Valeura Energy Inc

TSX:VLE

Earnings Call Analysis

Earnings Call Transcript 2024-Q3

[Robin Martin, executive]

Hi, everyone. Thanks for joining us for Valeura Energy's Q3 2024 Webcast Conference Call. My name is Robin Martin. I'm Valeura's Vice President, Investor Relations and Communications. Joining me on this call today are CEO, Sean Guest; CFO, Yacine Ben-Meriem; and COO, Greg Kulawski.

The time is now 1 minute past 11:00 p.m. Singapore time, and we are recording today's event. We'll make a replay of this call available through our website later today.

Running order for the event today: in a moment, I'm going to hand over to Sean to take us through some prepared remarks. After that, we'll do a Q&A session, and I'll guide us through that portion. We'll be taking live questions this time. [Operator Instructions]

Before we get going, I'll just point your attention to our Disclaimers and Advisories slide, which should be shown on your screen now -- these slides are also available on our website -- pointing out, in particular, the information here or the disclaimers here on forward-looking statements that we may use throughout the presentation.

So with that, I will hand the slides over to Sean, and you can go ahead.

[W. Guest, executive]

Yes. Thank you very much, Robin, and welcome, everyone, and good morning in Canada through to good evening or good night over here in Asia. Before I hand over to Greg and then to Yacine, I'll maybe just give the Reader's Digest version of the key points that we're going to make in the presentation today. So, looking first at production, our Q3 production was up slightly on Q2, even though we had some issues we were dealing with the Wassana field. However, importantly, with Nong Yao C field brought on, we're now looking at Q4 production of around 26,000 barrels a day, which is up more than 35% if we go back to Q4 in 2023. And even more importantly, this higher production now and the work that we've done this year is really guiding us towards a 2025 production that's above the current consensus from the analysts that we see out there. So good news across production.

Now, on the other side of the equation on costs, OpEx is pretty well coming in right on guidance, but we are seeing an improving trend. CapEx is coming at the low end of our initial guidance. But more importantly, because we are drilling -- have the rig on contract for the full year, that cost is largely fixed. But with efficiencies, we expect to yield 22 production wells against our original budget, which was at 16. So we're seeing some really good work from the rig. And that kind of leads us to show that we now have extended that rig for an additional year into Q3 of 2026 and that we took advantage of what we saw. There were some good rig rates, and we extended that for another year. We also see a lot of activity we have coming up with the success we've had in increasing production and reserves.

Cash flow, obviously, key. We ended up with $156 million at the end of Q3. But importantly, also, given the timing of liftings, we ended up with a record high inventory for us, so with 1.2 million barrels of oil.

Now, the most important thing that we've really come across recently is, we have now completed is, fully signed off our corporate restructuring so that all of the Thai III assets are now under the company that only originally held the Wassana assets. That is going to really accelerate a lot of near-term cash flow as those 3 producing fields can now access at approximately $400 million in tax losses. That's a huge boost to the cash flow of the company.

And then, following on that news, you would have seen in the past couple of days, we did an announcement on share buybacks. We now see, with the cash position we have, this accelerated cash flow, the strength of the balance sheet, that we have enough cash to really do the organic growth that we're looking at on the assets in Thailand, the M&A opportunities that we're looking at, as well as providing some returns to shareholders. So, good news across all of that capital allocation.

And before I hand over, the final point I want to make is, since we've taken over these assets in 2022 and '23 in the Gulf of Thailand here, we've made a number of promises. We've set a number of targets, and I believe we're delivering across all of those, both financially and operationally. We see our guidance. We're going to either confirm all of the estimates on the midpoint or in the -- and the costs, we see the CapEx lower. But importantly, really for us, the focus is on those reserves and the resources. And we saw the significant increase at the end of '23 with more than 200% reserve replacement ratio. And I can tell you, with the drilling and the field development we've done this year, it's looking very good for '24.

So with that, I'll hand over to Greg. If we could have the next slide, Robin?

[Grzegorz Kulawski, executive]

Thank you, Sean. Hello, everybody. Let me show just a few more points on production over the last few months. So in July, production was lower due to the precautionary suspension of the Wassana field related to the underwater inspection. When this was resolved, Wassana [ Phase 3 ] resumed production on the 5th of August. And then, on the 15th of August, we achieved first oil from the Nong Yao C facility and then quickly ramped up production in the next few days. In September and in October, production was over 26,000 barrels. And overall, we are very pleased that all facilities are running smoothly, and particularly the new facility, Nong Yao C.

