Q3 2025 Meren Energy Inc Earnings Call
Speaker #1: At this time, I would like to welcome everyone to Miriam's third quarter 2025 results presentation. After the speakers' remarks, there'll be a question and answer session.
Speaker #1: Please note that at any time, participants on the webcast can submit questions using the questions button on the webcast interface. This event is being recorded, the company's website.
Speaker #1: I will now pass the meeting on to Mr. Shahin Amini, Miriam's Head of Investor Relations. Please go ahead, Mr. Amini.
Speaker #2: Thank you, Operator. Hello, everyone, and thank you for joining us for Miriam's third quarter 2025 results presentation. I am joined today by Roger Tucker, our President and Chief Executive Officer; Aldo Perracini, our Chief Financial Officer; and Oliver Quinn, our Chief Commercial and Operating Officer.
Speaker #2: We will begin with prepared remarks and then open the floor for questions. Before we start, I would like to remind everyone that this presentation contains forward-looking statements.
Speaker #2: These expectations involve risks and are based on current assumptions and uncertainties that may cause actual results to differ materially. You can find a full discussion of these risks in our regulatory filings that are available in Cedar Plus and on our website.
Speaker #2: Also, all dollar amounts in this presentation are in U.S. dollars unless otherwise stated. With that, I will now hand over to Roger. Roger, we are ready for you.
Speaker #2: Please go ahead.
Speaker #3: I'm pleased to present another strong quarter with continuing delivery on shareholder returns and delivery. The completion of the prime amalgamation marked a step change for Miriam and we have now honored our enhanced dividend policy with the declaration of the fourth quarterly distribution of 25 million US dollars taking the total payout for 2025 to 100 million US dollars.
Speaker #3: So, together with our share buybacks year-to-date, we have delivered meaningful shareholder capital returns of approximately $109 million. We have also materially reduced our outstanding RBL debt amount to underpin a stronger, more agile company that is built to deliver long-term returns and withstand market volatility.
Speaker #3: These deliverables reiterate the quality of our production assets in Nigeria, the company's financial strength, and our disciplined capital management. Maintaining a strong balance sheet continues to be one of our top priorities.
Speaker #3: Overall, it's been a resilient quarter, and we've delivered on what we set out to do, reinforcing our financial position and our commitment to creating long-term value for our shareholders.
Speaker #3: I'm also pleased to report that we have completed the integration of Prime, and the combined organization is working very well and seamlessly under the Miriam banner.
Speaker #3: I will now hand over to Aldo to give a more detailed commentary on the quarter's performance.
Speaker #4: Thanks, Roger. Now turning to our production performance. In the third quarter, we delivered production of 31.1 thousand barrels of oil equivalent per day on a working interest basis.
Speaker #4: And 35.6 thousand barrels per day on an entitlement basis. This brings us to a working interest of 31.8 thousand barrels of oil equivalent per day and 36.3 thousand barrels of oil equivalent on an entitlement basis for the first nine months of the year.
Speaker #4: Both of which sit within our 2025 guidance, which remains unchanged from the second quarter. Performance remains steady quarter on quarter, supported by strong contributions from the newly commissioned Aegina wells and a successful well intervention on the Anakpo well.
Speaker #4: These gains helped offset temporary impacts on plant and maintenance activity. With the Akpo and Aegina drilling campaign now on pause, work is focused on integrating for these seismic and well data to define and mature the next set of in-field targets.
Speaker #4: Turning on to the next slide. In the third quarter, Miriam completed three oil liftings for around 3 million barrels at a realized all-in sales price of $70.80 per barrel.
Speaker #4: Year to date, we have completed nine liftings of around 9 million barrels at an average all-in sales price of 74.9 dollars per barrel. Which compares favorably to the data brand at an average of 70.9 dollars per barrel.
Speaker #4: We have three cargoes scheduled for the fourth quarter of 2025. Two of these are hatched at $64.60 per barrel, with one cargo unhatched that will be sold at spot.
