Seascape Energy Asia plc (SEA) Earnings Call Transcript & Summary

Good morning, and welcome to the Seascape Energy Asia plc investor presentation. [Operator Instructions] And I'd now like to hand you to James Menzies, Executive Chairman. Good morning to you, sir.

Good morning, and welcome, everyone, to our presentation this morning. We're going to talk about the farm-out of Block 2A, and I'm here with Nick Ingrassia, the Chief Executive; and Pierre Eliet, who runs our business in Malaysia. And I think they're well known to everyone. So last time we were talking to you, it wasn't that long ago, we just signed the day 1 deal. Went down very well, and we were trailing this farm out of 2A to investors, and we're delighted yesterday to announce it. So we want to dwell on that and give you a lot of detail around the transaction itself. And Nick is going to do that for us. And Pierre is going to do a little refresh on what Kertang is and why it's so exciting. But before we do that, I just wanted to say a few words about Southeast Asia and our pivot. I think Seascape now has repeatedly demonstrated our ability to do business particularly in Malaysia, where the capture of 2A, the award of the Day 1 Block, the farm-out of 2A, we can get things done in Malaysia. And really, investors should expect us to do more. I think as we'll talk about, we've got very few competitors of our scale for whom these opportunities are material. We are one of very, very few companies, and there's a huge opportunity there right now. And what we're saying on this slide here about the Southeast Asia industry dynamics is it's actually really well positioned for companies like ours. We have a role in life there, the host governments want us to do things. We're encouraged by people. And we just contrast that with Europe. The U.K. is particularly bad, but even Norway was not looking so attractive. So -- and I think the way and the speed with which we've got about getting this portfolio built is telling you that this is an area which [ once ] companies like us. So expect to see us do more in Malaysia. I think we'd like to do more in the region. We're definitely looking around the region. We'd like to build a full cycle portfolio. And as we'll talk about, we're now so well set up to do that. The balance sheet is in excellent shape. The small portfolio is great, is brilliant. It's got all these really exciting elements to it. And we've got team, which is another critical part of this is having the right people. We are a small team, but we've got all the relationships, and we've got the right skills. So just moving on, what we have today 2 blocks offshore Sarawak. So this map on the right just shows you where we're located. That's the coast line of Sarawak. The Bintulu LNG plant is shown on this map, and that is where all the gas in this basin goes. And so these are the oil and gas fields in that basin, and you can see it's one of the biggest producing basins in Malaysia. And we are in the DEWA block the one we talked about last time where we have some in shallow water, we've got 12 gas fields there that we're looking at developing 4 of those fast tracking that. We're working with EnQuest. And we -- so that's the hard value aspect of our portfolio. And we also have the deepwater 2A, which we're talking about the farm-out for, which is the blue sky angle. And we'll have a look at that. Look at the potential value of those things, GBP 0.70 a share. For DEWA, if 2A comes in, it's going to be [ 8, 9, 10 ], who knows. It's a lot. So -- and that's one of the things we'll talk about the 10% retained interest. If we kept 15% or 10%, it doesn't really matter. If this works, it's going to be huge. So we were not really that sensitive to how much we retain and 10% is still very, very material for us. We also announced a financing. So we raised about GBP 2 million through a placing. And really, the main reason for that was to make sure that we were able to get through to closing this farm-out deal. And that would have been the biggest own goal we could have scored, would have been running out of money before we close, having done what we view as an exceptional farm-out transaction. Not being able to close it would have been terrible. So this ensures that we get there. And at the same time, we can continue to review new business opportunities. We can continue to work on the DEWA project. So none of that gets disturbed and we can get ourselves through to closing. It is Asia. Things take -- sometimes take longer than you would expect. But anyway, those concerns have gone away. So that's what that was about. And it puts us in a great position in terms of our balance sheet. So what I'm going to do, I'm going to hand over to Nick, who's going to take you through the details of the transaction itself.

