Maha Energy AB
STO:MAHA A
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Maha Energy AB
Earnings Call Analysis
Summary
Q2-2024
In Q2, the company saw a 65% revenue increase year-over-year, driven by higher oil prices and new wells in Illinois. Despite a net income loss of $22 million due to unrealized losses on 3R shares, operating netback was $1.1 million. The company optimized its debt structure, reducing interest rates from 13.5% to 6.9%, saving $60,000 annually. Production is set to grow, particularly in Illinois with new wells. The company is poised for future M&A activities, backed by $142 million in cash and investments and a new $50 million debt facility.
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[Foreign Language] As we call it here, is the [Foreign Language], which is the wonderful city. So it's always nice in Rio de Janeiro.
Yes, very nice. Thank you.
Well, Kjetil and Roberto, please walk us through, perhaps even by your standards, a very extraordinary and eventful quarter.
Well, thanks a lot for that, and thanks for a nice introduction and super happy to be here again and presenting. And thanks for the collaboration with you guys in Stockholm. Yes, it's been an eventful presentation. Let's go through a bit of the disclaimer first as we have to. Here we go.
So well, that was a quick read on the disclaimer. The 2 presentors are well known, I think by now. So if we go then straight to the presentation, as always, we are showing a bit of the highlights. And I will try to put it in a bit of perspective here on what we have been through over the last bit more than a year. I think it's important to start with the DBO transaction, as it changed Maha significantly, and laid the foundation for what we have been doing this year and ever since. It's created this -- the clear link to 3R, which is important, I'll come back to that.
We also have the entry into Venezuela, which has again laid the foundation for what we have been working on this year. And we exited Oman, which slided into this year, more formal reasons. But basically, all of that was done last year. And it meant that we now have the completely new company ready for very different agenda than what had been previously in Maha. And this is what we have been working on this year. In addition, I would say, as you see on the last events here, and I will go through them very quickly, we have also done a tremendous job over the last quarter and subsequent weeks and months on the balance sheet. And I think what we see today is a company very well prepared for the remaining of the year and for the next year, we have several opportunities. We are in a very good financial position.
So this year, just a quick reminder, we bought the shares in 3R Petroleum. And the idea was that we thought it's about time, we can really do the consolidation. We continued our efforts in Venezuela as we described. And we made the closing of the transaction. We have done our changes on the balance sheet as Roberto will talk more about. And just today, we have also initiated a buyback program, very much on a lot of request from actually shareholders. And of course, as you all know, this was approved by the AGM in May.
So that was -- I think it's good to see that actually what we laid the foundation for last year is what we have been focused on doing this whole year. And I'm very happy to see the results so far, and I'm sure there will be much more coming in this quarter and next last quarter. So next one, a bit more into 3R. I think we've been through this on several locations already, but I think a good story can never be repeated too many times. I think we -- first of all, we knew 3R very well. I think we also were very comfortable with the Enauta portfolio and the Enauta management, people that we have good knowledge of and are very comfortable with.
I think 3R, just to repeat that, was founded by Starboard and DBO, and with the merger between Maha and DBO, we brought, again, the link into 3R with us. And for Maha, the DBO transaction has been very nice, a very good transaction, basically paid something like $29.5 million and received in shares in 3R value equal $48.3 million in less than a year. So I think that says a lot about that transaction in itself, but I think the most important thing was also the link into 3R and what we think we can create out of this combined company.
I'll come more into that on the next page, but let me first just mention here the synergies that are identified by Enauta through the capital structure, capital allocation, basically meaning that we think this new company or Enauta, to be very precise, and we agree, believes that there is a lot of synergies in just reorganizing the debt and the capital structure. So this accounts for $0.5 billion. There is another $0.5 billion in synergies and optimizations on the operations and on the new investments. And also, we believe there is a gain in selling of the oil as we can blend into better blend and we also have more regular cargos, which also has the value in the market.
