Dno Asa Ord

Good morning and welcome to DNO's first quarter in 2025 earnings call. My name is Jostein Lovos and I am the communication manager here at DNO. Present with me in Oslo on this beautiful day in May are executive chairman Bijan Mostavaramani, managing director Chris Spencer and CFO Håkon Sandborg. At first, Bijan will give an introduction. It will be followed by a presentation of the results, which will be given by Chris and Håkon. After the presentation, we will open for questions in the customary Q&A session. Since this call is for investors and analysts primarily, press questions will be dealt with afterwards. During the presentation, the microphones of participants will be muted. If you want to ask a question in the Q&A session, 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 unmute yourself. With that, let's get started. I will hand over to Bijan.

Thank you. First, I mentioned who the call is primarily for. I should just add to that it's primarily for our shareholders and our bondholders. And the analysts and the press come alongside those important stakeholders in DNO. I seem to be blocking the DNO logo, so I'll duck my head. To any questions that you'd like to post to us. Just a few words of introduction before we go into the results. Presentation, which some of you may have already had a chance to look at. I know the analysts and also have. Before the meeting, I'd like to again. important for us, transformative in many important respects. First and foremost, with the announcement of our acquisition of Sval Energy, which we previously announced, and now we're in the final stages of the activities that will permit us to proceed with the closing, which is expected to occur in mid-June, so not too far from now. We've already said the obvious that there are many advantages to DNO from this transaction. Of course, it increases our size and scale considerably as a result of the transaction, our production, our output in the Norwegian continental shelf. at the time as of the completion of the transaction that's significant we roll it together with the small assets the dno assets will total output uh averaging uh i think just over uh 80 000 barrels of oil equivalent today and that now puts the the combined companies very significant milestone and the one that we hope to uh to continue uh improving on as we bring our discoveries on stream hopefully in a rapid click but also as we perhaps do additional acquisitions whether they're smaller bolt-on acquisitions in the north sea to improve our perhaps through larger acquisitions that might become available to us. So we hope and we expect on an upward slope in terms of acquisitions and additions through developments in terms of North Sea producers. There's been other, again, advantages to us. We expect having a larger reduce and improve the terms of financing for DNO, so to reduce our cost of capital. And there are different reasons why we expect that to be the case. Importantly, because Norway is considered more safe and more secure and more credit worthy than our other leg, where we have important production in Kurdistan. So there are these strategic advantages to us. We will be able to access some of the flow through these through these hubs, and that will help us again accelerate the development of our our impressive list of discoveries. As those of you who follow us know, but DNO has been over the last several years of one of the most successful explorers in the offshore Norway. I think in one year we probably came in the number one in terms of the cumulative size of the discoveries that we've made so we've been very successful and we hope to continue that uh that trend as well importantly also with with the uh the merger position but i think of it as a merger of the of dno and small we will acquire a crack and very impressive uh of a group of small uh employees right-sizing done recently. But the group, I had a chance to meet with them yesterday in Stavanger, and it's a very impressive group. And importantly, coming from a high-tech group and ownership, they have a private equity mindset. and private equity culture that's been importantly created and nurtured by the senior high-tech individuals, John Knight and also Einar Jelsvik, to whom both are friends and to whom we owe a lot of gratitude for creating and nurturing private equity investors first. mindset as well. And the DNO has been moving in that direction more and more. As you can see in the, for example, our dividend policy, which over the last several years we've created and maintained and do so for this quarter. And this is part of our announcement. And hopefully we will even move more in that direction as well. We've also announced today in our annual general meeting notification that we are adding two new board members. We're nominating them for shareholder votes in June, at our meeting on June 5th here in Oslo. One of them has been on the board of Sval, and very knowledgeable about Sval, the organization of the Norwegian oil sector. industry background and a very active partner, in fact, in a major US private equity firm. So he will also bring a private equity background and a private equity mindset that hopefully will help us pivot even faster towards that culture. I think we've said in the press release today that we're driven by the need and the expectation that we will move faster, cheaper and better in terms of bringing discoveries to market. these would have been on the on development less than a year here in norway it takes three four or five six years sometimes to get there we want to move that faster and uh and uh i think other companies of our size and scale uh be very supportive and hopefully even the largest of the companies here in norway would uh would be motivated and more inclined and uh and joined with us in trying to accelerate the uh development of many discoveries in Norway that are sitting, waiting to be monetized. That's very important. This moving faster, better, cheaper, of course, has served us well in Kurdistan, where we remain happy for the past 20 years or so. The most important in terms of volume and production, company operating in Kurdistan, and we've done it the DNO way, of innovative creative and quite fast techniques and mindset for putting oil on production and we've continued that another highlight of this quarter which I'd like to also touch on and I know Chris will in his remarks from the presentation and his own thoughts we've been we've surprised everyone the market maybe not ourselves but we've surprised everyone how well we've been able to that typically have a natural decline of 15 to 20% a year. We arrested that decline. In fact, we were able to inch it up a bit through creative So we'd like to continue to pivot the DNO and the industry towards that kind of Norwegian Viking get it done mindset. the nature and character of our presentation and our financial presentation, operational presentation will change and that'll be very exciting. So I look forward to seeing many of you at the second quarter presentation. I think we're going to have the combination of small and the APMR operations in the North Sea. I expect we will have an appeal to a larger group of investors, so I expect hopefully all our current investors will still be with us, but I expect to see other investors who will find the DNO an attractive opportunity for them because of our North Sea presence. Chris.

