Q2 2026 Meren Energy Inc Earnings Call

August 12, 2026

Operator: Your conference operator today. At this time, I would like to welcome everyone to Meren's Q2 2026 results presentation. After the speaker's remarks, there will be a question and answer session. Please note that at any time, participants on the webcast can submit their questions using the questions button on the webcast interface. This event is being recorded, and the recording will be made available for playback on the company's website. I will now pass the meeting to Mr. Shahin Amini. Please go ahead, Mr. Amini.

Speaker #1: Components operator today. At this time, I would like to welcome everyone to Marin's second quarter 2026 results presentation. After the speaker's remarks, there will be a question-and-answer session.

Speaker #1: Please note that at any time, participants on the webcast can submit their questions using the questions button on the webcast interface. This event is being recorded, and the recording will be made available for playback on the company's website.

Speaker #1: Shahin Amini. Please go ahead, Mr. Amini.

Speaker #2: Hello everyone. Thank you for joining us today for Marin's second quarter 2026 results presentation. I am Shahin Amini, Head of Investor Relations and Communications at Marin.

Shahin Amini: Hello, everyone. Thank you for joining us today for Meren's Q2 2026 results presentation. I am Shahin Amini, Head of Investor Relations and Communications at Meren. I am joined today by Oliver Quinn, our Chief Executive Officer, and Aldo Perracini, our Chief Financial Officer. We will begin with prepared remarks and then open the floor to questions. Before we get started, I will remind everyone that remarks made during this session are subject to forward-looking statements, which involve significant risk factors and assumptions that could cause actual results to differ materially. More detail on these risks can be found in our regulatory filings on SEDAR+ and on our website. The information discussed is made as of today's date and time, and Meren assumes no obligation to update or revise this information to reflect new events or circumstances, unless if required by law.

Speaker #2: I'm joined today by Oliver Quinn, our Chief Executive Officer, and Aldo Perracini, our Chief Financial Officer. We will begin with prepared remarks, and then open the floor to questions.

Speaker #2: Before we get started, I will remind everyone that remarks made during this session are subject to forward-looking statements, which involve significant risk factors and assumptions, that could cause actual results to differ materially.

Speaker #2: More detail on these risks can be found in our regulatory filings on CedarPlus and on our website. The information discussed is made as of today's date and time, and Marin assumes no obligation to update or revise this information to reflect new events or circumstances unless required by law.

Speaker #2: The company's complete financial statements and related MD&A are available on the company's website and on SEDAR+. With that, I will now hand you over to Oliver.

Shahin Amini: The company's complete financial statements and related MD&A are available on the company's website and on SEDAR+. With that, I will now hand you over to Oliver. Oliver, please go ahead.

Speaker #2: Oliver, please go ahead.

Speaker #3: Thanks, Shahin, and thank you everyone for joining. Starting with slide 4, the quarter shows our strategy working exactly as designed. High quality, low-cost production, and depending the business, and a disciplined capital allocation framework that balances investment in growth, maintaining financial strength, and shareholder returns.

Oliver Quinn: Thanks, Shahin, and thank you everyone for joining. Starting with slide 4, the quarter shows our strategy working exactly as designed. High quality, low cost production underpinning the business, and a disciplined capital allocation framework that balances investment in growth, maintaining financial strength, and shareholder returns. In the core business, our Nigerian assets delivered to plan, with H1 production of around 28,000 BOE per day, and that keeps us firmly on track to meet full-year production guidance. At less than $15 a barrel, our cost of operations remains low and resilient through a volatile landscape. Looking forward, there is a significant return to activity in Q4 across all fields, with a well intervention campaign using a dedicated vessel and two rigs returning to commence drilling campaigns across Agbami, Akpo, and Egina, including infill wells, discovered resource appraisal, and high impact near field exploration.

Oliver Quinn: Thanks, Shahin, and thank you everyone for joining. Starting with slide four, the quarter shows our strategy working exactly as designed. High quality, low cost production underpinning the business, and a disciplined capital allocation framework that balances investment in growth, maintaining financial strength, and shareholder returns. In the core business, our Nigerian assets delivered to plan, with H1 production of around 28,000 BOE per day, and that keeps us firmly on track to meet full-year production guidance. At less than $15 a barrel, our cost of operations remains low and resilient through a volatile landscape. Looking forward, there is a significant return to activity in Q4 across all fields, with a well intervention campaign using a dedicated vessel and two rigs returning to commence drilling campaigns across Agbami, Akpo, and Egina, including infill wells, discovered resource appraisal, and high impact near field exploration.

Speaker #3: In the core business, our Nigerian assets deliver to plan, with first-half production of around 28,000 barrels of oil-equivalent per day, and that keeps us firmly on track to meet folio production guidance.

Speaker #3: At less than $15 a barrel, our cost of operations remains low and resilient through a volatile landscape. Looking forward, there is a significant return to activity in Q4 across all fields, with a well-intervention campaign using a dedicated vessel, and two rigs returning to commence drilling campaigns across Agbami, Agpo, and Ajina, including infill wells, discovered resource appraisal, and high-impact near-field exploration.

Speaker #3: Financially, the picture continues to be one of discipline and financial strength. Net debt-to-EBITDAs of just 0.5 times, top quartile in our peer group, with around $320 million of total liquidity following the earlier RBL refinancing this year.

Oliver Quinn: Financially, the picture continues to be one of discipline and financial strength. Net debt to EBITDA of just 0.5 times top quartile in our peer group, with around $320 million of total liquidity following the earlier RBL refinancing this year. We have also declared our third dividend of 2026, taking year to date distributions to $75 million. Since closing the Prime amalgamation last year, we have returned $175 million in dividends to our shareholders. With a robust H1 performance and a clear path to recommencing investment activity in our production assets this year, we have raised our full year management guidance, and I will cover the detail later in the presentation. Mid to longer term, the wider portfolio has real optionality, and we continue with a laser focus on capital allocation as demonstrated with the restructuring of Impact Oil & Gas announced in May.

Speaker #3: Also, we've declared our third dividend of 2026, taking year-to-date distributions to $75 million, and since closing the prime amalgamation last year, we have returned $175 million in dividends to our shareholders.

Speaker #3: So, with a robust first-half performance, and a clear path to recommencing investment activity in our production assets this year, we have raised our folio management guidance, and I will cover the detail later in the presentation.

Speaker #3: Mid to longer term, the wider portfolio has real optionality, and we continue with a laser focus on capital allocation as demonstrated with the restructuring of impact oil and gas announced in May.

Speaker #3: We've simplified impact to create a pure play, Namibia-focused vehicle, removing Marin's exposure to non-core South African exploration costs. This focuses Marin's regional portfolio in the high-quality orange basin, with our effective interest in the Venus development and adjacent exploration unchanged, alongside the directly held 18% carried interest in South Africa orange basin, Block 3B/4B.

Oliver Quinn: We have simplified Impact to create a pure play Namibia-focused vehicle, removing Meren's exposure to non-core South African exploration costs. This focuses Meren's regional portfolio in the high-quality Orange Basin with our effective interest in the Venus development and adjacent exploration unchanged, alongside the directly held 18% carried interest in South Africa Orange Basin, Block 3B/4B. Turning to slide 5 and our production performance. Our assets continue to perform well with entitlement production of around 30,000 BOE per day. Akpo and Egina performed in line with expectations, and Agbami improved progressively through the quarter as the post turnaround maintenance recovery continued. Importantly, moving back to operational activity begins to provide support to production levels through year-end 2026 and into 2027. With that, I will hand over to Aldo for some more detail on the financials.

