In the latest earnings call, DNO ASA (DNO.OL), the Norwegian oil and gas company, reported a mixed set of financial results for the third quarter of 2024. Despite a decrease in net income from $35 million to $20 million, primarily due to higher tax expenses, the company saw a rise in revenues and operating profits. Revenues increased by $33 million to $170 million, and operating profit turned around from a loss of $3 million in Q2 to a gain of $31 million in Q3.
The company's production in Kurdistan, particularly from the Tawke license, was a strong contributor to the financial performance, with an average daily production of 7,800 barrels of oil equivalent. DNO also announced it would maintain its annual dividend at NOK1.25 per share, with a quarterly payment of NOK0.3125 per share scheduled for later in the month.
Key Takeaways
- Q3 revenues rose to $170 million, with an operating profit of $31 million.
- Net income decreased to $20 million due to higher tax expenses.
- Production from the Tawke license in Kurdistan averaged 7,800 barrels of oil equivalent per day.
- The company reduced projected operational spending by nearly 10%.
- DNO confirmed an annual dividend of NOK1.25 per share, with a quarterly dividend of NOK0.3125.
- Net cash position remained strong at $990 million, with planned investments of $75 million in exploration and development.
- Operational cash flow for Q3 was $112 million, down from $139 million in Q2.
Company Outlook
- DNO aims to build long-term value through exploration and development in the North Sea.
- The company maintains its production guidance of 80,000 gross for the Tawke PSC for the year.
- Future dividends will be considered based on cash flow from operations and market conditions.
Bearish Highlights
- North Sea production was down due to planned maintenance.
- Net income decreased from $35 million to $20 million, mainly due to tax expenses.
- Disruptions in local sales in Kurdistan due to regional politics.
- Baeshiqa well results were disappointing, leading to further technical evaluations.
Bullish Highlights
- Strong production in Kurdistan contributed to increased revenues.
- Reduced projected operational spending by nearly 10%.
- Strong capital structure with net cash of $134 million and an equity ratio of 40%.
- Robust operational cash flow at $112 million for Q3.
Misses
- Lower working capital adjustments led to a decrease in operational cash flow from Q2 to Q3.
- Disappointing results from the Baeshiqa well require further technical analysis.
Q&A Highlights
- Management indicated it is too early to provide 2025 cash flow guidance.
- Tawke production is expected to decline slightly in Q4 due to local sales limitations.
- Dividend policy remains uncertain, contingent on factors such as export recovery and debt repayment from the Kurdistan regional government.
- Future investments in Kurdistan are contingent on improved market conditions.
- Slow progress in the Norwegian North Sea has been a source of impatience, with a focus needed on the time value of money.
DNO ASA continues to navigate a complex landscape with its operations in Kurdistan and the North Sea. While the company has shown resilience with its strong production and financial performance in Kurdistan, challenges such as regional politics and disappointing exploration results have impacted its outlook. The company remains committed to its dividend policy and is cautiously optimistic about future investments, contingent on market recovery and regulatory developments. As DNO continues its focus on creating long-term value, investors and stakeholders will be closely monitoring the company's progress in the coming quarters.
InvestingPro Insights
DNO ASA's recent financial performance, as detailed in the earnings call, aligns with several key insights from InvestingPro. The company's ability to maintain its dividend, despite the challenging environment, is reflected in an InvestingPro Tip noting that DNO "has raised its dividend for 4 consecutive years." This commitment to shareholder returns is particularly noteworthy given the current market conditions.
The company's strong cash position, highlighted in the earnings report with a net cash of $990 million, is further supported by an InvestingPro Tip indicating that DNO "holds more cash than debt on its balance sheet." This robust financial standing provides the company with flexibility to navigate the volatile oil and gas market and potentially pursue growth opportunities.
From a valuation perspective, InvestingPro Data shows that DNO is trading at a P/E Ratio of 11.34, which is relatively low compared to its peers. This could suggest that the stock is undervalued, especially considering the company's solid operational performance in Kurdistan and its dividend policy.
It's worth noting that while the article mentions a decrease in net income, an InvestingPro Tip suggests that "net income is expected to grow this year." This forward-looking perspective could be encouraging for investors considering the company's future prospects.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for DNO, providing a deeper understanding of the company's financial health and market position.
