ANNUAL REPORT
2022
CONTENTS
4 Board of directors
8 Executive Management Team
12 Board of directors’ report
14 Business description
18 The annual accounts
21 HSSEQ in Aker BP’s operations
25 Risk factors
30 Events after the reporting period
32 Reporting of payments to governments
32 Reporting of payments
34 BoD’s report on corporate governance
34 Implementation and reporting on corporate
governance
34 Business
35 Equity and dividends
36 Equal treatment of shareholders and transactions with
close associates
37 Shares and negotiability
37 General meetings
38 Nomination committee
38 Board of directors: Composition and independence
39 The work of the board of directors
42 Risk management and internal control
43 Remuneration of the board of directors
43 Remuneration of executive personnel
44 Information and communications
44 Take-overs
44 Auditor
46 Financial statements with notes
COMPANY PROFILE
About the company
Aker BP ASA is an upstream oil and gas company established
in 2016, arising from the merger between Det Norske and
BP Norge. The company’s headquarter is in Fornebu, outside
Oslo, Norway. We also have offices in Harstad, Trondheim,
Sandnessjøen, Lysaker and Stavanger.
The company engages in exploration, development and
production activities on the Norwegian continental shelf
(NCS), and operates five hubs: Alvheim, Edvard Grieg & Ivar
Aasen, Skarv, Ula and Valhall. We are also a partner in the
Johan Sverdrup field. We do not engage in nor do we control
midstream or downstream activities, and as such do not
interact directly with end-user segments.
Production and ownership
With a total production of ~400 mboepd, Aker BP is the
second-largest operating company on the NCS and one of the
largest independent listed oil and gas companies in Europe.
The company is listed on the Oslo stock exchange (AKRBP),
and major shareholders are Aker ASA (21 percent), BP PLC (16
percent) and Nemesia S.A.R.L (14 percent).
Acquisition of Ludin Energy
In December 2021, Aker BP ASA announced that it would
acquire Lundin Energy’s exploration and production (E&P)
business. The announcement was in line with the company’s
growth strategy and with the ambition to create the E&P
company of the future; with low cost, low carbon, profitable
and sustainable growth, and attractive dividends. Since 1
July 2022, it has been operating as a fully-owned subsidiary
of Aker BP ASA, whereas the integration was complete and
all employees were fully integrated into a single organisation
from 1 October 2022. The key figures and considerations in
this report are representative for the merged company and
includes data from the former Lundin Energy as from 1 July
2022. Data concerning GHG emissions are accounted for the
full year as per the GHG protocol.
Intro BoD & EMT BoD’s report Payments to governments Corporate governance Financials
2
Valhall/Hod
Ula/Tambar
Edvard Grieg
Johan Sverdrup
Ivar Aasen
Alvheim
Yggdrasil
Skarv
Harstad
Stavanger
Fornebu
Lysaker
Trondheim
Sandnessjøen
Growth projects
On 16 December 2022, Aker BP and its partners submitted
Plans for Development and Operation (PDOs) for the Yggdrasil
field development project, the Valhall PWP-Fenris project,
the Skarv Satellite Project and the Utsira High projects. Aker
BP’s share of the investments in the projects is estimated
at approximately USD 19 billion (nominal) in the period
2023–2028. The projects are subject to Norwegian authority
approvals. We believe these projects are critical to sustain
our production and to responsibly support critical global
energy security, particularly in Europe, as well as to ensure a
sustainable energy transition to a low-carbon future.
Aker BP Annual Report 2022
3
BOARD OF DIRECTORS
* Number of shares in Aker BP ASA as of 31 December 2022
** Family relations to other members of the Board or members of the Executive Management Team
*** Though exposure to the Aker BP share price through shareholding in Aker ASA
Øyvind Eriksen
SHAREHOLDER-ELECTED CHAIR AND
CHAIR OF THE COMPENSATION AND
ORGANSATIONAL DEVELOPMENT COMMITTEE
Experience, skills and education:
Eriksen is the President and CEO of Aker
ASA. He has worked for Aker since 2009.
Eriksen has extensive experience as a
corporate attorney from the Norwegian
law firm BA-HR, where he started in 1990,
became a partner in 1996 and a director/
chairman in 2003. He has worked with
strategic and operational development,
M&A and negotiations. Eriksen has
held several board positions in various
industries including shipping, finance, asset
management, offshore drilling, fisheries,
media, trade and industry. Eriksen holds a
law degree from the University of Oslo.
Key external appointments:
Eriksen is chairman of the board in Aker
BP ASA, Cognite AS, Aker Capital AS,
Aker Holding AS, Aker Horizons ASA, Aker
Property Group AS, C4IR Ocean, the VI
Foundation, and REV Ocean AS. He is also
a director of several companies, including
Aker Solutions ASA, Aker BioMarine ASA,
Aker Energy AS, Aker Carbon Capture ASA,
Aker Clean Hydrogen AS, Aker Mainstream
Renewables AS, The Resource Group TRG
AS, TRG Holding AS and the Norwegian
Cancer Society (Kreftforeningen). He is also
a member of the World Economic Forum
C4IR Global Network Advisory Boar.
Aker BP shares*: None***
Member of the board since: 2016
Independent of major shareholders: No
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1964
Anne Marie Cannon
SHAREHOLDER-ELECTED DEPUTY CHAIR
AND MEMBER OF THE AUDIT AND RISK
COMMITTEE
Experience, skills and education:
Cannon has more than 40 years’
experience in the oil and gas industry
and investment banking and is an
experienced director, holding executive
and non-executive roles. She has served
as the Deputy Chair of the board since
2013, and is a member of the Audit
and Risk Committee and Organisational
Development and Compensation
Committee at Aker BP. Since 2019, she
has been a Senior Advisor in the Strategic
Advisory business at PJT Partners and from
2000, was a Senior Advisor at Morgan
Stanley focusing on international upstream
M&A. Prior to this, Cannon was an
executive director on the boards of Hardy
Oil & Gas and British Borneo, and earlier
in her career was a director in investment
banking at J Henry Schroder Wagg and
held senior financial roles at Shell UK.
Cannon holds a Bachelor of Science
(Honours) Degree from Glasgow University
and is a Fellow of the Energy Institute.
Key external appointments:
Cannon is a non-executive director on the
board of Aker Energy AS and STV Group
plc
Kjell Inge Røkke
SHAREHOLDER-ELECTED MEMBER
Experience, skills and education:
Røkke has been a driving force in the
development of Aker since the 1990s.
Røkke launched his business career with
the purchase of a 69-foot trawler in the
United States in 1982, and gradually built
a leading worldwide fisheries business. In
1996, the Røkke-controlled company RGI
purchased enough Aker shares to become
Aker’s largest shareholder, and later
merged RGI with Aker. Røkke owns 68.2%
of Aker ASA through The Resource Group
TRG AS and subsidiaries.
Røkke is Aker ASA’s primary owner and
Chairman. He is currently a director in
several companies, including Aker Solutions
ASA, Aker BioMarine AS and Aker Horizons
AS.
Key external appointments:
Røkke is Aker ASA’s primary owner and
Chairman. He is currently a director in
several companies, including Aker Solutions
ASA, Aker BioMarine ASA and Aker
Horizons ASA.
Aker BP shares*: None***
Member of the board since: 2013
Independent of major shareholders: No
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Switzerland
Born: 1958
Aker BP shares*: 12,078
Member of the board since: 2013
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: British
Residency: UK
Born: 1957
Intro BoD’s report Payments to governments Corporate governance Financials
4
BoD & EMT
Katherine Anne Thomson
SHAREHOLDER-ELECTED MEMBER
AND MEMBER OF THE AUDIT AND RISK
COMMITTEE
Experience, skills and education:
Thomson is the SVP Finance P&O for the
BP p.l.c. Group, having previously held
the positions of Group Treasurer and
Group Head of Tax. In her current role
she is responsible for commercial financial
support, planning and performance for
Production and Operations. Prior to joining
BP p.l.c., Thomson qualified as a chartered
accountant with Deloitte. She moved into
international tax with Charter plc, where
she became Head of Tax in 1998, before
joining Ernst & Young in 2001 in M&A tax.
Thomson is also a director of several BP
p.l.c. Group companies and a member of
the Institute of Chartered Accountants in
England and Wales.
Key external appointments:
None
Murray Auchincloss
SHAREHOLDER-ELECTED MEMBER
Experience, skills and education:
Auchincloss joined Amoco Canada in 1992
and BP p.l.c. through the merger in 1999.
He has built a career performing a range
of commercial and leading roles across
the company. Most recently he served as
BP p.l.c.’s Upstream CFO (2015 to 2020).
Auchincloss holds a Bachelor of Finance
degree from the University of Calgary. He
also completed his Chartered Financial
Analyst (CFA) certification in 1995.
Key external appointments:
Auchincloss is the Chief Financial Officer
of BP p.l.c. He is a member of BP p.l.c.’s
Executive Board and serves on the Main
Board Audit Committee
Trond Brandsrud
SHAREHOLDER-ELECTED MEMBER AND
CHAIR OF THE AUDIT AND RISK COMMITTEE
Experience, skills and education:
Brandsrud serves as a non-executive
director and industry advisor. From 2016
to 2019, he held several CEO and CFO
roles in the financial services companies
Lindorff, Intrum and Lowell, and from 2010
to 2015, he served as the Group Chief
Financial Officer of Aker. In the period
from 2007 to 2010, he served as the CFO
of the Seadrill Group. Prior to these roles,
Brandsrud had 23 years of experience
from leading finance positions in Shell.
Brandsrud holds a Master of Science
degree from NHH Norwegian School of
Economics.
Key external appointments:
Brandsrud is a non-executive director and
board member of PGS ASA, the Lowell
Group (Simon Midco Ltd), Lowell Finans AS
and Waterise AS.
Aker BP shares*: None
Member of the board since: 2016
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1958
Aker BP shares*: None
Member of the board since: 2018
Independent of major shareholders: No
Family relations BoD/EMT**: No
Citizenship: British
Residency: UK
Born: 1968
Aker BP shares*: None
Member of the board since: 2020
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: Canadian
Residency: UK
Born: 1970
Aker BP Annual Report 2022
5
* Number of shares in Aker BP ASA as of 31 December 2022
** Family relations to other members of the Board or members of the Executive Management Team
Charles Ashley Heppenstall
BOARD MEMBER
Experience, skills and education:
Heppenstall is the previous President
& CEO for Lundin Petroleum AB (2002
- 2015).
He has a B.Sc (Hons) from Durham
University.
Heppenstall is a board member in Lundin
Mining, Lundin Gold, International
Petroleum Corporation, and Orron Energy
AB.
Key external appointments:
Non-executive director on the board of
Lundin Mining, Lundin Gold, International
Petroleum Corporation and Orron Energy
AB.
Terje Solheim
EMPLOYEE-ELECTED MEMBER AND
MEMBER OF THE COMPENSATION AND
ORGANSATIONAL DEVELOPMENT COMMITTEE
Experience, skills and education:
Solheim is the General Manager of Aker
BP’s Harstad office. He has been with
Aker BP since 2013 and has held several
positions with the company. Solheim was
one of the founders of Norwegian Petro
Services (NPS). He came to Aker BP from
Det Norske Veritas (DNV).
Solheim has an extensive background
from the Norwegian Armed Forces and
is educated from the Norwegian Military
Academy, Staff College Norwegian Armed
Forces and Naval University of Monterey.
Key external appointments:
None
Ingard Haugeberg
EMPLOYEE-ELECTED MEMBER
Experience, skills and education:
Haugeberg serves as a full-time employee
representative. Prior to this position, he
was the HSSE Site Lead on the Ula field.
Haugeberg has broad experience from
the Royal Norwegian Air Force in Bodø as
a technical grenadier and as department
manager for Safelift A/S. He started in
Amoco Norge as a mechanic on the Valhall
field in 1991. He has held several positions
in BP p.l.c. Norge since 1998.
Haugeberg has held a number of
different directorships in BP p.l.c. Norge,
Industrimaskiner A/S, Global Clean Energy,
I/E Media and trippEl A/S.
Haugeberg was trained as an electro
mechanical repair tech at the Royal
Norwegian Air Force technical school
at Kjevik and has a company-approved
bachelor in mechanics.
Key external appointments:
None
Aker BP shares*: 852,587
Member of the board since: 2022
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: British
Residency: UK
Born: 1962
Aker BP shares*: 637
Member of the board since: 2018
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1962
Aker BP shares*: 948
Member of the board since: 2018
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1962
Intro BoD’s report Payments to governments Corporate governance Financials
6
BoD & EMT
Tore Vik
EMPLOYEE-ELECTED MEMBER
Experience, skills and education:
Tore has been employed by Aker BP since
2013 and is a full-time trustee. He has
previously worked as an electrician on the
Ivar Aasen platform.
Tore has over 30 years of experience as
an electrician with both high-voltage and
low-voltage papers. He has worked many
years as an electrician / automator on
drilling rigs and on ships.
Key external appointments:
None
Hilde Kristin Brevik
EMPLOYEE-ELECTED MEMBER
Experience, skills and education:
Brevik has been employed by Aker BP
since 2014. She is a process technician and
works at Skarv FPSO. Brevik has worked
offshore since 1998, for both Hydro and
Statoil.
Brevik is the company’s main trustee
and has been a deputy employee
representative to the Aker BP board since
2018.
Key external appointments:
None
Valborg Lundegaard
BOARD MEMBER
Experience, skills and education:
Lundegaard is CEO of Aker Carbon
Capture, a pure play carbon capture
company offering environmentally friendly
solutions for removing carbon emissions.
She has more than 30 years of experience
in the energy industry and has held a
number of key positions within corporate
and project management and international
business development. Prior to her
Aker Carbon Capture role, she served
as Executive Vice President Customer
Management from 2016 to 2020 and
Executive Vice President and head of the
Engineering Business Area from 2011
to 2016 at Aker Solutions. Lundegaard
began her career in Equinor (then Statoil)
gaining experience from both conceptual
and offshore work and holds a Master
of Chemical Engineering Degree from
the Norwegian University of Science and
Technology
Key external appointments:
None
Aker BP shares*: 4,539
Member of the board since: 2021
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1970
Aker BP shares*: 1,510
Member of the board since: 2021
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1971
Aker BP shares*: 0
Member of the board since: 2022
Independent of major shareholders: Yes
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1960
Aker BP Annual Report 2022
7
EXECUTIVE MANAGEMENT TEAM
* Number of shares in Aker BP ASA as of 31 December 2022
** Family relations to other members of the Board or members of the Executive Management Team
Per Harald Kongelf
CHIEF OPERATING OFFICER
Experience, skills and education:
Kongelf has been the Chief Operating
Officer in Aker BP since October 2022, and
do also oversees the strategic supply chain
and logistic function of the company.
Prior to joining Aker BP in 2016 as SVP for
Improvement, he served as head of the
Norwegian operations in Aker Solutions.
In Aker Solutions he was part of the
Executive team assigned different roles
since 2007. He has more than 35 years
of industrial experience from numerous
technical and management positions in and
outside Aker Solutions.
Kongelf holds a master’s degree from
the Norwegian University of Science and
Technology (NTNU).
Key external appointments:
None
David Tønne
CHIEF FINANCIAL OFFICER
Experience, skills and education:
Tønne has been the Chief Financial Officer
of Aker BP ASA since January 2019
after advancing from the position of VP
Corporate Controlling. Tønne has been
with Aker BP since January 2017.
Prior to joining Aker BP, Tønne worked for
the Boston Consulting Group where he
co-led the Nordic Energy Practice Area
supporting clients in O&G, Private Equity,
Shipping and Industrial goods across a
wide range of functional topics in Europe,
North America and the Middle East.
Tønne holds a master’s degree in finance
from the Norwegian School of Economics
(NHH).
Key external appointments:
None
Karl Johnny Hersvik
CHIEF EXECUTIVE OFFICER
Experience, skills and education:
Karl Johnny Hersvik has been CEO of
Aker BP since May 2014. Prior to joining
Aker BP, he served as head of research
for Statoil. Hersvik has held a number of
specialist and executive positions with
Norsk Hydro and StatoilHydro.
Hersvik holds a Cand. Scient. (second
cycle) degree in Industrial Mathematics
from the University of Bergen.
Hersvik is the chairman of the Board of
Directors of Aker Energy AS and aiZe. He
is member of the Board of Directors at The
Norwegian Oil and Gas Association.
Key external appointments:
Hersvik is the chairman of the Board of
Directors of Aker Energy AS, aiZe and Aker
Clean Hydrogen. He is a member of the
Board of Directors at Cognite and The
Norwegian Oil and Gas Association.
Aker BP shares*: 10,355
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1972
Aker BP shares*: 18,935
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1985
Aker BP shares*: 5,546
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1959
Intro BoD’s report Payments to governments Corporate governance Financials
8
BoD & EMT
Marit Blaasmo
SVP PEOPLE & SAFETY
Experience, skills and education:
Blaasmo has been the SVP for People
and Safety since October 2022, coming
from the position as SVP HSSEQ. She
joined Aker BP in August 2017 as VP
Improvement and Performance for Drilling
& Wells.
She holds more than 18 years’ experience
from Equinor and Baker Hughes INTEQ
and has held multiple operational and
management positions within Drilling &
Wells disciplines.
Blaasmo holds a master’s degree
in Petroleum Engineering from the
Norwegian University of Science and
Technology (NTNU)
Key external appointments:
None
Paula Doyle
CHIEF DIGITAL OFFICER
Experience, skills and education:
Doyle is Chief Digital Officer in Aker BP.
She comes from the position as Senior
Vice President of Sales and Marketing at
Cognite, where she was also part of the
Executive Management Team.
Doyle joined Aker BP in 2022. She has
held a variety of roles within the oil and gas
industry for companies such as ABB and
Siemens, in Norway and the Middle East.
During her time in the Middle East, Doyle
established and ran a non-profit industrial
technology organisation.
Doyle has a deep knowledge of industrial
software space and digitalization processes
in heavy-asset industries, and holds a
PhD in Computer Engineering from the
University of Limerick.
Key external appointments:
None
Aker BP shares*: 6,754
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1975
Aker BP shares*: 0
Family relations BoD/EMT**: No
Citizenship: Irish
Residency: Norway
Born: 1979
Ole Johan Molvig
SVP VALHALL
Experience, skills and education:
Molvig has been the Valhall Asset Manager
since 2020, and comes from the role of
SVP Reservoir.
Molvig has worked for the company
since 2009, and came to Aker BP via Det
Norske, where he held the position of VP
Subsurface.
Molvig has extensive and varied experience
from the oil and gas industry. He has
worked for companies such as ExxonMobil,
Statoil and Marathon Oil.
Molvig has a master’s degree in Mechanical
Engineering from NTNU in Trondheim.
Key external appointments:
None
Aker BP shares*: 15,169
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1972
Aker BP Annual Report 2022
9
* Number of shares in Aker BP ASA as of 31 December 2022
** Family relations to other members of the Board or members of the Executive Management Team
Per Øyvind Seljebotn
SVP EXPLORATION & RESERVOIR
DEVELOPMENT
Experience, skills and education:
Seljebotn has been the head of exploration
and reservoir development since he started
at the company in 2022.
Seljebotn has more than 20 years of
experience from exploration activity and
oil recovery on the Norwegian shelf and
UK shelf. He previously spent 10 years
at Lundin in various positions. He was
responsible for reservoir development in
Lundin starting in 2015, and in 2020 he
also took on responsibility for exploration
in Lundin. Seljebotn has also worked for
Marathon Oil, Noreco and ExxonMobil.
Seljebotn has a master’s degree in
geophysics from NTNU.
Key external appointments:
None
Tommy Sigmundstad
SVP DRILLING & WELLS
Experience, skills and education:
Sigmundstad has been SVP Drilling & Wells
in Aker BP since 2016. Prior to this, he was
Vice President Wells in BP Asia Pacific.
Sigmundstad has broad experience within
the oil and gas industry from companies
such as Baker Hughes and Philips,
before joining BP in 2000. Within BP,
Sigmundstad has held various operational,
engineering and management positions in
Norway, the United Kingdom, Azerbaijan
and Indonesia.
Sigmundstad holds a master’s degree in
petroleum engineering from the University
of Stavanger.
Key external appointments:
Sigmundstad is a member of the board of
directors in Fishbones
Knut Sandvik
SVP PROJECTS
Experience, skills and education:
Sandvik has been SVP Projects in Aker
BP since July 2019. He has more than
30 years’ experience from the oil & gas
industry. Throughout his career, Sandvik
has held various senior project and
leadership positions across Aker Solutions,
including four years as a member of the
Executive Management Team.
Sandvik holds a degree in Mechanical
Offshore Engineering from Heriot-Watt
University in Scotland.
Key external appointments:
None
Aker BP shares*: 5,111
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1962
Aker BP shares*: 10,451
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1970
Aker BP shares*: 619
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1973
Intro BoD’s report Payments to governments Corporate governance Financials
10
BoD & EMT
Georg Vidnes
SVP OPERATIONS
Experience, skills and education:
Vidnes has been SVP Operations since
1 September 2020. Vidnes started
working for the company in 2019, where
his first role was as project manager for
establishing the company’s operating
model.
Vidnes has more than 25 years of
experience from operating companies
such as Statoil, Talisman and Repsol
Sinopec, with an emphasis on drilling &
wells, asset management, operations,
and major change projects. He has held
positions as OIM, VP of Production, area
director, and has been at the helm of major
organisational transition projects.
Vidnes has a master’s degree in mechanical
engineering from the Norwegian Institute
of Technology (NTH), now the Norwegian
University of Science and Technology
(NTNU) in Trondheim.
Key external appointments:
None
Ine Dolve
SVP ALVHEIM
Experience, skills and education:
Dolve has been the SVP Operations and
Asset Development since July 2020. She
comes from the position of VP Operations
& Asset development for Skarv in Aker
BP. She has worked with the company
since 2010 and been involved in various
key projects to develop and improve both
company and industry performance.
Before joining Aker BP, she worked in
management consulting (PwC) within
finance, management of change and
digitalisation for O&G. She also has several
years of experience from the Armed
Forces, nationally and internationally.
Dolve holds a master’s degree in Finance
and International Management from NHH
Norwegian School of Economics / ESADE,
Barcelona. She is also educated at the Air
Force Officer Candidate School and the
Norwegian Naval Academy in Bergen.
Key external appointments:
None
Thomas D. Hoff-Hansen
SVP ULA
Experience, skills and education:
Hoff-Hansen has been SVP for Ula since
October 2022. He comes from the
position of Director for Operations and
Field Development for the Alvheim area.
Thomas has worked for the company since
early 2009 and has broad experience
from various technical roles, as well as
management roles both offshore and
onshore.
Before Hoff-Hansen started at Aker
BP, he worked with automation and
instrumentation at ExxonMobil.
Hoff-Hansen holds a Master of Science
degree in cybernetics from the University
of Stavanger.
Key external appointments:
None
Aker BP shares*: 1,553
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1968
Aker BP shares*: 6,773
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1975
Aker BP shares*: 3,110
Family relations BoD/EMT**: No
Citizenship: Norwegian
Residency: Norway
Born: 1972
Aker BP Annual Report 2022
11
BOARD OF DIRECTORS’ REPORT
2022 was a transformational year for Aker BP. Following the successful acquisition and
integration of Lundin, the company has doubled its production, reduced its unit costs,
and consolidated its position as a global leader within low carbon oil and gas production.
The operational performance was strong, with improved efficiency and safety, and new
production capacity was brought on stream at Johan Sverdrup and Valhall. The company
also made significant progress with its growth portfolio, sanctioning new field development
projects that will lead to further profitable growth in a few years.
Aker BP is a pure play oil and gas company which has expanded
to become the second largest operator on the Norwegian
Continental Shelf (NCS) through a combination of organic growth
and M&A. The company’s vision is to be the E&P company of the
future, with safe and efficient operations, low cost, low emissions
and a leading role in the transformation of the industry.
In 2022, the company took a significant step in this direction with
the completion of the acquisition of Lundin’s oil and gas related
activities. Following this transaction, production has doubled,
operational costs per barrel are reduced and the position as
a global leader within low carbon oil gas and production is
manifested. The combined entity is well positioned for future
value creation.
The year 2022 was also a year of geopolitical unrest and
economic uncertainty, causing supply chain constraints and
inflation, as well as an energy crisis in Europe resulting in high
and volatile energy prices. Aker BP’s focus has been on building
resilience in its operations and project execution strategies, and
to contribute with reliable supplies of oil and gas to the European
market.
Environmental, Social and Governance (ESG) issues are of the
highest importance to Aker BP’s Board of Directors. The Board
recognises its responsibility for the safety of people and the
environment and devotes appropriate time and resources to
comply with all regulations and adhere to the highest standards
in the oil and gas industry regarding Health, Safety, Security,
Environment and Quality (HSSEQ).
Aker BP’s overall HSSEQ performance improved in 2022 with
a continued low number of injuries and serious incidents. All
injuries are being thoroughly investigated to capture learnings
and to prevent re-occurrence. Aker BP had zero Process Safety
Events in 2022. The Total Recordable Injuries Frequency (TRIF)
for 2022 was 1.1 which is a significant improvement from 1.9 in
2021.
Aker BP’s emission intensity was reduced to less than 4 kg CO
2
per boe in 2022. This is among the absolute lowest in the oil
and gas industry globally. The company takes the global climate
challenges seriously and has a three-pronged strategy to meet
the world’s growing need for energy while simultaneously
contributing to reduce emissions. Aker BP will deliver oil and gas
with a minimum climate footprint and generate revenue that can
be used to facilitate the energy transition. Further the company
will contribute knowledge, data, and experience to support new
industries.
Aker BP has implemented an operating model aiming to
continuously improve safety and production efficiency and
to reduce costs through standardisation within areas such as
HSSEQ, maintenance, digital operations, procurement, and
logistics. The operating model provides a good framework for
driving performance through transfer of best practice, utilisation
of scale economics and continuous improvement.
The operational performance developed very positively through
2022. The first half of the year was negatively impacted by
technical issues and maintenance, leading to production
efficiency of 84 percent, production volume of 194.7 mboepd,
and production cost of USD 11.8 per boe. The Lundin transaction
was completed 30 June, and in the second half, production
more than doubled to 421.8 mboepd, with a significantly higher
production efficiency of 95 percent, and production cost was
reduced to USD 7.2 per boe. For the full year, the average
production was 309.2 (209.4) mboepd and production cost per
boe was USD 8.7 (9.2).
The company has over many years been working systematically
to develop strategic alliances with its main suppliers. The alliance
model is designed to align incentives, remove waste and drive
continuous improvement with a One Team culture. These
alliances now cover large parts of the company’s supply chain and
provides Aker BP with critical project execution capabilities which
will be essential in the years to come to execute the company’s
project portfolio.
The field development activity in 2022 was high and progressed
according to plan. The Hod project achieved first oil in April, less
than two years after sanction, and ramped up to full capacity
through the year. Johan Sverdrup Phase 2 was brought on stream
in December, increasing the field’s gross oil processing capacity
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BoD’s report
from 535 to at least 720 mbblpd. Meanwhile, three tieback
projects in the Alvheim area and one in the Ivar Aasen area
progressed according to plan.
In December 2022 Aker BP and its partners submitted 10
Plans for Development and Operation (PDO) to the Ministry
of Petroleum and Energy (MPE). These Aker BP-operated
field development projects are organised in four main groups:
Yggdrasil, Valhall PWP-Fenris, Skarv Satellites and Utsira High
projects. In the first quarter 2023, Aker BP has acceded to all
these PDOs except for Troldhaugen (part of Utsira High). Aker
BP’s net share of recoverable resources in these projects is
estimated to approximately 700 mmboe, with net investments
of approximately USD 18.5 billion and an average break-even
oil price of USD 35-40 per barrel (calculated using a 10 percent
discount rate).
The average break-even oil price of these projects exceeds the
previously communicated target of USD 30 per barrel, which was
set when the temporary tax system was introduced in 2020. The
estimated break-evens increased in 2022 due to a combination
of global cost inflation and late changes to the temporary tax
system. The Board of Directors still regard these projects as
highly attractive with low break-even oil prices, short pay-back
time and high returns.
Along with several measures to increase efficiency and recovery,
these development projects will enable Aker BP’s oil and gas
production to grow from around 400 mboepd in 2022 to around
525 mboepd in 2028.
Aker BP’s resource base was further strengthened in 2022.
The 2P reserves more than doubled to 1859 (842) mmboe at
the end of the year, driven by the Lundin acquisition as well as
reclassifications from contingent resources to 2P reserves in
connection with the new PDO projects. The contingent resources
(2C) were consequently reduced to 744 (1,022) mmboe at the
end of 2022. This combined resource base represents a unique
opportunity set for profitable growth.
Aker BP’s capital allocation framework concentrates on three
main priorities. Priority number one is to maintain sufficient
financial capacity through the cycle to safeguard the company’s
investment grade credit profile. The second priority is to fund the
investment programme, which is designed to generate growth
with low break-even oil prices and hence maximise value creation
over time. The third priority is to return value to shareholders,
primarily through a resilient dividend.
During 2022 the company has improved the investment grade
credit ratings from the three leading rating agencies. At the end
of 2022, the company’s financial position was stronger than ever,
with total available liquidity of USD 6.2 billion, a conservative
leverage ratio of 0.2 and no debt maturities before 2025.
The Board is focused on maximising long-term shareholder value
and is of the opinion that Aker BP is well positioned for further
value accretive growth on the NCS. At the same time, the Board
is conscious of the risks associated with project execution and
the changing market conditions in which the company operates.
The Board is prioritizing capital discipline and mitigation of risk
wherever possible throughout the organization.
Share price performance and ownership structure
Aker BP’s shares are listed on Oslo Børs with ticker symbol
AKRBP and are freely negotiable. The total number of shares
issued is 632.0 (360.1) million. The increase is due to the
Lundin transaction.
The three major shareholders are Aker ASA with 21.16
percent, bp p.l.c. with 15.87 percent and Nemesia S.A.R.L.
with 14.37 percent of the shares. The remaining 49 percent of
the outstanding shares are held by a diversified group of more
than 30,000 shareholders.
In 2022, the share price for Aker BP ended at NOK 304.10
per share, compared to NOK 271.60 per share at the end of
2021. Dividends paid in 2022 amounted to approximately
NOK 19.3 (USD 2.0) per share.
Aker BP Annual Report 2022
13
BUSINESS DESCRIPTION
Description of the company
Aker BP is a Norwegian oil and gas company with exploration,
development and production activities on the Norwegian
Continental Shelf, ranking among the largest independent
E&P companies in Europe measured by production. Its
market capitalisation as of 31 December 2022 was USD
21.8 (11.1) billion (NOK 192.2 (97.8) billion). Headquartered
in Bærum, Norway, with branch offices in Stavanger,
Trondheim, Sandnessjøen and Harstad, Norway, Aker BP had
approximately 2,500 employees, a portfolio of 182 (124)
licences, with 120 (80) as operator and 62 (44) as a field
participant as of 31 December 2022.
Production assets and field developments
Aker BP’s oil and gas production in 2022 averaged 309.2
(209.4) mboepd. Of this, 82 (82) percent was oil and liquids,
while 18 (18) percent was natural gas. The production comes
predominantly from six major hubs: Alvheim, Edvard Grieg/
Ivar Aasen, Johan Sverdrup, Skarv, Ula, and Valhall.
PRODUCTION SECOND
HALF
FIRST
HALF
01.01.-31.12.
(mboepd) 2022 2022 2022 2021
Alvheim 47.6 44.6 46.1 46.5
Johan
Sverdrup
171.3 60.4 116.3 63.0
Valhall 53.1 37.7 45.5 46.4
Skarv 41.8 36.7 39.3 29.0
Ula 8.7 4.6 6.7 7.8
Edvard Grieg/
Ivar Aasen
99.3 10.5 55.3 16.7
Other 0.0 0.1 0.1 0.1
Total 421.8 194.7 309.2 209.4
Johan Sverdrup
The Johan Sverdrup field is operated by Equinor and came
on stream in October 2019 after a successful construction
and installation phase. Phase 1 of the project consisted of
four large bridge-linked platforms (the field centre), Norway’s
largest oil export pipeline, a gas export pipeline, three subsea
water injection templates, 20 pre-drilled production and water
injection wells, and 100 megawatts power from shore.
The processing capacity for Johan Sverdrup Phase 1 at
start-up was 440 thousand barrels per day (mbblpd). During
2020, it was established that the capacity exceeded the initial
assumptions, and by removing bottlenecks the processing
capacity increased to 535 mbblpd. In 2022 the field has
produced with high regularity near 100 percent, except during
planned maintenance. The longest shut down was for 17 days
in June/July for maintenance and preparing for start-up of the
Phase 2 production.
During 2022 the Phase 2 of the Johan Sverdrup development
progressed safely according to plan and cost. Phase 2 includes
construction and installation of a second processing platform
and modifications of the riser platform at the field centre, five
subsea templates in the periphery of the field, and an increase
of the power from shore supply from 100 to 300 MW. The
increased power capacity will also serve several surrounding
fields in the greater Utsira High area, including Ivar Aasen and
Edvard Grieg, operated by Aker BP and will contribute to an
annual reduction in total carbon dioxide emissions of nearly
1.2 million tonnes.
Production from the Johan Sverdrup Phase 2 development
started safely 15 December, according to plan and cost.
Production ramp up is ongoing to full field facilities design
capacity 720 mbblpd. Thereafter further increase to 755
mbblpd will be tested. All the initially processed oil is
produced by wells already drilled from the field centre drilling
platform DP. The first Phase 2 production well from a subsea
template was successfully put on production early January
2023.
Alvheim area
The Alvheim area consists of the fields Alvheim, Volund, Vilje,
Bøyla and Skogul, which are all being produced through the
Alvheim FPSO and operated by Aker BP. The oil is exported
by shuttle tankers, and the produced gas is exported through
the Scottish Area Gas Evacuation (SAGE) system.
Production from the Alvheim area in 2022 was in natural
decline, which was partly mitigated by the Kameleon Infill
West well which started production in February. However,
through the Lundin transaction, Aker BP increased its interest
in Alvheim, Bøyla and Volund, hence the company’s net
production from the Alvheim area was virtually unchanged at
46.1 (46.5) mboepd. The operational performance was strong
with a production efficiency of 99 (95) percent.
The lifetime extension project for the Alvheim FPSO is
progressing as planned. The purpose is to prolong the lifetime
to 2040. The project finished upgrading the living quarters,
ballast control system and changed out four mooring lines in
2022.
There are currently three field development projects
underway in the Alvheim area: Frosk, Kobra East & Gekko and
Tyrving.
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The Plan for Development and Operations (PDO) for Frosk, a
two-well subsea tie back to Alvheim via Bøyla, was approved
by the Ministry of Petroleum and Energy (MPE) in July. The
drilling activities were completed in 2022 and was followed by
a subsea tieback campaign, and production started in March
2023. 
The PDO for the Kobra East & Gekko (KEG) development
was approved by the MPE in February 2022. This project is
a subsea tieback to the Alvheim FPSO with four tri-lateral
wells through the Kneler B manifold. The initial PDO reserves
of 40 mmboe have been increased to 50 mmboe due to the
Alvheim FPSO lifetime extension project. First oil is scheduled
in first quarter 2024. 
On Tyrving (previously named Trell & Trine), the concept select
decision (DG2) was passed in fourth quarter 2021, and the
pre-investment program was approved by authorities during
first quarter 2022. The PDO for Tyrving was submitted to the
MPE on 10 August 2022. First oil is scheduled for 2025. 
Following the Lundin transaction, Aker BP increased its
ownership share in several of the Alvheim licences, including
15 percent in Alvheim, Bøyla and Frosk, 35 percent in Volund,
and 13 percent in Tyrving.
Valhall
The Valhall area consists of the Valhall and Hod fields in the
southern part of the Norwegian North Sea and is operated by
Aker BP. The infrastructure currently consists of a field centre
with three separate bridge-connected platforms, in addition to
five unmanned flank platforms. The produced oil is exported
via pipeline to Ekofisk and further to Teesside, while the gas is
exported via Norpipe to Emden in Germany.
Aker BP’s net production from Valhall averaged 45.5 (46.4)
mboepd in 2022. Production efficiency was 80 (83) percent.
The lower production efficiency was due to planned
maintenance. Well stimulation and intervention activities were
ongoing throughout the year to bring more wells up to their
full production potential.
The Hod Field Development (HFD) project was completed
according to plan. All six wells are stimulated and on
production, and offshore modifications have been finalised.
HFD started up in April, 22 months after the final investment
decision was made and all wells were on production within
five months of pipeline commissioning. The Hod field is
powered from shore via Valhall and hence the CO
2
emissions
from the field are close to zero.  
The Original Valhall Decommissioning project (OVD)
progressed according to plan. An important milestone
was reached when the DP platform and the PCP topsides
were removed from the Valhall field centre. The removed
infrastructure will be demolished at Aker Solutions Stord, and
more than 95 percent will be recycled.  
The Plans for Development and Operations (PDO) for the
joint Valhall PWP & Fenris development project (previously
named Valhall NCP & King Lear) was submitted to the
authorities in December 2022. The joint development project
comprises a new centrally located production and wellhead
platform (PWP) bridge-linked to the Valhall central complex
with 24 well slots, and an unmanned installation (UI) with
8 slots at Fenris (formerly King Lear) subsea tied back 50
kilometres to the PWP.
Expected total recoverable resources for Valhall PWP-Fenris
are estimated to 230 mmboe gross, divided into 160 mmboe
at Fenris and 70 mmboe at Valhall. The development plan
includes a total of 19 wells, of which 15 at Valhall PWP and 4
at Fenris. Production start is planned for the second and third
quarter 2027, respectively. 
The project will also involve a modernisation of Valhall that
ensures continued operation when parts of the current
infrastructure are to be phased out in 2028, thus enabling
production of the remaining Valhall reserves from 2029
onwards, which are estimated at 135-140 mmboe gross.
In addition, the project will add gas capacity to Valhall and
thus enable Valhall to serve as a hub for potential new gas
discoveries in the future. 
The development will leverage Valhall’s existing power from
shore system with minimal emissions, estimated at less than 1
kg CO
2
per boe. 
Aker BP Annual Report 2022
15
Skarv area
The Skarv area in the northern part of the Norwegian Sea
consists of several fields, including Skarv, Idun, Tilje, Ærfugl,
Gråsel and Idun Tunge, which are all produced through the
Skarv FPSO, and is operated by Aker BP. The oil is offloaded
to shuttle tankers, while the gas is transported to the Kårstø
terminal in a pipeline connected to the Åsgard Transport
System.
Net production from Skarv Area, averaged 39.3 (29.0)
mboepd in 2022. The increase from 2021 was mainly driven
by ramping up production from Ærfugl. The production
efficiency in 2022 was 92 (82) percent.
In March, the gas blowdown phase was initiated from two
reservoir segments in the Skarv reservoir following nine
years of gas injection to produce the oil reserves in the
segments. The blowdown is part of the approved drainage
strategy for Skarv and was initiated two years later than
originally stipulated in the PDO. The blowdown contributes
to increased utilisation of available gas processing and export
capacity from the Skarv FPSO and the Åsgard Transport
System, and thereby increases the gas volumes available for
export to Europe. 
During 2022 production from Idun Tunge was brought on
stream. Idun Tunge is a new structure in the Skarv area
developed by reusing an existing well slot on the Idun
Template. The drilling commenced in the third quarter and
production started in the fourth quarter.
The other development projects in the Skarv area made
good progress during 2022 and PDOs for three separate
developments were submitted to the MPE in December.
The developments, coordinated by the Skarv Satellite Project
(SSP), consist of gas and condensate discoveries in Alve Nord,
Idun Nord and Ørn. The projects are estimated to bring gross
resources of approximately 120 mmboe through Skarv FPSO
from 2027.
Edvard Grieg/Ivar Aasen
The Edvard Grieg and Ivar Aasen fields are operated by Aker
BP and located on the Utsira High. Both fields are developed
with a production and quarters (PDQ) platform with a steel
jacket and require a separate jack-up rig for drilling and
completion. For Ivar Aasen, the first stage processing is carried
out on the Ivar Aasen platform, and then partly processed
fluids are transported to the Edvard Grieg platform for final
processing and export. The Ivar Aasen field is powered with
electricity supplied from Edvard Grieg. The power generation
on Edvard Grieg was replaced with power from shore towards
the end of 2022.
The Edvard Grieg area, which consists of the Edvard
Grieg main field and the tiebacks Solveig and Troldhaugen
(previously named Rolvsnes), became part of Aker BP’s
portfolio through the Lundin transaction, and is included
in Aker BP’s financial statements from 30 June 2022. Aker
BP has combined Edvard Grieg and Ivar Aasen in one
organisational unit.
Aker BP’s net production from Edvard Grieg/Ivar Aasen in
2022 averaged 55.3 (16.7) mboepd. Production efficiency
was 84 (87) percent and was negatively impacted by a power
outage at Edvard Grieg due to damage to the electrical
systems in the gas export system from late March to late
May. Maintenance activities were accelerated to minimise the
impact on full-year production. Both installations were back at
full production from 25 May.  
In the second half of 2022 Edvard Grieg and Ivar Aasen
production remained stable at 99 mboepd with high
production efficiency of 99 percent. 
The Johan Sverdrup Phase 2 project was successfully
completed in the fourth quarter 2022. The project included
a power from shore solution for the Edvard Grieg and Ivar
Aasen fields and hence, the CO
2
emissions from these fields
are expected to be reduced by approximately 200,000 tonnes
per year.  
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At Ivar Aasen, the 2022 IOR campaign which consisted of
three new wells was successfully completed. In 2023, a
three-well IOR campaign is planned at Edvard Grieg.
The Hanz project progressed according to plan in 2022. This
is the first subsea tieback to the Ivar Aasen field. The reservoir
is estimated to contain 20 mmboe of oil. The project will use
crossflow injection for pressure support and will also re-use
subsea equipment from the Jette field. Consequently, the
Hanz project has a significantly lower environmental footprint
than comparable subsea developments. Production is planned
to start in first quarter 2024. 
On 16 December, Aker BP and its partners submitted PDOs
for the Utsira High Projects to the MPE, covering three
separate subsea tieback projects. Symra (previously named
Lille Prinsen) will be a tieback to the Ivar Aasen platform,
while Solveig phase 2 will be connected to the Edvard Grieg
platform. The third project, Troldhaugen, was subject to the
performance of an extended well test (EWT) which has since
been concluded, and which resulted in reduced expected
recoverable volume. The project was no longer considered to
have sufficient financial robustness, and the partners decided
to discontinue this project.
The two Utsira High projects will develop gross recoverable
resources of 85 mmboe. Drilling will commence in third
quarter 2025, and production is scheduled to start in 2026
for Solveig and 2027 for Symra. The total investments are
estimated to approximately NOK 16 billion in real terms. Aker
BP is the operator for both developments.  
Ula area
The Ula field is operated by Aker BP. The Ula area consists
of the fields Ula, Tambar, Blane and Oda, which are all being
produced through the Ula field centre. The oil is exported via
Ekofisk to Teesside, while the gas is reinjected into the Ula
reservoir to enhance oil recovery.