So going to the next page. So this new company, what is this new company? I think we already talked about the synergies; there's a lot of synergies. There would always be synergies when two companies like this merge. I've been through it many times, and it's important to take the synergies and realize them. So this is now in the hands of the new management, and I'm very comfortable that, that will go ahead. And I think the other thing is that we have a now even more diversified growth from actually more than 1/3 of all the wells in Brazil are inside this company and are delivering growth going forward. I think the combined management team, as we said, I think it's a very good team, and I'm very confident that they will produce good results.
Just a quick look at some of the numbers that you see on the page here. I won't repeat everything and you can read it yourself. But highlighting, of course, $1.8 billion in EBITDA estimated by Bloomberg next year, it says a lot. There's a lot of cash coming in. And that is supported, of course, by an expected growth in production from about 60,000 as we see currently, up to 111,000 barrels. We all know there can be delays in some of this, but I'm very comfortable. I'm very comfortable about the potential for this kind of growth. So I don't think these numbers are taking out all the fantasy in a way, this is very realistic numbers on what we can expect, and it will create a fantastic cash flow for this company. And then I would say as a significant shareholder or CEO in a significant -- in the company with a significant shareholding position, in 3R, in Enauta, my expectation is that this will yield a lot of dividend payments going forward. So I think we will be, as shareholders, excited to see the future of this combined company, and I think it will benefit the shareholders in Maha to a great extent.
So let's go to some of the other actions here quite quickly. Illinois, again, I must say, our very limited team, a couple of professionals in Illinois are delivering again. We have drilled 3 new wells last year, they have delivered and according to our expectation. And we are now completing 3 more wells and of course, hope that they will fall in line with the same kind of results as we saw last year. So we can see an interesting growth quarter-by-quarter and so on into Illinois. And the good thing is not only our production increasing, but we are able to do this without adding manpower, without adding much cost. So basically, that means that the production or the cost per barrel is actually going down. So congratulations to Alan and his team in Illinois, fantastic, well-done job.
Going to the next one. I think there is a lot of questions on Venezuela. And of course, I know also that the most interesting questions, I think you all know that I cannot answer. And not only because I wouldn't be able to do for market reasons, but also because we probably -- there's a lot of things here we don't know exactly what's going to happen and how it's going to play out whatever is happening in Venezuela on the political side. What I'm very comfortable on and I have been in -- I'm in daily communication with the authorities in Brazil, in Norway and also representatives, not from the authorities, but in Venezuela. And I'm very comfortable that we will see progress in Venezuela this year. I actually do expect to get licenses this year from the U.S. I cannot -- I don't have any indication about timing on this and so on, but my expectation is that this is going to happen. There is no guarantee in this, of course, but I'm very positive based on the signals I get that we will -- we are favorably looked upon. I think all the work we have done there; I've been several times talking to the State Department; I am comfortable that we will move forward in Venezuela. And with the authorities, we are discussing all the agreements that they need to get in place. So this is moving forward. Yes, I would love it to see it happening much faster, but that's how it is. I think we are making sure that this is done properly done carefully and that we have a good control of the outcome of these discussions.
So, we have been mainly focusing our business plan, which I'm very comfortable that we will initiate. Very quickly, we're looking into changing the lift mechanisms in the wells. I think it will have a tremendous result. We will, however, test well by well. We're not going to start on a huge CapEx program, sinking a lot of money here. We're going to -- before we have more confidence about the potential. The potential is in each and every single well, and there is a lot of them, and we are ready to move forward on all these wells.
So just a quick look at the next page, which I think also we have seen several times. I mean the -- I think there is no doubt about -- nobody has any doubts about -- there's a lot of oil in Venezuela. But just a reminder, million or billions of barrels that basically is in place in these reserves is mind blowing. So again, just 1% increase in the recovery factor represents 86 million barrels of oil in reserves. I'm very confident that we're going to contribute to increased productivity, meaning producing the barrels from the fields more quickly than what is being done today with 1,000 barrels per day or actually it's moving a bit up and down. I think we will increase that significantly up to -- in the order of at least 20,000 barrels per day and potentially even more. But that is something we need to prove, we need to test. We're very open about that. We have to do this test; it could take more time. We could be looking at -- take less time, but that's basically how we're going to do it. So -- but the potential is very, very large, and I'm very comfortable that we are working on the right issues, and what we need is the licenses and the progress in Venezuela on all areas.