Full transcript - DNO ASA (DTNOF) Q3 2024:
Jostein Lovas: Good afternoon and welcome to DNO’s Third Quarter 2024 Earnings Call. My name is Jostein Lovas and I am the Communication Manager here at DNO. Today, we will start with a short results presentation, which will be given to you by DNO’s Managing Director, Chris Spencer, and CFO, Haakon Sandborg. After the presentation, we will open up for questions in a Q&A session. Please note that the Q&A session is for investors and analysts. Media requests will be dealt with separately. During the presentation, the microphones of participants will be muted. If you want to ask a question in the Q&A, please click on the virtual hand on top of your screen. When you are selected, you will be notified on your screen that you are allowed to unmute, after which you must remember to unmute yourself. It could be nice if you introduce yourself before asking your question. And with that, let’s start the presentation. I’ll hand over to Chris.
Chris Spencer: Thank you, Jostein, and good afternoon, everybody. Welcome to DNO’s Q3 2024 interim results presentation being broadcast from our head office in Oslo, Norway. First slide, please. So, Q3 was a solid or another solid quarter for the company, I should say, increased revenues on the back of strong production in Kurdistan. North Sea production was somewhat down, but liftings were up and the North Sea production was reduced due to planned maintenance. So nothing unforecasted there. Also in Kurdistan with the continued local sales during Q3, we were able to tweak the prices up a little more. And that also contributed to the revenue increase during the quarter. On the appraisals and exploration side, the one event during Q3 itself was the Heisenberg appraisal well which is the second appraisal well we’ve driven in Heisenberg this year. And as with the first, we’re pleased that that has confirmed the resources that we have in that discovery. Clearly with that performance, we ended the quarter still with a very strong net cash position. And with the, particularly with the reduced activity levels in Kurdistan, we are going to be spending less this year than we thought at the outset. And therefore, we’re cutting our guidance to the market on projected total operational spend this year by, what, just under 10%. I’m pleased to say that we are maintaining the dividend of annual – which is at the annualized rate of NOK1.25 per share per year. This NOK0.3125 is a rather complicated quarterly version of that. As we mentioned in the last quarter, we increased that by 25% with a view to that being a new sustainable level of dividend. And so we’re pleased that this quarter we’ll maintain that level. Next (LON:NXT) slide please. Focusing a bit more into the North Sea, as we touched on in the last couple of presentations, we’ve been working apart to add production to the attractive portfolio of discoveries and developments that we have in the North Sea. And in the first half of the year, we were able to pick up a couple of bolt-on acquisitions that is giving us a nice short-term trajectory on our projected production, which is illustrated on the chart here. Those acquisitions are combining with development of the portfolio we had prior to them with Trym which should be coming on as soon as the beginning of 2025. And that is connected into the Danish infrastructure of Total (EPA:TTEF), which has suffered some delays. And now we understand that the ramp up is well on its way and Trym will follow as part of that. In addition, we’re expecting the Andvare field which is adjacent to Alve up in the Norwegian Sea. They come on stream during next year and Verdande which was part of the transaction we did in – announced during the summer, or completed during the summer where we bought some assets from Var Energi. And that should be coming on late ‘25, maybe early ‘26, I believe. And again, you see the nice ramp up we’re expecting over these 3 to 4 years. Then in ‘27, our Bestla project, which is the tieback to Brage actually is planned to come on stream. The little teaser with the gray is just to flag that, of course, we have as regular viewers, if I can call you that, no, we have lots and lots of reserves in our contingent resource category, and there’s a huge amount of effort going in to try to mature those as quickly as possible. Trym South is a small one, which we may be able to get on by 2027, but we hope that is a prelude to much more. The final point we wanted to highlight to the market is addition – building further on the competencies in our North Sea organization in Stavanger with a second production phase at operatorship. Again, that’s a result of this transaction we did with Var Energi, and we have taken over operatorship of the Marulk field up as one of the tiebacks to the Norne FPSO. And we’ve got some ideas there, in particular for drilling, which we are now working on with the partnership. That is then being brought into the organization alongside the Trym operatorship, and that’s realized some nice synergies for us in our organization in Stavanger and given the team more interesting tasks to deal with. Thank you, Jostein. Over to Kurdistan, I believe. Yes. So as I touched on in the first slide, we’re very pleased with production levels we reached during