EnQuest PLC (3EQ.F) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the EnQuest plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investormeet Company platform. Before we begin, I would just like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to Head of Investor Relations, Craig Baxter. Craig, good afternoon, sir.

Good afternoon. Thank you very much, Jake, and good afternoon to everyone joining the call. Good afternoon, ladies and gentlemen, and welcome to you all to today's retail shareholder-focused presentation. As I've already outlined, for those of you who don't know me, my name is Craig Baxter, and I'm the Head of Investor Relations at EnQuest. The purpose of today's meeting is to provide an additional forum outside of the Annual General Meeting for existing and potential noninstitutional holders to understand who we are, what our strategy is to recap on our recent results and achievements and enable shareholders to ask us questions about the business. So with that in mind, I'll start with an overview of who EnQuest is. For those who may be less familiar with our history, EnQuest is an independent energy company with operations focused on the U.K. North Sea and in Malaysia. We were first listed in 2010 with a focus on taking on mature and underdeveloped producing assets from majors and other companies and driving further efficiencies in order to extend their useful lives and maximize recovery in oil and gas before eventually ceasing production and moving into the decommissioning phase. As you can see from this slide, we have a number of assets in production, primarily in the U.K. North Sea with material reserves and resources in place. We have the Sullom Voe Terminal, which is based on the Islands of Shetland, which is a very important asset as we look to progress our decarbonization and new energy ambitions through the work being done by Veri Energy, our new subsidiary. And we also have a number of assets that we've moved into decommissioning over the last few years as they've reached the end of their useful economic lives. As we're all aware, the energy landscape is in transition. To ensure a long-term success, we recognize the business and must continue to show resilience, creativity and adaptability and EnQuest is showing its impressive capability across the life cycle. We believe our combination of assets and core capability sets EnQuest apart from any of its peers as we were able to provide an offering across the entire energy transition spectrum. By lowering cost and improving uptime, we are able to run our assets for longer than they would have run in the hands of our previous owners. And since our inception, we have extended the useful lives of all 9 assets we've operated. This performance has seen us deliver a strong reserve replacement ratio of 1.5x since formation. We started with 81 million barrels, we've produced almost 200 million barrels, and we still have around 175 million barrels left to access. We believe this to be an approach that is aligned with sustainability goals, making the best use of resources and assets that have already been discovered or developed and managing them responsibly. Since 2018, our strategy has been anchored around the 3 pillars of deliver, delever and grow. And following consistent delivery against our targets and the significant deleveraging of the balance sheet, EnQuest is now trying to pivot to growth. Following the efficient return to production at Kraken, strong production uptime across our portfolio and successful execution of our well work programs, we delivered production at the midpoint of our 2023 guidance range. We also delivered another year of record-breaking decommissioning performance, beating our own record and executing the P&A of 25 wells during 2023 across the Thistle and Heather projects. This further demonstration of our decommissioning capability was underpinned by NSTA data, which showed our average cost per well P&A to be 42% lower than the industry average. To put that into context, EnQuest averages about GBP 2.5 million per well, while the sector average is GBP 4.3 million. We also complete wells on average 5 days faster than others. Reflecting our continued strong operational delivery and against the backdrop of supportive, but slightly lower commodity prices, we generated $300 million of free cash flow in 2023, that's the dollar figure. As such, our trajectory of deleveraging continues with net debt at the year-end of $481 million and further reductions to $410 million by the end of February. We've also fully repaid our RBL facility in the early part of this year, leaving the $150 million term loan agreed in 2023 as our only outstanding secured debt. All of our debt maturities are now aligned in 2027, providing a clear runway ahead to focus on value creation and growth. This exemplary deleverage story with over $1.5 billion paid down since our peak debt in 2017, means that we are now in a position to deliver on our stated target to return capital to shareholders during 2024, and we'll do that through the commencement of a $15 million share buyback program, which we hope