Earnings call transcript: Meren Energy Q2 2025 sees stable earnings, focus on projects

Meren Energy Inc reported its second-quarter earnings for 2025, revealing steady financial performance and ongoing strategic developments. The company highlighted its EBITDAX and cash flow figures while maintaining a strong position in the energy sector. According to InvestingPro data, Meren Energy’s stock currently trades at attractive valuations with a P/E ratio of 6.67, suggesting potential upside opportunity. The stock showed no significant movement post-announcement, maintaining stability amid industry fluctuations, consistent with its low price volatility profile.

Key Takeaways

• Meren Energy reported a Q2 2025 EBITDAX of approximately $107 million.
• The company’s cash balance decreased to $267 million from $428 million in Q1.
• Meren Energy continues to advance its Venus Development Project in Namibia.
• Production guidance was slightly adjusted, with ongoing focus on deleveraging.

Company Performance

Meren Energy demonstrated solid performance in Q2 2025, with EBITDAX reaching approximately $107 million and a year-to-date figure of around $248 million. The company reported a cash flow from operations of $78 million for the quarter. Despite a decrease in cash balance to $267 million, Meren Energy remains committed to its annual dividend distribution target of $100 million, currently offering an attractive 4.57% dividend yield. InvestingPro analysis reveals the company maintains a GOOD financial health score, with particularly strong marks in profit and relative value metrics.

Financial Highlights

• Revenue: Not specified for Q2 2025.
• EBITDAX: $107 million for Q2 2025.
• Cash flow from operations: $78 million for Q2 2025.
• Free cash flow before debt service: -$19 million.
• Cash balance: $267 million, down from $428 million in Q1 2025.

Outlook & Guidance

Meren Energy’s future outlook includes a focus on deleveraging and potential refinancing of its RBL facility. The company is also advancing its Venus Development Project in Namibia, with an expected final investment decision in early 2026 and potential first oil in 2029. Exploration drilling in Nigeria is anticipated to restart in 2026, reflecting Meren Energy’s commitment to growth and development. Analysts maintain a Strong Buy consensus on the stock, with target prices ranging from $5.98 to $7.13, as reported by InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering 1,400+ top stocks.

Executive Commentary

CEO Roger Tucker stated, "We are delivering on what we said we would do, maintaining financial discipline." CFO Aldo Parisini emphasized, "Our approach towards cash management this quarter has been focused and disciplined." Chief Commercial Officer Oliver Quinn highlighted, "We have a leading independent E&P position with near-term exposure to multiple projects."

Risks and Challenges

• Potential delays in the Venus Development Project could impact future production timelines.
• Market volatility and fluctuating oil prices may affect revenue projections.
• Geopolitical risks in key operational regions could pose challenges.
• The company’s high dividend commitment may strain financial resources if cash flow decreases.
• Regulatory changes in the energy sector could impact operational strategies.

Meren Energy’s Q2 2025 earnings call underscored the company’s focus on strategic project development and financial discipline, positioning it for future growth despite industry uncertainties.

Full transcript - Meren Energy Inc (MER) Q2 2025:

Sergey, Conference Operator: Hello, everyone. My name is Sergey, and I will be your conference operator today. At this time, I would like to welcome everyone to MERSO’s Second Quarter twenty twenty five Results Presentation. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Please note that this event is being recorded. The recording will be available for the playback of the company’s website. I will now pass the meeting over to Mr. Shahin Amidi, Mersen’s Head of Investor Relations. Please go ahead, Mr.

Amidi.

Shahin Amidi, Head of Investor Relations, Mersen: Good morning, and thank you for joining us for Mersen’s second quarter twenty twenty five results presentation. I’m joined today by Roger Tucker, our President and Chief Executive Officer Aldo Parisini, our Chief Financial Officer and Oliver Quinn, our Chief Commercial Officer. We will begin with prepared remarks and then open the floor for questions. Before we start, I would like to remind everyone that this presentation contains forward looking statements. These are based on current assumptions and expectations and involve risks and uncertainties that may cause actual results to differ materially.

You can find a full discussion of these risks in our regulatory filings available on SEDAR plus and on our website. With that, I will now hand you over to Roger. Roger, please go ahead.

Roger Tucker, President and Chief Executive Officer, Mersen: Thank you, Shaheen. Before going into the quarterly performance, I want to take a step back and reflect on the first half of the year and the progress we’ve made as a business. We’ve operated in a dynamic environment over the last six months from fluctuations in oil prices to ongoing macroeconomic uncertainty. Despite this, our focus has remained clear, executing against our strategy and delivering long term value for shareholders. This brings me to our capital allocation priorities, something we’ve been very deliberate about over the last two quarters.

