Q3 2022 Africa Oil Corp Earnings Call

Okay.

Yeah.

Hello, everyone. My name is not yet and it will be your conference operator today at this time I would like to welcome everyone to the Africa oil third quarter 2022 results call and webcast.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session.

I would like to ask a question. During this time simply press star one on your telephone keypad.

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Tim will be available for playback on the company's website.

I would now like to pass the meeting to Mr. Checking Amini Africa oil Investor Relations and commercial manager. Please go ahead Mr. <unk>.

Well said.

She wants you to results cool Anja.

I'm joined today, with our President and Chief Executive Officer Keith.

Chief Financial Officer, Pascal in Nicaragua.

Shelby presenter quarters hard under business before.

Before we go into the Q&A session.

I would like to remind everyone that remarks made during this session are subject to forward looking statements, which involve significant risk factors and assumptions.

Being fully described in the company's continuous disclosure reports.

<unk> discussed is made.

I'm sorry.

<unk> assumes no obligation to update or revise this information to reflect new events or circumstances.

As required by law.

The company's complete financial statements and related MD&A are available on the company's website.

So Keith we're ready for you. Please go ahead.

Alright, Thanks, Stephanie and thanks to everybody for dialing in.

Obviously.

Another good quarter for us.

I think we are.

Meet met or surpassed our Mo.

Our financial goals this year.

We still have a few more catalyst remaining this year as well so I think it's still to be an interesting year.

I think most of you have seen this slide here, where I think we're showing that we've become a full cycle oil company not only production in <unk>.

Exploration, but cash flow and actually returning money to shareholders for the first time, which I think has been very well received by the market.

I think.

Couple of highlights there on the right side of that slide we are.

The quarter with a significant amount of cash over $200 million of cash in the bank. Even after we have done our shareholder return. So I think we're in a very good liquidity position also wanted to highlight.

Under the carbon neutral.

Target that we have made before we are we have made a pledge to be carbon neutral by 2025, roughly 25 years ahead of what the industry is.

And on to that.

Most of the airports and I do want to highlight that we are we did have a review done by us right.

For our largest shareholder by Novartis and we came out to be.

In the top 1% of our companies.

Over 80000 companies. So we are.

We're quite proud of that were actually the highest ranked oil company and the ESG framework.

That's something we'll continue to do that as I've said before I think for those who are good ESG operators and part of the solution I still think oil and gas is going to be investable for the foreseeable future.

So if we move to the next slide that really talks about what we've done this quarter.

And really the first nine months of the year, obviously financials are quite robust Pascal will give them a more detailed account of that but as I said.

We are now debt free when you look at cash on the balance sheet versus our share of that and prime we actually have a net cash position of $42 million and again, that's after we've done our shareholder returns so again, a very attractive.

EBITDAX ratio of 0.3.

And.

You see on the right. There we have started our shareholder returns.

Continued the dividend we put in but we've also launched the a 10.

10% buyback that we discussed at the <unk>.

Our last meeting.

As of now.

At $35 $7 million to repurchase 15, 8 million shares and we intend to continue on with that program throughout the rest of the year.

So again the total shareholder return was $59 $5 million I think it is a testament to the amount of cash that were.

Generating and also our commitment to give money back to the shareholders.

Again, it's all driven by prime and prime dividends.

We've already had $250 million this year.

<unk> to the $200 million, we've got in 2020 in 2021, and we're expecting more of this year.

The amount of dividend additional dividend this year will be somewhat dependent on getting our license extension.

In Nigeria, but regardless, there will be more dividends coming this year.

Got it.

I think the if the barometer of this acquisition, we have already taken $650 million off the table after only paying $519 million. So I think this is Ben.

Great acquisition for us.

We've also had some very good exploration successes led by Venus.

Venus looks like it could be the largest discovery in sub Saharan Africa ever.

It's early days, we've only drilled one well, but the well that we drilled at.

Very good reservoir at 84 meters thick.

Picture than we thought.

The oil water contact was significantly below where we thought so it looks like it could be quite big again early days, but we're getting ready to drill some appraisal wells there.

Pans out.

It could be incredibly.

Material to the company.

So again.

Other thing is we've opened up a new petroleum province, with that and with the well that shell drilled next door. So we have a very good position in that province as well.

So next slide.

I mean again, we are going to come in on production performance of all of our guidance for this year, we're going to be at the upper or middle part of the guidance. Both working introspection entitlement production, we're going to be well over guidance and cash flow and dividends received.

Everything seems to be ticking along well on that.

We will be coming out with guidance.

Yeah.

At the end of year forecast.

So far. These these are these are these assets continue to be the gift that keeps giving.

Thanks Syed.

So again record oil sales.

Uh huh.

Prime acquisition.

I wanted to spend a few minutes talking about hedging our hedging is something that we have talked about a lot in the past.

