Dno Asa Ord

Okay, good morning and welcome to D&O's second quarter of 2026 earnings call. My name is Jostein Löfvoss and I'm the communication manager here at D&O. Present with me today in Oslo are executive chairman Bijan Mossavar-Rahmani, managing director Chris Spencer and CFO Birgitte Wendelbo Johansen, who will take you through the presentation slides. But before we begin, I would like to draw your attention to a slide in today's presentation summarizing D&O's possible offer for Ganel Energy, which was announced on the 7th of August. Due to strict limitations under the UK Takeover Code, we will not take any questions regarding Ganel or the potential offer during today's call. Instead, we will refer you to the slide and to the full statement, which has been published on our website, through the NewsWeb messaging service and via RNS. With that, let's move to the presentation. Afterwards, we will have a Q&A session. But first, let me hand over to Bijan. Good morning.

Welcome to the Q2 2026 interim results presentation. by the DNO. I'm joined by my colleagues who usually attend and present at these quarterly reports, presentations. I will just say welcome and say a couple of introductory words before we proceed to discuss the slides. This quarter has been a very strong one for DNO. Among the strongest in our history, and our history is a long one, we celebrate this year the 55th anniversary of the formation of DNO. And that's quite a number of more than half a century. We are still around. Many of the oil companies in the international industry who were operating and active In 1971, when we were formed, are no longer in the industry for different reasons. So this makes us one of the oldest of the international oil companies in the world. And we're very proud of that history and of that record. This quarter was the strongest ever for the company in certain financial metrics, but we're very proud of our performance. And our strong performance has taken place, notwithstanding the fact that one of our most important legs, operating legs for the company are operations in Kurdistan, who are shut in for most of the quarter. During that time, and of course, all of you who follow the company and follow the region and the industry know that we've had and many other security events and threats to our operations, as have other companies in the Middle East and in Kurdistan in particular. But we used that period, while we were not producing for safety and security reasons, we used the period such as the second part of the quarter initiate workovers on our wells and even to start drilling new wells to position the company to start operations and production in particular when the conditions are permitted and have the ability to recover production at a rate that brought us back to where we had been pre-shutdowns. We have restarted production and my colleague Chris will discuss the operations in Kurdistan. But we hope to sustain production at the levels that we had before the shutdown over the course of the remaining quarters. But obviously with one eye, always two eyes or four eyes. on the security conditions and situation because paramount for us is the safety and security of our people on the ground, of course, of our facilities as well. But we hope that we continue to produce in Kurdistan and have a safe and secure operation in the coming weeks and months. I'd also like to make a quick reference to what Jostein said about the possible offer that we might make for Kenel Energy, our partner in Kurdistan. We hope that the board of Kynan Energy will engage with us as we pursue this opportunity. But I can't answer your side because of our 2.4 announcement of a possible offer and the conditions set by the panel that governs these matters in London. We can't say any more about that other than to say we hope to engage with the Board of AVECNL and to see how best to proceed on this matter. With that, I'll ask Chris to present the operating portion of the presentation today.

Thank you, Bijan, and good morning from me. As Bijan has already touched on, another great quarter for TNO and it really shows what a strong diversified company we are now. We're just over one year on from the Swale acquisition. and yet again the merits of that acquisition are coming through extremely powerfully in our results. I've talked a lot over the last year about the operational synergies that that combination has unleashed and you'll see more examples of that in this presentation. But I think the highlight in this quarter is the diversification. Obviously, as Bijan has described, we've had a difficult quarter in our Middle Eastern business in Kurdistan with almost no production. But by having the very healthy North Sea business, Combined with the high oil and gas prices has meant that we've still hit record revenues for the quarter. So the strong diversified growth-oriented DNO that we mentioned in our press release today is very clearly evidenced by last quarter. So the statistics are in front of you on this slide. Another very good quarter of production in the North Sea, a bit above what we were expecting. And with the prices we achieved more than compensating for almost zero production in Kurdistan in that quarter. West Africa, our Côte d'Ivoire business as normal around the 3000 All of which is gas, of course, and a nice cash positive contribution. But of course, it's the North Sea that is dominating the picture. On the back of that, we saw this record revenue of 760 million. We say largely unhedged. Maybe 1% of the revenue was hedged, so effectively unhedged in our North Sea and that traditionally has been the DNO approach. And with the great volatility that we've seen this year, that position has been rewarded by not capping the upside from these commodity prices. On the back of the high revenue, of course, you see that flowing through the operating profit and the net profit. But particularly gratifying for a simple engineer such as myself is the free cash flow, which is my most important performance indicator. And with this very high cash flow, we have actually paid down $220 million of debt in a quarter with zero production from Kurdistan. Who would have thought that three years ago for DNO? And of course, the board were comfortable to approve the quarterly dividend once again. And so a few years ago, we pivoted to always our shareholders. We are maintaining that pivot, if that makes any sense in an English expression. But anyway, we continue to provide an attractive dividend yield in addition to the upside potential we see in our equity story. Moving on to the North Sea, very strong quarterly production, as I've already mentioned, and we had expected things to go slightly worse in the second half than the first half. So we were expecting a stronger, but it has exceeded even our estimates. What you see in the last quarter, we had a deep dive into the Tyvek projects that we have ongoing and coming up on the North Sea. My colleague, Morton Greenie, for those who are watching, gave you a good run through of those projects. And once again, last Q2, you see that portfolio delivery with two new developments coming on stream. And this is, as we explained last quarter, very much the model. And you see that with the developments that were approved in the fifth bullet point on this slide. The fourth bullet point points to yet another value adding transaction. and as I've mentioned the last few quarters, that's another element to our business model in North Sea very definitely. Here it's a great step that we've been looking to do for some time because we have multiple projects either already tied back to the UR hub and we have several including Orphina and Sirisa Noor in the next bullet point that are being tied back to that hub. We did not have an ownership position there and the team have managed to get us in with a 5% interest, which is extremely helpful obviously when you're tying back so many of these satellites. So we're very pleased with that transaction and comes on the back of a string of similar North Sea either swaps or small acquisitions, small divestments. So with the majority of return into production, with the majority of the maintenance shutdowns behind us now and still ahead of our estimates, we are increasing our guidance for 2026 production. And we're now estimating we should get about 85,000 barrels of oil equivalent on average through here.