Earnings call: Panoro Energy reports record Q4 results, plans for growth

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Earnings call: Panoro Energy reports record Q4 results, plans for growth
Credit: © Reuters.

Panoro Energy has announced a record-breaking performance for the fourth quarter of 2023, with the highest revenue, EBITDA, and profit before tax in the company's history. The energy firm also declared its highest dividend to date, at NOK50 million, and shared its strategy for shareholder distributions and share buybacks in 2024. The company's operational achievements include progress in the Hibiscus field, the drilling of the Hibiscus South development well, and plans for drilling the Ruche discovery and the Bourdon Prospect. Despite a setback with the termination of a rig contract in Block G, Panoro Energy anticipates a 40% increase in production this year.

Key Takeaways

  • Record revenue, EBITDA, and profit before tax for Q4 2023.
  • Highest dividend announced at NOK50 million.
  • Expectation of a 40% production increase in 2024.
  • Capital expenditure guidance maintained at $75 million.
  • Shareholder distributions and share buybacks prioritized.
  • Successful operations in the Hibiscus field and the discovery in Hibiscus South.
  • Steady production in the Tortue field.
  • Rig contract in Equatorial Guinea terminated, with a new rig sought for Q2.
  • Profit tax rate in Equatorial Guinea reduced from 35% to 25%.
  • Reserve and contingent resource position of 65 million barrels.
  • Plans for significant shareholder dividends of NOK400 million to NOK500 million in 2024.

Company Outlook

  • Panoro Energy targets production growth, aiming for 11,000 to 13,000 barrels per day in 2024.
  • Focus on organic growth with openness to strategic inorganic opportunities.
  • Commitment to maintaining a conservative debt position while prioritizing deleveraging and shareholder distributions.

Bearish Highlights

  • Delay in drilling activities in Block G due to the termination of a rig contract.
  • Uncertainty regarding the timing of the next phase of drilling in Dussafu, which may affect capital expenditures.
  • High-risk profile of the Akeng Deep prospect in West Africa due to the unproven Albian reservoir.
  • Short-term issues, such as rig postponements in Equatorial Guinea, impacting the share price.

Bullish Highlights

  • Positive developments in the Hibiscus South well and steady production in the Tortue field.
  • Encouraging potential for gas and helium exploration in South Africa.
  • Reduced profit tax rate in Equatorial Guinea to attract investment.
  • Strong reserve base providing over 10 years of production.

Misses

  • Termination of the rig contract in Equatorial Guinea leading to a search for an alternative rig.
  • Slower progress in Tunisia affecting the short-term outlook.

Q&A Highlights

  • Plans for gas, helium, and methane exploration in South Africa progressing through the environmental authorization phase.
  • Emphasis on long-term business prospects despite short-term share price volatility.
  • Update on workovers in existing fields and potential drilling targets in Tunisia.

Panoro Energy's record performance in Q4 2023 is a testament to the company's operational success and strategic planning. With a strong focus on increasing production and maintaining financial discipline, the company is poised for significant growth in 2024. The firm's commitment to shareholder returns, coupled with its conservative approach to debt, positions it favorably in the market. Despite some operational delays and risks, the overall outlook for Panoro Energy remains positive as it continues to explore new opportunities and optimize existing assets. The company reassures stakeholders of its dedication to keeping the market informed of any further developments.

Full transcript - None (PESAF) Q4 2023:

