Okea ASA

OSE:OKEA

Earnings Call Transcript 2021-Q3

[Svein Jacob Liknes, Chief Executive Officer]

Good morning, and welcome to the OKEA Third Quarter 2021 Results Presentation. My name is Svein Liknes. I'm the CEO of OKEA. With me today, I have the OKEA CFO, Birte Norheim, who will also give you the financial details from the quarter. But before we get to that, I will give some highlights from the quarter and also give you an update on the strategy after a bit presentation of the financials. So obviously, there will be forward-looking statements in this presentation, which may be subject to change. The quarter -- last quarter for OKEA was a very good one. The financial and operations position for OKEA strengthened further.Our production numbers for the quarter was 16,315, which is more than 3,100 barrels up from previous quarter, and the reliability remained high, both on our operated assets and also on our non-operated assets.The EBITDA new development was announced to start production on the 25th of October, which is a significant milestone for OKEA as it increases our production by in excess of 30%. So that is very important for our future cash flow for OKEA. Our financials, operating income in excess of NOK 1 billion. Birte will go through the details there afterwards, which is an increase of more than NOK 400 million, EBITDA of NOK 797 million. Net profit, NOK 97 million, and our cash position has increased to NOK 1.54 billion. Actually, during 2021, the cash position of OKEA has increased by NOK 633 million. At the same time, as we paid NOK 115 million in interest and also bought by NOK 108 million of bonds.So a very good financial position and also an operations position, which positions the company very well when it comes to further value-accretive growth. With the EMA start-up and with progressing the Hasselmus, which will have Q4 2023 first gas and also the decision to hold for the development of the better discovery, which was not an easy decision to make, but we regarded the capital needed to further develop that project could be allocated elsewhere that would generate more value for OKEA.We are also spreading the Ginny well together with Equinor in Q4 this year, 40% stake in that well, and it's close to Draugen and could be a potential further opportunity for organic growth in a Draugen.So we have a strong cash position, and that will give us the flexibility to pursue M&A that I will also cover later than the strategy update and shareholder distribution throughout the years to come.We can't talk about the third quarter of 2021 without showing this graph. Obviously, the high prices of oil and gas have influenced our production of our results. So -- and the exceptional rise of gas prices as well has benefited OKEA as we are more than 30% exposed in gas and our sold volumes. So as a consumer, I'm a bit concerned of the graphs, but I'm very pleased as a supplier. And I also think the energy demand and somewhat the crisis we are seeing now is also helping us to define what is the purpose of OKEA and that is to be a stable energy provider of oil and gas to the market.And when it comes to being a supplier, we are a reliable provider of energy. As shown in this graph, we have a very balanced portfolio, as you can see, both from our non-operated assets and also operated assets. Year production has increased due to the addition of 2 wells in the P1 segment, as we call it. The production of Draugen is slightly lower than last quarter, but that is mainly due to planned maintenance activities with changes of the subsea pump that will give us reliable operations for the future and also some well maintenance, which has enabled all the wells on Draugen to now be in operations and flowing, which is a good place to be.So -- and also, the Duva reliability is slightly down to 97%, but that is due to the Duva tian work that was also done during the quarter. So no major shutdowns over the last quarter, and there is no planned major shutdowns in the last quarter of this year either. So how do we do it? We have a decreasing trend on the recordable incident frequency. Those -- that frequency is mainly due to minor medical treatment cases. So we are glad to see that, that is trending downwards. We've had 0 hydrocarbon leaks still over the last quarter, and we do still have too much CO2 impact that I will address a bit later in the presentation. But we also had one potential incident on Draugen, which shows that HSE can never be out of focus as we had one railing that loosened on the Draugen platform that could have caused somebody to fall to the sea level. So that is toughly investigated and also communicated to all other parties on the Norwegian Continental share to -- for them to check as well that could happen at their platforms.So a good trend on the incident frequency. We're happy to see that we are managing our barriers. So we have no leaks, and we are addressing the CO2 impact that we have. Draugen, good