Enquest (LSE:ENQ) — Results for the year ended 31 December 2023

0:01 Good afternoon, ladies and gentlemen. Welcome to the ENQUEST PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. 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 can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, I would just like to

0:31 submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to head of investor relations, Craig Baxter. Craig, good afternoon, sir. Good afternoon. Thank you very much, Jake, and good afternoon to everyone joining the call. Good afternoon, ladies and gentlemen. And welcome to you all to today's retail shareholder focused presentation. As I've already outlined, for those of who don't know me, my name is Craig Baxter, and I'm the head of investor relations at ENQUEST. The purpose of today's meeting is to provide an additional forum outside of the annual general meeting for existing and potential non institutional holders to understand who we are, what our strategy is, to recap on our recent results and achievements, and enable shareholders to ask us questions about the business.

1:17 So with that in mind, I'll start with an overview of who ENQUEST is.

1:26 For those who may be less familiar with our history, ENQUEST is an independent energy company with operations focused on The UK North Sea and in Malaysia. We were first listed in 2010 with a focus on taking on mature and underdeveloped producing assets from majors and other companies and driving further efficiencies in order to extend their useful lives and maximize recovery of oil and gas before eventually ceasing production and moving into the decommissioning phase. As you can see from this slide, we have a number of assets in production, primarily in The UK North Sea with material reserves and resources in place. We have the Sullenbo Terminal, which is based on the Island Of Shetland, which is a very important asset as we look to progress our decarbonization and new energy ambitions through the work being done by VERI Energy, our new subsidiary.

2:16 And we also have a number of assets that we've moved into decommissioning over the last few years as they've reached the end of their useful economic lives. As we're all aware, the energy landscape is in transition. To ensure long term success, we recognize the business must continue to show resilience, creativity and adaptability. And ENQUEST is showing is showing its impressive capability across the life cycle. We believe our combination of assets and core capabilities sets ENQUEST apart from any of its peers as we're able to provide an offering across the entire energy transition spectrum. By lowering by lowering costs and improving uptime, we're able to run our assets for longer than they would have run-in the hands of their previous owners. And since our inception, we've extended the useful lives of all nine assets we've operated.

3:02 This performance has seen us deliver a strong reserve replacement ratio of 1.5 x since formation. We started with 81,000,000 barrels. We've produced almost 200,000,000 barrels, and we still have around a 175,000,000 barrels left to access. We believe this to be an approach that is aligned with sustainability goals, making the best use of resource and assets that have already been discovered or developed and managing them responsibly.

3:30 Since 2018, our strategy has been anchored around the three pillars of deliver, delever and grow. And following consistent delivery against our targets and the significant deleveraging of the balance sheet, ENQUEST is now primed to pivot to growth. Following the efficient return to production at Kraken, strong production uptime across our portfolio and the successful execution of our well work programs, we delivered production at the midpoint of our 2023 guidance range. We also delivered another year of record breaking decommissioning performance, beating our own records and and executing the p and a of 25 wells during 2023 across the thistle and heather projects. This further demonstration of our decommissioning capability was underpinned by NSTA data, which showed our average cost per well P and A to be 42% lower than the industry average.

4:22 To put that into context, ENQUEST averages about £2,500,000 per well, while the sector averages 4,300,000 pounds. We also complete wells on average five days faster than others. Reflecting our continued strong operational delivery and against the backdrop of supportive but slightly lower commodity prices, we generated 300,000,000 of free cash flow in 2023. That's the dollar figure. As such, our trajectory of deliver of deleveraging continues with net debt at the year end of $481,000,000 and further reduction to $410,000,000 by the end of February. We've also fully repaid our RBL facility in the early part of this year, leaving the $150,000,000 term loan agreed in 2023 as our only outstanding secured debt.

5:10 All of our debt maturities are now aligned in 2027, providing a clear runway ahead to focus on value creation and growth. This exemplary deleverage story with over $1,500,000,000 paid down since our peak debt in 2017 means that we are now in a position to deliver on our stated target to return capital to shareholders during 2024 and we'll do that through the commencement of a $15,000,000 share buyback program, which we'd hope to kick off later this month. Looking ahead, our stronger balance sheet coupled with our differentiated operating capability and advantaged tax position will provide a platform to deliver on our growth ambitions. We will, however, remain disciplined in our investment decisions and will be value led in evaluating acquisition targets.

5:59 ENQUEST is a top quartile operator and aims to become a top quartile North Sea producer.

