Panoro Energy ASA

Good morning, everybody. This is John Hamilton. Thank you for joining us this morning. We're here to talk about our three new results for 2024. I'm joined today by a number of colleagues who will assist me in answering any questions. As a reminder, today's conference call contains certain statements that are made 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 was also announced this morning and the materials are available on our website. So next slide, please. As a reminder, we're using the same technology that we normally do, that we have time for Q&A at the end. You can either type your question in or you can raise your hand if you want to be unmuted. We will endeavor to answer all the questions that we get. If some are duplicated or if some are perhaps not, for the individual questions we can better answer on an email, please reach out to us also directly through our investor email address. Next slide, please. So this is our slide where we show the three months, the Q3. We also show in the orange the year-to-date financials, third quarter financials, So I was producing about 9,400 barrels a day with a revenue of 36 million and an EBITDA of $23 million. It was a quiet quarter in terms of liftings as was broadcast. So that's entirely in line. On a nine-month basis, we're looking at about $180 million of revenue and $101 million of EBITDA. On the balance sheet, we ended the quarter with $19 million of cash and a net debt position of around $51 million. Next slide, please. We also today have announced another shareholder distribution in the form of a return of paid-in capital, 50 million kroner, which has been very, very steady. We have also made good headway on our share buyback program. There's still some room left to go on that one. We're very, very happy to continue to follow our shareholder distribution framework that we announced about a year ago. Oil prices have been a little soft, obviously, recently. But despite that, we've continued on this track. And we still have the final quarter to go in terms of the shareholder distribution for the 2024 cycle. Next slide, please. So our production target of 13,000 barrels a day has been achieved. It's been at times a bumpy road, but we've gotten there. Very, very happy about it. It was achieved recently as wells were starting to come online in Gabon, which we'll touch on a little bit more, and also importantly in Equatorial Guinea. Next slide, please. So our liftings were more or less as guided. We had one small lifting in Tunisia, which kind of just slipped into October, so it kind of missed the Q3 revenue recognition. and slipped into Q4, where we anticipate lifting or have lifted a long way through this already, about 1.4 million barrels, something like 40% of our 2024 liftings are occurring in the fourth quarter. Our average price realization year-to-date has been around $80, which is pretty good. Obviously, oil prices have subsequently dropped. So we're keeping a close eye on that one. But nonetheless, it's a very busy quarter for us. That will see us in terms of full year financials, obviously. But that's going to be a big contribution in the fourth quarter. Next slide, please. So our debt profile, our BL facility, it says 70 million. Post period, we took advantage of a little headroom in there just to manage some working capital through this heavy capex period that we're in. But the real story, I guess, is around the CapEx this year, which we've guided back in August. That was going to be higher than 75, and we've recently announced it's closer to 95 now. And that's largely as a result of the two things. One is the expanded program in Gabon. We drilled a couple extra wells, which obviously are very good for the company. It's given us more production, more reserves. But equally, the amended work program, the change out of the rig in Equatorial Guinea, has improved. uh, unfortunately given us an additional capital expenditure that was not forecast at the time. Uh, the good news, uh, from our perspective certainly is that indicatively CapEx next year should be around 40 million. We will, uh, once the rig leaves Gabon after drilling the Bordon well in February, we will not have a rig, uh, on any of our assets, uh, uh, during 2025, uh, based on what we see at the moment. And, uh, so we're kind of at that, um, Cash flow inflection point, hopefully, where the increased revenue starts coming through against lower CapEx. Next slide, please. I'm not going to go through this in great detail. It's there for the workings, for people that like to look through these, but we always produce a reconciliation cash flow and how we got from the cash position at the beginning of the year to where we currently are. Next slide, please. So Gabon has obviously been a source of great attention for the company. It's been a tricky year with our ESP issues. I'm happy to say now and touching wood that the current ESP, we do not have any of the old retrievable ESPs in the field anymore. We are now either putting in pumps on wells that don't have an ESP on them yet. So, for instance, Roche and one of the Abiscus wells. or we're producing under the new AESPs. So it's been a bit of a journey, but things are working extremely well. We and BW announced last week that we had achieved greater than 40,000 barrels a day of production, which is a key thing for the company. The Adolo has the capacity to go above its nameplate, so We do get a lot of questions around how high could production be and all that. I would say it's still early days, but obviously with the additional two wells that we've brought online, so that being the Hibiscus