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.

Next slide, please.

Turn into the growth side of the business. And we are, as we've said many times, very growth oriented, not only here in the North Sea, but looking for growth in other areas also. And the latest in that regard was our Carmen appraisal. which came in in June you see the results there and that of course is right next to the Atlantis Discovery which is moving forward to development and which we entered through another one of those North Sea deals that we've been delivering we announced that in March so we discussed that also in the last quarter but Carmen is within I think about 20 kilometers and in the same area is the Aphrodite Discovery where we picked up a 10% interest. We're hoping for the best on that appraisal but that is a deep sort of type gas opportunity so we'll see what comes of that but we're operating on a well at the moment and four more wells to be drilled in our exploration appraisal portfolio this year. Thank you. Over to Kurdistan. Unfortunately, again, the quarter dominated by the war and the knock-on effects of the war in the Middle East. We had to shut down for the safety of our people and remain so for most of the quarter in terms of production. When the ceasefire was signed, we started to cautiously ramp up activities and really the slide describes that cautious ramp up that took place. We have, as Bijan said, the priority of course is the safety of our staff. We have put in place extensive passive protection in both the accommodation blocks but also around our process facilities in the form of big concrete walls which we are advised is the best way to minimize the impact of the greatest risk we have which unfortunately is drone attacks. With that in mind we felt sufficiently comfortable to restart production but as anyone who reads the news knows it's a very uncertain environment and we are not quite daily I guess but we're driven by events, we're reviewing security frequently and I would say we've been close to shutting down again recently but We're still going. And if the security condition allows, we do expect to be able to get the PSC back to around the same level of production as we had pre-shutdown, and we are drilling. But really, you can't get away from the security situation at the moment, and I hope in three months' time we'll be able to say, to look forward with more confidence and give better estimates. But at the moment, really, it's anyone's guess. We are, of course, producing though, and we are, as we have done for the last few years, selling the oil to local traders. And at the moment, we're getting in the mid to upper 30s. But as we always do, we've been insisting on being paid internationally before we deliver the oil. So at least we have a complete payment surety for oil.

Thank you.

Ben, as obviously many of you joining the call or if not all are aware and Bijan mentioned, On 7th August we publicly announced our possible offer to acquire Ganel Energy PLC. As already mentioned a couple of times, we have strict guidelines from the takeover panel that we have to stay within what we've stated in that announcement. And I think that's fine because I think it speaks for itself. The indicative offer we made is 69 pence per share, which is a premium of 38% to the price of that of the Ganel share the day before we made the announcement. We believe that if they were to accept this offer, The shareholders of Quesnel would see certainty of value and that's irrespective of what happens with their offer for Capricorn on the terms that they've announced. We note that if they don't succeed in taking Capricorn then Quesnel won't have the diversification it has been working on for some time. and a significant G&A cost burden that we consider to be disproportionate to the company's scale. The proposed offer that we've made is not conditional on completion or elapse of Ganel's announced offer for Capricorn, so it won't matter what happens in that process to our offer. Ganel shareholders have had Ganel shares have had a relatively poor trading liquidity in recent history. So we consider that our offer represents a liquidity event for those Ganel shareholders should they wish to take it. And for those who elect to take the possible offer of DNO shares, then As you've seen once again this quarter, that would allow them immediate participation in a strong diversified and growth oriented business with not least an established track record of dividend payments. So with that backdrop, we have to decide by the 4th of December, 4th of September, most likely, although there are certain circumstances in which that date can be extended. But we'll have to decide whether to announce either a firm intention to make an offer or that we are not going to make one. The famously dubbed put up or shut up deadline for us. And as Bijan mentioned, our hope, as we stated in the 2.4 announcement, is that we could get into some constructive discussions with the canal board on this offer. That concludes my part of the presentation, and I just hand over to Birgitte to tell us more about the record revenues. Thank you, Birgitte.