So, just as Sean said, for Q4 '24 as a whole, we expect production around 26,000 barrels and the full year average close to the middle point of the guidance range for this year. And again, importantly, this higher rate in Q4 of this year, we expect, will underpin guidance for production for '25, which will be above the current analyst range.

Now, moving to CapEx, next slide, Robin, please. So, again, CapEx is coming in at the low end of our guidance, which is quite important, considering that most of the drilling CapEx is largely fixed through the rig contract and associated contracts. Now, we have achieved significant efficiencies in drilling. And this year, we expect to deliver 22 production wells against our original plan of 16.

And I think it's again worth to highlight that our portfolio provides significant optionality, which we do exploit to continuously optimize the drilling sequence. So, in Q2, we added Nong Yao A infill production wells in advance of the Nong Yao C MOPU being ready for drilling. And then, all of this good drilling performance through the year enabled us now to accelerate the Manora infill drilling program into 2024.

Now, a few final points before I hand over to Yacine. So, being a responsible operator, safe and efficient is critical to Valeura's success and is a real priority for us. Our safety performance so far this year has been excellent [ touchwood ] with no lost time incidents or no spills. Now, in addition, we expect to deliver around 15% decrease in the greenhouse gas emissions intensity relative to the baseline in '23, '23 being our first year of operatorship. Furthermore, our low BTU generator project for the Jasmine field is on track to come on stream around the end of Q1. And this will bring us both savings in the cost of diesel and will also remove a significant amount of greenhouse gas emissions.

Now, with this, let me hand over to Yacine.

[Yacine Ben-Meriem, executive]

Thank you, Greg. Next slide, please, Robin. Greetings, everyone. I'd like to start by highlighting some key numbers for Q2. As Sean mentioned earlier, our production averaged [ 22,200 ] barrels during the quarter, lower than the last quarter. It's good to remind the audience that it's quite common for us to have a mismatch often between what we lift and what we produce. So you can see as on the lifting side of what we sold, we sold 1.8 million barrels. This led to us having the highest inventory of oil during the history of the company of around 1.2 million. We did manage to sell a couple of cargoes of -- in totality of 0.5 million barrels on the 1st of October, which obviously now are going to be booked as sales for the next -- in quarter 4.

In terms of realized prices, now in August -- in September and August, we've seen oil prices coming down, impacting our realized prices. Our crude still trades at a premium to Dubai, which is a key benchmark in the Gulf of Thailand in terms of selling the crude, and just arithmetically came slightly below Brent. This is really on the back of most of our sales occurring at the tail end of the quarter rather than at the beginning.

On the cost side, we recorded OpEx per barrel of $26.3 per barrel, which is an improvement from the last quarter, again, with a flat CapEx overall -- a flat OpEx overall. On the CapEx, it's broadly in line. This is the quarter when we had to pay payment for the PITA tax payment, which related to the H1 period in '24, which amounted to around $31 million.

Overall, that has led to us recording oil revenue of around $139 million and an EBITDAX of $71 million. This led to pre-tax cash flow from operation of $64 million and cash flow from operation of around $50 million.

Now, shifting to the balance sheet, we've had -- we ended up the quarter with $156 million versus $147 million in the last quarter. Importantly, our adjusted working capital is around $160 million, which is the highest we have in the company again.

Next slide, please, Robin. Thank you. Now, let's break down the cash flow from operation for Q3. So, as I mentioned earlier, we have recorded a revenue of $139 million on the back of the 1.8 million of lifting of sales. Our royalty totaled around $17 million this quarter. And our net revenue is around $122 million. With OpEx of $54 million, and SG&A, which has been flat compared to last quarter, of $4 million, we end up with an adjusted cash flow from operation of around $64 million and with a PITA accrual -- again, this number, the $14 million of PITA and SRB [ as accrued ]. $10.5 million of that amount is for PITA and the remainder is for the SRB. We end up with a cash flow from operation of around $50 million. Now, if we have managed to record those 0.5 million barrels during the quarter, obviously, the adjusted cash flow from operations and all these numbers here that you see in dark colors would have been significantly higher.

