Dno Asa Ord

Good morning and welcome to DNO's second quarter 2025 earnings call. My name is Jostein Löfvås and I am the communication manager here at DNO. Present with me in Oslo on this beautiful day in August are executive chairman Bijan Masavar-Amani, managing director Chris Spencer and CFO Håkon Sandborg. At first, Björn will give an introduction. It will be followed by a presentation of the results, which will be given by. After the presentation, we will open for questions in a Q&A session. And as always, shareholders first, but analysts are also welcome to ask questions. Press questions will be dealt with afterwards. During the presentation, the microphones of the 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 remember to unmute yourself.

With that, let's get started. I will hand over to Peter. Good morning.

Thank you, Joost, for that introduction. Before we start with the presentation of the operational results, financial results for our second quarter, I just wanted to say a few words first of welcome and to say that we have had, of course, for those of you who have had a chance to see the release or the reports this morning, We've had a very, very exciting second quarter at DNO on the back, importantly, of the acquisition of Sval Energy and the bringing together of our assets and of our teams. We've had now tremendous results in terms of revenues, in terms of operating profits, in terms of production in terms of reserves and it's really truly been a transformational uh for the company and we are all very very excited those of us uh who've been in dno uh longer and the new uh colleagues that uh have joined us from uh from uh small uh it's a terrific uh combination of assets of people of mindset of a strategic redirection of the company. dividends to our shareholders. Those dividends announced today have been now the quarterly dividends have been increased by 20%. I think that's a reflection of the confidence we have in the company in our results and our results moving forward and the growth path, but the growth trajectory that we are on. the quarter, we, of course, had an unfortunate drone attack on our fields in Kurdistan. And these are not just limited to those fields, but other fields. We were all very lucky, very blessed that no one was injured and that there are no casualties. But of course, there were damages to our our facilities and our operations, and that's a setback. It'll take us some time to recover in full, although we have started to – the Tauke field, as we had previously reported, is now back on production. The damage is now limited to one of our storage tanks or storage tanks. At our other field, the sister field, Peshkebir, There was damage to service facilities and importantly to two of our coalescers, which deal with water treatment and removal from our crude stream. I had an opportunity to visit our facilities, our fields in Kurdistan and meet with our teams there. we decided to, on a test basis, open up the number of the wells and see the condition of the pipeline and how the wells would react and how the facilities could be, at least on a test basis, breached to allow us to start moving oil from the Petrobras field to our terminal and loading facilities for sales to the local market that we've been doing as well. The ramp up has been impressive, although we've been very cautious in terms of which wells to open and how rapidly to open them to make sure we don't trip up during this test period. But we have already ramped up to about 35,000 barrels a day from the peshkaru field, which combined with 25,000 barrels a day from the Tauke field puts us, at the time of our release, we were at 55,000 barrels a day. This morning, we were at 60,000 barrels a day. Again, I caution that this is on a test basis. Repairs will take time, and of course, we have a difficult security situation, and we will keep a very close eye on that. And if there are additional security threats, we will, of course, revisit our operations But for now, again, the good news is that there are no casualties, no injuries, and also that we are beginning to recover from the shutdown of the fields and back producing. We'll also talk a bit more about what plans we have to resume investments in these fields to try to get production up. We haven't drilled any wells in the last several years. We've maintained production at about 80,000 barrels a day through tweaks, through workovers, but drilled no wells. And we are now confident enough in our revenue stream, currently from the local sales, to begin to invest, to raise production have before the shutdown of the Iraq-Purkia pipeline. So with that quick introduction, I'll ask Chris to start the presentation and the slides.