Thank you very much, Chris, and thank you, Bijan. Good morning, everyone. As you said, Chris, at the start of this call, we present another very strong quarter for D&O. Revenue in the second quarter was $761 million, up 21% from the last quarter. The increase from Q1 is driven by higher realized oil and gas prices, partly offset by lower sales volumes in the North Sea, explained by underlift as well as seasonal maintenance. As production in Kurdistan restarted very late in the quarter, we reported no sales or revenue here. Comparing with the second quarter of 2025, we must of course take into consideration that Sval was included in our figures as of June, which explains most of the large movements of almost 200% revenue increase. Year to date, revenue was almost 1.4 billion, tripling the revenue from the first half 2025. Our operational profit ended at $439 million, also a substantial increase of 55% compared to $284 in the first quarter. Our tax expense in the quarter was $340 million, an increase mainly due to higher taxable income, which is a good thing. Net profit in the quarter was $83 million, representing a 65% increase compared to the first quarter. And year to date, the net profit is $134.1 million, up from negative 10.9 in the first half of 2025. Next slide, please. So let's move to the cash flow. Our cash position moved from $531 million at the end of the first quarter to $550 million at the end of June 26. The operational cash flow was $639 million supported by robust earnings and working capital movements. We had three tax installments in Norway in Q2, totaling 98 million, and as these installments were the final ones related to the 2025 results, the cash tax in the coming quarters will be higher. We expect a total tax installment on the NCS in the second half of around 320 million US dollars, though this will also, of course, depend on the exchange rate at the time of the payments. The strong free cash flow in the second quarter should be seen in context of course then of the higher tax payments starting from Q3. Net investing activities was 228 million with the main effects coming from 202 million in asset investments and the 26 million in decommissioning. We had a material reduction in broad run amount under our offtake financing as Chris mentioned of 221 million and other financing of 73 million covers dividend and interest on our debt. So we had a cash at quarter end of 550 million as mentioned and as you can see this is a similar level as the last quarter reflecting that we have mostly used a strong free cash flow this quarter to repay debt and not build a cash position. Next slide please. Our total balance sheet as per quarter end is around 6.2 billion, of which PP&E represents around 50%, 3.2 at the end of the quarter, a slight increase from last quarter. Our net debt ended at 553 million, down 238 million or 30% from the last quarter, mostly driven by the previously mentioned reduction of the off-stake financings during the quarter. Our equity share is as of quarter end at 21.8% and with a total equity of 1.36 billion. We are well within also within the bond covenants. On the back of this strong balance sheet and cash generation, the board has decided to distribute 0.375 NOK per share as Chris mentioned. And following this payment, D&O will have paid dividend to our shareholders for 17 consecutive quarters totaling 491 million dollars in addition to 62 million in share buyback. All in all a very strong quarter for DNO and by that I think we'll move over to the Q&A session.

Thank you Birgitte and Bijan and Chris for an excellent presentation and Before we move on to the Q&A, I guess it's timely to remind you all that we will not take any questions about GINEL and the possible offer due to the UK takeover COVID limitations. And so with that, I think we can take the first question. And Theodor Sven Nilsson, analyst, you may unmute yourself.

Please go ahead.

Good morning, thanks for the update and thanks for taking my questions. A few questions, first on the tauke production and the current production in Kurdistan. You mentioned that we have restarted, but it's a little bit on and off. Could you comment on at what level has the quarter-to-date production been in Kurdistan? So that's the first question. Second question is also on Kurdistan, and that's on local prices. I know you get like pricing authorities, which also I think that you highlighted in your presentation. That's the same as previous periods. Why hasn't the local price increased when global oil prices has increased substantially lately? And then a third question that is on NCS and 2027 production outlook. You definitely... I have several fields coming on stream into next year. I'll also assume some long decline on the current production. Should we expect like double digit percentage production growth on NCS next year or is that too aggressive to assume that kind of growth? Thanks.

