Q3 2023 Parex Resources Inc Earnings Call

Thank you for standing by my name is tamika and that would be your conference operator today at this time I would like to welcome everyone to the Q3 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you want to ask a question during that time.

Speaker 1: Thank you for standing by. My name is Taneika and I will be your conference operator today. At this time, I would like to welcome everyone to the Parx Q3 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number 1 on your telephone keypad.

I'm simply press star followed by the number one I go telephone keypad.

Speaker 1: If you would like to withdraw your question, again, press star 1.

If you want to withdraw your question again press Star one.

Speaker 1: As a reminder, today's call is being recorded. I will now hand today's call over to Mike Crompton. Please go ahead.

As a reminder, today's call is being recorded I would now hand todays call over to Mike Compton. Please go ahead.

Good morning, and welcome to Park <unk> third quarter 2023 conference call and webcast. My name is Mike Kruchten Senior Vice President of capital markets and corporate planning of parks and on the call with me today are parks as President Chief Executive Officer, Martin Moulton, our new Chief Financial Officer.

Speaker 2: Good morning and welcome to Parks' third quarter, 2023 conference call and webcast. My name is Mike Corrupten, Senior Vice President of Capital Markets and Corporate Planning of Parks. And on the call with me today, our Parks' President and Chief Executive Officer, Amad Molson, our new Chief Financial Officer, Sanjay Bishnone, and Eric Furlin, Chief Operating Officer.

J, B snowing, and Eric Furlan, Chief operating officer. Please.

Speaker 2: Please note that at any time, telephone participants on the phone can press star 1 to submit a question.

Please note that anytime telephone participants on the phone compressed star one.

Maybe a question.

Speaker 2: As a reminder, this conference call includes forward-looking information, as well as non-GAAP and other financial measures, with the associated risks outlined in our news release and MD&A, which can be found on our website or at CDARplus.ca.

As a reminder, this conference call includes forward looking information as well as non-GAAP and other financial measures with the associated risks outlined in our news release, and MD&A, which can be found on our website or at SEDAR plus what C. H.

Note that all amounts discussed today are in U S dollars unless otherwise stated.

Speaker 2: Note that all amounts discussed today are in US dollars, unless otherwise stated. I'll now turn the call over to Matt. Please go ahead.

I'll now turn the call over to Matt. Please go ahead.

Thank you, Mike and good morning, everyone.

Speaker 3: I would like to start the call by introducing Thunder Abishnoy, our news CFO .

I would like to start the call by introducing Sanjay. Additionally.

Our new CFO.

Speaker 3: With the rich and diverse international background in energy strategy and corporate finance, he is poised to play a pistol role on the team role.

With a rich and diverse international background in energy strategy and corporate finance.

Just to play a pivotal role in the gene going forward.

Speaker 3: Before I turn it over to Eric to discuss our operational results and to Sanjay to provide an overview of our quarterly financials, I'd like to share some opening remarks regarding the progress we've made in our northern Yannes operations in Arauka, which is a core area for our long-term strategy.

Before I turn it over to Eric to discuss our operational results and to Sanjay to provide an overview of our quarterly financials I'd like to share. Some opening remarks regarding the progress we've made in our northern Kansas operations in Morocco, which is a core area for our long term strategy.

Speaker 3: I will conclude the call with our outlook for the remainder of the year, which I'm optimistic about given the recent production gain that are positioning us to deliver strong results in Q4 and 20.

I will conclude the call with our outlook for the remainder of the year.

Which I'm optimistic about given the recent production gains.

That are positioning us to deliver strong results in Q4 and 2024.

Speaker 3: Firstly, I'd like to recognize our team, who recently delivered our inaugural well at Araw.

Firstly I'd like to recognize our team recently delivered our inaugural well at our outcome.

Speaker 3: which is the deepest sponsor while drilling in Columbia's history. This is Circle Well also marks significant milestone as it's the first to be drilled on the block since the 1980s when operators left due to social issues.

