Panoro Energy ASA

Hello. Good morning, and welcome, everybody.

I'm Qazi Qadeer, Panoro's Chief Financial Officer. Thank you for joining us.

This is our third quarter and first 9 months of 2025 trading and results update. We have this morning released a press release and an accompanying presentation, which we'll go through now, which shows the progress we have made during the course of the year.

Joining me on this call today are Panoro's Executive Chairman, Julien Balkany; and our Chief Operating Officer and President, Eric d'Argentré. As a reminder, today's conference call contains certain statements that are and may be deemed to be forward-looking statements, which include all statements other than statements of historical fact.

Forward-looking statements involve making certain assumptions based on company's experience and perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. Although we believe the expectations reflected in the forward-looking statements are reasonable, actual events or results may differ materially from those projected or implied in such forward-looking statements due to unknown or known risks, uncertainties and other factors.

And for your reference, our press release is available on our website, panoroenergy.com. Next slide, please.

So we have our Chairman, Julien Balkany here, who is going to take you through the key messages.

Thank you, Qazi. Good morning, everyone.

Before we move to our Q3 results and operational update, I would like to say a few key words on the business, our recent achievement and our objectives. In terms of production and reserves, within the last 5 years, we have rapidly grown through both organic and external growth.

And today, we have a stable and well-diversified production and reserve base across three African countries. In 2026, we will actively continue developing our assets at Dussafu with first MaBoMo Phase 2 drilling as well as progressing the Bourdon discovery to FID.

Moving on to exploration and appraisal. We have an exciting portfolio that will provide us with some very good catalyst.

We have strategically positioned our E&A portfolio with Block EG-23 in Equatorial Guinea and Niosi and Guduma Offshore Gabon close to existing infrastructure, so that in a success case, we can seek to rapidly and cost effectively monetize any discoveries. As an example of this, in the Hibiscus South and other discoveries we made in the last Dussafu drilling campaign where new barrels that were put on stream within 6 months of discovery at a finding and development cost of just $5 per barrel.

On the corporate side, I want first to come back and address the recent announcement that our friend and very dear colleague, John Hamilton, long-time Panoro CEO that usually walks you through the quarterly results, has taken a temporary leave of absence for family reasons. John has our full support and best wishes during those difficult times.

While John is absent, let me reassure you that under my leadership, we have an extremely talented, focused and committed management that provide continuity in the delivery of our strategy and an entire team of colleagues who are experts in their respective fields and very excited by the potential of our assets. It brings me now to Panoro DNA that has been acquisition, which has, over the years, played a major role in our growth story.

In order for us to achieve our ambition and increase our size and scale, we will remain focused on M&A opportunities and are constantly evaluating new accretive deals that would deliver immediate free cash flow to the company and create shareholder value. Our successful bond issuance last year has diversified our access to capital and support our overall growth strategy.

Underpinning all this and our core objective remain to maximize shareholder return. And I clearly want to reemphasize that shareholder return is at the center of all decision-making in Panoro.

Since March 2023, including to the declared cash distribution of NOK 80 million, we have returned in total around 33%, 1/3 of our current market cap, to shareholders. It demonstrates our strong commitment to create value for all our shareholders while maintaining a very disciplined approach.

I would now hand back over to Qazi, who will take you through our Q3 results.

Thank you very much, Julien. And on this slide, you will see that we have assembled the highlights for this quarter and the year-to-date numbers.

For the first 9 months, we are showing a revenue of almost $150 million and EBITDA of $70 million. CapEx is just under $30 million, the majority of which was incurred in the early part of 2025 in relation to the successful bolt-on discovery offshore Gabon.

Then we have the third quarter revenue, which was $63.5 million, EBITDA of $19.3 million. It should be noted that Q3 EBITDA includes a noncash effect of negative $14 million worth of inventory movement arising from the expensing of Q2 inventory buildup, which was lifted and sold in Q3.

So you would expect to see swings like that if liftings happen quarter-on-quarter. On the balance sheet, we have around $44 million in cash at bank at September 30, $150 million of gross debt, and net debt to trailing 12-month EBITDA ratio of about 1.04x.

