Enquest (LSE:ENQ) — Full Year Results

0:01 Good afternoon, ladies and gentlemen. Welcome to the ENQUEST PLC Investor Presentation. Q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so, and these will

0:31 be available via your investor meet company dashboard. Before we begin, if I may, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to head of investor relations, Ian Wood. Good afternoon, sir. Thank you. Thank you for your introduction, and good afternoon, ladies and gentlemen, and welcome to our retail shareholder focused presentation. Just outlined, my name is Ian Wood. I head up a investor relations team here at ENQUEST. You also have on the video line with me today my colleague, Craig Baxter, our senior investor relations manager. The purpose of today's meeting is really to provide you with an additional forum outside of our annual general meeting for both existing and potential noninstitutional holders to engage engage with us, understand who we are, what our strategy is, what our achievements are, etcetera, and ask us some questions about the business.

1:29 So as the operator outlined, the Q and A box is open for people to submit items they'd like to discuss, and we'll come to those at the end of the presentation. So the format's pretty straightforward and in line with others, I'm sure you've attended, which is Craig and I'll cover the ENQUEST business, and then we'll turn over to that q and a section. So without further ado, I will start with an overview of who we are. So ENQUEST is an independent energy company. Our operations are focused in The UK, North Sea and in Malaysia. We were first listed on The UK and Swedish stock exchanges back in 2010. And our focus at that point in time was really on the upstream business and on taking mature and underdeveloped producing assets from majors and other operators and driving further efficiencies in in their operations in order to extend their lives maximize recovery of oil and gas. And then eventually, we would obviously move them into decommissioning once they cease economic production.

2:39 So as you can see from this slide, we've got a number of assets that are in production today. They're primarily in The UK North Sea, although we do obviously have our major asset in the Malaysian Basin. All of these have combined have material reserves and resources that we're looking to exploit. We also have the Sunbow Terminal, which is an onshore processing terminal in The UK, up in the Shetland Islands. And as I'll outline a bit later on, this is very important to both our existing upstream and our new energy ambitions. We've also got a number of assets that we have now moved into decommissioning over the last few years as they have reached the end of their economic lives. And so we are managing those decommissioning programs on behalf of other partners.

3:31 So as you're no doubt aware, the energy landscape is in transition. The wider macro environment has also had some challenges, not least in the last kind of twelve months or so. And obviously, to be a successful organization in such circumstances, the business has to continue to show the resilience it's shown over many years, but also the creativity and adaptability that are sort of core parts of our DNA. And we think the combination of the assets that we've got within the business, the people we have within the business and the capability set we have really sets the company apart from any of its peers. And we're really able to provide an offering across the entire energy transition spectrum as we see it today.

4:18 So being true to our roots, as you can see from this slide, our business model has the upstream business effectively on the left hand side there, and that remains our core business. This is what will deliver the cash flow over the medium to long term. But we are very cognizant of the changing energy landscape and want to play our part in a sustainable transition. And so we've enhanced the business model in the last twelve to eighteen months or so, to include complementary strands of infrastructure and new energy, which is the kind of middle green bit there. And this is where we aim to repurpose existing infrastructure that supports the delivery of our renewable energy and decarbonization ambitions.

5:05 And we also have the a more fulsome strand around decommissioning where we will effectively manage end of life production and then ultimately the safe, cost effective and as low carbon as possible decommissioning of those operations that have reached the end of their useful lives. So let's jump into a little bit of background on each of these business units that we have within the organization. The first one a couple of slides will relate to our upstream business. So again, going back to our roots, really, focus on three core areas for improvement when we look at assets that we want to take into the portfolio.

5:52 Obviously, we have health and safety and CO2 emissions reductions in mind as we develop these assets. But fundamentally, we are looking to ensure that we exercise strong cost control, capital discipline and lower the running costs of these assets. We look to drive improvements in their uptime, so ensuring that they run more efficiently, a bit like tuning your car more regularly and ensuring that it is in its most efficient mode, and therefore, it's cheaper and cheaper to run and obviously produces more hydrocarbons in good time. And then obviously, we look to also see what the reservoir opportunity is and enhance the recovery of the significant oil and gas reserves and resources that remain in place at many of these assets that others before us probably would have left behind as they move on to newer developments that they tend to prosecute.

6:54 So from this slide, you can see on the left our ability to lower costs when compared to those incurred by previous owners. So Magnus down 57% on average under our operatorship versus sort of 60 a barrel in its final few years with BP. We also took costs down in the Malaysia asset. And it's not just the day to day running costs where we exercise such a focus. It's also in the capital program as well. So obviously, we developed the Kraken asset back in kind of 2013, 2014 through to 2017 when it first came on stream. That originally had a budget of $3,200,000,000 and we managed to deliver that for $2,200,000,000 So significant savings there as we drove improvements through our strong drilling performance, but also strong contractor management and looking to ensure, you know, supply side worked with us to achieve efficiencies on sort of cost and performance basis.

7:57 On the right hand side, it's a little bit more operational focus. So again, obviously, we've got our safety stats there, which is still pretty strong, although recognize a slight deterioration in 2022 that we are obviously very conscious of improving as we as we move forward and and focused on a kind of continual improvement mindset in that arena as without strong safety, you have no license to operate these assets. But the other section there in the middle sort of is really the core of our uptime objective. So we really aim to get the production efficiency or uptime of these assets to be above 80%. That means it's running, you know, full bore, if you like, at 80% running at full capacity for 80% of the year, recognizing we have shutdowns and you will have other incidents and so on, cause platforms to trip from a safety sort of standpoint and ensuring that, you know, we, we keep our people safe offshore.

9:01 And we've got a we've got a good track record of of keeping things high, in this regard. So Kraken particularly, you know, has shown exceptional performance at 93% uptime last year, it was above 90%, I believe, the year before. And for floating production units, which is what the Kraken facility is rather than a fixed installation, you know, they tend to operate in the kind of low 70%. So so we've really demonstrated, you know, good operational capability there. And then we've this has continued really into 2023 at both Magnus and Kraken. So although we had some issues at Magnus in the early part of twenty twenty two, there have been a number of improvements put in place throughout the year, which Craig will cover some of those a bit later. And really, we've seen very, very strong uptime, north of 80% at both assets through the first quarter of twenty twenty twenty twenty one three, sorry.

10:00 So with such strong performance in terms of lowering costs and improving asset uptime, generally, means you can run the assets for longer than they would have been run for in the hands of previous owners because you're effectively driving efficiencies into day to day operations, and so they remain economic for longer. And so since our inception, you know, we've extended the useful lives of every asset that we've we've taken into our operatorship. So, here's some examples there on the left hand side.

10:32 Obviously, as we as you do that as well, you tend to extract more resource, naturally because you're running it for longer than than than the previous operator would have done. And so alongside, you know, just natural life extension through strong uptime and cost control, we've also looked at where we can extract additional resource largely through infill drilling where we have a a really strong operational capability to extract additional reserves. And that combined has effectively delivered a reserves replacement ratio, which is effectively your number of additional reserves you've added versus the amount you've produced over time. So you can see we've produced 1.6 sorry, we've added 1.6 times the amount of reserves into the portfolio versus that which we've produced.