production during the quarter, only influenced by what I said the maintenance activities with the subsea pump and well workovers, high production reliability of 97% continues. Most importantly, on Draugen, we are progressing and realizing the ambition to increase remaining reserves by 50% and also extending the lifetime of Draugen to 2035 and beyond. This will increase the recovery rate of the Draugen asset to above 70%, which is very high, and we're actually proud to show and demonstrate that we are able to actually do such a thing.In addition, we are working with new barrels to the Draugen asset. So the Hasselmus project has been initiated and are on track for delivery in Q4 2023, which will add 4 million net barrels in gas equivalents to OKEA. We're also working on the CO2 emissions from Draugen. Draugen is an aging asset and are powered by turbines, which obviously then also generates CO2 emissions. So we are actively working to reduce our footprint, and we are now on track, and we have plans to reduce the CO2 emissions on the Draugen asset by 95% by 2025. We are doing that by electrifying the Draugen asset and stopping our turbines. We are doing this in cooperation with the Njord asset, which is close by, and this project is being managed and driven by OKEA on behalf of both the Draugen asset and the Njord asset, which is operated by Equinor.This will reduce the CO2 emissions from Draugen by more than 200,000 tons per year. And we have passed DG2 or Decision Gate 2 in both licenses to actually proceed with this and have a final investment decision in 2022. We're also working on other aspects to reduce our footprint. We have installed battery packages on our logistics vessel or supply vessel that serves Draugen, which also adds to reducing our footprint from a logistics operation. And we are also participating as partner and technical adviser in other initiatives such as floating wind turbines and also carbon capture storage initiatives.Moving on to Gjøa, non-operated position, very good asset to be in for OKEA. It also gives us the increased gas exposure as 60% of the production of U.S. gas. Very high reliability. So we are very happy to be part of the Gjøa, and the Gjøa also has focus on reliable and focus on growth, which is the same parameters, which is very important for OKEA. So good asset to be in.Then EMA. Finally, we announced on the 25th of October that we had first oil of the EMA asset for the EMA redevelopment. Plateau production of EMA will be to net to -- okay, 8,400 barrels of oil per day, which is a significant contribution and 5,600 on average over the first 12 months.Reserves, OKEA are net, again, 9.4 million barrels of oil. So there's been significant work done since we came offshore with EMA, and I would also give credit and thank the operator, Repsol for the work they have done. And also the work that has been done by the main contractors, Aka and MAX actually realize this.So I'm glad to finally give a date and say that we have now started rather than just saying that we are estimating a startup in the second half of 2021. Talking of Maersk today was also the transfer of ownership of the unit, which was called Maersk Inspirer, now just call Inspirer. That change of ownership to the EMA license will generate or have a positive cash flow effect for OKEA of NOK 300 million over the next 9 months. So that's also a valuable contribution. In addition to the operations effect, it will actually have the Repsol is operating the asset themselves.So before I hand over to Birte and the financial details, we'll give a brief status before I then come back and talk about the strategy. And after that, we will have a Q&A session, and there's also a chance now to use the link on the webcast to actually ask questions as we go along, and those will be flagged after the presentation. But where we are now, we had a startup of EMA that I just said, contributing significantly for the production growth of -- for OKEA. The timing of the EMA start-up is obviously very good. It's very high commodity prices now. We have stopped the vetted discovery, and that is also going back to the strategy again.Capital allocation, where we think the capital will add most value for OKEA and our shareholders is one of our strategic pillars. So I'm going to get back to that. And it was important for us to flag this now that if we do not believe that this will generate the value we are looking for, then we need to take a proactive approach and then stop it now. We're going to spread the Ginny exploration well by the end of this year, together with Equinor. We will operationalize our new strategy that I will talk about shortly. And we are actively working on our projects, both in the Hasselmus towards startup in 2023 and also the electrification of Draugen that will reduce the emissions. So on that, I will then hand over to Birte for the financial detail update and then come back shortly on the strategy brief.

