Panoro Energy ASA

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Good morning and welcome to PONORO's half one results presentation. I would first like to draw your attention to this disclaimer. This presentation contains certain statements that are or may be deemed to be forward-looking statements which include all statements other than statements of historical fact. Forward-looking statements involve making certain assumptions based on the company's experience and perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual events or results may differ materially from those projected or implied in such forward-looking statements due to unknown or known risks, uncertainties and other factors. Next slide, please. There will be time for Q&A at the end of the presentation. If you would like to ask a question during Q&A, you can raise your hand and you'll be prompted to unmute your microphone, or you can submit written questions through the text box. I would now like to hand you over to Julien Balkany, PONOROS chairman, who will take you through some highlights of today's exciting news and our results.

Thank you, Andy. Good morning, everyone. I'm joined today on the call by Eric d'Argentré, Panaho's CEO and President, and Qazi Qadeer, our CFO. Before we move to our half-year result, trading, financial and operation update, I would like to say a few key words on the new transformational and equative acquisitions that we have announced yesterday evening. By now you will have all seen the exciting announcement we made yesterday after market close, whereby we have signed a definitive agreement with DNO to acquire an indirect 9.09% interest in the gas producing block CI27 offshore Ivory Coast. Before we talk in more detail in the next slide about our latest acquisition, I want to take a moment to reflect on how our well-timed and strongly accretive M&A strategy that is part of our DNA has been a core driver of our growth in recent years. Since 2018, we have successfully completed acquisition of production assets in Tunisia, Equatorial Guinea, Gabon, and now Ivory Coast, establishing a robust and well-diversified production business across four jurisdictions in Africa. This latest acquisition, which will be our second this year, coming hot on the heels of our recent purchase of an additional 40% interest in BlockG from Cosmos Energy. It will establish a fourth production leg to our business in a new first-class jurisdiction that has a very strong oil and gas sector. and which we believe can position us for further follow-on growth opportunities at the right time. When we look at the business back then compared to today and following the number on this slide, they speak for themselves. Panoro is to the more resilient, better diversified business that it has ever been at any point in its history. If you look at it, We have rapidly scaled our production from virtually zero at the start of 2018 to a current pro forma rate of around 20,800 BOE per day, firmly positioning Panoro as a leading independent producer in Africa. We have increased our 2P reserve by a factor of more than 4 with our overall 2P plus 2C resources have increased by almost 8 times to 183 million BOE, illustrating the depth of organic growth reserves and resources opportunity we have within our portfolio today. Over this time and up to yesterday close, we have seen around a four and a half time appreciation to Panoro share price in the same period. It is important to note that when we have issued equity to fund external growth, we have always done so at a progressively higher valuation each time than the time before. We stood there at 28.77 NOC we will issue share to DNO. Alongside this, we have responsibly used various forms of debt financing and been careful to preserve what we believe to be a prudent and disciplined leverage profile. It has also allowed us to return substantial amounts to shareholders. which including the cash distribution announced today amount to a total of 950 million NOC so far or roughly about 25% of our market cap as yesterday closed. Delivering enhanced shareholder return over the long run is our backbone and core to our strategy. Next slide, please. Acquisition of indirect 9.09% interest in BlockCI27. Moving on this acquisition itself, BlockCI27 is operated by the privately held and excellent first class and long time established operator Foxtrot International, whose principal business is a 27.27% effective participating interest in the asset. The DNO subsidiary which Panoro is acquiring hold an indirect 33.33% interest in Foxtrot and therefore an indirect 9.09% interest in that asset. Other joint venture partners in the asset include Petrocy, the national oil company and CCASA. The consideration is 80 million dollars and the effective date of the transaction is January 1st, 2025. It is important to highlight that there is no regulatory approval pending or required and there are no preemptive rights. This transaction is therefore fully de-risked and we expect completion to occur by the end of Q3. I will let Eric to talk to you in further details about the asset which holds the country's largest non-associated gas and meeting over 70% of the country's gas needs. Net production for interest in the asset stand at approximately 3,334 BOE per day in the first half of 2026 and net 2p and 2c resources at 14.4 million BOE. In terms of funding to finance the acquisition, Panoro will issue 7 million new shares to DNO, which will represent about 4.9% of outstanding Panoro shares, post issuance of those shares. The share price is based on the VWAP for the last five trading days preceding the announcement, so coming at a price of 28.77 NOK per share. Additionally, to diversify our credit profile, Panoro has placed a $50 million senior unsecured bond carrying a 10.25% coupon with maturity in 2031. The bond was fully placed and subscribed in the private domain by two long-standing strategic investors along primary insiders. In summary, this new acquisition will continue to transform the scale, geographical diversity and longevity of Panoro portfolio and strengthen our capital structure, enabling us to deliver enhanced shareholder return over the long run, while also positioning us for further growth opportunities at the right time in every cost. Next slide, please. Some of you may not be too familiar with Côte d'Ivoire, so I think it is worth briefly touching on why the core country fundamentals are extremely supportive for a gas business supplying the domestic market here. Natural gas sits at the heart of Côte d'Ivoire's power system, accounting for around 65% of electricity generation. which makes reliable domestic gas supply a strategic priority rather than a marginal fuel source. The country has delivered consistently strong economic growth with the World Bank highlighting average real GDP growth constantly above 6% for the last years. And growth in every course is not dependent on a single sector. Cote d'Ivoire has developed into one of West Africa's most diversified and strong economy with a BB minus sovereign credit rating, underpinned by agriculture, mining, services, manufacturing, and a growing hydrocarbon sector. Indeed, Cote d'Ivoire has a swimming oil and gas sector and has yielded some of the largest and most impactful oil and gas exploration discoveries in West Africa in recent years. ENI with Balen and Callao South discoveries, more recently Murphy with Boubale discovery that was announced as being commercial in June. I will now hand over to Eric, our COO and president, who will take you through the next slides. Thank you.

