Panoro Energy ASA

Good morning, everybody, and thank you for participating in our third quarter results presentation. On the call with me today, joined by Kazi Kadir, our Chief Financial Officer, Nigel McKim, our Technical Director, and Andy Diamond, our Head of Corporate Development. Richard Morton, our Technical Director, is actually in Bata in Equatorial Guinea today, so he's not joining us. He's down there working on the start of the drilling program in Equatorial Guinea, which we'll touch on in a moment.

Next slide, please.

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 the expectations reflected in these forward-looking statements are reasonable, actual events or results may differ materially from those projected or implied in such forward-looking statements due to known or unknown risks, uncertainties, and other factors. And for your reference, our results announcement and this presentation that we're going through were released this morning, which can be found on our website. Next slide, please. So when it comes to question time, you can either type in a question. As you can see in the left panel here, you type it in, and we will endeavor to answer the question as long as the question has not already been answered through a previous question. Or you can raise your hand, as you can see there in the top left, the little hand signal, and we will try to mute you to let you ask a verbal question on audio. And I'll remind you of these instructions at the end as well. Next slide, please. So it was a very strong quarter for us. It's even a new record quarter for us with revenues of well over $100 million, very strong EPA DA, almost $65 million, and a net profit of almost $28 million. We then have the year-to-date highlights, which show the progression of the business as we've gone through three quarters. We still have one quarter to go, obviously. And a balance sheet, which is still on a net debt basis, we believe quite strong, $35 billion net debt. In making those calculations, we're netting off the cash that we'd drawn on under the short-term advanced payment facilities, which help us manage working capital. But those numbers are a good reflection of the balance sheet position of the company, which is good. And today we've also announced a cash distribution of 40 million NOC. With a separate press release, you can find the details of that distribution there. It's important to note that this will be paid as a return of paid-in capital, which is not a dividend per se, but it's the same thing in the end. It's cash. But in returning it as paid-in capital, this may benefit certain shareholders from a tax perspective, and it's an efficient way for us to return cash to shareholders. And that equates to NOC 0.342 per share. The final cash dividend for 2023 will be declared at our fourth quarter results, which are in February. Next slide, please. We thought it was useful to maybe just take a step back and look at the context of what it is we're doing, whereas we are in our growth trajectory as a company and what that also means for shareholder distributions. We don't have to go so far back in time to see that Panora was a very small company producing about 1,300 barrels a day back in 2018. Deuces who started coming online in that period, we got to 2020, 2,200. And we're slowly climbing this ladder doing approximately 9,000 barrels a day this year. And as everybody knows, we're looking to produce greater than 13,000 barrels a day during the course of 2024. And we started really through our commitment to return cash to shareholders. We started that commitment six months earlier than originally guided. We started that in February of 2023, where we paid the very first one, 30 million kroners. And as you can see, we've been building that up. We've now moved to 40 million, and I'll talk about it shortly, but we've announced the 2024 framework as well, the policy for shareholder returns. So I think what we're trying to demonstrate here is that the company and its board are very, very dedicated and committed to being a very strong shareholder return focused company at the same time trying to run a business and manage our capital expenditure and our other financial stakeholders at the same time running a very prudent business. Another point to make here really is around where we see the free cash flow inflection point. We are still in a busy period. We're only about halfway through our massive drilling program. And we see the free cash flow, the real inflection point for the business happening somewhere halfway through the year, which is when most of the capex is behind us. And we will hopefully be producing a lot of barrels per day. And that really is where we're going. And that gives us scope really to really look at continuing to build on our shareholder return story from where we are, which we think is already in very good shape. Next slide, please. So what we've announced today is the framework for our 2024 share return policy. We're targeting between 4 to 500 million Norwegian kroner. The exact timing of that is depending on the de-risking of our production operations. We'll talk about it. We're about halfway through our extensive drilling program. It's probably the busiest period ever in Panora's history. We're about halfway through it now as we de-risk those production operations in Gabon and Equatorial Guinea in particular. And as we do that, the weighting will be towards the second half as production milestones are achieved. In terms of the core cash distribution, we see that paid on a quarterly basis, starting with our first quarter results, which we'll discuss in May. And those will be paid as a return of paid-in capital, again, which may have certain tax benefits to certain shareholders, an efficient way for us to do that. But we also want to keep a very substantial portion of that $400 to $500 million through special distributions and share buybacks. We recognize that at times we're trading at, most times, all times, we're trading at discount to our net asset value. And we think, depending on the circumstances inside periods and the share price in the prevailing market, that there are going to be opportunities for us to do meaningful share buybacks during the course of next year. The key factors and assumptions behind these, what we tried to do is take an oil price that represented where we felt the equity analysts on average had built their 2024 models on. And by our calculations, that's around $85 a barrel, current change rates around 10 to 1 on the kroner. The board will obviously continue to assess this upwards or potentially downwards, should oil prices be higher or lower, or if production de-risking occurs. So clearly there's some some upside, particularly as we get into the second half of next year, to consider further revisions. This is approximately a doubling of last year's, the 2023 return policy, so we really do feel we're continuing on to be on the ladder here of increasing shareholder returns. Next slide, please. What we tried to do here is encapsulate the busy program that we talked about. are really in the most active phase of drilling that this company has ever been in. It really is. It's remarkable. And through the support of our shareholders and through the support of the financial community that's on this phone call and our lenders, you know, we've really positioned the company well to get in a position where it can really undertake material capital programs. And as you can see, in 2023, we drilled the four hibiscus wells. We drilled at least halfway through the Ruche well. That will be completed only in 2024. And we've made the Hibiscus South discovery. And what we have now going on are a series of workovers in Hibiscus, which we'll come back to, related to the ESP issues that have been well flagged. And in Equatorial Guinea, we're also warming up the rig right now with a couple of the workovers before we spud the first well, probably around Christmas time. Then we still have next year three more production wells in Gabon, three production wells in Equatorial Guinea and two exploration wells. So I can't really think of a time in my time at Bonoro where the company's been busier. In the bottom part of this slide, we try and talk through a little bit some of the pros, some of the highlights and the lowlights of where we are to date. It's been excellent safety performance to date on the campaign, which is extremely important. The flow rates from the four hibiscus wells have exceeded expectations with production reaching almost 40,000 barrels a day. when four of those wells were online prior to some of the issues we've had with the ESPs. So we know that the reservoir is delivering at or beyond expectation at the moment. So it does show you some of the potential. On the negative, the ESP issues have caused production variability and those together with some of the earlier delays on the project have probably put us by our estimate three, maybe even four months behind the original schedule that we've been on. That is a negative, clearly, and that's been reflected in the market, I think, quite loudly. And then the right side, let's talk a little bit about the electrical issues we believe can and will be rectified. The reserves are unaffected, so this is deferred production, it's not lost production. We've now added an additional seventh production well to the Gabonese campaign, which should allow us to achieve higher rates, manage the reservoirs better, extend the plateau out, greater diversification of well stock. It really is a nice add-on for us. And these infill wells in Equatorial Guinea can add additional volumes to what we've seen so far. And then we have two very high-impact exploration catalysts, Bordeaux, which is the old prospect B for people who have been around for a while with Panora, and the Akeng Deep Well, which is the Cosmos-operated well in Equatorial Guinea.

