Good day everyone, and welcome to this Q3 results presentation with PetroNor E&P. Today's presenters are CEO Knut Søvold, Chief of Business Development Gerhard Ludvigsen, and CTO Claus Frimann-Dahl. We also have Chairman Eyas Alhomouz, and also Head of Exploration Michael Barrett with us remotely on Teams. I urge you all to send me questions along the presentation so that we can wrap up with a Q&A session towards the end, which I will moderate. With that, I think we're ready to leave the word to Eyas.
Morning, everyone. Welcome to the Q3 year-to-date 2020 results for PetroNor E&P Limited. My name is Eyas Alhomouz. I'm the chairman of the company, and I'm joined today by the team, Knut Søvold, CEO, Gerhard Ludvigsen, our board member and Business Development Manager, Claus Frimann-Dahl, our Technical Director, Michael Barrett, Exploration Director, and Chris Butler, our Financial Controller. Together we will take you through this presentation, and we should have some time for question and answer session at the end. Just as a reminder, this presentation contains summary information about the company, its subsidiaries, and their activities. This information does not purport to be complete or comprehensive and does not summarize all information that an investor should consider when making an investment decision.
It should be read in conjunction with the company's other periodic and continuous disclosure announcements lodged with the Oslo Axess, which are available on their website at www.oslobors.no. I encourage you all to read the rest of the disclaimer, which is available on our website, before making any investment decision. Next slide, please. Rough year for everyone, primarily in our sector with the depressed oil prices. However, despite all of that, our team has shown quite the discipline to maintain some healthy results and strong performance. Our producing asset in Congo continues to show some sustainable growth, despite the fact that the infill drilling program has been delayed due to the pandemic. This quarter as well, for those of you following, we have reinstated our license in The Gambia, and we will go into that more in detail in the presentation.
Less than two weeks ago, we've announced the acquisition of the Svenska Petroleum assets in Guinea-Bissau. The financials are very strong. EBITDA very strong discipline by the management team. We continue to show some focus on our ESG, primarily on our governance. This quarter, we have registered the Extractive Industries Transparency Initiative, which is the global standard for the good governance of the oil, gas, and mineral resources where they function in several of the jurisdictions that we are in today. Next slide, please. For an overview, PetroNor is a full-cycle portfolio in several jurisdictions. We have production assets in the Republic of Congo-Brazzaville. We have redevelopment assets in Nigeria, and we have a very strong exploration portfolio in three different jurisdictions: Senegal, The Gambia, and Guinea-Bissau. We have an average production of around 2,650 bbl per day.
The management has committed to increase that by tenfolds over the next three years. We have a very healthy pipeline with very strong ambition of growth in Sub-Saharan Africa. The management team is very experienced with a very supportive board of directors and very supportive shareholder base, with Petromal, which is a subsidiary of National Holding in Abu Dhabi, is the single largest shareholder with more than 38%. Updates for the quarter. Gross production in our asset in Congo, close to 23,000 bbl. I've mentioned The Gambia asset that we have reinstated. Michael will go into that in detail in his review of our exploration portfolio. Senegal, for those of you aware of the legacy arbitration that we have with the government, we have a very healthy dialogue with the government today.
Unfortunately, things have been delayed by the pandemic, where we had suspended the arbitration six months ago. It expired last October, where we would have hoped to have an amicable outcome. Unfortunately, again, because of the pandemic, things were delayed, together with the government of Senegal, we've agreed on a three-month extension that would take us through the first week of February. Less than two weeks ago, we've acquired the Sinapa and the Esperança licenses from Svenska Petroleum in Guinea-Bissau. We have initiated a market maker coverage with SpareBank out of Norway. Key metrics for the company. Today, we have a 2P reserves of around 10.3 million barrels. We have, as I mentioned before, 2,650 in daily production. We have 26 million barrels in 2C resources and in excess of 4.5 billion barrels in undiscovered prospects. Next slide, please.
