Ithaca Energy plc ($ITH)

Hello, everyone, and welcome to today's Ithaca Energy plc Full Year 2025 Financial Results Call. My name is Seb, and I'll be the operator for your call today. [Operator Instructions] I will now hand you over to Yaniv Friedman, Executive Chairman, to begin the call. Please go ahead.

Good morning. Thank you, everyone, for joining our full year 2025 results presentation and conference call. My name is Yaniv Friedman, and I'm the Executive Chairman of Ithaca Energy plc. With me on the call today are Luciano Vasques, CEO; Iain Lewis, our CFO; and Odin Estensen, our COO. I'm on the first slide. And as you can see, we've titled this presentation, Delivering on our strategy, and I'm really pleased to say that this has been another year of an excellent set of results and performance. And as you'll see, really executing on all of our pillars. Today's agenda on the next slide. So we'll talk about our vision in action, our proven strategy for supporting value-driven growth, financial update including our 2026 guidance and closing remarks to be followed by questions and answers. Vision in Action. So we titled the Scale, Stability and Strength. And if you move to Slide #4, you'll see the strong operational performance in 2025, delivering on an upgraded production outlook. And I'm going to go through this quickly. But as you can see, we've ticked all the boxes on guidance. So production, net OpEx, CapEx, producing asset CapEx just below the bottom of the range. Same with Rosebank CapEx. Cash tax was again lower than the bottom of the range. And our dividend target of $500 million that was declared and delivered with a $500 million payment cash as well in 2025. If we'll move to Slide 5. So strong strategic delivery, supporting our vision. If we look at scale, so 119,000 barrels of oil equivalent per day of production, strong production, delivering in line with our upgraded production schedule. Outlook, material 2P reserves and 2C resources base of 658 million barrels supporting our long-term value creation. Just over $2 billion of adjusted EBITDAX, so enhanced financial performance and cash generation in 2025, supporting our capital allocation flexibility and attractive shareholder returns. As I mentioned, $500 million of full year 2025 dividends that were declared. And the strength of our balance sheet with $1.5 billion of available liquidity. We've completed a successful EUR 450 million, 5.5% bond issuance and upsizing of our reserves-based lending facility this year as well. It's enhancing our financial strength and flexibility. And we have material financial firepower for our continued growth with a low leverage position of 0.56x at EBITDAX. Our vision for Scale, Stability and Strength in action. So if you look at scale, it's a nice kind of a chart that shows the growth of organic and inorganic production through the years. So if you'll see where we are today, 2025 pro forma production of 131,000 barrels per day reflects organic and inorganic growth. Strong production diversification with no hub representing more than 20% of our production. Exit rates in Q4 of 148,000 barrels per day. We had peaks of above 150,000 barrels per day. Production, and we have a balanced pro forma production mix of almost 50-50 liquids and gas, right? So 52% oil and 48% gas, but this shows the really nice trajectory of our growth. The next slide, and I'm on Slide 7, shows the Stability element in action, right? So I like this, and we're showing this quite often in our conference calls. So you can see ability to maintain production above 120,000 barrels per day for the foreseeable future. Our material resource base provides us with portfolio longevity and optionality that underpins our long-term production growth. And we focus on high-grading investment opportunities based on returns. So as you can see, we have material resource base, and we'll talk in more detail about our development projects later on in this presentation. Moving to Slide 8. Strength, $1.5 billion available liquidity. Iain will talk about hedging a bit later in much more detail, but we have a material financial firepower to support our growth with an undrawn reserve-based lending facility of $1.3 billion. Strong hedge protection for cash flows that provides the ability to invest for the long term and sustaining attractive dividend distributions. And high netback capability of our portfolio that provides resilience across the cycle with continued focus on cost control, and as you can see, under $19 per OpEx per boe, which is a very nice achievement. If we'll move to our strategy, and I'll ask you to move to Slide 10. So we'll try and cover all the pillars of our strategy. And as I said, we're successfully executing our value-oriented growth strategy, focusing obviously on optimizing our assets, but also looking at our potential developments and inorganic growth as well. Luciano, why don't you take us through production, safety and Rosebank.