[Birte Norheim, Chief Financial Officer]

Also for this third quarter, we'll start with looking at what drives the top line, and we illustrate here the development in volumes and prices over the last 5 quarters. And starting with the production. And as Svein has already outlined, Q3 is now back to normal production levels following the 31 days of planned downtime at Gjøa in the second quarter, parts of which was relating to the Duva and Nova tian projects.Produced volumes amounted to 16,315 barrels of oil equivalent per day, up from 13,210 in the previous quarter. Sold volumes amounts to 16,979, which is nearly 4,000 barrels per day in increase, which is 30%, mainly due to this effect. And in addition, we had an over-lift situation with about 500 barrels per day equivalent as well as the compensation volumes from Duva of 165 per day, which additionally drives the sold volumes in the quarter.The market prices for petroleum products have steadily increased since the low point in the second quarter of last year. And in particular, we've seen gas prices soaring to record high levels recently. The average realized price for gas in the quarter is equivalent to $97.1 per barrel, which is an increase of 76% compared to last quarter and nearly 7x higher than last year. The realized price for liquids amounted to $67.4 a barrel, which is an increase of 6% compared to previous quarter and more than a doubling compared to last year with an increase of $35 per barrel.So an increase in market prices and an increase in sold volumes. It's a good combination, and it drives the petroleum revenues to NOK 1.7 billion for the quarter, which is an increase of NOK 423 million or 71% compared to last quarter and an increase of NOK 709 million or 230% compared to last year.And as mentioned, liquids prices have steadily increased over the last 5 quarters. And the graph to the left here illustrates the OKEA allocated liftings of liquids over the last 7 quarters. In the third quarter, OKEA had 3 allocated listings, which is in line with what we communicated as expected in the second quarter. And we are also here illustrating the completed lifting of cargoes in the third -- in the fourth quarter, which relates to a lifting of Draugen in mid-October of 632,000 barrels.And due to EMA, just being in a start-up phase, we do not provide any guiding on the timing and the size of the volumes expected in the fourth quarter, even if we do expect allocated volumes in the quarter.And note also that for EMA, the adverse quality price differential compared to Brent will be high for the initial liftings. And this is due to the assay being outdated, and we expect that this price differential will narrow as the assay is being updated. We do not expect any further liftings from Draugen in the fourth quarter. And also, we have not been informed of any liftings from EA or Duva in the fourth quarter. That does not mean there will no -- there will be none, but we have not received any confirmation of such.The graph to the right illustrates the price differential between the average market price in the quarter of $73.4 a barrel and the realized price to OKEA of $67.4 million. And the differential in this quarter is mainly due to an adverse adjustment relating to the norm price on Draugen for the first half of the year as well as the NGL impact.On average and also for the third quarter, about 1/3 of OKEA's production is gas. And as mentioned, following the different prices last year, European gas prices have soared recently and trading well above crudes on an oil equivalent pricing. During the last part of September, gas was trading about $160 a barrel equivalent. And we have seen this favorable market condition continue into the fourth quarter with October averaging around $170 a barrel.And the income statement. Overall, the third quarter represents another strong financial quarter for OKEA and EBITDA of NOK 797 million is actually the highest ever for OKEA. And we delivered a net profit of NOK 97 million. But if we start at the top, total operating income of NOK 1.26 billion, mainly consist of the petroleum revenue of NOK 1.7 billion, as we just reviewed, and also tariff revenue from Gjøa, partly offset by a hedging loss of about NOK 5 million relating to a small hedging position.Production expense of NOK 181 million is equivalent to a cost per barrel of NOK 1.08 compared to NOK 159 million in the previous quarter. And this significant improvement is largely driven by 2 effects. One is that the absolute cost has come down as the operational activity level has normalized as the well intervention campaign at Draugen was completed in the second quarter. And also, of course, with the additional volumes from Gjøa, it drives the average cost per barrel down.There are no impairments in the third quarter and the improved macro conditions have increased the coverage on all our assets. You may recall that we described