Meren's safe harbor statements can be found on the investors tab of its website. I would like to also mention that this fireside chat may not be reproduced, nor can any written transcript be distributed without the express written consent of Water Tower Research. We will endeavor to address investor questions submitted during this session in a management series report that will follow or in the conference portal. Meren is an independent oil producer whose current asset base includes ownership stakes in producing and development assets offshore and deepwater in Nigeria, and in exploration development licenses offshore Namibia, Equatorial Guinea, and South Africa. Management is committed to a disciplined capital allocation framework that emphasizes delivering organic growth while maintaining low leverage and shareholder returns. With that intro out of the way, Oliver, thank you so much for taking the time to join us today.
Oh, thank you, Jeff. It's a pleasure.
I would like to start, Oliver, with just West Africa. Can you talk a little from a high level what makes the jurisdictions where Meren owns assets attractive destinations for capital in the global energy landscape?
Yeah, I think it's a great and timely question, really. I think there are four things in our minds that are very positive about the region. I think, firstly, like all basins, you start with the subsurface. What we've got here is excellent geology. We've got great reservoirs, we've got great source rocks. Look, we've got lots of oil and gas, right? Tick that box. I think secondly, the landscape today from a capital allocation perspective, you've got diverse opportunities. It goes through from big frontier exploration through kind of multi-billion barrel developments into mid and late life production assets. There's a whole series of kind of asset types, and therefore you can build a really full cycle business here. I think the third real advantage in the region is the host governments and the countries.
From a macro sense, the industry is very important on the continent. It is very important in the countries we operate, in Meren's case, such as Nigeria. Look, you get very good through the political cycle support. Regulations come, regulations go. But these are strategic industries. It is a strategic industry for the countries, and therefore you have got that high-level support for the long term. I think the fourth kind of topical point is security of supply, right? When you look at West Africa in particular, or of course in the Atlantic Basin, and from a European kind of security of supply perspective at least, no issues there, right? We are directly up across the Atlantic and into Europe.
I think in the current environment, that particular aspect is really in people's minds as well, and I think that is a big advantage for the region, actually.
You have said that Meren's corporate objective is to create long-term value through disciplined investment in and management of advantaged oil and gas assets. Can you talk a little bit about what you mean by advantaged oil and gas assets?
Yeah, it is a favorite topic for us, Jeff, because I think advantaged oil and gas, that terminology gets used quite a lot, and I think it means different things to different people. In our minds, what it is about really is cost of supply and of course low cost of supply. We want to build a portfolio that is robust through the cycle. Yeah, it is great at $100 oil. But look, we want to make sure our assets are generating free cash at much lower oil prices as you go through the base of that cycle. That is really important to us. It is about low cost of supply, and then I think you asked the question, well, what drives low cost of supply, right? What makes that barrel truly advantaged in that respect? I think, again, I will start with the subsurface.
So look, in simple terms, I think fields with significant scale of resource, so you've got volume that of course helps reduce unit cost. Good reservoirs, so they're prolific producers as well. So really what you end up with there is kind of in the conventional oil and gas world is you want a low well count, high recovery per well, get your unit cost down. On top of that, you need kind of high-quality infrastructure and efficient operations. Particularly in the offshore, uptime is important, right? The difference on an annual cycle, if you like, between a kind of 98% uptime and a 90% is huge, right? And so again, high-quality infrastructure, top level kind of operating practice drives down the unit cost. Third one is kind of low carbon.
Again, you can look at carbon and barrels in many different ways, but ultimately the carbon intensity of a barrel has a cost to it, whether that's oil or gas. And so actually what we're aiming for is low carbon intensity barrels, which again speaks to bigger resources, kind of cleaner, modern infrastructure, and therefore lower cost barrels. And we think when you have those three things, you get generally advantaged barrels in the sense of you've got a low cost of supply, you've got a low carbon barrel, and therefore, as you go through that cycle, they generate lots of free cash. That ultimately plays into the corporate balance sheet, of course, and it means that it helps your balance sheet stay strong through the cycle as well, really. So that's how we think about it in terms of advantaged barrels.
I think briefly, what does it mean to Meren and our portfolio? I think, of course, those are the type of assets we have today deliberately. If I take our Nigeria fields as an example, multi-billion barrel recoverable in each of the three fields we're a partner in there. World-class FPSOs kind of capacity up to 250,000 bpd peak production. Very high uptime, kind of 98% plus, so very low unit cost. When you look through that into the numbers, that's a lifting cost less than $15 a BOE. So, again, great when it's $100, but even if you're down in a $56 world, it's okay, right? So for us then, that's the important point. You take the principles, you translate it, and you make sure that, hey, when I'm allocating capital, I'm putting it into those assets that truly deliver those advantaged barrels.
