Enquest Plc Ord

Good morning, everyone. Thank you for joining us today as we present Enquest's interim results for the first half of the year. Through this webcast, you will have the opportunity to submit questions at any time, and we will look to answer as many of these as possible during your Q&A session at the end. Without further ado, I'll hand you over to our CEO, Amjad Bezezu.

Thank you very much, Craig, and good morning, ladies and gentlemen. Welcome to our interim first half results for 2024. Thank you, first, for taking the time to join us today. My name is Amjad Besseysou. I am the Chief Executive Officer at Enquest. Joining me today is our Chief Financial Officer, Jonathan Kopas, and Steve Boyer, our North Sea General Manager. Both Steve and Jonathan continue to provide great leadership as we drive Enquest forward towards growth, despite this challenging fiscal environment in the UK, which we will talk about. So let's start by taking just a look at the Enquest and what the story of Enquest is from the beginning. Some of you who may be less familiar with Enquest. Enquest is a late life and a development company that started in 2010. We have about 175 million barrels of 2P reserves, 389 million barrels of 2C resources, and we operate 95% of our 2P resource assets. We have replaced one and a half times our reserves since our IPO in 2010. We're a top quartile operator with Upstream at the core, and we have a track record of exceptional uptime performance, cost discipline, and reserve replacements. We've also enhanced our business model in recent years to look at a full cycle energy transition. We have notably started Very Energy, which we're very excited about, repurpose our existing infrastructure namely in salambo the east of shetland and west of shetland pipeline systems and to deliver a renewable energy and decarbonization company with significant ambitions we've taken four offshore licenses for carbon capture and sequestration and we are working diligently on in salambo on offshore electrification on electrification on Salambo as a site, and also on various other projects. We've also moved very much at pace with decommissioning, where we help to manage the end of life assets. We've gone from nine assets hubs to four assets hubs, and we are clearly making inroads with another 25 well program, which is industry leading in the Northern North Sea completed this year. If we go to the next slide now. For some time, we have talked from 2017 about tripartite strategy, delivering, delivering, and growing. I'm pleased to say that we are finally at the final chapter of our strategy, and we are primed to deliver growth. We have reduced our debt significantly, as you've seen, with the end of June net debt figure of 320 million, significantly below the peak of 1.7 million that we've had a few years ago. We've also achieved a net debt to EBITDA target of 0.4, also below our target of 0.5. Great operational performance. We have completed the five yearly recertification of Magnus, and we continue strong production uptimes across the portfolio with operating efficiency being very high at 93% for the first half. We've executed all of our world programs in the UK and Malaysia. And as you've seen, production is in line with our guidance at 42,700. an active program planned for the second year including a lot of shutdown activities at magnus and kraken and maintenance planned for the second half we acknowledge that production is likely to be in the lower half of the range overall our strong sector leading decommissioning performance continues and we've dedicated an in-house team to execute and plug the plug-in abandonment program of a further 25 wells this year as i've mentioned at Heather and Thistle. Our expertise and delivery in this area has been further vindicated by the announcement by Shell that they will be giving us the full decommissioning management of the greater Kittywick area, assuming all responsibility for decommissioning there. Also reflecting our continued strong performance is our generation of cash flow. where we generated $55 million of free cash flow in the first half of the year. We've had $160 million of reduction in our net debt, given the additional receipts following the completion of the Brest Farm Down transaction. Our trajectory for deleveraging continues, and we have repaid fully the RBL earlier this year. Looking ahead, The work we've done to strengthen the balance sheet gives us choices, and particularly important given the very punitive changes made to the UK fiscal regime by the government. A low-cost, quick payback opportunity remains within our core assets, and we will be disciplined in evaluating work programs to efficiently manage our capital. We are also very focused on opportunities in Southeast Asia, which give us significant return on capital. And you will be hearing more on our developments there, including the gas developments that we've talked about for a long time in Malaysia. With our strong liquidity, we still are looking at the UK tax assets as providing an advantaged foundation to transact and to grow. Our growth strategy remains intact and the leadership team and I are fully committed to deliver a value accretive acquisition both in the UK as well as acquisitions in the Southeast Asia region. All that will be significantly accretive hopefully to our shareholders. With that, I'll turn over to... Sorry, one second. Our growth strategy remains robust in a fiscally volatile environment. As you've seen, we are having lower cash flow generations from the North Sea, but we are looking to invest with our tax asset. So the UK remains a very core area for us, even with the significant challenges given the fiscal regimes. Our strategy remains robust. in both the UK and looking internationally at development opportunities. We are driven by our competitive advantages of capability, our competitive advantage of having great people, and our competitive advantage of now having strong liquidity with 566 million of liquid assets available to us. Next slide. With that, I'll turn it over to Jonathan.