Net production for Aker BP from the Ula area averaged 6.7
(7.8) mboepd in 2022. The production efficiency was 53
percent due to low well integrity and planned turn around.
An impairment charge of USD 385 million was made to the
Ula area during 2022. The main reason for the impairment is
the acceleration of expected shut-down from 2032 to 2028,
and the corresponding impact on cost and production profiles. 
Yggdrasil
The Yggdrasil area (formerly NOAKA) is located between
Oseberg and Alvheim in the Norwegian North Sea. The area
holds several oil and gas discoveries with gross recoverable
resources estimated at around 650 million barrels of oil
equivalents, with further exploration and appraisal potential.
Yggdrasil consist of the licence groups Hugin, Fulla and Munin.
Aker BP is operator and will develop and operate the full area.
Equinor ASA and LOTOS Exploration & Production Norge AS
are licence partners.
The development concept includes a processing platform
with well area and living quarters, Hugin A. It will function as
an area hub. Hugin A is planned with low manning levels and
is also being developed to be periodically unmanned after a
few years of operation. The Frøy field will be developed with
a normally unmanned wellhead platform, Hugin B, that will
be tied back to Hugin A. Munin is an unmanned production
platform. It will be tied back to Hugin A for oil and produced
water processing.
Yggdrasil also represents an extensive subsea development
with a total of nine templates, pipelines and umbilicals. 55
wells are planned in the area, of which 38 subsea wells and
17 platform wells. Additionally, the area concept has high
flexibility for potential tie-in of new discoveries. Yggdrasil will
be powered from shore to ensure minimal carbon footprint.  
In December 2022, PDOs for the Yggdrasil area were
submitted to the MPE. The project has moved into the
execution phase and is well into detail engineering.
Construction activities are planned to start in the autumn of
2023.
Wisting
Following the Lundin transaction, Aker BP holds 35 percent
interest in the Equinor-operated Wisting discovery in licences
PL537 and PL537B in the Barents Sea.
The partners were originally planning for a final investment
decision for Wisting by the end of 2022. However, due to
cost pressure and potential capacity constraints in the supply
industry, combined with changes in the temporary tax system,
the partners in November decided to postpone the decision
to 2026, which led to an impairment charge of USD 499
million (including technical goodwill) in 2022.
The partners are planning further exploration activity in the
area around Wisting, aiming to increase the resource base.
In parallel, the development concept will be further matured
to ensure an economically sound development and a robust
project execution.v
Exploration activities
Aker BP is one of the most active exploration companies
on the NCS, which is considered as a highly attractive basin
with significant potential for new discoveries. The company’s
exploration strategy is focused on two main goals. The
first goal is to discover commercial resources near existing
infrastructure. Such discoveries typically have short lead
times, attractive economics, and contribute to better capacity
utilization and lower unit cost at the host. The second goal is
to discover resources that are big enough for new stand-alone
field developments. The activity level within each category
will fluctuate from year to year, but over time the company
is aiming towards 80 percent of its exploration activity within
the first category.
In 2022, Aker BP participated in a total of 14 exploration
and appraisal wells, of which eight resulted in discoveries.
Aker BP Annual Report 2022
17
The most significant of these were Storjo and Newt, both
in the Skarv area, which are promising candidates for future
development as tiebacks to the Skarv FPSO. The company
also participated in a significant gas discovery named Lupa
in the Barents Sea, where a development will be more
economically challenging as it would require new gas
infrastructure in the area.
In January 2023, Aker BP was awarded 17 licences in the
Awards in Predefined Areas licensing round (APA 2022), of
which 9 as operator. Of the 17 production licences awarded
to Aker BP, 13 are in the North Sea (6 as operator) and 4 are
in the Norwegian Sea (3 as operator). Most of these licenses
are located close to the company’s existing core areas.
THE ANNUAL ACCOUNTS
The parent and group prepare its financial statements in
accordance with International Financial Reporting Standards
(IFRS) as adopted by EU and the Norwegian Accounting Act.
See note 1 for a description of two changes in the accounting
principles related to abandonment provision and deferred tax
on capitalised interest.
Income statement
Group
The group’s total income amounted to USD 13,010 (5,669)
million. Total production volume was 112.9 (76.4) mmboe.
The average realised liquids price was 97.9 (69.2) USD per
barrel, while the realised price for natural gas averaged USD
193.4 (88.5) boe. 
Production costs for the oil and gas sold in 2022 were USD
933 (745) million. Production costs per boe produced in 2022
amounted to USD 8.7 (9.2). Exploration expenses amounted
to USD 242 (353) million and were mainly related to dry
and non-commercial wells, seismic data, field evaluation and
general exploration activities. Depreciation amounted to USD
1,786 (1,193) million, with the increase mainly caused by
higher production as a result of the Lundin transaction. 
Impairments amounted to USD 1,032 (263) million, mainly
related to Ula/Tambar, Wisting and Edvard Grieg. More
information about the impairment charges is included in note
15 to the financial statements. 
Other operating expenses amounted to USD 53 (29) million. 
Net financial expenses amounted to USD 188 (190) million,
mainly driven by interest expenses and accretion, while net
currency gains are largely offset by impacts from related
currency derivatives. Financial items are further outlined in
note 11 to the financial statements.
The group reported an operating profit of USD 8,964 (3,086)
million. The pre-tax profit amounted to USD 8,777 (2,896)
million, and the tax expense amounted to USD 7,174 (2,068)
million. USD 7,163 million is tax payable. The main reason for
the tax rate above 78% is due to permanent differences on
impairment.
The tax rules and tax calculations are described in notes 1 and
12 to the financial statements. 
The net profit was USD 1,603 (828) million, while other
comprehensive income amounted to USD 295 (0) million.
The latter is related to foreign currency translation from
consolidation of previous Lundin legal entities with other
functional currencies than USD. At year end 2022 the legal
entities acquired in the Lundin transaction were either
liquidated or merged into Aker BP ASA. Hence, the mentioned
impact on comprehensive income will cease from 1 January
2023.
Parent
The parent’s total income amounted to USD 9,258 (5,669)
million. Total production volume was 75.4 (76.4) mmboe. The
average realised liquids price was 100.9 (69.2) USD per barrel,
while the realised price for natural gas averaged USD 194.4
(88.5) boe. 
Production costs for the oil and gas sold in 2022 were USD
814 (745) million. Production costs per boe produced in 2022
amounted to USD 11.1 (9.2). Exploration expenses amounted
to USD 196 (353) million and were mainly related to dry
and non-commercial wells, seismic data, field evaluation and
general exploration activities. Depreciation amounted to USD
1,232 (1,193) million. 
Impairments amounted to USD 831 (263) million, mainly
related to Ula/Tambar and investment in the subsidiary ABP
Norway AS. More information about the impairment charges
is included in note 15 to the financial statements.
Other operating expenses amounted to USD 50 (29) million. 
Net financial expenses amounted to USD 34 (189) million,
mainly driven by net losses on currency derivatives and
interests, offset by net currency gains. Financial items are
further outlined in note 11 to the financial statements.
The parent company reported an operating profit of USD
6,246 (3,086) million. The pre-tax profit amounted to USD
6,212 (2,896) million, and the tax expense amounted to USD
5,089 (2,068) million. The main reason for the tax rate above
78% is due to permanent differences on impairment.
The tax rules and tax calculations are described in notes 1 and
12 to the financial statements. 
The net profit was USD 1,123 (828) million.
Statement of financial position
Group
The statement of financial position was significantly impacted
by the Lundin transaction which was accounted for on a fair
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BoD’s report
value basis as described in note 2 in the Financial Statements.
Total assets recognised in the transaction amounted to USD
23.2 billion and was the reason for the increase in total assets
for the Aker BP group from USD 16.7 billion at year end 2021
to USD 37.6 billion at 31 December 2022.
Equity amounted to USD 12,428 (2,197) million at the end
of 2022, corresponding to an equity ratio of 33 (13) percent.
The substantial increase was mainly caused by the Lundin
acquisition. Net interest-bearing debt, including lease debt,
was USD 2,658 (1,742) million. The deferred tax increased
from USD 3,291 million to USD 9,359 million in 2022, mainly
caused by the Lundin transaction.
Bond debt increased to USD 5.3 (3.6) billion, as two bonds in
Lundin were transferred to Aker BP in the Lundin transaction.
At the end of the year, the company had total available
liquidity of USD 6.2 (5.4) billion, comprising USD 2.8 (2.0)
billion in cash and cash equivalents and USD 3.4 (3.4) billion
in undrawn credit facilities. For information about terms
on the credit facilities, see note 20. Financial covenants for
the company’s debt instruments were comfortably within
applicable thresholds. The company has a robust balance
sheet and ample financial flexibility. 
Aker BP is currently rated by three rating agencies, S&P, Fitch,
and Moody’s. All agencies upgraded the credit rating to BBB/
Baa2 in 2022.
Parent
The statement of financial position was significantly impacted
by the merger with ABP Norway AS completed 31 December
2022. The merger was accounted for based on group
continuity as described in note 2 in the Financial Statements.
As a result, the closing balance 31 December 2022 in the
parent company is in all material respect the same as for the
group.
Statement of cash flow
Group
Net cash flow from operating activities amounted to USD
5,729 million, up from USD 4,282 million in 2021, positively
impacted by higher oil and gas prices and sale volumes partly
offset by USD 5 billion in increased tax payments.
Net cash flow used in investment activities amounted to USD
3,117 (1,727) million. The main item was investments in fixed
assets of USD 1,580 (1,377) million and consideration paid in
Lundin Energy transaction net of cash USD 1,229 million. 
Net cash outflow used in financing activities was USD 1,828
million, compared to an outflow of USD 1,123 million in 2021.
The main items consisted of the dividend disbursements of
USD 1,006 (488) million and the repayment of a revolving
credit facility amounting to USD 601 million in 2022, versus
a net repayment of bonds amounting to USD 383 million in
2021.
Parent
Net cash flow from operating activities amounted to USD
4,396 million, up from USD 4,282 million in 2021, positively
impacted by higher oil and gas prices and sale volumes partly
offset by increased paid taxes by USD 2.9 billion.
Net cash flow used in investment activities amounted to USD
2,415 (1,727) million. The main item was investments in fixed
assets of USD 1,269 (1,377) million and consideration paid in
Lundin Energy transaction net of cash USD 895 million. 
Net cash outflow from financing activities was USD 1,197
million, compared to an outflow of USD 1,123 million in
2021. The main item consisted of the dividend disbursements
of USD 1,006 (488) million.
Aker BP Annual Report 2022
19
Accounting standards
The accounting principles used for the 2022 annual financial
statements are consistent with the principles used in the
2021 annual financial statements, except for the changes
reflected below.
The discount rate for abandonment provisions no longer
include a risk element and deferred tax on capitalised interest
is applied to tax rate 78 percent compared to earlier 22
percent. Comparative figures have been restated accordingly.
For more information see note 1.
EU Taxonomy
Aker BP has a process to prepare the reporting required
under the EU Taxonomy Regulation, whilst awaiting the
implementation of the regulation in Norwegian law. The
preliminary analysis indicates that whilst most of the
company’s revenue and investments are outside the scope
of the taxonomy in its current form, certain investments
in low-carbon or zero emission solutions may qualify as
sustainable investments.
Other reporting requirements
Our reporting on corporate social responsibility as required
by the Norwegian Accounting Act (section 3-3a and c),
Transparency Act (section 5.2) and Gender Equality Act
(section 26.a.2) are included in our Sustainability report which
is available at www.akerbp.com.
Hedging
The company seeks to reduce the risk related to foreign
exchange, interest rates and commodity prices through
hedging instruments. The company actively manages its
exposures through a mix of forward contracts and options. No
hedge accounting is applied. 
At the end of 2022, the company had no commodity
derivatives exposure.
The going concern assumption
Pursuant to the Norwegian Accounting Act section 3-3a, the
Board of Directors confirms that the requirements of the going
concern assumption are met and that the annual accounts
have been prepared on that basis. The Board considers the
financial position and the liquidity of the company to be sound.
Cash flow from operations, combined with the total available
liquidity, is expected to be more than sufficient to finance the
company’s commitments in 2023.
In the Board of Directors’ view, the annual accounts give a true
and fair view of the company’s assets and liabilities, financial
position, and results. The Board of Directors is not aware of any
factors that materially affect the assessment of the company’s
position as of 31 December 2022, or the result for 2022, other
than those presented in the Board of Directors’ Report or that
otherwise follow from the financial statements.
Resource accounts
Aker BP complies with guidelines from Oslo Stock Exchange
and the Society of Petroleum Engineers’ (SPE) classification
system for quantification of petroleum reserves and
contingent resources. Total net P90/1P reserves are estimated
at 1,251 (599) mmboe, while net P50/2P reserves amounted
to 1,859 (802) mmboe at year-end 2022. See note 32 for a
more detailed review of the resource accounts. The reserves
have been certified by an independent third party.
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Profit for the year
The Board of Directors proposes that the profit for the year is
transferred to retained earnings.
HSSEQ IN AKER BP’S OPERATIONS
Health, Safety, Security, Environment and Quality (HSSEQ) is
always the number one priority in all of Aker BP’s activities.
The company strives to ensure that all its operations, drilling
campaigns and projects are carried out under the highest
HSSEQ standards.
HSSEQ performance
Aker BP’s goal is to prevent any kind of harm and ensure a
safe workplace. Everyone who works for the company – our
employees and contractors – shall be able to perform their
work in a safe environment. Our facilities shall be in good
condition, and must be planned, designed, and maintained in
a manner that ensures their technical integrity.
Combining risk insight with learnings from events
and successes constitutes the foundation for further
improvement to our HSSEQ performance and requires
a continuous and systematic effort from the whole
organization. The company’s overall HSSEQ performance
displays a positive trend. However, to meet our ambition
of no harm to people and the environment we need to
maintain our continuous effort to seek improvements in our
HSSEQ performance.
In 2022 we had three incidents which resulted in serious
injuries to personnel. In one case a contractor was exposed
to acetic acid and the two other incidents resulted in finger
and elbow injuries, respectively. These incidents have been
thoroughly investigated to capture learnings and to prevent
re-occurrence. Aker BP had zero Process Safety Events
(PSE) in 2022, resulting in four consecutive years without a
PSE event. The Total Recordable Injuries Frequency (TRIF)
for 2022 was 1.1 which is a significant improvement from
2021’s number of 1.9.
During the first nine months after the acquisition of Lundin
Energy was announced in December 2021, work groups
consisting of personnel from both companies identified
differences in Aker BP’s and Lundin Energy’s work processes
and procedures and concluded which ones to carry forward.
Aker BP developed temporary bridging documents where
necessary. The incorporation of Lundin Energy personnel
into Aker BP has strengthened the company’s robustness
with respect to competence and capacity. 
Aker BP continued to strengthen its collaboration with
other operating companies on the Norwegian Continental
Shelf in 2022 to ensure that the collective industry
experience is utilised to maintain worker health and safety.
The collaborative efforts include coordinating the annual
cycle for preventative HSSEQ initiatives as well as common
training material.  Aker BP’s management system was subject
to 11 audits by health and safety related governmental
bodies in 2022. The Petroleum Safety Authority Norway
(PSA) carried out 10 audits, none of which resulted in
any major findings. Similarly, the Civil Aviation Authority
of Norway (CAA) conducted one audit of Aker BP, final
report expected Q1 2023. Due to the current geopolitical
situation in 2022 the PSA ordered all operators on the
Norwegian Continental Shelf to review their security related
contingency plans and implement mitigating measures
as needed.
Security
The purpose of security is to protect Aker BP’s assets from
malicious actors and unintentional security incidents. Through
intelligence, value and threat assessments, as well as by raising
awareness in the company, Aker BP works to ensure that
neither the business nor the personnel are directly affected by
threat agents.
Aker BP divides security into three main areas: personnel,
physical and cyber security. The company works within
these areas to protect the company’s values in accordance
with relevant legislation and company needs. This work is an
integrated part of Aker BP’s risk and barrier management and
is followed up regularly by the Board.
In 2022 Aker BP’s cyber resilience has improved through
collaborative work between the operational business units
and the cyber team. Main focus has been improved risk
management, integrating Edvard Grieg, digital infrastructure
improvements and training together with the emergency
preparedness organization. In parallel, the digitalization
program introduced several technical cyber security
improvements, further reducing cyber risk in Aker BP.
The company has continued to develop its threat intelligence
capacity program to reduce uncertainty and enhance decision
support to the Executive Management Team and specific
business units.
Business Management System and assurance
The Business Management System (BMS) is the company’s
internal control system and hence the framework for
creating value, controlling risk and secure safe operation. The
BMS is established to standardise our way of working and
enable the organisation to perform activities in a consistent
manner. Through the BMS, Aker BP ensures compliance with
external and internal requirements and facilitates that we
continuously improve to achieve common goals.
Risk-based assurance of conformity to the business
management system requirements provide confidence
that the requirements will be fulfilled. Aker BP’s Three
Lines of Assurance model govern these activities ensuring
three degrees of independency of auditor from auditee;
team manager, requirement owner, and internal audit. The
model is continually under improvement with regards to
processes and tools to ensure a risk-based understanding of
requirements and necessity of conformity.
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21
Climate strategy and status
Sustainability is formally integrated and embedded into
Aker BP’s strategy and decision-making processes. Aker
BP acknowledges the need for action in line with the Paris
Agreement and the Norwegian Parliament’s expectations
and remains committed to continue contributing to this
important objective. The company’s target is to achieve a 50
percent reduction in scope 1 and 2 GHG emissions by 2030,
and to have close to zero GHG emissions by 2050.
It is a strategic priority for the company to be best-in-class
in producing low-carbon oil and gas. In 2022, our carbon
intensity was 3.7 kg of CO
2
per barrel of oil equivalent,
which is around one quarter of the global average, and
below the average for the NCS. The upstream methane
intensity was 0.02 percent. In the future company is
targeting CO
2
emission intensity below Carbon intensity
<4 kg CO
2
e per boe and methane intensity < 0.1 percent.
The company is also working closely with relevant parties
to improve our mapping of Scope 3 emissions, evaluate
emissions reduction initiatives and set targets. Reference
is also made to the company’s Sustainability report, which
includes further details regarding climate strategy and other
related topics.
Employees and working conditions
Status of employees and recruitment
– At year-end 2022, the company had 2,457 (1,839)
employees.
– Aker BP recruited 243 (199) new employees and 9 (10)
apprentices in 2022.
– Aker BP has a long-standing collaboration with graduate
schools and universities to recruit talent as well as
cooperation with regards to student internships.
Diversity and equal opportunity
The company is committed to maintain a working
environment with equal opportunities for all based on
qualifications, irrespective of gender, ethnicity, sexual
orientation, or disability. Aker BP has a Diversity and
Inclusion Policy expressing the principles to be followed,
with clear targets and a plan for action. The company does
not tolerate any form of discrimination, whether it be
trade union affiliation, social background, political opinion,
sensitive medical conditions and so forth.
There were no incidents of discrimination reported in 2022.
At the end of 2022, women held 23.4 (22.6) percent of the
positions in the company. The share of women on the Board
of Directors was 33.3 (36) percent. The share of women in
the executive management team was 26.7 (36) percent and
in the middle management it was 25.4 (23) percent.
Men and women with the same jobs, with equal professional
experience who perform equally well, shall receive the same
pay in Aker BP. The complexity of the job, discipline area and
work experience affect the pay level of individual employees.
At the end of 2022, 9.8 (9) percent of the employees were
of non-Norwegian origin.
Further information about diversity and equal opportunity in
Aker BP can be found in the company’s Sustainability Report
for 2022.
The working environment
Aker BP has a working environment committee as described
in the Norwegian Working Environment Act. The committee
plays an important role in monitoring and improving the
working environment and in ensuring that the company
complies with laws and regulations in this area.
Employees enjoy freedom of association, and the company
is committed to maintaining an open and constructive
dialogue with the employee representatives through frequent
meetings, up to bi-weekly throughout the year in connection
with the Lundin merger.
Five local trade unions are registered as being represented in
the company: Tekna, Lederne, SAFE, Industri Energi and NITO.
Our employee engagement survey has had a steady
improvement in 2022 and has recovered to pre covid levels.
During 2022 we implemented a new and improved tool
Qualtrics which is also enabling us to benchmark our results
against the global and local work environment. We note that
we score significantly greater than averages and we aim to
adjust our benchmark towards the 90th percentile, in line with
our overall company ambitions.
Sickness absence
Working for Aker BP shall promote and not reduce the health of
our employees and employee health is of major importance for
us. Aker BP has several proactive and health promoting measures
available for our employees. Several of these offers are available
through our occupational health service and includes physical
therapy, ergonomic guidance, crisis support line, workouts, travel
medicine and vaccines, personal health, and occupational health.
In 2022, the total sickness absence in Aker BP was 4.5 (3.9)
percent, which is significantly lower than the national average of
6.5 (6.3) percent in Norway. For onshore personnel the figure
was 3.3 (2.9) percent. For offshore personnel, the figure was 8.4
(6.7) percent. Aker BP is closely monitoring the development to
address any risk to our employees or production. Reference is
also made to the company’s Sustainability report, which includes
further details on Aker BP’s working environment.
Ethics and Integrity
Aker BP’s values are Seekers (Søkende), Accountable
(Ansvarlig), Foreseeable (Forutsigbar), Enthustiastic (Engasjert)
and Respectful (Respektfull). The words form the abbreviation
SAFER. The values define the company culture and describe
how we want to work in Aker BP. The values also guide our
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behaviour in the workplace and enable us to live by our Code
of Conduct. Our goal is that every employee habitually acts
according to our core values.
During 2022, Aker BP continued to strengthen its anti-
corruption compliance program with focus on compliance risk
assessment, assurance activities and training and awareness.
Aker BP’s human rights policy was updated in 2022 to clarify
our expectations in respecting human rights of employees,
consultants, contractors and business partners. Reference
is also made to the company’s Sustainability report, which
includes further details on Aker BP’s work in these areas and
contains the Transparency Act statement.
Stakeholder engagement and social responsibility
Our stakeholders are the many individuals and organizations who
are affected in some way by Aker BP’s activities – whether it is in
our role as an energy provider, an employer or as a business that
helps boost local economies through jobs and revenue.
Open and proactive dialogue with stakeholders facilitates our
ability to access the resources we require through the whole life
cycle of our assets.
Aker BP works to create value for all key stakeholders, including
local communities where we operate, by integrating social
responsibility into the way we do business. We partner with local,
regional, and national businesses, organisations, and authorities
to achieve mutual understanding of expectations, facilitate
direct and indirect local benefits, and create opportunities
for stakeholders.
We work with governments, communities, and
non-governmental organizations to implement social investment
programs that can have a sustainable beneficial impact. We
invest in community projects that align with local needs and our
business activities.
When planning projects, we assess the potential impacts
on communities. This helps to identify early on whether any
activities could negatively affect stakeholders or the environment
in nearby communities, and to find ways to prevent or mitigate
those impacts. We consult with communities, so that we can
understand their expectations and address concerns. Through
this, we hope to resolve potential disagreements, avoiding
negative impacts on others and disruption to our activities.
Local business and community benefits
Aker BP is committed to stimulating local content by creating
jobs and growing local businesses in the communities in which
the company operates.
All six operated hubs (Alvheim, Valhall, Ula, Edvard Grieg, Ivar
Aasen and Skarv) have performed and secured acceptance
for the impact assessment studies as part of the Government
approval process.
According to the Government’s Northern Area Policy, special
focus should be given to the development and operation
of fields located in Northern Norway to help stimulate
local content and create value in the regions. Our operated
Skarv field with operations centre at Sandnessjøen induces
considerable ripple effects to the region. And in late 2022
we submitted PDOs for development of three fields that will
be tied in to Skarv FPSO. The estimated total Norwegian
content for the investment is approximately 60%. In addition,
the project aims to use local suppliers as much as possible, to
increase regional effects. Aker BP is a member of the Oil and
Gas Cluster Helgeland, an organization located in Northern
Norway with a key focus on how to involve local and regional
business enterprises.
To stimulate the cooperation with schools and education, Aker
BP is supporting activities and public offices that contribute
to the growth and development of the local community by
offering studies, competence-raising measures and innovation
processes and projects.
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Aker BP Annual Report 2022
Research and development
State of the art technology is an important lever to deliver
on Aker BP’s vision of being the E&P company of the future.
To drive availability of and set direction for state-of-the-art
technology, as well as to build competence and capabilities of
next generation technologies, Aker BP has a corporate level
R&D portfolio managed by an R&D Council with members
from the different business units.
During 2022, the R&D council has met quarterly to monitor
and manage the R&D portfolio in alignment with Aker BP’s
strategic priorities. Projects in the portfolio have been
prioritised and selected based on match with strategic
technology themes, alignment with specific business needs,
and line of sight to technology implementation and value
outtake. To further ensure a value driven R&D portfolio,
a dedicated technology workstream linked to Asset
Development Plans (ADP) is used to connect R&D activities to
asset value drivers and “top problems to solve”. This process is
key to drive committed customers and value realization.
Aker BP invests in R&D across the whole value chain and
has a balanced portfolio of projects targeting knowledge
and methods, physical technology development, and digital/
software development. For 2022, R&D spend has been
around NOK 500 million for the combined Aker BP and
Lundin legacy R&D portfolio.
Investments in several big bet technologies have been
initiated through portfolio sanctioning processes in 2022
including new seismic acquisition methods and riser-less
drilling. Important progress has been made within remote
and automated operation through e.g. subsea robotics with
the AID (Autonomous Inspection Drone) set for commercial
operation on Deep Ocean’s IMR vessel Edda Fauna, and
hands-free lifting technology piloted offshore on Valhall.
Corporate governance
Aker BP believes that good corporate governance with clearly
defined roles and responsibilities between the owners, the
Board and executive personnel is crucial for the company to
deliver value to its shareholders.
The Board of Aker BP is responsible for maintaining the
highest corporate governance standards. The Board carries
out an annual review of the company’s principles. The
company complies with relevant rules and regulations for
corporate governance, including the most recent version of
the Norwegian Code of Conduct for Corporate Governance,
published on 14 October 2021, unless otherwise specified.
An account of corporate governance is provided in a separate
section of the annual report and on the company’s website.
The company has emphasised the importance of providing
accurate information in interim reports, capital market updates
and through direct dialogue with relevant authorities.
Reporting of payments to governments
Aker BP is reporting on payments to governments at
country and project level, in accordance with the Norwegian
Accounting Act § 3-3 d) and the Norwegian Securities
Trading Act § 5-5a. The report is provided in a separate
section of the annual report and on the company’s
website www.akerbp.com.
Director & Officer’s Liability Insurance
The directors and officers of Aker BP are covered under an
Aker group Director & Officer’s Liability Insurance (D&O).
The insurance covers personal legal liabilities including
defence- and legal costs. The officers and directors of the
parent company and all subsidiaries globally (owned more
than 50 percent) are covered by the insurance. The cover also
includes employees in managerial positions or employees who
become named in a claim or investigation.
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RISK FACTORS
Response and measures used to manage or mitigate our risks
are embedded in our governance and business management
system complemented by our risk management framework.
Risk management is integrated in our activities and permeates
and supports our decision-making. Communication of risks
arising across the value chain and assets is ensured by our
enterprise risk process, which encompasses all business units.
The risk factors highlighted below could have a material
adverse effect separately, or in combination, on our financial
condition. They are classified according to three categories:
Operational, Strategic and Financial. Aker BP must manage
these risks effectively to sustain its long-term success and
growth. This requires continuous monitoring, assessment,
and management of risks, as well as the implementation of
appropriate mitigation strategies to reduce exposure to these
risks. Some of the key company risks are summarized in the
section below.
Operational risks
Operational risks are risks associated with the day-to-day
operations of the company, including health, safety and
environmental (HSE) risks, production disruptions, and
technological challenges.
Systemic risks
The context and systems in which Aker BP operates may
be subject to abrupt changes or disruptions, affecting the
company and its resources’ ability to conduct business.
Infectious diseases spreading worldwide, and global financial
crisis are example of triggers for such risks which include
a large degree of uncertainty and may vary greatly in scale
and impact.
Impact
The company may face situations where there are extensive
strain or full-scale shortage of resources (e.g. personnel,
goods & services, finances) in the supply chain as a result
from systemic risk. Any such conditions could drain cash-flow,
have material negative effect on our financial condition, force
undesired change in strategic direction, and impact our ability
to conduct business and deliver production.
Mitigation in place
While comprehensive mitigating measures against systemic
risks are by nature impossible to put in place, the company
monitors developments on a continual basis, and the
executive management team is proactive with respect to
implementing measures to omit/avoid risks wherever possible.
Geopolitical situation
The ongoing conflict in Ukraine is creating significant threats
to the global political and economic stability. Several countries
have condemned the invasion by Russia, and severe sanctions
have been imposed on banks, certain oligarchs, and the
state itself.
The energy markets are heavily impacted by the invasion and
the following sanctions, and oil and gas and electricity prices
have remained at a high level since the announcement on
24 February 2022. There is significant uncertainty around
the breadth and duration of all disruptions related to the
situation, as well as its medium and long-term impact on the
global economy.
Impact
The geopolitical situation has caused significant business
disruption, volatility in international debt and equity markets
and disruption to the global economy in the short term.
The extent to which the invasion impacts the company’s
results will depend on future developments, which are
highly uncertain and difficult to predict. The ongoing conflict
in Ukraine could also potentially lead to increased risk of
cyber-attacks.
Mitigation in place
For impact on the supply chain see Supply chain risk. For
cyber security, see Information and cyber security risk.
Supply chain
The post pandemic supply chain delays continue to influence
capacity and resources in all industries, with long lead times in
manufacturing causing delays for spare parts and development
projects. In addition, there is an increasing activity level in the oil
and gas industry in Norway related to the Norwegian tax relief in
2022, fuelled also by the increased energy prices. Furthermore,
there is an increased activity level related to renewables projects
which may cause even higher pressure on the supply chain.
Integrity related risks may also affect the supply chain, with
potential risk of corruption, sanctions, violation, human rights,
and decent working conditions.
Impact
The high demand and limited capacity in the supply chain may
lead to higher manpower and fabrication cost as well as delays in
supply of critical deliverables.
Mitigation in place
Close follow up of key suppliers, as well as identifying and
securing capacity contribute to mitigating the supply chain risk.
Our Alliance Model also contributes to a more predictable and
reliable supply chain. Aker BP has a robust supplier due diligence
process in place to identify and address integrity risks related to
suppliers should they occur.
Consentration of operations
Aker BP’s production comes from a limited number of assets
on the Norwegian Continental Shelf. This concentration of
operations increases the vulnerability to long-term production
and development due to a total portfolio effect of any
changes or unexpected events.
Aker BP Annual Report 2022
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Impact
The whole company portfolio of operations may be impacted
at the same time, disrupting the ability to deliver on
production targets and greatly affecting the company cash
flow and financial situation.
Mitigation in place
While being concentrated on the Norwegian Continental
Shelf, the company assets are varied in their geographical
locations, age, and technical solutions. The highly skilled
organization in Aker BP is continuously working with our
assets to ensure high regularity and minimize the impact of
any unexpected event.
Organizational capacity and capability
The company operates in a competitive environment, and
its future growth prospect depends upon its ability to access
executive and senior management and key personnel.
Executive or senior personnel may terminate employment
with the company rendering certain knowledge and skills in
shortage. Large numbers of personnel leaving the company in
a short timeframe could be a significant challenge to replace or
find alternatives to recover.
Impact
The inability to fill positions and retain executive and senior
management and key personnel with needed skills and
expertise could have a longer-term adverse effect on our
business, financial position, and results of operations.
A lack of capacity would also potentially jeopardize our ability
to deliver on the large portfolio of projects and activities as well
as our ability to realize the company transformation and change
agenda.
Mitigation in place
It is a strategic priority for the company to be an attractive
employer. To attract and retain talent, Aker BP offers
competitive salaries and other benefits, and strong career
development opportunities to all employees. The company
has an active internal job market, which allows for multi-skill
competency development. Aker BP prioritises its employees’
work-life balance, and constantly strives to maintain a
supportive corporate culture to the benefit of its employees.
Delay of development projects
Aker BP’s current activity portfolio includes many
development projects. Oil and gas projects may be curtailed or
delayed for many reasons such as health and safety incidents,
quality issues, changes in installation schedules, delays in the
supply chain or missed targets.
Impact
The impact of issues in development projects includes the risk
of cost overruns and a delay in production that could affect
liquidity. Delays and cost overruns would also reduce the value
of the project portfolio and future operations.
Mitigation in place
A highly competent project organization is following the
Management System processes of Aker BP and our Alliance
Partners for developing and delivering projects. Our Alliance
Model enables alignment of interests between alliance
partners and the company, with risk sharing between the
parties and result in higher efficiency and fewer cost overruns.
Work to improve the Alliance Model and optimise the
incentive structures is continuously ongoing.
Evaluation of reserves and resources
Uncertainty in the evaluation of estimates of economically
recoverable reserves and inability to bring estimates into
resources and reserves.
Impact
The reserves, resources and estimated cash flows contained
in such evaluations could be reduced to the extent that such
activities do not achieve the expected value creation, and
such reductions may have a material adverse effect on the
company’s business, results of operations, cash flow and
financial condition.
Mitigation in place
The company allocates substantial resources to analysing and
understanding its reservoirs and continuously monitors, updates
and stress tests its resource models. Further, the company
applies a set of project decision criteria ensure that assets
are as robust as possible before making investment decisions.
These criteria include, but are not limited to, full-cycle NPV
breakeven criteria and CO
2
emissions intensity targets.
Health, Safety, Security, Environment and Quality
Exploration, development, and production of oil and gas involve
numerous safety and environmental hazards that may affect
our people, the environment, as well as cause material losses
or additional expenditures. Examples of such hazards are fires,
process-related events, collisions or well control issues, which
are all significant risks within the oil and gas industry.
Impact
Occurrence of any such significant events may directly or
indirectly result in material losses and adversely impact our
cashflow and financial position.
Mitigation in place
The company has a Management System in place which is
fundamental for safe operations and execution of safety critical
activities. This Management System is continuously improved
by incorporating lessons learned through the execution of
work and by implementing improvements identified through
assurance activities. The company also works continuously to
improve the HSE culture in all parts of its operations, onshore
and offshore.
Aker BP is also cooperating with Norwegian authorities
and Armed Forces to minimise the risk of external threats
to the company’s assets. The Norwegian Armed Forces
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increased its military readiness during 2022 in response to the
geopolitical development.
Information and cyber security risk
As in all industries, there is potential for cyber intrusion
leading to financial loss, information data loss, data privacy
infringement and system irregularities.
Impact
Misappropriate proprietary information, opportunity to commit
financial fraud and/or cause interruptions to the company’s
activities, including a reduction or halt in production. Such
attacks could, inter alia, include adversaries obtaining access
to company systems, the introduction of malicious computer
code or denial of service attacks. Such actual or perceived
breaches of network security could adversely affect the
company’s business performance, and reputation, and may
create exposure to the loss of information, litigation, and
possible liability.
Mitigation in place
Aker BP’s Board and management has cyber security high on its
agenda, and all employees are required to take annual courses
in cyber security. For more information about the company’s
approach to cyber security, see the Security chapter elsewhere
in this report.
Strategic risks
Strategic risks are related to the company’s long-term
strategies, including market and competitive risks,
technological shifts, and regulatory changes. For example,
the energy sector is undergoing significant changes, with a
shift towards renewable energy sources. Aker BP must ensure
that it is well-positioned to adapt to these changes to remain
competitive and sustain its growth.
Climate change
The path toward the future energy system is uncertain, and as
reflected by the International Energy Agency’s (IEA) forecasts
and scenarios, there is a wide range of different outcomes
for oil and gas demand. The impacts from climate change
and the role of oil and gas companies in the energy transition
present a range of strategic risks. Investors and lenders are
demanding more transparency on climate change impacts and
risks, and divestment may occur in the absence of evidence of
decarbonisation. Stricter climate regulations and policies may
impact the company, whether directly through carbon costs
and taxes, or indirectly through technology developments. In
addition, a negative public opinion of oil and gas companies
can lead to reputational impacts, share price erosion and an
inability to attract new talent.
Impact
In line with the framework proposed by the Task Force on
Climate-related Financial Disclosures (TCFD) and our climate
policy, we group our climate-related risks into two major
categories: (1) Transitional: risks related to the transition to a
lower-carbon economy and (2) Physical: risks related to the
physical impacts of climate change.
Transitional Market
The demand for oil and gas can decrease significantly faster
than anticipated, resulting in significantly lower oil and gas
prices. In anticipation of the faster energy transition, key
producers can shift their strategy to market share maximization,
driving down prices.
Transitional Regulatory and Legal
The European Union Allowance (EUA) price and/or Norwegian
CO
2
tax can increase faster and rise higher than what is
anticipated. Mandatory emission abatements can be enforced
that are not competitive with other uses of capital or are
Aker BP Annual Report 2022
27
uneconomic. Access to new acreage can be reduced, in which
case Aker BP’s and the Norwegian E&P industry’s longer-term
growth prospects would be reduced, which would also lead to
a potential increase in the cost of capital.
Transitional Technological
Technological breakthroughs (e.g., batteries, renewables,
hydrogen) and/or regulations can drive faster displacement
of oil and gas in energy and non-energy sectors. A faster and
bigger scale of electrification in Europe can result in higher
prices for power and increase our costs.
Transitional Reputational
Investors’ perception of oil and gas investments can
deteriorate, impacting availability and cost of capital. Also, the
oil and gas industry’s attractiveness can deteriorate, making it
difficult to attract and retain the right talent.
Physical
Changes in weather, both chronical and acute with higher
frequency of extreme events may impact working conditions
and the design of our installations and barriers. Those changes
could impact the operating cost, reducing the expected value
of our operations and assets.
Mitigation in place
Aker BP employs scenario analysis to assess potential
impacts of the climate change and energy transition on our
business, financial performance, and long-term strategy. We
evaluate selected scenarios to assess possible shifts in the
macroeconomic outlook, technology developments, policy,
and legal implications, and we analyse projected demand for
our products (oil, gas, and natural gas liquids). Each energy
transition scenario yields a range of commodity prices (e.g.,
power, gas, oil) and environmental fees and taxes. We apply
these assumptions in our valuation models to test the resilience
of our portfolio.
Ethics and compliance
Risk of non-compliance with legal regulations such as
anti-corruption, anti-Money Laundering and data Protection,
as well as non-ethical business practices like fraud, bribery,
and corruption. Non-compliance could lead to investigations
and litigation, as well as negative impacts on reputation with
shareholders, lenders, and other stakeholders.
Impact
Any mismanagement, fraud, or failure to satisfy fiduciary
or regulatory responsibilities, allegations of such activities,
or negative publicity resulting from such other activities, or
the association of any of the above with the company could
materially adversely affect our reputation and the value of
our brand, as well as our business, results of operations, cash
flows and financial condition, and our ability to attract and
retain talent.
Mitigation in place
Aker BP has implemented a robust anti-corruption program
to prevent, detect and mitigate risk of bribery and corruption.
The dedicated compliance department conducts regular risk
assessments of integrity risks to align the anti-corruption
program with the current risk profile. Employees and hired
personnel receive regular Code of Conduct training which
includes topics of anti-corruption. The company’s integrity
channel is available to employees, consultants and external
parties to report instances of non-compliance with applicable
laws and regulations, the company’s Code of Conduct or
broadly accepted ethical norms.
Laws and regulations
Changes to applicable laws, tax regulations and legislation,
or complexity thereof, could negatively affect the company,
lead to investigations, litigation, negative financial impact,
reputational damage and cancellation or modification of
contractual rights.
Impact
The government could require operators to adjust their future
production plans, effecting production and costs related to
development projects and our operations. We could incur
additional costs in the future due to compliance with these
requirements or because of violations of, or liabilities under,
laws and regulations, such as fines, penalties, clean-up costs
and third-party claims.
Changes to the tax regime could lead to new investments
being less attractive and challenge further growth of
the company.
Mitigation in place
The company continuously monitors developments in the
political landscape and is positioned to act promptly to changes.
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Financial risks
Financial risks are related to the company’s financial
performance and stability, including currency risks, interest
rate risks, and credit risks. For example, fluctuations in oil
prices can have a significant impact on Aker BP’s revenue
and profitability, and the company must manage its financial
exposure to these fluctuations effectively.
Market conditions
Shareholder value is affected by our inability to meet
stakeholder expectations and create value, either through
current business strategies or due to market conditions.
Prolonged volatility in oil and gas prices, the effect of the
pandemic or other market uncertainties, could erode the
profitability of some of the company’s assets; affect financial
earnings, cash flow generation and the overall investment
and liquidity position.
Impact
Certain development projects could become unprofitable
because of a decline in price and could result in the company
having to postpone or cancel a planned project or activity,
leading to a loss of opportunity or a negative economic
impact of specific projects.
Mitigation in place
To mitigate commodity pricing risk, the company has in place
a hedging policy, through which it may secure downside price
exposure on oil and gas by purchasing put options 12 months
forward, with the flexibility to extend beyond 12 months at the
CFO’s discretion. Further, the company continuously mitigates
currency price exposure by using forwards and options.
Financial liabilities and financing of the company
Adverse developments in the company’s operations or
projects, as well as adverse developments in oil and gas prices,
may lead to a need for additional capital, which could increase
the company’s debt levels above industry standards.
The company has covenants related to its financial
commitments. Failure to comply with financial covenants and
other covenants may entail material adverse consequences,
including the need to refinance, restructure, or dispose
of certain parts of, the company’s businesses to fulfil
the company’s financial obligations and there can be no
assurances that the company in such event will be able to
fulfil its financial obligations.
Impact
Should the financing of the company not be sufficient to meet
its financing needs, the company may, among other things,
be forced to reduce or delay capital expenditures or research
and development expenditures or sell assets or businesses at
unanticipated times and/or at unfavourable prices or other
terms, or to seek additional equity capital or to restructure or
refinance its debt.
This could have a material adverse effect on the company’s
business, prospects, financial condition, results of operations
and cash flows, and on the company’s ability to fund the
development of its business.
The company’s ability to deliver on its strategy may be
impacted by measures necessary to mitigate financial
liabilities and secure financing, thus reducing the overall
value of our activities and not realizing the full potential of
our investments.
Mitigation in place
The company has a holistic approach to its financial planning
and runs extensive financial stress tests on its planned activities
to ensure that the company meets financial robustness
criteria necessary to breach covenants and meets its
financial commitments.
The company works closely with financial advisers to identify
threats and opportunities and ensure that the company
maintains it financial strength. This includes, but is not limited
to, monitoring options for optimising the company’s balance
sheet and lowering interest expenses.
Financial reporting
Delayed or inaccurate financial reporting impacting external
reporting requirements. The company may face the risk of
regulatory action, fiscal uncertainty, shareholder lawsuits and
loss of investor confidence.
Impact
Such errors and omissions, should they be significant, could
drain senior management attention and require measures
diverting efforts and prospects for growth. Inaccuracies
could adversely affect our strategic decision making,
productivity, slow growth and therefore may impact our cash
flows and financial condition. The company’s reputation and
goodwill could also be adversely affected.