Okay. Next. So, this is -- I think I will end here. I think I am, as CEO and in a close collaboration with a very active board, with large shareholders, very confident about the value potential or upside in our portfolio. I think today or at the end of the quarter, our company is valued at the stock exchange, more or less equal to what we have on net cash and shares in 3R. I think today, certainly, that is the case. I think we even more -- there is more value in the company with cash and shares in 3R than what the market can assess.
I'll leave that a bit for my good colleague here, Roberto as he has done a tremendous good job on the balance sheet and also preparing for the buyback. There's not so much to say about the buyback. I think it's something that we plan to do and we got the formal approval from the [Technical Difficulty]-- now it's about executing it. I might leave that to Roberto to go through. But I think as a final remark here, I mean the upside in 3R revaluation and the upside in Venezuela, I think, is tremendous. And I think as shareholders, I think we are looking forward to a super-exciting autumn, and a super exciting start on 2025.
So with this, I hand it over to you, Roberto.
. And before we jump in the financial highlights section, I would just like to make a quick disclaimer here because during Q2, we signed the agreement with 3R. So basically, our Brazilian entity was classified as asset held for sale. So moving forward, and if you go back in Q1, you will see some differences when we see the SG&A accounts because now we are not considering in terms of consolidation, the results of these Brazilian entities.
So starting here in the financial highlights, looking at the income statement, basically, if you start on the left side of the page, we have a stable production in Illinois Basin. And now as Kjetil was mentioning before, we are looking forward, expecting increasing in terms of production. If you compare, we have a significant increase during Q2 last year after we decided to move forward with this new wells program. Basically, this was also supported by a higher oil price during the quarter, and if you compare last year, which, of course, has a revenue increase of around 65% if you compare to last year's second quarter. And this is very important because we have this $1.1 million operating netback that support our cash flow and our G&A quarter-over-quarter. So it can be [ prepared ] for next acquisition/investments.
Going to the EBITDA, we have a negative EBITDA of around $860,000, mainly explained by nonrecurring events related to M&A on legal fees during the quarter. And a net [ residue ] of negative $22.7 million, which I am going to explain later, but basically impacted by 3R share unrealized loss. So basically, if you look at the daily proforma production, we have a stable production in Illinois, but a very significant increase if you look at last year quarter. And this, of course, is being totally reflected in the net revenue, when you look at stable net revenue of around 1.2% increase quarter-over-quarter and a 65% increase comparing last year. Our EBITDA, as I was mentioning before, I'm going to show you later, but we were mainly impacted by our nonrecurring events during the quarter as we were closing 3R transaction and also Venezuela project. And we have this net income of minus negative $22 million, mainly explained by 3R share price decrease and as a non-realized loss.
So, moving forward here, we're going to show a little bit about our financial income, which excluding 3R share price was pretty stable, only considering our cash investments. And we have in the previous quarter, an unrealized gain of $9.2 million. And if you look below in the financial expenses, we also have a decrease in terms of financial expenses because as we are amortizing our debt, these expenses are decreasing over time. And then we have, during the second quarter, unrealized loss of $20 million because of 3R share price decrease. But we still are pretty confident on the share price of 3R even though we still exposed to this volatility going forward. And this ended up with a net financial result of around [ $20 ] million loss, but unrealized loss during the quarter. And now like I made a disclaimer you before, if you look at our share of income from investment in [ offshore assets ], we are classifying this result of 3R [indiscernible] as assets held for sale, so moving forward, we won't see this line anymore in our reports.
So, moving forward here, talking a little bit about our bank debt, as Kjetil give you already a spoiler, after Q2, we were working to try to optimize our capital structure. As you know, we have this $24 million end of June, a very expensive interest rate, and we work to issue a new debt of $50 million in August, in order to reduce our cost of debt and also give more flexibility in terms of availability of cash. So basically, we prepay this all debt using our cash collateral, and this will save us going forward around $6,000, showing the ability of enhancing and optimizing our capital structure going forward. And about our shareholders' equity and also our assets, they were basically impacted by this unrealized loss in 3R share price. And we expect this getting better going forward.
