Q4 2024 VAALCO Energy Inc Earnings Call
Speaker Change: Good day, and welcome to the VAALCO Energy Fourth Quarter 2024 Earning Conference Call and Webcast. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. And to withdraw your question, please for a star and then two.
Please note that this event is being recorded.
Speaker Change: I would now like to turn the conference over to Hal Petrie, Investor Relations. Please go ahead. Thank you, operator. Welcome to VAALCO Energy's fourth quarter in four year of 2024 conference call.
Al Petrie: After I cover the far-looking statements, George Maxwell, our CEO , Review, key highlights of 2024, in Discussed Outplans for 2025. On Bain, our CEO will then provide a more in-depth financial review. George will then return for some closing comments before we take your questions.
Speaker Change: During our question and answer session, we ask you to limit your questions to one and a follow-up. You can always re-enter the queue with additional questions.
Speaker Change: I'd like to point out that we have posted a supplemental investor deck on our website that has additional financial analysis, comparisons and guidance that should be helpful. With that, let me proceed with our Friday-looking statement comments.
Speaker Change: During the course of this conference call, the company will be making forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance, and those actual results or developments may differ materially from those projected in the forward-looking statements.
Speaker Change: VAALCO has claimed any intention or obligation to update or revise any forward-looking statements whether it is result of new information, future events, or otherwise.
Accordingly, you should not place undue reliance on forward-looking statements.
Speaker Change: These and other risks are described in an earnings release, the presentation posted on our website, and in the reports we file with the SEC, including our form 10K. Please note that this conference call is being recorded. Let me turn the call over to George.
George Maxwell: Thank you, Al. Good morning, everyone and welcome to our fourth quarter on full-year 2024
George Maxwell: Over the past two years, we have delivered record-breaking operational and financial results from meeting or exceeding our quarterly guidance targets.
George Maxwell: Maintaining operational excellence and consistent production across our portfolio is essential to expanding adjusted EBITDAX, which has allowed us to grow inorganically and also to fund organic growth initiatives better positioning vocal for the future.
George Maxwell: Before I go into more details about the exciting opportunities that we have across our asset
George Maxwell: Let me first summarize some high-level financial and operational results that led to a record-breaking near of some key items that have occurred thus far in 2025.
George Maxwell: For a full year 2024, we increased our adjusted EBITDAX to 303 million, a new company record.
George Maxwell: We also had record production of almost 25,000 working interest barrels equivalent per day and record sales of almost 20,000 net interest barrels per day.
George Maxwell: Our SEC proved reserves grew 57% year-over-year to 45 million BLE and are 2PCPR reserves due to 96.1 million BLE.
George Maxwell: We sustained our commitment to returning cash to shareholders in 2024 and over the past two years we have returned 83 million dollars to our shareholders through our ongoing dividend program and share buybacks.
George Maxwell: We completed the Svenska Acquisition in April 2024, and by year and 2024, we had already seen a 1.8 times payback on the initial investment.
George Maxwell: We have positive momentum as we enter 2025, both operationally and financially. We are building science, scale and profitability to sustainably grow Valco.
George Maxwell: We now like to go through and give an update on our diverse portfolio of high quality assets beginning with our newest assets in court of law.
George Maxwell: I would like to remind you that a year ago we had no production or interest in Côte de Waar and then in April 2024 we swiftly and efficiently completed the Stemsk acquisition securing a valuable asset.
George Maxwell: Based on the results of our third-party reserve engineers, our year-end 2024 SEC net-proved reserves of 16.5 million BLE.
George Maxwell: was higher than our estimate at the time of causing and the 2024 reserves were reduced by production of 1.2 million B.O.E.
George Maxwell: In alignment with projected timeline, the FPSO assist hydrocarbon operations are scheduled on January 31st, 2025.
George Maxwell: with the final listing of crude oil from the vessel occurring in early February .
George Maxwell: Our partners of the CI-40 block have commenced mobilization efforts for the FPSO.
George Maxwell: The vessel is planned to be towed to the shipyard in Dubai for refurbishment upon departs from the field in March 2025.
John Dezellem, John Dezellem, John Dezellem, John Dezellem
George Maxwell: Significant development drilling is expected to begin in 2026 after the FPSO returns to service with meaningful additions to production from the main pay of our field.
George Maxwell: The Council of Ministers recently approved the 10-year extension of the license on CI-40, extending it to 2038.
George Maxwell: In March 2025, we announced a formal agreement for the CI-705 block offshore Côte de Waard.
George Maxwell: where we will operate with a 70% working interest and a 100% paying interest under commercial career arrangement through the seismic reprocessing and interpretation stages and potentially growing up to two exploration miles.
George Maxwell: We are partnering with Ivory Coast Exploration, Oil and Gas, SCS and Petracy.
George Maxwell: We believe the CI-705 block is favourably located in a proven hydrocarbon system.
George Maxwell: Near existing infrastructure with access to a strong growing domestic market and attractive upside potential.
George Maxwell: It is located in the prolific Tano Basin and is approximately 70 kilometres to the west of a CI-40 block and 60 kilometres west of E&I's Missing Caliol Discovery.
