Good morning, everyone. Welcome to today's Panoro Energy Q1 2020 results presentation, our webinar. This is John Hamilton, Chief Executive Officer of Panoro Energy ASA. We're all getting quite used to webinars and all that. We're trying something new today. I hope that it works. Our previous provider, there was a 30-second delay. We're trying this GoToWebinar product, hopefully it works for everybody. If anybody thinks otherwise, please drop us an email. If I could have the next slide, please. Before we get started, I'd like to quickly go over a few items. You know how to participate in today's call. Your screen should look a little bit like this when you're looking at your computer desktop. In the upper right-hand corner, you can see circled in red the interface that you can use.
You're listening in using your computer speaker system by default. If you'd prefer to join over the phone, just select phone call in the audio pane, the dial-in information will be displayed. If you are joining in by telephone, you'll be in listen-only mode. Next slide, please. You'll have the opportunity to submit questions to myself and to the presenters by typing in questions into the question pane there on the left in this slide illustrated, and you can send in questions at any time. We'll collect them at the end and address them at the end in the Q&A session. You can also, if you can see on the right-hand side, you can raise your hand for a verbal question by pressing that button, and then we can unmute you and put you into the call.
I'll remind you of all this towards the end of the presentation. If I could have the next slide, please. As a reminder, today's conference call contains certain statements that are or may be deemed to be forward-looking statements, which include all statements other than statements of historical fact. Forward-looking statements involve making certain assumptions based on the company's experience and perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. Although we believe the expectations reflected in these forward-looking statements are reasonable, actual events or results may differ materially from those projected or implied in such forward-looking statements due to known or unknown risks, uncertainties and other factors. For your reference, our results announcement was released this morning. A copy of the press release and our first quarter 2020 report are available on our website as well.
Next slide, please. As usual, today, I'm joined by these gentlemen, Qazi Qadeer, our CFO, Richard Morton, our Technical Director, and Nigel McKim, Projects Director. They will all participate in the webinar and be available for questions as well. Next slide, please. It's been quite an interesting quarter, I think, for everybody, and it's true for Panoro as well. Maybe I can just touch on a few highlights, if we can call them that. On the operations side, the important bit is that our staff too are healthy and have adapted to the new environment, both office staff who have largely been working from home in all our locations, and the operational staff who have really risen to the challenge and done well. To our knowledge, we do not have any nasty stories in terms of impact of the virus within our community, and for that, we're very grateful.
The HSE culture that we have and the systems that we have have proven to be resilient so far, which we're very proud of as well. I think that is absolutely critical and the most important point that we can broadcast today, that we have run safe operations, and our staff so far are healthy. Despite all that, production's been largely unaffected. In fact, we're producing over 2,000 bbls a day in the quarter, which is up from Q4. Production has continued during the period. We have had challenges. There have been some sleepless nights, crew changes, some drama around liftings, things like that have occupied us. So far everything has worked out fine but not without a little bit of stress and strain along the way. As previously indicated, we have deferred some development activity in Gabon.
If I'm looking at oil sales, all our liftings have occurred largely as scheduled, which is something to be said. Not everybody can say that in this market, unfortunately. We have lifted when we wanted to lift. Our oil sales in quarter one were quite light. I think that was well flagged. We just had one Gabonese cargo and some domestic sales in Tunisia. That will step up as we get through the next quarters. It was a light quarter. We also had an international lifting early in April in Tunisia. Our crude is priced off of Dated Brent, which I'll come back to.
One thing that I think we also like to stress here is that we get a lot of questions about this from analysts and shareholders about our offtake and our marketing contracts and who are they with and are we worried about them and do people have to come buy our crude? We're very, very fortunate. In Gabon, we work together with BP International. That's gone without a hitch. In Tunisia, we work with Mercuria. They're a first-class counterparty as well. We have not had any issues around people not wanting to lift crude, people not paying for crude, and things like that. It's not been an issue for us. On the finance side, we've maintained a strong balance sheet, net cash position. Our hedging strategy has proven effective, we believe, in this downturn. We'll come back to that one.
