Good morning. Thank you for joining us today. Before we begin, I would like to acknowledge the very sad news that we have heard about the passing of His Majesty King Harald V. I know on behalf of all in PetroNor E&P that I wish sincere condolences to the royal family and the people of Norway. From the conversations I have had in Oslo this week, I know that his loss will be keenly felt across the country. With that, I think we will begin our presentation about the second quarter results for PetroNor E&P. We sent out a report earlier this morning. I am here to summarize some of the high points of that and mainly to answer your questions. Please send those in and we will respond to them after a few slides. In many ways, it has been a great quarter for PetroNor E&P.
We saw improved production back over 5,000 bopd, on average for the quarter, which is welcome. This came from the benefits of the infill drilling program that we completed in 2025, but also more stable infrastructure uptime and a higher production efficiency as a result of that. We were pleased with the production performance. We were also able to lift and sell nearly 1 million bbl of entitlement oil in April in this quarter. The timing of that was somewhat fortuitous in that we realized a significantly higher oil price than expected. That resulted in a $112 million post-tax cash injection, in terms of US dollars, that was realized in May. This supported our balance sheet and encouraged the board to recommend a repayment of capital to shareholders of $50 million that was made effective in June.
Looking at the overall financial delivery, I always look to see what our cash balance is, and at the end of the quarter, we are at $85.2 million, which is up from the beginning of the year. We were nearly $60 million at the beginning of the year. We have continued to add cash. There is no debt in the company. Revenue for the half year, which includes the taxes that we have paid to the government in the Congo in terms of royalties and profit share is about $163 million. Gross assets of nearly $250 million, which are buoyed up somewhat by the cash that is in the top line there. EBITDA for the half year of just under $90 million.
You can see from the chart on the right-hand side of the slide that we, like other small companies, have quite a lumpy lifting kind of pattern, which makes it difficult to manage cash flow sometimes. But you can see we have had one lifting this year in April. You can see from the bottom chart that that lifting, which is the large blue column in the middle of the slide here of nearly 1 million bbl. Almost half of that was what we call an overlift, which means that they are barrels that we have not actually produced yet. We are now having to pay that back, and we are paying that back at a rate of about 100,000 bbl per month. We will be back in balance by probably October this year and then start to build towards our next lifting. This is the cash waterfall for the half year.
Starting in the beginning of the year with $60 million of cash. Oil sales of $112 million, then the treatment of tax and royalties is another $50 million. An accounting adjustment for that overlift that I just described of $41 million. That will disappear as we produce the barrels that I just mentioned. OpEx $11 million and CapEx of $5.5 million. This is the reinvestment into our main asset in the Congo. Admin of $4.1 million is what it takes to run the company. That's people costs, our legal fees, professional services like our audits and other consulting that we use to run the company as well as our office and IT and things like that. That's come down quite a lot over the last couple of years. We're trying to run the company as lean as we can.
The big $50 million brick there is a return of capital to our shareholders. The repayment of paid in capital of $50 million and then $10 million is part of moving money through the company is through dividends, is the leakage of dividends to our subsidiary shareholders. Which leaves us with the $85 million that's in the bank as of the end of the quarter. Just a couple of slides on the portfolio, our main asset is in the Congo. It's a Perenco-operated field complex called PNGF Sud. Large field in terms of over 2 billion bbl originally oil in place and about 500 million bbl recovered to date. It's a long tail of production to exploit here. It's long-lived production which responds well to infill drilling, as has been demonstrated in the last few years of reinvestment.
This is something that we are working on in terms of starting drilling again in 2027. We've had a bit of a break this year. Net reserves of just under 16 million bbl. If we carry on producing at the current rates, then that's another nine years of production. With 2C resources of 9.6 million bbl would mean that we could extend that to nearly 14, 15 years of production at current rates. Very high margin in terms of efficient addition of progression of reserves from 2C to 2P at about $11 a barrel and OpEx of $12 a barrel. At current prices, this is a profitable asset. You can see in the production slide in terms of this year's production in the bottom right of the slide.
You can see that although we've enjoyed a fantastic quarter in Q2, we have seen a tailing off during Q3 with a fall off in the production efficiency. A number of key wells have needed repairs and are in the workover queue. Perenco have added a workover crew to the asset, so they're addressing that situation. We expect that to improve. But Q3 will be a softer quarter in terms of production than Q2 has been. We will ultimately address that in 2027 with additional infill drilling program that will bring us back up. We anticipate to over 30,000 bopd. Moving to Aje in Nigeria, which is this redevelopment project that we've been working on for a couple of years now. We came into the project with a fractured partnership and a project that needed improvement in terms of economics.
I think we've demonstrated a consolidated partnership position by acquiring interests from misaligned partners. We've defined a project with attractive economics, which is getting better as we improve the subsurface definition. We've worked hard on that this year with a new static and dynamic reservoir model, which is enhancing the economics even more. That said, despite our enthusiasm for this redevelopment, PetroNor E&P is not the right company to approach the financial markets for project finance at this stage because of our legal challenges in Norway. So we've appointed an advisor, Talanger Capital, to identify commercial options and look at a farm-down or a divestment of some or all of our interests here. We have a number of potential acquirers that are viewing data under non-disclosure agreements, and so we're progressing that with our advisor.
