Q4 2024 Africa Oil Corp Earnings Call
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Sonia: Hello, everyone. My name is Sonia and I will be your conference operator today.
Sonia: At this time I would like to welcome everyone to the Africa oil called fourth quarter 'twenty to 'twenty four results presentation all.
Sonia: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session.
Sonia: We'd like to ask a question. During this time. Please press star one one on your telephone keypad, if you'd like to withdraw your question. Please press star one again.
Sonia: Please note that at anytime participants on the webcast can submit questions using the Q&A box on the webcast interface. Please note that this event is being recorded.
Sonia: Recording will be available for playback on the company's website.
Shahin: I suppose the meeting to Mr. Shahin, Amini Africa oils Investor Relations manager.
Sonia: Please go ahead Mr <unk>.
Speaker Change: Thank you operator.
Roger Tucker: We hope a management. Thank you for joining us today for our 2020 full results presentation on the call today, we have president and Chief Executive Officer, Roger Tucker, Our Chief Financial Officer, Pascal Nicola Chief.
Speaker Change: Chief commercial officer all of it quick.
Speaker Change: There will be a presentation for around 20 minutes before we go into the Q&A session.
Speaker Change: First 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.
Speaker Change: I've been fully described in the company's continuous disclosure reports.
Speaker Change: The information discussed is made as of today's date and time and Africa all assumes.
No obligation to update or revise this information to reflect new events or circumstances, except as required by law. The companies complete financial statements and related MD&A are available on the company's website and on SEDAR.
Jay we are ready for you. Please go ahead, Sir thank you very much.
Speaker Change: 'twenty 'twenty four it was a busy year for our company as we delivered a number of key strategic transactions to retain our growth opportunities streamline asset ownership and derisk our balance sheet. They just together with prime is robust performance, having to live with production and cash flows in line with our management Guy.
Speaker Change: It's enabled us to extend almost 68 million U S dollars to our shareholders through the base dividend policy and share buybacks. This is the largest annual return to Africa are all shareholders since our first dividend distribution in March 2022.
Speaker Change: Another notable achievement was the successful completion of the thickness appraisal program with the project moving forward into development planning stage I'm very encouraged by the operators positive updates as we look forward to the project's final investment decision by the end of the first half of 2026 and 12.
Speaker Change: Let me say you've been is coming on stream and then maybe as first producing oil sales.
This is a key growth asset for Africa oil and it is crucially. It is that it is funded too.
Speaker Change: First of all through the innovative farmed down agreement between our invested company impact until trial images. This deal also covers all of impacts exploration and appraisal expenditures through the first commercial production from the U S.
Speaker Change: We also successfully advanced our key strategic objectives.
Speaker Change: <unk>, our rights and influence or impact.
Speaker Change: Requiring additional shares and increasing our stake and impacts to 39, 5%. These deals were crucial enablers for us to reach the agreement with BCG to consolidate all the prime shareholding in Africa or into Africa oil and that company is now on the cusp of a truly transfer.
Speaker Change: Four months, it's been value accretive event next slide.
Speaker Change: And I'm pleased to report that we are very close to completing this transaction, which is expected to be on or about the second now.
Speaker Change: This will be a strategic milestone for the company as we will double our reserves and production.
Speaker Change: We'll take direct control of prime to cash flows and balance sheet.
Speaker Change: We will be in a stronger position to implement a steady and predictable shareholder returns and to pursue new growth opportunities focused on producing assets in a disciplined manner.
Speaker Change: Our intention under the new capital allocation framework is to distribute an annual base dividend of at least 100 million U S dollars.
Speaker Change: Subject to the customary consents and board approval is to declare the first quarterly dividend distribution of 25 million U S dollars on completion of the deal.
Speaker Change: Recall that we intend to distribute 50% of free excess free cash flows led to the base dividend and the supplementary dividends <unk> share buybacks next slide.
Speaker Change: 2024 was a good year in terms of production as the assets achieved average daily rates within our full year guidance.
Speaker Change: Reflecting robust operations, excluding allowance for funds maintenance problems leasing.
Speaker Change: These included.
Speaker Change: So there's a full field shut down from mid March to mid April.
Speaker Change: Stephen sorry, the new IP wells drilled and completed its achieved better than expected effort average rates and helped to offset natural declines.
Speaker Change: In total three new producers and one new injectable successfully tied back to the F.
Speaker Change: So in 2020 for a gene outperformed expectations, thanks to high production efficiency and successful well interventions during Q3, and Q4 and I quote Army performed in line with plan we.
Speaker Change: We did stop.
Planned maintenance on one compressor at the end of Q4, which will be carried over into Q1 2025 overall performance remains strong all in.
Speaker Change: All these results highlight the resilience of our portfolio and show them, how long is going well interventions and helping helping to sustain production.
Speaker Change: We'll share more details on our 2025 production outlook once the prime deal is finalized with that I'll hand things over to Pascal for the financial highlights next slide.
Pascal: Thanks sure Jeff in question 24, Prime achieved an average realized price of $84 six startup apparel compared to him that legislative branch of $82 $7 per barrel.
