DNO ASA

Good morning, and welcome to DNO's Third Quarter 2025 Earnings Call. My name is Jostein Løvås, and I'm the Communication Manager here at DNO.

Present with me in Oslo on this morning -- in this morning are Executive Chairman, Bijan Mossavar-Rahmani; Managing Director, Chris Spencer; and outgoing CFO, Haakon Sandborg. At first, Bijan will give an introduction.

It will be followed by a presentation of the results. And after the presentation, we will open up for questions in our usual Q&A session.

And as always, shareholders first, but analysts are also welcome to ask questions. [Press-held ] will be dealt with afterwards.

[Operator Instructions] With that, I leave the stage to Bijan.

Jostein, thank you, and good morning, everyone. It's a pleasure to be back with you in all of these quarterly earnings calls or presentations.

And we've had a very strong quarter, and we're going to be very pleased to report on it. And again, as Jostein mentioned, answer as best we can any questions that you have.

Before I start, I'd like to introduce to you Haakon. Haakon needs no introduction to many of you who followed the company.

He has been the company's Chief Financial Officer for the past 24 years. He is, I think, not the oldest DNO employee, but the one who's been here the longest.

And he knows the company's history. He knows the company -- he's seen the company through many period ups and downs, the number of transformations over the past I think it's now 53 years of the company approaching 54.

So as you know, as many of you may know that DNO has been Norway's oldest oil company, the first to be formed, the first to go on the Oslo Stock Exchange. And through much of that history, all of it and much of it, Haakon has been a major player in the company.

We are -- he's decided to step down from his role. And it's been a privilege for all of us, myself, especially, to have worked with him in that role.

I've learned a lot from Haakon, a lot about the history of the company, and he's been a very valuable colleague to me and a leader, one of the leaders of DNO throughout the period that I've been here and prior to my coming here as well. So we are sorry to see him go.

We wish him well. He's probably best known outside of DNO for his -- as the person who initiated, led our very successful run on bond markets.

That's not all he's done here. He's been involved on the stock side as well, the stock markets and shareholders and analysts, but he's perhaps best known for his stellar record of 21 successful bond raises over this period of time and he mentioned to me that he has raised through these bond raises over these periods, $5 billion, which is quite a large number for a company of our size.

So thank you again, Haakon, for all of us. We wish you well, but I know Haakon wanted to have an opportunity to say goodbye to many of you who he's worked and stayed in touch.

So I give the floor to Haakon to say those words to you.

Yes. Thank you.

Thank you, Bijan. Thank you for those very kind words.

Everything in life has its time. And I think now it's a good time for me to retire from DNO after 24 years in the company.

It's also at the age of 67, it's also a good time to do something else and go on to new chapters in life is my thinking. And looking back, it's been a great journey in many ways.

And I'm very proud of all the growth we have achieved and the market value that we have built in the company during these years. And I now wish all our -- all my colleagues and all our investors the best of luck and continued success and progress staying with DNO.

And I'm very happy to hand over to our new CFO, Birgitte, now taking over after me. And I know she will be doing a very good job.

So again, thank you, everybody, and best of luck. Thank you very much.

To continue, I would like to introduce Birgitte to you. We've already posted a notice about this transition.

But I'll say a word about Birgitte. And of course, she will deal with the finance part of our presentation this morning and also moving forward.

Birgitte Wendelbo Johansen has come to us from the shipping sector in Norway, the company Reach Subsea, where she was the Chief Financial Officer, and we had a long search process, a deep search and we're able to persuade her to join the company, and she's hit the ground running. And we look forward to many, many years, maybe 24 years here at Vienna.

I look forward to that Chris and the rest of us. So welcome to the company.

We had a very, very strong quarter in many respects. And my colleagues will have a chance to go into detail on those and I'll be available to add some color and answer questions.

But I'm very proud of the performance of our teams, both in Kurdistan and in the North Sea. In Kurdistan, we've continued to ramp up production.

When we last met a quarter ago, we were coming out of the period of damage to our surface facilities in Kurdistan, particular Peshkabir field, but we were able to ramp up production pretty quickly from 0 to I think we had -- we hit 55,000 barrels a day between Tawke and Peshkabir fields in our last quarterly presentation. And I indicated to our team, I was in Kurdistan, I said we're going to have our quarterly presentation.

I want to have 55 -- hit the 55,000 barrels a day figure. We're going to announce that when we meet in Oslo, and they jumped to the challenge, and we were able to do that.

