Q2 2024 Graham Corp Earnings Call
Good day, everyone and welcome to Kosmos Energy's third quarter 2023 conference call.
A reminder, today's call is being recorded at this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Kosmos energy.
Thank you you may begin.
Thank you operator.
And for joining us today.
This morning, we issued our third quarter earnings release, this release and the slide presentation to accompany tasteful are available on the investors page of our website.
Joining me on the call today to go through the materials I'm being goes chairman and CEO.
And Neal Shah CFO.
During today's presentation, we will make forward looking statements research estimates plans and expectations.
Actual results and outcomes could differ materially due to factors we know in this presentation.
The U K and SEC filings.
Please refer to our annual report stock exchange announcement, and SEC filings for more details.
Documents are available on the websites and at this time I will turn the call like this one day.
Thanks, Jamie and good morning, and afternoon to everyone.
Thank you for joining us today for our third quarter results cool.
Since our last call we continue to make good progress in our strategic objectives with several important recent developments.
I'll talk about these in more detail in today's material as well as giving an update on the quarter.
And then hand over the call to Neal to take you through the financials before wrapping up the presentation and I've seen the call for Q&A.
Turning to slide three.
It kills months' worth pursuing a clear and consistent strategy.
To provide the world with the energy needs today, while working hard to bring down the carbon intensity of our portfolio and providing the world with the clean energy it needs for the future.
To achieve this we're executing a differentiated set of projects that are focused on advantaged low cost lower carbon oil and advantaged low cost low carbon gas.
This slide shows the progress we are making.
So that's production, Brian we set a target to grow oil production in the second half of 2022 by around 50% through the second half of 'twenty 'twenty four from three core development projects cheaply, South East Torchy phase one unwinds itself.
In the third quarter, we brought the first of these development projects do you believe southeast online, which increase do you believe gross production to around 100000 barrels of oil a day, that's almost 50% from the production levels seen in the first half of the year.
Also go up on Jubilee in the following slides, but we're pleased with the progress being made with more expected in the coming months.
Second our two remaining developments continue to progress on Windsor found the partnership recently completed the first production well and important milestone for the project.
And so to the hub terminal was completed and handed over to operations and we can trying to the subsea work scope, which was previously on the critical path.
In recent weeks, we have deepened our portfolio of high quality advantaged oil and gas investment opportunities.
In October we announced the discovery with the Tiberius while in the Gulf of Mexico, and today, we announced that we had assumed operators <expletive> and increased our working interest in the world scale, yes, it's around and get sales in Senegal subject to customary government approvals. We're excited by both of these projects as we expect.
<unk> create the next leg of bodies right because last beyond 2024.
More on both of these likes that in the presentation.
The charts on the right in this line is one we've shown before which has been updated for these recent developments.
It shows the progress, we're making against our longer term strategic objectives.
The first meaningful step up in production was and treat you with production rising 17% from the second quarter with further upside potential from Jubilee and then the planned startup of Torchy phase one and went to sell in 2024.
We expect this growth to drive a material step up in free cash flow as these projects are deliberate enabling the company to further delever and ultimately to fund shareholder returns when leverage falls below our target level.
Looking beyond that we have a deep hopper of high quality operating and nonoperating growth options across both short cycle oil and long dated gas that will continue to differentiate cosmos from our peers over the coming years.
We plan to balance the pay some working interest in these future projects to ensure we can money John go out generate material free cash flow.
Turning to slide four which looks at the quarters operational highlights in more detail.
Net production around 68000 barrels of oil equivalent per day was in line with guidance and an increase of approximately 17% versus the previous quarter due to the Jubilee southeast out huh.
Do you believe produced an average of around 96000 barrels of oil per day gross joined the quarter, an increase of over 30% versus the previous calls that with street Fujisawa wells coming online across Jubilee, South East and the main field.
While we've been successful in delivering the production wells there were some delays in providing the necessary water Jackson, which is not a knock on impact to near term production, which I'll talk about in more detail on the following slide.
On the <unk> production in the quarter around 15000 barrels of oil per day was in line with expectations and lower than the previous quarter due to a planned two week shutdown.
While working on the maintenance of the yeah. Yeah. So we modified the gas train and the re routed gas is now being re injected into Intonate field support reservoir pressure and maintain production levels.
This has resulted in around a 75% reduction in flaring a major step towards our goal to eliminate routine flaring by 2026.
The amended 10 plan of development and combined 10 and Jubilee gas sales agreement is being submitted to the ministry of energy for approval.
