Panoro Energy ASA

Good morning, everyone, and welcome to Panora Energy's fourth quarter 2022 trading update and results. I'm John Hamilton. I'm joined today by my colleagues, Kazik Dhir, our CFO, Richard Morton, and Nigel McKim from our technical and project side of the business. And I'll be going through some slides as usual and we'll open it up to Q&A at the end. As a reminder, today's conference call contains certain statements that are or may be deemed to be forward-looking statements, which include all statements other than statements of historical fact. Forward-looking statements involve making certain assumptions based on the company's experience and perception of historical trends, current conditions, expected future developments, and other factors that we believe are appropriate under the circumstances. although we believe that the expectations reflected in these forward-looking statements are reasonable actual events or results made different materially from those projected or implied in such forward-looking statements due to known or unknown risks, uncertainties, or other factors.

Next slide, please.

As a reminder, you can join in the Q&A. You can either type a question in in the window pane, as you see on the left there. You can type a question. to answer it unless it's already been answered by a previous question, or you can raise your hand with the hand icon, as you can see on the right there, which we can unmute you so you can ask your question verbally, which everybody can hear. If you don't want to ask a question publicly, please send us an e-mail to the e-mail that's on the press releases, and we'll endeavor to answer those by e-mail as well. Next slide, please. So this is a record financial year for Panoro. And we also are today announcing a maiden cash dividend for the company at US dollars 3 million, which is in line with the expectation, NOC 0.2639 per share, payable in March. And this is a dividend that is coming six months earlier than we'd originally forecast at the time of making the Telo acquisition. So we're very, very happy. This is a big landmark day for Bernarda to announce its first cash dividend. Our revenue line, $188 million with a very strong EBITDA of $126 million. Cash flow from operations of $98 million. Our balance sheet is strong with net debt of $46.8 million. So a net debt to EBITDA ratio of 0.37 times, which is a very, very modest leverage we find. So, the company is in good shape, both on the P&L and on the balance sheet we find, and that's, of course, allowed us to initiate this first cash dividend. Next slide, please. So, as a reminder of what our 2023 shareholder return policy looks like, this is exactly the same as we have previously communicated. And as a reminder, this is not 2024, this is 2023. 2024 should look even different than this, hopefully to the positive. But what we're targeting is a core dividend this year of $20 million on a quarterly basis, which is starting in March, and weighted towards the second half. This is subject to oil realizations being in excess of $80 a barrel and no material change in the operations. So we're sticking by this. Obviously, if oil prices are higher, we're going to try and do better than that. But this is very much what we set out to do. under those conditions, and today's announcement, I think, is the first step towards that. And so, again, we're very, very happy to announce that today. Next slide, please. Production. You can see on the left side in the brighter colors what the past five quarters have looked like and what the full year looked like in terms of production. This has already been pre-communicated. We've also previously and today again reiterating guidance for the year between 9,000 and 11,000 barrels a day on average for the course of the year, with a target of reaching 12,500 barrels a day or higher towards the end of the year when the six hibiscus and roosh wells are coming online, which we'll talk a little bit more about. There's upside beyond this as well, which I'll touch on as well, and that is really in the form of additional wells in Equatorial Guinea, which we still have not added to our guidance. Those are probably early 2024 events rather than 2023, but there is some upside to that number. It's also worth pointing out that our first quarter 2023 production will be between 7 and 7,500 barrels a day, largely due to the shutdown of the FPSO in Gabon. This has already been pre-communicated, which is required for the tie-in of the new wells and the new production facility in Gabon. production grow during the year from a lower space, and every time a new reduced food well comes online, the production should increase, getting us towards that target towards the end of the year. So this is all in line with our previous communications and guidance. Next slide, please. Liftings. A lot of the business, the P&L and our cash flow is dominated by these liftings. We produce oil every day. We don't sell it every day. And so from a revenue recognition and a cash perspective, these liftings are quite important for us. As everybody knows and follows us, 2022 was a bit lumpy. We didn't have much going on in the first half of the year. And then we suddenly had record quarters in the third and fourth quarter last year as we had some big liftings happen. And we lifted approximately 1.8 million barrels of entitlement