Kosmos Energy Ltd. Price & Performance (KOS)

Thanks, Jamie, and good morning and afternoon to everyone. Thank you for joining us today for our fourth quarter and full year results call. I'd like to begin today's call by talking about what differentiates Kosmos strategy and the ability of the portfolio to deliver sustainable cash generation We'll then provide an update on the operational and financial progress we've made in 2020 Before discussing the outlook for 2025, how we will focus on cash generation through maximizing revenue and rigorous cost management. Starting on Slide three, Kosmos has a unique portfolio for a company of our size with a diverse set of world scale oil and gas assets. The quality of the portfolio can be seen in the long of more than twenty years. Our oil assets are characterized by low operating costs and high cash margins, while our gas assets are positioned to deliver growth in revenue, increasing margins, targeting long term sustainable cash flow, particularly as gas and LNG continue to grow. In the global energy mix. 2025 is an important year for Cosmos with increased production and reduced capital expected to drive an attractive free cash flow yield. Which can be seen on the chart on the right hand side of the slide.

With Kosmos Kosmos against our U. S. And international peers, as well as the majors. Because Mas, given the ongoing ramp up of GTA, and planned maintenance at other fields in the first quarter of the year, we have used an annual free cash flow from 2Q twenty twenty five forward which we believe is sustainable in the medium term. In addition to our strong cash generation potential, the portfolio also has significant future optionality with material discovered oil and gas opportunities such as Tiberias and Yakutaranga, alongside a quality hopper of infrastructure led exploration prospects in the Gulf Of America. Turning to Slide four. In the second half of twenty twenty two, set a target to grow production capacity by around 50% through several projects across the portfolio. The chart on this slide shows the foundation we've built to achieve that target which can be achieved with the ramp up of GTA and Winterfell and new wells in Ghana. Importantly, as these projects start up, the CapEx associated with them is ending. In 2025, total CapEx expected to fall significantly from over $800,000,000 on average in 2023 and 2024 to $400,000,000 this year, a reduction of over 50% We'll be working on ways to potentially reduce it further where possible.

We're not just refining the work scope, but the associated costs are also being managed rigorously. The resources needed to build and grow the portfolio are not the same to sustain it. And therefore, we're targeting a reduction in the annual overhead of around $25,000,000 the end of twenty twenty five largely from a reduction in contractors and external consultants, and having the right workforce focused on the right things. This includes focusing our exploration effort in the Gulf Of America, given the depth of the discovered resource base we have across the rest of the portfolio. With growing production in a lower cost base, our focus is on free cash flow generation.

In the near term, we intend to prioritize cash for debt pay down until we reach our leverage goal of below 1.5 times at mid cycle oil prices after which we'll balance cash across further debt pay down and shareholder returns. Turning now to Slide five. Underpinning the company's cash generation potential is a strong and diverse reserve with diversity across multiple geographies spread broadly fifty-fifty across oil and gas. At the end of twenty twenty four, we saw a 2P reserve replacement ratio of 137%. Replacing last year's production and adding more reserves during the year. With the upward revisions largely driven by gas, as we continue to progress the GTA project, With the project amount of ship is first cargo and more drilling in Winterfell and jubilee later this year, there is scope for further upward revisions in 2025. Year end 2024 2P reserves of five thirty million barrels of oil equivalent represents a reserves to production ratio of twenty two years a major differentiator for Kosmos versus our U. S. And international peers as can be seen in the chart on the bottom of the slide. Including the extensive 2C resource base beyond that, the number is closer to thirty years highlighting the organic running room we have for many years to come.

Over time through enhanced seismic imaging, further infill drilling and project sanctions, expect to migrate 2C resources into 2P reserves and 2P reserves into 1P reserves. The takeaway message from this important slide is while many companies across the sector face declining inventory and reserve lives, we have the reserves and resources to support sustainable cash generation for many years to come.