George Maxwell: We invested $3 million to acquire our interest in the new block and their initial assessment is that there are both oil and natural gas prospects of a diverse place on the block.
George Maxwell: We plan to conduct a detailed integrated geological analysis to assess and mature our understanding of the blocks' overall prospectivity.
Tony DeCanada
George Maxwell: We successfully drove four wells in the first quarter of 2024, completed those wells in March and April and brought the wells online.
George Maxwell: As a reminder, we drilled longer laterals to improve the economics of the problem and all four wells were 2.75 mile laterals.
George Maxwell: We're very pleased with the production results from our drilling program and as you can see that in the production mix in Canada.
In Q1,
George Maxwell: Our Canadian production was about 60% liquid and in Q2 through Q4, our Canadian production was approximately 75% liquid from the new wells coming online with a Lord G.O.R.
George Maxwell: The strong oil production has rebalanced production in Canada, more in favour of liquids which contributes to the strong production performance.
George Maxwell: As I mentioned in last call, we drove the well in the southern acreage in the fourth quarter
George Maxwell: In our southern acreage, we have a minimal horizontal subsurface information, and this exploration was due to help us better understand the acreage, and potentially add proved undeveloped locations.
George Maxwell: We have not started the initial production rates from the well yet, but the well has been completed and placed on pump. We are monitoring the well's results and will provide an update on it in the future.
George Maxwell: In Egypt, as we disclosed last quarter, our focus for most of 2024 was on the high rate of return capital workover projects that helped mitigate decline.
George Maxwell: In the fourth quarter of 2024, we had two reconclusions, and for the full year 2024, we had 12 completed to help mitigate decline.
George Maxwell: Also in the fourth quarter we contracted a rig and drilled two wells starting a drilling campaign that will carry into the first half of 2025.
George Maxwell: We expect to drill a medicinal 8-13 wells in 2025 as part of this drilling programme in Egypt.
George Maxwell: By drilling these wells in late 2024 and in the first half of 2025, we are maximising the positive impact of our Egyptian production throughout the youth.
George Maxwell: In addition to the successful workovers and drilling we have seen over the past two years I am very proud of a major milestone that we have accomplished in Egypt
George Maxwell: We did not have a lost time incident in 2024 and thus far in 2025 we have not had a lost time incident.
George Maxwell: which means we have gone over 3.5 million man hours without an incident.
George Maxwell: This is a testament to your commitment to safety, training and dedication which is of the utmost importance to a fall of all our people in the operation.
George Maxwell: We continue to work with the Ministry and EGPC on our outstanding receivables. Our rate of collections has improved in the second half of 2024 and has continued to outpace revenues in early 2025.
George Maxwell: We fractured one of our wells in the south Gaza lot in the western desert, late in the fourth quarter, and we are evaluating the results.
George Maxwell: We're considering I follow-up exploration well in the nearby prospect on the block.
George Maxwell: Moving to the bond, given that we haven't drilled a well in the bond for over two years, we are pleased with the positive overall production results with strong production uptime and improved the client curves on the wealth.
George Maxwell: The FSO and Field Reconfiguration Projects in 2022 have allowed us to maximise minimise downtime, capture efficiency and reduce overall op-picks.
George Maxwell: We secured a drilling rig in December 2024 for our 2025-2026 drilling program which is planned to begin in Q3 2025.
George Maxwell: The rate has affirmed commitment of five wells with an additional five well options.
George Maxwell: We are targeting at least two wells to be drove and completed in 2025 with the remainder of the program to occur in 2026.
George Maxwell: In total, we now anticipate drilling three info development wells, one oil exploration well, a high QR well to support the field fuel needs and to work over.
George Maxwell: We have also chosen to draw additional wealth if information gathered during the program results in the high grading and de-risking of already identified well locations.
George Maxwell: Since the last call, we have continued to review the well-sequencing of the program and the testing of their booty shot in well [inaudible]
George Maxwell: We are conducting an extended flow test on the Aboody 4-H well to gather information on the H2S concentrations at this location to aid in equipment design and to evaluate a chemical-cute, sweetening process.
George Maxwell: I am pleased to say that the H2S concentration is within our modelling expectations.
George Maxwell: This well has now flowed for over two months demonstrating our ability to treat the oil and has provided us with additional production in the process.
George Maxwell: This well will be walked over during the program and should provide a nice boost to oil production.
George Maxwell: Regarding our exploration blocks in Gibbon, the NIOZ Marine and the GEDUMA Marine, we are working with our partners and the operator BWLG on plans for the two blocks moving forward.
George Maxwell: A seismic survey to fulfill the work permitment on Niosi is being planned for acquisition in the late 2025 or early 2026.
George Maxwell: Given the proximity of these blocks to the prolific producing fields of Aetami and Dissifu, as well as the recent BWD discovery at the boredom prospect in the Dissifu concession, we're excited about the future possibilities for this block.
Current Equatorial Guide
George Maxwell: In March 2024, we announced the finalisation of documents related to the Venus Block P Plan of development.