About the G&A, we're looking at the chart here [indiscernible] before, we have around $1.3 million recurring expense, and $1.4 million of nonrecurring expenses, mainly related to this M&A and legal costs, mainly related [indiscernible] and also PetroUrdaneta transactions. And you can see a small decrease quarter-over-quarter of around 15%. So, we imagine this will stabilize as soon as we close these transactions, and we assume as we have our production in place.
Moving on to CapEx, as Kjetil also mentioned, we have this $6,000 approximately of investments in Illinois. Basically, after we approved this wells drilling program last year and now for this new year, we also approved another round of investments. Here, going to the cash flow review, I think this slide is very important to show what's happening with our capital structure and our cash availability. So, if you start from the left to the right, we end up last quarter with around $98 million in net cash plus short-term investments, which were basically our cash plus 3R share investment. And if you take a look in the cash flow from operations, basically, we have the impact of an active $1.5 million, mainly explained by our negative EBITDA during the quarter, and also some non-cash adjustments. In terms of cash flow from investing, we have around a negative $3.6 million, mainly explained by our new investment in 3R offshore debenture to finance Papa Terra and also the CapEx related to Illinois drilling program.
And moving to cash flow from finance, basically we have our debt service from the old debt that we used to have. And now and also, we received the first installments of amortization in our 3R debenture of around $1 million. And then we have a reclassification of 3R offshore debenture from long-term investment to short-term investments. So, this will help with the balance of short-term investments. And then we have this unrealized loss of $20 million in 3R share price, ending up with around $102 million in cash plus investments, and a net cash position by the end of June of $79 million approximately of this net cash plus short-term investments.
But as Kjetil was mentioning before, I think the most exciting happened as a subsequent event, basically looking for this optimization we did in our capital structure, we issued a $50 million debt at attractive terms in terms of cost of debt to enhance our liquidity, and also reduce the cost of debt that we were burning our cash flow. So basically, we are now having a 6.9% interest rate when you compare it to past debt that we used to have 13.5%, almost a 50% reduction in terms of cost of debt. And also, this will generate us around $60,000 savings going forward until March 2025.
And also very important enhancement in our capital structure is the additional 3R shares that we receive as payment between 3R merge with Enaute. This $49 million is considering end of June price, but if you look today, this is even higher. So, considering a pro forma cash flow plus short-term investments, we will end up with around $127 million net cash plus short investments, proving that we are with a strong balance sheet going forward for potential new transactions.
And now as closing remarks, as we already mentioned before, we are always looking to enhance and optimize our capital structure. So, we mentioned this debt we fully repaid during August, using only our cash collateral that was already restricted cash, generating future savings of around $600,000. And at the same time, issuing this new $50 million debt, not only reduce our cost of debt, but also improve our liquidity. Also, we have the solid pro forma capital structure of around $142 million in cash plus investments. And additionally, on top of that, we also have $42 million approximately in earnouts to collect going forward.
And looking forward, as Kjetil also mentioned, in order to give more flexibility regarding our equity and also to optimize our capital structure, we also initiate this share buyback program to repurchase up to 10% of our shares. Additionally, we are still waiting of our [ license ], which we are very confident that we get the license very soon, and start operation in PetroUrdaneta. Also, now we have the significant dry powder to look and pursue with other attractive M&A transactions going forward. And of course, we are very engaged in opportunities throughout Latin America for always focusing in value generation for our shareholders.
So Kjetil, I'll pass the word again to you.
No, I guess, we are open for questions. I'm sure you have some for us.
Yes, Kjetil and Roberto, we have received a lot of questions before this broadcast. And obviously, there are questions that streaming now. And unsurprisingly, we will kick off with Venezuela. And one of the questions, obviously, you are limited in what you can say, and that's basically that it's uncharted territory, I take it, but could you please provide us with an indication of the total upfront capital you plan to invest in Venezuela before these operations become self-funding? And I believe you mentioned that you are walking it slowly when it comes to drilling and expenditure, but there must be an estimate on the total before you get some revenue?