This is the deepest onshore wells drilled in Columbia history. This historical while also marks a significant milestone as the.

First to be drilled on the books of the 1980.

To his left due to social distancing.

Speaker 3: Successful delivery of Oracle 15, which is expected to commence production before the end of the year. So cases, our teams ability to operate in challenging area and is a differentiator as an operator who is aggressively pursuing Colombia's word class.

The successful delivery of our Alco, 15th which is expected to come on production before the end of the year showcases our team's ability to operate in challenging area.

As a differentiator as an operator.

Pursuing Columbia World Class reservoir.

Speaker 3: I'm also pleased to announce that you are making meaningful progress at the Ralka 8, which is one of our I impact big e-expression levels. I like this.

I'm also pleased to announce that you are making meaningful progress at our railcar H, which is one of our high impact exploration wells.

Like this one.

Speaker 3: The one is currently a paste setter for phirax achieved through the application of modern drilling technologies. And as we progress the learning curve in that area, we expect to, and as we progress the learning curve in that area, we expect to indeed just swell near the end of the year and look forward to sharing initial results in early 2012.

The well is currently a pacesetter for Paris achieved or the application modern drilling technologies and as we progress the learning curve in that area, we expect to.

As we progress learning.

Carbon that area, we expect to be just well near the end of the year and look forward to sharing the results in early 2024.

Speaker 3: With that, I'll invite you to cover our operational results. People ahead.

With that ill.

Invite Jack to cover our operational results. Please go ahead Sir.

Speaker 2: Thanks, Amat. In Q3 2023, production average 54,573 BoE per day and represents a quarter to the record for parrots. Up 7% compared to Q3 2022, and up 1% from the prior quarter. As Amat mentioned, we are seeing fantastic progress at Raoca, both socially and operations.

Thanks Ahmad.

In Q3, 2023 production averaged 54573 Boe per day and represents a quarterly record for <unk> up 7% compared to Q3, 2022 and up 1% from the prior quarter as Matt mentioned, we are seeing fantastic progress our railcar both socially and operationally.

Speaker 4: We are also finding success across the rest of our core portfolio through our exploitation and exploration efforts, which today's Quartz Strong production of roughly 59,000 BoE per day, with record production from a Cabrera block, success from our block 34 horizontal wells, and impressive results from our horizontal well in block 81, where we had a discovery last quarter.

We are also finding success across the rest of our portfolio through our exploitation and exploration efforts, which today's sports strong production of roughly 59000 Boe per day with record production from <unk> block.

<unk> block 34 horizontal wells and impressive results from our horizontal well in block 81, while we had a discovery last quarter.

Building on this production growth over the remainder of the year, we expect to grow through the commencement of production of near field exploration discovery on the camera sterile block, where we have drilled into a new pool with promising results.

Speaker 4: Building on this production grow over the remainder of the year, we expect to grow through the commencement of production of near field exploration discovery on the Cabrero block, where we have drilled into a new pool with promising results, delivering another horizontal well.

Delivering another horizontal well in block 34.

Speaker 4: bringing a Raoca 15 online following the multi-zone testing that we are doing.

Bringing our railcar <unk> online following the multi zone testing that we're doing.

Speaker 4: Although the operational side has been slower in the first half of the year than projected, the capital redeployed and the team's diligent efforts are now paying off, but we feel like we have lots of reasons to be excited on the operational front. With that, I'll invite Sanjay to-

Although the operational side has been slower in the first half of the year than projected the capital we deployed and the team's diligent efforts are now paying off and we feel like we have lots of reasons to be excited on the operational front.

With that I will invite Sanjay to please go ahead.

Speaker 5: Thanks Eric. Before I get into our results, I wanted to quickly say that I'm very enthusiastic about joining PAREC.

Thanks, Eric before I get into our results I wanted to quickly say, but I'm very enthusiastic about joining rx.

Speaker 5: My initial impressions are that the team and outlook for the portfolio are excellent. And I look forward to contributing to the company's success. Now let's move on.