Turning to Slide six, where I'd like to briefly touch on some of the highlights from 2024. [indiscernible] achieved a lot in 2024, ending the year with a better, more resilient company. Looking at some of the achievements. Safety is a key focus at Kosmos. And we continue to operate safely during the year with zero lost time injuries or total recordable injuries. Safety is a key focus at Kosmos and we can safely during the year with zero last time injuries or total high safety performance with incident rates well below industry averages is a trend we maintain for many years. As previously mentioned, our two pre reserves grew year on year to five thirty million barrels of oil equivalent a reserve replacement ratio of 137%, highlighting the longevity of the portfolio. We achieved first oil at Winseval in the summer of twenty twenty four and expect production to rise later this quarter Winterfell three comes back online with a fourth well expected online early in the second half of the year, Late in the fourth quarter, the partnership achieved first gas production at the GTA project with first LNG production achieved earlier this month and first cargo lifting expected shortly.

Through the year, we raised a total of $900,000,000 in new bonds at competitive rates and we refinanced and increased the capacity of our RBL facility. These activities significantly enhanced our financial position and extended our weighted average maturities with minimal near term maturities over the next two years. Neil will now provide some color on the last point and will take you through the financial results for the quarter and the year. Thanks, Andy. Turning now to Slide seven.

Production for the fourth quarter was lower than guidance. Partly due to lower Jubilee production just flagged last month by the operator. Actions have been taken to resolve the water injection and reliability issues at Jubilee with voyage replacement over 100% so far year to date. We also saw a slight delay in the production ramp up from the EG infill wells and Wonderfell 1 And 2 were down most of the quarter prior to being brought back online late in the year. The 4Q production issues have been largely addressed but with several planned maintenance programs in the current quarter, production is expected to be broadly flat quarter on quarter. Detailed guidance is provided as an appendix to the slides. The 1Q planned maintenance program closed the shutdown of the Jubilee FPSO a one month turnaround of Devils Tower, which hosts the Kodiak Field, and some other scheduled maintenance in Equatorial Guinea. We are also seeing GTA ramp up during 1Q and expect to end the quarter near full capacity. Looking at the cost side, costs were largely in line with budget with CapEx slightly higher due to GTA startup costs. Turning to Slide eight. 2024 was an important year in enhancing the financial resilience of the company.

As Andy mentioned, we issued $900,000,000 of new bonds refinance and increased the capacity of our reserve based lending facility bringing in two new banks.

Collectively, these transactions increased our average debt maturity to The top right chart shows our current maturity schedule. We have minimal near term maturities with only $250,000,000 due in 2026 which we anticipate repaying from cash flow. It's also important to note, we have managed our debt to ensure we don't have any large single maturity in any given year. Enabling us to repay the debt from future cash flow. Further derisking the balance sheet. The chart on the bottom right shows how we continue to actively manage future price volatility through our rolling hedging program. We currently have around 60% of our first half oil production hedge with downside protection of approximately $70 per barrel. Providing solid protection for our cash flow. We will continue to be proactive in the management of oil price volatility through 2025 and into 2026. Turning to Slide nine, our financial priorities for the year. Andy was clear in his opening remarks that cash generation is our key financial priority in 2025 and beyond. We therefore intend to be very disciplined in our cost management. Targeting meaningful reductions in both CapEx and overhead. As we come to the end of a capital intensive period for the company, we expect capital spending to fall sharply a 2025 capital budget of $400,000,000 or below a reduction of more than 50% year on year.

We're also working hard to decrease overhead, targeting a reduction of of around 25,000,000 by year end 2025. As we generate cash flow expected from the second quarter onwards, we will prioritize debt pay down. Initially focusing on the RBL as our highest cost prepayable debt as well as the outstanding 2026 and 2027 notes. And the final deliverable for the year from a financial perspective is the refinancing of the GTA FPSO. The financing was initially put in place with the operator during COVID and we're working with them on bringing down the overall cost.

Which should lower our unit operating costs on the project. So in summary, 2025, our goals are clear. Growing production and lowering costs to prioritize cash generation. With that, I'll hand it back to Andy to take you through the assets and the outlook for the year ahead. Thanks, Neil. Turning now to Slide 10.

