Good morning, everyone. Thank you for joining us today as we present EnQuest's interim results for the first half of the year. Through this webcast, you will have the opportunity to submit questions at any time, and we will look to answer as many of these as possible during our Q&A session at the end. Without further ado, I'll hand you over to our CEO, Amjad Bseisu.
Thank you very much, Craig, and good morning, ladies and gentlemen. Welcome to our interim first half results for twenty twenty-four. Thank you first for taking the time to join us today. My name is Amjad Bseisu. I am the Chief Executive Officer at EnQuest. Joining me today is our Chief Financial Officer, Jonathan Copas, and Steve Bowyer, our North Sea General Manager. Both Steve and Jonathan continue to provide great leadership as we drive EnQuest forward towards growth, despite this challenging fiscal environment in the U.K., which we will talk about. So let's start by taking just a look at the EnQuest, and what the story of EnQuest is from the beginning. Some of you who may be less familiar with EnQuest, EnQuest is a late-life and a development company that started in twenty ten.
We have about 175 million barrels of 2P reserves, 389 million barrels of 2C resources, and we operate 95% of our 2P resource assets. We have replaced one and a half times our reserves since our IPO in 2010. We're a top quartile operator with upstream at the core, and we have a track record of exceptional uptime performance, cost discipline, and reserve replacements. We've also enhanced our business model in recent years to look at a full cycle energy transition. We have notably started Veri Energy, which we're very excited about, to repurpose our existing infrastructure, namely in Sullom Voe, the East Shetland, and West Shetland pipeline systems, and to deliver a renewable energy and decarbonization company with significant ambitions.
We've taken four offshore licenses for carbon capture and sequestration, and we are working diligently on offshore electrification in Sullom Voe as a site, and also on various other projects. We've also moved very much at pace with decommissioning, where we help to manage the end-of-life assets. We've gone from nine assets hubs to four assets hubs, and we are clearly making inroads with another twenty-five well program, which is industry-leading in the North Sea, completed this year. If we go to the next slide now. For some time, we have talked from twenty seventeen about a tripartite strategy, delivering, delevering, and growing. I'm pleased to say that we are finally at the final chapter of our strategy, and we are primed to deliver growth now.
We have reduced our debt significantly, as you've seen, with the end of June net debt figure of $320 million, significantly below the peak of $1.7 billion that we've had a few years ago. We've also achieved a net debt to EBITDA target of 0.4, also below our target of 0.5. Following on great operational performance, we have completed the five-yearly recertification of Magnus, and we continue strong production up times across the portfolio, with operating efficiency being very high at 93% for the first half. We've executed all of our well programs in the UK and Malaysia, and as you've seen, production is in line with our guidance at 42,700.
With an active program planned for the second year, including a lot of shutdown activities at Magnus and Kraken, and maintenance planned for the second half, we acknowledge that production is likely to be in the lower half of the range overall. Our strong sector-leading decommissioning performance continues, and we've dedicated an in-house team to execute the plug and abandonment program of a further 25 wells this year, as I've mentioned, at Heather and Thistle. Our expertise and delivery in this area has been further vindicated by the announcement by Shell that they will be giving us the full decommissioning management of the Greater Kittiwake Area, assuming all responsibility for decommissioning there. Also reflecting our continued strong performance is our generation of cash flow, where we generated $55 million of free cash flow in the first half of the year.
We've had 160 million of reduction in our net debt, given the additional receipts following the completion of a farm down, of the Bressay farm down transaction. Our trajectory for deleveraging continues, and we have repaid fully the RBL earlier this year. Looking ahead, the work we've done to strengthen the balance sheet gives us choices, and particularly important, given the very punitive changes made to the U.K. fiscal regime by the government. A low-cost, quick payback opportunity remains within our core assets, and we will be disciplined in evaluating work programs to efficiently manage our capital. We are also very focused on opportunities in Southeast Asia, which give us significant return on capital, and you will be hearing more on our developments there, including the gas developments that we've talked about for a long time in Malaysia.
With our strong liquidity, we still are looking at the UK, at tax assets as providing an advantaged foundation to transact and to grow. Our growth strategy remains intact, and the leadership team and I are fully committed to deliver a value-accretive acquisition, both in the UK as well as acquisitions in the Southeast Asia region. All that will be significantly accretive, hopefully, to our shareholders. With that, I'll turn over to... Sorry, one second. Our growth strategy remains robust in a fiscally volatile environment. As you've seen, we are having lower cash flow generations from the North Sea, but we are looking to invest with our tax asset. So the UK remains a very core area for us, even with the significant challenges given the fiscal regimes. Our strategy remains robust in both the UK and looking internationally at development opportunities.
We are driven by our competitive advantages of capability, our competitive advantage of having great people, and our competitive advantage of now having strong liquidity with GBP 566 million of liquid assets available to us. Next slide. With that, I'll turn over to Jonathan.
