Welcome to the BW Energy Q2 presentation. My name is Alan, I will be your coordinator for today's event. Please note this call is being recorded, and for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any time, please press star zero and you will be connected to an operator. I will now hand you over to your host, Carl Arnet, to begin today's conference. Thank you.
Thank you, operator. A warm welcome to this BW Energy second quarter 2026 update. This update will be hosted as usual by our Chief Operating Officer, Brice Morlot, and our Chief Financial Officer, Thomas Young, and myself, Carl Arnet. Please note our disclaimer, then on to the second quarter highlights. We have just started the MaBoMo Phase 2 drilling campaign. Super exciting, and more of that will follow later on in the presentation. All development projects are on plan and budget. We had, of course, a record-high cash flow on the current oil prices in the quarter, which has strengthened our financial position with respect to sources and uses. We are very much on track to deliver above 100,000 bbl production per day in 2028. On the Q2 results, we had revenues of $296 million in the second quarter. We had a net profit of $44 million.
Cash from operations were at $260 million. We had a very healthy cash position of $254 million end of Q2. BW Energy is executing on five projects currently, which will add 222 million barrels of reserves, 2P reserves. All these have low breakevens and rapid payback. This will take us to 100,000 bbl per day. We will double production in 2027, and we will double again in 2028 from current levels of around 25,000 bbl. The MaBoMo Phase 2 drilling has just started and is on track. Maromba project is on track. Golfinho Boost project is on track. Bourdon is on track. We have also the Golfinho new wells, the new infill wells we are planning. This is also on track where we have ordered all long-lead items.
In addition to our, let's say, very concrete plans that you will be also given more granularity on later on in the presentation, we have significant upsides in all our licenses. We have the Bourdon area upsides. We have additional Dussafu targets in the north and east of our license with Walt Whitman area. We have the Maromba carbonates, and we have the prospects of the Greater Golfinho area. We have a significant backlog of additional targets that we are aiming to unlock as we go. Very quickly, I will give you the update or status on the Maromba project. The FPSO steel renewal is very near completion, and the current main work stream is on the top side piping and equipment refurbishment and tying of new equipment. The wellhead platform, the leg extension has been executed. Very impressive.
We have some of the longest legs in the business right now. We are continuing with the refurbishment of the equipment. So far, we've had no impact of the turmoil in the area, and the logistic challenges have been solved without causing any project impact. SURF. The SURF contractor has been selected, and procurement is continuing of all long-lead items, and we are also progressing well on the engineering. On the drilling, we have selected drilling contractor, and we are preparing for the initial six wells. That's it, short and sweet. I will leave the word to Brice that will take you through the operational update.
Thank you, Carl. Good afternoon, everyone. Let me walk you through the operational performance in the quarter. Total net production was 25,000 bbl in Q2, broadly in line with Q1. At Dussafu, production was 19,000 bbl oil per day, with 98% production availability. Reflecting strong, consistent performance in Gabon. At Golfinho, we produce 6,000 bbl oil per day at 74% availability, stable relative to Q1 and in line with expectation as we manage the ESP configuration ahead of the boost installation. On the full-year guidance of 24,000-27,000 bbl oil per day, this is unchanged. For the second half, three events would impact the production output. We have a two weeks planned shutdown at Dussafu in September. One Dussafu ESP is malfunctioning and potentially would require a workover if confirmed down. We are working right now to confirm this.
On the positive side, we see upsides to Golfinho production should the gas lift compressor reliability be improved in the second half. We are working to resolve that as well. This is the issue that is the core improvement of the Golfinho Boost project and should be removed in total by mid-year next year. They are both events on the upside and downside that could happen, we keep the range unchanged, but production is expected to track towards the lower end of the guidance range for the full year. On the unit OpEx in Q2, it was $24 per barrel, slightly above Q1. That was in $22 per barrel. The absolute costs are largely stable. The increase is primarily driven by higher fuel prices for power generation, no structural cost deterioration. The full-year OpEx guidance of $22-$26 per barrel is unchanged.
First half average was $23 per barrel, comfortably within the range. The H2 profile will be influenced by the Dussafu shutdown and in Brazil by the Golfinho gas cost sensitivity to oil price. MaBoMo Phase 2 drilling campaign, I'm very pleased to present this today. The campaign has started. We sped it a few days ago. We are currently drilling two Northwest Hibiscus appraisal wells, targeting additional reserves in a part of the Dussafu field that has not been produced before. If the appraisal confirms the resource, we will fast-track conversion to production wells in late 2027, adding production with minimal incremental cost. A successful outcome could add up to 10,000 bbl oil per day, and this is on top of the four MaBoMo platform production wells already planned in the business plan.
These four production wells follow the appraisal program, and each well is expected to add approximately 5,000 bbl oil per day gross. We expect first oil from this campaign in early Q1 2027, and the sequencing is deliberate. Appraisals first, then convert and scale, consistent with how we operate across the portfolio. Dussafu has a long and layered production runway, and this slide shows how it builds up. We have the MaBoMo Phase 2 delivered for the first oil in Q1 2027, adding approximately 20,000 bbl oil per day from four new producers, with a further 10,000 bbl oil per day potential from the two appraisal wells that we are drilling as we speak, if successful. We should get the answer by September. Bourdon Phase 1 follows in Q1 2028, adding approximately 10,000 bbl oil per day from three initial well across a 12-slot platform.