6:13 When I talk about ENQUEST being a top quartile operator, this slide provides a selection of proof points based largely on industry metrics. Safety underpins everything that we do, of course, and we see upper quartile performance in this area as our base license to operate. We have a very strong track record in drilling and well work, and our 2023 decommissioning performance is a continuation of the standards we have set in this area. When we take over an asset, we provide focus to its operations and have been consistently successful in applying our differentiated capabilities to lower costs and increase production uptime. Our 2023 group wide production efficiency of 87% represents a year on year on year improvement, which is a great achievement given the maturity of our infrastructure.

7:03 For as an example, Magnus has increased by 22%, and it it turned 40 years old last year. For additional context, our average is around 10% higher than The UK average, which obviously includes much newer infrastructure. The capabilities in the left have enabled us to consistently deliver on targets and provide a strong foundation from which to pursue value driven growth. While we will continue to execute opportunities which provide organic growth within the existing opportunity hopper, we're very much focused on delivering a transformative acquisition. Given our significant relative tax advantage in The UK, I would expect us to grow North Sea production initially and then utilize additional cash generation to fund international M and diversification.

7:51 We will also look to diversify the portfolio further and improve our overall carbon intensity by adding more gas to our commodity mix. Increasingly important is the fact that we have a credible plan to progress our business towards net zero. And through the opportunities being create progressed by our subsidiary business, VERY ENERGY, we have a marked advantage over many of our peers. We have projects in flight right now to rightsize SVT, reducing terminal emissions by 90%. To give some context to that, the SVT component of our group emissions total is around 15%. We also have plans to utilize a Bresse gas tieback to displace the diesel we use to power Kraken, and that would have a significant positive impact on our emissions emissions and cost, given Kraken represents over 20% of group emissions and more than 50% of our group wide spend on diesel.

8:52 We'd expect that project to cost around $60,000,000 net to ENQUEST and it should reduce Kraken diesel usage, which at today's rates cost around $30,000,000 per annum by more than 80%. This initial phase of the project is for the benefit of the Kraken JV partnership, so it doesn't need any further farm out and will be progressed on a standalone basis. But my technical colleagues in the business tell me that production of the Bresi gas cap would also be beneficial for any future phased oil development. You may well have seen that Bresi and Bentley have been in the press this week, but hopefully, you've also had the chance to read the clarifying statements which ENQUEST insisted be published by the newspaper in question, which emphasized the reality that there are several technical, economic, and regulatory hurdles for Bresi and or Bentley oil developments to progress.

9:45 The articulation of our emission reduction opportunities as well as our impressive track record of reducing emissions within the portfolio in recent years helped us achieve a b rating in the 2023 CDP survey, which effectively for those who don't know is the preeminent ESG rating and is used very much by institution institutions, banks, and a a wide range of investors. This is a great validation for our work in this area. These opportunities are directly ahead of us, and we have the valuable infrastructure chip to play at SVT, where very energy can decarbonize at levels that are many multiples of our current carbon footprint. Jonathan Corpus is our new Chief Financial Officer and he chose to pick up where we left off in terms of our financial priorities when discussing 2023 performance.

10:39 And he reiterated that it's been pleasing to see the group's impressive journey of deleveraging. Going through these in turn, number one, the reset of the capital structure. In recent years, we've refinanced our debt facilities with longer dated maturity profiles and the repayment of the $20.23 GBP retail bond in October last year, coupled with the implementation of $150,000,000 term loan, means all our outstanding debt maturities are now aligned out in 2027. Number two, as we look to continue to delever, we'll remain focused on further deleveraging through 2024 and beyond as we drive beyond our leverage target of 0.5x net debt to EBITDA. Operating in the sector where access to cost effective capital is becoming more challenging, it makes sense for us to hold our destiny in own hands by minimizing debt.

11:32 Looking at number three, cost discipline and capital optimization. We continue to exercise capital discipline in everything we do, and we optimize the execution and delivery of our capital program in light of the energy profits levy. We remain a very well informed and sharp operator within the supply chain and that stands ENQUEST in very good stead in getting the best deals available. Number four, and this is obviously the the the recent news that we announced and and and delivering on what what we've been telling you all for some time now. We've from a position of balance sheet strength, we've launched our first share buyback program, which is obviously a major milestone for the company and our supportive shareholder base. All of the items above in numbers one to four prime us for growth, and we continue to explore accretive M and A opportunities in our core upstream business.

12:27 As I noted at the start, we aim to become a top quartile producer in The UK, and we believe the majority of the barrels in the North Sea are transactable given public statements made by many of our peers.