Thank you again. And good afternoon to all who are joining this conference from me. So let's dive straight into the slides following that production from Bijan. And as we often do, sorry, maybe go back to the picture. We start with a wonderful picture from the DNO world. This time after last quarter, I think we ventured into the North Sea. Here we are back in our heartland of Kurdistan and one of the operators there who's taking good care of the production and we'll be talking more about that as Bijan has already mentioned. So let's get into the slides. Thank you. And the highlights. you can read for yourselves. I think we've announced this as a strong, another strong quarter for DNO. I think operationally it was an excellent quarter. As you can see, we have increased production across the board. We've added two more discoveries to an incredible track record now in the North Sea. We have maintained that 80,000 of gross production that Bijan mentioned. And we have done all that safely. We had no recordable incidents of any type in our operated activities, despite drilling operated well in the North Sea and high level of well intervention activity in Kyrgyzstan. So for me, although the news item of course from the quarter was the huge hugely important acquisition uh i think it's it's really important to our investors that you see we continue to deliver operational excellence and um with the great team that we'll be working within uh once swell and dno come together in the north sea i have no doubt we will continue um with that level of performance Of course, apart from the transaction, which I'll talk about a bit more in the next slide, immediately on the back of that, we were able to take step one of what we're calling optimizing our balance sheet on the back of that transaction, returning to our happy hunting ground bond market. many bond investors listening in today because we've had a great cooperation over 24 years now in the bond market and we certainly see that as a win-win and we're very gratified by the support for our latest and probably greatest bond that we've issued so far. Last but not least, as we always say, ranking just a little bit higher than our bondholders are our shareholders and we're very pleased to say that uh the board of directors have uh once again approved uh a uh the same level of dividend uh um which is giving us the 1.25 per share on an annualized basis if we go to the next slide then please uh we're obviously all um very excited to be uh that we're still naturally on track to close the uh acquisition um and it's coming up very fast so we're Really looking forward to that. A number of these figures have been mentioned by BHM, but it's worth repeating because we will quadruple our North Sea production and having just re-entered the North Sea in 2017, we are now going to hit 80,000 barrels a day some eight years later, which has been quite a journey. We will put us in the top 10 producers in Norway and interestingly, positions us, we think, even better for further growth. The combination of our set of discoveries and the upside opportunities within a number of the producing assets that Swale have give us a great pipeline of projects and infill opportunities to maintain this 80,000 barrels a day in the medium term. And of course, we will keep aiming to deliver these exploration discoveries and incremental M&A to build even further on the position that we are getting. The other point we've been making, and Bijan touched on the important financial synergies in terms of potential improvement in cost of capital. and the tax synergies that are well known to followers of the Norwegian continental shelf between having development heavy portfolio and a production heavily portfolio. The other point that we've been drawing investors attention to is what I call the operational synergies. As we said on the Bond Roadshow, we feel that the portfolios fit each other like a hand in a glove. And what we're alluding to there is that a number of Swell's positions are in the infrastructure that our discoveries need to tie back to. And so we believe and we see from other situations that that gives you much greater insight and we expect that to enable us to accelerate development of our discovery portfolio. So looking forward to driving that forward in the next year or two.

