AKRBP.OL — mttssn research

HOLD

Conviction: MEDIUM

Full manual deep-dive upgrades the prior streamlined read: mid-cycle adjusted ROIC 11.3% clears the 8% WACC (EP +USD 584M) even after normalising Q2's 107.9 USD/boe realisations to the 73.5 planning price, and LTM FCF turns positive (+1,210M) — the streamlined record had overstated the impairment add-back and understated NOPAT. But NOK 327.8 sits on a sharp cyclical peak and mid-cycle value ~NOK 348 is a thin margin. HOLD.

Adj. ROIC

11.3%

WACC 8% → spread +3.3pp

Economic Profit

+$584M

+USD 584M mid-cycle (LTM-peak +867M); ROIC 11.3% vs 8% WACC, +3.3pp

FCF Yield

n/a

LTM +USD 1,210M (corrected from streamlined H1-only figure); ~72% covers the 1,672M dividend; capex peak past

Price / Target

NOK 328 → NOK 348

+6% base; HOLD

Revenue (LTM)

$11.9B

LTM USD 11,866.6M; Q FY-anchor +42.5% YoY on the Q2 price spike

EBIT Margin

57.2%

Reported EBIT 57.2%; adjusted EBIT USD 8,001.3M (67%, ex-impairment); 78% petroleum tax below the line

EV / IC

n/a

Enterprise value / invested capital

Net Debt

n/a

Net IB debt USD 6,015M = 0.63x EBITDAX, interest cover 34.9x, undrawn RCF 3.2B; abandonment provision USD 4,696M excluded from IC (tail claim)

Thesis

Aker BP is the purest large-cap way to own low-cost Norwegian Continental Shelf barrels: ~398 mboepd at USD 7.7/boe production cost and 97% production efficiency, anchored by Johan Sverdrup with a project pipeline — Symra onstream nine months early, Skarv Satellites accelerated to Q3 2026, Yggdrasil and Valhall PWP-Fenris tracking first oil in 2027. This is now a full manual record (confidence 1.0, footnote-rigorous impairment resolution), replacing the streamlined confidence-0.75 read that carried the prior note.

The thesis-check is a numbers upgrade, not a story change. The manual record corrects two streamlined errors: the impairment add-back is cut to USD 794.4M (footnote-split into deductible vs non-deductible, reconciled to the Note 11 tax line) from the streamlined 1,219.2M full pre-tax figure, and LTM FCF is the true roll of +1,210M rather than the H1'26-only +1,537M. Net effect: mid-cycle adjusted NOPAT USD 2,003.8M, ROIC 11.3% vs 8% WACC, EP +584M (LTM-peak +867M) — versus the prior 8.45%/+82M. Aker BP is a genuine through-cycle value creator, not the razor-thin marginal case the streamlined record implied.

But the LTM window sits on a clear cyclical peak. Q2'26 realised liquids 107.9 USD/boe (Q2'25 66.9) drove the highest quarterly OCF in company history and a H1'26 net profit of 1,278.9M versus -7.8M a year earlier — a pure price swing. The headline metrics are already normalised to the company's own 73.5 USD/boe planning price (a single-sided haircut of USD 282.7M post-tax on H1'26 liquids), so even the 11.3% ROIC is a through-cycle figure; the reported peak ROIC is 12.9%. Chasing the spike is the error the cyclical_peak rule exists to prevent.

Valuation · reverse-DCF & scenarios

With economic_profit the anchor: capitalising mid-cycle adjusted NOPAT of USD 2,003.8M at the 8% WACC gives an enterprise value of ~USD 25.0B; bridging net interest-bearing debt of USD 6,015M (USD/NOK 11.42) leaves ~NOK 344/share on zero growth — roughly the current NOK 327.8, i.e. fairly valued to marginally cheap on conservative through-cycle economics, before crediting the 2027 project wave. On the LTM-peak NOPAT the equivalent figure is ~NOK 408; on a full reversion to ex-OCI book capital, ~NOK 208.

Base NOK 348 (+6%): oil holds near the 73.5 USD planning price, mid-cycle EP +584M sustained, modest 2027 volume growth. Bull NOK 415 (+27%): 90+ USD oil persists, Yggdrasil and Valhall land on schedule and peak-grade EP (~USD 867M) endures with the dividend fully covered. Bear NOK 225 (-31%): sub-planning oil (60-65 USD), renewed goodwill impairments and dividend pressure pull the equity toward book — the Q2 hedges soften the near-term path but not a durable down-cycle.