Mitigation in place
Financial reporting is subject to internal controls, a regular
management reporting process and is verified by audits.
The Aker BP Audit and Risk Committee (ARC) is responsible
for the oversight of the internal controls, risk management and
audit process and making recommendations or proposals to
improve the integrity of reporting. Details on the committee’s
work is available in the Corporate Governance section of the
annual report.
Interest and currency
As a result of the company carrying debt, a rise in interest
rates carries a risk. A foreign exchange risk exists in relation
to market fluctuations of foreign currencies, given that the
underlying value of the company’s assets is predominantly
USD denominated, whilst certain costs are denominated in
other currencies.
Aker BP Annual Report 2022
29
Impact
Increasing interest rates and unfavourable fluctuations in
exchange rates may affect the company’s earnings and free
cash flow potential.
The company is exposed to market fluctuations in foreign
exchange rates since the company reports profit and loss
and the balance sheet in USD. Revenues are in USD for oil
and in GBP and EUR for gas, while operational costs and
investments are in several other currencies and mainly in
USD, NOK and EUR in addition to USD. Moreover, taxes
are calculated and paid in NOK. Volatility in exchange rates
generally represents increased risk for the company.
Mitigation in place
The company’s long-term debt is primarily based on fixed
interest rates, minimizing the exposure to the interest rate risk.
The company actively manages its foreign currency exposure
through a mix of forward contracts and options, however
significant fluctuations in exchange rates between USD
and NOK could adversely affect the liquidity position of the
company. Hedging instruments are used to manage this risk.
EVENTS AFTER THE REPORTING PERIOD
On 10 January 2023, Aker BP was offered 17 new licenses,
including nine operatorships in the Awards in Predefined
Areas (APA) 2022 licensing round.
On 23 February 2023, Aker BP disbursed USD 347.6 million
in dividends to shareholders (USD 0.55 per share).
One of the PDOs submitted in December was for the
Troldhaugen project in the Edvard Grieg area. The execution
of this project was subject to the performance of an extended
well test (EWT). Based on the experience from this EWT, the
expected recoverable volume for the Troldhaugen project has
been reduced. The project is no longer considered to have
sufficient financial robustness, and the partners in March
2023 decided not to accede to the PDO.
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SIGNATURE PAGE
BOARD OF DIRECTORS
The Board of Directors and the CEO of Aker BP ASA
Fornebu, 15 March 2023
ØYVIND ERIKSEN
Chairman of the Board
ANNE MARIE CANNON
Deputy Chair
KATE THOMSON
Board member
KJELL INGE RØKKE
Board member
TERJE SOLHEIM
Board member
TROND BRANDSRUD
Board member
TORE VIK
Board member
MURRAY AUCHINCLOSS
Board member
HILDE KRISTIN BREVIK
Board member
VALBORG LUNDEGAARD
Board member
CHARLES ASHLEY HEPPENSTALL
Board member
INGARD HAUGEBERG
Board member
KARL JOHNNY HERSVIK
Chief Executive Officer
Aker BP Annual Report 2022
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REPORTING OF PAYMENTS TO
GOVERNMENTS
This report is prepared in accordance with the Norwegian
Accounting Act Section § 3-3 d) and Securities Trading Act §
5-5 a). It states that companies engaged in activities within
the extractive industries shall annually prepare and publish
a report containing information about their payments to
governments at country and project level. The Ministry of
Finance has issued a regulation (F20.12.2013 nr 1682 – “the
regulation”) stipulating that the reporting obligation only apply
to reporting entities above a certain size and to payments
above certain threshold amounts. In addition, the regulation
stipulates that the report shall include other information than
payments to governments, and it provides more detailed rules
applicable to definitions, publication and group reporting.
The management of Aker BP has applied judgment in the
interpretation of the wording in the regulation with regard
to the specific type of payment to be included in this report,
and on what level it should be reported. When payments are
required to be reported on a project-by-project basis, it is
reported on a field and/or license basis. Only gross amounts
on operated licences are reported, as all payments within the
licence performed by non-operators will normally be cash
calls transferred to the operator and will as such not represent
payments to the government.
As described in note 2 to the financial statements, Aker BP
finalized the acquisition of the oil and gas activity in Lundin
Energy on 30 June 2022. The oil and gas activity in Lundin
Energy was conducted in the legal entity Lundin Energy
Norway AS (renamed to ABP Norway AS at 30 June 2022),
and the figures below include payments from ABP Norway
AS from 30 June. At 31 December 2022 ABP Norway AS was
merged with Aker BP ASA and group reporting in line with §5
in the regulation is thus not deemed applicable. Reference
is also made to information about transactions with related
parties in note 28 to the financial statements.
At year end 2022, Aker BP ASA had one subsidiary within
the extractive industry. Reference is made to note 3 to the
financial statements for a description the UK subsidiary
Aker BP UK limited. The company’s activity is limited to
one exploration license on the UK continental shelf. There
is no employees or revenue in the company. The financial
statements for 2022 have not yet been finalized.
REPORTING OF PAYMENTS
The regulation’s Section 2 no. 5 defines the different types of
payments subject to reporting. In the following sections, only
those applicable to Aker BP will be described.
Income tax
The income tax is calculated and paid on corporate level and
is therefore reported for the whole company rather than
licence-by-licence. In 2022 the Aker BP group paid NOK 52
979 979 936 (including interest) in income tax to Norway and
GBP 3 090 in income tax to United Kingdom. The payments
are mainly related to income tax for income year 2021 and
2022.
CO
2
tax
CO
2
tax is to some extent included in the fuel price/rig rental
paid to external rig companies. The CO
2
tax paid on the
Alvheim field includes the fields tied in to the Alvheim FPSO
(Vilje, Volund, Bøyla and Skogul) as Alvheim performs the
payment and charges the other fields via opex share.
Name of field/license CO
2
tax paid in 2022 (NOK)
Alvheim 125 518 715
Edvard Grieg 75 066 325
Hod 7 453 219
Ivar Aasen 9 074 545
Skarv 117 542 073
Ula 95 187 431
Valhall 12 922 469
Total CO
2
tax paid 442 764 779
NO
x
The company is a member of the NO
x
fund and all NO
x
payments are made to this fund rather than to the
government.
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Payments to governments
Area fee
The table below specifies the area fee paid by Aker BP on
behalf of the various licences in 2022. Licenses of which the
company has received net refund of area fee are not included
in the figures.
Name of field/license Area fee paid in 2022 (NOK)
Alvheim 12 240 000
Bøyla 4 590 000
Edvard Grieg 2 856 247
Hod 2 450 000
Lille Prinsen 4 730 441
Rolvsnes 12 546 000
Skarv 20 655 000
Skogul 306 000
Solveig 6 500 000
Tambar 453 000
Trell & Trine Unit 4 419 000
ULA 4 789 000
Valhall 8 624 000
Vilje 931 000
Volund 765 000
PL 102D 5 049 000
PL 127C 791 408
PL 146 14 880 293
PL 159D 1 071 000
PL 212E 2 142 000
PL 261 6 885 000
PL 442 41 345 115
PL 492 9 180 000
PL 501 4 437 000
PL 533 4 590 000
PL 609 5 933 491
PL 784 8 297 013
PL 818 2 637 408
PL 838 2 355 479
PL 942 2 873 425
PL 1057 8 019 978
Total 215 092 276
OTHER INFORMATION REQUIRED TO BE
REPORTED
When companies are required to report payments as the
above, it is also mandatory to report on investments, sales
income, production volumes and purchases of goods and
services in the country in which companies have activities
within the extractive industries. As mentioned above, Aker
BP operates on the Norwegian Continental Shelf only. This
reporting requirement is therefore deemed to be met by the
financial statements as specified below:
– Net cash flow from investment activities for 2022
amounted to USD 3 116 596 thousand, as specified in
the cash flow analysis in the financial statements
– Sales income (Petroleum revenues) in 2022 amounted to
USD 12 896 182 thousand, as specified in Note 6 to the
financial statements
– Total production in 2022 was 112 853 thousand barrels
of oil equivalents, see Note 7 to the financial statements
– For information about purchases of goods and services,
reference is made to the Income Statement and the
related notes
Country-by-country Report
In accordance with OECD requirements and the Norwegian
Tax Administration Act § 8-12, multinational groups with total
income above NOK 6.5 billion shall report key financial data
and economic activity in the countries where the groups
operate. Aker BP has provided a Country-by-Country Report
(CbCR) to The Norwegian Tax Administration with 2021 data
for the subsidiaries Aker BP controls, distributed into two tax
jurisdictions (Norway and UK). The CbCR provides information
per tax jurisdiction of revenue split between third-party and
related-party revenues, profit before tax, accrued and paid
corporate taxes, capital and earnings, number of employees
and tangible assets.
Aker BP Annual Report 2022
33
BOD’S REPORT ON CORPORATE
GOVERNANCE
Aker BP ASA (Aker BP) aims to ensure the greatest possible value creation to shareholders
and society over time in a safe and prudent manner. An effective governance framework
with a clear division of responsibility and roles between the owners, represented by the
shareholders in the General Meeting, the Board of Directors and corporate management is
crucial to achieve this.
1. IMPLEMENTATION AND REPORTING
ON CORPORATE GOVERNANCE
The Board of Aker BP is responsible for actively adhering to
sound corporate governance standards.
Aker BP is a Norwegian public limited liability company (ASA),
listed on Oslo Børs and established under Norwegian laws. In
accordance with the Norwegian Accounting Act, section 3-3b,
Aker BP includes a description of principles for corporate
governance as part of the Board of Directors’ Report in the
annual report or alternatively makes a reference to where this
information can be found.
The Norwegian Corporate Governance Board (NCGB)
has issued the Norwegian Code of Practice for Corporate
Governance (the Code of Practice). The Code of Practice can
be found on www.nues.no. Adherence to the Code of Practice
is based on the “comply or explain” principle, which means
that a company must comply with all the recommendations
of the Code of Practice or explain why it has chosen an
alternative approach to specific recommendations.
Oslo Børs requires listed companies to publish an annual
statement of their policy on corporate governance in
accordance with the Code of Practice in force at the time.
Issuer Rules for companies listed on Oslo Børs is available at
www.euronext.com/en/markets/oslo.
Aker BP complies with the current edition of the Code of
Practice, issued on 14 October 2021, unless otherwise
specifically stated. The following statement on corporate
governance is structured in the same way as the Code of
Practice, thus following the 15 chapters included in the Code
of Practice.
More detailed reporting on corporate governance issues can
be found on our website www.akerbp.com, in this Annual
report and in our Sustainability/ESG report.
Deviations to the code: None
2. BUSINESS
According to Aker BP’s Articles of Association article 3,
its objective is ”to carry out exploration for, and recovery of,
petroleum and activities related thereto, and, by subscribing
for shares or by other means, to participate in corresponding
businesses or other business, alone or in cooperation with other
enterprises and interests”. The complete Articles of Association
is available on the company’s website.
Through an annual strategy process, the Board defines and
evaluates the company’s purpose and objectives, values
and main strategies, and risk profiles for the company’s
business activities such that the company maximise long
term value creation for shareholders. Environmental, social
and governance issues are an important part of the Board’s
annual strategy process. Together with the company’s financial
status, the objectives of the company are communicated to
the market.
Aker BP’s vision is to be the E&P company of the future, with
safe and efficient operations, low cost, low emissions and a
leading role in the transformation of the industry. To achieve
this, the company will carry out exploration, development
and production activities and be opportunistic in its
approach to buying and selling interests in companies, fields,
and discoveries.
The COVID-19 pandemic continued to cause uncertainty and
disruption to the global economy in 2022. Since the onset of
the pandemic in the beginning of 2020, the Board’s objective
has been to make sure that Aker BP took all necessary
measures to protect its people and operations from the
virus, and to make sure the company is prepared to handle
the potential operational and financial consequences of
the situation.
The company maintains a Code of Conduct to ensure that
employees, hired personnel, consultants, and others acting
on behalf of Aker BP, operate in a consistent manner with
respect to ethics and good business practice. The Code of
Conduct clarifies the company’s fundamental ethical values
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Corporate governance
and is a guideline for those making decisions on behalf of
the company. Aker BP requires that all its employees and
consultants complete a mandatory annual Code of Conduct
refresher course. In addition, Aker BP also maintains a Human
rights policy to clarify its human rights commitments and
describe how the company manages human rights impacts
in the supply chain and across its operations. The Code of
Conduct and the Human Rights Policy are available on the
company’s website.
The company demonstrates responsibility through actions,
the quality of its work, the projects, products and all its
activities. The company’s ambition is that business activities
shall integrate social, ethical, and environmental goals and
measures. As a minimum, Aker BP will comply with laws,
regulations, and conventions in the areas where the company
operates, but the established set of ethical guidelines
extends beyond such compliance. Established procurement
procedures secure non-discrimination and transparency in
the procurement processes, which also include environmental
decision criteria. Aker BP has established an anti-corruption
compliance program, and it is also stated in the Code of
Conduct that no form of corruption is tolerated. Aker
BP’s Anti-Corruption Policy sets out in more detail the
company’s expectations regarding the actions of Aker BP
representatives and business partners and is available on the
company’s website.
In addition, the company has a sponsorship policy and
program to promote the company and its activities. Guidelines
for the use of sponsorships are included in the sponsorship
policy and in the Code of Conduct. Aker BP supports
measures that improve the company’s brand and profile,
and measures that can be for the benefit of the employees.
Information about ongoing sponsorships is available on the
company’s website.
The company routinely conducts impact assessments as an
integrated part of the sanctioning process of projects, for
the purpose of evaluating the effects that a development or
a facility and its operation could have on the environment,
including cultural monuments and cultural environment,
natural resources, and society.
The company integrates considerations related to its
stakeholders into its value creation and shall achieve its
objectives in accordance with the Code of Conduct. In Aker
BP’s annual Sustainability Report, the company describes
its business activities in terms of sustainability performance
and development, its approach to environmental, social and
governance (ESG) issues and presents a balanced picture of
the opportunities and challenges it encounters in this area and
how it works to address them. The report is available on the
company’s website.
Deviations to the code: None
3. EQUITY AND DIVIDENDS
The Board seeks to optimise the company’s capital structure
by balancing risk and return on equity against lenders’ security
and liquidity requirements. The company aims to have a
good reputation in all debt and equity markets. The Board
continuously evaluates the company’s capital structure to
ensure a capital and debt structure that is appropriate to the
company’s objectives, strategy, and risk profile. This involves
monitoring available funding sources and related cost of capital.
It is the company’s goal that over time, Aker BP’s shareholders
shall receive a competitive return on their investment through a
combination of increased share price and cash dividends.
The company’s dividend policy is an integrated part of its
overall capital allocation framework, together with and
dependent on its financing and investment policies. The
ambition is to provide a reliable dividend which grows in line
Aker BP Annual Report 2022
35
with Aker BP’s long-term value creation. Aker BP pays dividends
in cash on a quarterly basis.
The Annual General Meeting (AGM) in April 2022 authorised
the Board to approve the distribution of dividends based on
the approved annual accounts for 2021, to facilitate quarterly
dividend payments.
In 2022, the company paid USD 2.0 per share in dividends. For
2023, the Board has resolved to increase the dividend level to
USD 2.2 per share.
The company’s financial liquidity is strong with cash and cash
equivalents of USD 2,756 million and undrawn amounts
on committed credit facilities of USD 3.4 billion as of 31
December 2022.
Aker BP is currently rated by three rating agencies, S&P, Fitch,
and Moody’s, all of which have assigned Investment Grade (IG)
credit ratings to the company. S&P Global Ratings and Fitch
have both assigned a BBB long-term corporate credit rating
with stable outlook, and Moody’s has assigned a Baa2 rating
with stable outlook.
In the company’s capital allocation framework, maintaining
financial flexibility and protecting the IG credit profile has the
highest priority. This means that, if necessary, the company
will adjust its plans for investments and dividends to protect its
balance sheet. This was last demonstrated in 2020 at the onset
of the Covid-19 pandemic.
At the end of 2022, the company’s book equity was USD
12.4 billion, which represents 33 percent of the balance sheet
total of USD 37.6 billion. The market value of the company’s
equity was USD 19.6 billion (NOK 192.2 billion) on 31
December 2022.
At the 2022 AGM, the merger of Lundin Energy MergerCo
AB (publ) and Aker BP ASA was approved, including a share
capital increase in connection with the merger. The merger was
completed on 30 June 2022, and 271,908,701 new ordinary
shares were issued as part of the merger consideration. The
company’s new share capital is accordingly NOK 632,022,210,
divided into 632,022,210 shares, each with a nominal value of
NOK 1.00.
In April 2022, the AGM authorised the Board to increase the
share capital by a maximum of NOK 18,005,675, representing
up to five percent of the total share capital at the time of such
meeting. The authorisation can be utilised for share capital
increases to strengthen the company’s equity, convert debt
into equity and fund business opportunities. At the time of this
report, this mandate has not been used.
The AGM in April 2022 also provided the Board with a
mandate to acquire treasury shares representing up to five
percent of the total share capital at the time of such meeting.
The mandate is valid until the AGM in 2023. As per 31
December 2022, the mandate had only been used in part and
in connection with the share savings plan for employees. The
company’s employees subscribed for a total of 596,590 shares
(approximately 0.1 percent of total shares outstanding). After
delivery of these shares, Aker BP held 229,065 treasury shares
at the end of 2022.
Deviations to the code: None
4. EQUAL TREATMENT OF SHAREHOLDERS
AND TRANSACTIONS WITH CLOSE
ASSOCIATES
The company has one class of shares and all shares carry the
same rights.
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When the company considers it to be in the best interest of
shareholders to issue new equity there is a clear objective
to limit the level of dilution. Aker BP will carefully consider
alternative financing options, its overall capital structure,
the purpose and need for new equity, the timing of such an
offering, the offer share price, the financial market conditions,
and the need for compensating existing shareholders if
pre-emption rights are waived. Arguments for waiving
pre-emption rights will be clearly stated.
If the Board decides to use its current authorisation to
re-purchase company shares, the transactions will be carried
out through the stock exchange or at prevailing stock
exchange prices if carried out in any other way.
As per 31 December 2022, Aker ASA (Aker) owned 21.16
percent and bp p.l.c. (bp) owned 15.87 percent of Aker BP.
Aker and bp both account for Aker BP in accordance with the
equity method.
Aker BP is committed to equal treatment of all shareholders.
The Board is of the view that it is positive for Aker BP that
Aker and bp assume the role of active owners and are actively
involved in matters of major importance to Aker BP and to
all shareholders. The cooperation with Aker and bp offers
Aker BP access to expertise and resources within upstream
business activities, HSSEQ, technology, strategy, transactions,
and funding. It may be necessary to offer Aker and bp
special access to commercial information in connection with
such cooperation. Any information disclosed to Aker’s and
bp’s representatives in such a context will be disclosed in
compliance with the laws and regulations governing the stock
exchange and the securities market.
Applicable accounting standards and regulations require Aker
and bp to prepare their consolidated financial statements
to include accounting information of Aker BP. Aker BP is
considered an associate of Aker and bp under the applicable
accounting standard. To comply with these accounting
standards, Aker and BP have in the past received, and will
going forward receive, unpublished accounting information
from Aker BP. Such distribution of unpublished accounting
information from Aker BP to Aker and bp is executed under
strict confidentiality and in accordance with applicable
regulations on the handling of inside information.
The Board recognises Aker’s and bp’s contribution as active
shareholders. Investor communication seeks to ensure that
any shareholders can contribute, and management will
actively meet with and seek the views of shareholders.
Aker BP has no related parties, as defined in the Public
Limited Liability Company Act (Allmennaksjeloven).
The company has nevertheless established a policy for
transactions with such parties. This policy requires that any
material business acquisitions or agreements with any related
parties which are not part of Aker BP’s ordinary course of
business are subject to an independent valuation. The Board
of Directors and executive management are very conscious
that all relations with Aker and bp, their subsidiaries and other
companies in which Aker or bp have ownership interests or
entities they have significant control over, shall be premised
on commercial terms and are entered into on an arm’s length
basis. Transactions with Aker and bp controlled companies
are described in the financial statements’ disclosure about
transactions with related parties.
Deviations to the code: None
5. SHARES AND NEGOTIABILITY
Aker BP’s shares are freely negotiable securities and the
company’s Articles of Association do not impose any form of
restriction on their negotiability.
The company’s shares are listed on Oslo Børs and the
company works actively to attract the interest of new
Norwegian and foreign shareholders. Strong liquidity in the
company’s shares is essential for the company to be viewed as
an attractive investment and thus achieve a competitive cost
of capital.
Deviations to the code: None
6. GENERAL MEETINGS
The General Meeting of shareholders is the company’s highest
authority and elects the Board of Directors as the highest
governing body. The Board strives to ensure that the General
Meeting is an effective forum for communication between the
shareholders and the Board and encourages shareholders to
participate in the meetings.
The Board can convene an extraordinary General Meeting
at any time. A shareholder or a group holding at least five
percent of the company’s shares can request an extraordinary
General Meeting. The Board is then obliged to hold the
meeting within one month of receiving the request.
Preparation for General Meetings
The AGM is normally held before the end of April each year,
and no later than the end of June, which is the latest date
permitted by the Public Limited Liability Companies Act. The
date of the next AGM is normally included in the company’s
financial calendar, which is available on the company’s
website.
The notice of a General Meeting is sent to shareholders and
published on the company’s website and the stock exchange,
no later than 21 days prior to the meeting.
Article 7 of the company’s Articles of Association, about
the General Meeting, stipulates that documents concerning
matters to be considered by the General Meeting will be
made available to the shareholders on the company’s website.
This also applies to documents that are required by law to
be included in or enclosed with the notice of the General
Meeting.
Aker BP Annual Report 2022
37
The supporting documentation provides the necessary
information for shareholders to form a view on the matters to
be considered.
Participation in a General Meeting
All shareholders are entitled to participate in the general
meeting. According to Article 7 in the Articles of Association,
the right to attend and vote at the General Meeting can only
be exercised when the share transaction is recorded in the
shareholder register no later than the fifth business day prior
to the General Meeting (registration date).
Shareholders who are unable to attend a General Meeting are
encouraged to vote by proxy or in writing, and instructions
for how to do this are included with the notice. Voting and
appointment of proxy can also be done electronically through
the VPS web portal. Separate voting instructions can be
given for each matter to be considered by the meeting. The
deadline for registration is set as close as possible to the date
of the meeting, normally the day before.
Conduct of a General Meeting and agenda for AGM
The Board proposes the agenda for the AGM. The main
agenda items are determined by the requirements of the
Public Limited Liability Companies Act and Article 7 in the
company’s Articles of Association.
Before the AGM, the Board will nominate a person who
can vote on behalf of shareholders as their authorised
representative. Shareholders may cast their votes in writing,
including by means of electronic communication, in a period
prior to the General Meeting. Appropriate arrangements are
made for shareholders to be able to vote on each individual
matter.
The chair of Aker BP’s General Meetings is elected by the
General Meeting itself.
The Code of Practice states that it is appropriate that all
members of the Board should attend General Meetings.
Representatives from the Board, the nomination committee,
the auditor, and the executive management will attend the
AGM.
Minutes of General Meetings are published on the company’s
website and through a stock exchange announcement.
Deviations from the code: The Code of Practice recommends
that all members of the Board are present at the General
Meeting and that the chairman of the Nomination Committee
should attend the AGM. Due to the nature of discussions
at General Meetings, Aker BP has not deemed it necessary
to require all Board members and the chairman of the
Nomination Committee to be present.
7. NOMINATION COMMITTEE
Article 8 in the company’s Articles of Association stipulates
the composition of and states the main duties of the
Nomination Committee.
The company’s Nomination Committee shall consist of three
members elected by the General Meeting. The Nomination
Committee should be composed in such a way that it
represents a wide range of shareholders’ interests, and if
possible, both genders should be represented. More than half
of the members shall be independent of the Board and the
executive management, and the members shall be elected for
a period of two years at a time.
The Nomination Committee shall propose candidates for - and
remuneration to - the Board of Directors and the Nomination
Committee and justify its recommendation for each candidate
separately. The Nomination Committee’s recommendations
shall be well-grounded. When reporting its recommendations
to the General Meeting, the Nomination Committee provides
an account of how it has carried out its work.
The Nomination Committee ensures that the shareholder’s
views are taken into consideration when candidates are
proposed. The committee also ensures that the proposed
composition of the Board covers all relevant fields of
competence, and that the requirement of at least 40 percent
of each gender on the Board is met.
Shareholders have an opportunity to submit proposals to the
committee. The electronic mailbox for submitting proposals to
the committee, with deadlines for submitting proposals where
such apply, is accessible through the company’s website at
www.akerbp.com/proposecandidate.
At the EGM in August 2022, Svein Oskar Stoknes was
re-elected as the Chair of the Nomination Committee, and
Ingebret Hisdal and Donna Riley were re-elected as members
of the Nomination Committee for a term of two years
until the AGM in 2024. No members of the committee are
members of the executive management or the Board of Aker
BP.
Deviations from the code: None
8. BOARD OF DIRECTORS:
COMPOSITION AND INDEPENDENCE
The Board of Aker BP consisted of 12 members as of 31
December 2022. The company’s Articles of Associations were
changed in connection with the Lundin transaction to allow
for additional board members and employee representatives.
Article 5 stipulates that the Board shall consist of up to 14
members. As required for all Norwegian public limited liability
companies, each gender shall be represented by at least 40
percent of the Board members (not applicable to employee
representatives).
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Corporate governance
The general meeting elects the Board members and Chairman
of the Board. The term of office for members of the Board is
two years at a time.
Among the shareholder-elected Board members, two
(Kjell Inge Røkke and Øyvind Eriksen) are affiliated with
the company’s largest shareholder Aker, and two (Murray
Auchincloss and Kate Thomson) are affiliated with the
company’s second largest shareholder bp. All other Board
members are considered independent, defined as individuals
who don’t have a material or pecuniary relationship with the
company either directly or through one of the company’s
partners, main shareholders, or management members. All
Board members are considered independent of the company’s
executive personnel.
In 2022, the Board conducted a total of 8 Board meetings.
Participation was 88 percent.
The Board composition ensures alignment of interests with
all shareholders and members of the Board are encouraged
to own shares in the company. It is the Board’s view that the
Board collectively meets the need for expertise, capacity, and
diversity. Aker BP’s Board members have extensive industrial
and managerial experience from the oil and energy sector as
well as from the finance industry.
The average tenure of the current Board members is six years.
An overview of the expertise of the Board members is
available on the website: akerbp.com/en/board-of-directors.
Deviations from the code: None
9. THE WORK OF THE BOARD OF
DIRECTORS
The Board has authority over and is responsible for
decision-making on, and supervision of, the company’s
business operations and management, including strategies
and targets related to sustainable development, and has
adopted a yearly plan for its activities. The Board handles
matters of major importance, or of an extraordinary nature
and may in addition require management to refer any
matter to it. The objectives of the Board’s work are to
create value for the company’s shareholders in both the
short and long term and to ensure that Aker BP fulfils its
obligations. An important task for the Board is to appoint the
CEO and while the CEO is responsible for the day-to-day
management of the company’s business activities, carried
out by the Executive Management Team (EMT), the Board
acknowledges its responsibility for the overall management
of the company. The Board is responsible for:
A. Reviewing strategic plans and supervising these through
regular reporting and feedback,
B. Reviewing significant risks to Aker BP’s activities and
overseeing the establishment of appropriate systems to
monitor and manage such risks,
C. Ensuring that shareholders have access to timely and
correct information about financial circumstances and
important business-related events in accordance with
relevant legislation, and
D. Ensuring the establishment and securing the integrity of
the company’s internal control and management systems.
Aker BP Annual Report 2022
39
The Board recognises the significant risks associated
with operations. Consequently, the Board has dedicated
significant resources and time to understand and discuss not
only general risks facing an E&P company, but also inherent
risks connected to organization, culture, and leadership.
For a company like Aker BP, the Board views the risks in
taking on an operated development project and meeting
the required financing for its entire portfolio as well as
taking on operated assets, to be among the most significant
risks. Accordingly, this is where the mitigating efforts are
concentrated.
In addition to the above-mentioned responsibilities, the
Board also develops, approves, monitors, and updates the
company’s sustainability strategies, policies, and goals.
The Board’s work in this regard includes, but is not limited
to, approval of business plans in which emissions are an
important decision criterion, and of initiatives to lower
emissions from own operations as well as in the supply
chain.
Aker BP’s decarbonisation strategy consists of the following
key ambitions:
– Reduce gross Scope 1 and Scope 2 GHG emissions by 50
percent by 2030 and be close to zero by 2050 through
investments in electrification, energy efficiency and
portfolio management
– Reduce the company’s carbon intensity to below 4 kg
CO
2
per boe by 2023
– Achieve net zero emissions across operations by 2030
by neutralising any residual emissions with high-quality
carbon removal projects
Keep the methane intensity below 0.1 percent. The work of
the Board is based on the rules of procedure describing the
Board’s responsibility including the division of roles between
the Board and the CEO. There are specific instructions to
guide the work of the CEO. The CEO, CFO and the company
secretary attend all Board meetings. Other members of
the company’s executive management attend the Board
meetings by invitation and as necessary due to specific
matters. If the Chair of the Board has been personally
involved in matters of a material character, the Deputy Chair
takes over the tasks of the chair directing the Board’s work
in the specific matter.
Considering the size of the company and the scope of its
activities, the Board finds it appropriate to keep all Board
members informed about all Board matters, except for cases
where Board members may have conflicting interests with
the company.
The Board regularly carries out self-evaluations of its
own performance, including evaluations of the Board’s
competence and potential areas for strengthening this
competence. The head of the Audit and Risk Committee
conducts one-on-one discussions with all board members
as part of these self-evaluations. The latest self-evaluation
was carried out by the Board at the turn of the year, and the
results of the self-evaluations are communicated to and used
by the Nomination Committee in its work.
The Board members and executive personnel are responsible
for making the company aware of any material interests
that they may have in items to be considered by the Board.
The company’s Code of Conduct requires all Aker BP
representatives to act impartially in all business matters and
provides clear guidelines on how to act in situations where
there is a risk of conflicts of interest and partiality.
The Board of Directors has two sub-committees: The Audit
and Risk Committee (ARC) and the Compensation and
Organisational Development Committee.
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Audit and Risk Committee
The Board has established an Audit and Risk Committee (ARC)
consisting of the following Board members:
– Trond Brandsrud, Chair
– Anne Marie Cannon
– Kate Thomson
All members are independent of the company’s executive
management. Anne Marie Cannon sits on the Board of Directors
in Aker Energy AS, which is 50 percent owned by Aker. Kate
Thomson is SVP Finance Production & Operations at bp.
The Chair of the Audit and Risk Committee is considered to
have experience and formal background qualifying as “financial
expert” according to the requirement stated in the Public Limited
Liability Company Act. From 2016 to 2019, he held several
CEO and CFO roles in the financial services companies Lindorff,
Intrum and Lowell, and from 2010 to 2015, he served as the
Group Chief Financial Officer of Aker ASA. He has also been
Chief Financial Officer in Seadrill, and he has held several leading
financial positions in Shell for 20 years, both in Norway and
globally.
The Audit and Risk Committee assists the Board’s responsibilities
within integrity of financial reporting and the financial reporting
process. The committee holds regular meetings and reviews the
quality of all interim and annual reports before they are reviewed
by the Board of Directors and then published. The Audit and Risk
Committee also reviews the Sustainability report. In 2022, the
committee held eight meetings.
The Audit & Risk committee had responsibility for the company’s
election of new auditor PwC, which was formally decided by the
annual general meeting in April 2022. The company’s auditor
works closely with the Audit and Risk Committee and attended
all meetings during the year. The committee informs the Board
of the result of the audit, including how the audit contributed
to the integrity of the financial reporting. The committee also
oversees the company’s financial risk management, internal audit,
and monitors and reviews the company’s business risks. The
Audit and Risk Committee oversees Aker BP’s anti-corruption
compliance program and handling of reports submitted via the
company’s whistleblowing channel.
The management and the Audit and Risk Committee evaluate
the risk management on financial reporting and the effectiveness
of established internal controls. Identified risks and effects of
financial reporting are discussed on a quarterly basis.
It is the view of the committee that cooperation between the
auditor and executive management is good. The Audit and Risk
Committee works together with executive management and the
auditor to improve the internal control environment according
to the principles of the COSO (Committee of Sponsoring
Organizations of the Treadway Commission) framework.
Compensation and Organizational Development
Committee
The Board has a Compensation and Organizational
Development Committee consisting of the following three
Board members:
– Øyvind Eriksen, Chair
– Anne Marie Cannon
– Terje Solheim
The Compensation and Organizational Development
Committee is established to ensure that remuneration
arrangements support the strategy of the business and
enable the recruitment, succession planning and leadership
development, and motivation and retention of senior
executives. It needs to comply with the requirements of
regulatory and governance bodies, satisfy the expectations of
shareholders and remain consistent with the expectations of
the wider employee population. Further, the committee shall
ensure that the overall organizational structure is set up to
deliver on the company’s strategy going forward. In 2022, the
committee held eight meetings.
In addition to the above-mentioned committees, the Board
may appoint various ad hoc sub-committees when required,
with a limited timeframe and scope. The authority of a
sub-committee is limited to preparing items and making
recommendations to the Board.
Oversight of HSSE and operational risks
The oversight of health, safety, security, and environmental
matters (HSSE) is retained directly by the Board. HSSE issues,
including cyber security, is at the top of the agenda in every
single Board meeting.
In addition, the Board has established a Safety and
Environmental Assurance Committee (SEAC) to strengthen
the administration work on health, safety, cyber security,
and environmental matters. The committee reports to the
Board on a quarterly basis and has in 2022 consisted of the
following members:
– Fawaz Bitar, SVP HSE & Carbon, bp – Chair of the
committee
– Karl Johnny Hersvik, CEO, Aker BP
– Marit Blaasmo, SVP HSSEQ, Aker BP
– Knut Sandvik, SVP Projects, Aker BP
– Mike Zanghi, VP Safety and Operational Risk assurance,
Wells, bp
– Doris Reiter, SVP North Sea, bp
– Tommy Sigmundstad, SVP Drilling and Well, Aker BP
– Kelli Gustaf, Business Advisor, HSE & Carbon, bp
– Gemma Nicholson, North Sea Finance Manager/Business
Manager Aker BP, bp
– Georg Vidnes, SVP Operations, Aker BP
SEAC assures that the HSSE work is adequately and properly
organised and addressed throughout the entire company and
that the HSSE policy and governing processes are embedded
Aker BP Annual Report 2022
41
in all operations. In addition, SEAC shall:
– Review all risks related to operating activities, including
operational integrity and technical and mechanical
integrity of wells
– Review all risks related to cyber security
– Share learnings from incidents by in-depth analysis in the
relevant areas of mutual interest or incident follow-up
– Align leadership experiences on common areas of focus
in relation to management of safety and operational risk
– Share experiences and practices in the HSSE area
– Review and give advice to management regarding the
company’s HSSE work
– The committee may conduct visits to all relevant sites,
including offshore installations, to ensure that the
company’s governing processes and proper practices are
adhered to.
In 2022, the committee held four meetings.
Deviations from the code: None
10. RISK MANAGEMENT AND INTERNAL
CONTROL
Risk Management
Appropriate internal control and risk management
contributes to transparency and quality reporting for the
benefit of the company, stakeholders, shareholders’ long-
term interests and operational excellence as an operator on
the Norwegian Continental Shelf.
The company continuously and systematically operates a
robust and transparent risk management process throughout
the organization. The purpose of the process is to enable the
company to maximise opportunities, minimise threats and
optimise achievements of business objectives.
Except for one exploration license in the UK shelf,, the
company’s operational activities are limited to Norway and
are subject to Norwegian regulations. All activities taking
place in a production license are subject to supervision and
audits from governmental bodies like the Petroleum Safety
Authority Norway, the Norwegian Environment Agency, and
from license partners.
The Board considers risk in the context of growing a
sustainable business while meeting governance, safety
and accountability expected by stakeholders. The Board
and the Audit and Risk Committee regularly review major
risks identified and communicated through the company
Enterprise Risk Management process.
The Business Management System (BMS) is the company’s
framework for creating and sustaining value, trust, and
predictability. BMS describes how Aker BP works, controls
risk and improves. The BMS describes approximately 300
business processes supplemented by governing documents,
requirements, and descriptions.
Risk-based assurance of conformity to the business
management system requirements is governed by the
company’s “Three lines of assurance” model. An improved
framework for Aker BP’s “Three lines of assurance” was
introduced in 2020 and is continually under improvement
with regards to processes and tools to enhance execution.
First- and second-line assurance-activities are performed
by management. First and second line roles are responsible
for delivery and assurance of core activities, by establishing
and maintaining appropriate structures and processes for
the management of operations and risk, including internal
controls to ensure conformity with regulatory and ethical
requirements and expectations.
Internal audit is established as the third line of assurance,
providing independent and objective assurance and advice
on the adequacy and effectiveness of governance and
risk management. This is achieved through the application
of systematic and risk-based audits. To ensure the
independence of the internal audit function, the chief audit
officer reports administratively to CEO, and functionally to
the board of directors.
Internal control for financial reporting
Aker BP has established a framework for Internal Control for
Financial Reporting based on the principles of the Committee
of Sponsoring Organizations of the Treadway Commission
(COSO) and is operationalised as follows:
– Internal Control Environment
– Risk Assessment
– Risk Response and Control Activities
– Information and communication
– Monitoring
The established framework is an integrated part of
the company’s management system. The company’s
internal control environment is characterised by clearly
defined responsibilities and roles between the Board of
Directors, Audit and Risk committee and management. The
implemented procedure for financial reporting is integrated
with the company’s management system, including ethical
guidelines that describe how the representatives of the
company must act. Aker BP’s Anti-Corruption Policy and
Speak-up policy provide additional control mechanisms to
address and detect deviations.
The company has established processes, procedures, and
controls for financial reporting, which are appropriate for
an exploration and production company. The company’s
documented procedures are designed to provide:
– Effective and appropriate identification and mitigation of
financial reporting risks
– Measurement of compliance against procedures
– Appropriate segregation of duties
– Provision of relevant, timely and reliable financial
reporting that provides a fair view of Aker BP’s business
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– Safeguard against fraudulent manipulation of reported
figures
– Compliance with all relevant requirements of IFRS
A risk assessment related to financial reporting is performed
and documented by management and reviewed by the Audit
and Risk Committee, which also performs a quarterly risk
review of business risks. The Committee reports any findings
or deviations to the Board of Directors. In 2022, the following
main risk areas were identified related to financial reporting:
– Purchase Price Allocation in relation to the acquisition of
Lundin Energy’s oil and gas business – risk of errors in
measurement of assets and liabilities
– Impairment of goodwill, tangible and intangible assets
– There is a risk that reductions in recoverable values
below book values are not identified and recorded in an
appropriate manner
– Tax – Complexity in tax regulations and calculation entail
risk of error in financial reporting
– Asset retirement obligation (ARO) - There is a risk of
errors in the input and calculations during the ARO
estimation process
The company seeks to communicate transparently on its
activities and its financial reporting based on significant
interaction between financial reporting management and
management responsible for exploration, development,
production, and decommissioning activities in the business.
Key events that may affect the financial reporting are
identified and monitored continuously. Judgmental items
regarding the financial reporting and tax consideration are
presented to the Audit and Risk Committee at least on a
quarterly basis.
The Finance Department monitors the compliance with
established procedures and reports any material deviations
to the Audit and Risk Committee. It also identifies actions to
improve procedures and conducts a self-assessment of its
performance against objectives, which are then presented and
discussed with the Audit and Risk Committee.
Deviations from the code: None
11. REMUNERATION OF THE BOARD OF
DIRECTORS
The remuneration of the Board members is not
performance-based but based on a fixed annual fee. None of
the shareholder-elected Board members have pension schemes
or termination payment agreements with the company. The
company does not grant share options to members of the
Board. Information about all remuneration paid to individual
Board members is provided in Note 9 to the annual accounts.
The General Meeting decides the remuneration of the Board
and the sub-committees. The Nomination Committee proposes
the remuneration of the Board to the General Meeting and
ensures that it reflects the responsibility of its members and the
time spent on Board work. The Board must approve any Board
member’s consultancy work for the company and remuneration
for such work. No such work was carried out during 2022.
Deviations from the code: None
12. REMUNERATION OF EXECUTIVE
PERSONNEL
The Board is responsible for the company’s guidelines for
executive remuneration, including the CEO’s remuneration
and other terms and conditions of employment. These
guidelines set out the main principles applied in determining
the salary and other remuneration of executive personnel and
are described in the company’s remuneration policy which is
subject to approval by the General Meeting.
The total remuneration consists of a base salary, a
pension contribution, an annual bonus based on company
Aker BP Annual Report 2022
43
performance, and a long-term share-based incentive (LTIP).
Members of EMT are covered under the same budget,
guidelines, and limitations as other onshore personnel in
the company.
Information about all remuneration paid to the CEO and the
EMT members is provided in Note 9 to the annual accounts.
13. INFORMATION AND
COMMUNICATIONS
Aker BP maintains a proactive dialogue with analysts,
investors, and other stakeholders of the company. The
company strives to continuously publish relevant information
to the market in a timely, effective, and non-discriminatory
manner, and has a clear goal to attract both Norwegian and
foreign investors and to promote higher stock liquidity. The
company complies with the Oslo Børs Code of Practice for IR
of 1 July 2019.
All stock exchange announcements are made available on the
Oslo Børs’ website, newsweb.no, as well as the company’s
website at the same time. The announcements are also
distributed to news agencies and other online services.
Aker BP publishes its preliminary annual accounts by the end
of February, as part of its fourth quarter report. The complete
annual report, including approved and audited accounts and
the Board of Directors’ Report, is available no later than three
weeks before the AGM. Information sent to shareholders is
published on the website simultaneously.
The company’s financial calendar for the coming year is
published as a stock exchange announcement and made
available on the company’s website no later than 31
December each year, in accordance with the continuing
obligations for companies listed on Oslo Børs.
Aker BP’s presentations of quarterly results are webcasted live
through the company’s web page and are also made available
for replay. At the presentations, executive management review
and comment on the published results, market conditions and
the company’s future activities, and answer questions from
the audience.
The company’s management gives high priority to
communication with the capital markets. Individual meetings
are organised for a wide range of existing and potential new
investors and analysts. The company also attends relevant
industry and investor conferences.
Aker BP will reduce its contacts with analysts, investors, and
journalists in the final 30 days before publication of its results.
During this period, the company will give no comments to
the media or other parties about the company’s results and
outlook. This is to ensure that all interested parties in the
market are treated equally.
With respect to communicating critical concerns to the
Board, the company has multiple reporting channels through
which concerns may be raised, all of which are highlighted
in employee’s annual refresher Code of Conduct course.
Regardless of the channel used to raise concerns, they are
normally first lifted to the Audit and risk committee (ARC)
for initial assessment, following which they are lifted to the
Board if necessary. The compliance department reports
regularly to the ARC and informs the committee about cases
received through the company’s integrity channel which is
also available for external stakeholders. If the ARC considers
it critical, the concern would be then lifted to the Board. The
number of cases received through the whistleblowing channel
is available in the ESG report under the compliance chapter.
