Dno Asa Ord

Good afternoon, and welcome to D&O's first quarter 2024 earnings call. My name is Justin Levos, and I head up communication here at D&O. The plan for today's call is to start with a brief presentation, which will be held by D&O's managing director, Chris Spencer, and our CFO, Håkon Sandborg. After the presentation, we will open up for questions in the Q&A session, where our executive chairman, Bijan Mosmaramani, will be available to take your questions. Please note that the Q&A session is for analysts and analysts, and any media requests will be dealt with separately. During the presentation, all other participants in this call will be in a listen-only mode. If you want to ask a question in the Q&A, please click on the virtual hand on top of your screen. When you are selected, you will be notified on your screen that you are allowed to unmute, after which you must remember to unmute yourself. And with that, let's start the presentation. I hand over to Chris.

Thank you very much, Øystein, and good afternoon to everyone from Oslo. It's my pleasure to be here today to talk you through our Q1 2024 and indeed subsequent events. I have the pleasure of presenting this quarter because I think it's a great quarter in terms of illustrating the value creation that we aim to achieve in DNO. As we've said many times, that value creation is based on our low-cost production combined with our attractive growth prospects, both in terms of organic portfolio development and inorganic through acquisitions. And all of those elements are at play in the slides ahead. And that in turn allows us to return some of the value created to our shareholders by continuing our dividend programme. So let's move into the first slide, Jostein. One back please. So if we look back at Q1, then on the back of the ramping up of production in Kyrgyzstan and the similar production in the North Sea, we had strong revenues. And in our flagship Taukey license, We're pretty much back to where we were before the Iraq-Turkey pipeline shutdown. And we discussed in previous quarters, we are selling into the local market there at the moment. We continue to push hard on our buyers and we've now managed to get prices into the upper 30s. But importantly, we're still selling what we call on a cash and carry basis so we receive payment prior to delivery of the oil and now the vast majority of those payments are made to us in international bank accounts on the north sea side our exploration story continues with the um we with the uh another very strong performance in the apa round i think we uh touched on that in the previous quarter this is uh now all done and dusted and officially awarded hence it uh appears again um but important importantly uh we've made great steps uh so far in 2024 on rebalancing uh north sea portfolio through uh two broadband acquisitions one of which was announced just this morning and uh we will uh through that add more than about 12 million barrels of oil equivalent in terms of reserves and resources. And importantly, they contribute immediately to the production and therefore the cash flow of the company. We're looking at probably around the 5,000 mark this year, but the nature of the two transactions will actually see that increasing a bit over the next couple of years. And we'll come back to that on the next slide. As I mentioned, the strength of the operational performance, our growth prospects, and the very strong balance sheet that we still maintain that Hawker will describe in his segment has allowed the board to maintain the dividend unchanged. If we move on then to the next slide, please. So fresh news out this morning. We're very, very pleased with another Voltron. We announced, of course, the Voltron in the UK earlier in the year. And we're pleased now that we've been able to add some production in the Norwegian sector. And most particularly, we're very happy because it's giving us a new core area. We had a presence in this area already with the Merrill and Alva licenses, and our license includes our ongoing and VARA development. We've now been able to pick up from more energy, the other producing and underdevelopment fields in this area and an interest in the NORNA field and FPSO hub itself, which is obviously critical for further development of the area. This is therefore now a core area for us in DNO and we obviously see good potential remaining, which is why we chose to make this acquisition. In addition to that, it's a nice production profile because the Vedande field will be coming on stream in late 2025. And so we have, we're expecting about 3,000 barrels of water equivalent per day this year, but it will actually be increasing over the next couple of years as that project comes in. Finally, as anyone who follows our adventure in the North Sea knows, we've had great success on the exploration side. We have moved, and we've now moved, as I'll talk to you on the next slide, our third, project into the development phase. And so this alien production obviously generates financial synergies as we move forward and also should give our board and the market generally more confidence that we can fully finance our development programme and reap the value from our exploration success. Next slide, please. So indeed, we've spent quite some time in recent quarters on the exploration side of our business, and we're still very active in that area. But the milestone, the recent milestone in our organic growth portfolio is the final investment decision amongst the partners on what used to be called BRASA, and which will now be called Bestifer. Brass has been a long journey for us, and so we're very, very pleased to finally have found a commercially effective route to development for the field. What is interesting to us is that the collaboration and cooperation that we've achieved with the operator and the host has, in my mind, been instrumental in opening this up. DNO has been very active on Bressa for a number of years. And we are finally, through a very collaborative relationship with the operator of Braga, the new operator of Braga, OK, been able to come up with a commercially effective solution. There's also been good alignment with other partners in the area. And you've seen a couple of those come into Brasser slash Vestler, as I have to get used to calling it, with minority interests. And certainly that alignment in the partnership has also helped us get to the point we are at today. So now we're looking forward to the ministry approval and getting into the project execution phase and seeing first production from Vestler in two or three years' time, H1, 2027, three years' time. As I said at the top of the slide, we're not to put our exploration efforts in the shadow. We had an important abrasal well during the first quarter, which we confirmed the type of volumes we had thought we'd discovered at the Heisenberg discovery and tested the deeper prospect at Hummer and we're currently drilling at the Couvette well which is also in the Trollier area and we have five more wells to come this year so there'll be plenty more news on that front I think with that I'm turning over to Hawkins to take us through the numbers Thank you Chris Yes, hello everyone

