Good morning, everyone, and thank you for joining our Q2 results presentation. This is John Hamilton, Chief Executive Officer of Panoro Energy ASA. I'm joined today by a number of colleagues, as well, who will be available to assist with any questions that you might have following a short presentation. 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 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 and is available also on our website, www.panoroenergy.com. As a reminder, for those of you who've been here before, for those of you who haven't, you have the ability to ask questions. You can either type in a question, or as you can see on the left pane there, and we'll endeavor to answer that question if it hasn't already been asked, or you can raise your hand, as you can see on the right panel there.
We will unmute you, and you can then ask a question, and there'll be ample time after the presentation to do so. Next slide, please. So just some highlights. The Q2 was obviously a slow quarter for us. That was all well communicated in terms of liftings. We didn't really have any liftings in the Q2 , so we're kind of focusing on the things that we think matter here. We recently had record production rates of up to 11,000 barrels a day. This is a record for Panoro, so it is, it has been a very good recent set of events for us, triggered largely by the increase in production in Dussafu, which we'll talk a little bit about.
We had crude liftings of a little over 800,000 barrels in the first half of the year. The second half is going to be much more active, and I will talk a little bit about that as well. Our CapEx is trending on line with guidance at the moment. On the financial highlights, again, revenue of $66 million, EBITDA, EBITDA of $39 million. Again, and we will see that increase in the second half of the year as our liftings increase during the course of the year. And then there's some balance sheet figures as well, as well as an inventory position, as at the end of 30th of June, of inventory of oil on the vessel to our entitlement.
Today, we also announced a Q2 cash dividend of NOK 0.342 per share, which is approximately NOK 40 million, which is a material increase from our Q1 dividend of NOK 31 million. So all in all, we think a very credible performance and within guidance. Next slide, please.
So again, just looking at the trajectory of the business, if I can put it that way, as we always show this slide with quarterly performance on the production side, where we are hoping to get to in 2023, and most importantly, where we think we're going to get to the peak rate of in excess of 13,000 barrels a day once the all six Hibiscus-developed Ruche wells are online, which should be around the end of the year, perhaps slipping into the first bit of next year, but right around that period. And that is really what we're aiming for, is to try and get that momentum up to that 13,000 barrels a day. And we're well on track to do that. Next slide, please. This is our lifting schedule.
Again, it's a slide we always show to try and show where our liftings are. As a reminder, we recognize revenue, and cash flow, not based on a daily basis as we produce the oil, but only when we sell it. And that creates quarters like the Q3 , where we hardly had any liftings at all. Again, that was well communicated. The second half of the year is obviously where it's going to be much more active. The Q3 , in fact, looks like it's going to be an extremely big quarter for us, with over 1.5 million barrels of oil being lifted, which you'll see coming through in the Q3 P&L.
Obviously, some of the cash that comes usually thirty days later after the lifting, so some of the cash may actually accumulate only into the Q4 . But nonetheless, it's going to be a very active Q4 for us and a very interesting Q4 for us as well. Next slide, please. I won't dwell on this slide much, but it. We always like to provide the detailed, granular information around our balance sheet, our debt amortizations. We're paying something like $26 million worth of debt back this year, and our CapEx is trending as per guidance, as per expectation, around the $75 million mark is where we expect to be by the end of the year. Next slide, please.
Again, a cash flow waterfall where you can see the movements in cash. I don't think there's terribly much to point out here, but again, for avoidance of any confusion, we like to really lay out the exact pattern of cash flow during the first half of the year, ending with a cash balance of around $31 million. Next slide, please. So, I want to talk about each of our three assets at the moment, our three production assets. Most in focus is going to be Gabon right now, given all the activity there. There was some grumpiness, perhaps some negativity, in the news yesterday, around Gabon in particular.
So I do want to make sure that we address what we think is an extremely successful ongoing development in Gabon. I'm gonna ask my colleague, Richard Morton, who incidentally discovered the Ruche and Tortue fields originally, and has been involved with this asset for 15 years now, to talk a little bit about what's going on in Gabon. Richard?
Yeah, thank you. Thank you, John. Good morning, everyone. I'm the Technical Director for Panoro. As John said, I've been working on this project for a number of years. So it's great to see this go from an exploration project in the early days of Panoro's history to a real core of the company and a production asset that's performing extremely well now. So we had a lot of activity in this asset the first part of the year. The first activities were the installation of the new platform at MaBoMo at the Hibiscus field and the installation of the pipeline down to the FPSO. So brand-new facilities installed according to plan. The rig arrived and drilled three wells in Hibiscus.