Great. Thank you, Amjad. If I could have the first slide, please. So I thought it'd be good to return to this slide, because it reiterates our financial priorities, and it also highlights the good work that we've done, to create, to prepare the business, and build a strong foundation, that will take us into the next phase of our journey, which is that growth path that Amjad has spoken about. First thing here is we've reset our capital structure. So we refinanced our debt, and we have no debt maturities before 2027. Secondly, we've continued to de-lever, and that really is very, very core to us as a group and that preparation for growth.
As Amjad mentioned, net debt was $321 million at the thirtieth of June, and we moved beyond our leverage target of 0.5 times. Net debt to EBITDA was 0.4 times at that thirtieth of June point. As I've said before, cost discipline is absolutely central to everything that we do, and executing our work programs and our investment programs in an efficient and cost constrained way is really important. Of course, it's even more important given the fiscal volatility that we are seeing around us at the moment as well. At the last results, we announced shareholder returns, and you know, that was a significant step for us as an organization and a significant step for our shareholders.
It marked the point at which we'd resize the balance sheet, and then we were moving to look at distributions, and we will continue to look at those in the context of our full capital allocation programs, and if I take all of these points, one to four, and add them together, you know, they are what is building this strong foundation for growth, and we see our role as being a consolidator within the North Sea, but also, as Amjad said, we have this vitally important position in Southeast Asia, and we're looking to diversify and grow internationally as well. If we turn to the statements now and begin with the income statement.
So in the period, Brent prices strengthened year on year, and that was a very supportive backdrop to us financially, and EnQuest delivered a net profit of $30 million for the first half of 2024. Now, driving that, we saw oil revenue that was approximately flat year on year. And in that, you see the slightly lower year-on-year production numbers being offset by higher Brent prices. Gas revenues fell, and that was on significantly lower prices. Obviously, we've seen a lot of volatility in gas markets in recent years, and also reduced third-party volumes, West of Shetland volumes, crossing the Magnus facility. But those lower volumes, of course, are offset within cost of sales, and cost of sales fell significantly period on period as well.
In line with our expectations, unit OpEx was a bit higher at $22.8 per Boe, and this reflects higher tariffs that we're paying, and that's basically just a function of the fact that we have a larger share of throughput through the southern Sullom Voe terminal today. Adjusted EBITDA was $368 million, and alongside that, we had an impairment of $21 million, and that was driven by changes in the production profiles of our GEAD non-operated Golden Eagle asset, as well as revisions to EPL that were undertaken at the balance sheet date by the prior government. The income statement tax charge of $74 million shows actually a reduced effective tax rate for the period.
But of course, with the revisions to EPL that are ahead, we expect that effective tax rate, income statement tax rate, to be higher for the full year. If we turn to cash flow, though, in this period, we generated operating cash flow of $324 million. Our CapEx totaled $95 million, and that was covering the Magnus five-year rig recertification, the Golden Eagle drilling program, and obviously our decarbonization work at SVT. Our Magnus profit share was $48 million. And reflecting the significant progress we've made in terms of reducing our debt, our net interest costs of $40 million were 19% lower year on year.
We also made lease payments of $85 million, and as you will remember, those lease payments step down significantly next year, when the day rates on Kraken fall by about 70%. The result of all of these cash movements was a reduction in net debt of $160 million. If we now turn to look at net debt, I thought, again, it would be useful just to put up this chart because it illustrates that tremendous pathway that we've had in terms of focusing free cash flow from the group on reducing our net debt balances. So in 2018, we had $1.8 billion of net debt, and a net debt to adjusted EBITDA ratio of 2.5 times.
I think we're all very proud to stand here today at the 30th of June with net debt of $321 million, and our net debt to adjusted EBITDA ratio down at 0.4 times. In the period, we also fully repaid our RBL as well, and that was a $140 million repayment. Gross debt at the 30th of June was $658 million. Our cash and cash equivalents were $337 million, and that left us with not just lower net debt, but a significantly enhanced liquidity position, and cash and available facilities, that's our undrawn facilities, were $566 million, which was an increase of $67 million versus the position at the end of last year.
Of course, alongside all of this, we have our historic tax assets. These total $1.9 billion. They are held within our EnQuest Heather entity, and they are there in a very clean structure and ready to be deployed. We have a further $1.2 billion of tax assets, which we're working to progressively move through the business as well. Lastly, I thought it'd just be good to touch back on guidance. As Amjad has said, we remain on track to deliver production within our guidance range for 2024. Of course, as he's noted, this is now gonna be within the lower half of that range.
CapEx, OpEx, and ABEX guidance is all on track, and we have a busy program of operational activity in the second half of 2024, which Steve will be talking about in his section. Tax, of course, falls due in the second half of 2024, and you'll see that we have an estimated current tax liability for 2024 of $171 million. Now, this figure does move around and, it's only finalized when we submit our tax return. And more generally, you know, we're continuing to work diligently to optimize our capital programs and our fiscal efficiency as a group, with a focus on delivering that growth portfolio and also the internationalizing our portfolio as well.
Now I'd like to just hand over to Steve, and Steve will give you more details in terms of our operational activity during the period.
