Everyone and welcome to the Kosmos Energy Webcast and Conference Call Presentation. Just a reminder, today's call is being recorded. At this time, let me turn the conference over to Jamey Buckland, Vice President of Investor Relations at Kosmos Energy.
Thank you, operator, and thanks to everyone for joining us today. Yesterday, we issued a press release that Kosmos has acquired additional interest in Ghana from Occidental Petroleum. This release and the slide presentation that accompany today's call and available on the Investors page of our website. Joining me on today's call are Andy Ingalls, Chairman and CEO with Neil Shah, CFO. During today's presentation, we will make forward looking statements that refer to our estimates, with respect to our expectations.
Actual results and outcomes could differ materially due to factors we note in this presentation and in our U. K. And SEC filings. Please refer to our annual report, stock exchange announcement and SEC filings for more details.
Thanks, Jamie, and good morning and afternoon to everyone. Turning to Slide 2. Kosmos has acquired an additional 18% interest Jubilee an additional 11% interest in the 10 fields in Ghana from Oxy, and we're pleased to present this compelling acquisition, which Kosmos was uniquely positioned to capture. It's strategically consistent and financially transformative. First, the acquisition accelerates Kosmos' strategic delivery, adding significant near term cash flow from high margin oil assets.
We expect the acquired assets to generate around $1,000,000,000 of free cash flow at $65 per barrel Brent by 2026. This near term cash generation underpins our transition to a more balanced oil and gas portfolio. 2nd, we're acquiring the assets at a compelling valuation with the 2P reserves expected to deliver around 3 times the purchase price at $65 Brent. We know the assets extremely well from our more than 15 years of ownership and are confident in the large remaining resource to be unlocked. Following our acquisition, we now have a very simple partnership whose objectives are aligned to maximize the value of the assets.
In a separate transaction, Oxy has agreed to sell its remaining interest in Jubilee and TEN to GNPC on the same terms. And because these assets are incremental to our existing interests, we don't expect any integration risk or additional G and A costs. 3rd, the transaction is highly accretive across all key metrics. Our independent reserves auditor has a 2P NPV-ten of the acquired assets of around $1,600,000,000 a $65 Brent at year end 2020, creating material value for our shareholders. The cash consideration is around 1.4 times the estimated 2022 EBITDAX of the assets being acquired at $65 Brent.
Given the strong free cash flow generation of the assets With a 30% free cash flow yield, the transaction is expected to have a fast payback of less than 3 years. The transaction remains resilient at lower oil prices with all metrics accretive at $45 Brent. 4th, the additional free cash flow generated from the assets is expected to accelerate the deleveraging of the company and enable Kosmos to fully fund its remaining capital commitments in Tortue Phase 1 to First Gas. We remain committed to reducing net leverage in The company to our 1 to 1.5 times target as quickly as possible. And finally, the transaction supports our ESG agenda.
The increased investment in Africa is consistent with our goal of supporting the just transition in the countries we operate in, delivering social and economic benefits in Ghana. We're also working closely with the operator in GNPC to eliminate flaring and drive down CO2 emissions across our operations in Ghana and enable the development of the gas resources to provide lower cost, Lower Carbon Power. Now turning to Slide 3, which looks at the transaction in detail. Kosmos has acquired interest in the Jubilee and 10 fields in Ghana from OXY for a total consideration of $550,000,000 with an effective date of the 1st April, 2021. As a result of customary closing adjustments, Total cash consideration paid was approximately $460,000,000 As part of the transaction, Kosmos has Quite an 18% interest in Jubilee and an additional 11% interest in TEN, which are currently producing around 17,000 barrels of oil per day, Net of the acquired interest, a price per flowing barrel metric of around $27,000 We expect the assets to generate EBITDAX in 2022 of around 325,000,000 at 1.4 times multiple on the cash consideration.
We estimate free cash flow from the We expect assets to be around $140,000,000 in 2022 using $65 Brent, a free cash flow yield of approximately 30%. The assets had 2P reserves of just over 100,000,000 barrels at the end of last year, giving an acquisition price per barrel of around $5 As detailed in today's press release, we received government approval concurrent with signing and fully closed the transaction on the 13th October. The effective date is the 1st April, which explains a lower cash consideration paid versus a headline purchase price. To fund the transaction, Barclays and Standard Chart have provided Kosmos with a 400,000,000 Dollar bridge loan with the remaining consideration funded from a drawing of our RBL. The company expects to refinance this with proceeds from a future $400,000,000 senior notes offering and an equity offering of $100,000,000 announced yesterday, enabling the company to accelerate the delivery of our financial targets.