As previously flagged, we have reduced CapEx, and we have been cost-cutting as well. On the outlook side, we really have been focused on financial discipline, maintaining our existing production, which is very important to us. Our production guidance for the year, 2,300 to 2,600 bbls a day. That's a slight trimming from the previous one. That's based on the recent announcements together with BW Energy in respect of the production range decreasing slightly in Gabon as a result of not being able to tie in well six and seven. The upside to our asset base is still there. We're just experiencing some timing delays. We think that the future is bright for us. Next slide, please. Yeah.
We've all lived the coronavirus and the drop in the oil price. I thought I'd just touch on a couple of these things. How has this impacted the oil sector generally? Some of this applies to Panoro, some of it doesn't. Again, we've been rather fortunate. We've been able to lift, we've been able to sell, we've been able to produce. Here are the things that kept us awake at night and to some extent, still do. I think things have eased a little bit now. Logistics have just been the thing to worry about. We have a global business. The oil business relies on international people, international suppliers, ships coming and going, selling crude internationally on the high seas. The logistics of that have just been severely compromised with the travel restrictions, the borders closing, the need for quarantines, isolation.
This has all really impacted the business and has resulted in HSE protocols really having to be stepped up and adapted where possible. We've been extremely busy trying to make it all work. Again, in Panoro's case and the operations we have, it has worked. Again, there's been enormous hard work that's gone into that. Many sacrifices, personal sacrifices have been made by people involved in the business. We have done it successfully, and I think perhaps we're a little bit more fortunate than others. We've also seen what it's done to the oil price together with the oil price war. We've had the global demand dropping, storage capacity becoming a huge theme. We've seen extreme volatility in oil prices. Leaving aside what happened to WTI, dated Brent to seaborne crude, you're not going to see negative prices, I don't believe in Brent.
Nonetheless, it's been under huge pressure. We've seen in many cases, stranded oil cargoes. Cargoes selling for single-digit dollars per bbl in other parts of the world. It has been a very challenging time for the industry, and I'm not sure we're out of it yet, but things look a little bit brighter now. Next slide, please. Again, I just want to illustrate what happens here. We get a lot of questions around, how do you sell your crude? What does crude get? How is crude priced? Brent gets priced on get what we call Dated Brent, which is the physical market. It's what happens actually at the coalface, so to speak, when we sell the crude.
That is often a different price than what you see on your screen when you look at your Bloomberg or whatever which is usually a futures price, a near-term futures price. Here, all we've done is we've plotted the delta, the difference between the dated physical, the physical on the day versus the futures price you see on your screen. Over the past five years, and if you look back even further, you'll see similar trends. It's more or less, it's usually a slight discount to the futures price. Sometimes you see it as a premium, depending on what's happening with supply, demand, storage, et cetera. What you saw during the crisis was unprecedented, a really unprecedented drop in the physical price of Brent. That's, again, the price you sell your crude at, not the price that you see on the screen, the futures price.
This is the price you sell your crude at, went down 10, $12 discount to what the price on the screen was. Of course, depending on where you were, you saw people looking for discounts above and beyond that. That's when we got into people selling cargoes for single-digit numbers. Luckily, that is now rectified. We're back at a more traditional discount to the futures price at the moment, thankfully. This is really what everybody was living through and where the panic set in. Next slide, please. How's Panoro set up for all this? What's been our response? I think we like to think that we had taken a lot of steps before the crisis. We couldn't foresee the crisis, of course, but I think that we have always maintained a reasonably prudent way of managing our business.
We took out oil hedges for 2020 and 2021 with floors at $55 a bbl. We did an equity placing in October of last year with the very strong support of some of our largest shareholders and others. That was really to put us in a balance sheet in a decent position going into the next phases of our Gabonese expansion. We had the option at the time perhaps to put a debt facility in place. We decided that's probably the wrong thing to do at that moment in time. In hindsight, that was obviously a very good thing. We streamlined our organization. We inherited an organization from DNO, as you guys know. In Tunisia, we cut the cost of that by 40% over the past year. We've always kept a low footprint corporately. During the crisis, as well flagged, we cut CapEx in Gabon by 40%.