We have maintained a very solid and good balance sheet throughout this period. On the right, we have announced a quarterly cash distribution of NOK 80 million, which will be paid as a return of paid-in capital.

Once paid, that will bring us to a cumulative cash distribution of NOK 660 million since March 2023. And including all share buybacks to date, we have returned approximately NOK 790 million to the shareholders, which, again, as Julien mentioned earlier, around 33% of our current market cap.

On the next slide, that builds up our distributions for 2025. We have followed our policy for the calendar year 2025 to distribute NOK 80 million quarterly in cash distributions, and that honors our commitment what we set out at the start of the year.

Year-to-date, we have purchased NOK 83 million worth of our own shares from the market as of close yesterday. We have been out of the market in the recent weeks because of close periods, but we still have some room left this year.

If you look at the right, we have a limit of NOK 500 million of total distributions in the calendar year 2025, which is about $45 million. It's a key figure that we distribute in Norwegian kronas.

As you can see, we have some headroom over the remainder of the year and have adhered to our quarterly schedule, again, underlining our commitment to shareholder distributions. This covers a bit of production update.

In terms of group production, we break it down by quarter, so everybody can see that what is going on at our assets and broader trends over time. Dussafu continues to perform brilliantly with all wells available and performing in line or even ahead of expectations.

The Q3 rate doesn't quite tell the story, as in the period, the operator successfully completed 3 weeks of planned annual maintenance, which limited production availability to about 80% in the quarter. You can see in the graph what impact this has on our group production in the gray shaded box.

Tunisia has been quite steady. But in EG, the previously communicated downtime at the Ceiba field has impacted group production over the last 2 quarters.

As a result, we expect group production for full year 2025 to average slightly below 11,000 barrels of oil per day. CapEx guidance for 2025 is unchanged at $40 million for the full year.

On the next slide, we'll talk about the liftings a little bit. Those that are familiar with our business know that while we produce oil every day, we do not sell oil every day.

It is sell in -- sold in parcels over different dates throughout the course of the year. We keep this slide updated each quarter and refine as necessary what's the logistical and commercial factors that drive our lifting allocation firm up.

Our lifting in the first 3 quarters have been in line with our expectations. The first 9 months, we have lifted and sold just over 2 million barrels at an average realized oil price of $67.49 per barrel.

In Q3, we realized a premium of around 1% over the average Brent oil price of the period 863,000 barrels or thereabouts, which is in line with previously communicated guidance at almost $69.5 per barrel. In Q4, we expect to lift around 1.1 million barrels of oil.

It could be a bit higher as well, given that we have some inventory available to be lifted at the end of the year. Notwithstanding this, Q4 remains our busiest quarter from a lifting perspective with around 35% -- 2025 liftings occurring in the period.

We have already lifted around 950,000 barrels in Gabon during mid-November. So the vast majority of Q4 has already locked in.

On the next slide, this is a busy slide, but it summarizes a few key points. But just taking it from the top right, there is a reconciliation on our top left rather, there's a reconciliation of our cash at the start of the year and cash at September.

On the left, we show our bond amortization, noting that we do not have any repayment during the year, and it only starts in the late part of 2026. On the right, we have our capital expenditure guidance for the year.

As I said, it is going to be in line with previously communicated USD 40 million for the year. As everybody knows, we had a very heavy CapEx last year.

This year, it's more around $40 million. We have just spent up to $30 million in September, and we are in line to meet our target of $40 million.

I will now hand over to my colleague, Eric d'Argentré, who is going to take you through the operations. Thank you.

Thank you, Qazi, and good morning, everyone. I am Eric d'Argentré, Panoro's CEO and President.

I have -- I'm delighted to join Panoro early September, coming from 29 years at Perenco in operational and senior management position globally and in particular across Africa. So I am indeed very familiar with Panoro area of operations.

This being said, on Dussafu operation update. So as Qazi mentioned, the production delivery remains strong and steady since the beginning of the year.