Pascal: We did have allocated lifting in Q4 relative.
Pascal: Deferred to Q1 2025, resulting in allowance.
Pascal: Sure.
Pascal: <unk> be unwound in Q1, 2025, we up to five cargoes to yield solid exposure.
For the full year of prime mixed at nine cargoes start selling in probably 90 million barrels.
Pascal: Compared to assess in lifting in 2023.
Pascal: Prime calling marketing enterprise risk management and continuous to rely mostly on kilowatt SaaS contract.
Pascal: The trigger price mechanism.
Pascal: Prime is complementing your strategy with hedging instruments, such as productions and Carlos.
Pascal: For instance, in the third quarter 2024, Prime pair chest and Asian output for 1 million barrels at a strike price of $75 per barrel for the period between January.
Pascal: January and February 1st of March 2025.
Pascal: Sorry, the avalanche brands, but price over this period is below $75 per barrel, primarily be compensated in cash for the difference between the strike price.
Pascal: During the third quarter of 2024 on Prime also entered into premium Asian dated Brent color transaction for 1 million barrel of oil.
Pascal: We have strong realized prices in the west structure at least on schedule, we are well positioned to optimize sales and cash flow in 2025.
Speaker Change: Next slide.
Pascal: In 2024.
Pascal: Recorded a net loss attributed attributable to common shareholders of $279 $1 million, which is a decrease from the net income of $87 1 million recorded in 2023.
Pascal: The net loss is primarily comprised of income from the company's investments in prime.
Pascal: 226 million.
Pascal: Which is offset by the losses from the Companys investment in associates.
Pascal: $38 7 million.
Pascal: And a noncash impairment loss from the company's investment in Prime for 400, such as $6 $7 million.
Pascal: Noncash impairment due to the fair value of the existing 50% shareholding in crime being captured agent based on the implied value of the portfolio. Your organization calculated using the number of shares to be issued to consolidate the other 50% shareholder over prime and I think our share price at the end of 'twenty 'twenty four.
Pascal: Important to reiterate that's a noncash impairment.
Pascal: Can be a further loss or gain on the completion date of the prime real based on the Companys share price and FX rates.
Pascal: Now looking at to try and financial results.
Pascal: A table that primary called Eden next to Africa was 50% shareholding and EBITDAX of approximately $242 million during the fourth quarter of 2024, which included the recognition of a $164 million gain from prime securitization agreement.
Pascal: <unk> made a provision for the full cash payment is received from the JV starting to reflect the mechanic Zimbra channel through.
Pascal: Which any formal settlement payments could offset the security deposits.
Primarily this provision for the cash payment in December 2024 to reflect the absence of a comprehensive resolution of logs all unit parties regarding participation and Jack Benny Shield.
Pascal: Hi, Joe has already stated that prime achieve working interests in entitlement collection rates within the management guidance ranges.
Im also pleased to report that Prime also achieved cash flow from operations before working capital adjustments and interest payments of approximately $268 million.
Pascal: That fell within our <unk> guidance of 2200 $60 million to $290 million.
Pascal: Next slide.
Pascal: We ended the transit time control, we had a cash balance of $61 4 million compared to year end 2020 free cash of $232 million.
Pascal: During the year I think I will receive dividends from prime call. It total receipt of such as $6 million.
Pascal: The menu is about cash flow and total shareholder return of approximately $68 million.
Pascal: Annual return sofa, and an additional investment of about $889 million and impact to enhance our influenza and called sort of our core strategic assets and value driver and an Olympian Orange basin containing the Venus slight old fields.
Pascal: But most importantly, as we look forward to the compression of the prime deal.
Pascal: Right at the combined I forgot on 100% of prime cash balance as of year end 2024, the boats, it's about $461 million.
Pascal: It does not account for private Chicago was already lifted this year such.
Pascal: Such a 2 million dollar dividends that we received a loan back earlier this year.
Pascal: So looking ahead, we can be very pleased with our substantial liquidity position, which grants us enhanced financial strength with greater flexibility to effectively support our strategic priorities and drive sustainable growth.
Roger Tucker: Now on your answer Roger for the next slides.
Roger Tucker: Yesterday, we published our year end 2024 statements and reserves.
Roger Tucker: <unk>, one <unk> and CPE reserve replacement ratios of 101% and 77% respectively.
Roger Tucker: Pro forma <unk> reserves, so I'm, 100% of Prime is approximately 102 million barrels of oil equivalent on the working interest basis and.
Roger Tucker: 116 million barrels of oil equivalent on the mentioned entitlement basis as of end of 2020 for.
Roger Tucker: This provides the enlarged Africa oil with full ownership with prime with long life assets and high netback production.
Roger Tucker: These reserves continue to be liquids rich with 78% in the medium to light gravity crude oil category.
Roger Tucker: Furthermore, considering that 60% of the two P working interest reserves into proven or in the proven category. We continue to benefit from our low risk reserve base from reservoirs that are technically well understood and monetize through high quality and well maintained Fpl's service we.