My initial impressions are that team and the outlook for the portfolio are excellent and I look forward to contributing to the company's success now.

Now, let's move on to the results.

Speaker 5: Fun flow provided by operations for the quarter was $158 million supported by strong commodity pricing and growing production offset by higher production costs from workovers and energy prices as well as higher current tax.

Funds flow provided by operations for the quarter was $158 million supported by strong commodity pricing and growing production offset by higher production costs from Workovers in energy prices as well as higher current taxes.

Speaker 5: The higher current taxes relate to the government tax reform that was passed in late 2022, which increased costs on oil and gas producers, specifically through the establishment of an income surtax of up to 15% linked to the historical Brent price.

The higher current taxes related to the government tax reform that was passed in late 2022, which increased cost on oil and gas producers specifically through the establishment of an income surtax.

Up to 15% linked to the historical Brent price.

Speaker 5: With your today's Q3 2023 brand pricing and the Ford curve near $82 per barrel, we moved from an estimated 10% surtax to a projected 15% surtax. It is important to note that for the quarter, current taxes were increased by $14 million to reflect.

With year to date, Q3, 2023, Brent pricing and the forward curve near $82 per barrel, we moved from an estimated 10% surtax to a projected 15% surtax. It is important to note that for the quarter current taxes were increased by $14 million to reflect this.

Capital expenditures for the quarter were $157 million, which was driven by our farm in agreement signed in 2021 with Echo control for both Euro Alka and the <unk> 38 blocks, where we have carry obligations. We expect Q4 2023 capital to be lower as our costs associated with <unk>.

Speaker 5: Capital expenditures for the quarter were $157 million, which was driven by our farm in agreement signed in 2021 with Ecopatrol for both the Arauca and the Llanos 38 blocks, where we have carry obligations.

Speaker 5: We expect Q4 2023 capital to be lower as our costs associated with drilling and a route out revert to a 50% working interest per our farm and agreement. And as we have less Cabrestero activity plan.

Drilling at a railcar revert to a 50% working interest for our farm in agreement and as we have less Katherine Jeremy can be plans.

Speaker 5: We ended the quarter with a working capital deficit of $58 million. This was primarily a result of the timing of certain capital related to the farm and agreement as discussed, as well as the build up of inventory, which has.

We ended the quarter with a working capital deficit of $58 million.

This was primarily a result of the timing of certain capital related to the farm in agreement as discussed as well as the buildup of inventory, which has peaked.

Speaker 5: Looking forward, our plan has us as a positive at a positive working capital balance by Q4 of 2023 and building our working capital in 2024 through the production growth that we are seeing today. A forecast that has lower capital as well as the deployment of long lead items and equipment inventory off of our balance sheet over the next six to nine months.

Looking forward our plan has us as a positive and a positive working capital balance by Q4 of 2023 and building our working capital in 2024 through the production growth that we have.

Seeing today.

<unk> that has lower capital.

As well as the deployment of long lead items and equipment inventory off of our balance sheet over the next six to nine months.

With that I would now like to turn the call back to the Mod for some final remarks. Please go ahead Marc.

Thank you Sanjay.

Speaker 3: The strategic deployment of capital throughout the year has begun to reap rewards. And we have realized meaningful production gains, as well as succeeded in gaining access to Oralco, which represents new problems for the company. With that momentum, we are confident in our ability to deliver strong results for the remainder of the year and into 2020.

The strategic deployment of capital throughout the year has begun to read.

Awards, and we have realized meaningful production gains.

As well as succeeded in gaining access to our outcome, which represents new province for the company with that momentum.

We are confident in our ability to deliver strong results for the remainder of the year and into 2024 and.

Speaker 3: importantly, I'd like to highlight a few strategic priorities that we have been progressing in support of our long-term strategy.

Importantly, I'd like to highlight a few strategic priorities that we have been progressing in support of our long term strategy.