11:19 So, yeah, some stats. We started with sort of 80 odd million barrels of oil. We've produced around 200,000,000 barrels, and we've still got $190,000,000 left to produce. And that's without accessing further opportunities that we see within our portfolio that I'll come on to in a moment. Clearly, from a sort of sustainability standpoint, we think this is quite compelling. It's better to make the best use of what you already have rather than perhaps going out exploring, expending significant capital, expending significant carbon and creating new production facilities and installing them. So best to make use of what we have while we do transition to a new lower carbon world in the decades to come.

12:10 So as I alluded to just now, this slide outlines the opportunity set, if you like, over and above that which we showed on the previous slide in terms of reserves and resources. So we across our assets, really, we've got quite extensive multiyear drilling programs, particularly Magnus, PM8, Seligy and our non operated asset, Golden Eagle. Yeah. These should see us kind of develop that 190,000,000 barrels of reserves that I noted, but also could potentially access more of the resources that also sit behind it, at present don't have a kind of full development plan in place, and therefore, you're not allowed to recognize them as reserves as yet under the various regulations that we report against.

12:59 So in Malaysia as well, we've got extensive, as I say, extensive drilling campaign, but there's also a huge gas opportunity out there. Now at the moment, that gas is owned effectively by the regulator, by PETRONAS. So we're in discussions with them as to how we can access that gas and produce it through our facilities. It sits effectively in the same reservoirs and would be produced through the same infrastructure as we currently operate, and therefore, we think there's an opportunity there for us to work with PetroNASA on a mutually beneficial basis to release that gas resource for largely domestic use in the Malaysian Peninsula. And then at Kraken, while we've got some infill drilling opportunities, these will largely be backed up by some additional analysis that we're doing on the seismic.

13:52 So this is where you take effectively a snapshot of the field's reservoir and all the different geological layers in there and what layers may be hydrocarbon bearing or oil bearing and which then are the best spots to drill a well in in terms of extracting that that resource. And so, you know, we we we did a huge seismic campaign about eighteen months or so ago. Processing that data takes time, frankly, particularly, you know, when you've got to amalgamate it with the history that we've got at the the field as well and make sure we're understanding everything appropriately. But that should put us in a good place in the coming years to reinstate a drilling program at Kraken and extract additional reserves and resources there as well. So as I Golden Eagle, while we're not operator, there are multiyear well programs that we're discussing with the JV partnership, the joint venture partnership there.

14:47 Obviously, we believe we've got strong drilling capability, so we are working with the operator to share our experiences and expertise to see if we can optimize any future drilling program as we go forward.

15:04 So while that those drilling programs and the kind of the organic portfolio, if you like, offers us opportunity really for kind of sustainable long term levels of production at reasonable rates, The growth aspect, I suppose, is is something that's also on our mind. And, really, that in terms of material growth, I think it's fair to say that's more likely to come through an m and a transaction. And as this slide sets out, we've got a good track record here of delivering really value accretive m and a transactions across, you know, both The UK and and in Malaysia. And, really, we're focused there on what what what can we minimize our cash outflows on upfront, so try not to pay significant consideration for those assets,

16:00 but then ensure that we get the quickest payback possible for whatever outflow that we actually we actually have to pay in terms of the deal. Now there may be other transactional structures around this, like at Magnus, you where we bought the first 25% for nothing and keep all the cash flows and the next seventy five percent interest we paid $100,000,000 for, and we share some of the future profits with BP, the previous owner there, to kind of ensure that both parties receive good value for that investment. So that, you know, that's that 100,000,000 that we invested in Magnus, that paid back in less than twelve months. And similarly, in Malaysia, you know, we invested a very small amount upfront.

16:46 Clearly, the cash flows there are slightly reduced from the the the nature of the contracting structure that you have in Malaysia, which is, I recall, a production sharing contract. And so you share the revenues and profits with the host government more so than you do in The UK in terms of a tax and royalty kind of regime. But still, we managed to achieve payback well within twelve months there as well. And our most recent acquisition at Golden Eagle, we paid a significant sum of money out, which I know a lot of shareholders followed that in terms of the placing an open offer that we put out for in terms of equity raise. So we thank everyone for their support for that. But from a cash perspective, it's already paid paid back that initial cash outflow of $250,000,000 as well.

17:35 So, you know, we've got a strong, stable base of opportunities, and we've got a significant kind of track record of delivering on M and A. But it's not just upstream kind of capabilities around drilling and operational uptime, etcetera, that helps us drive value. The decommissioning business that I mentioned earlier, kind of the third strand in the business, is also a very important area of our capability offering. So here, our ability to manage and execute large scale decommissioning projects, which is what it is in The UK, particularly with the size and scale of the infrastructure that's installed. This capability effectively means we can mitigate our future cost exposure because the the you've probably seen on our balance sheet, and we've got sort of 700,000,000 of decommissioning obligation to pay over the next twenty years or so.

18:32 So it's not insignificant

18:34 sums of money that we're managing there. So anything we can do to make that more efficient is clearly good news from a from a cash perspective. But also, as we do more of this decommissioning, more and more participants, particularly in The UK North Sea, would be looking for others to manage that decommissioning project on their behalf. And so this could well become a very strong underpin to any M and A transaction that we do where we could demonstrate the value we can drive through effective management of decommissioning for on behalf of others to ensure that people pass us the assets in good time. We enjoy some of the cash flows as we run them for late life, asset management as we do in our current upstream business, and then we take them into a smooth and well planned decommissioning phase.

19:26 I mean, last year, we did we really started to, I suppose, demonstrate how good we could be in this arena. We delivered the largest multi asset well campaign in the Northern North Sea. So this is where you have to under regulations, you have to physically plug and abandon, so stop any hydrocarbons potentially flowing out and leaking out of those wells once you've finished your economic kind of production from the reservoir. So we did 24 wells last year across the Heather and Thistle assets all on time, on budget, etcetera. So, you know, that's a that's a huge effort considering, you know, we kind of started looking at this only twenty four months or so, thirty six months or so ago. A lot of that is to do with as kind of similarities to our upstream drilling capability. You use drilling rigs to kind of reverse the installation of all the pipework and steel work down in the wellbores.

20:25 And so we can apply that drilling capability and decommissioning similarly to how we do it in the upstream business. And as you can see with the chart on the left, almost 50% of future decommissioning costs in The UK North Sea are estimated to be well plug and abandonment based. And so again, if we can drive efficiencies there, that's a huge win from a cost and NPV and cash flow standpoint. We'd also it's not just about the drilling. We do look at changing technologies and improvements in technologies in terms of how we maybe cut sort of the platform, how we dismantle the platform, etcetera.

21:12 And that will also help drive efficiencies in this cost pool as we as we go forward. So that's, again, that pink box there really of removals is significant area which you can drive further efficiencies and cost optimization.

21:27 So clearly, we've got strong capability upstream and decommissioning, lots of efficiencies that we can drive and lots of what we feel are competitive advantages. Let's now look at infrastructure new energy, where we similarly think we've got an advantaged position.