It's great. Thank you, James. Good morning, everyone. It's really nice to be speaking with you this morning. Really momentous day yesterday actually and really the culmination of a huge amount of work from a huge amount of people. And we've -- we were just so pleased to finally have an opportunity to announce the transaction to farm-out 2A to impact. So as James was saying, just we'll go through a few of the highlights here. And then I'll go into the detail of the transaction itself and then walk you through the valuation and how we sort of see the value feeding through to the share price. So I think the main point here is that there's a huge retained upside even though we farmed out perhaps a little bit more than we had initially intended. The idea was really to make sure that we still have a material exposure to it. And so a 10% interest still gives us a sort of net perspective resources of 166 million barrels of oil equivalent, just shy of TCF. It's a very, very big prospect for us. It's very material with the upside or kind of come on through in terms of the share price. I think another big thing to dwell on is the fact that we've got an uncapped carry here. This is not something you often see in the industry where effectively, we have no cost exposure whatsoever to that -- to exploration program. We'll go through what that is on the next slide. But it means that there's no potential for us to hit some sort of cap and then start getting diluted down. No matter what it costs, it's going to be met by INPEX. And that is, I think, a real key piece of the transaction we're able to negotiate. And I think the other important piece there is that there's no further seismic needed. So Pierre will come on to the sort of the technical side. But I think we've seen some farm-outs where there needs to be seismic before wells and all that sort of stuff, this is on course to be drilled in the near to medium term and no further work needs to be done. So that's fantastic. INPEX, we see as a very strong partner. I'll come back to that, but they're very well placed regionally. One of Japan's largest E&P business, $16 billion market capitalization, 600,000 barrels of oil equivalent production, real [indiscernible] Global operator. And we've been very, very impressed with the engagement to date. The deal value itself is worth over 100% of our recent share price and the cash element alone is also about sort of 65% of our current market capitalization. So this is a real sort of material transaction even before drilling for us. And as James said, we'll be able to use the funds raised to reinvest into the DEWA development, which is moving forward at pace and look to add more resources in Malaysia and further field. So just going through a little bit of the detail on the transaction. We retained a 10% interest. So we're divesting 42.5% out of the 52.5% that we held, and I'll go through exactly how that's being done. As mentioned, we have a full uncapped carry through the exploration phase. The exploration phase actually includes a wildcat well, so an exploration well. And then there's also a contingent appraisal well. Pierre will come into this one later during the technical piece, but this is a very, very large structure. It's likely to need an appraisal well to understand the full extent of it and the fantastic news is that will be carried through both of those elements. So we'll get to really test the entire scale and size of this structure and be carried through all of that. The cash consideration is $20 million. There's $10 million upfront at completion and we have another $10 million contingent on commercial discovery. That commercial discovery will be decided by the partners in conjunction with PETRONAS at the time of drilling. But likelihood is with many of the recent wells drilled nearby having discoveries, we think that actually commercial levels could be quite a bit smaller than the ultimate size, we think it's going to be. But I think that, that bodes well for us being able to monetize at some point. We're getting a reimbursement of historic costs of $0.5 million. And again, to put into context, and this is something we pointed out through our discussions on the fundraising, which was that we've been able to capture this opportunity from the $0.5 million. Don't forget we got all of the data for free as part of the original license award. And so being able to take that and turn even just some cost the cash-on-cash return of the $10 million upfront, even excluding all the value associated with the carry has been absolutely huge. The completion is targeted for the end of the first quarter. As James said, there's always a chance it could get delayed slightly, but there's been a huge amount of support through our socialization with PETRONAS and they're very pleased