Market-implied growth

≥10.7%

model ceiling — EV implies more than constant-ROIC sustains

No-growth value / share

$-65

-20% of price; rest = priced-in growth

ROIC − WACC

+3.3 pp

ROIC 11.3% vs WACC 8.0% — positive = value creation

CAP (priced-in)

30.0 yrs

years of excess returns the price implies (fades to WACC)

At today’s enterprise value the constant-ROIC reverse-DCF maxes out: even at its sustainable-growth ceiling (~10.7%, limited by ROIC 11% ≈ WACC 8%) it cannot reach the current EV. No-growth value is $-65/share (-20% of price); the market prices in growth and/or a higher ROIC than booked — richly valued on this lens. Read the sensitivity grid.

Scenario	24m target	Impl. g	Upside	Prob.	Driver
Bull	$415	≥11%	+27%	25%	90+ USD oil persists; Yggdrasil on time, peak EP ~USD 867M endures
Base	$348	≥11%	+6%	45%	Oil holds near 73.5 planning price; mid-cycle EP +584M, fairly valued
Bear	$225	≥11%	-31%	30%	Sub-planning oil 60-65; renewed impairments, dividend pressure, reverts to book
Prob-weighted	$328	—	+0%	100%	Scenario-weighted expected value

Sensitivity — fair value / share at WACC × growth

WACC \ g	0%	3%	5%	8%	10%	15%
6.50%	-49	-45	-41	-36	-32	-22
7.25%	-58	-55	-53	-49	-46	-40
8.00% (base)	-65	-62	-61	-58	-56	-52
8.75%	-70	-68	-67	-65	-64	-61
9.50%	-74	-72	-72	-71	-70	-69

Green = fair value above the current price of $327.80. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.

Method & data. NOPAT $2,004, invested capital and ROIC 11.3% are observed (adjustments.json); WACC 8.0% and terminal g 2.5% are assumptions. EV→equity uses net debt $68,693. The model holds ROIC constant (no fade) over the explicit horizon; the CAP figure instead fades excess returns to WACC.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Low-cost barrels

USD ~7.7/boe production cost and 97% production efficiency — among the lowest-cost portfolios on the shelf.

2. 2027 project wave

Yggdrasil and Valhall PWP-Fenris tracking first oil 2027; Symra started nine months early; Skarv Satellites pulled into Q3 2026.

3. FCF inflection

LTM FCF now +USD 1,210M after the FY2025 capex peak (-300M); structurally positive as Yggdrasil ramps.

4. Mid-cycle value creation

Even normalised to the 73.5 USD planning price, adjusted ROIC 11.3% clears the 8% WACC — EP +USD 584M, +3.3pp spread through cycle.

5. Dividend capacity

USD 0.6615/sh quarterly maintained; organically covered once the capex peak passes at supportive oil prices.

Key risks

Cyclical-peak priceQ2'26 realised 107.9 USD/boe vs the 73.5 planning price; the equity is priced near mid-cycle fair value with asymmetric downside on normalisation.
Goodwill massUSD 11.3B Lundin goodwill = 63% of IC; FY2025 wrote off 1,489M of technical goodwill (non-deductible, 97% effective tax) — the balance stays exposed to price-deck and discount-rate cuts.
Dividend coverUSD ~1,672M/yr dividend vs LTM FCF 1,210M (~72% covered); full organic cover awaits Yggdrasil first oil.
Johan Sverdrup declineThe anchor field is past plateau; decline management before the 2027 wave is the key volume risk.
78% petroleum taxThin NOPAT per EBIT dollar and extreme sensitivity to the tax treatment of impairments and Pillar II.

Conclusion

THESIS-CHECK vs the prior streamlined note (HOLD, base NOK 310, no_margin_of_safety): the call holds but the numbers improve materially. The manual deep-dive corrects the streamlined impairment add-back (794.4M vs 1,219.2M) and FCF (LTM +1,210M vs a negative streamlined read), lifting mid-cycle ROIC to 11.3% (from 8.45%) and EP to +USD 584M (from +82M) — enough to upgrade the Financial-strength tenet and the Buffett total to 7/15. Aker BP reads as a genuine through-cycle value creator, not a marginal one. The rule shifts from no_margin_of_safety to cyclical_peak, which more honestly frames the setup.

