Bw Energy Ltd

Welcome to BV Energy's third quarter 2025 presentation. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. To ask a question, please press five star on your telephone keypad. This call is being recorded. I now turn the call over to you, Carl. Please begin your presentation.

Thank you, operator. And a warm welcome to this third quarter presentation by BW Energy. This presentation will be hosted by Thomas Young, our new CFO, and Brice Morlot, our COO, also in a new position. And of course, myself, Karl Arnott. The third quarter highlights, the broad picture is that everything is on schedule and we are on track to meet full year production guidance. Our project portfolio is going very well on both cost and schedule and the Maromba financing has been completed and you will have more details on this later. The Berdon is moving towards FID the recently made discovery and we are drilling our Kudu appraisal well. So the EBITDA of the third quarter was 96 million, net profit at 20 million, and our cash position at around 260 million. The operational performance in the quarter was affected by the DUSIFU annual maintenance campaign. And this reduced the availability of ducefu to about 80% if we account for the downtime. The golfino production was at 92% availability, which is good and improvement over last quarters. The golfino production will be affected, though, in the fourth quarter with their growth. annual maintenance and that will be a five weeks campaign so the overall is that the guidance for 2025 is maintained and stands at 11 to 12 million barrels which is an average of 30 to 32 000 barrels per day the year-to-date production is 8.5 million barrels and just to um to clarify that if you look at the average production in the quarter, that was affected then obviously by the decline and the shutdown for maintenance. So again, just to reiterate what we had said previously, The quarterly decline is about 1,000 barrels net per quarter. This gives a competitive OPEX per barrel. And year-to-date is shy of $20, so $19.5 per barrel. And we are... We have an updated guidance of 19 to 21. We previously had a guidance a bit wider of 18 to 22. The annual maintenance on Dusafu was completed on schedule and we had a net production in the quarter of 20,000 barrels per day. Maromba execution. project is very much on track. The FPSO refurbishment is going very well in China and we have taken delivery of the rig in Singapore and we have inspections going on to prepare work scope and we plan to take the rig to Dubai for the conversion. The project engineering or the engineering effort is going well and we have placed all the orders for long lead items so very much on track with the maromba project so in terms of projects we are executing the maromba project the golfino boost project and the babomo phase two and you will see that this will add significantly to our 2p reserves 123 million for maramba and 12 million for golfino boost and 14 million for the babomo phase 2. we also work on the burden fid and we expect to mature that within the fourth quarter and add an additional 18 million barrels net of Berdon reserves. So this will take us to an industry-leading growth. We expect to go from 30,000 or north of 30,000 barrels per day in 2025 to more than 90,000 barrels per day in 2028. So we maintain our track record of expanding our high quality portfolio and we have shown consistent growth in our 2p reserves with the addition of maromba that will stand at 252 million barrels and of course we have significant remaining potential in the further 2c reserves of 388 or close to 400 million barrels with that i will Leave the word to Thomas Young that will take you through the financial highlights.