We delayed Ruche Phase I. That's more an oil price thing than the virus. In Tunisia, we deferred higher CapEx activities like Guebiba-10, Sidetrack, and Salloum West until the macro is a little bit more clear. We've taken major steps to reduce overheads. We've even been a little bit cute with some hedging around the currencies, dollars to hedge out some of the sterling and kroner cost base that we have. I think we've responded well to it before and after. Next slide, please. Here's a slide talking a little bit about, we had this discussion with the board actually yesterday. We had a board meeting yesterday, and it's like taking a step back and looking at the corporate strategy over the past few years. We wanted to put ourselves in a position where we can withstand the cycle. We're in a cyclical business, there's no question.
The cycle that, I'm not even sure it's a cycle we've just been through, but the shock that we've just been through is not something that any of us really prepared for. We were prepared for the cyclicality of the industry. If you just look big picture, we put ourselves in a position where we're producing a lot more oil now, so we have a real cash flow coming through the business. We've strengthened our balance sheet and our cash position over the years. We've increased the number of wells we have from just a couple a few years ago to 18, 20, if you include Aje, where we have a diversification of wells. We have different countries as well. Gabon, we've had to defer some activity there as has been well flagged. In Tunisia, we're able to step it up.
That diversification in terms of country and well count, I think is proving to work. We've made new discoveries as well. We made a couple of discoveries in 2018, Hibiscus in 2019. We still have a huge exploration portfolio, so we're able to replace reserves that we produce through the exploration drill bit. I think, we talked about it as a board, I think we're happy with the current circumstances, but nonetheless, I think we're happy that we put ourselves in a better position than we would have been a few years ago if we'd gone through the shock that we just had. Next slide, please. I'd like to turn over to Qazi Qadeer now, our CFO, to take you briefly through our financial highlights and talking a little bit about our debt and our hedging as well. Qazi?
Thank you, John. Good morning, everyone. On slide 11, we have a summary of our headline results for the first quarter. It is customary to note here that the results presented and discussed here are unaudited. We report our results here between continuing and discontinued business activities. The discontinued part includes Aje operations, whereas the continuing activities include our businesses in Tunisia and Gabon. I'll make a start with the revenue for the first quarter, which stood at $3.4 million, with a notable decline compared to the 4Q '19. This was principally a result of lower number of liftings and partially a decline in oil prices. Sales volume for the current quarter was 71,000 bbls as compared to 210,000 bbls in 4Q '19. Realized prices of $39 per bbl in Q1 and $65 a bbl in 4Q '19.
Including the commodity hedges, the realized price was $55 a bbl for the first quarter 2020. Moving to EBITDA from continuing activities for Q1 was $310,000 compared to $5.5 million for the previous quarter. The lower EBITDA is a function of low volumes and lower oil prices in the current quarter. Despite the adverse market environment, we have achieved a positive EBITDA for the current quarter. Below the EBITDA line, we have after-tax profit of $8 million for the first quarter, which included a $10 million gain from mark-to-market of commodity hedges. I will touch upon these hedges in a bit more detail in the upcoming slides. We exit the quarter with cash of $24 million and debt of $23 million. Next slide, please. Here we are discussing the known instruments we have in place for Panoro.
We have two external instruments, a senior secured loan facility with Mercuria, of $16 million, and a $7 million non-recourse loan payable to BW Energy. Both of these items are as of end of March 2020. The Mercuria loan has quarterly loan repayments of about $0.7 million for 2020. Due to a drop in LIBOR rates recently, we are expecting a decline in effective interest cost of at least 1% for 2020. Mercuria has been a very supportive lender during this downturn and the impact of COVID-19. In Gabon, we have a non-recourse loan with no fixed repayment. Following every lifting, the excess cash flows from cost oil after deducting operating costs are used for making repayments. Profit oil portion of the revenue is always retained by Panoro. We had a $1.4 million repayment to BW Energy in January this year.