Very busy period. Next slide, please. I won't dwell on this one too much.

This is simply a totting up of production over the past quarters, where our guidance was, and reiterating the fact that we're going to get to 13,000 barrels a day when six of these Gabonese wells are on line at the same time. We've also got the Equatorial Guinea campaign, which is coming in, so that should allow us some further upside there. We have been over 12,000 barrels a day as a group when the ESPs were working just fine. So we do know that we have the potential to get there. It's a matter of getting over the electrical issues that we've seen in Gabon. And then, you know, recognizing that we've changed the work order The drilling program in Gabon, our guidance for the year is around 9,000 barrels a day, as previously announced. Next slide, please. Our lifting update. This is, as we've always shown it, the final lifting that we have for the year. We've lifted already in Gabon and Tunisia in Q4. about half a million barrels, a little over half a million barrels in Gabon and Tunisia so far. We have one last lifting in Gabon, which is kind of right on the edge of the new year, if I can put it that way. So that may slip just into early January, let's see, but this is largely as guided already. Next slide, please. Every time we put out a little update here in terms of where our debt is and some of our capex guidance, there's no changes on the left side of this slide. The right side of the slide, we've got it around $75 million. That's unchanged for this year. We are upping slightly our capex assumptions for next year in 2024, a range of 70 to 75. We had never really provided firm guidance on that, but I think that indicatively, I think most Most people assume we're at 60 or 65 million, so we're upping that slightly. The reason for that, I think, is evident. We fast-tracked the Hibiscus South discovery, so we have additional development well we're putting in there, and we're drilling two exploration wells. We already drilled one, Hibiscus South, and the other being Bordeaux. So the combination of those things together with some rig time on the ESP remedial work has meant that CapEx has drifted a little bit higher for next year than perhaps some were expecting, but understandable, I think, given the expanded work program. Next slide, please. I'm not going to dwell here, but we do, again, try and provide this slide every time just to show the way the cash builds in the business and where the various elements are. I'm not going to spend any time on this, but if there are questions on it, I'll take those in the Q&A. Next slide, please. Right, come on. We've touched on it a little bit already, but we have the four hibiscus wells. Those have demonstrated excellent reservoir performance, good flow rates on those. We have some electrical integrity issues with the ESPs, which we're currently in a period of diagnosis, repair, and replacement. We've commenced that program. I'll touch on it a little bit later in the presentation, but that is currently underway. That has been a speed bump for us for sure. It's not been pleasant given the fact that we know that these wells flow so well, but everybody's on the case on this one. Baker Hughes, the pump specialists and supplier on board the Mabomo as we speak, together with BW Energy crews and other third party experts. So we really are getting after it, but it has been a little delay into the business. Abiscus South will be fast tracked into production. You can see Abiscus South there on the map. It was a really beautiful little 20 meter oil pay, six to seven million barrels. It may not sound big, but these are extremely valuable barrels. We calculate something like NPV 10, at least $40 a barrel on these. So basically the OPEX is almost free on them because you're already paying for everything through the Mobomo, through the existing production. So it's been a fantastic discovery for us. And we're finally going to get after Bordeaux as well as part of this program. This is a rather large structure that could be extremely large. We have currently about 29 million barrels. It's got targets in both the gamba and the dentile, and it will probably be the last thing that we do as part of this drilling campaign. So we've exercised the options there. On the Tortue field, the gas lift compressor was installed and up and running in July and has been operating just fine since that time. And then Tortue continues to produce in line with expectations of all six wells producing.