They were all extremely good results in terms of reservoir quality. We've got long, horizontal section in very good quality, sandstone and very productive, wells for the first three wells, Hibiscus three, four, and five. Those wells kick off at a gross rate of around 6,000 barrels a day, which is well within our... In fact, it exceeds our expectations for the reservoir. So we're very happy with that. The fourth well, number six, is currently completing. We'll have that on production shortly. Then the rig will move to drill the first two wells in the Ruche field to the northeast, to the east of the platform, to tie that back in. So we've got plenty of activity upcoming, and news flow for Hibiscus and Ruche.
The rig still has a couple of options available. We're showing a couple more wells possibly in 2024. We may have another production well to add to that. That's an optional thing. The joint venture needs to agree on that, and then there's an opportunity for some more exciting exploration in the area as well, which we're discussing. Down at Tortue, we've put on a new Gas Lift compressor to increase the capacity there, and that means we can run all of the six Tortue wells concurrently. So we're looking forward to, you know, once these new Hibiscus wells are on, all on, looking forward to some real gains in production towards the end of this year and the Tortue contributing as well with the new Gas Lift.
So I'll go to the next slide and talk a little bit about the project in EG. So we've got plenty of activity happening in EG as well. We have some ongoing work on the field, ESP conversions and some life extension projects which are currently underway, being carried out by Trident, the operator. There's also a gas compression project at Okume, which is being started, and that will help utilize gas injection to reduce flaring on the asset. The exciting news coming up here is we have a rig coming. That rig will drill three infill wells at Ceiba first, and then two wells at Okume, a total of three wells, and then the rig will move down to drill an exploration well in Block S.
So Block S is a new project for us. We farmed into this asset at the end of last year, alongside Kosmos and Trident, who also are in our Block G fields, and we have 12% of the project. It's a new play we're testing that is very, very close to the FPSO, so about 10 kilometers from the FPSO, which means it's quite an easy tieback should we be successful. We also have acquired the Block EG-1, which you see on the map to the right, and that one is operated by ourselves with our partner, Kosmos. There we don't have a well commitment, but we see some very interesting prospectivity, which extends east from Block S into this asset as well.
So go to the next one, please. Here's a little seismic cross-section on the left-hand side, showing the Akeng Deep target. So basically, it's a very large four-way, which we've identified 10 kilometers away from the FPSO. We've got a gross mean prospective resource in this of 180 million barrels. So it is potentially, if it comes in, potentially a significant game changer for the area and easily tied back into the production facilities in Equatorial Guinea. So thanks. I'll hand back to John now.
Thanks, Richard. Yeah, we're very excited with this exploration prospect, and we can probably talk about it a little bit more in due course. Next slide, please. Tunisia, there's quite a bit going on in Tunisia as well. We, as everybody knows, you know, bought this asset when it was doing about 3,500 barrels a day. We have recently been producing in excess of 5,000 barrels a day, so we see this as a great success, where we are joint operator together with the state on this one. We still have an ambition to get to 6,000 barrels a day. It's hard work every day to do it, but we have definitely been showing some movements, positive movements, to get towards those levels.
The big news in the quarter here was that we acquired a minority interest that we held in this asset, so we consolidated our position here. I think we announced that back in April. Most people will have followed it, but that happened in the quarter, which added another 3 million barrels, roughly of net 2P, to us, and around 800 or 900 barrels a day of production at the time of the acquisition. So we're very, very happy with developments in Tunisia as well. Next slide, please. It's the final slide, and we're repeating the messages that we have here. We have a very, very active work program ongoing in Panoro. We have at least 10 wells drilling, with 3 of, admittedly, have already been completed to date.
But this is, we're sort of just still in the beginning of a very, very active period for the company, and we have options over additional rig slots. Excellent results from the first new production wells. The first three, Richard touched on it, and again, we're extremely pleased. The timing of those three wells, admittedly, is a month or two behind the original schedule, which of course, skews things. But again, there was a little bit of negativity in the market yesterday, and we would counter that very strongly and say that we're extremely pleased with the progress and the development of these three wells to date and the overall Hibiscus Ruche development.
Kicking off, right as we're finishing off in the in Gabon, we're moving into a three-well infill drilling program in Equatorial Guinea, so it's going to be more, much more news flow as we come into 2024. The rig is contracted. It's due to arrive in early Q4, and we'll start drilling this well, probably towards the end of the Q4 . The next exciting thing is that there are up to three exploration wells that we're going to be drilling in the next 12 months. So the Akeng Deep one, which Richard touched on, is firm and planned, but we have these two additional slots in Gabon as well, and there is debate within the joint venture about what to do with those two slots. It's too early to say what the decisions on those are.