Thank you.

Coming back to the DNO portfolio, we are really pleased to, during the quarter, to announce yet another discovery, this time an operator discovery, second operator discovery we've announced within six months. And this has the delightful name of Shirtkaka, which is uh meatball to those of you who don't speak norwegian uh so the creativity of our explorationists knows no end um but what i like to draw my attention to here we often talk about trying to move faster and better and the example here is the way we've immediately appraised the discovery so we had a traditional uh vertical exploration world to minimize the financial exposure prior to uh prior to showing you have a discovery And we immediately sidetracked that in order to appraise the structure. And that was an extended reach near horizontal wellbore. And so within that one campaign, we have compressed what is traditionally, I would say, an 18 month, perhaps two year timeline into one well. So we're very pleased with that. And now we are putting a team in place that we hope will drive this opportunity forward to development in a timely fashion. That brings us to the next slide where we putting up our revised draw program for the year. And most of this is known to the market, but in the same feed might bring your attention to the page well there. This is the follow up to Othello. and I was just looking ahead of this call, I see that we announced the fellow discovery on the 2nd of December last year, and we are back there on the next well to, that's not appraisal of the same structure, it's a nearby structure, which we see as appraisal slash exploration, it's certainly not frontier exploration, it's a follow-up. Hello, so we're very optimistic about it and we're back there within nine months of announcing discovery again. Very rapid movement taking trying to build on success where we are operator and of course we can't do that without the support of our partners and in particular our KP who was the second biggest interest holder in that license have been extremely supportive.

Thank you.

Good to start and I talked a lot about this in the Q4 presentation back in February and the team continued to do a wonderful job that BJN has also described. We've got the gross production up to 82,000. We are able to maintain, that's been there in terms of production capacity for a good six months or so and we're still running at that type of level. um the time as in i think it was q3 we had a bit of a dip below that is more due to a little small um upheavals in the local sales market rather than any production issues uh that's going back six months now but that was as you may recall uh related to the elections in in kurdistan where even truck drivers want to vote So we had a little bit of an upset at that time. We've seen a bit of upset with Ramadan and Eid and so forth during this quarter, but the production capacity remains. lot of this was covered in in bj's words but i i would just like to take this opportunity to thank our team for delivering another quarter of fantastic performance i think the other aspect worth mentioning which is not covered on the slide is again the impact of our gas injection project That's been running for four or five years now. Four years, I guess, we started up just as COVID was coming to an end. And of course, it's saved a lot of gas from being wasted through our flares. We really see the impact on the Taukey field and that's been very helpful. That combined with this very active well intervention programme has been a key to the production performance that we've seen from the ESC. And it results in a very nice cash flow from Taukey License. Of course, still we are not able to get our crude to international markets directly. That has to go through the hands of refiners and traders. So we don't get the full value that we would hope to from those barrels, and we hope that that will return. Next slide. Let's go to the financials. Again, just to conclude what I've been saying, for me, an excellent force operationally, and we have a very different business from what we're sitting here presenting next time. We're looking forward to joining forces with the Sval team and continuing to deliver its operational excellence in order to give return to our shareholders. And the financial consequences of all that will now be set out by Hawker.