Yeah, thank you, Jonathan and Amjad, for the introduction. Good morning, everybody on the call. I'd just like to run you through where we are as a business operationally. Obviously, it's a challenging environment to work in at the moment in terms of the fiscal regime, but I think as I go through the slides, hopefully you'll pick up the EnQuest capability and operational performance. It's kind of perfect for this market. It's not the market we want to be in. I think Amjad's made a very clear statement this morning as to our views on the fiscal system. We've got short-term damage limitation to try and manage the initial soundings from labor policy, which have yet to be put into action yet, and we're trying to work on that and lobbying hard, both as a company and as an industry.
And long term, as we look to the next year's budget, when we can potentially see some change, we're lobbying very hard to get the fiscal stimulus out there that keeps the oil and gas business running, and running in the right way, which in our view is absolutely pivotal to the energy transition. We are an energy transition company, and as I talk through, you'll see that even in our oil and gas operations, we're reducing emissions, we're focused on carbon intensities, we're focused on increasing production. Our simple mantra as EnQuest is to increase production whilst reducing carbon intensities. You get that through Veri Energy, but you see that in our oil and gas portfolio as well. We need an effective bridge from oil and gas, which is lowest carbon, safest energy if it's produced at home, right through into new energies.
Beyond that, we're very active on acquisitions, and we'll talk a bit of that as we go through. Discipline is really important in this market, both in terms of how we spend our own money, but also how we approach acquisitions. I'm excited about some of the things we're looking at on the acquisition front, both in the UK and internationally, and I think Amjad and Jonathan would agree. We've got a very positive approach out there, and we're in a number of processes. And I can't say too much, and we won't say too much on that, because obviously that's confidential, but be assured, we're working very hard on that. And just as I go through the portfolio, you'll see we're working hard on delivering very positive results.
and it's good for me to say we've got a strong track record, but you can see validation now coming, not just from our peers, but also from regulators and government bodies, and I think that's encouraging. That demonstrates that EnQuest is delivering what it says, and we continue to focus on that delivery. So just talking through, I thought it's good to go through a summary of each facet of the business. So on upstream, very strong operating performance. We are at the midpoint of guidance, and we were at that midpoint of guidance as we exited July, and we're in a shutdown season, which obviously will bring production down a bit, but we have a number of well interventions, and obviously we've moved a little bit from drilling to focusing on what we can do with existing wells to try and bring that production up.
We also have some upside in Malaysian gas through the second half of the year, so we're in place to deliver within guidance, but indicating already we're at the lower end, and we're very focused on pulling all the levers we can to deliver as close to the midpoint of guidance as we can, so a classic example of what you do in a market like this is we've gone back and looked at all the Magnus wells, and we've added 1,000 barrels of oil a day just through well optimization on the existing wells, and that's an ongoing focus of the team, and just to pick up on all the good work the asset teams do, Kraken uptime 98.5% is phenomenal. That's an exemplary performance on an asset. It's a large-scale asset.
We're processing four hundred and sixty thousand barrels of water a day, and with that complexity, we're running uptimes that high, and that's, that's a credit to Bumi and our own asset teams and our performance across the business. We've completed the Magnus five-yearly rig recertification, which sets us up for continued drilling or well interventions on Magnus, and we've been delivering over 90% uptime. Magnus celebrated its forty years in production, and I don't think anyone would think it would be here today, let alone delivering over 90% uptime, so that's an exceptional performance, and in Malaysia, again, EnQuest, we can't only do it in the UK. We're exporting our skills and our credibility internationally with 93% production efficiency and working through well programs and reinstatement.
And as I talk, you know, as I talk through acquisitions, and, as per Amjad's statement, you'll see we're very focused on capital reinvestment in other areas and in other countries. And if the UK doesn't change the fiscal system, we will put the appropriate investment into the UK, and we'll direct a large chunk of our capital elsewhere. Operations performance, so the key focus of this business is safe results. I'd just like to give credit to the teams, in terms of the proactive action that we've taken across the business to get delivering safe results. There's no end of effort going in focused on the work site, and the site leadership has been strong, and that remains key and fundamental to everything we do.
And as Amjad mentioned, our operating efficiency across the board averages 93%, and that's really strong, and that's something, that's a foundation for what we do going forward. So if you think of us going out and buying capital light, producing assets, we need to drive the operating efficiency as high as we can. As Jonathan mentioned, on operating capital discipline, we need to drive our cost per barrel down, and that's something we're focusing on. So although we say we're top quartile, we can still do better. So we're focusing on driving those costs down, and we'll be focusing on our existing portfolio and the acquisitions we make, extending field life out as far as we can and extracting as much free cash flow as possible. And we were prepared for EPL being there.
It was there already, so we were already focused on the right acquisitions to suit this market. I would like to build some more 2C resources in the UK, and we will still look at that, but before we move any of those forward, we do need a fiscal stimulus. Future things to look out for in the portfolios, there's a lot going on, well, activity at Magnus, Malaysia, we're returning to Kraken drilling in 2025. We're in the process of finalizing plans for Kraken drilling, obviously looking to optimize that, and obviously reduce the capital in that program, but still deliver what we're looking to get out of the wells. We've got material upside through Kraken enhanced oil recovery. I think Kraken's one of the best examples of a field and an asset primed for enhanced oil recovery.
