Enquest Plc Ord

Good morning, ladies and gentlemen, and welcome to our 2024 Annual Results. Thank you for being with us today. My name is Amjad Besseyso. I'm the Chief Executive Officer of Enquest. Joining me today are Chief Financial Officer Jonathan Kopas and Steve Boyer, our North Sea Managing Director. Steve and Jonathan continue to provide great leadership as we drive Enquest forward in our second phase, despite a challenging fiscal environment in the UK. We remain very much focused on delivering our new growth of our journey. As I'm sure you're all aware, I wanted to advise all attendees with regard to discussions on the possible combination between Enquest and Serica. We are bound by strict takeover panel rules. Accordingly, I'd refer you to the RNS announcement released by Enquest and Serica on Friday, the 7th of March, and confirm that we won't be able to answer any questions relating to this possible combination today. Let's start by taking a look at our strong fundamentals that underpin our business. Our strategy is underpinned by our capability as a top quartile operator, both in the UK now and Southeast Asia. This is demonstratable across all our life cycles of our assets. I'm very proud to talk about our production performance in 2024, where our operated assets were 90% production efficiency, and 2025 is off to a similarly impressive start. And that's great considering the vintage of our assets, which is long life. With 96% of our 2P reserves under our operatorship, we maintain control over asset management, a factor which has been a key to our operational excellence over the years. During 2024, we celebrated 10 successful years of operations in Malaysia by being nominated the operator of the year in the Malaysia Upstream Awards. I was very proud to attend those celebrations for the 10-year anniversary alongside a wonderful team led by Razif Ahmad, our general manager in Malaysia. Our expertise is also now extended to decommissioning performance, where in the UK we've executed a further 22 wells in 2024 across the Thistle and Heather projects. This will take our total over the past three years to 70 wells plugged and abandoned, around 35% of the well P&A activity across the entire Central and Northern North Sea, being the largest P&A activity by a long shot. Our performance also in decommissioning extends to Malaysia, where we've been recognized as the best P&A operator by Petronas for 2023 and 2024. It was further validated by the decision taken by Shell and our GKA joint venture partners to hand over the decommissioning management of the greater Kittywake area to Enquest last year. We see this as a key enabler for us to transact in the UK in the future. Equally as impressive, following a period of significant deleveraging where we've paid more than 1.6 billion of debt down, Enquest now has a balance sheet that is primed for stronger growth. Our net debt at the end of the year was 386 million. Following a redetermination of our RBL facility, which remains fully undrawn, our liquidity has increased from 475 million at the end of the year to 549 million at the end of February 2025. Our solid footing means that we are in a position to build on last year's share buyback, and I'm very pleased to announce that our commitment to return capital continues during 2025, and that we will do that via a $15 million dividend subject to shareholder approval at our annual general meeting in May. We've been clear in our strategic focus also that executing a transaction which materially grows our UK business and accelerates the use of our 2.1 billion tax asset is part of our main strategy going forward. When I say that we are a top quartile operator, I wanted just to show you a selection of proof points based on industry metrics. As you can see, safety underpins everything that we do, and it is our license to operate. We see ourselves firmly in the upper quartile in the health and safety area. We have a strong track record also in drilling and well work over, and our decommissioning performance continues to set new standards. When we took over an asset, and we've done so on nine assets over our life, we provide focus to its operations and have been consistently successful in applying our differentiated capability to lower cost and, most importantly, increase production uptime. Our 2024 group-wide production efficiency of 90%, again, represents a year-on-year improvement, which is a great achievement given the maturity of our infrastructure. Magnus, for example, achieved its 40th year, which is great given the uptime performance at Magnus, but also that we've taken it at 7,000 barrels a day and it's doing about 15,000 barrels a day today. Our 90% production efficiency is 13% higher than the UK average. These capabilities have enabled us to consistently deliver on target and provide a strong foundation to pursue value-driven growth. Next slide, again in terms of solid performance, gives us the ability to grow our business and generate value. In 2024, our two P reserves were almost fully replaced by our Southeast Asia growth and actually would have increased on a comparative basis once the reserves from Vietnam are recognized. Since our inception, we've had a 40% reserve replacement ratio, 140% reserve replacement ratio. We started off with 80 million barrels. We have produced 200 million barrels over our life and still have around 170 million barrels left to access. We operate 96% of our 2P reserves, of which 76% represent proven volumes, a very high ratio of proven to 2P. Our approach also aligns with our goals of sustainability as a transition company, making the best use of resources and assets that have already been discovered or developed and managing them responsibly. We are set... for our foundational growth. While we continue to execute opportunities which provide organic growth, we are very much focused also on delivering transformative acquisition. Given our significant relative tax advantage in the UK, I expect us to grow our business materially in the UK by accelerating the value within our tax asset. In recent months, we have shown that we have delivered diversified growth in Southeast Asia, including the Phase 1B project, which adds 70 million SCUFs a day in Malaysia and allows us to access the existing resource there, but also in our acquisition of Harbor Energy's business in Vietnam, which we expect to complete in the next quarter. The recent deals we have agreed in Southeast Asia highlight our commitment to growth, a disciplined approach to M&A, and a strategy to invest capital where we identify the most favorable returns. In all of our endeavors, we also look to diversify the portfolio and improve our overall carbon intensity by adding more gas to our commodity mix. And as you've seen, our development projects in Asia have focused on gas with Phase 1B and the DEWA cluster, which is a new PSC that we've received in the last year to develop possibly a 500 BCF discovered resource. In short, we have a strong track record of delivery. We have a great team that gives us differentiated capabilities. And we are well-placed to execute our strategic claim, strategic aims. Thank you. I'll pass to Jonathan to take us through the financial performance.