Speaker Change: We do benefit from low lifting costs, which averaged approximately $10 per barrel of oil equivalent in 2024 supportive fiscal regimes and as Pascal has already presented premium Brent pricing.
Speaker Change: Independent valuation of the pro forma reserves base as more than $2 billion U S dollars.
Speaker Change: The next slide.
Speaker Change: Now, let's turn to 2025 and our outlook for these Nigerian assets. The focus of 2025 drilling campaign is on infill wells on the <unk> energy in that fields with a plan for up to five infill wells and one high impact near field exploration well.
Speaker Change: Targeting about 122 million barrels of oil on a gross sales basis.
Speaker Change: <unk>. This is EMEA field exploration play a discovery would benefit from the existing VSO and can present and Kevin presents a very attractive development opportunity is a subsea tie back further infill drilling on Expo is expected during the second half of 2025, and that's a benefit of four.
Speaker Change: Seismic data requirements during 2024.
Speaker Change: Similarly drilling on it gena.
Speaker Change: <unk> bye valuable insights from the for the M. Two surveys completed in 2024.
Speaker Change: <unk> is set to begin in the first quarter correct bombing at the end of fourth quarter 2020 for the operators started a planned maintenance program in one of the three gas compressors that has continued into 2025 with full overhaul. The remaining compressor is scheduled over the next.
Speaker Change: <unk> two years to sustain high uptime.
Speaker Change: At the same time, we are advancing on 40 seismic data processing. This will shape AG Bombies 2026 drilling campaign, which remains on track alongside a full field maintenance shutdown planned for fourth quarter 2025.
Speaker Change: Finally, a quick update on tray away.
Speaker Change: So the prior way discovery that lives at the north of the <unk> complex and as a subsea tieback candidate to be Gena Fps. The focus now is on cost optimization and field development studies using for the.
Speaker Change: At baseline seismic data from the second quarter of 2024.
Speaker Change: Aston efforts are key as we look forward.
Speaker Change: So the project's final investment decision now.
Speaker Change: Now as we are very close to completing the prime deal. We have made the decision to wait and present, the consolidated 2025 management guidance, but the enlarged company on or after the completion I'll now hand over to OLED for a discussion on the outlook for our Orange basin assets.
Speaker Change: Thank you Roger we're now going to turn on slide 12 for the Orange based and I'm talking about Namibia, while we have seen positive progress around the Venus development.
Speaker Change: To recap Leanness as a world class deepwater like oil discovery that was made in 2022 and subsequently appraised in 2023 and 2024 through three further wells and flow tests.
Speaker Change: Most recently, we're encouraged by the operators public statements about the commerciality of the fields on the timeline towards final investment decision, which is expected by the end of the first half of 2026, although we understand the JV stretch target is still focused on the end of this year.
As opposed to top Lng's communication first venous ipso is being designed with a sustained plateau production rates of 150000 barrels of oil per day.
Speaker Change: <unk> topside scaling plateau rate is ultimately driven by the forecast associated gas production on the reinjection of back half into the reservoir.
Speaker Change: Stepping beyond Peanuts exploration activity continues in the water area underpinned by two recent <unk> seismic surveys that were acquired during 2024.
Speaker Change: As already communicated my rule of Onex is drilling to the south of Venus oilfield targeting and large deepwater fan system very analogous to Venus itself.
Speaker Change: <unk> is also communicated the plan to continue with further exploration drilling across the license is through 2025.
Speaker Change: So overall and then maybe how we expect to see significant progress on two fronts. Both the maturation of the Venus development and in parallel extensive testing and further large prospects in the area.
Speaker Change: In terms of our commercial position, we of course hold on and maybe an interest sort of impact oil and gas and its ownership position remains a key value driver for the company.
Speaker Change: During 2024, we further strengthened our shareholding position and impact in <unk>.
Speaker Change: <unk> our stake from 31, 1% to 39, 5% through two investments for a total investment of approximately $89 million.
Speaker Change: <unk> deepens, our exposure to be honest on the broader exploration upside and enhances our influence and control over our core asset as it remind that impacts costs across exploration appraisal and development are fully carried across the two licenses delivering exposure to future cash flows and material results upside at no upfront cost.
Speaker Change: So we're not going to stay in the Orange basin and move a bit further south on slide 13.
So, let's look at Africa oils operations in blocks <unk>, a physician owned directly by African oil and an exciting area and the Orange basin position southeast of the Venus discovery on the <unk> to the north.
Speaker Change: The block is covered and high quality extensive three D seismic and this has allowed the team to identify several promising exploration prospects that have been matured to a drill ready technical statements.
Speaker Change: Our key commercial milestone came in August 2024, when we finalize the farm out agreement with total energies in Qatar LNG. This transaction secured up to $47 million in value, including cash upfront on an exploration drilling carry.
Speaker Change: Then in January 2025, with the exploration funding in place, we deepened our position by acquiring an additional 1% interest from Amsterdam, a subsidiary of Eco Atlantic.