In a low oil price environment, we expect repayments to be very, very low. Next slide, please. As John discussed earlier, the dynamics of Dated Brent and pricing of physical crude, our hedge positions are also priced off Dated Brent, and hence have a linear relationship with our cargo pricing, which is also based on Dated Brent. We execute our hedge positions with Mercuria, which is, again, a first-class and robust counterparty. Almost 20,000 bbls are hedged and settled each month, which is equivalent to about 25% of our production, mostly with floors of about $55 a bbl and have been providing the necessary cash flow support in recent months of low oil price environment. As of 31st of March, we have a $9 million mark-to-market valuation of our commodity hedges contracts maturing during 2020 and 2021.
This concludes my review of results, and I will now hand over to John to take us through the guidance on slide 14.
Thanks, Qazi. We touched on this a little bit. This is our current guidance production, 2,300-2,600 bbls a day. This is obviously a significant increase from 2019. It is a little bit lower than our most recent guidance due to the recent announcement also with BW in terms of the deferment of some of the production in Dussafu due to COVID-19. This excludes Aje, obviously. International liftings, our current guidance is around eight liftings this year. We had one in the first quarter, as announced. We have probably four more remaining in the remaining three quarters in Gabon and three in Tunisia. Always subject a little bit to change, but that's our current view of the world. On the CapEx side, all been previously announced. We had a full-year CapEx of $31 million that was announced earlier this year.
That has now been cut back to around $22 million, of which at the end of the first quarter, we have about $15 million remaining. That's about five in Gabon, then the balance is the Salloum commitment well in Tunisia. We do the sidetrack. Those are both currently delayed. We're holding these in our CapEx guidance. Timing them is a little uncertain, probably towards the end of the year. Needless to say, given the circumstances, we're seeking CapEx reductions across the board and across all of our operations. These are historical CapEx numbers and assumptions. Hopefully, we'll do a little bit better than that. Next slide, please. I'd like to now turn over to Richard Morton, who can take you through a little bit what's happened in Gabon.
A lot of this has already been flagged, but I'd like Rich to take you through it, please.
Thank you, John, and good morning to everyone. In Gabon, production continues from the Tortue field, of course. The main highlight in the quarter being that the first two of the planned phase two production wells, DTM-4H and DTM-5H, came on stream in March. Gross production for the quarter averaged 11,485 bbls of oil per day, and that's net 861 bbls of oil per day to Panoro. We're currently producing around about 17,000 bbls a day from the Tortue field from four wells. The finalization of phase II at Tortue has been impacted slightly by the COVID pandemic. The remaining two wells will come on later than originally planned. More on that in a moment. Accordingly, we've now reforecast an average rate of 15,000-16,500 bbls of oil per day for the year with an OpEx of $15-$17 per bbl.
For sales during the quarter, we had one lifting in Q1 with a net parcel size of 44,000 bbls of oil net to Panoro at a price of $32.90. The next lifting in Tortue will be performed by BP in June. We have a further three liftings scheduled for the second half of the year. Crude is priced on a Dated Brent average for the month of lifting plus a premium. In the future, activities in Tortue, as I mentioned, have been delayed by COVID and with the last two wells of the phase two program being impacted. The 6H well was actually drilled but has not yet been hooked up, and the 7H well drilling was postponed and the rig demobilized in March.
In addition, the firm exploration well planned for the end of the 2020 drilling campaign has been postponed, along with the optional exploration well slots that we were considering at the time. We of course still benefit from significant exploration inventory in the license. The prospect map of the area on the right illustrates discoveries in green, prospects in yellow, orange, and brown, and we plan to target some of these when the oil price situation improves. In the near future, we're looking forward to hooking up the DTM-6H well as soon as the operational situation permits, and then the drilling and completion and hookup of the final phase two well, which is DTM-7H. We expect these activities will take place either at the end of this year or early in 2021.