Let me start with the Kurdistan question and I'll turn to Chris and ask him to respond to the NCS question. With respect to our production level, that's a hard one to respond because as I mentioned, as Chris mentioned, we look at the safety and security situation in Kurdistan, in Iraq, in the region, and importantly in our areas of operation on a very regular basis, almost a daily basis. And it's possible that we will have to shut down production very quickly. And Chris referred to that as well. Because of the uncertainties and the shut-in, we prefer not to give a figure because today's production may not be tomorrow's production. And I think it would give a false projection and raise expectations or lower expectations if we report our production on a weekly basis, a daily basis, on a longer basis. It's not really helpful to our investors. It's not helpful in other respects either. So we will obviously, in our next quarterly presentation, present the numbers for this quarter. I hope it will be strong numbers, but I can't give numbers that... that represent one day's production, high or low, or not at all, because again, this would not really give a good guidance to the market as to what to expect in terms of Kurdistan production. We're producing currently, we've said that our expectation is that we will reach, if all goes well, our reach and sustain on an ongoing basis are pre-shutdown production levels. And what we have said about drilling and workovers would help offset normal decline in some of the wells and hopefully give incrementally higher numbers. But we just can't say this is a very unique situation. And we have one foot on the, on the accelerator in terms of operations, in terms of drilling, and one foot always on the brake. So I think the best numbers we can give you would be the numbers we present next quarter, which would be backward-looking rather than forward-looking. Having said that, you asked about pricing. Obviously, pricing in local markets sometimes are related to external markets, sometimes they're not. In this instance, There is a disconnect between prices for fuels and diesel, gasoline, other products in larger Iraq and global markets. Oil producing countries typically sell products into the local market and to well below international markets. It's moved into international markets. That changes. But at the current time, our sales reflect, again, other conditions, other considerations than those in terms of our North Sea pricing for oil in particular. That tracks the global supply and demand of oil markets very closely. We have said that the price that we are currently selling to local traders and where that oil moves, we don't know. But our sales price is in the mid to high $30 a barrel range. Before the shutdown, we were in a very, very low $30 range. So that's already about a 20% increase over our pre-shutdown levels, which is great. But But our pricing is not, the net pricing to us does not reflect international prices. That's unfortunate. And anyway, we were shut down in production wise at the periods, the weeks in which oil international prices were extremely high because of the war in the Persian Gulf and in Iran. We missed that opportunity in Kurdistan to capture those prices, but we did not miss that opportunity in the North Sea. And again, you've seen our financial performance. That's been terrific. So while we were not able to capture it in Kurdistan, we did in the North Sea, where the North Sea operations were hitting. I'm very pleased with that. And so the North Sea carried the quarter for us. And when we first started going to the North Sea, it was Kurdistan that was carrying quarters, multiple quarters for us and allowed us to move into Kurdistan revenues, Kurdistan operations, allowed us to go to the North Sea. And now the shoes on the foot of the other sister, the North Sea is carrying Kurdistan and hopefully In the third quarter and the fourth quarter, both will have their dancing shoes on, but we just don't know when we're offering you that guidance. I wish this situation were different, but it is what it is, and we try to make the best of it. But again, safety of our people on the ground in Kurdistan, uppermost on our mind. That's not to say we're not concerned about safety and security in the North Sea, Thank you, Bijan.

I'll turn to Tero's big question about North Sea production. And yes, you're right, Tero, we are growing in the North Sea. It's a very exciting part of our business. It takes a huge amount of energy from the team, primarily in Stavanger, a few over here in our corporate headquarters as well, so we like to get involved too. The growth trajectory that we are pushing for, we first set out in the pack we published at the time that we bought Sval. And at that point in time, I think we set out our ambition for 100,000 barrels of oil equivalent a day, DNO share by 2030. And we put a graph in the slide pack showing the sort of trajectory towards 2030. We updated that in February presentation, I believe. And I can't remember, unfortunately, Theodore, off the top of my head what the number was for next year. But if you refer to that, that will give you a sense of where we're going. We're not putting out official guidance for 2027 yet. So that's the best I can do to help you with that. But we're standing by our ambition for 100,000 barrels of oil equivalent per day. by 2030, and I personally am confident that we will achieve that target.

Thank you, that's clear. And then just to clarify on talk, Bijan, you said that you expect production to come back to pre-shutdown levels whenever the war ends, so then we're still talking about 100,000 barrels gross from talk expectation, right?