Thanks very much, Amjad. Morning, everybody. I thought a good place to start going through the finances is just to sort of pause and reflect on our capital structure. And when I stood here last year, I talked about our priorities and I talked about simplifying our capital structure, but also about capital discipline as well. So fast forwarding a year, we have continued to simplify our capital structure. And today we have a strong foundation of bonds and we demonstrated the support of those through our TAP, which I'll talk about a little bit later. And on top of that, we have a flexible RBL, which is a great tool in terms of managing our growth pathway as well. Capital discipline is absolutely essential to everything that we do. It's within our DNA as an organisation. And our investment portfolio is focused around fast payback opportunities. And as Amjad has said, what we're really concentrating on here is about delivering growth and about delivering diversification as well. And if we deliver that, we can see we're on this pathway on shareholder returns, and we've made further progress around this pathway at today's results with the declaration of the dividend, and also the internationalisation that Amjad has spoken about as well. So now moving on to look at the income statement. So in 2024, our revenues were $1.2 billion. And as Amjad mentioned, our production was down about 7% year on year. And Steve will talk us through that. What we also saw in revenue is that our Magnus gas was lower, both in terms of pricing and volume. But of course, that just passes through that asset, and it's offset in our cost of sales. And so we saw a reduction in our cost of sales to $787 million. Within that figure, our production costs were flat year on year. On a unit basis, they were $20.6 a barrel. And as we saw the half year, we continued to see tariff components, SVT, increasing, and that was $4.7 a barrel across the year. Our adjusted EBITDA was $673 million, and we had an impairment in the year of $71 million, and that reflects the changes to EPL, but also move to a more conservative long-run planning assumption. We used $75 a barrel. It was pleasing to report a net profit for the year of $94 million. And underlying that was also a group effective tax rate of 44%. Now that's lower than we've seen in past periods. And one important driver of that reduction in terms of our effective tax rate was the additional recognition of tax assets on our balance sheet. So growing that tax loss position. If we move on to our balance sheet, our RBL was fully undrawn and remains fully undrawn. We repaid $140 million of the RBL in the first quarter of the year. We had a very positive outcome in terms of our RBL redetermination. We saw a 34% expansion in the RBL capacity at the 1st of January. And this was a very positive outcome because it was a statement about the tangibility and quality of our assets. But of course, it also came hand in hand at the point where we're seeing EPL stepping up to a higher level as well. So this is about the quality of our assets coming out over and above the fiscal changes we've seen recently in the basin. As I mentioned at the start, we further simplified our debt structure. We successfully executed a $160 million tap on our high yield bonds. We priced that at a 1% premium to par. It was strongly supported in the market and we used it to repay our $150 million term loan and that has enhanced our access to our RBL capacity as well. And as Amjad mentioned too, we have known that debt maturities now before 2027. Of course, another really important component of our balance sheet are our tax assets. Our recognised tax losses are $2.1 billion at the 31st of December, and we have a further $1.2 billion of tax assets which are to be recognised. In terms of cash flow, our cash generation from operations in the period was $686 million and we reduced our net debt by $95 million. Our net debt at the 31st of December was $386 million and within that our gross debt totaled $666 million and our cash balances were $280 million. 2024 was a big year in terms of capex for us. Our capex totals $253 million. And an important component of that was the Magnus flare gas recovery project, which receives decarbonization allowance. And we finished the year with a strong cash and available facilities position, totaling $474 million. And post the RBL redetermination, at the 28th of February, that had increased to $549 billion. In conclusion, let's look to the future. So let's think about the 2025 outlook. So our production guidance for 2025 is 40 to 45,000 BOE a day. That's stated on a pro forma basis and it includes 5,000 barrels a day of production from our Vietnam operations. Underpinning that number is a continuation of our focus campaigns in terms of drilling and maintenance across our assets. Operating exposure, our base business is flat year on year, including pro forma $50 million of operating costs in Vietnam. Our guidance is $450 million. Again, this is about our disciplined approach to cost management and really making sure we're driving the best return out of the capital that we're deploying. CAPEX comes down to $190 million. We have well work campaigns at Magnus and in Malaysia, as well as the continuation of our rightsizing work at SVT. And decommissioning costs are guided at $60 million. And 2025, we'll see the completion of the well P&A campaign at both Heather and Thistle. We're also, of course, announcing today our first dividend, and that will be $15 million. We are delivering that from a position of balance sheet strength, and we will be paying it in June following the AGM. Before I finish, though, just some thoughts about 2026 outlook as well. Our focus is very much going to be about organic growth. Our focus is also going to be about the Kraken enhanced oil recovery project, which is an exciting upside that Steve will touch on in a minute. From an operating expender point of view, we remain rational investors and we are focused on optimising our core projects. Our capex we'll still focus on fast payback, low-cost opportunities, and decommissioning will move beyond our well P&A campaign into a program of removals. And finally, on shareholder returns, our focus is very much on sustainable capital allocation framework, and shareholder returns are absolutely core to that framework. So now handing over to Steve, who will walk through the operations.