And the 3 weeks annual maintenance operation on Dussafu was very well executed by the operator BW Energy in time with no extra days, but it does impact indeed the uptime in the period. On the project side, we have FID-ed and already planned mid next year, the exciting MaBoMo Phase 2 development coming around June '26.

That will be a four-well drilling campaign, horizontal wells with long drain as we successfully did in the past. So applying the same techniques and strategy for those four wells.

This -- those four wells will bring us back to the maximum surface capacity in terms of production on the MaBoMo and Adolo FPSO. The other exciting news on the Dussafu block is the Bourdon discovery.

You heard about it earlier this year. This is roughly 50 million barrel in place and 25 million barrels to be recoverables.

We are maturing with BW Energy, the FID for this project. The full development plan will include a first phase with three wells being drilled from a platform or a jack-up conversion and the pipeline to tie back to the existing facilities.

And that will come in future and help us to extend the production plateau at the Dussafu block. And there is other exciting prospect around the Dussafu area, which we will come in the next slide.

Again, you have heard about Niosi and Guduma block in the past. This is clearly a potential to repeat the Dussafu success story.

And I'm very excited to say that we have started the seismic survey, which we discussed in the past this week on Niosi and Guduma as well as on Dussafu. We have two area of interest, which you can see on the slide in blue gray.

One, including the top corner of the Dussafu block on the east part, where the seismic will help us to understand better and map better the Walt Whitman discovery and other prospects in the area, as well as the Niosi area, which you don't need to be a subsurface expert to realize that the Niosi area of interest is very well positioned between the Dussafu field and the Etame field operated by VAALCO in a very well-known and productive petroleum system here. So the partnership of BW Energy, VAALCO and Panoro is very well positioned in terms of knowledge in the area, and there is no better joint venture to understand the potential of Niosi and Guduma field.

Next, please. Okay.

On Equatorial Guinea operation, we have on Block G, two fields, the Ceiba field and the Okume field, tied back to the FPSO. While the Okume production has delivered as per expectation this year, we have suffered low delivery in Ceiba.

This was explained earlier this year due to subsea and equipment issues. The operator, Trident Energy has worked hard and is working hard and diligently to restore production on the Ceiba field.

One subsea cluster is already back on production. The second one is in operation.

Marine and subsea operations are ongoing as we speak. We expect to have cluster 2 back on production sometime end of November, early December.

And the rest of the production will -- should be back online early 2026. Next, please.

In Equatorial Guinea, we also have a very exciting and one of our best asset, actually Block EG-23, which is located, as you can see in blue, in between the Niger Delta and the Rio Del Rey in Cameroon. So a very prolific petroleum system, well known, lots of oil and gas fields in the area.

And you see Block EG-23 just up north of the Alba field operated by Conoco, which has already delivered above 1 billion barrel as well as the Zafiro prospect -- development with, again, over 1 billion barrel production. So we are at the moment in reprocessing of seismic data on this block.

And we should have a better image within mid of 2026. Just a zoom on Block EG-23 and the Estrella discovery, which is a very [ want ], a very important, very much interesting for us.

Estrella was -- Estrella-1 was drilled in 2001 and discovered 60 meters of reservoir. The well was tested above 6,700 barrels of oil per day and almost 50 million standard cubic feet of gas.

As you can see, it's very close to the Alba infrastructure. It's 7 to 10 kilometers away.

So it's an easy tieback and an obvious one, and then going onshore to the Punta Europa gas plant that has spare capacity. And we can see on the map, the dotted line shows you the 20 kilometers radius, which shows that most of the prospect identified and discoveries on our block are within tieback distance.

And the idea is once we have one field tied back, then the next one will be in short distance, and we can repeat the same strategy as we've done in South of Gabon. Coming to Tunisia.

Tunisia asset, as I mentioned, is producing steadily around 3,500 barrels as of today. So we have seen in the recent months, an increase in production of 10%.

I was -- I visited myself the site a couple of weeks ago, and I was very impressed by the dedication of the team in maintenance, integrity and uptime. So we have a good asset base in Tunisia, and we are working on new -- on productive project and investment to increase production and extend the plateau on the TPS asset.