Next slide, please.

Well, we all get a little caught up in electrical issues and other ups and downs that we have in our industry, but we thought we'd zoom out here a little bit and remind ourselves and remind anybody who cares to listen to us about what DUSIFU actually is. And if we start off where we start, you know, Panora, we acquired the seismic and drilled those very first wells there, finding Roche and Tortue back in 2013. And, you know, by the time we got to 2017, we estimated around 24 million barrels were held on that block. And since that time, we've added 91 million barrels through discoveries and revisions. We've gotten the field to almost 120 million barrels. Also, once you add in the Hibiscus South discovery, we've already produced 24 million barrels. So you can see this thing is, you know, since 2018, this thing is going to produce for many, many years to come. And on top of that, we have the 2C, the discovered resources that have not been commercialized yet. We have Bourdon, and then we have the remainder of the exploration portfolio that we currently see, which is estimated at another potentially up to 142 million barrels. So we are on a license that is going to produce oil and hopefully find more oil for a long period of time. The ESP issues are very frustrating, but this really is a very accurate, we believe, description depiction of Dussifu in this wonderful block we have. And we try not to lose sight of that as we go along. Next slide, please. Well, this is about to become the next exciting thing. Equatorial Guinea has been producing fine, but it's about to get exciting. We have a very, very active program here for the next six months. The Island Innovator, you can see there. in the picture is in country. It's already commenced workovers that were planned. The idea is to kind of get the rig kind of warmed up with a couple of easier workovers before it comes in and drills three new infill production wells, the first to be on stream probably towards the end of Q1, and the next two somewhere in the second quarter. There's also lots of other things going on with flow line replacements, gas progression units, and gas injection. Lots and lots of projects going on here. And on top of it, we're also then drilling the Akang Deep Prospect, which is a Cosmos-operated well that will be at the back end of the campaign, so probably the back end of Q2. We will drill this. This is testing a deeper Albion play. We've touched on it before. If it's a discovery, you can tie it back. It's infrastructure-led back to the FPSO. And its gross mean resource estimate is around 180 moon barrels. So potentially a transformational exploration well with about a 25% chance of success. So we have to keep that in mind. But what we're seeing in this portfolio that we have together with the Gabonese exploration wells I referred to earlier is that we have lots of good exploration catalysts going on in the next six months here as well. Positively, there's always a lot of talk about tax. tax risk and the North Sea and the UK and other jurisdictions. Well, in EG, they've gone the other way. They have actually lowered the profit tax rate to 25 from 35%. That will be effective from 2025 onwards. But it's a very, very progressive government we find here in terms of trying to encourage the oil and gas sector. And so that was very, very pleasing. We have a normal annual tax payment. It's kind of a lump sum tax payment that's due in Equatorial Guinea every year. That's the taxation regime. It's embedded within the production sharing contract. That this year is around $20 million that gets paid as a lump sum, which will be paid in the fourth quarter of this year and in every year going forward. That's just the timing of that tax payment. Next slide, please. Tunisia is doing very, very well. I think we are in a period of transition there. We've been very much focused on the onshore blocks here, the ones in orange there in Goubiba, Al-Hajib, Al Ain. These fields have been producing very, very well. But we're about to embark on a period of concentrating now on the offshore, on the Sassina field, where we are undertaking a series of workovers in 2024, which will really help us work up the field's potential there as we get into a renewal period on that license. So I think you'll hopefully be hearing some more about Tunisia in 2024. It was not a particularly active year in terms of news flow in Tunisia, although the production held up very well. But 2024 could see a lot more activity as we get into some work over campaigns in Sirsina. Next slide, please. So our typical summary slide, we really find ourselves in probably the busiest period of our history. At DUSAFU, we still very much stand by the delivering 40,000 barrels a day gross. There's been some noise around that kind of thing, but we very much stand by that, and we also very much stand by our production targets, 13,000 barrels a day as a group. These are unchanged targets. The results of the new wells in Gabon have exceeded expectations, and the reservoir deliverability has been very, very good. The ESP issues have obviously constrained production, but we're getting after it as we speak. There's a three-well drilling campaign coming from Equatorial Guinea, and we have the two infrastructure-led exploration assets in Equatorial Guinea and Gabon, combined with the CASA distribution framework, which we think is very shareholder-forward. If I could go to the next slide now, as a reminder how to ask questions here, you can type in a question or you can raise your hand. I suspect that a lot of the questions are going to be around the ESP issues. And I think we suspect that this has created some uncertainty and we ourselves have some uncertainty and we understand that. It's frustrating. It's frustrating for us as well. It's frustrating for BW as well. But rather than sort of clog up the Q&A with questions on the ESPs, You'll appreciate that we're in the middle of this diagnosis program, so there's only limited things that we can say. But what I'm going to do is actually Q&A myself. So I'm going to anticipate the questions that I think that you guys are going to answer, and I'd like to answer them. And then I would ask that try not to repeat those same kind of questions when you come online. I