I want to start with GTA and talk about the journey we've been on to create a new, at and why we're excited about the future. The timeline on the top of the slide starts in 2015 when Kosmos' operator had the initial exploration success at Tortue discovering a field with around 25 TCF of gas in place. Making it the second largest hydrocarbon discovery in the world that year. A year later, we ran our farm app process with BP coming in as operator for total consideration to Kosmos of around $950,000,000 which includes funding the first $550,000,000 of our development CapEx on the GTA project. In late twenty eighteen, the project took final investment decision with first gas production announced at the end of twenty twenty four. While there have been some challenges along the way, including COVID related delays, and a major typhoon in China that damaged the FPSO. The project has taken around five years to develop. Earlier this month, we announced the first of a series of important milestones related to the delivery of the project. LNG production was delivered in early February and we are very close to loading the first cargo from the project.

With LNG tanker standing by at the hub terminal. This new Atlanta Basin LNG hub is ideally low short sailing distances and low transportation costs. Also advantaged because the GTA Gas contains minimal calm day or hydrogen sulfide, important for both the environment and ongoing maintenance of the infrastructure. Turning now to Slide 11, which looks at the future. The partners will soon start to receive revenue from the project, another key milestone. Producing LNG at the off takers contracted volume of 2,450,000 tonnes per annum requires around 400,000,000 standard cubic feet of gas per day. This equates to approximately 30 gross cargoes a year. Project partners will co lift the cargoes, which should result in a steady revenues a limited undeveloped or over lift impact quarter on quarter. With GTA Phase one starting up, the partnership has been working [indiscernible] The operator, National Oil Company's and Kosmos Kosmos, a shared vision to fully utilize the existing infrastructure to drive a low cost brownfield expansion that increases future LNG output while ensuring the local markets gas needs are met.

As a chart on the bottom left shows there is more than enough recoverable gas in place to build out multiple future phases each capable of producing for over twenty years. Initial data from the producing GTA wells has been positive, providing confidence in a reserve base for future expansion phases. The partnership is initially focused on Phase one plus a brownfield expansion, which leverages the infrastructure we've put in place for the first phase.

On Phase one costs, year one is really a transition year and see higher operating costs as we complete the commissioning phase and ramp up volumes to full capacity. The unit cost should trend lower over time as the facility ramps up to the facility's limit and the start up costs are behind us. While we have sold 2,450,000 tons per annum under the BP sales contract, the floating LNG vessel should be able to achieve a nameplate product of around 2,700,000 tons per annum or higher as typically seen on LNG plants. In addition, as Neil mentioned, we're working with our partners to refinance the FPSO lease we should further reduce operating costs. In the medium term, adding growth from the Phase one plus expansion additional uncrowned trucks volumes should continue to drive higher margins. In summary, it's been a journey to get where we are today. The project has a lot more running room and we're excited about the future potential. Turning to Slide 12, which looks at operations in Ghana. Net production in 2024 was just over 41,000 barrels of oil equivalent which was below the operator's target for the year.

Primarily driven by the J-sixty 9 well and Jubilee coupled with insufficient voidage replacement or water injection due to reliability issues primarily related to power generation. We have worked with the operator to address these field management issues. The moderate decline ahead of the upcoming drilling campaign improved power reliability delivering voyage replacement in excess of 100% is required.

Consistent with what has been delivered through the first two months of twenty twenty five as can be seen on the chart on the slide. Looking ahead, we have an active year in Ghana, beginning with the four d seismic campaign, which is ongoing. This modern four d data will be processed with the latest technology giving us a much better understanding of the subsurface particularly in terms of fluid migration allowing the partnership to choose the best future drilling locations. We continue to believe Jubilee has significant upside and therefore are focused on accessing the best technology to increase the recovery factor of more than 2,000,000,000 barrels of oil in place. We're looking to leverage our position in the Gulf Of America accessing the latest seismic processing techniques and reservoir management tools, including AI. We're also planning two new wells in Jubilee this year, with a rig that is returning to Ghana and will continue with a four well program in 2026. In terms of guidance for the year, the operator didn't provide specific guidance for the fields in its recent trading update. But we expect gross jubilee production of between 70,000 barrels of oil per day and gross 10 production of between 15,000 to 16,000 barrels of oil per day.