Next, please. So as discussed in the previous slides, we have a very exciting pipeline of organic growth within our existing field with robust 2P reserves and a very good above 300% replacement ratio.

That's a very good performance. Bourdon discovery will -- is not yet included.

But as soon as FID is done, we should be able to book those reserves. We have other 26 million of 2C as of December '24 of discovered resources.

And on Block EG-23, you see above 100 million barrel potential which is the Estrella field and other identified prospect I discussed earlier. And we will work towards transforming those 2C into 2P and then in production.

On top of the Block EG-23, the Niosi, Guduma and the Dussafu, the EEA has clearly potential to increase substantially our resources. Again, the first step is happening as we speak with the seismic survey on the two exploration blocks, Niosi and Guduma, and that will be -- that will feed the pipeline of organic growth in coming years.

Coming back to the key messages, I will leave you with those messages on the screen and move to the Q&A session.

Thank you very much, Eric. We will now take question and answers.

If you will be able to raise your hand or post your questions via the chat box on the bottom, which should be available to you. If you have a question, please raise your hand and we'll try to unmute your line and take your questions live.

Thank you very much, Qazi. We will now open up to Q&A.

The first question has been submitted online. You have honored the quarterly cash distributions for 2025 with the NOK 80 million declared today.

Can we expect to see continued buybacks under the program?

As mentioned by our CFO, Qazi Qadeer, we have been in close period, and we intend to restart and restore our buyback program when we will be able to do so. We have headroom of just under NOK 100 million under our maximum priority distribution.

And once again, our core focus is to deliver shareholder return.

Thank you, Julien. The next question is from Christoffer Bachke.

This is Christoffer from Clarksons. So I have two questions today, if I may.

The first question relates to Block EG-23, where investors currently seem to assign limited value. Can you comment on how you view the potential of this asset and what strategic options such as partnering, farm down or alternative development pathways you're evaluating for the block going forward?

And the second question is on M&A. Given your history and track record on accretive acquisitions, how are you thinking about further growth and M&A at this stage?

Okay. Thank you, Christoffer, for your question.

Concerning Block EG-23 we see has presented a lot of potential, not just on Estrella-1 discovery, but on the global picture of this block, which is ideally positioned. We have 80% of the block.

We are the operator. We are in Phase 1.

We need to get our seismic reprocessed, get -- clarify the volume in place, and then we will most likely be looking for partners. There is already a lot of interest in our block because we believe this is clearly the best block in EG, in shallow water with lots of potential and very close to a infrastructure tieback.

So yes, we will be looking for partnership in the future.

Thank you, Christoffer. I will address the second part of your question.

As I mentioned earlier, M&A has been at the roots of Panoro, it has been part of our DNA. And clearly, in the current oil prices environment, we are remaining focused on M&A opportunities.

And we are constantly permanently evaluating, assessing new accretive deals. And those transactions need to be accretive starting day 1 and immediately generate free cash flow for the company to benefit all the shareholders.

The next question is from David Messer.

Andy, two questions from me. First, on the EG-23 block.

From the presentation, you can see there's been a number of smaller oil and gas discoveries. So I suppose my question is why were those discoveries appear to be subscale compared to, I imagine, what the original driller assumed them to be predrill?

And why was this block not -- or why were these discoveries not developed since they've been discovered by another operator, maybe? And then just secondly, on Trident and its operational issues.

Can you just give me a bit more color on what the facility issues have been on Ceiba and how Trident has gone about ensuring that these are not recurrent operational issues that happen going forward?

Okay. Well, thank you very much.

Concerning Block EG -23 and the discoveries of the well drilled. And yes, those wells have indeed penetrated reservoirs, some tested, some not tested.

But in fact, it's -- depending on what the previous operators were exploring for, whether they were looking for gas or looking for oil. On the Estrella, for example, it was a gas play with a lot of oil.

It was deemed to be marginal at the time versus bigger, what I would call the elephant or the giant field. Estrella might not be a multibillion field, but it's clearly a multi-hundred million in place.