For this quarter, we challenged them again. I said when I had the presentation on the 6th of November in Oslo.

I want to be able to announce that we've hit 80,000 barrels a day of production, so up from 55,000, which is up from 0 and 80,000 was where we were before the drone strikes and the damage to the fields. And I'm very pleased to say that we've -- that team has hit the 80,000 barrel a day figure, and Chris will go through the details as some more specifics about that.

So I'm very, very proud of that team, and they do a terrific job. What DNO does and has done in Kurdistan, no other company has even come close.

And we're very proud of that record and proud of the performance of that team. In the North Sea, we also have a fantastic team.

We've announced today as part of our release, and then we'll go into the detail on the slides about how our team in the North Sea now is similarly getting off the sofa and developing -- being to develop the extensive discoveries that the company has made in the Norwegian continental shelf. And again, Chris will go into some details on our joint efforts with a like-minded company, Aker BP with respect to one of our discoveries, the Kjøttkake discovery.

And we're very pleased. And again, we expect to bring that field on production to develop it in record time.

We don't do it as fast in Norway as we do in Kurdistan for many reasons. Most importantly, in Kurdistan, we're onshore and the lead times are much smaller than they are with an offshore project, but we hope to be also do in Norway, what we've done uniquely well in Kurdistan.

I expect our next quarter will be even stronger than this quarter and that it will reflect some of the recent developments. And I look forward to meeting again with you for our first quarter -- fourth quarter 2025 presentation in 2016 (Sic) .

But before then, I'll turn first to Chris to go over our operational performance this past quarter with a bit of a look ahead as well.

Thank you, Bijan, and good morning from Oslo. So we now have our transformational quarter on the back of our transformational acquisition.

So we were highly expected following the hugely important acquisition of Sval Energi back in -- which completed in June. And this is the first quarter that you see the full effect of that acquisition and that runs through all of the numbers that I'll be covering and really will be coming into on the financials.

And of course, immediate visual impact on the production. We are now up to 115,000 barrels of oil today during Q3 and actually, Q3 will be a relatively weak quarter on the production front, both in the North Sea due to the summer maintenance season, but also in the Kurdistan region because of the -- we were recovering from the Kurdish attacks as Bijan has described.

Similarly, the revenue follows the production, obviously, and even more so for us because the Sval acquisition, of course, is in the North Sea, where we have full exposure to global oil and gas pricing. We got back into the black with a $20 million profit.

And then operationally, we continue to have successfully drilled it. And as we'll go into in some detail, we are now making great strides in terms of monetizing discovered barrels at a record pace in the North Sea.

Happily, all of this allows us to continue making our shareholder distributions the way we've been doing for some years now and the increased -- increase in the quarterly dividend payment that we announced last quarter is maintained. If we go to the next slide then.

please, I think that -- I hope that this slide sets the tone for many quarters ahead in our North Sea. We talked about this on the back of the acquisition of Sval, that we're taking a huge step up in the North Sea, and we are determined to not only maintain but grow our production in the North Sea over the next few years.

And we will be doing that by continuing to explore and we've got 3 wells running at the moment and importantly, accelerating the development of discoveries into production. At the same time, we're going to be high grading and optimizing the portfolio we have and that is -- a great example of that in the bullet points here where we've done a nice swap transaction with Aker BP.

Both companies are very happy with it. For us, we are strengthening in our core area around the Norne FPSO up in the Norwegian Sea and increasing our share of the Verdande field, which is tied back to Norne.

Both of the projects that are coming on in the [ Andvare ] and Verdande are up in that area. And so the Norne area is going to have 8000 barrels of oil equivalent contribution just from those 2 projects by the year-end.

In exchange, of course, we handed over some assets. And again, it really is a tieback to Alvheim.

So that's a core area for Aker BP, non-core for us. So a nice rationalization for both companies.

Lastly, here are the final pieces of the financing on the back of the Sval transaction being put in place. We were very pleased to announce the gas offtake agreement we had with associated financing last quarter, and we are copying that now on the oil side.

Not quite, the ink isn't quite dry on the signatures here. So we can't give full details, but we're confident these will be in place very shortly.

and well ahead of the 1st of January date when those sales will commence. And again, there's the prefinancing on sales similar to the gas arrangement at very attractive interest rates way below the type of interest rates you see on our bonds.