However, there is very much a positive sentiment towards drilling at least one exploration well. We'd like to see that happen as Panoro. Our consolidated Tunisian business has really kind of given us extra, extra momentum in the country, and that's really helped solidify the company even further. We've made a very, very clear framework clear shareholder returns policy for 2023. Our 2024 shareholder policy will obviously come out in due course in November when we announce our Q3 results. We'll give some more information about 2024, but we've been very clear, and today's announcement around the dividend, I think is a very positive indication in terms of the board's sentiment towards shareholder returns.
So with that, I'll conclude and open the mic or the panel on the left, you can see, to type any questions if you don't want to speak. Andy, my colleague Andy's going to officiate here.
Thank you, John.
Stefan, I think you have to unmute.
Yeah, sorry. The first question is from Stephane Foucaud. Stephen, you're unmuted. Please go ahead.
Hi, guys. Hope you're all okay. Thank you for taking my questions. I have a few. The first one is around Dussafu. What is the current production, given the gas lift, the recent well result, and so forth? I know that you reached 30,000 a day at the end of July, but what's the situation now? That's my first question. Second question, if we look at 2024, and we look at the second phase of development for Ruche Hibiscus, what sort of CapEx are you expecting for that? And I'm not talking about the ongoing drilling program, but more what we should expect for this phase two. And perhaps lastly, the production in Q2 in Tunisia was really, really good.
Could you perhaps comment on that, on how the workover ha performed, has performed, what perhaps it means for reserve, what it means for perhaps, 2024 production? How do you feel about what you have achieved so far? Thank you.
Thanks, Stefan. So our partner, BW Energy, announced yesterday, and they mentioned current production at Dussafu are around 27.5 thousand barrels a day. The field had achieved 30, or in fact, even in excess of 30, when the gas lift compressor was working. The operator also announced yesterday that the ESP, the Electrical Submersible Pump, on one of the new Hibiscus wells, was down, so that's the delta, as it were. That is something that the operator's busy trying to figure out just how to replace it. These ESPs are reasonably straightforward to replace, so it's, I think it's a temporary thing, but that was disclosed by the operator yesterday. So it's around 27.5.
You know, the field really should be doing 30 or perhaps even slightly in excess of 30. And then we have a new well, as Richard touched on, coming online, we hope, in the next couple of weeks. So I think you'll see us comfortably into the 30s, as long as everything's working fine, which at the moment it is, you know, in the next couple of weeks. Your second question around phase two CapEx, I don't have that number to hand. I'm just looking at my colleagues to see if anybody knows the number offhand, but it will be consistent, we believe, with the numbers that you have in your models, and most of the analysts do, because those have all come out of previous guidance.
At the moment, obviously, we're seeing cost inflation across the sector, but at the moment, we don't have a newer number than the one that you probably already have, Stefan. I'm not sure if that's helpful in answering your question. I just don't have the exact number to hand. But we can circle back with you offline and validate that separately. Tunisia, yeah. So Tunisia, we had You know, Q1 , as already disclosed, our Q1 production pretty much across all the assets for various reasons, was a little bit down on budget. But Tunisia really kind of came into a great swing of things in the Q2 .
We had a very successful workover, a couple, which really sort of got production, you know, 4,500-5,000 barrels a day gross, sometimes in excess of 5,000 barrels a day. You know, we have a number of wells in production at any given time, working on how many? Fifteen wells at any given time, Nigel?
That's right, up to 15.
Up to 15 wells. So, you know, sometimes one will, you know, need an ESP replacement or something like that. But we've had some very good success around that. Is there anything you'd like to add to that, Nigel?
No. I mean, as in some of the other assets that we're involved with, you know, we're continuing to optimize production, particularly around the ESPs. And so, in the last couple of months, we've put particular focus on that in Tunisia. We brought in an expert on the ESP operations, and we're fine-tuning the setting of the pumps and the operational procedures in Tunisia. We see further potential, but this is a case that we're working through well by well, and looking at how we can optimize each well's setting, pump setting. So we're currently very pleased with performance, but we still believe there's further to go.
Thanks, Nigel.
And-
Yeah, go on, Simon.
Perhaps as a follow-on that would be, given this performance, you're achieving some positive read-through for reserves, or is it too early to say?