Finally, on Ruche Phase One, which is the development of the Ruche and Hibiscus fields tied back to the Adolo FPSO, this has also been delayed and CapEx deferred. We thought it was prudent to pause this project for now until the macro situation recovers. With that, I'll hand over to my colleague, Nigel McKim, to take you through activities in Tunisia. Nigel.
Thank you, Richard. Good morning, everybody. On slide 16, we provide an update on the status of the Tunisia assets. The map on the left-hand side shows the contiguous nature of the two assets acquired by Panoro. The TPS production assets located onshore around the city of Sfax with a further field offshore north of the Kerkennah Islands. Of the Sfax offshore exploration permit located adjacent to these concessions provides exploration opportunity. We have an active operational program on the TPS assets, which while being temporarily delayed due to the COVID-19 pandemic, is about to restart with a number of well workover operations. On the Sfax offshore exploration permits, we are in the final stages of detailed planning and approval for the drilling of the Salloum West well.
The average gross daily production for Q1 2020 was 4,000 bbls of oil per day, an increase of 15% as compared to the gross production of 3,473 bbls of oil per day during Q4 2019. We are currently producing at approximately 4,000 bbls a day, and our near-term objective is to raise production to our target of 5,000 bbls of oil per day. Production has been little impacted by the pandemic. Focus during the Tunisian lockdown was on maintaining existing production levels whilst new well work activity was deferred. OpEx for the operation is under $15 per bbl, and so very robust in the current environment. Two domestic liftings occurred during Q1 with a total of some 27,000 bbls net to Panoro at a sales price of $54 per bbl.
In April, post the quarter end, there was a lifting of some 90,000 bbls with a sales price of $19 per bbl. The next lifting is expected in late July or early August. Fortunately, our hedging strategy has performed extremely well in helping us maintain revenue through this unprecedented period. As we look forward, we are about to commence an extremely active period with multiple well work and drilling activities, which I'll describe on the next slide. In addition, we are undertaking further optimization of the production facilities, and we have subsurface modeling work in progress on two of the TPS fields, which we hope will lead to further development activity in due course. Next slide, please. This slide shows the TPS well activities, the specific recent ongoing and planned activities for the coming months. The Rhemoura 1 workover comprises stimulation and ESP replacement.
The stimulation was very successful, leading to a four-fold productivity increase in this well. This has encouraged us to identify further targets for stimulation across other fields, but is also pointing to additional potential in Rhemoura itself. Some of the highest impact near-term opportunities lie in the resumption of production at the Al-Ghaith field. At the Al-Ghaith 1 well, we will be acid stimulating and then completing the well with an ESP for the first time. We will also be bringing the Al-Ghaith 3 well back online after stimulation. Also, at Guebiba 5, we have recently perforated the Douleb reservoir in the field, and we'll be undertaking an acid stimulation in the coming days. These activities alone will, we envisage, enable us to reach our target production of 5,000 bbls of oil per day. Looking forward, we plan a series of additional well work operations.
On Guebiba 4 we hope to recover a bailed downhole completion and to also complete this well on the Douleb reservoir. We have taken the opportunity of the delay in the final approvals of the Salloum West well to schedule this activity with the CTF Rig 6 ahead of the Salloum West 1 well. I'll now hand back to John for the next slide 18.
Right. Thank you, Nigel. Thank you, Richard. Just a couple of other updates on some of the other things we have going on. Block 2B in South Africa, we farmed into in February, a very exciting exploration play together with Africa Energy. The application has been submitted to the ministry, the application for Panoro to enter the license. Like many ministries and government offices globally, the ministry has been closed. It's not clear exactly when the approval timetable will happen, but our best guess is Q3, maybe Q4 of this year. The completion of this transaction is subject to this consent being received from the government. Also the concurrent farming by Azinam for 50% of this block.