Yeah, thanks, Chris. And again, hello to all of you on the call. I'll now do a brief review of our Q1 financial results. We'll start with these key P&L figures, and you can see that our revenues are up by $11 million in the quarter, to a level of $188 million. And this time, the increase was mainly driven by higher oil and gas prices in both business units. The Q1 revenues were split between Kurdistan with 58 million and the North Sea with accounting for 130 million. If you look at the operating profit in the middle here, you will see that there's a significant improvement from Q4. And here it should be noted that in addition to the revenue increase, we have no impairments in the first quarter. And while we had significant impairments, so $104 million in Q4, mainly from the Pashika license adjustment in Kyrgyzstan. We have a stable cost of goods sold in Q1, but we had some higher expense exploration, mainly due to about $12 million dry well costs on the ratio well in the NCS. Going further on the slide to the right, you will see a net loss of $4 million in Q1. That follows primarily from higher tax expense in the first quarter. That came from changes in deferred taxes.

We'll move on.

We have cash flow. We saw higher cash flow in Q1 at $100 million, up from $82 million in Q4. And here we also include a contribution of $5 million in positive working capital change in the first quarter. Otherwise, no Norway or Norwegian tax payments in Q1. But, of course, looking ahead towards the end of this year, we expect to be in a taxpaying position following the acquisition of SoalEnergy. You see that our net investments increased to $109 million in Q1. That was primarily for CAPEX in the North Sea on development projects, but also continued investment in exploration with $39 million in exploration expenditures in the North Sea. Net cash from our West Africa operations in Côte d'Ivoire came in at net $5 million in the quarter, and that was in line with our expectations. As has been mentioned, for our financing activities, we successfully placed a new $600 million bond in March, a week after we announced the SWAL acquisition. We were pleased to see that the new bond, now named DNO06, was met with strong demand from investors, and we secured a competitive coupon in displacement. In addition, we made drawdowns of $30 million on our bank RBL facility in this quarter. Again, under our quarterly dividend program, we paid a dividend of $27 million to our shareholders in February. And including some other items, we thereby had net cash inflow from financing of $583 million. On this basis, our cash balances increased to close to $1.5 billion. at the quarter end. Of course, I think that looks pretty good, I would say, quite a record for us in D&O. Next. But of course, a key reason for raising the new bond was to refinance the short-dated D&O 04 bond, and we did so by calling this bond in early April in an amount of $350 million. So the high Q1 cash balances have thereby been subsequently reduced by the call amount. I should note that following the repayment of the DNO 04 bond, our credit strength is now further enhanced by having a long maturity profile on our bond debt, with the first bond maturity coming only in 2029, and the second maturity is in 2030. It's quite a good long horizon on our maturities now. Otherwise, with the high cash balances and with net cash of $43 million at the end of Q1, We are, again, maintaining a very solid balance sheet and a robust financial strength. We are clearly using this strength now to finalize the acquisition of Sval Energy. And as you heard today, the acquisition will transform our operations and also our financial outlook through much higher North Sea production and revenues. This will lead to a very substantial increase in our annual cash flow and our debt service capacity. As such, given the substantial size of the acquisition, we will have a higher leverage following completion. But it should be noted that on a net debt basis, leverage will be fairly modest compared to many fair companies. So, fine. In summary, these are certainly exciting times for us as we deliver on our goal and strategy of rebalancing the company through a much stronger position in the North Sea now. That really takes us to the end of the slide presentation. I think we're now at the stage where we hand over to Josef to lead the Q&A session again.

Yes, thank you, Chris, Bijan, and welcome. And yeah, let's get started with the Q&A session. The first question comes from Tom Erik Kristiansen.

And just unmute you, allow me. Here we go. Erik, you will have to remember to unmute yourself as well. You're muted, Kristine.

Thanks for taking my question. Can you hear me now? Yeah. First one for you, Bijan. How pleased are you with the portfolio overall in Dino after the Sval acquisition? Is this kind of balanced now and you will shift a bit focus from growing the North Sea to maybe more maintaining it and further lifting dividends? Or is it still kind of a growth focus on that part of the business? And secondly, does the increased materiality of Norway now imply that you're more open in Kurdistan to do strategic combinations there? Or do you expect to kind of stay with the same kind of structure there going forward as well? Thank you.

