Enquest (LSE:ENQ) — Half Year Results

0:00 Good morning, and welcome to the ENQUEST PLC Half Year Results Investor Presentation. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to the ENQUEST PLC team. Good morning.

0:30 Good morning. Thank you, ladies and gentlemen, and welcome to our twenty twenty six half year results presentation. My name is Amjad Besseso. I am the Chief Executive Officer of ENQUEST. Joining me today is our Chief Financial Officer, Jonathan Kopos. I'm very pleased today to cover our performance across the first half of the year while also providing key operational activities. Of course, this is a very important presentation for ENQUEST, and this is a seminal moment for the company. That's why I'm very glad that you're with us today. So we will look at also the future of the enlarged group, highlighting the progress that we've made in our transformational deal and the delivery of the acquisition in Malaysia, which more than doubles the size of the company.

1:16 Craig also joins us for his last results presentation as head of a r IR and will marshal us through your q and a. So let's start by taking a look at where the business is today and the strong fundamentals which we carry forward into the future.

1:36 So ENQUEST is built on sets of values and principles that define us and have defined us since our IPO sixteen years ago and the the genesis of company more than twenty years ago. The most important one is safety, which is our first priority. It's not only our license to operate, but it's also our license to exist. We also want to operate our assets ourselves, both in The UK and Southeast Asia, in order to to deploy really the tremendous competitive advantage that has been developed in the company over the last two decades. That is our differentiated capability. Today, we operate 97% of our 2P reserves, and those are at roughly 90% of production efficiency given a a great feat given that many of our assets are actually over 40 years old.

2:25 We've also built a highly tangible 22 p reserve base, proven and probable reserve base, with 78% of our 163,000,000 barrels being in the one p category or the proven category. This two p reserve base will increase to 300,000,000 with our Malaysia acquisition. These fundamental tenants make us the right operator of mature assets and undervested assets to and underpins our track record of extending the useful lives of of assets that we have taken over. This over the last ten years, and we are very excited about the new assets which are less mature that we will be able to hopefully take into the future. Building on the foundation, our first half performance represents another safe, strong period of delivery, overcoming operational challenges and delivering against key financial and strategic targets.

3:21 Our production was 9% up versus the first half of twenty twenty five with incremental production additions in Vietnam and at Seligy, where our accelerated one b gas project more than doubled our gas output resulting in increase in total production net to 12,500 barrels a day. Together, this production enhancement more than offset the third party infrastructure downtime, reducing Magnus production for the period by more than 4,000 barrels a day. Fundamentally, our differentiated capability is underpinned by an established top quartile operating capability. For the first six months of the year, the production efficiency of our assets was 89%, excluding third party impacts, and 83% when included when including the unplanned infrastructure at NINIAN South Central.

4:15 Putting this into perspective, the sector average for 2025 was 76%, so we are significantly above the average. Also, from a financial perspective, we've taken significant steps to simplify and strengthen our balance sheet, as Jonathan will cover in more detail. With the refinance and upsize RBL, refinance bonds, and the settlement of the Magnus contingent consideration in the first half, all contributing to a financial platform that has enabled us to deliver on our strategic aim, most importantly, through our transformational acquisition in relation, which we will deliver through without materially impacting our leverage. By accessing the accordion in the RBL, we also retain transaction ready liquidity from which to execute further acquisitional growth in Malaysia or beyond with our focus at all times on creating and providing value to our shareholders.

5:14 The disciplined approach that we have taken has been pivotal throughout ENQUEST's history and has enhanced our ability to consistently optimize value from mature and As we try and transform the scale of the group, we're highly confident that our key skills are transferable across geographies and can be deployed to optimize asset value.

5:40 Our next slide shows that strategically we operate under the same principle by getting the right hands right assets into the right hands. The first half of the year provided more opportunities for us to demonstrate our capabilities in this action. Three very different project we get after value enhancing opportunities quickly and are proactive in our approach to optimizing outcomes. Year on year, group production, as I said, is up 9% driven by the addition of block 12 w in Vietnam following the acquisition of Harbor Vietnam's business. Having completed in July 2025, Vietnam added 5,000 barrels a day to the group, While our proactive approach to production in came through proactive well intervention last year, which was primarily driven by our team and allowed us to extend the PSC by four years on the existing terms.

6:39 That's an important accomplishment given others have seen dilution in working interest when extending in January. The Vietnam acquisition is a classic ENQUEST deal and achieved payback within one year. At our existing operated PMH Seligy field in in Malaysia, we delivered the Seligy one b gas project nine months ahead of schedule. That was only an eighteen month schedule, so almost half the schedule, adding more than 6,200 barrels of oil equivalent of gas production. With global supply volatility impacting Malaysia's fast growing economy, we are now proud to have been able to supply volumes 40% above our committed rates of 70,000,000 standard cubic for today for much of this year.

7:26 And at times, we are supplying a 150,000,000 standard cubic for today, 10% of the Peninsula. Together, these projects have contributed significantly to enhance production in Southeast Asia, taking component of production in Southeast Asia to 41%.