Despite the depression in the oil prices that we have, which impacted our revenue compared to same time last year, nonetheless, with a very strong discipline from the management, we've maintained a very positive EBITDA year- to- date. The 30-year license in The Gambia was reinstated and signed on what we considered favorable terms for both the people of The Gambia and the shareholders of PetroNor. This last quarter, we've secured a $3.9 million loan facility from a related party, Symero, which is owned by NOR Energy, under terms that are equivalent to other financial settlements that we have from external sources. The Q3 2020 results from a high level. We can go into that in detail later into the presentation. We have $30 million in revenue.
We have an EBITDA of around 10.6 and a net profit of $2.9 million. The nine months year to date as of September 30th, we have $50.7, compared to $76 from last year. Again, this is due to the low oil prices. We had an EBITDA of $24.3 million and a net profit of $7.9 million. Financial position at the end of September, we have $18 million in cash and bank balances. We have interest-bearing debt of around $18.9 million. Of those, $2.5 as current and $16.4 million in non-current debt. We have a positive working capital of $20.7 million.
Oil, I mentioned that PNGF continued to deliver despite the delay in the infill drilling program. We have lifted 320,000 bbl compared to 296,000 bbl last year. We have an average selling price, which is, I believe, is healthy for the year we are in of $43.6 per barrel, compared, of course, to $62 per barrel last year. I'll leave you with Claus to go into more detail on our technical and producing assets in Congo, Brazzaville. Claus, it's yours in Oslo.
Thank you, Eyas, and good morning, everyone. I start out with a picture of the offshore shelf in Congo, Brazzaville, indicating a well-established region producing about 360,000 bbl per day with big actors such as Eni, Total, SNPC, Lukoil, Chevron, and Perenco. Next page, please. This shows a production profile from AGR, from our Competent Person's Report of last year. A couple of comments to that is that part of the light blue 2C production has already been decided, i.e., committed into 2P. On 2020 production is a little bit down from the indicated production due to delayed infill drilling. We do expect that further increases to the 2C will be present on the next revision. We're producing from seven steel jackets and 62 active wells, and the number hopefully keeps on increasing as we deal with the workover program that goes on in PNGF Sud. Next page, please.
This shows a little bit of the fantastic journey that we've been a part of in the past four years, where you see that production has increased from less than 15,000 bbl a day to more or slightly less than 23,000 bbl a day at very little CapEx investment. We have estimated that a total of $44 million has been spent on workovers and the bottlenecking and studies in that period leading up to the production increase. Just as a calculation on that is less than $1 per barrel or $0.80 actually, to be exact, for that reserves increase. Next page, please. This shows the OpEx in the same period, where two things I want to point out. First of all is that the operator, Perenco, has very good budget discipline, for which we're happy, in that the actuals usually comes in below the budgets.
Also we have a downward trend, and we are currently looking at for 2020 an OpEx per barrel of around $11. Next page, please. This shows the production profile on a daily basis for 2020, indicating a production of almost 23,000 bbl a day, which is net to PetroNor 2,400 bbl and up 4% from last year's production, with a high both facility regularity and well uptime. Just one thing I want to point out with the daily production plot, indicates that you see very little daily production upsets. Very stable production from the processes on the seven steel structures that we have present in PNGF Sud. Next page, please. This shows a little bit of our upcoming infill drilling program on previously announced Litanzi and Tchendo. Now we are adding also as a part of next year's budget, the Tchibeli infill drilling program.
The Litanzi infill drilling program consists of our wells in total, two producers, two injectors, has a little bit more complex wells than the Tchendo and Tchibeli, in that it is horizontal wells penetrating several fault blocks. Tchendo, we have six or seven infill wells planned in the first phase. The well head platform that we are installing actually has 14 slots in it, not 12 as it says here. The Tchibeli infill drilling program, we will announce more news on next time.
We hope that on the bottom right picture, we can start the infill drilling program, which was scheduled to start Q4 this year. This year we have concentrated on getting the infrastructure up and ready. The next picture again shows just an overview of Bis. Nothing new there, that comes after the infill drilling on the other structures. With that, I leave it to our Exploration Director, Michael Barrett in London.