And welcome again to our first quarter earnings call. We are looking at the financial review now and start with these P&L results for Q1 2024. We'll compare those mostly to the previous quarter, the fourth quarter. Starting with revenues, I think that was noted already. We achieved higher net production in Kyrgyzstan in Q1. And a key reason for that was that the full production for the whole quarter. And still our net entitlement production dropped under our production sharing contract as the carry forward cost pool was fully utilized during the first quarter under our talkie production sharing contract. So the lower entitlement volumes in turn led to a $21 million drop in revenue from Kyrgyzstan in the quarter. Our North Sea production was reduced in Q1, mainly due to lower uptime on the Maroc and Alba gas fields. But the sales volumes were still up on higher lifted volumes. And this provided a $5 million increase in revenues from the North Sea in this quarter. So in total, group revenues were thereby down by $16 million in the first quarter. Now, for the costs in this quarter, we had lower depreciation in Kyrgyzstan due to lower entitlement volumes. And other expenses are also down in Q1, including expense declaration and impairment charges. So mainly due to the lower cost, we thereby show an increase in operating profits of $23 million, to a level of $61 million in this first quarter. As we move down further on the P&L statement, net finance expenses are also reduced from Q4. This is mainly due to lower interest expense following the buyback of our D&O O3 bond in January this year, while tax expenses increased on higher taxable profits. But all in, net income thereby increased by $13 million to $17 million in Q1. I'm moving now to the cash flow, and operational cash flow came in at $100 million. That's a good round number, I think, and that was up $7 million from Q4 last year. This cash flow from Q1 was net of $10 million in negative working capital adjustments, and these in turn were mainly driven by a decrease in payables and accruals, mostly in the North Sea. There were no NCS on the region continental shelf tax payments or refunds in the first quarter. And we don't expect any and we don't see any in the second quarter either. Likewise, we don't expect any NCS tax payments in the second half of this year due to high exploration expenditures and the capex through 2024. We had a drop in our net investments by $18 million in Q1 to $51 million. and that was net over including a $4 million in cash inflow from Koch Devoir. The main investments in this quarter included the capex of $36 million, primarily on North Sea developments, and also North Sea exploration expenditures of $18 million. Finance cash outflow was $162 million, That was primarily covering $131 million of the buyback of the DNO-03 bond and also dividend payments of $23 million in this quarter. Our free cash flow, which is mainly operational cash flow, less capex and decom, came in at $44 million, up $11 million from Q4. So all in, our cash balance is reduced by $111 million in Q1, mostly due to the bond buyback. To go to the balance sheet, you see that our balance sheet strength is very much intact with high cash balances of $606 million. And we have a net cash position of $171 million at the end of the first quarter. We're also certainly pleased to see an increase in the equity ratio in the quarter, reaching now a strong level of 14.9% at the end of Q1. It should be noted here that we, since year end 2021, have strengthened our financial position significantly through debt reductions of $450 million in this period, while we had dividend payments and share buybacks totaling $270 million since year end 2021. So with the debt reduction and in addition, higher retained earnings in this period, our equity ratio has increased from 35% at the year end 2021 to the current strong level of 49%. And on this basis, we absolutely remain in very good shape with our current capital structures. I think I'll now end the financial discussion and back to you, Chris. Thanks a lot.

