Dno ASA

OSE:DNO

Earnings Call Transcript 2022-Q3

[Jostein Løvås, executive]

Yes. I think we are ready to start. People are still coming in, but I'd like to welcome you all to DNO's second quarter -- sorry third quarter earnings call. My name is Jostein Lovas and I am the Communication Manager of DNO, and I will first share some practical information. All participants in this meeting are muted by the organizer and will not be able to unmute themselves, chat or share their screens. We will start with a brief presentation of the third quarter results by CFO, Haakon Sandborg, present. After which we will have North Sea exploration update by Elizabeth [ Femsthenavik ], who is the North Sea Exploration Manager. After this sessions, we -- these sessions, we will have a Q&A as normal. And Executive Chairman, Bijan Mossavar-Rahmani, is also available to take questions.

And with that, I'll leave the stage to CFO, Haakon Sandborg.

[Haakon Sandborg, executive]

Good. Thank you, Jostein. Hello, everyone, and welcome now to our third quarter earnings presentation. We have kept it fairly short again this time, and we will be focusing on the main highlights and also on the key financials for the quarter.

So I'll go to the first slide. It's starting with the Q3 highlights. We are pleased now to deliver another quarter with strong cash flow and further strengthening of our balance sheet and also our net cash position. As you will see, the P&L results are also good, showing a clean quarter, free of any extraordinary items and also very close to the consensus estimates. So believe me, this is pretty good for the third quarter. And as we have seen in the prior quarters, the high oil and gas prices are driving these strong financial results in combination with our solid operations.

So as such, we increased net production by close to 4,000 BOE per day in Q3 to 95,700 BOE per day. From that, 81,700 barrels per day came from Kurdistan and 14,000 BOE per day came from the North Sea. We saw that the Kurdistan production increased in the quarter, mainly on new wells that were brought on stream on the Tawke field, while the North Sea volumes were up following the completion of maintenance at the Ula field in Q2.

As we comment on the slide, we maintain our strong gross production performance in the Tawke license in Kurdistan, and we also now have the first early production from the Baeshiqa license in Q3.

Third, we closed on an important transaction agreement with RAK Petroleum in October to acquire its assets in Cote d'Ivoire in West Africa. And from a strategic point of view, we see this transaction as the first step into a prospective region where we see new growth opportunities. The agreement has also opened up on the shareholder base in our company in DNO, which we hope and think will enhance the interest from equity investors.

As announced -- that we announced in August, we're also pleased to participate in the Ofelia discovery offshore Norway, where the partnership now will be working on a fast track tieback development to the Ula platform. Including the Ofelia discovery, we have now participated in 4 likely commercial North Sea discoveries last year and this year. I think that it's adding significantly into our long-term value creation. And as a key contributor to this success, Elizabeth will tell you more about this in a few minutes.

Great. We move on and talk a bit about our financials. Next slide, please. Here are the areas. So for P&L, it's good to see that the Q3 revenues of $339 million marked the fourth consecutive quarter with revenues above $300 million. Revenues in this quarter, in the third quarter, was split between Kurdistan at $198 million and North Sea at $141 million. As you can maybe see from the graph here, the Q -- compared to Q2, the revenues were down by $22 million in Q3 as Kurdistan revenues decreased by $42 million on lower oil prices and also inclusion of only one month with the final monthly override payment from the KRG. But, on the other hand, the North Sea revenues were up by $20 million in the quarter, and that was mainly on higher realized gas prices. These increased from $97 per BOE in Q2 to $192 per BOE in Q3.

Just to comment a bit on the cost side. Our cost of goods sold increased by $13 million from Q2, primarily due to higher lifting costs from the first production at the Baeshiqa license, but also increased the depreciation from the higher North Sea production. The main point is that with no impairment this time and with lower expensed exploration, the Q3 operating profit still doubled from the second quarter as you can see on the graph.

Much for the same reasons, the Q3 net profit increased by 79% despite much higher tax expense from taxable profits in Norway in the quarter. But again, we are pleased with the good P&L results for the third quarter. On a year-to-date basis, our revenues were up by 71% from last year. This growth comes mainly from higher oil and gas prices. And in turn, that increased both the year-to-date operating profit and net profit by 2.5x. So that's compared to the same period last year. So absolutely also a strong progress on the year-to-date P&L results.