Great. Thank you, Amjad. If I could have the first slide, please. I thought it would be good to return to this slide because it reiterates our financial priorities. And it also highlights the good work that we've done to prepare the business and build a strong foundation that will take us into the next phase of our journey, which is that growth path that Amjad has spoken about. First thing here is we've reset our capital structure. So we refinanced our debt and we have no debt maturities before 2027. Secondly, we've continued to delever. And that really is very, very core to us as a group and that preparation for growth. As Amjad mentioned, net debt was $321 million at the 30th of June. And we moved beyond our leverage target of 0.5 times. Net debt to EBITDA was 0.4 times at that 30th of June point. As I've said before, cost discipline is absolutely central to everything that we do. And executing our work programs and our investment programs in an efficient and cost constrained way is really important. And of course, it's even more important given the fiscal volatility that we are seeing around us at the moment as well. And at the last results, we announced shareholder returns. And that was a significant step for us as an organization and a significant step for our shareholders. It marks the point at which we'd resize the balance sheet, and then we were moving to look at distributions. And we will continue to look at those in the context of our full capital allocation programs. And if I take all of these points one to four and add them together, they are what is building this strong foundation for growth. And we see our role as being a consolidator within the North Sea, but also as Amjad said, we have this vitally important position in Southeast Asia, and we're looking to diversify and grow internationally as well. If we turn to the statements now and begin with the income statement. So in the period Brent prices strengthened year on year, and that was a very supportive backdrop to us financially. And Enquest delivered a net profit of $30 million for the first half of 2024. Now driving that, we saw oil revenue that was approximately flat year on year. And in that you see the slightly lower year on year production numbers being offset by higher Brent prices. Gas revenues fell, and that was on significantly lower prices. Obviously, we've seen a lot of volatility in gas markets in recent years. I'd also reduced third-party volumes west of Shetland volumes that are crossing the Magnus facility. But those lower volumes, of course, are offset within cost of sales, and cost of sales fell significantly period on period as well. In line with our expectations, Unis OPEX was a bit higher at $22.8 per BOE. And this reflects higher tariffs that we're paying. And that's basically just a function of the fact that we have a larger share of throughput through the Southern Vaux terminal today. Adjusted EBITDA was $368 million, and alongside that, we had an impairment of $21 million, and that was driven by changes in the production profiles of our Golden Eagle non-operated asset, as well as revisions to EPL that were undertaken at the balance sheet date by the prior government. The income statement tax charge of $74 million shows actually a reduced effective tax rate for the period. But of course, with the revisions to EPL that are ahead, we expect that effective tax rate, income statement tax rate, to be higher for the full year. If we turn to cash flow, though, And in this period, we generated operating cash flow of USD$324M. Our capex totaled USD$95M and that was covering the Magnus five-year rig recertification, the Golden Eagle drilling program and obviously our decarbonisation work at SVT. Our Magnus profit share was USD$48M and Reflecting the significant progress we've made in terms of reducing our debt, our net interest costs of 40 million were 19% lower year on year. We also made lease payments of $85 million. And as you will remember, those lease payments stepped down significantly next year when the day rates on Kraken fall by about 70%. The result of all of these cash movements was a reduction in net debt of $160 million. If we now turn to look at net debt, I thought, again, it would be useful just to put up this chart because it illustrates that tremendous pathway that we've had in terms of focusing free cash flow from the group on reducing our net debt balances. So in 2018, we had $1.8 billion of net debt and a net debt to adjusted EBITDA ratio of 2.5 times. I think we're all very proud to stand here today on the 30th of June with net debt of $321 million and our net debt to adjusted EBITDA ratio down at 0.4 times. In the period, we also fully repaid our RBL as well, and that was a $140 million repayment. Gross debt at the 30th of June was $658 million. Our cash and cash equivalents were $337 million. And that left us with not just lower net debt, but a significantly enhanced liquidity position and cash and available facilities. That's our undrawn facilities with $566 million, which was an increase of $67 million versus the position at the end of last year. And of course, alongside all of this, we have our historic tax assets. These total $1.9 billion. They are held within our Inquest Heather entity, and they are there in a very clean structure and ready to be deployed. We have a further $1.2 billion of tax assets, which we're working to progressively move through the business as well. And lastly, I thought it'd just be good to touch back on guidance. So as Amjad has said, we remain on track to deliver production within our guidance range for 2024. But of course, as he's noted, this is now going to be within the lower half of that range. CAPEX, OPEX and ABEX guidance is all on track, and we have a busy programme of operational activity in the second half of 2024, which Steve will be talking about in his section. Tax, of course, falls due in the second half of 2024, and you'll see that we have an estimated current tax liability for 2024 of $171 million. Now, this figure does move around and it's only finalized when we submit our tax return. And more generally, we're continuing to work diligently to optimize our capital programs and our fiscal efficiency as a group with a focus on delivering that growth portfolio and also internationalizing our portfolio as well. So now I'd like to just hand over to Steve and Steve will give you more details in terms of our operational activity during the period.