I'm going to go back one scene.

Yes.

Price versus dated Brent in 2020, we were kind of heroes.

We actually have hedged all of our production.

Uh huh.

When COVID-19 happened in the oil price went down to $20 $30. A barrel we were still getting 60 70 to $80 a barrel for our crude so essentially save the company in 2020 by having a very robust hedging program.

Since then we've given it back in 2021, and then 2022, we've been doing our best to unwind. Some of these hedges and come up with a new way of hedging that basically allows us to take.

Take care.

Public Fuller advantage of the current.

High prices in oil and I think we've accomplished that if you look at the progression from the first quarter.

Third quarter.

We've actually got to the point now in the third quarter, where we're getting we're realizing above.

David David Brent prices for our crude.

The way, we're doing that if you go to the next five years.

Uh huh.

Somewhat strange, but very effective.

Hedging mechanism, where we actually take 50% to 70% of the next 12 months cargos and we set a trigger those cargoes at 80% of what Brent is trading for and it's essentially a floor. It's a free Florida, we don't pay for it.

What happens is basically just chugs along in that.

We never have a significant downward events in price.

Sell at spot market.

But of course, we did in <unk>.

Remember, we just sold two crudes to Truecar.

Cargoes of crude over $100 a piece.

The triggers never hit but.

But I think what it does is it gives us downside protection, but things do go bad is it.

New wave of Covid or some of the economic.

Issues with inflation in the overall world economy start turning bad we've always got this cushion that basically stops us from.

Going down below these thresholds so right now most of our triggers in the $70 range.

For the first half of next year so.

It shouldnt be a big issue for US Mike My goal is that none of those triggers I forget.

I think we are still quite bullish on oil price. So I think this is.

Pretty interesting strategy that allows us to keep the upsides, but protect the downside and that actually have to pay for it.

So far working very nicely.

Hi.

Again, Nigeria is really the core of the company I think when you look at valuations I think the majority of our evaluation is still done on Nigeria. These are the three largest fields in Nigeria, they they're all performing quite well theyre going to be within guidance. They have low operating costs, they've got great operators and <unk>.

<unk> hotel and.

We see these as our cash flow going forward.

Underpinning the value of this company going forward.

But they do need investment if you go to the next slide I think.

One thing we will be doing is spending.

A fair amount of time and some money.

Reinvesting in these oil fields.

The primary thing we really wanted to do is drill development wells on the Gina.

So we've.

We've unfortunately had a little bit of a delay in the rig. So we're hoping the rig shows up in December or January earliest we have a rig identified is just going through approval procedures in Nigeria.

We can get that rig on location, we plan to drill nine.

On the <unk>, which will really be key to boost that boosting production stopping that we're seeing a bit of a decline in particularly of Gina that really needs. Some development wells to short up we're also going to drill a couple of exploration appraisal wells there are.

A number of good targets right around our <unk> that we want to start developing to bring online.

And of course <unk> the field, that's already basically ready for sanctioning.

When we get license extension, we hope to have sanctioned that fairly quickly as well.

I think this is a this is a great asset for us, but it does need some investments and I think you'll see in 2022, 2023, and 2024, we will be putting some money back into these fields to make sure that they continue to produce at the same levels.

Next slide.

So I'll turn it over to Pascal now and let him kind of run through some of the financial highlights.

Thank you Keith.

I think as we've said it's been.

Very good culture.

Posted $70 million.

Net income to a culture, which is.

Both.

Yes.

Since we made the acquisition in prime.

Is it also an increase compared to Q2.

In Q2, we had been affected by.

That's increasing.

<unk> position in this quarter.

You've seen the exact opposite.

There's been a decrease in cost of sales due to the movement in the net.

Exploration.

Roughly $73 million, which explain the great goods culture.

Yes, Keith mentioned we are.

$207 million of finance.

<unk> 5 million.

Uh huh.

Sure that we have.

Put back since we started.

Our buyback program next slide please.

So as I said I mean the discount.

<unk> value.

Another good quarter of homes.

Right.

Ill show a purchase from <unk> $78 million.

Each culture and.

So very strong EBITDAX.

So the $210 million Oh.

Oh sure.

Cash flow from operations.

Yeah.

Price still sits on the very large counterbalance more than $600 million of course.

So net net to Africa each day.

Prime is repaid net debt's too.

Roughly willing to $65 million net to us so our sub.

Prime continues to rage and.

Our next show up there.

<unk> is decreasing.

I'm curious so since as Keith mentioned in it since we've made the acquisition.

More than a rate case.

The consideration of the initial consideration we received a $650 million EBITDA.

EBITDA since we've.

We made the acquisition, which was $520 million.

Cash acquisition costs in the <unk>.

Meantime, the.

Our net cash balance throughout to us within Prime has also increased by $85 million.

So that's something to be taken into account.

Okay.