certain changes for EMA, which would come into effect once the Maersk Inspirer transaction was effectuated. As this took place now in October, and IFRS requires that the deferred tax effect of uplift is excluded from the impairment assessment, we do expect an impairment in -- at EMA into the fourth quarter, all else equal.This can have quite a significant impact on the impairment line, but importantly, it does not have any impact on the net profit because the offsetting line entry is on the tax expense. So it will not have any net impact, but it might cause some disturbances in the P&L in the fourth quarter. And bearing in mind that the resulting cash implication of the transaction and the -- from tax and other factors is a positive effect in excess of NOK 300 million. So it could be quite significant. But as mentioned, it will have no impact on the equity.Exploration and operating expense consists of NOK 37 million in exploration expense, mainly relating to the 2021 application round, certain field evaluation activities and also a onetime write-off of NOK 5 million relating to vet and gabbling as the projects were hosted now in October.SG&A costs amount to NOK 21 million, which is somewhat higher than our average quarter, which is due to the ongoing strategy work and similar activities. Net financial expense of NOK 91 million mainly relates to NOK 18 million in expensed interest and NOK 68 million in unrealized foreign exchange loss, mainly relating to our dollar nominated bonds as the NOK weakened somewhat compared to the dollar during the quarter.Tax expense amounted to NOK 429 million, which brings out a net profit of NOK 97 million. The strong cash position has further improved with a balance at the end of the quarter in excess of NOK 1.5 billion. In addition, we have bought back OKEA 02 bonds for NOK 108 million, and we have had reduced the net working capital, excluding tax by NOK 329 million, which is why the strong financial performance is not fully reflected in the cash balance at the end of September.Tax payable of NOK 418 million mainly relates to the tax for 2021. The transfer of ownership of the Expire -- Inspirer was effectuated in October and will significantly reduce the tax expense in the fourth quarter. Interest-bearing debt amounted to NOK 2.4 billion, and the reduction is due to the buyback. We bought back $12 million nominal value at an average price of $1.025. This effect is partly offset by the foreign exchange loss, of which NOK 63 million is directly attributable to the bonds.The asset retirement obligation of NOK 4.2 billion is partly offset by the noncurrent receivable of NOK 3.1 billion from Shell as Shell will bear the ultimate removal cost from Gjøa and Draugen.Cash development. The cash balance increased by NOK 158 million in the quarter, ending with a closing balance of NOK 1.54 billion. Cash flows from operations was NOK 452 million, which includes the changes in working capital. Taxes received was NOK 18 million and is the first installment received for 2021. And as it was estimated back in May. Given the significant increase in market prices, we actually expect to end up in a cash payable position for the year. And these adjustments will be payable in the last 3 installments, which is due in the first half of next year.The investments was NOK 166 million, half of which relates to the EMA, and it also includes some investments on the Hasselmus project. Cash paid in relation to the buyback was NOK 108 million and interest paid of NOK 23 million relates to the OKEA 02 bond, which is payable quarterly.For the first 9 months, the cash position has increased by as much as NOK 633 million. And the significant increase is mainly due to the solid margins following the strong market for our products, but also high production reliability, both from Gjøa and Draugen.And in addition, we received the last 3 installments for 2020 in tax in total NOK 291 million and also the NOK 18 million received for 2021. These inflows are partly offset by the investments that we made, mainly on EMA and P1 and also Draugen and Hasselmus, as well as the 2 wells that we drilled in the first half, Jerv and Ilder, of NOK 159 million. And in addition to the bond buyback and interest paid on both of our loans, which in total amounts to NOK 223 million.There is no change in our guiding. Nearly all of the planned shutdown at Gjøa has already been completed this year. And in addition, we had EMA coming on stream this week, which will additionally boost our production output going forward. So we keep our guiding of 15,500 to 16,500 barrels for 2021 per day. And the outlook of 17,000 to 18,000 barrels per day for 2022. CapEx guiding for 2021 of NOK 600 million to NOK 700 million is also unchanged and includes the CapEx investments expected on Hasselmus for the year.So on that note, I'll give the word back to you Svein to take us through the strategy update.