In the interim we have extended the Jubilee gas sales agreements through the end of November at a price of $2.90, but and then btu.
Nextera DNA gross production averaged around 25400 barrels per day during the quarter in line with expectations.
Infill drilling campaign as an expense it's down this quarter with the rig now in country.
Ahead of the three planned infill wells the rig is planning to carry out to work out it was on the save the sale, which should boost the yearend production right people. Then you will start coming online around the end of the first quarter.
Yeah, all right.
The work has been in infill campaign centered around 10000 barrels of oil a day gross production.
Most of our infill campaign your Kinzey infrastructure led exploration well is on track to spud early in the second quarter of 'twenty 'twenty four.
In the Gulf of Mexico, net production was approximately 15700 barrels of oil equivalent per day ahead of guidance due to lower than anticipated storm activity.
And I'll jump the subsea pump project continues to make good progress and is expected online in mid 2024 as planned.
<unk> production continues to perform in line with expectations and will be supported by the work of a scheduled for mid 2024.
I'll wait to file the partnership continues to make good progress the rig arrived in the third quarter and we have successfully completed the first of the three wells and important milestone for the project.
First of all is on track for the end of the first quarter 2024.
Post quarter end, we announced the discovery of the Tiberius Wild and Keathley Canyon, which I'll talk about in more detail later in the presentation.
Turning to slide five.
The start up of the Jubilee Southeast developments has driven a material uplift in production at Jubilee.
Producers are brought online during the course of taking gross field production up to around 100000 barrels of oil per day, a level not seen for several years.
As I mentioned earlier water injection rates in <unk> were lower than planned.
This is partly due to lower uptime on the water injection pumps and partly due to the delay in bringing to watch injection wells online, which we originally planned stops in three cute.
First quarter and we did bring these two water injection wells online and are now ramping up water injection support the elevated levels of production.
The partnership with previously assumed we would farm out the drilling rig in Ghana in the fourth quarter. This was to allow time to assess our initial three wells in Jubilee and high grade. The next set of wells. However, given our success in our well selection drilling execution, we're now planning to accelerate additional puts.
<unk> and water injection into the fourth quarter from 2024.
This should allow for continued you believe production growth into 2024 with both wells expected online early in the new yet.
The acceleration that this activity results in an increase in 2023 capex of around.
13 million net to Kosmos. However, the expected returns are very high with quick paybacks.
As a result of the lower water injection rates. The operator is now forecasting a G believes will produce around 85000 barrels of oil per day gross for 2023 down from its previous estimate of 90000.
This decrease is driving a lower production guidance for the and its expenses are resulting in one less 2023 cargoes from Jubilee than previously forecast.
It is just a timing issue and our view of 2020 full production is unchanged with a shortfall in 'twenty two 'twenty three I expect it to be made up in 'twenty 'twenty four.
Whilst there are always challenges in bringing new projects online and optimizing overall field performance. We're excited about the future potential of Jubilee and are continuing to work well with the operators to maximize cash flow from the field.
Turning to slide six this year.
<unk> is a slide we've used to over the year to provide a status update on the key work streams on the told you LNG project.
On the hub terminal construction is finished and Honda with your operations has been completed.
Within the quarter. We also made important progress on the subsea work scope, which was previously on the critical path to first gas.
Following the performance issues with the previous pipe lay vessel the subsea work is being re contracted.
Ladies and Saipem is now being brought in to finish the deepwater pipe lay in the infield flow lines with what I can expect it starts in early December and finish in the first quarter of 'twenty 'twenty four.
On the S. LNG cellular why have the backfill is expected later this quarter with Iran likes banks. It early next year.
The partnership is currently working with Golar, so identify ways to advance commissioning of the vessel.
The critical path to first gas on phase one of the Torchy project is now through the arrival of hookup and commissioning of the U S. P. S.
So just let me first gas in the first quarter of 'twenty 'twenty four is signaled by BP, the operator, and its third quarter results last week. It depends on the execution of these woodstream, which has the potential to slip into the second quarter of 2024.
Turning to slide seven.
On these key projects, we've been focused on defining the next set of growth projects for the company, it's all getting high quality advantaged oil and gas and basketball opportunities with operators in control.
Today Cosmos announced that it has increased its interest in assumed operator ship.
Okay triangle fails in Senegal subject to customary government approvals.
Yeah, I can try and there is a world scale gas resource with approximately 25 trillion cubic feet of gas in place and was the largest discovery in the world in 2017.