Speaker #4: For 2026, we have hatched 2.6 million barrels of oil at an average Brent price of $62.4 per barrel. The sales achieved in the first nine months, combined with our hedging strategy for the remainder of the year, curate a prudent balance between risk management and market exposure, reducing volatility risk while preserving potential upside.
Speaker #4: This approach ensures we remain well positioned to generate solid cash flows through to the end of the year, regardless of market fluctuations. Moving on to the financials.
Speaker #4: For Q3, we delivered an EBITDA of $120 million, bringing total EBITDA year-to-date to $368 million. Cash flow from operations before working capital came in at $66 million for the quarter, with reported CapEx of $22 million, largely driven by the well intervention in Akpo.
Speaker #4: Free cash flow before debt service and shareholder distributions was $126 million. Overall, for the first nine months, free cash flow before debt service and shareholder returns stands at $229 million.
Speaker #4: We are on track to meet our management guidance as revising Q2, and our full-year guidance ranges are unchanged. Let's now turn to cash flows for the period.
Speaker #4: We close the quarter with a cash balance of about 177 million, compared to an opening balance of 267 million at the end of Q2.
Speaker #4: We achieved about $66 million in cash flow from operations before working capital adjustments and interest, and had positive working capital movement of $81 million, most of which, about $63 million, was due to trade receivables driven by the timing of cargo liftings and receipt of sale proceeds between the second and third quarters.
Speaker #4: Our major cash outlays were RBL repayments, dividend distributions, and capital expenditures. In line with our approach to disciplined balance sheet management, we proactively paid down our RBL balance by 180 million, bringing our total debts to 360 million.
Speaker #4: This has been paid down further post-quarter, which I will touch on shortly. In line with our new payout policy, we made our third dividend payment of $25 million, bringing dividend distributions to $75 million year to date.
Speaker #4: And as Roger had mentioned, we are pleased to have announced our fourth dividend distribution of 25 million to be paid next month. Through disciplined cash management, we have materially reduced our debt interest expenses, strengthened the balance sheet, and established a solid platform for sustainable growth and value creation.
Speaker #4: Moving on to the next slide. The leveraging
Speaker #1: The $750 million . At the balance was completion have looked to approach . We this in a disciplined proactively and manner . At the end of Q3 , our RBL balances stood at 360 million , reflecting 390 million in Since taking repayments .
Speaker #1: This is on meaningful contribution towards a reduction in interest costs post-quarter. We paid down a further $30 million, bringing total repayments to $420 million.
Speaker #1: Year to , at the end of date the quarter , we had a net of debt to debt 183 million and a net EBITDA ratio of 0.4 times .
Speaker #1: Well below our one time ceiling . For the year , demonstrating credit strong our profile . We will continue to optimize our allocation capital strategy , strengthening Marin's financial profile and positioning us to deliver value for shareholders .
Speaker #1: I will now hand over to Oliver to take you through our business outlook.
Speaker #2: Thanks , Aldo . Turning to slide ten on Nigeria following the break in the and Akpo drilling campaign in Agena Q3 , work is underway to restart the campaign .
Speaker #2: The current drilling break has provided time to fully interpret the latest 4D seismic data and identify several future infill drilling opportunities . Operationally , progress is being made to secure a deepwater rig to drill the Akpo Far East near Field Prospect , followed by further development wells on both Akpo and Aegina .
Speaker #2: In late 2026, Akpo Far East is an infrastructure-led exploration opportunity with an unresearched best estimate of greater than 150 million barrels of equivalent.
Speaker #2: In late 2026 . Akpo Far East is an infrastructure led exploration opportunity with an Unresearched best estimate of greater than 150 million barrels of oil If successful , it will deliver a short cycle high return investment , leveraging existing facilities Akpo potentially and adding significant near-term production and reserves .
Speaker #2: Turning to the Prio development project optimisation work continues with recent seismic data indicating an increase in recoverable resources and likely better connectivity in the reservoir that may lead to a reduction in the development .
Speaker #2: Well count . This optimisation exercise is continuing and will conclude through 2026 . At agbami interpretation of recent 4D ongoing seismic is alongside Rig and long lead item contracting in preparation for a 2027 infill drilling campaign .