Thank you, Bijan, and good morning from Oslo. So Bijan has touched on the key points of the quarter, and it's As you said, it's a very exciting quarter with the completion of the transformational acquisition of Swale Energy. And therefore, this is the first quarter where you start to see the impact of the acquisition on our results. There's only one month of the quarter included, as we say here. But as you'll see throughout the presentation, that makes a big And at the top line, it's a huge jump in revenue, 37% up quarter and quarter. And that's despite us being in the summer shutdown season in the North Sea. The operating profit level also a huge jump of 200% to 86 million. That's on the back of increased production across the portfolio and that was obviously flowing through into those revenue and operating profit figures. Also during the quarter, we continued the refinancing of the balance sheet on the back of the acquisition. We discussed that both in the presentation that we did when we announced the deal and in the last quarters that we are trying to put in as effective financing package as we can. And we've made great progress just before the last quarter results when we came out with D06, our 600 million regular bond. During Q2, we put in place the 400 million hybrid bond, which is new for us and a relatively new product in the bond market. uh it is treated as equity on the balance sheet and it is covenant free essentially and uh gives us a lot of flexibility in the balance sheet uh since the end and then since the end of the quarter in july we are very pleased to um agree a gas top off take uh and finding some facility arrangement which provides uh 500 million dollars of liquidity at what we've achieved in the past. Operationally in the North Sea, the highlight was yet another discovery in the VidSyn prospect, which is very close to our Fenya producing field. Very nice discovery there. Could be easy tieback and it's clearly commercial. And then happily on the back of the transaction and view going forward. Once again, our board of directors have felt that we're in a position to increase the dividend. That is, as last time we increased overall assessment of the sustainability of that type of dividend level. And as you know, we are splitting our shareholders prioritizing our shareholders. And so we're very pleased to be able to share the success of this transaction by increasing the dividend.

Next slide, please.

And so we moved to the Kurdistan side of the business. And as we mentioned in the court in court on court, so we had the a little bit lower production on a gross basis. A lot of that was due to some disruptions in the local market. But of course, the quarter has kind of been put in the shadow by the events that Bijan touched on, where we, for the first time in our 23 years operating in Kurdistan, were hit by drone strikes, and that was really a watershed moment for us, unfortunately, in the region. Thankfully, no individuals were injured, but we did sustain some quite serious damage to processing equipment, particularly the Peshkabir side. So we're working and the teams are back to work now. Of course, it took us a bit of time to assess that it was actually safe even to go back to work. And it's unknown to us who launched these attacks. So it's very difficult to put your finger on why we were targeted, which leaves one with a lingering security concern. Nevertheless, we're back to work. We've made changes to our operational procedures. We've put in place passive protection measures, and our people are happy to go back to work. And we're now back on stream, as Bijan outlined in his introductory remarks. We see this as a test basis, both with respect to the security situation, but also the pots and pans and the hardware, Obviously, we've tested before restarting, but you never quite know until you operate in hot mode, as we call it, with oil and gas running through it, what damage may have been hidden from these attacks and the pressure waves that go through the equipment on the back of such an event. We will turn into the final point. We've now been in the local sales environment for two years or so. That has been working very well. We've maintained strict capital discipline and the team has done a remarkable job keeping gross production up at around the 80,000 per hour a day mark. If these conditions continue, we are now planning to get back to drilling. And we hope that we can ramp up production with the target of getting back to the pre shutdown levels.

Next slide, please.

Moving on to the North Sea business and I guess we'll be repeating this over and over in the presentation that again, the impact of soil can't really be overstated. Here's the production chart that shows the difference of our DNO portfolio we had in NLC or we have in NLC before and after soil. Now that is, of course, everyone quickly puts that in the past and starts to look at the future and the future is also bright. The red wedge where we're bringing in contingent resources into reserves has already started. That's the point of the comment about the Maria Revit or revitalization project that came on in May. We've got an interesting second half coming up with new projects coming in in the Norna area. And then we have six ongoing developments that are expected to come on stream in the next four years, which will help us keep this 80-odd thousand barrel a day of net production to DNO in the North Sea. Then we're working on the next wave, which is the converter-feeded series of discoveries here, which we're hoping can get to project ascension in the next year or two. Or, sorry, during the next 25 and 26, as it says on the slides. And then we have a rank of our own operating discoveries we're working on. So really opportunity rich in our North Sea portfolio, and we are going to have to make tough decisions and high grade our portfolio. We're happy position of being able to make a voice both in terms of our exploration opportunities, but also probably the projects we sanction in order to pick the best ones moving forward.

Next slide, please.