Can you talk a little bit about how some of the exploration assets fit into the notion of advantaged assets, like what you have in Namibia and the interest you have in South Africa?
Yeah. I think Namibia is a great example. As a refresher for people, we own indirectly a share in the Venus development. That project is, as stated by the operator, TotalEnergies, very close to FID. Again, it's a bit like our Nigeria assets. It's deep water, it's offshore, it's a huge multi-billion-barrel in place reservoir, probably 750 million bbl recoverable first phase. Big FPSO, a series of subsea wells underneath that. So 20, 30-year project, right? You've got the scale, you've got the reservoir, you've got light hydrocarbon fluids. When we look at that project, what does it bring for us? Again, it brings advantage barrels. They're going to be relatively low carbon. They're in a very efficient modern production system. The wells have high recovery per well. Again, it keeps the CapEx down on the unit cost.
Again, you got a modern facility with a high-quality operator. So your day-to-day, year-to-year operating costs are kept well under control. What it delivers for us is 20, 30-year horizon of long-term low-cost production. Right? Whatever goes on in the macro in the world as you go through the hydrocarbon price cycle, we're pretty confident those are going to be good high-margin cash-generating barrels. So that's a truly important thing for us as we get through into the 2030s, and it comes on stream. Then I look at the kind of exploration we've got in two buckets, really. I go back to Nigeria. What have we got there? We've got a whole series of kind of smaller, kind of lower-risk exploration opportunities that are near infrastructure. So they're 5, 10, 15 km from our existing fields.
Again, as we go through time, you can drill those up. Yeah, you're taking some capital risk on that exploration risk, but actually it's relatively low. In a success case, those things can be tied back to your infrastructure in maybe as quick as 18 months. Right? There's an example called Akpo Far East that we're planning to drill in the near term there in Nigeria. Again, it's testing new barrels, it's exploration on the nameplate, but really that's a low-cost test of something with huge upside and critically something that you can get on stream pretty quickly. So that's kind of bucket 1, that near field, short cycle exploration, add new barrels, existing infrastructure, kind of again, very low cost. The other one then is the kind of Big E Exploration, if you like, the kind of higher risk, higher reward portfolio.
You touched on South Africa, so again, we have a position there. It's a Block 3B/ 4B. It's in the Orange Basin, same play as Venus, Namibia, just south of the border in South Africa. Again, that's a multi-billion barrel test. We've got a well-planning process going on there. So higher risk, higher reward, and how do we manage that? Well, we manage that through kind of farm down deal, de-risk our capital, if you like. So we stay in it. We're in there for about 18%, but through the farm down process we've done on there, we're fully carried through the first well, maybe further from TotalEnergies and QatarEnergy. Again, it's about for a company like us, we retain access to something that's transformational. It's something that could develop into a world-scale project.
We've got material equity, but in the true risk capital phrase up front, it's very limited to zero exposure for us. We want to retain access to those, but again, we're super disciplined on allocating capital to them, right? And trying to find smarter ways to frankly use other money to do that for us.
I'd like to dig into Nigeria for a minute. The operators are planning to bring rigs back to Agbami and Akpo, Egina before the year-end for new drilling campaigns. You've described those campaigns really as being designed to arrest natural declines with some upside growth exposure. Can you just highlight for us what are the key milestones that investors should be aware of that could offset natural decline and provide some volume growth over the next several years?
Yeah. It's kind of top of the list in the short term for us. I think people that follow the story will know Nigeria, very long-lived assets, will run through the next decade into the 2040s, so great. But of course, those fields, there's natural decline. You start in a very high place, 200,000 bbl a day, or we're still in the 50s on two of the fields, and we're in the 70s gross on Agbami, the third field. So they're still big-scale fields, but of course, they're entering kind of later life, natural decline. We've had probably one of the longest drilling breaks since those fields came on stream, about 18 months since any kind of rig activity, and that was deliberate, really. There's a series of new seismic surveys across each field. We have 4D seismic there, so we repeat the surveys through time.
We can see pretty clearly fluid movements in the reservoir. So we've taken some time to evaluate that in the joint venture. Now we're coming back actually with two rigs in Q4, hopefully ahead of Q4, and also an intervention vessel. So we're going to go from this kind of period of evaluation, kind of de-risking, working up portfolio, and actually, as these things do, they all come at once, two rigs vessel across three fields all at once. That's kind of exciting for us as we go into the end of the year. In terms of the activity then, I would put it into three buckets really. The first one really touches on the question, which is infill drilling wells, so new wells, new barrels in the existing fields, areas of unswept oil we've identified on the seismic.