that this has sort of come about. So in terms of just the valuation, I just -- on the right-hand side, we'll do a sort of a quick run through that just so people can understand how we come to these calculations. We've got the back cost, the cash consideration upfront and also the contingent cash consideration. And then the exploration carries. So we valued that at $17 million. That's effectively the 2 wells. Our work has shown that we think that a successful well is something like $75 million well. There's also an element here where INPEX will be carrying the local state Petros. So we are actually -- we don't have to carry any of those costs either. So we get a slight uplift there. So the element that is being carried on our behalf is sort of 10% completely, completely carried interest. So I can just shy of $40 million, you gross that up and then sort of that's what the residual piece is worth sort of $9 million. So if you add those 2 together, at something around $47 million, divide that by the new shares outstanding, you get 59p. And as you can see, with the share price has been around 40p post announcement. So actually, the total consideration is at a multiple of the current share price. And so we're really pleased with that. In terms of the sort of structure mechanics, some of our thinking because I know that we've seen sort of some questions. We've had questions from people. So 15.75%, you've gone down to sort of 10%. I think that, as James was saying, the mentality really has been that it's such material prospects that 10% or 15%, there's not really that much in it. We had a huge amount of global interest in this prospect. Gave us an opportunity to run a very, very competitive process with a very sort of strong dynamic to it. But really sort of what came out was that a number of the players wanted a significant stake in this. So we took that as a very sort of positive indication. And it allowed us really to maximize the upfront cash element. And for us, that's very, very important because it allows us to reinvest into the portfolio, both into DEWA and elsewhere without diluting shareholders, and we saw that as being very important, given the fact that the upside is so huge anyway. So that was the decision really to take the slightly larger farm-out rather than a smaller one. We've structured this in a way to ensure that there's no tax payable. Had a lot of -- and that took us some extra time. I know a lot of people are wondering what's been taking so long and that's been part of it is getting the structuring right. And it should be a relatively straightforward process in terms of kind of getting the transaction approved by PETRONAS as well as our partners, Petros, and PETRONAS Carigali. In terms of INPEX for those who don't know them, INPEX is Japan's largest E&P company listed in Tokyo. It's actually a quarter owned by the Japanese government. Its production is around 600,000 barrels of oil equivalent a day, which is about 10% of Japan's annual energy consumption. So this is a big, important player in Japan. They're operating 2 regional LNG projects, one that's in production in Australia and one that is going into the development phase in Indonesia. So again, having a partner who is able to take Kertang on discovery through to development is really important for us, and they've proved themselves so far to be a very engaged partner, listening to us and working together with us. And they've had this regional presence since the '70s and have a real resurgence into Malaysia. They've kind of reentered Malaysia at the same time that we did in the MDR Malaysian bid around 2022. And you can see they've been busy picking up acreage all around Sarawak and adding 2A is has been a high priority for them for quite some time. In terms of the value, what does this mean for us, what we've done is given an illustrative implied value on the portfolio based on a transaction or 2 transactions that TotalEnergies undertook earlier on this year where they did a series of 2 transactions to buy out SapuraOMV which is a large regional gas-focused producer. So this is a business that had a little bit of gas production, but actually quite a bit of gas development. Again, all going into Bintulu. This is all going -- these are equity LNG volumes. And they paid about $4 a barrel of oil equivalent, so $4 BOE. And if you push that across to the resources that we believe we have in both DEWA and in Kertang, you can get some very, very big numbers. And including in that, the farm-out contingent payments, the cash value that we've got and the value of the farm-out, we see a hard value of about just shy of GBP 1.5 a share and then total value of up to GBP 10 a share. So these are huge numbers versus where the stock currently sits, and we think there's all to play for here.

