DNO ASA ($DNO)

Good morning, and welcome to DNO's First Quarter 2026 Earnings Call. My name is Jostein Lovas, and I am the Communications Manager here at DNO. Present with me here today in Oslo are, as usual, Executive Chairman, Bijan Mossavar-Rahmani; Managing Director, Chris Spencer; and CFO, Birgitte Wendelbo Johansen. In addition, we have a surprise guest, Morten Grini, who is Senior Vice President, responsible for Assets and Project Development in the North Sea business unit. And Morten Grini will wrap up the presentation with a North Sea deep dive. After the presentation, we will open up for questions in the Q&A session and press questions will be dealt with afterwards. With that, I give the word to Bijan, please.

Good morning, and welcome to our first quarter 2026 results and operational updates, again, with a focus on the North Sea. This is a beautiful spring sunny day in Oslo, clear blue skies. You won't have a chance to see it because we're in an indoor room. My colleagues typically put me in an indoor room away from a window and away from the seagulls that fly over Oslofjord. Those of you in Norway, some of you may understand the reference. But trust me, it's a beautiful day, and our results are similarly sunny and blue skies for the first quarter, and this has continued into the first part of the second quarter. Much of this has to do with higher oil and gas prices, principally in the month of March, but the impact has been significant on our results and those of many other international or national oil and gas companies. The strong performance of our North Sea operations, which we will review in more extensively, Morten will, and others will touch on it. Our strong North Sea performance has been able to capture higher prices. We are, as you know, not producing currently in our Kurdistan sector, but the acquisition of Sval Energy last year and our much larger presence in the North Sea now has proven the important de-risking that acquisition and diversification has brought to the company. And now we are a far more resilient company in terms of capturing as much as we can the performance of our 2 business units in Kurdistan, but also in the North Sea, principally on the Norwegian continental shelf. The higher oil prices, of course, and higher gas prices are a result of the geopolitical turmoil and the war in the Middle East. Based on recent latest reports, we may be seeing a light at the end of that tunnel and the peace and stability brought back to the Persian Gulf region and Iran in particular, and the other countries that have been impacted by this crisis. The higher oil and gas prices resulted from it that they have not been because of any action by the -- by our industry. Our industry has benefited, but of course, we all recognize that tragedy and devastation and suffering of people that are affected by these geopolitical crises are not something we welcome nor have we had anything to do with their creation. The impact has been a strong financial results for us and other companies. And these will -- these are not only reflected in our first quarter results. They will be importantly reflected in our second quarter results, but they give us the financial means with which to continue to grow our business. There are many opportunities in the DNO portfolio and the additional resources will allow us to capture those. So that's also points to a stronger weeks and months and years ahead. With that, I'll turn it to our Managing Director, Spencer, to give more color to the performance during the first quarter and facts and figures about the first quarter. Please, Chris.