Thank you, Jonathan. Thank you, Amjad. Good morning, everybody. I'll talk you through our operational performance through 2024 and also how operations are looking in 2025. We talk a lot about having a differentiated operating capability at Enquest, and I think you will see that come through as I talk through the results. What does that differentiated operating capability mean? It means we're strong and we display operational excellence across all facets of our business. So that's across upstream, midstream, the energy transition and decommissioning. As Amjad mentioned, underpinning everything we do is delivering safe results. We're doing a great job in Malaysia. We were awarded the HSE Excellence Award by Petronas, which was a fantastic achievement by the team. We also achieved three-plus years lost-time incident-free on Kraken, and we're heading towards 20 years lost-time incident-free on the greater Kittiwake area. So a fantastic safety performance by the team, but we keep focused on delivering safe results. That is our licence to operate, and it's really important for the business. If I just touch on our upstream and midstream performance, midstream 100% uptime up at the Sullivanville Terminal, which is a great performance by the teams up there. But production efficiencies at 90% across our operated asset portfolio is a phenomenal performance. And we carry on with that production efficiencies through 2025 with all of our assets above 90%. Really strong performance by the team. Also in Malaysia, as Amjad mentioned, we were awarded operator of the year, which is again testament to the hard work of the teams. And going back to what Jonathan was discussing, cost discipline, extending field lives, strategic management of our assets is core to everything we do. And you can see that in that we've extended field lives by 10 plus years across our asset portfolio. What does that mean? What does that generate? Well, in Magnus itself, we've already generated an additional billion dollars worth of revenue. So really strong performance. The energy transition is key to everything we do and playing our part in that energy transition. For me, the energy transition starts with oil and gas, and we've achieved material decarbonisation across our oil and gas operations. And we've reduced UK emissions by 40% since 2018, which is where the North Sea Transition Deal baseline starts, and we're well ahead of target in hitting the baseline and the target delivery by 2030 of a 50% reduction in our emissions. Again, good performance across the group. You can see we've reduced our emissions by 22%. So not only are we renewing energy projects, and I'll talk to you in a minute at Veri, we're also decarbonising our existing oil and gas operations, which is really important. In terms of SVT in the Solon Vaux terminal, that is effectively what we see as the energy transition in a microcosm. It's extending the life of the oil and gas facility as far as possible. It's reducing the cost footprint, and it's also reducing the emissions of our existing operations. So through the new stabilisation facility that we're 75% through completing the installation of, and through the grid connection that we'll do in 2026, that will reduce emissions at the Solon Vaux terminal by 90%, which is a tremendous achievement. That allows us to keep the oil and gas assets running out into the 2030s and allows the new energy projects through Veri Energy to be brought through. In terms of Veri, we're looking at onshore wind, with two onshore wind turbines being progressed through to FID in the next 12 months. We're also working on carbon storage, where we've high-graded the four licences to two, and we're also studying e-fuels. And all of those give us the potential for new energies across the business, which is exciting. Where we can't extend field lives and we can't repurpose the assets, we look at decommissioning. And as Amjad's mentioned, we're a sector leader in decommissioning performance. We've effectively executed 70 wells over the last three years. That's 35% of the wells P&A'd over the Northern North Sea and Central North Sea. And we're doing that at 35% of the benchmark NSTA cost, which is a tremendous achievement by the teams. More importantly, as you look at building an oil and gas business, it's ensuring you have low exposure to ABEX, which we've done very well, but we also operate that ABEX. And a proof point for what others think of our operating performance on decommissioning is Shell awarding us further operatorship across GKA, which is a great testament to the teams. And as we look at decommissioning, we see it as a key enabler for growth in this market. You not only need to be good at upstream cost discipline, extend the lives of assets and production efficiencies, you want to be doing the decarbonisation of your existing assets, but you also need to decommission them at the back end. Okay, just to focus in on some of the assets. So Kraken is our FPSO, as you'll be aware, 95% production efficiency. Just so people know, production efficiency includes unplanned and planned shutdowns, so that's a phenomenal achievement by the teams. That's done through close collaboration and working with Bumi Armada, who's our duty holder, with the right strategic approach from both parties. In terms of future upside for Kraken, we're looking at enhanced oil recovery, which Amjad and Jonathan referred to. That's effectively injecting a polymer into the reservoir. We're currently studying the right polymer for the reservoir. That has the potential to change the sweep patterns across Kraken and basically increase our recoverable reserves by 30 to 60 million barrels. We're progressing that project through towards an FID in the next 12 months. Probably a phased project, but we see huge potential. And it's quite exciting for the business to see Kraken having an extended field life and extended field of recoverable reserves. And Bressey Gas is the other project around the Kraken area that we're looking at. That would effectively involve the subsea tieback of a single well in the Bressey Reservoir. That significantly reduces the Kraken emissions footprint and extends the life of the Kraken asset out into the 2030s. And we're looking at progressing that through FID again in the next 12 months with those two projects aligned in terms of timing. And just to mention, Jonathan mentions cost control. When we did set up the Kraken vessel contract, the lease contract at the start of the project, with a step down in the lease, I'm pleased to say that step down in the lease will occur this year, where we'll see a 70% reduction in the lease cost, which is an $80 million per annum saving across the Kraken asset, which is key. And just to mention, obviously we developed Kraken. We still have that development capability in-house. We see Brescia and Bentley as key developments for the North Sea. We obviously need the right fiscal regime. We're maintaining and we're continuing to do technical studies on those