Meren Energy Inc.

Lovely. Sorry, guys. So just the run of show for today, obviously, as you will probably guess, it is audio only. From regards to the speakers, we'll have two separate connections. So Aldo and Oliver will join from the same place. same connection in the hotel Masana is obviously going to be on his own connection Masana is going to be so Jen Masana is the sort of second moderator if you like he'll be the ones that's dealing with any written questions that come through from what he's just confirmed we're expecting minimal numbers in terms of actual sell side analysts so raised hands we shouldn't have too much We've got the pre-record, so obviously we'll go live on the pre-record to start because Jen's already kindly done the intro for that and also the outro. So the end of the pre-record, which is about 20 minutes long. Jen basically goes through the Q&A intro. So, Jen, what I'm going to need from you is at the very end of that pre-record is to then obviously we'll be jumping straight into whoever's got their first raised hand, if that's all right with you.

Yep.

great um stephan if i can get you to um be messaging with like i said we haven't got too many on podium if i can get you to handle the chat with masana that would be fantastic oh sure um yeah no worries yeah it just just to give him prompts um it's only his second time using podium so just you know let's give him the white gloves for that one just to make sure um yeah and again just in podium obviously i know i've just gone through it with masana so left hand side we keep for written questions middle is for who's in the um as normal as who's actually in um the webinar by the sounds of it we probably won't get any more than the four that's already been input and right hand side will be for order um Aside from that, obviously, the only other thing, obviously, Chris, I know I've already mentioned it, and for Chris and Myra, is we'll need to go from the pre-record to the QA live slide throughout. Obviously, for the webinar, Jen's got it as her background. So, Luca, I don't know if you want to pin Jen or how you want to do that to make sure that's always up. I could get it.

Yeah, I could do that, unless we stay on Krishna's title.

Yeah, whichever is easier.

Could you do that, Krishna? Can you just go to the Q&A as you did now, as we stay on your title? Okay, cool. Yeah, so I need to... Okay. Perfect. Okay, so I'm going to go live with your tile on spotlight. Okay, perfect. Okay, so I don't need to replace any spotlight. Perfect.

So there's a five second delay at the start of the video. Then it goes into Jen's introduction, which then hands off to Masana and then goes through the whole presentation and pre-record at the very end. So about 20 minutes in, Jen then comes back on to give the instructions of how the Q&A will work, which is obviously that one will then cut to live Jen and obviously asking people to unmute and so on and so forth. Aside from that, has anyone got any questions on this one?

Yeah. Many questions. On the off chance that these four are the only one that join and none of them raise their hand, would I just do a quick prompt to hand over to Masana for any written questions?

What I would do, so if we don't have any raised hands whilst your recording is going on, Obviously, give it a couple of seconds.

Yeah, yeah, yeah.

Once that recording is ended, do another quick prompt, just something along the lines of, as previously, as just mentioned, if you would like to raise a question, please raise your hand. If we still have nothing at that point, we will say there is currently no raised hands in the queue. at which point we'll hand over to Masana for any written questions.

Okay. Hi, Ashley. Sorry to interrupt. It's okay. Just on that point. So, yeah, please do hand over if none, but it is very likely.

Hello, everyone. My name is Jenny and I will be your conference operator today. At this time, I'd like to welcome everyone to the Merren's fourth quarter 2025 results presentation. After the speaker's remarks, there will be a question and answer session. Please note that at any time, participants on the webcast can submit the questions.

jenny who's the uh moderator for today and you also have um stefan who's assisting on just needs a message saying ashley first jeff seconds you know so on and so forth something along those lines

Hello everyone. My name is Jenny and I will be your conference operator today. At this time, I'd like to welcome everyone to the Merren's fourth quarter 2025 results presentation. After the speaker's remarks, there'll be a question and answer session. Please note that at any time, participants on the webcast can submit the questions using the questions button on the webcast interface.

This event is being recorded and the recording will be available.

Hello everyone. My name is Jenny and I will be your conference operator today. At this time, I'd like to welcome everyone to the Merren's fourth quarter 2025 results presentation. After the speaker's remarks, there will be a question and answer session. Please note that at any time, participants on the webcast can submit the questions using the questions button on the webcast interface. This event is being recorded and the recording will be available for playback on the company's website. I will now pass the meeting to Mr. Musana Chowdhury. Please go ahead, Mr. Chowdhury.

Hello, everyone.

The bottom of your Zoom screen. Once your name has been announced, you can ask a question. If you want to withdraw your question, please lower your hand using the raise hand function. If you would like to submit a written question, please use the ask a question tab on the right hand side of the player window. Thank you. And a moment for the first question, please.

Coming through loud and clear, guys. Thank you for that.

Hello everyone. My name is Jenny and I will be your conference operator today. At this time, I'd like to welcome everyone to the Merren's fourth quarter 2025 results presentation. After the speaker's remarks, there will be a question and answer session. Please note that at any time, participants on the webcast can submit the questions using the questions button on the webcast interface. This event is being recorded and the recording will be available for playback on the company's website. I will now pass the meeting to Mr. Masana Chowdhury. Please go ahead, Mr. Chowdhury.

Hello, everyone. Thank you for joining us today for Meron's fourth quarter 2025 results presentation. I'm Masana Chowdhury, part of the investor relations team here at Meron, and I'm joined today by Oliver Quinn, our chief executive officer, and Aldo Pericini, our chief financial officer. We'll begin today with prepared remarks and then open the floor to questions. Just before we get started, a quick reminder that today's presentation contains forward-looking statements. These reflect our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially. More detail on these risks can be found in our regulatory filings on CEDAR Plus and on our website. With that, I'll now hand you over to Oliver. Oliver, please go ahead.