Thank you for the introduction, Carl, and good afternoon to you all. It's a pleasure to take over the financial leadership from Breeze and to continue strengthening our financial position, which I see as an important foundation for the ongoing growth journey, which is BW Energy. As we enter a period of increased productivity, I'm pleased to report that BW Energy maintains a strong financial position. Our producing assets continue to generate a very solid underlying cash flow. The balance sheet is robust and we currently have ample liquidity headroom. This quarter has been particularly active, at least from a financing perspective, with several key financing transactions successfully completed, including firstly the approximately $365 million Maromba FBSO ECA-backed financing, the 108 million short-term lease financing for the purchase of the Maromba rig, and lastly, the $250 million corporate RCF. In closing these transactions, we've established some important new banking relationships in the Middle East and Asia that has given us access to low-cost and efficient financing. Let's now take a look at the financial developments for the quarter. From a lifting or sales perspective, this quarter is nearly identical to the previous quarter. We had two liftings from Dusafu at about 950,000 barrels apiece and a 500,000 barrel lifting from Gorfinio. Realized prices were also quite similar to the second quarter, which then naturally means that the revenue this quarter is nearly the same. In terms of production this quarter, the production was a little lower due to the planned downtime on Dusafu, which was part of our annual maintenance cycle on the Dusafu FBSO. We've seen this planned maintenance effect come as a surprise to some of you in previous years, so probably helpful to note that this happens every year around Q2, Q3, and should be taken into account in any forecast or similar. The same goes for Gorfinio, really. Altogether, stable volumes and firm pricing delivered us a total revenue of approximately $200 million. Let's move on to cash flow and breakdown of recent quarterly development. We began the quarter with a cash position of 193 million. Operating cash flows reached 81 million, a notable increase compared to the previous quarter. despite similar lifting volumes. Just to comment on that, this increase was primarily due to timing. When we sell our oil to the oil marketer, they have a few days to pay us. As the last second quarter lifting took place at the very end of June, it meant that the proceeds from that particular lifting, even though it was booked P&L-wise in the second quarter, wasn't received until July, which explains the increase. As planned, we ramped up our investment spend this quarter in line with increasing productivity. While reported investment cash flow was around 120 million, actual spend exceeded 200 million. The reason why the investment cash flow shown here is lower than our actual spend is because we converted the Maromba rig purchase, or the Volaris 247, to a lease. The rig investment, therefore, does not show up in our investment activity cash flow, but rather as a right of use asset with a corresponding lease liability. Beyond Maromba, we invested approximately 30 million in the Kuduwell with the residual spending at Gofinio Boost and some early planning costs for Maromba Phase 2 at Dusafu. I'd like to point out that our intention is not to exit quarters with this level of cash on hand. Between the corporate RCF and the DUSA through RBL, both being revolving credit facilities, we have the ability to repay and redraw when needed. Again, this highlights the flexibility and efficiency of our current debt capital structure. Looking ahead, I'd expect to see less cash on our balance sheet going forward, as we would rather regulate down the RCF debt to reduce interest costs and rather keep more available liquidity. In addition to our liquidity position, our balance sheet metrics also remain strong. We ended the third quarter with a conservative leverage ratio of 0.9, which is a strong starting position as we move into a high activity growth phase. This growth phase is funded to a degree by operating cash flow, where excess spend is funded primarily by additional debt. Naturally, that means that we will see an increase in net debt as we move closer to Maromba First Oil and as we draw on the various project financings we have in place today. Equity continues to grow steadily, but as we're investing in a lot of high value activities, we see that total assets are also increasing, which will maintain the equity ratio going forward, at least until we see the fruits of our labour. Moving to liquidity, this is a very important part of what makes the current B2B capital structure efficient. When undrawn, we only pay a fraction of the drawn cost. The best example of this being the corporate RCF. When undrawn, we pay 60 basis points or 0.6% for the liquidity on the corporate RCF, which makes this a very efficient source of liquidity. The makeup of the additional liquidity in the third quarter is is 70 million available on the DUSAPU RBL and $200 million available on the corporate RCF. Although it is not by definition classified as liquidity in the presentation like this, it is important to note that the project financing on the FPSO and the planned Maromba Wellhead platform project lease is available to be drawn as we spend. We have slightly north of 200 million remaining on the Maromba FBSO project finance that will effectively offset against our CapEx guidance. And we expect that when we close the long-term project lease for the Wellhead platform, it will offset most of the $250 million Wellhead platform CapEx. In other words, there's about 200 million of undrawn debts in relation to the FBSO and about 250 million that we expect for the Wellhead platform Lease, that per definition, is not part of the 529 million liquidity shown here. But for all practical purposes, it's available subject to spending on the respective products. In total, these items give us significant headroom in the years before Maromba cursed oil. The chart illustrates our capital strategy for 2027. On the left, you'll see our available liquidity and expected cash flow generation from existing products. On the right, how we plan to invest it. The key takeaway is, even in the lower than $60 per barrel oil price scenario, through 2025, 2026 and 2027, a rather unlikely scenario if you ask me, but regardless, we'll have more than enough capital to fund our growth until Maromba is online. The majority of our debt maturities fall after Maromba comes on stream at the end of 2027, which of course marks a key inflection point for the company, where we expect to transition from drawing on facilities to being funded by cash from operations. Since the second quarter presentation, we have made excellent progress and completed several attractive financing agreements, a product finance facility for the FBSO, a short-term lease to cover the purchase of the jack-up rig, and secured a corporate RCA facility as additional liquidity buffer should it be needed. These solutions have been enabled through strong relations in the Middle East and Asia to strike deals with reliable long-term financial partners and very attractive terms and conditions With that, let me give you an update on how we are tracking against our targets for 2025. We are pleased to present an update outlook for 2025. Year-to-date production has averaged 31,500 barrels per day, including completed maintenance at Dusafu. While we still have some remaining downtime at Gofinio in Q4, we maintain our full year guidance of 30,000 to 32,000 barrels per day. Operating costs have been strong, allowing us to narrow our guidance to $19 to $21 per barrel from the previous $18 to $22. Capital expenditure for the first nine months totaled $304 million, below expectation due to the $108 million weather platform CapEx being converted to a lease financing. We therefore now revise our full-year CapEx guidance to $475 to $525 million. with spending expected to increase going forward as productivity ramps up. General and administrative expenses remain in line with expectation and we continue to guide as previously communicated. Overall, our year-to-date performance remains strong and we have momentum heading into year end. Before we open the floor to Q&A, I'd like to share a few concluding remarks. We're delivering on our strategy to create long-term value as a fast-growing EMP company, supported by a diversified portfolio, strong cash flow, and a robust balance sheet. We're actively advancing key development projects that will drive significant growth, targeting production of around 90,000 barrels per day by 2028. Our financial capacity underpins this journey, with disciplined capital allocation, a resilient balance sheet, and key Maromba financing milestones completed. In sum, the company is well positioned to fund our growth and deliver sustained value for shareholders. With that, I'll hand it back to the operator to the floor to open for questions. Thank you.

