EnQuest PLC

Good morning and welcome to the Enquest PLC half-year results investor presentation. Throughout this recorded meeting, investors will be in listen-only mode. Questions are encouraged. You can be submitted at any time by the Q&A tab situated in the right-hand corner of your screen. Just simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand over to the Enquest PLC team. Good morning.

Good morning. Thank you, ladies and gentlemen, and welcome to our 2026 half-year results presentation. My name is Amjad Bseisu. I am the Chief Executive Officer of Enquest. Joining me today is our Chief Financial Officer, Jonathan Copus. I'm very pleased today to cover our performance across the first half of the year while also providing key operational activities. Of course, this is a very important presentation for Enquest, and this is a seminal moment for the company. That's why I'm very glad that you're with us today. So we will look at also the future of the enlarged group, highlighting the progress that we've made in our transformational deal and the delivery of the acquisition in Malaysia, which more than doubles the size of the company. Craig also joins us. for his last results presentation as head of IR and will marshal us through your Q&A. So let's start by taking a look at where the business is today and the strong fundamentals which we carry forward into the future. So Enquest is built on sets of values and principles that define us and have defined us since our IPO 16 years ago and the genesis of the company more than 20 years ago. The most important one is safety, which is our first priority. It's not only our license to operate, but it's also our license to exist. We also want to operate our assets ourselves, both in the UK and Southeast Asia, in order to deploy really the tremendous competitive advantage that has been developed in the company over the last two decades. That is our differentiating capability. Today we operate 97% of our 2P reserves, and those are at roughly 90% of production efficiency, given a great feat, given that many of our assets are actually over 40 years old. We've also built a highly tangible 22P reserve base, proven and probable reserve base, with 78% of our 163 million barrels being in the 1P category or the proven category. This 2P reserve base will increase to 300 million with our Malaysia acquisition. These fundamental tenants make us the right operator of mature assets and undervested assets and underpins our track record of extending the useful lives of assets that we have taken over this over the last 10 years. And we are very excited about the new assets which are less mature that we will be able to hopefully take into the future. Building on the foundation, our first half performance represents another safe, strong period of delivery. Overcoming operational challenges and delivering against key financial and strategic targets. Our production was 9% up versus the first half of 2025, with incremental production additions in Vietnam and at Selig, where our accelerated 1B gas project more than doubled our gas output, resulting in an increase in total production net to 12,500 barrels a day. Together, this production enhancement more than offset the third-party infrastructure downtime, reducing Magnus production for the period by more than 4,000 barrels a day. Fundamentally, our differentiated capability is underpinned by an established top-quartile operating capability. With the first six months of the year, the production efficiency of our assets was 89%, excluding third-party impacts, and 83% when including the unplanned infrastructure at Ninian's South Central. Putting this into perspective, the sector average for 2025 was 76%, so we are significantly above the average. Also, from a financial perspective, we've taken significant steps to simplify and strengthen Our balance sheet, as Jonathan will cover in more detail. With the refinance and upsize RBL, refinance bonds and the settlement of the Magnus contingent consideration in the first half, all contributing to a financial platform that has enabled us to deliver on our strategic aim, most importantly through our transformational acquisition in Malaysia, which we will deliver without materially impacting our leverage. By accessing the accordion in the RBL, we also retain transaction-ready liquidity from which to execute further acquisitional growth in Malaysia or beyond, with our focus at all times on creating and providing value to our shareholders. The disciplined approach that we have taken has been pivotal throughout Enquest's history and has enhanced our ability to consistently optimize value from mature and As we try and transform the scale of the group, we're highly confident that our key skills are transferable across geographies and can be deployed to optimize asset value. Our next slide shows that strategically we operate under the same principle by getting the right assets into the right hands. The first half of the year provided more opportunities for us to demonstrate our capabilities in this action. three very different projects we get after value enhancing opportunities quickly and are proactive in our approach to optimizing outcomes year-on-year group production as i said is up nine percent driven by the addition of block 12 w in vietnam following the acquisition of harbor vietnam's business having completed in july 2025 vietnam added 5 000 barrels a day to the group while our proactive approach to production enhance came through proactive wealth intervention last year, which was primarily driven by our team and allowed us to extend the PSC by four years on the