Everyone, thanks for joining for this Valeura Energy webcast, where we will discuss our Q2 2026 results released earlier today. My name is Robin Martin, SVP of Communications and Investor Relations, and joining this call from Bangkok are Sean Guest, our CEO, Yacine Ben-Meriem, our CFO, and Greg Kulawski, our COO. We are recording the call today, the 6th of August 2026, and we will make a replay available through our webcast and YouTube channel later today. Running order for the event, in a moment, I am going to hand over to the team to present some slides and offer their prepared remarks. Those slides are available on our website, by the way, if you would like to download a copy.
After the prepared remarks, we will go into a Q&A session, which I will moderate. For that, you are able to either type your questions or ask a live question. Again, I will explain how to do that when we get to that segment. Before I hand over, I will just draw your attention to slide two in the pack, which is our disclaimers and advisories, and I will ask that you pay particular attention to the forward-looking information cautionary language here.
With that, Sean, I will ask that you unmute your microphone and you can go ahead.
Right. Hello, everyone. This is actually Greg here. Thanks very much, Robin, for kicking off the call, and thank you all for joining us. I will start with a few updates focused on operations. I will then hand over to Yacine and thereafter to Sean. First of all, it has been a really good quarter in terms of operational delivery, which combined with very strong pricing environment, it resulted in record cash generation for the company. We have that $154 million of adjusted cash flow from operations. I would really draw attention to the margin related to this, which we believe is top quarter, $77/bbl of CFO margin. Free cash flow $105 million. This resulted in increased overall cash position for the company at the end of Q2, $317 million. Overall realized price, behind these numbers is $106/bbl .
Now, the quarter operations proceeded without any incident. Production delivery was pretty much exactly right on plan. We have also continued to execute our drilling program per plan, and the wells have either met or exceeded expectations. We had a couple of specific highlights in well delivery in the quarter. The longest horizontal well that was ever drilled in the Gulf of Thailand, just pretty much exactly 5,000 ft. We have also delivered our first multilateral well, and actually the first multilateral well of that level of complexity in the Gulf of Thailand, which is now on production. Wassana redevelopment is ahead of schedule and under budget, and we are also on track at four additional drilling slots on the Nong Yao A platform. Let me just say a few more about those aspects.
I think on drilling, apart from the execution of the Q2 program, I would highlight the new drilling rig contract that we have signed during the quarter. It's a high-spec jack-up drilling rig, very comparable in terms of capability to the rig we've been using over the last years. But we have been able to secure about a 30% reduction in day rate for this rig compared to what we're paying now. Given this favorable rate, we have decided to lock this rig in for a three-year term, given also the strength of the drilling portfolio we see. We now expect that the operation of the rig will start in Q4, and initially, we will start drilling wells on Nong Yao, utilizing the slots that are now being installed. Thereafter, we will proceed to redevelopment of Wassana and drilling for the new platform.
I think the point about the multilateral well that we have now brought on stream is really that in an environment where we continue to be constrained by the number of slots on the platform, this is a technology that allows us to access more subsurface volumes and at lower unit development cost, through targeting two separate subsurface compartments to a single top hole and a single slot on the platform. We're really pleased with that result, and it's just this one off on the Nong Yao , something that we are planning to do in Wassana redevelopment rig and also other fields across the portfolio. Let me then say a few things about our projects. First of all, Wassana redevelopment.
This project is proceeding very well, and what you see on the picture on the right-hand side is a photograph of the platform in the yard, in Thailand in July. All of the main elements structurally, but also the main pieces of equipment are already in place. The contractor is now finishing mainly the cabling installations, instrumentations, and such like. We are pretty confident the mechanical completion will be accelerated to 1st of October. With that expectation, the team have been working really well to secure also an earlier installation slot for this platform. We expect to start installation in October. This is part of a sequence of installation activities of the same set of installation assets that are working in the Gulf of Thailand for other operators, will then come to execute the Wassana installation.