Thank you, Julien. Good morning, everyone. So I will take you through the slides. Presentation of CI27 asset overviews that CI27 is between 12 and 15 kilometers offshore Ivory Coast in what we call shallow water with platform territories. This is the largest non-associated gas accumulation in the country. And as Julien mentioned, emitting more than 70% of the domestic gas need. The asset was developed back in 1999 with the first two fields, Foxtrot and Mahi, and installation of the first platform, PFA, and the production has increased and been very good and steady over the years. In 2015, Foxtrot developed the Marlin and Monta accumulation that you can see on the right hand side of the map with installation of a second platform, platform Bravo PFB. Today we have 12 wells on production. Both platforms are equipped with all the required process to treat the gas and condensate as well as gas compression. Now we'll come back on the compression. There is a lot of, we see and there is a lot of upside potential in the CI27 in those current fields and additional We have today Foxtrot started a drilling campaign back four months ago on Foxtrot field with five wells to be drilled in field wells The first two wells have reached a reservoir with higher pressure than expected, which is very good news. It means that the depletion assumed is lower than it is in reality, so more volume to be produced. So those volumes will be moved very shortly from 2P to PDPs, proved, developed and producing volumes and will help to extend the production plateau and increase depending on gas demand. We are today producing an average of 200 million scuff per day for the last three to four years. If the demand grows, those wells will be available to match the demand if it does peak. To come back on the potential, there is a potential as well in surface facilities to upgrade. There is the gas compression system. without entering too much in details but the lower the pressure is on the gas well the better and the longer it will deliver in life and the compression can be worked on and there is some compression project to be able to produce longer and drain more volume at lower pressure in future so lots of potential way past the 2034 PSE terms. Next, please. So in terms of gas and liquid sales agreement, we have a very strong partnership in Ivory Coast. The vast majority of our gas produced is sold to CI Energy. CI Energy is a key partner in Ivory Coast. CI's mission is to ensure supply of energy, that supply of energy meets the demand. They lead a major structuring project in production, transport and distribution of energy with rural electrification. So CIE is a key partner de-risking the gas export sales to the local consumers. We have a long-term contract to the PSC term 2034 with a take-home pay of 140 million SCUF per day. We are delivering an average of 200, as mentioned earlier, and a gas price that is around the 6.5 US dollar per million BTU on the contract sales. Next, please. So once the group production updates, some of you will remember we communicated last quarter that Panoro was on the way to 20,000 barrels of oil per day net. Once we would have recovered the full potential of the Ceiba field in Equatorial Guinea and with the Mabonbo phase two drilling campaign in Gabon with the well on stream. We are already today at 17,500 net and that's a very strong performance in the last quarter. We are clearly on track to the 20,000 barrel of oil per day in 2027. including the recently announced transaction from last night that does accelerate the 20,000 milestone for the group and on the pro forma basis we would already be above the 20 and therefore Panoro net is more on the road to 23,000 barrels of foil per day net in 2027 once all the mentioned work will have been completed. I would like to highlight our resilience in terms of costs. It's important to note that our operating costs per barrel is at 23 today, with three to five dollars on what we call the non-recurrent capex, meaning all the important integrity FPSO life extension, class extension that needs to be done on a yearly basis so between 26 and 28 dollars per barrel that makes Panoro very resilient in low price environment which is a very good discipline to have. Next please. On Equatorial Guinea, Block G update. As I said in my previous slide, very strong performance in production, especially in the last quarter with some good with action on good results on Ceiba recovery from MPPs and subsea clusters as well as in productive investments while intervention work over on the Okume complex that does illustrate the great potential of those two accumulations. The latest production net to Panoro today is above 11,000 barrels of oil per day. And we are working on the future project with our partner and operator Trilo Energy. The recovery factor of the block is still low. Drilling campaign is being matured with our partner and the objective is to take FID for the future campaign in Okume complex with a jack-up, conventional jack-up rig, end of 2026 for the FID so that we should be able to drill on Okume complex by Q1, Q2, 2028. Recovery factor is low, so any 1% additional recovery is 25 million barrels to be produced. And that's the objective on the short, mid and long term of the partnership. Next, please. In Gabon, updates on Dusafour cornerstone asset. Dusafour is The very prolific area and we continue to have a strong performance, good uptime and good production in this very prolific block. We are today drilling in Maboumou phase 2 as it was announced previously. The rig is on location during the first well and we have a company of delineation and infill wells for producing wells, maybe more depending on the results. There is some optionality for more wells. This Mabon Moore Phase 2 drilling campaign will take us back to the nameplate capacity of the installation at 40,000 barrels of oil per day. And another important milestone is the partnership took FID on the Bordeaux discovery. that was announced last year. We have now, if I did the project, its work is ongoing on the jack-up conversion to become the MOPU, a little bit like the Mabomo development. And we have three wells to be drilled and a pipeline to be installed to connect the Bordeaux to the main pipeline. First soil of Beaudron is expected for Q1 2028. So lots of things happening in Doussafour as well as the processing of the recently shot seismic in New-Zigoudouma that is as well covering the north part of the block and to mature the current and already recognized prospects. So bear with us on Dusafu, lots of things happening in the near term. Next please. On Tunisia update, TPS asset, very stable production, above 3,000 barrels of oil per day. Project being matured on work over world intervention and additional development in our various concession. We have managed in the last six to nine months to offset the natural decline by some productive investments and work on our wealth. So it's encouraging for future project. Next, please. I will take you through quickly on the Australia and Rodo high-graded prospect in block EG23. We have discussed and presented this in the past. It's a very exciting prospect. We are now working on a coming development. As you can see on the map, the Australia discovery in 2001, which is a gas condensate. Field accumulation and next to it the Rodot in green. The Rodot field, it's an oil accumulation. There are a few kilometers away and our conceptual development plan is to install a drilling center in the middle and drill both accumulations in the same campaign and make what we call a commingled development. Engineering is ongoing for the well architecture, platform specification and pipeline design and installation. We will progress that and give some more news on this development next quarter. Next please.