to kick off later this month. Looking ahead, our stronger balance sheet, coupled with our differentiated operating capability and advantaged tax position will provide a platform to deliver on our growth ambitions. We will, however, remain disciplined in our investment decisions and will be value-led in evaluating acquisition targets. EnQuest is a top quartile operator and aims to become a top quartile North Sea producer. When I talk about EnQuest being a top quartile operator, this slide provide you to selection proof points based largely on industry metrics. Safety underpins everything that we do, of course, and we see upper quartile performance in this area as our base license to operate. We have a very strong track record in drilling and well work, and our 2023 decommissioning performance is a continuation of the standards we have set in this area. When we take over an asset, we provide focus to its operations and have been consistently successful in applying our differentiated capabilities to lower costs and increased production uptime. Our 2023 group-wide production efficiency of 87% represents a year-on-year-on-year improvement, which is a great achievement given the maturity of our infrastructure. As an example, Magnus has increased by 22%, and it turned 40 years old last year. For additional context, our average is around 10% higher than the U.K. average, which obviously includes a much newer infrastructure. The capabilities on the left have enabled us to consistently deliver on targets and provide a strong foundation from which to pursue value-driven growth. While we will continue to execute opportunities which provide organic growth within the existing opportunity hopper, we are very much focused on delivering a transformative acquisition. Given our significant relative tax advantage in the U.K., I would expect us to grow North Sea production initially and then utilize additional cash generation to fund international M&A and commodity diversification. We will also look to diversify the portfolio further and improve our overall carbon intensity by adding more gas to our commodity mix. Increasingly important is the fact that we have a credible plan to progress our business towards net zero. And through the opportunity being progressed by our subsidiary business, Veri Energy, we have a marked advantage over many of our peers. We have projects in flight right now to rightsize SVT, reducing terminal emissions by 90%. To give some context to that, the SVT component of our group emissions total is around 15%. We also have plans to utilize the Bressay Gas tie-back to displace the diesel used to power Kraken, and now we have a significant positive impact on our emissions and cost given Kraken represents over 20% of group emissions and more than 50% of our group-wide spend on diesel. We'd expect that project to cost around $60 million net to EnQuest and it should reduce Kraken diesel usage, which at today's rates cost around $30 million per annum by more than 80%. This initial phase of the project is for the benefit of the Kraken JV partnership, so doesn't need any further farm out and will be progressed on a stand-alone basis. But my technical colleagues who are in the business tell me that production of the Bressay Gas Cap would also be beneficial for any future phased oil development. You may well have seen that Bressay and Bentley have been in the press this week, but hopefully, you've also had the chance to read the clarifying statements, which EnQuest insisted be published by the newspaper in question, which emphasize the reality that there are several technical, economic and regulatory hurdles for Bressay and/or Bentley oil developments to progress. The articulation of our emission reduction opportunities as well as our impressive track record of reducing emissions within the portfolio in recent years helped us achieve a B rating in the 2023 CDP survey, which effectively for those who don't know, is the preeminent ESG rating and is used very much by institutions, banks and a wide range of investors. This is a great validation for our work in this area. These opportunities are directly ahead of us, and we have the valuable infrastructure chip to play at SVT, where Veri Energy can decarbonize at levels that are many multiples of our current carbon footprint. Jonathan Copus is our new Chief Financial Officer, and he chose to pick up from where we left off in terms of our financial priorities when discussing 2023 performance and he reiterated that it's been pleasing to see the group's impressive journey of deleveraging. Going through these in turn, number one, the reset of the capital structure. In recent years, we refinanced our debt facilities with longer-dated maturity profiles and the repayment of the 2023 GBP retail bond in October last year, coupled with the implementation of a $150 million term loan means all our outstanding debt maturities are now aligned out in 2027. Number two, as we look to continue to delever, we'll remain focused on further deleveraging through 2024 and beyond as we drive beyond our leverage target of 0.5x net debt to