Deviations from the code: None
14. TAKE-OVERS
The Board has established a separate set of guidelines for how
it will act in the event of a takeover bid, as recommended by
the Code of Practice. The overriding principle for review of a
takeover bid is equal treatment of shareholders. The principles
are based on the Board of Directors and management having
an independent responsibility for fair and equal treatment of
shareholders in a takeover process, and that the day-to-day
operations of the company are not unnecessarily disturbed.
It is management’s responsibility to ensure that the Board
of Directors is made aware of any potential takeover bid,
while the Board of Directors is responsible for ensuring that
shareholders are kept informed and are given reasonable time
to consider the offer.
Unless the Board of Directors has a particular reason, it will
not take steps to prevent or obstruct a takeover bid for the
company’s shares, nor hinder the progress of the bid without
approval from shareholders.
If an offer is made for Aker BP’s shares, the Board of
Directors shall make a statement to the shareholders that
contains an assessment of the bid, the Board of Directors’
recommendations and the reason for the recommendation. If
the Board of Directors is unable to make a recommendation
to shareholders, the Board of Directors shall explain its
reasoning for this.
Transactions that have the effect of a sale of the company or
a major part of it must be decided on by a general meeting.
Deviations from the code: None
15. AUDITOR
The AGM elects the auditor and approves the auditor’s fee.
The Board of Directors will meet with the auditor annually
without representatives of company management being
present, to review internal control procedures and discuss any
weaknesses and proposals for improvement. The auditor is
invited to and participates in the Board meetings to discuss
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Corporate governance
the annual accounts. In these meetings, the auditor reports on
any material changes in the company’s accounting principles
and key aspects of the audit, including matters on which
there has been disagreement between the auditor and the
executive management of the company.
The auditor participates in all meetings with the Audit and
Risk Committee and meets the Audit and Risk Committee
without the company’s management being present. The Board
ensures that the auditor submits the main features of the plan
for the annual audit of the company to the Audit and Risk
Committee annually. The auditor’s independence in relation to
the company is evaluated annually. The auditor may carry out
certain audit related or non-audit services for the company,
providing these are not in conflict with its duties as auditor.
The company has established an audit and non-audit service
policy.
In the annual financial statements, the auditor’s remuneration
is split between the audit fee and fees for other services. In
the presentation to the AGM, the chair presents a breakdown
between the audit fee and fees for other services.
Deviations from the code: None
45
Aker BP Annual Report 2022
OVERVIEW OF THE FINANCIAL STATEMENTS AND NOTES
Income statements
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the accounts
Note 1 Summary of IFRS accounting policies
Note 2 Business combination
Note 3 Overview of subsidiaries
Note 4 Climate-related risk
Note 5 Segment information
Note 6 Income
Note 7 Production costs
Note 8 Exploration expenses
Note 9 Payroll expenses and remuneration
Note 10 Auditors fee
Note 11 Financial items
Note 12 Taxes
Note 13 Earnings per share
Note 14 Tangible fixed assets and intangible assets
Note 15 Impairments
Note 16 Accounts receivable
Note 17 Other short-term receivables
Note 18 Inventories
Note 19 Other non-current assets
Note 20 Cash and cash equivalents
Note 21 Share capital and shareholders
Note 22 Bonds
Note 23 Provision for abandonment liabilities
Note 24 Derivatives
Note 25 Other current liabilities
Note 26 Lease agreements
Note 27 Commitments
Note 28 Transactions with related parties
Note 29 Financial instruments
Note 30 Investments in joint operations
Note 31 Events after the balance sheet date
Note 32 Classification of reserves and contingent resources (unaudited)
Statement by the Board of Directors and Chief Executive Officer
Alternative performance measures
Independent Auditor's Report
FINANCIAL STATEMENTS WITH NOTES
FINANCIAL STATEMENTS WITH NOTES
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INCOME STATEMENTS
Restated Restated
(USD 1 000)
Note 2022 2021 2022 2021
Petroleum revenues 6 12 896 182 5 639 990 9 258 009 5 639 990
Other income 6 113 716 28 757 111 302 28 757
Total income 13 009 898 5 668 747 9 369 311 5 668 747
Production costs 7 932 870 745 313 814 453 745 313
Exploration expenses 8 242 193 353 034 196 187 353 034
Depreciation 14 1 785 672 1 192 889 1 231 775 1 192 889
Impairments 14,15 1 032 154 262 554 830 650 262 554
Other operating expenses 9,10 52 577 29 261 50 229 29 261
Total operating expenses 4 045 466 2 583 051 3 123 294 2 583 051
Operating profit 8 964 432 3 085 696 6 246 017 3 085 696
Interest income 25 959 2 481 23 019 2 481
Other financial income 774 287 116 171 659 801 116 171
Interest expenses 107 718 139 533 120 244 139 533
Other financial expenses 880 109 169 032 597 072 169 032
Net financial items 11 -187 581 -189 913 -34 496 -189 913
Profit before taxes 8 776 851 2 895 783 6 211 521 2 895 783
Taxes (+)/tax income (-) 12 7 173 910 2 067 855 5 088 901 2 067 855
Net profit 1 602 940 827 928 1 122 620 827 928
Weighted average no. of shares outstanding basic and diluted 13 496 764 969 359 642 622 496 764 969 359 642 622
Basic and diluted earnings USD per share 13 3.23 2.30 2.26 2.30
STATEMENT OF COMPREHENSIVE INCOME
(USD 1 000)
Note 2022 2021 2022 2021
Profit for the period 1 602 940 827 928 1 122 620 827 928
Items which will not be reclassified over profit and loss (net of taxes)
Foreign currency translation
295 325 - - -
Actuarial gain/loss pension plan 3 - 3 -
Total comprehensive income in period 1 898 268 827 928 1 122 623 827 928
Group Parent
Group Parent
Aker BP Annual Report 2022
47
STATEMENT OF FINANCIAL POSITION
Restated Restated
(USD 1 000)
Note 31.12.2022 31.12.2021 31.12.2022 31.12.2021
ASSETS
Intangible assets
Goodwill 14 13 934 986 1 647 436 13 934 986 1 647 436
Capitalized exploration expenditures 14 251 736 256 535 251 736 256 535
Other intangible assets 14 2 344 354 1 407 551 2 344 354 1 407 551
Tangible fixed assets
Property, plant and equipment 14 15 886 659 10 214 438 15 886 659 10 214 438
Right-of-use assets 14 111 336 94 177 111 336 94 177
Financial assets
Long-term receivables 169 528 73 346 175 557 73 346
Other non-current assets 19 104 480 30 304 104 480 30 304
Long-term derivatives 24 2 907 1 375 2 907 1 375
Total non-current assets 32 805 987 13 725 162 32 812 015 13 725 162
Inventories
Inventories 18 209 506 126 442 209 506 126 442
Receivables
Trade receivables 16 950 942 366 785 950 942 366 785
Other short-term receivables 17 686 237 500 154 686 661 500 154
Short-term derivatives 24 153 096 18 577 153 096 18 577
Cash and cash equivalents
Cash and cash equivalents 20 2 756 012 1 970 906 2 756 008 1 970 906
Total current assets 4 755 793 2 982 863 4 756 214 2 982 863
TOTAL ASSETS 37 561 780 16 708 025 37 568 229 16 708 025
ParentGroup
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STATEMENT OF FINANCIAL POSITION
Restated Restated
(USD 1 000)
Note 31.12.2022 31.12.2021 31.12.2022 31.12.2021
EQUITY AND LIABILITIES
Equity
Share capital 21 84 348 57 056 84 348 57 056
Share premium 12 946 640 3 637 297 12 946 640 3 637 297
Other equity -603 482 -1 497 538 -596 809 -1 497 538
Total equity 12 427 506 2 196 814 12 434 178 2 196 814
Non-current liabilities
Deferred taxes 12 9 359 146 3 291 287 9 359 146 3 291 287
Long-term abandonment provision 23 4 050 396 5 071 491 4 050 396 5 071 491
Long-term bonds 22 5 279 164 3 576 735 5 279 164 3 576 735
Long-term derivatives 24 16 981 2 370 16 981 2 370
Long-term lease debt 26 98 095 91 835 98 095 91 835
Other non-current liabilities 19 82 306 - 82 306 -
Total non-current liabilities 18 886 088 12 033 718 18 886 088 12 033 718
Current liabilities
Trade creditors 133 875 147 366 133 875 147 366
Accrued public charges and indirect taxes 36 632 28 147 36 632 28 147
Tax payable 12 5 084 142 1 497 291 5 084 142 1 497 291
Short-term derivatives 24 34 924 35 082 34 924 35 082
Short-term abandonment provision
23 115 202 100 863 115 202 100 863
Short-term lease debt
26 36 298 44 378 36 298 44 378
Other current liabilities 25 807 113 624 366 806 891 624 366
Total current liabilities 6 248 186 2 477 493 6 247 963 2 477 493
Total liabilities 25 134 274 14 511 211 25 134 051 14 511 211
TOTAL EQUITY AND LIABILITIES 37 561 780 16 708 025 37 568 229 16 708 025
Group Parent
BoD signatures on next page.
Aker BP Annual Report 2022
49
The Board of Directors and the CEO of Aker BP ASA, Fornebu, 15 March 2023
ØYVIND ERIKSEN
Chairman of the Board
ANNE MARIE CANNON
Deputy Chair
KATE THOMSON
Board member
KJELL INGE RØKKE
Board member
TERJE SOLHEIM
Board member
TROND BRANDSRUD
Board member
TORE VIK
Board member
MURRAY AUCHINCLOSS
Board member
HILDE KRISTIN BREVIK
Board member
CHARLES ASHLEY HEPPENSTALL
Board member
INGARD HAUGEBERG
Board member
VALBORG LUNDEGAARD
Board member
KARL JOHNNY HERSVIK
Chief Executive Officer
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STATEMENT OF CHANGES IN EQUITY - GROUP
(USD 1 000)
Equity at 01.01.2021 before restatement 57 056 3 637 297 573 083 -76 -115 491 -2 164 587 -1 707 071 1 987 281
Change in accounting principle
1)
- - - - - -122 300 -122 300 -122 300
Restated equity as of 01.01.2021 57 056 3 637 297 573 083 -76 -115 491 -2 286 886 -1 829 371 1 864 982
Dividends distributed - - - - - -487 500 -487 500 -487 500
Restated profit for the period - - - - - 827 928 827 928 827 928
Purchase/sale of treasury shares
2)
- - - - - -8 595 -8 595 -8 595
Other comprehensive income for the period - - - - - - - -
Equity as of 31.12.2021 57 056 3 637 297 573 083 -76 -115 491 -1 955 054 -1 497 538 2 196 814
Dividends distributed - - - - - -1 005 731 -1 005 731 -1 005 731
Private placement 27 292 9 309 343 - - - - - 9 336 636
Profit for the period - - - - - 1 602 940 1 602 940 1 602 940
Purchase/sale of treasury shares
2)
- - - - - 1 524 1 524 1 524
Other comprehensive income for the period - - - -3 295 325 - 295 323 295 323
Equity as of 31.12.2022
84 348 12 946 640
573 083 -78 179 834 -1 356 320
-603 482 12 427 506
1)
Relates to changes in accounting principle for deferred tax on capitalised interest, as described in note 1
2)
The treasury shares are purchased/sold for use in the company's share saving plan.
Share capital Share premium
Other paid-in
capital
Actuarial
gains/(losses)
Foreign
currency
translation
reserves
Other equity
Other comprehensive income
Accumulated
deficit
Total other
equity Total equity
Aker BP Annual Report 2022
51
STATEMENT OF CHANGES IN EQUITY - Parent
(USD 1 000)
Equity at 01.01.2021 before restatement 57 056 3 637 297 573 083 -76 -115 491 -2 164 587 -1 707 071 1 987 281
Change in accounting principle
1)
- - - - - -122 300 -122 300 -122 300
Restated equity as of 01.01.2021 57 056 3 637 297 573 083 -76 -115 491 -2 286 886 -1 829 371 1 864 982
Dividends distributed - - - - - -487 500 -487 500 -487 500
Restated profit for the period - - - - - 827 928 827 928 827 928
Purchase/sale of treasury shares
2)
- - - - - -8 595 -8 595 -8 595
Other comprehensive income for the period - - - - - - - -
Equity as of 31.12.2021 57 056 3 637 297 573 083 -76 -115 491 -1 955 054 -1 497 538 2 196 814
Dividends distributed - - - - - -1 005 731 -1 005 731 -1 005 731
Private placement 27 292 9 309 343 - - - - - 9 336 636
Profit for the period - - - - - 1 122 620 1 122 620 1 122 620
Purchase/sale of treasury shares
2)
- - - - - 1 524 1 524 1 524
Equity impact from mergers - - - - - 782 318 782 318 782 318
Other comprehensive income for the period - - - -3 - - -3 -3
Equity as of 31.12.2022
84 348 12 946 640
573 083 -78 -115 491 -1 054 323
-596 809 12 434 178
1)
Relates to changes in accounting principle for deferred tax on capitalised interest, as described in note 1
2)
The treasury shares are purchased/sold for use in the company's share saving plan.
Other equity
Other comprehensive income
Share capital Share premium
Other paid-in
capital
Actuarial
gains/(losses)
Foreign
currency
translation
reserves
Accumulated
deficit
Total other
equity Total equity
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STATEMENT OF CASH FLOWS
Restated Restated
(USD 1 000)
Note 2022 2021 2022 2021
8 776 851 2 895 783 6 211 521 2 895 783
-5 332 125 -296 155 -3 205 490 -296 155
- 72 989 - 72 989
14 1 785 672 1 192 889 1 231 775 1 192 889
14,15 1 032 154 262 554 830 650 262 554
11,23 119 895 61 944 107 907 61 944
11 75 903 117 073 101 079 117 073
6,11 -325 242 50 015 -325 242 50 015
11 31 815 22 460 19 164 22 460
8,14 135 800 98 827 108 560 98 827
-268 657 -48 794 -82 628 -48 794
-302 594 -147 428 -601 321 -147 428
5 729 472 4 282 157 4 395 976 4 282 157
23 -78 870 -172 512 -78 177 -172 512
Disbursements on investments in fixed assets (excl capitalized interest) 14 -1 580 045 -1 376 879 -1 268 985 -1 376 879
14
-251 764 -177 464 -194 660 -177 464
Investments in financial asset -95 000 - -95 000 -
Consideration paid in Lundin Energy transaction net of cash acquired
2
-1 228 922 - -895 900 -
19
118 005 - 118 005 -
-3 116 596 -1 726 855 -2 414 717 -1 726 855
-601 050 -7 675 -1 050 -7 675
- -1 282 503 - -1 282 503
- 899 334 - 899 334
-156 465 -151 085 -130 965 -151 085
-42 452 -44 805 -37 537 -44 805
-24 121 -39 810 -22 922 -39 810
-1 005 731 -487 500 -1 005 731 -487 500
1 524 -8 595
1 524 -8 595
29 -1 828 294 -1 122 640 -1 196 682 -1 122 640
784 582 1 432 662 784 578 1 432 662
1 970 906 537 801 1 970 906 537 801
525 443 525 443
20 2 756 012 1 970 906 2 756 008 1 970 906
Paid dividend
Profit/loss before taxes
Taxes paid
Taxes refunded
Depreciation
Impairment
Accretion expenses related to abandonment provisions
Repayment of bonds
Net proceeds from bond issue
Changes in inventories, trade creditors and receivables
Changes in unrealized gain/loss in derivatives
Amortized loan costs
Net drawdown/repayment/fees related to revolving credit facility
Disbursements on investments in capitalized exploration expenditures
Cash received from sale of financial asset
CASH AND CASH EQUIVALENTS AT END OF PERIOD
Net purchase/sale of treasury shares
Cash and cash equivalents at start of period
Effect of exchange rate fluctuation on cash held
CASH FLOW FROM OPERATING ACTIVITIES
NET CASH FLOW FROM OPERATING ACTIVITIES
CASH FLOW FROM INVESTMENT ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
Net change in cash and cash equivalents
NET CASH FLOW FROM INVESTMENT ACTIVITIES
NET CASH FLOW FROM FINANCING ACTIVITIES
Total interest expenses (excluding amortized loan costs)
Expensed capitalized dry wells
Interest paid (including interest element of lease payments)
Payments on lease debt related to investments in fixed assets
Payments on other lease debt
Changes in other balance sheet items
Payment for removal and decommissioning of oil fields
Group Parent
Aker BP Annual Report 2022
53
NOTES TO THE ACCOUNTS
GENERAL INFORMATION
Aker BP ASA (“Aker BP” or “the company”) is an oil and gas
company involved in exploration, development and production
of oil and gas on the Norwegian Continental Shelf (NCS).
The company is a public limited liability company registered
and domiciled in Norway. Aker BP’s shares are listed on Oslo
Stock Exchange (Oslo Børs) under the ticker AKRBP. The
company’s registered business address is Oksenøyveien 10,
1366 Lysaker, Norway.
Prior to the acquisition of Lundin Energy as described below,
the Aker BP group comprised the parent company Aker BP
ASA and the three subsidiaries Det norske oljeselskap AS
(including its subsidiary Aker BP UK Limited), Alvheim AS and
Sandvika Fjellstue AS. Det norske oljeselskap AS, Alvheim AS
and Sandvika Fjellstue AS are not consolidated in the group
financial statements as they are immaterial.
The acquisition of the Lundin Energy’s oil and gas business
(“Lundin Energy”) was completed on 30 June 2022. The
activity of Lundin Energy has been fully reflected in the
financial statements from 30 June 2022, including effects
from the fair value adjustment of Lundin Energy in line
with IFRS 3, as described in note 2 At year end 2022 all
legal entities acquired in the Lundin transaction were either
liquidated or merged into Aker BP ASA. See note 3 for more
information about subsidiaries.
The financial statements were approved by the Board of
Directors on 15 March 2023 and will be presented for
approval at the Annual General Meeting on 14 April 2023.
NOTE 1: SUMMARY OF IFRS
ACCOUNTING POLICIES
1.1 Basis of preparation
The group and the parent company financial statements have
been prepared in accordance with the Norwegian Accounting
Act and International Financial Reporting Standards as
adopted by the EU (“IFRS”).
The financial statements have been prepared on a historical
cost basis with the exception of the following accounting
items which are measured on an alternative basis at each
reporting date
– Financial instruments at fair value through profit or loss.
– Loans, receivables and other financial liabilities, which are
recognized at amortized cost.
All amounts have been rounded to the nearest thousand
unless otherwise stated. As a result of rounding adjustments,
the figures in one or more rows or columns included in the
financial statements and notes may not add up to the total of
that row or column.
The group financial statements for Aker BP ASA include the
subsidiaries as described in note 3. The accounting policies
are applied consistently when consolidating ownership
interests in subsidiaries and are based on the same reporting
periods as those used for the parent company. When
preparing the consolidated financial statements, intragroup
transactions and balances, along with gains and losses on
transactions between group units, are eliminated.
1.2 Functional currency and presentation currency
The presentation currency in the Group’s consolidated
financial statements is United States Dollars (“USD”). The
parent company of the Group, Aker BP ASA, has USD as its
functional currency as most revenue and financing are in
USD and represents the primary economic environment in
which the entity operates. Balance sheet items of subsidiaries
in other functional currencies are translated into the
presentation currency, USD, according to the exchange rates
prevailing on the balance sheet date, while profit or loss items
are translated according to average quarterly exchange rates
for the relevant quarters.
In all material respects, the activity of Lundin Energy has been
conducted in the legal entity ABP Norway AS (previously
Lundin Energy Norway AS), which had NOK as its functional
currency. In line with accounting guidance, the related
purchase price allocation (PPA) has been fixed in NOK
accordingly, and thus given rise to foreign currency translation
in the group accounts recognized in the statement of
comprehensive income during the second half of 2022. At 31
December 2022, ABP Norway AS merged with Aker BP ASA,
meaning that the mentioned impact on comprehensive impact
will cease from 1 January 2023.
1.3 Important accounting judgments, estimates and
assumptions
The preparation of financial statements in accordance with
IFRS requires management to make judgments, estimates
and assumptions that have an effect on the application of
accounting policies and the reported assets, liabilities, income
and expenses.
The important judgments management has made regarding
the application of accounting policies are as follows:
Goodwill allocation and methodology for impairment testing
For the purpose of impairment testing, goodwill is allocated
to a cash-generating unit (CGU), or groups of CGUs
that are expected to benefit from the synergies of the
business combination from which it arose. The allocation
of goodwill requires judgment and may significantly impact
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any subsequent impairment charge. Although not an IFRS
term, “technical goodwill” is used by Aker BP to describe
the category of goodwill arising as an offsetting account to
deferred tax liabilities recognised in business combinations,
as described in section 1.8 below. There are no specific
IFRS guidelines pertaining to the allocation of technical
goodwill, and management has therefore applied the general
guidelines for allocating goodwill. In general, technical
goodwill is allocated at the CGU level for impairment testing
purposes, while residual goodwill may be allocated across all
CGUs based on the facts and circumstances of the business
combination.
When performing the impairment test for technical goodwill,
deferred tax liabilities recognized in relation to the acquired
licenses reduce the net carrying value prior to any impairment
charges. This methodology avoids an immediate impairment
of all technical goodwill. When deferred tax liabilities from the
initial recognition decreases, additional technical goodwill is
‘exposed’ to impairment. Subsequent to the initial purchase
price allocation, depreciation of book values will result in
decreasing deferred tax liabilities. When applicable, technical
goodwill is impaired before the asset.
Accounting estimates are used to determine reported
amounts, including the depreciation of assets, the cost and
timing of decommissioning activities, impairment testing
of goodwill and the recognition and measurement of tax
liabilities. Whilst these estimates are based on management’s
best judgment and assessments of previous and current
events and actions, the actual results may deviate from the
original estimates. Changes to accounting estimates are
recognized in the period when they arise. The main sources of
uncertainty when making estimates and judgments relate to
the following:
Proven and probable oil and gas reserves
Oil and gas reserves are estimated by the company’s experts
in accordance with industry standards. The estimates are
based on Aker BP’s own assessment of internal information
and information received from operators. In addition, proven
and probable reserves are certified by an external party.
Proven and probable oil and gas reserves consist of the
estimated quantities of crude oil, natural gas and condensates
shown by geological and technical data to be recoverable with
reasonable certainty from known reservoirs under existing
economic and operational conditions, i.e. on the date that the
estimates are prepared. Current market prices are used in the
estimates.
Proven and probable reserves and production volumes are
used to calculate the depreciation of oil and gas fields by
applying the unit-of-production method. Reserve estimates
are also used as basis for impairment testing of license-
related assets and goodwill. Changes in petroleum prices
and cost estimates may change reserve estimates and
accordingly economic cut-off, which may impact the timing
of assumed decommissioning and removal activities. Changes
to reserve estimates can also result from updated production
and reservoir information. Future changes to proven and
probable oil and gas reserves can have a material effect on
depreciation, life of field, impairment of license-related assets
and goodwill, and operating results.
Successful Effort Method - exploration
Expenses relating to the drilling of exploration wells are
temporarily recognized in the Statement of financial position
as capitalized exploration expenditures, pending an evaluation
of potential oil and gas discoveries. If resources are not
discovered, or if recovery of the resources is considered
technically or commercially unviable, the costs of exploration
wells are expensed. Judgments as to whether this expenditure
should remain capitalized or be expensed at the reporting
date may materially affect the operating result for the period
Fair value measurement
The fair values of non-financial assets and liabilities are
required to be determined, for example in a business
combination, to determine the allocation of purchase price
in an asset deal or when the recoverable amount of an asset
or CGU is based on fair value less cost to sell. Fair value is
the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value of an
asset or a liability is measured using the assumptions that
market participants would use when pricing the asset or
liability.
A fair value measurement of a non-financial asset takes into
account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the
asset in its highest and best use. The group uses valuation
techniques that are appropriate in the circumstances and
for which sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs. The fair value of oil
fields in production and development phase is normally based
on discounted cash flow models, where the determination
of inputs to the model may require significant judgment, as
described in the section below regarding impairment.
Impairment/reversal of impairment
Changes in the expected future value/cash flows of CGUs
results in impairment if the estimated recoverable value is
lower than the book value (including any allocated goodwill)
or the reversal of previously recognized impairment if the
recoverable value is higher than the book value (though
impairment of goodwill is not reversed). Estimates of
recoverable value involve the application of judgment and
assumptions, including the modelling of future cash flows to
estimate the CGUs value in use or fair value.
The evaluation of impairment requires long-term assumptions
concerning a number of often volatile economic factors,
including future oil prices, oil production, currency exchange
rates and discount rates. Such assumptions require the
estimation of relevant factors such as long-term prices,
Aker BP Annual Report 2022
55
the levels of capex and opex, production estimates and
decommissioning costs. These evaluations are also necessary
to determine a CGU’s fair value unless information can be
obtained from an actual observable market transaction. See
note 14 ’Tangible fixed assets and intangible assets’ and note
15 ’Impairments’ for details of impairments.
Decommissioning and removal obligations
The company has obligations to decommission and remove
offshore installations at the end of their production period.
Obligations associated with decommissioning and removal
of long-term assets are recognized at present value of future
expenditures at the date they are expected to be incurred. At
the initial recognition of an obligation, the estimated cost is
capitalized as property, plant and equipment and depreciated
over the useful life of the asset (typically by application of
the unit-of-production method). There is significant future
uncertainty in the estimate of costs for decommissioning and
removal, as these estimates are based on currently applicable
laws and regulations, and existing technologies. Many
decommissioning and removal activities will take place many
decades in the future, and the technology and related costs
are expected to evolve in this time. The estimates include
costs based on expected removal concepts using existing
technology and estimated costs of maritime operations, hiring
of single-lift and heavy-lift barges and drilling rigs. As as
result, there may be significant adjustments to the estimates
of decommissioning liabilities and associated assets that
can affect future financial results. Changes in the estimated
decommissioning liabilities are booked towards property, plant
and equipment. See note 23 ‘Provision for abandonment
liabilities’ for further details about decommissioning and
removal obligations.
Income tax
Income tax expense, tax payables or receivables, and deferred
taxes are based on management’s interpretation of applicable
laws and regulations, and on relevant court decisions where
relevant. These estimates are dependent on management’s
ability to interpret and apply the requirements of tax and
other relevant legislation, and requires judgment in respect
of the recognition and measurement of any uncertain tax
positions. See note 12 ‘Taxes’ for further details.
1.4 Foreign currency transactions
Transactions and balances
Transactions denominated in foreign currencies are translated
using the exchange rate on the transaction date. Monetary
items denominated in foreign currencies in the Statement
of Financial Position are translated using the exchange
rates at the reporting date. Foreign exchange gains and
losses are recognized as incurred. Non-monetary items that
are measured at historical costs in a foreign currency are
translated using the exchange rates on the date of the initial
transaction. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rate on the
date when the fair value is determined.
1.5 Revenue recognition
Revenue from the sale of liquids or gas is recognised at the
point in time when the company’s contractual performance
obligations have been fulfilled and control is transferred to
the customer, which will ordinarily be at the point of delivery
when title passes (sales method). This is normally at the time
of loading oil or NGL on vessels used for transport, or at
agreed point of delivery for dry gas.
There is no significant judgement applying IFRS 15 ‘Revenue
from contracts with customers’ to the company’s revenue
generating contracts.
Changes in over/underlift balances are valued at production
cost including depreciation and presented as an adjustment to
cost. See note 7 for further details.
Gains or losses on asset disposals as described in section 1.9
are included in other operating income.
Tariff revenue from processing of oil and gas is recognized as
earned in line with underlying agreements.
1.6 Interests in licenses and partnerships
IFRS defines a joint arrangement as an arrangement over
which two or more parties have joint control. Joint control is
the contractually agreed sharing of control which exists only
when decisions about the relevant activities (being those that
significantly affect the returns of the arrangement) require
unanimous consent of the parties sharing control.
The company has interests in licenses on the Norwegian
Continental Shelf. Under IFRS 11 Joint Arrangements, a joint
operation is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the assets
and obligations for the liabilities, relating to the arrangement.
The company recognizes investments in joint operations (oil
and gas production licenses) by reporting its share of related
revenues, expenses, assets, liabilities and cash flows under the
respective items in the company’s financial statements.
For those licenses that are not deemed to be joint
arrangements pursuant to the definition in IFRS 11 as there is
no joint control, the company recognizes its share of related
expenses, assets, liabilities and cash flows on a line-by-line
basis in the financial statements by analogy to IFRS 11 and in
accordance with applicable IFRSs.
1.7 Classification in statement of financial position
Current assets and current liabilities include items that fall due
for payment less than a year from the end of the reporting
period and items relating to the ordinary business cycle.
The following year’s instalments on long-term liabilities are
classified as current liabilities. Financial investments in shares
are classified as current assets, while strategic investments are
classified as non-current assets.
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1.8 Business combinations and goodwill
In order to consider an acquisition as a business combination,
the acquired asset or groups of assets must constitute
a business (an integrated set of operations and assets
conducted and managed for the purpose of providing a return
to the investors). The combination consists of inputs and
substantive processes applied to these inputs that have the
ability to create outputs. Amendments to IFRS 3 effective in
January 2020 introduce a new optional ‘concentration test’
which may result in a business combination being accounted
for as an asset acquisition if substantially all of the fair value
of the gross assets acquired is concentrated in a single
identifiable asset or group or similar identifiable assets.
Acquired businesses are included in the financial statements
from the transaction date. The transaction date is defined
as the date on which the company obtains control over the
financial and operating assets. This date may differ from the
actual date on which the assets are transferred.
For accounting purposes, the acquisition method is applied
to the purchase of businesses. Acquisition cost equals the fair
value of consideration, including contingent consideration,
equity instruments issued and liabilities assumed in
connection with the transfer of control. Acquisition cost is
measured against the fair value of the acquired assets and
liabilities. Identifiable intangible assets are regognized in
connection with acquisitions if they can be separated from
other assets or meet the legal contractual criteria. If the
acquisition cost at the time of the acquisition exceeds the fair
value of the acquired net assets (when the acquiring entity
achieves control of the transferring entity), goodwill arises.
In a business combination, if the fair value of the net
identifiable assets acquired exceeds the acquisition cost on
the acquisition date, the excess amount is taken to the Income
statement immediately.
In a business combination, goodwill is allocated to the
CGUs or groups of CGUs that are expected to benefit from
synergies of the acquisition. The allocation of goodwill may
vary depending on the basis for its initial recognition.
The majority of the company’s goodwill is related to the
requirement to recognize deferred tax for the difference
between the assigned fair values and the related tax base
(“technical goodwill”). The fair value of the company’s licenses,
all of which are located on the Norwegian Continental
Shelf, are based on cash flows after tax. This is because
these licenses are only sold in an after-tax market based
on the tax carry-over principles pursuant to the Petroleum
Taxation Act section 10. The purchaser is therefore not
entitled to a tax deduction for the consideration paid over
and above the seller’s tax values. In accordance with IAS 12
paragraphs 15 and 24, a provision is made for deferred tax
corresponding to the difference between the acquisition cost
and the transferred tax depreciation basis. The offsetting
entry to this deferred tax is goodwill. Hence, goodwill arises
as a technical effect of deferred tax. Technical goodwill is
tested for impairment separately for each CGU which give
rise to the technical goodwill. A CGU may be individual oil
fields, or a group of oil fields that are connected to the same
infrastructure/production facilities.
The estimation of fair value and goodwill may be adjusted
up to 12 months after the acquisition if new information
has emerged about facts and circumstances that existed
at the time of the acquisition and which, had they been
known, would have affected the calculation of the amounts
recognized.
Acquisition-related costs, except costs to issue related debt or
equity securities, are expensed as incurred.
1.9 Acquisitions, sales and license swaps
On acquisition of a license that involves the right to explore
for and produce petroleum resources, it is considered in each
case whether the acquisition should be treated as a business
combination (see Item 1.8) or an asset purchase. Generally,
purchases of licenses in a development or production phase
will be regarded as a business combination. Other license
purchases regarded as asset purchases are described below.
Oil and gas production licenses
For licenses in the development phase, the acquisition cost is
allocated between capitalized exploration expenses, license
rights and production plant.
When entering into agreements regarding the purchase/
swap of assets, the parties agree on an effective date for
the takeover of the net cash flow (usually 1 January in the
calendar year which would also normally be the effective
date for tax purposes). In the period between the effective
date and the completion date, the seller will include its sold
share of the license in the financial statements. In accordance
with the purchase agreement, there is a settlement with
the seller of the net cash flow from the asset in the period
from the effective date to the completion date (pro & contra
settlement). The pro & contra settlement will be adjusted to
the seller’s losses/gains and to the assets for the purchaser,
in that the settlement (after a tax reduction) is deemed to
be part of the consideration in the transaction. Revenues
and expenses from the relevant license are included in the
purchaser’s Income statement from the acquisition date, as
defined in 1.8 above.
For tax purposes, the purchaser will include the net cash flow
(pro & contra) and any other income and costs as from the
effective date.
Deferred tax is not recognized when acquiring licenses that
are defined as asset acquisitions.
Farm-in agreements
Farm-in agreements are usually entered into in the exploration
phase and are characterised by the transferor waiving future
financial benefits in the form of reserves, in exchange for
reduced future financing obligations. For example, a license
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interest is taken over in return for a share of the transferor’s
expenses relating to the drilling of a well. In the exploration
phase, the company normally accounts for farm-in agreements
on a historical cost basis, as the fair value cannot be reliably
determined.
Swaps
Swaps of assets are calculated at the fair value of the asset
being surrendered, unless the transaction lacks commercial
substance, or neither the fair value of the asset received,
nor the fair value of the asset surrendered, can be reliably
measured. In the exploration phase, the company normally
recognizes swaps based on historical cost, as the fair value
cannot be reliably measured.
1.10 Unitizations
According to Norwegian law, a unitization is required if a
petroleum deposit extends over several production licenses
and these production licenses have different ownership
interests. Consensus must be achieved with regard to the
most beneficial coordination of the joint development and
ownership distribution of the petroleum deposit. A unitization
agreement shall be approved by the Ministry of Petroleum
and Energy.
The company normally recognizes unitizations in the
exploration phase based on historical cost, as the fair value
cannot be reliably measured. For unitizations involving
licenses outside the exploration phase, it has to be considered
whether the transaction has commercial substance. If so, the
unitization is recognized at fair value.
1.11 Tangible fixed assets and intangible assets
General
Tangible fixed assets are recognized on a historical cost basis.
The book value of tangible fixed assets consists of acquisition
cost net of accumulated depreciation and impairment losses.
Ordinary repair and maintenance costs relating to day-to-day
operations are charged to the Income statement in the period
in which they are incurred.
Gains and losses relating to the disposal of assets are
determined by comparing the selling price with the book
value, and are included in other operating income/expenses
on a post tax basis. Assets held for sale are measured at the
lower of the book value and the fair value less cost to sell.
Operating assets related to petroleum activities
Exploration and development costs relating to oil and gas fields
Capitalized exploration expenditures are classified as
intangible assets and reclassified to tangible assets at the
start of development. For accounting purposes, the field
is considered to enter the development phase when the
technical feasibility and commercial viability of extracting
hydrocarbons from the field are demonstrable, normally
at the time of concept selection. All costs relating to
the development of commercial oil and/or gas fields are
recognized as tangible assets. Pre-operational costs are
expensed as they are incurred.
The company employs the ’successful efforts’ method
to account for exploration and development costs. All
exploration costs (including seismic shooting, seismic studies
and ‘own time’), with the exception of acquisition costs of
licenses and drilling costs for exploration wells, are expensed
as incurred. When exploration drilling is ongoing in a period
after the reporting date and the result of the drilling is
subsequently not successful, the capitalized exploration
cost as of the reporting date is expensed if the evaluation
of the well is completed before the date when the financial
statements are authorized for issue.
Drilling cost for exploration wells are temporarily capitalized
pending the evaluation of potential discoveries of oil and
gas resources. Such costs can remain capitalized for more
than one year. The main criteria is that there must be plans
for future activity in the license area or that a development
decision is expected in the near future. If no resources are
discovered, or if recovery of the resources is considered
technically or commercially unviable, expenses relating to the
drilling of exploration wells are charged to expense.
Acquired license rights are recognized as intangible assets at
the time of acquisition. Acquired license rights related to fields
in the exploration phase remain as intangible assets also when
the related fields enter the development or production phase.
Depreciation of oil and gas fields
Capitalized exploration and evaluation expenditures,
development expenditures from construction, installation
or completion of infrastructure facilities such as platforms,
pipelines and production wells, and field-dedicated transport
systems for oil and gas are capitalized as production facilities
and are depreciated using the unit-of-production method
based on proven and probable developed reserves expected
to be recovered from the area during the concession or
contract period. Acquired assets used for the recovery and
production of petroleum deposits, including license rights,
are also depreciated using the unit-of-production method
based on proven and probable reserves. The reserve basis
used for depreciation purposes is updated at least annually.
Any changes in the reserves affecting unit-of-production
calculations are reflected prospectively.
Depreciation of assets other than oil and gas fields, including
right of use assets, is calculated using the straight-line method
over estimated useful lives and adjusted for any impairment or
change in residual value, if applicable.
1.12 Impairment
Tangible fixed assets and intangible assets
Tangible fixed assets and intangible assets (including license
rights, exclusive of goodwill) with a finite useful life will be
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assessed for potential impairment when events or changes
in circumstances indicate that the book value of the assets is
higher than the recoverable amount.
The unit of account for assessment of impairment is based
on the lowest level at which it is possible to identify cash
inflows that are independent of cash inflows from other
groups of fixed assets. For oil and gas assets, this is typically
the field or license level. Impairment is recognized when the
book value of the CGU (including any allocated goodwill)
exceeds the recoverable amount. The recoverable amount is
the higher of the asset’s fair value less cost of disposal and
value in use. When estimating value in use and fair value less
cost of disposal, expected future cash flows are discounted
to the net present value by applying a discount rate after tax
that reflects the current market valuation of the time value of
money and the specific risk related to the asset. The discount
rate is derived from the Weighted Average Cost of Capital
(WACC).
The lifetime of the field for the purpose of impairment
testing is normally determined by the point in time when the
operating cash flow from the field becomes negative.
For exploration licenses, impairment is based on an
assessment of whether plans for further activities have
been established or, if applicable, an evaluation of whether
development will be decided on in the near future as
described in section 1.11.
A previously recognized impairment can only be reversed
if changes have occurred in the estimates used for the
calculation of the recoverable amount. However, the reversal
cannot be to an amount that is higher than it would have
been if the impairment had not previously been recognized.
Such reversals are recognized in the Income statement. After a
reversal, the depreciation amount is adjusted in future periods
in order to distribute the asset’s revised book value, minus any
residual value, on a systematic basis over the asset’s expected
remaining life.
Goodwill
Goodwill is tested for impairment annually or more frequently
if events or changes in circumstances indicate that the value
may be impaired.
Impairment is recognized if the recoverable amount of the
CGU (or group of CGUs) to which the goodwill is related is
less than the book value, including associated goodwill and
deferred tax as described in section 1.8. Losses relating to
impairment of goodwill cannot be reversed in future periods.
1.13 Financial instruments
The group’s financial assets and liabilities comprise non-listed
equity instruments, derivative financial instruments (assets
and liabilities), receivables, cash and cash equivalents,
payables, other short-term liabilities and non-current liabilities.
The classification of financial assets and liabilities at initial
recognition depends on the financial instrument’s contractual
cash flow characteristics and the Group’s business model
for managing them. The company has classified the financial
instruments into the following categories of financial assets
and liabilities:
– Financial assets at fair value through profit or loss
– Financial assets measured at amortized cost
– Financial liabilities at fair value through profit or loss
– Financial liabilities measured at amortized costs
The Group measures financial instruments at amortized cost if
the following conditions are met:
– The financial instrument is held within a business
model with the objective to hold financial instruments
in order to collect or pay contractual cash flows and,
the contractual terms of the financial instrument give
rise on specified dates to or requires cash flows that
are solely payments of principal and interest on the
principal amount outstanding. Financial instruments
at amortised cost are subsequently measured using
the effective interest (EIR) method and are subject to
impairment testing. Gains and losses are recognised
in profit or loss when the instrument is derecognised,
modified or impaired. The group’s financial instruments
at amortized cost includes trade receivables and other
short-term deposits, trade payables and other current and
non-current liabilities. Receivables are initially recognised
at fair value less impairment losses. Accounts receivables
that do not contain a significant financing component are
measured at the transaction price determined under IFRS
15. Cash and cash equivalents are measured at fair value,
loans and borrowings and other liabilities are measured at
amortised cost.
Financial assets with fixed or determinable cash flows that
are not quoted in an active market are classified as loans and
receivables.
Financial liabilities that do not form part of the “held for
trading purposes” category and which have not been
designated as being at fair value with changes in value
through profit or loss are classified as other financial liabilities.
Further details on fair values of financial instruments are
provided in note 29 ‘Financial instruments’.
1.14 Impairment of financial assets
Financial assets that are held at amortized cost are impaired
when, based on objective evidence, it is likely that the
instrument’s cash flows have been negatively affected by one
or more events that have occurred after initial recognition.
In addition, the loss event must have an impact on estimated
future cash flows that can be reliably estimated. The
impairment is recognized in the Income statement.
1.15 Research and development
Research consists of original, planned studies carried out with
a view to achieving new scientific or technical knowledge
or understanding, and the associated costs are expensed
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as incurred. Development consists of the application of
information gained through research, or of other knowledge,
to a plan or design for the production of new or significantly
improved materials, facilities, products, processes, systems or
services before commercial production or use commences.
Development costs are capitalized when the underlying
project is technically feasible.
1.16 Presentation of payroll and administration costs
The company presents its payroll and administration costs
based on the functions in development, operational and
exploration activities respectively, based on allocation of
registered hours worked, net of amounts recharged to
operated licenses.
1.17 Leases
At the inception of a contract, the company assesses whether
the contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration.
The lease liability is recognized at the commencement date
and measured at the present value of the remaining lease
payments, discounted using the company’s incremental
borrowing rate at the commencement date. The borrowing
rate is derived from the terms of the company’s existing credit
facilities. Right-of-use (RoU) assets are depreciated over the
lease term as this is ordinarily shorter than the useful life of
the assets. The lease term represents the non-cancellable
period of the lease, together with periods covered by an
option either to extend or to terminate the lease when the
company is reasonably certain to exercise this option.
The company applies the exemption for short term leases
(12 months or less) and low value leases. As such, related
lease payments are not recognized in the balance sheet, but
expensed or capitalized in line with the accounting treatment
for other non-lease expenses. The inclusion of non-lease
components may vary across different lease categories, but
for the most material class of assets (rigs), the company has
excluded the non-lease components when measuring the
lease liability.
The company may enter into lease contracts as an operator
on behalf of a license, and may for such leases only recognize
its net share of the related lease liability. Whether a contract
is entered into on behalf of the license is subject to a contract
specific assessment, but the general principle is that there
needs to be a direct link between the lease contract and the
license or field on which the RoU asset shall be used. Other
lease contracts, such as offices and supply vessels not linked
to specific fields, are recognized on a gross basis although
the related cashflows are charged to the license partners,
typically via cost pools. For such contracts, the partner’s share
of the cost recovered by the company are presented as other
income.