Speaker #2: addition to In the infill drilling and appraisal well is planned on the discovery , which in a success case will be tied back to the Agbami FPSo .
Speaker #2: Let's move to slide 11 for an update on Namibia . Joint venture continues to advance the venous development , which remains on track for FID next year , with first oil expected in 2030 .
Speaker #2: The environmental and social Impact assessment is continuing to progress , which is a key step toward regulatory approvals . The plan , outlined includes 40 subsea wells tied FPSo with a peak capacity of 160,000 barrels of oil per day , and once online , Venus could produce for more than 20 years , generating significant and sustained cash flow .
Speaker #2: For Merryn . As we get closer to the final investment decision , there will be scope for us to report contingent resources and ultimately part of our reserves as annual Canadian NI 101 reporting 51 process .
Speaker #2: On the exploration side , work continues to drilling on plan for several remaining prospects with a remaining . key The target and testing a different geological concept from marula and with a significant potential resource base .
Speaker #2: And importantly, we retain full exposure to these high-impact opportunities with no upfront cost, as all exploration and development spending is carried through to first commercial production.
Speaker #2: Moving to slide 12 and staying in the Orange turn to Basin , let's South Africa and three before we block . In September last year , we received an environmental authorisation to drill up to five exploration wells .
Speaker #2: And whilst progress was being made to move through the legislative appeals process, this has now been temporarily suspended pending a Supreme Court judgment in relation to Blocks Five, Six, and Seven.
Speaker #2: Despite this pause , the operator continues to prepare for drilling with the Naylor prospect remaining the likely first target and with sufficient potential success case to support standalone in a development .
Speaker #2: To remind you, an important point to note is that the transaction completed with TotalEnergies and Qatar Energy last year will cover Meren's costs for 1 to 2.
Speaker #2: Exploration wells , so there will be no demand on our capital as drilling commences . In summary , across the Orange Basin , we maintain a leading independent MP position with exposure to multiple near-term development and exploration opportunities and all without any near-term capital requirements .
Speaker #2: Now turning to Equatorial Guinea on slide 13 . Marin holds two licences offering differing opportunities inboard block , e.g. , 31 offers a compelling low risk appraisal opportunity that could unlock a low CapEx .
Speaker #2: cycle . Brownfield Short LNG project with a cost of supply competitive with US gas exports . The block lies in shallow water close to the existing onshore , e.g. facility , and contains several further Gazprom prospects in areas where wells historic have proven the presence of gas .
Speaker #2: The second position block , EG 18 , is a deep water exploration opportunity with billion barrels of oil potential . Recent seismic reprocessing and technical evaluation has unlocked a large Cretaceous aged basin floor fan system with several stacked prospects identified within the same play that has been actively pursued by several majors across the border .
Speaker #2: Sao Tomé, a farm-down process for both positions has attracted strong interest, and we are actively engaged in discussions with potential partners for both blocks with the aim of reaching a conclusion on the farm-down process.
Speaker #2: the end of By this year . With the right partnerships in place , drilling activity could take place in late 2026 or 2027 .
Speaker #2: I will now pass you back to Roger for his concluding comment. Thank you, Oliver. It's been a solid quarter for the company.
Speaker #2: We ended the period with a strong liquidity position, a net debt to EBITDA of 0.4 times, and we have significantly reduced debt to optimize interest expenses, underscoring both the strength of our balance sheet and our disciplined approach to cash management.
Speaker #2: I am to have pleased announced our fourth quarterly dividend , which will see the completion of our 100 million US dollars dividend plan , a clear reflection of our ongoing commitment to shareholders .
Speaker #2: Looking ahead , we see meaningful value across our portfolio with excellent catalysts in the pipeline . Each providing strong , long term potential .
Speaker #2: Thank you. And with that, let's move to the Q&A.
Speaker #3: Thank you , Doctor We Tucker . will now begin Q&A our session . If you have a ask that you question we please use the raise hand function at the bottom of your zoom screen .
Speaker #3: Once your name has been announced, you can ask your question. If you want to withdraw your question, please lower your hand using the raise hand function.