Great. So by way of reminder of Kertang and why all the excitement and the interest from the industry, who better to give us a reminder than Pierre.

Thanks, James, and hello. We just wanted to run through the assets to run through 2A and run through DEWA, just a few slides on those. I really like this map for context, just shows the competitor landscape that we have in Sarawak in and around 2A. East Malaysia always dominated really by Shell and by PETRONAS for many, many years. Of course, new players coming in Total and of course, INPEX coming back, but also ConocoPhillips and Mubadala and others. So a real wide competitor landscape but of large players and then Seascape. So I think it's really a testament to the opportunity set that you can have different companies operating in Malaysia and in Sarawak, and each company adding value in their own way. We signed this block in February '23, and it's a large block, 12,000 square kilometers. And the water depths vary across the block with the water depth of the location about 1,000 meters for approximately the location of the well, and we'll go through that in a minute. The farm-out impact is terrific, of course, and it's been -- and Nick alluded to the journey that we've had with INPEX over the past few months. And it's just been great. And one thing that sticks out for me is that we liaised a lot with the General Manager in Malaysia, [ Kanishi-san ], and she -- he was actually part of the discovery team working on Abadi, the LNG project that Nick just mentioned when he was a younger geologist. So it's great to see that appetite for exploration coming through. So let's run through the prospect itself. This is an East-West line across the prospect on the left-hand side. We've seen that several times, but I think it's really important to remind ourselves of the prospect and how great it is. I must say in my career of exploration, I've not seen really a better prospect, and it's really stunning in many ways and certainly deserves to be drilled. It's very interesting to see it in its context of the other discoveries in Malaysia, the 3 boxes there on the bottom right because each of these discoveries -- sorry, each of these discoveries have a really significant, really high volumes. You see the volumes there, Kasawari, 6 TCF, Lang Lebah, 5 TCF, Marjoram, over 2 TCF and the operators there, PETRONAS, PTT, the [ ties ] and Shell. What's really interesting about the discoveries are the column heights. We reach out on this last time. But the amount of gas that's between the caprock and the gas water contact, the distance between the caprock and the gas water contact can be over a kilometer. So over a kilometer of rock filled with gas. That's certainly the case in Kasawari, the Kasawari column is just shy of the kilometer and in Lang Lebah is some 800 or so meters. And in Marjoram it's some 450 meters or so. 450 meters. So that 450 meters is exactly the height of the PETRONAS towers. So it just gives you an impression of the columns that we have. And the reason why the gas volumes are so big is because of these columns. So in our Kertang structure, when we model the volumes, we model a 600 to 800-meter column for the gas column between the caprock and the contact. And that's giving us these kind of volumes. So modeling a 600, 800-meter column, which is in line with the columns we're seeing in those analog fields. We're getting volumes of about 9 TCF, which is that mean resource volume that we have from the auditors from ERCE, which is the number there and the box on the top right. But the numbers are so big, really because of -- not only because of the column but also because of the size of the structure, the size of the structure that inset map there is about -- it's actually about 220 square kilometers overall for the maximum closure of the structure. So large area, large columns and high-quality rock inevitably leads to very high volumes. And this is completely in line with the large fields that we've discovered in Malaysia. And Malaysia is quite exceptional for this having these really exceptional columns, which lead to these very high numbers. Just before we leave this slide, we also -- on the title of the slide, we always put Malaysia's largest undrilled structure and question mark. And a few weeks ago, a colleague of mine, Matthew was presenting -- our Exploration Manager, who is presenting this. And as he was presenting this at a conference this slide, an Exploration Manager from a large oil company come up to me, and they said to me, whispered in my ear and they said, you know, Pierre, we've reviewed all of Malaysia. It's definitely Malaysia's largest structure. So I took some comfort in that. We really like this second slide, showing the prospect in slightly different context and showing the size and the extent. I like this slide because it shows the coals, these bright amplitudes which make us hopefully labeled the white arrows. They brought amplitudes in these coal beds that are feeding -- that the gas is migrating up into the high, which is shaded in red there. And you see the maximum extent of the closure. What's super on this slide is also the gas cloud. You can see the rights and the amplitudes above the red as you're moving up to surface, and which shows that we have a seal and the seal is not necessarily perfect. It's seals and breaches and seals and breaches as it's being filled with gas. And some of the gas is permeating up. And in fact, we have sample the gas at surface, at the seabed surface, thermogenic gas samples at the seabed surface at the -- on the seabed sample from drop [ cord ]. So really, a lot of source rock feeding this major structure here in DEWA, Sarawak. Just before we leave this slide, the number at the bottom is quite important. Again, we never talk about this, but it's actually the P10 volume. So what would happen if the structure was -- if the structure was near full to spill, actually, those numbers, Matthew reminded me this morning, we're not actually complete full to spill. It's just using a maximum -- a larger column but actually not the complete full to spill, and you get these super high numbers for the P10 volumes in how we run the probabilistic numbers from low case, mid-case and high case. And those are the high case numbers. Just a few slides on DEWA, just to remind us where we're at. So we signed the PSC of course, and now we're moving forward. This is with operated by EnQuest and with Petros, the Sarawak status partners. Last week, we had our first MCM in KL. I must say, I have to describe it as a high energy meeting. It was really good, very positive, very engaged, everybody wanting to get after it. Petros, very, very positive, lots of energy. EnQuest wanted to get after it. So this is to review the fields to get ourselves to an FDP to move forward to the development of a number of the fields. As James said, there are 12 deals in the discoveries. There are 12 discoveries in the cluster. I think we see 4 or 5 as kind of key fields. Of course, we need to do the subsurface work now, and we're getting after doing that right now. But high grade 4 or 5. I think the 2 in the inset map on the right there, the 2, I think, we high-grade D41 and satellites of D41. And then the key for us is where do the gas -- where will the gas go and which nearby platform will the gas go, which platform can take it, and then it goes into the gas to Bintulu and for export. I think this -- when we reviewed this for the bid stage, it was really exceptional quality assets. We were very surprised by the quality of the asset much better than I thought it would be, and it's terrific. High columns, high-quality rock and good deliverability on tests. The next slide just shows the development scheme and how we would ultimately develop it. The map on the top right shows -- and of course, this is before where we're embarking on doing all the FDP work now. And of course, things can change, and we have to keep an open mind. But these are super low cost developments. You can see the monopod platform there, but super low cost development and tie back to the existing infrastructure. There are 2 nearby platforms, but even recently, other platforms have been mentioned as possibly accommodating the gas from the DEWA cluster and where the gas would go. Interestingly, on plateau, we see DEWA's having about 100 million standard cubic feet per day, which is very significant coming into the grid. So everybody very keen to get after this. The map here shows the pipelines going from D30 down to Bayan, that's an option. It maybe comes from D41 down to Bayan or perhaps even to other platforms. We'll see how that evolves. With a fair wind, this sees us getting to first gas in 2027 with FDP through the quarter to the end of next year. So that's kind of a run through the assets, 2A, and DEWA and kind of why we're so energized and positive about them.