Coming back to exploration, another lovely success with the vid sim that I've already mentioned, puts us a hit rate of three out of four this year. But still, I guess the standout is our Shetkaka operated discovery in Q1, where we not only drilled the discovery well, but drilled a near horizontal sidetrack to appraise the discovery at the same time, putting us rapidly in, putting us immediately into a position to work on serious development plans, and that is ongoing now. Looking ahead, I am very excited about the Pagewell. I have my fingers and toes crossed on that one. I think the rig is moving into position today, if the weather's calmed down. And we should be spotting that well next week. So I'm looking forward to that one.

Next, please.

So, as we're rolling up our sleeves on the integration of our two businesses in the North Sea, we thought it'd be useful to set out the key priorities that are guiding us as we put the new business together. We've got tremendous growth initiatives. At the same time, we want to make sure that as we go along, we're generating sufficient cash flow both to service the debt that we have, but also to maintain the dividends out to our shareholders. And obviously, we believe that that will provide us with sustainable ability to service the dividend increase that we have announced today. We've had tremendous success with the exploration drill bit. We've talked about that several quarters that our focus now is to wrap reduce the time from discovery to investment decision and first oil on the NCS. Happily we have, there are other companies in the industry that are like-minded and I think we'll see the whole industry working on this and we intend to be a leading player in that new approach to developing discoveries. We've got a lot of high grading to do with the combined portfolio. That's going to be a key focus the next month. And that's going to be combined with working on additional growth, both through drill bit and bolt-on acquisitions. We've talked a lot in the past about the financing cost synergies, also the operational synergies of the Swire Energy acquisition. And those are clearly a key focus as we put the organization together. And last but not least, we need to combine the two companies, the legal entities of Sval and DNO. That's a requirement in Norway, but it is also a key step in realizing the tax synergies that we can get by combining the strong positive cash flow from the SWAR portfolio with the investments that are being made in the former DNO portfolio.

Thank you. Next slide.

Okay, that's my segment. Over to Håkon to take you through the financials.

Yeah, thanks, Chris. And thanks again to all of you on the call for attending our quarterly presentation today. I will now do a brief review of our Q2 and year-to-date financial results, but let me also first start by commenting on the strong progress we have made so far this year. As you have seen and as we have discussed, the small energy acquisition clearly transforms our operations and financial outlook through much higher North Sea production, and that will lead to a very substantial increase in our future revenues and cash flow generation. But to close this acquisition, we have also put our substantial cash balances to good use to pay for the shares in Sval, and we have successfully refinanced most of the debt in both DNO and Sval through a series of capital markets transactions all done this year. The outcome of these transactions is a much transformed capital structure in DNO. with a long-term maturity profile and with access to new and diversified funding sources. And while we have moved to a net debt position, it should be noted that our leverage is still fairly modest compared to many peer companies. So again, we are very pleased with these significant achievements and the repositioning and strengthening of D&O in many respects. Okay, let's now focus on the key Q2 P&L results, where we show revenues of $258 million. That's up from $188 million in Q1. This revenue increase was mainly driven by the inclusion of Sval in our accounts for one month only, for the month of June, with some actual offset from both the lower oil and gas volumes and prices in Q2. for the other North Sea assets. The Q2 revenues were split between $204 million for the North Sea and $54 million from Kyrgyzstan. On the cost side, our lifting costs and DD&A increased in Q2 with the inclusion of SWAV, but expense exploration was reduced with no dry wells in this quarter. We thereby show a significant increase in operating profit to $86 million in the second quarter. We have an increase in net finance expense in the quarter from higher debt, but tax expense is also high, mainly due to changes in deferred tax. On this basis, we end up with a net loss of $7 million in Q2. Next one, please. And we move to cash flow. And with the higher revenues, we show a substantial increase in EBITDA in the second quarter. That leads to a strong increase in our cash flow from operations to $135 million, up from $100 million in Q1. This is also a net of $24 million in negative working capital changes in Q2. Otherwise, we had a North Sea tax payment of 114 million for the acquired Svald assets in Q2, and we will see an increase in NCS tax payments now going forward due to the strong earnings from the combined North Sea portfolio. Net investments were high in Q2 at $294 million, mainly driven by the $450 million in cash consideration paid for the shares in Svald. less 259 million of cash held in this company at the acquisition date. Other investments include 96 million dollars for North Sea development projects. As you can see for finance we had a net outflow of 412 million in the second quarter as we repaid 1 billion and 50 million in bond debt, RBL and prepayment financing. This was partly offset by the new hybrid bond at 400 million and a bank bridge facility at 300 million dollars. Further, we also paid our quarterly dividend at 30 million dollars in Q2. So, primarily due to the high investments at 294 million and the significant net debt repayments on a cash basis at 350 million, Our cash balances were reduced by $685 million to $788 million at the end of the quarter. When you look at this movement in cash balances, it should be noted that we had a very high cash position at the end of Q1. That came after we completed the $600 million DNO 06 bond in March. And the proceeds from this bond have as planned been used to cover debt repayments and investments in Q2.