The Jubilee field is unitized across 2 licenses and there's a 30 day preemption period on one of the licenses, Deepwater Tano, which also includes the 10 field. The table on the right shows the interest post transaction assuming no preemption. If reemption is fully exercised, Jubilee is only minimally impacted with our interest in Jubilee reduced by 3.8% to 38.3%, whereas the reduction in 10% will be more significant with our interest reducing by 8.3% to 19.8%. Even with preemption, the transaction remains highly accretive given the increased stake in Jubilee. Turning to Slide 4.
We are acquiring assets that we know extremely well. Over the last 2 years, you've heard me talk about the partnership's efforts to As the operator reported as part of their half yearly results in September, The partnership has continued to make very good progress and the chart on the bottom of the slide highlights the key areas of focus. First, uptime of the 2 FPSOs has been high. 10 has always had high uptime, but through the work we're doing with the operator, the Jubilee FPSO is Now seeing similar results. 2nd, Jubilee water injection is around record levels and significantly higher than recent years.
With increased levels of water injection, we're better able to manage reservoir pressure, which helps to mitigate natural decline. And finally, we're seeing increased commitment from the government to prioritize gas from our fields, which provides a useful outlet for the gas and reduces the need for Re injection into the reservoir or flaring. With growing gas offtake and sustained high levels of water injection, We're better able to manage the gas oil ratio, which should drive higher levels of oil production in the future, particularly as we add lower GOR wells in Jubilee. Turning to Slide 5. We continue to work closely with the operator on projects that can deliver And we see the greatest near term upside potential at Jubilee, where we have a larger working interest.
This slide focuses on the plans to grow production and margin at Jubilee over the next 2 years. We returned to drilling at Jubilee this year, Adding the first wells in over 2 years. A producer and injector were drilled in the first half of the year and the producer came online in July and the injector in September. Initial production has been positive and Jubilee is now producing over 80,000 barrels of oil per day gross. A second Jubilee producer should come online around the end of the year, And we which we expect to allow Jubilee production to exit the year at greater than 85,000 barrels of oil a day gross.
With additional low GOR wells added from Jubilee Southeast in 2023, we plan to grow Jubilee production at around 100,000 barrels of oil per day gross. The bottom chart shows the attractive cash margins of the Jubilee barrels. $65 Brent, total cash costs are around $30 per barrel, split roughly 1 third OpEx, 1 third maintenance CapEx and 1 third cash taxes, generating a total cash margin of around $35 per barrel. At current oil prices, there's further upside to that As production rises in line with our expectations, per unit economics should And we'll continue to improve as some fixed costs are absorbed by an increasing number of barrels, further improving the per barrel cash margin. Turning to Slide 6.
Now that we've described the assets, I want to walk you through the positive impacts it has on Kosmos. As I mentioned in my opening remarks, the transaction accelerates Kosmos' strategic delivery. It does so in 3 ways. First, the acquired assets generate significant free cash flow. At $65 Brent, we expect the assets to generate around $1,000,000,000 of incremental free Cash flow between now and the end of 2026 over 2 times our initial investment.
In addition, the assets are expected to produce through license expiry in the mid-two 2030s, generating an attractive multiple on our invested capital. 2nd, we expect the assets to materially enhance EBITDAX and cash flow, allowing us to grow the company organically while reducing our absolute debt. With the rising EBITDAX and excess cash to further pay down debt, we expect The transaction to rapidly accelerate the pace of deleveraging to our target level of 1 to 1.5 times. 3rd, after paying down debt, we plan to use some of this additional cash flow to fund our growing gas activities in Mauritania and Senegal, including our remaining CapEx to First Gas and Tortue Phase 1. On the right hand side of the slide, you can see how the portfolio mix is expected to Change as our LNG activities in Mauritania and Senegal ramp up.
Having high quality, Low cost, lower carbon oil assets to support our growing gas portfolio is key to Kosmos' differentiated approach to the energy transition. Turning to Slide 7, which shows that the significant value in the assets being acquired based on third party data from our independent with the reserve auditor, Ryder Scott. The $550,000,000 paid for the Oxy assets implies an attractive 23% And we will now begin the Q1 of 2019. And we will now begin the Q1 of 2019. On a proved plus probable basis, the NPV-ten of $1,600,000,000 shows there is significant additional value from our current infill drilling inventory, which has identified approximately 50 opportunities.