Fabulous. Thank you very much. So I'm just going to finish this formal part of this presentation, and we'll move on to Q&A in a second. But I think we can't emphasize enough how pleased we are with this deal. And this prospect, it's a one-off in a career getting hold of one of these things. So I think this transaction is incredible for a number of reasons, but just giving us and our shareholders basically a free ride on drilling what will be very, very closely watched well. It's a very high-profile prospect. The industry at large is going to be watching this. And we've got 10% riding on this that we don't have to pay anything for. Obviously, we get cash as well and we can reinvest that cash into these small gas fields and get them on stream. Once they're on stream, that production level that Pierre was talking about, that's going to be around 5,000 barrels a day in oil equivalent terms net to ourselves. So it's a very nice size for us. That kind of production underneath this company and this portfolio would be phenomenal. So we see a route now from where we sit today to getting there. We have the cash, we've got the assets, we've got the team. We've demonstrated our ability to go out and capture these things. We've demonstrated our ability to actually extract value from them even before we turn the drill bit. And that's what being a small E&P is all about. You've got to be quite nimble. You have to react quickly, you've got to seize opportunity. And I think we've demonstrated our ability to do that repeatedly. Our stock with the Malaysians is very high. I tell people they sort of used us as a test case. It's unusual for a company of our scale to go and capture assets, particularly like 2A. And PETRONAS have taken a gamble on us in some ways. They trusted us to go out and find a partner and move this forward and we've done it. So they're extremely pleased. We're extremely pleased. INPEX is very pleased. Everyone is a winner. And I think what we would say is that there's a great opportunity here for us to go and do more. We're delivering for our shareholders. We're delivering for the Malaysian state, we're delivering for the Sarawak state, where we have great relationships as well and now partners with us in both of these things. And lastly, we are just -- there's so few of these kind of companies around, particularly in the quoted sector, we're one of just a small handful. And we've got the right portfolio that we're building, and we've got the right team. So I think with that, I'll stop [ making ] lyrical and happy to move on to questions.