Bringing all stake up to 18%.
Speaker Change: On the regulatory side, the South African Department of mineral resources, and energy granted environmental authorization for up to five exploration wells in September 2024, which was a major step forward.
Speaker Change: Working our way through the customary appeals processing country.
Speaker Change: The maturation of farm down strategy has mitigated our financial exposure to exploration spend and leaves us with significant upside with an experienced operator and total energies. The stage is set for meaningful drilling activity in Africa oil is in a strong position to test the potential of <unk>.
Speaker Change: In line with total LNG as public statements. We expect the first exploration on this block to be drilled during 2026 and given all material direct interest a commercial discovery on the block could be transformational for the company.
Speaker Change: We will not change focus and move to slide 14 to discuss the companys value proposition and capital allocation framework.
Speaker Change: So on this slide we present the value proposition for the enlarged Africa oil. So that is post completion of the prime consolidation.
Speaker Change: I think the first point to note is the simplification of the business with core driven by offshore Nigeria production and as mentioned by Pascal a significant cash balance that results in a net debt of around $250 million.
Speaker Change: Just for reference Nigeria evaluation uses a 12, 5% discount rate and that these volumes are estimated for our year end 2024 statement of results.
Speaker Change: Yeah.
Speaker Change: So with our total cash balance of just under $500 million.
Speaker Change: Prime debt, which will transfer to Africa oil at completion of $750 million.
Speaker Change: We see a corn with Nigeria of around one point just under one 4 billion.
Speaker Change: The key point to focus on here is that at current trading levels of our share price that somewhere around 35% discount. So that what we believe is a very disciplined view of Cora in AAV.
Speaker Change: If we look at pro forma market cap on completion, we issue for this case no change in share price, we simply take today's share price multiplied by the new share count.
Speaker Change: We have a market cap of $900 million.
Speaker Change: As we look beyond coal production, we see future value in de risking of them, maybe as described the future Orange based on modeling <unk> Africa, and in Equatorial Guinea and exploration potential too.
Speaker Change: We see these as low cost while net zero cost options.
Speaker Change: Needless to say, we believe the current valuation does not reflect fair value. Following prime completion, we will be well positioned to unlock this discount leveraging a strong net cash position material reserves high margin production and fully current exposure to high value catalysts that can drive further upside.
Speaker Change: I'll now hand back to Roger to talk about capital allocation. Thanks Oliver.
Speaker Change: So after completing the prime consolidation we will implement.
Speaker Change: What we've actually shown you over the last several months since.
Speaker Change: Signing the deal, but we will implement our new capital allocation framework, which is designed around prudent balance sheet management.
Speaker Change: Sustainable leverage in our commitment to shareholder returns.
Speaker Change: Two key criteria for prudent balance sheet management, and maintaining a minimum cash balance of $150 million and a net debt to EBITDA ratio of no more than one times.
As already presented we are significantly increasing our base dividend policy, which is a clear and confident message on our outlook for the business and its free cash flow generation capacity over the coming years also as we have already communicated we are committed to supplementary returns which are 50%.
Speaker Change: Free cash flows net of the base dividend and this will be used for special dividends and share buybacks. This reiterates I'll go to strike the right balance between shareholder returns and continuing to deliver growth as part of our tribe for total shareholder return model of.
Speaker Change: Of course, we have the benefits of funded growth opportunities such as the Venus project and with the streamline business organization through the prime consolidation, which is supported by our strong liquidity and balance sheet strength. We are confident that we are in a very strong position.
Speaker Change: Pursue new business opportunities outside the existing portfolio focused on producing cash flow generating assets. We will do this exercising strict strategic financial and operation operational criteria.
Speaker Change: And then therefore to recap on the last slide.
Speaker Change: We can look back I think because of the business and on 2024 is a very busy and successful year for the company.
Speaker Change: We have concluded multiple strategic deals and investments as well as delivered on our shareholder return commitments. Our full year 2020 for capital return of $68 million is the highest in our corporate history and they were getting stacked to beat this in 2025 with the enlarge.
Speaker Change: <unk> annual dividend policy of at least $100 million.
Speaker Change: With a strong liquidity high netback production and funded organic growth opportunities, we often a balanced business model between shareholder returns and continuing to deliver growth. We have strong pillars to our business and I am confident that we will.
Speaker Change: <unk> positioned in the independent E&P sector to take advantage of the consolidation opportunities that we will.
Speaker Change: And believe we are coming our way and I will reiterate that we will do so.
Speaker Change: Adhering to strict strategic operational and financial criteria.
Speaker Change: We will very much for your attention and let's open up to the Q&A.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone keypad and wait for your name.
Speaker Change: <unk> be announced.
Speaker Change: Your question. Please press star one again, if you have any questions on the webcast. Please type it into the box and click submit.
Speaker Change: We will now take our first question.
Speaker Change: These standby.
Speaker Change: The first question comes from Harrison luck from Stifel. Please go ahead. Your line is now open.
Harrison Luck: Hi, Thanks for taking my question today I.