Thanks, Masana, and thank you everyone for joining us today. This is my first results presentation as Merin's CEO, and I'd like to begin by thanking my predecessor, Roger Tucker, for his strategic leadership and personal support over the past few years. I'm proud to have been given the responsibility to steer the company through its next phase of growth, to lead a great team of professionals, and to continue working with our industry and government partners towards long-term value creation. Turning to slide four and an overview of 2025, I'm pleased to report on a year of strong delivery. To begin with, last March, we closed a transformational prime consolidation deal, doubling our reserves and production from our high quality and high net back assets offshore Nigeria. This was a strategic transaction as we simplified the ownership structure of our core assets, enhancing day-to-day control and creating a strong platform for further growth. Through 2025, we have successfully integrated Prime and have a lean and fit-for-purpose organization to manage our production assets, as well as progress our strong portfolio of growth opportunities. Underpinned by closing of the Prime amalgamation, we delivered strong shareholder returns with $100 million in base dividend and $8 million in share buybacks. Alongside shareholder returns, the balance sheet has been strengthened with the repayment of $420 million of the outstanding RBL facility delivering both cost savings and a healthy year-end net debt to EBITDAX ratio of 0.4x, all whilst maintaining significant liquidity to cushion the business against market volatility. Aldo will talk in more detail about the maintenance of a prudent leverage position and our broader approach to ensuring financial resilience through the cycle. 2025 was a year of transformation for Meron, but our focus today remains on continuing to maintain our balance sheet strength, enhancing the production profile through organic growth opportunities, and continuing to mature options to deliver long-term value to our shareholders. I'll now take you through our production performance on slide five. For 2025, we achieved working interest production of 30.8 thousand barrels of oil equivalent per day and 35.1 thousand BOEs per day on an entitlement basis, both in line with our full year guidance. During the first nine months of the year, the ACPO and Agena infill drilling campaign supported steady average production of around 32,000 BOEs per day on a working interest basis, with production lower during the fourth quarter, primarily due to planned maintenance shutdown on the Agbami field. Q4 production was also impacted by minor facility issues, including temporary shutdowns related to power supply, particularly during the second period of the quarter. These issues were actively managed through targeted operational interventions, enabling the fields to continue performing in line with expectation following resolution. As previously communicated, the ACPO and Agena drilling program was paused in the third quarter to allow incorporation of positive early results from a recently acquired 4D seismic data set that will aid in the optimization of drilling locations. Due to the earlier finish of the 2025 drilling campaign, our full year capital expenditure came in at the lower end of our guidance range. In 2026, we expect to see sustained drilling campaigns on each of ACPO, Agena and Agbami commencing later in the year. I'll now hand you over to Aldo to take you through the financials.

Thanks, Oliver. In the fourth quarter, Merion completed three oil liftings for around 3 million barrels at a realized all-in sales price of $64.4 per barrel. For 2025, we have completed 12 total liftings, totaling around 12 million barrels at an average all-in sales price of $72.2 per barrel. comparing favorably to dated Brent at $69.1 per barrel. Marin has applied a variety of different hedging instruments to protect the downside while also maintaining partial exposure to potential upside. This will include a mix of physical and financial hedges such as swaps, callers, and puts, and you can find further details on this in our Q4 MD&A. Moving on to financial highlights. Before going through our numbers, it is important to note that we have reported an impairment of 105.3 million this quarter in relation to the Agbami cash generating unit. I must emphasize that this impairment is non-cash and it has no impact on our cash flows. This charge has come as a result of oil price volatility in 2025 and updated cost forecasts relating to the Agbami field. More specifically, the updated cost forecast is mainly in relation to planned long-term life extension activities, allowing the FPSO to continue to operate reliably and safely through to the end of the license. This will also allow more flexibility on the FPSO to support future infill drilling and tie-back opportunities, which we will touch on shortly. Moving on to our highlights. For 2025, we delivered an EBITDAX of R$441 million. This fell just short of our full-year guidance, mostly due to a larger over-lift adjustment for the period relative to the estimates for the mid-point range of the revised guidance and other smaller variations on Nigerian royalties and levies. Cash flow from operations before working capital came in at R$ 262 million for the year, with a reported capex of R$ 100 million, largely driven by drilling activity in Agpo and Egina this year and facility costs on Agbami, both of which have met our 2025 guidance. Free cash flow before debt service and shareholder distributions was R$ 289 million. As Oliver mentioned earlier, we have significantly deleveraged the business this year, paying down the RBL by 420 million, as well as distributing roughly 108 million in shareholder returns. Moving on to cash flow for the year. This slide shows the 2025 movements and year-end 2024 cash balance on a constructed basis, as if the prime amalgamation had closed on 1st of January 2025. We ended 2025 with a cash balance of $175 million compared to an opening cash balance of $461 million. Net cash generated in operating activities for the year was 348 million, which included a positive working capital movement of 86 million, primarily driven by the receipt of oil sale receivables, driven by the timing of cargo liftings. The cash outlay of 420 million post-consolidation was for the repayments of the RBL, clearly demonstrating our intention to optimize our capital structure and resulted in about 12 million savings in reduction of financing costs. We also distributed a little bit over 108 million during 2025, comprised of about 100 million in base dividends and 8 million in share buybacks. Overall, through disciplined cash management, we have materially reduced our debt, strengthened the balance sheet, and established a solid platform for sustainable growth and value creation. We are also pleased to announce our first quarterly dividend of 2026 of 25 million, which will be paid next month. Moving on to the next slide. At year-end 2025, our amount drawn under the RBL stood at 330 million, with a net debt position of 155 million and net debt to EBITDAX of 0.4 times, significantly below our target of 1 time. The chart on the right demonstrates our consistent and prudent approach over the last few years towards debt management with continuous efforts to optimize liquidity while minimizing borrowing costs. It is worth recalling that post-primal augmentation, we cancelled an undrawn 65 million marine corporate facility to eliminate standby fees. As a post-fourth quarter update, we drill down an additional 40 million under the RBL due to normal working capital timing related to liftings and short-term liquidity positioning within the group. So we have very good flexibility under the RBL revolver facility at competitive borrowing costs. We are currently in the process of refinancing the RBL debt facility, which will allow us to save more on borrowing costs and to enhance our debt amortization profile. In the meantime, as shown on the right hand side, we do retain an ample liquidity headroom. Moving on to the next slide. With our full year results, we have also announced our full year management guidance. Our working interest production guidance comparing to 2025 actuals reflects the timing for the recommencement of infill drilling campaign, which is currently expected to start towards the last quarter of the year. Our rebdax and cash flow from operation guidance relative to 2025 actuals reflect the lower production base and account for a lower full-year Brent oil price at $63 per barrel compared to the actual Brent average of $69 per barrel for 2025. Moving on to the next slide. And before handing back to Oliver to take you through our organic growth opportunities, I will briefly highlight the positive developments in Nigeria. The implementation of the PIA was supportive to our business and this positive development has been followed by a number of presidential executive orders aiming at facilitating investment in Nigeria's oil and gas sector and tackle project execution risks such as cost inflation and schedule delays. So we are seeing greater fiscal clarity, stronger government engagement and targeted incentives aimed at supporting upstream investments. Recent final investment decisions on projects such as Bonga North, the Ubeta Gas Project and the HI Offshore Gas Project demonstrate renewed capital commitment and growing confidence in Nigeria as a long-term energy investment destination. For us, a more stable and predictable operating environment is constructive for both capital allocation and valuation across our Nigerian portfolio. We are also seeing Nigeria's USD credit spreads tightening significantly from peak levels, reflecting a meaningful reduction in the market's perceived sovereign risk and improving investor confidence in the country. This has also been reinforced by recent positive credit rating developments in recent months. We are very pleased to see these positive developments and continue to have high confidence in Nigeria and its oil and gas sector with clear fiscal and regulatory frameworks supporting our core business and key assets. I will now hand over to Oliver to take you through our portfolio outlook.