[Svein Jacob Liknes, Chief Executive Officer]

So that's the position, and that's where the company is now. And obviously, one of the main tasks when I'm entering this company as well is to identify where is the company going? And why are we going in that direction. Therefore, we launched a strategy update process just after summer, which we have spent quite some time on to establish our strategic beliefs and also set the direction for the company. So the mission was to identify and also execute on the most value-accretive path for care going forward. And that includes both short-term and also long-term.The world around us have changed quite significantly over the past couple of years and particularly the last 2 years. And we need to adapt and ensure that our strategy is focusing on the right activities in this period. So during my first period and the first 2 or 3 months in OKEA, I've spent some time trying to establish what is the competitive advantage of OKEA? And what is the current state because it's also nice -- always nice to know where you are before you set the path of where you're going.So I've traveled in all our locations, visited all offshore shifts on Draugen and spoken to people. My background is also operations myself. So obviously, it's an environment where I think I can communicate well with the crew, and I've been impressed by what I've seen so far. Very few people in OKEA, as I said before, but those which is working in OKEA's working there for a purpose. They know what they are doing. They know why they are doing it, and they know that if they are not doing it, then nobody else will do it. So we're going to build on that culture and that competency to actually develop the company. But in what direction.Our status today is that we believe we have a very solid platform for further growth in OKEA. We have demonstrated that we can actually do transactions, and we can improve something that was already well-managed in Shell and operated by Shell has been turned around to be even better. We have extended the lifetime. We are doing infill targets. We are adding on new gas production fields into Draugen. So we have demonstrated that we have the capacity to extract value, further value of assets where other ones will divest.Our position when it comes to our financing position, obviously, also puts us in a good place with a strong balance sheet and robust cash flow, which we will be even more stronger now with the EMA startup and have that startup behind us, which gives us the financial flexibility to actively pursue an M&A strategy. So therefore, that is the path we wish to move into is to grow. And we wish to become the mid-to-late life expert on the Norwegian Continental shelf. And last but not least, the ESG needs to be central in all our operational activities. If you want to pursue the path of mid-to-late life assets, it's not the easiest path to take. But when it comes to ESG, we will do what we can do and also demonstrated what we can do on Draugen where we just said earlier, we are reducing the CO2 emissions by 95%, which will enable Draugen to actually be a solid platform for the future for further growth as well. So ESG will still be very important to OKEA, and we will deliver on where we can deliver.So the 3 pillars in our strategy going forward is going to start from the right-hand side, actually, with capital discipline. I think capital discipline in the markets we are seeing now is very important. As an industry, we have a tendency to completely take off when we see prices like this, but capital discipline and capital allocation, which is driven by further value creation is very important. We need also to survive a distressed case if that comes in the future. But we believe in growth. We believe what we are doing now, if we do more of that because I think we are very good at it. We'll generate a lot more value creation.So we are looking for scalability, in particular, over the next 2, 3 years. Because the market fundamentals and opportunities are in place out there. We believe in an attractive energy market. We, of course, know that there will be a transition into more renewables, but the E&P and oil and gas will have a very important role for energy supply in this period. And that is a position OKEA wants to be part of. And I believe that we have a very good position there and showing that we are a reliable supplier of energy.We see M&A opportunities on the Norwegian Continental shelf, both when it comes to companies. And when it comes to assets, I believe there are quite a few assets on the Norwegian Continental shelf where OKEA can add and extract more value than the existing operators. And therefore, we are focusing on the mid-to-late life operator ships either alone or in partnerships with others. So that is the main path that we will pursue now. Based on the 3 growth levers for continued shareholder value, we will exploit all the existing portfolio we have, which is now the platform we are showing you today, which is very good. So we will explore around our assets. We will drive infill or increase oil recovery, and we will add more volumes, and we will extend lifetime, and we will do this in a very cost prudent manner so we can actually extract value from it.We will have, therefore, inorganic path, which is basically around M&As and the partnerships with others where we believe that we can unlock value.And we will also pursue still the organic path, but that will be considering the attractiveness of the organic development because we see the most value-accretive path, at least in the short-term, is to pursue production, which is already in place. But we still need to do this and find our place and be very clear on our ESG position while doing so.On the environmental side, we have already demonstrated and talked about reducing emissions and also reducing other discharges from our operations. There will still be something that is recognized by OKEA, but also reuse and extending the lifetime of existing infrastructure on the Continental shelf is also a very good environmental effort that OKEA will then pursue. But we will do this safely and responsibly. And the social part and the S and the ESG that actually the oil and gas industry is still a fundamental part of the Norwegian society and adds a lot of value, I think, also needs to be communicated well, and that is a place OKEA also will take a very central role.And OKEA wants to be recognized to deliver competitive shareholder return. That is why we are here. And therefore, also the -- we would like the dividend plan to be presented next year. But as I just mentioned, dividend is also capital allocation, and we are looking for value accretive growth, which needs to be balanced against the dividend payouts. But in any growth scenarios that we are evaluating in addition to risk and price, the dividend capacity is an important parameter in that strategy that we are putting into our models. So we would like to present the dividend plan in 2022. But again, as I said, we are focusing on capital discipline, but we want to be recognized as a shareholder return company that is focused on that as well.So what is the twist in the strategy? OKEA I was established in 2015 to become the marginal field specialist and has worked with that, developed an organization, which is very competent and looking in different ways of doing things, very high cost focus and doing things that others are not doing. And that is competencies that we actually also need when we are focusing on mid-to-late life championship, cost focus, capital discipline, high reliability, and seeing opportunities where nobody else sees those opportunities. So I think that is also a very good platform for OKEA, the organizational one to actually make this move towards mid-to-late life operatorships.So the cornerstone then at the end, OKEA and Draugen. But we, as a company, wants to develop, we want to grow, and we want to be recognized as the leading mid-to-late life operator on the Norwegian Continental shelf, which is something that we want to be recognized by, but we're also going to do other value creative activities, but the dominant strategy for OKEA is this path.So last then summary and outlook. As I just mentioned, we think the market is conducive for growth. We think it's going to be a strong market. I do think that the gas prices obviously will tail off as the winter ends and come down to a more normal level, but we still believe in very good oil prices going forward, and the energy demand for our products will still be there is our belief. We think there are attractive deal opportunities on the Norwegian Continental shelf that we can pursue. As we can also demonstrate that we are actually a good operator, an excellent operator, by the way, in already existing mid-to-late life assets.This will then increase the dividend capacity of OKEA. So we would like to present the dividend plan in 2022, but we would like when we present such a plan that, that is actually a robust plan and has even more capacity than it has today, but it is part of our capital allocation and priorities. And last but not least, the ESG needs to be embedded in the business we are involved in. It will be activities that we are driving forward to actually reduce our emissions and take the role that we actually have on the Norwegian Continental shelf, and we are supporting the industry's targets as well with reducing emissions where we can. So I think that is the ultimate slide. So that takes us over to the questions-and-answers section, I think. So if you could join me, and I don't know what the deal is. Are we doing web first and then live or is it on? Yes, there are some questions on the web. Maybe first.