7:50 Together, in the in the North Sea, Magnus production performance has been held back by third party infrastructure disruption both in '25 and 2026, With NINI and Central heading towards cessation of production next year, we've led a project along neo alongside NEONEXT, our partner, and the operator of the Alwyn field, to create new direct export routes to Selombo Terminal. Having matured the project since inception in 2025, we've now sanctioned the NCP bypass with offshore execution expected to commence in the fourth quarter of twenty twenty six, and first oil for the export solution will be delivered by next half of the year, completely eliminating the dependency on the third party infrastructure that we have today.

8:37 These types of projects reflect our commitment to discipline investment with fast payback and proper quick execution. We're very excited also about our Kraken project as we move it into the next phase of operations. And a key focus of Kraken is the enhanced oil recovery project that seems to have matured significantly in the last year. The project aims to use polymer flooding to help push the oil through the reservoir, increasing our ability to recover additional volumes from the field. This is the largest single organic opportunity within The UK portfolio, and we are encouraged by the latest project results and updates.

9:24 We expect the project to be significantly equity enhancing. We've deployed improved polymer chemistry, which enabled the design to be simplified. That reduced also the topside complexity changes and lowered the cost of required modifications, as well as the cost of the polymer itself. The work to ensure compatibility of reservoir chemicals with topside process equipment is now also complete with specialist third party test testing generating positive results as you can see in the little slide above. Phase one, which will be a pilot polymer delivery with a single drill center, is expected to add approximately 5,000,000 barrels of recoverable reserves and is the subject of of a further investment decision.

10:13 Phase two, which represents a full field development, is currently estimated to add from 30 to 40,000,000 barrels gross, which is around 20% of the group's existing two p reserves, a very significant addition. The project also will not be highly capital intensive as it requires really just the polymer, and we've already made a an allowances for the tanks, the polymer tanks in our original design when we designed the vessel. The project is working towards the next decision gate later this year, and we've challenged the team to accelerate the delivery into early twenty twenty seven. Over the past two years, ENQUEST has been clear in our focus on scaling the business and bringing in the transformational acquisition.

11:08 We have delivered that through the the last Malaysia acquisition, but we have also completed four other acquisitions in Southeast Asia, including three new country entries in Vietnam, Indonesia, and Brunei. We've also executed a very highly accretive settlement of the Magnus contingent consideration in The UK, a credit enhancing deal that is very accretive, and we'll continue to work hard to crystallize the value of our UK tax asset via via North Sea transaction or a structured transaction. Immediately ahead of us, however, is our most seminal transaction announced in June, an acquisition of offshore Malaysian assets that transforms us to a much enlarged group.

11:55 The proposed acquisition add production assets with materially with material scale reserves and cash generation. Based on trailing 2025 numbers, the acquisition is expected to take the group revenues to around $1,800,000,000 for 2025 with more than 900,000,000 of EBITDA and a strong cash flow generation. Also, it gives us almost 1,000,000,000 barrels equivalent of total two p and two c resources, making us a very significant group in terms of resources. Our networking interest production increases to more than a 100,000 barrels a day of oil equivalent, over a 130% increase, delivering a significant rescaling of the group.

12:43 Just as importantly, these are very low cost barrels with production from the new interest carrying a unit operating cost around $10 a barrel. And we plan to deliver the new two p volumes with a very low CapEx of about a 170,000,000, less than $2 a barrel. This drives our overall OpEx group to $16 a barrel overall, a $10 per barrel reduction of our OpEx. Overall, this is a high impact, strategically aligned acquisition that drives material growth while maintaining discipline to our balance sheet. This slide provides a forward view of how important this transaction is and how to

13:37 It demonstrates the step change in production delivered by the Malaysia acquisition with the enlarged group production remaining above a 100,000 barrels a day through to the end of the decade. On the production chart, the navy blue represents our existing Southeast Asia production. The lighter blue, the additional production from the acquired assets from the Malaysia acquisition. This provides resilient base for group cash flows, both from our existing assets plus from the new assets. These are large volume, low cost, low CapEx assets with structural commercial protections inherent in PSC operations, underpinning our confidence in future returns and future cash flows.

14:28 Furthermore, The UK production shown in green can be maintained around current levels through continued fast payback investment in infill drilling, well intervention, and reservoir management, as well as continued commitment to maintaining key asset equipment to protect our top quartile performance.

14:50 Our focus will be beyond this, focusing on exciting organic opportunities, just like the EOR cracking project that we mentioned, and the potential to progress Bresse and Bentley, two sea resources into two p. These are two giant fields of 1,000,000,000 barrel in place, and I have a confidence that our team, if allowed to develop these fields, will be able to do so given the right regulatory and fiscal climate. You can also see that we've materially increased and diversified our two c resource base as well as adding 65 to a 100,000,000 of barrels in recovery factor enhancement volumes in Malaysia. Importantly, these recovery factor improvements correlate directly with our core skills and come at low capital costs.

15:43 The the slide highlights the shift in balance within the portfolio mix with Southeast Asia becoming increasingly important alongside The UK base, and the relative contribution of Southeast Asia and gas adding to the production mix and growing it. The transaction not only delivers diversification in our portfolio, in our gas share, but both in numbers of fields and geographically also.

16:13 An emerging change in our calculus of our asset reviews is now competition for cap capital within our expanded portfolio, which ensures that we allocate our investment to projects which generate the best value for shareholders.