So really kind of short cycle, hook those up straight away, high rate of return stuff, and that really does arrest the kind of natural decline. As the base wells depressurize and decline, we are adding those barrels quickly. Within that category, there is also the intervention campaign I touched on. We will bring a vessel in separate to the two rigs. That is a lower cost activity. That is really working over existing wells, but again, smaller volumes bringing on stream, but kind of ad perforations, recompletions, asset jobs, that kind of thing to clean up the wells. Again, kind of low cost, but short-term barrels offsets that short-term natural decline. Second category of this kind of rig activity, which we will roll through 2027, is really around maturing the next kind of bigger projects to tie back to the infrastructure.
We have got a series of relatively big discovered resources around the fields. For example, there is a discovery called Ikija next to the Agbami FPSO. It is a 20-kilometer tieback if we develop that. There is Preowei, which is something we are working hard on near Egina Field, which will tie back to a Egina vessel. There is an Egina South, which as the name gives away, would be another tieback to Egina. Preowei does not need any more drilling, but in this rig campaign, Ikija, Egina South, we will see on and off our licenses, appraisal activity there.
Really that second category then is saying, right, we have got a discovery, we have got a kind of interesting project, but we need to do a little bit more appraisal to rightsize and understand the development plan for that project. Look at those as kind of three to five-year plus projects.
There will be lots of milestones and catalysts along the way to that, but they are really backfilling that longer term decline. Again, kind of world-class infrastructure here, lots of capacity. Let us try and maximize the use of the infrastructure, right? Super efficient kind of capital returns. The third category is back in there, and we have touched on it, the exploration. Again, we will drill, for example, a well called Akpo Far East. That is an exploration well that I mentioned earlier.
Again, it is about 5 kilometers from the Akpo subsea infrastructure. We will test some new volumes there. If that is successful, it could be 18 months subsea tieback for the first oil ahead of a kind of bigger appraisal development. Again, that could be short-term oil, but really is unlocking a path to much, much bigger scale, kind of higher reward opportunity really. Three buckets there.
Barrels in the short term, barrels in the midterm, barrels in the long term. Again, the art is really trying to get the balance there, right? We are putting capital in all three, but they all have different characteristics, different kind of returns profiles, but they give us near-term production, near-term cash, and actually that longer-term growth portfolio that sustains the business.
Preowei for a minute. FEED work is underway there, and I think to the point you made earlier about getting new seismic, I think the new 4D seismic is being utilized as a part of that evaluation for that project. What are the hurdles that still need to be cleared to move that toward a FID-type project?
Yeah, I think Preowei is a super interesting project and to take a step back on that, what is it? Look, it's about 700 million bbl of oil in place. It's effectively in the license area of the Egina field. It's about 30 km from the FPSO. A lot of work has been done on it historically. What's happened in the most recent phase is that, again, as part of this wider seismic campaign a couple of years ago, we shot a new survey over there in the joint venture. Took a little bit of time out, if you like, a pause, which you never like to do, but sometimes it's the right thing, and worked that seismic. I think that's been pretty insightful to us actually, and it was the right decision to make because what's happened there is we see a couple of different things.
Firstly, we think that it's bigger, there's a bigger prize there, so there's more volume. Secondly, when you look at that reservoir, ultimately, the connected pools of oil within the field, they look slightly bigger to us, and the connections between fault blocks look better. What does all that mean? It means we think that there's more to recover, and we think ultimately you need less wells to recover the same or more oil. So less CapEx, less development risk, shorter timeline. We've kind of traded some time in moving it forward there to kind of reevaluating and saying, well, is there a more optimal way to do it? The answer looks like yes.
Now, as you said in the question, you kind of go to the Front-End Engineering Design and say, right, now we've got a better subsurface picture and much more confidence in that characterization. Let's try and optimize that Front-End Engineering. Again, not just the drilling CapEx, but let's now make sure that the tieback to the Egina field is right-sized and optimal, and then we've got a much better project on our hands. So, right now we're pushing back to restart that FEED, go back in, update that work, move through towards an FID decision, ideally late 2027, we'll see, and then that's a two to three -year cycle project to first oil. Again, two things about that. We call these things tiebacks, and people sometimes think that's a kind of small thing.
This thing would be plateau production gross 65,000 barrels a day of liquids, with some gas in there. We're 16% working interest in there, so it's material to us. It's both affordable from a capital perspective, and it's both material from a growth perspective. It goes through our own infrastructure. The kind of positive reinforcement on the economics is really, really strong there. Preowei is an important thing for us, kind of reset this year, move ahead through the end of this year and into 2027, and really in the joint venture, push as hard as we can to get that thing over the line.