And very impressive when you put that free perspective on it. Thank you. Just before we go into Q&A, as usual, a few comments as we start to look ahead. We can't have a presentation without discussing the hope for the reopening of the export pipeline from the coastline region. I haven't touched on that much so far, but clearly it's very, very important to VNO. It would double our revenue from the region if that were to happen, and therefore we do spend a lot of time and energy on that. We engage directly with the governments involved and also obviously with peer companies, and we are in Again, hopeful that the announced meetings between Baghdad and Erbil, the two ministries this week, can then give a new injection of energy into those sections. Notwithstanding the fact that we're on local sales, clearly that market has stabilised, we have reliable income and positive cash flow because of our low production costs. So we have tentatively started to reinvest. We had three wells that we just stopped drilling quite abruptly at safe points last year when ITV shut. We're going back to re-complete those and stimulate them and bring them on stream. And then the major investment from DNO into the region at the moment, as we've described in previous quarters, is the Bishika Three Well, which is operating on the Bishika licence and is a commitment well as part of the development plan there. On the North Sea, we continue to work as we've been talking about in this presentation. We will continue to work on adding value through the drill bit and acquisitions. And of course, the drill bit is sort of euphemistic for exploration and development. And we've seen good milestones on both those areas in the past quarter. And there's more to come. So summing up, we still like to think of ourselves as a bold and nimble international oil and gas company. we're into our second half century, our second semicentennial and I'll finish as I started by pointing to the value creation that we have based on our low cost production, successful exploration and attractive growth prospects supported by the robust balance sheet that Hawkins described enables us to provide what I think is attractive value distribution to our shareholders, which, as it says, ultimately rank highest for us and, as they should, for any listed company. Thank you.

Okay. Thank you, Chris and Håkon, for the presentation. I think we are then ready to start the Q&A session. And let me see, some of you have already raised your hands. I think the first question goes to Theodor, Glenn and Nilsson. Please remember to unmute yourself.

Good afternoon. Thanks for taking my questions. Three questions. First, on the acquired assets, which looks like a very reasonable deal, from your point of view, will that be immediately free cash flow accretive? um a second question that is a further mna how do you think around the cost or capital for assets and the Norwegian continental shelf compared to other jurisdictions you have assets in and uh third question that is all on the pipeline uh as you said Chris you didn't discuss that too much in the presentation of course acknowledge the fact that it's extremely difficult to predict any what will happen going forward, but I just wonder what have you seen in terms of progress since we last met at the fourth quarter presentation three months ago?

Thanks.

Thanks, Ted. Maybe I'll take the last question first and then hand over to Håkon for the financial questions on the acquisition. So over the last three months, what's been happening on the pipeline? I would say when we look back, we thought that there was an important agreement between Baghdad and Erbil on some of the technicalities around the budget law. At one point, that wasn't a complete solution, but was maybe one piece of the puzzle. Then it went quiet, and then I think that on the back of the Prime Minister of Iraq's trip to the US, there has been some renewed energy. Perhaps it was that. Perhaps it was President Erdogan from Turkey's visit to Baghdad. Difficult to really put cause and effect together, but it seems that there is a new initiative that's been launched by the Ministry of Oil in Baghdad which they talked about in the press, having two committees to try to resolve the issues between them and Aerodio. And they're reportedly meeting this week in both the technical and the commercial committees. So we will see what happens. As you know, there have been lots of attempts to solve this over the past year or so. I've given up speculating on when a resolution may come.