Q3 at the Tawke license. We mentioned in the last quarterly report that we had these 3 wells that we had drilled but not completed, and we suspended them when the Iraq-Turkey pipeline was shut. We suspended operations on these wells. In Q2, with the stabilization of the local sale situation where we were making positive cash flow from that arrangement, we decided to invest in completing those specific wells. And during Q3, all 3 wells were on for the entire quarter. And as you see, they made quite a significant difference to production rates from the license, some 7,800 barrels of oil equivalent on average across that quarter. We also continue to run workovers and various other types of well interventions that are what you might call barrel chasing continuous work that goes on in most oil fields. And our teams have done a great job there, and that contribution from that represented some 3,400 barrels a day on average through the whole quarter. So again, with those – that’s just to illustrate with those two bullet points, the difference it makes with the activities and the funding that we’re still dedicating to that PSC. And that is how we got to that production increase of 6% quarter-on-quarter. In addition, I should also mention that our production operations team did a fantastic job in terms of uptime. I think there must be record uptimes that we achieved during August and September. So my thanks to them and all of our well intervention team and drilling team for these contributions to the quarter. Over at Baeshiqa in our other PSC in Kurdistan, we have completed testing on the Baeshiqa-3 well. We’re going back to Baeshiqa-2 well we drilled a couple of years ago to do some further testing. The Baeshiqa-3 development well has not come in as we were hoping for. And so as we say here, we are now having to consider next steps. We are also considering those next steps in the light of, of course, the – that we’re having to justify investments based on local sales currently. And then having pointed to the investments that we’ve been making in the region, whether it’s in Baeshiqa or in Tawke, we also just remind our shareholders and other stakeholders that, of course, it’s an uncertain world that we live in down there. If for some reason there is disruptions on the revenue side of our business, DNO has always been ready to cut back on costs and activities further. And indeed, we are ready should we need to do that again, which we hope, of course, we won’t have to. Equally, if positive developments come along, we have put over, over the accelerator as well and would be more than happy to get back to drilling and so forth in Tawke if the environment allowed for that. Part of that environmental piece, the discussions we have ongoing with our hosts, the Kurdistan Regional Government related to the money they owe us from oil that they didn’t pay for during the period 2022 and 2023, still a significant amount of money for DNO and our partner, Genel, some $300 million or so. I’m sure the exact number is in our report and obviously an important focus for the company, our Board, and I’m sure our shareholders and bondholders. Thank you. I will then hand over to Haakon to take you through the financials.
Haakon Sandborg: Good. Thank you, Chris, and hello again, everyone. I’ll do a brief review also of the financial results for the third quarter, and I’ll start with these key figures that you see on the screen. To the left of this slide, you’ll see that our Q3 revenues are up by $33 million from the second quarter. That comes as our North Sea revenues increased by $31 million to $111 million. That was mainly on higher sales volumes in the third quarter. And in addition, we had higher gas prices in the North Sea that also contributed to the increase in our third quarter revenues. With the higher lifted volumes, the North Sea underlift position that we reported for the second quarter this year has thereby changed to a minor net overlift in Q3. We also had some increase in our Kurdistan revenues up to a level of $59 million in Q3 on higher net entitlement volumes and also higher realized oil prices. If you look at the cost side, our cost of goods sold are up in the third quarter. That’s mainly due to the higher North Sea sales volumes and overlift. But we also have, on the other side, the expense exploration was up because we had expensed costs relating to the 2 exploration wells that are – the names are shown on this screen. But we had no impairments, no material impairments this time. So the operating profit thereby increased up to $31 million from a loss of $3 million in the second quarter. As we go further on the P&L statement, the net finance expense was lower in this quarter, supported by FX gains and also a small positive revision in the book value of the KRG arrears. For tax expense, so we had a significant tax income in Q2 from the Arran acquisition, as you may recall. But this quarter we have a tax expense of $8 million. And this explains much of the reduction this change in the tax expense line explains much of the reduction in net income from $35 million to $20 million in the third quarter. But not shown on this slide, but on a year-to-date basis through Q3 this year, revenues are stable or a bit up at $490 million from the