Thank you, Jonathan and Jad for the introduction. Good morning, everybody on the call. I'd just like to run you through where we are as a business operationally. Obviously, it's a challenging environment to work in at the moment in terms of the fiscal regime. But I think as I go through the slides, hopefully you'll pick up the inquest capability and operational performance is kind of perfect for this market. It's not the market we want to be in. I think Amjad's made a very clear statement this morning as to our views on the fiscal system. We've got short term damage limitation to try and manage the initial sendings from Labour policy, which have yet to be put into action yet. And we're trying to work on that and lobbying hard both as a company and as an industry. And long term, as we look to the next year's budget, when we can potentially see some change, we're lobbying very hard to get the fiscal stimulus out there that keeps the oil and gas business running and running in the right way, which in our view is absolutely pivotal to the energy transition. And we are an energy transition company. And as I talk through, you'll see that even in our oil and gas operations, we're reducing emissions, we're focused on carbon intensities, we're focused on increasing production. So our simple mantra as Enquest is to increase production whilst reducing carbon intensities. You get that through very energy, but you see that in our oil and gas portfolio as well. And we need an effective bridge from oil and gas, which is lowest carbon, safest energy if it's produced at home, right through into new energies. Beyond that, we're very active on acquisitions and we'll talk about that as we go through. discipline is really important in this market both in terms of how we spend our own money but also how we approach acquisitions i'm excited about some of the things we're looking at on the acquisition front and both in the uk and internationally and i think amjad and jonathan would agree and we've got a very positive approach out there and we're in a number of processes and i can't say too much and we won't say too much on that because obviously that's confidential but be assured we're working very hard on that and just as i go through the portfolio you'll see we're working hard on delivering very positive results. And it's good for me to say we've got a strong track record, but you can see validation now coming not just from our peers, but also from regulators and government bodies. And I think that's encouraging. That demonstrates that Enquest is delivering what it says, and we continue to focus on that delivery. So just talking through, I thought it's good to go through a summary of each facet of the business. So on Upstream, very strong operating performance. We are at the midpoint of guidance and we were at that midpoint of guidance as we exited July and we're in the shutdown season which obviously will bring production down a bit but we have a number of well interventions and obviously we've moved a little bit from drilling to focusing on what we can do with existing wells to try and bring that production up. We also have some upside in Malaysian gas through the second half of the year so we're in place to deliver within guidance but indicating already we're at the lower end and we're very focused on pulling all the levers we can to deliver as close to the midpoint against as we can so a classic example of what you do in a market like this is we've gone back and looked at all the magnus wells and we've added a thousand barrels of oil a day just through well optimization on the existing wells and that's an ongoing focus of the team and just to pick up on all the good work the asset teams do cracking up time 98.5 percent is phenomenal that's an exemplary performance on an asset It's a large scale asset. We're processing 460,000 barrels of water a day. And with that complexity, we're running up times that high. And that's a credit to Boomi and our own asset teams and our performance across the business. We've completed the Magnus five-yearly rig recertification, which sets us up for continued drilling or well interventions on Magnus. And we've been delivering over 90% uptime. Magnus celebrated its 40 years in production. And I don't think anyone would think it would be here today, let alone delivering over 90% uptime. So that's an exceptional performance. And in Malaysia, again, Inquest, we can't only do it in the UK. We're exporting our skills and our credibility internationally with 93% production efficiency and working through well programs and reinstatement. And as I talk through acquisitions and as per Amjad's statement, you'll see we're very focused on capital. reinvestment in other areas and in other countries. And if the UK doesn't change the fiscal system, we will put the appropriate investment into the UK and will direct a large chunk of our capital elsewhere. Operations performance. So the key focus of this business is safe results. I'd just like to give credit to the teams in terms of the proactive action that we've taken across the business to get delivering safe results. There's no end of effort going in focused on the work site. And the site leadership has been strong, and that remains key and fundamental to everything we do. And as Amjad mentioned, our operating efficiency across the board averages 93%, and that's really strong. And that's something, that's a foundation for what we do going forward. So if you think of us going out and buying capital light, producing assets, we need to drive the operating efficiency as high as we can. As Jonathan mentioned, an operating and capital discipline. We need to drive our cost per barrel down, and that's something we're focusing on. So although we say we're top quartile, we can still do better. So we're focused in on driving those costs down, and we'll be focused in on our existing portfolio and the acquisitions we make, extending field life out as far as we can and extracting as much free cash flow as possible. And we were prepared for EPL being there. It was there already. So we were already focused on the right acquisitions to suit this market. I would like to build some more two-seed resources in the UK and we will still look at that, but before we move any of those forward, we do need a fiscal stimulus. Future things to look out for in the portfolio, so there's a lot going on. Well-activated Magnus, Malaysia. We're returning to crack and drilling in 2025. We're in the process of finalising plans for crack and drilling. Obviously looking to optimise that and obviously reduce the capital in that programme, but still deliver what we're looking to get out of the wells. We've got material upside through Kraken enhanced oil recovery. I think Kraken's one of the best examples of a field and an asset primed for enhanced oil recovery. We're at early stage of looking at polymer tests, but very encouraged by the work the team's doing. And I think that provides huge upside for Kraken and further life extension. In terms of our OPEX per barrel, we've got the Kraken FPSO lease rate dropping by 70% in April 25. That's key to delivering some of our cost reduction aims. And we're also maturing significant Malaysia gas resources through Phase 1B Saligi gas. And that's quite exciting. That's got a big upside for the business. It solidifies our position on those assets and allows us to diversify away from oil and more to gas, helping our carbon intensities. And just to say, although we are an oil and gas operator and we are a full energy transition cycle operator, On our oil and gas assets, our emissions reduction projects and our life extension projects are ongoing. We're ahead of the North Sea Transition Deal targets, which are due to be met by 2030. And we're investing heavily on emissions reductions across the portfolio. And I guess that's something I would reiterate is the cleanest energy is produced in the UK. We're very focused on it. The oil and gas sectors probably do more than any other sector in terms of delivering emissions reduction. And I think that needs to be recognised both by the government and in the market. And just to say, if we're going to go on and deliver success, I think Enquest are perfectly primed for that. The key at the moment is cost discipline, disciplined capital investment and managing the assets in the right way. And the team have worked through all the asset strategies to make sure we have the right plans in place. We have optionality across the portfolio, so we can switch on and off capex as required as the fiscal regime suits. And what will be key is to try and replicate what we've done