12:44 The chart on the left hand side of this slide shows the pace and quantum of our deleveraging, which is continuing into 2024. I wanted to return to this subject in this presentation as it really is a phenomenal achievement, requiring huge amounts of focus and discipline. With the reminder, we've now paid over $1,500,000,000 of debt since its peak. Our net debt position at the end of February was just over $400,000,000 and most notably, we've now fully paid down our RBL having repaid a total of $400,000,000 over the past fifteen months. We continue to make good progress towards our leverage target of 0.5 x net debt to EBITDA and we'll continue on that track.

13:29 It's also worth noting that while the RBL is fully with is fully paid off, we do remain with a section of headroom that would be available to redraw should we wish. That would be only really required in the in the event of a of an acquisition that that required some upfront payment.

13:52 Over recent months, we've aimed to provide a more forward looking view of our plans. So this slide provides guidance for 2024 and our high level aims for 2025. This year, we expect production to be between 41,045 barrels per day, largely in line with 2023 levels. Operating expenditure is expected to be approximately $450,000,000 with the increase in 2023 actuals largely due to the absence of cracking availability credits, which arose during the downtime we experienced in 2023. We continue to manage the inflationary environment well and this guidance is lower than the 2023 equivalent. In 2025, our cash margin is expected to improve significantly with a 70% reduction in Kraken FPSO lease costs, which kicks in on the 04/01/2025, a net saving to ENQUEST of around $80,000,000 in a full year.

14:49 Cash capital expenditure is expected to be around $200,000,000 and we plan to execute a two well drilling campaign at Magnus. We plan to drill three wells in Malaysia and we'll see the completion of the platform drilling campaign at Golden Eagle. The impact of these activities plus a continuation of drilling at Magnus and PM8 Seligie next year give us confidence that we will grow organic production in 2025.

15:14 We're also investing in projects which will yield significant emission and cost reductions at SVT and have plans to progress the Bresi gas tieback, as I mentioned earlier, in order to displace the diesel, which is currently used to power the FPSO. Decommissioning expenditure is expected to total approximately $70,000,000 primarily reflecting the closing stages of the well P and A programs at Heather and Thistle. All of the above factors contribute to our decision to initiate the share buyback program this year, and we are targeting sustainable returns to shareholders within our capital allocation program going forward. To conclude the main body of the slides, I'll return to the proof points I offered at the start of the presentation.

16:01 We're a top quartile operator with differentiated capabilities across all facets of the business. That fact, coupled with our differentiated tax position in The UK, makes now the ideal time for us to pivot to our next growth phase. Alongside our board, Amjad and the executive team, and my colleagues across the business, I'm excited about the immediate future for ENQUEST and the opportunity we have to emerge as a leader in the energy transition. Thank you for your attention, and we'll now move to the q and a section of this session. Perfect. Craig, that's great. And if I may just jump back in there before we move to questions. And thank you very much indeed for your presentation this afternoon. I will just bring back up your camera now. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the company takes 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.

17:00 Craig, obviously, we received a number of pre submitted 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. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Craig, at this point, if I may, sir, I'll just hand back to you to address those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Okay. What I'll do first of all, everyone, is we've we've actually it's been great to see we've we've received a number of pre submitted questions. So what I'll do is I'll work through those first, and then I'll try and address as many of the live questions as I can. So first of all, there's a couple of, financial questions that have come in. So the first one is, how does a pretax profit become a post tax loss?

17:45 It appears that ENQUEST is paying tax over a 100%. Surely, corporation tax is offset by remaining past tax losses carried forward. So, essentially, this comes down to the reality of the EPL, whereby the nondeductibility of cost items such as decommissioning costs and interest payments does result in effective tax rates in in in excess of a 100%. To put that into context, our 2023 effective tax rate was a 113%, while it was a 120% last year. Remember, though, that that's that's on paper. That's the accounting treatment. In reality, our historic tax losses do protect us from making cash payments. So the tax losses which sit in our balance sheet that number $2,000,000,000 at the end of twenty twenty three, they mean that we don't actually pay cash tax at these reported levels.

18:38 We are protected from corporation tax and supplementary charge, which together total 40%. So our 2023 tax spend was limited to EPL plus some Malaysia tax. So we still generated free cash flow in excess of well, around 300,000,000 actually for for for last year. Second, financial question second and third actually are quite linked. They're in there to do with the the subject of, the share buyback program. So the first of those is, if ENQUEST performance in 2024 continues ahead of guidance, would you consider increasing the size of the buyback in '24 rather than waiting till '25? And if yes, what would be the level of outperformance required? So the the answer to that question is that the the buyback was based upon and improved, and approved by the board in line with our 2023 audited financials.