It is advantaged gas with magazine C. O two located approximately 75 kilometers from the desktop and then Sheila enabling a low cost development.
Cosmos, it's working interest in Yankee triangle will increase to 90% with Panther sent holding the remaining 10%.
Volume is up 10% to participate as an equal partner and the full value chain with a greater working interest.
As long as it's working with Pakistan and the government of Senegal on our innovative development solution prioritizing cost competitive gas San Nicols rapidly growing domestic market combined with a floating LNG facility geography exports into international markets.
Petrus ends during two Gen with St. Jude in today's press release, the Yankees Ranga as a strategic project and supports the plan in Senegal, and there's one which aims to provide affordable abundant and clean energy for the country.
Cosmos in pancreas and plan to evaluate partnership strategies with the objective of Crazy and aligned partnership does that seem the necessary upstream and midstream expertise coupled with access to cost effective financing and access to international LNG markets.
Turning to slide eight last month Cosmos announced a successful discovery the Tiberius infrastructure led exploration well in the Gulf of Mexico like Cosmos is the operator and has a 30, 334% interest alongside oxy in Ecuador.
So I'm curious as a full wide structural trap in the outboard Wilcox trend, which was drilled using the partnerships ocean bottom nodal seismic.
It's modern seismic technology generates and enhance the image of the prospect, which help refine the location of the exploration well and Derisked our future development program.
The image on the slide shows the time, Bruce exploration, well, which was drilled on the crest of the structure and the central fault block with additional upside potential in the neighboring fault blocks.
The allergy improvements like IBM seismic are a game changer for the industry and allow us to have a much better understanding of the subsurface pre drill.
Well discovered and there's oil column around 250 feet, we were able to conduct an extensive logging program like having multiple fluid samples and sidewall calls initially.
Initial analysis suggests that pollute quality similar to other nearby discoveries in the world constrained.
That's one example controls are being sent to the lab for analysis that will enable us to better understand permeability and viscosity, which are key to confirming well flow rates and our future development.
We are now working with our partners on the planning of a phased development scheme, which targets first production in around two years.
Preferred host platform would be the oxy operated Lucius facility located six miles to the northwest of the discovery with key commercial terms of the production handling agreement agreed pre drill.
Successor, Tiberius validates our proven basin infrastructure led exploration strategy targeting low cost lower carbon short cycle oil opportunities to complement our deep hopper of long dated lower carbon gas opportunities in West Africa.
I'll now hand over to Neal to take you through the financials.
Thanks, Andy turning to slide nine.
<unk> for the quarter was in line with guidance Gulf of Mexico was slightly ahead of expectations offsetting the lower than anticipated production from Jubilee and Andy talked about earlier.
Opex was in line with guidance and higher quarter on quarter as a result of the 110 cargo that we have in the year falling in the third quarter.
As a reminder, 10, opex, which is higher than the rest of the assets in the portfolio.
Is recognized when we have the listing.
The guy that slide in the appendix shows opex falling down to normalized levels in the fourth quarter.
Capex was at the higher end of our range, but did include the extensive success cases evaluation program associated with Tiberius that Andy mentioned on the previous slide.
Turning to slide 10.
During the third quarter, we saw continued improvement in our financial position with leverage lower as a result of both increased EBITDAX and reduce net debt.
We repaid the Gulf of Mexico alone within the quarter and important step towards simplifying the capital structure.
Following the pay down of the gone <unk> term loan and the <unk> Amendment in October Kosmos has no scheduled debt maturities until 2025.
We've talked about reaching a cash flow inflection point has production rises and Capex capital falls as our growth projects are delivered.
Our near term priority with any cash generated is debt pay down to bring leverage towards our long term target of less than one and a half times at mid cycle oil price.
With our flooding that more now more expensive than our fixed debt. We are prioritizing the RV L, which allows us to maintain and grow their available liquidity over time.
We anticipate that we still have a couple of quarters of higher Capex ahead of us completing towards human winterfell.
After which we expect debt reduction to accelerate its free cash flow ramps up meaningfully in the second half of next year.
We continue to make good progress on our hedging targets for next year.
In line with previous practice, we are looking to hedge around 50% of the following year's production, which allows us to fund the capital plan for the for the year.
Using color structures. We currently have around one third of next year's production hedged at an average floor of $69 per barrel with an average ceiling of around $94 per barrel.
Looking forward at our four key guidance, which is included in the appendix. There are a few points I wanted to flag.