To rollout of that, defined inventory has commenced and is expected to increase Our return on investment to around 3 times. Lastly, there's additional upside from the potential acceleration of production with the 2nd rig and through possible reserves. Both of these, in addition to the potential for higher Looking at the top right chart at Jubilee, Total oil in place is estimated to be around 2,000,000,000 barrels. The field came online in 2010 and has reduced just over 3 100 1,000,000 barrels over the past decade, a recovery factor of around 16% so far. With almost 400,000,000 barrels of remaining 2P reserves.
The field has a 2P reserves to production ratio of around 14 years on current production, so a considerable runway of future opportunity. At 10, total oil in place is estimated to be around 1,000,000,000 barrels with less than 100,000,000 barrels produced, a recovery factor of around 10% so far. With approximately 175,000,000 barrels of remaining 2P reserves at 10, the field has a similar 2P reserve to production ratio as jubilee. Turning to slide 8, we look to the financial characteristics of the transaction. As I've said, this transaction is accretive on all key metrics, enhancing EBITDAX, cash flow and net asset value per share, while accelerating our deleveraging plans.
On the bottom of the page, you'll see how we plan to utilize the cash flow generated from the business. The acquisition has material operating cash flow with low maintenance CapEx, adding to an already strong free cash flow profile of our We plan to prioritize the extra cash flow towards debt reduction and funding our remaining CapEx on Tortue Phase 1. Turning now to Slide 9, which looks at how the transaction fits with Kosmos' disciplined financial approach. We're on a committed path to lower leverage. In 2020, leverage was elevated through a slight increase in debt and a material reduction in EBITDAX due to record low oil prices.
We've reduced net debt by around $100,000,000 in the second quarter with further progress expected through year end 2021. EBITDAX is also starting to increase with 2Q 2021 EBITDAX over 3 times higher than the same quarter last year. This means our leverage, which uses trailing 12 month numbers, will be significantly enhanced as we move through the year with another step down after our current hedges roll off later this year. The transaction has material EBITDAX and cash flow and we expect you to accelerate our deleveraging plan by several years. We are now targeting leverage of less than 2 times by year end 2022 at $65 Brent and closed at 1.5 times at current prices.
We have a disciplined returns focused approach to capital allocation, only investing in the most compelling opportunities across the portfolio. This acquisition generates returns in line or ahead of our organic investment opportunities and therefore is the right place for Kosmos to invest. In addition, going forward, our development drilling opportunities in Ghana are some of the best opportunities in our wider portfolio. We have an active hedging strategy, which limits the downside and retains exposure to rising prices. For the assets being acquired, we plan to hedge around 60% of the production for the next 12 to 18 months with minimum floors around $70 per barrel.
Given the attractive levels current futures are trading at, we can ensure we de risk our deleveraging plans and crystallize our investment returns by significantly removing the price risk from the acquisition. Post these additional hedges, we plan to prudently continue our hedging program to limit downside for our current barrels as well. We will also consider additional M and A, but we remain highly selective and only pursue opportunities that are a strong and we will continue to execute on our strategic fit with Kosmos' existing operations and grow shareholder value. Today's deal was very similar to the transaction we did in ExoGuinea, Cosmos' established track record in country enabled us to become the preferred buyer and close the transaction. With this transaction, Kosmos has a very strong organic growth story over the coming years, both from the growth expected in Ghana and with Torch View coming online.
However, we continue to seek out unique opportunities where our differential ability to transact and deliver value for our shareholders. And finally, once leverage is within our target range of 1x to 1.5x, we'll look at shareholder returns through either dividends or buyback. Clearly, this transaction moves us closer to that point. Turning to Slide 10. Cosmos has had a presence in Ghana for the last 17 years with a long history of being a valuable partner to the country.
We discovered the Jubilee Field in 2007, which was the first commercial hydrocarbon discovery in the country's history. We have had a consistent and highly active presence over that period with a fully Ghanaian team operating on the ground today and have maintained positive relationships with the key stakeholders in government, business and local communities. We remain committed to local content. We've had real success with our award winning Kosmos Innovation Center, a program we set up in 2016 to invest And we are committed to growing the impact of the Kosmos Innovation Center as well as investing in other key local projects. The strong track record is the basis for the government support for Kosmos increasing its presence in the country through this transaction as a differentiator for Kosmos.