Thank you for that question. questions at these sessions. The answer to your question, I guess, is yes, in the sense that are looking at opportunities where we not only get good aspects, but we have gain again, strategic value from the combination. And when you see strategic value, you put a price on it. We knew their strategic interest and strategic value, and we were prepared to put that into our offer price. So we want to do more in the North Sea. Getting up to 80,000 plus is good. It'd be better yet if we get up to 100,000 barrels a day and then some. So we're in a growth mode in the North Sea. Clearly, we're able to do it now. my colleagues mentioned, both operational but also financial. In Kurdistan, we'd like to do more, not necessarily by acquiring one of the other companies, but for those of you who followed DNO for a long time will remember that there were long periods of time when we were producing at 100,000 miles a day and more than that. We've reduced our spend, which we described, both Chris and myself, It was because of the cultural Kurdistan directly, you still hear about it because this is big international news. The closure of the pipeline, the discussions between Erbil, the capital of Kurdistan, and Baghdad, the capital of Iraq, that involve also the U.S. government's very involved in those discussions and pushing hard for the pipeline to reopen. Once that takes place, the matter of the arrears and the certainty of payments will also be addressed Well, the question of price, this is also pretty well known, that the price we received in the third quarter has been around $35 a barrel, and other operators maybe a bit higher, a bit lower, depending on the quality of their crude. Mid thirties number look quite quite good. Especially because now we are receiving a prepayment for our production repaid. Ahead of delivery once the payments are in our banks. Um, international international accounts. Then we deliver the, uh, the oil to the buyers and that by itself, that's certainly a payment. And prepayment is worth, I don't know, uh, pick a number, 8 dollars a barrel, 10 dollars a barrel. I think Chris has done some of the math and it seems that our under the current pricing of 35 or. Our partners around 35, so there's a bit less, a little bit more. We have, of course, a presence in West Africa. We've looked at other opportunities to do more in West Africa, but we haven't acted almost because we've been so focused on stepping up our North Sea assets and production, which we've now been very busy doing this year with small. And also, we've been spending a lot of management time and time dealing with the situation in Kurdistan and trying to careers issue without without which we DNO have said we will not be prepared to go anywhere in the pipeline and I think the the other companies have a similar sentiment which is expressed through this company grouping called Apicure that represents many of the international oil companies active in Kurdistan so their voice is our voice and I think our voice is their voice those have been very very clearly discoveries, a dozen discoveries or so, that were sitting there waiting their turn. And that's not acceptable. And this is a reflection of the slow pace at which things happen in Norway in the running gas industry for many, many reasons. But the slowness of speed and the other issues that we face in trying to have a more Anglo-Saxon international oil companies, many of them have left Norway and they're happy to pick up Norwegian barrels and Norwegian gas. We're finding that enthusiasm that we've been approached by trading companies, by banks and by large oil companies is operating in norway because these different holdings and we hope to to push ahead uh accelerate the uh the monetization of our of our assets and we have a huge inventory here already discovered in uh in uh in norway that uh we want to bring into the market so that'll get an area of great focus and a great uh opportunity for for dno all right uh thank you

Can I have just a short follow-up question on your statements there, Björn? Do you actually see a potential or do you think it's likely that after all of this turmoil, you could actually come strengthen out of it in Kurdistan with, you know, if Somo is paying you, you have the second largest crude seller in the world, probably more reliable than Kurdistan has been historically, for instance, you know, on payments, that the situation actually will be better than before the shutdown? Or is that too optimistic or too naive to think at this stage? Thanks.

I hope and expect that when the pipeline is restarted, when that takes place, either in the coming year, much less, but in the coming year or not, because next year, the old contract that governed the use of these lines by Iraq, that we will come to market. So I'm optimistic. I was optimistic very early on when I took this position. A lot of the questions in these sessions was, what are you going to do when the Iraqi government will survive, and they have. And in the past year, those of you who follow this have seen that Iraqi courts have ruled that the contracts signed in Kurdistan by the Kurdistan government with the international oil companies are in fact valid. So that problem's gone away. And I think there'll be a different regime in terms of the use of the pipeline. And now that the US is removing sanctions on Syria, perhaps some of the old Syrian pipelines in the Mediterranean which weren't in use, some of them may be in disrepair, will be repaired and oil can flow in that direction. And if the negotiations with Iran succeed, I expect some of the sanctions on Iran will be in another direction in which the oil can move. Perhaps if issues between Erbil and Baghdad are resolved, the oil can flow south these geopolitical fixes, but I also see these geopolitical fixes happening very rapidly, and that will be an opportunity. We're also interested in doing business in Iraq, in the south. Kurdistan has been very, very good to us. There's a lot more to be found than producing Kurdistan, but the mother load, as they say, the big oil and gas reserves are south in Kurdistan. So, all very, very exciting. Good.