We're at early stage of looking at polymer tests, but very encouraged by the work the team's doing, and I think that provides huge upside for Kraken and further life extension. We've. In terms of our OpEx per barrel, we've got the Kraken FPSO lease rate dropping by 70% in April 2025. That's key to delivering our some of our cost reduction aims... and we're also maturing significant Malaysia gas resources through Phase 1B, Seligi Gas, and that's quite exciting. That's got a big upside for the business. It solidifies our position on those assets and allows us to diversify away from oil and more to gas, helping our carbon intensities.
Just to say, although we are an oil and gas operator, and we are a full energy transition cycle operator, on our oil and gas assets, our emissions reduction projects and our life extension projects are ongoing. We're ahead of the North Sea Transition Deal targets, which are due to be met by 2030, and we're investing heavily on emissions reductions across the portfolio. I guess that's something I would reiterate, is the cleanest energy is produced in the UK. We're very focused on it. The oil and gas sectors probably do more than any other sector in terms of delivering emissions reduction, and I think that needs to be recognized both by the government and in the market. Just to say, if we're gonna go on and deliver success, I think EnQuest are perfectly primed for that.
The key at the moment is cost discipline, disciplined capital investment, and managing the assets in the right way. And the team have worked through all the asset strategies to make sure we have the right plans in place. We have optionality across the portfolio, so we can switch on and off CapEx as required, as the fiscal regime suits. And what will be key is to try and replicate what we've done on Magnus. Life extension extended by over 10 years, unlocking over $1 billion of incremental revenue. And you can see that as Jonathan talked through and Amjad, the unit operating costs that we've driven in terms of step change. So as we look at acquiring producing asset portfolios in the U.K., we'll be looking at making step changes in the OpEx per barrel, in terms of dollar per BOE.
Our decommissioning skills come in, in terms of late life management, and we'll be looking at maximizing value, from those assets, so I would say a strong operating performance. I would obviously like production to be at the higher end of the guidance, but we're working hard to deliver, but our capability sets us up perfectly, as the company to deliver in this market, and I think some ways there might be frustrations that acquisitions haven't happened, but in some ways, keeping your powder dry to the right time is the right way to do it. In terms of optionality, I've kind of mentioned, but our capital investment's geared to fit the fiscal regime. We will very much focus in on the things that extend asset life.
You may see us move a little bit away from or diversifying slightly away from heavy capital drilling to more well optimizations, which is very sensible on Magnus. On Kraken, we've got our 2025 drilling program, which we're finalizing. That will go ahead. We're committed to the rig, we're committed to the plans. Enhanced oil recovery has a huge upside for Kraken, and it's something you'll see more of in time. It's a little bit early stage, but that's got huge upside for the business, and Bressay gas is something we're excited about. That significantly changes the emissions footprint on the Kraken FPSO, extends the field life significantly and also secures the Bressay license, and we continue to mature Bressay oil, but in an appropriate way, given the current fiscal regime.
Our Golden Eagle asset, Jonathan mentioned, we've obviously not had a good run, and we're a non-operator on that, but the drilling's not been come out quite as we expected, which has been disappointing. We're working with our operator and our other non-operated partners to review the asset strategy there, to make sure we come up with the right plan. On PM8/Seligi, low-cost well programs are ongoing, but the big upside, and Amjad can touch on this if there's any questions on it, is we're maturing the gas opportunity we've always thought is there, and that'll be done in managed phases in a measured way, but it's an exciting upside for the business. You will see EnQuest move a bit more towards gas as we look at our acquisitions, and we diversify, which all helps our carbon intensities.
But the key here is to grow scale, grow barrels, manage our carbon intensity. Bressay, I've mentioned, we should be maturing towards an FDP this year. Obviously, the change in government and the regulatory regime means we'll probably have our FDPs and FDPAs in draft form, and then we'll be sitting, waiting for, regulators to be ready to give us the go-ahead. On Bentley, a little bit more challenging than Bressay, so we'll see that following Bressay. What we learn and apply on Bressay, we can apply at Bentley. And Sullom Voe, if you like, that's EnQuest and the energy transition for me in action. That's the way it should work. We're extending the life of oil and gas. We're repurposing a facility. We're having a material impact on the communities up at Shetland, who've relied on oil and gas long term, and we're bringing in renewables.
We're being disciplined in our renewables aims with Veri, and you'll have picked up through the results. Onshore wind is a focus that'll materially reduce the emissions footprint further up there, but it'll also provide power to run our operations, and that's something we're working through to FID. It's early stage. CCS, we still have our eye on and are keen to progress. We're working that in a managed way, and we want to be a fast follower on that while maturing our licenses, and on hydrogen, we've got the grant in place with the government, and we're progressing that in a managed way, so portfolio's there. We've got good opportunities within the portfolio already. Capital investment internationally, it's clearly appealing at the moment.