And finally, on the environment, the Jubilee 10 Partnership is working to reduce emissions across operations in Ghana. We're targeting the elimination of routing flaring by 2025 and are working with the government to develop gas resources to provide lower cost, lower carbon power to Ghana. Cosmo is also committed to mitigating emissions through nature based carbon capture projects and is already invested in a reforestation project in country in partnership with Shell. Turning now to Slide 11 to conclude today's presentation. The acquisition of additional interest in Ghana accelerates Cosmos' strategic delivery, adding strong near term cash flow from high margin oil assets, enabling the transition to a more balanced oil and gas portfolio.
We're acquiring the assets at a compelling valuation and there is long term value in the resource base across Jubilee and X and significant near term value upside potential from oil price production and margin growth. The transaction is highly accretive across all key metrics, including EBITDAX, cash flow and net asset value per share. We expect the transaction to materially enhance our free cash flow profile and accelerate our deleveraging plans. And finally, the transaction is aligned with our ESG agenda, growing investment in Africa and supporting the just transition to deliver tangible economic and social benefits in Ghana. Thank you.
And now I'd like to
Our first question is from Charles Meade with Johnson Rice. Please proceed.
Yes. Good morning, Andy. This looks like a really attractive deal for you guys. And I'm curious, Why not take down the whole of Oxy's position? Was that an option?
And if it was, How did you pick down or how did you pick up the size of the piece you wanted?
Oxy, you know, worked a deal where there was an opportunity for both Cosmos and GNPC to gain additional shares. And I think the structure of this transaction It was good because it's enabled a very simple partnership now, the same players involved. We have a very aligned partnership now with both Kosmos and GNPC having enhanced stakes. And actually alignment around ourselves, Tullow and GNPC on delivering the maximum value from those assets. So I think that the structure whereby there was a sale to both Kosmos and GMPC was good for all parties And one that we fully support it.
Got it. Got it. And then as a follow-up, a little on that same On the same question of the ownership structure, depending on what happens with the pref rights, you guys might Wind up with the largest working interest percentage in Jubilee. And Conceivably, that could put you in line to become the operator. Is that something that we should think about as a possibility?
Or is that not on your horizon?
Charles, I think we have a very good working relationship with Tullow. I think the new management team Have done a very good job on improving the operational performance of the fields. It's been a very collaborative relationship Between ourselves and Salo at all levels, from the CEO down to the working teams. I've got a huge amount of respect for Raul and we have a very good working relationship. So we have no desire to change that.
And we're confident of our ability now with a much Very simple partnership between ourselves, GNPC and Tello to continue that. And the relationship with GNPC is also very strong and we're pleased that they have a larger stake and everybody's aligned on the future. So The deal is clearly sort of good from a financial perspective, but from a strategic perspective, I think it gives us exactly the partnership we We want for the future to create the maximum value for our shareholders and all the stakeholders in Ghana.
Got it. Yes, that slide 4 you had really laid out the operational improvements over the last several years well. So thanks for that, Andy.
Great. Thanks, Charles.
Our next question is from Bob Brackett with Bernstein Research. Please proceed.
Good morning. Thanks for taking the question. A 2 parter, one on the CapEx. You mentioned the $10 a barrel of maintenance CapEx, but clearly there is a growth trajectory for the assets. Can you help us think about the CapEx over the next several years?
Yes. Go ahead, Neil.
Yes. So thanks, Bob. Yes. I'd say, it's hard to sort of differentiate between the maintenance and the growth CapEx, particularly as the growth is largely coming through Jubilee. And it doesn't require additional wells as much as sort of the next phase of growth will come along from the delivery of Jubilee Southeast in 20 23 as Andy sort of talked through and said it's a bit sort of a wash in there, but it's not it's a pretty low number.
We've carried around 100,000,000 Net to our interest our current interest in the past is sort of the maintenance level. So that's I think what you should count. And Yes. One of the things we are discussing, and as Andy mentioned as well, sort of been adding a second rig, which would sort of increase that a bit to the extent we want to accelerate some of the activity in 10, which is part of what we're looking at. And so, but it's not a lot of additional capital, which The asset, both our existing asset and the additional acquired interest will be able to contribute sort of
And the follow-up
would be, I love the concept of hedging With minimum floors on the acquisition, why not dial that 60% number up and then why not even think about that hedging Strategy across the entire production base.