In the meantime, we're busy with doing what we can, which is evaluating cost savings around the drilling operations and doing quite a bit of subsurface work still on this very exciting area. At Aje, production's continued. There have been some limited shutdown periods. Cost savings have been implemented by the operator there. We have, as previously announced, a transaction with PetroNor for the sale of this business, which is subject to the ministerial consent of this transaction, plus another transaction that PetroNor are doing together with the operator. Those processes are underway, have obviously also been impacted by COVID-19, are expected to take another several months, but they are underway. Next slide, please. This is a summary slide. We believe we still have a very strong outlook despite some of the timing delays we've encountered.
On the corporate side, we believe we have a solid balance sheet with low-cost production. Our shareholder base and our lenders have been amazing partners to have through thick and thin. We look forward to dividending the PetroNor shares subject to the completion of that transaction towards the end of the year, hopefully. Our reserves, our resources remain there, highly valuable. They're still in the ground. Nothing's changed that. We are taking a look at some market opportunities that are out there. We have nothing immediate, but clearly, this market does throw up quite a bit of opportunity, and of course, we need to be alive to that. On the production side, we look forward eventually to the hookup of DTM-6H, the well that was drilled in Gabon, and drilling the DTM-7H when the conditions allow.
We look forward, obviously, to Ruche Phase I and the 50 million odd bbls that we have lined up to start producing there. Tunisia, as Nigel stated, we're looking to bring on the production wells on the workovers in the very near term, and then still looking at Guebiba and other initiatives to try and boost production there. On the exploration front, we have Salloum West, which is still there, and we're continuing planning with that. Dussafu exploration, as Richard has touched on, has been deferred but is still very much on our radar screen. We, of course, have Block 2B in South Africa, which is probably a 2021 event. That concludes the presentation. Just as a reminder, if you would like to enter a question, a written question, you can do so in the question panel.
If you'd like to ask a question verbally, for those of you that are online, you can raise your hand by pressing that raise the hand button, and we'll hopefully be able to see that. I'd like to now invite people for any questions. I see a question from Let me just see here. New technology. From Teodor. Teodor, I'm going to try and unmute you here. Teodor? Did that work? Okay.
Good morning. Do you hear me?
Oh, good morning, Mike Ador. Hi.
Yeah. Good morning. Thank you for the update. Just two quick questions. You discussed around realized oil prices for Q1. Could you say anything about the realized oil prices this far into Q2 compared to the reference prices we can see on the screen? My second question is around dividend. You will, of course, dividend out the PetroNor shares this year after closing of the deal. You previously said that you're aiming for a cash dividend from 2022 and onwards. Just wonder, what kind of oil price environment do we need to see for you actually paying cash dividends from 2022?
On the oil price, the only cargo we sold so far in the second quarter is the one we already talked about in Tunisia, which was done in early April, unfortunately in the middle of the crisis. We achieved about $19 a bbl for that, which is a terrible price. Having said that, I think there are other cargoes being sold at the same time in Africa for single digits. I guess we have to count our blessings on that. That's been the only lifting so far. The only other one we have planned for this quarter is one in Gabon in the month of June. The way the Gabonese cargoes get priced is we look at the average of Dated Brent for the month of the lifting, so in this case, June.
We'll take the 30 days in June, we'll calculate what the average Dated Brent is, and then we'll get paid a $1 premium to whatever that number is. At the moment, Dated Brent is trading $1, $1.50, $2 below what you probably see on your futures screen. Right now, probably around $33, $34 a bbl, something like that. We'll have to wait and price it until June. In the meantime, obviously, even though we didn't lift in May, we have the hedging income from May because the hedges are settled monthly, and we'll have similar hedges in June as well. In respect of the cash dividend, I think what we've always said is that we would like to pay a cash dividend once we reach phase I on streams at the third phase of production.