We move to the next slide.

And as I discussed already, our balance sheet and capital structure has been substantially changed in Q2 through the SWAL acquisition and the financing transactions. And for this reason, we thought we could do more detailed explanation this time of our changes in the capital structure. And we look at this table and start at the asset side. The acquisition leads to a materially higher property, plant and equipment value at 2.7 billion. That's up from 1.2 billion in Q1. Goodwill, as you can see, increases significantly to 1.4 billion. Most of this is technical goodwill at close to 1.1 billion. That comes from the requirement to recognize deferred tax liability on the difference between the assigned fair value and the tax base of assets acquired in the acquisition. On the other side of the balance sheet, equity increased to $1.4 billion in the quarter through the $400 million hybrid bond, as this bond is accounted for as equity due to its unique features. Under interest-bearing liabilities, we redeemed the $350 million remaining balance under the short-dated DNO 04 bond in Q2. And this was, as mentioned, with proceeds from the new DNO 06 bond that we completed in Q1. For our bank debt, for RBL debt, we had $80 million outstanding at the DNO RBL at the end of Q1. and we assumed $522 million of RBL debt from Sval in Q2. Further, we repaid all of this RBL debt and canceled the facilities with an amount of $602 million in combined RBL debt at the end of the quarter. That's all now repaid. Further, we assumed $446 million in prepayments or offtake-based financing from Sval in Q2. and reduced this by $98 million to $348 million at the end of the quarter. And finally, we added that $300 million in the bank-rich loan, and all-in interest-bearing debt increased by $219 million to $1.6 billion at the end of the second quarter, as you can see in the table. When we move to deferred tax liability, the increase – sorry, go back again – in Q2, is as mentioned primarily due to the difference between the fair value and the tax base of the acquired assets. The income taxes payable at 420 million mainly include the NCS taxes due for the Sval portfolio for 2025 and also tax provisions for prior Sval transactions that are covered by tax indemnities. And the other liabilities at the 1.8 billion consists mainly of long-term asset removal obligations and also short-term trade and other payables. And you will see that detailed in our quarterly report. In summary, we have had a very busy and successful first half of this year, and we have carried out many of the steps in our extensive financing plan for the SWAL acquisition. And naturally, following these significant acquisitions, we moved to a net debt position at the end of Q2 at the level of $860 million. But importantly, using a pro forma first half 2025 EBITDAx on an analyzed basis, our net debt EBITDAx leverage ratio is still quite moderate at 0.5 times. You thereby maintain the modest net debt level that I mentioned, but also relative to earnings in the enlarged DNO group. Further in July, as Chris mentioned, we announced the completion of a DNO North Sea gas uptake agreement. with the related $500 million financing facility at very attractive terms. This facility will be used to refinance existing D&O debt and also to lower our cost of capital and will be an important part of our future debt financing. I can mention also that in addition, we have already repaid $150 million of the $300 million bridge loan in Q3. And we will continue to reduce debt levels and optimize our capital structure going forward. Fine. And on that good note, I will now hand back to Chris to complete our presentation today.

