Vår Energi (Oslo – VAR), Extreme good cash flow
Vår Energi is an oil and gas company from Norway. I bought a little before the war broke out and it went very well in terms of returns, and took some profits. Today we will look at the Q2 report. The distribution of sales is about 60% oil and 40% gas.
Production in Q2 was 376 thousand barrels of oil equivalents per day compared to 288 in the same quarter in 2025. Really nice, but slightly lower than Q1 2026.
Production costs have dropped from 12.7 to 11.2 million.
Cash flow before tax amounted to 2,925 million compared to 1,270 million.
Free Cash Flow was extremely good. During the quarter, Vår Energi earned 1,395 million and the dividend landed at about 1.1 SEK, which is only 300 million. This means that the company can continue to distribute dividends for a whole year with only one quarter of cash flow – and there will be money left over! This means that three quarters are pure profit, some of which will probably also be distributed to us shareholders.
That is already an 11% dividend at today’s share price, imagine if they double it in the future? Vår Energi distributed about 30% of its cash flow. They can easily double it in 2027.
The earnings per share this year are 0.47 USD, so I expect just under 1 USD throughout 2026. The war in Iran will continue for a while. Will it then be about 10 SEK in earnings per share? What does a share cost, 48 NOK? The P/E ratio is just over 8. I bought a little more before the report because the company accounts for just under 1% of my portfolio, and I want to own more shares and get a record high dividend.
Of course there are risks, but that’s the case with all companies. It sounds like everything is driven by the price of oil – if it drops, profits also drop. Last quarter before the war, a barrel cost $80 and now $100 on average during the quarter. It fell sharply to $70 in early July and the stock fell too, but last week oil rose sharply to $90 again. So profits will also be fine in Q3, but no one knows the future.
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