Petronor E&P Asa

Good morning. My name is Jens Pace. I'm the CEO of Petronor. And it's good to be back here in a somewhat wintry Oslo to follow up the fourth quarter results report that we put out at 6.30 this morning. I have a brief presentation, which we'll go through. But my main purpose here is to answer your questions. So please send them in. And we'll deal with them after a few slides. So first, the disclaimer, and I can't imagine there's many of you that look at these things, but there is a change from the last time we had this up on a screen. With the relinquishment of our position in the Gambia, the A4 license in the Gambia, we've removed references to Dr. Adam Law of ERCE, who did our independent assessment of prospective resources. So he no longer appears on the disclaimer. Those eagle-eyed of you might have noticed that. So first of all, an outline of the presentation, and while the fourth quarter results show a very strong operational story, I can't avoid dealing with the announcement that we made a couple of weeks ago regarding UrcaCrim's decision to indict a subsidiary of the company. So we're going to deal with that up front and then get into the operational update, financial performance, a brief overview of the portfolio, and then a summary. So look forward to your questions at the end of that. So first up, then, an update on the IRCA-Crim investigation. So as you know, IRCA-Crim has decided to indict Hemler Africa Holding, AS, which is a subsidiary of Petronor. It's an indirect subsidiary that holds our shares in the Congolese company that has our share of the PNGF sued license in Congo. It's been indicted in relation to suspected corruption committed on behalf of the company. And the company categorically contests this indictment and welcomes the opportunity to have this case thoroughly reviewed in court. And we understand that hearing will commence on the 23rd of November this year. So we're looking to that date as the beginning of the process. Probably worth also noting that the IRCACRIM decided not to press charges against Topco, against Petronor for suspected market manipulation because of lack of evidence. So I'm personally pleased about that. Messages to the market is something that we all take very seriously. So I'm pleased that that's not being put in question here. This is the beginning of a process which I understand could take quite a long time. The trial itself initially will last for about 10 weeks, I'm told. So we won't hear a result or ruling on that until, probably March or April in 2027. Whatever happens, there'll likely be appeals on either side, so with this going to another court and then maybe ultimately to a Supreme Court, we're looking actually at the result of this only being known at the back end of 2028 or early 2029. So we clearly have a long process here of uncertainty. In some ways, it's welcome, at least, that we know. Perversely, we know the process going forward. It's been four years that this investigation has been hanging over the company. So while we're deeply disappointed in this situation, we at least know that there is a process now to resolve it. In the meantime, Petronor needs to continue to operate in normal course of business. And so that's the job of me and my team to try and make sure that that is done as much as possible. So moving on to what that means and looking at the last quarter, we've seen the production that has resulted from the infill wells that were drilled in Chihuahua East in PNGF Sud. They came online at the end of the year and added a wedge of production I'll show you a chart later on, but added up to nearly 7,000 barrels of oil per day gross from these new wells at year end. And that raised the overall gross rate of the field to 32,000 barrels a day. If you look at the chart underlying this, you can see that this reverses a decline that we've noticed over the last three quarters. And it brings the average production for the year up to 4,600 barrels a day net. The new capacity of these wells is shown perhaps most markedly on the exit rate of the year, which was above 5,000 barrels a day, 5,400 barrels a day. And that's how we are starting 2026. This production is adding to our oil inventory. We had a lifting in November, you may recall, last year. So it was down to zero then. But it's now up to 250,000 barrels of oil. And we're adding to that at approximately 100,000 barrels a month. So we anticipate being in a situation to have another lifting and sale of oil in the second quarter. Well, that means in terms of the financial delivery for 2025, the cash that we have in the bank of the end of the year was just shy of $60 million. And with no debt, gross assets have somewhat reduced because of an impairment of our position in the Gambia with that relinquishment. And the revenue for the year was some $83 million, EBITDA of $63 million, and cash flows from operations of $61 million. So very healthy numbers there. And you can see from the pattern of oil sales that's shown in the chart there that oil We had only one lifting in 2025, and the reason for that was because of the record liftings we'd had in 2024, which included a significant over lift that we effectively had to pay back during the course of last year. And the realized average price of those liftings for each year is shown. So if I'm going to have an over lift and have to pay it back, I'd rather do it where we are able to sell oil at a higher price than we have to pay it back. But that's sometimes the way it goes and sometimes not. So looking at the bridge for cash, based on the report that we've just sent out, over the course of 2025, we started the year with about $80 million, oil sales of $33 million, and then the over lift that I mentioned, we account for that in the course of 2025, so that's another $36 million. Some working capital movements that this year were in our favor, so an additional $23 million on the positive side of the ledger there. And then in terms of costs, $20 million in OPEX costs works out at around $12 million a barrel, which is... I think, sorry, $12 a barrel, which is, I think, a high-margin, representative of the high-margin production that we enjoy at PNGF Sud. $20 million on gross investments, and that's on CAPEX. That's largely the infill drilling program that we're enjoying the benefits of now. $8 million on admin costs for running the company, and this includes our legal costs, all our professional services costs, as well as people and the costs of our listing and board and so forth. And that's come down over the years as we've run the company as lean as possible. Then the big flying brick there that's in orange is the return of capital to shareholders, nearly $56 million that we made over the course of 2025, and some leakage