All right. Good morning, everybody. So if we are going now on Slide 11. '25 represented a year of outstanding operational performance, significant improvements delivered across all our operational metrics, most notably marked enhancement on the HSE performance. The key takeaway that I want to highlight here, our focus on safe and operational performance with the introduction of the Perfect Day in 2025, we've talked a lot about it, and it allowed improving all our operational metrics, and we have consistently delivered on all our commitments. The target investment in '25 increased our production capacity, create a basis for a sustained midterm production of 120,000 barrels per day and then the delivery and progress of our ongoing and planned investments, which provide robustness for our production outlook midterm. If we can go to the next slide. First, let me focus, as usual, on our commitment to responsible operation and sustainable value creation driven by the disciplined focus on achieving the perfect day, which I remember is defined a day which has no Tier 1 or Tier 2 process safety incidents and without recordable personal safety injury and without a regulatory reportable event. And I'll talk about the production efficiency in the next slide. This has delivered improvement in safety and environmental performance and the group recorded zero Tier 1 and Tier 2 process safety events, delivered sustained improvement in personal safety performance with a material reduction of over 25% in the total recordable injury rate to 1.7, and it was 2.3 in '24 and 3.3 in '23. The greenhouse gas intensity was 28% lower than last year, primarily due to the higher production delivery from our low-intensity assets, which is significantly below the latest basin average of approximately 24 kilogram of CO2 per barrel equivalent. And in 2025, as part of our values relaunch, I want to focus, we introduced a new make it safer value which resonated well with all our workforce and making sure that safety is always visible in our culture and the front, at center of everything that we do. So moving on to Slide 13. 2025, as Yaniv said, has been a year of excellent operational delivery and disciplined strategic execution. The strong production reflects the enhanced operational robustness of our asset base first, supported by continued operational improvements and optimization, but above all, a consistent and reliable delivery. For a day to be a perfect one, we also have to meet our production target for the day. And with that focus, the production efficiency performance in '25 was 83% exceeded the previous year's 80% in '24 and the average of the basin of 75% including a sustained 4% improvement in the unplanned production efficiency performance across the operated assets. And now we entered 2026 with an increased installed production capacity having achieved a '25 rate -- exit rate, as we said, of 148,000 barrels per day, with peak daily above 150,000 following the successful delivery of new wells at Cygnus, Seagull and J Area. And beyond '26, we expect to maintain production above 120,000 barrels per day in the medium term, reflecting investments in our existing producing asset base with -- which is Captain, Elgin Franklin, J Area and Cygnus, and of course, the startup of Rosebank development with material upside from our pre-FID projects. Now going to assets. If we move to Slide 13, I want to touch on Captain field. I continue to see a very high level of activity in 2025. From the execution of the 13th well campaign to the completion of a significant summer shutdown with material backlog reduction, optimization and life extension activities, which were completed. As part of the 13th well campaign, we delivered three new producers, one injector and the Enhanced Oil Recovery Phase II project, delivered a production for the subsea wells, which was doubled from around 10,000 to about 20,000 barrels per day, which allowed to reach the highest production rate in recent years. Now the first phase of 14th campaign with two producers and one injector was sanctioned and is scheduled to start in Q4 2026 on a back-to-back basis with a 15th campaign. Also recognizing the importance of Captain as a strategic operated asset, there was a major flotel campaign commenced mid-25 to support the long-term stability and performance of this asset. So ensuring that the facility remains safe and reliable through its long-term life. Then we decided to extend the Safe Caledonia flotel campaign later in the year, executing further critical scope to safeguard longer-term performance and after more than 300,000 man hours that we liquidated than the flotel left the station in February this year. If we move to Cygnus in Slide 15. Cygnus, remember, is the UKCS largest producing gas field with low emission production, fits very well with the U.K. need for the domestic and sustainable gas production and fits excellently in our portfolio, offering upside potential. Its performance in the year has been the top across our assets, reaching 90% of production efficiency. At the beginning of the year, while we were working on the acquisition of the additional 46% stake. We've been active mobilizing the Valaris Norway rig and have then the well C12 drilled, which came on stream in December and was followed by the C13 spud in. Now in the year, last year, we have also sanctioned further two wells, C14 and C15, which are now planned to be spud in Q2 and Q4, respectively, of 2026. And this goes along further investment potential with further two new infill wells that we intend to sanction in the year and starting execution of the already sanctioned compression project, which will announce the production performance of the field and extend the plateau. If we move to the next slide, which is the slide on J Area. This is also a good performer of our portfolio, and we benefit there from a rather effective collaboration with the operator Harbor. 2025 has been very active for J Area. First action was Talbot that was indeed put in stream at the very end of '24, but then has delivered very strongly, both in terms of production rates and plateau duration in '25. Then soon after Talbot, Jocelyn South, a discovery of late '24 was tied back in Q1 '25 and materially supported production. That was followed by two more infill wells in Judy -- in Judy east flank which was brought online in December at the end of the year and then a stimulation campaign on Joanne has been planned and successfully executed in the year. All these investments initiatives in the area characterized by short time to market, quick payback have allowed the J Area to achieve its highest average production in 10 years, which rates above 20,000 barrels per day. And if I want to move to Seagull on Slide 17, following the acquisition from JAPEX U.K. in July '25, now our equity in Seagull field increased from 35% to 50%, equaling our partner BP's interest. At Seagull, the fourth and final plant well was completed, started up in November '25 after an extended well completion operation and the completion of J4 well marked the transition of Ithaca's Energy role as development well operator now to a non-operated owner and BP now is the operator. The early well performance of J4 has been very strong, in line with expectation and operational efficiency of Seagull wells at the ETAP facility, which is the one that Seagull is connected to, is operated by BP, was also in line with expectation with average net pro forma production at around 14,000 barrels per day. And moving to Rosebank. Our key project being operated by Adura. Material project activity was executed in 2025, including the successful delivery of offshore subsea installation scope that was delivered on time and within budget ahead of the drilling activities, which is planned for this year. The FPSO Rosebank recently sailed away from Dubai having undertaken major refurbishment works over the past 2.5 years. And remaining completion and commissioning scopes are now planned during this year as part of the program to moor and hook-up in field ahead of the first oil production plan for end '26, '27. And further environmental information was submitted to the regulator for the development in 2025, and now we await the award of the production consent. And as we enter this full year of development, now we need to maintain disciplined execution, which is going to be critical to deliver the project safely, on schedule and within the project cost window. With that, I give the line back to Yaniv.