have a feeling there'll be a lot of questions that may be coming from the same angle. So let me try and head them off. Hopefully I'll do a good enough job and you will appreciate that obviously we are in the middle of a program where we're getting information and details every single day. So it's very much a moving fee. So it's kind of hard to say much more than I will say. And then I will open up the lines of questions. Not many then on the ESPs, hopefully I will have dealt with them. So the first question I'm going to ask myself is, what is happening at the moment? So to start off, it's worth commenting, the driver to use these ESP technologies, these access ESP they're called, is that this technology provides an advantage over traditional ESPs and that you can replace failed pumps using a production platform and wireless systems So you don't actually need a drilling rig. So this really creates a lot of operational efficiencies. ESPs do fail at a certain point. They don't last forever. And to the extent that you come in with a wire line, retrieve them and put them back in, it saves you having to bring a drilling ring, expensive drilling rig out to replace them. So this has been the main driver. And in the longer term, we expect that these ESPs will deliver significant uptime cost benefits as a result. At the moment, BW are in the middle of a diagnostic exercise. Huge resources are being mobilized, and I really do mean that huge. This is the top, top, top priority for BW, but not only BW, but the ESP supplier, Baker Hughes, who are out there in force together with third-party exports on the BOMO. So the process that's currently underway and is likely to take the next few weeks up until the end of the year, let's call it, is to pull these ESPs out and probably at least one of the lower completions below the ESP just to find out where the root cause of the issues that we've been experiencing are. So it's really a root and branch exercise, pull everything out and look and see where we've got. We don't have a coordinated time yet with BW to update the market, but we'd expect this probably to be in the new year. But this is the top priority for everybody concerned at the moment. The next question I'm going to ask myself is what could the issues be? Well, we have a wide range of theories and there's further work needed on these. These ESPs are being used widely in the industry and indeed nearby by Chevron in Congo. So we feel a solution will be found. As we've stated, the reservoir performance of the wells has been fantastic. So it's the utmost priority for us to get the situation rectified. Next question I'm going to ask myself is how long will it take to fix? Again, it's too early to give a definitive answer, and any response really could be a little bit misleading at this time. But on the spectrum of possibilities, we envision possibly as many as three months, depending on the nature of the issue found. Perhaps it can be solved earlier than that, but I think that that's probably as good a guess as I can give at the moment. And how the remediation of the issues will overlap and be mixed and matched with the drilling program remains to be seen, and, of course, with the Bordeaux well coming. So we're looking at juggling supplies, logistics, and the priority of drilling the new wells, it all overlaps, and we're still putting the puzzle together. The priority for the group, though, is to maximize production, so we're not going to forego production. What we really want to do is try and make sure that we're doing everything as properly as possible in terms of the repair of these ESPs, and at the same time, making sure that we keep production rates as high as possible. The next question I'm going to ask myself is, do you agree with the BWE guidance that they provided last week that obviously caused quite a stir for the people that do follow the two companies? We were surprised by the guidance, particularly the low end of the guidance. Some of the guidance may have been driven by their desire to present a low target or one that they could beat. What we personally believe could have been better explained was the effect of time on the annual averages presented. So the original timetable for DUSIFU had all of these six wells to be completed by the end of this year, around Christmas time, you know, in December, early January. So coming to January, you would have been sort of at full tilt, a nice plateau, as it were. And, you know, due to all the well publicized, some of the delays we had, and now with these ESP issues kind of intervening with the introduction of the Hibiscus South well, mixing the program up a little bit between exploration and development wells, everything's been pushed out, as I said, by a series of, let's call it, three months. So when you're looking at an average production rate for a calendar year, if you're starting on January 1 at the top, obviously that's a different number than if you're starting at the top in, say, the second quarter sometimes. So I think that could have been a little bit better explained and I think does explain at least some of the lowering of the production target for next year. So that simply is pushing the calendar out to the right by, let's call it three months. So I think that that is the point that probably could have and should have been better explained. The important thing for us really is to get to the 40,000 barrel a day level at DUSIFIL on a sustained basis and capturing that deferred production that we've just been losing recently. And obviously, from a Panora perspective, what we really like is that we have the EG wells coming online also in this period. So the benefits of a diversified portfolio are really starting to come through. Despite the adversity of these electrical issues, we still have EG, which is now stepping up to come onto the field and contribute new volumes for us. So, again, we'd like to now open it up for questions, and with respect, we will answer questions around or try to answer questions around the ESPs to the extent I haven't dealt with them, but I would encourage people maybe not to ask questions that I probably can't answer or that I've already tried to answer in my earlier statements. So, Andy, can we open up the lines to any questions we may have?