Thank you, Håkon. And it's great listening to you, actually, because it takes us back through all of those transactions. And as you say, we're very pleased with the way we sit today. and the extent to which we've implemented the plan for financing a swell transaction. Still some optimisation to go, as you say, and an important step of that was to make the first 150 million repayment of the bridge loan, which of course is a bridge loan. It's to bridge during our financing project. And we hope to see the next steps on that by the time we're sitting here in three months time. I mentioned I repeat the point on the bridge loan, because, of course, that's also in the board's mind when they decide to increase the dividend. We are, as always, conscious of our need to service debt as well as provide an attractive return to our shareholders. But the shareholders are our priority, and since we have the cash flow to manage the debt that we have, the board was happy to increase the dividend by some 20%. And we now have a very nice track record of shareholder returns building up that we can proudly show in these presentations. And although there's been a bit of fluctuation due to exchange rate in the last five quarters, you'll see that we've had a nice increase over the last couple of years in the dividend level also. Next slide, please, because the final point made on the slide I've just moved on from was around streamlining and trimming expenditures. This is a good illustration. Once again, the transformational impact of Swell hits on every metric, including operational spend. And this is where we will be generating synergies going forward, 26 and beyond. Of course, we start off as every company, we have the revenue we generate from our assets. We have to pay OPEX to get that revenue. And at the corporate level, we have to pay interest and so forth on our debt. After that, we have our choices to make between EXPEX, CapEx, re-investment in the business, EXPEX and CapEx and dividends. And that is the optimization process that we're working on as we integrate the Swell portfolio. Then to close the presentation, a quick outlook. Obviously, the biggest thing in the next quarter is going to be that Sval will be integrated for the whole quarter. So that's going to make a huge difference to all metrics. Operationally, we're expecting to have a better second half in the North Sea than we had in the pro forma first half. As we bring on these new developments, we're guiding 80,000 to 85,000 BOE a day through H2. We talked in some detail in Kurdistan. As we say, we've resumed near normal operations at both the fields now. We hope that we'll be able to maintain that, but that depends on how the equipment performs and how the security situation develops. And lastly, which I've already mentioned, but we're taking the last couple of steps of the plan that we have in place for financing this whole transaction. And the aim of this will be to reduce the cost of debt that we have going forward. That concludes our presentation, and do we hand back to you for Q&A, Jostein?

Thank you, Chris, and thank you, Håkon, for the presentation. And at this stage, I think we are ready to start the Q&A, so please raise your hands. I'll put this exciting new illustration on the screen to set the tone.

So let's see who's going to be first. No question raised so far, but I'll give you a couple of more minutes.

There are a lot of attendees, more than 200 people listening in today, which I believe is a new record.

But maybe we explain everything to your full Yeah. Okay. Then, well, there seems to be two people on the end.

I heard their last moment. So I'll have Satya, maybe you can introduce yourself.

You are unmuted. Yeah. Thank you for everyone.

I think it's a great presentation and you guys are performing very great. Myself is Satya. I'm from Retail Investor in Oslo. And I'm very good fan of how the company is performing. Quick question for me to the export pipeline opening possibilities coming quarters.

That's my question. Thank you very much. Let me respond to that.