Yeah, on the reserves, I mean, one of the main fields that's in focus currently is the Guebiba field, and that's where a lot of the workover activity has been just recently. And indeed, we recompleted the Guebiba-10 well on the Guebiba Reservoir for the first time earlier this year. And there we would expect to see some additional reserves coming through. But we're in the process of updating firstly the static model for the field, and secondly the dynamic simulation model, and that's work that we're in the thick of right now. What we hope is that out of that exercise come recommendations for further drilling, probably injection wells in the northern part of the field, but also potentially producers.
Now, if we're successful in identifying such opportunities, clearly additional reserves could come, but we're not there yet. We're doing that work.
Great. Fantastic. Thank you very much.
Thank you. The next question is from Teodor Sveen-Nilsen. Teodor, you're unmuted. Please go ahead with your question.
Good morning, guys, and thanks for taking my questions. First, a question more in the long term. Looking ahead, like the next 3-5 years, how much priority would you give M&A versus harvesting from your current portfolio, and which areas in particular do you think are attractive? Second question is on CapEx next year. I understand you don't have any precise estimate yet, but could you just directionally indicate where CapEx should go next year? And third and last question is on the revenue recognition for Q3 . John, you said that some of the liftings may slip into, or payment for the liftings may slip into Q4 .
Would that also impact revenue recognition, meaning that we should expect some of the liftings for Q3 to actually be recognized as revenue in Q4 ? Thank you.
Sure. I'll do them in reverse order. The revenue recognition is at the time of loading of the bill of lading of the loading of the crude. So those will all happen in the Q3 . So in terms of P&L, it will all be Q3 activity, unless for some reason, one of the liftings, you know, for operational reasons, slips into Q3 , which we don't at the moment anticipate. So this will all be third Q4 P&L activity. My only point around the cash was that the cash usually comes 30 days after that, so you may not see it come through the cash flow until the Q4 , 'cause a couple of the liftings are in the second half of September, actually.
So again, based on what we know now, it'll all be... all that activity will happen in the Q3 and be in the Q3 P&L. CapEx in 2024, what we've generally said, and as you point out, we haven't gone through all the JV meetings, which is when the budgets get set for the next year. That typically happens in September, maybe October. So we'll give a little bit more clarity in the Q3 results, and then obviously we'll do a trading update early in the new year, which will give very firm numbers. But I would expect it to be, I think we've guided around $50 million or in that range.
It could be a little bit more than that, but, you know, $50-$60 million would probably be good guidance for the moment. But that's a little bit early, and that's just a guess, but we'll come back with more specific numbers in due course. In terms of M&A versus organic, I mean, what we've obviously positioned the company through these developments in Gabon, Equatorial Guinea, and the acquisitions we've made in the past, the recent acquisition we made in Tunisia as well, is really focusing on organic. We believe that, as you say, the next, you know, 2-3 years, we've got a great trajectory of production.
If oil prices stay sensible, it'll be a great time of harvest for the company with a lot of the CapEx behind us. New projects will always emerge through the organic portfolio. You know, if any of this exploration activity in Dussafu or in Equatorial Guinea yields results, those are infrastructure-led exploration opportunities that will be easy and much cheaper than going off and buying new assets. Much cheaper just to develop and put right into our existing infrastructure. So I think you'll see perhaps a bias towards organic growth in the case of exploration success. But, you know, a company like Panoro, we always need to remain opportunistic. And so we're always looking at M&A opportunities. You know, assets are coming for sale on a regular basis.
You asked about areas of interest. You know, I would think the current areas we're in, so selectively in North Africa, Tunisia, and West Africa are key areas of focus there. So I think, you know what? We're a growing company. We've gotten to a certain size. I think there's always opportunity to do more, but we really are focusing at the moment on delivering what we've set out in front of us here. But we... Nonetheless, you know, we have to—you know, it's our duty towards ourselves and our stakeholders and our shareholders to try and continue to grow the business, and we'll always do that.
Okay, that's clear. Thank you.
Thank you.
Thank you. The next question is from Alex Smith. Alex, you're-
Yeah. Morning, guys.
You're unmuted. Go ahead. Yes.
Hi. So just a question on Tunisia, and maybe a bit more detail on the expected synergies and incremental value from the recent acquisition. Additionally, can you provide some detail on the receivable increase? Is this relatively normal levels? If so, how do you plan to manage that, if it's not? Just a bit more clarity on that would be great. Thank you.
Alex, I think it's a good question. I think the, you know, the main synergy for us, other than just looking at in pure M&A metrics, you know, $ per barrel, that we acquired the reserves and the production out, which, you know, we believe were attractive and accretive to the business. The real synergy for us came from, it's a little more mundane, I would say, a little more internal focused than the market-focused synergies, in the sense that, you know, we, we had a 40% shareholder, so we had separate board meetings, separate technical sessions with that partner.