EBITDA. Operating in a sector where access to cost-effective capital is becoming more challenging, it makes sense for us to hold our destiny in our own hands by minimizing debt. Looking at number three in cost discipline and capital optimization. We continue to exercise capital discipline in everything we do. We optimize the execution and delivery of our capital program in light of the energy profits levy. We remain a very well-informed and sharp operator within the supply chain, and that stands EnQuest in a very good stead in getting the best deals available. Number four, and this is obviously the recent news that we announced and delivering on what we've been telling you all for some time now. From a position of balance sheet strength, we've launched our first share buyback program, which is obviously a major milestone for the company and our supportive shareholder base. All of the items above in numbers 1 to 4 premise for growth, and we continue to explore accretive M&A opportunities in our core upstream business. As I noted at the start, we aim to become a top quartile producer in the U.K., and we believe the majority of the barrels in the North Sea are transactable given public statements made by many of our peers. The chart on the left-hand side of this slide shows the pace and quantum of our deleveraging, which is continuing into 2024. I wanted to return to this subject in this presentation as it really is a phenomenal achievement, requiring huge amounts of focus and discipline. As a reminder, we've now paid over $1.5 billion of debt since its peak. Our net debt position at the end of February was just over $400 million. And most notably, we've now fully paid down our RBL having repaid a total of 400 million over the past 15 months. We continue to make good progress towards our leverage target of 0.5x net debt to EBITDA, and we'll continue on that track. It's also worth noting that while the RBL was fully paid off, we do remain with a section of headroom that would be available to redraw, should we wish. That would be only really required in the event of an acquisition that requires some upfront payment. Over recent months, we've aimed to provide a more forward-looking view of our plans. So this slide provides guidance for 2024 and our high-level aims for 2025. This year, we expect production to be between 41,000 and 45,000 barrels per day, largely in line with 2023 levels. Operating expenditure is expected to be approximately $450 million, with the increase in 2023 actuals, largely due to the absence of crack and availability credits, which arose during the downtime we experienced in 2023. We continue to manage the inflationary environment well, and this guidance is lower than the 2023 equivalent. In 2025, our cash margin is expected to improve significantly with a 70% reduction in Kraken FPSO lease costs, which kicks in on the 1st of April 2025, a net savings to EnQuest of around $80 million in a full year. Cash capital expenditure is expected to be around $200 million, and we plan to execute a 2-well drilling campaign at Magnus. We plan to drill 3 wells in Malaysia, and we'll see the completion of the platform drilling campaign at Golden Eagle. The impact of these activities plus the continuation of drilling at Magnus and PM8/Seligi next year give us confidence that we will grow organic production in 2025. We're also investing in projects which will yield significant emission and cost reductions at SVT and has plans to progress the Bressay Gas tie-back, as I mentioned earlier, in order to displace the diesel, which is currently used to power the FPSO. Decommissioning expenditure is expected to total approximately $70 million, primarily reflecting the closing stages of the well P&A programs at Heather and Thistle. All of the above factors contribute to our decision to initiate a share buyback program this year, and we are targeting sustainable returns to shareholders within our capital allocation program going forward. To conclude with the main body of the slides, I'll return to the proof points I offered at the start in the presentation. We are a top quartile operator with differentiated capabilities across all facets of the business. That fact, coupled with our differentiated tax position in the U.K. makes now the ideal time for us to pivot to our next growth phase. Alongside our Board, Amjad and the executive team and my colleagues across the business, I'm excited about the immediate future for EnQuest and the opportunity we have to emerge as a leader in the energy transition. Thank you for your attention, and we'll now move to the Q&A section of this session.

[Operator Instructions] But just while the company take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your Investor dashboard. Craig, obviously, we received a number pretty submitted questions ahead of today's event. And as you can see there in the Q&A tab, we've also received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And Craig, at this point, if I may so, I'll just hand back to you to address those questions where it's appropriate to do so. And then I'll pick up from you at the end.