We didn't hear you very well on the first two questions. Please repeat on those. We haven't gotten the volumes up correctly.

Yeah, sure. Absolutely will do. So first question was on the acquired assets in North Sea. The question is, will those assets be immediately free cash flow accretive, or will there be more CapFlex and operational cash flow over the next few quarters? That's the first question. The second question was on cost of capital. How do you assess the cost of capital for assets on the Norwegian continental shelf compared to assets you have in older jurisdictions.

Yeah, on the first question, whether these acquired assets will be free cash flow positive, we have a yes on that. There will be some capex going in, so that free cash flow number will, of course, move up and down a bit through the years. But we see free cash flow out of the assets from early on. Do you want to add to that, Chris? No, just agree. Yes. And I think your second question was on the cost of assets or, you know, the acquisition costs for licenses or assets on the Norwegian continental shelf relative to some of the other provinces that we are in.

Is that right? Well, yeah, partially. It was more around the capital when you assess M&A opportunities. How much higher risk do you assess to jurisdictions outside Norway compared to Norway, i.e., what's the spread of coastal capital in Norway versus other jurisdictions?

Right. Okay. Well, we worked through our back model for the regions that we are in, and they will differ, as you point out, Theodor. So exactly what the difference would be could be – 4%, 3% to 4% between what we typically apply in Norway and some of the other areas that we are in. So it depends a bit on the inputs to our back calculation, you know, country risk, et cetera. But I would sort of point you in that direction on a level of what the difference will be. Okay.

It's a tough question. I mean, that's that. That's correct, the answer from a financial point of view, but Teodor, you know, one aspect is jurisdiction, another aspect is are we talking about exploration, development, production? Are we talking about deep water offshore where we have to, say, spend a billion dollars before we get any oil? Or are we talking about Peshkabir where we have positive cash flow as soon as we bought the first well on stream? All of these things have vastly different risk profiles, and so we add that to the jurisdictional risk when we're assessing projects.

Yeah, sure. Understood. I'll leave it there.

Thanks. A couple of points from me. Theodore, as you know, it's not possible to get access to traditional sources of financing in Kurdistan because of the status of Kurdistan. So there is that difference and in the past when we have access to financing, it's been typically through the Nordic bond markets, but traditional sources of financing are not available in Kurdistan, so it's not really comparable to the range of options available in the North Sea and perhaps other areas. Secondly, on the issue of the pipeline reopening and our status in Kurdistan, I can say with some comfort that we're not in a terrible position in Kurdistan as we were when the pipeline first shut in. There was no market for local markets, quote unquote, for crude from us and from the other producers, but that market's now developed and it's almost limitless in the sense that oil directly or in product form find its way to global markets. What matters to us is that we are paid based on our contractual rights and the formula in hard currency outside of Kurdistan And before we agreed to load the tankers, this has not always been the case as you know. And as we approach a sort of a $40 mark to the extent we are actually paid that amount and on delivery, that's worth 10, $20 a barrel to us and maybe even more. And $40 is not a bad price given our cost of production in Carterstone. We prefer to have had all of the above, global prices, prompt payments, no arrears, etc. But that's never been the situation in Kurdistan for us or the other companies. Although we have said that when arrears build up, we have confidence that over time we'll find a way to get those arrears paid to us. We did it when the big area buildup occurred at the time of the ISIS. And we got that more in terms of sort of contractual cancellation of certain obligations we had. We got it by picking up a larger piece of the Taukey license, which turned out to be a very good deal for us. And I expect our arrears, which are now probably just over $300 million, will get paid in some form or fashion. But in the meantime, we're in unlimited markets for our production. We keep investing in taukey, raising production. We're now averaging about 80,000 barrels a day. I hope we can get that up higher. We'll see how those wells that Chris referred to perform once completed. We're doing a lot of other workovers. We have other things in our inventory of short-term production. low-cost investments we can make to get production up. So we've managed to make up for the losses we incurred early in the process by having a reasonably robust revenue stream and cash stream coming out of Kurdistan. So it's It's manageable and our financials are showing that now.