Luciano, thank you. And I think it's really, as I said, excellent set of results and very strong performance, and you can see from the assets, and I'll get to kind of our inorganic growth. It's nice to see how kind of acquisitions pay out through the year. So we've done those two acquisitions of Cygnus and Seagull through the year and they're definitely at the top of our performing assets. Before that, talking about organic growth opportunities, we are -- Ithaca is a long-term UKCS player. And as shown earlier, we have a lot of 2C resources that we intend to go and develop. So we've kind of unveiled our West of Shetland strategy earlier this year, and we have a significant and growing presence. We have around 300 million barrels of oil equivalent of net 2P reserves and 2C resources. Luciano mentioned Rosebank with production end of this year, early next year. And we have Cambo and Tornado that are progressing right now through key regulatory milestones and project technical milestones towards FID in '26 and '27. We're enhancing our position as a strategic infrastructure player in the West of Shetland. We've announced our Tobermory farm-in last quarter and really being a part of the new Northern gas hub and Greater Tornado Area strategy that would unlock future synergies and further exploration potential. Creating long-term value from hub-based investment approach with Fotla maturing towards final investment decision and resuming infrastructure-led exploration strategy in the Greater Cygnus Area, J Area and in the West of Shetland. So this is a clear focus for us, our kind of development asset arm. Our long-life reserve base supporting this material organic growth. You can see this here. I won't spend too much time on this. But today, around 660 million barrels of oil equivalent of 2P and 2C resources, of which 55% are operated. And this material reserve base, obviously, part of it is coming through the acquisitions that we've done as well and supporting our reserve replacement ratio, which is a very impressive 130%. If you move to Slide 21, we wanted to show you some of the works that we're doing internally, and we're seeing what we call unbooked resources that we identify and with a goal of reaching circa 1 billion barrel potential of resources. And part of it is obviously the farm-in into Tornado that is not captured in our year-end reserve audit, which is around 25 million barrels of oil 2C resources. But we're also advancing the maturing of contingent and prospective resources, focusing on infrastructure-led exploration to maintain and expand our optionality by bringing forward additional projects to create hub synergies. And when you look at this and our -- and when we look at our internal review on resources captured, we're seeing approximately 1 billion barrels potential. And we said we're seeing ourselves as long-term investors in this basin with a lot of potential. If we move to Slide 22, it's really a slide that talks, I think, about U.K. energy security and focusing on Cambo. And Cambo is the largest pre-FID undeveloped discovery in the U.K. Continental Shelf and a critical asset to the U.K. energy security. And just to give you a sense of what we're talking about here. So obviously, gross recoverable reserves of more than 140 million barrels of oil equivalent. We estimate a U.K.-based full-time employees over the full life of the field, from FID to decommissioning, of over 700 with peak number of full-time jobs at around 1,400. Gross value added over the field's life of GBP 14 billion. And if you look at the gross domestic product of Scotland, the gross value add here is 0.7% at peak production in 2031, which is quite remarkable and demonstrates the importance of this development to the U.K. energy security and to the Scottish economy. It will represent about 8% of U.K.'s oil production from first oil to 2035 and would meet 4.5% of U.K. oil demand at its peak and 20% of total U.K. oil production by 2050. So with all the challenges, we see this as a critical U.K. energy security project and a key element in our West of Shetland strategy. If we talk a bit more about Cambo on Slide 23. So updated Field Development Plan and the Environmental Statement were submitted this quarter -- last quarter, reflecting project optimization identified during successful technical refresh with a lot of support from Eni. We're completing tenders for EPCC for our FPSO and SURF and entering market for a drilling rig with the objective of consolidating project costs and schedule and derisking the project as we mature it towards FID in '26, '27. At the same time, we're reinvigorating our farm-in process, and that reflects obviously the project's enhanced maturity and part of the derisking that we're doing towards FID and a bit more stable uncertainty around fiscal and regulatory outlook. Another energy security slide, if you want, Slide 24, really runs our gas development strategy in the West of Shetland and initiating and maturing prospective and contingent resources towards development. So we're doing a lot of work around this. What we call the Greater Tornado area with the Tornado development progressing through the regulatory milestones with the NSTA, approval of the development concept in 2025 and submission of the Field Development Plan in Q1 of 2026. It will also -- Tornado will also be a key enabler for future tiebacks as well and unlocking further exploration potential. And a bit north in the Greater Tobermory Area. So we've announced a 50% farm-in in Tobermory in Q4 with Adura as operator. And this positions Ithaca as part of the Northern gas hub in the West of Shetland and strengthen our position as a strategic infrastructure partner in the basin. And obviously, this partnership will seek to unlock further prospects in the area to maximize value creation. So if you're looking at this and you're looking into the future, obviously, Cambo, but looking at Tornado, Tobermory, and associated potential, exploration and development, this is really a very strong story of further development in the UKCS. If we move to Slide 25 and shift to our inorganic growth strategy, again, another pillar that we ticked the box on in 2025. So as you said, we've continued execution of our UKCS consolidation strategy, increasing interest in high-quality, well-understood assets that offer upside potential. And we're seeing this right now with a great performance of both Cygnus and Seagull. We have a very clear framework of working through M&A options and very disciplined and focused. So we're going to keep doing that. And the consolidation activity of acquisitions of Seagull and Cygnus in 2025 met all those investment criteria. And as you can imagine, obviously, with -- in the current commodities landscape, they performed really well for us. And we're maintaining an active but patient and disciplined pursuit of international M&A opportunities in line with our focused international expansion strategy. On Slide 26, I spoke about this, and we've shown this slide before, but these are clear investment parameters to support our UKCS consolidation and our focused international expansion. And I think that we really saw in 2025, the contribution of Seagull and Cygnus to our pro forma production and financial performance. So we're very pleased with these acquisitions. And as I said, we're -- Ithaca grew through M&A and acquisitions, we are focused on looking at this from a value-led point of view, and we hope to do more. With that, I will hand over to Iain Lewis, our CFO, to talk about financials and guidance for 2026. Iain, please.