Speaker 3: We continue to make meaningful progress in reaching and signing a definitive agreement on our expatrial foothills MOU. I cannot stress that one enough. We expect to spot our next big high-impact Big E exploration well on Block 122 called Arantis by year end. This is expected to be the first well of several as we target the high-potential foothills.

We continue to make meaningful progress in reaching a signing of definitive agreements on our petrol foothills Mou I cannot stress.

Enough.

We.

We expect to spud our next week.

<unk> exploration well on block one tool called our auditors by year. Ed. This is expected to be the first well of several as we target the high potential for credit.

Speaker 3: We continue to progress the learning curve in new areas, such as Arauca, which is expected to improve our portfolio's capital efficiency going forward. And, as Eric alluded to, our strong quarter-to-day production is being driven in part by exploitation and near-field exploration being core to our strategy. Contributing to this success are short-cycle opportunistic ads.

Got it.

Continue to progress the learning curve of new area, such as <unk>, which is expected to improve our portfolio's capital efficiency going forward.

As Eric alluded to a strong quarter to date production is being driven in part by exploitation and near field exploration being core to our sites.

Contributing to this success, our short cycle opportunistic adds.

Speaker 3: on as such as on block 81, where production is outperforming our original expectations.

As such as on block H, one where production is outperforming our original expectations.

Speaker 3: and horizontals in Soka where we are seeing the delivery of capital efficient products.

And Horizontals and SOCAR, where we are seeing the delivery of care.

Efficient products.

Speaker 3: Our portfolio is full of these types of opportunities, which we plan to continue taking advantage.

Our portfolio is full of these types of opportunities, which we plan to continue taking advantage of.

Speaker 3: As we look to the end of 2023, I'm pleased with the operational momentum that we have achieved in the back half of the year, which puts us on track to deliver above 60,000 DOE per day and sets us and shareholders up for a great 2025.

As we look to the end of 2023 Im pleased with the operational momentum.

In the back half of the year, which puts us on track to deliver above 60000 Boe's per day.

That's us and shareholders up for a great 2024.

Core to our long term planning is there a return of roughly one third of our total cash flow shareholders through regular dividends and share buybacks and our priority for the next year to grow our production improved capital efficiency and deliver exploration success combined this should generate significant free cash flow and Ultima.

Speaker 3: Core to our long-term planning is a return of roughly one-third of our total cash flow shareholders through regular dividends and share buybacks, and our priority for the next year is to grow our production, improve capital efficiency, and deliver exploration sector.

Speaker 3: Combined, these should generate significant free cash flow and ultimately shareholder value.

The key shareholder value.

Speaker 3: I want to end by thanking our employees for their impressive contributions, our shareholders for their continuous support, and say again, welcome to the team, Sanjay.

I want to end by thanking our employees for their impressive contributions our shareholders for their continuous support.

Welcome to the <unk> Sanjay.

Speaker 3: This concludes our formal remarks. I would like now to turn the call back to the operator to start the Q&A session for the investment community.

This concludes our formulary remarks, I would like now to turn the call back to the operator to start the Q&A session.

The investment community.

Speaker 1: Thank you. As a reminder, if you would like to ask a question, press star one on your telephone keypad.

Thank you.

As a reminder, if you would like to ask a question Chris Star one on your telephone keypad.

Speaker 1: Your first question is from a line of Alejandro DeMichelis DeJeffries.

Your first question is from the line of Alejandro Demichelis with Jefferies.

Yes. Good morning, gentlemen, thank you everyone for taking my question two questions. If I may. Please. The first one is you mentioned the change in working capital turning positive as of this quarter actually so could you. Please give us some kind of.

Speaker 6: Yeah, good morning, gentlemen. Thank you for taking my question. I'll take two questions, if I may, please. The first one is, you mentioned the change in working capital turning positive as of this quarter, actually. So, could you please give us some kind of sense of the size of that kind of change in the working capital? That's the first question. And then the second question is, how do you see the production cost evolving as you're bringing new wells, you're doing more around council?

Of the size of that.