same period last year, while the net income has strengthened significantly to $71 million, mainly on the lower net finance and lower tax expense. The next, Jostein. So we’re moving to quarterly cash flow. And again, we have a very solid operational cash flow at $112 million for Q3. However, it was a bit down from $139 million in Q2, and that was basically due to lower working capital adjustments this time in the third quarter. We had no NCS tax payments or tax refunds in Q3, and we will only have minor Norway tax payments, if any, in the fourth quarter of this year. I should mention, however, that if you look ahead and given the substantial activity that we have in exploration and development, we do expect significant tax refunds for Norway in the fourth quarter of next year. Q3 investments, we had $75 million of organic exploration and development investments, mostly spent on the North Sea assets. And in addition, we spent a net $24 million on license acquisitions in the Norne area. Our Q3 finance outflow of $37 million was mostly for the dividend payment of $29 million that we made in August and also for net interest expense. On this basis, the net cash reduction was limited at $25 million, and the cash balances thereby remained largely unchanged at $990 million at the end of the quarter. A key point to be made here is that we again are mostly cash flow funded on both significant investments and also on the dividend in the third quarter. Next. So again, with these high cash balances, our capital structure remains very strong. We have net cash at $134 million, and we have a solid equity ratio at 40%. If you ask about the year-to-date reduction in our equity ratio, this reflects several transactions with effect on the balance sheet. I can mention the new long-term bond debt of $219 million on a net basis. We have made 2 North Sea acquisitions, and we have quarterly dividend payments and others with effect on the equity levels. And I know it’s been mentioned already, but for our dividend program, we are pleased to announce the quarterly dividend payment now at NOK0.3125 per share, which is equal to around $28 million to be paid later this month. So in sum, we are pleased to deliver another quarter with, we think, very good operational and financial results for DNO. And as we have also highlighted today, we are clearly also building long-term values and financial strength through our successful North Sea exploration and development program. So we have come to the end of our short presentation today and happy now to enter into a Q&A session. Jostein?
A - Jostein Lovas: Yes. Let’s see. I think we have a couple of questions already. Let’s hear of – I think the first one that wanted to pose a question was Stin Smith. Stin Smith, I think you are – you can go ahead and pose your question. Remember to unmute yourself. Okay. Maybe there was a mishap here. Okay. We’ll go over to Øyvind Hagen. Please go ahead.
Øyvind Hagen: Can you hear me?
Chris Spencer: Yeah.
Haakon Sandborg: Yes.
Øyvind Hagen: Excellent. So I just wanted to ask about the wording that you have on the Kurdistan slide, where it seems as you are, call it stepping up the wording when it comes to reducing activity levels. I’m just curious what’s driving the more harsh wording this time around? And is it in any way connected to the news that we saw a few days ago with the potential for budget amendments on the federal level in Iraq?
Chris Spencer: Thanks for the question, Øyvind. I’ll have a go at that, Haakon. I guess you’ll let me take that one.
Haakon Sandborg: Yes.
Chris Spencer: So it’s multifaceted. I think there has been some disruption to local sales, both before and after the regional election in Kurdistan. And if you follow the sector, you will have read about that in the media. So, media suggests that those disruptions are very much related to internal Kurdistan politics. And for us, it’s a great shame having worked with many other stakeholders over the past 18 months to establish a reliable mechanism for local sales that have given us comfort to bring on the new wells that I mentioned and so forth. It was disappointing for us that I mean, for political reasons that those sales became disrupted. Now just in the last couple of days, we’ve seen signs of that market getting back to normality. So we’re hoping for the best on that as to – and I guess that would be the main driver behind the comment there on the slides. Whether what becomes from the announcement from Baghdad in the last couple of days, we will wait to see. But I think it was the development in the local sales market that led us to put that point in the presentation.
Øyvind Hagen: Excellent. And if I could just follow up quickly, how big has the impact been on the local sales disruption so far in Q4 for you guys?
Chris Spencer: It’s very up and down. It’s not been that dramatic, but we felt the need to adjust our guidance for the year. So as you see, we haven’t changed the guidance this quarter, which means that we’re standing by the guidance of 80,000 gross for the year for Tawke PSC.
Jostein Lovas: Alright. So I guess the next question goes to Nikolas Stefanou, who will be allowed to ask next question.
Nikolas Stefanou: Gentlemen, its Nick Stefanou here. Can you hear me well?
Chris Spencer: Yeah.