Okay. What I'll do, first of all, everyone is we've actually -- it's been great to see. We've received a number of presubmitted questions. So what I'll do is I'll work through those first, and then I'll try and address as many of the live questions as I can. So first of all, there's a couple of financial questions that have come in. So the first one is how does the pretax profit become a post-tax loss? It appears that EnQuest is paying tax over 100%. Surely, corporation tax is offset by remaining past tax losses carried forward? So essentially, this comes down to the reality of the EPL whereby the nondeductibility of cost items, such as decommissioning costs and interest payments does result in effective tax rates in excess of 100%. To put that into context, our 2023 effective tax rate was 113%, while it was 120% last year. Remember, though, that's on paper. That's the accounting treatment. In reality, our historic tax losses do protect us from making cash payments. So the tax losses we've set in our balance sheet, that number of $2 billion at the end of 2023, they mean that we don't actually pay cash tax at these reported levels. We are protected from corporation tax and supplementary charge, which together totaled 40%. So our 2023 tax spend was limited to EPL plus some Malaysia tax. So we still generated free cash flow in excess, well, around $300 million actually for last year. Second, a financial question. Second and third actually are quite linked. They are to do with the subject of the share buyback program. So the first of those is, if EnQuest performance in 2024 continues ahead of guidance, would you consider increasing the size of the buyback in '24 rather than waiting until '25? And if yes, what would be the level of outperformance required? So the answer to that question is that the buyback was based upon and approved by the Board in line with our 2023 audited financials. Given that we expect the buyback program to run through the majority of the year, at this juncture, we don't have plan to amend the size of the buyback from the stated $15 million. A follow-on question from that is what is the estimated time line to start to pay dividends? So if we take the current program first, which is obviously a buyback program, we are working with our broker on initiating the buyback program, and we expect things to kick off in the coming weeks, hopefully, within the month of April. We'll advise shareholders and the commencement of the process by RNS and then we'll provide very regular updates on trades as they're actioned. I think this question is related to dividends, specifically. So on the subject of dividends, what I'd say is that our shareholder return program was always going to start small, primarily because we have a number of competing priorities to balance. So we've got to -- we're focused on growing the business. We need to continue to delever the business, especially while we have some components of quite expensive debt. So we always plan to start relatively small, but we want shareholder returns to be a sustainable and meaningful part of our capital allocation going forward. And that absolutely could include dividends, but the earliest juncture to do so would be next year. There's a couple of questions also that are grouped together, which relate to international growth opportunities. The first of which is what potential partnering opportunities do you see for EnQuest as it pursues international M&A in Malaysia, which is a really good question. I think, it's first of all, worth noting that we are in a very strong position. We're a preferred operator in Malaysia, which to be honest with everyone on the call, over the last couple of years, it's really -- I've kind of built my knowledge in this area and it's not an easy thing to achieve that sort of preferred operator status. Petronas, the in-country regulator hold a very high bar and EnQuest has done extremely well to achieve that status. We do see additional scope to grow our business in Malaysia, not least through the significant gas opportunity associated with the Seligi field, which we continue to negotiate access to. So some shareholders on the call will remember that and we've already negotiated and agreed a sort of strategic foundation to an agreement whereby, at the moment we are producing and transporting Seligi gas to service Peninsula or Malaysian demand. But that's basically ground zero from there, we continue to negotiate with Petronas. And then ultimately, we're looking to access an element of that opportunity, which is a significant gas opportunity in the country. Beyond PM8/Seligi, our operator status in Malaysia is also likely to see EnQuest as a credible partner for any opportunity, which emerges in the country. Processes will be run by Petronas and we have the opportunity to put forward a case to participate. Another one on international. So what type of international M&A opportunity would you consider most interesting for EnQuest to execute over the next 12 to 24 months? So what I'd first say about that is on the time line, we are clearly focused on North Sea growth in the immediate term, driven by our advantaged taxes in the U.K. But the cash flow generation from any U.K. acquisition will absolutely enable geographic and commodity diversification alongside investment in our existing portfolio, continued deleveraging and shareholder returns. I think what we would see, though, is we see an increase in our gas weighting as attractive and that type of opportunity could certainly be found outside the U.K. Our top quartile operating capability is transferable and repeatable elsewhere, and there are plenty of mature basins worldwide for us to take our skills. Still with the pre-submitted questions here, there's a couple on drilling. So the first question is around Golden Eagle. How many of the 2024 4-well program is now on stream? And what's the outcome to date? So the latest update is that the drilling program at Golden Eagle has been challenged. But as previously announced, the first well came online in January 2024, and