I don't want to give, again, any projections or any guides We had said at the start of the year that with the eight-well drilling program that we had planned, that we thought we could reach 100,000 barrels a day by the end of this year. Circumstances changed. We shut in production. When you shut in production, almost some of the wells will be affected. We have to go in and do workovers and get pumps that perhaps Because we were shut in, burned out, replaced those and other repairs. And that's been something that we've initiated. It's an ongoing process. The wells we thought we would be drilling at the first part of this past quarter, we didn't drill, we couldn't drill. We started drilling in the latter part of the quarter as conditions seemed to have improved security-wise for some period of time. So we are behind the schedule that we had anticipated early in the year and behind in terms of the ability to reach targets that have been set back. And again, the security conditions deteriorate. We will stop drilling the new wells again. I hope that won't happen, but we're mindful of that. So I think you should assume Based on what's been happening on the ground in other regions, our goals will not be met. These will be suspended. How much and for how long, I just don't know. I wish I did. We had the crystal ball and it was going to happen security-wise. We would stop on I should also note that I've talked about our North Sea and the Kurdistan as sisters. Again, this is a relic of the period in which DNO was formed in the 70s, 60s, 70s. The big oil companies were called the Seven Sisters. Why sisters, I don't know. But the sisters of Seven Sisters are now, I think, maybe four. These are the super majors, and we were always the small sister. But the feminine term is used when it comes to the oil industry, maybe to show the softer side of the company, in a sense. We have a soft site for operations, but we work in a very difficult, masculine, geopolitical environment, and that's okay too.

Okay, thank you. I'll hand it over.

Thank you, Theodor. Next question comes from an analyst, Nicholas Stefanou. Remember to unmute yourself before talking.

Hi guys, can you hear me?

Yes. Congratulations on a very strong quarter. It's really good to see these numbers coming through. I want to ask you a couple of questions on the North Sea and then one in Kurdistan. I understand the reluctance of giving an outlet for 2027, but you have increased this year's production in the North Sea. So would you be able to give maybe an exit rate for this year? And then the other question, could you please remind me the number of FITs planned for this year and what else is left in the OTC?

Certainly, I can. On the production side, you asked for an exit rate for the year. I don't have that number in front of me, but obviously we have this morning reported the actual production for the first two quarters and we have upped our guidance for the year to 85,000 barrels of oil equivalent a day. So I think that you should be able to quite easily calculate what to expect in the second half, if that helps answer that question. Unless any of my analysts here are coming up with a number for you. In the meantime, what was the second question, sorry?

Yeah, it was a number of projects sanctioned and to be sanctioned in 2026. And where are we at there?

Just an update basically. So we updated this quarter that we sanctioned three more of the subsidy tiebacks in Q2. Serisa, Ophelia and Yer Nor and we're still projecting that the Shirt Karka project will be sanctioned later in the year which I think is consistent with the presentation we made three months ago where we did a bit of a deep dive into that satellite portfolio so if anyone's interested to to get a bit more information on our near and medium-term satellite tie-back project portfolio. If you click on the slides from last quarter, you'll get a bit better overview and I think the dates there are still valid.

Okay, so it's just one more FIT planned for 2026 then? For 2026, yes. Okay, thanks so much. The other question, I guess it's for Bijan, and it's kind of like a bit of a strategic one. I guess in the past few years, the DNO narrative, especially after the Zyval acquisition, was to bring investor attention towards the North Sea. And it is a magnificent business, you're doing very well there. Given the recent developments, where does Kurdistan sit in your strategy at the moment? Because if this still happens, you're going to have to have a very large presence there, even larger penalties now. So I just want to get a sense of where Kurdistan fits with the rest of the portfolio now that the North Sea has grown so much.