barrels for us during the course of last year. This year is looking much better, and 2024 will look, I think, even much better than that. So we're really on a growth trajectory here. Here we're anticipating lifting about 750,000 barrels in the first quarter of this year. That is Equatorial Guinea in about a week's time, and a lifting in Tunisia in March. At the moment, second quarter looks a little bit light. There could be some movement there. This is our best guess at the moment. We'll have three liftings in the second half of the year, three big liftings supplemented by some smaller Tunisian liftings. So again, when we talk about the dividend buildup during the course of the year, this is what we have in mind. It's when our new wells are coming online and we're producing and selling more oil. And we hope that on our best assumptions at the moment, we should be lifting about 50% more than we did last year. So as much as 2.9 million barrels during the course of this fiscal year. All other things being equal, this should be a new record year for the company as well. Next slide, please. Something just on CapEx and our balance sheet. There's nothing new here, really, just in reiterating guidance. We anticipate during the course of the year repaying a minimum of approximately $20 million under our loan facilities this year. We have some scope, obviously. Oil prices are strong to accelerate some of that, which we may choose to do. And our capex as previously got is around $75 million for the course of the year. This is Equatorial Guinea for our drilling program that we have coming up. It's for Gabon where we have the big drilling program going on as well and a small slice in Tunisia as well. This includes some exploration spend as well in Equatorial Guinea principally. where we have announced a couple of things on the exploration side. These are small cost items, but they have been included here. We'll touch a little bit more on those exploration activities as well in the next slides. Next slide, please. I won't dwell on this slide. It's just we try every quarter to show the reconciliation of the cash flow, so be as transparent as possible in terms of when the cash comes in and where it goes out and how that affects our cash position. and we'll continue to produce a slide that looks like this every quarter. But I won't dwell on it here now. I think the numbers probably speak for themselves. Very strong net cash from operations, $98 million of cash from operations. Obviously, we're still spending a lot of money, the $54 million of capex. This year, everything should look bigger, but we're still spending capex this year. 2024 is when I think the capex will slow down a little bit, and obviously we'll be harvesting cash in 2024 to a higher extent than we are this year. Next slide, please. So a slide on each of our assets for the moment. DUSIFU is going to plan. As those that follow us know, we are in the middle of starting a six-well production well program, which is starting with the very first well in Hibiscus, which is drilling. We have pre-announced that, and we're expecting oil, first oil from that by the end of March, so sometime soon. Everything's going to plan there. And from there, we're going to be drilling five more production wells in this area, Hibiscus and Ruchin, tying those back to the FBSO, which is anchored at Tortue, the Adolo. We have additional well slots under this rig contract, a minimum of two additional wells. The joint venture is still deciding what to do with those well slots, whether we activate them or not. But you could see some interest perhaps in 2024 after we've drilled the six production wells, maybe looking at an exploration target in this prolific license that we have here in Dusafu. Not something to talk about today, but just to note that we do have two extra slots on that rig contract that you could activate. Next slide, please. Subinokume, we're very busy there with ongoing ESP conversion work, re-preparations, all kinds of activity. But the thing to really look forward to here, I think, from the market's perspective is that we have a rig contracted from Island Drilling to come and drill three production wells at Ceiba and Okume. That rig should arrive probably in the early fourth quarter, and we'll be drilling three new production wells there. And again, our production guidance for 2024 we've not provided yet, but clearly three new wells here is going to add to the plot as we get the new DUSIFU wells online that are taking us towards the 12,500. this should then supplement that so during the course of the years we get a little closer to it we'll start providing a little bit more guidance in terms of what we see for perhaps for 2024 production but clearly we're building a nice head of steam here and on the production front uh that re contract also has a slot on it earmarked for an exploration well uh in block s um which is i came deep and what i'd like to do briefly is because we've made some announcements recently both on the farm into block s which you can see on the left side there and EG01, which is inboard there on the right. We've made some announcements recently on that. I'd like to ask my colleague Richard Morton, our technical director, to talk a little bit about what our thinking is on these two exploration blocks. Richard, do you have a couple words to say there?