Thanks, Aldo. Turning to slide 12 and our business outlook, I want to focus on the organic growth opportunities in the portfolio, starting with our production hubs in Deepwater, Nigeria. For ACPO and Agena, we are planning to recommend drilling in late 2026 with the ACPO Far East exploration well. ACPO Far East is a near-field prospect located just five kilometers from existing production facilities and represents the test of a fast-cycle, infrastructure-led tieback opportunity with around 23 million barrels unrisked mean recoverable resource net to Meron. In a success case, first oil could be achieved through the ACPO FPSO in less than two years. The drilling campaign will then move toward infill drilling across both ACPO and Agena from late 2026 and into 2027. And this will add new production as we move through 2027. Beyond that, we have made progress around our undeveloped discoveries, Preoi, Agena South and Ikija, all located within 20 to 30 kilometres of existing Meron production hubs. That proximity is important, as it offers a growth portfolio of short-cycle, capital-efficient and lower-risk developments that utilise our existing brownfield infrastructure and together consist of around 42 million barrels of resource net to Meron. At Agbami, drilling also recommends this in late 2026, with a campaign including appraisal of the adjacent Ikeja discovery and six infill wells within the field. We are excited to get back to drilling in 2026, and the combination of testing new, low-cost resource and short-term production growth through infill drilling presents a series of low-risk, high-return opportunities to bolster our production profile and, in turn, supports long-term value for shareholders. On slide 13, let's turn to another key growth area for Meron, the Orange Basin. Beginning with Namibia, the joint venture continues to progress the Venus development project, which remains on track for final investment decision this year. According to the operator Total Energies, FID is targeted for mid-2026 with the environmental and social impact assessment now published and the environmental clearance certificate application submitted, marking a key regulatory step towards FID. As a reminder, Front End Engineering and Design, FEED, is progressing with a plan for 40 subsea wells tied back to an FPSO with a peak capacity of 160,000 barrels of oil per day and a production life of 20 years plus, delivering significant and sustained cash flow to Meron. As we get closer to the final investment decision, we anticipate scope for us to include Venus in our annual reserves reporting process. Beyond Venus, several material exploration prospects remain to be tested on the license with planning in progress. And importantly, we retain full exposure to these high-impact opportunities with no upfront cost as all exploration and development spending is carried through to first commercial production. In Block 3B, 4B in South Africa, the legislative notification and appeals process remains suspended pending the Supreme Court of Appeals judgment for Blocks 5, 6 and 7. From a project perspective, the identified lead prospect, Naila, is drill-ready and the operator Total Energies is ready to commence drilling once the appeals process is concluded. To remind you, the cost exposure to Meron in South Africa is limited, with the transaction completed with Total Energies and Qatar Energy including a capped expiration carry. Whilst the regulatory issues elsewhere in South Africa have caused delay, our 18% carried interest combined with the scale of the prospects identified means we remain excited about the potential for the block and its ability to act as a transformational catalyst for Meron. Now turning to Equatorial Guinea on slide 14, we hold two operated licences that offer another set of organic growth options within the portfolio. Starting with EG31, this is a shallow water gas position close to existing infrastructure and situated around 30 kilometers from the Punta Europa LNG facility. Through 2025, our evaluation is focused on maturation of the existing Gardenia gas discovery that represents a circa 200 BCF gross resource with the potential to be developed as a low capex, low unit cost, short cycle project that utilizes capacity in the adjacent LNG facility. Beyond Gardenia, several nearby gas prospects, Massif and Whistler, offer material longer-term growth potential with unrisked gross prospective resource estimates of around 5 TCF. As part of our wider organic growth options, EG31 provides an attractive right-sized LNG opportunity with low capex exposure through utilization of existing gas and LNG infrastructure. Moving to EG18, a deep water exploration block with oil prospectivity, we have identified basin floor fan targets with multi-billion barrel potential and a series of stacked prospects. Across both blocks, we have been running a farm-down process, and whilst the two opportunities offer differing investment profiles, industry interest has been encouraging and we are now in active discussions with potential partners. Importantly, we have secured two-year license extensions for both blocks, giving us additional flexibility as we progress partnership discussions and align next steps with the government. With the right partners in place, drilling activity could take place in the next couple of years. Moving to slide 15, I want to bring together these catalysts to outline the breadth and scope of our organic growth portfolio set across four countries and multiple basins. Whilst delivering corporate transformation for Meron in 2025, we have remained focused and active in deepening our evaluation of organic growth options and are confident as we move through 2026 that we are building a strong portfolio that offers compelling growth through choice, and most crucially, whilst remaining within our disciplined approach to the balance sheet and financial frame. I'll conclude on slide 16 and revisit our capital allocation priorities. Disciplined capital allocation underpins our business plan and the execution of our long-term strategy. Firstly, our balance sheet remains a core pillar of the business. Throughout 2025, we have demonstrated that discipline and we will continue to maintain a minimum liquidity position of $150 million and a net debt to EBITDAX target ratio of one times or less. Secondly, we see compelling value creation in our organic growth portfolio. Our Nigerian assets provide multiple pathways to grow production through infill drilling and subsea tiebacks. These low-risk, short investment cycle opportunities leverage existing infrastructure, generate capital-efficient returns, and help build a durable foundation for long-term value creation. With a streamlined business firmly in place and a strong balance sheet, we continue to selectively screen inorganic opportunities that meet our strict strategic and financial criteria, ensuring they are accretive and complement our existing business and priorities. Thank you, and I will now pass you back to the operator for Q&A.