Okay, I believe the next question goes to Eivind Hagen. Please go ahead, Eivind.

Yes, thank you. Adding to Bijan's comments on the local market, you are mentioning that the realized prices are up from mid to low 30s to now high 30s. What is it that is driving this price increase? Is it the buyers that are now starting to compete more in price as volumes are reaching some sort of short-term maximum level or what is the driver?

Yes, it is about there's now more demand than there is supply. Before there was more supply than there was demand. And obviously the laws of supply and demand do work. There are buyers who prefer working with us because we're reliable. We have large volumes and we've been a good partner for them in this process and vice versa. And we have our choice of buyers as well. We have preferred buyers and they understand that as markets move in one direction or the other, prices should be adjusted and we're in a position to adjust them. There's, of course, also a dearth or a lack of sufficient volumes of heavier Iraqi blend crews in the Mediterranean because the pipeline has been shut in for as long as it has been. So the market for these kinds of crudes is stronger. It happens seasonally or sometimes in respect to market movements. So the buyers are making a lot of money on these trades. We like to see buyers make some money on the trades, but we don't like to leave extra dollars behind. So we have conversations with them and they understand. And when the markets move in the opposite direction where we move and when they move in our direction, they move. So it's been a good relationship. And I think there's a large constituency now of buyers for our crude. And it finds its way again into the far, far corners of the global oil trade. But it does take some discussion with them. and uh explanation of our situation and if we understand which we do now much better what their economics uh look like we can uh ask for a uh a better split for us and they know that if they if they don't concur we have other other uh options My hope is that we will continue to move this price up because there still is money left on the table by us. And we have a fair share of that. So, I mean, even if $40 a barrel isn't a bad price, there are times when oil companies would love to have had $40 a barrel. for their crude. And the trade-off for us is somewhat lower prices in exchange for predictability and assurance of payment in dollars. Well, that's a pretty good trade for us. And we are taking quite a bit monthly, probably more than the market has realized. from our Curtis on operations. We reinvest some of it. We have to invest to keep production going, given, again, the nature of these fields and the natural field decline. But it doesn't take very much to invest to get attractive additional barrels out of the ground. So it's still, in my mind, it's still a very good business. There are political challenges and other challenges that legal that have to be addressed. But in the meantime, we reached a not unhappy equilibrium between the Kurdistan producers and the markets. And I think this is true probably of other companies as well. We're in a special situation because we produce as much as we do. And my hope is that, you know, in the not too distant future, we'll get up to 40 and maybe push a little bit higher, unless there are major changes in the global market, and that we can maintain 80 and maybe push that up a bit more. So we're pretty optimistic about that.

Okay. Anything else, I mean, or are you happy? Thank you for taking my question.

I'm understanding it correct that you now, after earlier being kind of quite cautious of saying, you know, that local demand will fluctuate a bit over time, saying that, you know, you see it more steady and more established. So that's question one. And then Is there a scope now to, as this progresses and times move on, to negotiate with the KRG to receive some of the receivables back or recover some of that on an ongoing basis in the near future? and then uh third and last question isn't capex on the ncs can you touch a bit of where you expect that to go kind of this year next year and 2026 on a profile basis given the development opportunities that you have in front of you if you start to the first part of that again on kurdistan as i mentioned the market for kurdish oil is