Full year 'twenty three production guidance is now expected to be approximately 63000 barrels of oil equivalent per day due to the delayed startup of Jubilee southeast and reduce water injection levels.
We raised full year <unk> production guidance due to the lack of storms. However, <unk> com production is lower than the third quarter due to both planned and unplanned downtime, which is expected to be largely complete this months.
We also now expect total capex for the year to be around $800 million, reflecting the accelerated drilling in jubilee in the fourth quarter and the increased activity at Tiberius following the successful well results.
We still expect a step down in capex into 'twenty four, particularly in the second half as we finish our capital spend of our three key projects.
With that I'll now hand, it back to Andy to close today's presentation.
Now turning to slide 11 to conclude today's presentation.
I started todays presentation talking about the importance of having a clear and consistent strategy.
So far in 2023 Cosmos has achieved multiple important milestones in the delivery of that strategy, which sets us up well for further deliveries in 2024.
Well, so I don't intend to dwell on all of the bullets on the slide I want to focus on some key themes.
Cosmos has a differentiated growth story, which we've started to deliver with the startup of the Jubilee Southeast project in Ghana with more growth expected to come in 2024.
Yeah.
We continue to be grants or other development projects that torture winterfell, which are expected to drive another material production uplift in 2024 with torchy, providing further portfolio diversification, both geographically and by adding a new multi decade LNG revenue stream.
Once online.
We are also expanding our medium to long term growth hopper with high quality operators invest in opportunities across both advantage oil and gas to Tiberius and jackets around yet.
And finally.
As we deliver increased free cash flow, we will prioritize debt paydown until we reach our target leverage level, which is when we plan to look at shareholder returns.
The Kosmos management team is excited by the future opportunity set in front of us and to energize growth in value for our shareholders.
Thank you I'd now like to turn the call over to the operator to open the session for questions.
Thank you at this time, we'll be conducting a question and answer session.
If you'd like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment it.
That would be necessary to pick up your handset before pressing the darkies one moment, please while we poll for questions.
Our first question comes from Matthew Smith with Bank of America. Please proceed with your question.
Hi, there guys. Thanks, very much a few questions from me if I could the first one would be on a tortured capex I think at the last earnings call.
There was an element of uncertainty over the phasing and also I guess the amount of additional capex to be incurred from the new subsea contract, but I think if I heard correctly, you didn't sort of map that to say.
Reason for the increased tiny tiny three guidance, so should I take it that that might be some deferred capex from this change on torturing the 'twenty 'twenty four mm that'd be the first question and second wanted to cut on Tiberius Yeah. I. Appreciate that's further analysis to be done here, but you're able to just remind us of the pre drill resource.
Estimate that you had that and why you feel like you may have come out of our society, if you're willing to comment and then lastly, squeeze a third one if that's okay, but that's just whether you can add anything on toward your phase two at this point I'm going to I suppose the question that some investors would ask is is there anything there.
We should read across from D P and their exit from Senegal may in terms of their enthusiasm on the expansion towards your place thanks very much.
Yeah. Thanks, Matt.
What are we splitting up the three questions I'll, let Nate will talk about what your Capex I'll pick a talk various and then talk about face a tortured close to yes.
Just on towards the Capex, Yes, we mentioned last quarter there'd be a re phasing due to the subsea our overall view for 'twenty three hasnt changed suddenly capex basically related to the subsea that was supposed to be in sort of the second quarter and third quarter as we face the fourth quarter.
And then ultimately some of that slipped into <unk> to 'twenty four 'twenty.
'twenty three is roughly the same there is an additional amount of capital versus what we originally planned.
In the order of around $100 million net for.
For <unk> in the 'twenty four.
Tom carried.
Okay, Yeah on Tiberius math, Yeah, we're really encouraged by the initial exploration, while as we talked about in the and the material we talking to the the central fault block.
And we believe that we probably not central fault block the risks around that.
But the.
Potential that we had pre drill you know in terms of H development.
You know, we did a pretty extensive.
Logging program, which was part of the additional Capex that we spent in in 'twenty. Three so I think we've got really good set of sidewall cores fluid samples, which give us gives us encouragement around being able to move our had quickly with the development. We've always you've got gotta catch all of it.
Analysis back from from the labs, the interim they've already kicked off actually the planning of a of the Thai baht tend to loose, yes, I think within a week actually after the discovery and ask the team has already put out the that they picked up and that is continuing to build the.
Subsea.