There's a bit of a queue, but we have actually secured an earlier slot in that installation queue. Now, it's a very positive development. Again, we are working to fully finalize the execution of it. But we expect it will accelerate some of the CapEx, which would otherwise have been spent in 2027 into 2026. But it would mean that the first oil from that redevelopment field will be onstream, say, two months later. That would, sorry, two months earlier, obviously. That would be equivalent to about half a million barrels of extra production within calendar year 2027 compared to earlier. So really good progress, and we'll give further update as we get closer to Q4 and the end of the year.
Now, the other project that we flagged earlier, is the decision to add additional four drilling slots on the Nong Yao A platform, for the cost of about $7 million of additional CapEx. That project is now in execution. Some of the equipment has already been fabricated, actually, on the platform itself. We are already executing some of the modifications and adding control lines in anticipation of these slots being ready for drilling. We expect we will finalize installation of these slots in around October time horizon. Then, in time to start drilling around November of these additional Nong Yao wells. The last project I would flag is progress in the G1 and G3 blocks, where we have signed a farming agreement with PTTEP. We have now obtained the 3D seismic that was acquired last year. The seismic has now been processed, and it is now on the workstations.
The teams are working to then interpret the seismic data and update the 2027 exploration program. We already know we are planning an exploration well in the oil-prone area, in the so-called Nong Yao Northeast area, that is adjacent to our G11 Nong Yao block. So that is already slated for Q1 2027. On the gas-prone part of this block in the Bussabong area, the teams have been working together, and really firming up an FID, which is pretty much technically and commercially ready of a two-platform gas development. So really, we expect to announce that FID in the coming months after Valeura has been formally signed on the DSC of the block following Thai Cabinet approval.
It is an approval where we do not see any risk of not getting it. But there has been probably a bit of delay in terms of how long it takes now with the new government to process it through the pretty busy cabinet agenda. So, again, really good operational progress, and translated into excellent cash delivery.
With this, I will hand over to Yacine.
Thanks, Greg. Greetings, everyone. I guess for the purpose of the financial, it might be worthwhile just circling back in terms of where the pricing is today. Because it kind of explains a lot of what our results of the financial quarter for these results. As I am sure you are all aware, our crude tends to be benchmarked against Dubai, which historically has traded at a slightly discounted Brent. What we benefit in our Thai crude is that most of our crudes in aggregate tend to be at a premium to the Dubai, which kind of lands us at around the Brent pricing. Now, I am sure if you have been following the relationship between Brent and Dubai since the conflict in the Middle East has started, you must have noticed quite a big volatility in terms of pricing between these two benchmarks.
At the start of the conflict, the Dubai price has shot up compared to the Brent at a significant premium, and a month or two after that, it reversed to quite a significant discount. However, in terms of our realized price, what we have noticed is that also our premium compared to Dubai in this quarter has also strengthened, which led to effectively matching the Brent prices. I think in terms of consistency, we continue to guide the market towards Brent as an equivalent to our realized price, rather than just relying purely on what we see in the news and where the Dubai benchmark is trading at. Effectively, the premiums we received have offset, to a certain extent, the discount that has been widening between the Dubai and the Brent.
The key message here is that as far as Valeura is concerned, our conviction right now at this point in time continues to be that we should be, as far as modeling or any perception as to what our revenue will be, the Brent benchmark is a good reflection of where we stand today. This part, where Dubai is today. As Greg mentioned, this is a quite standout quarter for Valeura, and it is across all the key numbers that we as a management team tend to keep an eye on. Let me walk you through the cash for this quarter. In this quarter we have recorded around $260 million of revenue. As a reminder this is over 100% increase compared to the last quarter and that's on the back of a realized price of $106 which is broadly in line with Brent and also on the back of 2.45 million of barrels that got sold.
Now this is you know sometimes it happens in our quarter this is above the production we have during the quarter but it's really a reflection of some of the inventory draw down that we've done compared to the previous quarter. Now once we include the royalties and adjusted OpEx and also the G&A we end up with a pre-tax you know, cash flow from operation of around $163 million. In this quarter we have realized tax of around $8 million with just a small amount related to the SRB.