it's doing okay. The second well, however, failed and was not completed while there's a well being drilled right now that remains on track, but still above the reservoir. Once that well is hopefully completed successfully, the program will be rounded out by an injector, which will follow in the next couple of months. And this one is on Kraken drilling, there's another question. In the results presentation, Steve Bowyer mentioned some 20 million barrels through it for 2025 drill targets at Kraken. What recon factors are estimated from this? So there's a number of variables to this really in terms of the communication between the accessed sand bodies and the well as it's drilled, but I think as a rough rule of thumb, we'd expect to see something around 20% as a recovery factor. I guess, unsurprisingly, given some of the press covers this week, there's a number of questions on Bressay, Kraken and the interlinkage between the two. So I'll try and cover them kind of together, and hopefully, that can give a bit of a clarifying overview. So the first question is, was the partial sale of Bressay subject to EPL and if yes, what would be the EPL amount? So the farm-down of the Bressay license and the EnQuest Producer FPSO saw us realize value in assets, which have largely been written down in our books. So from that perspective, it was a really good transaction. Beyond the partial sale, the 15% farm-down of the license in the vessel, we've also sold equipment, which we held for potential deployment on a future Bressay development. We will pay EPL in this transaction. And just to reiterate, we expect the overall net benefit to EnQuest in 2024 in cash terms to be $58 million. The next two questions, I'll read out together, and then I'll probably try and give a merged answer if that's okay. So one of the questions is, could management provide clarity on the planned development of Bressay and Bentley? In particular, will the existing infrastructure in the vicinity, i.e., the Kraken FPSO be leveraged on to extend the production plateau? The next question is, it would be appreciated if management could share the efforts being undertaken to make the Kraken FPSO greener in a bid to reduce emissions and pivot to more ESG-friendly organization? So taking these two things together. And as I covered, I think, earlier in the main presentation, our first priority is to progress the project to produce gas via the Bressay tie-back to Kraken and that fundamentally will displace the diesel we currently use to provide power and to basically power the FPSO and Kraken operations. It's estimated that we can reduce Kraken diesel usage by about 80% through this endeavor. That will obviously yield a significant reduction in Kraken's carbon footprint. And given that we're paying around $30 million per annum for diesel at Kraken, that represents more than 50% of our group's spend. It would also be a large cost saving. Referencing the overall kind of ESG nature of the business, I think it's worth a reminder here that the efforts that we're undertaking at Kraken with this Bressay tieback and also SVT where we're doing materially emission-reducing projects, that effort continues our already stellar decarbonization efforts. We've decreased U.K. Scope 1 and Scope 2 emissions by over 40% since 2018, and group emissions are down over 20% since 2020. We've also have the aforementioned projects that I talked about. And I think it shouldn't be ignored that at SVT, we're looking to reduce emissions by 90%, which is a pretty incredible effort through the projects that are currently in flight. So those are the -- I think those are everything I had for pre-submitted questions. So I'll take some from the floor now. So one question is from Hemant who I know very well. Are there concerns that the Kraken FPSO would be unable to remain operational until 2040s as per the original design following last year's operational issues of the vessel? So the short answer to you, Hemant, is no. I don't believe there are any lingering concerns. So the issue we had in 2023 was a number of HSP transformer units, which failed. And that's a fairly anomalous thing to happen and multiples of these things are failing. So we're obviously still looking very much to understand why all that happens. But my understanding is that a big component part of that was atmospheric conditions where by humidity in this sort of electrical room coupled with salty air and related salt deposits caused a problem for these pieces of kit. Now the reason we're not concerned going forward is we've taken steps to address that. We've changed the conditions in those areas. We've also been successful in refurbishing a number of those units and they're back in operation plus we were very proactive and we bought a number of critical spares. And so if we were to see a failure, which we don't expect to see to be very clear, if we were to see another failure, we could change out that piece of kit very quickly. So no, Hemant. There's no long-term implication following that outage. A question from David here. You've spoken off from the desirability of M&A to make each of our tax assets. There's been nothing material so far. What in general has been the problem with concluding agreements. Can you give us an update on net debt as of today or the end of March? Do you plan to buy our bonds in the open market rather than leaving cash in the bank earning very little interest? So multifaceted question from David there. So if I take the M&A question first, it's a very lively M&A market, as you would expect. And I can see that quite comfortably in a public forum because so many of the operators within our peer group have made public statements around their desire to cease investment or leave the UKCS entirely. So that really is what underpins that my earlier comment that we see a lot of the barrels in North Sea production as being transactable barrels. So I mean we could do a deal today, but could we do the right deal for the company today. And that's what we're trying to make sure we do. We can build barrels into the