John Hamilton: Good morning, everybody and welcome to Panoro Energy Q4 2023 Trading and Financial Update. I'm joined today by a number of colleagues who are available to assist on Q&A. And today I will just take you through our fourth quarter results and update you on some of our key operations. As a reminder today's conference call contains certain statements that are or 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 the 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 these forward-looking statements are reasonable actual events or results may differ materially from those projected or implied in such forward-looking statements due to known or unknown risks uncertainties and other factors. And for your reference our announcement is released this morning and a copy of the press release and the presentation are available on our website, www.panoroenergy.com. We will have some Q&A at the end of the call and you can submit your questions in two ways. You can raise your hand using the hand icon as you can see here on the left side of the screen, or you can type in your question here and we will endeavor to answer it to the extent it has not already been answered from the previous question. Here are our financial highlights for the year. This is a record year for Panoro. We had a record revenue, record EBITDA and a record profit before tax, so very, very much a very, very good banner year for the company. We're very proud of that and I think it's reflecting the trajectory that the company is on. We have also today announced a dividend of NOK50 million, which is our highest dividend to date. We're also very, very proud of our dividend track record to date is paying capital -- that's a distribution -- cash distribution rather than a dividend. We started dividends, cash distributions about a year ago and this was about six months before the guidance that we've provided to the market in terms of when to expect such cash distributions. And in that time, we've grown our distributions by almost 60% to today's announcement of NOK50 million. And the Board and the management of the company are very much focused on cash distributions and shareholder distributions and shareholder returns. It's a very key focus for the company. We're very proud today to have announced our highest dividend to date. This is a repeat slide from our announcements in November, which we talk a little bit about the way we see 2024. The NOK50 million dividend that we just announced today concludes our 2023 dividend cycle our Q4 dividend. And we're now officially as of today into our 2024 cycle. And this is a framework that we set out in November, and which we're sticking by now, which talks a little bit about our aspirations to pay a core cash distribution, which we've announced today and we'll continue to do those. And that we also want to supplement those with special distributions and share buybacks. Share buybacks are obviously something very much in focus particularly given the share price of the company recent. So there'll certainly be some strong attention paid to share buybacks as part of this distribution. And we set out the parameters of where we see the levels here between NOK400 million to NOK500 million during the 2024 distribution. And we're very much sticking by this and this is very much a key focus for the Board of the company. So a little bit of an operational update now in terms of where we are on the various things we have going on from top to bottom. We have Hibiscus, the Hibiscus field where we've been performing some workovers in the back end of 2023. The most recent activity, which I'll talk about, is the Hibiscus south development well. This was a discovery we made back here in 2023. We've now drilled this well, and it should be coming online quite soon. We will then be moving on to Ruche to drill the Ruche discovery that we've made to turn that into a production well. And we'll also be continuing with workovers dealing with the ESP issues, which I'll touch on again a little bit more. And that will finally see us coming back to drill a final well in Hibiscus, so we still really have three whole new wells coming online, plus a workover or two. And then we have the Bourdon Prospect, which, subject to timing, is a well that we very much would like to be drilling this summer. In Block G, we recently had to announce that the rig contract had been terminated, so it's pushed out the drilling icons there. We have them notionally here into the second half of the year. I'll touch again on the situation with the rig, but that looks like it's now a second half activity rather than first half activity, which it was originally. So we still have plenty going on in the company, and lots of production growth, lots of catalysts this year on the operational side. This is a slide sort of reconciling our production for the past year and a half or so, together with our guidance for the year. We last year produced 8,500 barrels a day, approximately, which was a record year for us. This year, we're guiding between 11,000 and 13,000 barrels a day, having taken the top end of that, the 14,000 barrels a day, off due solely to the rig termination in Equatorial Guinea. Again, those wells were meant to have been coming online in the first half and now are estimated to come on in the second half. But it still should be approximately a 40% increase in our production from last year. So again, another year of growth ahead of us. Liftings. Liftings are very important for the company, as everybody that follows the company knows. We recognize revenue and cash when we sell barrels, not as we produce them. And of course, historically, we've had very lumpy liftings, which have created some volatility in our quarterly earnings, quarterly P&L, and of course, our cash flow