Now as you are all aware Valeura have benefited from a tax losses that we still have but as a reminder those tax losses really are pertaining to [audio distrotion] of our assets. This feedback has been recorded in this quarter related to Jasmine which is out of the scope of that tax losses. This is why we have recorded [audio distortion] on this occasion. When we sum all these up, we end up with effectively the highest, one of the highest cash flow from operation we've ever recorded as a company of around $154 million which as Greg mentioned, it equals to around $77.1/bbl and an extremely outstanding results for this quarter.
How does this translate in terms of our balance sheet? We started the quarter with $262 million.
Once we add the adjusted cash flows from operations, also the CapEx that was spent in this quarter for around $54 million, of which $17 million was related to the Wassana redevelopment and around $1 million related to the explorations and other income of around $5 million. This $5 million is really related to interest income and also from the royalty that we receive from Rossocom. We continue to receive those royalties, and obviously, we benefit equally from a high oil price that is pertaining in current markets. Once we adjust for the working capital and also take into consideration the tax payment that we have done this quarter related to prior year taxes, SRB taxes of around $90 million. Equally as well during this quarter, we have spent around $7 million as what we call here anti-dilution, which related to prior historical option and PSUs and RSUs.
The aim here is really to try to retain our share count the same. We end up with a very healthy cash position of around $316 million, $317 million. As the title says here on the slide, the balance sheet continued to be strengthened. On top of that, which may be in the next slide, Robin, please. Leads us to how does it fit within our guidance now. As Greg mentioned, at this point in time, let me first maybe start with the production range. I think considering we are six months down the line in terms of for the full year, we have narrowed a little bit our production. It is really a reflection of our confidence in where the assets are performing, as Greg mentioned earlier on. We just narrowed the range a little bit here.
Now, if we look at the CapEx and OpEx in terms of capital spendings overall, we have maintained the same CapEx for now. As Greg mentioned, there might be scope later in the year once we have secured the slots for the installation of Wassana acceleration for this CapEx to actually move a little bit. As a reminder for everyone, and I think Greg also flagged it, the bulk of this spending really just shifting some of that phasing, shall we say, or shifting forward some of the spending from 2027 to 2026. As far as the OpEx are concerned, we are again maintaining the same spend in the same range for now.
It is worth highlighting that, and I think we have mentioned it to the market overall previously, there is a good percentage of our OpEx that is related to oil price via the diesel, which we use for our logistics and everything around that. As the prices strengthen, we might end up at the top end of that range, and there might be a possibility to go below that or even above that if the price goes above this. However, from a financial perspective, so to speak, if the oil price is higher, obviously our margins will expand and therefore, it is something that we are more than happy to absorb in that scenario. Overall, I think the whole message is that we are still maintaining that 2025 long-term view, and this is where we stand in terms of production.
Now, with the guidance as it is today and with the balance sheet as I have just described earlier on. Maybe, Robin, you can move to the next slide. It is worthwhile revisiting an item that we disclosed to the market, last few months really, is relating to our liquidity overall. It is obvious that as a company of our size, we do have the financial resources, quite a substantial amount of resources via our cash system on our balance sheet, which, as I mentioned, right now is about $317 million , $316 million. However, I think we have been quite clear to the market that our strategy and our growth aspiration is really related to how we can organically grow the business.
It is therefore, this is why we have decided to trigger or at least go on and secure the financial facilities that will enable us to tap the market when it is required, when we want it rather than when we need it. This is why we have announced the financial, sorry, the RCF and also the accordion. As a reminder for everyone is we have secured the $75 million of RCF. It does not require us to hedge it. It is also a three-year facility. But I would like to point to everyone really is the accordion associated with that. We have right now sized it at $250 million, but it is important for everyone to realize that that number can easily be expanded for the right assets. It is all about setting this up to be able to do deals that are transformational to the company.