Oliver Quinn: We have simplified Impact to create a pure play Namibia-focused vehicle, removing Meren's exposure to non-core South African exploration costs. This focuses Meren's regional portfolio in the high-quality Orange Basin with our effective interest in the Venus development and adjacent exploration unchanged, alongside the directly held 18% carried interest in South Africa Orange Basin, Block 3B/4B. Turning to slide five and our production performance. Our assets continue to perform well with entitlement production of around 30,000 BOE per day. Akpo and Egina performed in line with expectations, and Agbami improved progressively through the quarter as the post turnaround maintenance recovery continued. Importantly, moving back to operational activity begins to provide support to production levels through year-end 2026 and into 2027. With that, I will hand over to Aldo for some more detail on the financials.

Speaker #3: Turning to slide 5 in our production performance, our assets continue to perform well, with entitlement production of around $30,000 BOEs per day. Agpo and Ajina performed in line with expectations, and Agbami improved progressively through the quarter as the post-turnaround maintenance recovery continued.

Speaker #3: Importantly, moving back to operational activity begins to provide support to production levels, through year-end 2026 and into 2027. With that, I'll hand over to Aldo for some more detail on the financials.

Speaker #4: Thank you, Oliver. This quarter, we saw a recover in realized pricing compared to the prior period. We lifted two cargos in Q2 at an average all-in sales price of $92.8 per barrel, against an average dated brent for the quarter of $103.8 per barrel.

Aldo Perracini: Thank you, Oliver. This quarter, we saw a recovery in realized pricing compared to the prior period. We lifted two cargoes in Q2 at an average all-in sales price of $92.80 per barrel against an average dated Brent for the quarter of $103.80 per barrel. The two cargoes tell the story of a transition. The first cargo was a cargo price under the legacy trigger price mechanism, where we realized $63.60 per barrel. The second cargo was a spot cargo, and we achieved $121.90 per barrel, which was both a significant premium to Brent as well as a positive differential to dated Brent. The last cargo under the trigger price mechanism is now behind us, and we will no longer use this structure to manage oil price exposure. This structure served its purpose in the past.

Speaker #4: The two cargos tell the story of a transition. The first cargo was priced under the legacy trigger price mechanism, where we realized $63.60 per barrel.

Speaker #4: The second cargo was a spot cargo, and we achieved $121.9 per barrel, which was both a significant premium to brent, as well as a positive differential to dated brent.

Speaker #4: The last cargo under the trigger price mechanism is now behind us, and we will no longer use this structure to manage oil price exposure.

Speaker #4: This structure served its purpose in the past; however, we believe it is not well suited to the current volatile commodity price environment we are experiencing.

Aldo Perracini: However, we believe it is not well-suited to the current volatile commodity price environment we are experiencing. Our commodity exposure is now being managed through financial derivatives, and we continue to hedge approximately between 30% to 50% of entitlement production over a rolling 12 months period. Full details can be found in the MD&A. Post quarter end, we lifted one cargo in July with an all-in sales price of $90 per barrel against a dated Brent of $81 per barrel for the month. Turning to the financial highlights. We had a strong quarter and the market picked up in cash generation. EBITDAX was $180 million in Q2, taking the H1 to a total of $220 million, supported by two cargoes and stronger realized pricing, partially offset by lower entitlement production and higher royalties due to the higher pricing.

Speaker #4: Our commodity exposure is now being managed through financial derivatives, and we continue to hedge approximately 30% to 50% of the entitlement production over a rolling 12-month period.

Speaker #4: Full details can be found in the MDNA. Post-quarter end, we lifted one cargo in July, with an all-in sales price of $90 per barrel, against a dated brent of $81 per barrel for the month.

Speaker #4: Turning to the financial highlights. We had a strong quarter, and the market picked up in cash generation. EBITDA was $108 million in Q2, taking the first half to a total of $220 million.

Speaker #4: Supported by two cargos and stronger realized pricing. Partially offset by lower entitlement production and higher royalties, due to the higher pricing. Cash flow from operations before working capital was $60 million, and $139 million for the first half.

Aldo Perracini: Cash flow from operations before working capital was $60 million and $139 million for the H1. The gap to EBITDAX primarily reflects cash taxes. Capital expenditure was $50 million in the quarter and $24 million for the H1, mostly invested in Nigeria as we prepare for the drilling and well interventions, with the reminder of the spend weighted to the H2 of the year. Free cash flow was $53 million in Q2, bringing the H1 to $18 million. The message is simple. The portfolio is highly cash generative, and H1 performance is tracking well against guidance, with scope to revise higher, which Oliver Quinn will cover. That upgrade reflects both our H1 delivery and a stronger dated Brent assumption converted into cash by our cost discipline. Turning to cash movements in the quarter.

Speaker #4: The gap to EBITDA primarily reflects cash taxes. Capital expenditure was $15 million in the quarter, and $24 million for the first half, mostly invested in Nigeria as we prepare for the drilling and well interventions.

Speaker #4: With the reminder of the spend weighted to the second half of the year. And free cash flow was $53 million in Q2, bringing the first half to $18 million.

Speaker #4: The message is simple: the portfolio is highly cash-generative, and first-half performance is tracking well against guidance, with scope to revise higher—which Oliver will cover.

Speaker #4: That upgrade reflects both our first-half delivery and a stronger dated brent assumption, converted into cash by our cost discipline. Now turning to cash movements in the quarter.

Speaker #4: Operations generated $67 million reflecting the two liftings and a solid underlying performance. We invested $15 million in the asset base, mostly in Nigeria. We repaid $80 million under the RBL, lowering interest costs and reducing outstanding debt to $219 million at the quarter end, with net repayments across the first half at $40 million following the Q1 refinancing.

Aldo Perracini: Operations generated $67 million, reflecting the two liftings and a solid underlying performance. We invested $50 million in the asset base, mostly in Nigeria. We repaid $80 million under the RBL, lowering interest costs and reducing outstanding debt to $290 million at the quarter end, with net repayments across the H1 at $40 million following the Q1 refinancing. We distributed $50 million in dividends, the first two distributions of 2026, with a third distribution declared today. We will continue to allocate capital with discipline, protecting flexibility as activity in organic growth investment builds. Balance sheet trends remain the foundation of our business, giving us the resilience and flexibility to allocate capital through the cycle. Organic growth is our core value driver today, and even more so as we move into a very active phase with disciplined investment in short cycle, high return opportunities within our asset space.

Speaker #4: We distributed $50 million in dividends. The first two distributions of 2026, with a third distribution declared today. We will continue to allocate capital with discipline, protecting flexibility as activity in organic growth investment builds.

Speaker #4: Balance sheet strength remains the foundation of our business. Giving us the resilience and flexibility to allocate capital through the cycle. Organic growth is our core value driver today.

Speaker #4: And even more so, as we move into a very active phase with disciplined investment in short-cycle, high-return opportunities within our assets base. On shareholder returns, the base dividend policy has been our focus for returning capital, and this continues to be calibrated to market conditions and our investment priorities.

Aldo Perracini: On shareholder returns, the base dividend policy has been our focus for returning capital, and this continues to be calibrated to market conditions and our investment priorities. We have been consistent. Balance sheet and the highest return organic growth takes first call on our capital resources. About liquidity management. The headline here is Meren's financial strength and flexibility, and that matters even more as drilling activity ramps up. We ended June with net debt of $212 million and a net debt to EBITDAX of just 0.5 times, comfortably inside our through the cycle target of one times. We also retained $241 million of RBL headroom and $78 million in cash, with a total liquidity of $319 million. In practical terms, we enter the next operational phase from a position of strength, able to fund planned investment while staying resilient through the price cycles. With that, I will hand back to Oliver Quinn.

Speaker #4: We have been consistent, balance sheet in the highest return organic growth takes first call on our capital resources. About liquidity management, the headline here is Marin's financial strength and flexibility, and that matters even more as drilling activity ramps up.

Speaker #4: We ended June with net debt of $212 million, and a net debt to EBITDA of just 0.5 times, comfortably inside our through-the-cycle target of 1 time.