16:33 This last slide that I have talks about our two c resource in recovery factor enhancement, which is really the future. Building on the previous slide, you can see the detail of evolution of our resource base with the enlarged route now materially less reliant on the North Sea field developments it was once. Brassay and Bentley, each being 1,000,000,000 barrels, remain part of our opportunity set, but no no longer dominate the opportunity set. Given the prevailing fiscal regulatory environment in UK, that is very important. We look forward to more positive investment climate in The UK that would enable us to develop these outstanding fields and resources. However, with a robust long life two p production profile, this 725,000,000 barrels of contingent resources provide the volume engine that will enable us not only to mitigate natural field declines, but also look at increasing production in low recovery fields like the ones being acquired in Malaysia, with some as low as 16% recovery factor and 19% recovery factor, and more than 2,000,000,000 barrels in in place in Bellingen field, for example.

17:50 In particular, recovery factor enhancement will come from low cost well intervention, reservoir optimization, and topside process improvements. Exactly the kind of activities we deliver routinely routinely as top quartile operator of assets, offering material, low CapEx opportunities

18:10 that we can pursue upon assuming operation operatorship of the assets on the 01/01/2027. I'll now hand over to Jonathan, who will take you through our first half financials. Great. Thanks very much, Amjad. So as you've heard from Amjad, the first half of twenty twenty six was a period of strong cash flow generation. It's also a period where we took a number of strategic steps where we continued to simplify and strengthen the balance sheet and focus on growth.

18:47 That was delivered against a backdrop of 9% production growth, but also the commodity price environment was both elevated and volatile. Revenue that we reported in the period totaled $530,000,000, and that includes a $79,000,000 noncash unrealized hedging adjustment. Stripping that out, cash revenue was $609,000,000, and that was up 18% year on year. We also, as Andrew had mentioned, had the impact of the downside sorry, of the of the downtime on Magnus. And the way that is expressed in the financial results is that a cargo was deferred out of the first half of twenty twenty six, and that had a cash impact of about $60,000,000.

19:44 Cost of sales were $480,000,000. Now this was a rise year on year, but about $40,000,000 of that rise account for non cash or mark to market adjustments on our hedges, and 75% of that 40,000,000 was non cash.

20:07 If we focus on the underlying production costs, there are two important, moving parts to highlight. First of all, we include Vietnam production for the first six months, and those weren't present, those volumes, in the first half of twenty twenty five. The addition of Vietnam production added $25,000,000 of operating costs to the group portfolio. The other significant moving part in the period were diesel costs. In this environment of higher oil prices but restricted refining capacity, diesel costs have risen significantly up 40%. Now we use diesel, across our facilities, but the team has proactively been managing our diesel usage and has managed to reduce it significantly as well. And the benefit of that, we'll be seeing in the second half of twenty twenty six.

21:07 Adjusting for the new, contribution of Vietnam and these diesel costs, our underlying production costs for the period actually reduced year on year. We also, on the income statement, report a tax charge of $15,000,000, and this reflects taxation both in The UK where we pay EPL and also in Southeast Asia. Adjusted EBITDA for the period was 273,000,000, which is a 13% rise year on year. I think the best way though to tell the story of the first half of twenty six is to look at cash flow. Operating cash flow in the period was $281,000,000, and that's a 31% rise year on year.

21:59 In the first half, we invested $78,000,000 in CapEx and $28,000,000 in decommissioning. And then after our our interest costs, lease payments, taxation, we generated $71,000,000 of free cash flow, and that, without any additional costs, would have translated to a net debt of $383,000,000. It's also important again to pause and just reflect on the fact that the impact of the Magnus downtime impacted these cash numbers by $60,000,000. Now in the first half, on top of that operating performance, we also made a number of strategic investments.

22:47 The first of these was the purchase of the Magnus contingent consideration for $60,000,000. We also refinanced our bonds and extended our RBL through the activation of the accordion. Costs associated with this were $43,000,000, but $20,000,000 of that were early redemption, fees, on, the old older bonds, and the OID issuance.

23:17 We also, in the period, paid a deposit on our Malaysia acquisition, which was $28,000,000. At the end of the period, reflective of that combination of strong operating cash flow and those strategic items of spend, net debt totaled $517,000,000, and the cash balance was $206,000,000.

23:46 As we move towards the acquisition of of the the the strategic acquisition in Malaysia, of course, it's really important to reflect on our capital structure. That capital structure is the foundation from which we deliver our company, and our focus in the last two years has been on simplifying the capital structure and building strong liquidity in order to deliver a transformational transactional step change in our operations. You'll remember that in the fourth quarter of last year, we refinanced our RBL. And then the acquisition of the Magnus contingent consideration was a strongly credit enhancing transaction, which unlocked a 38% increase in the borrowing capacity on our existing assets within the portfolio.

24:44 At the December 30, our RBL was undrawn at sorry. Thirty thirtieth of June, our RBL was undrawn at $400,000,000. And as previously reported, we have expanded the loan tranche, the $400,000,000 loan tranche to $700,000,000 through the through the exercising of the accordion partial exercising the accordion option on the RBL. In the period, we refinanced our US dollar bonds. And through that process, we extended the maturity to 2031, both our RBL and bond maturities around 2031 now, and we reduced our borrowing cost by a 175 basis points. We also took the opportunity there to redeem our sterling denominated bonds, and we now have a simple capital structure, which is distributed between dollar bonds and RBL.