Since the prime amalgamation, we’ve made strong strides in aligning the business behind these priorities. Starting with shareholder returns, we are firmly on track to deliver our $100,000,000 annual dividend distribution. So far, we’ve returned $50,000,000 and I’m pleased to confirm a third quarterly dividend of $25,000,000 taking total distributions to $75,000,000 by the end of Q3. This is a clear signal of our ongoing commitment to shareholder value and shareholder capital returns. We also remain fully committed to maintaining a strong balance sheet with appropriate liquidity headroom.

Following the prime amalgamation, we have taken a proactive approach to deleveraging, repaying some $270,000,000 of the RBL through disciplined cash management with the aim of minimizing interest expenses. If necessary, we have the option of drawing down under our revolving RBL facility. With an end of Q2 cash position of $266,000,000 and the headroom under our RBL facility, we have substantial liquidity and the optionality to act quickly and decisively to changing business environments towards our goals of value creation and shareholder returns. Overall, we are delivering on what we said we would do, maintaining financial discipline, focusing and delivering on our shareholder returns and ensuring the business remains robust and well positioned for the future. And looking to the future, it is important to highlight our funded organic growth opportunity set.

This slide outlines the catalysts that we see as potential near term growth drivers for our business. Starting with the Venus development project in Namibia, I am encouraged by the recent positive updates and public statements by the operator, Total Energies. We are looking towards the final investment decision possibly during the 2026 with first oil by the 2029. This is a world class project that will provide us with a long life production profile, and importantly, it is funded through to first commercial production. We have captured the resource base and bridged the exploration to production gap without stretching our balance sheet.

Another important Venus catalyst for Meron is that as we get closer to the final investment decision, there will be scope for us to report contingent resources and ultimately reserves as part of our annual NI 50 one-one 101 reporting process. Moving to Prayerway, we are working closely with the operator and other partners to deliver a more economically robust project. The cost and subsurface optimization work for the project continues, and there are encouraging signs that the project can potentially capture more volumes with enhanced economics. Our Nigerian asset base also provides us with attractive near field exploration opportunities, such as the Akpo Far East prospect. This is expected to be drilled during the next Agena Akpo drilling campaign to start during 2026.

In case of exploration success, Akpo Far East will provide us with an attractive short cycle project investment that can utilize the existing AGPO infrastructure. And of course, I must reiterate our leading position in the Orange Basin offshore Namibia and South Africa, where as well as our interest in the Venus development, we also have exposure to follow on high impact exploration opportunities. Again, these are funded and provide us with potentially transformational catalysts without stretching our balance sheet. In South Africa, we hold an 18% interest in 3B, 4B. We are carried for two exploration wells and we are working with the operator to develop a drilling program.

Oliver will shortly speak about our position in Equatorial Guinea, where we continue our farm down efforts for blocks EG18 and EG31 with the aim of replicating our commercial deal making success in Namibia and South Africa. Taken together, this set of opportunities gives us clear visibility on future reserves and production growth. I will now hand you over to Aldo to take you through the second quarter highlights.

Aldo Parisini, Chief Financial Officer, Mersen: Thanks, Roger. During the second quarter, we produced close to 31,000 barrels of oil equivalent per day on a working interest basis and 35,700 barrels of oil equivalent per day on an entitlement basis. Q2 volumes were slightly softer than the quarter on quarter trend due to the temporary adjustments at AGPO and Agena. These were driven by gas export restrictions and scheduled maintenance early in the quarter, which form part of our broader strategy to ensure the long term reliability of these assets. Overall, first half twenty twenty five production performance is in line with our expectations and support the midpoint of our original production guidance.

At Akbami, production was also modestly adjusted to support flare management and maintenance activities. Offsetting some of this, our two new Egina wells came on stream during the quarter, performing in line with expectations and helping mitigate natural fuel decline and production adjustments complemented by strong well performance at AGCO. Looking ahead, we will continue to optimize the in field development wells over the remainder of 2025 and the joint venture of progressing our well intervention program aimed at enhancing reservoir production levels. Also ensuring asset integrity and maximizing production reliability remains central to our operating strategy underpinning stable cash flow generation and long term value delivery. Moving on to Slide seven.

This quarter, Marin completed one oil lifting of approximately 1,000,000 barrels at a realized price of $64.2 per barrel. Year to date, we have completed six liftings totaling around 6,000,000 barrels at an average realized price of $77 per barrel, which compares favorably against the data Brent at $71.8 per barrel. Looking ahead, we have six cargoes scheduled for the remainder of the year. Three of these have their Dated Brent fixed at an average price of $64.5 per barrel, while the remaining three are currently unhedged with no pricing mechanisms in place. This approach combined with the sale securing the first half of the year provides a prudent balance between risk management and market exposure, allowing us to mitigate oil price volatility risk and still capture potential upside.