21:47 So this slide, you can see a picture of the Sullenbo Terminal up there on the Northern tip of the Shetland Islands. As I mentioned, this terminal is a really important part, both our upstream and our future new energy business. It was once the largest terminal oil terminal in Europe and processed up to 1,500,000 barrels of oil a day. Clearly, The UK North Sea production has come down generally, so it doesn't produce quite as much today. But it does still, allow us to export our Magnus field oil production, and it also supports, other UK North Sea, participants, both on East Of Shetland's developments and the West Of Shetland, oilfield developments that, that are still in process and have many, many years still to run, particularly on the West Of Shetland Side.

22:41 So you can see here, given there's a huge oil tanker on the right hand side, they're on one of the jetties. This is a massive site, multiple storage tanks. It's already an industrial zone in terms of regulatory landscape. It's got storage facilities. It's got pipeline networks. It's got power, etcetera, already installed on on the site. And and, really, what what we need to do here is is first to support the the long term upstream business is right size the terminal and reduce kind of the capital and maintenance commitments of managing this site because clearly not all of it is used anymore given the the throughput at the site. If we can sort of move to other decommissioning costs around by repurposing the site for some of the new energy business. So, you know, we could use some of the brownfield kind of platforms, if you like, the the concrete bases and other elements, pipelines, etcetera, and not have to decommission them yet, then that that can actually, you know, ensure that the charge out, if you like, to the users of this terminal remains low and supports the economic life of oil production in the North Sea.

23:55 And then clearly, that also allows us to develop some of the new energy

24:01 opportunities that we see here. So we think having a stake and operating this site really puts us at an advantage to others who are looking at prosecuting new energy projects because a lot of those have got to go and build areas or, you know, develop brownfield areas. And so having that industrial site already in our hands is a huge competitive advantage for us in the new energy space.

24:32 And, of course, as we progress this, we've been probably talking about new energy now as a business for, again, sort of twelve to eighteen months or so, and it was a glint in the eye, if you like, just at start. And now really, we're getting quite excited about three particular strands that we can see, of good benefit to ENQUEST, and clearly, it's investors

24:53 as well. So these opportunities are laid out on the slide. You've probably heard some of these before based on many of our recent presentations and market communications. But carbon capture and storage is a massive area of focus for many jurisdictions, but it was a big area of focus in the recent, sort of treasury announcements around, funding and so on. Clearly, we're we're we're looking at whether we can access any of that funding in or in this round or in later rounds. But at the same time, we're also looking at how we can make this, you know, commercial model work in in its own right without relying on other other government funding, etcetera. And so within the CCS landscape, you know, with with the pipeline connections to offshore with the jetties that we have, that you saw in that picture, and with knowledge of offshore assets and reservoirs, you know, we think we can effectively reverse flows and bring carbon, CO2 into the terminal in liquid form, pump it out to the reservoir, and then store it permanently, in those reservoirs. And that's, you know, significant volumes of carbon as well, kind of up to 10,000,000 tonnes per annum. I think The UK is looking at trying to prosecute 30,000,000 tonnes or so per annum kind of around by 2,030. So we could be a significant player in The UK CCS landscape.

26:20 We've applied for two offshore licenses to store that carbon in areas that we know very well there, you know, co located to some of our East Of Shetland oil fields near close to the Magnus area effectively. And so we hope to hear about those awards in the coming weeks and months, and we can really sort of start to kick start further developments in this area.

26:49 Clearly, another project there is, given the scale of the site and its connectivity, is electrification. You may or may not be aware, but there's a huge amount of wind in the island in terms of wind power being developed both on the island and offshore Shetlands. It is a very, very windy place. Rest assured, I have been there and can verify that.

27:13 And with that wind power, we believe we could effectively install, you know, an aggregation system on the terminal that then provides access to The UK main grid but also could provide wired connection to offshore installations, particularly West Of Shetland Fields, to to ensure that they can be electrified and therefore have a lower carbon footprint in terms of how they are run and managed. And clearly, that's an area that the UK government and the Scottish government are very keen to ensure that we we decarbonize our existing

27:51 industries as well as as well as future industries. So that I mean, that's something that we're looking to prosecute as well from the terminal. And then the third one, which is probably a little bit more longer dated in fairness, is the potential production of green hydrogen or other associated derivatives. Again, you've got the wind resource there. Not all of it will be required or could even get into The UK main infrastructure in terms of the capacity available for bringing electricity in. You know, there's a much bigger multi gigawatt development happening, you know, offshore Shetlands. And so to to monetize that as early as possible, you know, we may be able to install electrolyzers again on the on the site that we have already,

28:38 develop green hydrogen that can then either be further processed into other derivatives or or, you know, be distributed either via the the jetties and etcetera and shipped off to other locations or if we needed to install other, you know, other connectivity through pipelines, etcetera, as well. So lots of opportunity in infrastructure and and new energy space really anchored in that in that strong holding position in the Southern Boat Terminal. And you may may be thinking, well, that sounds like a lot of money to invest for us as shareholders. Fundamentally, the projects are expensive, but we're looking to prosecute these effectively as low cost as possible. So we're not spending more than a couple of million dollars really a year at the moment while we do the studies and build out the, the understanding of how these projects could work. And what we'd look to do is bring in partners at the right point in time who then contribute the the physical cash, if you like, to develop these, the these opportunities.

29:42 You know, we're effectively offering up a ready made or, you know, nearly ready made site that needs some, needs some repurposing as our kind of equity into into any of those projects as we go forward. So looking to do this in a very low cost manner, as well. You've probably listened to me enough now just to get another voice on the on the presentation. So just before I hand over, you know, let me we really believe we've got a unique business model. We have some strong capabilities that that go right throughout the that transition landscape, whether it's upstream, infrastructure, new energy, or decommissioning. And we believe, you know, we can be an important player in a just and very sustainable kind of energy future, managing the needs of today's energy requirements by developing oil and gas and then developing lower carbon forms in the future.

30:34 So with that, I will now hand you over to Craig. Thank you, Ian, and good afternoon, ladies and gentlemen. So turning first to production in terms of our 2022 performance. We delivered a strong performance during the year with the 2022 figure of 47,259 barrels of oil per day, representing just over a 6% increase versus 2021. And that also represented delivery at the midpoint

31:02 of our full year guidance range. In general, as Ian's kind of alluded to, strong uptime has been a feature across the portfolio, including the continuation of top quartile production efficiency at Kraken. And, again, Ian's touching it, but it's worth repeating that the the 93% production efficiency achieved there is around 20% higher than The UK c UKCS average for for a a floating hub such as Kraken. At Magnuson and in Malaysia, well programs during the year represented low cost production enhancement scopes, and we have benefited from a full year of production following the October 2021 completion of the acquisition of the Golden Eagle asset. So if we can turn to slide 12, please.

31:52 So if we take it beyond production, we delivered a very strong predict performance relative to our other key guidance indicators for the year. The group's operating expenditure of 396,000,000 was lower than we guided, primarily reflecting strong cost discipline in the face of inflationary pressure. And we, you know, we we also benefited from a weakness in sterling. It's worth noting that our our OpEx cost base is 70% denominated in sterling. So, obviously, the the weakening of the pound did benefit us in terms of our reported dollar currency. In terms of decommissioning expenditure, that was driven by the extensive well program that Ian mentioned at Heather and Thistle, where we delivered those 24 wells. That was 13 at Heather, 11 at Thistle, which is obviously a a very, very productive campaign.