Thank you, Dr. Quinn. We will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once your name has been announced, you can ask a question. If you want to withdraw your question, please lower your hand using the raise hand function. If you would like to submit a written question, please use the ask a question tab on the right hand side of the player window. Thank you and a moment for the first question, please. First question comes from Jeff Robertson with Watertown Research. Please unmute your line and ask your question.

Thank you. Good morning. Aldo, can you talk a little bit about the timing of the liftings that you anticipate in 2026? Hi.

Good morning. Yes. So for... We have to look at the liftings as per FPSO, right? You know that it's a discretionary and that creates the timing difference in relation to the liftings. So for 2026, we're expecting around eight cargoes spread throughout the year. So I think it's safely to assume they are evenly spread throughout the year just for simplification purpose.

And oliver with respect to eg does the two-year license extension give the potential partners that you have had discussions with time to get an exploration well drilled on eg 18. yeah hi jeff um yeah i think i think the two years is important in the sense of you know as we said in the presentation we are inactive the conversations on on both positions and they're very different things of course

But what that two years does is it just gives us a runway to complete those conversations and see where we get to without license time pressure, if you like, which is good. It signals strong support from the government for the ongoing process. And to the specifics. Yeah, I think it depends exactly when we might close the transaction, you know, and who it's with. But I think it's sufficient time to mature and drill a well. I think when you look at 31, you know, we're very focused on Gardenia because that's a discovery. So that's kind of appraisal development, you know, straight away. And it's shallow water. So, you know, technically not challenging, quick to do. And 18 is deep water. But again, you know, we have one very, very high graded prospect. I think people have looked at it. take different views, of course, but they see the same prospect. And so therefore, you know what you're going after. It's not a matter of saying, well, hey, let's get a partner and then rework the whole block. So, yeah, there's a reasonable timeline there. I think the next key step is kind of as we go through the first few months of the year here, where do we get to on the commercial front and can we get the right partnership in place so we get the right funding structure to unlock both opportunities?

Under the timing of the extension for block 18, would the permitting of an exploration well add any time to the extension such that a group could consider the results of the well?

Yeah, so I think in the detail of it, you know, you've got a two-year – well, whatever license period you've got, say two years in this case – you drill a well, you make a discovery, let's say, and then you move in in the contract, it defines kind of appraisal periods, commercial evaluation periods before you would declare commerciality. And that brings time to do that. That makes sense. So the first period is in summary really for the first primary activity. And then depending on success and how clear it is from the first well, there is a period for appraisal there where you can come and put an appraisal plan together. That could be more appraisal drilling. It could say, well, hey, I'm going to test a well or whatever, but you have that period to do that.

And lastly, for now, with respect to inorganic growth, Oliver, when you think about Marin's current opportunity set over the next couple of years, which would require capital dollars, what type of asset fits best in the portfolio, do you think?

Yeah, good question. So I think, you know, I'll start with, you know, what we have today. And I think hopefully you saw that in the presentation that I'll take a step back, really. When we completed the prime amalgamation, of course, we were doubling down on production reserves, cash flow that we knew well because we'd been a co-owner. We also knew there was a lot of organic growth opportunity in there, so exploration resource, contingent resource, high-value stuff. I think as we've moved through putting the two organisations together with a bit more capacity over the last six months, we're more excited about that. So I think we see a lot more opportunity around that portfolio for tiebacks to the three FPSOs. EG, as we've just talked about, we've matured that very well and that's come a long way and looks exciting. So I think that set of opportunities in the company today is exciting and I think has emerged in a very strong way as a set of options. The other backdrop there, and Aldo touched on this in the presentation, is the Nigeria landscape has drastically improved. I think both fiscally, politically support, you see production rising there quite quickly. You see investment dollars coming back from international firms as well as local companies. So, you know, there's a better landscape there beyond the technical for maturing things in Nigeria. So in sum, we're really excited about what's in the current portfolio. When you look at the character of that, it's high value contingent resource coming into Nigeria. production short period but you know infill drilling next couple of years new kind of tie backs end of the decade so that's great and that delivers a lot of value what it does mean when we look at the inorganic space is we say well look are there opportunities out there that could add production cash flow scale up the business in that respect in the shorter term so they would complement the growth that's in the current portfolio, but they would kind of build the balance sheet, build the operating cash flow, let's say, and help us kind of fund some of those organic opportunities. Because again, as we show in our kind of capital allocation, you know, we're not going to over-lever the business to do that stuff, right? We develop a series of options, but we're choosing which ones to do in the context of that disciplined balance sheet. So again, some inorganic growth, if it's the right opportunity, and again, we're very, very disciplined on that, could help unlock some of those barrels as well. Thank you. Thanks, Jeff.