northern flank and the Hibiscus south, those two discoveries we made earlier that have been brought online, we've now gone from a position of having originally planned for six wells in the initial phase of this development to eight wells. So we still have four slots left on the platform for a future phase of development, but We really put ourselves in a position where we have a great inventory of wells that should allow us to produce oil, extend the plateau out here for longer than originally planned. So this has really recently been a great success in here. We do have the Bornovera all the way through February, at which point it leaves Gabon. And the last thing that we'll do after just finishing up a couple of workovers and the final pump installations is to drill the Bordon prospect, which we'll touch a little bit more on about. But that is a well that we will drill in January, February. Next slide, please. That's Sabin Akume. It's been also very active. We've had a tricky year with the swap out of the drilling rig. But I'm happy to now report that we have now completed both wells, the Seba infill well, so the red dots on the screen, and the Akume infill well. Those are both completed and hooked up. And we're starting now to see the benefit of the additional production coming from there. The drill ship, the Noble Venture, has actually left the production block, Seba and Akume, and moved over to block S, which is a Cosmos-operated production. exploration well called Aking Deep, which we have another slide on. And that well is currently drilling. We expect results in December on that well. I'll touch a little bit more on that one. Next slide, please. And in Tunisia, we continue to work. Production has been soft this year. The country has been going through some political change. It has resulted in delays in various regulatory approvals, which impact not just Bonoro, but the industry more widely. And that has simply resulted in less activity. So you'll see actually on our CapEx, although the CapEx group CapEx has gone up, Tunisia actually has been lighter than originally budgeted for that reason. And nonetheless, there are activities going on now. We're currently working over a nice looking well. We're hoping the first part of 2025 to get after a Remora well, which is a nice well and contribute nicely to production. So this is a little bit goes slow at the moment, but it continues to produce well with good opportunities for us in the coming years. Next slide, please. So one of the things we are starting to talk about a little bit more is, you know, where does the company go? We've achieved 40,000 at DUSIFU, we've kind of reached our group target of 13. What does the hopper look like? What does the future look like for Panoro looking across its asset base? And one of the things we've been very proud of is being able to continue to add contingent resource and obviously development resource opportunities. So these will be infrastructure-led opportunities that can continue to feed that 2P reserve, which is so important to have. And so we're looking at reserves in the high 30s at the moment, which is a very good, strong position to be at. We have 29 million barrels net of 2C resources, and that will continue to, not every one of those will migrate itself necessarily to 2P, but certainly a large portion of them should. We've recently announced, and we'll talk a little bit more about it, the BlockG EG23 license award that we have. And then looking on top of that, we have a number of infrastructure-led opportunities, Aking Deep and Bordone being the ones that are right in front of us. But we've got so much more to do in DUSIFU, and we have also, through some of our other exploration blocks, further opportunities to add both to the contingent resource and then ultimately to be reserved. So we think our portfolio base is zooming out of business for a second now. We put the company in an excellent position. organically, leaving any M&A to the side, to continue to grow the business over the coming years. And that's been very much part of the strategy to put ourselves in a position where organically we can continue to grow this business. Next slide, please. So just a couple of thoughts around the current exploration program. We're drilling, as we speak, in Block S, the Aking Deep Well. This is operated by Cosmos Energy. It is something like a 25% chance of success. So it is properly exploration. And its aim is to test the deeper Albion. So this is a kind of unproven play, quite compelling, because if we do find oil, there's a very short tieback distance to the FBSO. So this is what we mean by infrastructure-led exploration. And it would, in a success case, we'd have a very positive read across to our other block that we have with Cosmos called EG01. We should have results on this in December. And as a reminder, the most financial exposure to this is quite modest. We have a small stake in it, which could be meaningful in the case of a discovery. But in the case of no oil, it is partially cost recoverable through our production sharing contract. So this is a fiscally and economically very attractive contract. well for us to be drilling together with Cosmos. In Gabon, we have the Bordone well, which for those of you who followed us for many, many, many years, this is the old Prospect B. And it's one of the nicest looking objects we still We have lots of other prospects and leads on the block, but this is the one that really has always jumped out as being potentially quite interesting. It's got a sort of mid-case estimated recoverable in the success case for around 29 million barrels. Again, adding