as well. And I'm happy to say that the yellow graphs you can see here show a much steadier development this year. That's down to a few things. That's down to, obviously, growing production, but it's also down to actually getting in some joint lifting arrangements with one of our operators, which makes this much smoother. We're lifting smaller volumes more frequently, if I can put it that way. So that's been a very, very good development for the company, and I think should make the quarterly P&L a little bit more stable. What's important to note here, I think as well, is we have quite a few liftings coming up. So in Q1, we are showing 750,000 barrels here. We've only lifted 250,000 barrels of that. So still in Q1, in March, we have about half a million barrels being lifted. And then in early Q2, in April, we have about 650,000 barrels being lifted. So you can see that we have roughly one-third of our crude liftings for the year happening in March, from March into late April. So it gives people, I think, a little bit of idea that we're also hopefully catching a little bit of the higher oil price now, if those oil prices maintain above 80, whereas they've been in the mid-70s earlier this year. So I think you'll see quite a bit of P&L and cash flow activity as we get into March and April, early May, is when we start really kind of getting the cash in the door and as we start to get our capital expenditure behind us. Total liftings for the year estimated around 3.7 million barrels, which is a 40% increase on what we did last year. So again, I think depending on the oil price, of course, I think you should see our financials also potentially looking like a record year again. I won't dwell on this slide. We always produce it to show where our debt outstandings are and what our capital -- CapEx guidance for the year is. None of this has changed. There's no new information here, particularly with the exception of the breakdown of where the capital expenditure is on a per country basis, but the guidance remains the same at $75 million of capital expenditure this year. And we'll continue in our regular updates to update this slide as we go. Similarly, I won't dwell too much on our cash flow waterfall here. But again, we'd like to show this slide every time to kind of break down what's happening. Obviously, we're very happy to have, again, paid now with today's dividend $18 million of cash distributions to our shareholders during a year in which we are spending lots of money on our investments in our assets. So, again, feeling that we're willing to dedicate a large portion of our free cash flow towards shareholder distributions, and that will continue. Right. In Gabon, I'll start first with Hibiscus South, because that is the most recent thing that happened. People will remember back in the fourth quarter last year, we drilled an exploration well called Hibiscus South. It's just to the south of the main Hibiscus field. And we made a discovery there. We announced that, and we announced around 67 million barrels gross. These are very, very high-value barrels because we already have the production platform there. So the cost of upgrading these reserves is extremely and producing these reserves is extremely low, very high-margin barrels to bring back into the Hibiscus structure. And then we have now completed drilling the production well there. So we've come in and drilled a horizontal well. That well is completed drilling now. We're busy in the final completion stages of that well, and that well should be online within the next few weeks. And it just goes to show that you can -- in this area, again, shallow water, lots of objects to drill here in the future that you can make a discovery and have it online within five months. So infrastructure-led exploration is very much works in this area, and we have had a great success there. The drilling of the production well has also given us a new data point on the structure. And the structure now appears to be considerably bigger than we had previously guided. So it's a very, very nice additional data point for us. We don't have a perfect number right now in terms of the quantity, but it is significantly bigger field than initially estimated. We're very happy with the reservoir performance. And again, as we talk about ESPs and some of the issues we've had here, one thing that certainly keeps delivering here on the upside is the reservoir and finding additional oil reserves here. And Hibiscus South has been a great success. So again, that should come online in the next few weeks. So Hibiscus Ruche Phase 1, we've had the ESPs, which have been well flagged. We've had some electrical integrity issues there, which resulted in November and December having to literally pull out the ESPs, ship them back to the manufacturer. And then what we've done is we've reinstalled two new ESPs into two of the wells there, and we're free flowing one of the wells. So at the moment we have three out of four wells at Hibiscus producing. The ESPs that we've reinstalled in the two wells are operating under slightly modified operating parameters. So we're using different frequencies and things like that. Trying to operate the wells in a different manner than we had before, while we're waiting for the final reports in terms of what the ultimate failure on the previous pumps was. And so far we've been very encouraged with the performance of those two new pumps. They are very, very steady. Production is very steady around 25,000 barrels a day. That's prior to obviously bringing Hibiscus South online in the next few weeks. So we've been very encouraged with the new operating parameters. We should hopefully know what the final prognosis or the final reasons for the difficulties we've had should be known in the next few weeks or