As a reminder, to ask a question, please use the raise hand function at the bottom of your Zoom screen. Our next question is from David Round with Stifle. Please unmute your line and ask your question. David Round, your line is open. Please unmute and ask your question.

Can you hear me?

Hey, David. Cut you now. Yeah. Perfect. Sorry about that. A few questions for me, please. The first one is on the gas sales agreement. I read something about that this morning. Just wondering if you can give us a sense of how meaningful that may or may not be. The second question for me, please, is... You've mentioned ACPO Far East and Akija as specific targets. Just wondering how quickly those could be tied back in a success case. And I suppose if that is going to take a few years, how many infill wells should we be assuming each year to support production in the meantime? And if I actually, I'll sneak just a follow on to that. You've got a 26 capex budget of 100 to 140 million, I think. Are you able to just break that down for us, please? You know, just in terms of how many wells are assumed in that? Is it all just long lead items, please?

Yeah, thanks, David. I'll take the first one on the gas and then I can come back on the second one and then we can get to the third.

Yes. Okay. So in relation to the gas sales agreement, it was a result of a prolonged negotiation that we were having to revise the index. That's based on the contract that we signed back in 2018, given that it took some time to get that result. So there will be a couple, you know, a few impacts that you're going to see through cash flow and P&L in the coming period. So there will be first one lump sum payment that we're going to receive now in the first quarter of 2026. Second, there will be an increased price coming from the revised index, which will flow through all the periods as we produce and export the gas from Agpo and Agena. And there is a third component, which is the recovery of the arrears, right? The difference between what we should have received back from 2020 compared with what we have received. And that delta we will receive also in time to a reduction of the handling fee. So you should expect a larger impact in 2026 given to the you know, the resolution of the contract. And let's say on an ongoing basis, we're talking maybe something about, let's say, doubling the gas revenues that we have compared, you know, with the last two to three years. So it should be meaningful, especially in the first year.

Okay.

Okay. I think on the second one, Dave, it's a good question on Nigeria. So maybe I'll just take a step back. You know, we're getting two rigs back end of this year, which we'll come on to on timing and your capex question. But actually, what has happened is we've had the longest drilling break across the three fields since kind of first oil. So when you look at our 26 guidance, it's effectively, that's what it reflects. You know, there's of course, natural decline as you'd expect, but we've had this long drilling gap that, that again, we haven't really had before. And that's, that's probably, you know, what's underpinning that decline. So, you know, we turn to how do you firstly arrest that decline and then how do you grow from the base, if you like. So I think in terms of, of arresting the decline, it's, as you said, the infill drilling. So when we look at that, Next programme, if I start with Agbami, you know, RIG will come somewhere at the end of this year. I mean, there's operational uncertainty on, you know, exactly what time the RIG arrives. But nevertheless, you know, it's firm, it's coming. And there are 16 build wells planned on Agbami through 27. across the year. So when you look at that, I mean, that's quite, for a field of that age, it's quite positive. It's quite sustained. So there's a relatively big infill drilling campaign there, which will arrest natural decline. And then we go across to Agena and ACPO with Total Energies operating. And again, in parallel, if you like, Total Energies are contracting for a rig. The plan is to bring the rig in again towards the end of this year so we're kind of guiding q4 plus or minus operational kind of issues on whether it's coming from um and again interestingly there's two two buckets of opportunity there one is the kind of acpo far east so testing growth either prospective resource that's that's near field um contingent resource and then as we move into 27 the focus will be on infill drilling vagina and aqua so three wells there um So that gives us in the kind of near term, if you like, the end of this year, the kind of barrels that are coming on stream. It'll be early 27, but barrels come back on stream, a rest and natural decline. And equally gives us some more certainty on prospective resource, contingent resource and how that may play out. On the latter, I think, you know, reality for the Thai BACs is ACPO Far East is quick because it's five kilometres from the FPSO. So, you know, we hope to get first oil from that in the success case in less than two years. And I think the wider tieback opportunity set, we didn't talk about it today, really, but PreoE near Agena, there's Agena South, which is a similar size discovery to the south of Agena. You know, those things are kind of three year cycle. And again, we are optimistic of making project progress on those this year. And then that would be, you know, PreoE First Oil 29, Agena South a bit more uncertain, but again, three year cycle. So kind of end of the decade. um akija which we did mention is is a potential tie back to agbami and again similar so the well that we will drill probably end of this year early next year that's an appraisal well so again it's discovery contingent resource and depending on what we find in that appraisal well that's again circa three year cycle tie back to to agbami so i think i'd characterize it good campaign of infill drills coming in the short term kind of end of this year good testing of contingent resource that that gives us kind of a lot of options for growth barrels end of the decade. And then that leaves us kind of one more gap, which is, well, what more infill drilling is there to do before the end of the decade to keep production up in the fields? And so I think there, you know, that we see two or three options, at least in EGINA and ACPO, so potentially 28, 29. And in Agbami, you know, 6-well campaign is pretty big anyway, but, you know, we're working there on, is there another similar campaign a year or so later? So, I think we'll be on and off active on the infill drilling in summary through to 2930 with the aim of sustaining base production. And again, in parallel, that keeps us going while we grow the kind of contingent resource projects and prioritize which of those are the best to do.

That's really helpful. Thank you. And sorry, just the final one just around CapEx for this year. I mean, is that mostly long lead items?

