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Var Energi released an update yesterday stating their capex estimate has increased by $340m.
That means ours has increased by around $38m or £30.6m
"The Balder X targeted start-up is maintained in Q3 2024. To reflect a tighter supplier market, mitigate schedule risk and to improve construction productivity the capex estimate has increased by approximately USD 340 million (~NOK 3.6 billion²) net pre-tax to Vår Energi."
On a more positive note Var are committed to extending the life of Balder X beyond 2045.
"We aim to extend the Balder area production beyond 2045 with the upgraded Jotun FPSO as a host for potential new tie-ins such as the King and Prince fields discovered in 2021, and future discoveries and tie-ins."
https://varenergi.no/news/var-energi-project-portfolio-and-operational-update/
Short term pain for long term gain.
aimo dyor etc
Continuous CAPEX overruns were why Mime became distressed in the first place…hopefully that’s not going to keep happening.
At least 78% is returned as a tax recovery
Theshipscook1,
Yes, good point, and as I understand it we can claim around 73% back in year one.
In the ordinary tax base (22%), the costs must be capitalised and depreciated linearly over 6 years.
In the special tax base (56%), the costs are deductible immediately in the year they are incurred.
Example:
Investment in an offshore operating asset in Year 1 is 100.
In the ordinary tax base (22%), 100 must be capitalised and depreciated linearly over 6 years. The depreciation in Year 1 is 100 / 6 = 16.7, i.e., a deduction of 16.7. This results in a tax amount in Year 1 of -16.7 * 22% = -3.7.
In the special tax base (56%), the entire amount of 100 can be deducted directly. The special tax base will therefore initially be -100. However, we must deduct the tax amount from the ordinary tax base of -3.7 from the -100. The special tax base will thus be -100 – (-3.7) = -96.3. To calculate the special tax amount, we must use the technical special tax rate of 71.8%. The special tax will thus be -96.3 * 71.8% = -69.3.
Hence, total tax on the investment of 100 in the offshore operating asset in Year 1 is -3.7 + (-69.3) = -73, i.e., a tax deduction of 73.
In Years 2 – 6, the linear depreciation continues in the ordinary tax base. For each of these years, the tax on the investment of 100 in Year 1 is thus -3.7 in the ordinary tax base. At the same time, this tax is treated as "income" in the calculation of special tax, as the amount must be deducted in the special tax base. The special tax will thus be 3.7 * 71.8 = 2.7 in each of the years. Total tax per year will therefore be -3.7 + 2.7 = -1.
Looking at the entire period Year 1 – Year 6 as a whole, the total nominal tax for the investment of 100 in Year 1 is the sum of -73 in Year 1 and -1 for each of Years 2 – 6 (5 years), i.e., -73 + (-5) = -78, resulting in a total deduction of 78 over the period.
There is a rumor that Jotun is behind schedule and it is very likely that the CAPEX increase is in preparation of this delay.
Source please OGtourist.
If it is true it isn't totally unexpected and has been planned for.
· The consideration for the transaction is US$1 plus the issue of up to 6 million warrants exercisable into new Kistos ordinary shares at a price of 385p each, which represents a premium of 31.4% based on the last trading date prior to this announcement of 293 pence on 18 April 2023. 3.6 million of the warrants can be exercised between completion of the transaction and 18 April 2028. The balance will be exercisable from 1 June 2025 until 18 April 2028.
· A contingent payment of US$45MM will be made to the MIME02 bondholders in the event 500,000 bbl (gross) have been offloaded and sold from the Jotun FPSO by 31 December 2024. This will decline to $30MM from 1 January 2025 to 28th February 2025, to US$15MM from 1 March 2025 to 31 May 2025, and to zero thereafter.
· If 500,000 bbl (gross) has not been offloaded and sold from the Jotun FPSO by 31 May 2025, the holders of Mime's Nordic Bonds will be allocated up to 2.4 million warrants exercisable into Kistos ordinary shares at a price of 385p each. The warrants can be exercised between 30 June 2025 and 18 April 2028. Simultaneously, up to 1.9 million of the 5.5 million warrants issued as consideration for the Mime shares will be cancelled.
At least 12 months behind.
OilMan1984,
The operator, Var Energi, released an update on the 19th of September stating that the Balder X start-up is maintained for Q3 2024.
Are you seriously suggesting that start-up won't begin until at least Q3 2025?
That the operator knowingly misled their investors?
I seriously doubt it...
aimo dyor
https://varenergi.no/news/var-energi-project-portfolio-and-operational-update/
Wait & See.
OilMan is correct, no less than 6 months is what I heard, so 12 months could be expected. Also, Var and Kistos Norge have very limited communication between them, and Kistos is usually left unaware of the progress and delays. There are people regularly visiting the yard with better information than Kistos receives from Var.
Of course, these are rumours by people who are in the business. I cannot confirm anything, so don't give them for granted and DYOR
From colleagues i know in the industry that are working on the project, they’ve stated the FPSO will go on station as planned due to flotels, barges etc being booked but the FPSO is well behind schedule. Can only go of the info i’ve been passed and at present they’ve stated 12 months till hydrocarbon live which is around Q3/4 2025.
You mean Q3/Q4 2023?
Cant be 2023....thats now. I think
Sorry, I meant Q3/Q4 2024**
"There are people regularly visiting the yard with better information than Kistos receives from Var...."
Trust me, AA will be all over this is there is an issue, he will not let ANYTHING go.
He needs to shut up some people who 'hear things'.
If only to stop the price dropping. It has become too easy to focus on the negatives here, and it's playing into the general apathy.
I have made the company aware of the rumours being circulated here by OilMan1984 and OGtourist with screen shots of the posts.
I find it hard to believe that the statement made by Var Energi on the 19th of September, just two weeks ago, could be so inaccurate.
Tricky one...possibly a fair thing to do, but they won't reply, and more often than not ears to the ground do pick up info that isn't released. Timing on a Sunday was shambolic though
If anyone is going to say anything they hear, can they please just wait until Tuesday so we don't all wonder wtf just happened.
Good afternoon theshipscook1,
I don't expect to get a reply, I just hope they read their e-mails!
If they were not aware of rumours circulating this share chat forum regarding delays with the Jotun FPSO, they should be now.
One would think they will now act to see if there is any substance to the rumours and act accordingly.
I have chosen to trust the information provided by Var Energi on the 19th of September, and based on that, have added to my holding on the dip.
aimo dyor
Hi NQM, the rumours I received come from the last Pareto event, in case you want to reduce the scope a bit. Again, it is not confirmed and they are speculations at this moment. I'm sure both Var and Kistos are working to get the project back on track. Nevertheless, the project has suffered many delays until now; the announcement of another delay should not surprise anyone after the recent (and hopefully last) announced CAPEX increase.