Nikolas Stefanou: So I’ve got a couple to ask. Both of them are on this announcement about Baghdad in the other day. So the first one is, I just want to understand how enforceable is it for Schooner to just take over production because at the end of the day, you, I guess, in Kurdistan and the [indiscernible] has worked well. But can [indiscernible] take over the production there? That’s the first question. The second one is on the $16 compensation. Is that something that satisfies you and APIKUR in general? We haven’t seen a statement from APIKUR. So just wondering what you think about that. And then just a clarification, would this $16 be $16 per working interest barrel plus your OpEx and CapEx or is it just $16 flat regardless of the cost base per working interest barrel? Thank you.
Chris Spencer: APIKUR, that I will take those as well. Well, let me start by saying that a number of the questions you have are questions that we have. So I mean, we think that, that announcement by Baghdad a couple of days ago has indeed for us raised as many questions as it’s provided answers. Now clearly, that they are – they’ve announced a proposal to amend the Iraqi budget law. And our position is that that’s clearly a matter for government. That’s not a matter for us. And whatever views we might or might not have on it, it’s just not our business. Both DNO and APIKUR have been clear for the 18 months or so that things are to be shut, but in order for us to entertain putting oil back into the Iraq-Turkey pipeline for export, we need to have surety of payment for the past debt that I touched on in the presentation as well as future sales. And we require that our internationally recognized contract is honored. Now whether this proposed amendment to the budget or law gives the governments enough room to fulfill those conditions, we are yet to hear. So we’re looking forward to hear from our host governments how that bridge – how that will be bridged. As yet, we haven’t heard on that. So I can’t really provide any more answers. Similarly, you asked a specific question about SOMO. Again, I don’t really think that’s a point for DNO to answer. You’ll have to ask SOMO or the Ministry of Oil whether they have that power. Again, we have a contract – a clear binding contract, which sets out the rights and obligations for DNO. And we’re also very pleased that repeatedly through this and previous crises, the Turkish authorities, including the Prime Minister, have stated very clearly that they will stand by the contracts that they have with international companies such as DNO. So I hope that’s of some help to you, Stefanou.
Nikolas Stefanou: Yes. I appreciate these are difficult questions [indiscernible] so yes, I didn’t really expect you’d be able to kind of like provide some of the answers. [Indiscernible] it’s just hard to ask them anyway. Then another kind of like a follow-up question, I just want to get a sense of the future free cash flow generation based on the production outlook you have offered for the North Sea and CapEx there. Because for the past couple of quarters, free cash flow generation has been just enough to cover the dividend. So just wondering in the next quarters, especially as production from North Sea ramps up, how we get a sense of how cash flow trajectory could move forward? Thank you.
Haakon Sandborg: Yeah. Maybe I can comment on that. Yes, well, we’re seeing that, Nikolas, that our North Sea production is coming up. We’ve seen some – the prices, of course, are very important. We have seen some improving gas prices now. So that’s helped us. We do have a fairly good operational cash flow coming out of our North Sea business even now with the current production levels, and they will be coming up. But of course, we also have then our exploration and development spending. Remember that we are covering these on a sort of a 12 to 18 months basis before you get a lot of the expenditures back as tax refunds. So as I mentioned when I was talking this afternoon, we will get a significant tax refund at the end of next year. So I think we’re in a good shape to carry the initial investments and then you get reimbursed, say, roughly 78% on the major North Sea Norwegian spending. So we feel that we have a good control of this on a cash flow basis together with the cash balances and the very strong balance sheet that we have in DNO. We also have support from our RBL banks. So that’s taken care of, I think, for the Norwegian and the North Sea expenditures also on the U.K. side. And you will see that over time, Kurdistan has provided very strong cash flow to the group to maintain our low lifting cost, and we have made strong margins, strong cash flow even with half of the Brent prices that we get – have been getting in the local market. So I think all in, we have a good grip on this situation and lots of extra headroom from the factors that I have mentioned in terms of how we will handle our future spend and our growth trajectory going forward.
Nikolas Stefanou: So, can you provide maybe some guidance on 2025 cash flow or is it too early to ask?
Haakon Sandborg: That’s too early, yes, Nikolas, we will come back. So, thanks for the question, but we will revert to you.
Nikolas Stefanou: Okay. Thank you so much for the color.
Jostein Lovas: Okay. The next analyst to ask a question that will be Teodor Sveen-Nilsen. Please remember to un-mute yourself.
Teodor Sveen-Nilsen: Alright. Can you hear me?
Jostein Lovas: Yes.