Yeah, So I'm I'm actually quite pleased around the pace at which we're moving and the fact that we have without initial fault block a significant increment to production for Cosmos. So we'd anticipate that coming on within a couple of years. So again, you know sort of good progress.
And you know I think.
But the a subsea architecture will be laid out there'll be a single floor initially, but with the addition of maybe two maybe three additional wells from NATO. So fault blocks that we showed in the material.
On towards your phase two.
So to step back and and and and and I actually sort of think about how it links into jackets Ranga I'm sure there'll be more questions around yeah cause Ryan get but you know we have is very.
This things had growth portfolio and cosmos.
Vantage is low cost gas adjacent to Europe, and our objective now is to face the development of that in a way, where we can not only garage.
Capital to our shareholders. The first step of that is the completion of torture you are citing long obviously, we're giving you that to be the forward time line for that with controlling now yeah. It's Ryan I think we can then position that as the next building block and a in a in a sequence.
And I would imagine that torture thought I used to sit behind that so we have a set of developments now where you're building out around two and a half million tons of LNG, but doing it in a way where there's visit that there's control now with with an operated project and.
And in a way where you are limiting the capital outlay. So that you have a credible and manageable capital profile. So we're pleased.
We know what the future looks like now and we believe this is an important source of value drive of four for shareholders.
Alright, well, thank you very much pass it all right. Thanks, Matt.
Our next question comes from Charles Meade with Johnson Rice. Please proceed with your question.
Good morning, Andy and Neil and the rest of the Cosmos team there.
Andy I Wonder if I could just can pick up maybe just about where you left off you.
You said, you're sure they'd be more questions about about y'all Carter and good and that's what I'd like to ask about.
I guess, there's two parts. There's one can you just give us a.
The bigger context of Oh, where yoki charango.
You chose to develop toward two of Rioja, turning her first.
And and where younger triggered kind of sits in the I guess in the in your mind as far as the the you know.
Is it is it number two after yard after torture and then also as part of that you.
And I recognize that different companies have different priorities and have different viewpoints, but but how would you make the case for the value of jaco to Ranga to cosmos.
For people looking at it at B P and saying well if b P. Just walked away from this well you know why is it valuable.
Yeah. Thanks Charles.
All good questions and then maybe I can start at the end and sort of work back.
Yeah, Yeah. So ranga is a distinctive ah.
I, just think that gas resource it has low CF to content.
It is close to show a 70 ton kilometers off the back up and then Sheila.
And from a bus yeah, a domestic and an LNG perspective, it has strong market pool, there's a need to replace heavy fuel oil as a source of power and in Senegal, and clearly you know.
<unk> is is it is one.
One of the closest sources, new sources of LNG to to Europe.
You, then sort of say well, okay, how does that fit with various companies strategies and I think the.
To me the word.
<unk> now and in the lifecycle of the energy transition why different companies are placing different paths and I suppose nothing was clear on that then the two big announcements Ah yeah over the last couple of weeks here in the in the U S.
That strategic contacts actually influences the way that people will look at various investment opportunities.
As I said I think cosmos believes that this gas is distinctive.
And it's well described well described what do I mean by that I mean that and told you we drilled four exploration and appraisal wells and the D. S T.
Enables us to calibrate the seismic that lag to full successful development wells. So a huge amount of subsurface data that's directly correlates to yeah. It's running well we have three exploration and appraisal wells. So we believe we have a well described a subset.
Yes.
And are confident in its ability to deliver a very commercial project. We also believe is a low cost solution to development given the geographic situation close to the the task out Peninsula now yeah, I would say the P. P. He doesn't have the same.
Yeah, and I think it's not ultimately I think it heavily influence it is ultimately heavily influenced by that.
This would change the context of where they are allocating our capital and their ability to envisage a commercial development. So you know I I think this is a great opportunity for the company you know, we we've inherited that shall we start at 90% our objective is for Pakistan.
To build that share so that they are an equal partner with ourselves and whoever comes in we would anticipate that 425 to where it might be 33% jazz.
We've got work to do now I'm fully describing the concept.
Laid out and in a and no material and you know we've got work to do to bring in a partner around and the underpinning of it.
Financing, but with all of that done this is an incredibly a commercial opportunity, but it has to be done in a in a low cost way.
Really leverages all of the subsurface knowledge so.
That's the essence of it might be up the difference, but I see as a huge opportunity for the company and look as you know it's not without precedent.
Yeah.
Okay.