Good. So let's move to the next one on the cash flow. We again have a strong cash flow from operations in Q3 at the level of $276 million. This is down from the second quarter, but that was mainly due to much higher capital -- working capital contribution in the second quarter cash flow.

But for taxes, just to mention that, that's some of the questions we get on that, we paid the first NCS, Norwegian tax installment for 2022 tax year, of close to $2 million in Q3, and there will be another 2 installments in Q4 of close to $4 million. So then the next 3 final NCS tax payments for 2022 are due in the first half of next year. And we currently expect that these installments will amount to around $105 million due to taxable profits in 2022. To also mention the U.K. side, we received a tax refund of $18 million in October for decommissioning spend during 2021 in the U.K.

We show here on the graph, investments of $113 million for the quarter. These were primarily for drilling and development CapEx at $80 million. And we also had a $10 million in capitalized exploration and a further $23 million spend on U.K. decommissioning.

And the finance outflows, we bought back and canceled another $45 million in the DNO03 bond, and we paid $60 million on our RBL bank debt. Later we also paid a dividend of $25 million in August. Thereby we remain in a strong and comfortable position with cash flow funding significant investments, debt repayment and dividends, and also adding to our cash balances in this quarter with $17 million. As we note here that we have added $151 million in Q3. Our year-to-date free cash flow is now at a significantly strengthened level to up to $469 million year-to-date.

Okay. We'll be moving on to the balance sheet. And as you can see, backed by strong cash flow and debt repayments, our balance sheet strengthened again further in Q3, and the net cash position grew to a level of $252 million. Also important for us with support from retained earnings and debt reduction, our equity ratio has strengthened substantially over the last several quarters to a solid level of 46% at the end of Q3.

With the debt repayments in Q3 that I mentioned, the DNO03 outstanding balance is currently at $131 million, while the RBL, the bank drawdown, has been reduced to a fairly modest level at $35 million. So I think this is all looking really good and with this capital structure, we now have financial robustness and also flexibility to both continue to grow our business, but also to further work on our capital allocation going forward.

All right. Next one. So looking ahead, we expect that gross production from Kurdistan will come in between 107,000 to 109,000 barrels of oil per day this year. That's above the initial guidance for the year at 105,000 barrels per day, while currently North Sea net production, we think will average around 13,000 BOE per day as guided for the year.

Now we are in the early stages of development at Baeshiqa, and we see that ramp-up of production for this new license is going a bit slower maybe than expected. But as we get to understand the reservoirs and the resources better, we certainly aim to build this up through next year.

Otherwise, we have completed and executed operations this year largely as planned, but we still have revised the projected operational spend down to $725 million from the guided level of $800 million. Much of this revision is due to currency to FX effects as we have a large part of our North Sea costs in kroner and GBP, pounds. And these currencies have weakened against the dollar so that this is because we have -- our functional currency at DNO ASA level is dollar. So that's where we get the FX effect.

Our teams are working hard to finalize the 3 PDO candidates that we have in this year in Norway. But we see that the recent proposed fiscal changes are not very helpful in this respect. So we are reviewing the project economics and to see what we can do to offset the effects of these tax changes.

For our dividend program, we are pleased to announce today another dividend payment to be made in November of SEK 0.25 per share. That is around $25 million, $26 million, the same level as we had in August, also now to be paid out in this month.

Okay. Thanks. I will finish my part now. And I'm pleased to hand over to you, Elizabeth, for your presentation.

[Unknown Executive]

Thank you so much, Haakon. It looks like Q3 was a success for DNO as for many oil companies. I'm going to talk about an area that will continue to grow to give value creation into the future. Can you go to the next slide? Yes.

So we have -- the last years built financial portfolio in this Troll-Gjoa area you see on the map. Over the next years, we are planning to drill 6 wells, exploration wells, in this area and those will target about 100 million barrels net unrisked to volumes to DNO. It's the first one, which is coming this year, and that's [indiscernible] well that we are starting later this month.

As you can see from the table, it's a good spread of volumes. It has a good chance of success with low to medium risk and that we have a material license interest in the prospects. As with all good work, it starts with the data and with the people that we have. And I have a great team that digs into the data to gain the knowledge that we have that can result in prospects that we can mature, both within the license areas but also in new areas so that we can apply for them in the APA.