Thank you, Bijan, and good morning from me. As introduced by Bijan, we've had a good quarter with the strong performance again in the North Sea lifting our profits on the back of those higher prices that we've seen, particularly in March. So the operating profit level results increased by a full 60% quarter-on-quarter. And happily, we have black ink on the bottom line, which Birgitte, our CFO, will take you into a bit more in details shortly. The production, of course, as you see on the chart on the right-hand side of the graph, we again, at very strong levels of production in the North Sea. A new record by just 400 barrels a day, or barrels of oil equivalent a day, I should say. But we'd still love to talk about that because first of all, it re-emphasizes the importance of the Sval acquisition we made last year, which quadrupled our North Sea production. And of course, at a time like this, the strategic importance of that acquisition is self-evident to everyone who follows our company. Also that, that is a higher level of production than we expected to have when we made the acquisition, which is a great one of the many areas where that acquisition so far has been very successful for the company. As we say on this slide, we're not resting on our laurels. We are challenging that we put forward. We've been very open about our target to get to 100,000 from what we have within our portfolio in the North Sea by 2030. And I'm very pleased that my colleague, Morten Grini, is joining us this morning to give you a bit more insight into some of the key projects that will underpin that ambition. Another element that we've been very active on, and I hope you will continue to see, is the new business development. Not giant deals like the Sval one, but very much building on that through smaller and frequent transactions as we refocus that large North Sea portfolio into core areas and seek to accelerate production through business development as well as project development. And the deal we -- the swap deal we did with Equinor in Q1 is a fantastic example of that. I'm very pleased to say that we found a win-win deal. Equinor very happy with the deal we understand, and BMO is very happy from our side, and it's accelerating the production from and some of our discoveries in unusual way because we swapped out of those discoveries into primarily Atlantis, which we expect to come on sooner than the discoveries we left. Smaller deal, but another nice bolt-on is the Vega transaction, which we announced today. We just did yesterday. So thanks to INPEX and of course, our team, a small deal, but once again showing the way we are building and strengthening position in our core areas. Last on the slide, but very much not least, the dividend was maintained by our Board of Directors in their meeting yesterday, not a difficult decision on the back of these results, and that's maintaining a strong track record over the last 5 or 6 years. Next slide. So I'm just going to briefly touch on Kurdistan because we have a new number of slides on the North Sea, which Gordon will present shortly. In Kurdistan, we started the quarter optimistically and strongly. We had recommenced drilling just before the end of last year and had really great results from the first 2 wells we drilled. And until, of course, we got to the middle of end of February and the world changed for us as it did for everyone. Of course, we had to shut down as a precautionary measure. We are ramping up our what we call passive protection, in other words, concrete walls. So in case we do get targeted and we do whatever we can to protect, of course, our people, but also our critical facilities and particularly those that have long lead times to repair. Following the declaration of ceasefire, we have started tentatively to get back to work, bring back people to site and so forth. We've resumed work over of existing wells and restarted drilling. That means that when we're ready to start, we are optimistic that we'll be able to bring back Tawke and Peshkabir at higher rates than we left off at. So obviously, we're not quite sure now where the production levels from Kurdistan will be, so the final bullet point, saying at the moment, of course, '26 production will be lower than we thought when we addressed you a quarter ago. Similarly, investment's going to be lower. But when we do restart, we're expecting strong levels of production. With that, I will pass over to Birgitte to take you through the financials.