Well, it sounds like Preowei basically fits into what you described earlier as advantaged oil assets.
Yeah, absolutely. It's low cost, uses brownfield infrastructure, therefore it's low carb, and it helps unlock more barrels in the existing field because it lowers the OpEx. I'd say it's kind of the oil the world needs today, and I think from our investors' perspective, look, it's a solid project with a very good return. One of the important ways we look at that is its advantage to Meren specifically because putting capital into something you already own and something you've been in for several years is, by definition, less risky than something that you don't own today and you might acquire. That's the way we look at it from a risk perspective and makes us very happy about it.
You touched earlier on the Venus discovery offshore Namibia. The operator there is TotalEnergies, and they're working toward an FID on that project, potentially toward the end of this year. I think they have indicated that phase one development could target approximately 750 million BOE with a production capacity of around 160,000 BOE per day with first oil sometime after 2030. Can you share any color from Meren on what the expected timing of the FID and what the remaining steps are required to reach that decision? Secondly to that, how should investors really think about the growth potential that Venus could have on Meren, in light of your ownership structure there?
Yeah. No, great question. Because of course, it's a very deep water project. It's the first one in Namibia, so there's a lot of news flow, a lot of stories around Venus. I think as you said, Jeff, the operators put some guidance out there around the size and scale. Good. That's good that that's out there. It's clear what it is, the 750, the 160 per day peak production. I think then, as you say, the question comes timing on FID and where is that. From a project perspective, it's very mature, so it's technically ready, if you like, field development plan, contracts, et cetera. The last remaining piece of work, which is ongoing, is negotiation between TotalEnergies on behalf of the JV and government of Namibia on some of the fiscal terms. Again, that's not unusual here.
First project in the country, very deep water. That's a normal process you'd expect to go through. Of course, you can only go through that once you've got the whole thing buttoned up and both sides know what this thing looks like, what the economics are, and have a shared vision and a model. So it's in a really good place in that sense. I think our expectation then is that there will be progress in those conversations. I think it's in everyone's interests, of course, the government and the joint venture. We would be hopeful that before the end of 2026, there's an FID taken, and therefore the project moves ahead formally from that point. That would take you to, we would hope, a first oil back end of 2030. Then, what does all that mean for Meren?
Well, I think firstly, we have a transaction that we put in place here with TotalEnergies a few years ago, so we don't put development CapEx in, so we have no CapEx exposure to the project. So that's a great place to be in the sense that we don't want it to overrun on CapEx, we don't want it to overrun on time, but we don't have financial exposure to that. We have economic exposure, clearly, but not financial exposure. So, for us, it's very efficient in that respect. So it's very low-risk option. What happens then when it comes on stream, I think 2030-ish, you've got this long life of high-quality barrels.
So I think from our perspective in a company our size, it puts a fourth field, if you like, into our portfolio, which is super big, deep water, offshore, low-cost barrels, and with a 20-plus year trajectory. I think, again, when you look at our peers, that's one of the things that marks us out is the quality of those assets. That's true in Nigeria. I think as Venus comes forward, people will see that that's the same in Venus. Of course, that's the phase one as TotalEnergies call it. There's a lot more resource here, both discovered, but needs some appraisal work and some thinking around it. Then you step out and look at that wider basin.
We have, as discussed, our other position in South Africa, which could be material, but even around Venus in the license area, there's significant undrilled potential. Look at it as phase one comes on stream, good base production for a solid, predictable cash flow long-term. Actually, there's lots of things that can be layered on that as we go through time. In a kind of really good scenario for us, phase 1 is a kernel that then grows into quite a much more substantial business in that basin.
Your block in South Africa is also in the Orange Basin. Does what's going on in Namibia have any implications for your carried interest in your South African block?
Yeah, look, I think it's positive in the sense that most of the basin geologically is in South Africa. About a third of that basin is north of the border in Namibia again. When you look at that, there's a lot of wells drilled in Namibia now. There's been a lot of discoveries. It's been a really good success story. It's now with Venus moving towards commerciality and kind of real. Look, it does a couple of things. I think, one, it shows that the basin is going to be commercial, right? Confirms that. If it was a frontier basin 30 years ago, it's kind of heading to FID again on a multibillion-dollar project here. The basin's real, and therefore, why would it not be real in South Africa? We're dealing with the same geology.