George Maxwell: In the second half of 2024, we began a front-end engineering design or field study.
George Maxwell: We anticipate the completion of the Feast Study will lead to an economic FFINAT final in that investment decision or FID in 2025 which will enable the development of Venus.
George Maxwell: We are very excited to proceed with our plans to develop, operate and begin producing from the discovery and block P offshore equatorial guinea over the next few years.
George Maxwell: We look forward to discussing this new area of operations in more detail once the feed study is complete.
George Maxwell: Pony to reserves. We're very pleased with the growth of our SEC-proof reserve-based despite a significant decline in pricing.
George Maxwell: Our acquisition encode to our coupled with our positive reserve revisions due to fuel performance in Gabon and drilling results in Egypt and Canada more than offset production and slightly lower pricing.
George Maxwell: SEC proved reserves a year-end increased 57% to 45 million BLE under PV-10 increased 11% from 342 million to 379 million.
George Maxwell: Our two PCPR estimate, which includes proven and probable reserves, using VALCO's management assumption for future pricing and cost reported on a working interest basis prior to deductions for government royalties, so a year over year increase of 24% to 96.1 million BLE.
George Maxwell: The 2P CPR NPV10 saw a 9% increase to 687 million at year-end 2024.
George Maxwell: The value of our Svenska acquisition, as well as our efforts across our asset base to improve production, manage costs and expand our asset through drilling can be seen in the positive results from our reserve report.
George Maxwell: We have a strong runway of opportunities that will continue to add value, and as you can see from our SEC proof reserves, two PCPR reserves and corresponding PV-10 values compared to our current market cap, our stock is quite under-value.
George Maxwell: In closing, we have an outstanding diversified portfolio of assets that have significant upside opportunities.
George Maxwell: We remain focused on growing production, reserves, and value for our shareholders.
George Maxwell: I would like to thank our hard-working teams who continue to operate and execute our plans.
George Maxwell: Over the past two years, we have significantly diversified our portfolio, enhancing our capacity to generate operational cash flow and adjusted EBITDAX, returning capital to shareholders, grow our cash reserves while increasing our credit facility-capit capacity.
George Maxwell: We are well-positioned to execute the projects in a enhanced portfolio and are proven record of success in these past few years to do still confidence in our future.
George Maxwell: With that, we would like to turn the call over to Ron to share our financial results.
Thank you, George, and good morning, everyone.
Ron Bain: Let me first echo George's comments about the continued success driven by our diversified and high-performing us at this.
Ron Bain: Over the past two years, we have met or exceeded our quarterly and annual production guidance, needed to consistent the operational and financial results, including a record of just a wee bit gap generation in each of the last two years.
in the fourth quarter.
We recorded 76 million and adjusted ebit talks.
I had a concert in Chestnut.
Ron Bain: For the year 2024, we saw a positive impact on the Schlaunchke ask position on 300 and 3 million and adjust to be the dogs.
Ron Bain: We generated an additional $23 million or 8% increase in adjust to be the docs near over year.
for adjusted either darks growth, eyed case of production and sales growth.
Ron Bain: which shows that we've expanded margins in 2024, dated by court to Royal Acquisition, and continued focusing costs.
Ron Bain: Coming to production in sales, which along with the latest pricing, driver of revenue.
Ron Bain: Productions for the fourth cluster remain solid at 25,300 working in just follows of all the equipment produced at the midpoint of our guidance.
Ron Bain: Our first quarter sales was $20,352 net barrels and oil equivalent per day, which is at
Ron Bain: We, together with our partners, completed three-listened reports of R&Q-4 driving our sales growth on NTD-SPS sales from the dry-darkly project which began in January of 2025.
Ron Bain: I'd like to reiterate that with the diversified portfolio of assets, we will have changed from the cost of to cost of in the midst of sales for each of our producer unions.
Ron Bain: This will be seen in our 2025 guidance numbers as we have some major projects we've been on and talked about.
Ron Bain: This change in mix impacts a realised pricing and ultimately on revenue in our lives.
Ron Bain: But again, if you look at the bigger picture, over the past three years, with more than double production, and over the next several years, you'll see another step change you can
Ron Bain: Tracing the main stainless steel over the fourth quarter, and full year 2024, and our hedging the programme is always a litigant nest to protect our commitment to share the returns.
of current hedge conditions were disclosed in their own instruments.
Charity Costs
Ron Bain: Reproduct your costs on the fourth quarter of 2024, where below the low end of Gandhi's work in an absolute basis on a natural basis.
Ron Bain: For the full year of 2024, we went up the bottom of our guarantee trade [inaudible]
Ron Bain: Absolutely experiments with 57.7 million and on a probalt basis with $22.16 [inaudible]
Ron Bain: For the full year of 2024, for the absolute cost without that about $10 million, or for a battle cost for slightly more than $22.40.
Ron Bain: Our focus remains on keeping our costs small to enable estimates of margins and increase our threshold.