It's there's some long leads in there. I think the range that you see is really the timing of rigs arriving. So it's a classic, you know, year end issue. So we're planning on Q4, but those rigs could arrive just contractually operationally. possibly q3 and they could equally arrive late q4 so so it gives us a bit of range on that number um but it's primarily you know we're assuming the wells are drilling q4 so it's capex in the ground as it were we did put some numbers in some capex into long leads last year for agwami for example so that was that was done kind of 25 mainly okay brilliant really helpful thank you thanks david

Our last question comes from David Merzai with SP Angel. Please unmute your line and ask your question.

Hi there. Thanks, Terence. One on exploration, one on appraisal, one on scale, I suppose. Firstly, on exploration, you've got a forest. back profile, east deep, you've got a G in the south deep, you've got the key G deep. Is this in reference to deeper reservoirs or down from the fault? Have you intercepted them? What's the reservoir like? What's the kind of risk both around volumes and deliverability? in regards to these prospects. Secondly, appraisal. You pointed out your contingent resources on Priawe, on Ikeja, on Agena South in Nigeria, but also the existing Gardena discovery in Equatorial Guinea. Obviously, these discoveries have been around for a while. You've had capacity in nearby facilities and they haven't been developed, what's the key hold up, the key contingent reason behind these resources not being developed to fully utilise their respective FPSOs and just lastly in scale it's quite kind of observable to any investor that the market wants fewer oil and gas companies with greater scale, broader portfolios, more ability to finance their own developments, and that they reward effectively higher cash flow with lower debt levels and with greater liquidity. Now, having gone through the process of combining in Prime, that's clearly the next step forward for you. And I just want to kind of get your thoughts around what scale is enough or what your investor base is really looking for you to bring you up to the next level. Thanks.

Yeah, thanks for the questions. I think if we start with the first one, the expiration point, I'm going to split that up. So ACPO Far East is expiration. So that is, you know, prospective resource, let's say, you know, it's a kind of one in three, one in four chance of success geologically, I think. The commercial chance of success on the back of that is extremely high because it's very close to the existing infrastructure. It's within the kind of field fiscal ring fence, if you like. So the economics are extremely compelling. So it wouldn't take a huge volume there to reach commerciality. So that one is about geological chance of success. I think the others, just to segue that, so Akejia, Agena South are appraisal. So those are contingent resource for us today. So the discoveries that that we think, again, are strong candidates for tieback and development, but they do need some appraisal drilling to confirm volumes and technical parameters. And then PreoE is slightly different, again, because that is actually reserves for us. That's 2P reserves. And that really reflects the fact that PreoE has been very advanced as a project. It was delayed in COVID, you know, as many things in terms of CapEx contracting costs. um but it stayed in 2p reserves for us because it's very advanced um as a tie back to a gina and that that's a project that we are pushing with the operator and our partners to to mature this year um towards a final decision so they're all slightly different i think the only pure exploration one in that set is that both parties the others are really about um appraisal and again just just right sizing improving commercial volumes I think, you know, the second question, the wider point on Gardenia and some of the other resources, like I think there's a timing point to a lot of this stuff. So in two respects, one, the projects themselves and actually the second one, the market, which I'll come back to because I think it also addresses your third point. But, you know, if you look at our three FPSOs in Nigeria, you know, huge, fantastic facilities, huge capacity facilities. They've been full for most of their life, of course, and they're varying ages. They are in this natural decline phase, which you see in the base production. But what that means is there's an optimal timing point here of saying, well, actually, when is the right time to develop resource to backfill those facilities? And that's now because you don't just want to be able to bring a small amount of resource in, of course, you want to for the economic benefit. development you want to be able to maximum maximum development of something like a priori so i think the timing point is partly on the infrastructure then when is that infrastructure available when is the right time to backfill um i think specifically again on on eg um look we've had that block for a couple of years 31 but you know having worked that through matured it particularly gardenia as a discovery um again that's a timing point in that the demonetization is through the existing eg lng brownfield facility And so it's the optimal timing of doing the project, knowing that there's capacity in the brownfield infrastructure, which you will use to produce LNG off the back of it. So, you know, I think that timing is now. So, again, we'll make decisions on all of those through the coming period in terms of whether the right thing for capital allocation. But certainly the project aspect has unlocked. I think more broadly, again, the second point on that. you know, where is the industry? And I think you alluded to it again in your third question, but the industry is back in a kind of growth mode. I think a lot of bigger companies are short of resource. And so there's a lot more support for the right type of project, the right type of CapEx. Now, again, from our perspective we are super disciplined on a balance sheet so you know lots of good opportunities but we're not what we're not going to do is over leverage the balance sheet expose ourselves to capex overruns etc so we'll do it in a prudent way but i think it's it's a good time to be maturing contingent resource and pushing that into reserves and ultimately monetization so there's a macro backdrop i think is is important there as well I can move on to the third question, David, or if that covers your first two.

Sorry, I was just being unmuted there. Yeah, no, just to dig down on ACPO Far East, what is the geological risk? Sorry.

It's a one in three, one in four geological. Oh, sorry, specifics. Yeah, it's trapped, really. So the reservoir is same as the ACPO field, so we understand it well. It's phenomenal, you know, in the detail kind of. Darcy type permeability reservoir, super good fluids. So the thing on Aquafar East is the trap, you know, is there an uptick trap that works? And then I think there's a secondary, more commercial risk on fluid. But, you know, that's secondary in two senses. One, that we have a good handle on the seismic. So, you know, we think we understand that fluid and it's oily and we can characterize that. And actually, the second part of that ACPO course is, you know, very gassy field and we export that gas. And as Aldo just talked about earlier, we've got improved pricing on that gas as well. So I'd say that's a secondary risk. But the geological fundamental geological risk is trapped. Yeah.