Also expect around 6,000 barrels of oil equivalent of gas net Kosmos. Turning to Slide 13. The Gulf Of America, we saw a gradual quarterly ramp up in production from 2Q onwards as can be seen on the chart as we delivered the first Wintervale wells and the production optimization projects on our Job And Kodiak both of which are performing ahead of expectations.

The year end exit rate indicative of the product's potential of this business unit before taking into account planned maintenance and hurricane downtime. The operator of the Wintervale project is currently performing the remediation [indiscernible] is expected online early in the second half of the year. On Tiberias, we continue to progress the development with our part [indiscernible] We're aiming to complete the farm out around the time of project sanction. In addition, we have an attractive portfolio of ILX opportunities. The outlook for activity in the Gulf Of America has improved under the new the potential for more lease sales giving us more opportunity to continue Full year guidance is seventeen twenty thousand barrels of oil equivalent per day net an approximate 20% increase year over year. Turning to Slide 14. In Etroogine, we finished the infill drilling campaign in late twenty twenty four. With both wells now online collectively producing around 9,000 barrels of oil per day. [indiscernible] In the fourth quarter, we drilled the King Deep ILEX well, which stood encounter oil zones in the Upper Albion section confirming elements of an active petroleum system. But were deemed sub commercial the well was plugged and abandoned. TBE is now working on analyzing the results to better understand the future potential of the area.

For 2025, we're seeing the continuing contribution of the two in full wells and we'll be reprocessing the latest seismic we have over the fields to help plan the next infill drilling campaign which we expect to carry out in 2027. Full year guidance is 9,000 to 11,000 barrels of oil per day net and approximate 15% increase year over year. Turning to Slide 15 to conclude today's presentation. [indiscernible] As I communicated in today's material, we did a lot in 2024 to put in place the foundations deliver value for our shareholders in 2025. Production is rising as new projects come online and ramp up. As we showed in the earlier slides, we have the reserve base support this production well into the future.

We're rigorously managing Kosmos to prioritize free cash flow with material reductions planned in both CapEx and overhead. We plan to use cash generated to reduce our absolute debt and leverage enhancing the financial resilience of the company. And we maintained our attractive portfolio of growth opportunities which provides differentiated optionality for Kosmos into the future. Thank you. I'd now like to turn the call over to the operator to open the session for questions.

Thank you. We'll now be conducting a question and answer session. One moment please while we poll for questions. Thank you. Our first question is from is from Neil Mehta with Goldman Sachs. Please proceed with your question. Thank you, Andy, Neil and team. We've been getting a couple of questions this morning around startup costs and that you highlighted in the deck. And so maybe it's a good place to start, which is just talk about the start up and commissioning costs and these appear to be one time in nature, but how do you think about framing those out and working through them? Yes.

Hey, thanks, Neil.

Yes, good to hear.

Question. We've talked on prior calls about the key components of the operating costs, namely the FFO FLNG toll, the upstream OpEx and the FPSO financing. In today's update, we've given you a pretty fulsome guidance for the year, which reflects our best view of production ramp up cargo timings and costs As we said in our prepared remarks, this year is going to be a transition year. And the costs as we finish up all the commissioning work, and see the volumes to ramp up. Therefore, we would expect to see costs to be higher this year and then trend lower over time. What's going to drive that? Sort of no more one off commissioning Kosmos, volume ramp up to the contracted volume, which is a ACQ of 2,450,000 tonnes per annum. And then as I alluded to in the prepared remarks, testing the facility at its nameplate capacity of two point and potentially higher And then there's some refinancing of the FPSO lease to do. So probably good then if Neil can kind of give you a breakdown of those three areas and give you a little bit more color around what we're targeting going forward as as we remove some of those one off costs and get to a steady state. [indiscernible] when you look at it sort of going forward in terms of a normalized state, talked about the two components, which are normal OpEx, which is the FLNG vessel and the operating expense.