Are you familiar with the Gulf of Mexico, you go back to something like Shenandoah.
Yeah, I think two large companies gave it all a smaller company now has it and they're just now we're not executing a very.
Competitive a scale a project now so those things you know there's many precedent in the in the industry of that and I think the energy transition is simply money that he's differences more more acute and that's where the opportunity is greater.
That is that's helpful elaboration, Andy Thank you and if I could go back to your prepared comments you talked you talked about the two the two additional wells you're going to drill it at Jubilee in Jubilee South East I, just want to make sure I understood. So.
You guys were going to farm out the rig, but then you decided you you you've got these you've got these are these two wells once and do you believe if I understand right ones did you believe once Jubilee South east.
What does this does this lead to a higher plateau or is this or it's just or what are you supposed to just kind of more reduce the volatility around that that plateau. In case you have some more of these water ingestion can you can kind of frame it up for us what the yeah.
Yeah.
Yeah, it's simply everybody around accelerate activity out of 24 into 'twenty, three which allows us to actually build towards the facility limit.
Mr. Sayer, you know that that additional water injection well is important because it allows us to address some of the water injection issues that we've been experiencing and then the second well it is a producer of which would come on in 'twenty four and then we have a an ongoing.
Our drilling program on the table that you got fulfilled.
With additional producers so I hope some of you know it's about building.
All of these women are in terms of wall capacity, probably building slightly beyond the facility's limit. So we have a degree of wall capacity and reserve and then holding the feel field at that level. So it would accelerate some capital out of 24 into 'twenty three to allow us to build towards that facility limit.
Scott.
Got it thanks for the clarification.
Alright, Thanks Charles.
Yeah.
Our next question is from Bob Brackett with Bernstein Research. Please proceed with your question.
Hey, good morning, acknowledging that you don't yet have the ground truth of the sidewall core data or Tiberius. The wireline ferocity is in line with what you expected pre drill.
The follow up related is how do I think about the capital cost of developing Tiberius given that the host is a sunk cost and given the potentially the wellbore is on cost.
Yeah, Hi, Bob it's always good questions. The porosity was absolutely in line with expectations Yeah.
So, yes, as you're well aware of the next step then is to do the LIBOR to.
They can fill them pardon me, if I lets say rather that would be a read across when porosity and then to finalize the full every day there with viscosity armed with all of that where you can then optimize the completion design. So yeah everything is in line with what we expected. It's in line with analogs that are from adjacent fields.
So.
So so far so good.
As I said two to map, where you know we are moving ahead with a really cost effective development plan with the tie back to to loose yes, yes.
Picked up on the capital of that yes.
Bob I think you're right in terms of yeah, there's minimal infrastructure.
Structure to be late and therefore, yeah.
It should be very cost effective.
Tie back program, and we didn't and we develop it similar to how we've done winterfell and other projects in terms of the staged phased development to where we have a single well E. P. S.
To work with.
Wayne telephone line for this facility.
Brother development over time, and with a more information from them.
The world isn't the reservoir over time, so yeah, I think yeah, we've talked about the past that sort of F&B and tourists tend to $15 range generically I.
I think that's it.
Wherever they fall in.
That range.
Very clear thanks.
Great. Thanks, Paul.
Yeah.
Our next question is from Neil Mehta with Goldman Sachs. Please proceed with your question.
Morning team. Thanks for the update today. The first question I had was just around capital spending can you break just from your previous Capex guide to the current one.
How much of that was project related versus inflation and as you think about 2024, recognizing you don't have the full numbers, but how should we think about the airwave network.
To the extent you are able to provide that.
Yeah great.
Nail pick that up.
Danielle says yeah, I'm I'm twenty-three I think yes. The two biggest pieces were really around yeah. The tortured acceleration that Andy talked about without being $30 million and about $20 million of it was sort of the additional drilling everyone's got acceleration.
The additional two wells or one and a half wells in Ghana Jubilee.
It's 39 on that and then the $20 million.
Additional drilling at Tiberius post the success and the extensive logging campaign. So that's sort of tickets from sort of yeah. We were trending towards the high end of range that basically moved us from 750 day hungry. So that's kind of the.
<unk> of that so yeah, it would be call value, adding activity into 'twenty three.
If I look sort of going forward I think we've talked about sort of a normalized capex rate post our three big projects.
Call it.
Yeah, three to $3 50 of maintenance in two to $2 50, a growth sort of get to around 550 of our steady state.