Again, there's more of it, but that looks good as a read-through for that. I think the other thing specifically for us is we have the same operator, same partnership, not quite the same, but TotalEnergies and QatarEnergy are partners with us in both Venus and in 3B/ 4B. That's very helpful because, of course, all the learnings from the JV on Venus will help support our thinking on 3B/ 4B. The final thing on that is really kind of logistics and having a footprint in the region. It's a big region, but it helps having projects up and running. You get the supply chain, you get the kind of infrastructure you need to develop the industry. Because it's pretty remote territory, a long way offshore. Yeah, I think for us then, read-through is great.
Key next step is trying to unlock South Africa and some of the above ground issues there alongside the rest of the industry to get these wells drilled.
Well, we have laid out a portfolio. We have talked about the portfolio which combines a lot of near-term potential growth opportunities, as well as long-term potential growth. I just want to bring our discussion maybe to a close today and talk about how you think about managing Meren's CapEx requirements with the project inventory you have and the board's goals of maintaining the solid balance sheet and supporting shareholder returns.
Yeah. This is a really great place for us to talk because it is top of our list really, is that how do we differentiate ourselves? I think we do that as a business with the portfolio and with our focus on those advantage barrels and low-cost barrels. That is critical for us as an independent. But I think how do you make all that real? You make it real through the capital allocation framework, and that is something that internally in the company is embedded really strongly. It is in the culture here of all the people. Let us think about where our dollars go and where the best place for that dollar is. It is not always in a well, right? It could be in other places. Think about it as money. Firstly, and you touched on it, Jeff, the balance sheet.
Again, we have a very low net debt to EBITDA ratio today, and happy with that. Through cycle, we want to aim to keep that one times net debt to EBITDA plus or minus, keep kind of balance sheet strength. Liquidity, again, on the same basis. We kind of aim for around $150 million of liquidity. A, just from a kind of risk management perspective, but also because opportunities come and you want to be ready, strong balance sheet, ready to strike. Balance sheet kind of management is number one. I think you then look at what do you do with your capital?
I think we look at the organic portfolio and all the things we've talked about today, and we say, "Well, okay, what are the returns in that?" Of course, you rank the portfolio as you do, and you say, "Well, okay, some things are short-term, high reward, but smaller scale. Some things are high reward but bigger scale, longer term." We try to get a balance around that that says, "Well, okay, what does that look like from a returns perspective?" We don't need to do everything. I think we're fortunate that we've got more opportunities than we would want to do, which is how we like it. So they're choices. Organic is second. Organic growth, sustain and grow from the current portfolio. Then three is really shareholder returns.
Again, that really of course ties to two, which says, "Hey, look, I got strong balance sheet under this thing. We've got a great set of organic options with great returns." But if we felt that returning cash to shareholders was a better use of capital, then we'll do that. We've been doing that through our dividend. We've been paying $25 million a quarter, I think for about eight quarters now since we did our amalgamation deal last year. So, we've stood behind that and said, "Hey, look, we can grow the business and we can return capital." But look, we're always looking to say, "What is the best thing for our shareholders? Is it to return capital on a dividend yield? Is it a share buyback?
Or is it to put the money in these organic projects and their super high returns?" So that's how we think about the middle two. I'd say the fourth column, is then inorganic growth. Again, if we look at the sector, we do see opportunities for M&A and acquisitions. What I would say around that is it's fourth in the list for a reason because those things on a risk-adjusted basis, which is a whole other conversation in itself, but on that basis, they have to beat the organic portfolio, which is pretty tough. They have to beat, okay, is it better to return on a risk-free basis again or a risk-adjusted basis, the shareholder return dividend buyback. If they beat all that, we say, "Okay, well, let's have a go at that," right?
What I would leave people with is that, whilst we're very active in that area, how do you demonstrate discipline? Well, you demonstrate discipline in the things that you didn't do and nobody ever knows about because you didn't tell them. So it can be hard to explain the things that you turn down because it needs to stay confidential, but I think that's how we demonstrate our discipline. We haven't been out there doing things that are loose, if you like, with our capital. We've been doing organic, we've been doing shareholder returns while still looking for those inorganic M&A options.
Oliver, I think we'll leave it there. It sounds like Meren's portfolio supports a lot of interesting investment options for the company over the next several years.
Yeah. Thank you, Jeff. It's a super exciting time for us, so I appreciate being able to talk through it with you.
I'd like to thank our participants for joining us for this session of the Water Tower Research Virtual Insights Conference. Once again, please submit questions in the conference portal. If you would like to request a management meeting, please indicate that interest through the portal and we will work to coordinate requests. Thank you so much, and our next session will be up soon.