on Magnus. Life extension extended by over 10 years, unlocking over a billion dollars of incremental revenue. And you can see that as Jonathan talked through in AMJA, the unit operating costs that were driven in terms of step change. So as we look at acquiring, producing asset portfolios in the UK, we'll be looking at making step changes in the OPEX per barrel in terms of dollar per BOE. Our decommissioning skills come in in terms of late life management, and we'll be looking at maximizing value from those assets. So I would say a strong operating performance. I would obviously like production to be at the higher end of the guidance, but we're working hard to deliver. But our capability sets us up perfectly as the company delivering this market. And I think some ways there might be frustrations that acquisitions haven't happened, but in some ways keeping your powder dry to the right time is the right way to do it. In terms of optionality, I've kind of mentioned that our capital investment is geared to fit the fiscal regime. We will very much focus in on the things that extend asset life. You may see us move a little bit away from or diversifying slightly away from heavy capital drilling to more well optimizations, which is very sensible on Magnus. On Kraken, we've got our 2025 drilling program, which we're finalizing. That will go ahead. We're committed to the rig. We're committed to the plans. Enhanced oil recovery has a huge upside for Kraken and is something you'll see more of in time. It's a little bit early stage, but that's got a huge upside for the business. And Bresse gas is something we're excited about. That significantly changes the emissions footprint on the Kraken FPSO, extends the field life significantly, and also secures the Bresse licence. And we continue to mature Bresse oil, but in an appropriate way given the current fiscal regime. Our Golden Eagle asset, Jonathan mentioned, we've obviously not had a good run and we're a non-operator on that, but the drilling's not come out quite as we expected, which has been disappointing. And we're working with our operator and our other non-operated partners to review the asset strategy there to make sure we come up with the right plan. On PM8 Saligi, low-cost well programmes are ongoing, but the big upside, and Amjad can touch on this if there's any questions on it as well, maturing the gas opportunity we've always thought is there. And that'll be done in managed phases in a measured way, but it's an exciting upside for the business. And you will see Inquest move a bit more towards gas as we look at our acquisitions and we diversify, which all helps our carbon intensities. But the key here is to grow scale, grow barrels, manage our carbon intensity. Presley, I've mentioned we should be maturing towards an FTP this year. Obviously, the change in government and the regulatory regime means We'll probably have our FTPs and FTPAs in draft form, and then we'll be sitting waiting for regulators to be ready to give us the go ahead. On Bentley, a little bit more challenging than Bressey, so we'll see that following Bressey. What we learn and apply on Bressey, we can apply at Bentley. And Sollum Vo, if you like, that's Enquest and the energy transition for me in action. That's the way it should work. We're extending the life of oil and gas. We're repurposing a facility. We're having a material impact on the communities up at Shetland who have relied on oil and gas long term, and we're bringing in renewables. We're being disciplined in our renewables aims with VERI, and you'll have picked up through the results onshore wind as a focus that will materially reduce the emissions footprint further up there, but it'll also provide power to run our operations. And that's something we're working through to FID. It's early stage. CCS, we still have our eye on and are keen to progress. We're working that in a managed way. And we want to be a fast follower on that while maturing our licences. And on hydrogen, we've got the grant in place with the government and we're progressing that in a managed way. So portfolio is there. We've got good opportunities within the portfolio already. Capital investment internationally is clearly appealing at the moment. Capital investment in the UK in an appropriate way is something we'll do and we'll be very disciplined and measured to make sure we manage shareholder value. So SVT, I've kind of covered the two big projects I'll just touch on. So we are right-sizing the facility through the new stabilization project. That allows us to fully extend the life of the upstream assets, which if you're going to run the energy transition right, it's critical. Keep the jobs, keep the skills up there at Shetland, working hard. And then we're going to connect SVT to the electricity grid, which will allow us to import or potentially export power through time. What does that do for us? So a carbon emissions reduction of around 90% on our existing asset. That's a phenomenal achievement if we get there, and that's the plan through the new stabilisation facility. We're also targeting zero routine flaring by 2030, and it'll put a material cost reduction in the operating footprint at SVT, which clearly helps Magnus and helps the rest of our assets. So you're going to see Magnus' operating cost per barrel reduce through time. Always difficult as the production declines, but we're trying to keep our production flat or growing. and while reducing the operating costs, and you've got cracking with the material and lease reduction. And just to mention, I've already touched on onshore winds, the key focus for the team. The very team are very focused on delivering FIDs and early FIDs. So we're focused on the things that we can control and move forward. As the regulatory regime opens up for things like CCS, we'll have done our preparation work and we'll be ready to execute and move forward. In decommissioning, not the sexiest part of the business, but an important part. We're top quartile. I think phenomenal to look at inquest achievement. We're on track to P&A 60% of our suspended and shutting wells within five years of cessation of production. I don't know many other operators who are in that position. As you'll know, we had Heather, Thistle, Dons all come off round about the same time. The teams have focused then on safety and people first, then integrity and executed the programs in the right way. And if you look at our P50 cost per well versus industry average, and this is a conversion of skills, a bit like the energy transition from drilling new wells to decommissioning, we deliver wells at 2.6 million pounds per well versus an NSTA quoted average of 4.3 million pounds. That is a huge competitive advantage, not just in terms of executing others decommissioning through services, but if you look at us acquiring portfolios of assets, other parties can see us as a material advantage in terms of executing their decommissioning. We've got innovative technologies. We've also had award-winning performance on the removal of floating vessels. And the validations come from our partners and peers. So they're very impressed with the work we're doing at Heather and Thistle. And they're also impressed so far as to give us further decommissioning operatorship on GKA. And we are actually in discussions. While we're focused on our priority as a transformative production acquisition, We are looking at potentially offering decommissioning services to other operators where they retain the liability. We execute the decommissioning on their behalf. And just in terms of that capability, so it gives us a huge competitive advantage. As we look at portfolio consolidation, we can deliver a step change in costs. And it also helps us acquire. And I don't think we're a late life operator. We are a good operator. We will try and pick things up that are not late life. The key is to apply a late life mentality to drive through the right performance. And I just close by congratulating the Malaysia team, as I think Amjad mentioned. Winning the HSE Excellence Award is really important. Two years LTI free, great performance. And also receiving the Operator Excellence Award. So really pleased with that. You can see the UK team are validated in terms of their performance. And I think if I was to position Enquest just now, I would say we've got a lot of work to do in acquisitions, but we're on it. We're looking to deliver that in the short term, but we are the operator who's well positioned with our capability to actually deliver within this market and drive value, if not just only our existing assets, but other people's portfolios.