Next slide, please, Robin. Now, moving on to the cash position. So we started the quarter with $147 million. As you can see, our cash flow from operations is [indiscernible] to cover our OpEx, and we've quite a large headroom of $35 million. In this quarter, we also recorded other income, which consists of royalty payment that we received on Rossukon field. As a reminder, we are due -- as part of our divestment of the Rossukon field, we receive royalties. And embedded in that $2 million as well is some interest income as well. CapEx at $35 million, expenses were broadly just below $1 million. And as you can see there, there has been a tax payment of $31 million. With the working -- with the adjustment in working capital, we end up the quarter at $156 million.

I think it's important to highlight that with the additional cargo coming -- recorded in sales in Q4 and an exit rate of around 26 million, we're certainly looking forward to a strong quarter in Q4.

Next slide, please, Robin. Now, as Sean mentioned earlier on at the beginning, I think one of the key events this quarter is really this reorganization. And maybe as a general reminder to everyone, this organization allows us, mechanically speaking, to aggregate all of our assets under the [ same one region ], Thai III, which is Nong Yao, Manora field and Wassana field into one entity. This enables us to effectively use all the PITA tax losses that are sitting in the Wassana company, which amount, as of the 30th of September, to up -- just shy of $400 million.

Now, what we've put here in front of you is an illustration as to what the impact of that organization ought to look like. And again, we've used the last 12 months as an example to illustrate the effect of that. So what you have on the top side of the graph there is effectively our last 12 months' financials. During those 12 months, our production averaged 21,100 barrels and the realized price obviously was slightly higher than it is today at $84. But again, just trying to point you towards what the 21,000 barrels look like versus a potential higher number for -- going forward for today -- on today for us.

So, you can see that the revenue recorded, the adjusted -- I'm not going to walk you through all the numbers, obviously, but I'll start -- maybe I'll start from the adjusted pre-tax cash flow of $311 million there. The PITA component paid on that amount is around $82 million and the SRB was $10 million. This has led to a cash flow from operation of -- quite substantial of [ $220 million ], and if you deduct the CapEx, after that, free cash flow just shy of $95 million. Now, if we have managed to do this tax reorganization or this reorganization at the beginning of last -- sorry, 12 months ago, our cash flow, as you can see, from operations have [indiscernible] just shy of $280, and most importantly, our free cash flow from operations would have been $152 million, which is an uplift of around 62% compared to prior to -- without the reorganization. And this highlights how value enhancing and kind of a boost to the cash flow this reorganization should be able to deliver to the company. And maybe specifically, if you look at it from a PITA perspective, initially, we would have paid -- we paid $82 million. But post reorganization, it would have been $24 million. This $24 million relates to really the PITA from Jasmine, which is excluded from this reorganization.

Now, if you take that $400 million tax loss -- PITA tax losses and you apply the 50% tax rate, you can see how we end up with an enhanced -- at least an additional cash flow -- free cash flow of around $200 million. Our expectation now looking at the current oil prices and effectively the plan going forward, we will see this amount being realized in the next 2 to -- sorry, 3 to 4 years, all subject to oil prices. Obviously, if the oil price shots up again, that period -- that time window will shorten significantly.

Next slide, please, Robin. Now obviously, with the enhanced cash flow with a strong balance sheet, obviously, our capital allocation framework comes into play as well. It is something that we presented to the market a few months ago, but it's worth kind of revisiting it now in light of the tax restructuring and the performance as well expected going forward from the portfolio. So I think we've been quite transparent with the market in terms of how we see our priorities when it comes to capital spending. Obviously, investing in our portfolio is a priority for us. And our philosophy, as we speak, is to spend to maintain that production -- our production between the 20,000 to 25,000 barrels well into the [ 2030s ]. And it seems that the work that Greg and his team has done from a technical perspective kind of again supports that assertion at this point in time.

We also see some exploration that the previous owner of the assets haven't really kind of gone after. And with the work that the team has done, we see some interesting opportunities that we would like to target, again, to enhance our current portfolio. The one that comes to our mind that we see as critical as one important piece next year is the [ royalty from ] Jasmine, which could really unlock significant upside there as well.