so. But at the moment we're very encouraged with what we are seeing in terms of the new well performance. And on the Tortue field things are very, very steady there. The gas lift compressor is working just fine, very steady production on the Tortue field. So again, on Gabon we see production around 25,000 barrels a day, but we see that growing. We will be completing the Hibiscus South discovery into production in the next few weeks. We'll then be installing a pump into the fourth well in Hibiscus. So we'll then have additional well online there. All four wells should be online then, by April. And then, we will continue go drill Ruche, the Ruche field and another well back into Hibiscus. So I think that we are now climbing backup the production ladder, getting this asset back to where it needs to be which is towards 40,000 barrels a day. And so progress is very good on that front. Equatorial Guinea, just to remind people we have three assets effectively here in Equatorial Guinea. We have the Ceiba and Okume complex which is a production asset. Trident (NS: TRIE ) is the operator and Kosmos our partners there, together with the stake. And then we also have a stake in the exploration blocks Block S, operated by Kosmos and Block EG-01 operated by Panoro and partnered with Kosmos. So we kind of have cornered this area of Equatorial Guinea, where we see a lot of remaining prospectivity and obviously a lot of remaining reserves and contingent resources to produce. We had to announce recently the termination of a rig contract. So we had a rig work in the field here with the infill drilling program, three infill wells plus the drilling of the Akeng Deep prospect, the exploration prospect in Block S. Unfortunately the rig contract was terminated. This is a decision that was not easily taken, but it was the right decision. It's a decision that was endorsed by the JV partners and by the government in terms of letting this rig go. The partnership is very actively looking now for an alternative rig to come in and complete this program. That could happen as early as the late second quarter. We don't have a rig contract in hand yet, but we are very desperately working on trying to get a good rig to come in and drill out these wells including the Akeng Deep prospect. And we'll certainly update the market as soon as we have any news on that. But the partnership is very focused on getting a rig back out here. It's a very important, wells for us to drill. There's also a tax update. We mentioned this I think once before, but it's good to remind people that in an environment, where tax regimes are changing for the worse in many countries in which the industry operates in Equatorial Guinea, they are actually dropping the profit tax rate from 35% to 25%. So again, trying to encourage investment in Equatorial Guinea in the oil and gas space. Tunisia, we obviously during the course of the year, we consolidated our position there and took a bigger position. We have 49% of these assets now, which are a series of onshore and shallow water offshore production assets. And these continue to be very good strong solid reserves for us, with good solid production. The number of activities during the course of the year which may be less visible to the market than some of our other activities in Gabon and Equatorial Guinea but nonetheless, are quite important in the context of the asset we have here. Again, we have had success here as an operator in increasing production and we continue to see lots of upside here and we will be going after some of that in the second half of this year. So a summary slide before we turn it over to Q&A. The key messages to leave behind are the visible production growth. Again we are looking at a significant uptick in production this year, targeting between 11,000 and 13,000 barrels a day of working in production during the course of the year. Obviously, we'd hope to get above 13,000 barrels a day at the peak but this is an annualized rate. To remind people of our reserve and our contingent resource position is 65 million barrels. This is a very, very long life more than 10 years of production – reserve production replacement. So we have a long-term business here that should continue to develop production growth. And we have lots of development opportunities within our organic portfolio. On the middle column, infrastructure-led E&A Hibiscus South is a perfect example of how we can take just five months from finding oil to producing oil. It's the model that we seek not trying to find oil in strange places that are going to take years to develop but these are things that we can turn around quite quickly. And we do have high-impact wells Akeng Deep and the Bourdon Prospect in Gabon, which we hope to drill this year as well. And then all of that set up in what we think is a very, very healthy well-governed company with very strong commitment towards shareholder distributions, targeting NOK400 million to NOK500 million this year through a quarterly cash dividend supplemented by special dividends and of course share buybacks. We continue to look at opportunistic approach to new ventures, that's been part of what we've done as a company and done so successfully. Equatorial Guinea was a great example that we bought that and we received payback within 18 months. And we're continuing to look at opportunities as they come in a combination of course with our shareholder distribution framework. So that concludes my presentation. As a reminder, you can raise your hand and we will unmute you, and/or you can type a question in. And my colleague Andy will be managing the questions as they come in and we'll endeavor to answer all questions, unless we've already answered them in the previous response. So Andy I'd like to turn it over to questions now