Oh, no, that's great. And the first two, obviously, question three around scale. You know, you've talked to your first two answers that you're being prudent with the balance sheet because, you know, cost overruns. Obviously, there's that argument that if you were twice as large as you are now, you have to be a lot less risk averse.

Yeah, no, I think it's a great question. I think, you know, in terms of the strategic position of the company, you know, again, I'll take a step back. Two and a half years ago, you know, we were Africa Oil as it was, completely different company, much, much smaller in scale. You roll forward through that period, you know, we've doubled reserves, production, etc., which has been a big step forward in the scale sense. I think that has allowed us to mature some of these projects in a better way with more confidence because of the scale. So I think it speaks to your point. As we then look forward, look, I think there's a balance here because I recognise and agree with the points you make about the industry. I think, you know, it is overdue, this space within the industry, let's say, the international independence. It is overdue some consolidation, some capital efficiency, G&A efficiency, etc. Absolutely. And we see that. I think when you come to execute around that, I think, again, our message is discipline. So, yes, the ultimate prize does all the things that you describe. Again, I agree with that. So for us, it's not so much that fundamental principle. It's the pathway to get there. So, again, we look at the business today. It's incredibly strong balance sheet. We have some natural decline in production this year, but it's arrested and we go back into kind of growth through the end of the decade we didn't for example in school talk about venus and namibia but you know total have signaled very publicly that it's fid this year that adds barrels for us in in 2030 on their timeline so we go back into that mode so i think great but what we're saying is look we protect that that's always the number one job is to protect that business make sure it's robust but equally go and look at inorganic transactions that are accretive to that. And they really have to be. We don't want to dilute that business just for the sake of scale. But we recognize there are steps that we could make that give us both scale and are accretive. And those are the things that we are kind of narrowing our focus to. But I think the short answer is, yes, we are still active in that world. We still look at things. But again, we do it with rigor and discipline.

Thanks. Thanks, Oliver. Thanks.

There are no further questions at this time. I will now hand back to Masana to read through your written questions.

Thank you, operator. And thank you once again, everyone, for joining today and submitting your questions. I'll go straight into the questions. So I think one for you, Oliver, is given the transformative potential of the Venus discovery, we currently have 3.8% effective interest through our stake in impact. While this free option structure is highly capital efficient, does management view this level of exposure as sufficient to to capture the full value creation potential of the Orange Basin? And is there potentially a pathway or a world where we increase that exposure?

Yeah, I think it's an obvious question on Namibia and impact. And again, I'll, for the third time on this call, take a step back. I mean, if you go to where we were A few years ago with this, Impact had done a fantastic job, you know, over a decade of driving Venus as a target. That play attracted Total Energies in, got a well drilled, made a great discovery. As co-owners of Impact, we were faced with a kind of, you know, interesting dilemma here that, you know, this huge world class discovery. But of course, it quickly needs capital funding and capital funding of a big scale. I think as we've outlined many times on these calls, we've got a funding solution in place. We're not exposed to the capital. We transformed that into a kind of capex demand that we couldn't fulfill into one that becomes a growth opportunity, adding barrels in 2930. I think that then takes you to a place that says, well, it looks great. We'd like to have more. But I think with respect, we have another large shareholder at impact. There's really the two of us own kind of 97, 98 percent of that company now. And so we both see that. So I think, yes, in principle, of course, we'd like more exposure to a project with with no capex or risk exposure and lots of barrels coming. But, you know, recognize that, you know, equally our fellow shareholder also sees the same attraction. So, you know, yeah, yes, is the short answer. But, you know, the execution path on those things is a bit trickier.

Thank you. And then one for Aldo. Aldo, could you please give some more detail on the Akbami impairment and the increased costs expected going forward?

Yes, of course. I think in Akbami was what we tried to explain throughout the materials that was not just related to one single item, right? So it was a combination of lower oil price and increasing costs, mainly in relation to the life extension of the FPSO. So in terms of oil prices, I think that's obvious, right, throughout 2025 in relation to the decline. And then more specifically, in relation to the Akbami FPSO life extension, Akbami will continue to produce beyond 2044, which is currently our our license next license renewal period so there's a significant amount of reserves already as 2p to be recovered from the field however what the life extension allows us to do not only to recover these additional reserves in a safe and reliable way but at the same time allow us to continue to uh to invest or to to develop or to plan for bringing contingent resources as 2P, right? And 2P, the 2P numbers are the ones we use for the impairment calculation, the recoverable value, but the 2C numbers, so the additional few wells that Oliver mentioned beyond the campaign 27, 28, Ekesia, which is a tie-in to the Gubami FPSO, as well as other nearby opportunities outside our blocks. Those would all be produced through the Gubami FPSO. However, we need to make this investment upfront to extend the life of the facility and make sure that we comply with all the requirements and certification, as well as having a A reliable FPS. So, so I think it's just a reflection of that. And we know when we get to, to mature midlife fields that we have to go through this, this exercise. So that's, that's the detail behind the, the impairment on that BAMI.

Thanks, Aldo. And just two more, I suppose, for you is, can you give us some thoughts on the percentage of total hedging for 2026? And I think the second from this investor was, can you just give us some colour on our plans for the RBL going forward?