Speaker #3: Thank you . And a moment for the first question , please . If you would like to submit a written question , please use the ask a Question tab on the right hand side of the player window .
Speaker #3: Our first question comes from Geoff Robertson with Watchtower Research . Please unmute your line and ask your question .
Speaker #4: Thank you . Good morning Oliver , can you give some insight into the production profile in 2026 ? In the fields in Nigeria and what you anticipate the lifting schedule might be for the first couple of quarters of the year ?
Speaker #2: Yeah . Hi , Jeff , for the thanks question as we go . So into to 26 , we've got activity commenced , commencing again in the fields .
Speaker #2: We've got three wells , if you like , three , three infill . Well , activities Acpo and Egina then . And we've got an aqua exploration well , East which is important and likely in a on Agbami , which well over is appraisal .
Speaker #2: So I think the the key thing is on those wells , they'll be back end of the year . So we don't expect to see a meaningful production impact from them until early 27 .
Speaker #2: So they're important , but they're late in the year . So where that takes us is we'll see some natural decline through the year .
Speaker #2: And I think we're currently working through the final work programme and budget with the operators in the next couple of weeks here . But we do anticipate kind of seeing decline into the kind of high , high 20s in terms of production working interest level .
Speaker #2: Before again , picking up again as we come through the end of the year and into 27 , I think on the second part , the lifting schedule , I think we're anticipating around ten cargoes , and those are pretty evenly spaced throughout the year .
Speaker #2: I think you'll note this we year we've lifted all our cargoes for the calendar year as of November . So we don't have any in December .
Speaker #2: And then I think our next cargoes coming in two cargoes , I think in Q1 next year . Yeah .
Speaker #5: And just to remind everyone, our full-year management guidance for 2026 will be provided early next year, potentially in late January or February. So, we'll have more detail on the outlook for 2026 for our business.
Speaker #5: .
Speaker #4: And think correct to that the Far East prospect, if that's a success, that can be handled by the existing field infrastructure without any significant capital upgrades?
Speaker #2: Yeah , that's it's it's super kind of It's only just single digit kilometers east of of Akpo . And the facility , it's a large kind of target , you know , that could for a first phase .
Speaker #2: Come on within 18 months , two years , tied back to the Akpo facility . So it's very reachable . The timing is , is really been around ullage and availability over akpo .
Speaker #2: That's now with natural decline . You know , there's time and space if you like , have come together . And so yeah , that would be tied back very , very quickly .
Speaker #4: Thank you .
Speaker #2: Thanks , Jeff .
Speaker #3: Our next question comes from David Round Stifel . your line Please unmute and ask your question with .
Speaker #6: Great . Thank you . A for me couple The the break , guys . drilling from in Q3 . able to Are you elaborate how that break has helped improve your thinking around future targets ?
Speaker #6: And then also I guess , more just , generally , are you noticing any different approaches between the operators you've different got in Nigeria ?
Speaker #6: And then the second one separately just on EEG. As for your clarification, are you looking at farming down those blocks individually or together?
Speaker #2: Yeah . Hi , David . Thanks . Thanks for the question . So look . Yeah , a good point . You take a step back on on actually , Aegina and Akpo , which is where the drilling break occurred .
Speaker #2: This year . So again , you know , we say this a lot , but kind of world class fields kind of textbook petroleum engineering with 4D seismic over them .
Speaker #2: So, that allows us to shoot surveys at regular intervals. Of course. And in those fields in particular, we can see fluid movement.
Speaker #2: We can see oil , water , gas . And that allows us to kind of really hone in on the infill targets . So specific to the question , we took the drilling break in Q3 .
Speaker #2: We've had new 4D come in over the fields, and the reason to have that break and go back, kind of Q3 next year, drilling has been to allow that new data to be incorporated.
Speaker #2: It looks very positive from us . So I think we'll see , you know , two well , two targets on Agena , one on Akpo .
Speaker #2: Again, in Q3 and Q4 next year, they would anticipate running into 2027, and there'll be some more follow-up drilling on the back of that data.