Thank you. If you do wish to ask a question, you will need to press five star on your telephone. To withdraw a question, press five star again. Our first question comes from the line of Theodore Nielsen from SB1 Markets. Please go ahead. You will now be unmuted.

Good afternoon, and thanks for taking my questions. A few questions from here. First, on the card as well in Namibia, the ongoing, well, as far as I understand, the logging activity has been going on for at least a week or so. I just wonder what you can share about what you found there, or if there's any resources that you can disclose today. Second question, that is on CapEx and the changes to CapEx guidance. This year I understand that the major part of the change in Capric's guidance relates to the lease, but still I wonder how does that change impact 2026 Capric, should we expect some of the previously guided 2025 Capric to go over to 2026. And my last question is on that is on the decent food production for 2026. Should we expect some minor decline going into the year compared to the average 2025 per production or will that remain at the current level?

Thanks. Okay. I suppose I'll take the first, the Karas question. We have not been logging for a week. We're actually a little bit ahead of schedule. We reached target depth last night, and the logging activities are just getting started as we speak. So we will be back with news from Keras shortly. But it's a little bit early days, so we will come back when we have completed the logging activities. And then CapEx guiding, I guess you take that, D.Y.? ?

I can take that. Thanks, Tildo. Yeah, I mean, firstly, you know, you asked about, I think a little bit the impact of the lease on the CapEx guidance. Just to kind of clarify this first lease is obviously the short term lease that we've done for the rig acquisition anticipation of the longer term lease. So that's done a full offset basically of that CapEx, which was an acquisition cost of 107.5 million to be specific. In terms of kind of as we move forward into the longer term lease, which will hopefully be in place by year end, that's at least the plan, we expect to see roughly 100 million offset in 2026 and with the remainder of the weather platform cost in 2027. In terms of the remainder of the delayed phasing, we see this as quite natural for a couple of reasons. There's no change to the budget. There's no change to the schedule. When we do our planning, we see cash flows can be a bit delayed, reflecting really the difference between committed costs and actual cash out, which has elements of payment terms with suppliers, etc. And it's generally considered a prudent approach to cash flow planning. And further, we actively manage cash out, so we see some extension of the savings.

I can take the third question about production guidance. So our production guidance are unchanged for 2025. Golfino production is so today the installation or shutdown due to plan maintenance, we decided to extend the scope this year with a couple of weeks to accelerate some of the improvements we want to do for the boost project. This longer maintenance will avoid the shutdown next year. So therefore, there will be no shutdown in 26 in Brazil. On Dusafu, the production is in line with the budget. In terms of decline going forward, you can take in account approximately between 10 and 15% per year. While some whales will experience steeper declines, the new whales are also coming online. We have the Mabomo Phase 2 project, so it's for new whales in Gabon with appraisals. They will come online end 26. It's quite a highly profitable project with fast payback two to four months. So basically, by the time the trading begins, On the new wealth, the initial wealth is paid off. So in terms of cash flow, it means that the DoSafu project are repaid by Maromba Fairfax. And for the 2026 guidance, we will share this during the next quarterly communication.