32:43 And we also optimized our capital expenditure program by focusing on quick payback, well work opportunities, both Magnus and PM eight in Malaysia. A really good example of this was the a six well at Magnus. So this was already this was originally earmarked as a infill drilling target, but we were able to be quite innovative, and we implemented a perforation campaign rather than infill drilling, which delivered similar incremental barrels at a fraction of the cost. So these are these are sort of things I think ENQUEST has been really good at over its over its over its history, and that's obviously something we continue to target at at these assets in terms of inorganic sorry, in terms of organic opportunities. Turning to slide 13.

33:31 So, basically, the results of these efforts that I've just outlined can be shown most clearly in the reduction of our net debt. So the chart on the left hand side that we're looking at here shows the pace and quantum of our deleveraging with net debt reduced by 41% during 2022. Our leverage ratio has declined from 1.6 x to 0.7 x over the year, representing really good progress towards our stated leverage target of 0.5 x net debt to EBITDA. Our focus on deleveraging has continued into 2023, and our net debt position at the end of February was further reduced to around $624,000,000. It's particularly particularly noteworthy, and I'll I'll discuss why, but it's particularly noteworthy we have now reduced the cash drawings under our reserve based lending facility to $282,000,000 versus the original commitment that was agreed in October of 500,000,000.

34:31 Another major undertaking for the company during 2022 involved exploration of a variety of options to refinance the group's capital structure. In October last year, we successfully delivered a comprehensive refinancing involving a reduction in our gross borrowings and extension of the maturity of our RBL and US high yield bonds out to 2027. This was a really big piece of work for ENQUEST, and it was a significant achievement given the volatile backdrop in all financial markets last year. In accordance with our hedging policy and in line with RBL requirements, we've also optimized our hedging program in recent months, and it now involves a significant use of put options, which is something that that Salman Malik, our CFO, alluded to you at the half year.

35:16 This protects cash flows while product providing reasonable exposure to higher higher oil prices. And it's worth noting that the cost of put premiums is an allowable expenditure to be offset against EPL. For 2023, we've hedged 7,900,000 barrels predominantly through a combination of puts and costless collars, 4,600,000 barrels are hedged through puts at an average price average floor price, should I say, of $60 per barrel, with the remaining 3,300,000 barrels being hedged through costless collars and average average floor of $56 per barrel and an average ceiling price of $75 per barrel. For 2024, we are purely utilizing puts at this stage, and those we've done 3,200,000 barrels, an average floor price of around $60 per barrel.

36:06 Turning to slide 14. I'd like to take a few moments here to cover the energy profits levy and the the impact it's had on on on our business. So as most people in the call will be aware, the introduction of the NG profits levy in in May 22 and then the subsequent amendment and extension in November to, I guess, what what we would call EPL two point o has drastically changed The UK fiscal landscape for companies such as ENQUEST. And it's fair to say that over the intervening months, we've endeavored to engage government in discussion both directly and through our association with industry bodies about the consequences of this levy. The levy has had all has a has a number of unintended consequences to the industry, generating several challenges, but also some opportunities which I'll look to describe to you today.

36:56 In terms of the challenges, so essentially, the the the the the levy takes money out of the system. The extension and the increase in the EPL and the absence of a price floor at which the levy would cease to be applied results in in in borrowing basis across the sector being reduced by 40 to 60%, and our RBL was not immune to that. We repaid a 180,000,000 of the RBL in the first quarter of this year following redetermination, and that brought brought the outstanding RBL balance to 282,000,000 and within the available capacity. The next redetermination is is is scheduled for for June of this year. Despite the challenges, the changes in in the EPL regime also, believe it or not, create some opportunity for ENQUEST, which is which is obviously important for us to focus on.

37:47 As you can see from the bar charts at the bottom of this slide, our our relative tax advantage has increased from sixty sixty 66% to a 160 relative to a full taxpayer. What effectively this means is that cash flow from assets is now worth 260% in our hands relative to a company with no tax losses who who are full full UK taxpayer. This relative advantage along with our core capabilities support our ambitions to pursue accretive m and a opportunities and enhances our ability to bring our tax losses to bear and create win win outcomes in structured negotiations. Secondly, the enhancement of the tax incentives associated with decarbonization expenditure could also support our plans to repurpose the surps Selenbourg Terminal into one of the largest new energy hubs in Europe.

38:42 The primary way this this could could be achieved is it it creates a large incentive for full paying full tax paying strategic and financial partners. So as Ian laid out, ENQUEST is gonna continue to spend low single digit millions as we as we prosecute the opportunities at. But some of the beneficiaries who will probably become clients and partners are full taxpayers. So for every £100 that they were to spend in such an endeavor that would reduce decarbonization investment, they would be able to offset a $109. So it's a 109% enhanced allowance. I can move on now, Ian, thanks to Slide 15.

39:32 So I'd like to conclude by discussing our guidance for 2023. So we expect production to be between 42,000 barrels of oil per day and 46,000 barrels per day, including the drilling campaigns that we've got planned at both Magnus and at Golden Eagle. Operating expenditure is expected to be approximately $425,000,000 with the increase versus 2022 largely reflecting specific areas of inflation such as resourcing costs as well as the phasing of activities. Cash capital expenditures are expected to be around $160,000,000 for the year. We've looked to optimize CapEx in light of the EPL. It's been a real focus area for the company and management. Accordingly, we do plan to execute the three well drilling campaign at Magnus, where we have a great track record of delivering quick paybacks as well as a platform drilling campaign that's planned at Golden Eagle.

40:27 As we've previously announced, we have deferred Kraken's Western Flank drilling, but we utilize the additional time we now have to complete seismic interpretation work in order to identify the best well target locations in the Flank. Decommissioning expenditure is expected to total approximately $60,000,000 primarily reflecting the ongoing well campaign at both Heather and Thistle as well as proprietary work in advance of future subsea decommissioning at the Donnes, at Almaglia and also at Broome. I'll now pass back to Ian to summarize and conclude. Thanks, Craig. Just a couple more slides to go before we get to the Q and A.

41:13 So this you'll probably be familiar with if you've looked at any of our materials in the last couple of presentations that the group has made half year and full year. So this is our CFO, Salman Malek's priorities. As Craig outlined, we've made good progress on a number of these already during 2022. So the first one particularly in terms of resetting the capital structure, that significant refinancing that we did back in well, throughout 2022 really across a number of our debt instruments, improving their their maturity profiles, etcetera, was was a great achievement. We also hugely delevered the balance sheet, so we significantly reduced the amount of gross debt as well, and we'll continue to focus on that going forward. I think it's very important in particularly volatile credit markets and what you've seen Craig outlined with the the impact of EPL on reserve based lending facilities, etcetera, across the sector.

42:14 You know, we need to we need to reduce debt as much as possible and and and ensure that we're kind of masters of our own destiny somewhat. So delevering will continue to form a core part of our our focus for the coming years. Thirdly, we talked about it a lot, you know, cost discipline, optimizing the capital program. That's all around making sure that we do things as efficiently as possible and spend money in the right areas to drive value, whether that's drilling or operating costs, ensuring strong uptimes, etcetera. And we also want to pursue the accretive M and A landscape, which, again, we believe we're advantaged in. Similarly, the energy transition landscape is moving around us, and we think we've got a very strong position there with our Sullenbo terminal. So we'll continue to work hard on those dual track growth options.