Speaker Change: I appreciate you've shared the new capital allocation framework for post the consolidation, but if we actually look at the numbers here you can have a pretty healthy cash balance.
Harrison Luck: Wondering if you could talk around your positive cash balance I appreciate it.
Harrison Luck: Minimum liquidity, you're talking about say any color that would be extremely helpful.
Harrison Luck: Yeah.
Harrison Luck: Yes.
Harrison Luck: Actually we add your colleague.
Harrison Luck: Earlier today <unk>.
Harrison Luck: This is actually the same same question.
Harrison Luck: What I've said is that it's very very good to have a positive cash balance of $500 million much better than having a negative cash balance of 500.
Harrison Luck: It is obviously significant and we have a series of.
Harrison Luck: Options with this we didn't have debt repayment.
Harrison Luck: Opportunities within the existing existing portfolio, we have announced.
Harrison Luck: We will be starting the $100 million per annum.
Harrison Luck: Dividend stream and also implicit in that is that we're going to be paying that on a quarterly quarterly basis.
Harrison Luck: Obviously as we get towards the end of the at the end of the year, we do have the potential to.
Harrison Luck: Two.
Harrison Luck: Even further dividends or.
Harrison Luck: Potential share buyback, but we are.
Harrison Luck: In the midst of looking at other potential opportunities, which we will potentially meet.
Harrison Luck: The cash flow nothing is.
Harrison Luck: Is decided.
Harrison Luck: We are constantly looking at the criteria that we will use.
Harrison Luck: Both financial and operational to deploy that capital.
Harrison Luck: Additional returns to existing shareholders.
Harrison Luck: <unk>.
Harrison Luck: Acquiring other assets.
Speaker Change: Okay. That's extremely helpful. I mean, that's all from myself say, thanks, a lot guys.
Harrison Luck: Thank you.
Speaker Change: I would now like to hand back to the room for any questions on the webcast.
Speaker Change: Thank you operator.
Speaker Change: We do have a <unk>.
Speaker Change: Number of E mail questions.
Speaker Change: First of all to your question is strong.
Speaker Change: As far back Unfortunately, couldnt joined because of conflicts.
Speaker Change: So.
Speaker Change: Shareholder capital returns truly just wants to hear more from us more color on our thoughts around cash dividends versus buybacks.
Speaker Change: Any thoughts around that.
Speaker Change: Well, what we are committing to is the <unk>.
Speaker Change: Dividend.
Speaker Change: Street and Youll see if you look at the slide on the capital allocation.
Speaker Change: <unk>.
Speaker Change: We do have the auction.
Yes.
Speaker Change: Paying 50% of any excess free cash flow.
Speaker Change: Dividend or a buyback.
Speaker Change: Obviously at the present time.
Speaker Change: We think that the share price and that differential valuation.
Speaker Change: Share price a buyback could be attractive.
Speaker Change: But we will be reviewing that with the new board continuously as we go through.
Speaker Change: As we go through the year, but we are committing to a dividend stream this will be a dividend.
Speaker Change: And to see which is built the flexibility within it.
Speaker Change: Buyback components.
Speaker Change: When as and when required but that will be.
Speaker Change: Decided by the new board when that becomes effective.
Speaker Change: President.
Speaker Change: Statements.
Speaker Change: Well look I mean, we've over the last three years.
Well, our first capsule with Sam was the base dividend policy that was introduced in March 2020.
Since then we've returned more than $160 million.
Speaker Change: And some buybacks.
Speaker Change: So very important source of differentials, so clearly dividends at very confidence message.
Speaker Change: Some cash flow.
Speaker Change: After the robustness of the business and almost think that buybacks are a very important role in terms of allocating capital if you believe that.
Speaker Change: Your share price is at a significant discount to the underlying value. So that's baked into some different messages.
Speaker Change: But we have.
Speaker Change: Plagued both <unk>.
Speaker Change: Opportunistically.
Speaker Change: If I may move on data.
Speaker Change: Couple of questions.
Speaker Change: <unk> production guidance I think it's important for us to reiterate that we are very very close to completing the sale.
Speaker Change: Yes.
Speaker Change: Consolidation and we will give you a consolidated management guidance for 2020 on that point, So do bear with us, but said we will give you.
Speaker Change: Viewed in juice cost.
Speaker Change: The next question Theres actually if I may a couple on the Equatorial Guinea and about the expanded.
Speaker Change: The extension of the boundaries on Das and what is the plan.
Speaker Change: For disabled so our aspirations for this year Roger.
Speaker Change: So what was it.
Speaker Change: Quickly just a confirmation that the boundary of EG Festival has been expanded it has been.
Speaker Change: So there is a.
Speaker Change: There is the prospect, which was always the bulk of it was on our <unk>.
Speaker Change: Previous foundry.
Speaker Change: Foundry, which is called <unk> and that extended into the area to the north and now have that.
Speaker Change: Areas, which means now that hole.
Speaker Change: Mistake is on.
Speaker Change: Blocks has been.
Speaker Change: Allocated to us okay.