Okay, thank you.

Thank you, Theodore. There'll be a brief pause while new questions are being registered. And as a reminder, press five stars to ask a question. As no one else has lined up for questions in this call, I'll now hand it over to James for any written questions.

Thank you, Opereza. We have a question from Jakob in SP1 Markets asking about the breakdown of the debt structure. So I can jump into that. We have today a $400 million RBL. That's an RCA facility sitting at Dusafood level. We have currently drawn 330 million, which leaves 70 million outstanding. On Dusafood, we also have a state-unleased bank, Marbomo, that's producing there today. We have roughly 131 million outstanding there at the end of the quarter. On Golfinje, we have a small prepayment leftover that was there for covering the working capital of the acquisition. It's been extended once. At the moment, we plan to fully repay it by the end of the year. And that's currently sitting at 40 million. That is repaid with liftings. On the bond, we have a Nordicario bond, BW01, sitting at 100 million. We also have the Maromba weather platform short-term lease that we've covered. We have the corporate RCF. That's a $250 million RCF sitting at a corporate level with $50 million drawn at the moment. And we have the Maromba FBSO ECA-backed financing, which is a construction plus six and a half years term. It's a project finance facility, so it's draw as you spend, and it's... or 365 million, of which we have drawn roughly 130 million. Moving on, we have some questions on QDUV. I think that's already been covered by Carl. We have a question on the rationale for the onshore investments in Namibia. Carl, perhaps you could cover that.

Yes, I can cover that. Well, this is a little bit outside our normal, what we normally are interested in, but as it is Namibia, and we have a good relationship with Recon, we decided to participate in their onshore exploration program. And I think One reason is that we want to be a good corporate citizen in Namibia, and this is something that Namibia wants done. And it locally has good local support. The other thing is, of course, it's a good hedge for us with interests in gas to power in Namibia in the longer picture. So, Those are the main reasons for being interested in this exploration program. And we have a 20% stake in the asset.

Thanks, Carl. Moving on, we have a question on Bordon. I don't know if we could comment on FID timeline and how it compares to Marbomo. Brice, perhaps you could cover that one.

Yes, so Bourdon is a new major discovery in Gabon, very important for the country and for us. We are working on the field development plan. It's a great project with a strong economics because the FPSO infrastructures are there already and we have a lot of synergies. electricity production, living quarters, logistics. So we want to go ahead with the project, it will add two years of reserves replacement on the license. And it will contribute to material extension of the plateau production. And also, installing an infrastructure in this region of the field will unlock the potential of this region with other prospects to appraise. We see significant near-field developments with a proven potential. We have Bourdon-South-East, Bourdon-South-West, Bourdon-Up-Deep, Abaye, Grillon, So very good prospect there. The appraisal of Bourdon already confirmed the best reservoir and fluid quality in DOSAFU. So we are working on making an optimal solution which also fits the overall company development schedule. In terms of development, we are working on a capex-efficient concept leveraging the existing infrastructure. Basically, it's a blueprint of Mabomo. We will use the sister rig Jasmine in Dubai, but it's going to be a more efficient development later. For phase one... three producing wells tied back to the existing pipeline between Mabomo and Adelo and one or two appraisal. We will have the whale bay to accommodate 12 slots for future development. And the good thing is the rig is in Dubai and we have Marumba wallet platform conversion at the same time in Dubai. So there will be synergies with ongoing Jacob conversion project for the Marumba development. And we plan to FID in the coming months. Hope it answers the question.

Thank you, Rhys. I think it did. We have another question here asking about the 90,000 barrel targets by 2028. With a 10 to 15% decline for the current portfolio, Ducifu and Gofinio are currently producing 32 and Maromba adding 60,000 on Plateau, which other projects together with Gofinio Boost will contribute to reaching 90,000 barrels a day by 2028? I think I can cover that one quickly. We do not include Bordeaux on there, so it's Mabomo phase two. We have another question from Jakob. When can we expect announcement of long-term lease facility for Maromba as the Jakob conversion commences, commenced or later? As mentioned, I expect that we will be able to announce something there by the end of the year. And I think that concludes it for questions online.

Okay, so I guess the only thing that remains is that we thank everybody for listening in and participating in our Third quarter presentation. Thank you very much.