assets. But when the right fiscal regime comes in, which is progressive and encourages investment, we'll be able to kick on with our plans for Brescia and Bentley. Onto the other end of the life cycle, so as Anjad mentioned, the Magnus asset celebrated 40 years of asset life, which is a phenomenal achievement. And the production efficiencies, when we picked up the asset, production efficiency was below 60%. We've basically, through investing in the right equipment, investing in the asset itself, we've managed to transform that, getting up to 83% production efficiency last year. That production efficiency includes an unplanned outage where we had an issue at the Magnus SSIV which we reported. Again, that demonstrates the great work by the team. So although unplanned outage, problem sub C, a multi-operator collaboration campaign was undertaken. We basically sublet a vessel from another operator that was in the field and we had the full East of Shetland production back online within seven days. So really strong performance by the team, really impressed by that. Also, as we move through Magnus, Jonathan's mentioned, we're looking to extend the lives of all of our assets. So the Magnus flare gas recovery project is key to that. We're at the early stages of that project. And we're also now looking at a different phase of Magnus. So we'll carry on drilling, as we've mentioned. So we've got a drilling campaign ongoing. We'll carry on with well interventions, but it's all about reservoir management. How do we get the water in the right place to maximise recovery? And a proof point of that is we went through a well optimisation campaign through 2024. We reduced field water cuts by 2%. Now, through Magnus, we process about 120,000 barrels of fluid a day, so you can work out that's about 2,000 barrels of oil a day uplift, which is really, really impressive. We're also increasing our water injection rates into Magnus by going to five-pump water injection, so big potential through low-capx investment to maximise the recovery from the field. And that late life management expertise on Magnus, we've taken that, obviously, in our Southeast Asian portfolio. We've mentioned Malaysian operator of the year. But you can see, again, production efficiency is up at 94%. A three infill well and three work over program completed through 2024. And as Amjad touched on, we're really pleased to get an expansion of the Saligi 1B gas agreement. First gas is expected in 1H26, and that allows us to book 155 BCF of additional gas, which again allows us to diversify our component production between our oil and gas mix. So really important. um the malaysian team i mentioned the excellence award that was on the back of two years and about five million man hours lti free they remain lti free which is a great performance by them and we also picked up the diwa and production sharing contract which is a series of developments that we're studying which has about 500 bcf of gas in place so big potential to expand around our existing position in malaysia and as i just mentioned we're also looking at other country entries which takes me nicely to the Vietnam acquisition. So we've signed an SPA on the Vietnam deal. The deal's progressing through to completion. We expect that deal to complete next quarter, as mentioned by Amjad. It adds about 7.5 million BOE at 2P reserves. We also see 2C reserves that we can potentially convert into 2P. So a really nice acquisition. The staff will be fully transferring across to Enquest and are pleased that Enquest are coming in in terms of extending the field life of the asset. They've seen our credentials. They're delighted to be coming part of the Enquest family. And I think the transition's going really well. The block PSC itself runs to November 2030, but we see the potential to extend that through investing in the asset in the right way. Life of field asset break even is about $40 per BOE, but it's high value crude, about 10% premium to Brent, and there's a number of additional fast pay back, low capex, minimal decom opportunities that we'll look to progress within the portfolio. Okay, moving into midstream, I've already touched on, we'll be right-sizing the Sullivanville terminal over the course of 2024 into 2025. We're about 75% through that project. That project's, again, lost-time incident-free, which is good performance by the teams. The new stabilisation facility will obviously allow us to reduce our power demand. That ties in nicely with the grid connection, which we plan to do in 2026. which will transform the emissions footprint up at SVT. It also lowers the operating cost footprint and allows us to carry on with East of Shetland production and West of Shetland production in the 2030s, with Clare having the potential to go out in the 2050s. By doing that, that creates the fairway for new energy projects through VERI, and as I mentioned, we're working on carbon storage, onshore wind and e-fuels. Just to finish on decommissioning, it's not always the most positive finish, but we are very good at it, so it's worth touching on. It is a key enabler, as we see, for late-life asset acquisitions. We tend to operate in mature provinces, so our decommissioning capability is core to everything we do. And just to say, our decommissioning expenditure exposure is low. We're coming to the end of the Heather decommissioning program. So the full phase one and phase two, that's the reservoir and well abandonments, were completed just before Christmas and were due to disembark the Heather platform next month, which is a great work by the team. And the team needs to stay focused on safety performance through that critical phase. We'll then lift off the topsides in the summer. It's a single lift done by all Cs, and then the jacket will be removed later. So good work on Heather, really strong, if you like, validation by our peers, because Shell are one of our Heather partners, and that's why they've extended the operatorship across GKA. Thistle, we're at a very low paying equity, but again, tremendous performance by the team. We've only got a few wells left to complete on well P&A. And again, we're looking at disembarkation near the end of this year, possibly early next year. So good work, again, across the board. And as I mentioned, we've completed over 35% of the Northern North Sea and Central North Sea well P&As over the last three years. Obviously, through doing that, we've learned lessons, we've applied efficiencies, we've managed to deliver the well P&A costs at 35% of the NSTA benchmark, which is a tremendous achievement. And so in our view, we've got best in class expertise on DECOM. And as I mentioned earlier, our differentiated capability applies to all facets of our business. And we need to keep focused on that. So as Amjad mentioned, we've had a really strong start to 2025. And we're keen to maintain that. And as we look at a transformational acquisition, those skills will obviously come to the fore. Okay, with that, I'll hand back to Amjad.