Now, Erik Botten has been waiting for our credit analyst, I believe. Please go ahead.

Yeah, thanks. Can you hear me?

Yes.

Great. Congrats on a good quarter and a successful way of raising the bond. Two quick questions there on the Zorro Capital side. You have a very large cash balance now and you still drew down on the RBL. Is that something specific or was it more just to maintain the sort of facility limit? And also, could you please share some light on the RBL discussions with the Sval banks and how that's going. The oil prices dropped quite a bit since you acquired Sval or announced the acquisition. Has that impacted the amount the RBL banks are willing to commit to?

Yeah, I can address that and see if I get some help from others if I need. I think, Erik, that we I drew down on the RBL now basically because we had discussions that we ran the treasury in our North Sea business on a ring-fenced basis in Indyno. There was a temporary need to fill up on the drawdown on the facility. We had paid down some of it after and subsequent to the quarter. So it sort of will ebb and flow a bit, no specific reason other than running this in a good manner between the treasury at DNO ASA and the same group who are subsidiary in the North Sea business. For the discussions with the RBL banks, we have had very good discussions, very strong interest. We have seen three banks that were on both the DNO RBL that we haven't been having for ourselves, but also the same banks have been in the SWAL RBL. So these three banks are we are talking to as lead banks on a potential new RBL. There's also a fourth large bank that has been on the small side that is involved. So we have four major leading EMP banks now as our lead banks on the RBL discussion. So we don't think that the sort of the drop that we saw in oil prices has affected the capacity of these banks to provide the RBL amounts that we have been discussing. But we're not affected by that at all. So, RBL financing is one of the options we are exploring for the refinancing of the debt in Svalbard when we take over and complete the acquisition. But there are also other possibilities. We see very strong interest from, for instance, major oil companies that want to discuss with us on offtake agreements. Same thing goes for large trading houses around the world that see that we will have a very strong output to both oil and gas. In fact, we will have about an even split between oil and gas with our new portfolio in the North Sea. So you have some large entities wanting to do gas trading and some are more interested in the crude side. There's several potential off-takers that are so keen to get these agreements on the volumes in place and that they offer very competitive financing. this is also something we are exploring as a very good option. So I think it's clear that we are coming into new possibilities for financing now with the acquisition that we wanted to be sure we are picking the ones that are most effective, flexible, providing certainty of funds and also the lowest possible cost of capital. So it's not exactly determined as of yet which way we are going on the preferred options, but this is something that, believe me, we are working hard on at the moment. We also have the bond market where we have been successful for many years as one other possibility. So we are assessing all these various options as we move ahead towards completion of the acquisition.

and options very, very well. But I'd just like to add that a year or two ago, the RBL facility was the obvious one for the companies. The first we go to and we get better terms from the banks through the RBL mechanism than we would otherwise. large investors, but in Europe that culture, that mindset, that we want to steer away from the oil and gas and fossil fuel industries has made it slower. The movement of the RBL lenders, they've been moving more slowly, offering terms that are not attractive relative to the alternatives. is less attractive for them, with too many bells and whistles, to make it their first priority, or even any priority in terms of the funding of the oil and gas business, where, again, those who are the traders or the users of the oil have stepped up and are offering very, very attractive terms and conditions to producers, and we're going to take advantage of that. And the markets, the bond markets always I'm the oldest and he's been the most present here, and he's developed this bond business for, and been a great protector of our relationship with our bond investors. So again, thank you.

be available to us as we are fast approaching the one hour mark i hope we can keep the last couple of questions short and sweet um there are two more people wanting to ask questions and the first one is antonio segura i believe from the credit side Please unmute yourself.

