Bw Energy Ltd

A warm welcome to this third quarter 2024 presentation by BW Energy. This presentation will, as usual, be hosted by our CFO, Brice Molot, and our Chief Operating Officer, Lynn Espy, and myself, Carl Arnett. Quickly on to the disclaimer. Please note it. I take that as read and we go on to the highlights. The highlights of the third quarter were that production was significantly up and net production was 25,570 barrels per day. That was including the planned golfino maintenance shutdown. DUSUFU had a quarterly gross production. of 2.5 million barrels, which is the highest since production started at Dusefu. Currently, Dusefu is producing 40,000 barrels per day gross, and all the ESPs that we have changed out are functioning extremely well. We also became operator of the Niossi Marine and Guduma Marine exploration blocks offshore Gabon. And we will cover that in more detail later. The third quarter EBITDA stood at 130 million dollars with a net profit of 48 million. We had three liftings totaling 2.5 million barrels. with a net average price of $82 per barrel. So this gave a record quarterly operational cash flow of 145 million, and our cash position was very healthy at 210 million. So third quarter key figures, our net production was significantly up compared to previous quarter and last year. Our revenue was of course also significantly up compared to last quarter and previous year. Our OPEX per barrel came down by about 17% compared to last quarter, and 7.3% compared to third quarter last year. This gave us the EBITDA, which was also of course significantly up, and net income that multiplied many, many times since a comparable quarter. And of course, also the same with the operating cash flow. So this is the production profile. And we can see the effect of the ESP change out and the impact on production. We can also see the Golfino planned maintenance shutdown that was conducted in the quarter. In terms of LTIs. We recorded zero LTIs in the quarter and we also recorded zero environmental incidents and this also goes for to date in 2024. Then on to Gabon and our primary asset Ducefou. Q3 net production to company was 1.9 million barrels equal to 20,150 barrels per day. We had a very high operational uptime on Ndolo and Mabomo. And as I said previously, the wells performed extremely well. We are now, of course, completing the change-out program, and we will see a further improvement in our production and regularity. The OPEX per barrel came down with increasing production to 20.5 dollars per barrel. We are nearing now completion of the Hibiscus Rouge phase one drilling campaign. We have some ESP replacement to do and we will before end of the year put two more Hibiscus wells and the Rouge well, and we will then have first oil from Rouge as well in the fourth quarter. The last activity in the current drilling program is the Beurdon appraisal well that will be drilled early in 2025. And you can see here in the caption, the Beurdon field outline, and we are going after risk gross recoverable reserves of 30 million barrels. As we have infrastructure in place, we can trigger a development of the Bordeaux. Should we be successful in our campaign, we can trigger developments at fairly low reserve basis. Further developments in Gabon is that we are expanding our resource potential. We have just signed PSEs for the Niosi Marine and Guduma Marine exploration blocks. BW Energy holds 37.5% working interest and is operator of these two licenses. They are surrounding the known Etam and Dusefu fields as well as some fields closer to shore and has a total acreage of close to 5,000 square kilometers. Then on to Brazil. The golfino production was affected by the annual FPSO maintenance program and came out at around 500,000 barrels total, which equals to 5400 barrels per day. This of course also affected the average dollar per barrel so we had a production cost of 63.3 due to the lower production. The availability of the unit is expected to improve after startup as we have done extensive maintenance on the equipment. The focus going forward is going to be on optimizing production capacity and availability and of course operating costs. The Maromba development is progressing according to plan. Maromba, just to remind everybody, this is an oil field that we intend to develop. It's in a very good region. You see some of our neighbors that are Peregrino, Papatera, and it's an oil-rich area. And we expect to have our, excuse me, FID in early 2025 and we are targeting first oil 36 months after FID. We are looking at a highly efficient concept reusing the FPSO that we have already acquired and a platform with dry trees and drilling capabilities. The plan is for an initial production of 50 thousand barrels per day from six wells. Then on to Namibia and Kudu. The Kudu appraisal program is progressing to plan. We have named our first appraisal well. It will be named Karas and we have defined the location for this well. We have also secured all the long lead items to undertake this drilling campaign in the second half of 2025. We are currently reviewing rig bids and we are pleased to say that the current bids look attractive and we see price levels that are somewhat below the expectations we had, so that is good. We have now completed, of course, the 3D seismic processing of the FAST PSDM. And that is, we have a number of good locations for also future appraisal wells. The KUDU gas to power field development plan, is progressing and we expect to deliver an FTP to the government early 2025. With that, I will hand over to Brice.