Thank you very much Eric for the operational review. This is Qazi Qadeer. I'm the CFO of Panoro and I'll take you through the financial highlights. We have had a relatively stable quarter on an IFRS basis for the for the second quarter. The half-year results as we published this morning with lesser liftings compared to the previous period in 2025. This is largely due to timing differences on how the parcels are spread out through the course of the year. And other than that, there's no major difference which I would like to flag. However, the eventful thing that happened during the quarter right at the very end was the completion of our acquisition of The enhanced interest in Block G in Equatorial Guinea, which has been now integrated into our financial statements. So you would expect to see an increase in assets and liabilities, which were consolidated. through a purchase price allocation exercise on a provisional basis as of 30th of June. Because the completion only happened around mid-June there is very little reflected in the reserves with no sales and costs associated with the acquisition. Henceforth, we have prepared details on a pro forma basis to facilitate analysis. On a pro forma basis, first half results are strong with revenue of $130 million and a pro forma EBITDA of 68 million based on accounting policies and assumptions consistently used by Panoro as a group. We have been carrying a sizable amount of inventory as well at the end of the quarter with about unsold 1.3 million barrels as of 30th of June. We continue to make distributions to our shareholders and this morning we have announced a 50 million krona distribution for this quarter which is expected to be paid by 21st of September 2026. Next slide please. Again just continuing on the theme for shareholder distributions I will echo the points made by Julien that you know the company has consistently and returned cash to the shareholders and we will continue to make it part of our philosophy going forward as well however just to point out and repeat her like we always do is that The distributions are determined after taking into account various factors, including oil prices, operational performance, which is what we bring to the equation every time we make a decision to distribute. Our capacity to distribute is determined under the bond terms, which is basically 50% of full year You know, cash flow, which was determined to be about $21 million for the calendar year 2026. So we have basically followed the guidance that we gave at the start of the year and following, you know, in equal distribution throughout the year. Next slide, please. We are going to talk a little bit about liftings. So as I mentioned earlier, the second quarter was, you know, stable quarter with, you know, No enhanced barrels added on an IFRS basis from the acquisition so following the completion of the BlockG acquisition we will expect a more pronounced second half of 2026 with higher volumes and an improved frequency of liftings, which you would see that we are guiding about 1.3 to 1.5 million barrels for 3Q. Again, this is all coming from the inventory we are carrying at 30th of June, which I mentioned a few minutes ago. The fourth quarter guidance again is of a similar nature with consistent volumes available to be lifted in the fourth quarter. Next slide, please. This is a busy slide, but the key points here are to guide towards the CAPEX. CAPEX guidance has remained unchanged at 55 million on a core basis. Since we have now acquired Block G business, the $72 million guidance for the full calendar year on a pro forma basis is now Confirmed. On an IFRS basis, up to end of June, we have spent only $12.5 million year to date, which is the current trend rate at the moment, but expected to increase because of the higher percentage we are carrying in the assets we have just acquired. We are not giving any guidance at the moment on our newly announced acquisition in Ivory Coast. We will include the refined pro forma based guidance once we have made the completion of the acquisition and hopefully we should be able to give all the details by the time of our third quarter results later this year. I will now leave Eric to conclude on the next slide and open up for questions. Thank you, Qazi.