And.

I've mentioned.

The net debt has continued to reduce funding $60 million since we made the acquisition.

<unk>.

So.

We sit on those various finance today.

And the local branch facility in place.

Full banks, we've agreed with our banks to increase the facility to $200 million.

Soon as we get the license.

Oh, Hey, Matt why don't you touch the license can you.

In China, So thats.

Another evidence of the banks that are supporting us.

<unk> and <unk>.

Okay.

We expect to receive another large dividend full time as soon as we get these sessions extension as you.

We also refinanced.

At the same time.

When we close that so debt refinancing as soon as these licenses.

Sure.

Okay.

Keith I think all of US here. Thank you.

Alright, Thanks Pascal.

So yes, we have a number of catalysts still coming up a couple of these but I was hoping to be reporting today. Unfortunately, everything in Africa seemed to take a little bit longer than we'd like.

Two of them in particular, the project oil Kenya farm out.

Well we.

We were expecting to see this quarter, but.

It's still moving forward, but.

Hope to have those so literally literally in a matter of the next few weeks so.

The biggest one is probably the Venus appraisal drilling program that is going to be next year.

Again, we were hoping to have that right here this year, but.

It seems to be a lucky rig it's made a big discovery.

And cypress, so theyre drilling and testing on that right now and as soon as they're finished it will be coming to us should be there around mid February and we will start drilling the first venous appraisal well.

Totality, operator has so say that theyre looking to bring another rig in so I think we could have a two well drilling program going back by the second quarter of next year.

I think.

Obviously industry interest in the interest of our partners.

It is very big on the venous and Orange base scenario.

We are looking at a number of strategic assets producing assets. So I think our criteria is very simple, we got producing cash flowing assets.

Our target group is really looking at what majors divesting.

And.

We don't want things that are going to suck up a lot of cash we want things that youre going to be producing cash.

We will be doing exploration, but it'll be really following up the exploration that we've got we don't see ourselves doing a lot of new frontier exploration out there. It was mostly taking advantage of the portfolio, we built and really if we buy things is going to be focused on.

On Africa, primarily West Africa, producing assets.

Another big catalyst as this license renewal as Pascal mentioned once we have that renewal.

We'll be able to refinance the RVO.

And.

The PX at facilities. It frees up an awful lot of cash for us to go do things with <unk>.

<unk> shareholder returns potentially acquisitions. So I think we're very close on that that we should know something on that by the end of this month.

Keep an eye out for that because it actually is a pretty important thing for us to to get that license revenue.

And we all started looking to farm out of our box <unk>, Australia, a little map, where that is but that's kind of right in the heart of this orange based on trend and we've had quite a bit of interest from industry out of that.

Next slide.

So again exploration.

While it might not be the industry mantra, we still see it building value.

We want to make sure that we do it in the right way and what we like to call advantaged exploration, we're not gonna be probably going and doing.

Onshore basin type things that are going to take eight to 10 years to develop what we see is looking at the areas that could be brought on very quickly advantaged barrels that are either near infrastructure offshore where we think we could have fast track development similar to what they've done in Guyana.

So again, the three companies that we invest in Africa energy impact macro Atlantic have very active drilling program going on in South Africa, and a number of our very.

Well placed exploration blocks. So I do think there's a lot of value here I think our goal in the next year or so basically.

Figure a way to get that value to shareholders.

At some point, we need to consolidate this position where we don't have these portfolio companies that are either absorbed or sold.

Or moved forward.

Next slide.

Orange Basin continues to be I think it is now becoming the hottest the hottest based on on Earth.

Not only is the Venus discoveries, we made but the graph discovery made by shell shallow, bringing arabian as well so there'll be potentially two or three rigs working full time here for the foreseeable future.

Drilling there and bought to be it's a slightly different setting it's actually a risk based on thats not part of the Orange Basin Delta proper.

We hope to have results, but we will have results on that before the end of the year drilling down a little slower than we'd like there but.

Good news is we were able to spud the rig and spud the well and keep it moving but I think we did a very good job on our.

ESG compliance.

To make sure that we werent.

Shut down by.

Environmental groups there so I think as long as you do things the right way and you do your consultation Youre ESI and prove that you're a good operator I think you still can operate.

Almost anywhere in the World if you do things correctly.

Want to point out by <unk>.

<unk> on this block this block.

Number of prospects that we think are very similar to the graph and even the Venus discoveries and we are in a farm out process to bring in a partner.

I always like finding out that little inset map on the bottom left we've got the.

Area, that's roughly seven times.

The size of the Guyana trend. So we've drilled two wells and have 2 billion barrel discovery. So I think this is this is about as good as you get from an exploration standpoint.

Next slide.

Don't forget my good friend came yet I've been telling you about Kenya for 13 years.

All patients as warrant them I think probably most of the market doesn't give us much value there.