43:11 And then last but certainly not least, it's very much within management's thinking around getting to a point at which we can start to provide shareholder returns. Clearly, it's going to be post some additional deleveraging, particularly this year with some of the amortizations that we've got both in the RBL and our old retail bond that we have to repay in October of this year. So we've got more cash outflow, shall we say, in 2023, but we would anticipate from 2024 and beyond, we'd be in a stronger position at which we can start to develop a shareholder return element to our capital allocation framework.

43:58 So just very quickly, we've said all of this before. I'm not going to read every box on there, but we think our capabilities set us apart from our peers. We've proven this over many years. Craig outlined the extensive work program that we've got this year. And within the business model, we remain focused on operational excellence in upstream to deliver the cash flows and drive that deleveraging. We're also going to look to prosecute the iron and the opportunities, in particular, looking forward to the outcome of the carbon capture and storage license application that we made. And then in decommissioning, we've got another extensive program to to prosecute and just further embed our our capability there and prove to others that we could be a a a great decommissioning partner going forward.

44:46 So with that very brief summary, I'd just like to thank you for listening. And now we turn over to provide the audience with their opportunity to ask us some questions. So I think I'll hand back to the operator. Ian, Craig, that's great. And thank you very much indeed for your presentation this afternoon. If I may, I will just bring back up your cameras now. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Ian, Craig, we did receive a number of presubmitted questions ahead of today's event. And as you can see there in the q and a tab, we've also received a number of questions throughout your presentation this afternoon as well.

45:40 So firstly, thank you to all of those on the call for taking the time to submit their questions. But, guys, perhaps if we may start with the presubmitted ones, and then and then we'll look to take those that have come in during the presentation. The first question that we have here reads as follows. Following the amendments to the RBL, is the accordion feature still available for acquisitions? Thank you, Jake. Yes. The answer to that simply is yes. It's available. Clearly, we need to get lender consent, and they do their own kind of valuation because it's there really for, you know, future acquisitions, if you like, as a as a part of money that we could could go after. And so clearly, the banks would wanna look at the value of what those assets are, and does it support them lending us more money? If it does, then we could access that cooling facility accordingly.

46:31 Thank you very much for that, Ian. The next question that we have here reads as follows. What is the value of SVT on the balance sheet? Yeah. It's a good good question because we talk about the value that that offers to the the business. From an accounting perspective, it is de minimis. I mean, effectively, it's been written off given its age. You know, it first came into production in the nineteen eighties. And so, yeah, there's no sort of balance sheet value, shall we say, that's ascribed to it under accounting rules. But, you know, it it it's effectively a cost pool at the moment whereby any operating costs or capital expenditures are then shared amongst the users of that that terminal. Going forward, we think it's got significant value because it would cost significant sums of money to develop a new brownfield area on which to prosecute new energy opportunities.

47:26 And so, you know, that's that's really in our mind what the value is. But as a as a balance sheet angle, it's not it's not in our fixed assets as it were as a as a as a valuation. Perfect, Ian. Thank you very much for that. The next question that we have here talks to free cash free cash flow. And reads, are you able to provide any guidance as to likely free cash flow for '23 and '24 on the assumption that Brent remains around current prices? Yeah. I'm happy to take that one. Thank you, Jake. So, unfortunately, we're unable to provide anything that could be construed as a profit forecast in in this in this forum. But for 2023, we have provided significant guidance on the key component component elements of this calculation. So if I take you through those, that that might help.

48:20 So we have production guidance of between 42,046 barrel of oil per day. We have OpEx of circa $425,000,000 CapEx of circa $160,000,000 and decommissioning expenditure of circa $60,000,000. We've also got a couple of other cash outflows that we've we've talked about previously. So we've got the Golden Eagle contingent consideration of $50,000,000 that's payable this summer. We have the stub on the GBP 7% retail bond, which is circa $135,000,000 due in October 2023. And as part of the Magnus profit share mechanism, we are due to pay within within the accounts.

49:05 We we've stated we're due to pay somewhere in the region of of $80,000,000, sorry, to BP versus 46,000,000 that we paid last year. And we'll also have an EPL payment, which relates to seven months of 2022 taxable profit. So that's from when the the date of the original EPL coming in in in May 2022. The the the total estimate is is is you know, you could there's there's a number of estimates out there, but our sort of consensus our broker consensus is around 70,000,000, which around half, which was paid in in December 22. So if you take those component parts and you employ your view on on oil price for the year, then you should be able to arrive at a sensible estimate for free cash flow. And and I would say as well, on on the EPL, it's our status as as holding historic tax losses, which mean we pay one one payment effectively in arrears for EPL.

50:07 Thank you very much for that, Craig. The next question that we have here that was presubmitted asks, do you expect to be able to leverage ENQUEST's large tax losses in 2023 and or twenty twenty, twenty four? Sorry. And if so, can you provide any guidance as to how this might be done? Yeah. If it's okay, you need I'll take that one as well. So yes is the answer. We utilized around 500,000,000 of our tax losses to offset corporation tax and supplementary charge during 2022. And we expect to offset any CT and SCT due in 2023 and 2024 on our existing business at at current prices. We we'd expect that that to continue well into well into the tail end of this decade.

50:55 Looking forward, we see our tax losses as a key enabler for UK based m and a. Our tax losses are currently in the region of $22,500,000,000, and we have the potential to access a further circa bill $1,000,000,000 through the entity, which houses Bentley. But but and that's that's for for the future, but it is it's it's something we could access as as the the the project develops. These tax losses provide us with a, we believe, a competitive advantage in terms of negotiating any acquisition, and we'd be able to structure any deal to be win win for both ENQUEST and for for for the seller. The tax advantage created by these tax losses was previously 66% as I noted, as we retained a 100% of cash flows while full taxpayers retained only 60%.

51:43 But now having, you know, seen seen the the EPL come in, that that relative advantage increased where we now retain 65% cash flows, whereas a full taxpayer would retain on a simple basis 25%. So so to be honest, this this reality is what's causing some of our peers to consider departing the UKCS, and that will ultimately result in less competition for us in terms of acquisitions. It's probably worth noting that amongst our peers, only Ithaca and Equinor are the only only ones in in that have sort of any significant tax losses that that would be in the in the in the realms of ours. Thank you very much for that, Craig. And perhaps a couple of final questions here that were presubmitted. Why has a decision not been made on ENQUEST Preducer?

52:38 I'll take that if that's alright, Ian. So so, essentially, the ENQUEST Preducer is is is still a valuable asset to the company, and it's valuable in that it retains optionality for repurposing of you know, it could be using three ways I can think of. It could be repurposed in the future ENQUEST development, such as an early production facility on on on BREST PLC as one technical option. It could be sold to another entity for for cash, or it could even potentially be used as a as an equity offering in any external development. So it's it's a very highly specked piece of kit, if you like. It's got tremendous tremendously impressive sort of power generation, and it's a it's a it's an asset that's that's worked very well. So with with relatively minor mods, it it could it could be useful in a number of different guises.