As a conclusion, I'd like to come back on today's presentation on the strong operational performance the disciplined financial management of Panoro and the delivery of the growth strategy. Panoro has three main pillars in its strategy, production and reserve in our asset portfolio. Growth production today is at record level. As I mentioned at 17,500 bile of oil per day without the additional announced transaction. We are above the 20,000 including CI27 transaction. We are drilling in Dusafu as we speak with two pallet wells and four production wells. That's a very exciting project that will increase even more our production and delivery. And we have material reserve and resources base with almost 170 million barrels of oil equivalent in 2P plus 2C. and it's important to highlight that the very healthy position with in our 2p base with more than 15 years of production in our 2p volumes that's a very good position to be in so that's The first pillar, the second pillar of Panoro is to mature its asset portfolio and extend reserve life. We are doing this with the FID of Bordeaux as explained earlier in the presentation. Estrella and Rodot in EG23, it's a very exciting project. I have explained you the conceptual development plan we are working on. We are targeting first oil and first gas on this coming development by mid-2028. That's a very exciting part of the business. And the 3D seismic, again, shot last year in south of Gabon. is explaining and demonstrating the maturing and the work done on exploration and asset portfolio. So lots of projects on this Pillar 2 and the third one and a very important one that Julien explained in his introductory slide on the corporate and external growth strategy. PANOR has Strong track record and it's in its DNA, Accretive M&A Transaction. We have announced earlier the block G with Cosmos Energy today with the DNO indirect interest in CI27 and that's a demonstration of our strategy on growing the Panoro business. Thank you.