Once we have the 40,000 bbls a day gross of production online in Dussafu, that remains our intent. That project Ruche phase I needs to be re-sanctioned. I think we need to work together with the operator, with Tullow, with the state of Gabon and re-sanction that. I think we'd like to see a little more strength in the oil price before re-sanctioning that. Obviously, when we re-sanction it, I think we're going to be bullish on oil price. It'd be our intention still to try and pay the cash dividend once that production is achieved.
Okay. Thank you.
We have a couple more questions here. Hold on a sec here. A question from Jorgen from Fearnley Securities. Jorgen, good morning. You may need to unmute yourself, Jorgen. Jorgen, are you there?
Hello?
Hello, Jorgen, are you there?
Yes, I'm there.
Okay, good.
Okay, good. Good morning. I guess my question, it's along the same lines as Teodor's. With respect to prices, you said during the presentation, if I'm not mistaken, that the delay on Dussafu is more a matter of the oil prices than the COVID-19 situation. The question is, what kind of oil prices do you need to, let's call it normalized activity, and move forward with the next phase at Dussafu?
Thanks, Jorgen. That's a great question. I can just be a little more specific, I think some of what happened in Dussafu was related to COVID and some to the oil price. We had a rig in the field, obviously, drilling the four wells. We drilled three of those. The fourth one, we had to demobilize the rig, and that was COVID. We could not get the crews and the suppliers, the contractors in. That was purely COVID. The intention was to have drilled that third and fourth well. We drilled the third, but not fourth, and then come in with an installation vessel in June to hook both of them up. That had been the intention. That installation vessel, due to COVID, is unable to perform that activity at the moment. Which is where the uncertainty has been.
Those two bits of activity have been impacted by COVID. The Ruche development, which we were about to kick off, and had already kicked off a little bit, has been postponed due to the oil price. We benefit in Gabon from very low operating costs, a good tax regime. The CapEx per bbl is modest for that development, around $10 a bbl. Technically speaking, $30 oil would still be fine. I think together with the rest of the JV, I think we need to see a little bit more strength in the oil price. I would say probably something with a four in front of it would probably be psychologically where we would need it to be, even though technically, I think we could sanction and still make money off these current oil prices.
I think we'd like a little bit more of a buffer in front of us. We have partner meetings coming up soon. I'm sure this will be debated rather actively. I think everybody's been focused a little bit more on making sure we maintain what we have. Looking forward, I suspect it'll be something like that. We'll update the market as soon as we have a common view on that.
Thanks.
Right. We have a question from Werner Solberg. Werner, I'm going to tap your hand there, and you need to come off of mute. Are you there? Werner Solberg? Right. Well, I'll come back to Werner, maybe Stephen from Auctus Advisors. Stephen, can you hear me? Hi, Stephan.
John? Yeah. Hi, John.
Yes.
A few questions. Good morning. A few questions to me. First, in Tunisia, you highlighted the 5,000 bbl per day that could be achieved with working to the new subsets of the work program, and I'm not talking about Salloum. What do you think would be the upside case if we're including the sidetrack and everything in the 2020 work program in terms of production? Second question, in your discussion in Nigeria with PetroNor, how are you seeing PetroNor? Are they still responsive? Are they still engaged, that with regard to the divestment of Nigerian assets? Lastly, excluding 6H and 7H in Gabon, where would you see the latest view on the 2021 development CapEx program? Thank you.
Okay. Nigel, do you want to take his first question in terms of potential upside case in Tunisia?
Sure, John. The well work that we talked about in the near term, which is starting today, in fact, on two of the wells, will, we hope, enable us to lift production levels up towards the 5,000 bbls of oil per day target that we've set. That is activity that will be going ahead, taking place over the next month or so. The further work that you highlighted, the Guebiba-10 sidetrack, and indeed the operations on Guebiba 4, would happen later in the year. We're currently expecting drilling operations to start in August, but that clearly is subject to the improving situation globally, based on the loosening up of international borders after the pandemic subsides. The precise timing of that is uncertain. In that operation, we expect a well rate of 500 bbls of oil per day or thereabouts.