1.18 Trade debtors
Trade debtors are recognized in the Statement of Financial
Position at nominal value after a deduction for the provision
for credit losses. Historically there have been no significant
credit losses.
1.19 Borrowing costs
Borrowing costs that can be directly ascribed to procurement,
processing or production of a qualifying asset are capitalized
as part of the asset’s acquisition cost. Borrowing cost is only
capitalized during the development phase. Other borrowing
costs are expensed in the period in which they are incurred.
A qualifying asset is one that necessarily takes a substantial
period of time to be made ready for its intended use or sale.
Qualifying assets are generally those that are subject to major
development or construction projects.
1.20 Inventories
Inventories mainly consist of equipment for the drilling of
exploration and production wells and are valued at the lower
of cost price (based on weighted average cost) and net
realizable value.
1.21 Cash and cash equivalents
Cash and cash equivalents include cash, bank deposits, and
other short-term highly liquid investments with an original due
date of three months or less. Bank overdrafts are included in
the Statement of Financial Position as short-term loans.
1.22 Interest-bearing debt
All borrowings are initially recognized at transaction price,
which equals the fair value of the amount received net of
costs directly related to the establishment of the loan or
issuance of debt.
Subsequently, interest-bearing borrowings are valued at
amortized cost using the effective interest method; the
difference between the transaction price (after transaction
costs) and the face value is recognized in the Income
statement in the period until the loan falls due. Amortized
costs are calculated by considering all issue costs on the
settlement date, except for any discount or premium
expensed immediately.
1.23 Tax
General
Tax consists of tax payable and changes in deferred tax.
Deferred tax/tax benefits are calculated on the basis of the
differences between book value and tax basis values of assets
and liabilities, with the exception of temporary differences on
acquisition of licenses that are defined as asset purchases.
Deferred tax is measured using the expected tax rate when
the tax benefit is realised or the tax liability is met, based
on tax rates and tax regulations that have been enacted or
substantively enacted at the reporting date.
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Tax payable and deferred tax is recognized directly against
equity or other comprehensive income insofar as the tax
items are related to equity transactions or items of other
comprehensive income.
Deferred tax and tax benefits are presented net, where
netting is legally permitted and the deferred tax benefit and
liability are related to the same tax subject and are payable to
the same tax authorities.
Functional currency
The company’s functional currency is USD, while it is a
statutory requirement to calculate the current tax based
on NOK functional currency. This may impact the effective
tax rate when the exchange rate between NOK and USD
fluctuates. The revaluation of tax receivable and payable is
presented as foreign exchange gain/loss, while the impact on
deferred tax from revaluation of tax balances is presented as
tax expense / income.
Petroleum taxation
As an oil and gas company in Norway, Aker BP is subject to
the special provisions of the Petroleum Taxation Act. Taxable
profits from activities on the Norwegian Continental Shelf are
liable to ordinary company tax and special tax. For 2021 the
tax rate for general corporate tax was 22 percent and the rate
for special tax was 56 percent, giving a combined tax rate of
78 percent.
In June 2022, changes to the Petroleum Tax Act were enacted
with effect from 1 January 2022. The combined tax rate of
78 percent is maintained, but according to the new rules
the special petroleum tax (56 percent) is converted into a
cash-based tax. When calculating the special petroleum
tax for 2022 and onwards, companies can make immediate
deductions for expenses incurred, but with no right for uplift.
In addition, the corporate tax (22 percent) is deductible in the
special tax base (56 percent). In order to maintain the overall
tax rate of 78 percent, the special tax rate is increased to 71.8
percent [56 percent / (1-22 percent)].
Tax depreciation
Investments in pipelines and production facilities can be
depreciated by up to 16 2/3 percent annually, i.e., using
the straight-line method over six years. Tax depreciation
commences when the expenses are incurred. When a field
stops producing, any remaining tax values may be deducted
in that year. Changes to the Petroleum Taxation Act were
enacted in June 2022 with effect from 1 January 2022. Under
the new rules, investments are immediately deducted in the
special tax base, while the ordinary depreciation rules still
apply to the corporate tax base.
In 2020, certain temporary changes were enacted in the
Petroleum Tax Act. The changes included temporary rules
for depreciation and uplift, whereby all investments incurred
for income year 2020 and 2021 including uplift could be
deducted for special tax in the year of investment. The
temporary changes are also applicable for investments up to
and including year of production start in accordance with new
PDOs delivered within 31 December 2022 and approved
within 31 December 2023.Uplift
Uplift is a special income deduction in the basis for calculation
of special tax. Uplift is calculated on the basis of investments
in pipelines and production facilities, and can be regarded
as an extra depreciation deduction in the special tax
regime. Uplift is recognized in the year it is deducted in the
companies’ tax returns, and this has a similar effect on the
tax for the period as a permanent difference. The uplift rate
was 5.2 percent in 2019 over a period of four years, totalling
20.8. Under the temporary tax rule enacted in 2020, the
uplift is 24% for income year 2021 and can be deducted
for special tax (56%) in the year of investment. As part of
the introduction of new tax rules in 2022, the uplift rate for
investments made under the temporary tax system has been
revised to a technically adjusted level of 17.69 percent results
from the fact that the marginal tax rate has increased to 71.8
percent.
Financial items
Interest on debt with associated currency losses/gains (net
financial expenses on interest-bearing debt) is distributed
between the offshore and onshore tax regimes. Offshore
interest deduction is calculated as the net financial costs of
interest-bearing debt multiplied by 50 percent of the ratio
between net asset value for tax purposes allocated to the
offshore tax regime as of 31 December in the income year
and the average interest-bearing debt through the income
year.
Remaining financial expenses, currency losses and all interest
income as well as currency gains are allocated to the onshore
jurisdiction.
Uncovered losses in the onshore tax jurisdictions resulting
from the distribution of net financial items can be allocated
to the offshore tax jurisdictions and deducted from regular
income.
Only 50 percent of other losses in the onshore tax
jurisdictions are permitted to be reallocated to the offshore
tax jurisdictions as deductions in regular income.
Tax loss
As a consequence of the changes in the Petroleum Tax Act
effective from 1 January 2022, the cessation refund is no
longer applicable. However, companies subject to special tax
may, without time limitations, carry forward corporate losses.
Special petroleum tax losses are reimbursed by the state in
the following year as part of the ordinary tax assessment. The
tax position can be transferred on realisation of the company
or merger.
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1.24 Employee benefits
Pension schemes
The company complies with the requirement to have an
occupational pension scheme in accordance with the
Norwegian law on required occupational pension (“lov om
obligatorisk tjenestepensjon”).
The company makes contributions to the pension plan for full-
time employees equal to 7 percent for salary up to 7.1 G and
25.1 percent between 7.1 and 12 G. The pension premiums
are charged to expenses as they are incurred.
An early retirement scheme (AFP) has been introduced for all
employees. The scheme is a multi-employer defined benefit
plan, but is accounted for as a defined contribution pension,
and premiums are expensed as incurred.
1.25 Provisions
A provision is recognized when the company incurs a
commitment (legal or constructive) as a result of a past event,
it is probable that financial settlement will take place as a
result of this commitment, and the amount can be reliably
calculated. Provisions are evaluated at each period end and
are adjusted to reflect the best estimate.
An onerous contract is a contract in which the unavoidable
costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it. A
provision for onerous contracts is measured at the present
value of the lower of the expected cost of terminating the
contract and the expected net cost of continuing with the
contract. If the discounting effect is significant, provisions
are discounted using a discount rate before tax that reflects
the market’s pricing of the time value and risk specifically
associated with the commitment. As discounting unwinds,
the book value of the provisions is increased in each period
to reflect the change in time relative to the due date of the
commitment. The effect of this increase is expensed as an
accretion expense.
Decommissioning and removal costs:
In accordance with the license terms and conditions for the
licenses in which the company participates, the Norwegian
State can require license owners to remove the installation in
whole or in part when production ceases or the license period
expires.
In the initial recognition of the decommissioning and removal
obligations, the company provides for the net present value
of future costs related to decommissioning and removal. A
corresponding asset is capitalized as a tangible fixed asset and
depreciated using the unit-of-production method. Changes
in the time value (net present value) of the obligation related
to decommissioning and removal accretion are charged to
income as financial expenses and increase the balance-sheet
liability related to future decommissioning and removal
expenses. Changes in the best estimate for expenses
related to decommissioning and removal are recognized
in the Statement of financial position (property, plant and
equipment), except where it relates to licenses with no future
production. The discount rate used in the calculation of the
fair value of the decommissioning and removal obligation is
the risk-free rate.
1.26 Segment
Since its formation, the company has conducted its entire
business in one consistent segment, defined as exploration
for and production of petroleum in Norway. The company
conducts its activities on the Norwegian Continental Shelf,
and management monitors the company at this level. The
financial information relating to geographical distribution and
large customers is presented in note 5.
1.27 Earnings per share
Earnings per share are calculated by dividing the net profit/
loss attributable to ordinary equity holders of the parent entity
by the weighted average number of the total outstanding
shares. Shares issued during the year are weighted in relation
to the period in which they have been outstanding. The
weighted average number of shares used to calculate diluted
earnings per share includes contingently issuable ordinary
shares to the extent that they would be issuable as at the
reporting date if it were the end of the contingency period.
1.28 Contingent liabilities and assets
Except for in the event of a business combination, neither
contingent liabilities nor contingent assets are recognized.
A contingent liability is a possible obligation that arises from
past events and whose existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the entity; or
a present obligation that arises from past events but is not
recognized because it is not probable that an outflow of
resources embodying economic benefits will be required to
settle the obligation or the amount of the obligation cannot
be measured with sufficient reliability.
Contingent liabilities are disclosed with the exception of
contingent liabilities where the probability of the liability
having to be settled is remote.
Contingent assets are possible assets that arise from past
events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the entity.
Information about such contingent assets is provided if inflow
of economic benefits is probable.
1.29 Changes to accounting standards and
interpretations that:
Have entered into force:
The group has applied the following standards and
amendment for the first time for their annual reporting period
commencing 1 January 2022:
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Amendments to IAS 16,’ Property, plant and equipment:
IAS 16 requires that the cost of an asset includes any costs
attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner
intended by management. One of those costs is testing
whether the asset is functioning properly.
The amendment to IAS 16 prohibits an entity from deducting
from the cost of an item of PP&E any proceeds received
from selling products produced while the entity is preparing
the asset for its intended use (for example, pre-production
revenue from hydrocarbons produced as part of getting a field
on stream). The proceeds from selling such volumes, together
with the costs of producing them, are now recognised in profit
or loss. Cost will not include depreciation of the asset being
tested because it is not ready for its intended use.
The amendment also clarifies that an entity is ‘testing whether
the asset is functioning properly’ when it assesses the
technical and physical performance of the asset. The financial
performance of the asset is not relevant to this assessment.
An asset might therefore be capable of operating as intended
by management and subject to depreciation before it has
achieved the level of operating performance expected by
management. The application of the amendment did not have
a material impact on the income statement in 2022.
Have been issued but have not entered into force:
Certain new accounting standards and interpretations are
issued, but not yet effective as of 31 December 2022. These
standards are not expected to have a material impact on the
group in the current or future reporting periods.
Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12 Income taxes (IAS
12):
In May 2021, amendments to IAS 12 were published to
require companies to recognise deferred tax on particular
transactions that, on initial recognition, give rise to equal
amounts of taxable and deductible temporary differences. The
amendments will typically apply to transactions where assets
and liabilities are recognised from a single transaction, such
as leases for the lessee and decommissioning and restoration
obligations. The amendments are effective for annual
reporting periods beginning on or after 1 January 2023.
Disclosure of Accounting Policies – Amendments to IAS 1 and
IFRS Practice Statement 2:
The IASB amended IAS 1 to require entities to disclose their
material rather than their significant accounting policies.
The amendments define what is ‘material accounting policy
information’ and explain how to identify when accounting
policy information is material. They further clarify that
immaterial accounting policy information does not need to
be disclosed. If it is disclosed, it should not obscure material
accounting information.
To support this amendment, the IASB also amended IFRS
Practice Statement 2 Making Materiality Judgements to
provide guidance on how to apply the concept of materiality
to accounting policy disclosures.
Aker BP Annual Report 2022
63
1.30 Voluntarily changes in accounting policies:
Change in discount rate for abandonment provisions:
The accounting policy for abandonment provisions have
been changed in 2022. The discount rate for calculating
abandonment provisions has historically included a credit
element in addition to a risk-free rate. In line with the
development in industry practice with regards to the
interpretation of the relevant guidelines in IAS 37, the
company has changed the discount rate so that this no
longer includes a credit element. Comparative figures from
1 January 2021 have been restated accordingly. Based
on the complexity in the calculations, it has been deemed
impracticable to measure the impact on equity at 1 January
2021. As a result, the company has recorded the difference
between the remeasured abandonment provision and the
historical abandonment provision at 1 January 2021 as an
adjustment to Property, plant and equipment.
The following table shows the effects of the change in
accounting policy. The effect is similar for both group and
parent in 2021:
BREAKDOWN OF RESTATEMENT IMPACT ON
THE INCOME STATEMENT (USD 1000)
2021
Depreciation - prior to restatement 964 083
Depreciation - after restatement 1 192 889
Change 228 807
Impairment - prior to restatement 262 554
Impairment - after restatement 262 554
Change -
Net financial items - prior to restatement -241 718
Net financial items - after restatement -189 913
Change -51 804
Tax expense/income - prior to restatement 2 222 080
Tax expense/income - after restatement 2 084 012
Change -138 069
Net profit/loss - prior to restatement 850 704
Net profit/loss - after restatement 811 771
Change -38 933
BREAKDOWN OF RESTATEMENT
IMPACT ON THE STATEMENT OF
FINANCIAL POSITION (USD 1000)
31.12.2021 01.01.2021
Property, plant and equipment -
prior to restatement
7 976 308 7 266 137
Property, plant and equipment - 10 214 438 9 357 906
Change 2 238 131 2 091 768
Long-term abandonment provision
- prior to restatement
2 656 358 2 805 507
Long-term abandonment provision
- after restatement
5 071 491 4 897 275
Change 2 415 133 2 091 768
Deferred tax - prior to restatement 3 323 213 2 642 461
Deferred tax - after restatement 3 185 144 2 642 461
Change -138 069 -
Equity - prior to restatement 2 341 891 1 987 281
Equity - after restatement 2 302 957 1 987 281
Change -38 933 -
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Financials
Change in deferred tax on capitalised interest:
The tax regime for oil and gas companies in Norway limits the
tax deduction on parts of the company’s interest expenses
to 22 percent, while the general tax rate in the industry
is 78 percent. Parts of these interest expenses have been
capitalised as Property, plant and equipment, and deferred
tax has been calculated at 22 percent in line with the tax
deduction outside the special tax regime, in line with industry
peers. The company has revised its accounting policy, and
concluded to change the applied deferred tax rate from
22 to 78 percent for interest capitalised as Property, plant
and equipment, to better reflect the tax consequences
that would follow from the manner in which the company
expects to recover the carrying amount of Property, plant and
equipment. Prior periods have been restated accordingly. The
following table shows the effects of the change in accounting
policy. The effect is similar for both group and partent in
2021. The figures below include the restatements related
to abandonment provisions in the table above, to the extent
applicable.
BREAKDOWN OF RESTATING IMPACT ON THE
INCOME STATEMENT (USD 1000)
2021
Tax expense/income - prior to restating 2 084 012
Tax expense/income - after restating 2 067 855
Change -16 157
Net profit/loss - prior to restatement 811 771
Net profit/loss - after restatement 827 928
Change 16 157
BREAKDOWN OF RESTATING IMPACT
ON THE STATEMENT OF FINANCIAL
POSITION (USD 1000)
31.12.2021 01.01.2021
Deferred tax - prior to restating 3 185 144 2 642 461
Deferred tax - after restating 3 291 287 2 764 761
Change 106 143 122 300
Equity - prior to restating 2 302 957 1 987 281
Equity - after restating 2 196 814 1 864 982
Change -106 143 -122 300
Aker BP Annual Report 2022
65
Note 2 Business combination
(USD 1 000) 30.06.2022
Value of cash consideration 2 221 805
Value of share consideration 9 336 636
Total value of consideration 11 558 441
Purchase price allocation (USD 1 000)
(USD 1 000) 30.06.2022
Goodwill 12 542 852
Other intangible assets
1)
1 282 230
Property, plant and equipment 7 663 300
Right-of-use assets 34 757
Long-term receivables 12 550
Other non-current assets 241
Inventories 40 156
Trade receivables 389 758
Other short-term receivables 217 474
Intercompany 57 048
Cash and cash equivalents 937 619
Total assets 23 177 984
On 30 June 2022, Aker BP finalized the acquisition of Lundin Energy. The transaction was announced on 21 December 2021, and Aker BP issued 271.91 million new shares to the
owners of Lundin Energy as compensation. In addition, the group paid a cash consideration of USD 2.22 billion. The purpose of the transaction is to create the E&P company of the future
which will offer low CO2 emmisions, low cost and an attractive growth pipeline in the industry. The acquisition includes three Dutch and one Swiss legal entity, in addition to Lundin
Energy Norway AS (renamed to ABP Norway AS at completion of the transaction). All oil and gas assets included in the transaction are located on the Norwegian Continental Shelf.
The acquisition date for accounting purposes corresponds to the finalization of the transaction on 30 June 2022. The acquisition is regarded as a business combination and has been
accounted for using the acquisition method of accounting in accordance with IFRS 3. A purchase price allocation (PPA) has been performed to allocate the consideration to fair value of
assets and liabilities in Lundin Energy. The PPA is performed as of the acquisition date, 30 June 2022. The 30 June closing share price at Oslo Stock Exchange (NOK 342.1) and the
closing currency exchange rate (USD/NOK 9.9629) were used as a basis for measuring the value of the shares consideration, as set forth below. The value of the cash consideration is
adjusted for certain settlement arrangements and currency impacts as the cash was transferred in Swedish Kronor.
Estimated transaction cost incurred in Aker BP is approximately USD 8 million, and is included in the income statement as other operating expenses.
Each identifiable asset and liability is measured at its acquisition date fair value based on guidance in IFRS 13. The standard defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This definition emphasizes that fair value is a market-based
measurement, not an entity-specific measurement. When measuring fair value, the group uses the assumptions that market participants would use when pricing the asset or liability under
current market conditions, including assumptions about risk. Acquired property, plant and equipment have been valued using the cost approach (replacement cost), while intangible assets
(value of licenses) have been valued using the income approach.
Accounts receivable are recognized at gross contractual amounts due, as they relate to large and credit-worthy customers. Historically, there has been no significant uncollectible
accounts receivable in Lundin Energy.
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Financials
(USD 1 000) 30.06.2022
Deferred taxes 5 802 641
Long-term abandonment provision 724 320
Long-term bonds 1 725 965
Long-term derivatives 4 277
Long-term lease debt 20 251
Other interest-bearing debt 600 000
Trade creditors 17 858
Accrued public charges and indirect taxes 33 109
Tax payable 2 181 017
Short-term derivatives 199 367
Short-term abandonment provision 21 580
Short-term lease debt 14 506
Other current liabilities 274 655
Total liabilities 11 619 544
Net assets and liabilities recognized 11 558 441
Fair value of consideration paid on acquisition 11 558 441
Reconciliation of goodwill from the acquisition of Lundin Energy (USD 1 000)
30.06.2022
Goodwill related to synergies - residual goodwill 6 291 672
Goodwill as a result of deferred tax - technical goodwill 6 251 180
Net goodwill from the acquisition of Lundin Energy 12 542 852
The purchase price allocation above is preliminary and based on currently available information about fair values as of the acquisition date. If new information becomes available within 12
months from the acquisition date, the group may change the fair value assessment in the PPA, in accordance with guidance in IFRS 3.
If the acquisition had taken place at the beginning of 2022, revenue would have increased by USD 3.7 billion and net income would have increased by USD 422 million.
1. The ability to capture synergies that can be realized from managing a larger portfolio of both acquired and existing fields on the Norwegian Continental Shelf, including workforce
("residual goodwill").
2. The requirement to recognize deferred tax assets and liabilities for the difference between the assigned fair values and the tax bases of assets acquired and liabilities assumed in a
business combination. Licences under development and licences in production can only be sold in a market after tax, based on a decision made by the Norwegian Ministry of Finance
pursuant to the Petroleum Taxation Act Section 10. The assessment of fair value of such licences is therefore based on cash flows after tax. Nevertheless, in accordance with IAS 12
Sections 15 and 19, a provision is made for deferred tax corresponding to the tax rate multiplied by the difference between the acquisition cost and the tax base. The offsetting entry to
this deferred tax is goodwill. Hence, goodwill arises as a technical effect of deferred tax ("technical goodwill").
None of the goodwill recognized will be deductable for tax purposes.
1)
Mainly related to undeveloped oil and gas assets
The goodwill of USD 12.5 billion arises principally because of the following factors:
Aker BP Annual Report 2022
67
Parent company - accounting effect of mergers:
Note 3 Overview of subsidiaries
Companies acquired as part of the Lundin transaction
Aker BP UK Limited (100 percent)
ABP Services BV: A service company with limited activity in 2022. The company was liquidated in September 2022.
As of 13 October 2022, the wholly owned subsidiary ABP Energy Holding BV was merged with the parent company Aker BP ASA. The merger was carried out in accordance with the
Public Limited Liability Companies Act section 13-25, and the merger was carried out based on group continuity for accounting purposes. Upon completion of the merger, all assets, rights
and obligations of ABP Energy Holding BV was transferred to Aker BP ASA without any consideration being rendered. At the same time, ABP Energy Holding BV was liquidated. The
merger is considered a transaction for tax purposes.
As of 31 December 2022, the wholly owned subsidiary ABP Norway AS was merged with the parent company Aker BP ASA. The merger was carried out in accordance with the Public
Limited Liability Companies Act section 13-24, and the merger was carried out based on group continuity for accounting purposes. Upon completion of the merger, all assets, rights and
obligations of ABP Norway AS was transferred to Aker BP ASA without any consideration being rendered. At the same time, ABP Norway AS was liquidated. The merger is based on
company continuity from 1 January 2022 for tax purposes
ABP Energy Holding BV: The holding company in the previous Lundin structure. It was the surviving entity of the merger with ABP Finance BV in September 2022 and merged with Aker
BP ASA in October 2022.
ABP Marketing SA: Company used for trading and sale of Petroleum in the previous Lundin structure. This activity was transferred to Aker BP ASA at closing 30 June 2022 and the
company was liquidated in November 2022.
ABP Norway AS: The Norwegian company which included all oil & gas activity at the Norwegian Continental Shelf in the previous Lundin structure. All employees were transferred to
Aker BP ASA 1 October 2022 and the company was merged with Aker BP ASA at 31 December 2022.
Aker BP UK Limited was established as a subsidiary of Det norske oljeselskap AS during 2020. In 2021, the company entered into an agreement with Eni UK to acquire a 50 percent non-
operated interest in license P2511 on the UK continental shelf. The main activity has been to acquire and interpret seismic in the area. License P2511 is located to the borderline of the
Norwegian continental shelf. The key objective for the partnership between Eni UK and Aker BP UK is to explore the resource potential, based on the knowledge obtained in the Alvheim
area.
Aker BP ASA has three other subsidiaries which are not consolidated in the group accounts in 2022 due to materiality considerations:
As described in note 2, Aker BP finalised the acquisition of Lundin Energy at 30 June 2022. The transaction included the companies mentioned below, of which all of them have been
either liquidated or merged with the parent company Aker BP ASA within year end 2022. The companies were generally renamed from "Lundin" to "ABP" at closing of the Lundin
transaction.
ABP Finance BV: This was the financing company in the previous Lundin structure, and included two external bonds of USD 1 000 million each as well as intercompany receivables
towards ABP Energy Holding BV. The company was merged with ABP Energy Holding BV in September 2022.
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Financials
Det norske oljeselskap AS (100 percent)
Alvheim AS (80 percent)
Sandvika Fjellstue AS (100 percent)
Note 4 Climate-related risk
Det norske oljeselskap AS, previously Marathon Oil Norge AS, was acquired by Aker BP in October 2014. All activity was transferred to Aker BP on 31 October 2014. During 2020, Aker
BP UK Limited (see above) was established as a subsidiary of Det norske oljeselskap AS. Except for the subsidiary, the only asset in this company is cash equivalents reflecting the share
capital amounting to USD 1.0 million.
Sandvika Fjellstue AS owns a conference centre used by Aker BP, located in Sandvika in Verdal.
The sole purpose of Alvheim AS is to act as legal owner of MST Alvheim, the floating production facility which is used to produce oil and gas from the Alvheim fields. The costs of and
benefits from operating the MST Alvheim will be carried by the partners in the Alvheim field. Hence, Alvheim AS only has the formal ownership rather than the actual value of the
production facilities. Following the Lundin transaction, Aker BP has a 80 percent share in Alvheim AS, which corresponds to the ownership in the Alvheim field. There were no activities in
2022.
Climate-related risk assessment is generally described in the company’s sustainability reporting, and may have a significant impact on financial reporting. Climate-related risks can be
divided into two major categories:
- Transitional: Risks related to the transition to a lower-carbon economy
- Physical: Risks related to the physical impacts of climate change
Transitional risks
Transitional risks are deemed most relevant for financial reporting, and can be categorized as follows:
Market
- Demand for oil and gas can decrease significantly faster than anticipated, resulting in significantly lower oil and gas prices
- In anticipation of the faster energy transition, key producers can shift their strategy to market share maximation, driving down prices
- Continued underinvestment in oil and gas production can result in supply declining slower than demand, resulting in a supply gap and significantly higher prices than in our planning
assumption
Regulatory and legal
- The EUA price and/or Norwegian CO2 tax can increase faster and rise higher than what is anticipated
- Mandatory emission abatements can be enforced that are not competitive with other uses of capital or are uneconomic
- Access to new acreage can be reduced, in which case Aker BP’s and the Norwegian E&P industry’s longer-term growth prospects would be reduced, which would also lead to a potential
increase in the cost of capital
Technological
- Technological breakthroughs (e.g. batteries, renewables, hydrogen) and/or regulations can drive faster displacement of oil and gas in energy and non-energy sectors
- A faster and bigger scale of electrification in Europe can result in higher prices for power, and increase our costs
Reputational
- Investors’ perception of oil and gas investments can deteriorate, impacting availability and cost of capital and availability and cost of insurance
- Industry’s attractiveness can deteriorate making it difficult to attract and retain the right talent
Significant mitigating actions are taken by the company to address these transitional risks, such as:
- Climate risks integrated in all investment decisions.
- A strict financial framework for investment decisions; sanctioning projects with robust break-even price significantly lower than both current market prices and the company’s long term
price assumptions
- Long term corporate assumptions generally taking climate-related risks into account (e.g. long term oil price would have been significantly higher without that risk)
- Internal carbon price exceeding IEA’s Net Zero scenario
- Scenario analysis and sensitivity testing on both portfolio and project levels
- Cost reduction initiatives
- Requirement for all potential projects to be assessed for CO2 emission intensity and resilience against higher carbon taxes
- Emissions reduction initiatives
- Electrification, using hydro power from shore, or, where feasible, from offshore wind
Aker BP Annual Report 2022
69
Note 5 Segment information
The group's business is entirely related to exploration for and production of petroleum on, or to the borderline of, the Norwegian continental shelf. The group's activities are considered to
have a homogeneous risk and return profile before tax, and the business is located in the geographical area Norway, except for one exploration license in the UK. The group operates
within a single operating segment which matches the internal reporting to the company's executive management. In 2022 the group had sales transactions with two customers, which
represented more than 10% of total sales, BP Oil International Limited accounted for USD 8 797 million and BP Gas Marketing Limited accounted for USD 2 820 million. In 2021 the
sales transactions with BP Oil International Ltd were USD 4 281 million, and transactions with BP Gas Marketing Ltd were USD 1 056 million. The parent company`s transactions with BP
Oil International LTD accounted for USD 5 709 million, and transactions with BP Gas Marketing Limited accounted for USD 2 820 million. In 2021 the parent sales transactions with BP
Oil International Limited were USD 4 281 million, and transactions with BP Gas Marketing Limited were USD 1 056 million.
To illustrate the potential impact on some of the above mentioned financial reporting elements, we have included sensitivity analysis within the following areas:
- Impairment (note 15): Transparency on carbon pricing and impairment sensitivity on oil and gas prices in the most recent IEA scenarios
- Abandonment provisions (note 23): The impact on book value of abandonment provisions if cease of production of fields with estimated lifetime after 2040 were accelerated by 10
years
- Interest expenses (note 11): Estimated increased credit spread of two percent on current loan balances. Although this is not applicable on a short-term basis given fixed rates on all
current bonds, it provides visibility on potential increased interest exposure on a longer term basis
- Reserves (note 32): Impact on reserves if all production would cease from 2050 onwards
Physical risks
The following are examples of physical risks relevant for Aker BP:
Acute
Extreme waves/weather, if becoming more frequent, may lead to operational shut-down or accelerated need for modifications of existing installations by means of threatening safe design
limits and structural integrity. Several Aker BP fields with fixed installations may be exposed to this risk – the Valhall field platforms, Tambar and Ula platforms, Ivar Aasen and Edvard
Grieg platforms. The most significant factor being what is referred to as “wave-in deck”. This factor is controlled by the air gap between sea level and deck of the installation.
Chronical
Change in precipitation patterns and extreme variability in weather patterns over time may affect working environment conditions, for example reducing the period an offshore worker
may tolerably be exposed to a certain working environment condition while performing their scope of work.
Although considered less likely than transitional risks, physical risks may result in severe damage to the company’s installations and may lead to significant shortened lifetime of the
producing fields, as well as increased cost for mitigating actions, including preventive investments made in the field developments over the next years. As the climate changes further
evolve, it is also a risk for increased probability that the physical risks will materialize.
Opportunities
The assessment related to climate impacts will mainly be on the risk side. However, the situation may also give rise to some opportunities. In an investment environment that is
increasingly shaped by intensifying ESG pressure, Aker BP’s leading carbon efficiency and low production costs provide a strong competitive advantage and potentially better
opportunities to obtain capital. This opportunity is further supported by the same actions as mitigating actions on the risk side;
- Cost reduction initiatives
- Emission reduction initiatives
Net zero strategy
In 2022 Aker BP launched a decarbonisation strategy which included to reduce absolute CO2 emissions with 50% by 2030 and close to 100% by 2050. The reduction is mainly driven by
portfolio optimisation where current business plans indicate that the last non-electrified fields (Skarv and Alvheim) will cease production in the 2040’s. Certain emission reduction projects
offshore are reflected in the business plans, and carbon removal offsets such as tree planting is not expected to incur significant cost on a long term basis. Hence, the net zero strategy is
deemed to be sufficiently reflected in the current business plans, which is the basis for the company’s impairment testing.
Although the above mitigating actions may limit the exposure, the company’s financial reporting is significantly impacted by the transitional risks. Lower demand for oil and gas, and
increased cost for Aker BP operations may have the following consequences for certain items within the financial reporting:
- Decreased revenue
- Higher operational cost
- Shortened lifetime of the producing fields which may lead to higher present value of the abandonment provision, as well as increased depreciation rates and impairment charges of fixed
and intangible assets
- Lower profitability together with investor’s perception of oil and gas investments may result in higher cost of capital and lack of available capital resources. This is particularly relevant
for Aker BP given the expected significant project investments over the next years
- Increased tax burden as a result of unfavourable changes to the tax regime
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Financials
Note 6 Income
Breakdown of petroleum revenues (USD 1 000)
2022 2021 2022 2021
Sales of liquids 8 986 404 4 392 625 5 834 612 4 392 625
Sales of gas 3 898 895 1 233 314 3 412 515 1 233 314
Tariff income 10 883 14 051 10 883 14 051
Total petroleum revenues 12 896 182 5 639 990 9 258 009 5 639 990
Sales of liquids (boe 1 000) 91 816 63 447 57 830 63 447
Sales of gas (boe 1 000) 20 164 13 935 17 558 13 935
Other income (USD 1 000)
Realized gain/loss (-) on oil derivatives 27 003 -19 362 27 003 -19 362
Unrealized gain/loss (-) on oil derivatives 8 989 -5 449 8 989 -5 449
Gain on license transactions 11 000 - 11 000 -
Other income 66 725 53 568 64 311 53 568
Total other income 113 716 28 757 111 302 28 757
Note 7 Production costs
Production costs (USD 1 000)
2022 2021 2022 2021
Cost of operations 682 681 472 791 597 570 472 791
Shipping and handling 231 513 179 579 188 082 179 579
Environmental taxes 63 944 47 637 54 355 47 637
Production cost based on produced volumes 978 139 700 007 840 007 700 007
Adjustment for over/underlift (-) -45 269 45 306 -25 554 45 306
Production cost based on sold volumes 932 870 745 313 814 453 745 313
Total produced volumes (boe 1 000) 112 853 76 439 75 436 76 439
Production cost per boe produced (USD/boe) 8.7 9.2 11.1 9.2
Note 8 Exploration expenses
Breakdown of exploration expenses (USD 1 000)
2022 2021 2022 2021
Seismic 34 424 23 138 30 047 23 138
Area fees 12 324 18 891 13 292 18 891
Field evaluation 10 749 176 969 8 101 176 969
Dry well expenses 135 800 98 827
108 560 98 827
Other exploration expenses 48 896 35 208 36 187 35 208
Total exploration expenses 2
2
4
4
2
2
1
1
9
9
3
3
3
3
5
5
3
3
0
0
3
3
4
4
1
1
9
9
6
6
1
1
8
8
7
7
3
3
5
5
3
3
0
0
3
3
4
4
Group Parent
Refer to note 24 and 29 for further details regarding commodity derivatives.
Group Parent
Group Parent
Aker BP Annual Report 2022
71
Note 9 Payroll expenses and remuneration
Breakdown of payroll expenses (USD 1 000)
2022 2021 2022 2021
Payroll expenses 342 985 328 324 327 320 328 324
Pension 34 036 31 197 32 151 31 197
Social security tax 53 594 51 090 51 115 51 090
Other personnel costs 20 363 7 039 19 828 7 039
Total payroll expenses 4
4
5
5
0
0
9
9
7
7
8
8
4
4
1
1
7
7
6
6
4
4
9
9
4
4
3
3
0
0
4
4
1
1
4
4
4
4
1
1
7
7
6
6
4
4
9
9
Number of full time equivalents employed during the year 2022 2021 2022 2021
Europe 2 462 1 773 2 036 1 773
Total 2 462 1 773 2 036 1 773
Employee share program
Description of Remuneration arrangements
General bonus scheme
1H 2022 2H 2022
Key Performance indicators for Aker BP 2022
Actual Actual
0.2 0.5
195 422
11.8 7.2
13.5 563
-1.8 % -17.4 %
4.3 3.3
-2.5 % N/A
3.9 78%People & Organisation - Puls survey KPIs
Value creation (change in Risked NPV)
Except for the new LTIP scheme described below, the company`s remuneration policy has in 2022 been in accordance with the guidelines described in the Board of Director`s Report for 2021 and submitted to
the annual general meeting for an advisory vote in April 2022.
The Board makes guidelines for executive remuneration, including the CEO’s remuneration and other terms and conditions of employment. These guidelines set out the main principles applied in determining the
salary and other remuneration of executive personnel and are addressed as a separate item at the General Meeting. Adjustment of the CEO's base salary is decided by the Board. Adjustment of the base salaries
for other senior executives is decided by the CEO within the wage settlement framework adopted by the Board.
Senior executives receive a basic salary, adjusted annually. Executives receive non-monetary benefits such as electronic equipment, yearly health checks and other company-specific general benefit and welfare
programs. In addition, executives may participate in customary employee benefit programmes, e.g. employee share programmes. In special cases, the company may offer other benefits in order to recruit
personnel, including to compensate for bonus rights earned in previous employment.
The bonus for all employees, including the CEO and EMT, is determined by the company’s performance on a pre-defined set of key performance indicators (KPIs) and Company Priorities, which are important
improvement initiatives or activities with clear deliverables that are critical for the company's future success.
Normally, the bonus is based on full year measure of the same KPI’s and the company's priorities throughout the year. Due to the closing of the Lundin transaction at 30 June 2022, there was a change in the
measures at that point in time, and 2022 has thus been split in two in relation to bonus outcome, as reflected in the tables below;
Safety (SIF/1 mill hrs)
Production (mboepd)
Production Cost (USD/boe)
Net reserve additions (mmboe)
Relatively Shareholder Return
CO
2
Intensity (kg CO
2
/boe) - operated fields
The company has an annual share purchase program for all employees, including senior executives. The shares in the program are offered at a 25 percent discount and are subject to a three-year lock-up during
which employees are not allowed to sell the shares. In connection with the share purchase program, all employees are also offered an interest free loan of 60 percent of the basic amount in the National
Insurance scheme ("G"), to be repaid within one year. In total, employees subscribed for USD 15.5 million in 2022, compared to USD 12.6 million in 2021
Group Parent
The payroll expenses are allocated to activities and partners based on timewriting.
Group Parent
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Financials
Long Term Incentive Program (LTIP) for EMT
Bonus for the first half was paid in October 2022 and was set to 61% of maximum potential based on the applicable KPIs and priorities. The corresponding figure for the second half was 80%.
Payout of previous LTIP
Certain members of the EMT participated in a five-year incentive program started in January 2019, through December 2023, linked to the relative performance of the Aker BP share price versus a benchmark
index consisting of the average of the Oslo Energy Index and the Stoxx 600 Europe Oil & Gas index (each weighted 50 percent). The incentive program payment was calculated as a linear function of market
outperformance, where an outperformance of 30 percent or more would result in a payment of the maximum cap. The maximum total payment was capped at 200 percent of the executive’s annual base salary.
The CEO incentive program had the same mechanics and start/end date and was capped at NOK 30 million.
Due to change of control mechanisms, the Lundin Energy transaction triggered payment of the long term incentive plan in Lundin Energy Norway AS. Correspondingly, the Board of Directors decided to settle
Aker BPs five-year incentive program (LTIP) as described above, in order to put in place a new LTIP for the combined company. The market outperformance by the Aker BP share as of Q2 2022 was above 30
percent, and the Board of Directors decided to pay 90 percent of maximum payment in July 2022 to the CEO and the EMT members participating in the previous LTIP scheme. The payment is reflected in a
separate column in the table below.
The KPIs and Company Priorities are each weighted 50 percent when estimating the bonus outcome . The final bonus outcome, following the formulaic assessment of performance relative to targets is specifically
reserved as a matter for the CEO and the Organisational Development and Compensation Committee. Accordingly, the committee may exercise its discretion to adjust the outcome upwards or downwards. The
CEO had maximum bonus potential corresponding to 100 percent of base salary until 30 June 2022. From 1 July 2022 the CEO’s maximum bonus potential was adjusted to 60 percent, which the same level as
for other members of EMT. The maximum bonus for employees outside the EMT varies from 10 percent to 30 percent depending on position level.
Company Priorities for the second half of 2022
• Deliver the Kobra East Gekko (KEG) project at planned quality and cost
• Identify and realise 600 000 boe gross through production optimisation, increased production efficiency and well interventions
• Realise value from identified integration synergies
• Revitalise alliance culture and improve alliance agreements and incentive models to balance risk and strengthen value creation
• Deliver Walk to Work project on (Normally) Unmanned Installations
• Integrate and deliver the Utsira High project PDO
• Deliver successful “day 1” in Aker BP/Lundin and deliver remaining 2022 integration program
• Deliver the Fenris (previously named NCP/King Lear) sanctioning and PDO with break-even price below USD 30/boe
• Deliver Yggdrasil (renamed from NOAKA) sanctioning and PDO with break-even price below USD 30/boe
• Develop plan for and successfully integrate Lundin and Aker BP
Company Priorities for the first half of 2022
• Deliver Hod first oil by end of Q1 at planned quality and cost
• Finalise Aker BP barrier management framework and requirements including barrier status panel
• Enable robust economics for small targets and utilise IOR potential around our assets through the delivery of low-cost reservoir access project
• Drive an increase in plan stability in the Execution Window
• Deliver New ways of working initiative as a first step to transform operating efficiency in Aker BP
• Establish and operatinalise project portfolio safeguarding in order to mitigate risks, ensure standardisation, capture and document synergies across projects, including regular portfolio outlook reviews by the
Executive Management Team
• Establish a prioritised and high-graded hoppe of 10-15 (6-8 operated) exploration drill ready for the combined company to meet economic hurdles
Aker BP Annual Report 2022
73
Outperformance of the market
indexes
Payout
30 % or above 200%
15% 150%
0% 100%
-15% 50%
Less than -15 % 0%
Fair value at grant date NOK 446.18
NOK 350.41
Expected volatility:
Aker BP 49%
Oslo Energy Index 36%
33%
44%
Expected life 3 years
2.8%
Pension scheme and notice period
The pension scheme continues to be a defined contribution plan capped at twelve times the National Insurance scheme basic amount (12G) for all employees including the executive management.
The CEO and members of the EMT have six months mutual notice period. For all other employees, the notice period is three months. The chief executive officer and the chief financial officer are entitled to a
severance payment equivalent to six months’ salary, commencing after the six months’ notice period, when the resignation is requested by the company.
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price, particularly over the historical period commensurate with the expected term. The expected term of the
grants has been based on three-year vesting period.
New LTIP from 1 July 2022
A new long-term incentive program for the combined company has been developed and is subject for approval of the General Meeting in April 2023. The program is designed to incentivize the executive
directors to deliver on the long-term business objectives and to maximize alignment with shareholder value creation. The proposed program is an equity settled share-based payment scheme with a three-year
vesting period. Grants will be made under the program on an annual basis for all members of the EMT, starting as of July 2022 when an award of 28 674 shares was made with a vesting date of July 2025 (being
the base number of awards before any performance adjustments as described below). The number of awards made corresponds to 20 percent of the employee’s base salary divided by the Aker BP share price on
the award date. The award includes a three year performance condition at the end of which there will be an assessment of the company’s total shareholder return measured against Oslo Energy Index, Stoxx
600Europe Oil & Gas index and the S&P Commodity Producers Oil & Gas Exploration & Production Index (each weighted 33,3 percent), to reflect the company’s business strategy and key ambitions. Based on
performance, the number of shares awarded will be adjusted as follows:
The shares convert to ordinary shares upon vesting, with a subsequent lock-in period for the employee of one year. None of the grants were forfeited as at 31 December 2022.
The LTIP agreement includes a clawback clause.
The fair value of the grants has been measured using a Monte Carlo simulation. Service conditions were not taken into account when measuring fair value. The post-vesting lock-in non-vesting condition has
been incorporated into the grant date fair value by applying a discount to the valuation by estimating the probability that the employee will not comply with this condition .
