Panoro Energy ASA

Good morning and welcome, everybody. Thank you for joining us. This is our second quarter, first half year trading and results update. We have this morning released a press release and an accompanying presentation, which we'll go through now, which shows the progress we've made during the course of the year. Joining me today on the call, our CFO, Kazi Qadir, and our head of engineering, Kim Hansen. As a reminder, today's conference call contains certain statements. I just want to check if the presentation is live. I don't see it myself. There we go. Thank you. 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 press release is available on our website, www.anualenergy.com. Next slide, please. We go through the slides and afterwards we can, as usual, answer some questions. You can either raise your hand and we will unmute you so you can ask a question live or you can type a question in. and we'll endeavor to answer those questions to the extent that they have not already been answered or are indeed relevant for the larger audience today. Any questions that we don't get to, we will endeavor to get back to via email in due course. Next slide, please. So the results highlights today, we're showing a first half of $86 million reported revenue, EBTA of just under $51 million. and CapEx of 26 million. A few comments around those numbers. Our lifting schedule is weighted towards the second half, so we will expect to see both on the revenue and EBDA side skewing towards the second half. Capital expenditure is the inverse. Capital expenditure is heavier in the first half than it will be in the second half, so we expect that number to be within guidance as well. On the balance sheet, we ended the quarter with a half year, June 30th, of $55 million of cash, $146 million of gross debt, and a net debt to trailing 12 months EBITDA of less than one time. So very, very strong and good balance sheet. On the right, today we've announced cash distribution of 80 million kroner. which will be paid as a return of paid-in capital. Again, there's a slight distinction between that and the dividend for those who follow these things. And that would bring us then to not 580 million of cash distributions and including the share buybacks at 120 million. That takes us to about $700 million of shareholder distributions and buybacks. approximately just under 30% of our market capitalization. So I think we've demonstrated a very good track record for turning cash to shareholders through this past couple of years. Next slide, please. So on the production side, we break it down by quarters so everybody can see what's going on. We've got first half production of 11,500 barrels a day, around guidance of 11,000 to 12,000 barrels a day, Our OPEX per barrel, around $21 a barrel, so as guided. And another $3 we'll call non-recurring project costs. These are operating costs dealing with the long-term maintenance of the facilities we have. So around $24 operating cost. And the CAPEX still at $40 million, which is as previously guided. You can see that DUSIFU has continued to be strong. Tunisia in the orange has been quite steady, actually. And the drop in production in the second quarter in Equatorial Guinea we touched on, but you can see that that is lower than it was in the first quarter or indeed in the fourth quarter of last year. Next slide, please. So shareholder returns, these are in line with our 2025 policy. Today, we've declared another 80 million kroners. That brings 240 million kroners, including today's announcement. Year to date, we've also done $69 million of share buybacks through the 20th of August. Yesterday, we've been out of the market buying shares for the past couple of weeks because of the closed periods. And then if you look to the right, we have the limit of 500 million kroner approximately. It's $45 million is the key number. It's a dollar number that we distribute in kroner. And if all things go to plan, we expect, of course, another 80 million cash distribution in November, December when we come up with our third quarter results, leaving still some ample headroom there. So we're well on track here as guided, and today's announcement hopefully underlines that commitment to shareholder distributions. Next slide, please. Crude liftings, we just try and show what's happened last year and some of the seasonality of the crude liftings. We've lifted, year to date, 1.1, 1.2 million barrels with the weighting, sort of a one to two relationship between the first half and the second half. So you will see additional liftings in the second half of this year. We've already pre-announced a lifting in Equatorial Guinea in July, which achieved around $70 a barrel. Now it's lifting 650,000 barrels. We announced that in the trading update recently. Next slide, please. Here we have a lot of information. I'll go through it all because it's a useful slide for the records showing the first half cash flow reconciliation, our cash at the end of last year and the cash now. On the lower left, we show our senior security bond amortization schedule. We have no repayments to make this year other than interest payments. the first amortization due in the end of 2026. And on the right, our capital expenditure guidance. As everybody knows, we had a very, very heavy year last year. This year is more around 40 million. We've spent 26 to date. That's principally been in and around the end of the DUSIFU drilling program and Bordon discovery in itself