Thank you, Chris. Thank you, Bijan. Good morning, everyone, from me as well. I'm very glad to present, start the year by presenting very strong results from DNO. The revenue in the quarter was $627 million compared to $482 million in Q4 2025. Please note that if you look at year on year, the large movement went from Q1 '25 is mainly related to the acquisition of Sval, included in our accounts as of June '25, and that's why you see the large movement from Q2 to Q3. If you look at the movement from Q4 '25 to Q1 '26, the main drivers are, of course, the increased prices in the North Sea and also the increased sales volumes. In Q1 '26, we have 93% of the revenue stemming from the North Sea and about 7% remaining from Sval. Look at the operating profit, as Chris mentioned, is a solid improvement from Q4. Also again, we don't compare with Q1 since that is not including the numbers from the North Sea, now Sval or previous Sval, now DNO, North Sea business unit. There are 2 one-off effects that I would like to mention. One is the change of deferred tax assets, having a positive effect of about $30 million on our numbers and the other one is an increased SG&A in the first quarter of about $20 million, which is related to the reorganization in the North Sea, that's also a one-off effect. That brings us, as Chris said, to solid black ink for the first quarter of $51 million in net profit in 2026. We move to balance sheet, Jostein? Sorry, the cash flow. First, we ended 2025 with $454 million in cash position, and the result after Q1 was $531 million. A solid improvement there as well. If we look at the cash flow from operations, stronger than previous quarters. High prices in March is yet to be reflected on cash flow, and you can see this in the cash flow statement through an increase in trade receivables of $125 million. At tax, we had 2 tax installments in Q1, totaling $64 million. Tax, we had 2 tax installments in Q1 totaling $64 million. That means we will have 3 tax installments in Q2, around $95 million, collecting the 2025 tax. Then we have the investing activities of $153 million, consisting of $107 million in asset investments and $48 million in decommissioning, partly offset by $3 million in net cash inflow from equity account investment in West Africa, as I said on the slide. If you look at financing activities, that includes net interest payments and also FX, net cost was $88 million, leading us to a cash at quarter end of $531 million. And the balance sheet, please. We have a very strong solid balance sheet still. Total balance sheet is about $6.2 billion, of which half is PP&E, and that has been quite in line the last 4 quarters after the inclusion of Sval in Q2 '25, as I mentioned. If we look at the net debt, an improvement there as well, about 12% reduction in net debt from $886 million by the end of Q4 to $790 million in Q1 '26. We have an equity percent -- equity share of the balance sheet of about 21%. The equity is $1.3 billion, so that is well within the covenants in our bonds. On the back of this strong balance sheet, as Chris said, the Board has decided to pay a dividend of NOK 0.375 per share, 16 consecutive quarters in a row with dividends to our shareholders, totaling $497 million in dividend and $62 million in share buyback. That is quite strong. On the back of that, a very good quarter, very good position for DNO. I hand over to Morten for a deep dive into our North Sea business.