existing terms. That's an important accomplishment given others have seen dilution in working interests when extending in January. The Vietnam acquisition is a classic inquest deal and achieved payback within one year. At our existing operated PMH Seligi field in Malaysia, we delivered the Seligi 1B gas project nine months ahead of schedule. That was only an 18-month schedule, so almost half the schedule, adding more than 6,200 barrels of oil equivalent of gas production. With global supply volatility impacting Malaysia's fast-growing economy, we are now proud to have been able to supply volumes 40% above our committed rates of 70 million standard cubic foot a day for much of this year. And at times we are supplying 150 million standard cubic foot a day, 10% of the peninsula. Together, these projects have contributed significantly to enhance production in Southeast Asia, taking component of production in Southeast Asia to 41%. Together, in the North Sea, Magnus' production performance has been held back by third-party infrastructure disruption, both in 2025 and 2026. With Ninian Central heading towards cessation of production next year, we've led a project alongside Neonext, our partner, and the operator of the Alwyn field, to create new direct export routes to Salambo Tunnel. Having matured the project since inception in 2025, we've now sanctioned the NCP bypass with offshore execution expected to commence in the fourth quarter of 2026. And first oil for the export solution will be delivered by next half of the year, completely eliminating the dependency on the third party infrastructure that we have today. These types of projects reflect our commitment to discipline investment with fast payback and proper quick execution. We're very excited also about our Kraken project as we move it into the next phase of operations. And a key focus of Kraken is the enhanced oil recovery project that seems to have matured significantly in the last year. The project aims to use polymer flooding to help push the oil through the reservoir, increasing our ability to recover additional volumes from the field. This is the largest single organic opportunity within the UK portfolio and we are encouraged by the latest project results and updates. We expect the project to be significantly equity enhancing. We've deployed improved polymer chemistry, which enabled the design to be simplified. That reduced also the topside complexity changes and lowered the cost of required modifications, as well as the cost of the polymer itself. The work to ensure compatibility of reservoir chemicals with topside process equipment is now also complete, with specialist third-party testing generating positive results, as you can see in the little slide above. Phase 1, which will be a pilot polymer delivery with a single drill center, is expected to add approximately 5 million barrels of recoverable reserves and is the subject of a further investment decision. Phase 2, which represents a full field development, is currently estimated to add from 30 to 40 million barrels gross, which is around 20% of the group's existing 2P reserves, a very significant addition. The project also will not be highly capital intensive, as it requires really just the polymer, and we've already made allowances for the tanks, the polymer tanks, in our original design when we designed the vessel. The project is working towards the next decision gate later this year, and we've challenged the team to accelerate the delivery into early 2027. Over the past two years, Enquest has been clear in our focus on scaling the business and bringing in a transformational acquisition. We have delivered that through the last Malaysia acquisition, but we have also completed four other acquisitions in Southeast Asia, including three new country entries in Vietnam, Indonesia, and Brunei. We've also executed a very highly accretive settlement of the Magnus Contingent Consideration in the UK, a credit enhancing deal that is very accretive, and we'll continue to work hard to crystallize the value of our UK tax asset via a North Sea transaction or a structured transaction. Immediately ahead of us, however, is our most seminal transaction announced in June, an acquisition of offshore Malaysian assets that transforms us to a much enlarged group. The proposed acquisition had production assets with material scale reserves and cash generation. Based on trailing 2025 numbers, the acquisition is expected to take the group revenues to around $1.8 billion for 2025, with more than $900 million of EBITDA and a strong cash flow generation. Also, it gives us almost 1 billion barrels equivalent of total 2P and 2C resources, making us a very significant group in terms of resources. Our networking interest production increases to more than $100,000 a day of oil equivalent, over a 130% increase, delivering a significant rescaling of the group. Just as importantly, these are very low-cost barrels, with production from the new interest carrying a unit operating cost around $10 a barrel. and we plan to deliver the new 2P volumes with a very low capex of about 170 million, less than $2 a barrel. This drives our overall OPEX group to $16 a barrel overall, a $10 per barrel reduction of our OPEX. Overall, this is a high impact, strategically aligned acquisition that drives material growth while maintaining discipline to our values. This slide provides a forward view of how important this transaction is. It demonstrates the step change in production delivered by the Malaysia acquisition, with the enlarged group production remaining above 100,000 barrels a day through to the end of the decade. On