53:34 So what we feel is that keeping the the the vessel warm stacked at the energy park as it is right now is a really inexpensive way to retain this optionality, and it's it costs in the low single digit millions per year, you know, circa 3,000,000 a year. Perfect. Thank you very much for that. And perhaps the final presubmitted question. What percentage of future free cash flow will be allocated to share buybacks? What percentage to dividends? Sure. I'll pick that one up. So right now, this is a question actually that a number of you have asked as I scroll down the question. So forgive me, I'll try and answer all of them in one go. But effectively, at the moment, the this would be a Board decision as to the dividend policy.

54:25 That process has not yet happened, but we are driving very much towards, you know, from 2024 onwards, we'd like to to be paying a dividend. So the actual construct has not yet been decided and may well vary over time between, you know, is it a fixed dividend? Is it a percentage of cash flow? Is it buybacks? You know, what kind of methodology may we use? And some of that will be predicated on our on our views of of our position at a point in time, some on the future, some on the relative value merits to our investors of of those. Clearly, if we felt the share price was significantly undervalued at a point in time, it may be more beneficial to do buybacks, you know, along those lines rather than a stable, steady dividend, pence per share type thing.

55:15 So, yeah, apologies. No no no firm news exactly on how that that will make, but it's definitely part of the work stream, you know, over the coming months or so to for us to to really try and articulate internally what we think it could look like. And then, obviously, we'd have to go to the board ENQUEST board for for sort of formal approval. And then, hopefully, in due course, we'll be able to announce something a bit more more fulsome on that. Ian, perfect. Thank you very much for that. And as you can see there in the q and a tab, know you've just been having a quick scroll. But perhaps if I may just hand back to you just to address any of those and where it's appropriate to do so and and perhaps in some instances hand the bat over to Craig. But if I may just hand back to you just to address those, and then I'll pick up from you at the end. Thank you. Thank you, Jake. Thanks. Yeah. No problem at all. There's a number of questions coming, which is great. So thank you very much everyone for for your time on this.

56:07 The first one, Craig, it's a two part question. But perhaps, Craig, if I could ask you to to answer the first bit, then I'll take the second. So we'll I'll do it in I'll read it out in two sections. So this is from Frank N. What are you doing to correct the public's misconception that their payments of higher electricity and gas bills are a direct gift in their minds to fat cap operators of oil and gas production facilities in the North Sea? An image that all political parties have done nothing to disabuse the public of or even of tax specialists like Dan Needle, who talks about £5,000,000,000 of oil and gas revenue under the previous EPL structure having escaped? Okay. Thanks, Frank, for the question. And, you know, I think it's it's it's no exaggeration to say that that this has been a a huge impact on on Ian's and and and and and my year, which is which is understandable given the sort of seismic nature of the of of the change that EPLs brought.

57:05 So so, essentially, what we have done is we've been extremely active both as a direct entity. So we have we have con we've sought contact with individual ministers. We've contacted treasury. We've written a number of of of letters putting forward the case for for a number of a number advocating number of changes to to the EPL, but the the most, I guess, the most pertinent of which would be the inclusion of a price floor, which we see as a as a real necessity in order to to to get people back back to business in in terms of of of investing in the North Sea. And we've also been active participants with some of the industry bodies such as Brindex, such as OE OUK, where, you know, we've been cosignitaries and representatives and and and, you know, being full participants in all of their communications.

58:02 I think sometimes it's been it's been some some of our peers in the in in in the UKCS have been a little bit more vocal about their participation, but I can assure everyone on the call that the the ENQUEST has had a place at that table and has been a full participant. So, you know, we we we've made a lot of representations. I think like like many on the call, I think it's probably fair to say that that we've also heard some of the indications and leaks and whispers that a price floor is being discussed at government. You know, we we're we're not in a position to to verify that, but we we've certainly heard those same same leaks, if you like. I think the government has has trailed it.

58:52 They haven't quite been able to to to cross the line and and put it into play, recognizing it probably is a little bit of a of a political hot hot topic. But we are we are we do remain hopeful that sort of sense prevails and a and a price floor is implemented. Thanks, Craig. Perhaps just just before I jump on to next one because there was a number of questions around EPL, and you've answered the majority of them there, I would say. There's just another one further down the list that talks about the potential for this is from Tom. So the potential for if the Labour Party came into power and they were able to, you know, prosecute retrospective taxes or bring in retrospective taxes, are we are we able to take any action against that? How are we how are we preparing for kind of a a Labour government, I suppose, or or changes to the tax regime in in in general? I mean, I'd I'd probably prefer to be more general, if if I may, in in terms of I think I think what what the EPL has done at its core is it's taken The UK from being probably the most stable fiscal regime in in in the world and and and made it made it appear very unstable.

1:00:08 And and our our sector has has suffered from that instability. I can confirm, obviously, we we we have discussions around what could come next, EPL, both, you know, a price floor coming in, which should be a positive versus some of the rhetoric that has been espoused by the the the labor party around potentially removing some of the enhanced allowances such as the CapEx and decarbonization allowance that we've discussed on on on this call today. And and and, you know, we have to be prepared for all for all eventualities. Obviously, any retrospective application would be extremely unwelcome, and we would do everything we we could in our power and our collective power as an industry to to to ward that off.

1:01:01 But, you know, e even even looking forward, you know, we we we we have to be prepared that that that EPL is around for the long term and potentially could be enhanced from from the from the view of the government in terms of its of its of its scope. So we we are preparing for all eventualities, but it'd probably be premature to to comment at this stage in terms of what that would actually look like. Thanks, Craig. Yeah. I think that's fair. And and, know, obviously, would hope that we would continue to have the tax loss position that that enables us, you know, to to to still enjoy that advantage of of owning assets in terms of, you know, cash flow protection that we can offer versus versus other operators in the in the basin, which could give us a a chance chance to to grow grow the the business business even further as as Craig outlined in the in the presentation earlier.

1:01:52 The I think there's I think that's probably all the questions on EPL. Sorry. There was one more question from Frank that, that I'll I'll come back to you now, which was around the, board changes, that we announced, just last week, and whether their their decisions to step down from the board were linked to their lack of new energy skills. I mean, certainly, that that's an element of it. You know, as we look to have a a board that can support the entire, business model, we need to make sure we've got the right skill set in in at a board level. But, similarly, you know, it it relates to sort of standard good practice from corporate governance, I would say, whereby, you know, certainly to the to the directors who who who decided to step down are at six years of their term. And, yeah, that's the normal. Good practice is around six years, you you you would step down.

1:02:45 You can go to nine years, but after nine years, you're considered to be, actually not independent anymore. And so this this felt like a good time with us kind of, you know, new chairman on board, looking at how we can prosecute and support the business in the new energy landscape. So we'll be looking to, you know, bring successes in as quickly as possible to support that that strategic delivery. And I think, Frank, as well, you also had a question with many others on this call. I think Michael has his question and a couple of other individuals as well around when might that new energy business deliver cash flow and and start to require perhaps more significant investment. I mean, I think it's fair to say in the very near term, it will be minimal cost output from from us as we've talked about this kind of few million dollars per annum to ensure we, you know, get our submissions in for various regulatory pieces that we might wanna participate in, prosecute studies, etcetera, around how we develop this, bring together sort of partnerships and so on.