Speaker #4: We also retained $241 million of RBL headroom and $78 million in cash. With a total liquidity of $319 million. In practical terms, we entered the next operational phase, from a position of strength.

Speaker #4: Able to fund planned investment while staying resilient through the price cycles. With that, I'll hand back to Oliver.

Speaker #3: Thanks, Aldo. Turning to slide 10, we are revising our full-year 2026 guidance upwards, given both the positive first-half operational performance and financial outlook. We've narrowed the working interest production range to $24 to $27,000 barrels of oil equivalent a day, and entitlement production narrows to between $28.5 and $32.5 thousand.

Oliver Quinn: Thanks, Aldo Perracini. Turning to slide 10, we are revising our full year 2026 guidance upwards, given both the positive H1 operational performance and financial outlook. We have narrowed the working interest production range to 24,000 to 27,000 barrels of oil equivalent a day, and entitlement production narrows to between 28,500 and 32,500. On the back of a higher assumed Brent price of around $85 a barrel for the year, we are raising EBITDAX guidance from an initial $270 million to $360 million to between $390 million and $430 million, and cash flow from operations to $235 million to $260 million, raising the midpoint of these ranges by around 30% and 12% respectively.

Speaker #3: On the back of a higher assumed brent price of around $85 a barrel for the year, we're raising EBITDAs guidance from an initial $270 to $360 million, to between $390 and $430 million, and cash flow from operations to $235 to $260 million, raising the midpoint of these ranges by around 30% and 12%, respectively.

Speaker #3: We've adjusted down our capital investment guidance range with a deferral of some drilling activity to 2027, and that's partially offset by additional activity for Regina and ACPO through the arrival of an intervention vessel to perform workover activities on wells later this year, and that will support short-term production ahead of the more significant impact of the infill drilling in 2027.

Oliver Quinn: We have adjusted down our capital investment guidance range with the deferral of some drilling activity to 2027. That is partially offset by additional activity for Egina and Akpo through the arrival of an intervention vessel to perform workover activities on wells later this year. That will support short-term production ahead of the more significant impact of the infill drilling in 2027. Turning to slide 11, let us take a broader look at our operational and business outlook for the next 12 months as activity picks up significantly across the portfolio. Starting with Nigeria and Agbami, the rig will arrive in Q3 to drill a campaign of up to 6 infill wells across the field, following an appraisal well on the Ikeja discovery.

Speaker #3: Turning to slide 11, let's take a broader look at our operational and business outlook for the next 12 months, as activity picks up significantly across the portfolio.

Speaker #3: Starting with Nigeria and Agbami, the rig will arrive in Q3 to drill a campaign of up to 6 infill wells across the field, following an appraisal well on the Akija Discovery.

Speaker #3: This Akija well has the potential to de-risk further contingent resource, and if successful, will mature the discovery towards development planning as a subsea tie-back to the Agbami FPSO, which would offer a short cycle and high IRR development opportunity for Marin, leveraging our existing infrastructure.

Oliver Quinn: This Ikeja well has the potential to de-risk further contingent resource, and if successful, will mature the discovery towards development planning as a subsea tieback to the Agbami FPSO, which would offer a short cycle and high IRR development opportunity for Meren, leveraging our existing infrastructure. The second rig for Akpo and Egina is expected to arrive and drill the Akpo Far East exploration well ahead of a series of infill wells. Akpo Far East is an attractive near field target, and if successful, will be tied back into the existing Akpo infrastructure less than 5 kilometers away, again, leveraging our existing infrastructure. With commercial success, early production could be brought online late 2027. Looking further through 2027, we expect infill drilling to continue on all 3 of our producing fields and providing effective support to field production levels throughout the year and into 2028.

Speaker #3: The second rig, for ACPO and Regina, is expected to arrive and drill the ACPO Far East exploration well ahead of a series of infill wells.

Speaker #3: ACPO Far East is an attractive near-field target, and if successful, will be tied back into the existing ACPO infrastructure less than 5 kilometers away, again leveraging our existing infrastructure.

Speaker #3: With commercial success, early production could be brought online in late 2027. Looking further through 2027, we expect infill drilling to continue on all three of our producing fields, providing effective support to field production levels throughout the year and into 2028.

Speaker #3: Beyond drilling operations, we will also see a return to the feed studies for the Preoi field, following interpretation of new seismic data that is underpinned at potentially higher resource space and lower cost development.

Oliver Quinn: Beyond drilling operations, we will also see a return to the FEED studies for the Preowei field following interpretation of new seismic data that has underpinned a potentially higher resource base and lower cost development. Moving to Namibia and the Venus project, we are very encouraged by the recent public statements of the operator, TotalEnergies, regarding progress of negotiations with the government of Namibia toward reaching final investment decision. There is strong alignment between the JV and the government on developing this strategic project, the first oil development in Namibia and in the Orange Basin, and we continue to anticipate FID can be achieved in 2026, with first oil still targeted by the end of 2030. Venus is a major deepwater development that diversifies our production base through the addition of another low-cost and long-term production stream.

Speaker #3: Moving to Namibia and the Venus project, we are very encouraged by the recent public statements of the operator, TotalEnergies, regarding progressive negotiations with the Government of Namibia toward reaching final investment decision.

Speaker #3: There is strong alignment between the JV and the government on developing the strategic project, the first oil development in Namibia and in the Orange Basin, and we continue to anticipate FID can be achieved in 2026, with first oil still targeted by the end of 2030.

Speaker #3: Venus is a major deep-water development that diversifies our production base through the addition of another low-cost and long-term production stream. The FID milestone, once achieved, will further underpin Marin's broader Orange Basin investment case, with significant additional exploration potential around Venus, as well as in our carried South Africa Orange Basin exploration position in 3B/4B.

Oliver Quinn: The FID milestone, once achieved, will further underpin Meren’s broader Orange Basin investment case, with significant additional exploration potential around Venus, as well as in our carried South Africa Orange Basin exploration position in 3B-4B. Finally, turning to Equatorial Guinea. Recall that earlier this year, we secured 2-year license extensions for both blocks, giving us additional flexibility as we progress partnership discussions and align next steps with the government. We continue to be engaged in active discussions with interested parties, and once we have the right partnership in place and the right capital structure, drilling activity could take place within the next couple of years. To conclude on slide 12, Meren has a strong foundation, high quality, low cost production, low leverage, and the financial capacity to invest through the cycle.

Speaker #3: Finally, turning to equatorial Guinea, recall that earlier this year we secured two-year licensed extensions for both blocks, giving us additional flexibility as we progress partnership discussions and align next steps with the government.

Speaker #3: We continue to be engaged and active discussions with interested parties, and once we have the right partnership in place and the right capital structure, drilling activity could take place within the next couple of years.

Speaker #3: So to conclude on slide 12, Marin has a strong foundation, high quality, low-cost production, low leverage, and a financial capacity to invest through the cycle.

Speaker #3: From that base, we're moving into an exciting and active period with key operational and project milestones through the remainder of 2026 and into 2027.

Oliver Quinn: From that base, we are moving into an exciting and active period with key operational and project milestones through the remainder of 2026 and into 2027. Investment in our Nigeria portfolio supports both short-term production and cash flow, as well as the maturation of a deep portfolio of future low-cost oil resource options. Beyond Nigeria, progress in Namibia and the wider portfolio is set to deliver significant long-term and low-cost growth opportunities that have the potential to deliver significant shareholder value. With that, thanks for your time, and I will now hand back to the operator for any questions.

Speaker #3: Investment in our Nigeria portfolio supports both short-term production and cash flow, as well as the maturation of the deep portfolio of future low-cost oil resource options.

Speaker #3: Beyond Nigeria, progress in Namibia and the wider portfolio is set to deliver significant long-term and low-cost growth opportunities that have the potential to deliver significant shareholder value.