M&A is the cornerstone in terms of what we do. So therefore, any value-accretive M&A is at the forefront in terms of how we think about capital allocation. We have, we are and we will remain very strict in terms of the selection criteria that we apply for those acquisitions. We have a patient mind. We will wait for the right opportunities. We don't rush into doing deals just for the sake of doing deals. Value [ accretion ] is critical to any M&A opportunity we look at. And when we look at those M&A opportunities, we tend to prefer cash-generative assets or at least assets that we can see a line of sight in terms of their ability to generate cash in production.

As we said earlier on, with the cash balance, where it stands today, and with the forward cash flow that we expect over the next few years, we see the ability for us to also, at the same time, while maintaining the hunt for M&A and investment in our portfolio, to allocate some of that capital to some share buyback and some shareholders' return. So, you've seen, we just announced yesterday our approval to start the share buyback program. That's going to be effective from today, and it's for 1 year. And all the shares that are going to be purchased may be canceled. Our targeted amount -- sorry, our maximum amount is around 7.3 million shares with a daily -- as you can see there in the box, with a daily maximum of just shy of 80,000 shares per day.

Now, we will be careful in terms of how we deploy that capital. The key driver for us in terms of when we think about share buyback is really trying to -- it doesn't come as a surprise that we see our share price today is way under value compared to where [ it ought ] to be. And this is, again, our belief that from a value -- from a shareholder accretion perspective, that could also -- that also makes sense for us.

And with that, I'll hand back to Sean.

[W. Guest, executive]

Thank you, Yacine. [indiscernible] talking about, as we started at the beginning about what have we accomplished in the past 18 months? Because it was really just over 18 months ago that we brought this portfolio together and really started our production operations in Thailand. And as we pointed out, the key thing is, on that production, production up 38% from Q4 2023. So that's great. But again, bringing that focus back to reserves and the work that we've done on identifying more opportunities, on the infill drilling, on the development we've done, 2023, that was 219% reserve replacement ratio. The reserves were increased across every field, not just 1 or 2, and the end of field life was increased on every field as well.

Now, we've obviously pointed out that we are looking at redevelopment of Wassana, and we see significant upside in oil volumes there, which obviously, we see that field being able to [ successful development ] push out well into the 2030s or mid-2030s.

We did do 3 successful exploration wells, and a lot of this is demonstrating there is more oil to find out here that we can tie back economically. But importantly, it's with that drilling we've done, the exploration, the other drilling, what we see -- the increase we see for the year-end 2024 on both the reserves and on the resources is looking good. But obviously, we still have to look ahead until our reserves auditor has completed that work and released it in likely about mid-to-late February.

On the balance sheet, cash is good. We just talked about the corporate restructuring. We're seeing the production increases as well, which is all pointing towards really good cash flow as we go towards 2025. But the last element on the balance sheet is also the abandonment liabilities, or the ARO. Now, last year, we saw a significant reduction in that. And what I can say is, we've done quite a bit more engineering work on that this year, and that's a focus for the team as well. It's just demonstrating that also that amount is really decreasing as we see the amount of abandonment going on in the Gulf of Thailand. So, we're just extremely pleased on how the team in Thailand is performing, how the results are coming forward and we're really delivering across all aspects of our business.

Next slide, Robin. So just looking at how have we really been doing as a company? Well, if you look at -- we have a 20-company international peer group that trade on Toronto, London and Australia. And if you look back from 2022, we were the #1 performer in that peer group. In '23, we were the #1 performer. And again, in 2024, we're the #1 performer in that peer group. We have done extremely well year on year. But what I can say, the messaging we kind of hear when we're out there is generally that I've missed it. People see the large increase we've had, and I think it's creating a bit of a level of nervousness. But we still see that there's significant value upside in the share price, even though we've been delivering these top results. And you can see on the left how we trade with peers on production and cash flow metrics, right, that we're still significantly undervalued to those same 20-company peers. So when you then look at how we're trading on our share price today being around $5.40, if you look back at year-end '23, the NSAI and our cash at that time would [ have about $158 million]. Now, that corporate restructuring will increase that. And that brings all those metrics to where the analysts, [ where is NSAI ] and year-end '23 looking of that just under $10 mark. So we're still at a significant discount to that. But you can see where the peers would be or where we would be if we were at the trading metrics of our peers. The key point is the NSAI, the analyst numbers do not have the work that we've done this year and where we expect the reserves and resources to be. We still see significant upside in the share price as we move forward. We see we're still one of the cheapest shares out there, and we continue to deliver.