Capital investment in the UK in an appropriate way is something we'll do, and we'll be very disciplined and measured to make sure we manage shareholder value. SVT, I've kind of covered. The two big projects I'll just touch on. We are right-sizing the facility through the new stabilization project. That allows us to fully extend the life of the upstream assets, which, if you're gonna run the energy transition right, is critical. Keep the jobs, keep the skills up there at Shetland, working hard. Then we're gonna connect SVT to the electricity grid, which will allow us to import or potentially export power through time. What does that do for us? A carbon emissions reduction of around 90% on our existing asset.
That is a phenomenal achievement if we get there, and that's the plan through the new stabilization facility. We're also targeting zero routine flaring by twenty thirty, and it'll put a material cost reduction in the operating footprint at SVT, which clearly helps Magnus and helps the rest of our assets. So you're gonna see Magnus' operating cost per barrel reduce through time. Always difficult as the production declines, but we're trying to keep our production flat or growing, and while reducing the operating costs, and you've got Kraken with a material lease reduction. And just to mention, I've already touched on onshore wind's the key focus for the team. The Veri team are very focused on delivering FIDs and early FIDs, so we're focused on the things that we can control and move forward.
As the regulatory regime opens up for things like CCS, we'll have done our preparation work, and we'll be ready to execute and move forward. In decommissioning, not the sexiest part of the business, but an important part. We're top quartile, I think phenomenal to look at EnQuest achievement. We're on track to P&A 60% of our suspended and shut-in wells within five years of cessation of production. I don't know many other operators who are in that position. As you'll know, with Heather, Thistle, Don fields all come off round about the same time, the teams are focused in on safety and people first, then integrity, and execute the programs in the right way.
And if you look at our P50 cost per well versus industry average, and this is a conversion of skills, a bit like the energy transition from drilling new wells to decommissioning, we deliver wells at 2.6 million GBP per well, versus an NSTA quoted average of 4.3 million GBP. That is a huge competitive advantage, not just in terms of executing others' decommissioning through services, but if you look at us acquiring portfolios of assets, other parties can see us as a material advantage in terms of executing their decommissioning. We've got innovative technologies.
We've also had our award-winning performance on the removal of floating vessels, and the validations come from our partners and peers, so they're very impressed with the work we're doing at Heather and Thistle, and they're also impressed so far as to give us further decommissioning operatorship on GKA, and we are actually in discussions. While we're focused and our priority is a transformative production acquisition, we are looking at potentially offering decommissioning services to other operators, where they retain the liability, we execute the decommissioning on their behalf. And just in terms of that capability, so it gives us a huge competitive advantage. As we look at portfolio consolidation, we can deliver a step change in costs, and it also helps us acquire... And I don't think we're a late life operator. We are a good operator.
We will try and pick things up that are not at late life. The key is to apply a late life mentality to drive through the right performance. And I'll just close by congratulating the Malaysia team, as I think Amjad mentioned. Winning the HSE Excellence Award is really important. Two years LTI free, great performance, and also receiving the Operator Excellence Award, so really pleased with that. You can see the UK team are validated in terms of their performance, and I think if I was to position EnQuest just now, I would say we've got a lot of work to do in acquisitions, but we're on it.
We're looking to deliver that in the short term, but we are the operator who's well-positioned with our capability to actually deliver within this market and drive value out of not just only our existing assets, but other people's portfolios.
Thank you very much, Steve and Jonathan, again, and we'll go to the next slide, please. As you've heard, really, we've delivered a solid first half of the year from both operational and financial perspective, and we continue to demonstrate progress against our established strategic priorities, within a very challenging backdrop. I think the combination of our track record of delivery, in addition to our advantage tax position in the U.K. and changing M&A landscape, gives us all confidence that we will be able to achieve a transformative growth transaction or transactions over time. Our tax asset of £1.9 billion is enhanced by the additional £1.2 billion from the Bentley purchase, which gives us over £3 billion of tax assets, one of the largest in the industry.
We will further enhance our position as a reasonable operator, making the best use of resources and assets that have already been developed, to ensure we play a leading part in the energy transition. As you've seen, we have been able to differentiate ourselves in terms of delivering over the last decade, and we are truly differentiated in the capability which we're moving to decommissioning and transition. As we look forward, we want to continue our top quartile performance and to be validated by external forces as external regulators. As Steve mentioned, and I mentioned earlier in Malaysia, where we were the top operator of the operators there voted last year, and that's a great testament to the capability that we've also built in Southeast Asia.
We also look forward to delivering our key targets across the new strands of business with our old strand of business, so not only delivering an upstream performance, which is exceptional, but we will continue to look at delivering the cash flows from those assets and de-leveraging our balance sheet even further, and looking at capital investment and allocating capital in the right way, first to highest return prospects outside of the U.K., second to U.K.-led transactions, which give us the use of our tax asset, and then also looking at returns to shareholders as part of the capital mix going forward, which is extremely important. Within our decommissioning function, which is a new function, we will enhance our position as a sector-leading partner.
And continue delivering targets and challenging ourselves to meet and beat industry averages, which is really the key for us being a decommissioning core then transition asset. And then with our wholly owned subsidiary, Veri Energy, we look to delivering a compelling suite of projects, which we are committing to reach net zero ourselves by 2040, as we've said. So in summary, we have completed a big part of our three-step journey in de-leveraging and evolving to focus on maximizing the ability to transact in order to deliver the third phase of our journey in growth. By a wide variety of measures, we are a strong top quartile operator with differentiated capabilities across all facets of our business.