We have to remember that there's an ongoing decline in these assets at the same time, and we can also lose ESP pumps occasionally, and they typically have a life of two to maybe five years. It's normal to expect some decline in the base production whilst we're adding production from new activities. We're targeting 5,000 bbls of oil per day in the near term. We're hoping to get beyond that, but the precise target is uncertain at this stage later in the year.
Yeah. Stephen, I'd endorse what he says. I think let's try and get to our first target. Clearly, there is upside beyond that. I think we need to demonstrate to ourselves and to you all that we can get to the five, and then we'll start looking at the next level. What's very encouraging for us is that we're able to resume activity. Tunisia has kind of come out of the lockdown. They've had Ramadan. Eid is over. Yeah, everything literally is coming back together there now, and we're able to get after that stuff, which is very encouraging. Your question on PetroNor and Aje. PetroNor have been fantastic partners. They remain heavily engaged in all that is going on in Nigeria. We cooperate extremely well together, and they have a lot to add to the Aje story.
They have a longer-term plan on Aje, which they're busy planning for. They're clearly not in license yet, so they have to do it on paper, so to speak. They've been very engaged and a very constructive counterparty to deal with. On CapEx 2021, DTM-6H and DTM-7H we've already spent quite a bit of money on those wells because DTM-6H only had the installation left on it. DTM-7H, we obviously bought most of the things there, so it was only really the drilling activity and obviously the eventual hookup that remained. There's probably a little bit of CapEx associated with those two things, but it's reasonably modest. The Ruche Phase One, I would hope that we would re-sanction it again sometime. We need to coordinate with our partners on that. The real CapEx probably for that probably wouldn't really hit until 2022, 2020.
It was always a little bit back-ended. You had some long lead items, a wellhead platform, things like that there was some big cost on earlier in the cycle, but a lot of it comes more towards the end with the drilling activity. Too early to say, really, given all the uncertainties, but on paper, 2021, leaving aside Ruche Phase One is a very modest CapEx year for us.
Thank you.
Right. I think we have one more? Yes. Hugo, I'm hitting your hand now. Can you hear us? I think you're on mute. You have to come off mute. Hello, Hugo? You look like you're off mute, I can't hear you. Okay. Well, in the meantime, it looks like we have a question that's come through. A few questions that have come through. Okay, there's a question on M&A about whether there's additional opportunities. Yes, I think that This question basically says, would you say that the shock we've been through has created more M&A opportunities in Africa? Is it possible to agree on price or is the bid-ask spread at the asset level typically very wide? Is M&A not the top of your agenda these days with the oil price uncertainty and reluctance to add debt to your balance sheet? Yeah.
I think everybody is looking to do deals in this market, obviously. There's been a huge dislocation. As you say, the bid-ask spread, I think, is still an issue. Obviously, companies would love to buy assets at a cheap level if they can, but sellers are reluctant to try and pick this price out in the market and say that that's the new reality. I think that there still is opportunity, I think, if you have mature people who can look at maybe contingent structures, things that might have some payout in the future if oil prices rally or if production ends up being generated, that that's possible. We have a lot of investment bankers who've also been sitting at home, working from home, who dream up all kinds of stuff. I'd say there's lots of chat with very little activity.
You've seen Total go in and pick up the position of Tullow. We've also seen deals fall apart with Total again on the Anadarko deal. I think there's a lot of chatter, but not so much activity yet. I think we may see some, but I think the world needs to stabilize a little bit first, because for most companies, you're going to be relying on external capital to do transactions or your shares. Share prices are low. External capital is probably scarce. I think it's going to be a little while before we see a boom. Certainly, I think that there will eventually be quite a bit of opportunity available. All right. I think that is it. I see Hugo's still got his hand raised. I'm going to try you one more time, Hugo, see if it works. Yep, Hugo?
I can see you've come off mute, but I can't hear you. Great. Well, Qazi, do you see any more questions that I've missed?
John, there are no more questions I can see or any raised hands. Yeah.
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