We still think it's a very good play and we still think we've got a very reasonable chance to get a strategic partner and get this farmed out. So again I think this is one of those believe it when you see it but.

What's the process I think there's a good chance that we will have an announcement on a partnership before the end of the year.

Next slide.

So again I think.

<unk>, probably seen the slide before I mean to me this is.

Why do you buy Africa oil.

I think you buy it because <unk> got Nigeria is the core value of Youre getting Nigeria at a pretty significant discount depending on what oil price you want to use it.

Use todays oil price, you're going to get it more than a 50% discount, but you use a longer term price $60 $70, you're still getting a pretty significant discount.

Just the Nigeria of course, and you get everything else for free.

Not everything is going to come good almost that right side of that slide.

Venus on itself could be almost the same value as our market cap if the appraisal wells prove up.

They work Kenya is worth the risk can be a value.

The risk any values worth at least a couple of hundred million dollars, maybe as much as $500 million to us.

In the long run and then we've got this portfolio investments.

Echo Atlantic is not only drilling a well now that they've put together a nice little portfolio. They have some interesting stuff in Guyana.

Across the water and I think.

Echo to me is very interesting because I think it's got a lot of upside exploration potential.

Obviously the discoveries we've made in South Africa with Africa energy. So Tau is working hard to push those forward and monetize those they also have a lot of upside.

And drilled parts of the basin potentially even oil upset.

I think Venus is probably the most interesting thing on the right side of that slide, but I think there's quite a few other things.

Quite interesting as well I think that's kind of at the end of the day Wow why am I, a big shareholder of Africa on why would I buy more of it because I think.

Optionality you get from all of the stuff on that side and the very low risk you've got from all the stuff on the website. It makes it a very attractive investment thesis.

Pieces.

So I think that's all we wanted to say in the presentation. I think you read the advisory is at your leisure and.

We're off to a field some questions.

Thank you Yeah participants as a reminder to ask a question you will need to press star one and one on your telephone keypad and Mike for your name to be announced.

If you wish to ask a question via the webcast. Please use the Q&A box available on the webcast link.

Please Tim Bob will compile the Q&A real studies will take a few moments.

Now we're going to take the first question.

Our first question comes from the line of dose than Nielsen from Sberbank wanted markets. Your line is open. Please ask your question.

Okay.

Good afternoon, guys. Thanks for taking my questions and congrats on the strong set of numbers.

Many questions there, but I think I'll limit myself to three <unk>.

First of all when you sell just the production trend I noticed there have been some decline during the third.

Third quarter production was substantially lower than first quarter production. So I just wondered should we expect this trend to.

10, new into 2020, we or what should we expect <unk> to get some more some of the decline we've seen in recent years.

Second question I'll throw away.

Exciting development when should we expect drill way to to commence production and then my third question is on <unk>.

The overall structure.

Sure.

Quick oil Africa, <unk> impact of course of Euro largest save a little it directly or indirectly at several of these companies.

Did you do see this structure going also forward or should we expect some kind of key industry structure.

Yes.

So I kind of missed the middle question.

When the production starting at <unk>.

That's correct per weighted timeline going forward and when should we expect production from <unk>.

Okay.

Well I'll take them in order.

Yes decline.

We hate that chart and the only reason that's declining is because you know.

Normally we would have been out there drilling wells in March of this year.

Two.

Sharp that production arrest the decline for sure and have a very minor decline in with a little luck, maybe even have an increase in production. So it all came down to the rig that we had identified.

We couldnt the operator couldnt come to a.

Agreement with a local partner to get that rig up and running so they.

They had to go into the market and get another rig so we've got a rig identified.

Already under contract with total and we're just going through the approvals if we get that and we get drilling I think we will be able to stem that decline and level that off maybe even increase to where the current day production is so the history of these fields all three especially the two older field Expo in Alabama.

Is that every 18 months they drill three to five development wells and that's what keeps the plateau going so unfortunately, we haven't had the opportunity to do that so I think once we do that I'm pretty confident we'll be able to.

Stem that decline.

The field is operating just about the way we expect it to under the reservoir models and there are places in the fields that have untapped fault blocks that haven't even got development wells in them. Yet those are what are really earmarked for the first program. So we feel confident about that.

Great way is really kind of waiting on this license renewal.

Even though license renewal is automatic and.

Nigeria.

Never been a license it hasnt been renewed once you.

<unk> fulfilled your work commitments and paid your taxes, both of which we have done.

Licenses renew automatically but I think given that we're going to be putting a significant investment in and we won't see production until after the license extension date.

The partnership feels more comfortable going out and spending the money on pray away. After we have that license extension.

As I said in my talk I think Theres, a very good chance, we will have that done by the end of the month.

Nothing is done until it's done so I think.

If you see that.

You'll see that announcement on the license exception I think you will see US also moving very aggressively forward.