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Yes. But we haven't -- this is something we haven't in detail decided upon in the Board yet. So, we are still working on the numbers, but let me give you some indications here, just to perhaps answer in -- with some -- at least some estimates that we have. So, I think what we expect is that there will be a cost of approximately $3 million per test of these wells. And we plan to at least start with -- and they will not start with 5 simultaneously. We start with a program of testing 5 wells in what we call the deep basement wells in La Paz. And then the math should be fairly simple, 3 times 5 is what we expect to spend over that. But we do expect to get revenues early on, but that depends a bit on what kind of offtake agreement we will get. So that's why it is a bit tricky to say. But let's say, at least, okay, if we don't have any kind of offtake or any revenues in that period, you're talking about $15 million for the testing program. And then we will also test 2 wells in the southeast, which is a different type of oil. And I would say that we haven't done all the final calculation on the cost there, but there could be a somewhat higher cost on some of these wells. They have other issues that we need to take care of, H2S, among others. This is very -- operationally not a big problem, but we just have to be well prepared for it. And so if we add $1 million per well there, okay, so let's add another 8 on top of the 15 million. And again, the math should be fairly simple. You're looking at $23 million maybe then to $25 million, in case you are not getting any sort of offtake or any revenues in that testing period, which is our aim. So I think that gives you at least something to do some capital adjustment.
And if I recall from the beginning of your presentation here, you did elaborate a little bit of the current value where you looked at the Maha cash position and its equity stakes. And was I right in understanding that in that case, you have Venezuela in there more or less for free?
Absolutely. And I hate to see it that way, but that's the reality, I think. And I think I'm at least personally, and as one of the largest personal shareholders in the company, I'm very confident about the value potential in Venezuela, about what we are doing. I'm very comfortable with the technical evaluations that we are doing. And of course, what I cannot say anything about is how soon, how long time will it take before we get all the licenses and so on. It's in the hands of others. But we are working also on that to, yes, increase the chances for getting it as quickly as possible.
And if we move on to licenses, this is also a question coming in here. If you could elaborate on the likely terms of the OFAC special license -- do you expect that it will be similar to Maurel & Prom [ EI ] expiry after 2 years? And may I expose my ignorance here and just say that sometimes it's difficult to be a mind reader of the authorities, but maybe you are in some sort of negotiations, so you would know terms and conditions.
And I think -- so my response -- I mean, I worked for the Norwegian government, so I know how government works. And I think that -- so we don't expect anything else than what Maurel & Prom has received on the positive side, on the negative side and so on. I think that the U.S. government wants to -- in any circumstance, I would say, in any potential future, they would like to secure themselves and not just giving licenses for 20 years, and so on, which will be natural. But I think behind this, there would be a policy. And I think that what we have seen, the U.S. attempt to kind of -- with the license 44, giving a general license to operate on the [ MP ], I think this is happening for a reason. And that reason is that they basically seen that what they have done previously hasn't really worked. And also, I must say, I think they would very much like to get the oil out of Venezuela.
So, I think there are these 2 driving interest behind the U.S. policy, which, of course, I cannot guarantee it, that's how it is, but that's my reading. And that's not going to change in this period. So, I -- for that reason, I expect that once you get the license, I think the chances for getting this renewed after 2 years and so on and so on going forward, it's extremely high.
So the big hurdle is to get the license, one should say?
I think so. And I think it's more -- actually -- I'm very -- should always be careful on these kind of calls, because we don't know what we cannot read into the future. But I -- with all the dialogue I've had, I'm very confident that we are very high on the list in the state departments. I was there in July, and we were very well received. And so my basis is not just the hope and praise, it's basically based on the feedback I get from the state department, from the authorities and so on, and I'm very confident that we will get the license.
OA portion of the earn-out from PetroReconcavo depends on the realization of synergies. And you had a slide where you discussed synergies in general terms there. Could you comment on the likelihood of these synergies-based payments being triggered?