Thanks, Yaniv, and good morning, everyone. So let's move on to Slide 28, and let's close out the 2025 performance overview by looking at some of the key financial figures. So the 119,000 barrels a day production average with a less than $19 per barrel OpEx translates into a $2 billion EBITDAX delivery for the year, $1.7 billion of net cash from operations and $683 million of free cash flow. So in a strong production and operation delivery, we see that translating into cash and financials. So you can see the loss for year of $84 million. That was driven by the EPL charge in the year of $328 million. But underlying performance despite the tax headwinds on net income, very impressive. The bottom of that slide shows the net debt and liquidity position. You can see that we're $1.3 billion net debt at the end of the year, 0.56x leverage ratio to EBITDAX, maintaining a low leverage position in the business despite the investment delivery that we are continuing to undertake. And we closed the year with $1.5 billion of liquidity, which is enabling us to look with confidence of opportunities, both organic and inorganic as we move forward. Next slide, Slide 29, gives a bit more detail on EBITDAX for those that want to dig into the numbers. A couple of things I'd just call out here. Obviously, we're in a lower price environment 2025 versus 2024. In fact, the value from production line, with six lines up from the bottom of that chart shows that per barrel, we've moved from $79 a barrel value of production delivered in 2024 to $67 per barrel, so a $12 reduction in the delivery of value from production per barrel. But you can see at the bottom that the adjusted EBITDAX per barrel is only down $8 a barrel. So that's a $4 per barrel reduction in the cost base as we come through 2025, just underpinning the importance of, first of all, the hedging, which added $4 a barrel of value in 2025. But then cost management, again, reducing $4 a barrel compared with prior year. So strong delivery through the operations side of the business, supported by strong hedging positions and by good cost management, delivering strong EBITDAX of over $2 billion in the year. And moving to Slide 30, we'll talk through something of the net debt and liquidity positions. This is an unfolding story that has been consistent through a number of years now where we maintain low net debt, high liquidity and low leverage. And the results at the end of '25 demonstrate that on every front, an undrawn RBL at the end of the year with $1.3 billion available. We also had a technical accordion facility available remaining on our RBL of $435 million through the rolling assets through acquisition and exercise the accordion if that is what we do. So just capacity everywhere really from a financial perspective. And this kind of firepower enables us to do many things in the market and gives us a lot of credibility with all counterparties we talk to as we look to evolve the business, both organically and inorganically. On to Slide 31 and a bit of an update for you on the capital allocation framework. So this has remained unchanged since IPO with our key pillars being to take the cash from operations on the left-hand side to invest, protect, return and then evolve the business. Now all of these matter and always have been up rev as part of the enhanced framework we're announcing today. So in terms of investment, previously, we were looking to maintain over 100,000 barrels a day of production. We now see our ability to maintain over 120,000 barrels a day. That's the quality of our assets, the quality of our investment opportunities and delivery, showing us a path to continue above 120,000 for the foreseeable. And therefore, an up-revved investment base. Secondly, in terms of protection, we've taken the ceiling down on our normal course leverage ceiling from 1.5x to 1.25x. Clearly, as we are at the moment, 1.56x, we're a long way from that, but we believe there's an appropriate reduction in the ceiling on our net debt-to-EBITDAX position. And of course, our hedging protects this position integrally as we move forward. And then announcing today an increase in the return range forward for our investors, 20% to 35% post-tax cash from operations, up from 15% to 30% over the past few years since IPO. 30% post-tax cash from ops has been the delivery for the last 3 years now, and we're increasing the range of outturns in our capital allocation framework to reflect that robust delivery and confidence going forward. And of course, the evolved category maintains. We have actually executed on all three elements of this at different times over the last few years. We've added growth CapEx. We've added M&A extension, and we've added additional distributions, and we'll continue to keep those options open as we move forward in the business. So an enhanced capital allocation framework as we look forward. Now in this Slide 32, something of what underpins that confidence forward is stability of our cost base. And you can see here that we have delivered a cost reduction through '24 into '25 with cost per barrel now below $19 in 2025. And the guidance for 2026 takes us to a further reduction towards $18 a barrel in our guidance for the year 2026. Now you can see forward the CPR that's released today and is on our website is an external view of our business, and you can see the reflection of their view of costs being relatively flat as well in the medium term. And that is what we're doing, portfolio managing and cost management and all the hard yards that are involved in that. We've always been aiming to keep our costs in the low 20s, and we are beating that at the moment and aim to continue to drive that kind of performance. Next slide is on investment. So Slide 33, and we have the guidance range for producing asset CapEx in the year. We have an uplifted guidance of $600 million to $700 million. So a little bit more investment expected this year. And that reflects the confidence in our business and the cash flow that we believe is available to deliver that investment and the high-quality nature of the assets that we have to invest in. You can see that the next few years in the CPR that the organic producing asset CapEx is maintained in the next couple of years at a relatively high level and then reduces. And of course, project CapEx would be the aim to infill that as we move forward in this production maintenance mode. Rosebank, on the right-hand side of that chart, of course, is a big year for Rosebank. We have sailed the FPSO, as Luciano mentioned earlier, and we are now moving into the final phase of the project. There is a lot to do this year to get the vessel in field and hooked up and the drilling rig starts soon to drill the wells on the field and therefore, a material year of spend, but essentially the last material year of spend 2026, and then we're very much down to low levels of CapEx going forward as the field comes into production. Slide 34 on hedging, and there's a few slides on this because clearly, it's an area of deep interest at the moment as prices have moved in the last few weeks. So we have an active policy and program on hedging, which has delivered over $500 million of hedge gains in the last 3 years. We have a very active intervention and proactive hedge policy where we aim to protect downside at 50% -- 75%, sorry, but also produce upside of 50% as we use swaps and collars and wide collars to deliver on our program. Now oil and gas have behaved differently in the market in the last year or 2 years. And therefore, we've had to work between the two as we've moved this program forward. And we're glad to announce today that as at close of business yesterday, where nearly 64 million barrels hedged through the end of '27 with a robust program of both downside protection, but also upside exposure. Slide 35. The next slide gives a little bit of information of what's been happening in the market and how we've responded. Clearly, everyone knows that oil prices are higher given the events in the Middle East. However, one of the key things that we've been looking at in the market and working within the hedge book is that the dislocation of gas price has been more substantial than oil. And in fact, particularly 1 year out in 2027, there has been a material change in the gas forward curve relative to the oil forward curve with the oil curve only up around 10%, but some of the forward curves in gas over the last couple of weeks, up more than 50% in the summer '27. So what we've been doing through this last couple of weeks is specifically focusing on 2027 and augmenting our '26 position. And this uplift in market price curve, we expect to deliver additional value in '26, but has also unlocked significant opportunity in '27, which we now have built into our hedge book. So the next slide, Slide 36, explains that a little bit more, really focused on gas. Prices in the summer '27 have been systemically low for a long time now, so much so that we didn't like the pricing. And Q2 to Q4 '27, we had no gas hedges as we moved into 2026. We've been able over the last few weeks to materially change that and uplift our gas hedge position for 2027 at very good pricing. And so although we've done some 2026 trades, the opportunity that's been developing in the market on gas hedging, we really have benefited from. So as we look into the next slide, which is the hedge book for oil and for gas, really important, we land a couple of things here. One is that we have -- given the low position in oil, we have seen this as being a base cash flow delivery to support dividends and capital program. And therefore, we've done a lot of coloring of oil over the past 6 months in the $60 to $70 range. We have some color that take us up to $90 a barrel in the second half of the year. And of course, we have some unhedged volumes, but we have seen the oil hedge book as being a base cash flow delivery engine. And we are now well positioned in '26 and also robustly in '27 to deliver base cash flow support for the business. We move on to the next slide on gas. And of course, we closed the year nearly at 50-50 in terms of gas and oil production in the business. We have significant upside in gas, which, of course, as I've mentioned in the previous slides, it's actually more dislocated than the recent history than oil is. And we have unhedged gas over 20% of the volumes through the first three quarters of '26. We also have about 20% of our gas volumes hedged at up to ceilings of GBP 1.30 a therm and then a further 35% hedged at average ceilings of over GBP 1.00 a therm. So as gas has increased and it's in the GBP 1.20 to GBP 1.30 range at the moment, we are benefiting very materially from the gas uplift with the oil price base delivery and the gas upside in our book. So this is an example of the kind of designed and thoughtful intervention in the market that enables us to deliver base cash flow for protection of our dividend and capital program, but upside to our investors through exposure to collars in the market. And we'll see this come through 2026, but we close out our results today with a very robust hedge book with a lot of upside in our gas book, particularly. On to Slide 39 and a couple of comments on decommissioning. Just to reference, we've got a slightly higher decommissioning cost this year because we bring two of our long-term servant assets, Alba and Greater Stella Area to station of production. And we'll see the floating storage unit on Alba move to decommissioning yard and also the Greater Stella area asset, the FPF-1 vessel, likewise, the floating vessel will go to decommissioning yard. It's quite a moment for the company. The Greater Stella Area asset was the maker of the company. And in fact, of course, investment in that asset was curtailed by EPL a few years ago, one of the reasons why it's coming to station of production today, but a long-term servant of the business and really the core around which the business was built and a very high-quality asset and delivery performance. So the focus now is late life -- ultra-late life management of these assets, making sure that we decommission these assets appropriately, environmentally sensitively. And that we run the Alba P&A program over the next several years in an efficient manner. It's an opportunity for us to demonstrate the kind of decommissioning performance that we aspire to, that actually will reflect our high operational performance in our core business. Moving on to Slide 40 and just a couple of comments on dividend. Clearly, a strong dividend delivery over the last few years and $500 million delivered this year '25 with the closeout of the $200 million payment in April. Our dividend range for 2026, of course, based around that new uplifted capital allocation framework. 20% to 35% being the range we have committed to 30% post-tax cash from operations in 2026. And we've given a target range around that of $470 million to $520 million, clearly with oil and gas prices in play, particularly gas prices, as I've mentioned, driving a lot of the upside. And we're confident in the delivery of that dividend target range and hence able to bring that to market today. So a strong dividend history, and we believe a strong '26. And as you've seen from the hedging book, we expect '27 also to be shaping up to be a strong delivery year from a cash flow perspective as well. Sounds like for me, Slide 41, guidance for the year. Very simply, we are increasing our production versus '25 with a 120 to 130 production range. We are decreasing costs, OpEx down to an $840 midpoint, which is about $18.5 per barrel, down on $18.9 for 2025. We're able to increase our investment in core assets and also in Rosebank accordingly, delivering on our decommissioning obligations and executing on our program. A slight increase in cash tax being the reference points from '25 coming through and payments made from EPL in the year. And then this uplifted guidance on dividend with a strong outlook and upside based on pricing available for our investors. We've always said we'd share the upside on prices with investors. That's why the post-tax cash from operations dividend range and glad to commit to that today. Back to Yaniv.