But at NOK 327.8 the price sits on a sharp price peak and mid-cycle value (~NOK 348) is a thin ~6% cushion, so the rating stays HOLD, medium conviction; base NOK 348. The setup to act on is weakness — a retreat toward the low-NOK 200s restores a real margin of safety on through-cycle oil while the dividend does the waiting. Sustained FCF cover of the dividend post-Yggdrasil would support an upgrade; renewed impairments or a dividend re-base at sub-65 USD oil would push the name to SELL.

Footnote evidence & sources

Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open

Adjustment / figure	Value	Source	Why mttssn treats it this way
Total income (FY2025 anchor)	10,943	Income statement / p.137 📄 p.137	FY revenue anchor for the LTM roll (FY - H1'25 5,784.9 + H1'26 6,708.4 = 11,866.6).
Operating profit (FY2025 anchor)	4,760	Income statement / p.137 📄 p.137	FY operating profit anchor for the LTM roll (-> LTM EBIT 6,782.1).
Total income (H1 2026)	6,708	Interim income statement 01.01-30.06.2026 / p.17 📄 p.17	Half-year revenue added in the LTM roll.
Total income (H1 2025 comparative)	5,785	Interim income statement 01.01-30.06.2025 / p.17 📄 p.17	Prior-year half subtracted in the LTM roll.
Operating profit (H1 2026)	4,859	Interim income statement 01.01-30.06.2026 / p.17 📄 p.17	Half-year operating profit added in the LTM roll.
Operating profit (H1 2025 comparative)	2,836	Interim income statement 01.01-30.06.2025 / p.17 📄 p.17	Prior-year half subtracted in the LTM roll.
Net profit (H1 2026)	1,279	Interim income statement / p.17 📄 p.17	H1'26 net profit; drives LTM net income 1,419.0. vs H1'25 -7.8 -> peak-price swing evidence.
Impairment (FY2025 total)	2,021	Note 13/14 impairment split / p.165-167 📄 p.165	Goodwill 1,489.0 + other intangibles 532.4. Non-operating price/DTL-driven valuation charge, treated as post-tax addback.
Impairment goodwill (FY2025)	1,489	Note 14 / p.165 📄 p.165	All technical goodwill; non-deductible permanent difference ('no impact on deferred tax', p.166).
Impairment other intangibles (FY2025)	532	Note 13/14 / p.165-166 📄 p.165	Depreciated 461.3 (deductible at 78%) + not-depreciated 71.2 ('recognised on a post-tax basis', Note 14 footnote p.166, non-deductible).
Impairment (H1 2026 net)	103	Interim income statement / Q2 Note 6 p.28 📄 p.22	Q1 reversal -521.6 + Q2 charge +624.5, ALL other intangibles, zero goodwill. LTM impairment = 2,021.4 - 905.2 + 103.0 = 1,219.2 pre-tax.
Impairment (H1 2025)	905	Q2 Note 6 comparative / p.28 📄 p.22	All goodwill (non-deductible); subtracted in LTM roll.
Permanent differences on impairment (tax line)	1,217	Note 11 reconciliation of tax expense / p.160 📄 p.160	= non-deductible impairment (goodwill 1,489.0 + post-tax-basis intangible 71.2 = 1,560.2) x 0.78. Validates the deductible/non-deductible split used for the 794.4 post-tax addback.
Marginal petroleum tax rate	0.78	Note 11 Taxes / p.160 📄 p.160	22% ordinary + 56% special = 78%; every reconciliation line is struck at 78%. Reported 97% effective rate distorted by non-deductible goodwill + NOK FX.
Post-tax nominal impairment discount rate	0.084	Note 14 discount rate / p.166 📄 p.166	8.4% (from 8.8% YE2024); derived from WACC of a peer group. Rate fall reduces impairment; price fall increases it.
Long-term oil price assumption	73.5	Note 14 price deck / p.165-166 📄 p.166	Updated 75.0 -> 73.5 USD/boe (real 2025). Used as the mid-cycle normalisation anchor.
Realised liquids price (Q2 2026)	108	Q2 operational review / Note 1 p.22-23 📄 p.5	vs Q1'26 82.2, Q2'25 66.9; H1'26 94.6. Well above 73.5 planning price -> confirms cyclical peak.
PPA amortisation (other-intangibles depreciation, LTM)	167	Note 13 depreciation split / Q2 Note 6 p.28 📄 p.165	FY 192.3 - H1'25 99.1 + H1'26 73.8 = 167.0; kept in opex (real depletion of acquired reserves), no APM addback.
Total equity (Q2 2026 snapshot)	11,670	Statement of financial position 30.06.2026 / p.19-20 📄 p.20	IC equity base; nil NCI on the equity roll-forward.
Accumulated OCI (translation + actuarial)	180	Statement of changes in equity / p.20-21 📄 p.20	FX translation 179.8 + actuarial -0.1; stripped so equity_ex_oci = 11,490.0.
Interest-bearing bonds (Q2 2026)	8,507	Statement of financial position 30.06.2026 / p.19 📄 p.19	LT bonds 8,317.9 + ST bonds 188.9; lease debt 1,222.6 excluded (ROU ~4% of tangible assets).
Right-of-use assets (Q2 2026)	1,117	Statement of financial position / Q2 Note 6 p.27 📄 p.18	vs PP&E 28,254.5 -> ~4%; below 50% ROU-dominance threshold -> leases out of IC.
Cash and equivalents (Q2 2026)	2,492	Statement of financial position 30.06.2026 / p.19 📄 p.19	Operational cash = 2% of revenue (237.3); excess 2,254.4 subtracted from IC.
LTM operating cash flow	8,744	Statement of cash flows / p.21 + FY p.144 📄 p.21	FY 6,958.2 - H1'25 3,349.5 + H1'26 5,135.6 = 8,744.3; underpins FCF 1,210.1 after capex.
Abandonment provision (Q2 2026)	4,696	Statement of financial position / Note 12 / FY Note 23 p.171 📄 p.19	LT 4,623.2 + ST 72.8; discounted decommissioning obligation, NOT added to IC (context only).