No, I appreciate the Question. Yes. So I think we've always in the past our hedging strategy has been to do around sort of 60%, 65%, 70% of the 1st year production and then go up sort of several years out. And so we've consistently done that. It's not around sort of Speculation, but actually ensuring that we have the cash flow to run the business.
So we don't take a view on sort of the oil price. What we're trying to do is make sure that we can fund the program and deleverage the business over time. This is a slightly different situation in terms of we are taking on additional debt, but it's clearly very leverage accretive and Given where the curves moved, particularly over the last 2 months, it provides us a unique opportunity to ensure That we sort of lock in the deal economics and at the same time, get to that, yes, Leverage goal that we've talked about on an accelerated basis. And so, yes, there's nothing magic around sort of the 60% of sort of 2P level, but you do want to make sure that you have some downside, You have some tolerance for operational shifts, but I think we're hedging out enough Cash flow, to protect the deal economics and get to the end leverage target.
Okay. What I'd add, Karl, With the deal sort of closed, do we have the consents in place? So we have the ability now to move on the hedges. We're not waiting for the deal to close. So I think that important part of the structuring of this was to make sure that we were fully closed and therefore can move ahead.
Great. Just to clarify, the hedge in the past, you all have used a range of types of hedges. This sounds like given that you're retaining the upside, that sounds like you're structuring puts. Is that fair?
We haven't put them in, but we will I mean, I think we'll look at I think A combination of puts, swaps and collars as we have in the past. And again, the specific instrument we use will depend on the day, but at least we want The minimum floor that we'll get to is 70. We may do better. Great.
Thanks for that. Puts, please.
Got it.
Our next question is from Neil Mehta with Goldman Sachs. Please proceed.
Hey, good morning. Thanks for taking the question. This is Nicholas Slessor on for Neil Mehta. We just wanted to ask about the remaining Tortue financing for Phase 1. On the last quarter call, I think, KAWS is targeting to complete the NOC refinancing in the Q4.
We just wanted to know, is this still on track? Or is the full remaining CapEx now expected to be financed from the incremental Ghana position? And then if you could just remind us how much CapEx is remaining on the project
Sure. Yes. So while this provides the cash flow to fund the remaining amount of Tortue, It hasn't changed our objectives in terms of the financing plan related to Phase 1. So the NSE financing in terms of putting that in is still on our list to do and we're still targeting to get that done by the end of the year. As far as additional capital in Tortue sort of Phase 1 to first guess, Our current sort of estimate on that CapEx number is around $300,000,000 within sort of the 2022, 2023 period.
Thank you. Really helpful. And then just a follow-up. So in the deck, you mentioned targeting dividends and buybacks When that leverage target reaches the 1 to 1.5 range, is there any sort of preference that Cosmos would be placing, in terms of priority around dividends or the buybacks?
Yes. I'd say, we'll look at that when we get there. Again, I think the large of it depends on Where things are trading at that point in time. And so it's not something we would make a decision on today, but we'll evaluate it once we get to that leverage target.
All right. Makes sense. Thank you.
Our next question is from Nick Stefanow with Capital hold up. You may proceed.
Good morning, gentlemen. It's Nick from RemCap here. I'd like to congratulate you on what looks like a really good deal and well done. It's been The 3rd ION1, I think you quite a bit from M and A. I have two questions to ask, please.
I just wanted to understand How competitive this process was? And generally, I mean, if I look at the broader kind of like landscape, should we expect Do you expect the market to be at around this kind of like valuation levels that we maybe like maybe half the price of Well, it should be all. If you could comment, that would be helpful, please. My second question is on production. Andy, is that 100,000 barrels per day for Jubilee, is that contingent on bringing a second rig on?
Or is it Just with a single rig, you plan to reach that level. And what is it that the segment will be doing then? Would it actually Managed to bring production even higher at €2,000,000,000 kind of like a couple of weeks each year for TEN. Is that how I should be thinking about it, please? Thank you.
Yes. Hi, Nick. Yes, so that competitive process, I think the media has sort of talked about Various parties been involved. I think what differentiated Cosmos ultimately in it was the fact that We've been we have a long track record in Ghana. We've been a positive influence on the partnership And I actually have a long track record of a positive contribution more broadly to the country.
So as Oxy was looking to structure their exit. I think that the combination of increased stakes for both Cosmos and GNPC was the structure that shone through. And I think we were able to take advantage of that in terms of our competitive So look, I think there were plenty of people interested. And I think ultimately, we prevailed because at a good valuation, Because I think of the track record and contribution that we've made in the past and will make in the future. So I think and look, as you look back at deals that we've done, I think that The differentiation of what you bring is important.