Anyway. So we've done a field development plan, we've done all the engineering studies are pretty ready to pull the trigger and we just want to see that license extension before we do that once we pull the trigger youre talking about two to two and a half years for production.

And then the last one.

I do think it is.

Unsustainable this portfolio approach that we have with our exploration companies.

We set it up as a matter of convenience to get into some very good exploration plays.

It worked we are some of the hottest plays in.

It's certainly in southern Africa, even in Guyana.

But I think at some point we need to.

Put this down.

Put this on a regular basis were not a portfolio company, we're an oil company. So I think.

The key well drilling right now is cavani yet.

It is held by both Echo and Africa energy.

The two of them they've got 87, 5%.

I think.

I think that what we are.

We need to see the results on that before we see no. What we wanted to do if we've got a development project going forward on our appraisal pilot project you have done that.

I think we are.

We may have one equation.

For not fortunate.

Maybe another path.

I think my My Board has told me by the end of next year, we need to get that sorted out.

And get away from being a portfolio company and holding those blocks. So.

I said I think there's three options you either either absorb them, which is something we would look at all three of those companies are buying up the interest we don't have.

We divest them.

So selling them off to someone else.

In the cases of <unk>.

<unk> that have been discovered and developed.

Pro pot or.

Potentially even Venus once a week.

Drilled the appraisal wells, you know an outright sale of those prospects and projects.

Or are we even look at spinning out some of the eastern two exploration vehicles. So.

It's too early to make that judgment until we see what happens in venous what happens, but the development project in leopard part of what happens in Gabon, yet, but once we have that data.

The goal is by the end of next year to have those no longer meet portfolio of investments in Africa oil.

Okay. Thank you and just if I may a fourth question had a timing or solve their announcements is that like just shortly shouldn't expect anything this week.

Not sure we're still drilling so.

I think it's probably going to be it's probably not going to be this week.

Okay understood perfect. Thank you.

Thank you.

Now we're going to take over next question.

And the next question comes from the line of James Hosie from Barclays. Your line is open. Please ask your question.

Hi, there good afternoon at least you could talk a bit more but the <unk> conversion and renewal just just standing to secure this and could you also quantify the scale of the step up in investment they could follow that conversion I guess, what you guys Gino drilling.

In fill wells plus <unk> plus that you mentioned exploration as well just trying to get an idea of how much more you're going to be spending on that asset in the next few years.

Yes. Thanks.

The renewal is down to one factor, which is the peak.

So I mean.

There is a fee that we're willing to pay on it.

Be that the government is willing to get and there's still a little bit of a gap between those two but.

I'm, hoping that that closes off before the end of the month and we get that done.

As far as our our decision to invest I would say in the in the core fields does not really dependent on that at all so all of the wells that we drill up all the appraisal development wells added Gina Echo all the <unk>.

Even the near field appraisal slash exploration wells will be drilled regardless of whether we get extension the only thing thats really dependent as is.

Okay.

Even on that.

Yes.

We will continue to move that project forward as much as we can so I think the spending the big dollars on it we won't do until extension, but I think we have put so little capital into these projects since we bought them and you do need to take care of these fields. So I think the.

Drilling the eight to nine.

Development Wells is critical.

Although those will be done as soon as we can get a rig in.

We may even extend that program to keep production up.

As far as license exception the only one that's really dependent is probably right.

Okay.

You talked about the I guess the fee being extended answer is that is that is that speed determined by formulas and I guess you are negotiating around some of the impacts that formula.

The case.

Yes.

It is fairly standard and it's already been done on several licenses in Nigeria. So we're not breaking new ground as it comes down to what you use.

It's essentially a.

A percentage of the NPV going forward that you pay for license renewal.

So how you calculate that MPV what reserves you use what oil price you use all the parameters go in that that's the negotiation.

Okay.

It's fairly standard and we're not that far apart to be honest with you.

I think.

We Africa oil or EBITDA position, let's let's just finish this and move on.

Then we can then we can get after pray away and really start developing these fields.

Alright, and then just.

Second question, how do we just run debate supply chain capacity.

Really I have now secured all the rig capacity and other sort of lets say long lead items you'd need for what you plan to do in 2023 or are you basically going out to market.

So with that still.

Yes, assuming we get this rig under contract to tell Tom already.

I think we're fine on both of them.

I can't give you a detailed answer and all of the supply chain stuff.

Casing and well have some things like that that you know hotels.

So that was pretty good operator in them.

Sure that they have that sorted out.

The second rig going down to Venus I think is one that still needs to be a bit sorted out I think they've got some candidates and they are out to tender.

Secured yet.

Okay. Thank you.

Thank you.

Yeah participants as a reminder, if you wish to ask a question over the phone. Please press star one on your telephone keypad.

Now we will take our next question.