We now have the ability, basically, to keep the exact same overheads that we have that support that business, both in London and in Tunis, where we have a team, a technical and financial and a country management team, that is now entirely focused on Panoro. We can do exactly what we like with that team. With that support, we can make decisions on our own, and we're not really spending any more money to do it. So we've kind of acquired assets without having to have an overlay, an additional overlay of management of those new assets. If those assets have been bought in an entirely new concession in any country, we would have to have the full infrastructure, organizational infrastructural support of that.
We don't have that here, so that's the key synergy on that one. The receivable in Tunisia, yeah, there's always kind of a receivable position in Tunisia, where this arises from our domestic sales obligations, which are form part of the taxation regime in many countries, including Tunisia, where the state's oil company sells some of our crude, and then they pay us in due course. That due course can sometimes be a little bit drawn out. And when we made the acquisition in Tunisia, obviously, we acquired 40% of the share of the receivables as part of that acquisition. So the receivable went up, and we just felt it was prudent to highlight that because the number had gone up.
We are seeing in Tunisia, a slowing of, payment of those receivables. So it does happen occasionally, in other countries as well, and as well in Tunisia. Sometimes they're a little slower, sometimes they are much faster, and we're just in a period of time where there's been a little bit of a slowdown in terms of the payment of those receivables. So we just felt it was prudent to point it out. We do fully expect to be paid for those. But, it also helps because the number, $16 million, you know, it, it... We're waiting to see that come through the cash flow statement, so we felt it was prudent to mention it.
Great. Very clear. Thank you.
Thank you. The next question is from Chris Aristide. Please, please go ahead. You are unmuted.
Oh, thank you. I've got a couple of questions. The first one is on Hibiscus Ruche drilling. Can you please tell us when are you thinking of doing the Hibiscus Ruche-2 drilling?
Yeah, I mean, we don't have any particular firm news on that one at the moment. I think we are looking at that next phase, and obviously, the results of this first phase are going to inform both our technical and our operational assessment of that next phase, and when it's best to do it and how best to do it. We have these additional well slots now. Are we gonna use them? Are we not gonna use them? So there's still some uncertainty there in terms of exactly when we might sanction the next phase. So it's a little premature to give you much additional guidance on that, other than to say-...
But clearly, there are the six wells that we're drilling now in the Hibiscus Ruche area are not sufficient at all to drain the considerable reserves that are there. So there is certainly the room for a second phase. Obviously, if we have success through the exploration, if we're going to drill exploration wells here, that might also change the configuration of any phase two. So it's a little bit early on it, but there is plenty of reserve left there to do, but it's a little early in terms of the timing. We have a total of 12 well slots on the platform, the MaBoMo, and we fully intend to fill all 12 of those in due course.
Okay. And my second question is on cash. Would it be fair to say that Q2 is kind of a trough, given your liftings in the second half? And if you can give a bit of color on how you think cash is... The cash outlook, given the $70 million of oil revenues in advance, how does that affect, you know, Q3 cash and Q4 cash, whether that's from Q3 or whether that's from Q4? A bit of color that would help.
Sure. You know, I think we've got all the elements, you know, in our presentation and our disclosures to try and build it. The uncertainties that we have are simply around exactly when we're lifting oil, exactly when the cash calls on the capital expenditure come. Do some of them leak into next year, or are some of them accelerated this year? So there are always a lot of moving parts. So I wouldn't want to give you an extremely specific answer, other than to say that I think, you know, we've got all the elements in our disclosures that you should be able to pick it out. I would say that obviously, as people who follow us know, you know, 2023 is very much a year of investment.
While we are starting to produce more, we're starting to sell a little bit more, we're also in a heavy spending phase, and that will continue. A lot of it, a lot of this depends on oil price as well. I mean, oil's at about $80 a barrel now, which is a good level for us. We like this level. Obviously, it'd be nice if it's higher. But a lot of it's also dependent on the oil price as and when we lift these barrels. So, I don't think I can give you a more specific answer than that. Chris?
Okay, and... Okay. All right. Thank you, thank you for, for taking my questions.
Thank you.
Good luck.
Thank you. The next question is from Lennart Hagéus
Lennart, are you there? You might need to unmute yourself.
Okay. Okay, that concludes the Q&A for today. Thank you very much, John.
Thanks, everybody. Thank you for sharing this time with us, and we look forward to updating you further. Again, I think it's gonna be an active nine months for us. So hopefully we'll be reporting good things back to you in that period. Thank you very much.