the production chart, the navy blue represents our existing Southeast Asia production. The lighter blue, the additional production from the acquired assets, from the Malaysia acquisition. This provides resilient base for group cash flows, both from our existing assets plus from the new assets. These are large volume, low cost, low capex assets with structural commercial protections inherent in PSC operations, underpinning our confidence in future returns and future cash flows. Furthermore, the UK production shown in green can be maintained around current levels through continued fast payback investment in infill drilling, well intervention and reservoir management, as well as continued commitment to maintaining key asset equipment to protect our top quartile performance. Our focus will be beyond this. focusing on exciting organic opportunities just like the EOR cracking project that we mentioned and the potential to progress Bresset and Bentley 2C resources into 2P. These are two giant fields of one billion barrel in place and I have a confidence that our team if allowed to develop these fields will be able to do so given the right regulatory and fiscal climate. You can also see that we've materially increased and diversified our 2C resource base as well as adding 65 to 100 million of barrels in recovery factor enhancement volumes in Malaysia. Importantly, these recovery factor improvements correlate directly with our core skills and come at low capital costs. The slide highlights the shift in balance within the portfolio mix, with Southeast Asia becoming increasingly important alongside the UK base, and the relative contribution of Southeast Asia and gas adding to the production mix and growing it. The transaction not only delivers diversification in our portfolio, in our gas share, but both in numbers of fields and geographically also. An emerging change in our calculus of our asset reviews is now competition for capital within our expanded portfolio, which ensures that we allocate our investment to projects which generate the best value for shareholders. This last slide that I have talks about our 2C resource and recovery factor enhancement, which is really the future. Building on the previous slide, you can see the detail of evolution of our resource base, with the enlarged group now materially less reliant on the North Sea field developments it was once. RSA and Bentley, each being 1 billion barrels, remain part of our opportunity set, but no longer dominate the opportunity set. Given the prevailing fiscal and regulatory environment in the UK, that is very important. We look forward to more positive investment climate in the UK that would enable us to develop these outstanding fields and resources. However, with a robust long life 2P production profile, this 725 million barrels of contingent resources provide the volume engine that will enable us not only to mitigate Natural Field Declines, but also look at increasing production in low recovery fields like the ones being acquired in Malaysia, with some as low as 16% recovery factor and 19% recovery factor, and more than 2 billion barrels in place in Bellingen Field, for example. In particular, recovery factor enhancement will come from low-cost well intervention, reservoir optimization, and topside process improvements. Exactly the kind of activities we deliver routinely as top quartile operator of assets, offering material, low capex opportunities that we can pursue upon assuming operatorship of the assets on the 1st of January, 2027. I'll now hand over to Jonathan, who will take you through our first half financials.

Great, thanks very much, Amjad. So as you've heard from Amjad, the first half of 2026 was a period of strong cash flow generation. It's also a period where we took a number of strategic steps, where we continued to simplify and strengthen the balance sheet and focus on growth. That was delivered against a backdrop of 9% production growth, but also the commodity price environment was both elevated and volatile. Revenue that we reported in the period totaled $530 million, and that includes a $79 million non-cash unrealized hedging adjustment. Stripping that out, cash revenue was $609 million, and that was up 18% year on year. We also, as Amjad mentioned, had the impact of the downside, sorry, of the downtime on Magnus. and the way that is expressed in the financial results is that a cargo was deferred out of the first half of 2026 and that had a cash impact of about 60 million dollars. Cost of sales were 480 million dollars. Now this was a rise year on year but about 40 million dollars of that rise account for non-cash or mark-to-market adjustments on our hedges and 75% of that 40 million was non-cash. If we focus on the underlying production costs, there are two important moving parts to highlight. First of all, we include Vietnam production for the first six months, and those weren't present, those volumes, in the first half of 2025. The addition of Vietnam production added $25 million of operating costs to the group portfolio. The other significant moving part in the period were diesel costs. In this environment of higher oil prices but restricted refining capacity, diesel costs have risen significantly, up 40%. Now, we use diesel across our facilities, but the team has proactively been managing our diesel usage and has managed to reduce it significantly as well. And the benefit of that we'll be seeing in the second half of 2026. Adjusting for the new contribution of Vietnam and these diesel costs, our underlying production costs for the period actually reduced year on year. We also on the income statement