This gives us a solid and stable framework for cash flow performance into the second half of the year despite ongoing volatility in the oil market. Moving on to the next slide for the financials. To start, please note that our Q2 financials are presented on a fully consolidated basis. The hybrid reporting used last quarter following the amalgamation no longer applies. For Q2 twenty twenty five, we delivered EBITDAX of approximately 107,000,000 bringing total EBITDAX year to date to around $248,000,000 Cash flow from operations before working capital came in at $78,000,000 for the quarter with reported CapEx of 30,000,000 For the first half, that equates to approximately $178,000,000 in operating cash flow and $59,000,000 in CapEx.

Free cash flow before debt service and shareholder distributions was approximately negative $19,000,000 for the quarter. For the first half overall, free cash flow before debt service and shareholder returns stands at approximately $103,000,000 With that, let’s turn to cash management. We closed the quarter with a cash balance of $267,000,000 compared to the opening balance of CAD $428,000,000 at the end of Q1. As mentioned previously, this is primarily driven by RBI repayments made during the quarter, dividend distributions as well as movement in working capital. Given our strong liquidity position following the prime organization in Q1, we see the opportunity to use our cash position to deleverage the business and proactively pay down our RBL balance by $80,000,000 during the second quarter.

This brought our total debt balance at the end of the first half to $540,000,000 and significantly reduced interest expenses. We have paid this down even further after the end of the second quarter. We also paid out our first two dividends of the year. In line with our new payout policy, we distributed $50,000,000 year to date in dividends. As a reminder, under the new policy, we have committed to distributing a base dividend of $100,000,000 per year, subject to customary consents and Board approval.

As Roger had mentioned earlier, we are pleased to have announced our third quarterly dividend, which will be paid next month. We also had a large working capital movement of approximately $84,000,000 which comprised largely of movements in our underlift and receivables position. Overall, our approach towards cash management this quarter has been focused and disciplined, deleveraging the business and bolstering our financial strength. Coupled with a strong liquidity position, we remain grounded and well positioned to deliver long term value to our shareholders. Now turning to liquidity management.

As we highlighted last quarter, following the amalgamation of Prime, Marine assumed Prime’s RBL facility with an outstanding balance of $750,000,000 at the deal completion. We remain confident in Marine’s outlook and maintaining disciplined cash management continues to be a key strategic focus. Deleveraging is a priority for us, and we have taken a proactive approach to reduce debt and interest costs. At the end of Q2, our RBL balance stood at $540,000,000 reflecting a $210,000,000 pay down since the deal completion. Post Q2, we reduced this further by $60,000,000 bringing the balance down to $480,000,000 and delivering a meaningful reduction in interest costs.

We also canceled Marin’s $65,000,000 standby corporate facility. This facility had remained undrawn and by canceling it, will save approximately $2,000,000 in annual commitment fees. At the end of the quarter, we had a net debt of $273,000,000 with a net debt to EBITDA ratio of 0.6 times, well below our one time ceiling, demonstrating our strong credit profile. Going forward, we will remain disciplined, considering how best we strengthen Marin’s financial profile and ultimately continue to deliver to our shareholders. Next slide, please.

We have revised our 2025 management guidance based on the actual results from the first half. The changes are summarized in the table on this slide. Working interest and entitlement production ranges have narrowed with midpoints for both ranges increasing marginally. EBITDAC and cash flow from operations guidance ranges are revised lower based on a lower full year average Latham Brent oil price estimated at $68.5 per barrel. This compares to the assumption of $75 per barrel used for the original management guidance.

The revised full year oil price estimate of $68.5 per barrel accounts for average stated Brent price of $71.8 per barrel for the first half twenty twenty five and an average dated Brent price of $65 per barrel for the second half twenty twenty five. We also expect a lower capital expenditure profile, primarily due to the phasing of drilling operations offshore Nigeria with the restart of drilling operations in 2026. I will now hand over to Oliver to discuss the outlook for the rest of our portfolio.

Oliver Quinn, Chief Commercial Officer, Mersen: Thank you, Aldo. Let’s now move to Slide 12 and an update on Namibia. In the last quarter, the joint venture has continued to work on two fronts. On the first front, work continues to progress the Venus development project towards final investment decision, which is expected in the 2026 with potential first oil in 2029. The project engineering is mature and the operator has guided to a development scheme with up to 40 subsea wells tied back to an FPSO with a plateau production of 160,000 barrels of oil per day.