Capex for the company 24, yeah. It is a bit of a transition here because we've got the completion of tortilla and winterfell residual capex related to that is as well as sort of the sort of steady state capex. So again, we haven't given out in 24 guidance yet we'll do that in February.
That's correct, yeah that yeah, 24 will fall in between the two where.
Where we are this year, and then sort of a steady state level as we finish those two key projects.
Thank you Neal Thanks, Andy that's the follow up is just around <unk>.
Phase one and then maybe you can get us a little bit more clarity around the work stream that you highlighted which has the potential to slip into the second quarter, but as of now.
On track for first gas in the first quarter of 2024 can you get us into the field and give us more granularity. So we understand what specifically you're talking about.
Yeah, not shown there yeah, if you instead.
To go through the BD.
The key work streams, you know that we've talked about the hub terminals sort of being finished handed over to operations that was a big milestone in the quarter. You go out and look at the I phone G basketball, which will obviously be more than enough terminal.
That leaves.
Singapore.
Around the yeah.
Around this in this quarter and it will get to side at the beginning of next year, so sort of no sitting on the AR on the critical path the big breakthrough in the quarter was around getting all of the subsea.
Architects are finished.
Yeah re contracted with all cities in Saipem that work stops early next month, and we have a clear programs can play in the in the first quarter. So I feel good about that.
But we know they used to or whatever else thing, but at the moment is just around the F. P. M. So it's actually an issue that set of external to the vessel the vessel has families on it.
Italy saw used and they are permanent anchoring off the basketball on location.
So you kind of thing and then the voice across to the.
The East Coast of Africa.
But it is C pass things were damaged.
Hum the boats are currently sitting off shore.
We're looking to get access to the potent urban so that work to address the issue with the families can be conducted so that's the thing that is a little bit of you know what sort of uncertainty in the timing so not a big issue, but it's sort of it is a very you know a singular issue that we're working with all that said as you know.
That's what I call them going on they see the efficacy so itself and all the top side. So we can get on with work to do with the the pre commissioning. So when it does arrive on site now that work stream is shortened yeah. So I'd love to know a lot with all big projects. It is about the integration of the pieces where are clearly getting closer.
I actually felt good about the progress we made in our in <unk> and we'd go yeah significant milestones out ahead and they are for the remainder of this quarter and into the first quarter of next year and the one that wherever else you can kind of see poke some with the the deal Friday, because they paid us to make sure that they get the F. P. S.
So on location. So that we can then deliver first gas. So that's the color I think were behind the Oh, great. That's great. Thanks, guys.
Great. Thanks.
Our next question is from Mark Wilson with Jefferies. Please proceed with your question.
Okay. Thanks, Gents and thanks for the color on the F. B a show that I was going to ask about that journey. So that's clear so yeah, let's go to your car.
Ranga, you've actually outlined a very specific development concept and the press release today 550 million cubic feet a day.
With piped gas domestic and export via LNG and I think Andy you mentioned E and F LNG vessel.
All of a similar size to till two that's what I wanted to check is what would be the split of that gas how much does.
Senegal require domestically and therefore, how much would be left to a to export and you mentioned, bringing in a partner. So I guess that is a definitive requirement to move forward.
And what sorts of final percentage stake would you envisage taking in such a development. Thank you.
Okay, Yeah, right hope good questions Mark Yeah. So I think if I take sort of covered earlier, but just sort of I think that well.
It is a well described our development scheme that you know I think I hope you get a sense from that that we'd been obviously been working closely with Patterson in the development of that and a scheme that clearly is a competitive commercially attractive but that makes the countries.
Our development goals, which were around the domestic gas supply and the ability then to create additional revenue through LNG export.
The split is.
Around 150 million standard cubic feet, a day into the domestic gas and you know.
And I think that you know it initially you know probably that won't be the full power capacity to take that but that will grow.
Through time.
Again, a steady state we would be looking at in LNG scheme, which is about two and a half to 3 million tons, yeah, which sort of you know it takes you to a gas supply of 400 to 500 million standard cubic feet. Yeah. So that gives you an idea of the <unk>.
And therefore, the number of wells that will be cool be required the well the well potential is very similar to a G. T E and I think that's.
Did that flow to linking back to the question. The you know sort of why why why sleeping uninvolved. You know this is a scheme that we developed in collaboration with with Pakistan and then ultimately the decision by BP not participate has allowed us to move forward with.