Change in the working capital that's the first question and then the second question is how do you see the production costs evolving.

As you're bringing new wells, you're doing more neuro consort.

Great. Thank you very much for the call I'm going to pass it first as Sanjay and I'll have Eric talk about the Opex.

Speaker 2: Great. Thank you very much for the call. I'm going to pass it first to Sanjay and I'll have Eric talk about the op-ed. Thanks.

Sure, Yes, thanks, Mike.

And nice to meet you Alejandro I think.

Speaker 5: And nice to meet you, Alejandro. I think from a positive working capital standpoint, really the drivers of that are we're going to see better production. We're going to see lower capex in the quarter. In terms of specific numbers, I think we'll hold off on giving any guidance on that.

From a sort of a positive working capital standpoint.

Really the drivers of that are we're going to see.

Better production, we're going to see lower capex in the quarter in terms of specific numbers I think we'll hold off on giving any guidance on that.

Speaker 5: Um, you know, obviously there's there's some unknown such as commodity prices, etc, that will factor into that as well. So we're going to leave our comments today with just we do expect to revert to a positive balance by the end of the quarter.

Obviously, there is there is some unknowns such as commodity prices et cetera that will factor into that as well so.

We're going to leave our comments today, which is we do expect to revert to a positive balance by the end of the quarter.

Great. Thank you.

Speaker 4: Okay, and thanks Sanjay. With regards to operating costs.

Okay.

Thanks, Sanjay with regards to operating costs.

Speaker 4: Yes, operating costs in this quarter were higher for a couple of main reasons. One, the El Nino effect is creating a much higher power cost in Colombia that was outside of what we had budgeted for the year. That accounts for about half the increase in operating costs. We've also had some changes in peso valuation and in addition, some additional work over costs associated with some shutdowns and social disruptions that we've had in a couple of areas that we've covered in the.

<unk> operating cost in this quarter were higher for a couple of main reasons, one the El Nino effect is creating a much higher power cost in Colombia that was outside of what we had budgeted for the year, but that accounts for about half the increase in operating costs. We've also had.

Some changes in peso valuation and in addition to some additional workover costs.

Associated with shut with some shutdowns and social disruptions that we've had in a couple of areas that we've covered in the past as far as going forward and the question regarding new areas generally speaking areas like <unk> and our <unk> are our lowest operating cost deals other generate prolific fresh production. So.

Speaker 4: As far as going forward in the question regarding new areas, generally speaking, areas like like Apaches and Arauca are our lowest operating cost deals. They're generally prolific, fresh production. So our original initial operating cost is much lower, roughly around half of what we are corporately. So as we bring those volumes on, we do expect those volumes to be very efficient from an OPEX perspective.

Original initial operating cost is much lower roughly around half of what we are corporately. So as we bring those volumes on we do expect those volumes to be very efficient from an opex perspective.

That's great. Thank you.

Speaker 1: As a reminder to ask a question press star one on your telephone keypad. Your next question is from the line of Kevin Fiske with Scotiabank.

As a reminder to ask a question Chris Star one telephone keypad.

Your next question is from the line of Kevin desk with Scotiabank.

Speaker 7: Thanks, I just have 2 questions. The 1st, which is, if you can give us an update on the political and security situation, and then, if you're able to give us any initial thoughts on what the capex and production look like next year, including what sort of areas you would like to focus the spending on and where production is.

Thanks, I just have two questions. The first which is if you can give us an update on the political and security situation.

And then if youre able to give us any initial thoughts on what the Capex and production will look like next year.

Including what sort of areas you would like to focus the spending on where production growth will come.

Thanks.

Speaker 2: Great. Thanks, Kevin. I'll let Imad talk about the overall macro political situation first, and then I'll tell you about the plan for next year.

Great. Thanks.

Thanks, Kevin I'll, let Mike talk about the overall macro political situation first and then I'll.

Ill tell you about the plan for next year.

Thank you Mike.

Speaker 3: I mean, overall, we are currently fully operational. We have had minimal social challenges, I would say.