Thank you, Iain. I'll briefly go through closing remarks on Slide 43 and leave time for questions and answers. And as you've seen through this, are really -- our model delivers growth and sustainable shareholders' returns. I think we proved that in '24 and '25. We intend to prove that in 2026 as well with sustaining and optimizing medium-term production above 120,000 barrels per day of production. Significant cash flow generation from a diversified portfolio of scale. Capital discipline is key to us with a strict high grading of investment opportunity. And we're delivering organic and inorganic growth together with sustainable shareholder returns. So that's the Ithaca model. And I think 2025 is a testament to that. Last slide, I really run through this briefly just to capture everything, strong operational performance, increased installed production capacity. As Iain said, we're confident in our kind of revised installed base capacity, low OpEx per barrel, a strong hedge position that allows us to protect cash flow with significant upside exposure and supporting our continued investment and securing dividend. Strong strategic execution, developing our West of Shetland strategy and focusing on high-grading investment to maximize value creation. And of course, at the same time, delivering attractive shareholders' returns, $500 million declared dividend for 2025, looking at total distributions post IPO of $1.4 billion and a refreshed dividend distribution range of 20% to 35% post-tax CFFO. So with that, after the -- what we feel are pretty excellent and strong results for Ithaca. We'll be happy to open up for questions.