Speaker #2: So yeah , it's been useful . I mean , there is obviously a short term impact . You know , in these mid-life fields from not drilling .
Speaker #2: But I think it allows us to come back with a more focused kind of target campaign just to move to the EEG question .
Speaker #2: So the simple answer is we see them as separate processes. Now they have run kind of on a timeline in very close parallel, almost on top of each other. Look, there are parties that are in both.
Speaker #2: There . So interested in one or the other of the two . And again , we touched on it in the in the presentation .
Speaker #2: But they're very in nature . So different egg 31 is kind of . Gas brownfield LNG tieback to existing facilities , etc. . 18 in the outboard multi-billion barrel kind of oil target .
Speaker #2: So, kind of material, kind of catalyst if that comes in. Yeah, very so different opportunities. And therefore, we've run a parallel but separate process, if you like.
Speaker #6: Okay . Thanks . Very clear . Just in terms of the approach operator's in Nigeria , any differences there or are they getting on with kind of things in a similar kind of fashion .
Speaker #2: Yeah . Look , a good question . didn't mean to I skip over it . Yeah I think very they're both active , which from a operator perspective is what you look for , right ?
Speaker #2: I mean , the fields are , you know , as we heading to know they're midlife . They're in that kind of natural decline .
Speaker #2: What they need is , is a bit of care and activity . And I think on both from both what we're seeing . So , you know , I didn't talk about Agbami so much .
Speaker #2: But you know , the plan is to come back . Chevron drill will six infill production injector wells in 2027 . So you know , it's a pretty big campaign given the age of the field and kind of speaks to a their activity as an operator , which is very positive .
Speaker #2: And B , you know , the nature of the resource base . I think a genuine again , slightly different , you know , we're seeing the same in-field activity focus from , from TotalEnergies .
Speaker #2: There's lots of opportunities there to mature . But there's a wider set of tie back and organic kind of growth opportunities around those fpsos as well .
Speaker #2: we're seeing So obviously which is which is ongoing , but there are several discovered resources within the license that we see TotalEnergies taking quite an active view on at the moment .
Speaker #2: So yeah , look , I think we're that they're comfortable both engaged and active , which again , is non operator important to see that really .
Speaker #6: Brilliant. Very clear. Thank you.
Speaker #2: Thanks ,
Speaker #2: David .
Speaker #3: There are no questions .
Speaker #3: further At
Speaker #7: .
Speaker #3: There are no questions time . I at this hand back over to will now Shahin Amini to read through your written questions .
Speaker #5: Thank you very much, Operator. We've got a number of questions submitted over the Q&A facility and a couple of questions that were emailed to us earlier today.
Speaker #5: So, I'm going to start with an email actually, a question from one of our long-standing shareholders in Sweden. And I'm going to put it to Aldo. What are expectations, in your view, for further reductions in net debt in the coming quarters?
Speaker #5: ?
Speaker #1: you . Okay . Shane Thank relation , in to to that reduction in deleveraging , the balance I think we have sheet , done focus .
Speaker #1: We focus a lot throughout seen the 2025 . You have amount of reduction we did with the existing Rvo , as it's natural kind of in this instrument .
Speaker #1: As we towards progress the maturity of the facility , we get compressed by the lower life and therefore we have to continue to make payments or we continue to have a reduction in our in our borrowing base .
Speaker #1: that will And continue to happen throughout 2026 . So in terms of what we plan for , for the next year compared to 2025 , I think the main difference is that we have already started the to process refinance our existing facility , and so far we have been getting strong indications from the the banking syndicate .
Speaker #1: And as if we're able to achieve that target , which we expect for the beginning of 2026 , we then should be in a position to keep our borrowing base higher for a longer period of time , which will give us additional liquidity for , for whatever reasons , our organic growth in organic growth and etc.
Speaker #1: So the plan in relation to that, as we get into 2026.
Speaker #5: Thank you . Also . And the same , the same investor couple of follow on questions . I'm actually going to address this myself because this questions are kind of detailed about our 2026 estimates and outlook .