So we will have once these 2 deals are completed, facilities of over $900 million on the prefinancing associated with oil and gas -- oil liquids and gas sales in the North Sea. If we move to the next slide, then this obviously is a key component now of our engine room for value creation in the North Sea.

So we're going to continue to discover resources and then we are going to bring them on very rapidly. As Bijan mentioned over the past few months in the North Sea, we need to find like-minded partners or like-minded companies to be able to do this together.

It's -- and we're very pleased to be collaborating very closely with Aker BP here to make Kjøttkake very fast in Norwegian continental shelf terms development going from discovery in Q1 of this year to production starting in Q1 of 2028, which is obviously 3 years. And that compares to 6 years or so as the average for subsea tiebacks that have been brought on stream so far this decade according to the data we have.

So that underlines the acceleration that we are going to achieve together with Aker BP and Sval here. And indeed, the operator of the host that we'll be getting tied into, which is [indiscernible].

So we're very excited for that, and we are determined that this won't be a one-off. We will be discovering hydrocarbons, working with license partners to develop this sort of speed.

And as we move forward, we're aiming to improve this further. We see internationally that, that is possible.

and we're setting the bar very high for ourselves. For investors, why should you care?

It's not just fun to accelerate developments, but obviously, in terms of the net present value on the original investment in exploration, it's quite transformational on the return on capital invested when you can reduce the time from discovery to production by 50%. And that, of course, is the value proposition behind the whole exercise.

Next slide please. This is in the front end of that funnel.

We've had an exciting exploration program this year. This, of course, is reflecting both the portfolios of DMO and Sval as they were as we enter 2025.

And we've got results for 3 wells coming up very, very soon. And we have an exciting program ahead of us next year.

In fact, we have a luxury problem of probably too many opportunities next year that we are working to high grade. Next slide.

Turning to Kurdistan and Bijan touched on it, but we've been ramping up production here and -- the Q3 numbers are still, of course, impacted by the terrible experience we went through in mid-July, where we were hit by drones and that caused damage to critical processing equipment at the Peshkabir field, having rushed ourselves down over a couple of weeks, put in place new security protocols to protect our staff and so forth. The team got back to what they do best, and that is overcome challenges in an amazingly speedy fashion.

And so within 3 months of the attack, we had replaced the damaged processing equipment by repurposing some redundant equipment we had over at the Tawke field and got back up to 75,000 barrels earlier this month. Well, actually, sorry, mid-October.

And then as Bijan has announced this morning, they've pushed it even further, and we're back to the 80,000 mark as we speak. Of course, the big event in the quarter for Kurdistan oil and gas business in general was finally the reopening of the export pipeline through Türkiye to Ceyhan.

That was after 2.5 year closure during which the entire industry, as you know, has been selling locally. from our side, we've been -- as we've been talking about quarter after quarter, we've not been drilling in Kurdistan to properly manage our reservoirs, and we need to get back to drilling and increase the production again.

And so that means we are moving into a period of higher investment again in the Tawke PSC. And for us, therefore, the certainty of payment is even more important than it has been in the past.

And that has pushed us to lean on continuing to sell our oil to local buyers. The other element with respect to restarting exports that was not addressed in the agreements with other companies have signed up to is also the significant debt that the Kurdistan regional government still has outstanding with us, and we continue to look for ways to resolve that with the KRG.

So we're very pleased that exports have restarted. We're also very pleased to have the certainty of payment that we have with our arrangements.

And on the back of that, we will be ramping up our investment, and we set another hairy target for our team. We're going to get to 100,000 barrels -- back to 100,000 barrels gross through restarting drilling on the Tawke PSC and as Bijan commented in September, we may look back a year from now and feel we have left a little bit of money on the table with respect to exports, but the value creation from getting back to drilling and pushing the reproduction up will exceed that in our view.

With that, I've done my operational update, and I will hand over for the first time to Birgitte for the quick run through of the financials. Over to you, Birgitte.

Thank you.

Thank you very much, Chris, and good morning to everyone. As Chris and Bijan mentioned, we present a strong quarter where we now see the full effects from the Sval acquisition, which was completed in mid-June this year.

So let's jump right into the financials and the details. Starting with the income statement.

The strong contribution from Sval Energi, now included in DNO's North Sea business units is clearly visible. Revenue was $547 million, up 112% from the last quarter.

As much as 92% of the group's revenue in the third quarter came from the North Sea business compared to 65% in 3Q '24. Our operating expenses have increased following the inclusion of Sval, which is natural, and operating profit ended at $222 million, up more than 100% from the last quarter.