[Operator Instructions] But just while the company take a few moments to the questions that have been submitted today, I'd like to remind you that a recording of this presentation along with the copy of the slides and the published Q&A can be accessed via your investor dashboard. As you can see, we have received a large number of questions throughout today's presentation. And James, if I could just hand back to you just to read out the questions and I'll pick up from it at the end.

Very good. Somebody here is asking about chance of success. How is it calculated? There's 4 separate chance of success numbers, you consider each a stand-alone. And if the first drill fails to the other 3 drop. Pierre, do you want to...

No. I think what -- so obviously, [indiscernible]. Chance success is calculated with looking at reservoir, trap and charge primarily and how those are interlinked. And of course, there's linkage between source rock and migration into the different traps. So there is linkage between the risk elements. The risk elements are slightly different because each of the reservoir objectives are slightly different characteristics. But overall, we're seeing the pause of the prospect between 20% and 25%. It's interesting during the farm-out process, we had a lot of different comments on the risk and the risk levels and some companies risking it a lot more positively than was done by ERCE, but different companies will take different views. But I think it's good to see it's about a 1 in 4 type prospect.

Excellent. Thank you. We've got quite a number of questions from 1 shareholder. But on DEWA, can we discuss the higher profitability on a per barrel basis relative to 2A. So that's the special terms. Nick, maybe you could...

Yes, a good question in terms of what the sort of value is. So as PETRONAS has been good at cutting sort of different terms over different periods of time to incentivize investments into different areas across Malaysia. The -- I guess, in terms of the deepwater PSC that we've got 2A, we calculate the economics. I think at the back of this presentation, there's a little bit of a summary in terms of what the sort of key PSC terms are. But we calculate the sort of contractor takes [ over ] us to be about 30% of the economics versus the SFA terms, which are of these new terms put out by PETRONAS in the past couple of years to incentivize smaller businesses to invest into discovered resources. And we see those economics being closer to something like 50% of the economics overall. So the free cash coming out of it. I -- we've done a little bit of numbers. I don't think we've -- I'm not sure how -- I'm not sure we can sort of share at this stage because everything is sort of still moving. We have talked a little bit around how much we think that the development is going to be. We've talked about that DEWA development probably being in the order of magnitude of about $200 million gross. The phasing of that will be sort of quite crucial. And everyone is aligned in trying to spend the minimum amount of capital prior to first gas, so that the cash flow coming out of the asset funds further phases of development and the idea is really to have a long plateau. So keep the facilities filled up, which is often what you see with the gas development. And I guess in terms of sort of cash flow per BOE in the sort of gas prices that range that we were talking about. We see it as being probably in the sort of kind of mid-teens in terms of dollar per barrel of sort of cash flow coming out once we've got it all sort of develop. But look, it's a very good question. And I think one of the things we can certainly look to do as the development moves forward is to give people a better idea around the economics for a project like that. I know the Cavendish report was -- they've had a couple of research reports published recently. I believe they're available on Research Tree for anyone who'd like to have a look and they also published numbers that might be useful.

Okay. Quite a number of people are asking when it is Kertang likely to be drilled. I mean I think what I would say about it, obviously, we're handing the operatorship over to INPEX. And so really, it's the operator who makes these decisions for the group. We know that PETRONAS do have a deepwater program kicking off, I think the back end of next year, Pierre, is that right?

Yes.