[Karl Fredrik Schjøtt-Pedersen]

Karl Fredrik Schjøtt-Pedersen from ABG Sundal Collier. Two questions, if I may. The first is regarding your production guidance for next year. Given the strong production that you had in the third quarter and that even now is in production, isn't the guidance a bit low? That's the first question. And the second question is regarding the capital structure and your dividend policy for next year, I guess, it will be a bit -- a bit of a front running. But how -- what will be the basis for the dividend plan? Is it so that it will be connected to a leverage ratio covenant? Or is it a leverage ratio? Or is it the total capacity of the company? Of course, you have some limitations in the bond structure as well. So how should we start to think about it before you actually announce it next year?

[Svein Jacob Liknes, Chief Executive Officer]

Well, I can answer the first one on the production guidance, and then maybe Birte could answer the dividend structure. Our production guidance next year, as you said, could seem a bit low, but we do have natural decline on the existing assets, both in Gjøa and also on Draugen. And the plateau of EMA is rather short. That's also something you can see on the 8,600 -- no 8,400 in the beginning and then it tails off and will give us 5,600 thereafter. In addition, EMA has been shut in for quite some time. So we haven't been very bull on the production estimates from EMS. So that is reflected in the production guidance that we have given so far.

[Karl Fredrik Schjøtt-Pedersen]

As you're guiding for a first 12-month production level?

[Svein Jacob Liknes, Chief Executive Officer]

Yes.

[Karl Fredrik Schjøtt-Pedersen]

So the implied production from the older asset basis. It's fairly higher.

[Svein Jacob Liknes, Chief Executive Officer]

That is really high natural decline from the other assets, which has put into that production guidance here.

[Karl Fredrik Schjøtt-Pedersen]

Okay. And are there any changes to the operational performance of the assets in addition to underlying decline?

[Svein Jacob Liknes, Chief Executive Officer]

No.

[Birte Norheim, Chief Financial Officer]

There are some maintenance work being scheduled for next year as well, but the main part is the general field decline.

[Svein Jacob Liknes, Chief Executive Officer]

Yes. And there will also be tian, for example, which is put into the production profile. The Nova field will be tighter next year, so the do effect that we saw this year with a reduction in production when you are due to that tian and will also happen next year. But again, the same mechanism with compensation for deferred volumes will also come in place then, but it will actually take the actual volumes, obviously.

[Birte Norheim, Chief Financial Officer]

And a tough question for me. Well, I think what we're saying is that we will announce this next year. So we will not provide any more details at this stage. But I think the key message we're trying to send here is that dividends will be a key priority. And you're also pointing to the restrictions that we have in our bond loans, which is, right? We have a hard restriction on not paying anything until the end of the year. And secondly, we have -- going forward, we have a limitation tied to our net profit. So it's -- we need to, of course, make sure that we are not in any -- we're not restricting any of our terms in the bond loans, and we will have to depend on what our growth will look like in the next year. That will, of course, be a key driver for the dividend capacity beyond that.