Thank you very much, Steve. Thank you, Jonathan. So in conclusion, I just wanted to highlight that we have a really diversified approach to growth. Both areas of focus are slightly different in terms of how we deal with them. And we are looking at a strategy which is slightly different. In the UK, really, it's a declining asset base. We're looking at taking late life assets through our tax advantage. And in Southeast Asia, it's a mix of late life assets and growth through developments, and mostly increased gas component developments. So in the UK, again, the compelling and credible position they have as operator gives us a strong position as consolidator, and leveraging our tax is important to extending the assets going forward. We bring our skills to bear and continue our track record of extending the economic lives of all assets under our operatorship. And of course, our decommissioning expertise, which is an increasingly important component of the North Sea capability, is a key enabler in that M&A space. In Southeast Asia, the recent growth actually shows that we are able to grow now with our new balance sheet, and it's included gas development blocks in Diwa, in Sarawak, and enhanced gas production agreement with the existing Seligi asset, which extremely importantly gives us access to up to two TCF of reserves in the Seligi PM8 complex. Even though we started with 155 BCF of booked reserves last year, the infrastructure can take up to 300 million standard cubic foot a day, and we see significant growth in gas requirements in Peninsular Malaysia. While our UK targets are focused on the late-life operating and transition end of the assets, we see value working across the full spectrum, as I said, from discovery to development and optimized production in Southeast Asia. This international growth is aided by our strong reputation, as we mentioned, both in Malaysia and now outside of Malaysia, and that's been a key for our success in the competitive M&A processes that we've seen. So just to summarize, we see a clear plan to add value across both sectors in the business, and we're all energized by the opportunities ahead of us. In conclusion, Just highlighting the growth strategy in action, we're a top quartile operator. We have a strong balance sheet built through discipline and consistent deleveraging, and we're well positioned to deliver transformative value accretive growth. With our deleveraged balance sheet, enhanced liquidity, and significant tax asset, and our strong fundamentals, we are very well positioned to deliver a transformative value accretive acquisition and growth to our shareholders. Thank you all for your attention. We'll now move to the Q&A and hand over to Craig, please.