Speaker #3: With that, thanks for your time, and I'll now hand back to the operator for any questions.

Speaker #2: Thank you, Dr. Quinn. We will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen.

Shahin Amini: Thank you, Oliver Quinn. We will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once your name has been announced, you can ask a question. If you want to withdraw your question, please lower your hand using the raise hand function. 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. Our first question comes from Jeff Robertson with Water Tower Research. Please unmute yourself and ask your question.

Operator: Thank you, Oliver Quinn. We will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once your name has been announced, you can ask a question. If you want to withdraw your question, please lower your hand using the raise hand function. 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. Our first question comes from Jeff Robertson with Water Tower Research. Please unmute yourself and ask your question.

Speaker #2: Once your name has been announced, you can ask a question. If you lower your hand using the raised hand function. Thank you, and a moment for the first question, please.

Speaker #2: 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. Our first question comes from Jeff Robertson with Water Tower Research.

Speaker #2: Please unmute yourself and ask your question.

Speaker #3: Good morning. Thank you. Can you hear me?

Jeff Robertson: Good morning. Thank you. Can you hear me?

Speaker #4: Yes, go ahead.

Oliver Quinn: Yes, go ahead.

Jeff Robertson: Do you think it is closed?

Speaker #3: Can you hear this guy?

Speaker #2: Please go ahead and ask your question. Our next question comes from Theodore Sveen with Nilson. Please unmute yourself and ask your question.

Shahin Amini: Please go ahead and ask your question. Our next question comes from Theodore Speen with Nelson. Please unmute yourself and ask your question.

Operator: Please go ahead and ask your question. Our next question comes from Theodore Speen with Nelson. Please unmute yourself and ask your question.

Speaker #5: Good afternoon, and thanks for taking my question. Can you hear me?

Theodore Speen: Good afternoon, and thanks for taking my question. Can you hear me?

Speaker #4: Yes, we can. Go ahead.

Oliver Quinn: Yes, we can. Go ahead.

Speaker #5: Perfect, thanks. So there's a few questions from me, and the first one is on the drilling campaign in Nigeria you’re talking about. I assume that will make some positive contributions to production for 2027.

Theodore Speen: Perfect. Thanks. There are a few questions from me. First one is on the drilling campaign in Nigeria you are talking about. I assume that will make some positive contributions on production for 2027. Should we expect that that drilling campaign and the infill wells will arrest decline, or should we model some production growth in 2027 versus 2026? That is the first question. The second one is also related to that. Given that you step up drilling activity, I also assume that CapEx in 2027 maybe will be slightly higher than 2026. Can you confirm that? Third and final question for now, that is lifting schedule. You mentioned that you had one lifting in July. How does the full H2 lifting schedule look like? Thanks.

Speaker #5: Should we expect that drilling campaign and the infill wells will arrest decline, or should we model some production growth in 2027 versus 2026?

Speaker #5: So that's the first question. Secondly, also related to that, given that you step up drilling activity, I also assume that CapEx in 2027 may be slightly higher than in 2026.

Speaker #5: Can you confirm that? And third and final question for now, that is a lifting schedule. Could you mention that you had one lifting in July?

Speaker #5: How does the full H2 lifting schedule look like? Thanks.

Speaker #4: Yeah, thanks for the question. It's all over here. I'll take the first two, and then I'll hand over to Aldo for the lifting schedule.

Oliver Quinn: Yeah. Thanks for the question. It is Oliver here. I will take the first two, and then I will hand over to Aldo for the lifting schedule. Yeah, I think on the activity in Nigeria, I think firstly, very happy to get back to activity across all three fields. Again, as we said in the call, two rigs coming, intervention vessel ahead of that. I think important to characterize, there is a range of activity there. Firstly, we are drilling a new field exploration well off the side of Akpo, which is kind of super exciting catalyst, very low cost, and could be quite a significant resource. There is a potential significant value add from that activity. Similar adjacent to Agbami, we will drill an Ikija appraisal well, which again, is testing future resource, if you like, tieback potential to existing infrastructure.

Speaker #4: So yeah, I think on the activity in Nigeria, I think firstly, very happy to get back to activity across all three fields. And again, as we said in the call, two rigs coming, intervention vessel ahead of that.

Speaker #4: So I think what's important to characterize is the range of activity there. Firstly, we're drilling a near-field exploration well off the side of Akpo, which is kind of super exciting.

Speaker #4: Catalyst, very low cost, and could be quite a significant resource. So there's a potential significant value add from that activity. Similar in adjacent to Agbami, we'll drill in Kija appraisal well, which again is testing future resource, if you like, tie-back potential to existing infrastructure.

Speaker #4: So those are important in the longer term, mid-term sense of significant value creation, value add to the portfolio. And then you look at the rest of the campaign and the intervention vessels, and those are adding kind of to the point, really.

Oliver Quinn: Those are important in a longer-term, mid-term sense of significant value creation, value add to the portfolio. Then you look at the rest of the campaign and the intervention vessels, and those are adding, to the point really, those are adding production very short term in the intervention vessel sense. Those things come on as soon as the vessel has done its activity. Then in the wells, it takes a couple of months to hook them up, of course. What that will result then is, longer-term value creation growth in the resource space, which is important. Then in the short term, firstly, it will arrest the natural decline of the fields through 2027, which, given we are kind of in the midlife here, is important.

Speaker #4: Those are adding production very short term, in the intervention vessel sense. Those things come on as soon as the vessel is done its activity. And then in the wells, it takes a couple of months to hook them up, of course.

Speaker #4: So what that will result in, then, is longer-term value creation, growth in the resource space—which is important. And then, in the short term, it will arrest—firstly, it will arrest—the natural decline of the fields through 2027, which, given we're kind of in the midlife here, is important.

Speaker #4: And then, depending on results—yeah, look, I think we'd expect to see some incremental extra performance from that activity. But I would characterize it as, firstly, from a production perspective: arrest decline, keep production stable through '27, and then, with some positive wind behind this, if you like, an increase on production levels from that kind of plateau through '27.

Oliver Quinn: Then depending on results, yeah, look, I think we would expect to see some incremental extra performance from that activity, but I would characterize it as firstly, from a production perspective, arrest decline, keep production stable through 2027, and then with some positive wind behind us, if you like, an increase on production levels from that kind of plateau through 2027. So, we look at the year as important because we start to see the results of that activity. If you look at the production levels as we go through the back end of 2026, we certainly, again, would hope to maintain those and, if possible, increase those.

Speaker #4: So we look at the year as important because we start to see the results of that activity, and if you look at the production levels as we go through the back end of '26, we certainly, again, would hope to maintain those and, if possible, increase those.

Speaker #4: All right, so I'll cover the question about the lifting schedule. And I think just before I answer, I mean, reminding that the lifting schedule is conditioned on two things, right?

Aldo Perracini: All right. I will cover the question about the lifting schedule. I think just before I answer, reminding that lifting schedule is conditional on two things, right? One is the line performance of the FPSO, the production. As well as the fact that we are in the PSC arrangements, any change in oil prices or even assumptions on CapEx and OpEx can change the lifting schedule. It is a little bit fluid. With that disclaimer, we expect the H2, as you correctly pointed out, we already lifted one cargo in July successfully. We have expected for the rest of the semester, let's say another three to four cargoes to be lifted throughout the H2 2026 on top of the July cargo. We had three cargoes in the H1.

Speaker #4: One is the performer, then the line performance of the SBSO, right, the production. But as well as the fact that we are in the PSC arrangements, any change in oil prices or even assumptions on CapEx and OpEx can change the lifting schedule.

Speaker #4: So it is a little bit fluid. But with that disclaimer, we expect the second half, I mean, as you correctly pointed out, we already lifted one cargo in July.