is unlimited at the right price. We had the same issue came up during the ISIS period when there were a lot of topping plants around in Kurdistan, and I'd be asked, well, how large is local demand? And we'd say, well, local demand is not exactly the amount that's consumed in the local markets, but it's the amount of oil that local refiners, topping plants, refiners, traders can take and move, and they can move that oil into the far reaches of the market, Singapore, other refineries. So the demand is, in that respect, at the right price, unlimited, at least for now, even though the topping plants were collected and shut down many years ago because they were dirty in terms of the very simple topping plants and spewed a lot of noxious gases and other things. other byproducts. So that's, I think, we're in a good place there. On the question of the arrears, last time around our arrears were approaching, I think, a billion dollars. They're huge. And when the Kurdistan government was in a position to sit down and talk to us, for a while they weren't, they asked us, to share in the pain of the ISIS attacks and lack of any revenues from Baghdad. And we shared in that. So when the situation turned around, they sat down and said, well, what do you want? Do you want cash? And we said no, because if we get the cash, the best place to put it is in Kurdistan and in Talkey. and we had an arrangement where we had set certain parameters for the Tauke assumptions, $50 oil prices. But anyway, so we got the money back, and then some. I expect there will be a similar conversation. If hopefully the Sheikah well comes in, there will have to be some discussions with the government as to how best to proceed in other terms. That could be a time to do some trades, cash for producing rights. Maybe it can be part of an extension of the Taki license, which has now been operating quite some time. So it would be hard for the government to come up with a cash to us and to the other producers, which I think approach about a billion dollars. because that money was used, and it was their only source of revenues that they had at the time. It would be hard but not impossible, and maybe as part of a tripartite arrangement with Baghdad, there will be some resolution of that. But I'm certainly not worried that in due course we'll find a solution. It will be fair, and it will be fair, and – turn out to be a win-win situation as it was last time. It has been painful for us, but now we're comfortable that the money's coming directly to us, not going through that channel where it can be blocked again if the government's needs grow once again. If we're bell-tightening, we've always expected them and then told the government they've got to bell-tighten too. not something that governments want to do, but they understand that the importance of the oil companies, those who remain in Kurdistan now, that's to their economy and to their future. So it'll sort itself out. And I think we've made, revisited some of these contracts are quite, complicated and have a lot more going on. And we've been able to sort of claw back some monies towards the areas, but not significant ones. That'll have to be part of a different kind of negotiation. But in the meantime, cash coming out, I don't know how much we get. Chris Hawkins would say maybe $30 million a month or so. Coming out of Kurdistan, that's not, as I say, that's not peanuts. Okay.

Good.

There was a question on CapEx for NCS from Eric. He asked about 25 and 26. Well, we haven't really guided much during those years in detail as of yet. This year we have provided a capex number for Norway and the North Sea around $175 million, which was given in our February Q4 update. As we look at spend levels for 2025 and 2026, there will be some increase in that number because we're going to have more developments coming in. Previous Brasov, now Vestav will ramp up over the next years. And we have others as well, like Berlin and others. So it will be some years now that you will see a bit higher than we had projecting for 2024. Then when you head into later on in 2027 or at least 2028 and onwards, there will be increasing capex on developments as we have several development projects that have been kicking in with the more spending from especially from 2028. So I think just to give you some idea what we're talking about, at least some increase now from 2024 over the next years. And then with the bigger increases kicking in later on from 2028 onwards. So there's quite a big program here now over those years. And as we have talked about before, that will give us a real organic ramp up in production as these various products come on the street. over the next many years. So there's a significant increase in our production from all these organic projects. So, Ben, anything to add on that, Chris?

No, it's a good summary. Of course, once you get into 2027, 2028, there's a lot of work to be done and a lot of things to be taken before that time, but that's certainly what we're aiming in order to get that production increase that we've challenged ourselves to achieve in the North Sea.

Okay, we've got some more questions here, because I think the ambition is to round this up at the one-hour mark, so we'll move on to Christophe Bocquet. Please go ahead.