A –Unidentified Company Representative: Thank you, John. The first question comes from Stephen Foucaud. Stephen, you’re self muted. Can you please unmute yourself and proceed with your question. Thank you.

Q – Stephen Foucaud: Good morning, guys. Thanks for taking my question. My question mostly is around South Hibiscus. So you talk about the South Hibiscus being potentially materially, much larger than expected. And I was wondering, whether if you could give an order of magnitude? Is it double the size? Is it triple the size or what is it?

John Hamilton: I think it's a little early to say. But yes, I mean it's not going to be triple -- I'd say maybe double the size, in that range maybe 50% to 100% bigger, which again these are quite -- these are quite free barrels, but it's not far off in terms of their contribution given the low operating costs associated with them. But yes, it's probably in that order of magnitude.

Q – Stephen Foucaud: Thank you. And therefore, would that require an extra well, do you think to be above those reserves? Or could that be done with the existing one?

John Hamilton: It probably would require a second well, in due course. Obviously, we just put in the first well in there and we're going to start getting some production data off of that in the next few weeks. It's an undrilled structure. So, we would hope that we're going to get a good production response from -- the reservoir quality looks really good. But I think certainly, in due course, the second well given the size of it, would probably be warranted perhaps in the next phase of the Hibiscus Ruche.

Q – Stephen Foucaud: Okay. Thank you. And again on South Hibiscus, you talk about the, I think structure being bigger. Does that mean you have seen more net pay that you were expecting and perhaps better reservoir quality or is it something else?

John Hamilton: Stephen, I'm going to ask my colleague Richard, to respond to that question. He's here with me.

Richard Morton: Yes. Stephen, on that point, we came in a little bit high to prognosis with the wells. So in other words, the structure seems to be a bit larger. We came in more or less as expected in terms of reservoir quality and oil saturation. So, it's more a structural game.

Q – Stephen Foucaud: Wonderful. Thank you very much.

John Hamilton: Thanks, Stephen.

Operator: Thank you. The next question is from Teodor Sveen-Nilsen. Teodor, you’re unmuted. Please proceed with your question. Thank you.

Q – Teodor Sveen-Nilsen: Good morning, guys. Thanks for taking my question. I have three questions. So first on investments, you already provided some colors on how much you expect to invest in 2024. Just wondering for 2025 directionally, should we expect lower CapEx in 2025 and 2024 definitely understand that it's early days, but some kind of direction would be useful. Second question is on the Akeng prospect, which looks exciting. Can you talk a little bit about the prospective resources, and the chances of success. And my third question is on your 2P reserves you currently -- by end 2022 you have 65 million barrels 2P. Reserves for 2023 when you disclose your reserve report, should we expect the reserve replacement ratio to be maybe below 100 and by that also reserves slightly down year-over-year? Or how should we think around that? Thanks.

John Hamilton: Okay. So CapEx guidance for 2025, yes, it's a little early. Obviously, we don't decide these things with the joint ventures until much later this year. But directionally, yes it will be considerably lower, certainly not going to zero. There will always be capital expenditures associated with this. And some of it is quite driven by how quickly we get around to the next phase of drilling in Dussafu. I think it's kind of the key item there of uncertainty exactly when that will happen. But -- so I'm not quite ready to give you guidance on it, but I would certainly take it substantially lower than the 75 this year. On Akeng Deep, Richard, do you want to talk a little bit about Akeng Deep and what that looks like?

Richard Morton: Yes I can do that. So Teodor, the Akeng Deep very interesting prospect. It's a full way in the Albian, which is a slightly deeper formation compared to where we're producing at Block-G. It's a nice-looking structure. The main risk in the prospect is reservoir. So the Albian reservoir is unproven in this part of West Africa. So this will be a new play. So it's reasonably risky from that perspective and the operator is estimating a one in four chance for this well. The reserves -- or sorry prospective resources we're looking at in this case is a key mean case of about 180 million barrels. So it's a very high impact. And again, it's kind of this infrastructure-led exploration idea an easy tieback to our production facilities at Block-G.