Analysis history

How the mttssn view has evolved — each prior dated note is preserved.

Quality · Buffett tenets7 / 15

Understandable business●●○

Pure-play NCS E&P — 398 mboepd Q1, USD ~7.7/boe production cost, one revenue line off the oil/gas deck. Now a full manual record (confidence 1.0, pages 137-174 FY + Q2 interim) rather than the prior streamlined read; still 78% petroleum tax and asymmetric price/discount-rate impairment swings (FY2025 reported effective rate 97% on non-deductible goodwill) that cut clean modelability.

Durable moat●○○

[kostnads-skalfördel · stabil] Production cost USD ~7.7/boe and 97% production efficiency on premier NCS acreage (Johan Sverdrup) keep it in the low-cost quartile, and the MID-CYCLE spread is positive — adjusted ROIC 11.3% vs 8% WACC (+3.3pp) after normalising Q2's 107.9 USD/boe realisations to the 73.5 USD/boe planning price. But it is a price-taker with zero pricing power: the FY2025 impairment was triggered by a 1.5 USD/boe cut to the long-term deck. frame: mid-cycle spread +3.3pp; commodity price-taker caps at 1. falsifierare: a structural oil-price reset below breakeven, or NCS cost inflation eroding the unit-cost gap.

Management & capital allocation●○○

Execution is genuinely strong (Symra onstream nine months early, Skarv Satellites pulled into Q3 2026), but the Lundin deal left USD 11.3B goodwill = 63% of invested capital, USD 1,489M of technical goodwill written off FY2025, and the USD 0.6615/sh quarterly dividend (~USD 1,672M/yr) is only ~72% covered by the now-positive LTM FCF of 1,210M. Allocation discipline remains contested even as delivery impresses.

Financial strength & returns●●○

The manual record materially upgrades the prior streamlined read: mid-cycle adjusted ROIC 11.3% clears the 8% WACC with EP +USD 584M (LTM-peak +867M) — versus the streamlined 8.45%/+82M, which had overstated the impairment add-back and understated NOPAT. Balance sheet is investment-grade: leverage 0.63x EBITDAX, interest coverage 34.9x, undrawn RCF USD 3.2B, LTM FCF now +1,210M.

Valuation margin of safety●○○

At NOK 327.8 the price sits on a sharp cyclical peak (Q2 realised 107.9 vs 73.5 planning price). Capitalising mid-cycle NOPAT at zero growth gives ~NOK 344 — a thin ~5% cushion, not a discount — with the abandonment provision (USD 4,696M, excluded from IC) as a tail claim. The margin of safety exists only if the 73.5 planning price proves through-cycle.