And we'd expect that to normalize in the $4 to $5 per type range. And then his question of the FPSO financing and how much we can bring that too. But I think sort of notionally, if you think about that as a little more than another dollar per M Yes. In terms of a long term FPSO cost. But again, significant reduction on the basis of decreasing the cost and actually [indiscernible] as Andy pointed out, and then I guess you are prepared producing very cost competitive LNG at that point. Okay. Thanks, Andy. Thanks, Neil. And the follow-up is just around CapEx. The company's guide to a ceiling of $400,000,000 Is there a scenario where it come in lower than that? What are some levers you can pull on to maximize capital efficiency? And that's a $25,000,000 look. I know it's early to talk about $26,000,000 but for investors who are worried about the sustainability of that capital efficiency, are we entering into a harvest mode that could be multiyear in nature?

Good question.

I think Look, I think as I sort of appropriately emphasized and prepared remarks, we are prioritizing free cash flow. I think that's what our shareholders have been looking for. And we're clear about delivering a sustainable free cash flow yield at today's equity price. Of around 25%. That's what we showed on that opening slide. What's that about? We've been through a growth phase. Now it's about rigorous cost management and rigorous capital allocation. We're tackling the overhead with a significant reduction delivered by the year end, which obviously is sustainable going forward. And then on the capital side, as you said, we're targeting $400,000,000 or lower and primarily in 2025, that's capital going into sustaining the base, the Wild Jubilee, the wells in Winstapp. And then then going forward, it's about getting that right balance between growth and cash flow returns. And we believe we've got a portfolio where we can do do that and create the right balance. Operated projects go going forward, some of those are operated. Those growth projects are operated. So we have a greater degree of control In prior calls, we've talked about a a capital profile. Of around 500 sort of we said $300,000,000 to $350,000,000 in the base. 150 to 200 growth.

In '25, we're at the low end of that guidance because we've got limited spend on growth. And we are going to be disciplined around the allocation of growth. It's not about big fine, it's not about harvesting. We can absolutely the business. At $300,000,000 to $350,000,000 And then it's about bringing in those quality growth options at the right pace to sustain the company. And one of the things that does differentiate Kosmos is the quality of its portfolio. Now we've got an RRP on a 2P basis of over twenty years. We've got plenty of organic material to to work on. And now it's about the discipline of getting the free cash flow yield into the right place through delivering the cash and managing that growth portfolio so that we can sustain that free cash flow yield. And that's absolutely what we're engaged in now. And hopefully by some of the points that we've illustrated in the prepared remarks, around the discipline around cost. Therefore, should be confidence that we can deliver that forward. Together with the right pacing of of the growth targets. So absolutely, it's not about harvest, it's not about decline, it's about a sustainable free cash flow yield going forward.

Thank you, Eddie.

Great. Thanks, Neil. Our next question is from Charles Meade with Johnson Rice.

Please proceed with your question. Yes. Good morning, Andy and Neil and the rest of the Cosmos team there.

Andy, I want to go back to your prepared comments about about GTA, not the immediate, but your discussions about Phase one plus I guess you're calling it, Is that I want to understand what that is and the timing. Is that is one plus the increment from the contract of 2.45 to the nameplate of 2.7? Or does that also include some gas into local markets? Or what is it composed of and what's the timeframe for that?

Yes, no, good question, Charles.

I think that the way to think about one plus is fully Utah, fully utilizing all of the infrastructure that we've got in place. In terms of Phase one. [indiscernible] So the FPSO actually has a debottleneck capacity of close to 800,000,000 standard cubic feet, so double what it reduces to today. And that is a relatively low cost, relatively really low cost debottlenecking Then it's about utilizing the rest of the infrastructure we have in place to best move that gas through the existing plant and beyond. So I think you're going to see a component which is increasing the capacity of the current vessel. The gimme that's [indiscernible] And you're going to probably see an increase in the domestic gas take. But equally, those projects are phenomenally economic. Because it's literally at very low capital cost and you have the potential to double the throughput. So that's the journey we're on. And I think in terms of timing we have great alignment now between the NOC ourselves and BP getting on with the technical studies to deliver that And I think as Minister Khaled from Mauritania said, our goal is to accelerate production in the upcoming phase with a target for 02/1930.