Once online, the expected production life of Venus is greater than twenty years and as such, it will deliver a long term sustainable cash flow to the company. The second front in Namibia is follow on exploration drilling to fully unlock the potential resource within the licenses. Results from the last drilling campaign are being studied and integrated with the recent seismic data to high grade targets for the commencement of drilling that is expected in 2026. The current drilling break will allow time to incorporate the recent well results and allow the next well targets to be further optimized. We currently expect the campaign to commence with a well on the Olimpay prospect and it is worth noting that this will test a slightly different geological concept with a four way structural closure and as such presents a different prospect to the stratigraphic traps in Venus and Marula.

Of course, and as a reminder, we have the benefit of retaining exposure to these high impact wells at no upfront cost and no pressure on our balance sheet as all costs exploration and development will be carried through to first commercial production from the two blocks. Moving to Slide 13 and staying in the Orange Basin, we’ll now move to South Africa and Block 3B, 4B. Last September, we were granted an environmental authorization for the drilling of up to five exploration wells and the remaining regulatory process is continuing to move forward at pace. With that, the joint venture is planning for the first exploration well in 2026. And currently, the leading prospect for the first well is Nyla located in the Northwest of the license area, and this is a prospect with sufficient resource in the success case to underpin a standalone future development.

In terms of capital spend, the transaction we concluded with Total Energies and Qatar Energy last year will cover Meron’s costs for one to two exploration wells. So in summary, across the Orange Basin, we retain a leading independent E and P position with near term exposure to multiple projects across both development and exploration and of course, without the requirement for any near term capital funding. Now turning to Equatorial Guinea on Slide 14, Merin holds two licenses offering differing opportunities. Inboard, Block EG31 offers a compelling low risk appraisal opportunity that could unlock a low CapEx short cycle brownfield LNG project. The block lies in shallow water close to the existing onshore EG LNG facility and contains several gas prone prospects in areas where historic wells have proven the presence of gas.

The second position, Block EG18, is a deepwater exploration opportunity with material scale oil potential. Recent seismic reprocessing and technical evaluation has unlocked a large Cretaceous aged basin floor fan system with several material prospects identified that sit within the same play that is being actively pursued by several majors across the border in Sao Tome. Whilst we see significant value in both positions, our commercial approach and capital allocation remain disciplined and as such, we are running data rooms for both blocks to introduce partners to both risk share and support capital funding. The farm down process has attracted strong interest and we are actively engaged in discussions with potential partners on both blocks with the aim of reaching a conclusion on the farm out process by the end of this year. With the right partnerships in place, drilling activity could take place in late twenty twenty six or 2027.

I will now pass you back to Roger for his concluding comment.

Roger Tucker, President and Chief Executive Officer, Mersen: Thank you, Oliver. It has been a strong and resilient first half of the year for the company. We ended Q2 with about $267,000,000 in cash and a net debt to EBITDA ratio of 0.6x, which underscores the strength of our balance sheet and our disciplined approach to managing leverage. We will continue to build on this, guided by our capital allocation framework to further strengthen Merin’s financial profile. With our new payout policy now firmly in place, I’m pleased that we have already distributed half of our $100,000,000 base dividend commitment with a further $25,000,000 to be paid next month.

This reflects both our confidence in the quality of our cash flows and our commitment to delivering meaningful shareholder returns. Meron today has all the key elements of a balanced business, the ability to consistently return capital, a robust financial profile, high quality producing assets and a fully funded growth pipeline. These are the foundation that position us to grow the business in a disciplined way while continuing to create long term value for our shareholders. Thank you very much for your attention. And with that, let’s move to the Q and A.

Sergey, Conference Operator: Thank you, Doctor. Tucker. We will now begin the question and answer session. Our first question is from Jeff Robertson from Water Tower

: Research.

Sergey, Conference Operator: Please go ahead.

: Thank you. Good morning. Roger, given Marron’s position with development activity and an exploration portfolio that’s pretty robust, can you talk about the type of acquisition that would best fit the portfolio in terms of future capital and timing commitments? Commitments?

Shahin Amidi, Head of Investor Relations, Mersen: Roger, are you?

Oliver Quinn, Chief Commercial Officer, Mersen: Gene, it’s Oliver here. I think we couldn’t quite hear the question at this time. Could it be repeated?

Roger Tucker, President and Chief Executive Officer, Mersen: Yes.

: With respect to the notion of being a consolidator in Africa, given Marin’s current development and exploration portfolio, can you talk a little bit about what type of acquisition best fits the portfolio with respect to capital outlays or capital obligations rather and timing considerations?

Roger Tucker, President and Chief Executive Officer, Mersen: Yes. This is Roderick. The type of thing that we would consider, it has to be within the scope of the the same sort of scope of the assets that we’ve got. So we’re looking at significant fields, if you like, in the production phase and not requiring significant development CapEx. If they’ve got tieback opportunities and small additional CapEx, we would be interested.