25:41 As I mentioned, cash on hand at the June 30 was $206,000,000, and we had transaction ready liquidity of $759,000,000, which was an $80,000,000 expansion versus the 12/31/2025.

26:01 An absolute pillar though of our growth strategy, of course, is to be acquiring cash producing assets. And as is summarized on the right of this slide using the prospectus information, although we are utilizing our balance sheet to buy the Malaysian assets, this has a very significant increase on our EBITDA generation, and so the our our net debt to EBITDA ratio on the basis of the enlarged group price of transaction would be 1.1 times, which is only a very small, rise over the point nine times that we reported at the December 31, 2025.

26:49 Moving to the transaction timeline, we've made a number of really important steps in recent weeks. We received the strong support of our shareholders through the vote to approve the acquisition. And in very short order, we then received the PETRONAS approvals, which means all of the conditions precedent have now been met for completion to proceed on the December 31.

27:16 Between now and the December 31, our focus is on work streams that are all built around operatorship transfer so that we are ready to operate from that December 31 completion date. Post completion, almost immediately, our enlarged group will be readmitted to to to to trading.

27:43 But stepping back from all of this, you know, I think it's worth also just thinking again about that growth pathway which we have been outlining. On calls like this over the last, you know, year or two, we've consistently talked about what our acquisitional template is. We've talked about being very, very focused on buying assets that are in production, which have robust production profiles and low levels of CapEx and also low or no, you know, decommissioning liabilities. And I think at times when we've talked about that, it's almost looked like a wish list of the perfect. However, that is exactly what we have delivered through this Malaysian acquisition.

28:31 This is a deal that not only increases,

28:36 the volume metrics of our business, but it very clearly is a step change in value as well. Volumetrically, production will rise a 134% and reserves and resources 56%. But as Anjad has already said, we would see group costs falling, operating costs falling by 35% to about $16 a barrel and very low levels of forward CapEx to deliver those profiles and a near doubling of our EBITDA.

29:08 So these as we look to the future, both operationally and financially, we are on the cusp of completing this deal, which will rescale the business. It fundamentally diversifies our our our our earnings and operations, and it is a step that will deliver robust, predictable cash flow throughout the commodity cycle. So I'll hand back to Anjad now for some concluding remarks. Thank you very much, Jonathan. And as you can see, we've had also a transformational shift in our balance sheet and the and then the simplicity and the robustness of our balance sheet.

29:55 I wanna just kind of finish with reiterating our targets for 2026. As we announced this morning, we are narrowing our expected production to 41 to 43,000 barrels a day, which is the lower half of our original 41 to 45. And this has been really driven by the NCP impact on Magnus, the 4,000 barrel a day reduction in the first half.

30:19 To counter that, we have seen a 50% increase in Seligie, which is four four and a half thousand barrels a day, and that has been outperforming our expectations. We'll be off the cost guidance on six at $670,000,000, while the shareholders among you will also be aware that we paid out an increased dividend in June of $20,000,000. This has been a busy period as we close out planned production shutdowns and return to drilling at both Magnus and at PMH Saligi in the coming weeks. We're also progressing the NCP bypass, which we recently sanctioned to eliminate as we discussed the third party risk on Magnus production.

31:05 We remain highly across our portfolio, And we'll continue to challenge our teams to maximize outputs ahead of the upcoming period of production growth. We're also benefiting from the period of elevated commodity prices as you've seen at our realization of $87 a barrel for the first half pre hedging and 84 post hedging. The last slide was used as a introduction to the company in in the past. But, really, it looks to me now like it's a new introduction to a new ENQUEST with a 100,000 barrels a day and 300,000,000 of two c with two p resources and a billion barrels of two c plus two p resources.

31:56 This really reestablishes a group as a diversified international operator that can deliver value accretive scale. It's no small feat that we entered three new countries across Southeast Asia in eighteen months. That speaks highly about our strategic relationships in the region and our ability to enter the region. But what speaks most highly is really the latest transaction with with Malaysia where Petronas has put their faith and significant assets in our hands. The group's metrics are all enhanced by this transaction, and it's clear that it's not just growth for growth. Highly accretive. It's a disciplined expansion. It's high quality assets with recovery factors that are very low, like I've said, where ENQUEST's operating model and differentiated capability can unlock significant additional value.