19:32 Given that we expect the buyback program to run through the majority of the year, at this juncture, we don't plan to amend the size of the buyback from the stated $15,000,000.

19:44 A follow on question from that is what is the estimated timeline to start to pay dividends? So if we if we take the current program first, which is obviously a buyback program, we are working with our our broker on initiating the buyback program, and we'd expect things to kick off in the coming weeks, hopefully, within the month of month of April. We'll advise shareholders in the commencement of the process via RNS, and then we'll provide very regular updates on trades as they're actioned.

20:13 I think this question is is related to dividends specifically. So on on the subject of dividends, what I'd say is that, you know, our our shareholder return program was always gonna start small and primarily because we have a number of of competing priorities to to balance. So we've got to you know, we're we're we're focused on growing the business. We need to continue to delever the business, especially while we have some l some components of quite expensive debt. So we we always plan just to start relatively small, but we want shareholder returns to be a sustainable and meaningful part of our capital allocation going forward. And that absolutely could include dividends, But the earliest juncture to do so would be next year.

21:02 There's a couple of questions also that are are grouped together, which relate to international growth opportunities. The first of which is, what potential partnering opportunities do you see for ENQUEST as it pursues international m and a in Malaysia, which is which is a really good question. I think it's first of all worth noting that we are in a very strong position. We're a preferred operator in Malaysia, which to be honest with with everyone on the call, you know, over the last couple of years, it's really I I've kind of built my knowledge in this area, and it it's not an easy thing to achieve that that that sort of preferred operator status. PETRONAS, the the in country regulator, hold a very high bar, and ENQUEST has done extremely well to to achieve that status. We do see additional scope to grow our business in Malaysia, not least through the significant gas opportunity associated with the Seligy field, which we continue to negotiate access to.

21:55 So some shareholders on the call will will remember that, we we've already negotiated and agreed a sort of, strategic foundation to an agreement whereby at the moment, we are producing and transporting, Seligy gas to service Peninsula Malaysian demand, but that's basically ground zero. From there, we continue to negotiate with Petronas, and and then ultimately, we're looking to to to access an element of that opportunity, which is a significant gas opportunity in country. Beyond PMH PMH Saligi, our operator status in Malaysia is also likely to see ENQUEST as a credible partner for any opportunity which emerges in country. Processes will be run by PETRONAS, and we'd have the opportunity to put put forward a case to participate.

22:45 Another one on international. So what type of international m and a opportunity would you consider most interesting for ENQUEST to execute over the next twelve to twenty four months? So what what I'd first say about that is on the timeline, we are clearly focused on North Sea growth in the immediate term, driven by our advantaged tax position in The UK. But the cash flow generation from any UK acquisition will absolutely enable geographic and commodity diversification, alongside investment in our existing portfolio, continued deleveraging and shareholder returns. I think what what we would see though is we'd see an increase in our gas weighting as attractive and that type of opportunity could certainly be found outside The UK. Our top quartile operating capability is transferable and repeatable elsewhere and there are plenty of mature basins worldwide for us to take our skills.

23:39 Still with the pre submitted questions here, there's a couple on drilling. So the first question is around Golden Eagle. How many of the twenty twenty four four well program is now on stream, and what's the outcome to date. So the latest update is that the the the drilling program at Golden Eagle has been challenged. But as previously announced, the first well came online in January 24 2024 and is doing okay. The second well, however, failed and was and was and was not completed. While there's a well-being drilled right now that remains on track, but still above the reservoir. Once that well is hopefully completed successfully, the program will be rounded out by an injector, which will follow the next couple of months.

24:24 On the subject of Kraken drilling, there's another question. In the results presentation, Steve Boyer mentioned some 20,000,000 barrels to it for twenty twenty five drill targets at Kraken. What recovery factor is estimated from this? So there's a number of variables to this really in in terms of the communication between the access sand bodies and the well as it's drilled. But I think as a rough rule of thumb, we'd expect to see something around 20% as a recovery factor.

24:58 I guess, unsurprisingly, unsurprisingly, given, some of the press covers this week, there's there's a number of questions on Bresi, Kraken, and the interlinkage between the two. So I'll try and cover them kinda together, and hopefully, that that can give a bit of a a clarifying overview. So the first question is, was the partial sale of Bresi subject to EPL? And if yet and if yes, what was the EPL, amount? So the farm down of the Bresi license and the ENQEST producer FPSO saw us realized value in assets, had largely been written down in our books. So from that perspective, excuse me, it was a really good transaction. Beyond the partial sale, the 15% farm down of the license in the vessel, we've also sold equipment which we held for potential deployment on a future breast aid development.