business very easily, but we're value-add. And we want to make sure that any deal we do optimizes and accelerates the use of those tax losses efficiently. So I think Amjad has stated this in a number of public forums recently, and I feel very empowered to do the same and that we are in a number of conversations that are ongoing. And they range really from asset purchases right the way through to corporate transactions, whereby you could make a transformative jump in one transaction. So I think what I would say to you, David, is that these deals are never easy to put together. They take time to be put together. So to give some context, I mean, obviously, in a very different operating environment and different macro environment. But the Kraken -- sorry, the Magnus deal we did took about 18 months to negotiate. Now I'm not for 1 second sit here saying it's going to take 18 months just to get something over the line. But hopefully, I'll contextualize that these conversations with counterparties can sometimes take time, especially when the counterparty themselves may have other irons in the fire. So we are very conscious and we're very focused on growth. I mean I think those of you who have watched back the results presentation would have seen it was very clear from Amjad, Jonathan and Steve that we have a refreshed leadership team that are very much here with the mandate to grow the business. So we won't rest until it's done, but we're going to do it and make sure that the deal is the right deal for EnQuest. So I know that's not a specific answer, but hopefully, that gives you some context of what we're dealing with. In terms of the -- so the latest update I can give is the $410 million at the end of February. I mean, I think we gave probably more frequent updates on net debt than just about anybody. So I don't actually have the figures as yet for the end of March. But yes, we're certainly tracking in the right direction in terms of net debt, David. And in terms of the plan to buy bonds in the open market rather than leaving cash in the bank. So it's important for us at the moment to have some cash, especially given the fact that we ended the year -- we ended 2023 with $500 million of liquidity, and that's very helpful in terms of M&A conversations because it largely simplifies the conversation, and it certainly makes things easier if we have some cash to put into a transaction. But equally, I've talked a number of times in this call already around deleveraging, and we'll certainly look to reduce the more expensive elements of our debt as and when that's appropriate. So while we have a long runway ahead for our debt maturities, we've shown with the RBL, we're very happy to accelerate repayment. And so I guess the next -- the most expensive piece of debt in our capital structure is the term loan. So I would imagine us, maybe looking to do something with that as the first priority, and then we'll move through the bonds. But yes, it remains an option, David. Another question from Hemant. Would EnQuest and its partner considering purchasing the FPSO, given that the Kraken deal is expected to continue producing into 2040s with potential for Bressay and Bentley tiebacks? Yes, I think that's the answer. I think we would absolutely consider it. I think there's ongoing conversations with the vessel owner at the moment. We do have optionality around making a purchase. And it just really depends on what the economics look like at the time. So -- but yes, it's very much part of our thinking. And there's a question here saying what exactly is a hopper opportunity. So sorry, that's maybe a bit jargon, so apologies for that for whoever asked the question, these initials that have been provided. And hopper basically means it's the basket of opportunities that sit in front of the organization, which are being ranked and prioritized based on a number of factors, whether it's economic return, whether it's safety and obviously, the safety ones go straight to the top or whether it's emission reductions. So it's really the pool of opportunities that the EnQuest is choosing from and choosing how to prioritize its capital investment. So apologies if that wasn't clear. Hopefully, that explanation is. How would you view -- the question here from another David, David M this time? How would you view an nonoperated interest in the U.K. field? Or will most upside come from operating position? I think that's a really, really good question. And actually, we've been talking about this a lot internally. And I think we are very clear on the fact that EnQuest differentiated operating capability meaning that we can definitely add more value as the operator. So I talked a little bit earlier on around a previously submitted question around Golden Eagle drilling. Now we remember that JV, we're nonoperated, and I'm not going to sort of go into the details of that drilling campaign. But we're obviously disappointed in partnering that. So we've got a very strong drilling capability. So as an example, the drilling that we've undertaken in recent years at Magnus, the PM8/Seligi and that we're looking to prosecute next year at Kraken, we definitely prefer having that in our own hands and certainly our ability to improve uptime on mature assets mean that I think we are best placed to look at operated opportunities. So I think that would certainly be our priority. And what else have we got here? So unsurprisingly, there's a couple of questions around The Telegraph article, which came out a couple of days ago. This question is quite long. So if you just bear with me 1 second. The question is basically saying that although the article promoted a major development, there was little reaction from climate alarmists. I'm assuming that means like climate groups. Have you seen any other reaction either directly or in other media outlets that you can direct us towards any government department responses? So I can answer to you that. That's what [indiscernible] has asked that question. Thanks, Ron. So let me start by saying the article was not instigated by EnQuest. The