Thank you, Birgitte, and good morning, everyone. Today, it's my pleasure to talk to you about -- or give you some highlights about the project portfolio in the North Sea. And if you look at Q1 results, production results of close to 90,000 barrels, you for sure see line in sight of reaching 100,000 barrels per day production in the North Sea by 2030. The scribbles you see on this whiteboard is some schematics identifying development opportunities for one of our discoveries in a spring session together with Aker BP. I'll get back to that later. And starting off with our sanctioned projects that are coming on stream between now and 2029, representing about 200 million barrels gross reserves. And starting off with Symra, that's a 4-well subsea tieback to the Ivar Aasen platform. And here, we have 2 wells already on production as of April 2026. That's about 9 months ahead of the PDO plan, so well done by Aker BP and the license to make that happen. We're still drilling, and we have 2 more wells to finish off. Expect to put these 2 on production in Q3 and Q4 2026. And then over to the Dvalin and North, which is a 3-well subsea tieback to the existing Dvalin subsea template. Here the subsea infrastructure is in place, and we are currently drilling this 3-well campaign. 2 wells have been drilled to TD with the results as expected. And here we hope to get to production in Q3, also well ahead of the PDO plan of January 2027. Next, 2-well subsea tieback to the Brage platform. Both wells have been drilled and the reservoir came in as expected. We have some subsea campaign going on this year and also some work to be done on the Brage or Asgard platform. Here, OKEA is still in on good drive to get to production start in Q1 2027 and potentially late 2026. And last but not least, the Berling projects, which is a 3-well subsea tieback to Asgard B. Subsea infrastructure is mainly in place, and we are getting ready to start drilling operations late this year or sometime during first half next year. Peak production start is in Q1 2029, and critical path is the work to be done on Asgard B. And hopefully, we can also accelerate production here from Q1 2029 to late 2028. And now next here is the discoveries we have made, where we have finished appraising appraisal scope. Here you see it's 9 different projects that is being matured for final investment decision between now and 2028. If you look at the first 4, Cerisa, Cuvette, Kjøttkake, and Ofelia, they have all final investment decisions in 2026 for production start planned in 2027 and 2028. I plan to come back in some more details here on Kjøttkake, Kveikje, and Atlantis. But first, I also want to highlight the focus that DNO has on accelerating first oil on all the projects and with the ambition of getting all this on stream before 2030. We have a fast-track mindset, or a get off your assets and develop mindset, which basically means say, what does it take to bring first oil sooner? And if it makes sense to make it happen, we go after it. If you look at the 2 columns to the far right, you see the scheduled production start for these, and you also see the DNO ambition, if accelerated, with the goal of getting all this, as mentioned, on production before 2030. The success of that, of course, remains to be seen. We're working hard to make it happen. And also wanted to mention a couple examples on our fast-track mindset. First of all, Kjøttkake development, that was discovery in Q1 2025. We have a final investment decision coming up in September this year, but we're on good path here to be able to deliver first oil in Q1 2028. That is 3 years from discovery to first oil, which is no other project of this kind have been delivered that quickly in the North Sea. If you look on the schematic to the right, you see Kjøttkake mentioned there. That's a 4-slot template tieback into the Nova subsea field. It's where Harbour Energy is the operator, and then further tieback to Gjøa, where vår energi is the operator. Critical for this success for us was to immediately appraise the discovery we had back in 2025, and there shortly thereafter, team up with Aker BP to do a sprint to mature a development concept which we identified. And then shortly thereafter, we put a team together. Aker BP had a team just coming off another project. It made sense to hand the operatorship over to them. And we also have secondees in from DNO into that team and started the planning of this project with early pre-FID investments of the long lead and vessels was also critical to maintain the opportunity for Q1 2028 production start. Of course, also important to have a close dialogue and early involvement with vendors on this, but also hosts and regulators, it was also important, and that is progressing very well. And over to Kveikje. Kveikje is the base plan there was to bring Kveikje into the Ringvei Vest development and down to Troll for a 2031, 2032 production start. And here in Q1 this year, the license and Equinor as the operator, asked then DNO and Aker BP to go ahead and perform a sprint on behalf of the license to look into this alternative of taking Kveikje to Kjøttkake and up to Gjøa as an alternative to be able to accelerate first oil with a couple of years. We had the sprint together with Aker BP, and they identified the development concept, as you can see on this schematic, with a 4.3-kilometer tie-in from Kveikje into Kjøtkake. There's a team in this team working on this to mature this development concept simultaneously as they're maturing the development concept to take Kveikje down to Ringvei Vest and to Troll. Concept select here is coming up this summer, and then we will see what alternative will be chosen. Still to be confirmed what alternative we will go for. Chris mentioned, of course, happy with the BD deals accelerating production for us. In this case here, it's Atlantis, where we had swapped then with Equinor to get 19% in that discovery. But the plan is a tieback to increase [Indiscernible] where we also have a 19% work interest. FID here and investment decision is coming up early next year and a production start in 2029 or 2030. Expect to be at around 8,000 barrels net DNO when they get to plateau in 2030. Also wanted to mention on this slide here, we have appraisal program ongoing. And Afrodite and Carmen is in the same area. If in discovery could be developed back to Kvitebjørn potentially in some sort of combination with the Atlantis. Which takes me to my last slide, which is upcoming North Sea 2026 exploration program. We have 6 wells planned, 3 appraisal and 3 exploration wells. The change from previous report out was of course we got Afrodite in with the deal with Equinor, we handed Mistral Nord and Sjørøver over to them. And Sjørøve was also moved from previously we planned on drilling in 2026 to 2027 because of rig schedule. Still a good program coming up here now in 2026. We have already started to drill on Carmen, where we expect to be in the result shortly. And DNO, we remain among the most active explorers on the NCS, and it's another exciting portfolio to drill also now in 2026, as you see. Some of them may be some good opportunities for fast-track development. Thank you.