[Unknown Executive]

First question from the web from Anders Holte in Kepler Cheuvreux. You mentioned the lifting on -- you may have answered this partly already Birte. You mentioned the lifting on Draugen in October, but are you now saying it's no further liftings planned on any fields for the rest of 2021?

[Birte Norheim, Chief Financial Officer]

Well, for EMA, we are expecting -- we're just not guiding on it, considering that it's in its start-up phase. And from Gjøa, there could be one, but that's not under our control. So the production there is going well. We have just not received any confirmation of any allocation for fourth quarter yet.

[Unknown Executive]

And three questions from Teodor Nilsen in Sparebank 1 Markets. First, regarding strategy around mid-late life assets, how do you think around oil versus gas assets? And are there any NCS assets that are more interesting?

[Svein Jacob Liknes, Chief Executive Officer]

We are obviously looking into both oil and gas and how the competition is of those assets, but we are not restricting it because then something could fall out of the screening that would still generate value for us. But the latest period that we have gone through, obviously shows that higher gas exposure is an advantage, but it's not something we are guiding in accordance with -- it's not something that we are using as a critical target or critical criteria for actually selecting these assets that you are looking at. And to second question, if there are some assets, which is more interesting than others, the answer to that is obviously yes, and there will always be. But if you are, for example, targeting a portfolio, there will always be good assets, but there will also be a medium assets. So that is part of our screening process. But there are definitely assets on the Norwegian Continental shelf that fits very nicely into the OKEA operating philosophy and then also can be further improved by them or doing what we have already done at Draugen.

[Unknown Executive]

Okay. And the third question from Teodor Sveen-Nilsen in Sparebank 1 Markets. We see bottlenecks in parts of the value chain in other industries, do you see any delays, bottlenecks or supply chain issues?

[Svein Jacob Liknes, Chief Executive Officer]

Yes. Well, the impact of the boom that we are seeing will obviously generate some constraints in the supplier side, but also in construction and maybe also some on the materials. But from OKEA's point of view, we have the Hasselmus project, mainly now and the Power from Shore project that we are executing on. The supplier constraints could have been a big risk for us when it came to execution if we had pursued the wet and graveling development, obviously, that we need to risk in, but we are not so exposed on this supplier restrictions that potentially could come. So I would say that from our side, we are not so exposed to it.

[Unknown Executive]

Okay. So I actually had one more on the strategy. Our assets outside NCS possible targets.

[Svein Jacob Liknes, Chief Executive Officer]

Not in the current regime, they were looking at where see a huge advantage in being very focused on the Norwegian Continental shelf, both when it comes to how we operate it and the regime we are within, in addition to staying within 1 fiscal regime as we are extracting value for this. So Norwegian Continental shelf only at this time.

[Unknown Executive]

Okay. I think that's what we have on -- if there are no more questions here in the auditorium. Svein, some closing remarks?

[Svein Jacob Liknes, Chief Executive Officer]

Yes. Obviously, we have a very strong position in OKEA that I think we have demonstrated, and we have also set a clear path ahead for OKEA that we believe is the most value path will generate most value for our shareholders. We wish to be recognized as by the shareholders as well that we are giving good value to our owners. That is one of our main priorities. But at the same time, as we need to balance the dividend strategy that I know there's been a lot of questions about, up against the capital allocation when it comes to growth, which will then further increase the capacity for the company to when we enter into the dividend payouts. But if the market stays the way it is now, obviously, we will our position will become even more stronger.So that is why we also table that this is a plan that we need to present based on the position we have. We want to do more of what we are already doing and doing very well, which is operating and extracting value from mid-to-late life assets on the Norwegian Continental shelf. And I'm a strong believer that if we are an early mover there, there will be a lot of assets in Norway over the next decade that actually will fall into the category mid-to-late life in addition to then maximizing and being very good on decommissioning and that position if OKEA positions ourselves there now, I believe there will be a lot of value generated in the next phase. So I think that's it. So thank you, everyone, for your attention, and we will also be available if there is anything else afterwards.