I think as we mentioned during the announcement of these facilities, that we would rather have it in place, when we are, prior to be ready rather than when we actually need it. It's like, to a certain extent, it also reflects how we see the current market and how we can, how we feel confident about being able to actually participate in all the opportunities that we are seeing around us. It sits again with the whole strategy, which I'll let Sean really give you a bit of an overview again or a reminder for everyone. Sean?
Thank you, Yacine. Yeah. Thanks. Greg took us through a lot of what's going on in our operations because we have had an extremely good quarter, both operationally and financially. One of the things we like to point to is we said one of our key pillars of our strategy is operational excellence. We're seeing that whether it's delivering on the production, the HSE projects, where we're taking on the biggest project we've ever done and delivering that early and under budget. All of these really build to the credibility of the company, which is what shareholders are looking for. All of that is going extremely well.
Yacine has pointed to the amount of cash that we've actually brought in, and importantly also at this point in time, to that extra debt facility that we now have accessible to us that really creates that liquidity that allows us to look at further growth. This slide from our corporate presentation, we always talk about, okay, that strong cash flow and where is it going. We've said to the market, we've said to all of you that we're a growth stock, and that's what we're looking at. But when we look at it, we're really producing about the same amount of hydrocarbons as we were three, four years ago, and we took over the assets from Mubadala. But we've delivered top-end growth, top quartile in the shareholder growth.
That's because we've been able to deliver to the market and demonstrate that these assets have much more future to them. Really reaping the extra amount out of the assets and showing that future, which has really underpinned that growth that we've had. So when we look at that cash flow, yes, it's deploying it back into these assets to remain that, to really support that strong cash flowing engine. What we've also seen in Turkey now is we're starting to see growth there in the deal with G1 and G3, and we're making investments there. That's really a solid foundation that we have. The other element then to it, which we've talked about for a while, is the M&A aspect. Really, we believe the two pieces of that are coming together right now.
Our cash position, the access to liquidity is coming at the same time that we are actually seeing some significant deals that we are involved in right now in the market. We have been focused on this for a while. We have been telling you that. We have continued to deliver the strong shareholder growth and value growth there, but we see this is an opportune time now. There is a lot going on in the market, and we see ourselves as very well positioned to deploy that into further M&A for that next step of growth for the company. Robin, maybe just go to the last slide. Look, we talked about this, all the aspects that are going right.
One of the things we really want to emphasize to you is that we have set up this business, we have designed this business to deliver solid, good returns at $65 oil price. We have seen that over the past couple of years, so we have been delivering on that on the oil price. We also made a decision last year when oil prices had dropped to make the biggest investment decision that this company had made by doing the Wassana redevelopment, and that has proved to be perfect timing, is that was at a point in time when oil prices had dropped. We made the right decision because we are looking at the long-term view. The other aspect, if you look right now, is that now oil prices have jumped up.
Greg was talking about the new project that we are looking at on Nong Yao, the acceleration in the project on Wassana. We are not doing these because the oil prices jumped up at this point in time. We are doing them because these are projects that deliver positive cash flow, positive returns within 12 months. That is why we are doing these projects and accelerating these things, is because of the value of the company at $65 and then setting it up that way, when we get these bonuses in the oil price, we just reap the benefits of that into our cash flow to create the solid foundation of the company. It has been an excellent quarter. Things have gone extremely well operationally and financially, and we just look forward right now that we are extremely well-positioned to take this company to the next level.
Thank you very much for joining us here today, and at this point in time, we can take questions.
Thanks, Sean. To pose a question, you have two options here. You can either press the Q&A button in Teams and then type something for us. Several people have done that already, and I will voice those in just a minute. Or if you would like to ask a live question, you can press the button that says raise your hand, and that is a cue to me to say you would like me to unmute your microphone so that you can ask it live. While you type your questions, let us go to some of them that have been given already.