has taken up about half of that capex, with the balance being in Equatorial Guinea, a little bit in Tunisia, and our exploration portfolio as well. We've had some activity with the award of the new license, EG23, which I'll touch on. So this is all going to plan. Next slide, please. So Dusafu, this is really our flagship asset. We've had really good, strong production. The reservoir performance has been excellent. We've had very, very good uptime on the FPSO. For those who follow it in detail, BW Energy took over the O&M contract on the FPSO. They took that over from BW Offshore, and they're doing a fantastic job, and that's really reflected in that uptime that we've had on that asset. During the first half of the year as well, we made the Bordone discovery, which initially looks like over 50 million in place and 25 million barrels recoverable. There are additional drilling targets that have been identified through the remapping of that drilling campaign, and there could be some further upside indeed in and around that Bordone concept. The next big thing to happen Uh, at, uh, at the license is for new development wells and the business and the business South fields. These are 2 distinct fields, but we will be, uh, uh, approving together with partners, a plan to do 4 more development wells into this area. Again, the reservoir. supports easily four more wells in this area, with first oil targeted for the second half of next year. So we just need to finalize the rig contract and figure out exactly when it's going to get there. But I think that that's going to be the next big activity on Dusafu, which will start next summer sometime. Again, first new oil targeted 2026. What that will do is that will bring the production you know, back up, you know, up around the PSO capacity. We have four available slots on the mobile platforms. Everything's set up for that. Next slide, please. So we've talked about this before, but this is starting to get real and exciting. The award of these two new blocks, which has been pending for a while, has been fully ratified now by the government. You can see DUSIFU there in the orange. Niyoshi and Kaduma are the new blocks. We've joint ventured together with Falco, who operate the Etan field there to the northeast of Dusafu, and with BW Energy, who are obviously the operator of the Dusafu area. And we've effectively got this large contiguous area here, which is full of existing oil production, existing oil discoveries, and historical work with 3D seismic. It's a great partnership because between the three of us, we probably understand this area better than anybody else. The next big planning underway is to acquire seismic on this. It's possible we may also see an early well into one of the blocks in due course. That's yet to be decided. But this is a prolific area where the Gamba Reservoir and the Gentile are to be found with existing discoveries on these blocks. So in terms of the long term, continuation of the success story that we've had at DUSIFU and D&B Balco have had at ATAM. This really, I think, provides a runway for many, many years to come of continued success here in this area. Next slide, please. In Equatorial Guinea, we have two fields here, the SEBA field and the Akume complex. The Akume complex has been producing more or less in line with expectation. At Saba, we've had, as announced back in the first quarter results and indeed in the most recent trading updates, since April, we've had some unplanned downtime issues. which have impacted production. By my estimates, we're probably about, on a gross basis, about 5,000 barrels a day less than, say, we should be producing. There are plans in place. It's not a reservoir issue. It's a subsea equipment issue. The operator is working extremely hard and diligently to turn this around. We expect to have that turnaround starting during the fourth quarter, so actually in the next couple of months. So it's a temporary issue, but it has given us unplanned downtime on this asset, which again, we anticipate to fully recover that production during the fourth quarter into early next year. The next plans on this asset are considering an infield drilling campaign, perhaps at the jack up. on the shallower end of the Kume side of things, which may include looking at something in EG01, which is the Panoro-operated, we're in that with Cosmos, Panoro-operated exploration block, which is south of the Kume. So I would expect more news on that campaign to be forthcoming during 2026. Next slide, please. One of the interesting things that we have, the most interesting thing, I think, in our portfolio that we have right now is this new block, EG23. It's early stage. We're at the point now where we just awarded a seismic reprocessing contract. So the geoscientists are busy working on it. But as you can see there in the blue, that's our block. And you don't, I think, have to be a geologist to see that we are in an extremely prolific fairway here. got the Niger Delta there so it's a southern part of the Niger Delta in Nigeria with multi-billion barrel discovered reserves and resources lots of production in there we've got the Zafiro field which has already produced over a billion barrels we've got the Alba field just to the south of us which has already produced in excess of a billion barrels and then in Cameroon which is just above us there are multiple oil and gas fields historically So we feel like we're in a very, very exciting area. We have 80% of this block, so