First of all, in relation to hedging, we have a policy where we hedge between 70% to 100% of our post-tax net entitlement production on a rolling 12-month basis. What does that mean? It means that we check first the amount of barrels that are exposed to oil prices, right? As we have cost recovery, for example, in our agreements in Nigeria, that means that not all barrels are exposed to oil prices, right? So we first calculate the post-tax net entitlement. And out of that, we hedge between 70% to 100% on a rolling 12-month basis. Now, we make a combination of either physical Ford sales or swaps where we lock in a price that's close to the Ford curve at the moment that we enter into the hedge. But we also have a mix of collar and boot structures, where we keep some participation on the upside as well for a certain percentage of these hedges. So that being said, at the end of 2025, we had approximately 3.5 million barrels of oil for 2026 sales that were hedged through a combination of physical and financial instruments. Out of that, 2.3 million are on the first half of 2026, which those are primarily hedged through the physical for sale. So through the physical offtake agreement with an average floor price of around $62 per barrel. And in the second half of the year, we have 1.3 million barrels hedged using a mix of swaps and collar structure. So we provide good downside protection, but we also retain some exposure to the upside. So that's in relation to the hedging part. For the RBL, I mean, as we saw through the presentation, our numbers, it was very important for us in 2025 to pay down substantial amount of the RBL facility, right? We started the year 2025 with substantial large cash position and to reduce financing costs, it made total sense for us to pay that down and reduce the financing costs. As we mentioned throughout the presentation, We estimated that we save around $12 million in financing costs just by doing that. Now, the next step in relation to debt management, the last time we financed the RBI was in 2023 on the back of the license extensions in Nigeria. So we are now getting to that period where to keep a substantial headroom in the RBL facility, not necessarily to utilize the money, but to have the flexibility to do so. We are in the process of refinancing the current RBL, and we expect to finalize that sometime soon in the first half of 2026. So with that, we increase the RBL capability, but at the same time, we'll continue to be very disciplined of how much we draw from the facility to reduce financing costs.

Thanks, Aldo. And Oliver, I'll put this one to you and it's something you briefly touched on a little earlier. How much risks do you see when it comes to securing the Nigeria drill rigs this year? And yeah, if you could just give us some more color on that.

Yeah, no, I think we're not concerned about that. I think we're very advanced, both joint ventures and the re-contracting process. So I think we'll be very confident those rigs will come this year, that we'll get back to drilling later. And again, I think, you know, it's been a quiet period for us and that reflects our production. But actually, we're going to turn that around with those rigs coming towards the end of the year. And again, combination of infill drilling, short term barrels and getting back to testing some contingent resource and long term growth and value. So, look, I think, you know, first part of the operation in quiet while we finalise the campaign. But then as we move into the To the latter half, it's pretty exciting for us to have two drill rigs again active for a prolonged period on our major assets. So I think that's quite a positive view to the year overall.

Thanks, Oliver. And just keeping on Nigeria, there's a question, our reserves have dropped from 2024 to 2025. Of course, there's been a portion of production in that as well, but maybe you can give some colour on that and how we're arresting that decline.

Yeah, and again, I think If you look at the shift in 2P, that is dominantly the produced resource. I mean, every year you're going to get some minor ups and downs on your kind of existing well stock and fields based on, you know, latest performance. But again, when you look at the year, it's really around the fact that we've had this, again, longest period in the kind of history of the fields without active drilling and adding new wells. And so you see that in the sense that you produce 2P reserves faster than you're replacing it in that context. But again, the two key points are, you know, you look at our contingent resource that has grown significantly through 25. So again, in terms of options for future value and growth of the business, that's good. And secondly, again, to the prior question, we're very confident that we're getting back to drilling here. you know, not just with one rig, but with two, and sustained campaigns starting end of 26 through 27. And therefore, we'll start to grow again on that time period, which I think is really positive as we look at the cycle, oil price cycle in particular.

Thanks. And just two more before we close off. When we speak about capital allocation, balance sheet strength and organic opportunities are the first two that we speak about. Just what should everyone read from this? And then shareholder returns, of course, and M&A come in third or inorganic opportunities, I should say.

Yeah, I think we've been very focused on the balance sheet. We talked about that a lot on this call. And I think, again, that's important as a base to the business. And Aldo's talked about The moves we made last year, we paid down debt. We've got a lot of liquidity. We've got low leverage. And I think the way people should look at that is prudent. You know, it's, of course, a volatile world. And I think our view is it will remain so. So we just have to deal with that. But starting with a strong balance sheet opens up a lot of options for us. It opens up options to allocate capital for organic growth, options to, as we are doing, returning cash to shareholders. And again, we've touched on it, the inorganic growth. It puts us in a very strong position to test from that kind of balance sheet. You know, is there an organic transaction out there that makes sense for us? And is it better than the kind of organic growth capital allocation options we've got in the portfolio today? But that balance sheet gives us choices. And I think that's what's really key in this message is strong balance sheet, strong hedging in place for this year. Very, very good foundation to grow the business. Right. And there are a number of choices to do that. And we're always seeking to have those choices. And in parallel, again, we've been very strong on shareholder returns to recognize that, you know, we want to grow the business, but equally, we're not going to grow it at any cost.

Perfect, thanks. And just lastly, and one on EG, given the size of the prospects in EG, would it be possible to go into EG31 alone? Or how much are we willing to give away in a farming to a partner?

We're definitely not going to give anything away if I put my commercial hat on. But look, I think I think we're, you know, we're 100 percent in those licenses. Our partner is G Patrol, a state national oil company. And so they have 20 percent, but they're carried in the early stages here. So it's 100 percent funding. So it's just it's a risk allocation, a capital allocation that, you know, we're not going to do a project at 100 percent. That's not a statement of view of risk or value on the project at all. um it's it's a point of saying again it's portfolio effect it's risk sharing and it's bringing in strong partners helps helps any project and that's our focus um i think the important point on 31 is again you know we need to be really clear that the gardenia discovery itself is something that could become a short cycle fast track development with the right partnership in place so it's not high risk exploration dollars it's lower risk short cycle brownfield lng which could be incredibly low cost resource for us as a company so look we wouldn't do it 100 but equally we want to hold a material position in the project recognizing the potential value it can bring to us and again i'll go back to the theme of you know it's around prudent capital allocation and discipline within that you know great growth options we'll pursue them but we'll do it in the right way that doesn't jeopardize the company

Perfect. Thanks, Oliver. That's all the questions we have for today. So, operator, I hand back to you to bring us to a close.

This concludes today's call. Thank you for joining. You may now disconnect.