And so as I step back and kind of focused on getting phase one a J T. I finished and that creates us the opportunity to to to work days. So I think you know the scheme is it's sort of clear in terms of working percentages you know that we typically have 25% to 33%.
And our current projects I've been visiting to saying Hey, you know what.
Our objective is what Patrick was saying to staff up to an equivalent share to other policies that would come in if it's too it's maybe in a way a 25% 25%. If it's if it's just one party come in and maybe we're at a third a third a third so it's that sort of a shape and you know.
We forget that we've got work to do now to bring into the partnership.
Yeah that is the gating item for both ourselves and Petro, saying and secure the necessary financing to enable a patras end to move forward. So again lots to do on it but it is a project, which I believe.
As you know the full support of the government has a very clear development concept and a very cost competitive proposal yeah.
Now there's work to do to bring all of that to see fruition.
Okay. Thank you for that and.
That development concept can we just push it a little bit harder on that so talk to for instance, there's a.
Very large break would've been built in a lot of the phase one was sized.
With a view to a follow on phase two.
F LNG being added.
Could you explain what's different in terms of yacht count to rank or maybe in terms of its location of Shaw.
It might make it.
Uh huh easier or quicker.
In its initial phase.
No again.
Good good piece of cover mall, Yeah, Yeah, we you know I suppose that the way to describe it is we don't envisage a building a a break water. We believe there is a design.
To enable our Nf L in Geneva, so to be located.
On location there different met ocean conditions. So that you don't have the significant cost of building up a break water. So I think that it is about being innovative around the disarm inflation that we've talked about and we believe that we've done significant work in a way.
Happens if it doesn't work to enable us to be able to progress that concept.
Okay, that's great and I'm, sorry, I've, just got one more I just want to confirm so in Jubilee now additional producer injector Pat before year end, but it is still the plan for that rig to continue in 2024 with a three to four well annual program I think that's been talked about before by the operator.
Yeah, No no you're right.
Mark and concept that's that's the last proposal so goodbye.
About half a rig there I would say Jubilee in 'twenty four.
And again I think it was Charles just question around you know the objective is to build a well capacity so that we'd get all they took a reserve capacity beyond the facility's limit.
And you know together with a reliable water injection. You then have the ability to sort of hold the plateau.
At that level and then you know clearly your fault, but you can follow up with additional while says is that well capacity becomes tested but we're on a good track now to sort of continue to move forward with good Jubilee is as we have those wells and you know fundamentally under.
The new wells with with reliable water injection so yeah.
The increase in Jubilee as well well described and as you know in terms of the forward activity set.
Okay I appreciate it I'll handover great. Thanks.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad, one moment, while we poll for questions.
Our next question comes from stellar courage with Barclays. Please proceed with your question.
Hi, Dara and afternoon, all many thanks for all the updates and I want to ask on two things.
Please and the first just a question on Yucca Glenda do you actually have to pay any consideration to BP, but the additional stake and that would be the first one and the.
Second on the 10 guests about man I did see a figure in the press about potential cockpit. That's I just wonder if you could give us a comment directly about what Capex you see there and how you would fund the Cosmos sure.
And then finally do you have any updates on the Ghana tax situation that would be great.
Yeah.
Alright, I'll sort of go Brian those in a reverse.
Or as regards Cosmos, we have no ongoing dialogue with the with a gel right, which is the government in taxes for Odyssey.
Got any tax issues.
On 10, the I think the newspaper article talked about a 1.3 billion dollar development, which would cover the full development.
Of the the next phase of the 10 P. M D.
We would ask that would be 20% of that and then clearly that spend would be fooled spend through potentially 24 five.
It sounds correct sorry.
We're still waiting for progress with the government of Ghana in terms of.
That spend so we don't yet have any firm timing for that and then on the ACA triangular there was no consideration paid to be paid.
That's great thanks and.
I'm sure you don't have it.
And any ongoing dialogue with the government do you mean, there is no tax claim anymore or the tax claim is still there.
B no discussion about it.
We have no tax claim.
Right. Okay. Thanks for the clarification on that was there any particular reason that just dropped off.
There's not.
With regard to ourselves versus other policies that was never a tax claim against never just never dispute.
Okay.
Every partnership is different.
Ever had any formal dispute with the DRA, we obviously have ongoing discussions with them, but we don't have any claims that were working through.
Okay, all right many thanks for that.
Thank you.
Yeah.
If there are no further questions at this time I'd like to bring the call to a close thanks to everyone. Joining today you may disconnect. Your lines at this time and thank you for your participation.
Okay.