So if you look at the prospects that we have, I'll start in the South and we have the North license. And as you can see, it's 3 wells coming in that license. All of these prospects were identified when we applied for the license, but we have been able to mature them further during the license time and also, of course, the revenue discovery has derisked all those prospects.

The Carmen to the North is also in the same play as Rover Nord, but at a deeper level. So it's -- it has somewhat higher pressure and temperature than the Rover. Further to the North, we have Kveikje discovery that I will present a bit more about later in the slides. And the knowledge that we gain from the Kveikje made us -- made it possible for us to take the Heisenberg well commitment. And what we are looking at here is that it's shallow targets where the amplitudes are really important to guide what we want to drill. And we see that the knowledge from Kveikje made it possible for us to take the good and have a good understanding of the Heisenberg.

Then we have Cuvette to the North, which sits between 2 discoveries that we already are part of, Orion and [indiscernible]. And this prospect is not the biggest one, but it's really important for the Vega area because it is possible to drill it from the template. So this is a very low-cost development should it be a discovery in the Cuvette.

As you can see from this -- no, back. As you can see, we have a lot of work ongoing and it's new data coming all the time with wells, and we also have new developments in the seismic data and we put together data in new ways. So all of this, it's really important to combine so that we take advantage of all knowledge that we have to make the best decisions going forward.

So then you can take the next one. So this is showing the distance to the infrastructure, Orion in the North and Troll in the South. And as you can see, the license that we have sit within tieback distance to the infrastructure. So it is important for us to work -- it's been important for us to work this area and how do we -- how have we gone about it. It's a mix between departments and licensing rounds, and it's an opportunity that we have to take advantage of the seismic database that we have and to grow the portfolio.

I think the last prospect that we farmed into was the Carmen which was part of strategy that we're having. As the developments that we are looking into for the discoveries that we have are different in the 2 areas. So we have the Ofelia in the North, which is looking to tieback to the [ Gjoa ], together with the Hamlet discovery that has also been made just south of it. And in the Troll area, it's -- we're looking at different scenarios. It can be single tiebacks to the infrastructure or it can be a combined development with other discoveries in the area.

So in this area, in the last 3 years, more than 300 million barrels have been discovered. So it is important to get the best development scenarios and the best tieback solutions for discoveries that are there and the volumes have been identified as very important for -- by Equinor. They are the operator of the Troll and they have identified this as a focus area for them to get as much as they can and to get the best developments that they can and the best or to maximize the value of the discoveries that we have.

So we have, during the last 2 years, made 4 discoveries: 3 in this area and then we have the Bergknapp, which I will not touch upon today since the focus is Troll-Gjoa. But I will show you a bit on the 3 discoveries that we have made, and we will start in the North with Ofelia and then Kveikje in the middle of it.

Ofelia is situated just north of the Hamlet discovery that Neptune made early this year. And as you can see from the figure, the sands in the guard is present across the area. And predrill, we believe that the hydrocarbons in Ofelia would be similar to the Hamlet with both gas and oil. So the gas is red and the oil is green on the figure. But when we drilled, we found a very good sand with just oil. So that gives us some uncertainty on the amount of gas opted and also -- so we have to evaluate that further. So we are looking into an appraisal well on Ofelia to see if we will find a gas cap.

But there's also more upside potential in the north of the structure and also in a shallower level on Kyrre, which is being evaluated. We see an amplitude in the Kyrre that we did not drill through in the Ofelia well because it was seen as a shallow hazard. But if the well is optimized for that, it's possible to also look into that anomaly and see if the gas has moved from Ofelia and up to Kyrre level or if we have some gas in Ofelia structure.

Neptune is working this area very hard. They are the operator of the area. And they have plans to submit a PDO on the Hamlet discovery. They also have another exploration well in the Gjoa license next year. And also they are then working on Ofelia. So hopefully, this will be tied back to Hamlet and will be a quick tieback for us in this area. We have a lot of licenses around this, which is both operated and non-operated, that we are also working to see if it's possible to find other good prospects to drill.

Next slide. So this is Kveikje. We did this discovery early in the year. It's a tieback distance to the Troll platform. And it has gas in injectites. As you can see from the figure, it's the lower most, which is the Kveikje and oil in horizontal sandstones. So the volume only quotes the oil because the uncertainties in the injectites in this area is so that we haven't calculated any volumes in. So it's an upside in that.