Ron Bain: Geely costs were well below the midpoint of Gavins, and the Fowl cost were over quarter [inaudible]
Ron Bain: We've commenced a bath-office process-improving project with the implementation of a single Kyberist E.O.P. system across the whole country that went live in Q3 2024.
Ron Bain: This is helping us to streamline processes and efficiently work across multiple offices and keep it around the world.
We will continue to develop this in 2025.
Moving to Thoughts
Ron Bain: As occasionally stated, Inga Bowen, Egypt and Court of Law are following the consultations assertive by the government to oil the things, Inga Bowen and Court of Law and the government taking this year to lose it.
Turning them to the following sheet of crossroads statement.
Ron Bain: Understricted cash at the end of the fourth quarter becomes slightly to US$2.6 million.
Ron Bain: Both year-end on the 4th of January 2025, it receives the payment of $11.2 million for quotes who are missing and $4 million from EGPC.
Ron Bain: So a year-end cash balance could have been $60 million higher.
Ron Bain: The reduction for two-slee closing cash was given by an additional 15 million capital spend
Ron Bain: In Q4, we spent $41.5 million in cash topics, and it's only $6.5 million to give it institution holders.
Additionally, in February of 2025,
We have one more argument to under that agreement.
Ron Bain: This offset has allowed us to reduce the legacy received low balance with EGPC for the kept an ongoing operational human's current.
Ron Bain: Looking at our Wesley Capital Changes unit over here, there was two main drivers to the interest account assets and liabilities.
Ron Bain: The first is related to the acquisition code for R&Q-2, which includes both arossets under a lot of difficulties
Ron Bain: The second is related to Egypt, where we saw an eight-piece luxury decimals.
Ron Bain: In Egypt, during the first six months of 2024, but all of our credulous switch to being assigned locally, we continue to press for our next work title.
Ron Bain: This results in the collection's first half of 2024, running the heavy fields.
Ron Bain: which was trafficking behind some of our peers after we'd come off a strong collection year in 2023, where we also had two export cargels and had a nine-month fully-canceling.
Thank you.
Ron Bain: In a certain half of 2024, we focused on working with the state to allow many suppliers to receive Egyptian payments allowing us to accept a greater quantity of collections.
Ron Bain: as well as utilize offsets in some US dollar collections to better keep peace with revenues.
George Maxwell: As George outlined, he's an active drilling plant being done to kick off the mid-2025s that go on.
George Maxwell: The next ESO upgrade project, the Badame-Chi-Won Inc. as well as an additional brilliant
George Maxwell: To support these development capital programs this month, we introduced a new evolving credit facility with a
George Maxwell: This new facility, the first in existing, and on developing credit facility, will provide short-term funding that may be needed from time to time to supplement an entirely generated cash flow and cash balance.
George Maxwell: Q4 2024 found that the cross only cost of it in a six-and-a-quarter sense for the province here are $6.5 million.
George Maxwell: In 2024, Wheaton's $32 million to shareholders to dividends in buybacks
George Maxwell: We also announced the first dividend payment of 2025, which will be paid later this month.
George Maxwell: Let me meltdown to guidance, where I'll give you two highlights in updates.
George Maxwell: I want to remind you that gauges for 2025 has been filled with CO4 to shut them in on January on March 3, 2021, and go drilling a plant being in Devon, not kicking off until early 23.
George Maxwell: So the production and sales for 2025 are expected to be lower than 2024 but will jump up the TV in 2026 when the FPSU is back online with Court of War and the full impact of the
George Maxwell: Our show guidance breakout is in Leon's release and in their supplemental slide deck, on our website, with the production breakout of both working interests and networking interests by asset area.
George Maxwell: From the central company, we have forecasted Q1 2025 production to be between 21,000, 500,000, and 22,000, 700,000, what can I just deal with you today?
Not revenue interests, DOE or DOE.
This takes into account the SDSO shutdown and naturally decline.
George Maxwell: and 22,310 working ages BOE per day and between 14,500 and 16,710 net revenue ages BOE per day.
George Maxwell: For the first quarter, we are forecasting your sales to be higher in our production.
George Maxwell: For some four-year, we believe that sales would be more or less in line with our production.
George Maxwell: At Q1, we are forecasting two listings from Devon. The first thing is to set them up for the
George Maxwell: For the substantial pocket on the operation program in 2025 for Gagallas, a four-class estate lift could be the only estate lift in the current year.
George Maxwell: We expect an absolute operating cost to be more compared to 2024, but because of the lower sales in 2025, we are projecting, like, do we really expect?
to increase the release between $24 and $28.00 can be re-reached.
We also expect a lot to slightly lower oxygen in it.
How are you looking at Province?
George Maxwell: of 2025 pastoral scale is projected to be between 270 and 352 million, as we begin the drilling
George Maxwell: Execute the 2025 FTSO Championship report to far, and continue doing it in the near future in Canada.
George Maxwell: George outlined the multiple programmes across our assets as we believe that our efforts in 2025 will allow us to experience another step changing production in 2026 in the end.
George Maxwell: For the first quarter, we're expecting a range of between $70 million and $90 million for our tactics.
and closing.