of dividends to our minority shareholders of $8 million, which leaves us with this cash position of just shy of $60 million as we enter 2026. So a 30,000-foot flyover, the portfolio, and it's really focused on two areas now. Production is from the Congo Brazzaville PNGF Sud license, a gross field production of over 30,000 barrels a day. It's operated by Perenco, specialist operator for mature fields. Been doing a good job there. Petronor's working interest is 16.83%, and as I've mentioned, high-margin production. Moving to Nigeria, this is a redevelopment project that we have in the OML113, which is the Aje field. We have a redevelopment plan there that would yield some 25,000 barrels of oil equivalent per day. 70% of that is gas. Gas is considered a transition fuel in Nigeria because it displaces the use of heavy fuel oil and diesel for power generation. So it's an environmental alternative to the current situation. And our working interest now with the completion of the acquisition of NewAge, which has interests in Nigeria, is now at 52% effective in the Aje field development. So this increases our 2C resources to 78.2 million barrels. So 70 of that is associated with the Aje field. 2P reserves in the Congo of 17 million barrels. And with our current production at current rates, that would be 10 years of production. So a pretty healthy resource base to be operating from. Diving into the PNGF sued asset a little bit more now. It's a field complex of a number of different fields with different reservoirs in each field. Some 2.3 billion barrels of oil originally in place. only 500 million barrels extracted to date. So we think that there's an opportunity for recovery of as much again as has already been recovered. So a long tail of production with a, as we've demonstrated, a production rate that responds well to investment in new well capacity. And so the five-well infill program that was drilled in Chubuela East was completed in December. All the wells found good reservoir as expected. And the rig has now moved on to different assets that Perenco operate in the Congo. And the plan is to bring it back in 2027 for more infill drilling programs. And we're looking at candidates now either in the Chendo field, Chibuela, or even returning to Chibuela East for one of the upper reservoirs that has proven to have worked out very well in this last campaign. And you can see the wedge in the production that ramped up at the end of 2025 there from Tribuela East. So that's the sort of thing we want to replicate from future programs. So going to look at AGE now, and I think it's worth stepping back a little bit and looking at what Petronor has set out to achieve with the AGE redevelopment. I think that we recognized that this was a field that would benefit from a fresh look. And we wanted to do a few things up front. First is to align the partnership and consolidate our position there. There was a history of misalignment between the partnership that had partly resulted in holding the field progress back. So we've formed a joint venture with the operator, YFP, And with the new age transaction completed now, we have a leading position in the partnership. And I think we have a great opportunity to have an aligned partnership going forward. Second area that we've been focused on is defining a project with attractive economics. And this is something that we've done quite a bit of work on with vendor cost estimates and a view of what would work here. So the idea is for an FPSO with gas processing capacity that would flow gas condensates to shore with a gas pipeline. and where we have bought land near the compression plant of the West African gas pipeline, so a clear export route for the gas and extraction of LPGs onshore. We would be able to use some of the existing well stock and drill a few more wells to produce both liquids and gas. And so there'd be offshore export for the liquids and gas going to shore. So we've defined that project in our estimate as some very attractive economics. And that's the basis in which we think the project should move forward. The other thing that we set out to do was to improve the subsurface description. Argyle Field does lie in a kind of area of complex geology and overlying geology with a steeply dipping canyonized seabed. So there is a technical issues to be overcome in really refining the subsurface description so that it's fit for purpose for a redevelopment. And there have been surprises in wells that have been drilled in the past. So we knew this was an area that needed to be addressed. We've had two rounds of 3D depth migration of the seismic. And I think we're satisfied now that we have a stable product that we're taking into rebuilding a static and dynamic reservoir model. So a solid basis in which to plan the location of future wells. So I think we've ticked the box in a lot of those areas that we set out to come into this project with. I think what's now in front of the partnership is really the project financing that's needed to move forward powerfully with this. And I think it's fair to say that with this company's situation in Norway, we recognize that Petronor is probably not the right company to lead the project financing of AGE. in discussion with advisors as to what the commercial solution would be to realize the value of AGE and secure project finance. So I expect that we'll be able to make more information available to the market in the future, but that's the focus right now of looking for the commercial solution with our partners. So in summary then, Good fourth quarter production with the production capacity increased by new wells, giving us a net production of over 5,000 barrels of oil per day. Building inventory of oil for sale at a rate of 100,000 barrels per month. And so we're planning for the next lifting and sale of oil in Q2. and entering 2026 with a strong balance sheet. And our focus is, apart from running that business, is to prepare ourselves for the legal defense of the Hemler indictment in the hearing that starts in the fourth quarter. So thank you very much. I look forward to trying to address your questions. Do we have any?

Yes, we do. We will start with a couple on the dividend outlook. Is there any dividend policy in mind for 2026?

The company has a dividend policy that was proposed a few years ago to an AGM that remains in place. We would see the concept of dividend or further shareholder distributions as part of the normal course of business Probably too early for me to say what the situation is. The board will be looking at the company's situation, legal, operational, and financial, in order to make the recommendation to our AGM in May on that. So there'll be more news on the possibility of shareholder distributions at that point.