Thank you very much, Steve and Jonathan again. And we'll go to the next slide, please. As you've heard, really, We've delivered a solid first half of the year from both operational and financial perspective, and we continue to demonstrate progress against our established strategic priorities within a very challenging backdrop. I think the combination of our track record of delivery in addition to our advantage tax position in the UK and changing M&A landscape gives us all confidence that we will be able to achieve a transformative growth transaction or transactions over time. Our tax assets of 1.9 billion is enhanced by the additional 1.2 billion from the Bentley purchase, which gives us over 3 billion of tax assets, one of the largest in the industry. We will further enhance our position as a reasonable operator, making the best use of resources and assets that have already been developed to ensure we play a leading part in the energy transition. As you've seen, we have been able to differentiate ourselves in terms of delivering over the last decade, and we are truly differentiated in the capability, which we're moving to decommissioning and transition. As we look forward, we want to continue our top quartile performance and to be validated by external forces as external regulators. As Steve mentioned, and I mentioned earlier in Malaysia, where we were the top operator of the operators there that voted last year. And that's a great testament to the capability that we've also built in Southeast Asia. We also look forward to delivering our key targets across the new strands of business with our old strand of business. So not only delivering an upstream performance, which is exceptional, which we will continue to look at delivering the cash flows from those assets and deleveraging our balance sheet even further, and looking at capital investment and allocating capital in the right way. First, to highest return prospects outside of the UK. Second, to UK-led transactions, which give us the use of our tax assets. And then also looking at returns to shareholders as part of the capital mix going forward, which is extremely important. Within our decommissioning function, which is a new function, we will enhance our position as a sector leading partner and continue delivering targets and challenging ourselves to meet and beat industry averages, which is really the key for us being a decommissioning then transition asset. And then with our wholly owned subsidiary, VariEnergy, we will look to delivering a compelling suite of projects, which we are committing to reach net zero ourselves by 2040, as we've said. So in summary, we have completed a big part of our three-step journey in deleveraging and evolving to focus on maximizing the ability to transact in order to deliver the third phase of our journey in growth. By a wide variety of measures, we are a strong top quartile operator with differentiated capabilities across all facets of our business. That fact, coupled with our differentiated position in tax asset in the UK, makes it now an ideal time to deliver the growth ambitions, given that the new tax policy the government tax plans have now been laid out. All of these elements come together to enable us to focus on creating value to our shareholders, including, as I said, shareholder return, either in share buybacks, as we're doing now, or in dividends. We are well-placed to create value through leveraging our expertise, our experience, our track record, and creating win-win transactions. And in order to grow, it's all about our people, and I do think we have a strong set of assets and a strong set of people. I'm very excited about the journey, and I feel this is a good time for us now to set on our last leg of the journey, which will be very exciting for not only our employees, but also our shareholders. Thank you for your attention. We will now move to Q&A session, which Craig will lead.