So, with that, I'd like to hand it back over to Robin. We'll take some questions at this point in time. And thank you, everyone, for joining us.

[Robin Martin, executive]

Thanks, Sean. As I've mentioned, we'll be able to take live questions on this call. Just bear with me a moment to enable that. Your first question is going to come from David Round. This is David Round from Stifel.

[David Round, analyst]

Can you hear me, Robin?

[Robin Martin, executive]

Yes, all good. Go ahead.

[David Round, analyst]

Perfect. Right, brilliant. I've got a couple of questions. The first one, I'm going to go back to one of the earlier slides, and there's a comment in there that says you are poised to exceed initial expectations for '25. I just wonder, are you able to help us understand how much of that is driven by what you're seeing in terms of better well results versus the increased activity you also talked about?

[Grzegorz Kulawski, executive]

Yes. Dave, this is Greg. I think it's a combination of both. So, I think, as we have said, we have managed to drill more wells, more production wells this year than we originally planned. So that's a plus. And some of the wells and some of the fields are performing better than we expected. Particularly, Nong Yao C is doing really well.

[David Round, analyst]

Okay. Great. Second question, tax reorganization, obviously, brilliant to see that come through. I'm just wondering whether it's going to change your approach at all? And particularly, I suppose I'm thinking about how you're ranking the opportunities pre and post the tax reorg. I assume some have moved up in the pecking order. Would that be correct?

[Yacine Ben-Meriem, executive]

David, this is Yacine. Are we talking in terms of like our own portfolio or more like in terms of M&A?

[David Round, analyst]

Your own portfolio, and thinking about, obviously, the consolidation affects, 3 of the fields and not the other one. So, whether you're probably incentivized to focus more on those fields than the -- well, than Jasmine?

[Yacine Ben-Meriem, executive]

Well, it's a good question. It's worth highlighting that, for example, when it comes to our portfolio, obviously, Nong Yao is our most profitable field by far. I think the OpEx per barrel there is just shy of $14. So, you can see, for example, in terms of how we think about things, whether it might be better to kind of allocate more work there. But again, it's more of a portfolio approach, I guess, rather than specifically just driven by tax reorganization or tax monetization.

[David Round, analyst]

Okay. Great. And final one is just a quick clarification. You mentioned the additional rig contract. Could you just remind me exactly when that contract runs into? And I'd be interested in any kind of inflation that you saw on that contract versus what you had this year, please.

[Grzegorz Kulawski, executive]

Yes. So we've extended the contract effectively from September 25 through to August 26. So that's exactly a 12-month extension. And the rate that we signed the extension on is significantly lower to what we're paying this year. So we have seen improvement in the market. I think some of it came on the back of Saudi Arabia releasing a number of rigs. And so, we've exploited this opportunity. And given the portfolio that we have, it was a good time to extend the contract.

[Robin Martin, executive]

Next question will come from Jesus Sanchez. Maybe Jesus is not ready. Let's move on. We'll come back to you. Stephane Foucaud of Auctus Advisors.

[Stephane Guy Foucaud, analyst]

I've got 2, hopefully, quite straightforward. The first one, 4Q '24 production is really high, 26,000 barrels per day. Do you see that rate sustainable in 2025, given probably the amount of flush production you had in Q4? That's my first question.

And my second question, so Sean, you talked about the expected good reserve replacement ratio in 2024. Are there any specific fields that you've been very happy with in terms of reserve addition in 2024?

[W. Guest, executive]

First of all, when we talk about the fields and the reserve replacement, the work is still ongoing, still working with NSAI. But a lot of the work that the team has done is really to go in very much in depth into the fields, the productions, the history because you now have a lot of data from these fields as to how they're producing as they move into this kind of mid to later stage of their life. And the performance of the wells is actually, I think, doing better than you would model just using with a standard hyperbolic type equation, for example. And it's building up that database to really demonstrate that we need to model this later life behavior differently to how it was previously being modeled. So there's just a lot of really good work being done, not on one field for that, but across the portfolio to really look in much more detail than a lot of companies sometimes do to really then demonstrate to the reserve auditor where we see the potential.