The inputs used in the measurement of the 1 July 2022 grant date fair values were as follows:
Aker BP share price at grant date
Stoxx 600 Europe Oil & Gas Index
SS&P Commodity Producers Oil & Gas E&P & Index
Risk free interest rate (based on government bonds)
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
74
Financials
(USD 1 000)
Bonus**
Karl Johnny Hersvik (Chief Executive Officer) 967 520 2 805 64 4 356 23 10 355 4 925
Per Harald Kongelf (Chief Operating Officer)
1)
417 184 686 2 1 289 23 5 546 2 125
David Torvik Tønne (Chief Financial Officer)
390 178 620 9 1 197 22 18 935 1 921
Paula Doyle (Chief Digital Officer)
2)
182 103 - 209 494 11 - 2 028
Knut Arne Kristian Sandvik (SVP projects) 370 189 601 3 1 164 23 5 111 1 863
Tommy Sigmundstad (SVP D&W) 367 161 621 3 1 151 23 10 451 1 922
Evy Glørstad (SVP Exploration & Reservoir Development)
3)
188 - - 8 195 6 N/A -
Morten Heir (SVP Exploration & Reservoir Development)
4)
261 98 - 6 364 23 1 856 -
Per Øyvind Seljebotn (SVP Exploration & Reservoir Development)
5)
121 110 - 1 232 8 619 1 347
Brit Tone Bergman (SVP People and Organisation)
6)
257 106 - 3 366 22 - -
Marit Blaasmo (SVP People & Safety)
7)
287 136 477 2 902 23 6 754 1 468
Jan Rosnes (SVP Strategy and Business Development)
8)
254 118 - 5 377 23 683 -
Georg Olav Vidnes (SVP Operations)
9)
269 88 - 8 366 23 1 553 1 398
Ine Dolve (SVP Alvheim)
10)
360 170 594 8 1 132 24 6 773 1 840
Lars Høier (SVP NOAKA)
11)
349 164 601 17 1 131 23 7 770 1 850
Ole Johan Molvig (SVP Valhall)
12)
357 106 609 3 1 076 23 15 169 1 886
Thomas Hoff-Hansen (SVP Ula)
13)
264 80 - 14 358 23 3 110 1 386
Kari Nielsen (SVP Edvard Grieg & Ivar Aasen)
14)
78 100 - 178 6 413 1 439
Thomas Øvretveit (SVP Skarv)
15)
170 65 - 62 297 17 309 1 276
Total remuneration of senior executives in 2022 5 908 2 675 7 614 426 16 624 367 95 407 28 674
1)
SVP Digitalisation & Business Transformation until 30.09.2022. Chief Operating Officer since 01.10.2022.
2)
Chief Digital Officer since 01.07.2022. Payments in kind
/
Other includes signing on fee
3)
SVP Exploration & Reservoir Development until 31.03.2022
4)
SVP Exploration & Reservoir Development from 01.04.2022 until 30.09.2022.
5)
SVP Exploration & Reservoir Development since 01.10.2022.
6)
SVP People & Organisation until 30.09.2022.
7)
SVP Health, Safety, Security, Environment & Quality until 30.09.2022. SVP People and Safety since 01.10.2022.
8)
SVP Strategy & Business Development until 30.09.2022.
9)
SVP Operations since 01.10.2022.
10)
SVP Operations & Asset Development until 30.09.2022. SVP Alvheim since 01.10.2022.
11)
SVP Operations & Asset Development - NOAKA until 30.09.2022. SVP NOAKA since 01.10.2022.
12)
SVP Valhall since 01.10.2022.
13)
SVP Ula since 01.10.2022.
14)
SVP Edvard Grieg & Ivar Aasen since 01.10.2022.
15)
SVP Skarv since 01.10.2022. Payment in kind
/
Other includes signing on fee.
*** These shares have been purchased by the individuals and are not part of the remuneration. The numbers include shares held in companies where the senior executives have controlling interest.
**** The numbers of grants awarded to each EMT member/individual as part of the new LTIP from 1 July 2022 as described above
Number of grants
awarded*****
* All remuneration to senior executives is paid in NOK and converted to USD using a yearly average USD/NOK-rate of 9.6245. For executives who have been in the Executive Management Team only parts of
the year, the figures include payroll for the full year.
** Numbers represent actual ordinary bonus earned in 2022. For the total amount in this column, USD 223 thousand relates to the new LTIP from 1 July 2022 as described above
*** Payment related to the previous LTIP from 1 January 2019, as described above
Remuneration of senior executives in 2022*
Salary LTIP***
Payments in
kind/Other
Total
remuneration Pension costs
Total number of
shares****
Aker BP Annual Report 2022
75
(USD 1 000)
Bonus**
Karl Johnny Hersvik (Chief Executive Officer) 929 651 121 19 1 719 24 10 355 0.0 %
Øyvind Bratsberg (Special Advisor)
1)
344 91 1 780 1 216 12 N/A N/A
Per Harald Kongelf (SVP Improvement) 423 171 3 - 598 24 5 546 0.0 %
Tommy Sigmundstad (SVP D&W) 380 154 12 7 553 24 10 038 0.0 %
Evy Glørstad (SVP Exploration & Reservoir Development)
392 160 7 - 559 25 9 423 0.0 %
Lene Landøy (SVP Strategy and Business Development)
2)
340 451 5 6 802 16 N/A N/A
David Torvik Tønne (Chief Financial Officer)
384 154 6 3 547 23 16 869 0.0 %
Marit Blaasmo (SVP HSSEQ) 287 111 3 - 401 24 4 688 0.0 %
Knut Arne Kristian Sandvik (SVP projects) 377 224 7 - 608 25 4 078 0.0 %
Ine Dolve (SVP Operations & Asset Development)
369 130 5 6 510 25 5 534 0.0 %
Lars Høier (SVP Operations & Asset Development - NOAKA)
359 138 4 1 503 24 6 671 0.0 %
Jan Rosnes (SVP Strategy and Business Development)
3)
209 49 4 - 263 24 408 0.0 %
Total remuneration of senior executives in 2021 4 793 2 487 177 822 8 279 269 73 610 0.0 %
1)
Special Advisor until 30.06.2021. Other includes payments arising from a mutual agreement in relation to Bratsberg leaving the company.
2)
SVP Strategy and Business Development until 31.08.2021
3)
SVP Strategy and Business Development since 01.09.2021
Fees in 2022*
Name Comments
Øyvind Eriksen
Chairman of the Board from 11.03.2016. Chair of the Organizational Development and Compensation committee. 96 - -
Anne Marie Cannon
69 12 078 0.0 %
Kjell Inge Røkke
Board member from 17.04.2013. 42 - -
Murray Auchincloss
Board member from 16.04.2020 - - -
Trond Brandsrud
Board member from 11.03.2016. Chairman of the Audit & Risk committee from 28.04.2016. 68 - -
Kate Thomson
- - -
Valborg Lundegaard
28 - -
Charles Ashley Heppenstall
Board member from 07.07. 2022.
21 852 587 0.2 %
Terje Solheim
24 637 0.0 %
Ingard Haugeberg
Employee representative from 30.08.2018. 20 948 0.0 %
Hilde K.Brevik
Deputy employee representative from 30.08.2018. 20 1 510 0.0 %
Tore Vik
Employee representative from 14.07.2021. 20 4 539 0.0 %
Sarah Alexandra Berg
Deputy employee representative from 07.07.2021. 3 2 225 0.0 %
Rune K. Fauskanger
Deputy employee representative from 07.07.2021. 3 7 888 0.0 %
Thomas Husvæg
Deputy employee representative from 07.07.2021. 3 132 0.0 %
Ørjan K.Brakstad
Deputy employee representative from 07.07.2021. 3 420 0.0 %
Svein Oskar Stoknes
Chair of the Nomination committee from 16.04.2020. 4 - -
Ingebret Hisdal
Member of the Nomination committee from 16.04.2020. 4 - -
Donna Riley
Member of the Nomination committee from 16.04.2020. - - -
Member until 05.04.2022
Paula Doyle
Board member from 15.04.2021 until 05.04.2022. 14 N/A N/A
Total 445 882 964 0.2 %
Fee
(USD 1 000)
Total number of
shares
Deputy Chair from 17.04.2013. Member of the Audit & Risk committee and Organizational Development and
Compensation committee.
Board member from 30.09.2016. Member of the Audit & Risk committee from 04.10.2016.
Board member from 05.04.2022.
Employee rep. from 20.03.2014. Member of the Organizational Development and Compensation committee.
* Fee to board members are paid in NOK and converted to USD using a yearly average USD/NOK-rate of 9.6245
Owning
interest
Remuneration of senior executives in 2021*
Salary
Payments
in kind Other
Total
remuneration Pension costs
Total number of
shares***
Owning
interest
* All remuneration to senior executives is paid in NOK and converted to USD using a yearly average USD/NOK-rate of 8.5991. For executives who have been in the Executive Management Team only parts of
the year, the figures include payroll for the full year.
** Numbers represent actual ordinary bonus earned in 2021, excluding LTIP (see description above).
*** These shares have been purchased by the individuals and are not part of the remuneration. The numbers include shares held in companies where the senior executives have controlling interest.
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
76
Financials
Fees in 2021*
Name Comments
Øyvind Eriksen
Chairman of the Board from 11.03.2016. Chair of the Organizational Development and Compensation committee. 104 - -
Anne Marie Cannon
71 12 078 0.0 %
Kjell Inge Røkke
Board member from 17.04.2013. 46 - -
Murray Auchincloss
Board member from 16.04.2020 - - -
Trond Brandsrud
Board member from 11.03.2016. Chairman of the Audit & Risk committee from 28.04.2016. 69 - -
Kate Thomson
- - -
Paula Doyle Board member from 15.04.2021.
34 - -
Terje Solheim
26 637 0.0 %
Ingard Haugeberg
Employee representative from 30.08.2018. 23 948 0.0 %
Hilde K.Brevik
Deputy employee representative from 30.08.2018. 13 1 201 0.0 %
Tore Vik
Employee representative from 14.07.2021. 11 3 594 0.0 %
Sarah Alexandra Berg
Deputy employee representative from 07.07.2021. 2 1 949 0.0 %
Rune K. Fauskanger
Deputy employee representative from 07.07.2021. 2 6 649 0.0 %
Thomas Husvæg
Deputy employee representative from 07.07.2021. 2 132 0.0 %
Ørjan K.Brakstad
Deputy employee representative from 07.07.2021. 2 423 0.0 %
Svein Oskar Stoknes
Chair of the Nomination committee from 16.04.2020. - - -
Ingebret Hisdal
Member of the Nomination committee from 16.04.2020. 7 - -
Donna Riley
Member of the Nomination committee from 16.04.2020. - - -
-
Member until -
Gro Kielland
Board member from 20.03.2014 to 15.04.2021. 19 N/A N/A
Ørjan Holstad
Employee representative from 01.11.2017 to 07.07.2021. 13 N/A N/A
Anette Hoel Helgesen Employee representative from 30.08.2018 to 07.07.2021. 13 N/A N/A
Nina Aas Deputy employee representative from 30.08.2018 to 07.07.2021. 2 N/A N/A
Oddbjørn Aune
Deputy employee representative from 30.08.2018 to 07.07.2021. 2 N/A N/A
Total 463 27 611 0.0 %
Board member from 30.09.2016. Member of the Audit & Risk committee from 04.10.2016.
Employee rep. from 20.03.2014. Member of the Organizational Development and Compensation committee.
* Fee to board members are paid in NOK and converted to USD using a yearly average USD/NOK-rate of 8.5991.
Deputy Chair from 17.04.2013. Member of the Audit & Risk committee and Organizational Development and
Compensation committee.
Fee
(USD 1 000)
Total number of
shares
Owning
interest
Aker BP Annual Report 2022
77
Note 10 Auditors fee
(USD 1 000) 2022 2021 2022 2021
Fees for statutory audit services - PWC (excluding VAT) 230 - 200 -
Fees for statutory audit services - KPMG (excluding VAT) 132 432 132 432
Fees for other services - PWC (excluding VAT) 533 - 533 -
Fees for other services - KPMG (excluding VAT) 202 124 202 124
Total auditor's fees 1 098 555 1 068 555
KPMG was the statutory auditor of Aker BP until April 2022, and was then replaced by PwC.
Note 11 Financial items
Restated Restated
(USD 1 000) 2022 2021 2022 2021
Total interest income 25 959
2
2
4
4
8
8
1
1
23 019 2
2
4
4
8
8
1
1
Realized gains on derivatives 33 466 27 392 33 466 27 392
Change in fair value of derivatives 333 674 - 333 674 -
Net currency gains 308 373 88 779 193 887 88 779
Other financial income
1)
98 774 - 98 774 -
Total other financial income 774 287 116 171 659 801 116 171
Nominal interest expenses 154 019 145 651 147 304 145 651
Amortized loan costs
2)
31 815 22 460 19 164 22 460
Interest on lease debt 7 496 11 558 7 120 11 558
Capitalized interest cost, development projects -85 612 -40 136 -53 344 -40 136
Total interest expenses 107 718 139 533 120 244 139 533
Net currency loss 269 434 - - -
Realised loss on derivatives 480 945 23 249 480 945 23 249
Change in fair value of derivatives - 44 565 - 44 565
Accretion expenses related to abandonment provisions 119 895 61 944 107 907 61 944
Other financial expenses 9 834 39 274 8 220 39 274
Total other financial expenses 880 109 169 032 597 072 169 032
Net financial items -187 581 -189 913 -34 496 -189 913
Group Parent
ParentGroup
1)
Related to gain from the sale of shares in Cognite in 2022 (see note 19)
2)
The figure includes amortization of the difference between fair value and nominal value on the bonds acquired in the Lundin transaction in 2022
The rate (weighted average interest rate) used to determine the amount of borrowing cost eligible for capitalisation in 2022 is 3.69 percent. The corresponding rate for 2021 was 4.46
percent.
Climate-related risk:
As described in note 4 on climate-related risk, a sensitivity analysis have been performed to show the estimated impact of a two percent increase in credit spreads on current loan
balances as of 31 December 2022 . This would result in an increased interest expenses of USD 111 million.
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
78
Financials
Note 12 Taxes
Restated Restated
Tax for the period (USD 1 000)
2022 2021 2022 2021
Current year tax payable/receivable 7 162 988 1 526 236 4 826 060 1 526 236
Current tax related to change in tax system -176 391 - -176 391 -
Prior period adjustments to current tax -17 752 15 093 -18 977 15 093
Current tax expense (+)/income (-) 6 968 845 1 541 329 4 630 692 1 541 329
Change in current year deferred tax -12 294 530 497 240 850 530 497
Deferred tax related to change in tax system 189 444 - 189 444 -
Prior period adjustments to deferred tax 27 916 -3 971 27 916 -3 971
Deferred tax expense (+)/ income (-) 205 065 526 526 458 209 526 526
Tax expense (+)/income (-) 7 173 910 2 067 855 5 088 901 2 067 855
Effective tax rate in % 82% 71 % 82% 71 %
Restated Restated
Reconciliation of tax expense (USD 1 000)
Tax rate
2022 2021 2022 2021
78% tax rate on profit/loss before tax 78% 6 846 295 2 258 703 4 845 235 2 258 703
Tax effect of uplift 56% -161 708 -270 454 -148 884 -270 454
Permanent differences on impairment 78% 294 386 -36 862 338 709 -36 862
Foreign currency translation of monetary items other than USD 78% -170 564 -68 575 -170 564 -68 575
Foreign currency translation of monetary items other than NOK 78% 129 563 16 508 129 563 16 508
Tax effect of financial and other 22% items 56% 60 126 97 881 -33 603 97 881
Currency movements of tax balances
1)
78% 138 929 43 332 138 929 43 332
78% 36 883 27 321 -10 484 27 321
Tax expense (+)/income (-) 7 173 910 2 067 855 5 088 901 2 067 855
ParentGroup
1)
Tax balances are in NOK and converted to USD using the period end currency rate. When the NOK weakens against USD, the tax rate increases as there is less remaining tax
depreciation measured in USD.
Other permanent differences, prior period adjustments and change in estimate
of uncertain tax positions
Group
In accordance with statutory requirements, the calculation of current tax is required to be based on NOK functional currency. This may impact the effective tax rate as the company's
functional currency is USD.
See note 1 for a description of change in accounting principles impacting deferred tax.
Parent
Changes to the Petroleum Tax Act were enacted in June 2022 with effect from 1 January 2022. The combined tax rate of 78% is maintained, but according to the new rules the special
petroleum tax (56%) is converted into a cash based tax. When calculating the special petroleum tax for 2022 and onwards, companies can make immediate deductions for expenses
incurred, but with no right for uplift. In addition the corporate tax (22%) is deductible in the special tax base (56%). In order to maintain the overall tax rate of 78%, the special tax rate is
increased to 71.8% [56% / (1-22%)]. During the fourth quarter, the National Budget 2023 was approved. This includes a change in the temporary tax regime uplift from 17.69 to 12.4
percent. Such change will increase the tax charge for the group from 2023 and onwards.
Aker BP Annual Report 2022
79
Restated Restated
2022 2021 2022 2021
Tangible fixed assets
-11 057 229 -6 474 847 -11 057 229 -6 474 847
Capitalized exploration cost
-196 364 -200 098 -196 364 -200 098
Other intangible assets
-1 470 437 -735 936 -1 470 437 -735 936
Abandonment provision
3 249 333 4 034 436 3 249 333 4 034 436
Lease debt
104 832 106 246 104 832 106 246
Financial instruments
-26 421 3 850 -26 421 3 850
Other provisions
37 139 -24 938 37 139 -24 938
Net deferred tax liability (-)/deferred tax asset (+)
-9 359 146 -3 291 287 -9 359 146 -3 291 287
Restated Restated
2022 2021 2022 2021
Deferred tax liability/asset at beginning of period
-3 291 287 -2 764 761 -3 291 287 -2 764 761
Change in current year deferred tax
12 294 -530 497 -240 850 -530 497
Change in current year deferred tax related to change in tax system
-189 444 - -189 444 -
Deferred tax related to acquisition of Lundin Energy
-5 802 641 - - -
Deferred tax related to merger of group companies
- - -5 607 844 -
Prior period adjustments
-27 925 3 971 -29 731 3 971
Deferred tax charged to OCI and equity
-60 144 - 9 -
Net deferred tax liability (-)/deferred tax asset (+)
-9 359 146 -3 291 287 -9 359 146 -3 291 287
Restated Restated
Calculated tax payable (-)/ tax receivable (+) (USD 1 000)
2022 2021 2022 2021
Tax payable/receivable at beginning of period
-1 497 291 -163 352 -1 497 291 -163 352
Current year tax payable/receivable
-7 162 988 -1 526 236 -4 826 060 -1 526 236
Current year tax payable/receivable related to change in tax system
176 391 - 176 391 -
Net tax payment/tax refund
5 332 125 223 166 3 205 490 223 166
Net tax payable related to acquisition of Lundin Energy
-2 181 017 - - -
Net tax payable related to merger of group companies
- - -2 427 178 -
Prior period adjustments and change in estimate of uncertain tax positions
29 847 -57 165 31 081 -57 165
Currency movements of tax payable/receivable
245 846 26 297 253 424 26 297
Current tax foreign currency exchange charged to OCI and equity
-27 055 - - -
Net tax payable (-)/receivable (+)
-5 084 142 -1 497 291 -5 084 142 -1 497 291
Note 13 Earnings per share
(USD 1 000) 2022 2021 2022 2021
Profit for the year attributable to ordinary equity holders of the parent entity 1 602 940 827 928 1 122 620 827 928
The year's average number of ordinary shares (in thousands) 496 765 359 643 496 765 359 643
Earnings per share in USD 3.23 2.30 2.26 2.30
Group Parent
Group
Group
Earnings per share is calculated by dividing the year's profit attributable to ordinary equity holders of the parent entity, which was USD 1 603 million for the group and USD 1 123
million for the parent (USD 828 million in 2021) by the year's weighted average number of outstanding ordinary shares, which was 496.8 million (359.6 million in 2021). Weighted
average number of diluted and ordinary shares is the same, as the company does not have any dilutive instruments.
Parent
Breakdown of tax effect of temporary differences (USD 1 000)
Group Parent
Parent
Deferred tax liability (-)/asset (+) (USD 1 000)
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
80
Financials
Note 14 Tangible fixed assets and intangible assets
TANGIBLE FIXED ASSETS - GROUP
Property, plant and equipment
(USD 1 000)
Restated book value 31.12.2020 1 088 754 8 154 152 114 999 9 357 906
Restated acquisition cost 31.12.2020 1 088 754 11 978 643 241 304 13 308 701
Additions 814 409 620 779 12 750 1 447 938
Impact of change in accounting principle - 375 169 - 375 169
Disposals/retirement - - - -
Reclassification -107 727 428 436 2 395 323 103
Restated acquisition cost 31.12.2021 1 795 436 13 403 026 256 449 15 454 911
Restated accumulated depreciation and impairments 31.12.2020 - 3 824 491 126 305 3 950 795
Restated depreciation - 1 061 574 43 440 1 105 014
Impairment/reversal (-) - 184 664 - 184 664
Disposals/retirement depreciation - - - -
Restated accumulated depreciation and impairments 31.12.2021 - 5 070 729 169 744 5 240 473
Restated book value 31.12.2021 1 795 436 8 332 297 86 705 10 214 438
Restated acquisition cost 31.12.2021 1 795 436 13 403 026 256 449 15 454 911
Additions
1)
1 036 027 -1 203 100 18 215 -148 858
Acquisition of Lundin Energy 933 182 6 726 306 3 811 7 663 300
Disposals/retirement - - 17 483 17 483
Reclassification
2)
-2 132 595 2 266 639 7 273 141 317
Foreign currency translation -17 874 108 146 42 90 314
Acquisition cost 31.12.2022 1 614 177 21 301 017 268 306 23 183 501
Accumulated depreciation and impairments 31.12.2021 - 5 070 729 169 744 5 240 473
Depreciation - 1 635 302 39 944 1 675 245
Impairment/reversal (-) - 385 562 - 385 562
Disposals/retirement depreciation - - -17 483 -17 483
Foreign currency translation - 13 017 27 13 044
Accumulated depreciation and impairments 31.12.2022 - 7 104 610 192 232 7 296 841
Book value 31.12.2022 1 614 177 14 196 407 76 075 15 886 659
See note 1 for a description of change in accounting principle related to abandonment provisions.
See note 15 for information regarding impairment charges.
1)
The negative addition is caused by decreased abandonment provision with an offseting entry on PP&E
Production
facilities including
wells
Fixtures and
fittings, office
machinery Total
Assets under
development
Capitalized exploration expenditures are reclassified to "Assets under development" when the field enters into the development phase. Assets under development are reclassified to
"Production facilities" from the start of production. Production facilities, including wells, are depreciated in accordance with the unit-of-production method. Office machinery, fixtures and
fittings etc. are depreciated using the straight-line method over their useful life, i.e. 3 - 5 years. Removal and decommissioning costs are included as production facilities or assets under
development.
2)
The reclassification is mainly related to the Johans Sverdrup phase 2 development project, which entered into production phase during 2022
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Right-of-use assets
(USD 1 000)
Drilling Rigs Office Other
Book value 31.12.2020 41 864 57 395 31 525 1 950 132 735
Acquisition cost 31.12.2020 47 963 62 016 46 427 2 303 158 709
Additions - - 5 989 - 5 989
Allocated to abandonment activity -11 518 -1 943 - - -13 461
Disposals/retirement - - - - -
Reclassification -18 034 -2 636 - - -20 669
Acquisition cost 31.12.2021 18 412 57 436 52 416 2 303 130 567
Accumulated depreciation and impairments 31.12.2020 6 099 4 620 14 902 353 25 974
Depreciation - 2 076 8 164 177 10 416
Impairment/reversal (-) - - - - -
Disposals/retirement depreciation - - - - -
Accumulated depreciation and impairments 31.12.2021 6 099 6 696 23 066 530 36 390
Book value 31.12.2021 12 313 50 740 29 350 1 774 94 177
Acquisition cost 31.12.2021 18 412 57 436 52 416 2 303 130 567
Additions 22 542 - 11 223 - 33 765
Acquisition of Lundin Energy 11 069 - 23 688 - 34 757
Allocated to abandonment activity - -366 - - -366
Disposals/retirement 6 099 10 8 086 - 14 194
Reclassification
1)
-28 072 -2 338 - - -30 409
Foreign currency translation -2 - -1 952 - -1 954
Acquisition cost 31.12.2022 17 850 54 723 77 290 2 303 152 166
Accumulated depreciation and impairments 31.12.2021 6 099 6 696 23 066 530 36 390
Depreciation 2 776 3 938 11 826 177 18 716
Impairment/reversal (-) - - - -
Disposals/retirement depreciation -6 099 - -8 086 - -14 185
Foreign currency translation - - -92 - -92
Accumulated depreciation and impairments 31.12.2022 2 776 10 634 26 714 706 40 829
Book value 31.12.2022 15 075 44 089 50 576 1 597 111 336
See note 26 for information regarding leases.
Total
1)
Reclassified to tangible fixed assets in line with the activity of the right-of-use asset.
Right-of-use assets are depreciated linearly over the lifetime of the related lease contract.
Vessels and Boats
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Financials
INTANGIBLE ASSETS - GROUP
(USD 1 000)
Goodwill
Depreciated
Not depreciated Total
Book value 31.12.2020 1 647 436 521 922 806 469 714 842 1 521 311
Acquisition cost 31.12.2020 2 726 583 668 029 1 480 063 888 922 2 368 985
Additions - 177 464 -
Disposals/expensed dry wells - 98 827 - - -
Reclassification - -302 434 - - -
Acquisition cost 31.12.2021 2 726 583 444 232 1 480 063 888 922 2 368 985
Accumulated depreciation and impairments 31.12.2020 1 079 146 146 107 673 594 174 079 847 674
Depreciation - - 77 459 - 77 459
Impairment - 41 589 87 042 -50 741 36 301
Retirement/transfer depreciations - - - - -
Accumulated depreciation and impairments 31.12.2021 1 079 146 187 696 838 096 123 338 961 434
Book value 31.12.2021 1 647 436 256 535 641 967 765 584 1 407 551
Acquisition cost 31.12.2021 2 726 583 444 232 1 480 063 888 922 2 368 985
Additions - 251 764 743 - 743
Acquisition of Lundin Energy
1)
12 542 852 - 25 653 1 256 577 1 282 230
Disposals/retirement/expensed dry wells - 135 800 - - -
Reclassification
2)
- -110 907 855 022 -855 022 -
Foreign currency translation 134 964 1 012 275 12 339 12 614
Acquisition cost 31.12.2022 15 404 399 450 301 2 361 756 1 302 816 3 664 572
Accumulated depreciation and impairments 31.12.2021 1 079 146 187 696 838 096 123 338 961 434
Depreciation - - 91 711 - 91 711
Impairment/reversal (-) 377 398 10 869 - 258 325 258 325
Disposals/retirement depreciation - - - - -
Foreign currency translation 12 868 - -60 8 808 8 748
Accumulated depreciation and impairments 31.12.2022 1 469 413 198 565 929 747 390 471 1 320 218
Book value 31.12.2022 13 934 986 251 736 1 432 009 912 345 2 344 354
2)
The reclassification is mainly related to the Johans Sverdrup phase 2 development project, which entered into production phase during 2022
Licenses include both planned and producing projects on various fields. The producing projects are depreciated in line with the unit-of-production method for the applicable field.
1)
The goodwill recognised in connection with the Lundin transaction includes the subsequent adjustment as described in note 2
Capitalized
exploration
expenditures
Other intangible assets
Aker BP Annual Report 2022
83
TANGIBLE FIXED ASSETS - PARENT
Property, plant and equipment
(USD 1 000)
Restated book value 31.12.2020 1 088 754 8 154 152 114 999 9 357 906
Restated acquisition cost 31.12.2020 1 088 754 11 978 643 241 304 13 308 701
Additions 814 409 620 779 12 750 1 447 938
Impact of change in accounting principle - 375 169 - 375 169
Disposals/retirement - - - -
Reclassification -107 727 428 436 2 395 323 103
Restated acquisition cost 31.12.2021 1 795 436 13 403 026 256 449 15 454 911
Restated accumulated depreciation and impairments 31.12.2020 - 3 824 491 126 305 3 950 795
Restated depreciation - 1 061 574 43 440 1 105 014
Impairment/reversal (-) - 184 664 - 184 664
Disposals/retirement depreciation - - - -
Restated accumulated depreciation and impairments 31.12.2021 - 5 070 729 169 744 5 240 473
Restated book value 31.12.2021 1 795 436 8 332 297 86 705 10 214 438
Restated acquisition cost 31.12.2021 1 795 436 13 403 026 256 449 15 454 911
Additions
1)
834 776 -1 181 581 18 107 -328 697
Merger with ABP Norway AS 146 690 7 245 435 2 809 7 394 933
Disposals/retirement - - 17 483 17 483
Reclassification
2)
-1 162 724 1 288 050 7 273 132 598
Acquisition cost 31.12.2022 1 614 177 20 754 931 267 155 22 636 263
Accumulated depreciation and impairments 31.12.2021 - 5 070 729 169 744 5 240 473
Depreciation - 1 102 232 38 819 1 141 051
Impairment/reversal (-) - 385 562 - 385 562
Disposals/retirement depreciation - - -17 483 -17 483
Accumulated depreciation and impairments 31.12.2022 - 6 558 523 191 080 6 749 603
Book value 31.12.2022 1 614 177 14 196 407 76 075 15 886 660
See note 1 for a description of change in accounting principle related to abandonment provisions.
2)
The reclassification is mainly related to the Johans Sverdrup phase 2 development project, which entered into production phase during 2022
Assets under
development
Production
facilities including
wells
Fixtures and
fittings, office
machinery Total
Capitalized exploration expenditures are reclassified to "Assets under development" when the field enters into the development phase. If development plans are subsequently re-
evaluated, the associated costs remain in assets under development and are not reclassified back to exploration assets. Assets under development are reclassified to "Production
facilities" from the start of production. Production facilities, including wells, are depreciated in accordance with the unit-of-production method. Office machinery, fixtures and fittings etc.
are depreciated using the straight-line method over their useful life, i.e. 3 - 5 years. Removal and decommissioning costs are included as production facilities or assets under
development.
See note 15 for information regarding impairment charges.
1)
The negative addition is caused by decreased abandonment provision with an offseting entry on PP&E
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Financials
Right-of-use assets
(USD 1 000)
Drilling Rigs Office Other
Book value 31.12.2020 41 864 57 395 31 525 1 950 132 735
Acquisition cost 31.12.2020 47 963 62 016 46 427 2 303 158 709
Additions - - 5 989 - 5 989
Allocated to abandonment activity -11 518 -1 943 - - -13 461
Disposals/retirement - - - - -
Reclassification -18 034 -2 636 - - -20 669
Acquisition cost 31.12.2021 18 412 57 436 52 416 2 303 130 567
Accumulated depreciation and impairments 31.12.2020 6 099 4 620 14 902 353
2
2
5
5
9
9
7
7
4
4
Depreciation - 2 076 8 164 177 10 416
Impairment/reversal (-) - - - - -
Disposals/retirement depreciation - - - - -
Accumulated depreciation and impairments 31.12.2021 6 099 6 696 23 066 530 36 390
Book value 31.12.2021 12 313 50 740 29 350 1 774 94 177
Acquisition cost 31.12.2021 18 412 57 436 52 416 2 303 130 567
Additions 22 542 - 31 890 - 54 432
Merger with ABP Norway AS 6 024 - - - 6 024
Allocated to abandonment activity - -366 - - -366
Disposals/retirement 6 099 10 8 086 - 14 194
Reclassification
1)
-23 029 -2 338 - - -25 366
Acquisition cost 31.12.2022 17 850 54 723 76 221 2 303 151 097
Accumulated depreciation and impairments 31.12.2021 6 099 6 696 23 066 530 36 390
Depreciation 2 776 3 938 10 664 177 17 555
Impairment/reversal (-) - - - -
Disposals/retirement depreciation -6 099 - -8 086 - -14 185
Accumulated depreciation and impairments 31.12.2022 2 776 10 634 25 645 706 39 760
Book value 31.12.2022 15 075 44 089 50 576 1 597 111 336
1)
Reclassified to tangible fixed assets in line with the activity of the right-of-use asset.
Right-of-use assets are depreciated linearly over the lifetime of the related lease contract.
TotalVessels and Boats
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INTANGIBLE ASSETS - PARENT
(USD 1 000)
Goodwill
Depreciated
Not depreciated Total
Book value 31.12.2020 1 647 436 521 922 806 469 714 842 1 521 311
Acquisition cost 31.12.2020 2 726 583 668 029 1 480 063 888 922 2 368 985
Additions - 177 464 -
Disposals/expensed dry wells - 98 827 - - -
Reclassification - -302 434 - - -
Acquisition cost 31.12.2021 2 726 583 444 232 1 480 063 888 922 2 368 985
Accumulated depreciation and impairments 31.12.2020 1 079 146 146 107 673 594 174 079 847 674
Depreciation - - 77 459 - 77 459
Impairment - 41 589 87 042 -50 741 36 301
Retirement/transfer depreciations - - - - -
Accumulated depreciation and impairments 31.12.2021 1 079 146 187 696 838 096 123 338 961 434
Book value 31.12.2021 1 647 436 256 535 641 967 765 584 1 407 551
Acquisition cost 31.12.2021 2 726 583 444 232 1 480 063 888 922 2 368 985
Additions - 194 660 743 - 743
Merger with ABP Norway AS 12 287 550 27 201 715 357 293 873 1 009 230
Disposals/retirement/expensed dry wells - 108 560 - - -
Reclassification
1)
- -107 232 154 058 -154 058 -
Acquisition cost 31.12.2022 15 014 132 450 301 2 350 221 1 028 737 3 378 957
Accumulated depreciation and impairments 31.12.2021 1 079 146 187 696 838 096 123 338 961 434
Depreciation - - 73 169 - 73 169
Impairment/reversal (-) - 10 869 - - -
Disposals/retirement depreciation - -
- - -
Accumulated depreciation and impairments 31.12.2022 1 079 146 198 565 911 265 123 338 1 034 603
Book value 31.12.2022 13 934 986 251 736 1 438 955 905 399 2 344 354
Restated Restated
Depreciation in the Income statement (USD 1 000)
2022 2021 2022 2021
Depreciation of tangible fixed assets 1 675 245 1 105 014 1 141 051 1 105 014
Depreciation of right-of-use assets 18 716 10 416 17 555 10 416
Depreciation of other intangible assets 91 711 77 459 73 169 77 459
Total depreciation in the Income statement 1 785 672 1 192 889 1 231 775 1 192 889
Impairment in the Income statement (USD 1 000)
Impairment/reversal of tangible fixed assets
385 562 184 664 385 562 184 664
Impairment/reversal of other intangible assets
258 325 36 301 - 36 301
Impairment/reversal of capitalized exploration expenditures
10 869 41 589 10 869 41 589
Impairment of goodwill
377 398 - - -
Total impairments of tangible and intangible assets 1 032 154 262 554 396 431 262 554
1)
The reclassification is mainly related to the Johans Sverdrup phase 2 development project, which entered into production phase during 2022
Licenses include both planned and producing projects on various fields. The producing projects are depreciated in line with the unit-of-production method for the applicable field.
Capitalized
exploration
expenditures
Other intangible assets
Parent
Group
See note 15 for information regarding impairment charges, including impairment of other non-current assets for the parent company.
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Financials
Note 15 Impairments
Impairment testing
Oil and gas prices
Year USD/BBL
2023
83.9
2024
79.0
2025
75.0
From 2026 (in real 2022 terms)
65.0
Year GBP/therm
2023
2.05
2024
1.97
2025
1.59
From 2026 (in real 2022 terms)
0.67
Oil and gas reserves
Future expenditure
The nominal oil prices applied in the impairment test are as follows:
For producing licenses and licenses in the development phase, recoverable amount is estimated based on discounted future after tax cash flows. Below is an overview of the key
assumptions applied for impairment testing purposes as of 31 December 2022.
The nominal gas prices applied in impairment test are as follows:
- Impairment test of fixed assets and related intangible assets, including technical goodwill
- Impairment test of residual goodwill
Future price level is a key assumption and has significant impact on the net present value. Forecasted oil and gas prices are based on management's estimates and available market data.
Information about market prices in the near future can be derived from the futures contract market. The information about future prices is less reliable on a long-term basis, as there are
fewer observable market transactions going forward. In the impairment test, the oil and gas prices are therefore based on the forward curve from the beginning of 2023 to the end of
2025. From 2026, the oil and gas prices are based on the company's long-term price assumptions. Long-term oil price assumption is unchanged from year-end 2021. Long-term gas price
assumption is updated from 0.48 GBP/therm applied at year-end 2021.
Future capex, opex and abandonment cost are calculated based on the expected production profiles and the best estimate of the related cost. The cost profiles include an estimated
impact of the currently high cost escalation in the industry. The cash flows include a step up of CO2 tax/fees from current levels to approximately NOK 2 160 per tonn (2022 real) in
2030.
Impairment tests of individual cash-generating units are performed when impairment/reversal triggers are identified, and goodwill is tested for impairment at least annually. In 2022, two
categories of impairment tests have been performed:
Future cash flows are calculated on the basis of expected production profiles and estimated proven and probable reserves including potentially additional risked volumes. For more
information about the determination of the reserves, reference is made to note 1, section 1.3, and to note 32.
Impairment is recognized when the book value of an asset or a cash-generating unit, including associated goodwill, exceeds the recoverable amount. Correspondingly, a reversal of
impairment is recognized when the recoverable amount exceeds the book value. Prior period impairment of goodwill is not subject to reversal. The recoverable amount is the higher of
the asset's fair value less cost to sell and value in use. The impairment testing has been performed in accordance with the fair value less cost to sell method (level 3 in fair value hierarchy)
and based on discounted cash flows. The expected future cash flow is discounted to the net present value by applying a discount rate after tax that reflects the current market valuation
of the time value of money, and the specific risk related to the asset. The discount rate is derived from the weighted average cost of capital (WACC) for a market participant. Cash flows
are projected for the estimated lifetime of the fields, which may exceed periods greater than five years.
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Discount rate
Currency rates
Year USD/NOK
2023
9.64
2024
9.54
2025
9.49
From 2026
8.00
Inflation
Impairment testing of assets including technical goodwill
Cash-generating unit (USD 1 000)
Other Ula/Tambar Wisting
Net carrying value 414 385 148 625 793 4 673 989
Recoverable amount - - 109 885 4 532 497
Foreign currency translation - - 17 011 4 665
Impairment/reversal (-) 414 385 148 498 897 136 826
Allocated as follows:
Technical goodwill - - 240 572 136 826
Other intangible assets/license rights 414 - 258 325 -
Tangible fixed assets - 385 148 - -
Group
Edvard Grieg &
Ivar Aasen
The long-term currency rate is unchanged from year end 2021.
The post tax nominal discount rate used at year-end is 8.7 percent. This represents a change from 7.6 percent applied at year-end 2021.
The long-term inflation rate is assumed to be 2.0 percent, which is the same as applied at year-end 2021. The currently high cost escalation in the industry is reflected in the cash flows
rather than in the inflation rate.
Group & Parent
The technical goodwill recognized in business combinations is allocated to each CGU for the purpose of impairment testing. Hence, the impairment test of technical goodwill is included
in the impairment testing of assets, and the technical goodwill is written down before the asset. The carrying value of the assets is the sum of tangible assets, intangible assets and
technical goodwill as of the assessment date. In the impairment test performed, carrying value is adjusted by the remaining part of deferred tax from which the technical goodwill arose,
to avoid an immediate impairment of all technical goodwill. When deferred tax liabilities from the acquisitions decreases as a result of depreciation, more goodwill is as such exposed for
impairment. This may lead to future impairment charges even though other assumptions remain stable.
Below is an overview of the impairment charges and the carrying value per cash generating unit where impairments have been recognized in 2022:
The discount rate is derived from the company's weighted average cost of capital ("WACC"). The capital structure considered in the WACC calculation is derived from the capital
structures of an identified peer group and market participants with consideration given to optimal structures. The cost of equity is derived from the expected return on investment by the
company's investors. The cost of debt is based on the interest-bearing borrowings on debt specific to the assets acquired. The beta factors are evaluated annually based on publicly
available market data about the identified peer group.
The main reason for the Wisting impairment is related to the postponed planned investment decision, with new profiles and where less favorable tax rules will apply. The Edvard Grieg &
Ivar Aasen CGU impairment is mainly related to decrease in short-term gas prices and currency translation effects of PPA balances in functional currency other than USD. The main
reason for the Ula impairment is updates on cost and production profiles from the acceleration of the expected shut-down from 2032 to 2028.
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Financials
Sensitivity analysis
Assumption (USD 1 000)
Change
Oil and gas price forward period +/- 50 % 0 2 093 950
Oil and gas price long-term +/- 20 % -109 526 859 349
Production profile (reserves) +/- 5 % -27 382 297 482
Discount rate +/- 1 % point 104 438 -29 544
Currency rate USD/NOK +/- 2.0 NOK -85 150 790 605
Inflation +/- 1 % point -37 435 355 663
Exploration assets
Impairment testing of residual goodwill
Impairment testing of other non-current assets (parent)
Climate-related risks
IEA Scenario (USD 1 000 000)
Net Zero Announced Pledges Stated Policies
Valhall/Hod 2 223
- -
Skarv
- - -
Ula
- - -
Alvheim 45
- -
Johan Sverdrup 75
- -
Edvard Grieg & Ivar Aasen 601
- -
Yggdrasil 682
- -
Wisting 110
12 -189
Scenario price ranges
2030 2050 2030 2050
Net Zero
35 24 4.6 3.8
Announced Pledges
64 60 7.9 6.3
Stated Policies
82 95 8.5 9.2
As described in note 4 on Climate-related risk, a sensitivity analysis have been performed towards various scenarios from International Energy Agency have been included in a separate
sensitivity test as presented below. The price assumptions in those senarios have been provided by IEA at 2030 and 2050 in 2021 real terms. For the sensitivity calculation, a linear
development between spot price at year end 2022 and IEA price in 2030, as well as between 2030 and 2050 have been applied. The table below summarizes how the impairment
charge would increase (+) or decrease (-) using the oil and gas price assumptions in the following scenarios:
An impairment test of investments in subsidiaries and other non-current assets have been carried out, and an impairment charge of USD 434.2 million has been recognised during 2022.
The impairment charge is related to ABP Norway AS prior to the merger with the parent company Aker BP ASA. The impairment charge corresponds to the post-tax decrease in value
related to the Wisting and Edvard Grieg & Ivar Aasen CGU.
The table below shows how the impairment or reversal of impairment of assets and technical goodwill would be affected by changes in the various assumptions, given that the remaining
assumptions are constant.
Increase in assumption Decrease in assumption
Change in impairment
Gas USD/mmbtuOil USD/bbl
Change in impairment after
During 2022, an impairment charge of USD 10.9 million has been recognized. The impairment charge is mainly related to the Gomez well and has been allocated to
capitalized exploration expenditures.
The residual goodwill is tested for impairment on corporate level. The starting point for the impairment test is the difference between market value and book value of equity, compared
to the residual goodwill. At year end 2022 this difference exceeds the carrying amount of residual goodwill by a substantial margin.