And if we were still operating and there was no -- INPEX weren't involved, PETRONAS would want us to take a slot within that program, which would mean Kertang probably been drilled in 2026. However, as Nick has shown you, INPEX have got quite a number of blocks now in this basin and which they operate. And they will have their own view on drilling programs and rig availability and may well want to take Kertang and put it into a program they've got going on. So at the moment, we don't know quite what the program is for them, but they are very, very keen to get it drilled. So I would rest assured, we want to get this drilled as soon as possible. And the whole group are aligned in doing that. So I'm afraid we don't know at the moment, but it's -- all the things being equal, it would be in 2026. But -- and I would guess probably impact will be likely on that page, but we'll see. In terms of the deal itself, some are asking, although we want to close in Q1, what's the long stop date just in case?

Long stop date on the transaction is June '25. So it's halfway through next year. So we've got plenty of time to get the transaction not completed. It will surprise anyone to know that these sort of transactions get socialized with regulators ahead of the announcement. So in terms of sort of making sure that everybody is on the same page and supportive, Pierre, actually be crucial in doing that in his role as running our operations out there. So we've had a huge sort of support thumbs up. And as James was saying, real support from PETRONAS. So we really don't see any issue in terms of completion but it's all around timing, which was really the decision to raise a small amount of money was to make sure that should there be or if we're getting close to end of the first quarter, which has always been the time frame we've talked about starting to run short of money that there is going to be no kind of issues that we don't want to just sort of fall a week later and then have all sorts of chaos. So this seemed to be the most prudent thing to do. The fundraise was done at a teeny tiny discount. I think one of the smallest discounts that's been done all year. So it was, I think, a prudent thing to do.

Yes. And a couple of questions on the gas. So who buys the gas and people asking about the gas price we expect or how the gas prices is set in Malaysia. I mean in terms of the buyers, the buyers for all this gas goes to Bintulu, that's what we expect and what Petros and PETRONAS want. And the buyers for Bintulu LNG are principally in East Asia. So it's mainly Japanese and Koreans. And -- so when you look at -- which is one of the reasons why INPEX want this sort of equity upstream position is because the government are buyers of the product. And of course, the Koreans are also present in the basin and not in such a big way, but they are there, and they are a big buyer of the gas as well. So that's where the gas goes. They are the buyers of the gas ultimately. In terms of the reference price for gas, that's the basis of which the gas price will be set. We don't know at the moment what that will be. When we get to -- the DEWA, it's going to be the first thing, of course, that we'll have discussions around the gas pricing for. But it will be indexed to oil to liquids, right? And we'll expect a factor of that. And typically, they're quite high, it's like 80%, 90% of MRP is historically what we've seen. So the gas price is extremely healthy.

And you have to remember, in an area like this, the cost, especially on something like DEWA, the costs are very, very low. I think it's something like $1 [indiscernible] or something. So your costs are very low. So anything, $6 is a very good price to be getting you're making good money at $6 now.

And then a question on are we expecting the deals imminently, the fact that we've been buying in the market. Does that mean nothing's happening. I would say that on the announcement of this farm-out, of course, we've cleansed is the word they use the market for stuff going on within the company. So you now know as much as anyone and everyone. Should you expect more? Yes, you should expect more. We are -- I don't know, Pierre, do you want to comment on looking at things, whereabouts we looking.

Well, we love a lot of stuff in Malaysia, lots of opportunities. Lots -- we try to look at opportunities that are not just run of the mill. We will, of course, look at the Malaysian bidding round and the discovered resource rounds that Malaysia will run. But I try to -- we try to look at opportunities that are off pieced, discovered resource, of course, what else could we do in the kind of DEWA space. What other exploration could make sense and then also production opportunities, looking at how we could build a full-scale integrated business, including production and also looking at across the region. And I think, obviously, anchored in Malaysia. We're looking across the region at what could be possible across the main countries in the region. I think it's only sensible that we do that.