Net profit in 3Q back in black, as Chris mentioned, at USD 20 million. Next slide, please.

So let's move to -- let's move to the cash flow. Yes.

Thank you, Jostein. The high revenues led to a near threefold increase in cash flow from operations to a high level of $407 million in Q3, up from $135 million in Q2.

This Q3 cash flow includes $53 million in positive working capital changes. Stronger earnings in the North Sea also means higher taxes, and we paid 2 tax installments in Norway, totaling $53 million in Q3.

As you may recall, we indicated last quarter cash taxes of around $150 million in the second half of '25. The cash tax will increase in the fourth quarter.

We again had substantial investments at $225 million in Q3, consisting of $183 million in CapEx, mainly for North Sea development projects and also $34 million in exploration expenditures. We also spent $10 million on decom in this quarter.

Net finance outflow of $386 million primarily covers repayment of $300 million bank bridge loan that was part of our acquisition financing for Sval Energi. We also paid a dividend of $36 million in Q3, as you know.

So with the investments of $225 million and $300 million in debt repayment, our cash balances were reduced by $257 million to $531 million at the end of 3Q. But again, the key takeaway here is the very substantial increase in our operational cash flow from the first full quarter with the Sval assets in operation.

Next slide, please. Now as discussed in DNO's Q2 presentation, our balance sheet and capital structure were substantially changed through the Sval acquisition and related financing transactions.

Compared with the Q3 last year, we now have quite diversified funding sources with a good combination of long-term bonds and short- and medium-term offtake financing. The size of the balance sheet, thereby increased by close to 70% in Q2, primarily through higher property, plant and equipment values as PP&E was up by 135% in the second quarter, as you can see on the slide.

For Q3, the PP&E value remains fairly stable from Q2 as expected. Similarly, we went from a net cash position in Q1 to a net debt of $860 million in Q2, whereas we now show a reduction in the net debt in the third quarter.

The key driver for the reduced net debt is close to $100 million in free cash flow, partly offset by the dividends paid. Total equity increased with the $400 million hybrid bond that we placed in Q2, and this metric also remained stable in Q3.

All in all, it's a very strong quarter from DNO, no surprises or special items. So by that, I hand the word back to you, Jostein, for the Q&A session.

Thank you, Birgitte. That was a good run through, and we'll take questions now.

Nikolas is with us, Nikolas Stefanou.

Congrats on the very strong quarter. And congratulations for a long and rewarding career with the company.

And thank you for the engagement with the sell side this year. So I want to wish you all the best in your next step in life.

So I've got 3 questions to ask, please. The first one is about Kurdistan.

And the other one in kind of like broader on the balance sheet. So in Kurdistan, if you're ramping up production, drilling was there, but then you sell them locally and someone else is making this kind of like crazy sort of like margins on the exports.

I'm just wondering what is the incentive from the KRG to make a deal with you in order to -- in first for you to kind of like sell the crude directly. So that's kind of like the first question.

And if you can talk about how the negotiations there are going, that will be good. And then on the Sval assets and in general, the North Sea kind of like outlook, you've got these assets for a few months now, would you be able to give us maybe a production target for '26 and 2027 in the North Sea?

And then finally, on the balance sheet, you have been quite conservative in the past few years. I mean, obviously, that was because of Kurdistan.

Now that you have repositioned the business in the North Sea, how do you think about the balance sheet going forward? And more specifically, is there an optimal level of debt or leverage you guys target.

Let me try to answer the question on Kurdistan. I'm not sure I fully understood it.

You mentioned something about crazy margins and some other things. I'm not quite sure I understood it or I understand what you understand we've done.

What we decided to do was to continue selling our entitlement crude to the buyer -- who have been the buyers who have been buying our crude at the same prices more or less as prior to the exports. The amount that we receive, again, is the same under the same mechanism when we are prepaid, we're paid in advance by these buyers and we deliver the oil to them.

In the past, these buyers have sold the oil into the local market. We're not -- we don't follow exactly who that oil is sold to and on what basis, but we continue -- we had an existing contract with them, and we elected to continue that -- those arrangements.

Our buyers have made their own arrangements as they had done previously to sell that oil. But this time, they've sold the oil onward into the pipeline that oil as we understand it, is exported with all the other oil from Kurdistan, whether it's produced by the other IOCs or other, what terms they have set into place with Kurdistan, we don't know.