But the well results, what was really important for us with those is that it gave us a confirmation about our interpretation of the seismic signatures and the rest of our presence in quality. And based on that, we were able to identify new prospects in the area and also take a drill decision on the Heisenberg injectite prospect, where we anticipate to go find oil and gas.

And I believe that the great work our geologists and geophysicists are doing is proving hard work and an open dialogue between colleagues is really important. We need to challenge each other to learn more. And this is a typical example where we have taken knowledge from other areas into this area where this was not a play that was proven. So for us, this is opening up a new area in the Troll area where we actually can further discover or find prospects that are in this injectite play.

I think we need to ask each other questions, and we also need to not know the answers to all of it because it is that will make us wiser. We need to look for new ways of finding the puzzles -- pieces in the puzzle. Yes. I think that will help us develop as people but also as a company and an exploration department. So it's really a focus in -- for us to not have accepted proofs.

And then we can go to the next slide. The last one is Rover Nord we discovered last year and which was a starting point in this area. It's also really close to Troll. And it's a horse-block, very typical play in this area. And it proved to be better than what we predicted, which is always a great feeling, and it's positive for us. It gave us the opportunity to further work the license with a lot of prospects, some of them with quite good potential, and it's just next to Troll where the capacity to tieback new discoveries is there.

And mapping of the structures in this area has given us 3 new wells to drill in 2023 in addition to Rover Sor, which is coming now. And I think the Rover Sor is on the spill route from Rover Nord up towards Troll. So it's going to be really interesting to see what we will find in the well. And as always, we're crossing fingers for our exploration wells.

I have shown you a flavor of the work that we are doing in this area. It's a lot of work and it's really exciting. It's a very good area to be in, I think, and I'm looking forward to the last well this year with the Rover Sor and also the coming wells in 2023.

So that was it for me. To Jostein.

[Jostein Løvås, executive]

Yes. Thank you. It's really interesting to see all the good stuff we've got going in this area. So with that, I think we can open up for questions. And if you want to post a question, please rise the tiny yellow virtual hand on the top of your screen. And when you are chosen by the organizer, you will be notified on your screen that you are allowed to unmute after which you will have to remember to unmute yourself too. So please, I think we have a question here from Teodor Sveen-Nilsen at Sparebank 1 Markets. So please Teodor.

[Teodor Nilsen, analyst]

I have 3 questions. First on over the realized prices. Some of your peers have reported that basis for the prices or the revenues to get in Kurdistan will be changed because of competition from Russian oil. I just wonder how that will impact DNO and the realized prices from Kurdistan going forward? Second question is on dividend and buyback. It's positive to see that you announced dividend today. Just wonder how we should think about the dividend and shareholder payback going into 2023 and what's the preferences between buybacks and cash dividends. Third question is on exploration on NCS. exciting to get some more details in the -- for exploration portfolio. Just wondered the chance of success that you showed on the slides is -- they are pretty high. Is that a geological probability? Or is that a commercial probability?

[Bijan Mossavar-Rahmani, executive]

Teodor, let me start with the first question and I'll turn to my colleagues for the second and third ones. On the question on pricing, you're correct. The pricing for Kurdish blend crude as gap between that and Brents has widened in the last several months and most noticeably in September probably as a result of some of the political developments and legal challenges in Kurdistan. You're certainly aware of the court hearing and challenges posed by Baghdad with respect to the Kurdish production sharing contracts. This has been an ongoing matter. It changes character and wording. But as I've been an investor in and Chairman of DNO, we've had this issue in various forms and that, of course, has been compounded by the ongoing -- not really ongoing arbitration, but the -- awaiting the outcome of the arbitration between Baghdad and Ankara with respect to use of the pipeline.

So that -- those uncertainties have put pressure on pricing of Kurdistan blend. And of course, there's been some perception of risk in the parts of some refiners and buyers, and the traders have -- I think, have pushed hard traders on the business of pushing buyers and sellers, and increasing their own margins. They've spent blood, and they put pressure on the price and parts. So we've seen a widening of that gap. How long that will last, I don't know.

You mentioned it's competition from Russian oil. It really isn't. We've always had competition from euros crude in that market. I think the -- to the extent sanctions against Russian oil exports are strengthened in the next -- in December as is expected that, in fact, that will be positive for Kurdistan crude because that source of supply will dry out or will become more less available. So I think we will see a reversal in the widening of the price gap.