We'll have Bourdon Phase 2 that will come in 2029, and Walt Whitman appraisal drilling is planned for 2030. The long-term production targets for the Dussafu area is between 30,000 and 45,000 bbl oil per day gross. The Akoum platform, which is the platform for Bourdon, is currently in conversion and will serve as a hub for the Bourdon development and opens up the southern part of the license for further exploration with the Bourdon Up Deep, Bourdon Southw est, Abbey, and Bourdon Southe ast. Dussafu is not a maturing asset. The asset still has the majority of its production life ahead of it. Now, Thomas will take you through the financial section.
Thank you, Brice, and good afternoon, everyone. Q2 was a strong quarter. The oil price environment gave us a meaningful tailwind that fed directly into revenues and cash generation, resulting in record operating cash flow for the quarter. That cash generation has done real work on the balance sheet. Liquidity is up, leverage is down, and we've entered the second half in a better financial shape than when we started the year, which is pretty good when you're in the middle of the heaviest investment program in the company's history. Now let me take you through the key drivers behind our quarterly results. Net production came in at 2.3 million barrels, or 25,300 bbl per day, essentially flat on the first quarter. Sales, though, were 3.2 million barrels against 2.2 million barrels in Q1.
That difference, what we produce and what we sell, is probably worth a moment because it does drive a lot of what we see in the quarter. We produce continuously, but we sell in cargos of roughly 1 million barrels a piece, so the two rarely line up neatly within the quarter. At the end of Q1, we were carrying about 1 million barrels of produced but unsold oil, and we sold that down in Q2. On the revenue side, that worked out well for us. We realized $103.50 per barrel before hedges against $79 per barrel in the first quarter, and with Brent averaging around $104, we captured essentially the full market price. We also lifted 1.4 million barrels in April at $121 per barrel, which is a level we haven't seen since 2022.
Those inventory barrels were produced in the first quarter cost and sold at second quarter prices, and that timing alone was worth somewhere in the order of $20 million. Perhaps fortunate rather than clever, but money is money. On the cost side, it works the other way, which explains why EBITDA only grew $29 million on $124 million of additional revenue. The inventory cost that was parked in Q1 came back out in Q2, a swing of roughly $76 million, with higher royalty and depreciation on sold volumes on top. This is, of course, simply a timing effect, not margin compression to be clear on that, and the underlying unit economics are unchanged. After $40 million hedging loss on the 1.2 million barrels of hedged barrels, effective realized price was approximately $90 per barrel and total revenue was $296 million.
I think the $254 million that you can see on the right-hand side is best understood in two parts. Around $121 million is what the business actually earned in the quarter, which is sold oil, cost paid, taxes paid, and I guess can be seen as the underlying run rate at current oil price. The other $139 million came out of working capital, which is essentially the first quarter reversing. If you remember in Q1, working capital absorbed about $134 million and operating cash flow was negative, I did say to expect this reversal in this quarter. One thing I would like to flag for your models, though, the $40 million hedge loss is charged in the second quarter, but it does not actually settle in cash until the third. It is sitting in payables as of the end of the quarter.
Third quarter operating cash flows will land roughly $40 million below what third quarter earnings would imply. Investment activities were $101 million across Maromba, Golfinho Boost, and Dussafu. Financing was a net outflow of $66 million, mostly repayments of the corporate revolver. All that translates into a stronger balance sheet across most parameters, I think the slide sums it up quite well. Starting from the left, net interest-bearing debt has come down $113 million to $698 million, with leverage falling from 2x down to 1.8x . Frankly, this is not development we expected to see before 2027, it is a comforting sight in the middle of an investment program. Worth saying that CapEx, of course, is going to ramp up in the second half, we do still expect to have higher leverage before we get to first oil on Maromba.
Book equity increased $113 million to $1.142 billion, driven by the net profit and the hedge book moving in our favor relative to Q1. The equity ratio is back up to 40%, putting that against our equity covenant, which is effective at 25% before Maromba first oil, that leaves us with a very comfortable headroom. On liquidity, we closed at $544 million, roughly $210 million above the first quarter. That is $254 million of cash, $290 million of undrawn revolving credit facilities across the revolver and the RBL facility. The two key drivers are $100 million of RBL accordion that we closed in the quarter and operating cash inflow, which of course is partly offset by debt repayments and ongoing investment spend. On the guidance, we are keeping the full year guidance unchanged across all four lines.
On production, first half came in at 25.2 thousand barrels per day. Tracking the midpoint in the second half, we expect production to be skewed towards the lower end of the range as some factors will impact production rates. At Dussafu, a two-week planned shutdown in September and one ESP potentially requiring a workover. On the positive side, we see upsides to Golfinho production should the gas lift compressor reliability be improved in the second half. On operating cost, we were at $24 per barrel against a range of $22-$26. Unit costs cuts both ways. Fuel costs move with oil price and unit cost moves with volume, so a strong price take with production at the lower end pushes us likely towards the top half of the range for the year. CapEx is at $231 million.