32:52 As we embark on the next phase of ENQUEST's journey with production of over a 100,000 barrels a day for the remaining part of the decade and around a billion barrels of reserves and resources to deliver, I'm excited and energized by these opportunities ahead and motivated to convert significant shareholder value. Thank you for being with us this morning. I'll now pass over to Craig to cover your questions. Just before going to Craig, ladies and gentlemen, do please continue to submit your questions just using the Q and A tab situated in the right hand corner of the team. Just while Craig takes a few minutes just to review those questions submitted today, I'd like to remind you recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

33:38 As you can see, we've had a number of questions throughout today's presentation also pre submitted. I'd now like to hand you over to Craig Baxter, Head of Investor Relations, to host the Q and A. Craig, I'm just going pop your camera on, if you don't mind. Lovely. Thank you very much indeed. Craig, please, if you could just read out the questions where appropriate to do so, direct them from the team, I'll pick up from you at the end. Will do. Thanks very much, Paul, and thanks, Amja, and Jonathan for the presentation. So we've got a number of questions to get through, so I'll I'll dive straight in, if I May. So starting with Malaysia and the transaction we've obviously talked about in this presentation. Just for clarification, Amgen, when the deal completes, how quickly will the production of a 100 k be attributed to ENQUEST financials? Basically, the question is, will it be immediately upon completion? Yes. Our expectation is from the January 1, we can accrue those barrels, on completion. So, yes, we we are looking to to include the 57,000 barrel a day in 2025.

34:36 That would be on stream in from the January 1. Great. Thank you. Now I'll stay with you, and then if I may, a question from from Sam at the Peel Hunt. And so, obviously, this transaction changes the mix within the business geographically, particularly. And Sam's asking, you know, should should investors view the new ENQUEST, ENQUEST two point o, if you like? Should should they event view that company as primarily a Southeast Asia growth story or a diversified international consolidator that will continue to look at the North Sea? So so I as I've mentioned earlier in one of the questions, I mean, you you can be good to you can have more than one child and be and be focused on more than one child. So I I feel that, you know, that Southeast Asia and The UK represent areas of focus and will continue to represent areas of focus. Now there is no question that Southeast Asia has better fiscal terms, and growth opportunities there are are significant given also the new portfolio that we have. And the new calculus with us competing for capital is extremely important. So we will we will deploy the capital where we have the highest returns.

35:49 We do still see some highly accretive opportunities in The UK, namely the EUR. That's why we've highlighted it. That's probably, you know, one of the most accretive opportunities that we have across the globe. And so we will continue allocating capital to The UK in accordance with the accretion. Now larger developments, larger CapEx requires The UK to have a change in fiscal regime and and growth incentives for investment in The UK as we all know. And so we're very much hopeful that the the government will take a pragmatic approach as it seems to be signaling, you know, through minister Pambula and and prime minister that that they can see this as the lifeline that needs to be given to the to the to the industry for it to continue growing.

36:37 Thanks, Hamzah. I think this is a question I'd probably like to hear from both of you gentlemen on, actually. It's a question that came from Alejandra at JPMorgan. He was asking around it's it's building on this this view of, you know, the competition for capital across the enlarged group. Right? And the question is, you know, can you can you talk a little bit more about the sort of group wide investment review that we talked about in in the in the r and s today and give a sense of how we're kinda prioritizing the opportunity set and what ultimately will determine which of these sort of incoming high quality projects move first. You know, should should we expect capital to be concentrated on the highest return opportunities, or there are other other considerations around, you know, p c PSC extension or infrastructure dependency that that could influence sequencing of these things.

37:26 I'll leave that to Jonathan to start. If I need to add something, I'll add something. Great. Yeah. No. I mean, you know, I I think, you know, the the the the the sort of standalone pie chart slide that presented really highlights this point, right, which is that we have a very broad opportunity set now. And I think, you know, the best way to think about it really is is that, you know, we we we now have in place something of a sort of conveyor belt that is a series of, you know, low cost, high return opportunities. Now we have two precious resources inside our organization, which is our capital and our people's time, and we need to make sure that we're applying both in the most appropriate way.

38:15 I think the simple answer is is that, you know, as we go through capital project ranking, then, of course, you know, we are, you know, sifting through these opportunities using, you know, the the the measures you expect in terms of, you know, returns and payback and and that kind of filtering process. We do also, though, in parallel with that, take a very sort of strategic view about the future of the business. You know, we are building on this platform a company which we want to grow significantly from this point. Right? You know, this is not the end of the journey. This is the beginning of the journey. And so we always, you know, you know, drive our investment decisions through fundamental asset strategy.

39:03 But, of course, you know, the the the the the first rank of winners are always gonna be what we've always focused on, which are those fast payback, you know, high returning opportunities, which really are our bread and butter and have been the engine of the group to date. Thanks, Jordan. And you want to add on that, Yeah. I mean, just to say that the opportunity set looks really very strong now, and we are looking at the opportunities we're looking at are very, very fast payback and have very high investment efficiency. So it's I think we're we're very pleased with the ability both to expand the opportunity set and and for the returns to be much higher. Mean, Vietnam is a great example, and we will you know, that's paid back in twelve months for the acquisition. So strategically, sometimes, you know, we we look at strategic acquisitions, which would would have have paid long would have been a a longer payback. But entry country entry was important, like Jonathan was saying, and so we probably made a decision there to enter with maybe two year, three year payback, but we were able to achieve that in in one year given the additional wells we put in place and the higher oil prices.

40:17 Yes, that's great. So there are other questions on Malaysia, as you would probably expect. I think a lot of them have been answered through the presentation, particularly around the completion time line. So I won't focus too much on that. I'm come to you, Ahmed, for for the moment to finish up on Malaysia. James at Shore wants wants to know, you know, essentially, his question is, why did, in your view, why did PETRONAS and Petronas Charagalli trust ENQUEST with these highly valuable assets? So I I mean, in we've been in Malaysia for over ten years, but even as, you know, myself, it's been almost twenty years in our first project in 2020 2005 when we introduced also, you know, the first mobile production unit which reduced costs and was taken by Malaysia.