All of this, of course, has led to a rethink on the part of the Kurdistan regional government about the existing price formulas. There have been discussions, as I understand, that we read these in the press the way you do, but at least I think 2 of the companies of the various operators in Kurdistan have agreed to new lifting agreements involving new pricing. It's not -- but what the exact formula are being used, we're not privy to that information. There's not a lot of details being given. And we are not, at this time, engaged in active discussions with the Kurdistan government and the Ministry of Natural Resources about lifting agreements, for example, at Tawke production.

And so we have nothing to report all that other than we follow market developments, and it's been a difficult period. There's been a price widening of the discounts, work out some blend for the reasons I've explained, these political risks or perceived political and legal risk, how those will unfold themselves with the new government in Baghdad, or what the new government -- what posture they will have with respect to the arbitration and what posture they will have with respect to the Kurdistan oil and gas sector, we don't know. But for us, it's business as usual. We continue until the developments cause us to bring some -- bring forward correction.

On the issue of dividends and buybacks and cash, let me ask Haakon to respond to that.

[Haakon Sandborg, executive]

Teodor, as you know, we have a -- you may know that we have an authorization from the shareholders in DNO from the AGM in May this year to pay out up to NOK 1 per share in dividends through the 12-month period from May this year to May next year. So as you have seen so far, we have done that -- used half of that authorization by the payment in dividend in August and another NOK 0.25 per share now have to be made this month. So we basically used half of the authorization given to the Board so far.

You asked the question what happens into next year on dividends and share buybacks. So the Board will then decide on the use of the remaining half of the authorization from that AGM in May. So we sort of have the approach here where we have also looked forward and made recommendations each year to the AGM on the coming year for the dividend payments. So I certainly expect that, that will be the case also for next year that there will be a discussing at the Board level and a recommendation to the shareholders at the upcoming AGM, what do we do for dividends from the 12-month period from May 2023 going forward.

So I won't preempt that by saying anything, but we will see. But at least this year's program is significantly up from the previous year, and then we will see what the shareholders and the Board decide for the AGM next year. But there is, as I said, the remaining half of the NOK 1 authorization that the Board will decide on going into next year.

On the share buyback question, yes. Well, there's been periods where we have been very active on the share buybacks in the past in DNO. I think when I think back here, we had bought back up to 10% of our shares, and that was done through pretty long period, but we canceled the 10% that we had as treasury shares. It must have -- that must have been last year in Q3, I believe. So we have done this in the past. Whether we're going to then embark on that again, that's also of course up for the Board to decide. The Board has an authorization from -- also from that AGM this year to buy back shares. So that could maybe come on the table. But at least it's been some time since we did that last in our company, but we have a history of being active in that respect also on the share buybacks.

So I can't be very specific here, but these would be the parameters we would work within the authorization granted to the Board from this year's AGM and then we request that we will make to the AGM for next year on both the future dividends and also on the buyback program. So I think I'll rest that discussion there.

And then, Elizabeth, this is for you to decide -- no to you to answer, please, on the chance of success question from Teodor.

[Unknown Executive]

Yes. So the chance of success in the table is the geological chance of success. But as I've told you, this area has its close infrastructure, all of the wells that we are drilling and within tieback this means. So the commercial chance of success will also be high for all of the prospects that we have.

[Teodor Nilsen, analyst]

That's clear. Just a follow-up to Bijan, thank you for your comments around the pricing mechanism. Just to be sure that I understood you correctly, you believe that the discount we have seen recently is mostly explained by local factors and not competition from Russia. Was that what you said?

[Bijan Mossavar-Rahmani, executive]

Importantly, yes, there's been some competition in Russia and since the Russian oil is being sold at discounts, as you know, everywhere, I don't know what the discount has been for euros, I guess, in the $20 a barrel range. That's the number I've heard, but I don't know. And who that -- who picks up that discount, I don't know. Whether it goes to the traders, whether the traders pass it all to the refiners, I don't know. Ultimately, it's more -- has more of an impact on us if it goes to the refiners. If it goes to the traders, then it becomes sort of a different kind of issue.

But I think the -- for us, the important thing has been the perception of political increased political risk, and that's been, I think, made absolutely clear by the traders that there's more of a risk, and therefore, there has to -- they're taking on more risk. Therefore, they need to have deeper discounts to cover that. And that's been the driver more than that there's a lot of very, very cheap Russian oil available.