article was an article that was going to be written anyway. EnQuest did provide a comment. In fact, I think I was name checked as having provided that comment. I mean what we were doing there was seeking to clarify that in terms of Bressay and Bentley, our clear and present priority is the gas tieback that I've touched on a few times in this presentation. So we've engaged with the regulator on that piece of work. And while things are moving along positively there, we still don't have even regulatory full approval for that, and we're looking to progress that to FDP by the end of the year with a view to doing some of that work next year. That's Phase 1. Getting the oil development technically laid out, technically planned and then approved to the regulator is a more challenging job for us. So we felt that the article that was published was premature. I think it was a little bit mischievous in terms of using our immediate attention to do the gas piece and conflating that into our immediate intention to do a whole oil development, which is not really where those projects sit at the moment. So I want to make that very clear in this presentation, and we basically insisted the newspaper involved and some subsequent media outlets that picked up the story, we've asked them to publish a clarifying statement, which they've done at the bottom of the articles. And in fact, some of the media outlets that we spoke to, because of our explanation, chose not to run the story at all. So I think that maybe would explain why the media coverage has been quite limited. As part of the sort of outcome of that story, I have spoken to the regulator just to reaffirm that this was very much a media-led story and our engagement with them continues on a positive, but fairly early note at the moment. So yes, I haven't seen -- to be honest with you, Ron, I've not seen much reaction. I mean I didn't know actually that within the digital forums that the article was published. There was a lot of supporting comments in the comments below. You can take that as you choose. But no, I've not had any incoming in terms of any climate groups or green agenda groups. I've not read any context following the media articles this week. How much focus -- a question from Paul here, how much focus is the nomination committee given to succession planning at the top of the company? And to be honest with you, Paul, that's probably a question that's more suited to the AGM because I don't sit on the board. I'm not trying to [indiscernible] shoulder there, but I certainly don't -- I'm not party to the sort of prime discussions and Board committees. I mean, from my own perspective, what I would say though is that EnQuest does have a culture of personal development. I'm certainly someone who has benefited through development opportunities within the organization. And I think you can look at other senior appointments. So for example, Salman Malik, is somebody who has developed through the company and now he has gone from CFO, which is obviously an extremely senior position, into a CEO position of one of our subsidiaries. So I would imagine this is something that the Board gave a lot of consideration to. But to be honest with you, I'm not a party to those conversations. So maybe one for the AGM if you plan to attend that, Paul. A question from Sam. What do we have planned for EnQuest producer considering we're going to use the Kraken FPSO to tie back to Bressay. Will the EnQuest producer need modification to lift oil from Bressay and Bentley? That's a good question, Sam. So certainly, in the first phase, as I've talked about, gas is the priority. And that will be a direct tieback to the Kraken FPSO, which is really being prosecuted by the Kraken JV as opposed to the Bressay JV because it benefits Kraken. The EnQuest producer is absolutely seen as a credible option to be an early production system for Bressay. So it's very much in our minds to find a technical solution that works and incorporates EnQuest producer. Should Bressay not proceed? And of course, we remain very positive that it will, but should Bressay not proceed, the EnQuest producer is a very impressive piece of kit. It's a highly functioning FPSO with a lot of capacity, and it's something that could be deployed basically anywhere in the world. So we talked a bit earlier on about opportunities for international expansion. So should Bressay not work out for EnQuest producer, it could be deployed as an equity chip into a new development in West Africa, Southeast Asia, lots of locales around the world. So we still very much have plans for the EnQuest producer. I mean, before the deal we did with the RockRose Viaro, I was regularly asked about the EnQuest producer and EnQuest was consistent in that we felt there was value in that piece of infrastructure, which is why we warm stacked it in the way we did. And I think that's been vindicated. So an asset that was largely written down in our books has generated material cash flow for the business. So very much in our plan, Sam, but it really all depends on what the development concept is progressing. And current share price simply does not reflect fair value. I was hoping for a larger buyback in the short term, any reason for holding back somewhat liquidity or other? So yes, I mean, look, as I mentioned earlier on, we were always going to start small, relatively small. It's a 5% yield effectively, which is smaller than some are doing. But I think it's an important start for our organization. It starts in a vein which we mean to continue. So we have other priorities. We're looking to grow the business. We're looking to delever the balance sheet, and I think starting in the way in which we have is the right thing to do. And certainly, that was the view of the executive team and the Board. So it's disappointing to me that the delivery of this really important milestone has been if that's seen with disappointment by some shareholders, then I'm disappointed to hear that because I think it's actually a really important milestone in the company's evolution. And