All we know is we continue to be paid in advance and at the price that's known to us, it's predictable. There are no delays.

There's no calculation of price by an outside consultant. There are no issues we have about delay in payments and where those payments come from.

We decided that we were better placed, continue to receive money in advance at predictable and set prices that we would be under the terms of the export that other companies have elected. This is important to us because we -- this allowed us and allows us now to make these very, very substantial investments, including the drilling of 8 wells next year, which will start right away.

We've signed up a contract for a drilling rig. We're going to be deploying our own rig.

And as Chris says, we believe that the investments we're making and the increased production that we will get from these investments will more than offset any money that we might end up leaving on the table. It's possible.

We know that there is a formula. Everyone knows that there's a mechanism that the companies get paid, hopefully, by December it's $16 a barrel, less I think an estimated average $2 in transportation fees, that's $14 to then be supplemented at some point next year by additional monies to be calculated based on an outside consultant retained by the Iraqi government coming in and saying what the contractual number should be based on some other principles, fairness or otherwise that we're not privy to.

It's possible that as we participated in this, we would eventually receive more than we're receiving now. We have announced what we're getting.

We're getting paid per barrel, payment of -- low $30 a barrel for every barrel that we are putting selling based on our entitlement, which is now roughly, I think, 20,000 barrels a day with our share, we get paid in advance, and we are happy with that arrangement. Now perhaps if we participated in the export pipeline project, this number would have been higher.

That's quite possible. And as we said last quarter and as Chris again said, we may end up looking back, see that we left some money on the table.

Maybe we will have left some money on the table and maybe we won't have left money on the table. We don't know.

But we thought that the predictable receipt of money would allow us to ramp up production. As I said, we've now ramped it up based on this thinking from 0 when we were -- just after we were hit by the drones to 55,000 3 months ago to 80,000 now and to 100,000 at some point next year.

I think this is best for us. It's best for Kurdistan.

It's best for Iraq since they're selling the oil. I think it's a win-win-win situation.

If we find that the -- as we've ramped up production, that the terms and conditions and payments for the export arrangements are attractive that they continue beyond the end of this year. My understanding is that these arrangements were done until the end of this year and don't have to continue.

There's an election in Iraq. There will be elections in Kurdistan.

There'll be changes perhaps to conditions, we'll see. If we find that those terms are attractive to us, we will participate in exports.

If we find that the current arrangements give us predictability, we will stay with our current arrangements. And hopefully, we'll be able to ramp up our prices.

Already, our prices for our sales -- local sales as we call them, in November are higher than they were in October when we started, and we expect those prices will continue to rise. So we're happy with it, this arrangement, and we're happy to be drilling again.

We're happy to be producing larger volumes. As I've said, DNO is great at this.

And we have great fields, we have great people, and we're able to deploy $1 and get more value for it than other companies have. So we're very pleased with the way things are progressing.

We hope exports will continue. We wish everyone well as part of the exports team and their success will eventually be our success as we'll participate in exports and some other arrangements that we might make ourselves.

But in the meantime, we are investing in Kurdistan. We're the only company doing drilling and planning to drill as many wells as we are.

And that's what we've always been. We've been the largest producer, the fastest mover.

We've said this before -- sometime before the end of this year, we will produce our 500 million of barrel of oil from Tawke's license. That's a great achievement for us.

It's been great for Kurdistan. And it's a record we want to improve on.

And I think we're set well to do that. On the issue of what our North Sea production is going to be, I'll ask Chris to refer to that, but we haven't given that sort of longer-term guidance because our situation changes as much as it does.

Historically, that's been the case in Kurdistan, but even the North Sea, a year ago, who would have thought that our production in the North Sea would quadruple, which it has for a small acquisition. And we shared with you our plans to fast track production.

We've shared with you our record of discoveries, which has been quite significant. And you know from us, what we've been saying for quite some time and again repeat it today that we're going to fast track the monetization of our discoveries by bringing them into production quicker.

So you can do some back of the envelope calculations. We are still on the lookout as we've been for some time for additional acquisition of additional production.

We will ramp up production from our own discoveries, and we have long pipeline discoveries, but we'll be on the lookout to do swaps and as we've announced again and to acquire bolt-on acquisitions, smaller ones, we've been doing some of those in the past that we reported and maybe more significant acquisition as well. Our ambitions for the North Sea are as large as our ambitions have been for Kurdistan.