Overall, we are.

Currently fully operational we have had minimal social challenges I would say.

Speaker 3: so far this second half of 2023. There was regional elections at the end of October . We didn't see any adverse

So far the second half of 2023.

There was the regional elections at the end of the ox.

Silver, we didn't see any adverse effects.

Speaker 3: Now, we are in general very well aligned with the government in terms of its desire to bring gas to the country through the MOU or in terms of getting the most out of the fields we have through exploitation and technology in our strategy. So we've seen very good support, no issues in terms of getting permitting, and we have the right to do so.

Now.

We are in general very well aligned with the government in terms of.

His desire to bring guests of the countries towards the Mou or in terms of getting the most out of the field as we have through exploration and technology in our strategy. So we've seen very good support no issues in terms of getting permitting and.

<unk>.

We have the running room only mean.

Speaker 3: That being said, I'd say in Colombia, there could be volatility sometimes. So I can never guarantee that next week would be perfect. And but as a company, we demonstrate our ability over long term to be successful. And because we create these win-wins with the communities and the area to operate and we take steps to proactively work with our stakeholders to ensure.

That being said I would say Columbia, there could be volatility, sometimes so I can never guarantee that next week would be perfect.

But as a company with demonstrates our ability over the long term to be successful and because we create these with linzess the communities the Arab Gulf rate.

And we take steps to proactively work with our stakeholders.

Ensure that.

Kevin.

Speaker 2: Kevin, with regards to next year, you know, we'll be providing an update in early in the new year, how our plans for 2024 are, and certainly, you know, when we look at our three year plan, we'll be tweaking that and updating that data also. One thing I want to confirm is our strategy remains the same.

With regards to next year.

We will be providing an update.

Early in the new year.

Our plan for 2024 are and certainly when we look at our three year plan will be tweaking that and updating that data also one thing I want to confirm as our strategy remains the same.

Speaker 2: We plan to continue to invest.

We plan to continue to invest in growth areas, such as northern channels a route.

Speaker 2: in growth areas such as northern Llanos, Arawka. We'll continue with some of the programs that we've seen success for this year, such as the exploitation in small e in the Kastaneri, southern Llanos region. And we'll have a diversified program across the lower mag and even in the middle mag next year.

I'll continue with some of the programs that we've seen success for this year such as the exploitation and small Lee in the casting area Southern Llanos region, and we will have a diversified program across lower Meg and even in the middle Mag next year now some of the things where we've invested considerably over the last two years.

Speaker 2: Now, some of the things where we've invested considerably over the last two years, such as the Cabo Serro water flood, the Arauca farm end,

Such as the Cabot's Darrow waterflood.

<unk> farm and really leads us to lower Capex and higher more efficient production as we move into 2024. So I think those key elements remain the same higher production and lower capex generate higher free cash flow next year.

Speaker 2: really leads us to lower capex and higher, more efficient production as we move into 2024. So I think those key elements remain the same, higher production and lower capex generating higher free cash flow next year.

Excellent. Thanks, very much that's it for me.

Your next question is from the line of <unk>.

Speaker 8: Your next question is from the line of Conrad Bresnitsky with Peters and Company. Hi, everyone. Thanks for taking my questions. I have two. The first one's just around shareholder returns and how are you

At present, <unk> with Peters <unk> company.

Hi, everyone. Thanks for taking my questions I have two the first one is just around shareholder returns. How are you thinking about that changing going into 2024 and then the second question. I had is just around kind of a stereo maybe you can just highlight to us some of the wins that we've seen from the waterflood and then how you think polymer and rate change.

That going forward.

Speaker 2: Great. I'll start off with the shareholder returns. I'll pass that to Eric. As we see shareholder returns going forward, I think it's really three prong. You know, we have a healthy dividend, the dollar 50 a share. We have a share buyback program that's, you know, been very consistent. And I think probably industry leading, if you look at the number of shares that have been repurchased over the last three years. And I think the third element is actually just growing the business.