George Maxwell: We are both positions to continue executing our strategy at growing, forgot, trillions of revs while adding meaningful value.
George Maxwell: We have a long track record of success with all of the results and unique and exceed expectations.
George Maxwell: We have achieved many things with 2024, from record trails and record-adjusted-a-bit parks to completing the strength acquisition and already paid back operation in 1.8 times the initial William Dezellem.
George Maxwell: Despite all of us, we continue to treat it a very low, multiple-of-you-bid box.
George Maxwell: Despite having a top quarter of dividend yield amongst N-Y-S-E Inc. and stocks.
George Maxwell: We have a new up to 300 million evolving credit facility and over 80 million in cash and
George Maxwell: Ready to fund a robust organic capital program of high return rate opportunities, which should help us set really effort shields and adjust a little bit box in 2026 and beyond.
George Maxwell: We've delivered a very well positioned to continue to achieve a high level across our diversified assets over the next several years.
George Maxwell: With that, I'll most turn the call box over to George.
Speaker Change: Thank you, Ron. As you have heard this morning, we have successfully delivered strong operational and financial results for the past several years by successfully executing our strategic vision.
Speaker Change: Our strategy remains unchanged. Operate efficiently, invest politely, maximize our asset base and look for a creative opportunity.
Speaker Change: We have delivered record growth and profitability over the past three years and we are pleased to deliver more in the future.
Speaker Change: Looking across our asset base, we have a multitude of projects to execute.
Speaker Change: In Gibbon, we have an extensive drilling campaign at a time that should add reserves and production.
Speaker Change: The FPSO refurbishment project in Côte de Waal has already begun and we are working with the operator on the development drilling program that should begin in 2026.
Speaker Change: Also in Cordova, we'll be acquiring a different regional well data, licensing seismic data and conducting further geological evaluations of our newest block, CI-705, where we are the operator of the 70% working interest.
Speaker Change: We have additional drilling campaigns planned in Egypt and Canada to help offset the claim.
Speaker Change: In Equatorial Guinea, we are progressing the free study. I'm looking to take the project to FID in the first half of 2025.
Speaker Change: Our entire organization is actively working to deliver sustainable growth and strong results to continue funding our capital programs, while also returning value to shareholders through a top-quartile dividend.
Speaker Change: I believe we have gained credibility over the past three years having delivered on our commitments to the market and to our shareholders and we will continue to deliver with the exciting legislative projects that we have over the next few years.
Speaker Change: We are in an imbibble financial position with a much stronger and diverse portfolio of producing assets with significant future upside potential.
Speaker Change: Over the past two years, we have returned over 83 million dollars to our shareholders through dividends and share buybacks and we are on pace to deliver another 25 cents per share. I will dividend for 2025.
Speaker Change: which our current share price is a dividend yield of about 6.5 percent.
Speaker Change: We are truly excited about the future, and VAALCO now has multiple producing areas and future prospects that have diversified and a risk profile
Under sources of income.
Speaker Change: Our disciplined approach to maximising value for our shareholders by delivering growth and production, reserves and cash flow have not been reflected in our stock price.
Speaker Change: We believe that we will see the market begin to properly value VAALCO as we execute on our organic opportunities over the next few years.
Speaker Change: Thank you and with that operator we are ready to take questions.
Thank you.
We will now begin the question and answer session.
Speaker Change: To ask a question, you may press star, then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, and then two.
Speaker Change: as a reminder, please lay yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our Ross.
Speaker Change: And your first question today will come from Jeff Robertson with Water Tower Research. Please go ahead
Jeff Robertson: Thank you. Good morning. George, on the exploration projects in both Gabon and C.I. Can you talk about the cycle times? I mean, there's a tremendous amount of variables in there, but the cycle times between when you drill and
Speaker Change: when you might be able to produce it if you make a discovery.
George Maxwell: Yeah, well, the cycle times, first and foremost, on the two new blocks in Gabon, they've basically just been approved and the decree is just being issued, so...
George Maxwell: Where we are with that, with conjunction with our partners, BW Energy and Penorial, as I think in the coming weeks we're going to have the first TCM with the partners and that will start to outline the work program and budget for 25 and 26.
George Maxwell: So the first activity there is going to be a seismic acquisition and that's likely to take place sometime in Q1, 2026 and then from seismic acquisition in Q1 we then go to the processing [inaudible]
Most of, most of 2026.
George Maxwell: There's also a commitment well, so I don't see it as it's spinning the drill bit on the first block until late 26 of the earliest, probably early 27.
and on the Code of War bloc.
It's slightly different. We've formed into that.
George Maxwell: There is a third party seismic acquisition has already taken place.
by I think it's TGF.
George Maxwell: So, we would be looking at acquiring that source data and taking that into interpretation. So, that would probably...
Again, so the acquisition of that information would be...
George Maxwell: into Q2 or Q3 this year, and then probably six months of interpretation to identify and firm up the targets, and then you may see in the supplemental.
George Maxwell: that was published this morning. We have a little bit of an overview of up 7 to 5 and we've kind of given you a little bit of information as to where we already see some targets identified within the block that made it.