report a tax charge of $15 million and this reflects taxation both in the UK where we pay EPL and also in Southeast Asia. Adjusted EBITDA for the period was $273 million, which is a 13% rise year on year. I think the best way, though, to tell the story of the first half of 26 is to look at cash flow. Operating cash flow in the period was $281 million, and that's a 31% rise year on year. In the first half, we invested $78 million in capex and $28 million in decommissioning. And then after our interest costs, lease payments and taxation, we generated $71 million of free cash flow. And that, without any additional costs, would have translated to a net debt of $383 million. It's also important again to pause and just reflect on the fact that the impact of the Magnus downtime impacted these cash numbers by $60 million. Now in the first half, on top of that operating performance, we also made a number of strategic investments. The first of these was the purchase of the Magnus contingent consideration for $60 million. We also refinanced our bonds and extended our RBL through the activation of the accordion. Costs associated with this were $43 million, but $20 million of that were early redemption fees on the older bonds and the OID issuance. We also in the period paid a deposit on our Malaysia acquisition, which was $28 million. At the end of the period, reflective of that combination of strong operating cash flow and those strategic items of spend, net debt totaled $517 million and the cash balance was $206 million. As we move towards the acquisition of the strategic acquisition in Malaysia, of course it's really important to reflect on our capital structure. That capital structure is the foundation from which we deliver our company. and our focus in the last two years has been on simplifying the capital structure and building strong liquidity in order to deliver a transformational transactional step change in our operations. You'll remember that in the fourth quarter of last year we refinanced our RBL and then the acquisition of the Magnus Contingent Consideration was a strongly credit enhancing transaction which unlocked a 38% increase in the borrowing capacity on our existing assets within the portfolio. At the 30th of June, our RBL was undrawn at $400 million and as previously reported, We have expanded the loan tranche, the $400 million loan tranche, to $700 million through the exercising of the accordion, partial exercising the accordion option on the RBL. In the period, we refinanced our US dollar bonds. and through that process we extended the maturity to 2031 both our RBL and bond maturities are out in 2031 now and we reduced our borrowing costs by 175 basis points. We also took the opportunity there to redeem our sterling denominated bonds and we now have a simple capital structure which is distributed between dollar bonds and RBL. As I mentioned cash on hand at the 30th of June was 206 million dollars and we had transaction ready liquidity of 759 million dollars which was an 80 million dollar expansion versus the 31st of December 2025. An absolute pillar though of our growth strategy of course is to be acquiring cash producing assets. and as is summarized on the right of this slide using the prospector's information, although we are utilizing our balance sheet to buy the Malaysian assets, This has a very significant increase on our EBITDA generation and so that our net EBITDA ratio on the basis of the enlarged group process of transaction would be 1.1 times which is only a very small rise over the 0.9 times that we reported at the 31st of December 2025. Moving to the transaction timeline, we've made a number of really important steps in recent weeks. We received the strong support of our shareholders through the vote to approve the acquisition. And in very short order, we then received the Petronas approvals, which means all of the conditions precedent have now been met for completion to proceed on the 31st December. Between now and the 31st of December, our focus is on work streams that are all built around operatorship transfer so that we are ready to operate from that 31st of December completion date. Post completion, almost immediately, our enlarged group will be readmitted to trading. But stepping back from all of this, I think it's worth also just thinking again about that growth pathway which we have been outlining. On calls like this over the last year or two, we've consistently talked about what our acquisitional template is. We've talked about being very, very focused on buying Assets that are in production, which have robust production profiles and low levels of capex and also low or no decommissioning liabilities. And I think at times when we've talked about that, it's almost looked like a wish list of the perfect. However, that is exactly what we have delivered through this Malaysian acquisition. This is a deal that not only increases The volume metrics of our business, but it very clearly is a step change in value as well. Volumetrically, production will rise 134% and reserves and resources 56%. But as Amjad has already said, we would see group costs falling, operating costs falling by 35% to about $16 a barrel and very low levels of forward capex to deliver those profiles and a near doubling of our EBITDA. So these, as we look to the future, both operationally and financially, we are on the cusp of completing this deal. which will rescale the business. It fundamentally diversifies our earnings and operations and it is a step that will deliver robust, predictable cash flow throughout the commodity cycle. So I hand back to Amjad now for some concluding remarks.