41:08 But also in our in our history there over the last twelve years, you know, we have we have exhibited very strong performance, winning, you know, several times, but two twice in a row, the operator of choice or the the highest the platinum operator award twice in a row, which is and and again, several times throughout the last twelve years. Getting, you know, getting also an award for the the the best gas supplier in Peninsula Malaysia award, the best Malaysianization award several times, not just once, not just twice, the best DCOM operator several times. So, you you know, I think these things have a lot of weight when when the when PETRONAS looks at things. It's not a one year thing.

41:56 It's a twelve year thing, awards in the dozens. And and I think that, you know, that's part of the calculus. Obviously, we were competitive in the in the in the price we offered, and it was a it was a competitive process. But I do feel that the relationship with Petronas is a special one given our performance and and given that we, you know, we're part of the the fabric there now that we've been there for twelve years plus. Thanks, Hamdah. So so switching geography a little bit, you you you probably won't be surprised to learn that there have been a number of questions around additional m and a. So m and a beyond the transformational deal we've announced in Malaysia. So I think the the the summary of those questions really is how are things progressing in the North Sea?

42:42 What opportunity do you see there? And, obviously, we're now aware there's a large package on the market, and it'd be in I think shareholders would be interested to hear your thoughts on BP's decision to leave the North Sea and what that might mean for ENQUEST going forward. Okay. I'll start with that. But, Jonathan, please feel free if you want to add anything about anything. So so The UK still is an is a focus area for ENQUEST. We have a very a large asset, which is 3,400,000,000 of of tax credits, which were earned through more than £4,000,000,000. I mean, five and a half, six billion dollars of investment over the last sixteen years.

43:28 So we have an asset which is very important, which gives us a competitive advantage of paying a lower tax because we've invested so much in The UK, and we've developed heavy oil fields in The UK, which which have been which have been not invested in for many decades. So so I think that asset is very valuable. It allows us to have a lower tax rate than others, and that asset is becoming even more valuable as the the prices are high and as less less less and less companies with the tax history exist. So so I I think we have a competitive advantage. In terms of VP, we don't comment on on transactions. Clearly, there's only a handful of players in in the North Sea, and there's only a handful of players that would be involved in these types of transactions.

44:17 Jonathan, anything for you to add? No. I mean, I I I think you've summed it up. I mean, you know, we clearly have the operational skill set to, you know, build and grow value in the North Sea, and we have the fiscal advantage as well. So, you know, as I'm just said, you know, know, the growth paths between Southeast Asia and the North Sea are not a choice. You know, they're parallel paths that actually, you know, reinforce each other. So, So, you know, I think you you put it right, Andrew. Sustain with you, Jonathan, because, I mean, ultimately, you're the guy who writes the checks for these things. James Hose, he's asking, what what is your comfort level when it comes to UK acquisition activity? Activity? What's your comfortable what's your comfort level taking on additional decommissioning liabilities within the group?

45:08 I mean, yeah, clearly, historically, our business model been to leave as much of the decommissioning liability behind as possible. And the, I guess, you know, the example the sort of the, you know, the best example of that is magnets, you know, where we have a 100% of the operating equity, a 100% of the cash flows, but only 9% the decommissioning liability. And I think our way of looking at the world is that, you know, if we're putting time and capital to work, from a capital point of view, we really wanna be putting it to work in high margin hydrocarbon production and using all of our skills that we have to lower costs and extend asset lives rather than putting that capital to work in that decommissioning step. You know?

46:02 The business model means that we've, you know, we have all of those highly evolved skills in decommissioning, but the cost is on someone else's balance sheet. So I think our preference always would be to to leave as much of the decommissioning liability behind as possible. And, you know, just reflecting back on the deal in Malaysia, of course, the characteristic of Southeast Asia is that the decommissioning costs are prefunded through CESS contributions across the life of the PSC. So it's just a totally different equation there. So, you know, I guess the simple answer is wherever possible, we'll we we we would like to focus capital on on on high margin production growth. Thanks, Jonathan. And and obviously, you know, we we've talked about the Malaysian transaction and the fact that our because we're buying producing assets, our leverage doesn't change markedly post completion.

46:56 There's a few questions that I would on this subject, I would sort of summarize and say, how would you expect to finance further transformative m and a? For example, if we did work to do something in the North Sea, you know, John, in which markets would you would you go to to to fund such a transaction? Well, I, you know, I I think the first point is that, you know, we've we've spent our time focusing on simplifying and strengthening the balance sheet. The simplification is expressed by the fact that we now have RBL, and we have a single, you know, tranche of US dollar bonds. Right? Our RBL is very strongly supported by our syndicate of eight relationship banks. So eight banks, $800,000,000, you you know, know, and then the accordion adding another 300 to that. So clearly, you know, not not no tail in terms of banking relationships. All of our bank relationships are core.