But at the moment, we are not at a sufficient sufficient size to take on major development opportunities. So it’s the type of assets that are out there are pretty difficult to find. It’s not a great big long list, but we will maintain our capital allocation priorities as we look forward. Does that answer your question? Yes, it does.

: A question on Akko Far East. You mentioned it’s a short cycle exploration project supported by current infrastructure. Is that a project that if it gets drilled in 2026 as a part of your campaign, it could be on in 2027?

Roger Tucker, President and Chief Executive Officer, Mersen: With that, we could only make that sort of call after we see what acquired or found, obviously. So in all likelihood, it would be a little longer than that. But depending on the flow rates, etcetera, etcetera, we would look to make it as a short cycle as absolutely possible. But we need to wait and see what the results of the well are or committing to it, obviously. Thank you.

Sergey, Conference Operator: Our next question is from Theodor Sven Nielsen from Fuglinaire Investor. Please go ahead.

: Good afternoon and thanks for taking my question. Three questions from me. First on cash flow, you said that or you highlighted that you had strong cash flow year to date, which definitely is true. So I just wonder at which or when in time do you expect to be debt free assuming flat oil prices? So that’s the first question.

Second question, that is on dividend. This year, you guide for $100,000,000,000 for 2026. I’m aware of that. You’re probably not in a position to provide any guidance yet, but how should you think around the 2026 dividend? Should that be a fixed amount, percentage or EPS or percentage or cash flow or any other measure?

Third question, that is on the pro way developments. Could you just remind me of timing for first oil and also the current resource potential?

Shahin Amidi, Head of Investor Relations, Mersen: Thank you, Theodore. I think we’ll go to Aldo to answer those questions. So first on the cash flows. What do you expect to be net debt free assuming flat oil price, Aldo?

Aldo Parisini, Chief Financial Officer, Mersen: Yes. So our current facility will mature at June 2029. So that’s the current RBL. Of course, between now until June 2029, we’ll always be with some gross debt and then repaying down the line. I think the important part is that from the beginning of the year until now, we have reduced the RBL by two seventy million dollars right?

That’s the pace of the cash flow that we generate that we are using to pay down debt while keeping the company liquid. So in terms of being fully debt free, of course, it will take time. But actually, our idea is at some point in the near future to refinance the existing facility and keep firepower and liquidity to pursue our M and A and our growth strategy. So I think that’s on the cash flow. In terms of dividends expectation for next year, I mean, have committed to the $100,000,000 base dividend, which is respective of what we get in terms of cash flow for next year.

Of course, to make any dividend distributions is always subject to the Board approval, right, which will be evaluated at each single time. But considering 2026, the base dividend and looking at oil prices and everything that we see at the moment, we are pretty confident with the continuance of the base dividend policy.

Shahin Amidi, Head of Investor Relations, Mersen: And the third question, and for that, we could go over to Roger and Oliver, which is the pro weight development expectations on final investment decision and first oil date.

Oliver Quinn, Chief Commercial Officer, Mersen: Yes. Thanks, Shaheen. So I think, as mentioned on the call, there’s ongoing work by the operator, which is very active this year in terms of the front end engineering and optimization, particularly around the resource size and whether there’s potential for a relative increase in resource size there. So in short, we expect that work to conclude through this year, and that would present the project for a potential final investment decision next year.

Roger Tucker, President and Chief Executive Officer, Mersen: You roll forward from there, I

Oliver Quinn, Chief Commercial Officer, Mersen: think we project a two to three year development cycle. It’s about a 40 kilometer tieback from Priory to the Aegina FPSO. So let’s set up for oil somewhere in 2029 first oil on that basis. Could you just remind us

: of the in the resource potential to the item?

Oliver Quinn, Chief Commercial Officer, Mersen: Yes. So the last numbers in our public disclosure, probably from a gross project level was over 116,000,000 barrels, and then we carry our 16% of that through about 20,000,000, 25,000,000 barrels of 2P for the Meron.

: Thank you. That’s all for me.

Sergey, Conference Operator: Thank you. Our next question is from David Round from Stifel. Please go ahead.

Shahin Amidi, Head of Investor Relations, Mersen0: Great. Thanks, guys. Firstly, can you please just talk through the thinking around taking an early break from the drilling campaign in Nigeria? I can appreciate, obviously, giving yourself more time to look at seismic, look at well performance. But are there any specific things you’re looking at there?

Because I suppose the lead time between making that decision on what would have been the next well feels fairly tight. And then second one again on Nigeria. I mean, you mentioned the wells at Agena and the workover at Akbo. Are you able to give us a sense of the kind of production lift that, that could give you in H2, please?