By ensuring the local gas market needs are met. So that's the objective, Charles. It's a brand field expansion. It's getting the most out of what we have today. And doing that in a really capital efficient way.

No, that makes sense, Andy. Thank you for that. And then if I could go back to, I think it's slide where you talked about Jubilee and I believe it's slide 12. Can you talk about the question is about you got it to $70,000,000 to 76,000 barrels of oil a day gross. Can you talk about what the assumptions are you have perhaps specific to the FPSO generation and water injection? What assumptions do you have are implicit in that 7,076 for the performance of the FPSO.

Yes. So look Charles, again, it's coming back to what are the fundamentals of Jubilee, yes? What I do want to reemphasize, I think, is Jubilee is a world class oilfield. It's got 2,400,000,000 barrels of oil in place. We're currently carrying recovery in our reserves are probably very around 33%. Run the math on that, we've just produced maybe 55% of the reserve base.

I think the recovery fracture will be in the high 30s at at the end of the day. So we're probably sort of halfway there. [indiscernible] Less than halfway there. So to get to the remaining reserves once you have to do, do. It's fundamentally about good reservoir management, which is fundamentally about getting water in the ground in the right place We struggled the operator struggled in 2024 as we show on Slide 12 with less than 100% voyage replacement. And that has impacted the entry rate into '25. And that's sort of that's why the guidance is sort of where it is. Our objective is to get to 100% voyage replacement through the year. That's one of the key assumptions and we've started the year strongly on that. And it's really about power generation reliability and we work with the operator to address that. Clearly, there's a a piece around facilities uptime. Facilities uptime has been strong. 98%, 99%. [indiscernible] not worried about that. We do have a plan shutdown built in. Which is taking place at the end of the first quarter. Which is sort of impacting 1Q volume. So those are key assumptions. And then the final assumption is the delivery of two additional wells, one producer and one injector The objective started in 2Q with the wells delivering the back end of 3Q.

So I think we've got a good set of credible assumptions there. And the objective clearly is then to utilize the four d that we're shooting this year We started already Then there's the objective to use the information from that that four d to impact the well selection curve for 26.

When we have a full well program So the combination event of sort of building forward with a higher exit rate '25 The additional drilling in 2026 higher quality data from the four d that enables you then to the profile going forward. So we're not sure the reserves here. The issue is making sure we get the proper field management which is fundamentally about boardage replacement water going in the right place. And then selection of high quality and full wells and the delivery of of them. That's great detail. I'll hop back in the queue.

Great.

Thank you. Our next question is from Matthew Smith with Bank of America. Hi there. Good morning, Andy. Good morning, Neil. Couple of questions. If I start with one on Tortugan, if I could.

I guess, firstly, it would be it's interesting to see you talking about three phases.

Or further phases on Tortue again.

Including the Phase one plus So I guess the first question was really whether you've you've detected a clear change in emphasis from the operator or at least a more impetus perhaps, I should say, with those potential development schemes. Then equally, could I just link it back to Phase 1a looks as though it it's potentially progressing. Should we still think about your CapEx go forward run rate should we keep that 400,000,000 in mind? In terms of the ceiling for future years beyond 2025. Or could the Torchi CapEx be incremental to that?

Okay. Yes, Matt. Let's unpack those questions. Sort of the first question is sort of, is there alignment as it were between the operator ourselves and the NSCs on the way forward. And I think, yes, there is. I think BP has always talked about getting the first phase on and results from the wells enabling them then to sort of start to think about the next phases with new data. What I would add, is that initial data from actually flowing the wells from the beginning of the year is actually positive. So that sort of underpins the resource base. That enables you therefore to have confidence in the future phases. I think that is an important piece of data as it were six weeks into the flowback or seven weeks into the flowback. I think we're also clear about being really capital efficient about the next phases. As I said, to To Neil and Charles, we're What we're aiming to do is expand Phase one plus in a really capital efficient way. It's got very little additional CapEx associated with it. And therefore, we're getting an incremental sort of value add from that. Brownfield development. So if you then go to your sort of follow on question, which is okay, well, [indiscernible] how does that work within the council allocation.