Thank you. Next slide, please. I'm going to talk you through the Petro exploration portfolio in the exploration hotspot of the MSGBC basin. MSGBC extends from Mauritania in the north to Guinea, Conakry in the south. Highlighted in yellow on the map on the right, you can see the A4 license in The Gambia, where Petro hold 90% equity and the government the remaining 10%. To the south, the previously mentioned recent purchase of the Sinapa and the Esperança, two licenses in Guinea-Bissau from Svenska. It's a really exciting period coming up with a lot of activity. Why is it a hotspot? Well, the recent success of the major gas projects in the north from Kosmos and BP and the upcoming development of that gas. Most importantly, the discovery of the Sangomar field, marked on the map there with the brown triangle.
This is now operated by Woodside, I'll come on to go into the details of that a little more. The black dotted line is the edge of the carbonate platform. There are five wells upcoming. The first one I'll talk about is BP Gambia A1. That's marked with the yellow dot. FAR Petronas in Gambia A2 marked with the green dot. CNOOC and Impact to the south in the AGC marked by the pink dot. Petro FAR Guinea-Bissau Sinapa well marked by the orange dot. Finally, the Petro Gambia A4 well anticipate to drill, and that's signified by the blue dot. Most of these wells are positioned towards the edge of the carbonate margin, the black dashed line, and are chasing the same successful play type as proven by the Sangomar field.
At the bottom, we can see a timeline with these five wells, which potentially could be drilled somewhat sequentially. These are very approximate timings, but there's an opportunity to share costs both in terms of logistics and reducing mob and demob costs. Next slide, please. Here's a summary of the Sangomar field now operated by Woodside. Development drilling of 23 wells starting from the middle of 2021, with the first oil projected to be in middle of 2023. 3.6 billion barrels of STOIIP. I believe the number for the block is now 5 million barrels of STOIIP. First phase production will produce about 100,000 bbl a day. Approximately 500 million barrels recoverable. The two diagrams on the right, starting with the one at the top. This illustrates both what we call the shelf plays, which is the Sangomar field is a shelf field, and then the basin play.
The FAN-1 well drilled by Cairn and FAR and ConocoPhillips was successful in the basin. To the bottom of that is a cartoon showing the critical success ingredients here of the Albian sandstones deposited at the edge of the carbonate platform with an eastward tilt setting up the trap. In the basin, the same age sandstones deposited. Next slide, please. Just go into a little bit more detail on the Guinea-Bissau two licenses, the Sinapa license and then the Esperança license that's comprised of blocks 4A and 5A. The water depths vary from 15 m in the east to 1,400 m in the west. The licenses cover approximately 5,000 sq km. The equity position held by Petro is 78.6%. A very significant prospect has been identified and a well location chosen. You can see in the diagram in the bottom right.
This is called the Atum/Anchova prospect and has a P50 net prospective resource of 568 million barrels from the PDC CPR report at the end of 2019 that was completed for Svenska. Petro, we hope to build on the excellent technical work done within the partnership of Svenska and FAR and to carry on the momentum towards drilling in this block. Next one. Next, please. This is just to reiterate the similarity of the Sangomar field, the SNE field, and the slide in the top can see seismic line going through the field and to the bottom, we can see a seismic line running through the acreage in the Sangomar, in the Sinapa license. The green line signifies the edge of the platform. You can see the similarity again of the two prospects. Next slide, please.
On the Gambia A4 block, you can see the image on the left, you can see the platform. We're looking towards the south here. You can see the platform with sandstones, interpreted sandstones being deposited on the edge of the platform in yellow and orange. In the basin in the red colors, we've got the younger Senonian sandstones in the canyons, and beneath that, we've got Albian sandstones. Again, we're seeing the same ingredients that have worked for the success at the Sangomar field. On the map on the right, you can see the Sangomar field to the north, then 30 km to the south, you can see highlighted in the red outline, the A4 block.
Again, we've got prospectivity on the platform, the Lamia prospect, and also in the basin, Rosewood and Acacia prospects in the basin. Very exciting prospectivity and on trend with the success further to the north, but we anticipate increased reservoir quality in the sandstones in the basin in the Gambia block because of a lower depth of burial there. With that, I'll end the summary and hand over.
Thank you, Michael. We will move on to Nigeria. As you all are aware, we signed an agreement with Panoro and YFP to acquire the share in the Aje field off Lagos. The Aje field is a large gas condensate oil field which is currently producing a few thousand barrels per day, where we are coming in as technical partner to the operator YFP, and are going then to redevelop the assets. As you see from the figure, the Aje field is just outside Lagos, where you have 20 million people in need for energy. The tieback of gas to shore will be a very solid contribution to the energy need in that region.