Speaker #4: Successfully. And we have expected for the rest of the semester, let's say, another three to four cargoes to be lifted throughout the second half of 2026, on top of the July cargo.

Speaker #4: So we had three cargoes in the first half, NOB slightly more concentrated on the second half with something between four to five cargoes for the second half.

Aldo Perracini: It will be slightly more concentrated on the H2 with something between four to five cargoes for the H2. Yeah.

Speaker #4: Yeah.

Speaker #5: Okay. Could I just follow up on that? Does that mean probably that implies that lifting will be more or less equal to production in the second half?

Theodore Speen: Okay. Could I just follow up on that? Does that mean, probably that implies that lifting will be more or less equal to production in the H2. So we shouldn't expect any material overall underlift.

Speaker #5: So we shouldn't expect any material overall in the lift?

Aldo Perracini: Yeah. We finished June with, as you could see in the financial statements, we finished with an under-lifted position. Therefore, with that under-lifted position, which was roughly 600,000 barrels, plus the production throughout the H2, then we get to, in our current assumptions, six cargoes for the year. For the H2, sorry.

Speaker #4: Yeah, we finished June with, as you could see in the financial statements, we finished with an underlifted position. And therefore, with that underlifted position, which was roughly 6,600,000 barrels, plus the production throughout the second half, then we get to, in our current assumptions, six cargoes for the year—for the second half, sorry.

Speaker #5: Okay, thanks. And on the 2027 CapEx, are you in position to say anything about that?

Theodore Speen: Okay, thanks. On the 2027 CapEx, are you in position to say anything about that?

Speaker #4: Yeah, I mean, obviously, it's a bit early. In terms of budgets and specifics, firming up for next year. But I think what we do have line of sight too is, of course, the activity that we've outlined today.

Oliver Quinn: Yeah. Obviously it's a bit early, in terms of budgets and specifics firming up for next year. But I think what we do have line of sight to is, of course, the activity that we've outlined today. There'll be some optimization of that in 2027, which will drive the final capital figure. But I think, if you look at our capital guidance for this year, it's come down a little bit, and I think that's really not change of activity or cost. It's really a deferral of some of that activity into 2027. Look, at this stage, I think a broad view on it, but it will be something similar to where we are this year, if not lower.

Speaker #4: There'll be some optimization of that in '27, which will drive the final capital figure. But I think, look, if you look at our capital guidance for this year, it's come down a little bit.

Speaker #4: And I think that's really not change of activity or cost. It's really a deferral of some of that activity into '27. So look, at this stage, I think a broad view on it, but it will be something similar to where we are this year, if not lower.

Speaker #5: Okay, that's clear. Thank you.

Theodore Speen: Okay, that's clear. Thank you.

Speaker #4: Thank you.

Oliver Quinn: Thank you.

Speaker #2: Our next question comes from Jeff Robertson with Water Tower Research. Please unmute your line and ask your question.

Shahin Amini: Our next question comes from Jeff Robertson with Water Tower Research. Please unmute your line and ask your question.

Operator: Our next question comes from Jeff Robertson with Water Tower Research. Please unmute your line and ask your question.

Speaker #6: Thank you. Good morning. Oliver, can you share any color on what kind of reserve movements you might expect from the drilling campaign that is laid out for late this year and in 2027?

Jeff Robertson: Thank you. Good morning. Oliver, can you talk or can you share any color on what kind of reserve movements you might expect from the drilling campaign that is laid out for late this year in 2027?

Speaker #4: Yeah, hi, Jeff. Thanks for the question. I think if you look at it, again, I kind of two buckets, if you like. So firstly, the series of activity around the field.

Oliver Quinn: Yeah. Hi, Jeff. Thanks for the question. I think if you look at it again, kind of two buckets, if you like. Firstly, the series of activity around the field, so the Akpo Far East is effectively exploration near field, and then Ikija next to Agbami's appraisal. So those are either adding to contingent resource, so kind of 2C in the case of Akpo Far East. In the case of Ikija, that is again firming up a contingent resource to say, do we have sufficient volume in that discovery to underpin a project, move it towards an FID, and then move that into 2P in reserves? I think those are in that contingent, increasing the pathway maturing towards 2P. I think specifically to go back on Akpo Far East, what is interesting with that is it is about 5 kilometers from our existing subsea infrastructure on Akpo.

Speaker #4: So the Akpo Far East is effectively exploration near-field, and then Akija, next to Agbami, is appraisal. So those are either adding to contingent resource—to kind of 2C, in the case of Akpo Far East.

Speaker #4: And in the case of Akija, that's again the firming up of a contingent resource to say, do we have sufficient volume in that discovery to underpin a project?

Speaker #4: Move it towards an FID, and then move that into 2P and reserves. So I think those are in that contingent, increasing the pathway and maturing towards 2P.

Speaker #4: I think specifically to go back on Akpo Far East, what's interesting with that is it's about five kilometers from our existing subsea infrastructure on Akpo.

Speaker #4: There's plenty of village over the FPSO, so that would be a very short-cycle project. So, I mean, again, you see it in the call here, but it could be kind of 12 to 18 months to first oil from that, in the success case.

Oliver Quinn: There is plenty of ullage over the FPSO. So that would be a very short cycle project. Again, you see it in the call here, but it could be kind of 12, 18 months to first oil from that in the success case. So although the well would actually, it is an exploration well and would add to contingent resource, we would expect that very, very rapidly to move to actually to reserves and 2P, in the success case, because of that cycle time. So that whole bucket is a bit of 2C and then some success case incremental 2P in the next kind of 12 months on Akpo. Then if you move to the fields themselves, I think largely it is infill wells, interventions that are targeting current 2P. Again, some of those targets have some reasonable upside on them, which would be contingent today and would move to 2P.

Speaker #4: So, although the well is actually an exploration well and would add to a contingent resource, we would expect that very, very rapidly to move to reserves and 2P.

Speaker #4: In the success case, because of that cycle time. So that whole bucket is a bit of 2C and then some success case incremental 2P in the next kind of 12 months on Akpo.

Speaker #4: And then, if you move to the fields themselves, I think largely it's infill wells, interventions that are targeting current 2P. Again, some of those targets have some reasonable upside on them, which would be contingent today and would move to 2P.

Speaker #4: But I would characterize it as it's broadly about production sustaining production increasing cash flows through '27 rather than adding significant 2P to that reserve space, if you like.

Oliver Quinn: But I would characterize it as it is broadly about

Oliver Quinn: But I would characterize it as it is broadly about production, sustaining production, increasing cash flow through 2027, rather than adding significant 2P to that reserve space, if you like. So it is really getting the most out of that 2P and moving some of it to 1P.

Oliver Quinn: production, sustaining production, increasing cash flow through 2027, rather than adding significant 2P to that reserve space, if you like. So it is really getting the most out of that 2P and moving some of it to 1P.

Speaker #4: So, it's really about getting the most out of that 2P and moving some of it to 1P.

Speaker #6: Thank you. And Aldo, can you share some thoughts around how the drilling campaign and the capital that will be spent on the drilling campaign will affect entitlement production in 2027?

Jeff Robertson: Thank you. Aldo, can you share some thoughts around how the drilling campaign and the capital that will be spent on the drilling campaign will affect entitlement production in 2027?

Speaker #4: Yeah, so I think what you're referring to is we're going to have, from the last quarter of this year to, let's say, two rigs drilling in the different areas, right?

Aldo Perracini: Yeah. So I think what you are referring to is we are going to have, from the last quarter of this year, let us say, two rigs drilling in the different areas, right? One with Chevron and one with Total. So we should expect that 2027, we are going to have a higher CapEx rate compared to 2026. 2026, if you follow our guidance as well as the actual results, you are going to see that we are very concentrated on the last quarter of this year as well, right? So in terms of the first half of the year, we delivered, we spent $24 million only, and we expect the bulk of the expenditure to be in the last quarter of 2026.