Roger Tucker, President and Chief Executive Officer, Mersen: Roger again. So yes, the reason for the effectively, the accelerated release of the rig. And obviously, it was the operator’s decision, and it was the operator’s decision that they wanted to further study the four d seismic to better optimize future locations. And actually, we are in agreement with that. If you’ve got a four d seismic, it is important to make the ensure that it is interpreted correctly to optimize your drilling locations.

Sorry, what was the second part of the question again?

Shahin Amidi, Head of Investor Relations, Mersen0: No, I suppose maybe just a follow-up to that is just really you’re pushing this by, let’s say, three months or something like that. Does that give you enough time to analyze the four d? Yes.

Oliver Quinn, Chief Commercial Officer, Mersen: Well, think, David, it’s Oliver here. The rig we’re saying would come back probably in ’twenty six. So I think it does give us enough time and the operator to go through the four d seismic there. I think I will say in the early kind of view of that, ACPO in particular, a lot of the early work is focused, it looks like there’s some strong potential there that’s coming out of that data, right? So again, on that basis, better to take a short break, go through the data properly and optimize the wells.

So I think the next thing to look out for is contracting a rig to come back in ’twenty six and then drill the Akpo Far East potentially and then other infill wells, Agena and Akpo. So it will give us a break through the end of the year effectively on the work front, if that makes sense actually.

Shahin Amidi, Head of Investor Relations, Mersen0: Yes. And you’re not expecting any big difference between rig rates?

Oliver Quinn, Chief Commercial Officer, Mersen: No, it’s a good question. I mean, it’ll come down, but that’s an internal aspiration. But no, I think the thing to watch for there is in Nigeria, there’s not many deepwater drilling rigs in the country. So I think there’s an optimization around rigs being in country or available and rate. So it’s going to be a timing versus rate question in terms of getting after the activity with an available rig.

Okay.

Shahin Amidi, Head of Investor Relations, Mersen0: And sorry, the second question, Roger, if you

: need me to repeat it,

Shahin Amidi, Head of Investor Relations, Mersen0: was just the in terms of the wells at Agena and the work over at AGPO, if you’re able to give us some sort of context about sort of how material or whether we could see a production uplift from those activities in H2?

Roger Tucker, President and Chief Executive Officer, Mersen: The wells are on now, what should we say? All I can say is that

: we are

Roger Tucker, President and Chief Executive Officer, Mersen: pleased with the results, particularly the last well, which has resulted in an increase, if you like, on what we actually initially anticipated. But it won’t materially affect the outturn for the year. And as you note, we’ve guided to a very tight production out term range. We tightened it up because we do have confidence post the results of those two wells.

Sergey, Conference Operator: Thank you. And it appears there are currently no further questions in the phone queue. With this, I’d like to hand the call back over to Mr. Shaheen Namini for any webcast questions. Over to you, sir.

Shahin Amidi, Head of Investor Relations, Mersen: Thank you. We do have a question with three parts from one of our institutional investors. I’ll start off with that. First part is, has the time line for the Namibia FID, so this is the Venus Project FID change, previously early twenty twenty six, now end twenty twenty five? So I’m actually going to put that to Oliver to answer.

Sergey, Conference Operator: Yes. Thanks, Shaheen. So I think

Oliver Quinn, Chief Commercial Officer, Mersen: the short answer is it hasn’t changed. So I think what’s important to note is the significant degree of front end engineering work that’s ongoing this year. We expect that work to conclude towards the end of the calendar year, the 2025. So I think there’s potential for that FID to be in 2025. But I think as we said on the call, the planning case is in early twenty twenty six.

But I think either way, it doesn’t change the prognosis, particularly to a first oil around 2029. It’s a three plus year cycle time.

Shahin Amidi, Head of Investor Relations, Mersen: Thank you, Oliver. The second part of that question, I’ll put that to Aldo. Could you please comment on your hedging position for the second half of this year?

Aldo Parisini, Chief Financial Officer, Mersen: Yes. So as we also noted in the during the call and throughout the financial statements and the MD and A, for the remainder of this year, we expect to lift 6,000,000 barrels of oil spread throughout six liftings. Two of those we have already lifted at the July. And out of those six cargoes, three of them we have hedging a floor price of $64.5 per barrel on average. And then we have two other cargoes also already fixed, for the 2026 at an average price close to $63 per barrel.

So we are in the next nine months, we have quite a good part of our production hedged, but the other part of it around a little bit more than 50% is still exposed to oil price upside.

Shahin Amidi, Head of Investor Relations, Mersen: Thank you, Aldo. And the third part of the question, and I’ll open up to all three of you, is obviously, we’ve talked about the PRAO way, but if you could elaborate more on the project optimization work that’s been carried on the project so far and any other hurdles towards the final investment decision. So Oliver, do you want to tackle that first?