25:48 We will pay EPL in this transaction. And just to reiterate, we expect the overall net benefit to ENQUEST in 2024 in cash terms to be $58,000,000. So the the the next two questions, I'll I'll read out together, and then I'll probably try and give a a merged answer if that's okay. So one of the questions is, could management provide clarity on the planned development at Bressey and Bentley? In particular, will the existing infrastructure in the vicinity, I e, the Kraken FPSO be leveraged on to extend the production plateau? And the next question is, it would be appreciated if management could share the efforts being undertaken to make the Kraken FPSO greener in a bid to reduce emissions and pivot to a more ESG friendly organization.

26:35 So taking these two things together, and as I covered, I I think, earlier in the main presentation, our first priority is to progress the project to produce a gas you know, produce gas via the Bresse tieback to Kraken. And and that fundamentally will displace the diesel we currently use to provide power and to basically power the FPSO in Kraken operations. It's estimated that we could reduce Kraken diesel usage by about 80%, through this endeavor. That will obviously yield a significant reduction in Kraken's carbon footprint. And given that we're paying around $30,000,000 per annum per for diesel at Kraken, that that represents more than 50% of our group spend. There would also be a large cost saving.

27:23 Referencing the overall kind of ESG nature of the business, I think it's worth a reminder here that the the the efforts that we're we're undertaking at cracking with this Bressey tieback and also SVT where we're doing materially emission reducing projects. That effort continues our already stellar decarbonization efforts. We've decreased UK scope one and scope two emissions by over 40% since 2020 sorry, since 2018, and group emissions are down over 20% since 2020. We've also have the aforementioned projects that I've I've talked about, and I think it's it it's it it can't be it shouldn't be ignored at at SVT. You we're looking to reduce emissions by 90%, which is a pretty incredible effort through the projects that are currently in flight.

28:16 So those are the I think those are everything I had for pre submitted questions. So I'll take some from the the floor now. So one question is from Himat, who I know very well. Are there concerns that the Kraken FPSO would be unable to remain operational in the twenty forties as per the original design following last year's operational issues of the vessel? So the short answer there, Himat, is no. I don't believe there are any lingering concerns. So the the issue we had in 2023 was a number of HSP transformer units, which failed. And that's a fairly anomalous thing to happen to multiples of these things hap failing. So we're obviously still looking very much to understand why all that happened, but my understanding is that a big component part of that was atmospheric conditions, whereby

29:15 humidity in this sort of electrical room coupled with sort of salty air and and and related salt deposits caused a problem for these for these pieces of kit. Now the reason we're not concerned going forward is we we've we've taken steps to to address that. We've we've changed the atmospheric conditions in those in those areas. We've also been successful in refurbishing a number of those units, and they're back in back in operation. Plus, we were very proactive, and we've we've bought a number of critical spares. And so that if if we were to see a failure, which we don't expect to see to be very clear, if we were to see another failure, we could change out that piece of kit very quickly. So no, Hemat. There there there's there's no long term implication following following that outage.

30:08 A question from David here. You've spoken often the desirability of m and a to make use of our tax assets. There's been nothing material so far. What in general has been the problem with concluding agreements? Can you give us an update on net debt as of today or the end of March? Do you plan to buy our bonds in the open markets rather than leaving cash in the bank earning very little interest? So multifaceted question from David there. So if I take the m and a question first, it's a very lively m and a market as you'd expect, and and I can I can say that quite comfortably in in a public forum because so many of the of the operators within our peer group have made public statements around their desire to cease investment or leave leave the the UKCS entirely?

31:01 So that really is what underpins that my earlier comment that we see a lot of the battles in in North Sea production as being transactable battles. So, I mean, we could we could do a deal today, but could we do the right deal for the company today? And and and that's what we're trying to make sure we we do. We we could we could build barrels into the business very easily, but we're value led. And we want to make sure that any deal we do optimizes and accelerates the use of those tax losses efficiently. So I think has stated this in a number of public forums recently, and and I I feel very empowered to do the same and that we're in a number of conversations that are ongoing. And they range really from, you know, asset purchases right the way through to, you know, corporate transactions whereby you could make a transformative jump in in in in in one transaction. So I think what I would say to you, David, is that these these deals are never easy to put together.

32:06 They take time to put together. So to give to give some context, I mean, obviously, in a very different operating environment and different macro environment. But the cracking the so the Magnus deal that we did took about eighteen months to negotiate. Now I'm not for one second sitting here saying it's gonna take eighteen months just to get something over the line, But, hopefully, that just contextualizes that that that these conversations with counterparties can sometimes take time, especially when the counterparty themselves may have other irons in the fire. So we we're very conscious, and we're very focused on growth. I mean, I think those of you who have watched back the results presentation would have seen it was very clear from Amgen, Jonathan, and Steve that we have a refreshed leadership team that are very much here with the with the mandate to grow the business.