Speaker #4: One with Chevron and one with Total. So, we should expect that in 2027, we're going to have a higher CapEx rate compared to 2026. In 2026, if you follow our guidance as well as SDX or results, you're going to see that we're very concentrated on the last quarter of this year as well, right?

Speaker #4: So in terms of the first half of the year, we delivered we spent 24 million dollars only, and we expect the bulk of the expenditure to be in the last quarter of 2026.

Speaker #4: So I think, let's say, let's look at 2026 second quarter and expect that the spend will be similar on a quarterly basis throughout 2027 as we keep drilling the wells on both blocks.

Aldo Perracini: I think, let's say, let's look at 2026 Q2 and expect that the spend will be similar on a quarterly basis throughout 2027 as we keep drilling the wells on both blocks. When you do that in an entitlement regime, maintaining everything else the same, you should, in theory, increase your entitlement production, which will then generate the entitlements for the additional lifts, right? That is how you should expect it to happen.

Speaker #4: So when you do that in an entitlement regime, maintaining everything else the same, you should in theory increase your entitlement production which will then generate the entitlements for the additional lifts, right?

Speaker #4: So that's how you should expect it to happen.

Speaker #6: Of course, the other big factor is the oil price. I mean, today's oil price volatility.

Oliver Quinn: Of course, the other big factor is the oil price. I mean, today's oil price volatility-

Aldo Perracini: That is why I said keeping everything else the same.

Speaker #4: That's why I said, keeping everything else the same.

Speaker #6: It would be two words. We're still nearer to the end of the year, so we'll obviously do our full-year 2027 management guidance in due course, and we'll update you, Jeff.

Oliver Quinn: It would be-

Aldo Perracini: That's what-

Oliver Quinn: too soon forward until we're nearer to the end of the year. We'll obviously do our full year 2027 management guidance in due course, and we'll update you, Jeff.

Speaker #6: Thank you. And last question on 2027, just generally with if you arrest a decline and grow production, then on the fixed cost, your unit LOE should trickle down, shouldn't it?

Jeff Robertson: Thank you. Last question on 2027, just generally with if you arrest the decline and grow production, then on the fixed cost, your unit LOE should trickle down, shouldn't it?

Shahin Amini: We're currently facing a technical challenge. Please hold and we'll be right back.

Operator: We're currently facing a technical challenge. Please hold and we'll be right back.

Speaker #2: We're currently facing a technical challenge. Please hold, and we'll be right back.

Speaker #6: Oliver, can you hear us?

Shahin Amini: Hello, can you hear us?

Jeff Robertson: I can, if I'm still live.

Speaker #7: I can, if I'm still live.

Speaker #5: Hello, Ashley. Yes, can you hear us?

Shahin Amini: Hello. Hello, Ashley. Yes, can you hear us?

Speaker #8: Yes, we can hear you.

Oliver Quinn: Yes, we can hear you.

Speaker #5: Yes.

Shahin Amini: Yeah, apologies. We had a technical malfunction at our end. If Jeff can hear us, can he please repeat his last question?

Speaker #6: Yeah, apologies. We had a technical malfunction at our end. If Jeff can hear us, can he please repeat his last question?

Speaker #7: Yes. In 2027, with the drilling campaign and the expectation of adding production, do you anticipate much of an impact on production costs just from a unit standpoint?

Jeff Robertson: Yes. In 2027, with the drilling campaign and with the expectation of adding production, do you anticipate much of an impact on production costs, just from a unit standpoint?

Shahin Amini: Sorry, Jeff. Again, we are still suffering from some problems. Can you just repeat that?

Speaker #6: Sorry, Jeff. Again, we're still suffering from some problems. Can you just repeat that?

Speaker #7: Yes. Do you expect an impact in 2027 production costs? From the 2027 drilling campaign?

Jeff Robertson: Yes. Do you expect an impact on 2027 production costs from the 2027 drilling campaign?

Shahin Amini: Jeff, that sounds like it perhaps at our end. Just repeat that once more.

Speaker #4: Jeff, that's fine. Lucky perhaps on our end, just repeat that once more.

Speaker #7: Shahin, should we expect an impact on 2027 production costs, at least on a unit basis, from the 2027 drilling campaign, with the expectation of incremental volumes being added?

Jeff Robertson: Shahin, should we expect an impact on 2027 production costs, at least on a unit basis from the 2027 drilling campaign, with the expectation of incremental volumes being added?

Speaker #4: Yeah, so you shouldn't impact production costs those costs will mostly be reflected in our CapEx requirement in 2027. So production costs will be a function of what we're getting from the operator's budget for next year.

Aldo Perracini: Yeah. So it shouldn't impact production costs. Those costs will mostly be reflected in our CapEx requirement in 2027. So production costs will be a function of what we're going to get from the operators' budget for next year. If you look at the last quarters, you can see that we have been spending consistently a little bit below $40 million per quarter. So we do believe that remains our view for the short term, Jeff, and the drilling expenditures will be reflected in CapEx.

Speaker #4: So if you look at the last quarters, you can see that we have been spending consistently a little bit below 40 million dollars per quarter.

Speaker #4: So, we do believe that remains our view for the short term, Jeff. And the drilling expenditures will be reflected in CapEx.

Speaker #7: Thank you.

Jeff Robertson: Thank you.

Speaker #6: Yeah, apologies for that technical mishap on our end.

Shahin Amini: Yeah, apologies for that technical mishap at our end.

Shahin Amini: There are no further questions at this time. I will now hand back to Shahin to read through your written questions.

Operator: There are no further questions at this time. I will now hand back to Shahin to read through your written questions.

Speaker #2: There are no further questions at this time. I will now hand back to Shahin to read through your written questions.

Speaker #4: Thank you.

Shahin Amini: Thank you. Aldo, there is a question on hedging. The question is, under the RBL agreements, do we have to hedge? Can you just share your views on the hedging plan moving forward and what has changed?

Speaker #6: Aldo, there's a question on hedging. The question is: under the RBL agreements, do we have to hedge? And can you just share your views on the hedging plan moving forward?

Speaker #6: And what has changed?

Speaker #4: Sure. So, in relation to hedging—no, we have no obligation under our RBL to have minimums, minimum hedging, or any type of hedging strategy.

Aldo Perracini: Sure. In relation to hedging, no, we have no obligation under our RBL to have minimum hedging or any type of hedging strategy. I think, of course, the banks consider that we will have a prudent management in terms of commodity and price risk. We do that consistently, and we have an internal policy which we follow, and we have explained that in our MD&A. Roughly, we hedge between 30% to 50% of our gross production on a 12 months rolling basis. We keep with the hedging strategy. We think it is a protection against the volatility in oil prices. That is especially even more important than we step up the drilling operations in the next year. We will continue with following our hedging policy.

Speaker #4: I think, of course, the banks consider that we will have a prudent management in terms of commodity price risk, so we do that consistently, and we have an internal policy which we follow.

Speaker #4: And we have explained that in our MD&A. So, roughly, we hedge between 30% to 50% of our gross production on a 12-month rolling basis.

Speaker #4: So the only we keep with the hedging strategy. We think it's a protection against the volatility in oil prices. And that's especially even more important than we step up the drilling operations in the next year.

Speaker #4: So, we will continue with following our hedging policy. The only change worth highlighting is that we have moved away from using the trigger price mechanism that we used in the past, which had its purpose back in the day.

Aldo Perracini: The only changes worth highlighting is that we have moved from doing the trigger price mechanism from the past, which was something, it had its purpose back in the days. As I mentioned before, in this volatile oil price environment that we have, and also the fact that the floor has increased dramatically with the tensions in the Middle East, we have moved to a more structured hedging implementation through financial derivatives. You can see the full details in our MD&A.