Thank you, Amjad, and thank you gentlemen for the presentation. Amjad, good to see there's a number of questions that have been submitted. Some of them are quite similar, so I will group some of them with apologies to those who have submitted questions. You may not hear it verbatim, but I'll do my best to summarise. Amjad, first of all, a question that's come in from James Hosey at Shore Capital, also quite similar from Matt Smith at Bank of America. Can you provide some colour on how you see the market for North Sea assets at the moment, in terms of are there good quality packages out there that fit our criteria that we've stated about having a low future capex? And do you have any preference in terms of commodity? Just as a build on that, and in final terms for this question, how would you see international M&A, Amjad, competing versus the UK opportunities that you're looking at?

Okay. Yeah, so I think the market for the North Sea assets is getting... stronger in terms of people trying to exit. So I think we are seeing more packages. It has been difficult to transact with a very volatile system, as we've seen with volatile tax system. So I think the ability to transact now post the system in place, however painful it is, is at least it gives us the bandwidth and the the boundary layers to be able to transact. So I do see more transactions. We are now looking forward to engaging on several fronts, on the M&A front in the UK. So I do see that's going well. In terms of preference, I think we mentioned we prefer gas over oil if a choice is there, but we will continue looking at assets which we feel fit our operating capability, where we can add value reduce costs and look at incremental investments, which are small but can be accretive to the transaction. But we will all be looking at large investments in terms of developments because we have a good development portfolio in-house with Bresset and Bentley, as you know, as well as the Magnus opportunities and the Kraken opportunities. On international M&A, I mean, we Yeah, that is more competitive, but we do have an advantage in operating capability in Southeast Asia specifically and beyond in our early part of our history as a company. So we are looking at transactions. We're also looking at, obviously, the organic opportunities that we mentioned in terms of gas. We've signed the phase 1A. And we're looking to extend that into the future, into several other phases, which would be very enhancing in terms of both our position, our mix on gas, as well as our capabilities in Southeast Asia.

Thanks, Samja. Just a couple of builds on that, please. You've talked about international opportunities in Southeast Asia. Do you see this all being Malaysia-focused, given our foothold there, or are there other locations that you're looking at?

No, we're looking, I mean, we're looking also, we have acquired some joint study areas in Indonesia, and we're looking at Southeast Asia as a whole. So we do see growth opportunities across the region.

Thanks, Andrew. And finally, on M&A, in terms of sellers, obviously, we've talked a lot about the current fiscal environment and EPL changes. Have you seen an increase in willing sellers in the basin? And is there anything you can sort of say here to sort of characterize the motivations for sellers in this market?

I mean, with the increase in tax and the removal of the investment allowances, you know, the cash flows from these assets have become very low and clearly assets in our hands will have a higher cash flow than assets in other people's hands. So assuming the 78% tax cash flow in taxpayers' hands, fully taxpaying hands, will be 22%, where with our tax cover for CT and SCT, in our hands will be 62%. So just under three times the cash flows. And I think that is more exasperated with the removal of the investment allowances, which were... which were attractive at least for operators to invest in their existing fields. And that going away actually has made some operators look at putting more assets on the market for transacting.

Thank you, Amjad. So moving away from M&A for a moment, but not escaping the EPL. How do the latest proposed changes impact your thinking on 2025 and beyond in terms of capital spending and should shareholders and stakeholders anticipate it being lower than the 200 million guidance that we've given for 2024?

So I think we're waiting for the government to issue the budget which will be in November and I think that's the time we will be looking at our 2025 plans. And based on the new budget, we will determine what the right size investment is. There's no question, though, that we will be shifting, and I can see more projects being shifted into Southeast Asia and requiring more capital. So I think our programs are more fixed for Malaysia because of the stable fiscal regime there.

