CEO’s Letter

Karl Johnny Hersvik

We are creating the leading
independent offshore E&P company

2016 was yet another transformational year for Aker BP. Through the merger of Det norske oljeselskap ASA (Det norske) and BP Norge AS (BP Norge), we more than doubled both production and the number of employees, and created a forceful company that was able to pay dividend to its shareholders for the first time. More importantly, our installations operated safely and efficiently throughout the year, and the Ivar Aasen field came on stream on time and within budget. I am proud to lead an organisation characterised by reliable operations, systematic improvement and formidable growth!

On 10 June, I was pleased to present a new chapter of Norwegian industrial history together with Øyvind Eriksen, President & CEO of Aker ASA and Bob Dudley, Group Chief Executive of BP p.l.c. By merging Det norske and BP Norge, we created Aker BP – a company with strong industrial owners and high ambitions for further improvement and growth. The ambition was established from day one; we will create the leading independent offshore E&P company.

Our first task was to carry out the integration process, and after nearly 25 weeks of hard work, we were able to celebrate the final merger of the two companies on 1 December.

Although the merger with BP Norge dominated much of 2016, we further strengthened our position on the Norwegian continental shelf (NCS) by acquiring Noreco’s Norwegian licence portfolio, Centrica’s licence interests in Frigg Gamma Delta and Rind, and licence interests from Tullow. We aim for further growth, and the organisation’s ability to rapidly reorganise will be key to our improvement agenda going forward.

Ensuring the safety of our personnel and surroundings will always be our first priority. We work systematically to safeguard our operations every day, and we have paid particular attention to this during the extensive reorganisation process involved in integrating the two organisations. 2016 was a year of many incidents on the NCS, including some with fatal outcomes, reminding us that we can never be complacent when it comes to health, safety and the environment.

Many have labelled the Ivar Aasen development a ‘baptism of fire’ for Aker BP. With production start-up on Christmas Eve, the project team passed the test with flying colours. Our philosophy was always to work together with our suppliers as “one team” with a shared goal, namely to deliver Ivar Aasen on time, on budget and without serious incidents. We succeeded. Aker BP will build on these learnings as we now seek strategic alliance partners for future projects. We believe that long-term relations and shared incentives will produce better results over time than a more transactional customer-supplier relationship. We have already established a further refined alliance model for subsea projects, and our ambition is to expand this model to other business activities.

Aker BP is growing through business development, and by discovering new reserves through exploration. In 2016, Aker BP’s net contribution from exploration activities totalled 83 million barrels of oil equivalent, corresponding to about a quarter of all volumes discovered on the NCS last year. Most of the volumes were discovered in mature areas in the North Sea. Our discovery at Langfjellet will be an important piece in the potential field development in the area north of Alvheim.

Aker BP aims for organic and inorganic growth to increase shareholder values. We prefer oil over gas, and we will primarily look for operatorships, where we can control the work to reduce costs per barrel and maximise value from our investments.

In 2016, the company increased its number of operated fields in production from one to five. Alvheim produced more than planned for the year, and the Viper and Kobra wells were put into production in November. Skarv’s production was also above target, and oil cargo number one hundred was delivered to the European market well ahead of schedule. Ula passed 30 years of production, while Valhall reached an important milestone when it produced its one billionth barrel.

Aker BP will further develop all our fields and will build on learnings from the Alvheim area. Here, we have, through a series of profitable investments in additional volumes, managed to arrest the decline in production after the acquisition of Marathon Norge in 2014. Furthermore, we will continue our pronounced and ambitious search for improvements. We are therefore scrutinising all value streams in order to eliminate work that does not add value. Our improvement efforts are grounded on Lean principles, and we are constantly seeking inspiration from other industries to achieve an operation model that can tackle both recessions and upturns  in the years to come. We have achieved a lot, but have also identified considerable improvement potential in all our business areas. We believe that safe operations, continuous growth and improvements will, day by day, bring us closer to achieving our vision:

“We are creating the leading independent offshore E&P Company”.


Karl Johnny Hersvik

Chief Executive Officer, Aker BP ASA

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