Speaker #4: But as I mentioned before, in this volatile oil price environment that we have, and also the fact that the floor has increased dramatically with the tensions in the Middle East, we have moved to a more structured hedging implementation through financial derivatives.

Speaker #4: And you can see the full details in our MD&A. Thank you for that, Aldo. And turning to the Fairway developments...

Shahin Amini: Thank you for that, Aldo. Turning to the Preowei developments, Oliver, do you see further nearby, I suppose this applies to other fields in Deep Water, offshore Nigeria. Do you see further near field opportunities, and do you see positive takeaways for Preowei, and how do you see that moving forward?

Speaker #6: Oliver, do you see further nearby? I suppose this applies to other fields in the port of Nigeria. Do you see further near-field opportunities? And do you see positive takeaways for prayer away?

Speaker #6: And how do you see that moving forward?

Speaker #4: Yeah, I think it's important to take a step back around the Nigeria production assets and the portfolio. We talked on this call we're excited to drill the Aquaforest while coming up.

Oliver Quinn: Yeah. I think it is important to take a step back around the Nigeria production assets and the portfolio. We talked on this call, we are excited to drill the Akpo Far East well coming up. We have got an appraisal well on Akit just so again, testing and maturing significant resources there next to infrastructure. So super kind of high-value stuff, short cycle developments. More widely, of course, we have Preowei, which is a tieback project to the Egina FPSO. As a reminder, Preowei in itself is a significant field. It is kind of expected to deliver peak production gross 65,000 barrels a day. So that is a big opportunity for us as a tieback that is maturing well. There are others. There is an Egina South discovery, which again, the name gives it away, but it is a tieback potential development to the Egina field.

Speaker #4: We've got appraisal well on a key gear. So again, testing and maturing significant resources there next to infrastructure. So super kind of high-value stuff, short-cycle developments.

Speaker #4: But more widely, of course, we have priority which is it's a tieback project to the Aegina FPSO. As a reminder, priori in itself is a significant field.

Speaker #4: I mean, it's kind of expected to deliver peak production gross 65,000 barrels a day. So that's a big opportunity for us as a tieback.

Speaker #4: That's maturing well. There are others. There is an Aegina South discovery, which again, the name gives it away, but it's a tieback potential development to the Aegina field.

Speaker #4: It's actually across our block, and it goes into a neighboring license area. So Total are in the license area adjacent to our side, if you like.

Oliver Quinn: It is actually across our block, and it goes into a neighboring license area. TotalEnergies are in the license area adjacent to our side, if you like, and they are planning an appraisal well on that forthwith. So again, although that is not a well on our side of the license, it matures that project into what could be a priority type scale tieback as well. So those are two big opportunities. As we look more widely around the fields, I think there has been a series of kind of new 3D seismic acquisitions over the last few years, particularly over Preowei, for example, that have really unlocked the subsurface a bit further. Actually, there is a good portfolio there of follow-on opportunities in terms of low risk near field exploration, discovered resource, et cetera. So you put all that together, and how do we look at those assets now?

Speaker #4: And they are planning an appraisal well on that forthwith. So again, although that's not a well on our side of the license, it matures that project into what could be a priori-type scale tieback as well.

Speaker #4: So those are two big opportunities. And then, as we look more widely around the fields, I think there's been a series of kind of new 3D seismic acquisitions over the last few years, particularly over Priori, for example, that have really unlocked the subsurface a bit further.

Speaker #4: And actually, there's a good amount of low-risk near-field exploration, discovered resources, etc. So you put all that together, and how do we look at those assets now?

Speaker #4: Well, of course, they have very low lifting costs, very reliable base production, and very long field life through the next decade—so significant and sustained cash flow.

Oliver Quinn: Well, of course, they have very low lifting costs, very reliable base production, very long field life, through the next decade. So significant and sustained cash flow. Very secure cash flow in a, again, in a volatile world because of those low lifting costs. But actually, there is more than that now because we have got really big, kind of 200,000 barrel a day FPSOs. Those FPSOs have all the capacity as the core fields have matured. So of course, we are now quite aggressively looking with the partnership on, well, what other aspects of volumes could we tie back into those fields? So, I think we are really positive about that. It does take time to get through, decide, and make the right decisions and make the optimal development plans, if you like.

Speaker #4: Very, very secure cash flow in, again, in a volatile world because of those low lifting costs. But actually, there's more than that now because we've got really, really big kind of 200,000 barrel a day FPSOs.

Speaker #4: Those FPSOs have all legit capacity as the core fields have matured. And so of course, we're now quite aggressively looking with the partnership on, well, what are the aspects of volumes can we tie back into those fields?

Speaker #4: So, I think we're really positive about that. It does take time to get through the cycle and make the right decisions, and make the optimal development plans, if you like.

Speaker #4: But we're working hard with our partners on that, and I think we'll see a series of both near-field exploration and contingent resource maturing to FID tieback projects through the next couple of years.

Oliver Quinn: But we are working hard with our partners on that, and I think we will see a series of both near field exploration, contingent resource maturing to FID tieback projects through the next couple of years, and there will be quite a lot of news flow on that front.

Speaker #4: And there'll be quite a lot of news flow on that, really.

Speaker #6: Thank you, Oliver. A question on the recent fiscal incentives announced in Nigeria for deepwater projects. Any views on these? And any specific comments on how these could relate to our assets in Nigeria?

Shahin Amini: Thank you, Oliver. A question on recent fiscal incentives announced in Nigeria for the Deep Water projects. Any views on these and any specific comments on how these could relate to our assets in Nigeria?

Speaker #4: Yeah, I think that's almost the second part of the question we just addressed because we've got great subsurface resource here. We've got great running route.

Oliver Quinn: Yeah, I think that is almost the second part of the question we just addressed because we have got great subsurface resource here. We have got great running route. We have got great facilities. The other piece of the equation, of course, is obviously above ground. And you say, "Well, okay, how does that work in terms of the economics, the commercial, the stability, the wider landscape," if you like. And Nigeria is in a very good place. I think everyone can see in the industry that firstly, there is a stability now. There is a really strong support from the top level and throughout government to mature their hydrocarbons and maximize recovery. So that industry landscape is fantastic from an investor perspective. It is the best it has been for a long time, and there has some really hard work gone in there from the government side.

Speaker #4: We've got great facilities. The other piece of the equation, of course, is obviously above ground. And you say, well, okay, how does that work in terms of the economics, the commercial, the stability that the wider landscape, if you like?

Speaker #4: And Nigeria is in a very, very good place. So I think everyone can see in the industry that firstly, there's a stability now. There's a really, really strong support from the top level and throughout government to mature that hydrocarbons and maximize recovery.

Speaker #4: So that industry landscape is fantastic from an investor perspective. It's the best it's been for a long time. And there's some really, really hard work that has gone in there from the government side.

Speaker #4: So that gives you good landscape to say, well, hey, I've got great resources. I've got great kind of political landscape at support here. The third piece then is really to the question is the fiscals.

Oliver Quinn: So that gives you good landscape to say, "Well, hey, I've got great resources. I've got great kind of political landscape and support here." The third piece then is really to the question is the fiscals. We are in deep water. Like any deep water project, you need terms that work to respect the scale of the CapEx that goes into these projects, the duration of that CapEx investment, and therefore the duration of a reasonable return. What you see in Nigeria is a series of, I guess, executive orders there that are translating through the system into real fiscal incentives. We have seen it with some other operators in the deepwater.

Speaker #4: And so, of course, we're in deep water. And like any deep-water project, you need terms that work to respect the scale of the CapEx that goes into these projects, the duration of that CapEx investment, and therefore the duration of a reasonable return.

Speaker #4: And what you see in Nigeria is a series of, I guess, executive orders there that are translated through the system into real fiscal incentives.