47:58 And in the bond market, we went through a very successful refinancing, and those bonds are trading, you know, trading well. So I think we have the right, you know, the right ingredients for that. But I think alongside that, then the question is, what are you buying? Right? And, again, we're very, very focused on how we see acquisition or growth, and that is about buying assets that are in production. I think the key thing here is is that if you're using the balance sheet, you know, to to finance that growth, what's essential to it is that your cash flow is also growing alongside your leverage. So your leverage metrics, you know, remain, you know, in in the same zone.

48:45 Now we've also always demonstrated great, you know, discipline and focus in terms of managing the balance sheet. And that is also reflected in the fact that, you know, we're not gonna lose, you know, discipline here through acquisitional growth. And as we then, you know, digest those assets and go through the step changes in terms of free cash flow, you know, of course, that's also a pathway to then, you know, make sure that we're delivering a strong balance sheet, which gives us a great platform for further, you know, organic investment and acquisitional growth as well. Thanks, Jonathan. I'll come to you for the next one. Obviously, in this format of presentation as well as the analyst questions, we obviously get a lot of questions from our our retail holders, obviously, some of them who, of course, we know and have been with us for for a long time. And one one of the themes that's come through in the question, is is about the the the the valuation of the company and the the the relative undervaluation of the company versus, you know, a lot of analyst models and NAVs and things like that. And I guess the the the summary of the question would be, what's your view on that and and how we can close that gap?

50:01 And, also, would you consider ever relisting ENQUEST in a jurisdiction that was perhaps more openly supportive to the oil and gas industry? So so on the valuation, I mean, generally, the industry is has been trading at a discount to to NAV, and we continue to trade at discount to NAV. So I I'm I'm hopeful as we get more and more investors interested in the company and as we scale up more and more, we will, you know, we'll get more demand for our shares, and that will try and rebalance and and try and close the gap bit on the discount to NAV. So so, again, I little to control there other than continue to do well and continue to expand and continue to to allocate capital correctly.

50:53 On on the second question, you know, we were listed in two locations in The UK and in Sweden when we started. We delisted in Sweden primarily because the there was very limited shareholder holding there, and also the the new EU regulations were coming into effect, which would complicate, you know, our reporting. But but I think we would always you know, we can we can we will look at that. We can look at that in the future, especially as we, you know, we pivot more and more of our assets away from The UK. But at present, there is no no plan to do that. I I do think we are a unique company in The UK. There's there's less companies there's fewer independents in The UK. There's, you know, five listed companies that are kind of our size.

51:38 And so I feel that, you know, we still will be either way, we'll still be listed in The UK. Okay. Thank you. I mean, coming coming to both of you and sort of sticking to the theme, again, this has come up from a lot of our retail holders, but also key in it at the Bank of America has has asked us sort of similar questions. I'll kinda structure it for you in that way. So so the first question is, in your experience, in your interaction, Amgen and Jonathan, with with shareholders across the register, do do you sense a preference for buybacks or dividends? That's question number one. And question number two is how we might think about the way shareholder returns might evolve as the company grows. I think, Amgen, when we announced the the the transaction back in June, I think you talked about, you know, shareholder returns growing as as as the company grows. So maybe a few words from from from you gentlemen on on that would be helpful to to to participants in in the call today.

52:35 So so I I guess on shareholder returns, dividend versus buybacks. I mean, we have tried both. I mean, we you know, when we first started the shareholder returns, we they're primarily share buybacks. And and in the last couple of years, they've been they've been more dividends. I think it just depends on where you stand on on the NAV discount versus others, and, you know, if it makes more if it becomes compelling to do one versus the other. Otherwise, you know, we will continue to look at both. Our slight preference is is dividend because now that's become a a, you know, part of our capital allocation, and so we'll continue with our dividend as a, you know, as a as a basis. If we see there's excess returns to capital returns of capital to shareholders and and the the the price is such that it justifies partially partially doing it better.

53:27 We will we will will leave that under consideration. And then, I mean, I'll leave Jonathan to mention to maybe comment on that too because this is his his area of expertise, but also on the second question. No. I mean, I I I think that I mean, what totally agree what Andrew says. I mean, you know, there may be you know, there is a persistent structural discount between where companies like ourselves are trading and and analysts, NAVs. But, you know, quite honestly, that's kinda cold comfort, you know, for investors and things like that. Right? So the question, you know, comes back to the same point, right, which is what what are we doing to to to close that and how can we be proactive. Right? And I think there's two principal things that we need to focus on as a as a leadership team and the board. Right? You know, one is about delivering the business, and the other one is about telling the story and making sure people understand the value proposition and that we meet new people.

54:27 I think one of the things that we noticed strongly is a very, very significant expansion in the range of conversations that we're having with investors. And that really has been a product of two things, think, broader research. You know, we have seven plus people writing on us, producing policy notes and numbers. We have a a good good story to tell, right, which is just being turbocharged by the acquisition in in in Malaysia. And, you know, as I said, that's the beginning, not the end. Right? You know, we wanna kinda keep growing the business and and and and, you know, having delivered a significant transaction, it's about delivering, you know, momentum, both operation and deal momentum.