Teodor Sveen-Nilsen: It looks like we are semi to dive [ph] on your site, but yes, this is Teodor Nilsen, Sparebank 1 Markets. Three questions from my side. You mentioned that the Tawke production was higher in Q3 compared to Q2, but probably it will decline slightly in Q4 because of like just limitations on local sales. Could you comment on what’s the Tawke production right now? And next question that is on dividends, I appreciate that you need to repeat your dividend guidance for this quarter. But looking into 2025, how should we think around dividends? Should we assume that will be paid as a percentage of earnings or based on a certain percentage growth from 2024? And last question, that is on working capital, it was also in this quarter some release of working capital, could you just comment on what that’s related to and when you expect that to be reversed? Thank you.
Chris Spencer: I can try the first two, Haakon, then hand over to you.
Haakon Sandborg: Yes. Thanks.
Chris Spencer: On the production side, Teodor, obviously it’s very important numbers for us. And clearly, if you just figure out the average year-to-end Q3 and then that we are not increasing our production guidance, that suggests that indeed, Q4, we are expecting to be a little lower than Q3. And that’s the guidance that we are giving on production. When it comes to the dividend, as you know, we – the Board take account of a number of factors when deciding to set the dividend. We have the intention for it to be sustainable, which is particularly with the uncertainties around our Kurdistan business, make that difficult to sum up in a neat dividend policy as some other companies express that. For example, of course, we hope that exports will come back. That will have a huge impact on our positive cash flow. Secondly, we fully expect that the $300 million of debt that I touched on will be repaid by Kurdistan regional government. They have always settled debts in the past. And again, if that were to happen next year, another huge impact on the corporate cash flow. So, to sum up a dividend piece policy in DNO sort of in one sentence or something is, I don’t think realistic. And hence, the Board take account of all these factors, also our investment profiles in the North Sea when landing the dividend. But as we have said over quite consistently in the last year or so, we have pivoted towards our shareholders whilst respecting our bondholders, and we are hoping that all investors are now getting a decent return for their investment in the company. Haakon, you might wish to add something on the dividend and then move on to the other question.
Haakon Sandborg: No I think the dividend has been covered in a good way. I think the other one, you asked about the working capital and you call it release or I call it sort of a positive adjustment or a change to cash flow from working capital movements. There have been several things happening over this year. We have had the North Sea situation with the different licenses and the working capital adjustments within the partnerships. We are talking about prepayments during under-lift that we have with our contracts that will move our payables up and down. And we also have different situations in our sales and listing arrangements in Kurdistan that we are currently doing with the local sales. So, we will see movements in especially on the trade payables side relating to the sales arrangements in Kurdistan that have been adding to net positive working capital change over the last quarters. You ask when will that be reversed that you said, well, we are looking at that, and we don’t have a clear exact answer on when this will be reversed, but we have a position that we wish to discuss with the KRG on the working capital side. So, that’s one thing that we are also working on. So, it’s a combination of things that, as always, move our working capital up and down quite significantly, both in the North Sea and Kurdistan. So, I don’t think I will be more specific than that, but that gives you an idea of what we are looking at.
Jostein Lovas: Go ahead.
Teodor Sveen-Nilsen: Okay. Thank you.
Jostein Lovas: So, Tom Erik Kristiansen, the floor is yours. Please un-mute.
Tom Erik Kristiansen: Thank you for taking my questions. Tom Erik from Pareto, I have three questions. Firstly, you decided now to be more vocal on what you need to see or not see in order to sanction new investments in Kurdistan and you move on drilling out in time. Is that due to the company seeing progress on the negotiations and something that could happen there and therefore feel that this is the right time to be more public on your demands because I guess this is thoughts you have had for a while. So, that’s the first question, this is why this is coming now. Secondly, if you do not drill new wells at the Tawke block, what kind of decline rate should we be thinking of going into 2025 on production there? How long can you maintain current levels? And then the last question on Norway, you commented on the progress towards the development concept on the Troll-Gjøa area. Is there a big challenge with different blocks and different incentives given ownership structure? And if so, is that something DNO can take part in resolving, or how do you look at that situation? Thank you.
Chris Spencer: Yes. I am not sure I got all the questions, majority, I can start with the first point on, I think, Tom Erik, you are saying that you didn’t feel we have been as vocal on setting out our requirements for restarting exports, is that the first point?