[Operator Instructions] The first question is from Cian Evans-Cowie with Bank of America.

It's Cian Evans-Cowie from Bank of America. So I guess going straight into the payout policy changes you've made today, I wonder if you could, I guess, talk us through your thinking in a bit more detail on why you've upgraded the payout ratio. I know for this year, you've set that 30% target. I wonder if you could tell us how you arrived at the 30%? And what would lead you to aim higher than that, possibly towards that 35% level in the future? And I guess if you could also comment briefly on why you've altered that payment schedule? And then Secondly, if I may, on M&A and your progress towards that Cambo FID. I noticed that last year on that nice production profile slide that you include, in the footnotes, you said you're in live farm-down processes. And I don't see any such footnote this year unless I'm missing it somewhere. So I guess, could you perhaps give us an update on where you stand there, how things are going? I know you said the process is being reinvigorated, but what exactly does that mean, I guess, the maturity and shifting tone from government that we've seen would be a positive in the process. But of course, any volatility in the commodity markets can't really be ideal for these kinds of discussions.

Iain, why don't you start with dividend? I'll take the Cambo question.

Sure. Yes. Thanks, Cian. Yes. So I mean our capital allocation framework, obviously, we set IPO. And clearly, that's a number of years ago on our development opportunities. Our CapEx program have all evolved since then. And what this range gives us is the opportunity to flex dividend based upon our commitments and expectations of capital deployment because, of course, invest and protect comes before return in our framework. So therefore, it depends the investment required and in fact, the balance sheet position as well determining the range. So we gave ourselves a range for that reason. 30%, we believe every year, we will guide on a position. 30% has been what we've paid the last few years. We see the strength of our business such that we can't see ourselves getting to a place where 15% is what we would pay out. And therefore, we just uplifted the bottom end of the range. And in fact, in some years, I think we may be able to deliver more. So that's why we changed the range. It's a good point you mentioned on the policy. We decided to flatten the delivery of the dividend from a 1/3 at half year results and 2/3 at full year results. We've moved to a 50-50 cash dividend payment. Again, we think that's just reflective of the kind of balanced nature of our business that we can deliver around that 50-50 basis. And therefore, we've moved to that. It makes calculation of dividend flows a little bit easier for people, and it's a flat policy that's in line with many in the market, and we think appropriate.

Yes. I think just to add to that, it really reflects the, I think, maturity and stability of the business as well, right? I think that's what we're trying to convey here with everything else. Cian, thanks for your Cambo question. First of all, I'm glad someone is reading the footnotes. That's really encouraging. But we are obviously not going to comment on kind of ongoing discussions. But we said all along that Cambo is a project that we like and that we'd like to do, and we would like to bring in partners. As I said earlier through the presentation, we're seeing the improved, I call it, stability or certainty around fiscal regime as obviously something that's supporting project going forward, and we'll see where that goes. But we're confident in our ability to bring in partners into this project and for future investment in the UKCS.

Our next question is from Werner Riding with Peel Hunt.

Yes, could you please talk a little more about capital allocation in respect to M&A. As you set out, 2026 is already shaping up to be a pretty highly cash generative year. So in addition to the potential for maybe debt reduction and increased shareholder distributions, you're going to have significant liquidity to pursue acquisitions. So can you maybe give a sense of what types of opportunities you're screening in terms of scale, any geographies outside the U.K. that appeal in particular? I noticed you're flagging international expansion more openly now, for example.

Thanks, Werner. I'll take that. So look, we're -- as we said, we have our -- what we call a Consolidation Strategy, in the UKCS. And as you look at our portfolio, and we are -- we have a very high-quality portfolio. Our intention is to high-grade that portfolio, right? So we're being very disciplined in the opportunities that we would take and execute on. But we're definitely still interested in adding high-quality assets to our portfolio in the U.K. And as you said, we have the balance sheet and the firepower and flexibility to also move quickly on opportunities. The international expansion angle is not new. I think we've been saying that in order to continue to grow the business, we would like to look at opportunities outside of the U.K. that meet our investment criteria, right? So we're kind of value-led. But at the same time, I want to mention everyone, remind everyone, we have our organic growth arm as well, right? And we're looking at things from a value perspective and where the marginal dollar makes the higher return, and this is how we look at things. So international expansion, yes, not at any cost, and it will be a very disciplined one. And we also say we're not -- we don't intend to expand to nine geographies, but we want to focus on one or two that we can grow the business in an environment that we feel we have an added value, work with quality partners and be able to kind of replicate the Ithaca story in another basin.

Our next question is from Mark Wilson with Jefferies.