The development plan we have, it comprise of re-bringing a new FPSO suitable for handling gas and condensate, extracting condensate offshore, and then bringing the rich gas to shore, drilling three new wells to increase the production capacity, and then onshore, sell the gas into West African gas pipeline or into the gas grid locally or into gas to power. The process with DPR and the ministry has been delayed due to COVID, unfortunately, but we hope that we'll be able to pass the required formal approvals within the next few months.
With that, in addition, in Nigeria, we also have one very exciting initiative, which is flare gas reduction. This is a program we've been working on for some time now, and we hope to update you early next year, mid-next year, on the progress on this one. Back to Daniel and the company. Thank you very much for hosting us, Daniel.
Excellent. We received quite some questions here. I think that the first one is from me. You have a quite wide portfolio now with the recent addition from Guinea-Bissau. You have the exploration blocks in Gambia. You have an optionality also in Senegal. You have the project in Nigeria, as you just touched upon, Knut. You also have the cornerstone asset in Congo. Which of the assets in your opportunity set are you most excited about based on where we are today and the information today?
Congo portfolio. Congo is the base production and the base cash flow. It has a fantastic upside with the huge in-place volumes. We are just, as you see from the work plan so far, only scratched on the surface on what we can do of infill drilling. The first four years have only been workovers, as Claus said, $1 per barrel in added production costs. The potential in Congo, I don't think we have seen yet because we haven't had the capacity just to do all the geo models. That is in making, and we hope that in the next year by year, we will add positive surprises on this asset. Nigeria, which is the development project, it's a significant resource. It has a huge customer base next door. In one way, it's a logical development.
It has been like a hunted reservoir or asset because of unfortunate timing and so on. We really hope that when we now get the final approvals from the ministries, that we can move on and really make this to value-creative for the license partners, as well as good for the Nigerian people. Exploration portfolio, when we did the RTO with African, of course, we acquired exploration company by the latest acquisition of Svenska Guinea-Bissau. We've been able to reinstate two licenses, which we think is very good. We have very good fiscal terms, we are in one of the hot spots in the region for exploration. We're happy with the overall portfolio and the mix with both the stable production, upside in production, new development, which is exciting value-creative, and also this extremely lucrative exploration assets.
Can you say something about the environment for farming down, because you're having quite substantial equity stakes in most of these exploration blocks. Could you say anything about the environment for farming down and the interest that you're receiving from potential acquirers of the stakes that you could reduce to be carried, for instance, on some of these exploration wells? Gerhard.
Thank you. Yeah, I can comment on that. I think we have a very exciting portfolio of the three countries now, Gambia and Guinea-Bissau. We really hope that we also resolve Senegal start next year. There's a new also minister of energy in Senegal, which we recently spoke to. I think there's, as Michael also said, this is the hot spot. We are now in discussions with several other majors and the IOCs and looking at several opportunities if we're going to do strategic alliances, farm outs, and other cooperation models. I think we will just wait and see a little bit, a couple of more months, to see how now Guinea-Bissau is very fresh for us. We need to also understand better in the country and how to operate there.
Gambia has just reinstated, so give us a couple of more months, then we know more about Senegal and also more about who we will prefer to work with and what kind of package we can find in the market today. I think we are fortunate being in that region and also happy that we managed to deliver that we promised to the old shareholders of APCL, that it was important for us to reinstate these licenses and be dedicated to what we agreed with our shareholders. We're also happy to manage that and with great help from our Abu Dhabi partners.
Very good. With this wide portfolio that you're now having, are you satisfied with what you already have and are ready to develop it, or would you like to add more frontier exploration blocks or other assets to the portfolio? What's your view on that?
We have ambitious growth targets for three years, 30,000 bbl.
We're open.
Open, seeking value creative transactions. Yes.
We got actually a specific question on that growth target because I think it was first launched about one year ago. This person here is asking, shouldn't you deliver on this growth just within two years and not additional three years? Is the final target date, in your view, two years from now or three years from now?