Sergey, Conference Operator: Yes. Thanks, Shaheen. So I

Oliver Quinn, Chief Commercial Officer, Mersen: think, again, as we touched on, I think, in the prior question,

Roger Tucker, President and Chief Executive Officer, Mersen: start with the subsurface.

Oliver Quinn, Chief Commercial Officer, Mersen: I think there’s work going on around the recoverable resource. And I think not in its early days, but that looks like there may be an increase to a degree in the recoverable resource, which will obviously help the economics of the project. And I think on the back of that, then you follow the flow. There’s an optimization then through the FEED process, the front end engineering design of the subsea tiebacks, number of wells and scope of that tieback. So I think it’s incremental work.

There was significant work done on this project previously. So it’s incremental in adding to that and optimizing the current development scenario. And again, we think that work will play out through the end of this year to lead to a potential FID decision next year.

Shahin Amidi, Head of Investor Relations, Mersen: Thank you very much, Oliver and Aldo and Roger. So next question, I’m going to put to Aldo. It is to do with financing. And are there any plans to do a refinancing of the RBL facility? And if yes, what are the plans?

And what is the outlook for that?

Aldo Parisini, Chief Financial Officer, Mersen: Aldo? Yes. Thanks, Shain. So as I’ve briefly mentioned, yes, I think the idea and we have been doing that for a decade now, and it’s quite usual with this kind of structure is that every two to three years, you start looking at potential refinancing opportunities for an RBL. As we get closer to the loan life the maturity of facility, we our borrowing base starts to be comprised by or constrained by the lower life cover ratio.

So, the idea would be to, evaluate several options. We are not fully focused on only one single alternative. We are exploring a portfolio of alternatives and trying to identify which one or a combination of alternatives that would fit in our company business plan and our company strategy. So we will go through these options in the near term and then decide which one is more appropriate for the business and the company as a whole going forward. I think the good thing on that side is that we are not due to our strong liquidity, we are not in a rush to take any of these refinance opportunities, and we’re able to evaluate the appropriate and the best strategy for the company.

We have time to do that, so not compressed by any liquidity in the near future.

Shahin Amidi, Head of Investor Relations, Mersen: Associated well, related question to do with the RBL facility, existing RBL facility. We have talked about this liquidity headroom of the RBL. Can you elaborate what does that actually mean?

Aldo Parisini, Chief Financial Officer, Mersen: For Yes. So when we talk about liquidity headroom under the RBL, it’s just the difference between the borrowing base that we currently have available under our facility and the amount of the RBL that we have currently drawdown. So to give you an example, at the end of the first quarter, our the second quarter, apologies, our borrowing base was $634,000,000 while we had drawdown at that point only $540,000,000 out of debt. So we had an undrawn part of the facility of $94,000,000 which is what we’re calling the facility headroom. And this money is fully available to the company if we wish to draw it down again up to the constraints of the borrowing base.

Shahin Amidi, Head of Investor Relations, Mersen: Thank you, Aldo. A number of technical questions here. Actually, one with Proway, that’s an easy one to tackle. What is the expected share of production from Proway? I can quickly tackle that on the presentation slides.

We have indicated a peak production rate of 65,000 barrels of oil per day gross field basis. And net to Meron, that would be around 10,000 barrels of oil per day. Next question is on Olimpay 1X. This is in Namibia Block Two Thousand Nine Hundred Twelve. Oliver, any thoughts on when that could potentially be drilled?

Oliver Quinn, Chief Commercial Officer, Mersen: Yes. So I think, as we said, we’ve taken a drilling break on the exploration front in Namibia. Again, important to put that in context that in 2024, there were two new three d surveys covering large portions of the block. And workers are going to interpret those and optimize the next prospects to drill. Alimpe is a leading prospect, as we said, for that.

And again, it’s slightly different in that it’s the same reservoir play, if you like, but it’s a four way structural closure. So it offers a different kind of test, if you like, in the block. And importantly, beyond that, as that work is progressing, there are, of course, several other prospects maturing in there with significant potential as well. So I think we look to restart the drilling campaign in 2026. And then I think the next question to answer as the work matures is just how many wells is that because I think there’s an alignment across the joint venture to fully explore the block, to fully characterize everything that’s in there in parallel with the Venus development.

So I think exact timing confirmed on rig schedules, but it’s the 2026 and it could be pretty exciting year in terms of the drill bit there.

Shahin Amidi, Head of Investor Relations, Mersen: Very good. And Oliver, a follow-up on for you on Equatorial Guinea. Can you give any more color on the pharma process that’s currently underway? And what are the aspirations for the company in relation to that effort?