Let us start off with a batch of questions that we have had on the PTTEP farm-in. Perhaps not surprisingly, the main question here is on timing and in three separate ways. Number one, best estimate for timing of the government approval. Number two, timing for providing more color on the size of the opportunity set that we are looking at. Number three, anticipated timing for the Bussabong FID.
Yeah. Okay. Maybe I will take that one. Thanks, Robin. It is a key one because it was 12 months ago that we actually announced this deal. I know I can say that honestly, we have been a little disappointed that it has not been through formal approval yet to get it in. There is nothing that has us concerned on this. We are watching it progress. We are seeing what is happening, the political situation in Thailand, elections, new Cabinet, energy crisis that is currently ongoing. They are dealing with the matter. We are following this.
Everything looks like it will come to fruition very closely. We do appreciate in the market that there is a little nervousness when you see it kind of waiting around on this. But during this whole 12 months that we have been waiting for that approval, our team have been working very closely with the PTTEP team, right? We have drilled wells, we have shot seismic, processed seismic. All that data has arrived on the workstation, and importantly, the teams have been working together to come up with an FID, a final investment decision for the Bussabong Gas Project. We really expect that to come fairly shortly after we actually get the formal approval and get in on that.
It has taken longer than we would have liked. The teams have been working positively together, and what I can say is once we do get that formal announcement, we will plan to really try and get more information out to the market there to allow, whether it is the analysts, the investors, and that, to quantify the value of this opportunity, because it is something of both oil and gas that we are very excited with. But we do really want to actually start converting this opportunity into actually cash flow.
Okay, thanks for that. Let's move on to a question on exploration. So probably for Greg. Can you say more about the open water well that you're planning on the G1 block, and anything you could share on size of the prospect, risk and comment as to whether the volumes are in our prospective resources?
Yeah. I think I was referring to an open water well on the G3 block, not on the G1 block. So it's this area of Nong Yao Northeast. We see already a set of prospects that are adjacent to our Nong Yao facility. It's sort of northeast of Nong Yao A. There's actually a number of well-identified prospects for which we already have prior 3D seismic, but the new 3D seismic covers all of that area. We've already, between our technical team and PTTEP, have agreed that we will drill exploration area wells in that area in Q1.
And now with the new seismic, the teams are just finalizing the best locations and the best well targets for that. But again, we see strong prospectivity, and so we expect that in the case of successful discovery, this is a block that can go into relatively quick development with a tie-in into the Nong Yao system with the same well platform. And there is potential for multiple wells, not just a single one.
Thanks for that. While we are on the subject of drilling, in our announcement, we speak about Turkey and specifically mention that a well was drilled on the Banarli block that has been flagged as a discovery. The question is, what does that actually mean for us? I think what the questioner is getting at here is this in fact a Valeura well or does it just have some other bearing on us?
Yeah. Simply on that, we actually explored the two big blocks that we have in that area. Each of them had actually a well commitment that had to be drilled prior to June 26, and one of them was drilled in the West Thrace block earlier this quarter or a while ago. In actual fact, now we have drilled one, which we had drilled for us in the Banarli block. That was a gas discovery and kind of an agreement we had there was that we paid for the drilling of that well. It is a success, the revenue will flow back to us to cover all the costs that we had in there. But what it gives us is a discovery in that block. It gives us the right to then go forward for a two-year extension period.
We have the extension period on the West Thrace block. Now that we have this commitment fulfilled, the discovery in this block, we will actually go forward with the seeking an appraisal, a two-year appraisal period on the Banarli block. It is really about protecting the acreage much more than it is about having a discovery and having cash flow.
Okay. Let us move on to some finance-oriented questions. First of all, on operating costs. We mentioned diesel a couple of times, and the question is, how much are our diesel costs and what proportion of the operating cost does that comprise?
All in, Robin, the estimate across all our fields and across all the operations, around 25% of our cost is diesel, is related to diesel. As you might imagine, an increase in oil price, which we've seen over the last few months since the conflict in the Middle East have started, have led to an increase in our OpEx.