John Hamilton: And your last question on reserves it's just a little bit early. We're just in the final stages of working through our reserves. So we'll do our ASR as usual in the next month or six weeks or something like that. So I don't want to get ahead of that Teodor, but we will publish that as we usually do.

Richard Morton: Okay. That's great. Thank you. Andy?

Operator: Hello. The next question comes from Christoffer Bachke. Christoffer, you’re self-muted, can you please unmute yourself to ask your question. Thank you.

Christoffer Bachke: Hi, guys. Christoffer Bachke from Clarksons here. Thanks for taking my questions. I have two questions for today. The first question is can you elaborate a little bit on the progress in Guinea and also talk a little bit about the rig availability now that Island Innovator has been terminated? At least from what I see there is little rig availability in the area right now. And can you also say if you are in direct contact with rig owners right now? And as a follow-up to this does the production guidance range for 2024 take into account that the intro wells in Guinea may be postponed to 2025. The second question based on dividend guidance of NOK 400 million to NOK 500 million can you be a bit more specific about how you wish to balance between dividends and buybacks now in 2024? Thanks.

John Hamilton: Okay. Sorry, could you just repeat the first question about Equatorial Guinea? I just want to make sure I understood properly. I get the part about the rig but the first part of it was?

Christoffer Bachke: Yes. Just elaborate a little bit on the progress in Guinea now that the rig the Island Innovator rig has been terminated and whether you are in direct contact with rig owners right now? Because from what I see at least there is little rig availability in the area right now.

John Hamilton: Right. Yes. So the activity in Equatorial Guinea is continuing to do a lot of work around the infrastructure. We're doing a lot of the flow lines and preparing in addition for the eventual completion of these wells, which have now been slightly delayed. So there's plenty of activity there but not of the production growth nature until such time as we come in and drill these wells. The rig market is tight, there's no question but we are in direct contacts as a joint venture with a number of parties. We've indicated that the timing is uncertain but that there could be the possibility in late second quarter of having a rig at our disposal. But until such time as that process is concluded, it would be premature to say anything more. But what I can say is the joint venture including the government we're very much aligned with the joint venture on this are very focused on getting back to this drilling activity. It's very important for each of the companies involved. It's very important for the government. The drilling of the Akeng Deep well is obviously something that Panoro is very, very interested as is Kosmos who've been talking a lot about it to their shareholders and analysts. So something we'd very much like to get after. And then the production guidance, yes, the range includes an assumption that we have a contribution during the course of the year from some of the new wells in Equatorial Guinea. If that gets postponed for longer then we'd probably be towards the lower end of that range. If we can get the rig in there in a decent time then perhaps we're more in the other part of the range. So, it does include some of the uncertainty around that. So I hope that answers the questions.

Christoffer Bachke: Well, thanks John. And regarding the dividend guidance…

John Hamilton: Yes. So, not quite ready for that one. But clearly what we'd like to do is set up a quarterly return of capital a paid-in capital to shareholders. So it's a quarterly core payment, which kind of sets a minimum payment. And then, share buybacks are something that are very much on the radar. Today we've increased the dividend substantially up to NOK 50 million. But in terms of the mix, I think it's going to depend on a number of factors. But share buybacks particularly where our share price is and the view of the Board and the management is that we have a very low share price and certainly share buybacks are going to be a significant portion of what we do.

Christoffer Bachke: Certainly agree. Thank you very much for taking my questions.

John Hamilton: Thank you.

Operator: Thank you. The next question comes from Steffen Evjen. Steffen, you are unmuted. Can you please ask -- proceed and ask your question. Thank you.

Unidentified Analyst: Yes. Good morning. I dropped out for a few minutes so apologies if my questions have been answered. My first question is on the Hibiscus South. Looks were promising. Could you say anything on when we should expect a more quantification of how high the reserves can be? And just to confirm, I guess this will extend the production plateau right from that development? And my second question is on the drilling termination in Equatorial Guinea. Do you face any risk of any termination fees or any sort of, yes, cash payments there to the rig operator? Thanks.