Yes. Look, and I think that doing this transaction on 2A, I think it really puts us on the map. And so I think that we're going to become a desirable partner people who are going to want to have us, host governors are going to want to have us in because we've demonstrated an ability to deliver to pick up acreage that was somewhat forgotten. Have been a little bit overlooked, work it up, presents an incredibly strong technical case, get majors of the world over interested in it. Get a real competitive process going and get things into drilling mode. So I think that that's something we bring to the table. I think that that's going to be welcomed by lots of people.

Just to add to that, Nick, I think in the Malaysia space, sorry, I didn't say earlier that the whole -- we have a real edge in front in terms of the data. The Malaysians and PETRONAS have opened up all data, all subsurface data seismic and wells on a subscription basis to have made it all available. So we can review not only data on our block but review data across Malaysia for discovery resources for all the wells for the seismic or even for production data. And that's given us a real edge. So now we are coming up with our own ideas and then approaching PETRONAS and saying, how about these, have you thought of this, could we do this? And as that -- so I want to be on the front foot of what we do and not just be reactive in terms of the [ BD ] flow.

Okay. Just time for 2 more. Someone is asking about is there a drop-dead date by which time Kertang has to be drilled? This is the terms of the PSC?

So it's a 5-year PSC, so that's February '28.

February '28, yes, we will have a 5-year unless that's -- that's the latest it could go. Yes, they will have to drill the well. That's part of the PSC terms. Contractually they will be obliged to drill that well. And of course, if it's commercial. Actually, there was a question while we're on it, on commerciality and who decides.

Yes. What we've done is the farm-out has linked the commerciality to the definition in the PSC. I can't sort of really go into it, but there are no firm numbers. It's basically what the collective group decides is commercial. I think the way to look at it is that if the PSC goes out of the exploration phase and into either what's called a gas holding phase or it gets extended or just to kind of go straight into a sort of development phase then effectively, that means it is commercial and the payout would occur. So it's kind of quite -- in -- to our advantage, actually, it's kind of quite broadly drawn. And I think it's going to be in everyone's -- to the extent that there's a discovery there as the infrastructure has been building out now, and there's been a lot of discoveries just to the south of us, I think this will be a strong push to declare it as commercial.

And the last one is around new institutions on the register...

Yes. Yes. I don't think we can disclose the -- but I would sort of keep an eye out when the shares have a T+2 settlement on them. I'm sure there will be some Tier 1s coming out potentially. So keep an eye on the register on the website. So we'll be doing that. And Mr. Menzies will be putting them out as well.

I mean I would say part of the objective of replacing. And I think we touched on this last time we did one of these is one of the challenges we had was a share register, which was Norway-centric now being presented with Asia and we had to rebuild effectively. And this has been an important step in doing that. So we do have new institutions on who like resource sector who like the smaller companies and value the growth. And that was an objective, and we achieved it. So we now have several institutions on -- obviously, in a small way because it's only a very small placing. So we're hopeful that they're going to support in the aftermarket. And as participants in this market and investors, should we need them, they're going to be there for us. And that's what we need as a quoted company. So yes, that was achieved. And as Nick says, look out on Tier 1s. Okay. I think that's it. Maybe we can hand back?

Yes. Perfect. Thank you for answering those questions from investors. Of course, the company can review all the questions submitted today, and we will publish a responses out on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company. Nick, could I just ask you for a few closing comments.

Absolutely. Listen, thank you so much for dialing in today. Huge thank you to James and Pierre. Pierre, who is all the way over from KL to join us and basically celebrating what is a real transformational transaction for Seascape to a, delivering everything we said we're going to and more over the past 6 months has been absolutely fantastic. We appreciate all of the support we get from shareholders. We're going to continue to do these meetings because we think they're useful way of engagement. Please look at our socials, LinkedIn, our IR e-mail if you have any further questions and we'll endeavor to get things answered. But thank you so much, and Merry Christmas.

Thank you once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order of the management team can better understand your views and expectations. This then take a few moments to complete potentially will be greatly valued by the company. On behalf of the management team of Seascape Energy Asia plc, we'd like to thank you for attending today's presentation, and good morning to you all.