And we've clearly, as you say, in the Equatorial Guinea deal, As I mentioned in our remarks, I think there was a similar set of circumstances. So I think we're careful about where we do business, how we do business and the deals that we pursue are ones where we believe we have a differential advantage to create value for our shareholders. On the second question, look, I think going forward, we see opportunity in both Jubilee and TEN. We are clear, I think, on how we're going to unlock that opportunity set. There's Jubilee Southeast to pursue in 2023, which I think can actually occupy a pretty fulsome rig line.
And then there's the pace at which we open up new opportunities in Tan. So I think it's when we have both of those operating in parallel, which could be as early as the end of next year, that sort of timeline as to how do we then operate with 2 rigs. So I think there's plenty of opportunity. The most important thing now is to get sort of the sequencing All the opportunities, right, so that we can maximize that recovery and actually accelerate the delivery. So I think we see plenty of opportunity.
I think ultimately that there is a 2 rig line to pursue. We just need to make sure that we've got timing exactly right versus the build out of the infrastructure, so the wells come on at the right times. It's sort of That optimization, Nick, that we're going through with the operator at the moment.
Okay. Thank you. And just a quick follow-up here. When you sold your Frontier Exploration portfolio to Shell, I think there was a contingency that If the next 4 wells that Sherwood drill there, you get $50,000,000 for each discovery up to 100,000,000 I think that some of these wells are about to be drilled. What's the update there?
And can you give kind of there could be some Potential windfall here. So I just want to know when that will be happening if it's going to happen?
Yes. I think obviously, this is Shell are obviously pursuing those opportunities now. I think my best understanding is The first of those wells could be drilled this quarter with subsequent wells in 2022. So that drill out of the portfolio they acquired will happen over the next 12 months.
Okay. And if there is some discovery, You could get maybe $50,000,000 or is it contingent on appraisals and other things?
No, I think the actual the way that the deal is The term is that with the discovery and the submittal of an appraisal plan, then the upside is due to us.
Understood. Thank you so much.
Great. Thanks, Nick.
Our next question is from Mark Wilson with Jefferies. Please proceed.
Hi, good morning. Some of my questions have been answered. I was going to ask about acceleration of getting a second rig in, but I think you just answered that talking about the end of next year. So some points I'd like Cover off. The reserves you show $104,000,000 are quite a bit different from the operators Implied $8,000,000 across those two assets.
If you could speak to the difference there, please. I think it may be related to the 10 field. And secondly, we noticed how Oxy had A settlement of a tax situation is that and we know that Tullow has one as well in Ghana. Just wondering if there's any position or a tax discussion dispute going on with Kos, if you could just answer that. And then finally, production From here is the big question and the last few years has really seen oil gently declining while gas Production has stayed constant.
And so could you just outline the steps, Andy, towards getting to a 0 flaring Or lower gas off take if that indeed is the case by 2025? Thanks a lot.
Yes. Kay, on reserves, Mark, It's always hard to actually comment. We have our own independent reserves auditors, Ryder Scott do our reserves and we've seen a consistent approach with that. So, I think the difference is actually, again, I'm not quite sure of the timing, but I think the differences are relatively minor. Yes.
Again, we have our own track record with Ryder Scott, and obviously, we stand behind that. On tax, yes, as part of their exit, Oxy settled their ongoing tax audit issues. Every company operating in every jurisdiction Always has tax audits that need to be settled. Obviously, it was important for us that Oxy settle those On exit, with regard to our own position, we don't believe that we have any Material issues, clearly there's always ongoing discussions with the GRA, but we don't believe that we have any material ongoing issues. And then in terms of the flaring, we've got a really good plan between ourselves and the operator to get to 0 Operational flaring by 2025.
And there's plenty of opportunity for the usage of the gas within the country. So for us, this is an absolute win win. We're clearly lowering the carbon from the flaring, but actually the gas is going to use where it's displacing diesel in power generation, which again is an additive additional benefit from it. So I feel good about the these are Assets which are both low cost and lower carbon. And I believe by the middle of the decade With the flaring significantly reduced, then we're in a position where these are truly top quartile oil assets from an emissions Appreciate
it. Thank you. Since there are no further questions at This time, I would like to bring the call to a close. Thank you to everyone for joining us today. You may disconnect your lines at this time and thank you for your participation.