Thank you, John. The first question will be from Stefan Evian from DMB Markets.

Good morning, Stefan. Good morning, Lars. I hope you can hear me.

So thanks for the clarity on the ESPs. Very, very helpful. I have two questions more on your balance sheet than on your distributions. So first, I see if the oil price exceeds $85, you'll increase likely both dividends, but also accelerate your debt amortization. In light of that, just wondering what you consider to be the optimal net debt level going forward? And my second question is a bit more down the road, but it seems like 2024 will be more progressing year and 25 might be the full effect of all the work you're doing next year. Just what kind of long-term capacity do you see yourself having on dividends and buybacks in light of how that growth now will probably be more into 25 on production rather than 24? That's it for me.

Okay, yeah, on the balance sheet, in terms of optimal debt levels, I mean, we don't have like a targeted net debt level. I mean, I think if we look at our debt, and I'm not sure if any of our bankers are on the phone call today, but what the bankers do is they run the theoretical borrowing capacity of the assets, and then they calculate, you know, how much you could technically borrow. And what I would say without giving away all the numbers is that we are very under geared as a company. We feel quite comfortable with the debt we have. Obviously, interest rates being high, it is an interest cost burden, so we're not sanguine about it. But we don't feel uncomfortable with the levels of debt we have right now. I think we would like to see them come down as we start generating the free cash flow. We do like a little bit of debt in the company. We think it's a good discipline for an EMP company. I've been around this sector a long time and I think that an RBL is a really important tool to have in a company. It provides a third party discipline with third party reservoir engineers coming in and scratching around and asking tough questions. And it's a very nice discipline for the company to have and it also provides you with a facility that you could use if you needed it suddenly, if you had a new development well that needed drilling and you needed to borrow a little extra money in the short term, you have a facility in place, you don't have to start from scratch. So I think we would philosophically like to keep some debt on the balance sheet, but to keep it at modest levels. In terms of your statement on 24, yes, I mean, I think arguably we're a few months behind where we wanted to be if you'd asked us a year ago, where we thought we'd be with DUSFU is drifted, as I said, to the right by three or four months or something like that, which is pinched into 2024. I think what we can see from the board's decisions in terms of doubling the the target for 2024 is a real intention to be a very progressive shareholder, a friendly company in return cash. And as you correctly say, as we get really into the second half of 2024, which is kind of where we get behind the CapEx of the 75, you know, 70, 75 million I talked about, you know, the lion's share of that really is in the first half of this year. But we really start coming out of that the second half of the year, and obviously 25, 26, These are years where, you know, all the things being equal, capex is going to be quite a bit lower. Obviously, if you make a big discovery in Bordeaux, if we make a big discovery in Akin Deep, we suddenly have a luxury problem of some additional capex to tie in that additional reserve. But, you know, these will be years where the free cash flow generation at normalized oil price will be considerable against our market capitalization. So I think you'll continue to see the board being progressive in their attitude towards shareholder distributions. So I hope that helps answer your question.

Yes, that's very clear, John. Thank you. All for me.

Thank you. And the next question is from Stefan Foucault of Optus Advisors. Stefan, you are muted. Please go ahead.

morning guys and thank you for taking my questions um i i i gave a few so starting on the the dividend for 2024 if we look at the core dividend you talk about how should we think about this in terms of relative to um 2023 is would the call even be of a similar magnitude at least that or what's the thought process trying to think at the the floor cash payment at 85 that are about Then on Bordeaux, I think the well is targeting both the Gamba and the Dental. Could you give us an idea of the splits of those 20-plus million barrel resources between these two horizons? And perhaps lastly, Tunisia is becoming more important next year. To get a sense of materiality, what sort of percentage of capex do you see going to Tunisia in 2024? Thank you.

Thank you, Stefan. Great questions. We didn't state a number and the reason we didn't, I know people would like to hear that number is it's still a number of months away. We're in the middle of this program. We'd like to just mature things a little bit more over the next couple of months and we'll come back and Talk about that early in the new year. But what I can say and I should say is that, no, we expect it to be a higher level than we have been paying to date in the 3.23 cycle. We expect that to be a substantial core dividend, but we'd like to keep quite a bit of firepower on the share buyback and or the special dividend, depending obviously on the share price and the market circumstance. So, we will come back, but I think you can imagine it being considerably higher than we've paid to date. Your second question around the GAMBA and the dental split on Bourdain. Nigel, I don't have that handy. I believe most of the volume is in the GAMBA. There is a huge dental structure below it. Nigel, do you have that to hand or is that something we might need to circle back with Stefan on?

Yes, John, I've just been trying to check on that. I haven't got the numbers at my fingertips. I think we'll have to circle back on that.