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Impairment testing in 2021
Summary of impairment/reversal of impairments
The following impairments/(reversals) have been recorded:
(USD 1 000) 2022 2021 2022 2021
Impairment/reversal of tangible fixed assets 385 562 184 664 385 562 184 664
Impairment/reversal of other intangible assets 258 325 36 301 - 36 301
Impairment/reversal of capitalized exploration expenditures 10 869 41 589 10 869 41 589
Impairment of goodwill 377 398 - - -
Impairment of non-current assets - - 434 220
Total impairments 1 032 154 262 554 830 650 262 554
Note 16 Accounts receivable
(USD 1 000) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Receivables related to the sale of petroleum 950 942 366 785 950 942 366 785
Total accounts receivable 950 942 366 785 950 942 366 785
Age distribution of accounts receivable as of 31 December for the group and parent was as follows:
Year (USD 1 000)
Total Not due <30d 30-90d >90d
2022
950 942 950 139 804 - -
2021
366 785 363 662 2 208 542 373
Group
Parent
- a long-term inflation of 2.0 percent
- a long-term exchange rate of NOK/USD 8.0 (forward curve first three years)
- a long-term oil price assumption of 65 USD/barrel, using forward curve first three years
Group
In 2021, the net impairment charge was mainly related to two CGU's and allocated to other intagible assets from acquisitions and tangible fixed assets, in addition to an net impairment
of exploration assets. The methodology for impairment testing was the same as in 2022 as described in this note.
- discount rate of 7.6 percent nominal after tax for both value in use and fair value testing
The following assumptions were applied for the impairment testing at year-end 2021:
Parent
The company's customers are mainly large, financially sound oil companies. Accounts receivable consist of receivables related to the sale of oil and gas.
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Financials
Note 17 Other short-term receivables
(USD 1 000) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Prepayments 123 980 45 429 123 980 45 429
VAT receivable 12 406 13 354 12 406 13 354
Underlift of petroleum 53 630 36 944 53 630 36 944
Accrued income from sale of petroleum products 335 505 290 254 335 505 290 254
Other receivables, mainly balances with license partners 160 715 114 172 161 139 114 172
Total other short-term receivables 686 237 500 154 686 661 500 154
Note 18 Inventories
The inventory mainly consists of equipment for the drilling of exploration and production wells.
Inventory value (USD 1 000)
2022 2021 2022 2021
Inventories - measured at cost 256 004 144 457 256 004 144 457
Provision for obsolete equipment 46 498 18 016 46 498 18 016
Book value of inventories 209 506 126 442 209 506 126 442
Note 19 Other non-current assets
(USD 1 000) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Shares in Alvheim AS 10 10 10 10
Shares in Det norske oljeselskap AS 1 021 1 021 1 021 1 021
Shares in Sandvika Fjellstue AS 1 814 1 814 1 814 1 814
Investment in subsidiaries
1)
2 845 2 845 2 845 2 845
Continuing involvement - Cognite AS
2)
81 400 - 81 400 -
Tenancy deposit 1 627 1 810 1 627 1 810
Unamortized fees - RCF
3)
10 975 15 860 10 975 15 860
Other non-current assets 7 634 9 789 7 634 9 789
Total other non-current assets 104 480 30 304 104 480 30 304
Group
Group Parent
Parent
Group Parent
1)
Alvheim AS, Det norske oljeselskap AS and Sandvika Fjellstue AS have been deemed immaterial for consolidation purposes. The share capital in Aker BP UK is only 100 GBP and is thus
not reflected in the table. All companies acquired in the Lundin transaction has been either liquidated or merged with Aker BP ASA in 2022. For more information regarding shares in
subsidiaries, see note 3.
2)
In 2022 the company sold its shares in Cognite AS to Saudi Aramco Development Company for a consideration of USD 118 million. As part of the transaction, Aker BP has granted the
buyer an option with maturity in November 2024 which under certain conditions gives the buyer the right to sell the shares back to Aker BP for USD 81.4 million. On this basis, Aker BP
is considered to have continuing involvement in Cognite AS, in accordance with guidelines in IFRS 9. Hence, both an asset and a liability of USD 81.4 million is recognised in the
statement of financial position at 31 December 2022.
3)
Remaining unamortized fees related to the Revolving Credit Facility (RCF). These have been reclassified from other interest-bearing debt as the RCF was undrawn as at 31 December
2022 and 31 December 2021.
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Note 20 Cash and cash equivalents
The item 'Cash and cash equivalents' consists of bank accounts and short-term investments that constitute parts of the group's transaction liquidity.
Breakdown of cash and cash equivalents (USD 1 000)
31.12.2022 31.12.2021 31.12.2022 31.12.2021
Bank deposits 2 756 012 1 970 906 2 756 008 1 970 906
Cash and cash equivalents 2 756 012 1 970 906 2 756 008 1 970 906
3 400 000 3 400 000 3 400 000 3 400 000
Note 21 Share capital and shareholders
(USD 1 000) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Share capital 84 348 57 056 84 348 57 056
Total number of shares (in 1 000) 632 022 360 114 632 022 360 114
Nominal value per share in NOK 1.00 1.00 1.00 1.00
There is only one single class of shares in the company and all shares carry a single voting right.
Group
Parent
The senior unsecured Revolving Credit Facility (RCF) of USD 3.4 billion was established in May 2019 and consist of two tranches:
(1) Working Capital Facility with a committed amount of USD 1.4 billion until 2025 with an extension option for one year until 2026, and
(2) Liquidity Facility with a committed amount of USD 2.0 billion until 2025 and USD 1.65 billion until 2026.
The interest rate for USD is Term SOFR plus a margin of 1.00 percent for the Working Capital Facility and 0.75 percent for the Liquidity Facility. Drawing under the Liquidity Facility will
add a utilization fee. A commitment fee of 35 percent of applicable margin is paid on the undrawn part of the total facility. The financial covenants are as follows:
- Leverage Ratio: Total net debt divided by EBITDAX shall not exceed 3.5 times
- Interest Coverage Ratio: EBITDA divided by Interest expenses shall be a minimum of 3.5 times
Unused Revolving Credit Facility
Parent
The financial covenants are calculated on a 12 months rolling basis. As at 31 December 2022 the Leverage Ratio is 0.21 and Interest Coverage Ratio is 73.6 (see APM section for further
details). Based on the group's current business plans and applying oil and gas price forward curves at end of 2022, the group’s estimates show that the financial covenants will continue
to comply with the covenants by a substantial margin.
The financial covenants in the group's current debt facilities exclude the effects from IFRS 16, and therefore cannot be directly derived from the group's financial statements. See
reconciliations of Alternative Performance Measures for detailed information.
Group
The RCF is undrawn as at 31 December 2022 and the remaining unamortized fees of USD 11.0 million related to the facility are therefore included in other non-current assets.
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Financials
Overview of the 20 largest shareholders registered as of 31 December 2022
AKER CAPITAL AS 133 758
21.16%
BP Exploration Op Co Ltd 100 303
15.87%
NEMESIA S.A.R.L. 90 798
14.37%
FOLKETRYGDFONDET 29 992
4.75%
JPMorgan Chase Bank, N.A., London
1)
19 681
3.11%
State Street Bank and Trust Comp
1)
15 162
2.40%
JPMorgan Chase Bank, N.A., London
1)
13 844
2.19%
State Street Bank and Trust Comp
1)
6 776
1.07%
JPMorgan Chase Bank, N.A., London
1)
6 128
0.97%
JPMorgan Chase Bank, N.A., London
1)
5 958
0.94%
State Street Bank and Trust Comp
1)
5 047
0.80%
JPMorgan Chase Bank, N.A., London
1)
5 016
0.79%
CACEIS Bank
1)
4 991
0.79%
Avanza Bank AB
1)
4 956
0.78%
Swedbank AB
1)
3 725
0.59%
CLEARSTREAM BANKING S.A.
1)
3 322
0.53%
VERDIPAPIRFONDET KLP AKSJENORGE IN 3 192
0.51%
State Street Bank and Trust Comp
1)
3 091
0.49%
SVENSKA HANDELSBANKEN AB
1)
3 043
0.48%
Skandinaviska Enskilda Banken AB
1)
2 423
0.38%
OTHER 170 816
27.03%
Total 632 022
100.00%
1)
Nominee accounts
Note 22 Bonds
(USD 1 000) Maturity 31.12.2022 31.12.2021 31.12.2022 31.12.2021
AKERBP – USD Senior Notes 3.000% (20/25)
Jan 2025 498 172 497 295 498 172 497 295
AKERBP – USD Senior Notes 2.875% (20/26)
Jan 2026 497 813 497 103 497 813 497 103
AKERBP - USD Senior Notes 2.000% (21/26)
1)
July 2026 907 387 - 907 387 -
AKERBP – EUR Senior Notes 1.125% (21/29)
May 2029 795 304 843 995 795 304 843 995
AKERBP – USD Senior Notes 3.750% (20/30)
Jan 2030 994 411 993 622 994 411 993 622
AKERBP – USD Senior Notes 4.000% (20/31)
Jan 2031 745 302 744 720 745 302 744 720
AKERBP - USD Senior Notes 3.100% (21/31)
1)
July 2031 840 776 - 840 776 -
Long-term bonds - book value 5 279 164 3 576 735 5 279 164 3 576 735
Long-term bonds - fair value 4 829 678 3 752 778 4 829 678 3 752 778
The fair value of bonds are based on the listed prices in the active markets (level 1 in fair value hierarchy).
Group Parent
Interest is paid on a semi annual basis, except for the EUR Senior Notes which is paid on an annual basis. None of the bonds have financial covenants.
No. of shares
(in 1 000)
Owning
interest
1)
These bonds have a nominal value of USD 1 billion and were recognized at fair value in connection with the Lundin transaction. The difference between fair value and nominal value is
linearly amortized over the lifetime of the bonds.
Aker BP Annual Report 2022
93
Note 23 Provision for abandonment liabilities
Restated Restated
(USD 1 000) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Provisions as of beginning of period 5 172 354 4 897 275 5 172 354 4 897 275
Incurred removal cost -79 236 -185 973 -78 543 -185 973
Accretion expense 119 895 61 944 107 907 61 944
Abandonment liabilities from acquisition of Lundin Energy
1)
745 900 - - -
Merger with ABP Norway AS - - 598 563 -
Foreign currency translation 6 692 - - -
Impact of changes to discount rate -1 876 918 -382 458 -1 747 688 -382 458
Change in estimates and provisions relating to new drilling and installations 76 911 781 566 113 006 781 566
Total provision for abandonment liabilities 4 165 598 5 172 354 4 165 598 5 172 354
Breakdown of the provision to short-term and long-term liabilities
Short-term 115 202 100 863 115 202 100 863
Long-term 4 050 396 5 071 491 4 050 396 5 071 491
Total provision for abandonment liabilities 4 165 598 5 172 354 4 165 598 5 172 354
Note 24 Derivatives
(USD 1 000) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Unrealized gain currency contracts 2 907 1 375 2 907 1 375
Long-term derivatives included in assets 2 907 1 375 2 907 1 375
Unrealized gain currency contracts 153 096 18 577 153 096 18 577
Short-term derivatives included in assets 153 096 18 577 153 096 18 577
Total derivatives included in assets 156 003 19 952 156 003 19 952
Fair value of option related to sale of Cognite 15 995 - 15 995 -
Unrealized losses currency contracts 986 2 370 986 2 370
Long-term derivatives included in liabilities 16 981 2 370 16 981 2 370
Unrealized losses commodity derivatives - 8 989 - 8 989
Unrealized losses currency contracts 34 924 26 094 34 924 26 094
Short-term derivatives included in liabilities 34 924 35 082 34 924 35 082
Total derivatives included in liabilities 51 905 37 452 51 905 37 452
Parent
Parent
Estimates are based on executing a concept for abandonment in accordance with the Petroleum Activities Act and international regulations and guidelines. Following the change in
accounting principle as described in note 1, the nominal pre tax discount rate (risk free) at end of 2022 is between 3.9 percent and 4.7 percent, depending on the timing of the expected
cash flows. The corresponding range at year-end 2021 was between 0.4 and 1.9. The calculations assume an inflation rate of 2.0 percent for all applicable periods.
Climate-related risk:
As described in note 4 on climate-related risk, a sensitivity analysis have been performed to show the impact on the book value of abandonment provisions as at 31 December 2022, if
cease of production of fields with estimated lifetime after 2040 were accelerated by ten years. Such acceleration would result in an increase in the book value of abandonment provision
of USD 539 million.
Group
Group
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Financials
Note 25 Other current liabilities
Breakdown of other current liabilities (USD 1 000)
31.12.2022 31.12.2021 31.12.2022 31.12.2021
Balances with license partners 43 132 48 456 43 132 48 456
Share of other current liabilities in licenses 460 783 311 694 460 783 311 694
Overlift of petroleum 30 922 40 044 30 922 40 044
Payroll liabilities, accrued interest and other provisions 272 276 224 173 272 053 224 173
Total other current liabilities 807 113 624 366 806 891 624 366
Note 26 Lease agreements
Significant lease agreements
The company has various types of economic hedging instruments, but no hedge accounting is applied. Commodity derivatives are used to hedge the risk of oil price reduction. The
company currently has limited exposure towards fluctuations in interest rate, but generally manages such exposure by using interest rate derivatives. Foreign currency exchange
derivatives are used to manage the company's exposure to currency risks, mainly costs in NOK, EUR and GBP. These derivatives are mark to market with changes in market value
recognized in the income statement. In the income statement, impacts from commodity derivatives are presented as other income, while impacts from other derivatives are presented as
financial items.
As of year end 2022 the company has used currency derivatives to secure approximately NOK 42 billion in 2023 by selling USD to an average exchange rate of NOK/USD 10.02.
Correspondingly, approximately NOK 6 billion in 2023 has been secured by selling EUR to an average rate of NOK/EUR 10.44.
For 2022, the group and parent had four rig commitments. This included three jack-up rigs from Maersk/Noble; now named Noble Invincible, Noble Integrator and Noble Reacher
respectively. Noble Invincible was contracted by the Valhall/Hod licenses until May 2022 and is included as lease in the table below. Noble Reacher was initially hired from August 2021
on a 9 month contract. In January 2022, Noble and Aker BP entered into a rig swap agreement where Noble Reacher was to be replaced by the Noble Integrator under a new contract.
The swap occurred in March 2022. Noble Reacher work scope was transferred on to Noble Integrator with an added scope estimated to complete in July 2023. This new Noble
Integrator contract has thus been recognised as lease liability in 2022. In addition, we had the semi-submersible rig Deepsea Nordkapp contract with Odfjell Drilling during 2022. After the
exercise of the one-year extension option in 2021, committing the Deepsea Nordkapp until June 2023, an additional option was exercised to extend the contract to include the Kobra
East Gekko (KEG) scope, which is expected to last until end of Q1 2024 and will thus be recognized in the statement of financial position when commencing the KEG scope in early 2023.
The company has entered into leases for rig contracts, other license related commitments and office premises. The leases do not contain any restrictions on the company's dividend policy
or financing. To the extent the lease has been approved and committed by the partners in the relevant Aker BP operated licenses, the commitments disclosed represent Aker BP share
only.
Group Parent
Under the drilling and well construction alliance agreements, Aker BP has during 2022 entered into a five-year rig commitment for the jack-up rigs Noble Integrator and Noble Invincible.
Different rate structures will apply during the period reflecting different operating modes, agreed incentive schemes, and market developments. There will be different work scopes, with
varying durations in the period from 2023 to 2027, including options to cancel the rigs for parts of the period. Noble Integrator is expected to commence operations in Q2 2024, while
Noble Invincible is expected to commence operations in late March 2023. The semisubmersible rig Deepsea Stavanger is expected to join the Aker BP rig fleet in first half of 2025 for a
five-year contract. These rigs are planned to be deployed on the upcoming Aker BP PDO projects and thus subject to governmental and license approvals.
In addition, Aker BP has entered into a rig agreement with Saipem for the semisubmersible drilling rig Scarabeo 8. The contract duration is three years with two one-year options and a
mechanism of rate adjustment to market rates from the third year onwards. The rig commenced with Aker BP in January 2023 and will be recognized in the statement of financial position
as a lease liability in Q1 2023.
The minimum commitments from the lease contracts described above that has not commenced within year end 2022, have been included as other commitments in note 27.
Aker BP Annual Report 2022
95
(USD 1 000) 2022 2021 2022 2021
Lease debt as of beginning of period 136 213 215 760 136 213 215 760
New lease debt recognized in the period 33 765 5 989 54 432 5 989
Payments of lease debt
1)
-74 068 -96 173 -67 579 -96 173
Interest expense on lease debt 7 496 11 558 7 120 11 558
Lease debt from acquisition of Lundin Energy 34 757 - 6 024 -
Currency exchange differences -3 769 -921 -1 816 -921
Total lease debt 134 393 136 213 134 393 136 213
Break down of the lease debt to short-term and long-term liabilities
Short-term 36 298 44 378 36 298 44 378
Long-term 98 095 91 835 98 095 91 835
Total lease debt 134 393 136 213 134 393 136 213
1)
Payments of lease debt split by activities (USD 1 000):
2022 2021 2022 2021
Investments in fixed assets 46 942 50 423 41 725 50 423
Abandonment activity 751 31 715 751 31 715
Operating expenditures 13 878 7 499 13 878 7 499
Exploration expenditures 6 222 1 858 6 222 1 858
Other income 6 275 4 678 5 003 4 678
Total 74 068 96 173 67 579 96 173
Nominal lease debt maturity breakdown
(USD 1 000):
Within one year 42 646 51 010 42 646 51 010
Two to five years 87 179 68 602 87 179 68 602
After five years 26 403 42 837 26 403 42 837
Total 156 227 162 448 156 227 162 448
The incremental borrowing rate applied in discounting of the nominal lease debt is between 1.78 percent and 6.90 percent, dependent on the duration of the lease and when it was
intially recognized.
See note 14 for disclosures relating to the right-of-use assets
Non-lease components such as the service element of rig commitments are not included as part of the lease debt. As at 31 December 2022 this amounts to USD 13 million.
ParentGroup
The group does not have any residual value guarantees or variable lease payments. Extension options are included in the lease liability when, based on management's judgement, it is
reasonably certain that an extension will be exercised. No such extension options are recognized as at 31 December 2022. No sublease of right-of-use assets has occured.
The total expenditure relating to short-term leases which are not recognized as part of lease liabilities was USD 71 million in 2022 (USD 66 million in 2021).
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Financials
Note 27 Commitments
Capital commitments and other contractual obligations
(USD 1 000) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Within one year
1 572 052
387 894
1 572 052
387 894
One to five years
714 680
263 283
714 680
263 283
After five years
283 955
61 288
283 955
61 288
Total 2 570 687 712 465 2 570 687 712 465
Guarantees
Contingent liabilities
As for other licenses on the NCS, the company has unlimited liability for damage, including pollution damage. The company has insured its pro rata liability on the NCS on a par with other
oil companies. Installations and liability are covered by an operational liability insurance policy.
During the normal course of its business, the company will be involved in disputes, including tax disputes. Potential tax claims related to previous taxable income of acquired companies
can to some extent be reimbursed from the sellers. The company has made accruals for probable liabilities related to litigation and claims based on management's best judgment and in
line with IAS 37 and IAS 12.
Aker BP`s net share of capital commitments and other contractual obligations in the table below are mainly related to unavoidable costs related to development projects, non-rig
commitments not recognized as lease liabilities, rig leases not yet commenced and booked future gas transportation capacity. Parts of the rig leases have been entered into in the
company’s name at the initial signing, and subsequently partly allocated to licenses. The figures have been calculated based on the assumed net share for the company based on the
planned use of the related leased assets as at 31 December 2022. The numbers below exclude any liabilities disclosed in note 26 in relation to right-of-use assets.
Group Parent
The company has a bank guarantee related to withheld payroll tax of NOK 300 million.
The main part of the commitments within one year in the table above relates to cancellation fees on contracts entered into in connection with the PDO's delivered in 2022
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97
Note 28 Transactions with related parties
Related party (USD 1 000)
Revenues (-) / expenses (+) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
ABP Norway AS Interest cost - - 9 152 -
ABP Norway AS Interest income - - -7 445 -
ABP Norway AS
Operating expenses - - 18 539 -
ABP Norway AS
Recharges
1)
- - -52 531 -
ABP Energy Holding BV Interest cost - - 1 231 -
aiZe AS
Purchases of consultant and
technology services
5 111 880 5 111 880
Aker ASA Board remuneration etc 904 632 904 632
Aker Insurance Services AS Insurances 1 099 11 1 099 11
Aker Offshore Wind operating Company
Purchases of consultant and
engineering services
35 1 243 35 1 243
Cognite AS
2)
Purchases of consultant and IT
services
7 046 15 273 7 018 15 273
Lily Akerkvartalet AS Office cost 535 332 535 332
OCY Frayja Limited
3)
Platform supply vessel leases 3 853 3 853
OCY Orla Limited
3)
Platform supply vessel leases 3 853 3 853
Other Aker Group Companies Other operating expenses 469 239 469 239
BP Oil International Sales of Oil and NGL -8 796 575 -4 280 791 -5 707 486 -4 280 791
BP Gas Marketing Sales of Gas -2 819 700 -1 055 588 -2 956 511 -1 055 588
Other BP Group Companies Other operating expenses 419 344 419 344
Related party (USD 1 000)
Receivables (+) / liabilities (-) 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Aker BP UK Ltd
Other receivables - - 6 225 3 129
Cognite AS
2)
Trade creditors -166 -1 991 -166 -1 991
BP Oil International Ltd. Trade debtors 838 468 360 600 400 360 360 600
Other related parties Trade creditors -161 -489 -161 -489
3)
These entities are not deemed related parties to Aker BP ASA from September 2021.
Group
Following the Lundin transacation, the three main shareholders in Aker BP is Aker Capital AS, BP Exploration Operating Company and Nemesia S.a.r.l, which are all considered to have
significant influence over Aker BP. An overview of the 20 largest shareholders is provided in note 21. Aker BP has no transactions with entities controlled by Nemesia. Entities controlled
by either of the Aker Group or BP Group are considered to be related parties under IFRS and are listed in the table below. The figures listed represent net charges to Aker BP.
As desribed in note 3, certain subsidaries of Aker BP following the Lundin transaction have been merged with Aker BP ASA during 2022. The group internal transactions listed below (i.e.
figures in the parent column only) represent transactions for the period before the mergers.
Group Parent
Parent
1)
The figure represents total gross charges related to personnel employed by Aker BP ASA working for ABP Norway AS. These charges have been allocated to various licenses and
corporate activity based on timewriting.
2)
As described in note 19 Aker BP sold its share in Cognite during 2022. Due to the continuing involvement arising from the put option arrangement, the transactions with Cognite is still
considered to be within related parties.
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Financials
Note 29 Financial instruments
Capital structure and equity
Categories of financial assets and liabilities
Categories of financial assets and financial liabilities - Group and Parent
Total
Assets
Trade receivables - 950 942 - - 950 942
Other short-term receivable
1)
- 562 257 - - 562 257
Cash and cash equivalents - 2 756 012 - - 2 756 012
Long-term receivables 10 974 158 554 - - 169 528
Derivatives 156 003 - - - 156 003
Total financial assets 166 978 4 427 765 - - 4 594 742
Liabilities
Derivatives - - 51 905 - 51 905
Trade creditors - - - 133 875 133 875
Bonds - - - 5 279 164 5 279 164
Other short-term liabilities - - - 807 113 807 113
Total financial liabilities - - 51 905 6 220 152 6 272 056
1)
Prepayments are not included in other short-term receivables, as they do not meet the definition of financial instruments.
31.12.2022
Financial assets at fair value
through profit and loss
Financial assets
measured at
amortized cost
Financial liabilities at fair value through
profit and loss
Financial liabilities
measured at
amortized cost
The main objective of the company's management of the capital structure is to maximize return to the owners by ensuring competitive conditions for both the company's own capital and
borrowed capital.
The company is rated by S&P Global, Fitch and Moody's. The investment grade rating assigned by all three rating agencies continue to provide access to capital markets, including bank
and bond financing, at attractive terms. The company's production level, financial position and resource and reserve levels are important parameters in relation to the assigned rating. The
company continues to optimize its capital structure by balancing the return on equity against liquidity requirements.
The company monitors changes in financing needs, risk, assets and cash flows, and evaluates the capital structure continuously. To maintain the desired capital structure, the company
considers various types of capital transactions, including refinancing of its debt, purchase or issue new shares or debt instruments, sell assets or pay back capital to the owners.
Unless specified otherwise, the numbers below apply both to the group and the parent.
The company has the following financial assets and liabilities: financial assets and liabilities recognized at fair value through profit or loss, cash and receivables, and other liabilities. The
latter two are recognized in the accounts at amortized cost, while the first item is recognized at fair value.
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99
Total
Assets
Trade receivables - 366 785 - - 366 785
Other short-term receivables
1)
- 454 724 - - 454 724
Cash and cash equivalents - 1 970 906 - - 1 970 906
Derivatives 19 952 - - - 19 952
Total financial assets 19 952 2 792 415 - - 2 812 367
Liabilities
Derivatives - - 37 452 - 37 452
Trade creditors - - - 147 366 147 366
Bonds - - - 3 576 735 3 576 735
Other short-term liabilities - - - 624 366 624 366
Total financial liabilities - - 37 452 4 348 467 4 385 920
1)
Prepayments are not included in other short-term receivables, as they do not meet the definition of financial instruments.
Financial risk
(i) Commodity price risk
(ii) Currency risk
Exposure relating to (USD 1 000)
31.12.2022 31.12.2021
Tax receivables, cash and cash equivalents and receivables 260 014 192 622
Trade creditors, tax payable, leasing liability and other short-term liabilities -5 397 320 -2 038 762
Net exposure to NOK -5 137 306 -1 846 140
31.12.2021
Financial assets at fair value
through profit and loss
Financial assets
measured at
amortized cost
Financial liabilities at fair value through
profit and loss
Financial liabilities
measured at
amortized cost
The company has financed its activities with bonds (see note 22) and has an undrawn revolving credit facility with a syndication of banks (see note 20). In addition, the company has
financial instruments such as trade receivable, trade creditors, cash balances etc., directly related to its day-to-day operations. For hedging purposes, the company has different types of
economic hedging instruments, but no hedge accounting is applied. Commodity derivatives are used to hedge the risk for lower oil prices. Foreign currency exchange derivatives are used
in order to reduce currency risk related to cash flows. For the year 2022 all outstanding debt hold fixed rate coupons. The group currently has limited exposure towards fluctuations in
interest rate, but generally manages such exposure by using interest rate derivatives.
The most important financial risks which the company is exposed to relate to lower oil and gas prices, change in foreign exchange rates and access to cost efficient funding.
Aker BP's revenues are derived from the sale of petroleum products, and the revenue flow is therefore exposed to oil and gas price fluctuations. The company is continuously evaluating
and assessing opportunities for hedging as part of a prudent financial risk management process. The company had no commodity derivatives exposure per 31 December 2022.
Revenues from sale of petroleum and gas are mainly in USD, EUR and GBP, while expenditures are mainly in NOK, USD, EUR and GBP. Sales and expenses in the same currency
contribute to mitigating some of the currency risk. Currency derivatives may be used to further reduce this risk.
The amounts above does not include tax balances in NOK, as they are not deemed to be financial instruments. The company's management of currency risk takes into account the USD
values of non-USD assets, liabilities, opex and investments over time, including those exposures arising from the requirement to perform the tax calculation in NOK while the company's
functional currency is USD.
The company's risk management, including financial risk management, is designed to ensure identification, analysis and systematic and cost-efficient handling of risk. Established
management procedures provide a sound basis for reporting and monitoring of the company's financial risk exposure.
The table below shows the company's exposure in NOK as of 31 December:
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Financials
(USD 1 000) Change in exchange rate 31.12.2022 31.12.2021
Effect on pre-tax profit/loss: + 10% 56 215 25 423
- 10% -68 707 -31 072
Exposure relating to (USD 1 000)
31.12.2022 31.12.2021
Cash and cash equivalents and receivables 1 407 531 332 143
Bond, trade creditors and other short-term liabilities -861 069 -849 375
Net exposure to EUR 546 462 -517 232
(USD 1 000) Change in exchange rate 31.12.2022 31.12.2021
Effect on pre-tax profit/loss: + 10% -49 678 47 019
- 10% 60 718 -57 473
Exposure relating to (USD 1 000)
31.12.2022
31.12.2021
1)
Cash and cash equivalents and receivables 402 116
Trade creditors and other short-term liabilities -22 535
Net exposure to GBP 379 582
(USD 1 000) Change in exchange rate 31.12.2022
31.12.2021
1)
Effect on pre-tax profit/loss: + 10% -34 508
- 10% 42 175
1) Deemed immaterial in 2021
In 2022 the company had GBP/USD exposure related cash and cash equivalents and receivables from gas sales.
The table below shows the company's exposure in GBP as of 31 December:
The table below shows the impact on profit/loss from changes in GBP/USD exchange rate for cash and cash equivalents and receivables.
The company is also exposed to changes in other exchange rates, but the amounts are deemed immaterial.
The table below shows the impact on profit/loss from changes in NOK/USD exchange rate.
The table below shows the impact on profit/loss from changes in EUR/USD exchange rate for the EUR bond, cash and cash equivalents and receivables.
The sensitivity above includes the impact from currency derivatives.
In 2022 the company had EUR/USD exposure related to bond, cash and cash equivalents and receivables from gas sales. As the Senior Notes bond is EUR denominated, there is currency
risk associated with the translation to the company’s USD functional currency and the cash payments of interest and principle amounts, though EUR denominated gas sales and EUR Time
Deposit mitigate the risks associated with payments.
The table below shows the company's exposure in EUR as of 31 December:
Aker BP Annual Report 2022
101
(iii) Interest-rate risk
(iv) Liquidity risk/liquidity management
31.12.2022 Book value 1-2 years 2-5 years over 5 years SUM
Non-derivative financial liabilities:
Bonds 5 279 164 156 999 156 999 2 391 936 3 890 949 6 596 884
Trade creditors and other liabilities 940 988 940 988 - - - 940 988
Derivative financial liabilities
Derivatives 51 905 34 924 16 981 - - 51 905
Total as of 31.12.2021 6 272 056 1 132 911 173 980 2 391 936 3 890 949 7 589 776
31.12.2021 Book value 1-2 years 2-5 years over 5 years SUM
Non-derivative financial liabilities:
Bonds 3 576 735 106 563 106 563 1 290 002 2 894 690 4 397 818
Trade creditors and other liabilities 771 732 771 732 - - - 771 732
Derivative financial liabilities
Derivatives 37 452 35 082 2 370 - - 37 452
Total as of 31.12.2020 4 385 920 913 378 108 933 1 290 002 2 894 690 5 207 003
Short-term (12 months) and long-term (five years) forecasts are prepared on a regular basis to plan the company's liquidity requirements. These plans are updated regularly for various
scenarios and form part of the decision basis for the company's management and Board of Directors.
Excess liquidity is defined as the sum of bank account balances, short-term bank deposits and unused credit facilities. For excess liquidity, the requirement for low liquidity risk (i.e. the risk
of realization on short notice) is generally more important than maximizing the return.
The company's liquid assets as of 31 December 2022 are deposited in bank accounts and on short term time deposits with banks. As of 31 December 2022, the group had cash reserves
of USD 2 756 million (2021: USD 1 971 million). Revenues and expenses are carefully managed on a day-to-day basis for liquidity risk management purposes.
Contract related cash flow
The company's liquidity risk is the risk that it will not be able to meet its financial obligations as they fall due.
The company's objective for the placement and management of excess capital is to maintain a low risk profile and good liquidity.
Less than 1 year
Contract related cash flow
Less than 1 year
The table below shows the payment structure for the company's financial commitments, based on undiscounted contractual payments. For the corresponding information on lease debt,
reference is made to note 26.
For all the relevant material financial agreements, Aker BP has in place new benchmark rates or a fallback clause to cater for the discontinuation of IBOR rates. The IBOR reform did not
have any current impact on Aker BP and is not expected to significantly affect future periods. All our bonds are at fixed interest rate, and the RCF is currently undrawn. Further, the
fallback to SOFR rates adjusted for applicable credit adjustment spread after June 2023 is not expected to materially differ from the IBOR rate.
In 2022, the company had no oustanding debt liabilities exposed to floating interest rate risk, which is unchanged from 2021. The company is relatively limited exposed to interest-rate
risk related to cash and cash equivalents.
The terms of the company's debt instruments are described in notes 22.
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Financials
(v) Credit risk
Determination of fair value
Fair value of financial instruments (USD 1 000)
Book value Fair value Book value Fair value
Financial liabilities measured at amortized cost:
Bonds 5 279 164 4 829 678 3 576 735 3 752 778
Total financial liabilities 5 279 164 4 829 678 3 576 735 3 752 778
Fair value hierarchy
The company has no assets or liabilities in Level 3.
The Senior Notes are all listed on The Luxembourg Stock Exchange. The fair values for disclosure purposes are determined using the quoted value as of 31 December 2022.
The risk of counterparties being financially incapable of fulfilling their obligations is regarded as minor as there have not historically been any losses on trade receivable. The company's
customers and license partners are generally large and credit worthy oil companies, and it has thus not been necessary to make any provision for credit losses.
The maximum credit risk exposure corresponds to the book value of financial assets. The company deems its maximum risk exposure to correspond with the book value of cash and cash
equivalents, accounts receivable and other short-term receivables, see notes 16, 17 and 20.
The following is a comparison between the book value and fair value of the company's financial instruments, except those where the carrying amount is a reasonable approximation of fair
value (such as short-term trade receivables and payables in addition to instruments measured to fair value).
31.12.2022 31.12.2021
The company classifies fair value measurements by employing a value hierarchy that reflects the significance of the input used in preparing the measurements. The fair value hierarchy
consists of the following levels:
Level 1 - input in the form of listed (unadjusted) prices in active markets for identical assets or liabilities.
The fair value of forward exchange contracts is determined using the forward exchange rate at the end of the reporting period. The fair value of commodity derivatives is determined
using the forward Brent blend curve at the end of the reporting period. The fair value of interest rate swaps and cross currency interest rate swaps is determined by using the expected
floating interest rates at the end of the period and is confirmed by external market sources. See note 24 for detailed information about the derivatives.
The following of the company's financial instruments have not been valued at fair value: trade debtors, other short-term receivables, long-term receivables, and other short-term liabilities
and bonds.
The carrying amount of cash and cash equivalents is approximately equal to fair value, since these instruments have a short term to maturity. Similarly, the carrying amount of trade
receivable, other receivables, trade creditors and other short-term liabilities is materially the same as their fair value as they are entered into on ordinary terms and conditions.
In the management of the company's liquid assets, low credit risk is prioritized. Liquid assets are generally placed in bank deposits that represent a low credit risk. All investments are
subject to internal policy that requires a rating equivalent to A-2 from S&P and limits investment with a single counterparty.
Level 2 - input other than listed prices of assets and liabilities included in Level 1 that is observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
Level 3 - input for assets or liabilities for which there is no observable market data (non-observable input).
Aker BP Annual Report 2022
103
31.12.2022
Financial instruments recognized at fair value (USD 1 000)
Level 1 Level 2 Level 3
Financial assets or liabilities measured at fair value with changes in value recognized through profit or loss
Long-term receivables
1)
- - 10 974
Derivatives
2)
- 120 093 -15 995
31.12.2021
Financial instruments recognized at fair value (USD 1 000)
Level 1 Level 2 Level 3
Financial assets or liabilities measured at fair value with changes in value recognized through profit or loss
Derivatives - -17 501 -
In the course of the reporting period, there were no changes in the fair value measurements that involved any transfers between levels.
Reconciliation of cash flows from financing activities
31.12.2021 Cash flows Currency
Other
2)
31.12.2022
Bonds 3 576 735 - 25 880 -49 425 1 725 974 5 279 164
Other interest-bearing debt (RCF) - -601 050 - - 601 050 -
Interest -53 011 -156 465 134 485 - - -74 991
136 213 -66 572 - -3 769 68 522 134 393
Paid dividends -1 005 731 - - -
Treasury shares -8 623 1 524 - - - -7 099
Totals 3 651 314 -1 828 294 160 364 -53 194 2 395 546 5 331 467
31.12.2020 Cash flows Currency
Other
1)
31.12.2021
Bonds 3 968 566 -383 169 14 658 -61 725 38 405 3 576 735
Other interest-bearing debt (RCF) - -7 675 - - - -
Interest -46 887 -151 085 144 961 - - -53 011
215 760 -84 615 - -921 5 989 136 213
Paid dividends - -487 500 - - -
Treasury shares -28 -8 595 - - - -8 623
Totals 4 137 411 -1 122 640 159 619 -62 646 44 394 3 651 314
The table below shows a reconciliation between the opening and the closing balances in the statement of financial position for liabilities arising from financing activities.
Lease debt
1)
Amortization of Bonds in Parent was USD 14.7 million.
2)
Other includes transfer of bonds and other interest bearing debt to Aker BP in connection with the Lundin transaction
Non-cash changes
1)
The sale of 2.6 percent of Johan Sverdrup during 2019 (made by Lundin) included a contingent consideration based on future reserve reclassifications and is due in 2026, The valuation
is considered level 3 in the fair value hierarchy.
2)
The level 3 figure relates to the put option granted to the buyer of the shares in Cognite AS, as described in note 19. The valuation is considered level 3 in the fair value hierarchy due
to the significance of unobservable market data in the valuation.
Lease debt
Non-cash changes
Amortization and
interest expense
1)
1)
Other repesents early redemption fee of bond and discount on new bond.
Amortization and
interest expense
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
104
Financials
Note 30 Investments in joint operations
Fields operated: 31.12.2022 31.12.2021 Fields operated: 31.12.2022 31.12.2021
Alvheim
80.000 %
65.000 % Tambar
55.000 %
55.000 %
Bøyla
80.000 %
65.000 %
Tambar Øst
46.200 %
46.200 %
Edvard Grieg
65.000 %
0.000 % Ula
80.000 %
80.000 %
Hod
90.000 %
90.000 % Valhall
90.000 %
90.000 %
Ivar Aasen Unit
36.171 %
34.786 % Vilje
46.904 %
46.904 %
Skogul
65.000 %
65.000 % Volund
100.000 %
65.000 %
Skarv
23.835 %
23.835 % Volve
50.000 %
0.000 %
Solveig
65.000 %
0.000 %
Ærfugl Nord
30.000 %
30.000 %
Production licenses in which Aker BP is the operator:
License: 31.12.2022 31.12.2021 License: 31.12.2022 31.12.2021
PL 001B
35.000 %
35.000 % PL 212E
30.000 %
30.000 %
PL 006B
90.000 %
90.000 % PL 242
35.000 %
35.000 %
PL 019
80.000 %
80.000 % PL 261
70.000 %
60.000 %
PL 019E
80.000 %
80.000 % PL 261C
23.835 %
23.835 %
PL 019F
55.000 %
55.000 % PL 262
30.000 %
30.000 %
PL 026
87.700 %
87.700 % PL 300
55.000 %
55.000 %
PL 026B
87.700 %
87.700 % PL 333
77.800 %
77.800 %
PL 028B
35.000 %
35.000 % PL338
65.000 %
0.000 %
PL 033
90.000 %
90.000 % PL338BS
50.000 %
0.000 %
PL 033B
90.000 %
90.000 % PL338C
80.000 %
0.000 %
PL 036C
80.000 %
65.000 % PL338DS
65.000 %
0.000 %
PL 036D
46.904 %
46.904 % PL 338E
80.000 %
0.000 %
PL 036E
61.260 %
48.420 % PL 340
80.000 %
65.000 %
PL 036F
61.260 %
48.420 % PL 340BS
80.000 %
65.000 %
PL 065
55.000 %
55.000 % PL 359
65.000 %
0.000 %
PL 065B
55.000 %
55.000 % PL 364
87.700 %
87.700 %
PL 088BS
80.000 %
65.000 % PL 442
87.700 %
87.700 %
PL 102D
50.000 %
44.000 % PL 442B
87.700 %
87.700 %
PL 102F
61.260 %
48.420 % PL 442C
87.700 %
87.700 %
PL 102G
61.260 %
48.420 % PL 460
65.000 %
65.000 %
PL 102H
50.000 %
44.000 % PL 492
100.000 %
40.000 %
PL 127C
68.083 %
88.083 % PL 501
37.384 %
0.000 %
PL 127DS
88.083 %
0.000 % PL 501B
37.384 %
0.000 %
PL 146
77.800 %
77.800 % PL 609
55.000 %
0.000 %
PL 146B
77.800 %
77.800 % PL 609B
55.000 %
0.000 %
PL 150
100.000 %
65.000 % PL 609D
55.000 %
0.000 %
PL 159D
23.835 %
23.835 % PL 685
0.000 %
40.000 %
PL 167
50.000 %
10.000 % PL 784
40.000 %
40.000 %
PL 167B
50.000 %
10.000 % PL 815
60.000 %
0.000 %
PL 167C
50.000 %
10.000 % PL 818
40.000 %
40.000 %
PL 203
80.000 %
65.000 % PL 818B
40.000 %
40.000 %
PL 212
30.000 %
30.000 % PL 822S
87.700 %
60.000 %
PL 212B
30.000 %
30.000 % PL 830
40.000 %
0.000 %
Aker BP Annual Report 2022
105
Production licenses in which Aker BP is the operator:
License: 31.12.2022 31.12.2021 License: 31.12.2022 31.12.2021
PL 838
35.000 %
35.000 % PL 1051
60.000 %
0.000 %
PL 858
0.000 %
40.000 % PL 1057
60.000 %
0.000 %
PL 867
80.000 %
80.000 % PL 1066
50.000 %
50.000 %
PL 867B
80.000 %
80.000 % PL 1082
50.000 %
0.000 %
PL 869
80.000 %
65.000 % PL 1083
40.000 %
0.000 %
PL 873
47.700 %
47.700 % PL 1084
60.000 %
0.000 %
PL 874
87.700 %
87.700 % PL 1085
55.000 %
55.000 %
PL 886
60.000 %
0.000 % PL 1088
77.800 %
77.800 %
PL 886B
60.000 %
0.000 % PL 1089
50.000 %
0.000 %
PL 906
50.000 %
50.000 % PL 1091
40.000 %
0.000 %
PL 914S
0.000 %
34.786 % PL 1092
50.000 %
0.000 %
PL 915
0.000 %
35.000 % PL 1094
60.000 %
0.000 %
PL 919
80.000 %
65.000 % PL 1095
50.000 %
0.000 %
PL 932
60.000 %
60.000 % PL 1097
70.000 %
40.000 %
PL 941
70.000 %
80.000 % PL 1099
40.000 %
40.000 %
PL 941B
70.000 %
0.000 % PL 1102
60.000 %
0.000 %
PL 942
30.000 %
30.000 % PL 1110
40.000 %
40.000 %
PL 976
40.000 %
0.000 % PL 1124
23.835 %
23.835 %
PL 979
60.000 %
60.000 % PL 1133
35.000 %
0.000 %
PL 986
0.000 %
50.000 % PL 1134
35.000 %
0.000 %
PL 1005
40.000 %
40.000 % PL 1139
40.000 %
0.000 %
PL 1008
90.000 %
90.000 % PL1141
70.000 %
0.000 %
PL 1026
0.000 %
40.000 % PL1142
82.060 %
0.000 %
PL 1028
0.000 %
50.000 % PL1143
82.060 %
0.000 %
PL 1032
40.000 %
0.000 % PL1144
40.000 %
0.000 %
PL 1041
70.000 %
55.000 % PL 1153
40.000 %
0.000 %
PL 1042
40.000 %
40.000 % PL 1157
60.000 %
0.000 %
PL 1045
80.000 %
65.000 % PL 1158
40.000 %
0.000 %
PL 1045B
80.000 %
65.000 % PL 1162
50.000 %
0.000 %
PL 1047
0.000 %
40.000 % PL 1164
40.000 %
0.000 %
PL 1048
50.000 %
0.000 % PL 1170
35.000 %
0.000 %
Number of licenses in which Aker BP is the operator 120 84
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
106
Financials
Fields non-operated: 31.12.2022 31.12.2021
Atla
10.000 %
10.000 %
Enoch
2.000 %
2.000 %
Johan Sverdrup
31.573 %
11.573 %
Oda
15.000 %
15.000 %
Production licenses in which Aker BP is a partner:
License: 31.12.2022 31.12.2021 License: 31.12.2022 31.12.2021
PL 006C
35.000 %
35.000 % PL 894
10.000 %
0.000 %
PL 006E
0.000 %
15.000 % PL 896
30.000 %
0.000 %
PL 006F
0.000 %
15.000 % PL 917
40.000 %
0.000 %
PL 035
50.000 %
50.000 % PL 917B
40.000 %
0.000 %
PL 035C
50.000 %
50.000 % PL 929
10.000 %
0.000 %
PL 048D
10.000 %
10.000 % PL 935
20.000 %
0.000 %
PL 102C
10.000 %
10.000 % PL 943
20.000 %
10.000 %
PL 127
50.000 %
50.000 % PL 956
20.000 %
0.000 %
PL 127B
0.000 %
50.000 % PL 968
30.000 %
20.000 %
PL 211CS
15.000 %
0.000 % PL 981
0.000 %
40.000 %
PL 220
15.000 %
15.000 % PL 985
30.000 %
20.000 %
PL 229E
50.000 %
0.000 % PL 989
30.000 %
0.000 %
PL 229G
50.000 %
0.000 % PL 1040
30.000 %
30.000 %
PL 265
27.384 %
20.000 % PL 1052
0.000 %
20.000 %
PL 272
50.000 %
50.000 % PL 1054
0.000 %
30.000 %
PL 272B
50.000 %
50.000 % PL 1064
20.000 %
20.000 %
PL 272C
50.000 %
0.000 % PL 1069
0.000 %
50.000 %
PL 405
15.000 %
15.000 % PL 1087
50.000 %
0.000 %
PL 457BS
40.000 %
40.000 % PL 1090
30.000 %
0.000 %
PL 502
22.222 %
22.222 % PL 1104
40.000 %
0.000 %
PL 533
0.000 %
35.000 % PL 1106
20.000 %
0.000 %
PL 537
35.000 %
0.000 % PL 1122
20.000 %
20.000 %
PL 537B
35.000 %
0.000 % PL 1123
30.000 %
30.000 %
PL 554
30.000 %
30.000 % PL 1126
30.000 %
0.000 %
PL 554B
30.000 %
30.000 % PL 1129
30.000 %
0.000 %
PL 554C
30.000 %
30.000 % PL 1131
20.000 %
0.000 %
PL 554D
30.000 %
30.000 % PL 1138
30.000 %
0.000 %
PL 722
0.000 %
20.000 % PL 1140
40.000 %
0.000 %
PL 782S
20.000 %
20.000 % PL 1145
40.000 %
0.000 %
PL 782SB
20.000 %
20.000 % PL 1147
20.000 %
0.000 %
PL 782SC
20.000 %
20.000 % PL 1149
30.000 %
0.000 %
PL 782SD
20.000 %
20.000 % PL 1151
20.000 %
0.000 %
PL 820S
41.000 %
0.000 % PL 1152
50.000 %
0.000 %
PL 820SB
41.000 %
0.000 % PL 1154
30.000 %
0.000 %
PL 838B
30.000 %
30.000 % PL 1163
20.000 %
0.000 %
PL 892
0.000 %
30.000 % PL 1165
40.000 %
0.000 %
Number of licenses in which Aker BP is a partner 62 39
Aker BP Annual Report 2022
107
Note 31 Events after the balance sheet date
Note 32 Classification of reserves and contingent resources (unaudited)
Classification of reserves and contingent resources
Figure 1 - SPE's classification system used by Aker BP ASA
Reserves, developed and non-developed
On 23 February 2023, Aker BP disbursed USD 347.6 million in dividend to shareholders. In March 2023, it was decided to not accede the PDO for the Troldhaugen project.