George Maxwell: to be an interesting for us to make that acquisition. And 705 is, as again, likely to be...
George Maxwell: Once we've got the interpretation, we don't have a commitment to drill, but we have an option to drill so the commitment is really just seismic acquisition and interpretation and then move to the next phase which we've been committing a drilling program over those identified targets.
This is, secondly, the Capital Campaign in 2026 in both Caboan and...
Speaker Change: CI, can you talk about what impact that will have on your cost recovery pool, as you move into 2026?
Speaker Change: Million. You immediately think, well, that's a very large number, but you have to take into a kind, particularly in the producing aspect of Gabon that we start to recover that capital as soon as we have the successful wealth on production, so that actually cash sink on that capital isn't at the headline number.
and when-
Speaker Change: When we look at the starting position of the drawing program for Gabon, that's due to start in the beginning of Q3 and as I mentioned in the earlier script, we're hoping to get to at least two well children completed.
Speaker Change: and on-stream before the end of the year. So that cash that's going out, it's already coming back in before the end of this year.
Speaker Change: More importantly, when we look at CDI, which is an all-thing and a different scenario because it is all cash out because the asset is currently off production.
Speaker Change: But to incentivise the investment, the production sharing contract does offer a 25% uplift for every dollar that you invest.
Speaker Change: So as we look at the position in CDI, which is about 40 to 45% of our capital program this year, you already have a 25% uplift to that investment as soon as production recommences in early 2026.
Speaker Change: So it's an extremely attractive PSC that incentivizes this level of investment.
Thank you.
Speaker Change: And your next question today will come from Chris Wheaton with Stephal. Please go ahead.
Chris Wheaton: Thank you very much indeed. A couple of questions if I may firstly just coming back to the point on
Speaker Change: In good bomb, last time we had a big drilling campaign in 22, we were able to get production up, not quite doubled sequentially year on year. I'm interested in...
Speaker Change: Do you think you could achieve something similar given the additional grilling you've got planned for late this year into 26? That's obviously then going to have quite a significant impact in on volumes, certainly exit volumes from say 2026 onwards.
Speaker Change: How much that gap actually is FPSO? How much of that is long lead time for the drilling plan for 26 because it feels like as soon as the FPSO is back, you want to be drilling as well because you want to be putting as much.
Speaker Change: flow through your new SPSO as possible and also to maximize the cluster of coverage, as you just mentioned in your last answer, George. I think I'd also got a question on working capital that maybe I'll finish off with Ron after those two for starters. Thank you.
Speaker Change: the enhanced performance we were seeing from the production after the fuel
Rather than just having a run in the most time, the drilling campaign.
Speaker Change: Are there other things we're now seeing with a post-reconfiguration that can enhance the opportunity of the Joven campaign?
Speaker Change: And as you've seen, when we were talking about this over a year ago, we were talking about a four-well campaign. We're now talking about a five-well campaign with five options.
Speaker Change: So, we've really seen a lot of opportunity to get the drill bits spinning again in the tummy that's been very prolific for us in the past.
Speaker Change: So, yes, we obviously have some forecasts and therefore IP rates for the first two worlds going in. We are to answer the question on the cost recovery. Jeffrey, we, I think, are all mentioned in any script.
Speaker Change: We do see a DOC lifting coming into one but with a level of investment going into Gaborne this year, we don't really see another government lifting for the rest of the year so the cost pool will increase without investing in the drilling activity.
Speaker Change: and I think the success base of this particular programme highlights both the prolific nature of a tummy and gives us much more confidence and comfort that we're going right through into the mid-20 thirties with production on this asset.
Speaker Change: When we look at the court of opposition, yes, there's a lot of the lonely items in relation to the drilling campaign have already been purchased.
Speaker Change: So the vast majority of the capital you're seeing coming to Foucaud, the VAAL, relates to the MV-10 refurbishment in 2025 and that will continue to 2026.
Speaker Change: We're awaiting discussions with the operator about rig selection and rig confirmation and we expect to be able to say something about that in Q2.
Speaker Change: I thought this was going to augment now a little bit for you. Yeah, just a step back to the Gabon program. One of the things that we were able to do with the delay in the program from 2024 was the aburi Saur Wells and the aburi enhancements on the Saur processing facilities to coincide with that drilling program.
Speaker Change: Great. Thank you. And Ron, one question for me on working capital. There's been quite a significant outflow in the year. I wondered if you were expecting any of that to reverse in...
Speaker Change: 2025, because that was obviously quite a significant hit to your free cash flow generation this year, or sorry, 2024.
Speaker Change: Indeed, Chris. I think I really say two parts to that. First part is yes. We see obviously with the CDI, but it feels shut in in Q1. The outstanding receivables and the oil on crude oil inventory is all collected in Q1.
Speaker Change: Additionally in 2024 and I kind of laid it out in mice.
Speaker Change: Anatman, we learned collections in our first half of the year.
Speaker Change: Our new country manager came in in the summer, took a little bit of speed obviously with the Ministry of UGPC changes at the same time. That needed to settle down, but really from about August of 10 the time you really got off after it.