Stefan, we'll come back, but it's a very, very nice-looking camber four-way, which would be the main target. The dental below it is, historically, people have seen the possibility of prospect B being north of 100 million barrels, and a lot of that comes from the size of the dental below the camber. I believe most of the 29 is in the gamber with some contribution in the dentile. But we'll try and come back to you on that one. And Tunisia, Tunisia CapEx. Yes, Tunisia CapEx is not going to be particularly high. I don't have the exact numbers in front of me, but I would have thought of that 70, 75 million maybe. Maybe 10 or 15% of that will be in Tunisia. It's not a big number. Really, it's not concentrated on big drilling campaigns. It's on smaller scale workovers, depending on how you classify them can either be classified for tax reasons as OpEx or CapEx, but it's not a huge number, Stefan.

Great. Thank you very much.

Thank you. The next question is from Theodor Sven Nilsson of SB1 Markets. Theodor, you're unmuted. Please go ahead.

Good morning. Thanks for taking my questions. First, a question on exploration. As far as I understand, you plan to drill two exploration wells in 2024. And just on slide 13, the resources you show on for DUSAFU license, When should we expect you and VivEnergy to pursue those resources? Should we expect any new wells in 2024? Is that like a 2025 or beyond case? A second question, that is, I want to ask about the ESPs, but I just wonder if you could comment on today. What is the production from the DUSAFU license today? And final question on, I think we discussed this before. I just want to ask it again. M&A market in North Africa and West Africa, where do you see opportunities, which areas are less likely to look into, and should we expect you to do anything over the next few years on the M&A front? Thanks. Sure.

Excuse me. On the exploration front, you know, what we've managed with BW to do is every time we bring a rig out to drill more development wells, we're sort of both predominantly interested in production rather than exploration-focused strategies. I think we all recognize that, you know, you need to have exploration in the EMP portfolio. Best to do it when you're producing oil and have the cash flow to afford it. And so, as a result, we – on this particular one, we've effectively drilling two exploration wells. So, Hibiscus South, which has been a discovery, and now Bourdon. And obviously, then our Kang Deep that you mentioned as well. And I think you'll see that trend continues. So everybody's aware that there'll be the next phase of DUSIFU, the Hibiscus Rouge phase two, which is not a 2024 event, that's more of a 2025 event. The drilling rig will come back out and probably the same thing will happen again, which is we will seek to drill additional near-field infrastructure-led type of exploration prospects on that block. So I wouldn't expect any more exploration activity from Ponoro other than the two wells that we've mentioned. In respect of your question on Dusavu production, I mean, it was one of the reasons I wanted to try and head off some of those questions is that the production at Dusavu is extremely variable right now. We are shutting down stuff, restarting stuff, so it changes day to day. So to give an answer to the question I think would be quite misleading. potentially misleading and all I would say is I think we'll try and come and update together with BW and again, we don't have a planned time for this. I suspect it'd be early in the new year in terms of what it is we've decided the issue was, where production is and what are the forward looking plans to the extent that those need to be discussed. Excuse me. M&A market. I think it continues to be dominated by large majors selling out assets as they get to a period of immateriality to them, or perhaps in an effort to get some carbon off their balance sheet, so to speak. We'll continue to see that trend, which has been going on for decades now, large companies selling to small companies, and that trend very much continues, and it is It's encouraged by some of the bigger mergers that have happened, you know, Anadarko and with Chevron, Noble, you know, the series of mergers that have gone on. What that does is creates continued churn in these portfolios of these larger companies. The role that Panora can play within that is, is important, I think. I think we've held ourselves out to be a very responsible partner within the JVs. We seem to be well regarded in the countries in which we operate. So it's very important to be well accepted by the regulators in these countries. So we've worked hard over the years to make sure that we're seen in our industry, so not the stock market necessarily, but also in our industry as a responsible party who does what they say. We're not the biggest company in the world, so it's hard to think about the really big ones, but there will be opportunities for Panora. I think the biggest issue for us really, and that probably goes for a lot of other companies in our sectors, we're trading in a discounted NAV. So if you're trying to participate in the M&A market and trying to make money for your shareholders and you're trading in a significant discounted NAV, that makes the hurdle higher. as you've probably heard from us before, extremely picky. We were very, very fortunate to be able to pick up Patello Assets as we did a couple of years ago at a very, very attractive price and those have shown to be excellent acquisitions. We're looking for that type of opportunity where through a certain circumstance, could be a corporate situation, it could be a blip in the market, it could be something unique that creates an opportunity for Panora to really try and do something that's clever. In the meantime, we're not super greedy. We really have our hands full internally at the moment. You know, busiest period ever in the history of the company in terms of drilling and production growth. So we really need to be a little cautious when it comes to these kind of opportunities. But the M&A landscape is there, and it's there for companies like Monoro to participate in. But the deal has to be the right one. I hope that answers the question in some respects.

Absolutely.

That's useful. Thank you.

Thank you. And the next question is from Alex Smith of Investec Securities. Alex, you're self-muted, so if you could please unmute yourself.