Kurdistan is very important to DNO. It has been historically. You might recall that this past December, we hit a very substantial, significant milestone. We announced that we had produced 500 million barrels for the Talke license, the Talke field and the Peshmerga field. This is a very important milestone. It's by far the largest production from fields in Kurdistan. People that are operated by international companies in this recent period of 25 years or so. So it's been very important to the company. But we obviously, given all the challenges in Kurdistan, these countries aren't just Kurdistan. We've seen these challenges now throughout the Middle East and much, much larger producing countries as a consequence of the war. are again very, very exposed to movements in oil and gas prices, movements in production, and then the external conditions of geopolitical, political security and otherwise. So it was a very smart move. It was a deliberate move. We started moving into the North Sea starting about maybe five or so years ago, and then were able to accelerate with the acquisition of the Sval assets. And before the shutdown, our two legs were producing about equal volumes, about 8,000 euros in an operational sense. Of course, the net figure and entitlement figures are a bit different. But we felt that the two major parts of the competition We have our own rig that is drilling shallow wells, but also dealing with our workovers of our existing wells. We have another A large rig drilling additional wells on Peshkabir. We have engaged a second large rig as well. Rigs that can drill to the depths of our producing reservoirs in our fields. And we're now looking for a third large rig to come in. So we're actively drilling. I think we're the only international oil company in Kurdistan that's drilling. We are the only international oil company in Kurdistan that's producing. The others have all shut in because of security concerns of their own reasons. But we're the only one drilling, drilling a lot, the only one producing. And we were committed to Kurdistan. We were committed in terms of spend, in terms of activity. We do have our North Sea business that can support our presence in Kurdistan. We've been the first international company in Kurdistan. We have a strong presence in Kurdistan. We have great working relationships with the Kurdistan regional governments, and we're proud of our history of our relationship with them. That allows us to have the confidence and the support to keep going. And this is not the first time when ISIS came into Northern Iraq. They came very, very close to our operation. All the other companies shut down and left. In fact, the UK government instructed British citizens to leave. That's the US government. But DNO stayed and we produced. And during that period, we weren't paid very much. But it was important for us to be a good corporate citizen and to be there for Kurdistan at a very, very difficult moment when millions of refugees had come to the country. Kurdistan's financial support from Baghdad was cut and we felt we needed to be supportive and be in Kurdistan at bad times as well as in good times. And so that Mindset continues and both then and now we remain committed to the operation of Kurdistan. And that shows that we're able to do it because of our size and our diversity and our history there and our relationships with the people of Kurdistan, the government of Kurdistan and the Ministry of Natural Resources there. So we feel that they have our back, we have their back and we're going to keep going and hopefully The situation in the Middle East will resolve itself. It can't go on like this. And once it does, and we hit the accelerator, we're going to go faster than any other company. And hopefully it will make up for the period in which we've been, our production and our operations have been disturbed. So we have that confidence. Thank you very much. Thank you. So we're very committed to Kurdistan.

Thank you. Could I add one point? Bijan, you've covered it very well, but on the financial side, I think that Kurdistan fits better in our business these days. We used to have to hold hundreds of millions of dollars on the balance sheet to protect the company against downturns in Kurdistan. and you've seen us successfully navigate that, especially if you're a bond investor, over 20 years. But that comes at quite a significant cost and we had, in the years I've been with the company, many comments from equity investors pointing out the inefficiency of holding such large amounts of net cash. Now, with that engine room in the North Sea, you see the balance sheet, in my mind, is a much more healthy one for any company with a modest level of and Ned Dett.

OK, thank you, Niklas. And then the next question comes from analyst Tom Kristiansen. I think I should say that if there are anyone else that wants to ask a question, you have to please use the raise your hand function at the top of your screen. I think I didn't say that at the very beginning. But if there aren't any others asking questions, then we'll We'll wrap it up after Tommi-Erik's questions. So, Tommi-Erik, please go ahead.

Thank you for having the opportunity to ask a question. Could you please talk a bit more about how you think about the export payment regime? Do you see that now as more proven that you've seen some of the companies Is that a regime you would like to change to now when you think about export pricing, what you mean with that? Or is this the right time maybe to stay with the local sales? How do you think about that and timing of how to manage this process?