certainly, we're looking to make shareholder returns as part of our capital allocation framework going forward. That could include continued buybacks but also dividends. So yes, I mean we want to continue in a positive vein and we want to continue to return value to our shareholders. I'm just going to skip back through and see if there's anything I've missed. It's quite difficult. There's quite a lot of questions coming in. When will buybacks start? Yes, I think we're looking to start at the end of this month. We're working with the broker to do that now. And there's also a question around whether it will be canceled or retained by the company. So there are basically meetings going on right now to discuss the actual process and the details on that. So I'll be able to update on that in the coming weeks when I actually released the RNS that kicks off the process. At the moment, I think the norm would be to cancel the shares. But yes, that hasn't been fully decided yet at this stage. So there's a couple of questions on that subject. So hopefully, that covers it for now, and we will update on that once we have a final answer. So I'm just looking back through. So there was a question -- this is quite a long question. So apologies. Let me just have a quick look here. In view of indications of the potential Labor government regarding the possibility of blocking drilling in North Sea, safeguarding our investment is paramount. Considering this, I'd like to pose the following question. If future government actions do indeed hinder our ability to move forward with drilling, is our company willing to use the Investor State Dispute Settlement mechanism provided within the ECT. If so, what measures we've implemented to ensure readiness of this process? So this question from Martin. So Martin, I've seen quite a lot of, I think, misrepresentation of this over the last 6 to 9 months. We are very much engaged with the incumbent government and also with other political parties, including Labor, and we're also very engaged with trade unions and industry bodies. To my knowledge, there is no suggestion that drilling has stopped at active or existing licensing -- licenses. And actually, that's a very important distinction. EnQuest is not really an explorer. We look to take on late-life assets, which are already producing or in the case of Bressay and Bentley kind of proven discoveries, which simply require development. So licenses are in place for all of our assets. So I don't think there's a material risk to us that drilling is stopped. I've not seen any indication about any of the conversations that we've had. So if that weren't to be the case, I would imagine there would be a significant legal challenge from across the sector. But I have no indication that's going to be the case. So we are focused on the movement in our interactions with government and the potential new administration. We are very much focused on putting in place a tax regime, which is reflective of where the basin sits within its life and is progressive and is fit for purpose for the North Sea. So that's the focus of our discussion at this stage. I think I've covered pretty much everything here. Sorry, there's one question I've just seen in the bottom. I'll take this one and then this will be probably the last question. Apologies to any that I've missed. I'll pick up -- pick them off through the Investor Meets and company process. In your view of broad project experience in the U.K.'s North Sea, are you also looking at opportunities in Norwegian part of North Sea or is Southeast Asia much more interesting for your international expansion? It's a good question. So absolutely, North Sea is our immediate focus, given our tax advantage. There's nothing that screens like the North Sea for us given that we take on an asset that generates $150 million in the hands of the incumbent if it's a full taxpayer. That's equivalent of $390 million in our hands. So that's a very compelling economic argument for us to be focused in the North Sea. Southeast Asia is an area, where we have some expertise. We have our footprint already. We have the preferred operator status, and we can definitely grow the business there. So that's an obvious place for us to look. I'm not aware of anything being currently looked at in the Norwegian sector of the North Sea. It doesn't mean to say we won't look out in the future. But for now, our focus is on North Sea with international expansion probably to Southeast Asia. I think that covers -- it certainly covers the vast majority of the questions. Is there anything I've missed, I'll circle back around and I'll answer. So, Jake, back to you.

Perfect. Craig, that's great, and thank you very much indeed for being so generous of your time and then addressing all of those questions that came in from investors. And of course, we will give you back all of the questions that were submitted today as well as any further ones that do come through. We'll give you those back immediately after the presentation has ended just for you to review, to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the platform. But Craig, perhaps before really just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great.

Absolutely, Jake. Well, really, just a thank you from me and the executive team at EnQuest, for taking the time to join and for your continued support of the company. And just a reiteration of my view, this is an exciting time for the organization. We've had our initial growth phase, we've had a deleveraging phase and now we're ready to grow again. So it's an exciting time to be part of the organization. I'm certainly invigorated by. I know Amjad, Jonathan, Steve and the teams are. So we look forward to working with you as our shareholders going forward, and we hope that we can deliver some really good returns to you in the near future. So thanks again for joining.

Craig, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can be better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of EnQuest plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.