I think when we made the first announcement of the target, that was pre-oil price crash. To be realistic, I think that has done setback not only to us but to the whole industry. I think everybody's lost half a year, like we see on the Aje development, for example, nothing happened for six months in the ministries. It was total standstill. Likewise, on the processes with The Gambia and Senegal, everything really. We lost half a year in all our activities, but we've still been able to deliver good results. Yes, but that is more like semantics, I think. As long as we can show a strong growth, which we believe we can do, if it's two and a half year or three and a half year, I'm more concerned about we create value about what we do.
Good answer. A quite specific question here. Have you contracted a rig for the Congo infill drilling, and when do you expect to start? A follow-up, have you chosen an FPSO for the Aje project? Also, have you started to look into rigs or hired specific rigs for that development job?
Bit too specific. We are in negotiations with several parties. There is number of rigs available in the markets, so access to rigs, access to FPSOs is not the issue. Time-wise, it will not impact us that we have not yet signed off those contracts. Of course, everything like drilling depends on the COVID restrictions, because such operations are complex. You need to be able to allow people to travel. You need a lot of subcontractors working on a rig. It's a huge logistics operation. We don't want to end up in a position where we have a rig and no people on board. It all needs to be managed properly, which Perenco does.
Very good. Last time you mentioned a target of being transferred to the main list. Is that still on the table? When do you expect that to happen, if so?
Yes, we are still working toward that goal. Practicalities delayed, I think the interest back to this year was very different from what we expected when we started. That process is still there. We hope now that, as we wrote in the Q3 report, we hope that this will now be completely transferred from Australia to re-domicile during Q1. The process to get on the main list, that has then certain criteria, which we then strive to reach within the next foreseeable months or quarters.
The infill drilling at PNGF Sud has been scheduled for Q2 next year. As Claus mentioned, the development of Bis potentially comes later. Can you give any indication of what needs to be in place to move forward with PNG Bis? If that gets in place, when would you expect that to happen?
For us, this is not a priority. We have plenty to do on PNGF Sud. I think the capacity and activity of the operator, I think with the investment program we now have on PNGF Sud, PNGF Bis is not an urgent thing, so we have more time. It is still an ongoing discussion with the ministry to get through the formalities. When that is completed, we will then start with the normal appraisal work and then the plans are ready. It is more like it's not a rush. Then, I think, still in this COVID times, we just need to ensure that things are planned properly, that we don't try to rush anything for the sake of rushing it.
Very good. This is, for now, the final question. You've been quite clear and outspoken with your M&A strategy, indicating that you want to grow to a much more substantial producer through acquisitions. Do you have an approach to M&A that differentiates you from other E&P companies out there? Do you see that you have any advantages when it comes to access to deal flow, technical capabilities, or when it comes to establishing relationships, common ground for negotiations, et cetera?
Yeah, I think, yeah. Sorry.
Yeah. Oh, thank you. I think we are very well-positioned in Sub-Saharan Africa and West Africa due to our shareholder base also. Coming from Norway and having understanding of IOR is an important factor because we are developing for producing asset and development asset. I think also our combination with Norway and Abu Dhabi still opens a lot of doors in this region, which has colonial history. I think there's a refreshment of coming from Norway and Abu Dhabi into this region, and I think we also seen the results of that when we managed to renegotiate and reestablish in Gambia. I think as Knut, our CEO, alluded to, I think there is great opportunities, maybe more now for M&As than pre-COVID because actually this oil price has also made people to look for more efficient operations.
I think the shareholder and the banks and the market are just forcing also the industry to be more efficient. I think definitely we are very well-positioned. I think very happy to be on the stock exchange in Norway. I think that's also an added value to it. We are, of course, looking and working daily with these kind of potentials. There's a lot of things that has to match, but I think we are in good process to do that. It could be smaller transactions or maybe one large transaction that will bring us past our scope of 30,000 bbl. As our CEO says, it has to be a smart transaction for the shareholders. That's my job to do. Thank you.
Okay, excellent. I think we've now covered all the topics and all the questions we've received so far. Yeah. Thanks for a very good presentation from Team PetroNor, and thanks to everyone that have listened in. I think that's it for today, so thank you all.