Tom Erik Kristiansen: No. Specifically, as you are today, is all new investments in Kurdistan, including drilling of wells should restriction be applied to pricing, revenue split advanced payments, those kind of things is a bit more outspoken in public, but probably something you told KRG before as well. So, why is this kind of a bit of a new communication now? Is that because you see some progress on the exports negotiations? Is something actually happening now, do you think, or is it just a talk as we have seen in the past?
Chris Spencer: Yes. Well, I think I touched on this in an answer earlier that I think the main motivation for that comment related to the disruptions in the local market that we have seen. Recently, which reportedly have been due to political squabbling in the region, which we think is a pure reason to disrupt the oil industry in a difficult time. So that, I think is one of the prime motivations. But of course, it’s just a reminder, it’s probably a timely reminder with that announcement from Baghdad is there – are we going into a period of more uncertainty, we hope not. We have navigated such periods before. But of course, we always, as we like to say, have one foot on the brake and one foot on the accelerator. So, if the investment climate is put into a good place and past debts are dealt with, we will be drilling as we always have done. We are a long-term partner with the region. And once the environment is right, as you have seen time and time again with DNO, we will be back drilling. At the same time, we have the other foot poised over the break, such that if things get more difficult, we will cut back costs and mitigate the exposure for our shareholders. So, I think that’s with the second part of the question...
Haakon Sandborg: The decline, well, I think that’s a great – a very interesting question for us all at the moment, because I have been very surprised how our team has been able to maintain production at the Tawke PSC this year without drilling. Now, in terms of decline, we put out the numbers in Q3 that were associated with the new wells. So, you can calculate the decline of the prior wells. The variable is the well intervention and work-over activity, which I also highlighted through which the team is doing a tremendous job at maintaining, minimizing decline rates. Troll-Gjøa area, so I think the Troll-Gjøa area, indeed, all of our developments in the North Sea, there are multiple factors at play. Sure, the different owners is part of that, is that a decisive issue, I doubt it. It’s a contributor. If that were the decisive issue and there were solutions available with DNO, we will most definitely be playing a role. We are trying to play as constructive role as we can to move these things forward. And we are impatient, we feel that in the Norwegian sector in the North Sea that it is very thorough work done at looking at all of the options available for all developments, but we feel that perhaps more respect should be paid to the time value of money, rather than trying to optimize the visible concept, one should also have an eye on the clock and bear in mind that all the companies have already sunk quite considerable investment into those blocks in terms of exploration and appraisal. And that’s the impatience that DNO has. But – and we work hard to bring that voice into all our license groups in a constructive manner. We do a lot of technical work in-house to help move discussions forward. And we are working very closely with all our partners as well as the – I can’t remember the new name for NPD, Havtil, is it, no. Norwegian Petroleum Director, sorry, the new title that escapes me for a moment.
Jostein Lovas: NOD.
Haakon Sandborg: Norwegian Offshore Directorate, thank you, Jostein. Apologies to anyone who works there for my forgetfulness. So, we are determined to move these things forward, and we will keep working in that manner. And indeed, if interest realignments are part of that, we will be at the table and working to make that happen.
Tom Erik Kristiansen: Thank you very much.
Jostein Lovas: Yes. It looks as if Stin Smith [ph] wanted to ask his questions. I will give you one chance if the sound works. Please un-mute yourself. If that still doesn’t work, then we will take the last question, and that will come from Øyvind Hagen again, and we will wrap it up after that, I think. So, please go ahead.
Øyvind Hagen: Excellent. Just one quick one on Baeshiqa, how should we think about that going forward, it seems like there was quite a bit of a disappointment with the well.
Chris Spencer: Yes. I think it’s fair to say that the well was not what we hoped for. And so we need to look at how to take that development forward. The results are still pretty fresh. And so we haven’t landed our conclusions yet. I think I mentioned previously, it’s also a factor of local sales, whereas, of course when we went into the FTP, we were assuming exports to international markets. So, we have some – we have got some technical work to do and both the technical work and the development of the business environment will feed into our thoughts as we prepare for our 2025 work program and budget on that block.
Jostein Lovas: Okay. With that, I think we are – it’s about time to end this earnings call, and thank you all for taking part and for the good questions. And we all look forward to see you again next quarter. That will be next year. Okay.
Chris Spencer: Thank you.
Haakon Sandborg: Thank you.
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