1:03:52 I'd say in terms of cash generation, it's back half of this this decade, you know, second half of of of the decade. Some could come a bit earlier. It just really depends on some of the regulatory frameworks and how they might evolve over time. You know, you could see potentially carbon capture, for example, accelerating if the license applications are strong, and then you can build the value chain of where are the emitters. Can you then get, you know, those emitters to capture their carbon and then get it onto ships, ship it to the terminal, etcetera, etcetera? We could look at, you know, we could look at how we could accelerate that. Similarly, electrification, if if if the electricity effectively is available in good time, you know, we may be able to assist with developing, you know, features sort of West Of Shetland oil fields by providing with that electricity in a good time frame to enable them to bring, you know, oil and gas production online, albeit in a lower carbon manner.

1:04:55 But, really, yeah, it's not it's not for the next couple of years for sure, but we'd look to do what we can to to bring that in as as as soon as possible. The next question is, again, from Michael S. So this is around revenue per barrel in Malaysia is lower than the North Sea. Is it due to the royalties or other arrangements in place? I think, Craig, if you'd like to pick that one up. Yeah. I think you kinda covered it in the in the presentation, Ian. It's it's just simply a different regime. So the the the production sharing contract, the PSC, effectively has a different mechanism, Michael, which which means that we share in we share in this cost recovery and effectively a new share in in profit oil. So so the way in which that flows through is slightly different and and results in having a lower revenue per barrel metric for Malaysia.

1:05:54 Absolutely. Maybe the next one for you as well, Craig, if you don't mind. This is on debt instruments, so from Zander M. Could you outline what debt instruments mature this year or twenty three straight twenty four? And what the position is of our RCF? I think that's the the reserve based lending facility rather than the revolving credit facility. Yeah. Sure. Sure. Absolutely. Thanks, Xander, for the question. So essentially, we we do have a maturity this year, which is the 7% sterling retail bond, and we have a £111,000,000 of a stub, which is due in the middle of October this year, which is around a $135,000,000. In terms of the RBL, I think as I've outlined in the in the presentation, so to sort of walk you through the journey of this, so we started off with a borrowing base in the in the q four or so last year of about 630 plus million dollars, and we agreed a commitment level of 500,000,000 for the RBL.

1:07:01 On day one of that RBL, we only chose to draw 400,000,000 of it and haven't subsequently drawn. As part of a scheduled redetermination process, which happens twice a year, but, of course, the first one we were one of the first in the industry to go through the redetermination post EPL 2.0. And as part of that, that effectively has reduced the the the borrowing base. And and and the main reason for that, I think most people, hopefully, on the call would understand that the the rationale for the the borrowing base to drop is that the banks employ a much more cautious and conservative view of of of oil prices, and then they they they risk the risked prices.

1:07:48 So they they're operating on quite a low price deck. And when EPL first came about, Rishi Sunak, who at the time was the chancellor, noted that there would likely be a price at which anything below that oil price then the levy would cease to exist. That was specifically removed as part of EPL 2.0. So what it means is that in the banking models where prices are, you know, in the low fifties, they are still applying the 35% EPL tax effectively. So across the board, borrowing basis in the sector have been reduced. Ours is no different. And as a result, we've paid $118,000,000 in the first quarter of the year to take our outstanding amount to $282,000,000 which is within the redetermined capacity.

1:08:42 Hopefully, that answers the question. Thank you, Craig. Thank you. Perhaps give you a slight rest, and we'll share some of this question. This is around the Kraken Field and Bresse Bently Fields. This is a question from Hima, broken down into a a few parts. So I suppose first part for yourself, Craig, perhaps, what are the future prospects vis a vis the Kraken field? Yeah. So in terms of in terms of Kraken, so we we do still intend to to drill in in the western flank. So the western sand, which is just just, obviously, as it says, the tenant is slightly to the west of of of the of the main field.

1:09:28 And I think as as both Ian and I alluded to, we we we are in possession of and we are currently working through interpretation of seismic data, which will allow us to really zoom in on on on the best prospects in which to drill in those areas. So in in a in a in essence, the deferral of of of drilling kinda buys us some time to be a bit more exact in our targeting. And and we'd hope to get back to to drilling that in the next in the next couple of years. And I think that the the most likely the most likely option there is that we probably need a new drill center, which effectively is a is a subsurface piece of kit, which allows you to to to connect both a a producer and an an an injector pair, and and that would then then be connected back to the FPSO.

1:10:21 So that's the most likely outcome for Kraken in the next couple of years. Thanks, Craig. Yeah. And then linked to that, I'll I'll just pick this next one up so you can maybe get a glass of water if you want. But the the the question, again, continuing from Hima, is the leased FPSO is due to expire in 2025. What are the plans thereafter? Well, effectively, you're right. The the the main charter lease has an expiration date in 2025, but it has an automatic annual rollover clause in it. So, effectively, it just keeps running on an annual basis until the field stops. And the the upside of that is we don't really have to do anything to worry about the asset disappearing, and, also, the cost associated with the lease drops by two thirds at that point as well because, effectively, the lessor who we've we've taken the boat from has made their returns, if you like, that they were required under their initial investment by 2025.

1:11:19 And so from this April 2025, the rate drops by about two thirds. We have an annual rolling contract thereafter and is effectively canceled at our our behest when the field is no longer economic. Now we do have another option whereby we could purchase the FPSO, and then effectively own that boat. And does that then lead itself to other, you know, future potential repurposing opportunities, other development opportunities, etcetera, in time. That's something we'll continue to explore as we move forward. But effectively, no risk to production, benefits on cost and optionality around the future purchase of the asset as well for ourselves. Craig, if you don't mind, a couple of questions then on Bresse Bentley as well. One one from him at, which is what are the prospects at Bresse Bentley in regards existing infrastructure at Kraken? And then a further linked question from Michael S. Around the exit of Harga and Equinor from the licenses there late last year. Is there a realistic chance of progressing to FID under the current EPL structure?

1:12:34 Okay. Thank you for the questions. So so in terms of where where those projects stand, so Bresi is definitely on the slate first in the timeline for us, and and Bentley would follow. And while Harbor, you know, and and and have have bowed out, and and I would say in in a you know, speaking to my colleagues in commercial, did it in a in a very sort of gentlemanly way, if you like, because they they simply weren't gonna they didn't want to be blockers to to the development. But what it means essentially is that, you know, ENQUEST needs to bring in bring in a partner. You know, this is not it's not a development that we would take on as a sole risk opportunity.

1:13:24 So so that's one stream that's working, and and and that is that is working in the background in terms of, you know, still an attractive opportunity. The the other key thing to note and and and within Michael's question, it refers to the impact of EPL and and whether that affects the likelihood of progressing to FID. I I would say it probably does bizarrely, I would say it increases it because what you're gonna see is you're gonna see that a full tax paying entity is gonna get a a huge amount of allowance effectively back from the EPL. So it makes any economics on on on a decision whether or not to invest in a in a in a development opportunity like Brezhee. It may it makes those slightly easier.