Just to clarify, you said PetroReconcavo…
Yes.
I guess, you are referring to 3R. Are you not?
Yes.
Yes, you're referring to 3R, right? Otherwise, I would be unsure about the answer. But no, so I think with 3R -- well, first of all, it's in the hands of this other management team now. I think we are very comfortable about the estimation of the -- a bit more than $0.5 billion in savings on the capital structure. I think without going into too much details, I think there are things to be done there linked to how the -- on the tax efficiency and how the debt is structured between the different companies within the new company's portfolio. And so we are very comfortable that, that is something which is reasonable and achievable.
I think when it comes to the operations, I think that also -- it almost goes without saying that when you -- that's been the driver behind the big mergers that we have seen for decades between the big companies and was for my own sake, with [indiscernible], there will be always synergies in management and so on that you can realize. And you will have more assets to play with, which also means that you have -- you are increasing the chance or we are reducing a chance of adding equipment being idle for a longer period of time. So basically, I think all of these things, it's fairly straightforward synergies on operations, on CapEx being more efficient in the operations and having a more leaner, mean management. So I think this thing is fairly straightforward. And I think the capital structure, as I said, is well based on basically what we can do with the debts.
And if I may switch geographical focus, I would like to look at the Illinois holdings. You mentioned here, the production was up to more than 50% due to a completion of development program. Are there more programs ahead? Or shall we expect the going rate to be the 232 barrels equivalent per day? And basically, what I'm looking for here is would the U.S. asset here or Illinois, will that be a stable contributor? Or will it be more to come, but then also more costs?
I think a great opportunity for me to highlight how this works. So the U.S. wells and the play, the Mississippi play as we call it, is basically known by adding these wells that are coming on stream. We have been able to increase kind of what we call the type curve somewhat with being better in applying the right kind of fracking, I would say, tactics, so to speak, based on results where we have used tracers in some of the wells to understand really where we have the contribution in production, from which layers and so on.
So that actually increased our results in the last couple of wells. But anyway, regardless of what we do with the fracking and so on, the type curve here is indicating you a very high or like a high initial production of 100 barrels or in that range, per well, for the initial production period, which can be as short as a month or up to 3 months. And then we have a quite quickly decline. So, in other words, you will not maintain any production level in Illinois without drilling new wells.
We have existing more than, I think, about 20 well targets. These are currently also being reevaluated, as always, based on the information from the later wells, but I'm very confident that we have significant new targets, and I'm also very confident that we will drill more wells. We're discussing a bit on how many new wells, and I think that is -- will be a decision taken by the administration and the Board on basically an alternative use of that cash. I think the payback here is in the order of a year, as we're quite happy with that, but that is, of course, also oil price related. So, I think if oil price stays strong, and we believe that this is going to continue, it makes a lot of sense to let our excellent team in Illinois continue to drill more wells. And maybe this time, we can look at an even larger portfolio wells, but that is something we haven't decided yet. We'll come back to that later.
And we have an additional question from a viewer here regarding the 3R synergies, and that is -- could you remind us or inform us whether there is any oil price-related hurdles in this -- well, synergies and cooperation?
No. I am not aware, I have to look at Roberto here, but the things that we have mentioned now, there is nothing. I mean, this oil price linked kind of issues that we have had before has been linked to the selling of assets from PetroReconcavo, where the price was kind of then depending on the earnout, was depending on oil price levels. So -- and that is running continued, but with 3R synergies, this is basically with the balance sheet and cleaning up or reorganizing the balance sheet, reducing the cost of capital in the company and operating more efficiently and operating the investments more efficiently going forward. And there is a small gain on selling the oil as a result of having a more ongoing continuous production, which means that you are a more attractive seller of oil.
And if we then focus here on the share transaction with 3R, you are a proper minority owner, we're just shy of 5%. How should I view that as a humble, just observer, of the market? Is this a financial or an industrial investment?