And I think the other question was really related to production. And look, obviously, the Nong Yao facility right now is still pretty well producing at its maximum. So the fields -- Nong Yao C is doing extremely well. The A and B facilities are doing extremely well. You're right, at some point, you'll see that start to come off, and we'll expect that we'll have to do some more infill drilling around that facility next year. That's currently in our plan. So, no, we don't expect to be staying at '26, well through '25, but we do expect to deliver kind of above the consensus type of production. And we'll probably put our guidance out late -- in mid-December or into early January, depending on how the production is going and timing.

[Stephane Guy Foucaud, analyst]

Okay. So, back on the reserve, if I understand what you're saying, is that it's really across the field that you're relooking at the historical production and recovery factor rather than a specific outperformer in 2024.

[W. Guest, executive]

There will be some of that, and the guys do do gap analysis on the different wells at different blocks that are producing to try and look for the gaps and where they have to investigate more. But they're also even going back and looking at the original [indiscernible] that's been using and going back through the core data and the analysis there. And you have so much more information now on how things are producing.

[Stephane Guy Foucaud, analyst]

I see. So, difficult to say at this stage if there is really one that was really outperforming and driving reserve addition. That's what you're saying?

[W. Guest, executive]

What we're really pleased with at year-end '23 was that the reserve increases were across all the fields. And we would hope to see a similar effect this year. But again, we'll let our reserve auditor complete their work.

I think Jesus is live there now.

[Unknown Analyst]

Yes. Do you hear me?

[W. Guest, executive]

Yes.

[Unknown Analyst]

Yes. Apologies for earlier. Congrats on the recent developments and the results. Just 2 questions, very quick questions. As far as I know, there is a 15% tax exit rate in Thailand. Will we have to pay that exit tax before buying back our shares in Toronto?

[Yacine Ben-Meriem, executive]

This is Yacine. No, we don't have to. We do have cash sitting outside of Thailand that we can deploy to do this.

[Unknown Analyst]

In order to perform the complete buyback program?

[Yacine Ben-Meriem, executive]

Yes.

[Robin Martin, executive]

Let's move on to Charlie Sharp of Canaccord. [Operator Instructions]

[Charlie Sharp, analyst]

Can you hear me now?

[Robin Martin, executive]

Yes, Charlie. Good to go.

[Charlie Sharp, analyst]

Sorry about that. Apologies. Thanks very much for the presentation. Very comprehensive. Appreciate that. Just sort of going back to Nong Yao and maybe Wassana, I think in the announcement, the results announcement, you indicated the strong performance of Nong Yao and you've reiterated that today and indicated that it has the lowest per unit adjusted OpEx. I just wonder if there's something about Nong Yao that is particularly good that you can apply elsewhere across the portfolio, in particular, into the redevelopment of Wassana, the bigger, larger development of Wassana? Are there lessons that you can apply?

And then, also on Nong Yao, what's the current status of Nong Yao D? Is that likely to be a go? Or are you still in the in consideration period?

[Grzegorz Kulawski, executive]

Yes. So, I think on your first question in terms of Nong Yao metrics and performance and learnings and application to others, I would say 2 things. One is, some of the features of Nong Yao are due to just the size of the production being at peak at the moment and very efficient operations we've got there, including improvements after we have bought the FSO. So that's one part. I think the second part that's very much replicable across the portfolio is all of our drilling operations and continued improvement that we are applying there and very much all of the ongoing lessons and the way we optimize rig performance, all of this is playing across all of the portfolio. And we are also using the size of the portfolio to optimize logistics, reduce fuel usage and all of those features apply right across, including they will play into our new developments, [ part of ] Wassana redevelopment.

[W. Guest, executive]

Yes. There's another point too, which is on the power generation, I think, which is one that will flow through to Wassana as well, which is Nong Yao has some gas, and it was built with bi-fuel generators. So the gas provides a lot of the power requirements on the rig, whereas the older projects like Jasmine were set up to require diesel. So you're actually using that kind of gas that comes with the oil to supply a lot of the power, and that can reduce your OpEx a bit. So we're looking at that for Wassana, even though that is a lower GOR. So the oil itself has less gas in it. There's areas we might be able to use bi-fuel.