to that great deuce of who story. We'll drill that in January, February. The chance of success on that is higher than it is in block S, but nonetheless is still exploration. So It does have some risk on it. We will hopefully have some good news, though, to share on that in the early part of next year. Next slide, please. And just something about some of the recent press releases that we've made and around the strategy about what we're doing here. We recently announced the award of Block EG23. EG23 sits right there. at the toe thrust of the Niger Delta. So it's a very, very geologically interesting area to be in. And that petroleum system that's in this area has been extremely prolific. To the west of us, we have the Zafira Field, which was operated by ExxonMobil. It produced over a billion barrels of oil. Just below us, the Alba Field, which is a gas and gas condensate field operated by Marathon, has produced well over 1.2 billion barrels as well. And entering the block EG23, we come in with existing discoveries on the block. Our commitment on this is very, very light. So we have a three-year license to reprocess data. We have no drilling commitment on this. And ultimately, we then have the option to convert that into a drilling commitment in about three years. And it's clearly a situation where we would seek to partner with a larger oil company on this one. We would not be carrying a large piece of equity on this one, but we think that we can certainly incubate the block and hopefully bring in some partners in due course if we're encouraged by the work that we do. And again, this is infrastructure-led. If we make discoveries here, it can tie into the ALBA facilities and ultimately into the LNG facilities on Bioko Island. Equatorial Guinea is a very, very large LNG producer run by Marathon Oil. And we recently announced together with BW Energy and Valco the award of two blocks. These have been pending for a little while, but we finally got them done. As you can see on the right there, we have the Niossi permit, which is in yellow and clearly is just following the fairway between Dusafu, which we've talked about, and Itane, which is a series of fields that have already produced 150 million barrels and are continuing to produce and have plenty of reserves on them. So we think binding the subsurface expertise of Panora with the development expertise of both Valco and VW. We've really got a great joint venture here, joint venture with the state on this one as well, and looking at just kind of gathering this area, working on reprocessing data, working up the prospects and leads, and probably drilling the well certainly in the yellow license, NEOC, sometime in the next few years. But again, Panora's exposure to this financially has been kept at a modest size, but we're clearly in a very, very prolific oil area here. In the event of a discovery, oil can be delivered either to the Atame, the production facilities, or into the Ducifu facilities. So a very, very sensible piece of long-term business for us to do on both these assets. Next slide, please. So a little picture on – and the key messaging. Really, we have had a few years now of heavy investment, 2024 being a record investment, which is now starting to yield those results. I think we're coming into more of a harvest period now. Through all this development activity we've done, we've managed to grow production from – 2020 at around 2,000 barrels a day to 13,000 barrels a day, at the same time guiding CapEx in and around the $40 million mark next year. So this really, 2025, is looking to be a strong year for Panora. We have very good visible production growth, we think, with long-life assets. We believe we have nice infrastructure-led catalysts as well, which continue to hopefully add to the resource base, reserve base that we already have. And we're continuing with a very shareholder-focused distribution plan where the board and the management team are all aligned to reward shareholders as we go through, as we have been doing in the past, and as we move through this harvesting period where we expect to continue to deliver both through return of paid-in capital, which, again, might have certain advantages to certain certain shareholders and obviously through the approved buyback program. So next slide, please. Again, if you'd like to ask a question, raise your hands using the little hand icon there. And if you have a question, type it in. Again, we'll endeavor to answer questions as long as they've not already been answered or if they're very, very specific questions. we will ask you if your question is not asked to send us something and we'll endeavor to respond to it by email. Good. So my colleague Andy, our head of corporate development, is going to chair the Q&A. But over to you, Andy.

Thank you, John. The first question is from Stefan Foucart. Stefan, you're self-muted. Can you please unmute yourself and ask your question? Thank you.

Stefan? Yes. Can you hear me? We can. Please go ahead. Great. So thanks for taking the question. So my first question is around capital allocation next year, balance sheet, and so forth. So CapEx will be much lower, much more cash flow. What, in your view, is the ideal cash you would keep in that period, and particularly in the context of the debt? And I saw the announcement this morning about the fixed income meetings, if you could talk around that in that context. about what you're planning to do with that with the Arbela would be great. And my second question is more straightforward. Once the second EG well is on stream, where would you see gross production stabilizing at in EG? Thank you.