Thank you, Amjad. Steve obviously covered decommissioning and talked a little bit about the potential for being a service provider across the sector. Obviously there's a huge amount of decommissioning activity. that sits out there in the North Sea. How should we think about how Enquest leverages its decomm capabilities in the UK and beyond? And what sort of scale do you think a third party operation could deliver? Could it become, for example, a standalone division within Enquest?

I mean, we are looking at different commercial models for decommissioning, but at present, you know, I think it's very good that we have been able to sign a greater kitty wake as a part owner and taking over that asset. Our original model was taking over late-life assets and taking as little decommissioning liability as possible, but executing the decommissioning. And we are investigating, like Steve said, other commercial models where we could possibly look at a service approach to that. But that's still yet to be triangulated.

Thank you, Amjad. Again, within Steve's section, he touched on very energy and the exciting opportunities we've got at Sullenvaux Terminal, primarily in Shetland. A question from Thomas Streeter from Streeter Research. Amjad, can you talk about how a CO2 storage business model might work in terms of as a concept and how would it work in terms of being competitive with both the UK and EU emissions trading schemes? I think just Thomas is looking for a bit of colour on how this sort of potentially large business sits within your thinking.

Yeah, so we have four fields which we've taken for our carbon capture. in East Shetlands, two of which are our fields, two are other operators' fields, we would be looking to do something similar to what's happening in Northern Lights, but with a lot lower capex. We've got the infrastructure onshore. We've got four deepwater jetties. We're allocating one of those jetties to the CO2 sequestration. We have the coma site, which is able to handle CO2. We have a pipeline, which goes to our fields, our four fields, with the licenses and then we have an offshore infrastructure with magnus where we can use that infrastructure to drill wells as well as to handle the co2 coming in from the east from the southern world terminal so so we have a we're we're front-footed on capex because we have a lot of infrastructure we still have capex to spend and we still need a regulatory framework where we can inject the uh the co2 and get uh either tax relief or eu ets relief or a certain amount of money that we could be paid for to provide that service of injecting CO2. So that's the model we're seeing. It has yet to be kind of proven by the regulatory framework, but it is a commercial model that is not looking for subsidy, which I think is one of the few in the UK without looking for subsidy.

Thanks, Amjad. We've had a number of questions on the development opportunities that sit within the portfolio. I'll try and summarise those, if I may. In terms of, we've obviously touched on the fiscal environment and the regulatory environment. Should those shift against us in line with these developments? What's your thinking on the future for Brescia and the potential for the farm down to be unwound should the regulatory environment not be conducive to development?

Brescia is one of the largest fields remaining in the UK and it's a billion barrels in place, several hundred million recoverable in a full field manner. We are very focused on aligning the reduction in emissions in Kraken with Bresse. So this is where the gas line comes in. So we're going to start producing gas from Bresse to reduce emissions in Kraken. And that is in line with our goals of reducing emissions, in line with the government goals of reducing emissions. But yet there still remains a very large resource to be developed. I would believe that something of that ilk, which has a huge impact on the UK economy itself. I mean, you're talking about a production of tens of millions, maybe a hundred of millions of barrels, which actually are significant in terms of the GDP of the UK, which is two trillion pounds. So something of that ilk, I would hope that would be developed because it is a resource. that people scramble for. If this field was in any other European country, it would be developed. They would actually be probably dogfighting over it. But we are very positive and very hopeful that development will take place of these resources. I don't see a reversal. We're aligned with our partner and we're moving forward with the FTP which we will submit on time. And so we're moving forward on that front. It may take longer, given the government frameworks, similar to other developments, but I don't see developments have been stopped. The developments are taking longer to put in place. The other thing about Brescia is we already have the infrastructure. As Kraken declines, we have an FPSO there. that can be used for long-term, the Bumi Armada Kraken. And we also have another FBSO to do the early production facility, which has been highlighted, which is Anchorage Produce. So it is existing fields, existing assets that we'll be deploying to develop the press area.

Thank you, Amjad, that's very clear. If I may switch to you, Jonathan, there's been some financial queries submitted. So first of all, and again, kind of linked to development, can you kind of lay out the timeline and the process by which Bentley losses can be folded into the corporate structure and be utilised against CTSCT?

Sure. Yeah, no problem. I mean, you know, as I said, we, you know, the lion's share of our tax assets sit within Enquest Heather. That's the $1.9 billion. And it's really important to stress about that, that they sit within a very simple structure and they're going to be, you know, very simple to utilize through any transactions. And those are our recognized tax assets. We mentioned the additional 1.2 billion that is in Bentley, that obviously came in through that acquisition. We take a conservative approach in terms of recognising these tax assets, and there is a process that we need to go through, through time after the transaction was completed. And we would be seeing those tax assets, you know, moving into our recognised pool in that sort of 25, 26 period. So certainly, you know, I think from a transactional point of view, the point here is that by utilising these tax assets, because they're sheltering us from 40% of that 78% tax charge, which we'll be moving into post the budget, The utilization of them, if we're buying flowing barrels from full taxpayers, is clearly that every barrel those tax assets uplift the value. Over and above that, the more volume we can bring through the portfolio, the more we can accelerate utilization of those tax assets and the more value that creates. It's just a kind of MPV effect in terms of uplifting volume and utilizing those tax assets quickly. So, the 1.9Bn is there ready to use. and the other pool of tax losses sits very close to becoming recognised and that can also then be moved in a very orderly way through any transactions.