[Charlie Sharp, analyst]

That's great. And Nong Yao D, is that -- where is that sitting at the moment?

[W. Guest, executive]

Yes. The team has been working on that. We were just up in Bangkok a couple of days ago and went through, with the Board, a look at the program. They're working hard on that. They're working up a number of locations in that, and we have notionally plans to get to some more drilling over there.

[Robin Martin, executive]

[Operator Instructions] In the meantime, a couple of questions have come in through other means. I'll just voice them for the team here.

First one, can you give an update on potential transformative M&A?

[W. Guest, executive]

Yes. I think the main thing to point out with the M&A, because this is one that does come up a lot, I can say recently, we have been trying to push people to really have a good look at the value of the company because that last slide I showed, there is no M&A in that. There's still significant upside in it prior to M&A. However, the point I'll kind of say is, we are very focused on making sure we get the M&A deals that we want. They have to be accretive and tie in. But at this point, what I can add to that is that there's no deal that we went for that we have not got, right? So deals that we're looking at are still active. There's none that we've actually lost at this point in time. So we're continuing to work on those. We see progress, but the larger ones, where we use the term transformative, will take a little while.

[Robin Martin, executive]

Okay. Next question is on Turkey. Can you discuss Turkey a little bit? Any active discussions? And also, how long can you keep renewing the licenses there?

[W. Guest, executive]

Yes. So, we've got our next extension finally [ gazetted ], approved by the government, and that was issued. We're looking at actually extending that further. We can -- because we have obviously discovered things there, we could put in an application that we've had a discovery to get the 2-year appraisal period. But there is also a potential for a force majeure type of period, given some delays that occurred there. So we're looking to try and extend those somewhere beyond the period that we have with these blocks now to go to June '25. We would see our desire to get another 2 to 3 years there, and that's a discussion that we're currently ongoing with. There are [indiscernible] data room. There's -- we're now starting to rejuvenate our efforts, given the fact that we do have these blocks assigned.

[Robin Martin, executive]

Great. One further question. How do you feel about hedging?

[Yacine Ben-Meriem, executive]

At the right price, yes. Obviously, considering like you know, the overall market conditions today, it's worth highlighting that the oil price came down by $10 in a period of like 2 weeks. So we are actively looking at a way to at least protect the balance sheet. I think on the back of the tax consolidation and the strong performance from -- operationally from the team and the expectation in terms of going forward, we're not worried about like being effectively operationally being hammered by the oil price, but more trying to preserve that dry powder for further growth. But in short, yes, we are looking at a few hedges.

[W. Guest, executive]

Yes, I think we do look at it every quarter. It's something we investigate and discuss. But with no debt, with the cash position to fully cover all of our plans right now, it's not really required. So, it's opportunistic. And with where oil price is now, I don't think we would see hedging at this point.

[Robin Martin, executive]

Very good. Okay. Well, thanks for that. We've got no further questions on the line at the moment. I'll just mention if there is anything that you'd like to ask, feel free to reach out to us. E-mail address is just [e-mail], available any time.

Sorry, one last question having come in here. Let's just get this one. How do you expect to actually use the buyback point forward? Is there a floor share price in mind that you're trying to support? Or what other conditions would enable you to be active in the market?

[Yacine Ben-Meriem, executive]

I think we did say earlier on that like we see our current share price doesn't reflect the value of the business. I think that just gives you an indication as to how we see this whole share buyback. But again, we take into consideration a few other aspects or least parameters in terms of defining that number. I don't think I'm going to be able to give you an exact number today. I don't think it's fair for the whole market. But at least it gives you some guidance of how we think about it.

[Robin Martin, executive]

Very good. Okay. No further questions from the floor. I'll hand over to you to wrap up, Sean.

[W. Guest, executive]

Yes. Thank you, everyone, for joining us here. As I said, we're obviously really pleased with the success we've had this year on bringing on these fields. Production is doing [indiscernible]. And we're really looking forward to getting into 2025. We'll get our guidance out, as we said, probably around year-end. But we're looking forward to a good year. It's very exciting. Thank you very much all for joining us and supporting us.

[Robin Martin, executive]

Thanks, everyone. That concludes the call.