I'll sort of just do a rinse repeat of the prior answer, which is to say We've always talked about $300,000,000 to $350,000,000 in the base. 150 to 200 in growth. The 300 to $3.50 in the base sustains the base. That's the focus of the capital spend today. So we're not in harvest mode. It's not declining. And then it's about phasing those growth projects. So we're in the free cash flow yield that we've we forecast in terms of our current equity price that takes account of probably a little more growth CapEx, but certainly within that frame, that we've talked about in the past. So the underlying question is sort of are you off to the races again with a mass capital spend, the answer is absolutely no. And the capital spend on Torture really through the end of this decade is going to be minor. It's going to be about to sustaining the current well count and doing a little bit of brownfield marks, which allows us to get more volume and match Thank you very much for that, Andy.

And then if I could ask a question, just a quick one. Apologies if I missed this earlier, but just around Ghana and Jubilee specifically if I could. So it seems like a pleasing performance in terms of the voidage replacement on the water side of things. Early twenty twenty five. I just wondered if you could clarify like I said, apologies if I missed it, where the production has run so far in January, February? Has the production run rate been similar to the voyage replacement?

Yes. So we're absolutely in the range that we forecast. And of course, the only thing is that if you look at the quarter, you need to remember the we have the downtime in the from the maintenance. So we're absolutely producing within the range that we're forecasting.

Currently, but we'll have a little impact in 1Q because of the unplanned maintenance.

And then we get the benefit of the additional wells starting up in the in 3Q. So everything going to plan in terms of the a range that we've guided to.

Well, thank you very much. Happy to handle Great. Thanks, Matt.

Our next question is from David Round with Stifel. Great. Thanks, guys.

Just a follow-up please on Jubilee, which actually I thought guidance was pretty upbeat given some of the other comments out there. How much of that guidance and let's say your feels like a more optimistic view on Jubilee is down to the results you've seen from voyage replacement. And at what point can we be confident that those issues are in the past? Or is it too early to get carried away there?

Yes. It's a good question, David. I don't want to be over simplistic about it, but if you do the right thing in the right way, you'll deliver the right result. So we know what it is we need to focus.

I would say that the focus for the operator and as it works so far, we we've started the year positively. I think the fundamental issue is just about power generation reliability. We've done a lot of work to identify the vulnerabilities and address those. We actually did a a shutdown at one of the the generators earlier this year. And that's actually going to be beneficial going forward. So I think I feel comfortable that we know what needs to be done. How it needs to be delivered. And we're therefore focused on on delivering the forecast that we've put in place. What are the variables? The additional variable will be the addition of the two wells. But I think we know we've demonstrated in the past a good track record of delivery of those wells. The rig that's coming back to drill is the same rig that we used in the prior campaign. So that sort of derisks that to some degree. I think we've got a very clear set of objectives for the field. We know what it is we're managing and therefore what you should do is hold this to account delivering the things that we said we do in terms of order displacement, timing of the wells, timing of the shutdown, etcetera.

Okay. Thanks, Andy.

Second one then, just I think this is the first time we've heard you since the terminated discussions with Tullow. Can I just get your thoughts there please and whether that's off the table from now on?

Sort of I sort of step back a little from the question and sort of maybe sort of talk about M and A in general. I think we've been through a period of growth for the company and a period of investment. It's now coming to an end We've built a very strong portfolio, I believe, with a strong and long RTP and with it a deep offer of growth projects. And actually, as we've discussed on the call, the challenge is actually making sure that we get the right balance between the free cash flow delivery and the growth. And as you can see in 2025, we're focused absolutely on that. Free cash flow generation. I think as you then sort of turn to to M and A, I think We've constantly always looked at opportunities through sort of two lenses and these to be clear value accretion for our shareholders. And most importantly free cash flow accretion, which Given our focus on leverage reduction, it absolutely has to be part of of any transaction. So So that's what we did on the Oxy deal, for instance. So as you sort of come back to Tello, I think the short answer to you is, are we planning to look at it again?