And our next question comes from the line of Matt <unk> from Peel Hunt. Your line is open. Please ask your question.

Thank you and thank you for the presentation.

A bit of a follow up to an earlier question is I wondered if you could quantify how much the delay to achieve it drilling has impacted your 2022 production.

And how much this is offset by the full well intervention is my first question.

Yes, so we did the four well interventions and three of them turned up pretty well.

Which kind of helped.

Help stem some of that decline.

We are looking at doing some more interventions as well.

Try to do that but we're.

It's not like we're losing production were just delaying production so.

Drilling those wells the reserves remain the same and we will get those barrels but.

Obviously, especially in a nice high oil price environment that we.

In the second half of 2022.

Would love to have those barrels coming sooner than later, so I can't give you a number.

Off the top of my head of what it's cost us.

Again, it's really more of a delay them.

Actual cost.

And of course, we didn't spend the capex. So we did.

The cash flow out of that but.

Okay.

It is.

The things that keep me up at night.

That's kind of one of my biggest ones, we need to get.

Reagan there and we need to start drilling these wells and make sure we keep that production going because that is kind of the lifeblood of the company.

Okay.

Important.

Sorry, Matt I, just wanted to reiterate that our expectation is to and yes. We did all of 2022 management guidance.

Yeah.

Yes.

Yes, Okay I wish you guys good EBITDA.

Okay.

Sorry, a bit because I guess maybe.

A lot of that production from the <unk> Nols was maybe going to come in the back end of this year and into next year. So hence why it's maybe not a massive impact on this year's production and why you're still within guidance well within guidance.

Yes.

<unk> field has always been an over achiever. So it's definitely it's producing about 109% of target.

Even at Balmy has actually had a pretty good year.

<unk>, which we had a little trouble with in previous years, especially with gas.

Uh huh.

The gas handling capabilities has actually done much better. This year. So I think if we can get in with that rig infill development wells will be right back on track.

Okay great.

Wondering if you could give a little bit more color on.

Well I think as our new well move back slightly.

Yes, I've got two reasons.

I guess I shouldn't go into too much detail, but.

There was a weather delay at the beginning and then the drilling has been.

Taken longer than expected.

We're about 15 to 20 days behind prognosis on it.

So far <unk> operations are ongoing there's no serious problems with a well I'm taking that long ago.

Okay. That's great. Thank you.

Thank you.

Dear speakers there are no further questions at this time I would your lines.

Mr. <unk>. Please continue.

Thank you very much not yes, we do have.

A lot of the questions through the webcast Im mindful that we don't have much time, so we'll try and get through.

Many of these as we can.

Keith upscale theres been a number one assume that keeps being repeaters and this type of display.

It is.

Is it balanced optical oil is growing.

No.

And also what are we where.

We tend to be an update on our business development activities. So perhaps Keith you want to just share your views on what is your plan.

Yes.

Two are kind of hand in hand, I mean.

We've got.

Quite a bit of cash on hand, and we've got at least $200 million.

Once once we get the license extension will have $200 million of Undrawn debt as well. So we do have a good catch.

Cash pile to go hunting with.

But you know and we do have I would say a half a dozen what I think are pretty attractive acquisition opportunities.

As we've talked before we will always compare those against buying our own shares back.

I can tell you when our shares were priced at $2 $30 40.

Things like levels like that it was pretty hard to find anything that was better than buying our own shares.

Got a little bit more.

The potential in the market, we got our share price up to $3 $33 40.

And though it's dropped back just a little bit in the last few days, but.

I still think it's embark them at that price I think I still think.

If you look at that <unk> five that we put up and do your own math calculations I still think even what we paid our maximum price I think was about $3 38.

Canadian for sure it's still a bargain at that price. So we are continuing our buyback program and we still think it is.

A good deal of that price, but when.

When we look at these acquisitions that will always be are these accretive or not.

And I think that's an important fact.

We also want to look at production assets that are gonna infill going forward, we are in Nigeria on the declining asset base.

Even with <unk> coming in.

We would like to see some some some longer term robust producing assets to kind of fill in so shall we say our cash flow from 'twenty four 'twenty five 'twenty six onwards so.

There are still deals to be made there are still more sellers than buyers I think you have to be prudent and careful in this market, we're not going to be out there paying 70 $80 oil prices.

These assets, but that's not what the majors are looking for it.

They carry these on their books at $60.

So as long as they don't have to write down and they can get out of it.

Non strategic asset.

Cash to use on their more strategic assets I do think theres deals to be done.

That will be a big focus for us as a management team.

If you say kind of what are the three things I would really push forward them.

<unk> 2023, one is a strategic acquisition of a producing asset.

Two is getting getting the Venus results and three is continuing to.

Return money to shareholders.

As appropriate.

Very good questions with scale and once we have more than $1 13 license renewal I'm trying doses below refined what's what are your expectations in terms of.