At the halfway point implies a step- up in the second half as expected on the back of a back-weighted CapEx program, I'd say, with MaBoMo Phase 2 drilling underway and MaBoMo master and payments coming through. G&A of about $11 million for the first half tracks ahead of the midpoint. We expect it to drop in the second half compared to first half, which had a few one-offs. We remain comfortable in the full year range. This chart brings together everything we've covered today and paints a picture of what comes next. What drives us above 100,000 bbl per day by 2028 is entirely organic. Five projects already in execution, all sanctioned and funded, built on the same infrastructure-led model that defines the company. The growth does not stop at 100,000 bbl per day.
The appraisal and upside layer represents a further step- up that is within reach from assets that we already own and operate. Those are already identified resources and named targets, which includes Bourdon Phase 2, Golfinho phase two and three, and upsides improving targets around the current Maromba development. Beyond that, the exploration layer adds Walt Whitman, the Niosi, Guduma, Golfinho prospects and further exploration in the Maromba area. Each of these layers feed naturally into the next and should enable us to comfortably sustain 100,000 bbl per day of production, hopefully into the next decade. To close the investment case rests on four pillars. More than 600 million barrels of reserves and resources as the foundation for organic growth. A plan already in execution to take production from 25,000 bbl per day today to above 100,000 by the end of 2028.
A portfolio that returns above 30% IRR at $60 Brent, and $2 billion-$4 billion of free cash flow, depending on oil price, between 2026 and 2030, against an enterprise value of around $2.2 billion today. I think that remains a pretty solid investment case. With that ends the prepared presentation, and I will hand over to the operator for Q&A. Thank you very much.
Thank you. There are currently no question from the phone line. Please proceed for the written question.
All right. We have a question here. Can you give an update on the Kudu data room process? How much interest have you seen and what are the next steps? That's Brice, you can take that one.
Yes. We did open the data room at the AAPG conference in Windhoek. That was mid-June. Actually, we have seen a very good interest from a good range of players. We are now on the process is ongoing, so we will update the market when there is something material to report.
Very good. I think this one is also for you, Brice. How should we think about the production ramp into 2027 as MaBoMo Phase 2 wells and Maromba comes online?
Yes. In 2027, we'll have a lot of project coming online. First, MaBoMo Phase 2 with four new wells. Perhaps two on top of that. We will get the results of the Northe ast appraisal. If it's positive, we will add more wells from the MaBoMo Phase 2. We will have Golfinho Boost coming online as well, Maromba towards the end of the year. Taken together, we expect production to build steadily through the year, moving towards 50,000 bbl oil per day in the second half. We'll provide more guidance on the 2027 later in the year.
Thank you. Next question. Q2 production cost of $145 million was the highest ever. What was the key drivers and what should we expect in the next few quarters? As mentioned, most of the increase is due to the Q1 on the lift barrels that was released into the second quarter as they were sold. That's the single biggest item. If you strip out these, let's say, timing effects, the operating expenses was about the same as the first quarter, so it's largely flat, in other words. Looking forwards, the inventory line does not really repeat at the scale because the position is currently down to 0.2 million barrels. Next, we have Q2 cash flow was strong, driven by working capital. Is working capital now at a normalized level or should we expect a reversal shortly? Broadly normalized, yes.
The one thing I would flag again is the $40 million of hedge settlement, which was charged to the second quarter but does go out in cash in the third quarter. I have a what is the nature of Brazil oil export tax? $7 million a quarter. Should we expect this to be a recurring effect? I expect an effect of similar size in the coming quarters. It is a temporary 12% crude oil export tax in Brazil. In July 26, the levy was extended for an additional 60 days, that is to stabilize domestic fuel supplies amid global geopolitical tensions. We believe they will, at the moment, end in 60 days, roughly. I have a question here for you, Brice. How would you assess the geological risk in Maromba?
On Maromba, we have been working on the data set we have since many years now. We do have a lot of data, DST data, and we are quite confident with the geological risk. We don't see a lot of risk on the production forecast coming from the subsurface.
Thank you. Next question. You target more than 100,000 bbl a day from 2028. Do you have any unit OpEx target guidance from this year and onwards? Dussafu Golfinho OpEx will come down as production comes on through our investment program. Maromba should start below $10 per barrel on average over the first few years of production. In total, on the company level, we expect significant reductions from levels in 2026 as we see the outcome of these various investment programs that we have across our assets coming online. I have a question here for you, Brice. Could you please provide a bit more color on how you work to mitigate potential disruptions to the Maromba wellhead sail away from Dubai in late 2026?
Yes. We are assessing options, and actually we have several opportunities. As Carl stated last quarter, the rig is in fact Chinese, and that could prove valuable. In general, we have a low concern for the situation, and we expect to be able to get the rig out in due time.
Right. I think that's all the questions I can see here. That concludes the Q&A. Thank you very much, and we'll see you on the next quarter.