Hello, Christopher from Clarksons here. Thanks for taking my questions. First of all, congrats on a strong quarter. My first question relates to your expectations in terms of production in the North Sea this year. And do you still anticipate a closing on Arran in Q2? Second question relates to M&A. And while it's quite clear that you still want to increase your footprint in the North Sea, Are you considering doing even bigger things in the North Sea, for example, spinning off the North Sea segment or merging that part with another NCS-based company? The last question, a rather technical one, but regarding the ITP agreement between Turkey and Iraq, is there anything stopping KRG from exporting through Turkey once the current agreement runs out in the summer of 2025? Thank you.

So the first is on the question. The second was Aaron. So Aaron, yes, we will complete Aaron in Q2, as previously forecast. That, combined with the acquisition we announced today, is changing the frame quite a bit on all C production. We've also had some ups and downs, as we always do in the fields that are going on. And similarly, as Vivian touched on over in Kurdistan, we've been ramping Talkey up and we have hopes for the rest of the year there. So we are looking at our production guidance to the market. We haven't changed it as yet, but as with all other companies, we'll keep that under review and make the updates as and when it is necessary. Anything to add on that? What was the other question? Oh, yes, the IDP. Well, is there anything that stops Kyrgyzstan using IDP after the current agreement runs out? I'm not sure I'm the right person to answer that question because that really has to be addressed to those governments. I mean, I don't like, as you know, to get into sort of speculating. I'm not sure I have a full insight into the full suite of agreements that cover that very strategic piece of infrastructure. So I can't give a definitive answer on that, so I'd rather not go there. BJ, I don't know if you have any, if that internet connection doesn't look very good.

Can you please hear me? Yes, we do. Okay. I agree with Chris on the response on ITP. I think for us, DNO, the interesting bit of a wild card is at the Beshika, our partner is the Turkish Energy Company, TEC. And if we have a significant discovery and need to move oil, Then the question is, how will that sort itself out? Because then you have Turkey having a stake in production directly. So that's going to be a fun one to watch. But as for the rest, it's very political. The legal issues aren't resolved. The arbitration continues. Part two continues. how that might be affected by how the parties deal with ITP. These are all issues that lots of lawyers on all sides have been struggling with and trying to deal with. And we have no particular insight other than, you know, we sort of hear what's going on. And so I have nothing more to add to what Chris said. But Beshika could be interesting. and how that'll work, how that order will move to the market, move to Turkey and maybe through Turkey or to Turkey, whether by truck or a special pipeline that would be built. We just don't know, but fingers crossed we will have that problem because that would mean we'd have had a successful drilling program at Bishika.

I think if we had a Middle question, whether we would consider spinning off our IRC business or merge or do something structural. Well, first of all, to note that we have been successful in building tremendous value through our exploration successes over the last year. And we have a big development program we just talked about. So we're starting to get really noticed among other oil companies that are active in the North Sea. We have very good business development discussions, both through the large investment banks, but also in bilateral discussions with other oil companies. So there's a lot of opportunities for us to look at restructuring. But we are focused on what we have been doing, and that is to grow organically through exploration and development. And as we have now shown, we're also quite busy on NA-led growth, to especially develop both the production over the next years until our long production drops up. So, I don't know, we won't sort of answer your question, but just kind of confirm that we are starting to really, you know, become an important actor on the, especially on the Norwegian continental shelf. And through that, being seen as an attractive candidate to talk to on various ideas. And that goes both ways towards Dino, but also that we speak to other companies. So, I think we're, you know, basically seeing a lot of what we call BD or business development type opportunities for us to maybe jointly explore with other companies or that we, you know, do more M&A that we aim to. So a bit of a roundabout answer, but anything to add to that?

I think just a fun reflection for me because most of my time in DNA, those type of questions have been directed to Kurdistan, whether we should be merging with others in Kurdistan. So it's a nice validation of the importance of our North Sea business now that that comes onto the radar screen. As always with DNO, and that's very much in the motto that the shareholders are our number one stakeholders. We're always in pursuit of shareholder value. So if people come to us with transactions that we believe will add value to the shareholders, we are open to discuss. I think it's as simple as that.

