Panoro Energy ASA

Good morning, everyone. This is John Hamilton, Chief Executive Officer of Panora Energy ASA. I'm joined today by my colleagues Kazi Kadir and Richard Morton. As a reminder, today's conference call contains certain statements that 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 may differ materially from those projected or implied in such forward-looking statements due to known or unknown risks, uncertainties, and other factors. So, this is our Q4 conference call, and for reference, our announcement was released this morning. A copy is available on our website, www.penuroenergy.com. Next slide, please. As usual, the format of the presentation will be a number of slides presented, and at the Participants can ask questions either by raising their hand. We will endeavor to answer all questions. You can also type a question into the frame, as you can see there on the left. And we will try to answer questions, certainly, unless the questions have already been answered by a previous answer. Next slide, please. So we announced our results today, I think a very strong quarter, a very strong year with $106 million of revenue in Q4, $50 million of EBTA and a net profit of 32 million in the quarter. Full year in the orange colors, just under 10,000 barrels a day, average for the year, $285 million of reported revenue, 152 million of EBTA and a net profit of $56 million. Our balance sheet also very strong with cash position of around $73 million, gross debt at 145.9, giving a net debt position around 73 million, and distributions during the calendar year 2024 of 246 million kroner. Next slide, please. Today, we're also providing some guidance around production, around OPEX and around CAPEX. Here we are with our working interest guidance for the year, between 11,000 and 13,000 barrels a day. These estimates factor in operator forecasts, planned routine maintenance that we often have on the assets and buffer for some unplanned outages. And our unit cost of production, we are guiding around $21 a barrel production OPEX and additionally around $3 of non-recurring project costs on top of the run rate production OPEX of 21. Next slide, please. Today, we're announcing the 2025 framework for distributions. This is a material step up from previous years. We are at 500 million NOC target distribution through quarterly returns of paid-in capital and supplemented by share buybacks and potential special dividends during the quarters, particularly in the final quarter of the year. This is an implied yield based on our current market cap of around 15% to 16%, which we think is very well positioned in the peer group. in which we operate and shows a strong demonstration of our commitment towards shareholder returns. It's worth noting that we do not pay dividends. We pay a return of paid-in capital, which for certain shareholders may have some tax advantages, both in Norway and internationally. And that's worth noting. We today have announced a quarterly dividend of 80 million kroner, which we paid in March. And then during the course of the year, so then in the May announcement, in the August announcement, the November announcement, a core cash distribution of 80 million kroners. That's the total of 320 million kroners distributed as cash at a minimum. During the year so far, we've already purchased 23 million kroners worth of our own shares. And if we look at the blue box, that leads on top of all that, an additional approximately 160 million kroner that can be used for additional share buybacks and or special dividends. With the bond that we did, we have also set up a ongoing, very transparent framework where we've permitted distributions for following years, 2026 and beyond, will be based on 50% of free cash flow to equity. for the calendar year and no limitation of net cash pro forma post distribution. So again, very transparent and we believe very, very forward-leaning shareholder distribution framework, all based on a calendar year. Now, if I can go to the next slide. As I mentioned, the distribution framework has changed with the bond that we did, and we've gone from a sort of a financial year, 12 months, kind of February to February type of calculation to more of a calendar year one. So it's January to December. So it's an important point to note here. And this slide is simply to kind of reconcile our previously announced framework for the financial year. So one could compare if one wanted to our previous guidance, which had been four to 500 million kroners for 2024 financial year based on an oil price of $85. Oil price was about $9 less than that. That $85 was based on the analyst's average oil price assumptions for the year at that time. Obviously, oil prices underperformed there. That had a delta in terms of our cash flow of about $30 million, 300 million kroner or something like that. But despite that, we have returned significant amounts of capital back in 2024. And if we were still under the old framework, we think that we would perform around 330 million against that framework. So again, this is just for comparison purposes. The new dynamic is really set around the calendar year, the 500 million kroner, and that is far less sensitive to oil price. We're not setting that one at 85. We're targeting around $70 a barrel to achieve that. So hopefully some decent headroom on that. Next slide, please. So on the left side, we show our senior secured bond issue. Many of you will follow that we issued a bond at 10 and a quarter percent, which is a saving of approximately 200 basis points on our previous loan. We set up a framework for $300 billion. So a tap issue is possible in due course if we should find the right acquisition targets, for instance. And with that, we repaid the $82 million of reserve-based loan that we had. So this is really replacing one financial product with the next. And this really provided us with great flexibility within our capital structure, diversifying our access to capital. And we can see here in the orange what the amortization looked like. We very deliberately set out an amortization in our bond. We wanted to effectively replicate the reserve-based loan, but do it at a lower price. So, having an amortization which starts at the back end of 2026 and the bond matures approximately five years from now. On the capital expenditure, those of you that follow us know that we had a very, very heavy year last year. It became even heavier than we expected, which was guided. We ended up spending around $100 million last year in capex, $5 million of that was sort from 2025 that kind of crept back into 2024. So our guidance for the year has moved from approximately $40 million to approximately $35 million for 2025. Next slide, please. Crude liftings and sales. On the left, we have, as we pretty much largely as guided, the lifting pattern that we had last year. This year, you can see that the second, third, and fourth quarters quite evenly balanced. The first quarter is going to be not terribly eventful from a P&L or cash flow perspective, and that's simply just the way that the cargoes and the inventories and the vessels have built up. So we're going to have very, very strong three quarters, the first quarter being