Hello, can you hear me now? Yes, Alex. Perfect. So you've answered most of my questions. This is a quick one on Equatorial Guinea, if I can. This with the profits tax update kind of makes AchenDeep even more interesting and are there other things in the hopper I know there's quite a large 2c resource there but does then does this begin to make you think about you know maybe fast tracking a few of those kind of you know infrastructure-led kind of developments that you have in the hopper bring them in a little bit earlier or are those discussions that are going on with the partners

Yeah, absolutely. So first on the tax, yes, I mean, it does make everything we do not just acting deep, but it makes it much more attractive. It extends the economic life of the field out. It's then encouraging, obviously, us to drill for more wells. And the government's been very, very good about that. We don't necessarily put it in the press, but they've also encouraged us to drill acting deep. So they're allowing us to cost recover some of the cost of that well from Block S into Block G. So it's effectively a way of the government trying to encourage exploration and sharing the risk with the operators for that risk. So we're very, very pleased with the progressive nature of that opportunity. There's so much to go for in Block G. We have a lot of contingent resource. We have a huge stoic there. you know, so much oil has been generated. It's already produced 500 million barrels, that field, and there's just so much more to give. So I think that this is the real first campaign that we've had with these three new wells and the exploration well. There are a couple of additional slots on that rig as well that may or may not be exercised, but certainly we see a sustainable campaign over the coming years to continue to go after some of that 2C resource and probably to find some more, to be honest. We benefit very much from 40 seismic there, so over the years, multiple acquisitions of seismic that are able to be viewed in terms of the way that the, with the benefit of time, that you can see the migration of oil, you can see where the unswept areas are, and everything from a subsurface perspective there suggests that this field has a lot more resource in it than currently booked. So I hope that answers that question.

Yeah, no, very clear. Thank you.

Thank you. The next question is from Christopher Bach of Clarksons. Christopher, you're also self-muted. If you could unmute yourself and ask your questions. Thank you.

Perfect. Hi, John and the rest of the team. Thanks for taking my questions. First of all, I have a question concerning the ongoing well campaign in Gabon, which now has been reordered to seven production wells and one exploration well. Regarding the timeline here, are you confident that all these wells will be drilled and completed by early first half 2024? And the next question is related to dividends. If production next year were to exceed the expectations, could this lead to an increased dividend payment for 2024? Or would you stay within the guided 400 to 500 million Norwegian kroners? And furthermore, could you elaborate a little bit on how you intend to strike a balance between dividends and the share buybacks as you are on a such a discounted knob?

uh you might have touched upon this earlier but just to clarify please thanks sure happy to help um the the remaining three wells to be drilled to do sifu um again the only uncertainty now is exactly when we'll start those that depends a little bit in terms of you know how we carry on with the esp campaign but yes i would it would be our expectation that all three of those would be drilled and completed uh what did you say in the first half of this year probably you know, probably looking, you know, maybe all three of them finished by, let's call it sometime in the second quarter or something like that. I would expect that early in the new year, we would be resuming drilling all those wells exactly when I can't say at the moment. But yes, we would expect all three wells to be drilled in that period that you mentioned. So exceeding, if production exceeds, would we increase the, you know, the dividend? We intend in January, as we normally do, in January we try and come out and say, here's where the capex is, here's where we see our production ranges for the year. And what sits behind those production ranges is we sit and we work with the operators in each of the assets. We're obviously an operator in Tunisia, but we work within the operator's budgets and we try and create an expectation of what we think production is. And that production is based on obviously timing and reservoir performance. based also on looking at uptime of the FPSOs, for instance. You know, these vessels are not uptime 100 percent of the time. You know, they could be 95 percent, so maybe. But we try and sort of, as we get into the new year, try and establish what we think is a reasonable range of production. And again, we're trying to use, we're trying to be consistent with where the operating budgets are. Clearly, in the case of our two biggest assets, I think that there is upside that could be manifested in the first half of the year as we get into these wells and start producing them. And so I think the simple answer is yes, there is, of course, if production upperforms the current expectations, that there is scope to revisit the shareholder distribution plan. for sure and you know obviously oil prices are important too given the capex we have particularly in the first half of the year you know even five dollar swings you know your your recent research report Christopher I think even highlighted this point it's particularly at the moment we're in time right now oil price is important as we get as we get over the hump obviously it becomes you know much more flexible in terms of in terms of the oil price but But I would certainly expect that if all other things being equal, production exceeds, we can accelerate things. Again, I think the sentiment for the board, and hopefully that comes through in these communications, is that we have a board that's very serious about shareholder distributions. We're not being conservative for the sake of being conservative or over bullish for the sake of being over bullish. It's just a commitment. We have a chairman who's a large shareholder as well. And so we believe quite well aligned with shareholder expectations on that side. So we'll of course do what we can. And if we outperform, I think that's going to be good news for everybody.

Thank you, John. And regarding the balance between dividends and share buybacks, do you have any comments there?

Well, I refer back to the question that was asked by Stefan a little bit, where is the core dividend going to sit? It's obviously going to be higher than we've currently been doing. With share buybacks, I think that there is a real feeling within the company that the share is undervalued and that a share buyback is going to be a very effective way of using shareholder money, if I can put it that way. to buy back our shares when we're trading at a big discount to NAV. What that mix looks like at the moment, I'd rather not be drawn on quite yet. Again, we still think we're a little bit early on that cycle. We just want to come into the new year and get our bearings and figure out exactly where we are. But I think that you'll find that the share buybacks will be something that we would really like to use. We've done it before in the past, some very small ones, but you will see that it's very much in focus of the board at the moment.