Thank you very much. And we will now move to Q&A. If you have a question, please raise your hand and you will be requested to unmute your microphone. The first question will come from Stefan Foucault. Stefan, if you can unmute your microphone and ask your question, please.

Yeah thanks Andy and morning everyone. I've got a few on Côte d'Ivoire. So the transaction is an effective date of early 2025, there is a consideration of about 80 million dollars. Is it what you expect to pay on closing in 3Q? That's my first question. And I was wondering whether you could talk about payback for the acquisition, maybe the remaining capex to produce the 2P, if there are any decommissioning and when that would happen. And lastly, so Panoro would hold a stake in Foxtrot. So how do you see the mechanism for the cash from Foxtrot to go back to Panoro? Thank you.

Thank you very much, Stefan. This is Qazi Qadeer. I have noted down a few questions, so I may ask you to repeat some. I think I'll take the last one first. There's a very well-established mechanism from Foxtrot to the entities we will own in a few weeks or months' time, which is basically You know, formalized arrangement between the Foxtrot and up the chain, how the money is distributed. So what we see is that, you know, instantly when funds are paid by the, you know, buyer of gas, They land in dedicated accounts and those bank accounts have instructions to basically flow the money up the chain pretty much immediately. So there is hardly a lag of about a day or two from collection to reaching the top of the chain. But financially speaking, the way the funds flow is technically distributions from down the chain to the top of the chain.

Thank you. So sort of dividend on a regular basis.

Yes, dividends on a regular basis, but it is a function of how the mechanism is designed. There's no lag. It is on proceeds basis that the funds are routing up the chain. Thank you. Okay, then your other question was about... Closing price. Closing price, yes. So I'll let Julien answer that.

Yeah, good morning, Stephan. I, you know, based obviously on what would be the timing, but I would say to be on, you know, more or less we would expect, you know, the closing price around 70 million dollars. You had some additional question?

Yes, then maybe a sense of payback on the acquisition, if you had, and then I had some question around the technicality, some technicality on the asset.

Yeah, I believe the asset has been constantly generating between 17 to 20 million dollars in free cash flow per year. So, you know, on the safe side, I would say it would be somewhere between, you know, it's 3.5 times. So, you know, it gives you an idea about the payback. Thank you.

And then I have more question about the asset, which is the remaining capex to produce the 2p reserve and whether there are some decommissioning and by when.

Yeah, this is Eric. The remaining capex, well the ongoing drilling campaign has a budget of around 220 million dollars gross for the five wells that are being drilled on the Foxtrot field and decommissioning is not We have numbers. There is obviously numbers on decommissioning, but it's not something that is imminent at all. As we said, there is more than 520 BCF of 2P and almost more than 900 BCF of potential altogether with 2P2Cs. And the contract will undoubtedly be extended and the life of the field extended.

So just to add to that, Stefan, we see that the remaining productive life is 15 years or more for the asset. So it's a very long-dated, stable, steady profile. And so the decommissioning is at the back end of that. Thank you. Thank you. The next question will be from Theodore Sven Nielsen. Theodore, if you could unmute your microphone and go ahead with your question please.

Good morning guys and thanks for taking my questions. A few questions first on the deal. The Ivory Coast Deal definitely establishes you in a new country and a new jurisdiction. How should we think about they still as a platform to do more M&A in the country and what kind of opportunities do you see in the country? And second question on the deal specifically that is that I understand that the gas is priced at 6.5 dollars per mm B2. Is that a fixed price for the entire volume or is that a function of a gas price or oil price? Any comments around that would be useful.