And the answer is no. You sort of know the background. David. We were at a very, very preliminary stage before we were forced to put out a press release as I end the talks.

We obviously have no intention of using Cosmossa's accuracy the current depressed levels, which was a view shared by our shareholders. Thanks, Andy. Great. Thanks, David.

Our next question is from Mark Wilson with Jefferies. Please proceed with your question. Thank you. Good morning, gents. I'd just like to ask on the timeline you expect 1.5 times leverage level? And then, yes, just remind us of your priorities once you get beyond that point possibly for shareholder returns versus further debt and leverage pay down? Yes. Thanks.

Well, I'll let Neil take that.

Yes. Hey, Mark. Yes.

So again, we've been clear sort of the priorities of generation of free cash flow. That free cash flow we use to pay down debt.

In sort of a regular cadence 2Q forward In terms of getting to around 1.5x, you see that that's probably towards the back half of '26 in terms of where we are. And that was through a combination of debt pay down, and growth in the EBITDAX as sort of production continues to increase. And that's all assuming sort of normalized oil price. And so as we get to that point, then again, I think then the conversation reopens around where's the right priority in terms of further debt pay down and shareholder returns. That's in my mind. We'll revisit that conversation and continue to have it with our shareholders as we approach that in the '26.

Got it. Okay. That's great. Thank you. And then another one moving over to Tortue and this speaks to your overall twenty two year 2P reserve life. You spoke clearly to very little additional CapEx required to debottleneck and otherwise the capacity in the vessel. Could you also speak to the if we assumed running this facility 2.45 or even the 2,700,000 tonne per annum How long would it be before you'd have to drill any wells at all into the Tortue Reservoir to extend at that level. Thank you. [indiscernible] good questions. I go back to what I said earlier, which is the initial sort of whatever it is, sort of seven or eight weeks into the the production data we're getting back to the reservoir is sort of positive. Obviously, we need to simulate all of that and build it into therefore the timing of the next well. So currently, well capacity well exceeds the $400,000,000 standard cubic feet. That we would need to deliver ACQ of around of 2.45. Therefore, the timing of the current of the next set of wells is dependent on the obviously, the connected volume to each well and therefore the decline rate that we [indiscernible] several years away from needing that.

That well capacity. And then if you were to drill, you would probably add sufficient wells then to increase the capacity. Overall above the $800,000,000 standard cubic feet that will be driving the profile sort of in that sort of 02/1930 timeframe.

So I'm not going to give you exact guidance of how many wells in which year. So I think it's slightly early on there. But I think where you can take from that is it's not a significant draw on capital.

The infrastructure is in place in terms of tiebacks to the existing manifolds. So really, it is it is the cost of those individual wells.

Okay. Thank you. I'll hand it over and good luck with that ramp up. Thank you. Great. Thanks, Mark.

Our next question is from Charles Meade with Johnson Rice. Please proceed with your question. Andy, thanks for letting me back in the queue here. You touched on this twice, maybe three times, the performance of the wells, which you've seen in the first seven weeks. Can you talk about that? Is that just you're seeing less drawdown and better flowing pressures or is there something more that you guys have seen in these early days? No, what you're doing in the early days Charles, is basically to understand what you think the size of the tank is associated with each of the wells. [indiscernible] So in terms of actual productivity, we did pretty good DSTs with initial DST and then we pretty good flowbacks extended flowbacks of the wells when we commissioned each of the So we had a pretty good idea of the rate of each of the wells. So if you like, the next piece of data we needed was just actually what do we think the size of the tank is [indiscernible] And I would say we're seeing more positive indications of the size of [indiscernible] Because clearly we've got sort of weeks of production from one of the wells as opposed to just a few days.

Got it. That's great detail. Thanks, Andy. Great.

Thanks.

Since there are no further questions at this time, I would like to bring the call to a close. Thanks to everyone for joining today. You may disconnect your lines at this time and thank you for your participation. [indiscernible]