Great I'll start off with the shareholder returns I'll pass over to Eric.

We see shareholder returns going forward I think thats really three pronged.

We have a healthy dividend to $1 50, a share we have a share buyback program.

Thats been very consistent and I think probably industry, leading if you look at the number of shares had been repurchased over the last three years.

And I think the third element is actually just growing the business and I think that's our competitive advantage in our peer group have the ability to generate free cash flow to do all three things. So as we look into shareholder returns as we go forward.

Speaker 2: And I think that's our competitive advantage in our peer group of the ability to generate free cashflow to do all three things. So as we look into shareholder returns, as we go forward, you know, we'd like to continue on all those three prongs as we go forward.

We'd like to continue on all of those three prongs as we go forward.

Eric.

Thanks, Mike.

Speaker 4: Thanks, Mike. Conrad, you know, Cabo Stero has been a key area for us, and it's kind of a block that keeps on giving to us.

Conrad <unk> has been a key area for us and it's kind of a block that the Keystone giving to us.

Speaker 4: Here we are 10 plus years after we started operating there, setting new peak records from the block. On the backs of multiple different opportunities, we mentioned the discovery, the recent discovery. So we're finding additional opportunities where they're seismic. The water flood is starting to ramp up. We are seeing positive oil production responses. And optimization of that water flood over the long term will steady the decline and maximize reserves recovery.

Here, we are 10 plus years. After we started operating there set a new peak records from the block on the on the backs of multiple different opportunities you mentioned the discovery.

The recent discoveries so we're finding additional opportunities with the seismic the waterflood I starting to ramp up we are seeing positive oil production responses and optimization optimization about waterflood over the long term, we will study the decline to maximize reserves recovery.

Speaker 4: And then finally, when we talk about polymer, what does polymer do for us?

And then finally, when we talk about all of them are what is polymer do for us.

Speaker 4: It takes us to that next level. It pushes a product into the ground that has a similar characteristic to the oil in the ground. So it's more efficient at pushing the oil out. And it has two real impacts.

Makes us to that next level.

Pushes a product into the ground that has a similar characteristic to the oil in the ground. So it's more efficient.

<unk> the oil out and it has two real impacts are the first being you can recover the oil much more quickly more efficiently using this technology and ultimately a higher recovery factor. So we're on track with our pilot this year and are excited to see those results those results and the possible application on <unk>.

Speaker 4: The first being you can recover the oil much more quickly, more efficiently using this technology and ultimately a higher recovery factor.

Speaker 4: So we're on track with that pilot this year and are excited to see those results and the possible application on the wider.

Wider scale.

Speaker 3: Can I add something here, Eric, I mean, you're.

Okay got it can I add something here Eric.

Hello.

Speaker 3: It's not only Capybara, Capybara is our lab, and as Eric said, right, so we can apply it in other places, most notably in Yemen.

It's not on the type of therapy are a thorough as our lab.

Eric said.

Right. So we can apply to other places most notably 34.

Yes, Thanks, Mike got it thanks.

Speaker 8: Yep, thanks a lot. Got it. Thanks. Just maybe to that point, when do you...

To that point.

When do you expect to see a response is it six to eight months is a typical response you would see in these types of reservoirs.

Then would you look at maybe moving to a larger scale development or would that be 'twenty four 'twenty five timeframe late 'twenty four 'twenty five.

Those those those are reasonable estimates I mean, the first part will be.

Speaker 4: Those are reasonable estimates. I mean, the first part will be monitoring injection performance. How well is it displaced into the reservoir? And then, as you said, probably six plus months to see some some response and end of year to have some decisions on on an expansion either to a larger pilot or more full scale type development.

Monitoring injection performance how was the displacement of the reservoir and then as you said, probably six plus months to see some some response and end of year to have some decisions on an unexpected engine either to a larger pilot or more full scale type development.

Great. Thanks, that's all I had.

As a reminder to ask a question press star one on your telephone keypad.