Speaker Change: And the next one was what is the outlook for this year, Oxford Lane in terms of the founder.
Speaker Change: Yes. Thanks.
Speaker Change: So we've got two positions in Equatorial Guinea, which are actually a very different nature. So as Brian just mentioned EG 31 is effectively.
Speaker Change: Discovery undeveloped very.
Speaker Change: Close to the existing EG LNG facility so.
Speaker Change: The development concept is a fairly short cycle low capex tie back to tobacco.
Speaker Change: <unk>.
Speaker Change: The second position again, it's different.
Speaker Change: Block <unk>, which is our board's kind of deepwater large Sam fan, so kind of high risk high reward exploration.
Speaker Change: We have a position of 80% in each of those and then the state as a 20% position.
Speaker Change: So that's what's critical is to bring partners in.
Speaker Change: And threw upon it to attract capital to de risk the financial investment from a from our position.
Roger Tucker: So look that's a very active process. This year, there's been a lot of new data that's been some critical milestones as Roger said expanding the licensed brand around Ms seeks to capture the full prospect.
Roger Tucker: A significant technical de risking.
Roger Tucker: That is all in good shape and so we will be through the summer period, Yes spring summer.
Roger Tucker: Seeking to attract.
Roger Tucker: <unk> for that.
Roger Tucker: Final thing to say on that is just to tie that back to our capital allocation framework and again.
Roger Tucker: Why do we see king from foreign partners.
Roger Tucker: <unk> partners that bring funding.
Roger Tucker: Again, given the cash balance because we got from that ourselves, it's about capital discipline and risk allocation. So we would like to de risk. It financially ahead of any further activity.
Speaker Change: Thank you very much Oliver and Theres, a question, which is more to do with such the outlook for M&A activity and the question is do you expect consolidations amongst some of the larger international oil companies to yield acquisition opportunities as they rationalize portfolios are you seeing any new entrants in the areas of interest of increased competition in the M&A market.
Roger Tucker: Yes.
Roger Tucker: Also joining us yes look I think so good question. So look I think as the cycle goes here.
There's been a lot of golf course, M&A in the U S. Onshore business has been M&A in the international E&P business kind of big companies midsize companies right as you move down to the space that we're in.
Roger Tucker: It hasn't been so much for various reasons. So I think our view is that there is a natural consolidation of the say sub $5 billion type type space here right of companies that could come together and ultimately create better vehicles. So that investors. So there's a big opportunity generally in the market for that.
Roger Tucker: I think the flip side, specifically on the asset point is at.
Of course the.
Roger Tucker: <unk> may be fast right now but.
Roger Tucker: Generally the bigger companies are going longer on hydrocarbon and therefore, they are not necessarily in the place. They were a couple of years ago to divest at the asset level. So I think even when they do the question from our perspective would be again, we talk all the time about discipline in M&A.
Roger Tucker: M&A and inorganic growth is could we get true value from those type of acquisitions right take questions. So look I think restructuring.
Roger Tucker: Still kind of a <unk> if you like in this space.
Roger Tucker: Transactions first say somewhat more challenged from a value perspective, but it certainly.
Roger Tucker: Expect it to be an active landscape through the next period.
Roger Tucker: It's also important to.
To note that because of the strength of our balance sheet. We know we can be we can afford.
Roger Tucker: Exactly the right opportunities.
Rather than rush into.
Roger Tucker: Machine Joanna.
Roger Tucker: So we can be extremely selective with.
Roger Tucker: With what we've got.
Roger Tucker: Paul.
Speaker Change: A question on BTG, becoming Africa oils largest shareholder loans.
Roger Tucker: It's close.
Speaker Change: Does that mean for Africa.
Roger Tucker: What it means.
Children's and vehicle.
Roger Tucker: Elliot.
Roger Tucker: Yesterday.
The last board meeting.
Roger Tucker: Bill.
Roger Tucker: Oil award.
Roger Tucker: Ahead of completion of this transaction and what I'd like to say is that.
Roger Tucker: The way I just wanted to.
Roger Tucker: This is the full stop.
Roger Tucker: Hi.
Speaker Change: Africa oil we've been through all of the consolidation we're bringing in.
Roger Tucker: Very highly educated.
Roger Tucker: Shareholder that we've known for over the phone.
Roger Tucker: Over five years.
Roger Tucker: And with the.
Roger Tucker: Company has.
Roger Tucker: As I said, we tend to 80 degrees to be focused on.
Roger Tucker: Generating cash and production and the company will continue in that.
Roger Tucker: A critical element is that primarily obviously signing a deal we agreed walk forward strategy would be we agreed view of this space was we agreed with.
Roger Tucker: We thought was going to have to.
Roger Tucker: To happen over the next 345.
Roger Tucker: Five years, and we are very very.
Roger Tucker: Volumes aligns with the recession.
Speaker Change: Well other companies that are out there that have got major investors in.
Speaker Change: July down and I think it is going to be a theme.
Speaker Change: Defines a successful companies that are down.
Speaker Change: And this.
Speaker Change: This market cap.