Okay. While I've got you, Yacine, a question on the debt facility as well. The question is: Is the size of this debt facility tied to our existing assets somehow? Would an increase in the borrowing base by way of an acquisition change the debt capacity?
Yeah. Look, let me make this crystal clear. We've selected this debt facility, the firm side of it, which is the $75 million, is really just as a means to build a relationship with the banks. It's not a reflection of our current borrowing base. It's really just a number that we felt, A, created that relationship with the banks, and secondly, as a working capital, allows us to really just, again, having that flexibility around that. It does not reflect by any measure really what's the borrowing base of our current assets. I think as we flagged it before, this borrowing base doesn't require us to hedge. We continue to be completely unhedged company.
We have a full exposure to the oil and gas. It's really about, again, building those relationships with the financial institution that's backed us so far and to enable us to build. Sorry. Enable us to tap into the market for the right acquisitions targets we're currently pursuing.
Okay. That's a good bridge to the next question here, speaking about M&A. I'm just going to read this one straight out. Many of your peers talk about seeking scale and relevance in the markets. How do you consider this with respect to the future cost of capital for both debt and also for equity in terms of attracting large institutional shareholders?
Look, I think philosophically, I'll let maybe even Sean and Greg comment into it, but philosophically speaking, we do not believe that scale on its own actually creates value. I think we've been crystal clear from the beginning that all we really focus on is creating value. You can build scale by just acquiring, by overpaying for things. I think this is something that people have done before, and it works and sometimes it doesn't work. But our focus is about creating value to shareholders. Do we believe that scale create opportunities? Absolutely, we do. There is potential re-rating in terms of your cost of capital associated with the scale of the business and diversification. But all of this is really philosophical in nature.
Look, it's a very simple business model. We focus on the cash flow, we focus on the barrels, we focus on paying fair value for assets, if we can even lower than that. That's what we will continue to do. If you ask us, are we going to be overpaying for things just for the sake of building scale? I don't think this is within our DNA.
I think the only thing to add there is, it does come down to your weighted average cost of capital, right?
Yeah.
Whether you're relying on your own cash or relying on debt or relying on equity. What we've tried to be very clear with people is it's in that order, cash, debt, equity. We are always going to equity last because of the cost of capital on that. So why we've tried to build up this cash position, now we've added on this debt facility, is that actually right now is quite a low cost of capital for us to go after acquisitions.
Very good. Okay. While we're on the topic of cash, a couple of questions here, and I'll sort of paraphrase them because there's two or three that are very similar. It is very clear that the company is focused on M&A as the primary use of our financial resources. A further comment from an investor here saying there's a clear preference for high IRR project investments to use that cash. However, the questions turn to returns here as well and beg the question, at what point do you feel you need to pivot a little bit and provide for some form of shareholder returns, whether that's through a special issue or bid or some other similar mechanism?
Yeah. I think we've tried to say to people that really the size of deal we were looking at, we wanted to maintain that $250 million, $300 million cash base. People can see with what's happened over the past quarter that actually we've got to the point of we've actually exceeded that. However, what I can say is that with the opportunities we're currently involved in and the opportunities that we see coming at us in the next six months, it's very unlikely we'll be looking at returns in this near-term period. There are some extremely good opportunities that are right in really the area, the sweet spot that we've said to the market we're after, which is transformational here in Thailand, here in Asia.
Carrying on that line of thought, another question here is there's been a surprising amount of M&A transactions getting over the line, given how high oil prices have gone. Are you starting to see a convergence between buyer and seller expectations?
I mean, historically, when the oil price goes up suddenly the way it has been, we have seen recently, you actually have a diversion between the bid ask that has widened. I think broadly speaking, what we are seeing is that long-term views on prices have not really shifted that much between buyers and sellers at this point in time, which kind of create a deal space to happen. Look, I think people now are also becoming a lot more creative in terms of trying to bridge the difference between both sets of buyers and sellers. So far, we have not really seen a complete dislocation in terms of what the sellers are seeing and what the buyers are. So what the sellers are asking for and what the buyers are willing to pay for things.