Thank you very much.

Thank you. The next question is from Tom-Erik Rysbrobakken-Christiansen. Tom-Erik, you're unmuted. Please go ahead.

Thanks for taking my question. Seems to me that dividend guiding was pretty much in line with expectations and a solid one. But how much of the remaining capital that you expect to generate do you think you can use on organic opportunities compared to, you know, growing the underlying M&A capacity of the company and where do that stand at current, do you think, in terms of the ability to further accelerate growth through more acquisitions?

It's, you know, it's a great strategic question. And I think that, you know, that is, you know, clearly the strategy of the company right now is kind of, you know, delivering what we said. We've got all this great production growth ahead of us here. We've got our hands full. But clearly, you know, a company like Monoro needs to always consider opportunities, whether those be corporate opportunities or whether those be asset-based opportunities that might require some capital to be dedicated towards opportunistic things. So, again, it really comes back to kind of what we were talking about before is, you know, if we're finding attractive, creative opportunities in the M&A market, we will certainly be dedicating free cash flow towards opportunities towards those opportunities. But we have to look at them in the context of obviously our share price and the opportunity of buying back our shares instead. So it's kind of an iterative process that we have to constantly go through. But it's in our blood, it's in our nature for a mid-cap oil company to continue to try and grow. We don't set out production targets. We want to be a 50,000 barrel a day producer. We don't do that because that's kind of brainless really. Anybody can buy production. What we have to do is buy reserves and production well and cheaply. With upside as well, technical upside, we have to do all the proper homework there. So if we can find the right opportunities that compete with shareholder returns in terms of their attractiveness, we will certainly dedicate some of the free cash flow towards that growth.

Just a follow-up from me, John. How easy or hard is it to find those opportunities in the current market you feel Compared to, say, last year, you had almost $100 oil, still been very solid this year, but lower at, call it, $80 Brent average for the year. Has more, call it, seller expectations come down to a more realistic level, or is it still a bit too sweet for the industry to harvest cash at these oil prices?

I think it's still a little too sweet. I think people still, you know, will be putting in... You know, the seller will be obviously looking at the forward curve or something like that, whereas a buyer will not be looking at the forward curve. The buyer will be assuming that oil prices drop considerably from here as you get a year or two out. And so once you start putting those kind of oil prices into financial models, there still ends up being that gap between buyer and seller expectation. That is often being made up in transactions that we see and ones that we've even done in the past you offer contingent consideration to the seller. You say, well, right, if you're right, if oil prices are 100, you can get some contingent consideration in 2027 if oil prices are 100. We're happy to give you some of that upside back. So you're finding those kind of creative structures through deferred or contingent consideration are the tools that you need to close that gap. And maybe that's become a little bit more realistic. But again, we're finding that your standard M&A opportunity where 20 oil companies are being invited to bid for something. This is not a good environment for Panoro to wade into and try and be the highest bidder on situations. We prefer a slightly unusual situation, an unusual corporate situation where Panoro is well-positioned, whether it's the fact that we're a public company or whether we're Norwegian or that we're accepted in the country, where we can differentiate ourselves. from the masses. And the masses aren't that big, to be honest. There are only a handful of credible counterparties in this market for these kind of things, but where we can differentiate ourselves as a buyer and where we can find a price that's attractive to the company.

Okay, that makes sense.

Thank you. Thanks, Tomer.

Andy, I think we've probably reached an hour or so. I don't know if there are any burning questions out there still, but we should probably respect the hour here.

Yeah, John, just a question that's coming online is if you could please provide some context or insights on the group's operating cost per barrel metrics at the company level.

Sure. I'll answer that question, then maybe we'll cut it off from there. And if anybody has any burning questions, you can obviously reach out to us through other channels. The operating cost per barrel of the three assets are quite different. We have sort of Equatorial Guinea and Tunisia, which are steady state, if I can put it that way, assets. where operating costs have been kept comfortably low, depending exactly on how you calculate operating costs per barrel, you know, you could see in the sort of $18, $19 a barrel, $20 a barrel kind of territory. Just if it's been more well-flagged, the operator comes out every quarter and gives you an exact calculation of that, and that's obviously been higher, closer to 30 at the moment, because we're dealing with an FPSO, which is a fixed cost, that is the lion's share together with the O&M contract and the FPSOs, a lion's share of the operating cost. So the variable cost per barrel is very low. So the intention here is as DUSUVU gets up towards that kind of plateau rate, those operating costs per barrel also come down into that kind of territory, let's call it high teens. It's not there yet, but if things go according to plan, it will get there. So hopefully that answers that question. And for the rest, I'd like to thank everybody for joining us. It's been a long call, but I appreciate everybody's attention to the company and look forward to updating you guys on all things Panoro in the near future. Thank you very much.