32:57 So so we won't rest until it's done, but we're gonna do it and make sure that the deal is the right deal for ENQUEST. So I I know that's not a specific answer, but, hopefully, that that gives you some context as to what we're dealing with. In terms of so the latest update I can give is the is the 410,000,000 at the end of February. I mean, I think we give we give probably more frequent updates in net debt than just about anybody. So, I don't I don't actually have the figures as yet for the end of March. But, yeah, we're we're certainly on we're certainly tracking in the right direction in terms of net debt, David. And in terms of the plan to buy bonds in the open market rather than leaving cash in the bank. So it's important for us at the moment to to to have some cash, especially given the fact that, you know, we ended the year ended 2023 with $500,000,000 of liquidity, and that's very helpful in terms of m and a conversations because it it largely simplifies the conversation.

33:53 And, you know, it's it's it certainly makes things easier if we have some some cash to to to put into a transaction. But equally, I've talked a number of times in this in this call already around deleveraging, and we'll certainly look to reduce the more expensive elements of our debt as and when that's appropriate. So while we have a long runway ahead for our our debt and maturities, you know, we we've shown with the RBL, we're very happy to accelerate repayment. So I guess the next the most expensive piece of debt in our capital structure is the term loan. So I would imagine us maybe looking to do something with that as as the first priority, and then we'll move move through the move through the bonds. But but, yes, it remains it remains an option, David.

34:46 Another question from Hemat. Would ENQEST and its partner considering purchasing the FPSO given that the cracking fields would is expected to continue producing in the twenty forties with potential for Bresi Bentley tiebacks? And, yes, I think I think that's the answer. It's the answer. I think we would absolutely consider it. I think there's ongoing conversations with the vessel owner at the moment. We do have optionality around making a purchase, and it just really depends on what the economics look like at the time. So but, yes, it's very much part of our thinking. There's a question here saying what exactly is a Hopper opportunity? So sorry if if that's maybe maybe a bit jargon, so apologies for that, for whoever asked the questions. Just initials have been provided.

35:36 And Hopper basically means it's the it's the it's the basket of opportunities that sit in front of the organization, which are then ranked and prioritized based on a number of factors, whether it's economic return, whether it's safety, and obviously, the safety ones go straight to the top, or whether it's emission reduction. So it's really the pool of opportunities that the ENQUEST is choosing from and choosing how to prioritize its capital investment. So apologies if that wasn't clear. Hopefully, that explanation is. How would you view it? The question here from another David, David m this time, how would you view a non operated interest in The UK field, or will most upside come from operating position?

36:25 I think that's a really, really good question. And, actually, we've been talking about this a lot internally, and and I think we are very clear on the fact that ENQUEST differentiated operating capability mean that we can definitely add more value as the operator. So, you know, I talked a little bit earlier on around a previously submitted question around Golden Eagle drilling. Now we remember that JV were nonoperated, and I'm not gonna sort of go into the details of of of that drilling campaign, but but we're obviously dis we're a disappointed partner in that. So we've got a very strong drilling capability. So as an example, the drilling that we've undertaken in recent years at Magnus, the PMA, and that we're we're looking to prosecute next year at Kraken, we definitely prefer having that in our own hands.

37:16 And, certainly, our ability to improve uptime on a mature assets mean that I think we are best placed to look at operated opportunities. So I think that would certainly be our priority. What else have we got here? So unsurprisingly, there's a couple of questions around the Telegraph article, which came out a couple of days ago. This question is is is quite long, so if you just bear with me one second. The question is basically saying that although the the article promoted a major development, there was there was little reaction from climate alarmists.

38:03 I'm assuming that means, like, climate groups. Have you seen any other reaction either directly or in other media outlets that you can direct us towards or any government department responses? So I can actually see that that's that's Ron Smith Gaylor has asked that question. Thanks, Ron. So let me start by saying the article was not instigated by ENQUEST. The article was an article that was gonna be written anyway. ENQUEST did provide a comment. In fact, I think I was name checked as having provided that comment. And we what we were doing there was seeking to clarify that in terms of Bressey and Bentley, our clear and present priority is the gas tieback that I've touched on a few times in this presentation.

