertain tax items increased slightly in the quarter, and he asks for some color on that.

[David Torvik Tønne, Chief Financial Officer]

Accruals for uncertain tax items, yes. So of course, we have several uncertain tax cases and discussions ongoing with the tax authorities, and there are some pluses and minuses on those tax cases. So without going into too much detail on that, I think that's the correct answer.

[Kjetil Bakken, Vice President of Investor Relations]

Then one question on liquids pricing. Would you be able to disclose the premium or discount to Brent price that you assume across your production hubs throughout 2018?

[Karl Johnny Hersvik, Chief Executive Officer]

So far, we have not disclosed these premiums. This is basically a commercial position that we take in the market and that they vary from cargo to cargo, depending on the market situation when we push this cargo into the market. So it's both complicated to predict, but it also is an indication of our marketing position. And of course, this is a competitive market. So at this point in time, we're not going to disclose that kind of information.

[Kjetil Bakken, Vice President of Investor Relations]

Okay. I guess that concludes the questions that we got from our web audience.

[Karl Johnny Hersvik, Chief Executive Officer]

Great. Thank you. And have a great day, everybody, and safe travels for those of you who are traveling. Thank you so much.