Could there be additional debt.

The plan at the moment is really to refinance those.

Page six.

As soon as we get license extension and.

<unk>.

EBITDA of 700 immune, but I'm going to pitch that to 300 so.

He is not who generates a massive amount of new money with the license extension.

The extension so it will be probably.

Uh huh.

Signed to a single <unk>.

Refinancing about $1 billion <unk> million dollars.

And so we are not going to G&A is a massive amount of money.

The whole purpose of this refinancing is really to extend the maturity of the debt again and and of course to defer all of the year should show them a solution.

<unk> facility. So we are going to reset dementia.

Particularly.

The five year tender from the days when we sang.

It was a refinancing.

David I'm not sure if you have needs that we get to that mid 2024.

Thank you Pascal.

There are a number of questions on Kenya and Keith.

We put this to you.

No.

<unk>.

Okay.

Question is how are the negotiations progressing in Kenya.

Obviously, if you covered this earlier in the presentation.

Well Theres a follow on question about this SDP approval.

What is the timing for that.

Yes, Im not sure I can say too much more about negotiations on a half we have we had to interested parties were moving forward with one of the two interested parties.

Got it.

It.

We feel we're fairly close and I think there is a.

Each person can put us on percentage of.

Chances of success on that but I think.

I think we have a fairly high chance to get a deal done that.

I think the FDP process is something different we're working with the government as you know theres election, there. So theres a little changeover of some of the administration there Matthias.

Don't see that as a big issue, we've submitted the FTP and obtain approval and.

We're just going through the normal course of getting that that field development plan approved.

So shifting gears to exploration.

There's a question here.

I'm sure. This is something that you could share your views on Keith.

The College is Africa oil has a great exploration.

Absolutely great prospects.

I think what we will try and specifics at speeding up the development.

Which president seems to be rather slow.

Yes.

I'm not sure that I guess, you have to I'm going to take them one at a time.

South Africa Leopard Blue product is really a negotiation about monetizing that gas from getting gas prices and getting guarantees and the operators are very focused on that.

The CEO Patrick P&A was recently in South Africa discussing this issue.

That's the key to unlocking that value them at least the existing discoveries were also quite keen on some of the.

Exploration on the eastern side of the block, which we think has oil potential which was oil will always be easier to monetize them.

Yes.

I think at some point, we'd love to see some wells drilled in the eastern part of that block as well.

Think for Venus.

I think it can go very fast once we prove it.

Right now we have one well thats not tested when we have at least two wells that are tested.

Prove proving that not only that.

The lateral continuity of those reservoirs, but the deliverability of those reservoirs I think youll see total moved very quickly into our early production phase.

I think on both of those it's a question of do we want to stay in or not.

And I think we'll just have to look at that at the time check our balance sheet.

The timing of that but I think what we see as both of those are potential fast track development.

If you look what was done in Guyana.

Three to five years from discovery to first production is not an unrealistic target for either one of those projects.

Yeah I think.

Sounds like the <unk> and leopard the only delay is getting all the gas terms that we're getting the commercial agreement set.

I think I think we are in good position to move those forward and that's really a question of how long do we want to stay on most projects or.

Or do we seek to monetize them early.

Very good a couple of other questions specific on the <unk>.

Bookings appropriate for us to comment on the.

The ultra sound apologize in cubicles given updates on.

Well, so let's move on.

Pushes on our share buyback program and the first one.

The announcement of the Canadian governments change equals a new tax on share buybacks and the question is well how is that going to impact.

Program.

If I may Keith.

Looking into this matter in detail and we will update you as necessary to close something we were aware off but at this present some good just looking at the details.

Just a couple of investors ask about the potential for a substantial issuer bids so to go.

Beyond our normal course issuer bids do you have any views on that.

Yes, and just to just to follow up on that first point to that.

Taxes are talking about Wouldnt take effect till 2024 anyway.

So we don't really see it as a big issue right now.

The tax on buybacks, but.

Yes, I mean, we would look at that I mean, I think our sister company IPC has been very successful doing that.

At the end of the day, it's looking up the amount of money, we've got them and what we want to spend it on but.

Again.

Certainly it certainly is on our laundry list of ways to spend that money.

Potentially do a larger.

Yeah.

Substantial issuer bid.

Buying back more shares, but I think I think we also have to keep in mind do we P.

The M&A.

Opportunities that we have and where best to spend our money you'll see is the is the big question.

Okay very good.

There was actually a question on the daily.

David will just for share buybacks.

People were wondering well kind of Africa oil.

No change to thrombosis, just want to remind everyone that optical oil easing that blackout periods and during the blackout period.

Sure just flat.

A lot of soup ROIC is to continue repurchasing shares on our behalf and we cannot actually change those parameters on silver will come out.

Blackout periods, and pushing to Pascal and chief.

Most of them come out of blackout.

