Release Date: July 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong performance of base assets and continued progress on the Tyra project.
- Successful capital structure reset, including upsizing the RBL facility and issuing a new senior unsecured note.
- Production in Q2 increased to 24,500 barrels of oil equivalent per day, in line with guidance.
- Secured a 17-month extension of the Shelf Drilling Winner rig, ensuring continued drilling activity.
- Positive outlook for 2024 and beyond, with expected net production of over 55,000 barrels per day of oil equivalent in 2025.
Negative Points
- Startup of the Tyra project impacted by issues with compressor transformers, leading to temporary cessation of production.
- Temporary solutions for gas export are still being matured, causing uncertainty in the short term.
- Effective gas price was lower by 26% due to higher value hedges rolling off.
- Net loss of $1 million reported for the quarter.
- One-off penalty associated with gas nominations due to unexpected issues with Tyra production.
Q & A Highlights
Q: Do you have guidance on production from substantial volumes from Tyra in Q3 and especially in Q4? What are the risks that there will not be a temporary solution and only a permanent solution?
A: We have included guidance in line with the operator's current plan, which includes temporary solutions in Q3 and a quicker ramp-up in Q4, leading to faster plateau production.
Q: Will the new activities impact 2024 CapEx guidance? How much CapEx will be required to meet the production profile shown on page 18?
A: The activities announced, including the FID of an infill well, were already in the plan. Therefore, the 2024 CapEx guidance remains unchanged. We haven't guided beyond 2024, but future projects are expected to be in the mid-teens range, around $13 to $15 per boe.
Q: Assuming that Tyra ramp-up proceeds according to current plans, when do you expect to announce dividends?
A: Based on the operator's guidance that Tyra will be at plateau production by November 30, we expect to meet the Tyra completion test before the end of the year and consequently announce the first dividend at the same time.
Q: How similar are the two gas compressors, and are they delivered by the same supplier? Was the issue of the second gas compressor expected following the issue on the first one?
A: The startup issues are related to the transformers, not the compressors. They are similar and come from the same supplier. The recurrence of the issue has led the supplier to look more closely at the transformers.
Q: Can you give some color on the amortization profile of the refinanced RBL?
A: Amortization starts in early 2027 and follows a fairly even profile through to December 2029.
Q: Do you still expect the full-year production to average approximately 35,000 barrels per day?
A: Yes, we do.
Q: On the first pulse on Dan Echo wells sanctioned during the quarter, can you provide more specifics on exactly when in Q4 you expect volumes?
A: We expect the final completion in late Q4, so volumes are anticipated in very late December or January.
Q: Regarding the Tyra infill wells, you currently guide on six wells being matured. Can you provide an estimate on how many infill wells you have identified at Tyra and the potential volume contributions?
A: We will provide more details as we get closer to maturing the wells. We have a portfolio of opportunities with Tyra, and drilling infill wells is one way to maximize the contribution from the new facilities.
Q: If the HEMJ well proves to be a success, when specifically in Q4 can we expect first volumes?
A: We don't have a specific date yet, but it depends on the completion time. This is a high-pressure well, but we expect it to be in Q4.
Q: Can you elaborate on the one-off penalty on gas nominations?
A: This relates to the nomination process and expectations on gas volumes, which included Tyra gas. The issues with Tyra meant production did not occur as expected, but this has been updated in our forward gas nomination process.
Q: What about the low-pressure compressor? Could you give more color on what happened there and how long it will take to repair?
A: The IP transformer repair is scheduled to be completed by Q3. The issue with the LP transformer is similar, so the repair will take a shorter time. Both repairs are consistent with achieving plateau production in Q4.
Q: Was it a similar issue that occurred on the LP compressor as on the IP compressor? How many compressors of significance are on the Tyra field? What are the risks that other compressors could experience similar issues with their transformers?
A: The issues were similar for the LP and IP transformers, and we don't have more than those two on the facility.
Q: Do you still expect to pay the market cap to shareholders in the form of dividends and buybacks before the end of 2026?
A: Yes, the majority of our dividend profile comes in the first 24 to 30 months. A short delay in starting payouts doesn't change the ultimate amount we will pay out, driven by the monetization of tax losses expected to be used up by 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