Speaker #4: We've seen it with some other operators in the deep water. We've seen FIDs on other projects in the deep water. And I think that for us is just really encouraging that the more resource we see around our blocks, the more of the contingent resource that we mature towards reserves, the bigger that portfolio of opportunities comes for us.

Oliver Quinn: We have seen FIDs on other projects in the deepwater. I think that for us is just really encouraging that the more resource we see around our blocks, the more of the contingent resource that we mature towards reserves, the bigger that portfolio of opportunities comes for us, and therefore the better we can allocate capital to the higher ranking returns, all with a high degree of certainty of the landscape or operators within. So that all said, I think to say we are very excited by the portfolio in Nigeria. We are very excited by the political government landscape and the support we are seeing there. I think it is one of the leading countries right now in terms of not just saying that they want the hydrocarbons out of the ground, but actually putting plans and opportunities in place to allow investors to do that.

Speaker #4: And therefore, the better we can allocate capital to the high-ranking returns all with a high degree of certainty of the landscape we're operating within.

Speaker #4: So, with all that said, I think it's fair to say we are very excited about the portfolio in Nigeria. We're very excited about the political and government landscape and the support we're seeing there.

Speaker #4: I think it’s one of the leading countries right now in terms of not just saying that they want the hydrocarbons out of the ground, but actually putting plans and opportunities in place to allow investors to do that.

Speaker #6: Thank you, Oliver. A couple of questions on shareholder returns policy. So let's put this to Aldo. Combining these two questions with perhaps a more constructive oil price outlook, what is the company's thinking around capital allocation and shareholder returns?

Shahin Amini: Thank you, Oliver. Couple of questions on shareholder returns policy. So let's put this to Aldo. Combining these two questions with perhaps a more constructive oil price outlook, what is the company's thinking around capital allocation and shareholder returns?

Speaker #4: Yeah, so in terms of our capital allocation, well, our priorities and the policy remain the same. As we have explained throughout the different presentations and results, I think our priority is first to protect the balance sheet.

Aldo Perracini: Yeah. So in terms of our capital allocation, our priorities and the policy will remain the same. As we have explained throughout the different presentations and results, I think our priority is first to protect the balance sheet, which will be always number one. The second one, we want to make sure that we go through the cycles, being able to invest on all these organic opportunities that Oliver just mentioned. Those are high returns, short-term paybacks, utilizing our existing partnership in a country that we understand well and is very supportive. So, in case of Nigeria. Also, that remain our priority number two after the balance sheet. So that would not change. Then third case, in terms of distributions, that remains subject to review and board approval on a quarterly basis.

Speaker #4: Which will be always number one. And the second one, we want to make sure that we go through the cycles being able to invest on all these organic opportunities that Oliver was just mentioned, right?

Speaker #4: Those are high returns, short-term payback, utilizing our existing partnership in a country that we understand well and is very supportive. So well, in case of Nigeria, and also we that's remain our priority number two after the balance sheet.

Speaker #4: So that wouldn't change. And then third case in terms of distributions, that remains subject to review and board approval on a quarterly basis. We'll always look at the market and our investment priorities and we'll come up with the distribution policy, which is not only something interesting for our shareholders as well as a show of discipline from the company perspective.

Aldo Perracini: We'll always look at the market and our investment priorities, and we'll come up with distribution policy, which is not only something interesting for our shareholders as well as a show of discipline from the company perspective. So that remains. There is no change to the capital allocation policy.

Speaker #4: So that remains; there is no change to the capital allocation policy.

Speaker #6: Thank you, Aldo. There are a number of questions on equitable gaining. So again, I'll combine them because they're common themes. And the questions are what our timing expectations and we basically have stated our position in the shareholder report.

Shahin Amini: Thank you, Aldo. There are a number of questions on Equatorial Guinea. Again, I'll combine them because they're common themes. The questions are, what are our timing expectations? We basically have stated our position in the shareholder report, and we will update the markets in due course. I don't think there's anything else to be added at this point. There's a couple of questions on strategy and inorganic growth, Oliver. One is, Meren's very active in West Africa. Are there still thoughts around growing outside this area, or will you stay focused on West Africa for the time being?

Speaker #6: And we will update the markets in due course. I don't know if there's anything else to be added at this point. And there's a couple of questions on strategy.

Speaker #6: And inorganic growth, Oliver. Meren is very active in West Africa. Are there still thoughts around growing outside this area, or will you stay focused on West Africa for the time being?

Speaker #4: Yeah, I think it's a great question. And I think, firstly, it relates back to the capital allocation point, really, because again, I think we've been very clear and consistent about our capital allocation priorities.

Oliver Quinn: Yeah, I think it's a great question, and I think firstly, it relates back to the capital allocation point, really, because again, I think we've been very clear and consistent about our capital allocation priorities. M&A and inorganic growth, it's in there. But it's in there in a very disciplined way, right? We're only going to do things that we have a high degree of confidence in, and therefore that we understand very well before we pursue a transaction. So that does take you to the geographic component because of course, doing transactions, M&A in areas that you know well because you're already working there is by definition somewhat less risky from a transaction perspective. So West Africa remains critical in that respect, and I think that will be the case for a considerable time. We also see, of course, significant flow of duties in West Africa.

Speaker #4: And M&A and inorganic growth, it's in there. But it's in there in a very disciplined way, right? We're only going to do things that we have a high degree of confidence in.

Speaker #4: And therefore, that we understand very well before we pursue a transaction. So that does take you to the geographic component because, of course, doing transactions, M&A, in areas that you know well because you're already working there is by definition somewhat less risky.

Speaker #4: From a transaction perspective. So West Africa remains critical in that respect. And I think that will be the case for considerable time. We also see, of course, significant flow of opportunity in West Africa again.

Oliver Quinn: Again, there's the benefit to focus in the sense of understanding an area, understanding the players, the assets, the direction of travel, and that's really positive. So I think, firstly positive on West Africa. Good flow of opportunities. Again, we look at lots of things, but we act with discipline. If we see the right thing, we'll make the right move. More broadly, though, I think we do look slightly more wider around, let's say, the Atlantic basin, Atlantic margins, because again, there are a lot of thematics there in terms of the technical world, in terms of the fuels, in terms of the developments, in terms of the kind of above ground opportunities and risks. So that's a natural extension for us. But again, it's a wide lens, but we look with discipline and we look carefully.

Speaker #4: There's the benefit to focus, in the sense of understanding an area—understanding the players, the assets, the direction of travel. And that's really positive.

Speaker #4: So I think firstly, positive on West Africa, good flow of opportunities, again, we look at lots of things, but we act with discipline. If we see the right thing, we'll make the right move.

Speaker #4: More broadly though, I think we do look slightly more wider around, let's say, the Atlantic Basin, Atlantic Margins because again, there are a lot of thematics there in terms of the technical world, in terms of the fuels in terms of the developments in terms of the kind of above-ground opportunities and risks.

Speaker #4: So that's a natural extension for us. But again, it's a wide lens. But we look with discipline and we look carefully. And we've evaluated these things—geographies are important components, but it's only one of those components in the mix of a decision.

Oliver Quinn: When we've evaluated these things, geography is an important component, but it's only one of those components in the mix of a decision.

Speaker #6: Thank you, Oliver. There are no further questions, so I'll hand back to the operators.

Shahin Amini: Thank you, Oliver. There are no further questions, so I'll hand back to the operator.

Shahin Amini: This concludes today's call. Thank you for joining. You may now disconnect.

Operator: This concludes today's call. Thank you for joining. You may now disconnect.

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Q2 2026 Meren Energy Inc Earnings Call

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Meren

MER.TO

Earnings

Q2 2026 Meren Energy Inc Earnings Call

Wednesday, August 12th, 2026 at 1:00 PM

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Meren

Earnings