That fact, coupled with our differentiated position in tax asset in the UK, makes it now an ideal time to deliver the growth ambitions, given that the new tax, the government tax plans have now been laid out. All of these elements come together to enable us to focus on creating value to our shareholders, including, as I said, part shareholder return, either in share buybacks, as we're doing now, or in dividends. We are well-placed to create value through leveraging our expertise, our experience, our track record, and creating win-win transactions. In order to grow, it's all about our people, and I do think we have a strong set of assets and a strong set of people.
I'm very excited about the journey, and I feel this is a good time for us now to set on our last leg of the journey, which will be very exciting for not only our employees, but also our shareholders. Thank you for your attention. We will now move to Q&A session, which Craig will lead.
Thank you, Amjad, and thank you, gentlemen, for the presentation. Amjad, good to see there's a number of questions that have been submitted. Some of them are quite similar, so I will group some of them with apologies to those who have submitted questions, that you may not hear it verbatim, but I'll do my best to summarize. Amjad, first of all, a question that's come in from James Hosie at Shore Capital, also quite similar from Matt Smith at Bank of America. Can you provide some color on how you see the market for North Sea assets at the moment?
You know, in terms of, are there good quality packages out there that fit our criteria that we've stated about having a low future CapEx? And do you have any preference in terms of commodity? Just as a build on that, and in final terms for this question, how would you see international M&A, Amjad, competing versus the UK opportunities that you're looking at?
Okay. Yeah, so I think the market for the North Sea assets is getting stronger in terms of people trying to exit, so I think we are seeing more packages. It has been difficult to transact with a very volatile system, as we've seen, with volatile tax system. So I think the ability to transact now post the system in place, however painful it is, is at least gives us the bandwidth and the boundary layers to be able to transact. So I do see more transactions. We are, you know, we are now looking forward to engaging on several fronts on the M&A front in the U.K. So I do see that's going well.
In terms of preference, I think we mentioned we prefer gas over oil if a choice is there, but we will continue looking at assets which we feel are fit our operating capability, where we can add value, reduce cost, and look at incremental investments, which are small, but can be accretive to the transaction. But we will won't be looking at large investments in terms of developments, 'cause we have a good development portfolio in house with Bressay and Bentley, as you know, as well as the Magnus opportunities and the Kraken opportunities.
On international M&A, I mean, we yeah, that is more competitive, but we do have an advantage in operating capability in Southeast Asia, specifically, and beyond in our early part of our history as a company. So, we are looking at transactions. We're also looking at, obviously, the organic opportunities that we mentioned in terms of gas. We've signed the phase One A, and we're looking to extend that into the future, into several other phases, which would be very enhancing in terms of both our position, our mix on gas, as well as our capabilities in Southeast Asia.
Thanks, Amjad. Just a couple of builds on that then, please. You've talked about international opportunities in Southeast Asia. Do you see this all being Malaysia-focused, given our foothold there, or are there other locations that you're looking at?
No, we're looking, I mean, we're looking also, we have acquired some joint study areas in Indonesia, and we're looking at Southeast Asia as a whole, so we do see growth opportunities across the region.
Thanks, Amjad. And finally on M&A, in terms of sellers, obviously, we've talked a lot about the current fiscal environment and EPL changes. Have you seen an increase in willing sellers in the basin? And then is there anything you can sort of say here to sort of characterize the motivations for sellers in this market?
I mean, with the increase in tax and the removal of the investment allowances, you know, the cash flows from these assets have become very low, and clearly, assets in our hands will have a higher cash flow than assets in other people's hands. So, assuming the 78% tax, cash flow in taxpayers' hands, fully taxpaying hands, will be 22%. Whereas in our hands, with our tax cover for CT and SCT, our cash flow in our hands will be 62%. So, you know, just under three times the cash flows.
I think that is even more exasperated with the removal of the investment allowances, which were, you know, attractive, at least for operators to invest in their existing fields. That going away actually has made some operators look at putting more assets on the market for transacting.
Thank you, Amjad. So, moving away from M&A for a moment, but not escaping the EPL, how do the latest proposed changes impact your thinking on twenty twenty-five and beyond in terms of capital spending? And should shareholders and stakeholders anticipate it being lower than the GBP 200 million guidance that we've given for twenty twenty-four?
I think we're waiting for the government to issue the budget, which will be in November, and I think that's the time we will be looking at our 2025 plans. Based on, you know, the new budget, we will determine what the right size the investment is. There's no question, though, that we will be shifting, and I can see more projects being shifted into Southeast Asia and requiring more capital. I think our programs are more fixed for Malaysia because of the stable fiscal regime there.
Thank you, Amjad. Steve obviously covered decommissioning, and talked a little bit about the potential for being a service provider across the sector. Obviously, there's a huge amount of decommissioning activity that sits out there in the North Sea. How should we think about EnQuest leverages its decon capabilities in the UK and beyond? And what sort of scale do you think a third-party operation could deliver? Could it become, for example, a standalone division within EnQuest?