Speaker Change: But you do need to have a very powerful investor alongside.
Speaker Change: That is going to be long term supportive.
Speaker Change: A question on domestic oil how much precious docomo quite specific operator ship.
Speaker Change: Yes.
Speaker Change: We'll get it out on the table.
Speaker Change: We will review operated operated.
Speaker Change: Operated assets.
Speaker Change: It's got a huge amount.
Speaker Change: Operating experience I didn't want to necessarily build an operating business that we.
Speaker Change: We would look at taking on operated assets because we have certain strategic directions that we're considering shreveport.
Speaker Change: He is out where that could be a strong competitive.
Speaker Change: Advantage so.
Speaker Change: To answer the question.
Speaker Change: <unk> operated assets, Okay very good.
Speaker Change: There are three questions, which are Orange basin specific one is actually on the venous phase one development.
Speaker Change: And <unk> has guided to.
Speaker Change: <unk> hundred 60000 parcel per day for the <unk>.
Oliver: Does this imply that there's only one piece on this discovery Oliver can you show your usual.
Speaker Change: Yes, I think there's probably two things in that so I think the.
Oliver: For context on the.
Oliver: The recent guidance on 150000 barrels of oil per day plateau production. So look ultimately a significant resource in venous the question of scale of the first Fps. So.
Oliver: It's really around handling gas associated gas from the reservoir, which will be re injected into the into the reservoir.
Oliver: I'd have to optimize that process. So ultimately.
Oliver: The scale of gas compression on the top sides vis vis how much oil does that unlock and so I think the recent work that they've done.
Oliver: As pointed to.
Oliver: Lower headline rate than some of the prior numbers.
Oliver: As a peak production rate, but.
Oliver: A longer plateau, so really that's an optimization.
Oliver: Economic optimization of development of the first half BSO.
Oliver: The second part of the question I think was around does it imply that only be one fps. So.
Oliver: It doesn't.
Oliver: Again, it's about optimizing that first Sps so.
Oliver: The economics and returns on that rather than just going for scale incrementally those those top end barrels cost you more.
Oliver: But look I think the work is ongoing but I think we would say sufficient resource that is certainly a case in consideration for further development.
Oliver: Okay.
Oliver: Moving further south into Orange basin at block three before be South Africa, what is the timing for the first exploration well, yes. So the three before will be of course just to recap.
Oliver: We got a farmout process farm down process in 2024, we attracted and brought in total LNG as operator in Qatar LNG as partner. So we put in place a very powerful.
Oliver: Consortium with a very very good operator and of course, we know well from both Nigeria.
Oliver: And then maybe.
Oliver: Having done all that.
Oliver: The joint venture has proceeded at pace the technical work is mature.
Oliver: The well planning is mature.
Oliver: And then moves of course late last year into the regulatory space, where there was an application process for.
Oliver: An environmental permit from the government essentially to drill up to five wells that was approved.
Oliver: That has gone into a statutory.
Oliver: <unk> periods.
Oliver: As expected in South Africa, because this has happened on every well so far.
Oliver: Appeals have been made and those will be reviewed by the department.
Oliver: They will either accept or reject those appeals and then there is a further rights of appeal.
Oliver: From those that may wish to pursue that so that process is ongoing again again nothing unusual there it's what we expected.
Oliver: What that means on timing is that total LNG as a pointed publicly to 2026 as the planned date for the well they have other positions in country as well so it ties together for them, which makes sense for us too.
Oliver: So look the view is it would be 2026 right now.
In Britain.
Oliver: <unk> had been contracted.
Oliver: Yes, I know, it's early stage, but again I would point to.
Oliver: It's happening in the in the base and then you step back to tell LNG is of course very important partner to us.
Oliver: One of the many attractions of bringing them into the <unk> before because of as you can imagine on the Orange base and there was a lot of interest is that they are costs drilling in Namibia. So they understand the play they've drilled a lot of wells that have rigs in the region.
Oliver: Tungsten explorer and a 10 year contract, which they have co ownership and.
Oliver: So we think very very well placed to bring a rig in.
Oliver: As opposed to bringing in another partner, who may have had to social Reagan that cut across the small client.
Oliver: There is an interesting question on fuel should fluids of Pascal.
Oliver: With BCG as a partner.
Oliver: We still have a banking syndicate.
Oliver: Yeah.
But that's a good question.
Oliver: Obviously, you're going to remain in place and we have a very strong syndicate at the <unk>.
Oliver: Albeit level.
Oliver: Therefore, we are able to keep that floating gate.
Andre: As Andre mentioned.
Oliver: Refinery.
Oliver: We talked about for financing.
Okay.
Oliver: So we are looking forward to.
Oliver: Thank you, Steve Thanks for being with Us on banks uploads Lee.
Oliver: It's important that we keep all relationship.
Oliver: Okay.
Oliver: Excellent.
Oliver: Questions on recent drilling activity on block 291, previous specifically some biopsy and we're not going to say anything other than what we've already put in our press release.
Oliver: The results.