Thanks a lot, Morten, for the excellent presentation. And then we'll open up for questions in the Q&A session. I guess I should give a couple of technical remarks there. [Operator Instructions] With that, it looks like Teodor is ready to ask a question.

Can you hear me?

Yes. We hear.

A few questions from my side. First on summer maintenance for NCS, given the strong oil and gas prices we see now. Is it tempting to postpone some of the summer maintenance, or is it possible at all? Second question, that is on Kurdistan. Impressive to see that you already have started drilling there after the potential peace plan. Just wonder what do we need to see specifically to see you resuming production and not only drilling? Third and last question, that is on guidance. In fourth quarter report, you provided some guidance on production and operational spend. I didn't see any update on that in the Q1 report. Could you just confirm that the guidance given in the Q4 report is still valid?

Morten, do you want to answer?

Yes. For sure. Summer maintenance, some of the scope here, is important for tie-ins. We have important scope on Brage, which is important for to tie in Bestla. We also have important scope on o Ivar Aasen and Edvard Grieg for the, for this Symra production. We also have some critical maintenance that we have to do on the Norne field because of backlog there. Some of it's difficult to push out in time. But I'm sure there'll be some optimization opportunities there to maximize on production.

Thank you. On Kurdistan, yes, we resumed drilling, and we did that following the first ceasefire that was announced. Our concerns in Kurdistan in terms of operations broadly, including drilling and workovers and other investments and activities. Our concern is the safety and security, primarily of our staff, but also, as Chris mentioned, our critical surface infrastructure. In the time that we've been, we had stopped operations at the start of the war, the Israel, U.S. war, and on strikes on Iran, we started put into place as best as we could passive security measures that has since we've been in the form of concrete walls around critical infrastructure and even more importantly, around residences and areas in which our staff either live or work. We have now put in something over two kilometers of these concrete walls in the Peshkabir field and also in the Tawke field, so we're more comfortable that we have provided a safe work environment as much as possible, as much as we are capable of doing for our staff. Knock wood, there have been no strikes and therefore no impact on the individuals or on our equipment in Kurdistan since last summer where we had those drone attacks that we reported on. So with that, we resumed the drilling, and other activities so that we can hit the button when the time comes with respect to again, safety and viability, commercial viability of our operations. Once we hit the button, as Chris said, we expect we will have even higher production levels than we did when we stopped production. And as a result, in part of not having produced these fields for some time, so there will be flush production, but also a result, again, as Chris mentioned, of our drilling in the interim period. We have new wells coming on that are available now to be produced or will be coming off production soon. Now I made a reference to commercial viability because if you recall, as we again widely reported, our average sale price prior to shutdown was around $30 a barrel, just a bit over $30 a barrel. That price was that we were receiving, and we had indicated that we received that the payments for our production in advance of production. We were paid first and then produced subsequently, quickly thereafter. But that was in a global price environment of, I don't know, $60 Brent give or take a few dollars. We're in a very different environment now. There are wild gyrations in prices every time there's a report of peace or new strikes, prices can move $5, $10, $16 a barrel in a day. The average seems to now be about $30 to $40 a barrel more than it was before. And so we are obviously not prepared to sell our oil for any period of time at the same price today. Much higher price environment globally than we did previously. But how do we get there? Again, there's a lot going on that affects the pricing and affects how we sell our oil, to whom, and to where or from where. The government of Iraq has only just been announced that there is a prime minister who has been elected, subject to confirmation by the parliament in Iraq, and that's expected to take place. It'll take some time, and it's taken many, many months for to get to this point. A cabinet has to be appointed and approved. That will take a bit of time. Until that happens, any discussions we have with Baghdad and the Iraqi State Oil Marketing Organization, and we are having those discussions, will take a bit of time. And those of who follow Kurdistan also know that the contract between the Government of Türkiye and Iraq for the use of the pipeline that takes Iraqi and Kurdistan oil to the Mediterranean port of Ceyhan, that contract expires in the end of July. What will replace it, we don't know. It's still a work in progress. What the implications of that are in terms of the access of Kurdistan companies to that pipeline and Iraqi companies to that pipeline, under what terms and conditions, that remains to be seen. And how that is resolved, and it'll have to be resolved by summer, by the end of July, will impact how we can market our oil and what terms and conditions. So there are a number of moving parts out of our control, but there are imminence. There will be a government in place in Baghdad, hopefully, in the not too different, distant future in a matter of weeks, and a matter of couple more months, there'll be a new, potentially have a pipeline agreement that will govern how our oil can move, at least through Türkiye to global markets. There's a situation in Syria as which there's a lot more stable today. There's still work to be done there's repairing pipelines and the roads and access to companies to move oil and gas out of Syria. That opens up another possible route. We've said before that we are trying to and hoping to, and probably in a matter of months, if not earlier, we'll be able to access export prices in some form now even when we were exporting our oil through Türkiye. Teodor as you well know, and others, shareholders and analysts know, as well, we were getting, again, much higher prices, but there was still a deep discount because we're moving across a large territory geographically, and it's complicated. But my expectation is we will approach those sorts of prices or those sorts of discounts to Brent and global prices that were in place previously. We're pretty optimistic we'll achieve that. And once we do that will make a very significant difference in terms of our production, our sales, our pricing, our revenues, our operating profits, our net profits. So we're -- that's our target, and that's achievable once some of these complexities are addressed and hopefully resolved, and hopefully sooner. Chris, would you like to add something to that, or?