I hope to be able to squeeze in questions from two questioners at the end here. The first one is Lucas from Flotten. Please go ahead.

Thank you very much for taking my question. I'm Lucas van Plaat and I'm a private investor in D&O. The question relates to the arrears from KRJ. And my question is maybe pretty blunt, but has there been any sort of discussion about KRJ paying their debt? using their part of the oil that is produced now. That is, instead of sending the KRG part of the oil to KRG and selling DNO's part of the DNO locally, DNO keeps part or all of KRG's oil and sell it as part of an arrangement to pay off the debt.

Yeah, the answer is yes. Of course, we've explored with them all sorts of mechanisms. As the price moves up, there's more money available for the KRG to share with us and with the other companies as one way of addressing the arrears. But you can be sure that where there's $300 million involved, we're focused like a laser on exploring with the options. But we're always... realistic about what their limitations are and opportunities are. And for the limitations, we try to be a good corporate citizen when there are opportunities to try to grab them. So thank you for your question. I'm delighted that there is a group of our shareholders in this call, on this call, always happy to meet other shareholders and discuss with them what their concerns are, in addition, of course, to the analysts and others who build this information and processes for shareholders as well. So I just want to just tip my hat to our shareholders. As Chris says, we are very focused on our shareholders and and try to meet their needs and try to be in communication with them, and I hope that continues. So thank you for your question.

Thank you very much.

Okay, so the last question goes to Nick Linnanert. Please, Nick, can you unmute yourself?

Hi. There was a report I saw about Iraq looking to reopen the old pipeline to Turkey, kind of to the west of Kurdistan. Do you think that's feasible, that they can repair and get that working in the not-too-distant future, and what do you think that could mean?

Yeah, we're... We have no special insights on that. We speak to all the parties, but we have no particular insight that's an option that the governments have to sort out. And we're not counting on it. We hope the pipeline will be open. We hope that the terms and conditions available to us and pricing and other contractual modifications possibly will be favorable to us and put us in a worse situation than before and probably more so. But as Chris said in response to the earlier question, we don't have anything to add. It's an interesting question and we pose it ourselves. We really have nothing to add on that. It'll have to take its own course and governments are involved at the highest levels and we're just there producing oil and trying to stay as much as we can out of the regional political scene. That's not our role or our interest to do so. But when you have this kind of oil, 100,000 coming out of Talke license or 90,000 coming out of Talke license or wherever in that range. And then another couple hundred thousand, maybe a bit more from other oil companies. This oil will find its way to market. We've said this before many years ago, because 5,000 barrels a day, uh, you know, it wasn't going to get very far, but at these levels, this oil will have to, uh, will come to market. And, uh, And Kurdistan, in a sense, production has become the tail that wags the dog. The U.S. elections may be won or lost based on oil prices and their impact on the economy. And then Kurdistan becomes a bit of a factor. That's one reason the U.S. governments are involved in these discussions from time to time. So we'll leave it to them to sort out. And We'll try to avoid the pitfalls and try to grab the opportunities and do what we do best, find oil cheaply, efficiently, safely, cleanly in Kurdistan. We have a great track record in that respect. I think we're in year 20 now of the Taki-Taki contract. That's before my time. Maybe Hawkins was around then. He must have been, you know, 14 or something. But so we've been there for a long, long time. And we've done well. There have been some very, very strong years and some weaker years. But over time, DNO has managed well. And from the very beginning, I was very impressed how this then, when I first got involved with DNO, how the small Norwegian oil and gas company this plucky company was there and how fast the Norwegians were able to bring the oil to market and it's a source of pride for me, although I can't take credit for it. There are others among our shareholders who have been there from the beginning who can do so. So, you know, we've been very successful on balance in Kurdistan and I think we can do better and we can continue this great run that we've had over 20 years, sort of bumps along the way.

And with those words, I think we are about to conclude today's conference call on a good day for DNO. And thanks for taking part. And we all look forward to see you again in three months' time. Bye. Thank you, Victor.