Oliver: Well did in cancer oil bearing intervals.
Oliver: And the data is being analyzed as always we will look to the operates at Lasalle energies for formal communication on that but we have nothing more to say on that for now.
Oliver: So now just changing tack on the corporate side in terms of the ports.
Oliver: Obviously, we have the last sports online leasing took place and the new board is coming in would you. Just please remind people of that quickly off the makeup of that quarter.
Oliver: Incoming chairman and soft yes.
Oliver: Yes, so the new board.
Oliver: As mentioned in the prepared at the present time will.
Oliver: Will become effective on the day after completion of this process.
Oliver: In place and so the channel.
Jenkins: Replacing John Craig is going to be huge Jenkins.
Oliver: It is an extremely senior.
Jenkins: And the BTG.
Jenkins: Group based in.
Jenkins: Placed in London.
Jenkins: And then in addition to that BTG.
Jenkins: Points to April and benign business, both by the way.
Jenkins: 0.2 of the people one of them is that good.
Jenkins: Who runs one of the major.
Jenkins: Trading desks within created beauty GE.
Jenkins: And the other one is coming in.
Speaker Change: As the chief executive of <unk>.
Jenkins: Actual loan which is.
Jenkins: Becoming a significant shareholder in the company post this transaction and that is.
Jenkins: It will be coming on board.
Jenkins: And then on our side.
Jenkins: I'm sorry on our side.
Jenkins: The only two directors that will be continuing on from the old <unk>.
Jenkins: Marc <unk>, who was appointed in March and May last year extremely experienced man Nigel.
Nigeria.
Jenkins: At the CEO level and see.
Jenkins: And he will be become the lead.
Jenkins: Independent director.
Jenkins: And then also Kimberly word is continuing on.
Jenkins: And the board and then as some of you will see.
Jenkins: Current CFO, who.
Jenkins: I will say is that absent.
Speaker Change: The outstanding job and getting us through this transaction and difficult circumstances will be standing down the CFO, but will.
Jenkins: We'll be taking and NTT.
Jenkins: And we will be up.
Jenkins: Then in addition, there are two.
Jenkins: Independent denominated.
Jenkins: Okay.
Jenkins: One of them is nominated by <unk>.
Jenkins: BTG and his name is Richard Norris.
Jenkins: Free content.
Jenkins: We regard this technical person but background.
Jenkins: Background opposite technical background, but also strangely.
Speaker Change: Has been an adviser to Etfs and so he knows these assets very very well.
Jenkins: Days and he does fits all another company board.
Jenkins: Yes.
Jenkins: For.
Jenkins: PCT.
Jenkins: And then on side.
Jenkins: Currently temporarily put on John Crane, Iowa.
Jenkins: Independent Slops, whilst we are outsource switches proofing.
Jenkins: And a lot of difficult, but we have a particular requirement in the Canadian regulations require that we have both the Canadian.
Jenkins: National and our Canadian residents.
Jenkins: We are.
Jenkins: Close to filling that.
Jenkins: Temporarily shown credit will continue so.
Jenkins: That is the makeup of the board I am continuing on the board. It is nine nine people we've already held the.
Jenkins: Integration session about three three weeks ago.
Jenkins: We.
Jenkins: Went through the commission structures.
Jenkins: And so.
Jenkins: Transition will be seamless, but you are going to see.
Jenkins: Significantly different places on this board.
Roger Tucker: Thank you Roger.
Roger Tucker: There are a number of questions on share buybacks above and beyond.
Roger Tucker: We've already done I think the important point here everyone is that we have given you.
Roger Tucker: Well capital allocation framework.
Roger Tucker: With a large IOC is clearly communicated.
Roger Tucker: This loss and of course, it's no you've seen speculation on what we may or may not be what were waiting for the incoming board as always Dave.
Roger Tucker: <unk> policies and share buybacks subject to board approval. So we're not going to say peak and the fact that we've already agreed that the group we're going to do.
Roger Tucker: Quarterly $25 million.
Our quarter and that has been pre announced subject to completion of the transaction exact state.
Roger Tucker: So on that note there are no further questions. So Raj I'm going to hand, it back to you for <unk>.
Roger Tucker: Final comments.
Roger Tucker: This was partially covered it up when it was going to say is that this.
Roger Tucker: This is the last time, you will be seeing posco sitting up we don't see it.
Speaker Change: Opposite me.
It has been an absolute pleasure working with.
Speaker Change: With Posco.
Speaker Change: We work through this transition process.
Speaker Change: Totally gentlemanly manner, knowing the deal which results in essentially leaving the leap.
Speaker Change: Leaving the company and I am really happy that his knowledge and experience is going to continue with us.
Speaker Change: It looks at us as an entity.
Speaker Change: On the board.
Speaker Change: So you will be missed by scale spin absolute pleasure and privilege working with you.
Speaker Change: Got it.
Speaker Change: Operator, we have done so.
Speaker Change: So it takes a disconnect your lines.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference and you mentioned you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change:
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Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
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Speaker Change: Yeah.
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Okay.
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