I mean, we are looking at different commercial models for decommissioning, but at present, you know, I think it's very good that we have been able to sign Greater Kittiwake as a part owner and taking over that asset. Our original model was taking over late life assets and taking as little decommissioning liability as possible, but executing the decommissioning, and we are, you know, investigating, like Steve said, other commercial models where we could possibly look at a service approach to that. So, but that's still yet to be triangulated.
Thank you, Amjad. Again, within Steve's section, he touched on Veri Energy and the exciting opportunities we've got at Sullom Voe Terminal, primarily in Shetland. A question from Thomas Streeter from Streeter Research, Amjad. Can you talk about how a CO2 storage business model might work in terms of as a concept, and how would it work in terms of being competitive with both the U.K. and E.U. emissions trading schemes? I think just Thomas is looking for a bit of color on how this sort of potentially large business is, it sits within your thinking.
Yeah. So we have four fields which we've taken for our carbon capture in East Shetland, two of which are our fields, two are other operators' fields. We would be looking to do something similar to what's happening in Northern Lights, but with a lot lower CapEx. We've got the infrastructure onshore, we've got four deepwater jetties. We're allocating one of those jetties to the CO2 sequestration. We have the compressor site, which is able to handle CO2. We have a pipeline which goes to our fields, our four fields, with the licenses.
And then we have an offshore infrastructure with Magnus, where we can use that infrastructure to drill wells, as well as to handle the CO2 coming in from the east, from the Sullom Voe Terminal. So we have a... We're front-footed on CapEx because we have a lot of infrastructure. We still have CapEx to spend, and we still need a regulatory framework where we can inject the CO2 and get either tax relief or EU ETS relief, or a certain amount of money that we could be paid for to provide that service of injecting CO2. So that's the model we're seeing.
It has yet to be proven by the regulatory framework, but it is a commercial model that is not looking for subsidy, which I think is one of the few in the UK without looking for subsidy.
Thanks, Amjad. We've got a number of questions on the development opportunities that sit within the portfolio. So I'll try and summarize those, if I may. In terms of... We've obviously touched on, you know, the fiscal environment and the regulatory environment. Should those shift against us in line with these developments, what's your thinking on the future for Bressay and the potential for, you know, the farm down to be unwound should the regulatory environment not be conducive to development?
Bressay is one of the largest fields remaining in the U.K. It, you know, is a billion barrels in place, several hundred million recoverable in a full field manner. We are very focused on aligning the reduction in emissions in Kraken with Bressay. So this is where we've come. This is the gas line comes in, so we're gonna start producing gas from Bressay to reduce emissions in Kraken, and that is, you know, in line with our goals of reducing emissions, in line with the government goals of reducing emissions, but yet there still remains a very large resource to be developed. I would believe that, you know, something of that ilk, which has a huge impact on the U.K. economy itself.
I mean, you're talking about production of tens of millions, maybe, maybe hundreds of millions of barrels, which actually, you know, are significant in terms of, in terms of the GDP of the U.K., which is £2 trillion. So something of that ilk, I would, I would hope that would be developed because it is a resource that people scramble for. I mean, if you, if this field was in any other European country, it would be developed. But, so, you know, they would actually be probably dogfighting over it. But, you know, we are hoping that this... You know, we, we are very positive and very hopeful that development will take place of these resources. And I, I don't see a, I mean, I don't see a reversal.
We're aligned with our partner, and we, you know, we're moving forward with the FTP, and which we will submit on time. And so we're moving forward on that front. It may take longer given the government frameworks similar to other developments, but I don't see developments have been stopped. It's been the developments are taking longer to put in place. The other thing about Bressay is we already have the infrastructure. You know, as Kraken declines, we have an FPSO there that can be used for long term. The Armada, the Bumi Armada Kraken. And we also have another FPSO to do the early production facility, which has been highlighted, which is EnQuest Producer.
So it is existing fields, existing assets that we'll be deploying to develop the Bressay field.
Thank you, Amjad. That's very clear. If I may, switch to you, Jonathan. There's been some financial queries submitted. So first of all, and again, kind of linked to development, can you kind of lay out the timeline and the process by which Bentley losses can be folded into the corporate structure and be utilized against CTSCT?
Sure. Yeah, no problem. I mean, you know, as I said, we, you know, the lion's share of our tax assets sit within EnQuest Heather. That's the $1.9 billion. And it's really important to stress about that. That they sit within a very simple structure, and they're gonna be, you know, very simple to utilize through any transactions, and those are recognized tax assets. We mentioned the additional $1.2 billion that is in Bentley. That obviously came in through that acquisition. We take a conservative approach in terms of recognizing these tax assets, and there is a process that we need to go through through you know time after the transaction was completed.
We would be seeing those tax assets, you know, moving into a recognized pool in that sort of 2025, 2026 period. So certainly, you know, I think from a transactional point of view, the point here is that by utilizing these tax assets, because they're sheltering us from 40% of that 78% tax charge, which we'll be moving into post the budget. The utilization of them, if we're buying flowing barrels from full taxpayers, is clearly that every barrel, those tax assets uplift the value. But over and above that, the more volume we can bring through the portfolio, the more we can accelerate the utilization of those tax assets and the more value, you know, that creates.