This will likely lead to an impairment charge of the book value related to the project of approximately USD 90 million on a pre-tax basis, which will be recognized in Q1 2023.
Aker BP ASA's reserve and contingent resource volumes have been classified in accordance with the Society of Petroleum Engineer’s (SPE’s) “Petroleum Resources
Management System”. This classification system is consistent with Oslo Børs requirements for the disclosure of hydrocarbon reserves and contingent resources. The
framework of the classification system is illustrated in Figure 1.
All reserve estimates are based on all available data including seismic, well logs, core data, drill stem tests and production history. Industry standards are used to establish 1P
and 2P. This includes decline analysis for mature fields in which reliable trends are established. For undeveloped fields and less mature producing fields reservoir simulation
models or simulations models in combination with decline analysis have been used for profiles generation.
Note that an independent third party, AGR Petroleum Services AS, has certified 1P and 2P reserves for all Aker BP assets except for the minor assets Atla and Enoch,
representing 0.0003 percent of total 2P reserves.
RESERVES
PROSPECTIVE
RESOURCES
UNRECOVERABLE
UNRECOVERABLE
CONTINGENT
RESOURCES
TOTAL PETROLEUM INITIALLY-IN-PLACE (PIIP)
UNRECOVERED PIIP
COMMERCIAL
SUB-COMMERCIAL
DISCOVERED PIIP
PRODUCTION
P
P
r
r
o
o
j
j
e
e
c
c
t
t
M
M
a
a
t
t
u
u
r
r
i
i
t
t
y
y
s
s
u
u
b
b
-
-
c
c
l
l
a
a
s
s
s
s
e
e
s
s
On Production
Approved for
Development
Justified for Development
Development Pending
Development Unclarified or On Hold
Development Not Viable
Prospect
Lead
Play
Range of uncertainty
Increasing Chance of Commerciality
Not to scale
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
108
Financials
Table 1 - Aker BP fields - Developed reserves
Field/project
Alvheim Base
Boa Base
Bøyla Base
Frosk Test Production
Skogul Base
Vilje Base
Volund Base
Edvard Grieg Base
Troldhaugen EWT
Solveig Ph1
Ivar Aasen Base
Johan Sverdrup Base
Oda Base
PL212E Ærfugl Nord Base
Skarv Base
Skarv Gråsel
Skarv Idun Tunge
Skarv Ærfugl
Tambar Base
Ula Base
Hod Base
Valhall Base
Atla
Enoch
80.00 % Aker BP
On Production
70.92 % Aker BP
On Production
Aker BP ASA has a working interest in 49 fields/projects containing reserves, see Table 1 and 2. Out of these fields/projects, 24 are in the sub-class “On
Production”/Developed, 9 are in the sub-class “Approved for Development”/Undeveloped and 16 are in the sub-class “Justified for Development”/Undeveloped. Note that
several fields have reserves in more than one reserve sub-class.
Investment share Operator Resource class
80.00 % Aker BP
On Production
46.90 % Aker BP On Production
100.00 % Aker BP On Production
65.00 % Aker BP On Production
80.00 % Aker BP On Production
80.00 % Aker BP On Production
65.00 % Aker BP On Production
30.00 % Aker BP On Production
23.84 % Aker BP On Production
65.00 % Aker BP On Production
36.17 % Aker BP On Production
31.57 % Equinor On Production
15.00 % Sval Energy
On Production
90.00 %
Aker BP
Aker BP
2.00 % Repsol Sinopec
On Production
23.84 % Aker BP On Production
On Production
23.84 % Aker BP On Production
55.00 % Aker BP On Production
23.84 % Aker BP
On Production
On Production
On Production
10.00 % TotalEnergies
90.00 % Aker BP
On Production
80.00 %
Aker BP Annual Report 2022
109
Table 2 - Aker BP fields - Undeveloped reserves
Field/project
Kameleon Gas Cap Blow Down
Alvheim East KAM L5
Frosk
Kobra East/Gekko
Edvard Grieg IOR
Hanz
Ivar Aasen IOR
Johan Sverdrup IOR
Johan Sverdrup WAG
Tyrving
Solveig Ph2
Symra
Frigg Gamma Delta Development
Frøy Development
Fulla Development
Langfjellet Development
Lille Frigg Development
Rind Development
Krafla/Askja Development
PL127C Alve Nord Development
PL159D Idun Nord Development
PL942 Ørn Development
Verdande Development
Fenris
Valhall PWP
Total net proven reserves (1P/P90) as of 31 December 2022 to Aker BP ASA are estimated at 1 251 million barrels of oil equivalents. Total net proven plus probable reserves
(2P/P50) are estimated at 1 859 million barrels of oil equivalents. The split between liquid and gas and between the different subcategories are given in tables 3 and 4.
68.08 % Aker BP
Justified for Development
23.84 % Aker BP Justified for Development
30.00 % Aker BP Justified for Development
7.00 % Equinor Justified for Development
77.80 % Aker BP Justified for Development
90.00 % Aker BP Justified for Development
47.70 % Aker BP
Justified for Development
87.70 % Aker BP Justified for Development
50.00 % Aker BP Justified for Development
87.70 % Aker BP Justified for Development
47.70 % Aker BP Justified for Development
87.70 % Aker BP Justified for Development
Aker BP Justified for Development
65.00 % Aker BP Justified for Development
50.00 % Aker BP Justified for Development
87.70 % Aker BP Justified for Development
31.57 % Equinor
Approved for Development
35.00 % Aker BP
Approved for Development
36.17 %
80.00 % Aker BP
Approved for Development
Aker BP
Approved for Development
65.00 %
Aker BP
Approved for Development
80.00 %
31.57 % Equinor
Approved for Development
61.26 %
80.00 % Aker BP
Approved for Development
Investment share Operator Resource class
80.00 % Aker BP
Approved for Development
Aker BP
Approved for Development
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
110
Financials
Table 3 - Reserves by field, area and reserve class
Gross oil Gross NGL Gross gas
Gross oil equiv
Net oil equiv.
Gross oil/cond
Gross NGL Gross gas
Gross oil equiv
Net oil equiv.
31.12.2022 (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe)
Alvheim (incl Boa) 53 - 38 91 72 71 - 59 130 103
Bøyla
0 - 0 0 0 2 - -0 2 2
Frosk 7 - 0 7 6 11 - 1 12 10
Skogul 2 - 0 3 2 4 - 0 5 3
Vilje 7 - - 7 4 11 - - 11 5
Tyrving 13 - -0 13 8 21 - -0 21 13
Volund 3 - 0 3 3 5 - 0 5 5
Alvheim Area 86 - 39 124 94 127 - 60 187 141
Ivar Aasen 33 2 7 43 15 49 3 11 63 23
Edvard Grieg 78 6 9 93 60 118 8 13 139 90
Solveig 46 5 9 61 39 77 10 14 101 66
Troldhaugen EWT
0 0 0 0 0 0 0 0 0 0
Symra 17 2 4 24 12 27 2 4 34 17
Hanz 9 1 2 12 4 15 1 3 20 7
Edvard Grieg Area 184 16 32 233 132 286 25 46 357 203
Skarv 16 28 131 176 42 22 36 169 227 54
Gråsel
3 1 4 8 2 4 1 5 10 2
Idun Tunge 0 0 1 1 0 0 0 2 2 0
Verdande 20 0 2 23 2 29 1 6 35 2
PL127C Alve Nord 2 2 8 11 8 9 6 21 35 24
PL159D Idun Nord 0 0 6 7 2 0 1 9 10 2
PL942 Ørn
1 1 23 26 8 2 3 50 55 17
Ærfugl Nord
1 3 13 18 5 2 3 16 21 6
Skarv Area 44 36
189 269 68 67 51 278 396 109
Tambar 1 0 0 1 0 2 0 0 2 1
Tambar East - - - - - - - - - -
Ula - - - - - - - - - -
Ula Area 1 0 0 1 0 2 0 0 2 1
Hod 24 1 4 29 27 32 1 5 39 35
Fenris 28 4 40 71 56 57 7 82 146 114
Valhall 159 9 32 199 179 209 11 42 263 237
Valhall Area 210 13 76 300 261 298 20 129 447 385
Johan Sverdrup 1 473 17 30 1 521 480 1 984 32 53 2 069 653
Frigg Gamma Delta 45 1 4 51 45 78 3 8 89 78
Frøy
21 1 3 25 22 30 2 7 40 35
Fulla 3 4
23 29
14 5 9 46 60 29
Langfjellet 11 1 4 17 15 26 2 7 35 31
Lille Frigg 2 1 6 9 4 3 3 14 19 9
Rind 28 4 11 43 38 40 5 14 58 51
Krafla/Askja 70 26 59 155 78 109 49 110 268 134
Yggrdrasil 180 39 110 329 215 291 73 206 569 367
Oda 4 0 0 4 1 5 0 0 6 1
Atla - - - - - - - - - -
Enoch - - - - - 0 - - 0 0
Other (Atla, Enoch and Oda) 4 0 0 4 1 6 0 0 6 1
Total 2 181 123 477 2 781 1 251 3 060 201 772 4 033 1 859
1P / P90 (low estimate) 2P / P50 (best estimate)
Aker BP Annual Report 2022
111
Table 4 - Reserves by project and reserve class
Interest
On production
Gross oil/cond.
Gross NGL Gross gas
Gross oil equiv
Net oil equiv.
Gross oil Gross NGL Gross gas
Gross oil equiv
Net oil equiv.
31.12.2022 %
(mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe)
Alvheim Base
80.0 %
25 - 6 31 25 32 - 7 39 31
Boa Base
70.9 %
9 - 1 10 7 13 - 2 14 10
Bøyla Base
80.0 %
0 - 0 0 0 2 - -0 2 2
Frosk Test Production
80.0 %
1 - -0 1 1 2 - -0 2 2
Skogul Base
65.0 %
2 - 0 3 2 4 - 0 5 3
Vilje Base
46.9 %
7 - - 7 4 11 - - 11 5
Volund Base
100.0 %
3 - 0 3 3 5 - 0 5 5
Edvard Grieg Base
65.0 %
69 5 8 82 53 104 7 12 123 80
Troldhaugen EWT
80.0 %
0 0 0 0 0 0 0 0 0 0
Solveig Ph1
65.0 %
29 3 6 39 25 48 7 9 64 42
Ivar Aasen Base
36.2 %
30 2 7 39 14 43 3 10 56 20
Johan Sverdrup Base
31.6 %
1 415 24 42 1 480 467 1 892 38 63 1 993 629
Oda Base
15.0 %
4 0 0 4 1 5 0 0 6 1
PL212E Ærfugl Nord Base
30.0 %
0 1 6 7 3 1 2 8 11 4
Skarv Base
23.8 %
7 17 78 102 25 8 18 84 110 27
Skarv Gråsel
23.8 %
3 1 4 8 2 4 1 5 10 2
Skarv Idun Tunge
23.8 %
0 0 1 1 0 0 0 2 2 0
Skarv Ærfugl
23.8 %
10 13 61 85 20 14 20 93 127 30
Tambar Base
55.0 %
1 0 0 1 0 2 0 0 2 1
Ula Base
80.0 %
- - - - - - - - - -
Hod Base
90.0 %
24 1 4 29 27 32 1 5 39 35
Valhall Base
90.0 %
123
7 24 154 138 154 8 31 193 174
Atla
10.0 %
- - - - - - - - - -
Enoch
2.0 %
- - - - - 0 - - 0 0
Total 1 763 74 249 2 085 816 2 377 106 332 2 815 1 103
1P / P90 (low estimate) 2P / P50 (best estimate)
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Financials
Interest
Approved for development
Gross oil Gross NGL Gross gas
Gross oil equiv
Net oil equiv.
Gross oil/cond
Gross NGL Gross gas
Gross oil equiv
Net oil equiv.
31.12.2022 % (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe)
Kameleon Gas Cap Blow Down
80.0 %
1 - 6 6 5 0 - 19 19 15
Alvheim East KAM L5
80.0 %
2 - 2 4 3 4 - 3 7 5
Frosk
80.0 %
6 - 0 6 5 9 - 1 10 8
Kobra East/Gekko
80.0 %
17 - 24 40 32 22 - 29 51 41
Edvard Grieg IOR
65.0 %
9 1 1 11 7 14 1 1 16 11
Hanz
35.0 %
9 1 2 12 4 15 1 3 20 7
Ivar Aasen IOR
36.2 %
3 0 0 4 1 6 0 1 7 3
Johan Sverdrup IOR
31.6 %
4 0 0 4 1 5 0 0 5 2
Johan Sverdrup WAG
31.6 %
54 -6 -12 36 12 88 -6 -11 71 22
Total 105 -5 24 124 71 164 -4 46 207 114
Interest
Justified for development
Gross oil/cond.
Gross NGL Gross gas
Gross oil equiv
Net oil equiv.
Gross oil/cond
Gross NGL Gross gas
Gross oil equiv
Net oil equiv.
31.12.2022 % (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe)
Tyrving
61.3 %
13 - -0 13 8 21 - -0 21 13
Solveig Ph2
65.0 %
16 2 3 22 14 28 3 5 37 24
Symra
50.0 %
17 2 4 24 12 27 2 4 34 17
Frigg Gamma Delta Development
87.7 %
45 1 4 51 45 78 3 8 89 78
Frøy Development
87.7 %
21 1 3 25 22 30 2 7 40 35
Fulla Development
47.7 %
3 4 23 29 14 5 9 46 60 29
Langfjellet Development
87.7 %
11 1 4 17 15 26 2 7 35 31
Lille Frigg Development
47.7 %
2 1 6 9 4 3 3 14 19 9
Rind Development
87.7 %
28 4 11 43 38 40 5 14 58 51
Krafla/Askja Development
50.0 %
70 26 59 155 78 109 49 110 268 134
PL127C Alve Nord Development
68.1 %
2 2 8 11 8 9 6 21 35 24
PL159D Idun Nord Development
23.8 %
0 0 6 7 2 0 1 9 10 2
PL942 Ørn Development
30.0 %
1 1 23 26 8 2 3 50 55 17
Verdande Development
7.0 %
20 0 2 23 2 29 1 6 35 2
Fenris
77.8 %
28 4 40 71 56 57 7 82 146 114
Valhall PWP
90.0 %
36 2 8 45 41 55 3 12 70 63
Total 314 54 205 572 364 518 99 394 1 012 642
Total reserves 31.12.2022 1 251 1 859
Total reserves 31.12.2021 599 802
1P / P90 (low estimate) 2P / P50 (best estimate)
1P / P90 (low estimate) 2P / P50 (best estimate)
Aker BP Annual Report 2022
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Table 5 - Aggregated reserves, production, developments, and adjustments
Net attributed million barrels of oil equivalent
(mmboe)
1P/P90 2P/P50 1P/P90 2P/P50 1P/P90 2P/P50 1P/P90 2P/P50
Balance as of 31.12.2021 467 601 128 194 4 6 599 802
Production -112 -112 - - - - -112 -112
Transfer 141 216 -155 -238 15 22 - 0
Revisions -39 -75 2 5 - - -38 -70
IOR - - 13 20 22 33 35 53
Discovery and extensions - - - - 323 579 323 579
Acquisition and sale 360 473 83 132 1 1 444 606
Balance as of 31.12.2022 816 1 103 71 114 364 642 1 251 1 859
Delta 349 502 -57 -80 360 636 652 1 057
End of financial statement
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As described in note 4 on climate-related risk, a sensitivity analysis have been performed to show the impact on reserves as at 31 December 2022, if all production would
cease from 2050 onwards. Such acceleration of cease of production would result in an decrease in the reserves of approximately 10 million boe.
Changes from the 2021 reserve report are summarized in Table 5. During 2022, Aker BP 2P reserves were increased by 1 057 mmboe from 802 to 1 859 mmboe. The
production was 112 mmboe. Thus, net reserves increases were 1 169 mmboe. The main reasons for increased net reserve estimate (i.e. disregarding the produced volumes) are
acquisition of Lundin Energy, 14 PDOs that were submitted during 2022 and IOR-activities in all fields (except Ula). On the negative side, reserves were reduced in Valhall,
primarily due to well difficulties, thinner reservoirs on flanks, on Johan Sverdrup (due to a 2% mapped reduction in in-place volumes) and on Ula (reduced lifetime, well
difficulties and reduced WAG-performance).
An oil price of 80 USD/bbl (2023), 70 USD/bbl (2024) and 65 USD/bbl (following years) has been used for reserves estimation. Low- and high case sensitivities with oil prices
of 40 USD/bbl and 90 USD/bbl, respectively, have been performed by AGR. The low price resulted in a reduction in total net proven (1P/P90) reserves and net proven plus
probable (2P/P50) reserves of ~40 %. The high oil price scenario resulted in a marginal increase in reserves of less than 2% to the proven (1P/P90)- estimates and no change to
the proven plus probable (2P/P50)-estimates.
On production Approved for devlop. Justified for devlop. Total
Note also that production numbers are preliminary pr October 2022, leaving numbers for the last two months of 2022 as estimates. The final numbers may be slightly different.
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Financials
STATEMENT BY THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER
Øyvind Eriksen, Chairman of the Board Kjell Inge Røkke, Board member
Anne Marie Cannon, Deputy Chair Trond Brandsrud, Board member
Kate Thomson, Board member Murray Auchincloss, Board member
Charles Ashley Heppenstall, Board member Terje Solheim, Board member
Ingard Haugeberg, Board member
Hilde Kristin Brevik, Board member
Valborg Lundegaard, Board member Tore Vik, Board member
Karl Johnny Hersvik, Chief Executive Officer
The Board of Directors of Aker BP ASA
Akerkvartalet, 15 March 2023
Pursuant to the Norwegian Securities Trading Act section § 5-5 with pertaining regulations, we hereby confirm that, to the best of our knowledge, the company's
and the group's financial statements for 2022 have been prepared in accordance with IFRS, as adopted by the EU, and requirements in accordance with the
Norwegian Accounting Act. The information presented in the financial statements gives a true and fair view of the company's liabilities, financial position and
results overall.
To the best of our knowledge, the Board of Directors' Report gives a true and fair view of the development, performance and financial position of the company,
and includes a description of the principal risk and uncertainty factors facing the company and the group. Additionally, we confirm to the best of our knowledge
that the report 'Payment to governments' as provided in a separate section in this annual report has been prepared in accordance with the requirements in the
Norwegian Securities Trading Act Section 5-5a with pertaining regulations.
The Board of Directors and the CEO of Aker BP ASA, Fornebu, 15 March 2023
ØYVIND ERIKSEN
Chairman of the Board
ANNE MARIE CANNON
Deputy Chair
KATE THOMSON
Board member
KJELL INGE RØKKE
Board member
TERJE SOLHEIM
Board member
TROND BRANDSRUD
Board member
TORE VIK
Board member
MURRAY AUCHINCLOSS
Board member
HILDE KRISTIN BREVIK
Board member
CHARLES ASHLEY HEPPENSTALL
Board member
INGARD HAUGEBERG
Board member
VALBORG LUNDEGAARD
Board member
KARL JOHNNY HERSVIK
Chief Executive Officer
Aker BP Annual Report 2022
115
Alternative performance measures
Interest coverage ratio
is calculated as twelve months rolling EBITDA, divided by interest expenses, excluding any impacts from IFRS 16.
1)
Includes payments of lease debt as disclosed in note 26.
Aker BP may disclose alternative performance measures as part of its financial reporting as a supplement to the financial statements prepared in accordance with IFRS. Aker
BP believes that the alternative performance measures provide useful supplemental information to management, investors, security analysts and other stakeholders and are
meant to provide an enhanced insight into the financial development of Aker BP’s business operations and to improve comparability between periods.
Abandonment spend (abex)
is payment for removal and decommissioning of oil fields
1)
Depreciation per boe is depreciation divided by number of barrels of oil equivalents produced in the corresponding period
Dividend per share (DPS)
is dividend paid during the year divided by number of shares outstanding
Capex
is disbursements on investments in fixed assets
1)
Operating profit/loss is short for earnings/loss before interest and other financial items and taxes
Production cost per boe
is production cost basd on produced volumes, divided by number of barrels of oil equivalents produced in the corresponding period (see note 7)
EBITDA
is short for earnings before interest and other financial items, taxes, depreciation and amortisation and impairments
EBITDAX
is short for earnings before interest and other financial items, taxes, depreciation and amortisation, impairments and exploration expenses
Equity ratio
is total equity divided by total assets
Exploration spend (expex)
is exploration expenses plus additions to capitalized exploration wells less dry well expenses
1)
Leverage ratio is calculated as Net interest-bearing debt divided by twelve months rolling EBITDAX, excluding any impacts from IFRS 16
Net interest-bearing debt
is book value of current and non-current interest-bearing debt less cash and cash equivalents
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(USD 1 000) Note
2022 2021 2022 2021
Abandonment spend
Payment for removal and decommissioning of oil fields 78 870 172 512 78 177 172 512
Payments of lease debt (abandonment activity) 26 751 31 715 751 31 715
Abandonment spend 79 621 204 227 78 928 204 227
Depreciation per boe
Depreciation 14 1 785 672 1 192 889 1 231 775 1 192 889
Total produced volumes (boe 1 000) 7 112 853 76 439 75 436 76 439
Depreciation per boe 15.8 15.6 16.3 15.6
Dividend per share
Paid dividend 1 005 731 487 500 1 005 731 487 500
Number of shares outstanding 496 765 359 643 496 765 359 643
Dividend per share 2.02 1.36 2.02 1.36
Capex
Disbursements on investments in fixed assets (excluding capitalized interest) 1 580 045 1 376 879 1 268 985 1 376 879
Payments of lease debt (investments in fixed assets) 26 46 942 50 423 41 725 50 423
CAPEX 1 626 987 1 427 302 1 310 710 1 427 302
EBITDA
Total income 6 13 009 898 5 668 747 9 369 311 5 668 747
Production costs 7 -932 870 -745 313 -814 453 -745 313
Exploration expenses 8 -242 193 -353 034 -196 187 -353 034
Other operating expenses -52 577 -29 261 -50 229 -29 261
EBITDA 11 782 258 4 541 139 8 308 443 4 541 139
EBITDAX
Total income 6 13 009 898 5 668 747 9 369 311 5 668 747
Production costs 7 -932 870 -745 313 -814 453 -745 313
Other operating expenses -52 577 -29 261 -50 229 -29 261
EBITDAX 12 024 451 4 894 173 8 504 630 4 894 173
Equity ratio
Total equity 12 427 506 2 196 814 12 434 178 2 196 814
Total assets 37 561 780 16 708 025 37 568 229 16 708 025
Equity ratio 33% 13% 33% 13%
Exploration spend
Disbursements on investments in capitalized exploration expenditures 251 764 177 464 194 660 177 464
Exploration expenses 8 242 193 353 034 196 187 353 034
Dry well 8 -135 800 -98 827 -108 560 -98 827
Payments of lease debt (exploration expenditures) 26 6 222 1 858 6 222 1 858
Exploration spend 364 380 433 529 288 509 433 529
Group Parent
Aker BP Annual Report 2022
117
(USD 1 000) Note
2022 2021 2022 2021
Interest coverage ratio
Twelve months rolling EBITDA 11 782 258 4 541 139 8 308 443 4 541 139
Twelve months rolling EBITDA, impacts from IFRS 16 26 -20 835 -14 035 -20 835 -14 035
Twelve months rolling EBITDA, excluding impacts from IFRS 16 11 761 424 4 527 104 8 287 608 4 527 104
Twelve months rolling interest expenses 11 154 019 145 651 147 304 145 651
Twelve months rolling amortized loan cost 11 31 815 22 460 19 164 22 460
Twelve months rolling interest income 11 25 959 2 481 23 019 2 481
Net interest expenses 159 876 165 630 143 450 165 630
Interest coverage ratio
1)
73.6 27.3 57.8 27.3
Leverage ratio
Long-term bonds 22 5 279 164 3 576 735 5 279 164 3 576 735
Cash and cash equivalents 20 2 756 012 1 970 906 2 756 008 1 970 906
Net interest-bearing debt excluding lease debt 2 523 151 1 605 829 2 523 155 1 605 829
Twelve months rolling EBITDAX 12 024 451 4 894 173 8 504 630 4 894 173
Twelve months rolling EBITDAX, impacts from IFRS 16 26 -20 153 -12 177 -20 153 -12 177
Twelve months rolling EBITDAX, excluding impacts from IFRS 16 12 004 299 4 881 996 8 484 477 4 881 996
Leverage ratio
1)
0.21 0.33 0.30 0.33
Net interest-bearing debt
Long-term bonds 22 5 279 164 3 576 735 5 279 164 3 576 735
Long-term lease debt 26 98 095 91 835 98 095 91 835
Short-term lease debt 26 36 298 44 378 36 298 44 378
Cash and cash equivalents 20 2 756 012 1 970 906 2 756 008 1 970 906
Net interest-bearing debt 2 657 545 1 742 042 2 657 548 1 742 042
Operating profit/loss
see Income Statement
Production cost per boe
see note 7
Group Parent
1)
These ratios are calculated based on Aker BP group figures only, with no proforma adjustments for the Lundin Energy transaction. Based on estimates of historical
financial metrics of Lundin Energy, combined interest coverage ratio and leverage ratio are estimated to 80 and 0.2 respectively.
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Financials
PricewaterhouseCoopers AS, Kanalsletta 8, Postboks 8017, NO-4068 Stavanger
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the General Meeting of Aker BP ASA
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Aker BP ASA, which comprise:
● the financial statements of the parent company Aker BP ASA (the Company), which comprise
the statement of financial position at 31 December 2022, the income statement, statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and
● the consolidated financial statements of Aker BP ASA and its subsidiaries (the Group), which
comprise the statement of financial position as at 31 December 2022, the income statement,
statement of comprehensive income, statement of changes in equity and statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion
● the financial statements comply with applicable statutory requirements,
● the financial statements give a true and fair view of the financial position of the Company as at
31 December 2022, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU, and
● the consolidated financial statements give a true and fair view of the financial position of the
Group as at 31 December 2022, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards as adopted by the
EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company and the
Group as required by relevant laws and regulations in Norway and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 1 year from the election by the general meeting of the
shareholders on 5 April 2022 for the accounting year 2022.
Aker BP Annual Report 2022
119
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Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matters
How our audit addressed the Key Audit
Matter
Impairment of Goodwill, Property, plant and
equipment and Other intangible assets
Aker BP ASA has Property, plant and equipment
with a carrying amount of USD 15 886 659
thousands, and Other intangi
ble assets with a
carrying amount of USD 2 344 354 thousands as
of 31 December 2022. In addition, the carrying
value of goodwill (including technical goodwill)
was USD 13 934 986 thousands.
In line with Aker BP’s accounting policies for
impairment of non
-financial assets, management
has assessed whether there are impairment or
reversal indicators. Based on identified impairment
indicators, an impairment calculation was
prepared.
Management’s assessment of recoverable
amounts of goodwill, property, plant and
equipment and other intangible assets requires
estimates and application of assumptions relating
to operational and market factors, and involves
judgement. In addition, the calculation of
recoverable amounts requires financial modelling
of cash flows rela
ted to cash generating units,
which can be inherently complex, and may require
use of additional judgement.
Based on the results of management’s
assessment of impairment indicators and the
corresponding calculation of recoverable amounts,
a total net impai
rment charge of USD 1 032 154
thousands was recognized in 2022.
We focused on this area because Goodwill,
Property plant and equipment and Other intangible
assets constitute a significant share of total assets
in the balance sheet, and because the
assessm
ent of recoverable amounts is complex
and involves management judgement which may
have a direct impact on net profit.
We assessed management’s identification of
impairment and reversal indicators and agreed
that indicators were present.
We obtained management’s calculations of
recoverable amounts as of 31 December 2022.
Management’s identification of cash generating
units were in line with our expectations. For
relevant cash generating units, including
allocated technical goodwill, we assessed the
key inputs to the calculation of recoverable
amounts by:
● comparison of management´s short-term
price assumptions against external price
forward curves,
● comparison of long-term oil price
assumptions against long-term price
assumptions communicated by peers and
other publicly available sources,
● comparison of underlying asset specific
assumptions underlying the impairment test
model (e.g. production profiles, capital
expenditures, operating costs, removal
costs) towards Aker
BP’s Business Plan for
Q4 2022,
● assessing the calculation from post to pre-
tax impairment charge, and
● benchmarking of inflation, exchange rates
and discount rates applied against external
market data.
We also assessed the mathematical accuracy
and methodology of management’s impairment
models.
Management determined that ordinary goodwill
at the balance sheet date was not impaired. We
obtained and considered management’s
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The valuation of Oil & Gas properties and goodwill
are inherently uncertain due to the judgmental
nature of the underlying
estimates
Refer to note 15 for a description of
management’s assessment of impairment.
assessment supporting the carrying value of
goodwill at 31 December 2022. We also
calculated the market capitalization at 31
December 2022 based on the quoted share
price at year-end. We found support for the
carrying value of oil and properties and ordinary
goodwill as of 31 December 2022.
We evaluated the appropriateness of the related
note disclosures and found that they satisfied
IFRS requirements.
We also assessed the sensitivity analysis and
underlying calculations showing how the
recoverable amounts of tangible assets and
technical goodwill would be impacted by
changes to underlying assumptions, such as
change in hydrocarbon prices and discounts
rates. In addition, we considered consistency
between the climate risk related disclosures in
note 4 and the sensitivity analysis to the
impairment testing in note 15.
Estimation of abandonment provision
Abandonment provisions as of 31 December
2022 were calculated for operated and non-
operated assets. Abandonment provisions
represent a non-current provision of USD 4 050
396 thousands and a current provision of USD
115 202 thousands at the balance-sheet date.
The estimation and measurement of
abandonment provisions require application of a
number of assumptions, as well as use of
management judgments. This includes timing of
actual cash flows, amount of abandonment costs
and discount rate. The timing of removal is also
dependent on the reserves estimation and is
impacted by the commodity price outlook.
Calculation of asset retirement obligation requires
financial modelling of cash flows related to the
removal and decommissioning cost. Such
modelling can be complex and may require use of
additional judgement.
In 2022, the Company made a voluntary change
in accounting principle relating to measurement of
Meetings were held with management to
understand the process for identifying and
measuring th
e abandonment provision including
internal controls performed by management.
We obtained management’s assessment and
model for calculation of abandonment provisions
as of 31 December 2022. We also considered
the nature and details of the underlying
calcula
tion model. We found the methodology to
be in line with requirements in IFRS.
We tested selected internal controls over the
abandonment provision performed by
management.
The decommissioning cost estimates for the
non-operated assets are based on the
respective operators’ cost estimate. We
obtained the cost estimate prepared by the
external operators of the non-operated fields
from management. We checked that the
external cost estimates were included as input
in the calculation of the asset retirement
Aker BP Annual Report 2022
121
4 / 9
the abandonment provision. Specifically, the
credit element has been removed from the
discount rate applied to discount future cash
flows. Comparative figures were restated as
described in note 1.30.
We focused on this area due to the significant
value the abandonment provision represents in
the balance sheet, and the level of management
judgement used in determining the provision for
abandonment provisions.
Refer to note 1.30 and 23 for a description of how
management has estimated and accounted for
the abandonment provision.
obligation for the non-operated fields and
challenged assumptions applied.
For the operated fields, the cost estimate is
based on Aker BP’s internal calculation and
assessment. Aker BP has involved a multi-
discipline project team with professionals from
various technical areas. The calculation of cost
estimates for the Aker BP operated fields are
based on several cost inputs. We assessed the
cost estimate assumptions applied for
reasonableness. This included, but was not
limited to, the number of wells to be p
lugged, rig
rates per day, and number of days per well. We
also tested the model used for calculating the
abandonment obligations and found that the
model makes calculations as expected. We
received management’s assessment of the
timing of decommissioning and removal
activities for each field. In addition, we
benchmarked the inflation rate and the discount
rate used in calculating the abandonment
provision. Our testing substantiated that
management assumptions were fair.
We evaluated the appropriateness of the
change in accounting principle related to the
measurement of abandonment provision against
requirements under IFRS. We obtained
management’s calculations of prior period
restatements and tested the mathematical
accuracy and adjustments made to prior
periods.
In order to test the abandonment provision for
completeness, we tested that a provision was
recognized for abandonment for each of the
relevant fields where Aker BP has an ownership
interest.
We evaluated the appropriateness of the related
note disclosures and found that they satisfied
IFRS requirements
Acquisition of Lundin Energy group
On 30 June 2022, Aker BP finalised the acquisition
of the Lundin Energy group. The acquisition
consisted of Lundin Energy Norway AS and three
Dutch and one Swiss legal entity.
We obtained and read the Sale & Purchase
Agreement between Aker BP and Lundin
Energy AB, and held meetings with
management to understand the nature and
details of the transaction. Management engaged
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The acquisition date for accounting purposes
corresponds to the finalisation o
f the transaction on
30 June 2022. The agreed purchase price consisted
of shares in Aker BP and a cash consideration. On
30 June 2022 Aker BP issued 271.91 million new
shares to the owners of Lundin Energy as
compensation. In addition to the consideration
in
shares measured at USD 9 336 636 thousands,
Aker BP paid a cash consideration of USD 2 221
805 thousands.
The acquisition was determined to constitute a
business combination and has been accounted for
using the acquisition method of accounting in
accord
ance with IFRS 3.
The purchase price allocation (PPA) and the
measurement and determination of fair values
required financial modelling of the cash flows
relating to each tangible asset acquired and
abandonment provision assumed, including tax
effects. This can be complex and requires a number
of estimates and judgements to be applied
including:
● estimates of oil and gas reserves and
forecasted production profiles,
● price curves for oil and gas and related
petroleum products,
● forecasted operating, capital, ab
andonment
and tax expenditures,
● fair value of bond loans,
● estimated future foreign exchange rates;
● discount rates to be applied, and
● allocation of goodwill balances to cash
generating units.
We focused on this area due to the significant value
the investment represents in the balance sheet, and
the applied level of management judgement in
determining the value of the assets and liabilities
acquired from the transaction and resulting
subsequent potential impacts on the income
statement.
Refer to note
2 for a description of the business
combination and how management has accounted
for the PPA.
an external valuation expert to prepare a
purchase price allocation (PPA) showing the
estimated fair value of assets and liabilities
acquired in the transaction. We found the
methodology to be in line with the requirements
in IFRS, and that the model makes calculations
as expected.
We challenged the purchase price allocation
prepared by management and if there were
other assets and liabilities not properly
accounted for. As part of this process, we held
several meetings with management and the
external valuation expert and obtained
underlying documentation to support
calculations and measurements in the PPA.
A major part of the value assumed in the
transaction was allocated to other intangible
assets and property, plant and equipment.
Management has measured the value of the
investment in other intangible assets and
property, plant and equipment based on the net
present value (NPV) after tax of future estimated
cash flows. We applied selected procedures to
compare th
e estimated future cash flows related
to production profiles, operating and capital
expenditures to the Company's internal
Business Plan. For future crude and gas prices,
we assessed applied prices for the 2-3 first
years to quoted market forward prices and the
long term prices to analyst and broker forecasts.
Prices are adjusted for quality differentials. We
assessed the discount rate applied with
reference to market data. Furthermore, we
tested the estimated future foreign exchange
rates against external quoted forward curves.
The liabilities assumed in the transaction mainly
relate to abandonment provisions, external
bonds, other interest-bearing debt, deferred
taxes and taxes payable.
We reconciled management estimates for
abandonment provision against
Aker BP internal
estimates and tested for mathematical accuracy.
For external bonds we tested the fair value
towards quoted prices at Bloomberg. Other-
interest bearing debt was tested against
confirmation from the lender, and vouched
payments to settle the debt.
Aker BP Annual Report 2022
123
6 / 9
We obtained from management a calculation of
deferred and payable taxes as part of the
business combination. We tested the
mathematical accuracy of the tax calculation
and the assumptions used and examined the
application of tax regulations.
A material part of goodwill from the transaction
relates to technical goodwill calculated on the
basis of the difference between the estimated
fair market value and tax value of the assets
acquired. We tested the mathematical
calculation of technical goodwill.
We involved PwC valuation specialists as part o
f
the audit team to assess material market
participant assumptions made by management
and applied in the valuation of assets and
liabilities. T
he valuation specialists also assisted
the audit team in testing and assessing the
mathematical accuracy and methodology of
management's valuation models. The results of
our testing showed that management applied
reasonable assumptions for the valuation of
assets and liabilities assumed as part of the
transaction, that the methods applied were in
accordance with IFRS requirements and that the
model was mathematically accurate.
We evaluated the appropriateness of the related
note disclosures and found that they satisfied
IFRS requirements.
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements. The
other information comprises information in the annual report, but does not include the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the information in the Board of Directors’ report nor the other information accompanying the financial
statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other information
accompanying the financial statements otherwise appear to be materially misstated. We are required
Intro BoD & EMT BoD’s report Payments to governments Corporate governance
124
Financials
7 / 9
to report if there is a material misstatement in the Board of Directors’ report or the other information
accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
● is consistent with the financial statements and
● contains the information required by applicable statutory requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility, and to the report on payments to governments.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as adopted by the EU, and for such
internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
● identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
● obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's and the Group's internal control.
● evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
● conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company's and the
Group's ability to continue as a going concern. If we conclude that a material uncertainty
Aker BP Annual Report 2022
125
8 / 9
exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company and the Group to cease to
continue as a going concern.
● evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
● obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Aker BP ASA, we have performed an assurance
engagement to obtain reasonable assurance about whether the financial statements included in the
annual report, with the file name AkerBPASA-2022-12-31-en, have been prepared, in all material
respects, in compliance with the requirements of the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to
Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all
material respects, in compliance with the ESEF regulation.
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Financials
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Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
regulation. This responsibility comprises an adequate process and such internal control as
management determines is necessary.
Auditor’s Responsibilities
For a description of the auditor’s responsibilities when performing an assurance engagement of the
ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger
Stavanger, 15 March 2023
PricewaterhouseCoopers AS
Gunnar Slettebø
State Authorised Public Accountant
Aker BP Annual Report 2022
127
CONTACT
Please contact Senior Vice President HSSEQ,
Marit Blaasmo, if you have any questions.
marit.blaasmo@akerbp.com
Tel: +47 416 87 486
Aker BP ASA
Fornebuporten, Building B
Oksenøyveien 10
1366 Lysaker
Postal address:
P.O. Box 65
1324 Lysaker, Norway
Telephone: +47 51 35 30 00
E-mail: post@akerbp.com
www.akerbp.com
Design: Headspin
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