John Hamilton: Yeah. Steffen I think your first question has been dealt with. We're not going to come up with any volume metrics yet, but we were put on the spot and we said it's probably 50% to 100% bigger than we thought something in that order. Reservoir quality seems very good. We seem to have a bigger structure than originally modeled off the back of the initial exploration well. So that's all very promising. And yes ultimately of course it will extend the plateau out of that area. I think what's also maybe not mentioned but I think it's very encouraging. I think it continues to prove the Dussafu model where we've got this license for another 15 years and there are lots more exploration targets to be drilling here. And we've had mostly successes here. There've been a couple of things have been disappointing over the years but the Hibiscus Discovery (NASDAQ: WBD ) and Hibiscus South. It's encouraging you to continue to look at further exploration on this. So it's more than just the barrels we've found. I think it's sort of validating the model the mapping the seismic interpretations that have been done is giving us another really encouraging data point. In terms of the rig contract termination fees, contractual position it's inappropriate for me to comment there. As you've seen, we've not changed our guidance really in terms of capital expenditure or anything like that. Obviously if the rig gets delayed we'll be spending a lot less money. But it'd be inappropriate to say much more than that at this point.

Unidentified Analyst: Okay, understood. Thanks.

John Hamilton: Thank you.

Unidentified Company Representative: The next question is from Pal Farman [ph]. Pal, you are unmuted. You are self muted, can you please unmute yourself and proceed to ask your question. Thank you.

Unidentified Analyst: Thank you so much. I got an answer to my question from one of the analysts. So that's okay. Thank you so much.

John Hamilton: Thanks Pal.

Unidentified Company Representative: Thanks Paul. Thank you. John a couple of questions submitted online. Can, you please elaborate a little bit on any thinking around accelerating deleveraging in balance with other forms of shareholder return?

John Hamilton: Yes. We've -- we're always trying to keep these things in balance, making sure that we are first of all are not aggressively borrowed. We never are and I don't think you'll ever see the company in a position where we stretch our debt position. We're very comfortable with the reserve-based loan structure. We think it gives a lot of discipline. We think that the relationship with the banks is important. It provides us with source of capital for future developments. So it's quite important to us to maintain a reserve-based loan. I think that that's something that we feel strongly about. But we'll never push it hard. It would always be conservatively geared. That's very much the philosophy of the company. But at the same time recognizing that we hopefully have a period of good three, four, five years of good free cash flow generation that repaying debt should go alongside shareholder distributions. And so we very much find keep those things in balance. Having said that I think a little bit of debt in RBL is always useful for a company like that for us. So I'm not sure you'll see us completely gear down to zero. Maybe on a net basis, we'll be net cash. But I think we'd like to keep this facility. It's a very good discipline for a company like us. Hopefully interest rates will start coming down. So hopefully the cost of maintaining that debt will also decrease. But you will certainly see deleveraging over this period of time that I'm talking about. The next three years is what I think most people are trying to focus in on in terms of free cash flow generation. And pretty much any model you generate yourself or that we generate will show us in a significant net cash position.

Unidentified Company Representative: Thank you, John. And further questions submitted online. Could you please comment on the current status of the technical cooperation permit onshore South Africa?

John Hamilton: Absolutely, I'm going to get Richard to comment on the South African business.

Richard Morton: Yeah. Thanks for the question. Right, so this is a technical cooperation permit, which we were awarded a couple of years ago. We completed a year's worth of desktop studies on that area, where we're looking for the potential for gas, helium and methane exploration. We concluded favorably, and then we made an application for an exploration rights over the area. Now we're currently going through a environmental authorization phase, which is required, working with the regulators to make sure we're adhering to all the rules about operations in the area. Once that's concluded, we'll enter the exploration phase and we'll have a three-year period to conduct further works in the area. So quite early days, but we're encouraged by what we've seen from the desktop work and want to pursue the project going forward.