Speaker #5: As I mentioned earlier , we will give a more detailed well , we will give detailed a management guidance . And next year and Oliver , I think it's fair to say that the team right now are very busy with the JV partners in sort of setting the work programme and budget for next year .
Speaker #5: So some work we some through need to get before we're ready to share management guidance .
Speaker #2: play that out through the That's end of the as you say year . And , early next year , there'll be a clear plan on right .
Speaker #2: Production, forward vision. We'll be on that production.
Speaker #5: Okay . Very you . good . Thank And going back to Aldo , this is this is a long standing point of debate .
Speaker #5: And that's the question is that as you're lowering net in 2026 , what is debt your of what is your outlook expectations for one , you know , in terms capital of allocation and shareholder you returns , can sustain the dividends ?
Speaker #1: question . Okay . Good And we get that question a lot . I think sense in terms of capital allocation , again , the focus in 2025 was to reduce the RBL as we we were not utilizing the whole the whole liquidity we available under that had facility .
Speaker #1: And we achieved a significant interest expense reduction throughout the year, which I think is an important way to generate equity value for our shareholders.
Speaker #1: Now , when we look forward , I think we basically the way we look through through capital allocation and distributions , we look at mainly for things .
Speaker #1: First, we look at the short term or the cash generation coming from the Nigerian assets, and then how short term production behaves.
Speaker #1: that's the That's first bit . The second bit would be in relation to organic growth through the existing portfolio . As you know , in Nigeria , we've we fund organic growth with existing cash flow from operations .
Speaker #1: And outside of Nigeria , we fund organic growth through the carry arrangements , which we have put in place with , with partners , for example , in Namibia , with total energy through impact .
Speaker #1: The third , the third part that we look , then look we at the debt obligations again , as I mentioned , we would continue to have a reduction in the borrowing base through 2026 .
Speaker #1: address So to that , we have restarted the refinancing exercise , which will give us additional liquidity to go through that . And fourth part , then the which is a little bit of our of our control or a our control is , is the is the oil price movements , right .
Speaker #1: I think we are looking at oil price forecast for 2026 , which are , you know , very and most of them on the bearish side , which we see also reflected on the on the forward curve .
Speaker #1: we're going So to take going to be we're very very careful when we look at additional distributions in 2026 or elsewhere . As we as we prepare for a year where we expect to to have a lot of cash flow volatility , given the oil price .
Speaker #1: So that's the mechanism . Those are the that's the process that we go through when a evaluating dividend distribution . So when we go through all of that as of this moment we don't foresee any surprises into into into 2026 .
Speaker #1: But again, keeping an eye on oil, which price will be the major variance.
Speaker #5: Thank you Aldo . And there are a couple of questions on M&A . As always . We can't go into detail . So but perhaps from a more philosophical and high level point of view , Roger , perhaps you want to first , how does Merryn see M&A opportunities in the market .
Speaker #5: And two specific jurisdictions have been mentioned , or one continent , South America and Nigeria , in two different questions . How do we view opportunities ?
Speaker #5: You know ?
Speaker #4: Shaheen Thanks , .
Speaker #2: So, we are looking at a whole series of opportunities. But as...
Speaker #4: I've said .
Speaker #2: Before and as Oliver has said, we're in.
Speaker #4: rush . No
Speaker #2: We have a balance .
Speaker #4: Sheet which .
Speaker #2: Allows us the .
Speaker #4: The opportunity .
Speaker #2: To wait and find the right opportunity, the right moment.
Speaker #4: Opportunity . I think .
Speaker #2: In the short .
Speaker #4: Term , it .
Speaker #2: Is likely if .
Speaker #4: Do we know anything? It is likely to be.
Speaker #2: Within
Speaker #4: West Africa and we are reviewing a series of opportunities . There . But all I can say at the moment is that we are in the luxurious position of being able to wait until we find the exact right , right opportunity .
Speaker #4: So no rush . We are reviewing very , very carefully and it will . Whatever we do will fit with our investment criteria .
Speaker #5: Thank you. That's it—really. I don't have any other questions that we haven't already answered from the webcast. So I'm going to hand back to the operator to bring this presentation to a close.
Speaker #5: To conclusion .