Speaker Change: And what you'll see is, or collections, you'll never want to improve in the second half of the year. I was improved even further into Q1 2025.
Speaker Change: and partly that's because we looked at different ways of being able to work with the state and with other suppliers with approximately now between 95% of all supplies in country is being paid in Egyptian pounds.
Speaker Change: So, we can't accept more Egyptian pounds from the state. As you know, US dollars has always been an issue for the state, especially in 2024, both with the cows are conflicted.
Speaker Change: obviously impact on the serious canal, and the tourism in can be in doing. So, that's being worked with EGPC, your partner, to be able to do that and with their suppliers, and it's working very well for this now into Q1.
Speaker Change: And we're seeing, as a state of revenues and collections keeping pace for one another and indeed in Q1 so far, without facing that.
Speaker Change: And when you say outpacing that role, that's excluding Code Devoire.
Ron Bain: Yes, that's excluding quite a lot of arms, specifically just looking at Egypt on its own there, Chris, when I say it's by
Ron Bain: Right, I just wanted to make sure I understood what perimeter you were referring to and that's coming. Brilliant, that's really helpful one. Thanks very much indeed. And I'll hand it back to the operator. Thank you.
Speaker Change: Your next question today will come from Charlie Sharp with Canacord. Please go ahead.
Speaker Change: Good afternoon, gentlemen. I appreciate the presentation earlier. Question really on Code Devoire and the refurbishment of the FPSO. What are the critical path items in this process?
that you will be looking for in that.
Speaker Change: work in Dubai that you might be announcing to the market as well. And what do you see as the timing for that field coming back to the Bay of Bay, excuse me, Bay of Bay, field coming back on stream. Thank you.
Speaker Change: I'll start with part of it, then I'll hand it over to Thor, who knows a lot more about this but I think the first thing is critical to understand is although we are not the operator we are integral and inside the project with with with our own personnel with working very closely with with C and R so because of the
Speaker Change: The size and nature of this project and the importance to our success, we have a team working directly with the operator in the execution of this project.
Speaker Change: And the second thing we would say, Charlie, is that, you know, when we look at the timeline of the project, where we are today, we're already 10% through the timeline of the project and slightly, I'm going to say slightly ahead, Thor, but I'll let Thor give you more detail.
Thor: Yeah, so thanks, Charlie. I think we mentioned earlier the production was shut in January 31st, which was on schedule. The toll to do by should commence here on the 24th of March. The disconnection was completed.
Speaker Change: essentially the toe tugs are either in place or being put in place for that to start.
Speaker Change: The critical path, I guess aside from sort of the normal ship work that has to be done in a dry dock, is probably the turn bearing. That turn bearing was ordered I think almost a year ago and is in root now to Dubai.
Speaker Change: from West Germany. So that's really probably one of the key milestones that we're looking for.
Speaker Change: We expect that the Keysight arrival in late May and we expect it to leave.
of the Keyside in January of 26th.
Speaker Change: with commissioning starting in early May of 26th and depending on the commissioning works it will be any time between sort of mid to late May for first oil.
Speaker Change: That's helpful. Thank you. And then the follow on from that is I'm just looking at your slide 16 key milestones and catalysts.
Speaker Change: with that now coming on stream sometime, maybe Q2, like Q2 next year.
Speaker Change: and the BALCO, suppose, of the Gabon Drilling Campaign next year. How should we think about CapEx next year? Should we think it'll be for Gabon and Kotevoire, pretty similar to this year?
But a bit more weighted towards, get on.
Speaker Change: and the CAPEX profile on CDI on the FPSO should be pretty well done.
Speaker Change: by May, with the drilling program commencing probably in July , is what we're seeing of 26, sir.
Speaker Change: The other thing to bear in mind, Charlie, is that, you know, we've got...
Speaker Change: How successful we are in the firm program. We may look at the extending that program.
Speaker Change: And as we mentioned in the script earlier, we do expect to immediately roll into a CDI drilling campaign in Phase 5 on Bayabab to hook up as soon as the vessel's new commission.
Speaker Change: In fact, I believe some of the some of the risers for the drilling program are being installed during the commissioning phase.
Speaker Change: Good, good, good, good, good, good. Well, it sounds like we should be thinking in terms of a similar capex level next year to this year.
Bites, I would say.
Speaker Change: We don't give guidance for 26 at this time, but you can see the work program flowing through, so it's a reasonable assumption. The only difference, I would say, again, is that with both assets fully on production, the recovery of that cafe will be really accelerated, particularly through CDI.
That's great. Thank you.
Speaker Change: And your next question today will come from Bill Dezellem with Titan Capital, please go ahead. Thank you. Relative to the wells that have H2S.
Bill DeZellum: Now that you have found a way to process that, does that open up a significant amount of acreage that previously was centrally closed off or off limits to you because you're a lack of processing capability.
Bill DeZellum: That's a tough one, tough one to answer. We're looking at, inside the 20, not the 20, the 2025-26 program, so we do have an additional well planned for a Bury in that firm program.