It goes without saying, I have to mention the Økokrim indictment of one of our indirect subsidiaries, Hemla Africa Holding AS. This is in relation to historic allegations of corruption. The company categorically contests this indictment, and we're looking forward to the opportunity to have this thoroughly examined in court, and that hearing will start in November this year. I'm working with our legal team between now and then to get prepared for that. This is still the beginning of quite a long road because the initial outcome, which will be expected in probably March next year, will be subject to appeals. If the process runs to its ultimate conclusion of a Supreme Court hearing, then it could be as late as fourth quarter 2028 that we get a final outcome of this. In the meantime, we've been very focused on shareholder value.
The operational delivery and a very focused strategy has generated cash to support. We paid out NOK 4.2 per share in 2025 in two payments. Then this year, the NOK 3.25 per share was paid out in June. In aggregate, with the performance of the share price, the total shareholder return over the past two years is about 100%, which I think has been an attractive return for our shareholders. Our current market capitalization is about NOK 1.6 billion , and 50% of that is represented by the cash we're holding in the bank. I think, a very strong balance sheet in terms of our valuation. To wrap this up now, a summary of the key points and production capacity has been demonstrated over the second quarter with production over 5,000 bopd for the whole quarter, which we're pleased about.
We're preparing additional infill drilling investments in 2027. We're pleased with the lifting of 1 million bbl, and the timing of it giving us a big cash injection of $112 million in May. We're currently able to rebuild that inventory of entitlement oil for sale at about 100,000 bbl per month. We will anticipate being back in balance by the fourth quarter. We are making progress with our advisor process to look for candidates to farm-down or divest our Nigerian assets too. That's really all I wanted to say today. Thank you very much. I'd welcome any questions that you have.
Thank you, Jens. We will now go through our online questions. First one is, why are you holding on to so much cash?
This is a good question. $85 million if we are spending modestly, it looks like we are holding onto cash and our policy is to distribute excess cash. I think the real reason is really about the issue I mentioned before about timing of liftings. We have to be prepared for quite a long wait before our next lifting and oil sale. We are currently paying back our overlift that we made. Given that we would be back in balance in October, we would need to wait a few months of continued production to build up an inventory to sell later on in 2027. Right now, we anticipate that would be probably around May next year. We need to retain cash to run the company in the meantime and to continue to fulfill our obligations under our licenses.
In particular, this means the CapEx and OpEx billing that we have for PNGF Sud. If we go into a drilling program next year, our CapEx will be increased, and we need to be ready to manage that. That is the reason that we are holding on to the current stock that we have of $85 million. The board is focused on finding opportunities to repay capital where we can. I would anticipate that would be as part of the normal cycle, and approved at our next AGM in May next year.
Thank you. Following up on the timing of lifting, when do you expect the next lifting to take place?
Well, that's kind of related to my answer to the first question. We don't know when we get to the front of the queue at the Djeno terminal. We anticipate it'll be in May. But we will be working with the terminal operator and our oil trader, ADNOC, the national company of Abu Dhabi, to get the timing for the next lifting. So I expect it to be in May, but it could be a little earlier, it could be a little bit later than that.
Okay. Why are you continuing to invest in Aje if you are selling out?
We are investing modestly in Aje in terms of really enhancing the project definition. We think that's value-added work, and will be of use to any incoming partner. It's aligned with what we've agreed with the Aje partnership. We can't simply stop work and down tools and leave the asset stranded. So it's a balancing act of doing work that will be useful, that will not have a shelf life, in that it will be out of date with an incoming party. So I anticipate that if we can get a transaction agreed in the fourth quarter, we would have a discussion with an incoming party while we're awaiting regulatory approval for what would be useful for us to continue to do. In the meantime, we will continue to add value to the project with the work we're doing.
Moving on to CapEx. How do you expect CapEx to develop going into the next year?
CapEx is pretty much driven by our infill drilling program. There are no major infrastructure investments at the current stage envisaged. We've had a bit of a holiday this year. I think our CapEx this year will be around $10 million. Next year it will be more like it was in 2025, which is closer to $20 million. So I expect that will be the 2027 CapEx. But we won't know that for certain until our operating committee meeting with the operator Perenco, which will be held in November, which is when they will present their proposed budget.
Thank you. Next question contains two topics. First, can you give any specifics so we can understand the strength of the company's case in defense of the corruption allegation? Secondly, any ballpark value for the Aje asset?
I'm going to decline to be drawn too much on both of those questions. It would be inappropriate for me to comment on a case that is going to trial. The trial is going to be where that debate will be had. Clearly, we contest the indictment, and we're working with our legal team to make sure that we can present the facts as we see them in that context. As for value of Aje, we see an attractive asset there with half a TCF of gas and a sizable amount of liquids. I think our 2C resources of 70 million bbl of oil equivalent. This is ready-baked for development in a situation where there's local infrastructure to accept the gas and offshore loading of the liquids. This is an attractive project, and we expect that to be recognized in the market.
Thank you. Can you talk about how Perenco plans to further develop the PNGF Sud license and efforts to boost production capacity?
I think more of the same. Perenco, I think, are specialists on mature field management. They have a particular operating ethos that works well here. They like to have access to the wellheads, so they don't like subsea wellheads. They're all reachable on the platforms in shallow water, and that allows them to use their expertise and workovers very effectively, which is what we've seen in the Congo asset. There's also an opportunity in a field complex that has multiple stacked reservoirs to address areas where there hasn't been an efficient sweep of oil. The infill drilling program and wells that extend the perimeter of some of these fields has been very successful, and we expect more of that. I think we see a long tail of production here that is effectively managed at low cost.
Thank you. There are no further questions, so that concludes today's presentation. Thank you.
Thank you for your attention.