First question is, I'd just like to check on the production guidance for 2026. You highlighted how you exited at around 150,000 and guidance for the year at 120,000 to 130,000. So just could you walk us through the moving parts down to that average level and whether there's any planned maintenance that includes that versus decline? That's the first question. Second, thank you for the answers just then on international opportunities. But in the U.K., first off, are there still opportunities like the Cygnus and Seagull out there? Or do we think a lot of that consolidation has happened? And then secondly, if I look at your West of Shetland, you partnered at Rosebank with Adura, you've got 20%. You partnered with Adura in Tornado, in Tobermory 50-50, and you've got Cambo at 100%. Frankly, an asset swap Rosebank into Cambo carry seems to me the logical conclusion there. Any comment on that?

Okay. I can pick up on the guiding. So first of all, the exit rate that we quoted is kind of demonstrating the capacity of our integrated production system in covering the totality of our portfolio under rather ideal conditions and we basically more or less all our and cylinders firing at the same time, main thing then demonstrating the robustness of our promise for '26. So when we then come up with the P50 estimates as we have had, that is taking then into consideration decline rates, the fact that we are COP 2 of our assets in 2026, start-up of new wells and like you said, also the planned shutdowns for 2026. And just as a kind of an illustration, we have, over the last years, been on a continuous improvement journey when it comes to PE. We have gone from 77% PE in '23. We had -- in '24, we had 80%, and we delivered 83% in '25. However, when we then assume the assumption for PE for '26, we had to then take what we assume as kind of the P50, which is now set at 83%. Being more aggressive and bullish on that would not be prudent. Having said that, from a kind of professional point of view, we are on a continuous improvement journey here. We are chasing the planned production deferment, the unplanned production deferment and they are trying to reduce our locked-in potential and continuously chasing opportunities. So I personally would be professionally disappointed if we are not beating 83% for '26.

Mark, on -- if there are still opportunities in the UKCS, yes, there are. They're becoming scarcer for us, I mean, because of the quality of our portfolio and our wish to high-grade our portfolio, but there are opportunities. You always need kind of a willing seller as well to be there. But we're definitely looking and we would like to do more in assets that we like and know and that could be accretive to our portfolio. And if that will happen or not, time will tell, but we still see opportunities. On the Cambo farm down, so first of all, thank you for the suggestion. We'll take a look at that. We're -- I'm sure you won't be surprised when I say we're not going to comment on any ongoing potential discussions. I think farm down in Cambo is one of our derisking elements and kind of in route for FID. So we're looking at -- I would just say we're looking at all options. And obviously, we'd like to optimize our portfolio as well. So all options are on the table.

Our next question is from Chris Wheaton with Stifel.

Congratulations on great operational performance in the year, 83% uptime and great safety performance is exactly what shareholders need. So well done. Two or three questions from me, if I may, please. Firstly, interesting OpEx guidance to me looks down in absolute terms, OpEx looks like you're guiding to lower OpEx in '26 versus '25, and that seems a really impressive achievement given you've got adverse FX and you've got higher production. So I'm interested in the underlying thoughts about how you can actually achieve that. Secondly, I was interested in Slide 13, that near-term production guidance. What projects are you assuming actually get sanctioned and approved in that 2C and pre-FID project wedge going out to 2030? And my last question, it wouldn't be a conference call without me asking a question on the EPL. If you believe press reports, there was a quid pro quo offered that if the windfall tax could be modified, then there'd be extra investment from the industry. I'm interested in what -- how much and how fast could you accelerate that enormous sort of 2P contingent resource base that contingent on the economics working and the tax being right instead of being agreed just compensatory ridiculous 78% that's currently in place. How much of that and how quickly could you get into production? And how much would that be -- would that likely to cost? It seems there's a win-win for everyone. The country wins, the industry wins, the taxpayer wins, everybody wins. How much could you actually come up with in terms of investments and delivery? Those are my questions.

Thanks, Chris. Let me take those and maybe Yaniv overlay on top. I mean I'll take all three of those in terms of -- in order. In terms of OpEx management, and this is around, first of all, the base delivery of OpEx involves a lot of hard yards of close cost scrutiny and careful management of internal and external costs that continues to be a huge focus, also good FX management, which we do very well. There are two assets, of course, coming to COP this year, which are higher OpEx per barrel fields, so Alba and GSA. So that will play in here as well. But of course, they're not actually that significant in terms of production now towards the end of their life. So it's really about long-term management of the base and getting production into a higher and stable place as we have done over the last few years, really drives that OpEx per barrel kind of number. In terms of Slide 13, this is all in our CPR, which I know, Chris, you'll read with great interest. But essentially, these are tiebacks like Fotla and MonArb infill. There are new greenfields like Tornado and Suilven, Tobermory and of course, further out beyond 2030, Cambo. These are investments that we plan to make, we look to make, but the link with tax is not lost and in fact, is directly relevant. This is about a tax fiscal and a regulatory regime that needs to support this industry. We have successfully managed several headwinds across the fiscal and regulatory environment and continue to do so. We've delivered a lot of value and expect to continue to do so. There's no doubt the industry as a whole needs some support from the government and from the regulatory bodies. We need partners in these fields, as has been mentioned. And therefore, our strength as a company doesn't necessarily mean that's the strength of the basin and the fiscal and regulatory environment really matters. So I would say changes needed. We have said quite publicly that they have come up with the right tax now. This should have been the tax 40 years ago, there was GPM that is now delivered. So credit to the government for that, but it's the wrong time line and they need to put it in earlier. So right tax wrong time is our heading, and it will certainly support this project pipeline if we can get those changes and regulatory support kind of clarified. But Yaniv, anything to add on top of that?