Hi. Thanks, Amjad. Thanks, gents. We'll take some questions from the floor first before I go to the webcast. And again, just to repeat the reminder that Amjad gave that with regard to the ongoing discussions with Serica, we're not able to take any questions on that in line with takeover code rules. Thank you.

Okay, any questions from the floor?

Dave? Hi there, Dan Slater from Zeus Capital. I just wanted to ask about the dividend. Clearly it's great that you've returned to the dividend list and that's a nice strong payment for last year. Can you give us any guidance on how we should think about it going forward? Should we be expecting a sort of flat 15 million or might there be a sort of

targeted growth rate or a percentage of free cash flow I'll just start and then maybe Jonathan you can continue so we have we made a commitment three years ago about looking now at returning part of our capital allocation going forward is returned to shareholders and so we started with the share buybacks last year this year we're committing to a dividend it's our maiden dividend and obviously now we've got the balance sheet and the consistency to continue with that going forward I don't know if you want to add anything to that.

No, I mean, all I would add is it's a journey, right? As you said, we started on this journey three years ago. We've been clear in recent years our number one priority has been to put free cash flow into the balance sheet to reduce our debt. We've put $1.6 billion of free cash flow into the balance sheet. But three years ago, the team said, well, when we've got the balance sheet in the right place, then we'll turn to returns. And it was great last year to announce the buyback. And that was $9 million last year. I think what the dividend announcement gives shareholders today as the next step on that path is certainty. And I think that's a really, really important milestone kind of in this journey. And going forward, the dividend will be core to our capital allocation framework. And we will always look at it as a sustainable part of that capital allocation framework.

Perfect, thanks very much.

Hi, Mark Wilson, Jefferies. Could you remind us why you stand on a return to drilling at Kraken? Is that still the plan for 2026? That's my question.

So I'll just start with that and then maybe Steve can add. So obviously we had planned two wells for Kraken for this year. I think it's public that our partner is in administration there. And so I think the issues with our partner made us look at the options at the time. And I think we decided in October that we wanted to probably stop the contract. And so we settled with our drilling contractor. And that was also pre the change in the tax. So there was an advantage to do that before end of October. And there was an advantage to do that with the uncertainty on our partner funding. So those are kind of the two keys. I think we still, in our... In our program, in our plans, we do still look to return to drilling in Kraken. And I think that will happen in the near future, because I do think our partner will resolve their financial issues in the near future. Steve, I don't know if you want to add anything.

Yeah, the cracking opportunities where we're looking at drill mark remain robust. So they're very robust infill wells. Obviously, I mentioned enhanced oil recovery project. That's exciting. And we've put the wells back to 2027 at the moment. We could accelerate those. But as we progress EOR, we will look at how sensible is it to drill those wells if EOR is going ahead, because EOR has the potential to basically transform the performance of all the wells across the cracking well stock.