38:55 So we've engaged with the regulator on on that piece of work. And while things are moving along positively there, we still don't have even regulatory full approval for that, and we're looking to to progress that to FDP by the end of the year with a view to doing some of that work next year. That's phase one. Getting the oil development technically laid out, technically planned, and then approved to the regulator is is a is a more challenging job for us. So we felt that the the article that was published was premature. I think it was it was I think I think it it was a little bit mischievous in terms of using our immediate attention to do the gas piece and conflating that into our immediate intention to do a whole oil development, which is not really where those projects sit at the moment.

39:53 So I want to make that very clear in this presentation, and and we've we've basically insisted that the the the newspaper involved and some subsequent media outlets that picked up the story, we've asked them to to publish a clarifying statement, which they've done at at the bottom of the articles. And and in fact, some of the media outlets that we spoke to, because of our explanation, chose not to run the story at all. So I think that maybe would would explain why the the the media coverage has been quite limited. As part of the the of the the sort of outcome of that story, I have spoken to the regulator, just to reaffirm that this this was a very much a media led story, and our engagement with them continues on a positive but fairly early note at the moment. So, yeah, I I I I haven't seen to be honest with you, Ron, I've not seen much reaction. I mean, I did note actually that within the digital forums that that that the article was published, there was a lot of supporting comments in the comments below.

41:00 You can take that as as you choose. But, no, I've not had any incoming in terms of any climate groups or, you know, green green agenda, groups. I've not I've not read any contact, following following the the media, articles this week. How much focus a question from Paul here. How much focus is the nomination committee given to succession planning at the top of the company? To be honest with you, Paul, that's probably a question that's more suited to the AGM because I don't I don't sit on the board. And I'm I'm not trying to be sloppy shoulder there, but I I certainly don't I'm not party to to the the the sort of private discussions of board committees.

41:48 I mean, from my own perspective, what I would say, though, is that ENQUEST does have a culture of personal development. I'm certainly someone who has benefited through development opportunities within the within the organization. And I think, you know, you can you can look at other senior appointments. So for example, you know, Salman. Malik is somebody who, you know, has developed through the company and is now he's gone from CFO, which is obviously extremely senior position into a a CEO position of of one of our subsidiaries. So I would imagine this is this is something that the board give a lot of consideration to. But to be honest with you, I I'm not I'm not a party to those conversations. So maybe maybe one for the AGM if you plan to attend that poll. A question from Sam.

42:36 What do we have planned for the ENQUEST producer considering we're going to use the Kraken FPSO to tie back to Bresi? Will the ENQUEST producer need modification to lift oil from Bresi and Bentley? That's a good question, Sam. So so certainly in the in the first phase, as I've talked about, gas is the is the priority. And that will be a direct tie back to the Kraken FPSO, which is really being prosecuted by the the Kraken JV as opposed to the the the Bresi JV because it benefits Kraken. The ENQUEST producer is absolutely seen as a as a credible option to be an early production system for Bresi. So it's very much in our minds to to find the technical solution that works and that incorporates ENQUEST Preducer.

43:25 Should Bresi not proceed, and, of course, we we remain very positive that it will, but should Bresi not proceed, the ENQUEST producer is a very a very impressive piece of kit. It's a highly functioning FPSO with a lot of capacity, and it's something that could be deployed basically anywhere in the world. So we talked a bit earlier on about opportunities for international expansion. So should BRECY not work out for the ENQEST producer, it could be deployed as an equity chip into a into a new development in West Africa, Southeast Asia, know, lots of locales around the world. So we still very much have plans for the ENQUEST ENQUEST producer. I mean, before the deal we did with the Rockrose Viaro, I was regularly asked about the ENQUEST producer, and and and ENQUEST was consistent in that we felt there was value in that in that piece of infrastructure, which is why we we warm stacked it in the way we did. And I think that's been vindicated. So an asset that was largely written down in our books has generated material cash flow for the business. So very much in in our plan, Sam, but it really all depends on what the the development concept is for Bresi.

44:47 Current share price simply does not reflect fair value. I was hoping for a larger larger buyback in the short term. Any reason for holding back somewhat liquidity or other? So yeah. I mean, look, the as I as I mentioned earlier on, you know, we were always gonna start small, relatively small. It's a 5% yield effectively, which is smaller than some are are doing. But I think it's an important start for our organization. It starts in a in a in a in a vein at which we we mean to continue. So we have other priorities. We're looking to grow the business. We're looking to delever the balance sheet. And, you know, I think I think starting in the way in which we have is is the right thing to do. And, certainly, that's that was the view of the executive team and the board. So it's disappointing to to to me that that the delivery of this really important milestone has been you know, if if that seemed the disappointment by some shareholders, then then I'm I'm disappointed to hear that because I think it's actually a really important milestone in the company's evolution. And, certainly, we're looking to make shareholder returns a part of our capital allocation framework going forward. That could include, you know, continued buybacks but also dividends. So yeah. I mean, we want we want to continue in a positive vein, we want to continue to return value to our shareholders.