No. I think that's a comprehensive answer. I can just touch on the final question on guidance. The only guidance we updated this quarter, Teodor, you'll have seen on was on the Kurdistan business. I touched on that on the slide I presented. And obviously with the current, with what's happened since the 28th of February, we're not really in a position to offer new guidance. I think you can make your own judgment on that just as well as we can given the current situation. And then the fact that we haven't updated the other guidance means that we stand by what we said last quarter. Simple is that, basically.

The next question comes from [ Claudia Carpenter ]. You might have to introduce yourself.

I'm a reporter. Is that okay?

There's no one else on the list, so we can take a question from a reporter.

It's really interesting what you're saying about Iraq. Couldn't you give -- since you say that the production and investment that you'd planned in Kurdistan is going to be lower than previously. Can't you say what you're expecting now? You must have some expectation if you say that there's an expectation.

You raised 2 questions about what's going on politically and what we're able to do. We have resumed now our investment plans that we had previously announced, which included the drilling of 8 wells in Kurdistan this year. We're back on track. We have rigs drilling. We're going add rigs. And so our investment plan was interrupted maybe a couple of months, but it's now been resumed. I believe we're the only international oil company in Kurdistan drilling and with such ambitious drilling plans and such ambitious, but also extensive. So we're back on track drilling. The fact that we've had such a great quarter and that our revenues are higher because of -- partly because of higher prices in March and now in April, and going into May, there's a lot more cash coming in. So we have the corporate resources with which to execute our plans, investment plans. So that we're doing. What happens in terms of actual production and price, those are out of our control. Price, of course, depends on perhaps the global prices, but also importantly, what happens to the price that we can achieve and other international oil companies operating in Kurdistan. They have a different price plan and export plan than ours. They reached an agreement last year and we chose not to participate in that in those arrangements at that time, in part because we were able to receive payment from our buyers in advance of our actual sales. We called it cash and carry. Of course, it wasn't really cash. It was cash during the ISIS period, where people would show up with suitcases of cash. The banking system had broken down at that point. They delivered suitcases of cash and we delivered the truckloads of -- tanker truckloads of oil to them. Now, of course, it's a different arrangement, but we still use that cash and carry term.

But you can't just give me a number? What you think the production is -- the net production is going to be in Kurdistan in 2026?

If you can -- you're a reporter, I assume you follow Iraq in the region. If you tell me what's going to happen in Iraq and when the government formation will take place and when the what will happen to the Türkiye pipeline. If you give me those inputs, I can give you the outputs that you're looking for.

Okay. And so are you exporting everything through the pipeline, or are you using trucks?

When we were still exporting, it was through the pipeline. There have been periods in the past where the pipeline wasn't available to Iraqi and Kurdistan sales that we used trucks, lots of trucks.

Apparently there's like a huge surge in demand for trucks now everywhere.

Claudia, I think that will -- we will have to take the next question now. That's from Nikolas Stefanou. I think that will be -- and there seems to be a follow-up question from Teodor, I think those will be the last two questions today. So Nikolas, you might go ahead.

Good to hear back from you again. So that's -- sorry just a clarification on Kurdistan realizations. You very rightly said so that, I mean, we're like $120 debt Brent now. And for that number for this quarter, but I mean would you -- if you're going to resume production there and sales, would you try and make an agreement with the traders for a much higher price before you do that? Or how should I be thinking about your sort of like approach to maybe getting a bit more of the share of the pie there?