Chris from Stifel. Question following on from what you've said on Kraken on free cash flow. If you look forward to the next two or three years, it feels like there's more capex opportunities now, and it feels like your free cash flow might actually all be consumed by the business. If you sanction Kraken EOR, if you've got DUA, as well as the existing capex in the business, that feels like that's all your free cash flow. So is your balance sheet in the right place now to execute on all those opportunities at once? Also, just picking up on the specific point on Kraken, could you sole risk the EOR development and basically, if you'd not rely on Waldorf to have to find the money, and therefore execute on that. And also in terms of risk on DUA slipping further to the right in terms of timing, again, could you talk about the partner risks there and the ability to fund that 500 BCF gas development?

I guess I'll start and then... I think the premise on EOR is it's capital light, it's actually operating costs, but it's not significant. So I think the premise that that will be taking a lot of capex, I think, is not in our calculus going forward. I think what Steve mentioned is realistic about 27. I do feel the partner issues should be resolved well before 26, which then allow us to plan for activities in 2027. So in terms of soil-risking EOR, I think that's difficult because, again, using existing wells and existing well stock. However, I think it's clear from the existing JOAs that activities need to be done to continue with the growth prospects of any field. And so I think we will have enough buttons to be able to execute things which are correct and the right decisions for enhancing and optimising a field going forward. And if you want to add anything to that.

Yeah, you've covered it really well, Amjad. I would just say it's a short pause on cracking while our partner resolves their issues. You'll know they're going through restructuring, which is in the... press and I think from my side of things it's all about getting the right strategy for cracking the projects we're talking about of a material impact on MPV 10 so that's good for our shareholders and theirs and they are as Amjad mentioned capital light so EOR doesn't need any new wells it's putting the polymer into the existing well so it's more an operating cost than a capital cost and it'll be managed and phased in the right way.

I guess the first thing to say is we're operating under the code at the moment and one of the absolute building blocks of that is no profit forecasts given where we're at so I can't answer that part of the question. What I would say though around your question though is The one thing that we celebrate in our business is opportunity and optionality. And if there's genuine competition for capital in our organization, we will allocate our time and our capital towards the best opportunities. So I think having a full hopper of opportunities and having a strong capital allocation framework within which to deal with those things ultimately speaks to one of our core skill sets, which is making the right decisions about where we spend our time and our money.

Yeah, and I think I would just add it's fantastic to have the growth opportunities we have in our existing portfolio, right? And we'll be capital disciplined, as Jonathan says, in terms of how we execute, but we have a good suite of opportunities within.

Mark? Actually, on that point about the growth, could you just explain to us what the expansion of the SLEGI 1B gas agreement will look like on a run rate basis after first gas in 1H26 versus today? And yeah, what are the next steps on the DUA PSC being awarded? Thank you.

Okay, so on Seligi 1B, it's the first time we've actually contracted as a main deliverer of gas to Petronas in Peninsular Malaysia. We have an agreed price, which was negotiated, and agreed take-or-pay. So it's 70 million scuffs, cent a cubic foot a day, which is effectively 11,000, 12,000 barrels a day equivalent. But the issue is also it comes with a take-or-pay commitment. Whereas in our phase one, it was a kind of a standby commitment. And also it was more of a tariff that they paid for the gas, because at that time the gas was property of Petronas in Seligi, not in PMH. There were two different PSCs there. Seligi, the gas, was property of Petronas. We've now annexed the gas rights to the PSC and ourselves and Charigali, which is Petronas' operating affiliate in-country. So we're excited about, number one, the availability of the gas resource there, and number two, the growth of gas needs in Peninsular Malaysia. So, I think this is an important launching pad for growth of gas opportunities to supply gas in existing infrastructure in Malaysia. This first phase is all about non-associated gas, so it's in horizons which we're drilling and completing to supply non-associated gas from the Seligi field to Peninsular Malaysia. On Andiwa, it's a very early phase, but we're very excited about having, again, an opportunity to have 500 BCF in place in a cluster, very much near existing infrastructure and existing market, which is actually short of gas. So I think we're excited about that development opportunity. Again, in the next 18 months, we will be looking to FID that going forward. And part of the attractiveness is, just like Minnesota military, you get an off-take contract for gas, which again would be a take-or-pay contract, which allows financing to be easily available also. Mr. Fenn.