You have no need to be humble. I think you're very knowledgeable guy, as far as I see. But I think not to be -- I think it goes with how it's structured in our balance sheet. It's held as, what do you say, assets for sale. It's a short-term investment, meaning that it's expected at least that we hold it not necessarily more than 12 months, but -- so that's the formal part of this. That's how it is in our accounting.
I think I would say that there, we have no rush in selling these shares. I believe that the potential for the 3R share price should be at least double of what we see today. So of course, we are in no rush. We have a good capital structure and so on. So we would like to see some of the synergies, some of the operational issues and synergies and also the growth which is embedded in the current plans, see them realized. I think that will be reflected in a very strong cash flow. And I think again that, that will be reflected in expected dividends. So I don't have any issues personally to sit on these shares for quite a long time. I think it will yield dividends that we can also apply for new businesses in Maha. And I think in itself, that will create massive interest for the share here in the market in Brazil. So no rush, but formally, yes, it's there as kind of [ assets or ] investments, yes.
Oh, so you're giving -- you have given yourself a pretty good hand there with a flexibility in industrial and a financial flexibility that it seems to me. Could I just...
I like that summary.
Could I just look at the share buyback? As I understand it, obviously, you can now buy up to 10%. Am I right in understanding that, that would be treasury stocks because you will not, well, kill them, so to speak, but you will keep them and you could use them as a currency if you want to make a transaction, an M&A transaction. Is that correct?
Yes, I think that was what we stated very clearly in the press release. I think normally, you would think that you started buyback program for shares, and you think that unless something a bit special comes up, where you can use this for a transaction, you would seek to know these shares after a period of time. So I -- but yes, the flexibility is there, and that's good. I think we like to see -- we like to have options. We like to see using or having the flexibility. And -- but I think that the main target is basically that this share buyback program means that each shareholder gets a bigger piece of the pie of what we have in the company. And we are very enthusiastic about what is in the company. So it's, in a way, that easy, and we can do it. And I think that it's been also a request from several shareholders. So I'm happy to say that to each one of you that has written to me and to Jakob, that yes, we do read your emails, and we do care about what you think. So -- and here, we were able to deliver on this request.
And just one comment, Kjetil, if I may. It's -- if we deciding about the cancelling the shares, we also need an AGM for approval. About a...
Ah okay, very good.
Yes. So if we then look at the situation here, in a short period of time, you have restructured the operations and your geographical footprint with Venezuela, Brazil and the U.S. And the balance sheet is being restructured and also the shareholder list here. Will 2025 be a year of consolidation? Or will it be as, let's say, diversified in actions during 2024? And I guess one other question here was what's the M&A pipe looking like?
Now, I have to answer generically on that. I think we do see quite a lot of opportunities in Latin America. I must also say that we, meaning myself, the core team in Maha and the Board, I think we have now a lot of experience in evaluating, making this deal happen. We have a very good collaboration with the different banks. I think we have flexibility on the financing side that few others have. So I think we're well recognized in the market. We are being contacted, I would say, almost on a daily basis on projects, some people wanting us to participate in different things and deals. So no, I don't -- if consolidation, if you mean by that, that there will be not so much activity, no, I think that we will work hard to continue to develop the portfolio. I think that in the short run, it's a lot linked to what's going to happen with 3R. And as a shareholder, we are pushing for what we have already said.
I think the other thing is, of course, Venezuela, which I think has a tremendous potential as we have talked about. We're going to deliver on Venezuela. And then I think to a degree, we also have more financial flexibility, which Roberto has already said we have. We will, of course, look into other great opportunities. I think we'll always look for those opportunities where we can think that we have a different angle in something that which we are familiar with, taking perhaps more risk than -- or some different risk than others. And -- but then basically see that, well, it's because we are comfortable in Latin America. We understand Latin America, we have a good network in Latin America and I think that will provide us with very good deal opportunities going forward.
Excellent. Thank you for that. So the conclusion there would be -- it's more to come if the right opportunity arises, one can say.
Yes.
Kjetil and Roberto, thank you for this presentation, was very intriguing, very exciting I must say. And more to come would be the conclusion. So with that, thank you very much. [Foreign Language].