Speaker 1: As a reminder to ask a question, press star one on your telephone keypad.

Speaker 1: Your next question is from a line of Tom James with Glendic Associates Limited.

Our next question is from the line of Tom James with Greenwich Associates Limited.

Speaker 9: Yes, right. Thank you very much for kicking my call.

Yes, hi, Thank you very much for taking my call.

Speaker 9: You're drilling very deep wells in Araka in number 15 and number 8. Obviously, you really expect very high impact. Can you give us any more color of what your expectations would be in terms of reserves and production?

Sure.

Deep drilling very deep wells in Iraq, and number 15 and number eight obviously you really expect very high impact can you give us any more color of what your expectations would be in terms of.

Reserves and production.

Okay.

Okay. Thanks, Tom for the question I'll pass that to Eric.

Speaker 2: Thanks, Tom, for the question. I'll pass that to Eric.

Speaker 4: Yeah, thanks, Tom. I mean, we base our expectations on historical performance from some of the wells in Yeralka area that had capability easily of three to 5,000 barrels a day. So it's not completely blind. We have an understanding of the reservoir distribution there. As far as commenting on reserves and potential, obviously we see a lot of potential there. We have about three or four zones that we're mainly going after with all of these wells. So it is multi-zone potential.

Yeah. Thanks, Tom I mean, we base our expectations on the historical performance from some of the wells in your area of that capability easily a three to 5000 barrels a day. So it's not completely blind we have an understanding of the reservoir distribution there as.

As far as commenting on reserves and potential obviously, we see a lot of potential there we have about three or four zones that we're mailing going after with all of these wells. So it is multi zone potential.

Speaker 4: and depending on how those own stack and which ones are successful, there is a very large prize there. But so that's what we're looking at as far as well costs.

And depending on how those own stack and which was the successful either there is a very large prize there.

But.

That's what we're looking at as far as well costs, we had a lot of challenges on the first well we learned a lot from the first well with social challenges that have disrupted us we're setting we're drilling our pacesetter wallets as we speak that.

Speaker 4: You know, we had a lot of challenges in the first while. We learned a lot from the first while. We had social challenges that disrupted us. We're setting, we're drilling a pay set or while as we speak. That is ahead of schedule and maybe the most cost efficient while I've drilled in the area as we go to our final casing stream. So we're excited on two fronts, the opportunity, the multi-zone, and the cost improvements and performance improvements we've seen drilling as well.

That is ahead of schedule in and may be the most cost efficient well ever drilled in the area as we go to a final casing stream. So we're excited on two fronts the opportunity the multi zone and the cost improvements and performance improvements we've seen drilling these wells.

Speaker 9: So number eight, I guess you're expecting the same depth as number 15.

So number eight I guess youre expecting the same depth as number 15.

Speaker 4: It's slightly shallower, but essentially yes. It's a 20,000 foot type well in line with the rock.

It's slightly shallower, but essentially yes, it's a 20000 foot type well.

In line with their obligations.

Speaker 10: When do you expect to get the results from number 15?

When do you expect to get the results from a number of 15.

We will be doing.

Speaker 4: I will be doing selective testing or multi-zone testing here in the next 30 to 45 days. There are numerous zones to test. So after that time we'll have a more wholesome understanding of the well. And with regard to our 8 we expect to have logs and some preliminary characterization before the end of this year.

Selective testing or multi zone testing here in the next 30 to 45 days.

There are numerous zones to test. So after that time will have a more fulsome understanding of the well and with regard to <unk>, we expect to have logs and and some preliminary characterization before the end of this year.

Thank you very much.

Thank you.

Speaker 1: At this time, there are no further questions. I will now hand the call back over to Mike Crompton for any closing remarks.

At this time there are no further questions I will now hand, the call back over to Mike <unk> for any closing remarks.

Thank you very much for joining us today, we appreciate your feedback and feel free to contact us if you have any further questions.

Have a great day.

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

Speaker 1: This concludes today's call. Thank you for joining. You may now disconnect your line.

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