Thank you. I'm cracking in a few questions and I'm a bit naive, but as part of the GOA, given the partner, given that you're the operator and the partner can fund his share, isn't there a mechanism by which you could take the stake of the partner and get 100%? That's my first question. And my second question is, in the absence of drilling activities, where would you see Kraken production at least sort of decline compared to 24 and 25 and then 26?

Thank you.

Yeah, do you want to start with the production? I'll do them in order.

So yeah, there is a mechanism in the GOE where you could... end up with their equity share. But it's, just to remind you, it's their group companies that are administration, not the operating companies. And operating companies continue to pay their costs as they fall due. So there's no real... opportunity there, or chance of that occurring at the moment. But we keep a close watch on it, as you can imagine. In terms of the cracking rates, they're pretty much on with the decline rates. We'd expect the fields performing well. We're starting to see that decline flatten off, as you do in heavy oil fields. And that's why we see EOR as a great potential for the cracking reservoir. And cracking, unlike other EOR-type projects, benefits from an underlying shale across the majority of the field. So you'll get a really nice benefit from EOR in terms of changing sweet patterns.

It's an exponential decline, and again, we're getting close to the 90% water cut, so you can kind of look at it and see where it comes in. But it is kind of slowly, very slowly declining now.

And just with the partner stuff, we've looked at all the options to do things on our own, but as Amjad mentioned, because we're going into existing wells for anything we do on infill wells or EOR, you need to involve the partner. There's a good working relationship at the partnership level, so it's just a case of working with Waldorf until those issues have been resolved.

Thank you.

Do we have anything else from the room? If not, we do have some questions in on the webcast, gents. Some of them do relate to the Seligi discussions, which obviously we can't cover as Amjad laid out. The question I will ask, and it's actually based on a couple of questions, including one from Charlie Sharp at Canaccord, and it's kind of a two-clause question, if you don't mind. One is around... the future of decommissioning for our organisation beyond the Thistle and Heather campaigns that Amjad and Steve and Jonathan have talked to, and then how are those funded, which might be a section for Jonathan, how is the future of decomm funded?

Do you want me to do the first part?

Let me just... Strategically, the future of DECOM is still not clear. We know that we have this capability. What this capability has enabled us to do in the past and continues to enable us to do in the future is taking late-life assets which have cash flows and are able to generate cash flows during the T-5 or T-10 period, just like we've done with Heather, with Thistle, including the Dons, even Southeast Asia. So that business model is clear. Again, we are clearly performing at a very high level, like Steve said, 35% below the average, and so we continue to look at opportunities to expand our business model Again, it's great that the Shell and the Greater Kittywake area partners wanted us to do the decomm and that's a great confidence in our team and shows that the industry recognizes that confidence. So I think the future of DCOM remains a strategy that is part of our T-5, T-10 strategy, where we extract value from the late-life production, but then execute that as part of it. Do you want to add to that? No, it's clear. It's good.

The important thing about us in terms of decommissioning is that we are a very active decommissioner. As Steve said, 35% of the wells decommissioned in the North Sea, delivering it at 35% lower than the average cost in the basin. However, alongside that, we have done deals where we have left the decommissioning liability mostly behind. So whereas we have very high equity interests from a production point of view and assets, we have very low equity interests in terms of the decommissioning amount. To put that into the basin context, if you look at our decommissioning costs and you divide them by our 2p reserves, we are amongst the three or four lowest in the North Sea in terms of decommissioning cost exposure. And so what that means is that we have this great combination. We have a lot of activity and expertise which we execute in-house, but we don't have a huge amount of cost exposure to those projects. And that's important because when we come to look at transactions, Generally, that is something of value to the people that we are talking to, because it means that we can execute those projects in a safe way, in a timely way, and a cost-effective way. So it's a core part of our offering that backs up our really strong operational production performance as well.

Thanks, gents. There's no further questions from the webcast. Amjad, I don't know if you want maybe to give a couple of closing remarks.

Yeah, no, thank you, everyone, for being here. Again, I think we are at kind of a pivot point both in the UK with our tax asset and the shrinking pot in terms of the players in the fields, but also in Southeast Asia where we've now been able to start growing. And I think... we actually see people approaching us and recognizing our capability there too. So I think we're in a pivotal point, a seminal point in terms of the company with the balance sheet and the availability now of additional credit. And hopefully we'll have a lot of value accretive opportunities in the not-too-distant future. So thank you for being here, everyone. And I look forward to seeing you in the mid-year results. Thank you.