Let me just say one thing before you do. You say we're going to ask a short question, but the short question demands a long answer. And the answer is a lot, because we want to explain. It's not because we don't want the time to run out, so you have time to ask the difficult questions, which in the past were always about Kurdistan. When will the pipeline open? Can you hear me?

Can you hear me?

Yes, we can.

So I'm going to make it like a very short and sweet. So my only question is, what's the impact of your new acquisition in on your net debt to APT ratio? Like what is the proforma leverage ratio for DNO post acquisition?

Yeah, we have run some good presentations on that in our bond roadshow that we did in March and run various metrics. You're touching on one of the metrics that show that we will be moderately levered after the acquisition. So net debt to EBITDA X on a pro forma 2024 number will be 0.7 times. And we have some slides that we compared, you know, on that level to several other companies in our peer group, including investment grade companies. And as I said in my presentation today, we are going to be moderately leveraged ranking compared to several of the other companies that we get compared to. So the answer is 0.7 times on the, you know, combined the swallow that, you know, perform up many 24 basis. Thank you. Okay. So the last question seems to go from, uh, that was too short.

Yeah, there's one, one person raising their hand here and that's a Nick Coleman. So, uh, please go ahead.

Thank you for taking my question. I'm a journalist with Platts. You'll be aware that there's an election coming up in Norway in September, and there seems to be some sentiment in the air, an idea that the results could be more positive for the oil and gas industry. I wonder if you have any observations on opportunities that might arise as a result of such a political move and a bit more specifically there seems to be discussion of holding numbered licensing rounds every two years and I wonder specifically if that's something that you are looking at that it would kind of maybe create opportunities to explore outside the the currently available areas, which I think are pretty extensive already, to be honest, as a result of the APA rounds. But your thoughts, I'd be interested. Thank you.

I can have a go at that one. So we would be, we look back at the old numbered rounds and see that participation in those rounds historically actually had papered off. And I think that's largely, as you point to, the fact that the APA round areas really are now the lion's share, not only of the North Sea and Norwegian Sea, but of course this year the Ministry hugely expanded the area in the Barents Sea that is covered by APA. So whilst it would be welcome that numbered rounds returned, I don't think that will make a major shift to the business of many of the companies in Norway. I suspect it's in Norway's interest because that is the more frontier areas and a country needs to be getting those areas tested whilst there's a good healthy production to provide the support for such frontier exploration. That's a longer term view for the country and that's entirely up to them. So I don't think there'll be any major short-term change. The APA system has clearly been a backbone of Norway's success. Can you have one of the backbones? One of the important factors of Norway's success the last 20 years has been the APA. Of course, all of the major discoveries that have happened in that time, or almost all, have been acreage that have gone through that APA system. and the government has been rightly building upon that and for us that was a key element of coming back to norway seven or eight years ago because you can access acreage without having to put hundreds of millions of dollars down um non-refundable do you have uh thoughts on that i have some closing thoughts please go ahead um with respect to the uh the elections uh

North and South in the airline. With respect to the election results in Norway, the government here has been very supportive of the NO and all reentry and growing away in the large recipients of APA licenses and we've acted on them. We've had important discoveries. So I think that's been it's been we've been supported and we've given back in terms of acting quickly and getting these discoveries made and we want to get mobilization advanced. So we will look to work on the government. The current government has said that they want to see more of these discoveries coming on faster. So they're the of how to deal with the industry overall and industry practices, but we could also use greater tax incentives coming years and that uh how to reverse the what's going to be a an obvious decline in production by the larger companies today and but therefore by the whole industry which will start I think currently you know probably as these discoveries and because the the small actors are one of the fastest growing companies in Norway and developments are going to be I think expected to be ahead many of our pair of companies and that's an exciting place to be and move on to get there well so with that thank you very much again I take my time responding to these questions but I hope this has been helpful to you and that my colleagues can stop kicking me under the Kidding, I'm kidding, I'm kidding. Thank you.

With those words from the chairman, we'll conclude this call and see you again soon. Thank you for being this great.