55:16 I I I think the the dividend buyback thing, I think it is a journey. I mean, we started with the buybacks. We've moved to, you know, paying a 15,000,000 dividend that we lifted to 20. It it it's not an either or choice. I think I'm just right in that there are, you know, other sort of considerations. But I think I'm just hit the nail on the head, right, which is that, you know, the dividend is a structural part of our capital allocation considerations considerations and and and framework. So, you know, it it's something that we will, you know, take forward in into the future. As we move through capital allocation and things, you know, we're very focused on how we deliver, you know, value growth at the company level, but also value growth in the shareholders' pocket.

56:08 Thanks, Jonathan. I think that's thanks both. I think that was a very fulsome answer. Andrew, I'll come to you with a couple of stand alone questions if I may. The first is whether you have any comment or update on the Gaia and Gaia two prospects in Indonesia. Obviously, we put an an update in the RNS, which is any comments from yourself. And, of course, you know, I'm pleased to see in my in my last presentation of results with with us. Great to see Ron Smith Taylor not letting me down and asking a question about plans for the ENQUEST producer, Amgen, and how how how the future of that asset looks. Okay. So always a question to be asked. So on GAIA and GAIA two, you know, this is slightly unusual in terms of the fairway of ENQUEST, but we yeah. We're very you know, we're opportunistic and opportunity driven, and we found this as an area.

57:03 We had a a team that had that was a local team that had expertise on on the area, expertise by having data, which we had access to. And so we were able to do a joint study, you know, through on on that area with another company, another local company. And then and then, clearly, that area turned out to be quite important. When the bids came for the PSC, we had, obviously, the ENQU Alliance joining us, which is a great, effectively litmus test on how how important these assets were. They wanted to come in with us, we were operator, and they wanted to be to, you know, to to also carry some of the cost going forward to just participate with us. So we're very excited about the opportunities, and and I think we're moving them forward.

57:53 But, you know and so the the program will be approved by the the partners in the next in the next month or so for for next year. And, you know, the program is based on, you know, initially doing seismic to try and identify the areas that that will further be explored. And, you know, there are discoveries in discovery wells in the block, but, clearly, it's a very the two blocks are very, very large onshore and offshore. And and then we are, you know, we're looking at the at the opportunities, which probably they're talking about a 100 TCF of of prospectivity there, but, really, we are focused on the highest chance factor of success from the existing well data there.

58:39 In terms of the ENQUS producer, you know, that remains in in NIC, and it's, you know, it's part of the project, which is the press a field development project that was the field development project in press a is two phases. Phase one is the gas going from Bracei to Kraken to reduce emission of Kraken. That project is the first phase. We're looking at that doing feasibility studies on that and sanctioning that in time for the 2030 reduction in emissions. And and and that the second phase is an early production facility for proving the oil of Bresse, and that would that would include the ENQUS producer as the available vessel to to do the early production facility.

59:27 And that was submitted with the field development plan, you know, in in the past. So that the they they use the main plan for us both on the as well as ENQOSH. Thanks, Andrew. And and and may maybe to given the in the interest of time, we're coming up on the hour. So I'll come back with any questions that we haven't got to you in this session, and I can do that offline. But if I could maybe ask you to close out, instead of closing remarks, maybe ask a closing question that that that kinda came that came from Sam we have at Peel Hunt, which is when when you look at the the the enlarged groups I'm looking ahead a little bit here. When you look at the enlarged group, what is it that excites you most about the new assets joining the business?

1:00:14 I mean, what excites me most is they are different than the assets that we've had in the past. They're significantly different. And the reason they're different is they are the lowest recovery factor assets that we've been acquiring. Bellingen has a 19% recovery factor. D Thirty Five has a 16% recovery factor. And then there are many and, you know, Bellingen has 2,200,000,000 barrels. It's the largest field that we have in terms of oil in place, you know, by a long shot. You know, We've mean, you know, both and Magnus were around a billion barrels in place, and those are the largest fields we had. But they had much higher recovery factors. They had 50% recovery factors, and we're pushing them to the to the 60 level. But these have low recovery factors, you know, low hanging fruit. They fit our business extremely well, and I'm also excited about the gas component in our assets. I mean, they they you know, we are now, you know, building our gas components. These are, you know, gas and oil, and that will also enable us to be a a player in in a in an important area, not only pipe gas, but I'm also looking forward to thinking about LNG because, again, the the the the Balingen and the the the Balingen block with its fields, Amana, this supplies gas to Malaysia LNG, so it gives us expertise in LNG.

1:01:33 The Brunei, two fields that we're looking at developing in Brunei, they you know, or Patti, those are also going to the Brunei LNG plant. So, again, I think that is exciting that we will have, you know, exposure to an an area of growth and a barrier of future of of the of the energy industry. Thank you, Abjad. Thanks, Jonathan, also for your your time and, obviously, answering all the questions. So, yeah, I'll hand back to Paul now to close out, and we've gone just over the hour. Thank you. Fantastic. Thanks indeed. And thank you all for covering those questions, as Craig said. Thanks for updating investors today. Please ask investors not to close this session to be automatically redirected to provide your feedback and also the team can better understand your views and expectations. This will only take a few moments to complete be greatly valued by the company.

1:02:21 Thank you, and good afternoon to you all. Thank you, everyone.