So, depending on that,
Bill DeZellum: It may allow us to look further afield from a brewery.
Bill DeZellum: And the reason why we're saying that is that there's a fault line that we're dealing with there and we're not clear on what's on the other side of that fault line which is what this well potentially would address.
So...
Bill DeZellum: That's one question here. There are also some wells that are sort of isolated, I guess, between aburian e-tom that may possibly down the road allow us to look at a bit closer that.
Bill DeZellum: We're originally drilled and showed some levels of H2S that are not tied in right now.
Great. Thank you both. I appreciate it.
Speaker Change: Your next question today will come from Jamie Willan with Willan Management. Please go ahead.
Speaker Change: Yes, on the H2S wells, how many are we going to be looking at initially as Arlan, are those the first part of the drilling program and we have the tools in hand to be ready to extract them and could you tell us the approximate volumes that those wells were doing when they were shut in?
Speaker Change: Okay, so the abory platform currently has two wells that are tied in, and the third one is tied in when not producing.
Speaker Change: between 13 and 1500 barrels a day. It's a fairly low H2S concentration well.
Speaker Change: The Abory 4-H was shut in, I'm going to say about 10 years ago.
Speaker Change: Due to high H2S levels, that well was brought on in December on a test basis to see if we could handle a high H2S with the chemical programs that we're using now.
Speaker Change: and there was some question on when we brought that well on because it's been sitting so on whether the ESPs were going to actually operate.
Speaker Change: In fact, ESPs came online, and the well is producing as of yesterday around 1600 barrels a day of flow at a higher level H-dress which we're still able to handle with the chemical injection programs but still within our model.
Speaker Change: So both those wells will get a work over in the program coming up in addition to that we're building a third of Bowrie well into a sour area and expect it to be somewhere in that same range.
Speaker Change: I think the number of cars is offline, Jimmy. The first world we're going to be drilling.
Sorry, that was the first in the sequence.
Speaker Change: Yes. That's the question. No, those are the tail end of the sequence, actually. The first welds are e-tom welds, and then it's e-tweld.
and an expiration well in any of Bury Wells.
So within this sequencing is at a 2026 number
Speaker Change: The last of very well, in the current sequence that we're looking at, would be a 2026 vote.
Speaker Change: A lot of that, Jamie, is to do with the long lead items, you know, we've put these wells on tests and we understand what we've got for it's to us concentration, we then need to order the equipment that can handle severe service.
Speaker Change: that we do at Atatami. So if they can be accelerated, of course, we'll look at re-sequencing the program to ensure that we production well as ahead of, for instance, the exploration well, but it's all down to delivery of the equipment.
Speaker Change: Okay, and lastly, on Cote de Rade, what is the actual cost for the FPSO as opposed to how much we're putting into items for the next drilling campaign there?
Speaker Change: At the moment, the gross cost position of the FPSO for the total project is around about 650 million.
Speaker Change: Some of that's already been spent and we are, as you know, about one third, one third of that roughly, about 30%.
Speaker Change: We've already spent some of it. When we look at the long lead items for the drilling program, such as the trees, the subsea trees and the control ports, they've already all been purchased. Some of those were purchased before we acquired the company and the commitment that we made.
Speaker Change: and some of the equipment was being bought through 2024 and into 2025. I think Thor was going to give you an update. We're talking about PSO.
Speaker Change: and will the FPSO create any efficiencies that will be helpful when it returns?
Thor: The work on the FTSO itself is pretty well putting it back into the original condition. There will be probably some enhancements on instrumentation, monitoring equipment, valving and all types of things, increased levels of trim.
Obviously the swivel is a big issue there.
Thor: Significant changes that have to be done. A lot of modernization has reduced it amongst two.
Okay, thank you. I'm sorry, metal replacement.
Thor: This concludes our question and answer session. I would like to turn the conference back over to George Maxwell for any closing remarks.
George Maxwell: Thank you operator. I think, as we have grown the company over the last few years with
George Maxwell: Created a portfolio now organically that can make a significant step change as we come into 2026.
George Maxwell: but we put a lot of technical work and technical effort into our key point forward.
George Maxwell: We've successfully refracted the South Garland position, another of our concessions in Egypt.
George Maxwell: We'll be looking at that later in 2025 to see, can we build an even bigger program in the Western Desert for Egypt?
George Maxwell: and we've re-based the program in Canada to go for longer laterals and more economically viable wells.
George Maxwell: We have an exciting project, hopefully to get through to FID with Equatorial Guinea, which will give us again a massive boost to production in 2027.
George Maxwell: As I said earlier, those investing activities with the quality of the production sharing contracts we have with our host government made them a very exciting investment.
George Maxwell: We will be monitoring very closely our execution of these projects because the key for us as we've done in previous years is to deliver these projects on time, on budget, whether we operate them or whether we don't operate them. And we will be very focused on delivering that and communicating that throughout the year.
George Maxwell: So with that, I'd like to thank everyone for their time today and thank everyone for their attendance and the qualities of the questions. Thank you very much.
Speaker Change: Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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