Let me just the medium to long it sounds sort of share buybacks.

Keith you want to take the question I can answer Jones.

Go ahead pepco.

Yes, so I think so.

It is important to note that.

David Jimmy can be amount as we can.

Bye.

So we are limited by not.

Daily liquidity.

I think.

Truly useful unless proved to be very successful.

So it's yes.

Katherine you continue to keep that in mind in terms of.

Our return to shareholders.

But I think it's important also to note is we want to keep flexibility going forwards.

Especially in <unk>.

M&A and doing the acquisition of producing assets. So we want to keep flexibility and keep all options open going forwards.

As Keith mentioned, we received more than 200 being a little off cash we have.

Yes.

And on cost with facilities I mean, all this.

Definitely.

Yeah.

Which means we would be useful if we do.

When a clinician and so we are currently awaiting auctions between doing more M&A.

Continuing the share buyback program as we as we did.

In September .

Thank you Pascal.

<unk>.

Thank you for the question Keith you may want to tackle this month.

Can you just provide some color on the differentials that is prime.

The comments Im guessing.

Those rents.

As far as production any views on that.

Yes, so far.

We haven't we've had a couple of nice big spikes, we have like I think it was $9.

Premium to Brent on one of our Jena cargos.

But we've averaged about four to $5. So the market really likes these crudes and Expo ended gena so.

Generally I think that's what we would plan is to get in that $4 plus or minus range.

Premium to Brent.

When it goes.

There's a couple of questions about what is your shares outstanding balance under.

Sure capsule updates you can see the press release with a number on our website.

There is a question which.

Bafflingly since the markets opened this morning and issue for us is down 7%.

Well Keith we've been discussing this over the last couple of hours.

I don't know whether you have any comments.

I'll leave that one.

It's a bit of a mystery to me that you can put up these good numbers of them have your share price goes up.

So obviously I have been very busy going through the trade data that's available since the markets opened almost have been speaking to a couple of excellent trends in Scandinavia.

And one of the hypothesis, which we are looking into more detail.

Is that.

Quite a few investors in Scandinavia, It may have been taking Liberator Laurence.

In order to have leverage exposures to Africa will ship fulfillment and those positions.

Technical training you may have on volumes and that's why I think the first.

Quite frankly.

On reasonably rational.

Reactions on our results.

One of the hypothesis.

Looking at slips.

The management see optical does not see anything in our results or anything else to explain that.

Suddenly the drop the trading.

Trading sources.

So that's all a hypothesis will now.

So that's no slips.

Any other questions.

Yeah.

A number of questions on fund, which we have responded to and there is one question on tax Pascal.

And the fact that the tax rate seems to be going up can you just come at us quickly for US Yes, I think the main reason is that.

Actually it's rather good news and Thats, where I think you'll see it.

Investment tax credits in Argentina, So we.

We are not capable to a six ppt was being done.

And then.

So going forward, we are going to pay a larger and I think Keith PTT rates and Thats. The main reason why.

Increasingly that also translated into free.

Free cash flow blueprint.

Greg.

If I may just bringing one points, perhaps you don't Keith can also comment on this.

Is it possible to have.

The conversion to the new PIH says without extending the losses.

And I suppose what I'm trying to.

Communicate to the market.

Yeah.

For us to benefit from a lower tax rates on the <unk> Petroleum industry Act.

Yes.

Yes.

Correct.

Convert to PDI immediate Covid doesn't get 10 year extension, but of course, we are.

Using the commissions, new TIAA assumes as a leverage to get license.

Attention Ernie.

Since we need to license extension to be able to refinance all of them, yet but stay tuned.

That's prime levels. So it should be read are win win situations you get license extension and switch to the <unk> of course, if we couldnt get license extension.

Immediately for whatever reason, we would still consider switching to the pis, okay, and it's really a function of switching to the pis and <unk> tax rates exactly 50%.

As we move into a pure corporate tax system.

We are indeed pvp system at the moment.

So we're good.

Well I think we've cycled most of the questions as we're running out of time.

Thanks, everyone.

So join US Keith do you have any final comments.

Now I mean, I'm feeling very good about the company I think it's going to be.

Going to be some exciting wells next year, especially at the Venus.

Fingers crossed we get Kenny over the line.

<unk> put some money back into our investments in Nigeria and that the.

Yeah.

I think so.

A big oil ball I think <unk>.

Transition is moving forward and we're going to be part of that transition and we're gonna be on the top.

For Tyler's decile of ESG for farmers, that's our goal but.

The transition is going to take 30, 40 years and I think there's still a lot of room for oil and gas as long as you do your business right. So I appreciate everyone, taking the time today on that.

I'm very excited about moving ahead.

Well, thank you everyone.

But back to the operator.

Thank you.

That does conclude teleconference for today. Thank you for participating you may now all disconnect have a nice day.

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