We have no visibility on the payment scheme that the other companies have set up. We know how it works, but we understand that there is a preliminary payment. I think it's based on a $16 a barrel payment. What the actual figure is, we're not sure, because there's an odd formula that governs that. And there was to be a top-off payment for both of the payments to match international pricing. It was to come later. It was anticipated to come in a matter of months. I don't think that payment has come. I do know that Iraq's budget is squeezed, importantly because during part of this crisis they have not been exporting through the Persian Gulf, and it's not a secret that the Iraqi government has said that their ability to meet various budgetary needs and commitments has been Where that's going to go, we don't doubt. We, DNO, together with our partner, Ganel, on the Taukey, decided that we preferred certainty of payment rather than promise of payment. We've been promised payments, certainly in Kurdistan in the past, that were not made and we had to find other ways. to compensate for that. And we did so successfully in the period, the ISIS period, where we weren't paid. We put on the place a plan that eventually worked out quite well for us and also for Kurdistan. So this time we thought that we don't want uncertainty of payments. We don't want to build up receivables as all the companies have done. And that certainly a payment would allow us to budget How much to spend to grow the business? So we thought it was better to have one bird in the hand than two birds in the air. And that's allowed us to conduct our business, to keep producing, because we know we're getting paid when we produce, we wouldn't otherwise, and to invest. So that's why we're uniquely placed. One company that didn't participate in that scheme is the only one producing and the only one investing. So maybe we've done something right. We've been told we've done this right. And our payment scheme, we've described it as cash and carry. We don't really mean cash and carry, although during the ISIS period, hankers would show up, suitcases of cash, and we'd fill, it's like a gas station, and we'd fill them up. Now, of course, it's cash as such. But we do get payments in advance of deliveries. We get it in advance, and we deliver the amount of oil that was prepaid for to the trading companies. And that's worked out well for us. It's worked out well for them. There's a margin for them. We don't know what that margin is, but it's just the fact that they're prepaying. There's a cost to them. We try to have a good relationship with them and work with them. We work to try to get that price as close to the actual market price as possible. We would love to export, but there are, as you know, political and other constraints. Pakistan is landlocked. It has to export through a neighbor. That neighborhood is a difficult neighborhood. Outlet of choice for the companies in Kurdistan and for others has been through the pipelines that go through Turkey to the Mediterranean or to Ceyhan. We'd like to access that. We always work towards trying to get to that point. And that's a work in progress. I can't give any visibility or projection or guidance on when that will happen, but that clearly is our aspiration. and we hope that will be possible. I can't give you a date, but that is an aspiration and I assure you we work on that, on finding a way to do that on a very, very regular, ongoing basis and speak to the different stakeholders. But we understand it's complicated and complex. If we get there, that would be fantastic and I hope to get us there. Thank you very much. Because our payments are secure and we use part of that payment to reinvest. And as long as we're producing and getting those payments, we recover our costs pretty quickly. But as Chris said and as I've suggested, we have a backup now. In the past, the backup was several hundred million dollars target that we had to always have that cash on hand. Now, we don't need that in the same way because we have the North Sea. The North Sea has its own challenges, but payments isn't one of them. In the past, Chris mentioned the bond market. The bond market was really the only way we could raise funds to invest. We now have access to pre-financing as of our North Sea oil and gas. The cost of that pre-financing is probably half of our blended cost of bonds and our hybrids. So we now have access to financing that the very largest oil and gas companies have across the globe because they're part of our pre-financing arrangements and we're effectively borrowing against their balance sheets. We give them secure supply, committed supply, and they help us with the financing. That's going to make a significant difference to the company. We'll need to maintain those large cash balances. We can use those cash balances to invest in drilling, in bolt-on acquisitions, and other acquisitions, and do so with costs of money being something under 6% versus... 12% for other Kyrgyzstan oil and gas companies versus other companies anywhere that are not of that size and scale of the big sisters. And that makes a big difference to us as well.

And keep going Kyrgyzstan.

Any further questions? Is there anything more on that point or have I covered it?

No, I think now we have very efficient and sustainable balance sheets. That is to say, we now have a broader portfolio of financing sources that fits the purpose and is also correctly priced.

Chris, do you want to add on this or any other points? No, I think you've covered it very well, sir.

Okay, with that, I think we're... We can safely conclude this earnings call and thanks to all for attending and see you again next quarter.

Thank you. Thank you.