John Hamilton: It may not be entirely visible, but this is a very hot area for helium and methane gas in South Africa. There is a very large company now starting to produce both helium and liquefying the gas they produce in the area. There are a number of other smaller public and private companies that are starting to get acreage going after exactly what we are doing. This is not a big cost center for Panoro, where you'll find it to be a rounding error in our CapEx line. But nonetheless, it's using our skills, our subsurface skills, to make a contribution towards the energy transition, trying to help South Africa wean itself off of coal and into gas. And the by-product of helium, which is a strategic gas and extremely valuable. And South Africa, it looks like it is an emerging province for helium. So we'll certainly talk a little bit more about it once we're given the formal exploration right. But things are going well.

Unidentified Company Representative: Thank you, John. A further question online, could you please comment on Panoro's approach thinking towards inorganic opportunities and any observations you may have on the M&A market that we're seeing in the region?

John Hamilton: Well, we're fortunate enough to have a lot of organic growth in the company still. This year, obviously, is a production boost year. We see a lot of organic growth still in Gabon, Equatorial Guinea, through our exploration activities, but also through further development activities. So we don't feel pressured to look at inorganic opportunities. But Panoro has also grown over the years from producing just a few hundred barrels a day to now around 10,000 barrels a day, partially through acquisition. And the tricky bit for us is to find the right opportunity. So the opportunity needs to exist and we need to get it at a fair price and fend off any competition. And those are tricky things to get the stars and moon to align. But in our business, we're always looking at opportunity. We think we've been good acquirers in the past. And if we can demonstrate first to ourselves and secondly to shareholders, obviously, that we're doing accretive deals that don't disrupt our distribution platform, shareholder distribution platform then we will certainly look at them.

Richard Morton: And a final question which has been submitted online. Could you please address the -- comment on progress in Tunisia which seems to have been a bit slower of late? And also in summary given the current prevailing market valuation what do you feel that the market is overlooking or missing with Panoro?

John Hamilton: Okay. I'll let Nigel comment briefly on Tunisia where there's lots going on. But again, it doesn't seem to get the headlines or the attention that our bigger assets do. But Nigel, do you want to give a brief update on Tunisia?

Nigel McKim: Absolutely. So I think, we'll see multiple activities in the year ahead and beyond. We in particular looking at a series of workovers on the existing fields which should boost production during the course of this year. And alongside that, we've been looking at further growth opportunities. So we've come to the final phases of detailed simulation modeling of the largest onshore field, the Guebiba reservoir and are identifying a couple of potential drilling targets there. So we're in the process now of gearing up for a drilling program, which would we hope kick into action in the latter part of this year and early into next year. Alongside that activity on Guebiba, we'll also be planning to drill a well in the Rhemoura field also onshore. So there's quite a busy period of activity that will boost production that's scheduled for this coming year. And beyond that, the next real focus will be the Cercina field offshore. And we're in the process of renewing the concession for that field. And we then are looking at a very significant program of revamping and upgrading the facilities for that life extension and then looking at further potential drilling opportunities in that reservoir.

John Hamilton: And as to the final question in terms of what the market may be overlooking. Obviously the market is driven by short-term sentiment and we understand that. And we've had some issues in Gabon and now the issue in Equatorial Guinea with the rig postponement. And that's going to affect the share price. And I think that that is seen very much in our share price at the moment. I think what I would say is missing is for longer term people with a longer-term focus is that the reserves have gone nowhere. These barrels will still be produced. We're in fact finding more of them for instance Hibiscus South. We have a couple of very exciting exploration wells on the horizon in Akeng Deep and Bourdon. So we have a very, very good long-term business here with an overlay of a very shareholder-friendly distribution framework. So for longer-term holders or even medium-term holders I think that hopefully they can see through some of the shorter-term volatility created by the issues we've had. But none of these issues are fundamentally changing the investment proposition of Panoro. Thanks Andy.

Richard Morton: Thank you, John. And that concludes today's Q&A.

John Hamilton: Perfect. Well Thanks everybody for listening. And we'll certainly be updating the market as and when we have news in particularly around some of the key items that I know people are focused on. So we'll update the market as soon as we possibly can. Thank you.

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