No. I'll just -- very briefly, I think that the point around energy security is -- cannot be emphasized more right now. We're seeing what's happening in the world. Commodities just being part of it. And I think the United Kingdom cannot afford walking away from the assets that it has. And I think there are willing businesses here to go and invest, and we just need the right framework from the government to go and do that. And I think these kind of shocks right now to geopolitical shocks and global economy shocks are exactly the right opportunity and time to take the decisions.

I would tell us all, that we agree, let's hope some sanity prevails at some point. Let's keep our fingers crossed.

Next question is from Mark Wilson with Jefferies.

The two points. I like the way you reflected back on some of the IPO guidance there and also the Greater Stella Area finally being CLP. So two points. The first one is, could you, for the layman, Iain, explain how the tax effect works for the decommissioning in the next few years? Is there anything that people need to know about that as that goes forward? The second one is Captain EOR, 17,000 net production to yourselves. Could you explain just how that enhanced oil recovery has worked versus expectations? I think that was expected to get to about 40% when it was originally proposed.

Thank you. Yes, sure. I mean in terms of decommissioning and tax, it's very simple. There is 40% corporate tax relief on decommissioning. These are fields that have paid a lot of corporate tax over the years. And therefore, it's simply a cost relief like any other. So that's standard. It's not a huge part of our cost base. You'll see that the total numbers here in this year are not huge. And in these assets, of course, they're also relatively limited. This year, for example, GSA will largely be work in field to flush and purge the vessels and the lines and then moving the vessel to the decommissioning yard. So there's kind of late life work and possibly OpEx, but it's over a 7-year program, the spend on decommissioning. On Captain, I'll hand over to Odin, but I think the history of the CPR tells you that the volumes delivered in Captain have been very consistent actually over the years. It's simply the timing of how they come out the ground through the EOR II recovery that's been the question and in fact, has been an unfolding project and analysis. But yes, Odin?

Yes. I think you're right, Iain. And I think the -- what we are seeing on the EOR is that the behavior from the subsurface is according with the way we predict it. Our biggest challenge over the last years have been to get enough polymer injected into the reservoir. But particularly if you look on the EOR II project, which is the latest one, the response that we are seeing from the reservoir is in accordance with our predictions relative to how much polymer we have been able to inject. And that's why we now are paying so much attention to making sure that not only the uptime for the Captain field when it comes to production is as high as possible, but also the uptime on the volume we are able to inject into the reservoir of polymer.

Our next question is from Nash Cui from Barclays.

I have two questions, please. The first one is on your hedging strategy. I just wonder, given the higher commodity prices forward curve, both oil and gas, how do you think about your future hedging strategy? And also understandably, the volatility is high as well. Are you going to keep it flat? Or are you going to increase your hedging? Just wonder what you think forward? Then the second question is just to get a bit of understanding on the decommission cost in 2025. I think in your report, you noted that there's a $266 million increase because of revision to cost estimates. I just wonder how much of that revision is driven by cost inflation in the North Sea decommission market versus change in scope?

Sure. Sure, Nash. I think they're both financials, they're both me. On hedging, Yaniv and I work very closely on this and very actively in the market now. I would say that our hedging policy has been very value delivering for shareholders over the years, and we see no reason to change it. In fact, the outlook as we are just now is very positive. We are looking to deliver base protection for a significant dividend and capital program that give upside exposure because our dividend program, of course, is based on post-tax CFFO. So we want to share with our shareholders an upside. And that's what this whole program is based around. This last iteration in the last 6 months, we've had to move towards oil being more of a base delivery in terms of cash flow with less upside simply because of the very, very flat forward curve on oil even today with a peaky front end, it's extremely flat at the back end. So what we've done is evolved our policy so that we are looking at gas upside as being upside delivery for the next 12 months. So I think our policy actually organically evolves to deliver the same kind of outturn protection and upside opportunity, but it will move between what we used to do with some puts, for example, we now do wide collars because puts are far too expensive on their own. But it delivers the same outturn in a managed and disciplined fashion. And we're very satisfied with our '26 and '27 hedge book after 3 years of significant hedge gains. We see a lot of protection plus upside in the years ahead. On decommissioning, yes, sure, the balance sheet management that you're referring to, and it's -- I'm glad someone's been in the details of the financial statements, Nash, since the release this morning. I'm sure many will get there as well afterwards. This is an increase in a number of things. One is discount rate actually, which is obviously a market risk-free rate issue that is driving part of that increase in the book. Part of it is non-operated assets, kind of revised views of costs. And some of it is related to rates. So rates in the market for assets like rigs. And actually, this is partly linked to the whole tax system, to be honest, Nash, because the lack of investment in new development wells means less rigs attracted to the area, means a little bit of an uptick in rates in the market. We're not actually seeing a lot of that from our perspective in terms of actual delivery from our side, but we benchmark our cost estimates decommissioning on market rates and therefore, market rates do affect the provisioning. So you're seeing a lot of that going on. I wouldn't say it's one particular issue. It's a number of issues, but costs go up as well as down in these areas. And I think an EPL change actually will change the whole environment for assets and attract investment and therefore, cost reductions in the decommissioning space, too, one of the reasons why the decommissioning sector is advocating for EPL removal.

We have no further questions on the line at this time. So I will hand the floor back to Yaniv for any closing comments.

Thank you. Thank you for joining our conference call. I'll take this opportunity, as always. You're seeing the results and presentation and us, but this is the work of hundreds of people offshore and onshore, and I want to thank them here for their dedication and hard work as we continue the Ithaca journey into 2026. So thank you for joining us, and have a great day.

This concludes today's conference call. Thank you all very much for joining. You may now disconnect.