That I can say with some confidence. But Chris, would you like to?

I think that's a good summary. We think that we have mentioned in our material this quarter that -- and as I said in my remarks that Q3 was impacted by the summer maintenance season and so forth, and we indicated an exit rate in the North Sea of 90,000 barrels of oil equivalent per day roughly.

And that gives obviously a good sense, we feel of the scale of the business we have there. We've put -- and we've made similar comments in several presentations since we completed the acquisition.

So yes, we feel we've given a good indication of what you can expect from the North Sea business. And then with the comments that Bijan has made and mine earlier, we're trying to help the market understand how we are planning to generate a lot of value out of this new portfolio that we have.

We've used the term repeatedly, but the 2 portfolios went together like a hand in glove with the production strong portfolio of Sval combining with the exploration and development strong portfolio of D&O. And that's -- again, I think Kjøttkake is just the first example of that, where Sval have an increased -- a much stronger presence in the hosts and potential pieces of infrastructure that could be relevant for Kjøttkake development.

We made the discovery, and that is going to be on stream in early 2028. This is something, as I mentioned earlier, we are going to be working hard to replicate.

And not forgetting in the backbone that will maintain production as well is the type of legacy assets we have in the [indiscernible] area, which came with Sval is everyone who follows the Norwegian Continental Shelf activist just goes on and on, that type of asset, Martin Linge, the broader asset from the D&O portfolio, these also will provide a tremendous core of long-term production to which we're adding this machine of explore, develop and to create value for the shareholders. So I hope that gives you enough color on what we're aiming to achieve in the North Sea.

On your other question about our balance sheet, let me say the following. Yes, you're right.

We've been conservative. And we will continue to be conservative.

We're not going to bet the company on anything. Part of that's been driven, as you said, by Kurdistan because of the movements up and down in payments in the past and other challenges.

But that wasn't just about Kurdistan. It's not just about being conservative.

The Kurdistan part is being prudent. I think generally, we're conservative in how we think about the business.

But we've also been opportunistic. We built out large cash reserves, and we're looking for an acquisition several years ago, and we're able to deploy those cash -- additional cash through the acquisition of Faroe.

We then started building up again our cash position, looking for another larger opportunity, and we used it in part to finance the acquisition of Sval. Right now, as we reported, we have something in excess of $500 million in cash on the balance sheet.

We have $900 million in total availability of prefinancing. We've drawn down, I think, $340 million of that.

Again, as part of the small transaction, the repayment of our debt, which Birgitte discussed, that we have another significant amount of money available to us if and when we need it, either for an acquisition or for some other purpose. So we build up these cash reserves.

We'd like to always have a significant amount of cash on the balance sheet both because of the ups and downs of the market and the price of oil goes up and down, and we want to be prudent and in a position to continue to pay dividends to our shareholders. We continue to service our bond debt, which we've done now for 22 years and quite successfully.

We're proud of that record. And our investors on the equity side or the debt side are really important to us, our credibility and our wish to perform is really important.

So in that sense, too, we're conservative. Not all companies have these sort of targets of continuing to pay dividends and continue to service the debt we do.

And for that, we need to have enough cash on the bank and be prudent and be conservative. And we're proud of that, but we do build up cash and we do look for opportunities.

And we'll grab those when we can. We don't have a specific sort of target figure other than whatever is prudent and conservative and opportunistic, we will -- that will drive our thinking and our...

Next one up is another analyst, Teodor Sveen-Nilsen.

A few questions from me. First, on Tawke, congrats on reaching the 80,000 barrels per day target.

Regarding the 100,000 barrels per day, how should we think around timing of that and also potentially the duration that should we like expect from 100,000 barrels per day flat out for entire 2026? Or should we factor in a lower average production for next year?

Second question, that is just following up on the export potential. As far as I understand, you now sell at local prices in Kurdistan, how does your route to export prices look like?

Is it only a deal around the receivables so, that is between us now and you getting international oil prices? Or are there any other outstanding issues?

And my third question is for guidance 2025. In your second quarter report, you gave some guidance on operational spend and CapEx for the Norwegian portfolio.

I didn't see that in the Q3 report, can you just confirm that, that guidance is still valid?

Thank you. I was amused when you and your back and forth about unmuting who's ever unmuted Teodor [indiscernible] but thank you for your question.

You always have interesting and important questions. The easiest one is on 100,000 barrel target.

For us to get from 80,000 to 100,000, that's about 5,000 additional barrels a quarter. That's not difficult for us.