Yes, there's been a lot in the press between the international oil companies, the government of Iraq, and the government of the Kurdistan region. And for those of you who follow these, you'll note that those discussions have intensified, and that there's been some agreements, broad agreements, on what a reopening would look like. Those discussions have not been concluded, but so far as DNO is concerned, our position is clear and it's been stated many times. We would be thrilled and excited to participate in a reopening of the pipeline. through Turkey and access to global markets. But we've also said that there are conditions that we have. One is that there'd be certainty of payments to us under any new arrangements. These issues are not new. Some 10 years or so ago, much the same dynamics were at play. We participated in exports, and we were not paid in full by the exporting entity at the time, which was the state oil marketing organization in Baghdad, but also the Kurdistan Regional Government was part of those arrangements, but due to a lack of firm arrangements at that time. DNO and many of the other international companies were not paid, and there are still significant sums outstanding from that period. We've also had, during the COVID period, we were delivering oil to the Kurdistan Regional Government for on-road sale, and because of the economic difficulties of the time, We were asked to agree to defer payments or receipts on our part, payments to us. And we did so, and there are still significant outstanding receivables that we fully expect to be paid. And the government at the time and repeatedly since then have said that these errors will be covered. So we're looking to have firm arrangements in place where there is certainty of payment to us for our contribution to the pipeline. Our production in Kurdistan historically has been and will soon be the highest among the international companies. I believe among the international companies, we represent 40% of the production in the Kurdistan region. So we are key to the full export of Kurdistan produced oil we would be again thrilled to be part of that but we don't want to repeat the situation in which we deliver the oil but aren't paid correctly according to our contracts in a timely fashion and in full so that is a requirement on our part another requirement is that we revisit the issue of the arrears the payments that were not made to us In the first period that I'm referring to, we're at the order of $300 million. And our payments, our arrears from the COVID period are a similar sum. There have been other arrears during the ISIS crisis. Those were paid to us by the Kurdistan Regional Government at the time in full. And we were always confident that we would be paid. and we're still confident that we will be paid. These areas will be addressed. In the meantime, we have been, as Chris also referenced, successful in working with the local Kurdistan traders in moving our crude at a discount to international prices, but at prices that still allow us to cover our operating costs and with additional free cash to DNO and to the contractor with our partners like DNO and Energy. And based on the successful implementation of those local sale arrangements, we are prepared to increase our spend on drilling of wells. As I mentioned, I was in Kurdistan several days ago our drilling program and to identify where we would drill and how much we'd hope to recover. And my hope and my expectation, working with our very, very strong team, is to restart drilling and get us back up to the pre-pipeline closing levels. So years ago, 100,000 barrels a day from the Pechka Rear and the Town Quay fields. And to do so, again, on the back of local sales. If the pipeline reopens and we participate in it, we expect that our revenue stream, based on our production sharing contract, which ultimately is the only fiscal framework for our sales, whether we sell the local market or the export market, we would expect with the opening of the pipeline for our revenue stream to be significantly higher And on the back of that, we would hope to do even more in our fields and our license in Kurdistan. So we're hopeful all these export discussions will come to a quick fruition, but they must be done in a manner that respects our contracts, sanctity of our contracts, our contract terms, and addresses the arrears that need to be addressed to satisfy our requirements to participate in the export of our oil through the pipeline under the arrangements that have been discussed and appear to be close to being finalized, but have not yet been finalized, but we hope they will be finalized. We hope that the structure will be such that our very legitimate and clear problems we met and be part of that program as well.

Okay. If there are no further questions, then I think we should wrap up for the last question coming in here from . Please introduce yourself.

You are unmuted. Hello, guys. Can you hear me well?

Great. Hey, this is Mehmet from Deutsche Bank. Just a few questions. First on the export, which you have just recently mentioned on the production levels of 100 kilo barrel. If you were to increase the current levels to 100, what kind of additional investments would you need here? And then the second question on this one. given that you are just at the moment ramping up production in the Kurdistan region of Iraq, and I guess you are doing some repairs at the Peshka beer field. Do you expect any disruptions, production disruptions in the coming quarters?

On your latter question, you're asking me if I expect any more drone attacks?

I hope not. No, not drone attacks, don't get me wrong, sorry. Because of the repairs, are you expecting any disruptions in the field, the production?