Well, again, the price we were getting before and the arrangements that we had in place before were based on $50, $60 oil prices. Those are now doubled. It moves up and down every day, as I said. So you can be assured that our aspiration is to get a higher price, and we are talking to several different parties to see how best that can be achieved. It's complicated by politics and geopolitics and the access to infrastructure -- transportation infrastructure. It's complicated, but you can assume and you should be assured that we will do everything possible to try to capture the higher oil prices and the higher value that our oil commands. But I hope when we meet again for our next quarter, the discussions, that we will have some of those arrangements clarified and hopefully put into place, but we're working day and night to try to get there.

Does the change to the oil price environment change any way you think about your participation in the tripartite agreement?

We had some concerns about that agreement that we voiced at the time. That was many, many months ago. That agreement is now evolving in terms of how it's working. I'm not privy to all the details, but I assume we will have more information about how it works and how those arrangements and those payments compare to what we were receiving through our alternative arrangements. So we'll see how that's working out, how the consultants report, if you're familiar with the details, has worked in practice, how quickly and how much Baghdad is going to be paying the other companies under that arrangement. And if that turns out to be favorable, if some of the uncertainties that we were concerned about have been resolved one way or the other, then we'll have more information as to how that option works compared to other options that we are producing. Again, the region has changed. Who knows? If the U.S. and Iran come to some agreement and sanctions are removed, Iran would be one other way of getting oil out of Kurdistan into global markets through swaps that there are refineries near the border between Iran and Iraq. One can potentially move oil into those refineries and get a swap in the Persian Gulf and hopefully by then the Strait of Hormuz will have opened up. I mean, the world is changing very rapidly and creates optionality, including how Iraq and Türkiye what agreements they reach and the use of that pipeline are an option. So there are new options that did not exist when those agreements that by the other international companies in Kurdistan reached their agreement. They did the best they felt they could at that time. The world has changed. It's going to continue to change and in ways that we're we can't quantify right now what are the implications of that. And, of course, the role of Baghdad in the sale and transfer of Kurdistan oil was based on a budget law that was passed over a year ago, with a different, with a different government. And how those, whether there'll be a new budget law that also covers Kurdish oil or whether Kurdistan will choose to again, export its oil, the oil from the region itself, we don't know. But those are all -- there are a lot of moving parts, and we're watching them very carefully, and we will try to engage in the arrangements that we can put into place that best collapse the price we receive for our oil, that price and the global prices. But again, we should know more on how those conversations will go, at our next quarterly meeting, I hope. If something is put into place before then, of course we will announce that to the market, when that takes place.

And there will be a last, short follow-up question from Analyst Teodor Sveen-Nilsen.

Thank you for taking that follow-up. It's regarding North Sea lifting schedule in Q2. Should we expect overlift or underlift for your North Sea production in second quarter?

Birgitte, can you address that?

Yes. I don't have all the details on top of my head. But April and June more normal is at least some thoughts that I've been given. I don't have all the details and all the facts for the time being, to be honest. Sorry about that. We can come back to you afterwards. Maybe Morten, you can help me.

I can chime in. We talked about the Q1 production. Just talk about production from my side. The Q1 production, as we talked about doing, came in very well. We expect to go down as we mention now because of the maintenance and this upgrades that is happening now in Q2 and Q3, slightly less than production, of course, next 2 quarters before we then ramp back up and have a strong finish in 2026 here, around 90,000.

I think -- no, no -- for lifting.

The liftings are always very difficult to predict, as you know, and particularly when you get to the end of the quarter, just a mere few days can make a cargo flip from 1 quarter to the other. It's extremely difficult to give guidance on liftings. However, I just emphasize for everyone that we have contracts in place so that we don't just get paid depending on the price of the oil on the day of the lifting. We have what we call PQ contracts in place so that we're exposed to the price of oil every day. So you don't have to worry. I know for some of my colleagues who have offshore production in West Africa and so forth, then you cannot get those type of financial arrangements, and so the price you get is just when you load your cargo. For us, we are on both the gas and the oil in the North Sea. We have the exposure to the ongoing prices that you see. Well, you may not see on your screens because, of course, the dated Brent has been considerably higher than the front-month Brent during March and April. Whilst the liftings impact on our profit and loss side of our accounts, look, when it comes to the cash flow, we are not dependent on the liftings. Are there any other questions?