46:11 I'm just gonna skip back through and see if there's anything I've missed. It's quite difficult. There's quite a lot of questions coming in. When will buybacks start? Yeah. I think we're looking to start at the end of this month. We're working with the broker to do that now. And there's also a question around whether it'll be canceled or retained by the company. So the there there are basically meetings going on right now to discuss the actual process and the and the details on that. So I'll be able to update on that in the coming weeks when I actually release the RNS that kicks off the process. At the moment, I think the the the norm would be to cancel the shares, but, yeah, that hasn't been fully decided yet at this stage. So there's a couple of questions on on that subject. So, hopefully, that covers it for now, and we will update on that once we have a final answer.

47:04 So I'm just looking back through so there was a question. This is quite a long question, so apologies. Let me just have a have a quick look here. In view of indications from the the potential labor government regarding the possibility of blocking drilling in North Sea, safeguarding our investment is paramount. Considering this, I'd like to pose the following question. If future government actions do indeed hinder our ability to move forward with drilling, is our company willing to use the investor state dispute settlement mechanism provided within the ECT? If so, what measures will be implemented to ensure readiness for this process? So this question is for Martin. So, Martin, I've seen quite a lot of, I think, misrepresentation of this over the last six to nine months.

47:51 We we we're very much engaged with the incumbent government and also with other political parties including labor, and we're also very engaged with trade unions and industry bodies. To my knowledge, there is no suggestion that drilling is stopped at active or existing licensing licenses. And, actually, that's a very important distinction. ENQUEST is not really an explorer. We look to take on late life assets, which are already producing, or in the case of Bressey and Bentley, kind of proven discoveries which simply require development. So license are in place for all of our assets. So I don't think there's a material risk to us that drilling is stopped. I I've not seen any indication about any of the conversations that that that we've had. So if that were to be the case, I would imagine there would be a significant legal challenge from across the sector, but I have no indication that's gonna be the case. So so we we are we are focused in the moment in our in our interactions with government and the potential new administration.

49:06 We are very much focused on putting in place, a tax regime, which ref is reflective of where the basin sits within its life and is progressive and is fit for purpose for the the North Sea. So that's the focus of our discussion at this stage. I think I've covered pretty much everything here. Sorry. There's one question I've just seen at the bottom. I'll take this one, and then this will be probably the last question. And with apologies to any that I've missed, I'll I'll pick up pick them up, through the investor meets, company process. In your view of broad project experience in The UK's North Sea, are you also looking at opportunities in Norwegian part of North Sea, or is Southeast Asia much more interesting for your international expansion?

49:56 That's a good question. So, absolutely, North Sea is our immediate focus given our tax advantage. You know, there's nothing that screens like the North Sea for us given that, you know, if we take on an asset that generates a 150,000,000 in the hands of the incumbent, if it's a full taxpayer, that's that's equivalent of 390,000,000 in our hands. So that's a very compelling economic argument for us to be focused in North Sea. Southeast Asia is an area where we have some expertise. We have a footprint already. We have the preferred operator status, and we could definitely grow the business there. So that's all that's an obvious place for us to look. I'm not aware of anything being currently looked at in the Norwegian sector of the North Sea. Doesn't mean to say we won't look at in the future, but for now, our focus is on North Sea with international expansion probably to Southeast Asia.

50:48 I think that covers certainly, it covers the vast majority of the questions. If there's anything I've missed, I'll I'll I'll circle back around the answer So so, Jake, back to you. Perfect, Craig. That's great. And thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors. And, of course, we will give you back all of the questions that were submitted today as well as any further ones that do come through. We'll give you those back 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 platform. But, Craig, perhaps before really just looking to redirect those on the call to provide you with 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'd be great. Absolutely, Jake. No. That that just well, really, it's just a thank you for me and and and the executive team at ENQUEST for taking the time to join and for your continued support of the company.

51:43 And just a reiteration of my view, this is an exciting time for the organization. You know, we've we've had our initial growth phase. We've had a a deleveraging phase, and now we're ready to to grow again. So it's an exciting time to be part of the organization. I'm certainly invigorated by I know I'm Jad, Jonathan, Steve, and the teams are. So, we look forward to working with you as our our shareholders going forward, and we hope that we can, deliver some really good returns to you in the near future. So thanks again for joining. Craig, that's great. And thank you once again 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 the management team can really 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.

52:31 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.