a little bit quiet. Next slide, please. Cash flow reconciliation, I won't go through it in detail here on this call, but we do try to provide that cash flow waterfall every time so everybody can see exactly where the cash moves. Next slide, please. So something around each of the assets. Gabon is still our largest asset in terms of production in terms of reserves, in terms of net asset value. And as previously reported, all new production wells in the expanded campaign have been drilled and conventional ESPs installed on them. The Tortue field, which is the original field, continues to produce steadily from six pre-existing wells using gas lift support. Gross production reached 40,000 barrels a day in November and has consistently remained around this level since. There is scope on the vessel should we be able to produce more than 40 to exceed that name plate capacity by approximately 10%. We are currently drilling the Bordeaux prospect well, and that's the last operation in this campaign. We expect results to be announced during the first quarter. The Bordeaux Novara, which has been with us for quite a while now, will be released after the Bordeaux well with no further drilling on due to be planned in 2025. Next slide, please. Equatorial Guinea being our second largest asset in terms of production reserves and the asset value. Also had a busy campaign last year with the C45 and the OF19 infill wells drilled with the Noble Venturer Drill Ship. We encountered good quality oil in saturated reservoirs and unswept zones in both the Ceiba and the Akuma complex. Both wells were put on stream in November. And the joint venture is currently valuing the potential for further campaigns in the Akuma complex, Seba field. That will not happen this year. That would be next year that those plans would become more clear. Next slide, please. In Tunisia, we are joint operator along with ETAP. For those of you who follow us, the activity there has been slow. impacted by delays in the regulatory process. It's a very important asset to us. It continues to be an important asset to us. We've got very, very good HSE performance on there. We brought it well online just recently, around 200 barrels a day following a nice workover. And we do have a couple of plans this year for some additional workovers on these assets. So we do have activity. It's simply just not as – as active as we would like it to be, and hopefully that situation will resolve itself in the coming months. Next slide, please. We added new blocks in both Gabon and Equatorial Guinea on the left. In Equatorial Guinea, we have recently signed a production sharing contract for block EG23. EG23 sits right there at the top of Equatorial Guinea in the toe thrust of the Niger Delta. It's a very exciting block that just to the south of it has the ALBA field, which is ConocoPhillips. 1.2 billion barrels equivalent operated, produced today, operated by Marathon ConocoPhillips. It's the largest producing field in the country and we're right next to it. And then just to the west of us there's Zafiro Field, which had been an Exxon development. It's already produced over a billion barrels. So we found ourselves in a very, very nice postcode. This is a an exploration license, which we'll have for three years. The only commitment on it really is to purchase and reprocess data. And during that period, we will seek to work up drillable prospects, probably seek to farm that out before deciding whether to enter into a next period, which could involve an exploration well. But it's a very exciting block. And then we've also announced two PSCs signed in Gabon, which surround DUSIFU in the yellow and the Aussie and the blue for Duma blocks. This is all G and H we used to call them. And this is a fantastic collaboration between Panoro, BW Energy and Valco Energy, who between us, probably understand the subsurface of this area between these three companies better than anybody else. Any discovery can be tied into existing infrastructure. And it's a very, very nice long term acreage position that we've established in this key fairway in southern Gabon. Next slide, please. So we thought a lot about production, but what we also like to look at is the long-term nature of the business. And just looking at what else the company has in its hopper, we had 35 million barrels of 2p reserves at the end of 2023. We previously announced some discoveries in Gabon, which approximately 4 million barrels net to us estimated at the mid-year. taking us to around 39 million barrels at the end of 2023. Now we've come out with our annual statement of reserves in the next month or so. So you'll have fresh data soon, but this is based on historical data. We also have 29 million barrels of contingent resource booked. And then as we get into the oranges and the blues to show the continued upside that exists within the portfolio that we have, the organic portfolio we have, We've got 112 million barrels of discovered 2C in EG23. That's the block I just discussed in Equatorial Guinea at the north of the country. In Ducifu, we have another 30 million barrels of infrastructure led up opportunities for ourselves there. Then we have a very large inventory of other things within NIOSI, Gduma, Block EG01, Equatorial Guinea, Block EG23, and ER376 in South Africa. So we think that we have a very, very solid reserve base here. But importantly, we also have a very good contingent resource and prospective resource base to continue to feed the hopper over the years. Next slide, please. So the key messages really are that we are coming out of a very intensive period of CapEx. We're coming into a period of higher production, lower capital expenditure. We have long life oil-weighted assets diversified across three countries. We have catalysts within the company, both the Bordeaux and ILX well, new blocks in Gabon and Equatorial Guinea. We've diversified our access to capital during the course of the last year. And we set that all up with what we think to be a very front-footed shareholder distribution program with our return of paid-in capital and share buybacks with a quarterly core distribution and ongoing share buybacks. So that's it for the presentation. If I can go to the next slide and remind people how to ask a question on the right, you can either raise your hand. My colleague Andy Diamond will try to unmute you, or you might need to unmute yourself. Or if you'd rather type a question, we will endeavor to answer questions that haven't already been answered that are typed in as well.

Thank you, John. The next question will come from Stefan Foucault. Stefan, you're unmuted. Please go ahead and ask your question.

Yes, morning, guys. Okay, well, I get a few on my side. The first one is around the 25 production guidance. And could you give us a sense of the split between the various assets? Then the second one is how do you see the M&A market at the moment? Have you looked at many things recently? Do you see things coming up that could be the oil price going down a bit? Are you bidding on things? Interesting to have a bit of sense. And perhaps lastly, could you come back to the non-recurrent OPEX between the RPA bowel and what that corresponds to? Thank you.