Thank you Théodore, this is Julien. So clearly it's an exciting new entry for us in a well-established all-engagered diction as I mentioned earlier and obviously it's a first step. and I think it's going to position us you know in the near future for fall on growth opportunities but you know I would say it will be the future not right now you know first thing first we have to close on this transaction and you know we will have to digest it understood thanks and on all the pricing can you share some more

Details on how we should think around the pricing, other than the $6.5 per MMBTU?

Yeah, so there's a minimum fixed price of $6 per mm BTU and there's an indexation applied to that which has increased the current pricing to around $6.50 per mm BTU. So there's a very, very stable minimum price and there's underpinned by a take or pay So there's virtually no volatility on 95% of the product sales from the asset.

Okay, understood. And a couple of more questions here on the overall production for your portfolio. You're talking about a few new wells. In Gabon and EEG in second half of the year, from the portfolio excluding Ivory Coast, how much growth should we expect in second half?

So sorry Theodor, you're asking about the production growth organically in the second half of the year or including pro-forma the acquisition?

Organically excluding IRECO's assets.

Okay, yeah, that's Eric. Production growth, as I mentioned earlier, in Block G has been very strong, very good and positive in the first half of the year. We started the year a bit softly with some, you know, the SEIBA subsidy problems and some in Okumi as well. We have regained a very good level at almost 22,000 barrels of oil per day growth in Block G today. We were more in the 15-16 earlier this year. There is still work ongoing in productive investment in Okume. The workover unit is still doing one intervention. So we expect to increase. An important point I did not mention, not to enter in too much details, but the long-term problems we had on water injection in the Ceiba accumulation as well as in Okume has been repaired. And we see now a very positive effect on the Ceiba production from the water injection. So that's a very steady operation and we will regain potential. on a long-term basis on Ceiba with water injection. We have as well a dedicated team working on the Sunflot cluster and C45 well intervention. That takes more time with supply chain and engineering, but we hope to do the intervention end of the year and next year on those wells. So yes, organically, Block G will continue to increase. Tunisia will remain stable with a slight increase. Importantly, in Dusafu, we will be on the increasing trend from now on with a well coming on stream every two to three months on the Mabomo phase two drilling and very shortly after the Vodun development. So yes, production will remain strong in 26 and continue to increase in 27. Okay, thank you.

And my final question, that is just an accounting technicality for the Ivory Coast assets. I assume you will account for that or use full consolidation, or will this be accounted for as an associate company?

I think Theodore the accounting assessment at present is the same how the vendor used to account for it so it will be accounted as an associate but we will obviously include enhanced pro forma disclosures to capture the fundamentals on a you know like for like basis okay understood that's useful that's all from me thank you

Thank you.

The next question is from Robert Budegba. If you could please unmute your microphone and ask your question, please.

Good morning, everyone. Good morning, Sazh. Thank you. Thank you for your presentation. This is my question. With the PLC extension in Gabon to 2053 and Panoro's focus on the long-term asset, how is Panoro approaching government relation and local content strategy to ensure regulatory stability and sustainable partnership across the West African country, including Equatorial Guinea. Thank you.

Hi, this is Eric. Thank you for your question. As you mentioned, yes, we have a long-term extension on our PAC in Gabon, 2053. Part of our policy and strategy in Panoro is to have a very healthy and positive relationship with all stakeholders, including the authority in each country where we operate. Local content is part of the strategy that we are monitoring and implementing with our partners when we are non-operated. And there is a strong local content policy and reporting and the regular reporting from our operator in Gabon as well as in Equatorial Guinea. where we have a regular meeting, operating committee meeting and other statutory meeting with government, national company and ministries to demonstrate our involvement in the local content and sustainability part of our operation.

Thank you, Eric. And with no further questions, that will conclude today's Q&A and our webcast. Thank you all very much.