1:14:11 Effective, a full taxpayer from memory, I think, gets about 91p in the pound back for such an investment. So so we're fairly confident that we can we can attract the right partner in order to work with us in that. I think the the the original question from Hemat was more nuanced towards how did how did those potential developments link with Kraken. And I think it's probably at this stage probably too premature to to to say because we haven't agreed a a development concept. One option would be to utilize the ENQEST producer that we discussed earlier on as an early production system. And then as as the development were were to be enhanced with future drilling, etcetera, you would have to look for a more permanent solution with with a tie back to to Kraken being again a a potential option. And Kraken is has proved itself as a as a vessel that's very well equipped to to deal with heavy oil coming on board.

1:15:13 So it does have its own advantages. But I think at the moment, it's probably a bit premature to see precisely how those technical solutions are gonna are gonna, you know, find find their feet. And and, again, that would obviously also depend on agreement and alignment with any partner coming into the coming into the entity. Thanks, Greg. Very fulsome. Appreciate that. We'll skip through down a couple of questions as they've already been answered around DPL and dividends, etcetera. So the next one, which I'll pick up, is around SVT ownership and shareholders. So what's the percentage kind of makeup there? So effectively, this is from Ronald. So thanks for your question, Ronald. The we own, if you like, in terms of equity, probably about, I think, 15% of the of the terminal as it stands today in terms of kind of the upstream processing plants and so on and so forth.

1:16:11 We probably pay costs in the 20 odd percent range because that's the throughput effectively. We've got the highest throughput at the terminal of all those who who come in. There are 11 owners in total of the Stullenbough Terminal. And the way it works there effectively is we we we kinda collectively lease the land that that's on on from the Shetland Islands Council. And we've obviously, we have the infrastructure in play there, and that, you know, the cost, as I said earlier, is shared amongst those those owners based on their their utilization. When When we we look look at at the the new energy piece, what we've done is secured exclusivity with the Shetland Islands Council to be the only owner operator, if you like, of the the land, the site on their behalf to aggregate new energy opportunities there. So as we decommission certain parts, which the partnership as it stands today effectively share the costs of and and and so on, We then we would then effectively have the rights to that piece of land to then build with other strategic partners, you know, the the new energy infrastructure that's needed on-site. So so it's it's a slightly evolving landscape. There's the existing upstream ownership structure, and then there's the kind of future new energies piece, which we are effectively sole control controlling owners of, which is which is a great position to be in, obviously, not having to go through multiple committees and companies to get approval for various

1:17:42 courses of action. Moving on down then. Again, lots of dividends, which we've answered. Question from Craig M. I'll pick this one up. Have ENQUEST considered entering a more stable fiscal regime? For example, Norway. Yes. I mean, we've actually we in our history, we have been involved in a number of different regimes. So whether that we have we're actually in Norway for a short period, and we've been in North Africa as well as obviously having our operations in Malaysia and The and The UK. So we're not immune to looking elsewhere and operating elsewhere. Clearly, I think our first point of call in terms of M and A and future developments would be UK for the fiscal advantage that Craig actually outlined. So while it may seem unstable, our relative tax loss position creates a a value opportunity for us to to prosecute in in that environment. And, obviously, we would like to accelerate the use of those tax losses as quickly as possible because that's real value, if you like, that we can we can extract very quickly. Then we're doing that, obviously, already with the Golden Eagle asset.

1:19:00 Doesn't mean we wouldn't look at other areas. Obviously, we've got our step out in Malaysia already, and we have strong relationships there with the regulator and others. And so in terms of M and A, we would look at opportunities around that kind of Southeast Asian basin. But if the right opportunity comes up, we would look at other basins. I mean, you we'd go through our formal kind of new country entry assessments around fiscal, political risk, you know, health and safety of people, infrastructure, commercial arrangements, etcetera. You know, there's a there's an extensive process, shall we say, that we go forward. Certainly, first port of call is that let's make the most of our advantages in The UK. Probably Southeast Asia is this kind of second area just given our knowledge of the the that that part of the world, and then others, may follow if they're the right value value proposition.

1:19:51 Next question from Ronald s. There's only a couple more questions to go. Any idea when the results for the thirty third licensing rounds are done or released? I must admit, I don't know the answer to that question. Craig, I don't know if you do know. Shaking your head. So we'll try and get back to you on on on that one, Ronald, and see if there's a a a specific date. I mean, we I don't believe we, participated extensively in that in that round anyway. So, hence hence, the slight acknowledge there. So apologies. Question from I and m on the, what oil price do the banks use. So I assume this is the lender banks. I'll quickly pick that one up as well. So, effectively, they use, a discount from the current price as it's downstairs. They're probably in the mid sixties for kind of the short term, and then it it declines quite quickly into the, sort of high fifties, low fifties thereafter, in terms of a long term pricing model.

1:20:49 So they, they're very much on the conservative side, shall we say, against forward curves, which you'd understand as as a credit investor looking to ensure they get their their cash back in good course. So they are significantly below the the current market prices and current forward curves. And that links back to the point some of you have made in your questions and Craig outlined earlier around a price floor and how would that help. Well, if the price floor was at a point at which the banking prices fell below it, therefore, there's no EPL. Therefore, Therefore, the value of your reserves are higher. Therefore, they could lend more money. And so the borrowing base of people's reserve based lending facilities could increase. So it it, you know, it would be helpful to get that price floor in place at a reasonable level in going forward.

1:21:40 And then the very last question before I pass back to to J. Co operator again today. This is from Stephane B. Thank you for this question. Is there any interest in bidding on ENQUEST in view of your tax loss deductions? How do you feel about being bought out or a merger? Yeah. And Salman have been asked this question before in the investor roadshows and and the various presentations and so on. And, look, we absolutely do what's right for the shareholders. So if it was the right value proposition and someone came in with an offer, then we would have to consider it, take it to the board, review, alternatives, and is that the best value? Then, if it was considered to be the best value for our shareholders, then, then, you know, is, certainly no no no qualms about prosecuting that that sort of transaction because it would be the right thing to do for for all of you and and and future investors. So, absolutely, we don't have any concerns about it.

1:22:42 Can't say whether anyone is or isn't bidding on us because that's that would all be confidential and need disclosing at various points in time under regulatory requirements. But, certainly, if if you know, we would have to consider all bids in that in that regard, and, you know, it's a it's a value proposition at the end of the day. So with that, thank you very much, everyone, for your question. I'll just pass you back quickly to to Jake. Ian, Craig, thank you very much indeed for being so generous of your time there and addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the investor meet company platform.

1:23:27 But, Ian, just before really looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great. Sure. Thank you very much. And, yeah, just really a big thank you to everyone who joined us today. I appreciate you taking the time out of your schedules to to raise some really, you know, useful and engaging discussion points for us. You know, as we say, we think ENQUEST is well positioned to play its part in a just and sustainable transition with strong capability in upstream decom and and in the future new energies. So, you know, look forward to to further prosecuting that that strategy successfully to the point Jake just made. If any of you do have other follow-up questions that you'd rather post directly to us, there's some contact details on this slide. Any one of those four email addresses will eventually make its way to Craig and I so we can respond in in due course. But thank you once again for your time, and thanks to Jake and Investor Meet for hosting us today.

1:24:33 Ian, thank you very much. And Craig as well, thank you very much indeed for updating, investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments, to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of ENQUEST PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.