We were over 100,000 barrels a day, if you recall, before the pipeline was shut 2.5 years ago. So we know how to get there.

As you know that in the 2.5 years or so that we weren't drilling any new wells, we were still able to maintain production by tweaking the wells and by doing workovers. And we really -- our tracked production team as we learned so much about the Tawke field and about the wells and how to with minimum amounts of spend and effort to keep those wells flowing.

And this is really quite spectacular because as we've discussed many times in the past, these fields typically, these reservoirs have a 15%, 20% decline rate. How we were able to stop that decline rate without drilling any new wells is, again, an amazing achievement, but it speaks to the 20 years or so of DNO working in that field and learning how to optimize it.

So with that base knowledge and understanding and they've already -- during this period, they've located other wells they want to drill at other locations, some of them are production wells, some of them are a bit of a step out and 1 or 2 of them have an exploration component that's quite exciting. And we're going to drill into those in 2026.

When we're going to hit 100,000 a day, the target we set for them is towards the end of the next year, but they've surprised us pleasantly every time we set targets for them, they've achieved those targets and achieved in record time. So I wouldn't be surprised if we once again beat those targets.

But let's give them a chance to do what they do very well as they get going. And as I said, we're bringing a rig back in again, and that's going to drill the deeper wells.

Our own Sindy rig, which has been doing all the work over in the last couple of years, we'll focus on some of the shallower targets that we have and those are even shallower horizon in the target Tawke field. So we'll get to 100,000, we'll get to 100,000, we'll set new targets and see if we can achieve that.

It will get harder over time. But if we can drill 1 or 2 of these exploration wells and are successful, we can have a step-up in production from the two fields.

But to give us a chance to do it and our history is a good predictor of our future, certainly in the Southeast. On exports, how would we participate in exports, if it looks like the payments are greater than we can get in the local market.

That's a good question. There are several avenues to that, that we were considering.

We can sell our entitlement oil to whoever we want to sell it to for our new production sharing contracts. It was helpful for everyone for us to have this 3-way arrangement between ourselves, our local buyers and Kurdistan and Iraq for our oil to be sold under arrangements we were comfortable with, but find its way into the pipeline.

And again, that DNO is 80,000 barrels a day, a very substantial part of the total production of Kurdistan. And without it, the pipeline project wouldn't have worked.

So we didn't want to block the export project. That's an important project for many stakeholders.

But we just want to make sure we were getting paid $30 or low 30s before we put the oil into the pipeline, then be paid maybe $14 -- $12, $14, maybe sometime in December to be topped off maybe sometime in the future or reduced maybe sometime in the future, depending on what an outside consultant would decide would be a fair price or a price that was somehow acceptable to other companies. That uncertainty, we didn't want to live with.

And we believe that by, again, selling in the low 30s and getting paid in advance, we can invest and get more production and more revenue to offset any money we leave on the table, but there are several ways to get there. And because we're not signed up into the larger project, we have our rights under our PSC to sell the oil to wherever is the best buyer from our point of view in terms of pricing and payment terms of that oil.

And we had said and all the companies that said that we would not participate in exports unless the arrears was resolved, we've kept to that. Our arrears are important for the other companies, maybe the arrears were less that we know there were less, our areas were the greatest.

And we said consistently that we will not participate in that export project until our arrears were addressed. So we get comfort that we would receive those arrears.

We have different mechanisms to achieve that and none that have been finalized that we can announce now. But we will get our arrears back one way or the other as happened in the previous time we built up even much larger arrears during the ISIS period, maybe you remember that period well.

For us, they've always been good for all of the contracts eventually. We understand sometimes other squeezes, we work with them, but we expect one way or another and there are different ways of doing this.

So we will get the arrears paid. And at some point, we hope to participate in exports.

If not in the next few months, the export agreements between Iraq and Turkey end -- expire in July. We don't know what -- how that pipeline will be used by whom and under what terms and conditions.

But things will change in July. And we haven't been participating in the export stream directly now.

Perhaps from July, there will be other opportunities for us to participate in a different way in an export project and we're comfortable with that decision. And we have the cash to drill wells to raise production.

So all that is, I think, on track as far as D&O is concerned.

It's okay and how time flies when you're having fun, we're approaching the 1-hour mark and unless there are any more questions from the audience, I think we'll wrap it up. And thanks for listening in, and see you around soon.

Thank you.

Thank you.