Obviously, there is always strategic premium that people might choose to put in on assets, and that is quite understandable. At this point in time, I think people are still of the opinion that what we are currently seeing in the market, it is still underpin effectively quite a healthy oil price in the long term.
Yeah.
Okay. Thanks for that. I will just remind the audience that if you are interested in asking a live question, no one has been bold enough to do that yet, press that raise your hand button, and I will give you a chance to unmute your microphone. Otherwise, you can continue typing questions or you can email us on any of our email addresses. ir@valeuraenergy.com is the main one for that.
One more question has come in. If nothing else comes above, this will be our last one. On the Wassana acceleration option, assuming you are going ahead with that, how much CapEx do you anticipate moves from 2027 into 2026? Can you give a directional steer on what that means for overall 2027 CapEx?
Look, I think again, we will be a little bit cautious about firming up the numbers at this stage, but I would say at a high level, it is sort of between $10 million and $20 million, I would guess. That is the amount that would move across effectively between 2027 and 2026, largely. If that does happen, we can fully execute this. We would then expect that the 2027 CapEx will be probably the lowest we have had on these assets over the last few years, given also the much lower rig rate we will be now using from Q4.
Very good. One more question has come in here. There was mention on the call of production being unhedged. Can you elaborate on the thinking behind that and the prospect of potentially locking in some hedges over the next 6- 12 months? Is that something you're considering?
Look, we certainly keep an eye on trying to ensure that the balance sheet is protected. Again, operationally speaking, our breakeven prices are significantly low. This is kind of like as we explained, the kind of margin we're receiving. When we think of hedging, unlike a lot of other competitors, we're not really trying to hedge against operationally or even trying to prepare some sort of financially required hedging. Our hedging is really, the way we look at it is around how can we protect the cash balance that we already have, as this is really what we want to use as dry powder for M&A. We obviously keep an eye on in terms of hedging. We still see that the volatility in the market doesn't really make hedging attractive to us at this point in time.
This is why we kind of haven't really pulled the trigger on it. Obviously, if the market moves the way we'd like it to move and we see opportunity to put some sort of a floor on our price, then we'll do it. As a reminder to the whole market, when we talk about hedging, we are talking buying puts. We fundamentally think that our whole equity story is about giving us that beta to the oil price and that exposure to the oil price. What we don't want to do is to put some sort of hedging mechanisms that limit the upside that exists. There are a few companies out there that hedge at the beginning of the year and might have missed out on the increase in oil price. We don't want to be doing that.
We think when it comes to hedging, we think about buying puts just to protect the downside.
I'll kind of just expand on that in a bit of a simple way, which is people tend to think when oil price jumps up, it goes to $80, it goes to $90, it goes to $100, you should hedge. Right? Because oil price is high. But it's all related to the forward curve. The forward curve with all of this volatility has fallen off drastically. So if oil's $100 a couple of years out, it's back at $75. The cost of hedging is extremely high. So it's not easy. Just because you see oil at $100 doesn't mean we can hedge at $100. The volatility has made it almost impossible to hedge in the near term. We've just kind of ridden it, and so far, it's worked out well.
Thanks for that. We've had no further questions. I'll just remind the audience that if there is anything that springs to mind after the call, feel free to reach out to us. Contact details are on the website. You can always email me at ir@valeuraenergy.com, and we'll make a replay of this call available through our YouTube channel and website later today.
With that, over to you, Sean, just to wrap up.
Yeah. Thanks, everyone, for joining us. It's obviously we're experiencing a time globally where there's a lot of uncertainty, there's a lot of volatility. To us, it's worked very advantageously. We've had an extremely good quarter, but that's just on price. I just really want to emphasize to people, we designed the business to work at $65. This is just a windfall that we actually take on because it's the quality of the team delivering on the assets that's really working out, and we have the confidence in the team to take this forward. So again, thank you for joining us here today.