And the nearby exploration, the problem is when you have no infrastructure or just one not bad close, it's difficult to make a small discovery commercial. And that's a strategy we will develop in EG-23.

Once we have a platform and a mean of evacuation from Estrella, for example, any small discovery not material from major in the past will become clearly material and commercial forest with easy tieback. So that will be a step-out approach from one to the other on EG-23.

Just to your second question on Ceiba field. What has been the issue is, as discussed, it was a subsea.

In a development like this, you have your well producing to the seabed and from the seabed, you have flow lines or umbilicals, risers going to the surface on your FPSO. It's deep and long.

So there is multiphase pumps installed on the seabed, what we call on different clusters with X number of wells arriving at each cluster. And we had a combination of a series of failure of multiphase pump earlier this year, which obviously without the pump, the well cannot deliver to surface.

It's too high, okay, with back pressure on the well, without going too technical. So the operator has, with one subsea, worked very hard and diligently to get those multiphase pumps shipped back, turned around and sent back to Equatorial Guinea.

The first one has been installed. The second one is on the support vessel with the ROV and should be installed in a couple of weeks, and the third one earlier next year.

On the long-term plan with Trident, the operator is looking at a quick turnaround of multiphase pump system with one subsea, but as well with internalizing a bit more the maintenance of the pumps in country. They have done that successfully with one already.

So we expect to see a quicker turnaround of any maintenance issue on those subsea equipment.

The next question is from Ntebogang Segone.

Can you guys hear me?

We can.

Ntebogang Segone from Investec Bank Limited. I have got a few questions around production.

If you could provide us with more color around OpEx per barrel for me. I mean, production, even management is saying that for FY '25, we'll be tracking below guidance.

However, if you look at guidance for FY '25 in terms of OpEx per barrel at a consolidated basis, it still remains unchanged. So if you can maybe provide more color on that as to why it is that there is no increase or increase in your OpEx per barrel?

And then in relation to the Gabon asset where there's been the 3 weeks planned annual maintenance, how should we then be looking at production, particularly in the fourth quarter? Should we be looking at it relative to operating at similar levels as in 1H 2025?

Or will it be tracking below that? And then in relation to CapEx, on the exploration side, I do see that there's a lot of projects that you have in place.

I mean, you've got the discovery, the Bourdon discovery coming up. If you could please just provide us with more guidance around how we should look at CapEx from FY '26 as well?

Thank you, Ntebogang. Just there's been a couple of questions as well online just about 2026.

I mean we issued 2026 guidance once we've been fully through the budgeting cycle with our partners at our assets. So we're going to continue to do that.

So as we have always done, we'll be providing 2026 guidance early in the new year. Obviously, Ntebo, I think in terms of the production question that I think we set out, kind of what that impact had in terms of deferring volume in Gabon from the planned maintenance, which was successfully completed in the quarter.

If we hadn't had that impact and if you just would look at it on producing days, we'd have been fairly stable. So I think you can extrapolate that sort of into the fourth quarter.

I think Tunisia production is pretty stable as well. Equatorial Guinea, as Eric has already gone through, we are seeing some restoration and expect to see that and normalize into Q1 2026.

So I think from that, that kind of builds the picture as to the guidance that we've set for the full year at just under 11,000 barrels a day. The capital expenditure at Bourdon, we made the discovery in Q1 of this year.

And so there's still a lot of work going on. It's a bit premature to start sort of speculating because there's various concepts under evaluation and it's being matured towards FID.

And once we have sort of a firm picture on the basis for FID, we'll obviously communicate that. But what I would say is, look, the intention is to follow the sort of MaBoMo strategy.

So as a starting point, you can look at the kind of costs that we've developed and the strategy we've developed the Hibiscus area with the operator. Just on the OpEx per barrel, I mean, obviously, what we try and show there is the actual cost of producing the barrel of oil out of the ground.

There are some timing things. So what I'll do with that is I'll -- rather than go into so much detail right now, I'll follow up with you separately, Ntebo.

And that will conclude our Q&A for today. Thank you very much, everyone.