Roger Tucker, President and Chief Executive Officer, Mersen: Yes. So we’ve had the two positions there for a

Oliver Quinn, Chief Commercial Officer, Mersen: couple of years. Nothing is important to, again, put context on where we are. We’ve done a lot of work reprocessing seismic data, a lot of technical and subsurface work to unlock both the blocks. Nothing that has matured to a very advanced stage. Both would be described as drill ready, if you like.

We know what we’d want to drill and what that would test. So having got that far over a couple of years, it’s been a pretty extensive farm out process in the sense of lots of companies have shown interest. I think the timing is good in the kind of bigger picture. A lot of people are back, particularly in this basin in the Sao Tome side, looking for significant volumes. So with that, we hold effectively 80% in each of the blocks.

So again, you go back to our capital discipline, and we would look to drill those at reduced equity just from a risk sharing perspective. And also, as we’ve been successful in the last couple of years in attracting kind of premium, if you like, on these opportunities, whereby our capital exposure has been reduced, in most cases, to zero or at least a very, very small amount for the early phase of exploration and appraisal. So I think here, those operations are the same. As we said, we’re mid process. We’re positively engaged with several companies, and I think we’ll come back later in the year with clarity on both the farm down position and outcome and therefore the forward plan for the blocks in terms of drilling and capital allocation.

Shahin Amidi, Head of Investor Relations, Mersen: Thank you, Oliver. And here is the usual question on capital allocation and shareholder returns, buybacks versus dividends. I’ve got many, many questions, well, clearly from those in the camp of who favor buybacks. Why aren’t you doing buybacks? Do you plan to do buybacks?

So there’s quite a few of those. But obviously, we have to put that within the broader context of total shareholder return program we have. So I’m going to hand it over to Oliver first sorry, to Aldo first, and then we can go to Roger for his views on this as well. But Aldo, tough one for you.

Aldo Parisini, Chief Financial Officer, Mersen: No, I think it’s a fair question, and we are always evaluating the portfolio of opportunities in terms of returning cash to shareholders and also while at the same time keeping in mind the strategy of the business and the growth aspirations that we have for the group. So we always discuss share buyback. I think if you look throughout this year, we have already distributed $50,000,000 in dividends and around $8,500,000 in share buybacks towards the beginning of this year. And we are on track and firm on delivering the other $50,000,000 in terms of base dividend. Now if we go on top of that, that’s something we need to continue to evaluate on a quarterly basis.

And again, it’s an evaluation that we do not only from a capital allocation perspective, not only in terms of distributions, but also as well with regards to company growth strategy.

Shahin Amidi, Head of Investor Relations, Mersen: Roger, any views on this hot debate, dividends versus share buybacks?

Roger Tucker, President and Chief Executive Officer, Mersen: Thanks, Shaheen. Yes. What I will say is we the day before yesterday, we had our second Board meeting post the amalgamation. And I can tell you that it is a rich topic of debate at the Board. And it is a topic that comes up when we have investor meetings.

But currently, we are going to continue, as we’ve announced today, with the dividend stream that we’ve got. And as all of you are aware, should we distribute any of the excess free cash flow, we do have the ability to issue do buyback program. But as I say, this issue, which is the best for the company in terms of returns policy, is debated at the Board virtually every single Board meeting. And so it is right up there. We’re continuing with the dividend at the moment, but we will again review it later in the year at the next Board meeting.

But we’re continuing with the dividend as we speak, but we recognize that there is a continual debate on this issue.

Shahin Amidi, Head of Investor Relations, Mersen: Thank you, Roger. Just a question has just come in on the deleveraging, Aldo, that we’ve done year to date. Obviously, we still have substantial cash on hand. Do you envisage paying back more of the RBL in the near future?

Aldo Parisini, Chief Financial Officer, Mersen: Yes. So after the end of the second quarter, we made another repayment, which we have already mentioned in the presentation of $60,000,000 So now our drawdown portion of the RBL, it’s around $480,000,000 We see scope to reduce that portion even further, including in the third quarter, but also more towards the end of the year. So we will continue with that strategy. The amount of cash we saved in reducing interest expense is quite material. So we’ll continue with that strategy, towards the end of the year.

Shahin Amidi, Head of Investor Relations, Mersen: Thank you very much, Aldo. There are no further questions from the webcast. So I’ll hand back to the operator and Roger.

Sergey, Conference Operator: Thank you. As there are no further questions on the webcast, with this, I’d like to hand the call back over to our speakers for any additional or closing remarks.

Shahin Amidi, Head of Investor Relations, Mersen: Okay. Well,

Roger Tucker, President and Chief Executive Officer, Mersen: thank you.

Sergey, Conference Operator: No. You. This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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