It's just a kind of MPV effect in terms of uplifting volume and utilizing those tax assets quickly. So, you know, the £1.9 billion is there ready to use, and the other pool of tax losses sits, you know, very close to becoming recognized, and that can also then be moved in a very orderly way through any transactions.
Thank you, Jonathan. Very helpful. You touched on it in your section of the presentation, Jonathan, but we've got a couple of questions on expected tax payments in the second half of the year. Do you want to just reiterate potentially what you've said about EPL? I think that would be helpful.
Yeah, sure. Absolutely. So you know, our tax payments, you know, they fall due in the second half of the year. And you know, the tax that we're discussing here is what's been levied on 2023 activity. It's the first twelve-month charge at the 35% rate.
... We have a current tax liability recognition in our balance sheet, and I said in my slides, that's $171 million. Now, you know, I guess it's important to remember that the components of that are our base, you know, EPL payments. We also have some tax to pay on the Bressay transaction, and of course, we're tax paying in Malaysia as well. I also said, of course, that that figure does move around, so I think if you look at the thirty-first December position versus the thirtieth of June, that current tax liability has come down a bit, the estimate of it, and it won't be finalized until we submit our tax return as well.
But that's, you know, through the balance sheet, that's the best visibility which we can give the market at this moment.
Thanks, Jonathan. That's very helpful. We've got a couple of last questions. I'll take one to Steve, if I may, and then I'll finish with a question for Amjad and Jonathan. Steve, can you give us a sense on how the slowdown in UK investment is affecting the supply chain and the North Sea supply chain in terms of... It might also be helpful to maybe give some insights into what happens as and when capacity exits the UK.
Yes, it's fair to say we've got a world-class supply chain, market-leading supply chain in the North Sea, and it's been leading the market since inception almost. We need a strong supply chain to be an effective operator. We've started to see, and this has been going on for ten years, we've seen equipment and personnel move out of the basin. This sector at its peak employed about four hundred and fifty thousand people, about ten years ago. It was maybe higher before that, but ten years ago, we employed four hundred and fifty thousand people. We're now down at two hundred thousand, and we are concerned about those people moving out. We know processes are underway around moving people. The skills won't stay if there's no upside, and most of our skills need capital projects.
And from the EnQuest perspective, we are very much running an operation. We've got good contacts with all of our supply chain, and I don't see any risk to our operations. We keep those good relationships in place. We manage the supply chain, and we're keen to promote the supply chain. So we're concerned. We'll do our bit to promote the supply chain. We keep control of our operations in the right places, and we supplement that with the supply chain where required. But, in my view, the government really do need to look at what they're doing. Provide the right framework. It won't happen at this budget, but the next budget, they need to protect the supply chain, 'cause that supply chain, skills, jobs, they actually help the cost of living crisis, and the oil and gas industry helps the cost of living crisis.
It doesn't make it worse. And don't over tax it, 'cause when you're paying 78% tax or 75%, as it is now, who can invest in that market? Now, we still do on the right projects, and we'll be very disciplined. But as Amjad said this morning in his press release, we invested $4 billion, and we can do so again. There's a huge potential in this industry. The upside of oil and gas is great. New Zealand left oil and gas behind and have come back to it 'cause they realized that they need to manage their energy transition. So supply chain, critical, keen to support them. They're lobbying alongside the oil and gas operators at government level. As Amjad says, in some ways, this creates opportunity for EnQuest, where we can be countercyclical and look at the opportunities. But yeah, concerned and see changes.
We will do our best to support that supply chain.
Thanks, Steve. It's a very strong message. Just to close the Q&A, gentlemen, I'll probably put this to you, Amjad, first. You may wish to bring Jonathan in on this. It's a question from Paul Davey. When do you expect to complete the share buyback, and are you looking at dividends to cover any shortfall in the buyback program?
So we're making good progress on the buybacks, and we continue to make progress. Obviously, it's a system that we've put in which the instructions are irrevocable, so we'll continue buying these shares. And so we will, for next year, just recalibrate where we are, and then look at what is best in terms of whether it's a buyback or dividend. We said before that, you know, we will, you know, as part of our capital allocation, we will have returns to shareholders, and we will look at that next year if, you know, if indeed we haven't finalized the share buybacks.
Thank you, Amjad. That's the final question. Thank you to everyone for submitting those, and thanks, gentlemen, for your answers. That then just leaves me to thank everyone for their attendance. Our next planned update to the market will be our usual ops update in November. And I guess that just leaves Amjad, if you have any final comments to make before we close. Thank you.
No, so thank you, Craig, for emceeing this, and thank you for joining us, and then thank you for being with us on this journey. And, again, I do think this is, we're kind of at an inflection point, even with the difficulties that are here, but I'm a glass half full kind of guy, and, we, you know, we do see that we have a competitive advantage, fewer competitors, and, with this competitive advantage, I'm very excited about the next leg ahead. So thank you.