I don't know. We are still examining what repairs need to be done. We know what facilities have been damaged. There may be other parts of the system that have been damaged that we have not yet identified, as Chris mentioned. So, that's why we described this as a test production period, certainly at Peshkabir, and we'll see how well we can sustain production at this higher level, which is still not the full level that the Peshkabir field can produce at. So, we're proceeding cautiously. I mentioned that I hope we don't have any more drone or any other attacks or surprises of this nature, are in a better position now to protect our staff. We have fewer people in the field. We've erected some concrete barriers and some in-house security protocols to protect our people. That's a number one priority. And as we look at repairs and at drilling, we will keep security very much in mind. The repairs at Tauke, the replacement of the repairs to our coalescers, which are the principal equipment that we've identified as having been damaged, it's very visible. That will take quite some time to locate coalescers and then bring them and install them. That'll take some time. We've done workarounds around the coalescers using other temporary fixes that have lower water cuts to reduce that problem. And I think at this level, on the current level, about 35,000 barrels a day in Pechka, where we can sustain that, unless, again, we see other surprises. So we can, I think, sustain that, but the repairs will not be done in a matter of days or weeks or even a month or two. But in the meantime, we are doing things the DNO way, It's finding fixes that are safe, environmentally sustainable, but create the opportunity to move oil to market. I mentioned the DNO wave. When my predecessors at the DNO came into Kurdistan 20 years ago, there was very little oil infrastructure in Kurdistan. There was no diesel to run the facilities on the fields. purchased a small used refinery and brought it down and installed it at the Taki Field where it still sits today and it still provides diesel in support of our operations. They brought in their own diesel making facilities and so they found ways to develop the Taki Field and produce quickly and effectively unconventional things, but it made it happen, and we're now doing that again here. But we are following the work on the ground very closely, how long we can sustain these levels. I think we can sustain these levels, and hopefully we can move them up. But we are watching the skies. We have sky drone watchers, and we have to be able to put into place, again, protocols to be able to get early warning. And so that if the, hopefully, event, in the event of non-drone strikes, we can then keep going. We're very security conscious, and I'm confident that we'll be able to maintain these production levels and hopefully increase them. And also at Tauke, because the Tauke field has performed well. The natural decline in the fuel production has been stopped in the last several years, notwithstanding the drilling of no wells, because we've been re-injecting the petro-carrier gas into Tauke. When the petro-carrier field went down, we had no gas to inject to Tauke, but now we are moving gas to Tauke, and hopefully the Tauke production On the issue of what sort of spend we are looking at, some of these statistics are known. We have three kinds of wells in the Taki License. We have the Geneva shallow wells, which are still producing. Those wells cost under a million dollars up at the top and are doing quickly because, again, the Geneva formation is quite shallow. SINDI rig that we use for workovers and the deeper wells will be used to drill at least a couple of Geneva wells. That'll contribute hopefully a few thousand barrels a day for production. Our Tauke development wells cost around $5 million a pop. At the Peche Guerrero, the cost is twice that, but the Peche Guerrero wells are expected to produce more than the Tauke wells, so we're We have a number of targeted drilling sites that we prepared years ago, and we're dusting those off and deciding in the current production situation, in the current security situation, which wells we want to drill when. There are rigs available in Kurdistan. There's a rig that's been stacked on Taoki, and so we can move rapidly in the DNO way to put these wells down and add to production, I think, pretty quickly. And again, our teams are terrific, they're dedicated, and they are raring to go, as all of us are, to get wells drilled and production up and our revenue stream up.

okay can i just ask one last question on your last comment in the in the presentation you're saying that you're working to establish similar arrangements with regards to the um to the financing for the north sea oil production uh can you give us some color what kind of um arrangements those would be is it something like again like an off group of tech agreement rbl facility a bond and and maybe some color about the the size of it Please, Chris.

Thank you. Yes. We are considering all of the above, Mehmet. Thanks for the question. We're now in a situation where we have time, we've got the deal done, and we've been very pleasantly surprised by the strong interest from trading companies to secure both gas and oil streams. And they are being very creative and making various offers of financing packages together to secure the rights to marketing of the oil or gas without us having to take a haircut on the prices of those products. So it's been so far a very interesting and positive journey for us. So how that will look, we will come back to, I think, next quarter. But whether it's debt or more pre-financing, whether it's sort of 300, 500 million, that's the sort of scope we're looking at. And then we should be able to reduce some of the higher cost debt that we have on the balance sheet.

Have you mentioned 300 to 500?

I think that's the order that we're looking at. But we've been surprised. We were very pleased with the deal we've done on the gas side. I think when we were going into that, I wouldn't have thought we would get 500 million. And the other beauty of that facility is it's on demand or not, but we can use it or not use it. It's there. There's no holding cost to it. And if we obviously reduce the amount of financing on it, then the interest rate comes down. interest rate in itself is very attractive. So it's a lovely source of capital. My point is it's very, very flexible. So in good times, we can let it run down and still provide the company with a liquidity buffer going forward.

We're actually fast approaching the one hour mark. So I think it's time to wrap it up. And thanks to all for participating and see you around next quarter. Thank you. Thank you.