Thank you, Jonathan. Very helpful. You touched on it in your section of the presentation, Jonathan, but we've got a couple of questions on expected tax payments in the second half of the year. Do you want to just reiterate potentially what you've said about EPL? I think that would be helpful.

Yeah, sure. Absolutely. So, you know, our tax payments, you know, they fall due in the second half of the year. And, you know, the tax that we're discussing here is what's been levied on 2023 activity. It's the first 12 month charge of the 35 percent rate. We have a current tax liability recognition in our balance sheet, and I said in my slides, that's $171 million. Now, you know, I guess it's important to remember that the components of that are our base, you know, EPL payments. We also have some tax to pay on the Bresa transaction. And of course, we also, we're tax paying in Malaysia as well. I also said, of course, that that figure does move around. So I think if you look at the 31st of December position versus the 30th of June, that current tax liability has come down a bit, the estimate of it, and it won't be finalised until we submit our tax return as well. But that's, you know, through the balance sheet, that's the best visibility which we can give the market at this moment.

Thanks, Jonathan. That's very helpful. We've got a couple of last questions. I'll take one to Steve, if I may, and then I'll finish with a question for Bramjad and Jonathan. Steve, can you give us a sense on how the slowdown in UK investment is affecting the supply chain, the North Sea supply chain? It might also be helpful to maybe give some insights into what happens as and when capacity exits the UK.

Yes, it's fair to say we've got a world class supply chain, market leading supply chain in the North Sea. And it's been leading the market since inception almost. We need a strong supply chain to be an effective operator. We've started to see, and this has been going on for 10 years, we've seen equipment and personnel move out of the basin. This sector at its peak employed about 450,000 people about 10 years ago. It was maybe higher before that, but 10 years ago we employed 450,000 people. We're now down at 200,000, and we are concerned about those people moving out. We know processes are underway around moving people. The skills won't stay if there's no upside, and most of our skills need capital projects. And from the Enquest perspective, We are very much running an operation. We've got good contacts with all of our supply chain and I don't see any risk to our operations. We keep those good relationships in place. We manage the supply chain and we're keen to promote the supply chain. So we're concerned. We'll do our bit to promote the supply chain. We keep control of our operations in the right places and we supplement that with the supply chain where required. But in my view, the government really do need to look at what they're doing. provide the right framework. It won't happen at this budget, but the next budget, they need to protect the supply chain, because that supply chain, skills, jobs, they actually help the cost of living crisis, and the oil and gas industry helps the cost of living crisis. It doesn't make it worse. And don't overtax it, because when you're paying 78% tax, or 75% as it is now, who can invest in that market? Now, we still do on the right projects and we'll be very disciplined, but as Amjad said this morning in his press release, We've invested $4 billion and we can do so again. There's a huge potential in this industry. The upside of oil and gas is great. New Zealand left oil and gas behind and have come back to it because they realised that they need to manage their energy transition. So supply chain, critical, keen to support them. They're lobbying alongside the oil and gas operators at government level. As Amjad says, in some ways, this creates opportunity for Enquest where we can be counter-cyclical and look at the opportunities. But yeah, concerned and see changes. we will do our best to support that supply chain.

Thanks, Steve. It's a very strong message. Just to close the Q&A, gentlemen, I'll probably put this to you, Amjad, first. You may wish to bring Jonathan in on this. It's a question from Paul Baby. When do you expect to complete the share buyback? And are you looking at dividends to cover any shortfall in the buyback programme?

So we're making good progress on the buybacks and we continue to make progress. Obviously, it's a system that we've put in which the instructions are irrevocable, so we'll continue buying these shares. And so we will, for next year, just recalibrate where we are and then look at what is best in terms of whether it's a... buyback or dividend. We said before that we will, as part of our capital allocation, we will have returns to shareholders and we will look at that next year if indeed we haven't finalized the share buybacks.

Thank you, Amjad. That's the final question. Thank you to everyone for submitting those. And thanks, gentlemen, for your answers. That then just leaves me to thank everyone for their attendance. Our next planned update to the market will be our usual ops update in November. And I guess that just leaves Amjad, if you have any final comments to make before we close. Thank you.

No, so thank you, Craig, for seeing this and thank you for joining us. And then thank you for being with us on this journey. And again, I do think this is a we're kind of at an inflection point. even with the difficulties that are here. But I'm a glass half full kind of guy. And we do see that we have a competitive advantage, fewer competitors. And with this competitive advantage, I'm very excited about the next leg ahead. So thank you.