Thank you, Carl. It's very satisfying to see production so high and it's reflected in the financial figures. Let's dive in the Q3 financial section. To the income statement for the third quarter, we had an operating revenue of $206 million. It's plus $41 million compared to Q2. We had three liftings, two for Dusafu and one for Golfino, 2.3 million barrels compared to 1.8 in the last quarter, and 8.6 million of unrealized gains on hedging. It reflects the highest quarterly production since inception. And as Carl mentioned, we are now in Q4 producing over 40,000 barrels per day gross. Operating expenses are on the right track. $85 million, minus $3 million compared to last quarter, which gave us an EBITDA of $130 million. For the third quarter, it's plus $44 million compared to Q2. This is an excellent quarter for BW Energy with strong production growth on track for ESP change out by year end and with three ESPs, three wells remaining in the work of a program. Depreciation, the difference with last quarter is related to the lease of our supply boat in Brazil for Golfino. These lease contracts were effective from February, but they were not identified as leases and accounted for under IFRS 16 until September. So in Q3, we recognize the catch-up impact for Q1, Q2 and Q3. giving us an operating profit for the quarter of $78 million. It's plus $37.9 million compared to Q2. Interest income, we have $1.6 million of Mabomo, CEL and ISBAC interest from GV partners. We had interest expense of 10 million versus 5.6 in Q2. The main difference you see here is an increase due to 2.5 million corporate bond interest and 2.5 million due to less interest capitalized for Dusafu project. So a profit before tax of $75 million. It's plus 34 compared to Q2. and income tax expenses of 17 million dollars. So we end the third quarter with a net profit of 48 million dollars. To the balance sheet, tangible asset, there is a downward adjustment of 25 million on golfino asset retirement cost. The abandonment dates were delayed from previous estimated 2033 to 2042 Therefore, the discounted PV for the future liability is now smaller. Right of use assets, a net impact from adding the new leases of our supply boat in Brazil for Golfino. Intangible assets, we have an increase of 10 million. The studies are capitalized to intangible assets before FID. This is mainly studies on Kudu and Maromba. Other non-current assets, 30 million investment in Recon Africa shares. The original investment is 16 million, but we recognized the decrease in fair value of shares of 2.6 million. Trade and receivables, we had 41 million Q2 golfino lifting proceeds collected in Q3 and 14 million of DMO sales. And we end the quarter with 209.8 million in cash. Over to the equity liability side of the balance sheet. We can also see the effect of interest bearing debt of golf, you know, oil prepayment facility that started to amortize with a fertile first amortization during the August lifting. We can see a decrease in asset retirement obligation by 58 million. This is the Brazil a whole calculation due to revised abandonment date. Um, these liabilities increase. This is the new facilities of good funeral. Um, and you can see that we have a very high activity on the investing side, giving us high trade and other payables, mainly due to drilling and work of a program. So holding all very strong balance sheet with 42% of equity ratio. And an interest bearing that off about $556 million. To the cash flow overview, we had the cash at the end of September of close to $210 million. That was $244 million end of June. We had an operating cash flow of $145 million. That was $63 million last quarter. And net investment of $98.6 million. That was $125 million in Q2. mainly related to DUSAFU development, but also the investment in RIC and Africa shares. Then a net financing activities of $80.7 million. That was $155 million last quarter, and that gives us a $210 million cash position for this quarter. Here you have some guidance to our lifting schedule and also on hedging. On Dusafu, we had two liftings in Q3, 796,000 barrels with an average realized price of $83 per barrel, and another lifting of 779,000 barrels with a realized price of $80 per barrel. In Golfino, we had one lifting in Q3 of 487 barrels. In April, at $81 per barrel. So we will have three liftings for Dusafu in Q3 and one for Golfino. So the numbers might be good also for Q4. A few words on hedging. We have a requirement to hedge in the RBL facility for Dusafu, where we have to hedge 40% of the production year one and 25% for year two. This is completed, and we are also hedging part of the production of Golfino, about 25% of the annual production in 2025. So currently, we have 4.9 million barrels hedged for 2025. 25, 26, and this is a mix of puts, zero-cost collars, and swaps. Over to the summary. We are on track to maintain our production guidance of 10 to 11 million barrels net to BW Energy. On the production cost, we reduced our guidance this quarter to 30 to 32 dollars per barrel. So this is a very good news instead of 35. And we are on track to respect our guidance on capex and GNA. And to the final slide of the summary, on the production side, our target is to complete all ESPs, change out with conventional ESPs before the end of the year. Production is at peak right now at 40,000 barrel oil per day, and we still have three wells to come online before next year. We'll continue to optimize Golfino. Many things to do on our current well portfolio. On the exploration side, we plan to drill Bourdon appraisal in February and to drill an appraisal well in Namibia to assess the kudu potential. Since we acquire two new blocks in Gabon, we are preparing a 3D seismic to assess the potential of those two blocks. On the development side, we continue to optimize Marumba development plan and hope to complete all the studies early Q1 and also continue to progress the Kudu Gas to Power project. And on the corporate side, we focused our effort of boosting on boosting our operational cash flow and to complete Marumba financing before the end of the year. So that brings us to the end of the presentation. And then I leave the word to the operator for questions from the audience. And then we'll continue here with the questions we have received from the web. Thank you.

Thank you. If you do wish to ask a question, you will need to press five star on your telephone. To withdraw your question, press five star again. There'll be a brief pause while questions are being registered. Our first question comes from the line of Theodor Sven Nielsen from SV1 Markets. Please go ahead, your line is open.