we have lots of room to eventually bring in some partners. There are discoveries on this block. The commercialization of any production, though, is reasonably straightforward, as there is a large LNG plant there in Punta Europa. I think you can see that maybe just on the island there. That is an LNG facility operated by ConocoPhillips. And so this is an area that is full of oil, gas, and condensate. And we think we've got one of the most exciting blocks in the country. So this is going to be one to watch for us. Next slide, please. Tunisia, gross production was 3,100 barrels a day. We've had some good success on recent workovers. We've had some volatility, obviously, in production and operations in Tunisia over the past couple of years, as you followers will know. But at the moment, touch wood things are pretty steady. going reasonably well. We have some activities planned for early next year as well which could see production increase further and that predominantly is around the remora field where we're awaiting the final ratification of the license renewal. So that's one to watch early next year. Next slide please. So a slide showing the portfolio that we built here. We've shown versions of the slide before, but I think it's an important one to note. With our reserve position, strong 2p reserve position at 42, that doesn't include the Bordeaux and Discovery, which initially looks like it's around, to Netopinara, around 4 million barrels. Our contingent resource base currently around 26 million barrels. EG23, which I've touched on in Equatorial Guinea. We don't have a competent person's report on that yet, but there have been over 100 million barrels of contingent resource identified there through previous owners. We still have lots of infrastructure-led exploration at DUSUFU itself, all the remaining prospects there. And then we have a portfolio of other assets in the EOSI Kaduma, EG01, and some other projects as well. So we think that we've set up a company that has a very, very strong organic upside to exploit over the coming years on top of our existing production and 2P reserves. Next slide, please. So just some key messages for the half year and then corporately on the production side, First half production is in line, up 26% year on year. We announced earlier this year a greater than 300% reserve replacement ratio. That's very high in our industry. If you can get 100%, you're doing really well, but we had a particularly good year. That was before the Bordon calculation as well, so hopefully we will be able to report some good reserve replacement next year as well. And that gives us, based on current production rates, around a 10 year 2P reserve life, 16 years on a 2P plus 2C basis. So again, getting back to the point that we have a very long term business on our hands. On the exploration and appraisal side, we've made the Bordeaux discovery. We have the new blocks. We've basically secured this entire southern part of Gabon, chasing this Gamboa, this prolific Granby Reservoir. We know that there's going to be additional discoveries there in due course. And I've touched on EG23 already, which is, I think, one of the most exciting things we have in the portfolio right now. On the financial side, but we think that we're in line with the guidance there so far. Our bond issue, which was a big success, has really strengthened our liquidity position, gives us strength visibly in the market as well. Our CapEx guidance is materially lower than last year in line with guidance. And finally, on the shareholder returns, You know, we think the shareholder returns, we've shown that through our exploration drilling and our reserve and production growth, these are very, very creative things we've used shareholder funds to grow our net asset value. but we've also had a quarterly cash distribution and share buybacks. This is also all of these things together have given us a really enhanced ability, we believe, to capitalize on new venture, both opportunistic, but we're also very focused on value and making sure that anything new that we would do would be creative to the current business that we have. So with that, I'm going to finish and open up the line for questions. As a reminder, you can raise your hand by pressing the hand icon there, or you can type in a question. Again, we will endeavor to answer questions, written questions, to the extent they haven't already been asked and ensuring they're relevant for the wider group. And so my colleague, Andy, is going to take over from here and see if we have any questions.

Thank you, John. We'll start the Q&A with Stéphane Foucault. Stéphane, you're unmuted. If you could please go ahead and ask your question.

Good morning, gents. Thanks for taking my question. I've got three. The first one is around Rimura and Geviba. So during program, you're starting to define a journey program. Could you... me give us an idea of timing materiality and so forth is it 26 i guess event 27. Then similar question for EG 23. So as you said, this is an extremely material block for panel. You talk about a competent person to report and maybe as a potential development and exploiting dream. Likewise, any sense of timing of this competent person to report for event later and then first dream. And lastly, on the financial on the capex in 26 so expect it to be more than 25 but it was i think much higher thank you sure um so on um the drilling um plans for ramur and gubiba um these these are i wouldn't say um