But even if there is a cheaper Russian available, and others are buying too all the way. Saudi Arabia has been buying cheaper Russian oil. But has that really impacted their market? No. But I think that will be importantly impacted by the -- how the Mediterranean basin refiners, countries respond to the Russian sanctions decisions.

[Jostein Løvås, executive]

Okay. I think the next question…

[Bijan Mossavar-Rahmani, executive]

One more thing here. I just want to respond a little bit to a second question. Haakon was very measured and careful and correct in his response as he always is.

[Haakon Sandborg, executive]

He usually am, yes.

[Bijan Mossavar-Rahmani, executive]

As he always is. I'm little bit more free to give a bit more color or editorial comment. 2 things. First, on the dividends. As you know, we started the dividend program before COVID hits and that of course put a stop to our dividend program and to that of other quoting us companies. But we're now, in some respects, flushed with cash and expect that our cash position will continue to strengthen and that gives a lot of -- lot more leeway to the company to continue the dividend program, and there will be pressure from shareholders about some of that money returned to them. Other peer companies active in Kurdistan, of course, are doing so as well, some of them quite aggressively. So you might expect that there would be some push from our shareholders to continue to a robust dividend program.

With respect to share buybacks, we've already now have been treasuring, what, about 2.5% of our own shares that came back to DNO from as investments in RAK Petroleum when RAK Petroleum was wound down. So we're 2.5% towards the 10% authorization level. So since we've already picked up a little bit of that through that transfer and companies -- other oil companies are combining buybacks and dividends, VP just announced one yesterday. It was reported today. You might expect that the same rational that drives other companies to do share buybacks and dividends are also carefully considered by DNO and this -- Haakon's said we've done as before. So if we decide to do it again, it won't be a surprise -- shouldn't be a surprise and it's within the authorization level that was given by the -- by our shareholders in May -- last May.

[Jostein Løvås, executive]

Okay. The last, I guess, Tom Erik Kristiansen from Pareto will probably post the last questions here unless there are any others. So please go ahead, Tom Erik and remember to unmute yourself.

[Tom Kristiansen, analyst]

With $800 million plus of cash on the balance sheet now, can you comment a bit on what you're looking for on the M&A side? You've been quite active historically in terms of what type of asset and the size of the transaction that you may do there as well as you obviously have quite high flexibility to go out and acquire. And have prices moved a lot? Or do you think that there are still good deals to be done in the current oil price environment as well?

[Bijan Mossavar-Rahmani, executive]

That depends on what do you do with the cash. Depends whether you ask Elizabeth, Haakon or me.

[Tom Kristiansen, analyst]

Asking you then, Bijan.

[Bijan Mossavar-Rahmani, executive]

Well, with respect to M&A, in a sense the acquisition in West Africa in the Ivory Coast was one such move this year. We are always looking. As you well know, our prices for assets in North Sea continue to be on the high side. There need to be a seller's market, at least with respect to the expectation of the sellers; not lot of deals are being done because maybe the pricing hasn't been too high, but the North Sea remains a seller's market. There are opportunities elsewhere that we look at as well.

We've always said we're looking for a third leg. I hope it's been -- expectation has been the Africa - West Africa will become a third leg for us. This entry into the Ivory Coast is just the beginning. There are other opportunities. They have -- a large team of our management was in the West Africa the last week. I joined them and so we are pursuing opportunities in West Africa. And I think there are some that are available and we will look hard at them. But we're also good to going in and exploring, and Elizabeth talked about what some of the things we're doing in the Norway, offshore Norway. There are other opportunities for exploration as well.

Obviously, the highest impact in terms of value creation is through exploration, and we'll pursue that, and we can fast track things elsewhere much more than we can do in Norway, wherever it takes. It's a good time. We can move faster overseas and the speed of acquisition of exploration opportunities and execution and development is probably half overseas what it is in Norway. So in that sense too, that's of interest to us.

But you're right, we have a robust balance sheet. We expect that to grow as more payments come in between now and the end of the year. And among our peers, certainly we have one of the strongest balance sheets and the ability to go out and do more, which we very much plan to do and have financial strength now to do so.

[Jostein Løvås, executive]

Okay. Unless you have a follow-up, I think we will round it off. Nothing more. Okay. Thanks to all for joining this call and we look forward to seeing you again on a later occasion. Goodbye.