Just a press question that we'll deal with afterwards, I think.

Because we're like Donald Trump, we can't stop talking to the press. Also to our shareholders. We don't want to cut you off if there are other questions. We can take a few more minutes to address them. If not, we can close this session and then get on the press and shareholders.

I just wanted to ask, what is your name?

Sorry, if there is a press question, it's not going to be raised by you. Yesar Al-Maleki, from Middle East. I think, MEES, right? Will you unmute yourself?

Good morning. Can you hear me?

Yes.

Congratulations on the results. My question is to Chairman Bijan Mossavar-Rahmani. You mentioned I am just picking up on something you mentioned. You mentioned that there has been some sort of conversations with SOMO with regards to restarting production, if I understand it from your earlier answer. Because what we hear on the Iraqi side is that they want the Kurdistan companies to produce so they can double exports currently to Turkey. I am just trying to understand if there has been any conversations on that recently.

Thank you. Any other questions? The answer is yes. Yes, but, and we've had discussions with others as well who might open up channels to exports and monetization and the start of our production and monetization of that production. We still, I mean, the issue of security and safety of our people and of our equipment is critical to us. We've been hit by drones before. We had to cease production while we did repairs again, and we sprinted to make those repairs. But we've been hit before and damaged, and we are very sensitive to that. And the situation in the region continues to be very uncertain. Other companies have been attacked as well by missiles and drones. That is the single most important issue for us. But we anticipate we will start production and that anticipation of startup of production, we started up now for some weeks of work in the fields, work over some existing wells so that when we start up, the wells are available to produce at maximum volumes. We've drilled new wells. We will have additional production. So we're doing what we can, so when we hit the button, we will have significant amount of oil going into the system of Kurdistan. We are, as you well know, the largest producer in Kurdistan. As I said, we're the only company actively preparing for startup by drilling new wells, and I believe once we, as the largest producer, as the oldest producer in Kurdistan, once we start production, our expectation is that other companies will follow, their production of these other companies below ours. But I think if they see us producing, and they see us producing safely for some period of time, they will add. So for purposes of SOMO, when we start up, it won't be just us starting up at 85,000 barrels a day. It'll be additional oil coming from Kurdistan as well, and that's, I believe, to everyone's advantage. The other companies once we take the lead and take the first hits. I hope there won't be any hits, and that the situation will be stable and the region peaceful. But our engagement and our involvement in exports will open up much more oil than just ours alone.

Just a pick up on this. Is the channel you're looking at, is it Syria or is it Turkey, when you're looking at other alternative channels? I'm thinking here trucking.

Trucking is an option through Syria. Trucking is also an option through Turkey. But I think that the currently available route for substantial amounts of oil, where the transportation cost is lowest, it's the pipeline through Turkey. That has been the option that our preferred option, and the one that we've used, maybe not half the period we've been producing in Kurdistan because we have also used trucks. We used hundreds of trucks a day during the ISIS period and during other periods where the Iraqi-Turkey pipeline was not available. There was a time when we were producing, I think, 125,000 barrels a day in Kurdistan. We were loading a truck every 1.5 minutes. At the time I described it as being like a Coca-Cola bottling plant. The trucks would come up with -- fill up, they'd move on. That's an option, but trucking is far more expensive per barrel than pipelines. Our preferred route would be the pipeline through Turkey, for economic reasons, and for other reasons of efficiency. If it comes to trucking, we'll look at that option as well. Trucking opens up Syria as a possible route. It also opens up Iran. If hopefully all the issues are resolved and sanctions removed, then Iran would be an option for us as well.

Thank you. That concludes this earnings call and thanks to all for participating. See you again next quarter.

Thank you.