DNO ASA (DNO.OL), the Norwegian oil and gas operator, has reported a significant increase in its second-quarter net profit, doubling from the previous year, and an increase in production in both Kurdistan and the North Sea. Celebrating the 20th anniversary of the Tawke PSC, a cornerstone of its Kurdistan business, DNO is also advancing its operations with a new well in the Baeshiqa license and a gas condensate discovery in the North Sea. The company's financial health is robust, with a 25% dividend increase and a strong cash position, signaling confidence in its growth strategy, primarily in the North Sea.
Key Takeaways
- DNO's net profit has doubled, and production has increased in Kurdistan and the North Sea.
- The company celebrates 20 years of the Tawke PSC in Kurdistan and continues to explore and develop in the region.
- DNO has made a gas condensate discovery in the North Sea and completed the Arran acquisition.
- A new five-year bond has been issued, and dividends have been raised by 25%.
- The company maintains a strong balance sheet with $940 million in cash and $158 million in net cash.
Company Outlook
- DNO is focusing on growth opportunities in the North Sea, particularly in Norway, with a smaller focus on the U.K.
- The company is looking for opportunities for inorganic growth and is ready to pursue M&A opportunities in the North Sea.
- In Kurdistan, the export issue remains unresolved, but the company is focused on debt recovery.
- The company remains conservative in its financial strategy and aims for a sustainable dividend level.
Bearish Highlights
- The export issue in Kurdistan continues to be deadlocked, which could impact future profitability and operations in the region.
Bullish Highlights
- DNO's strong financial position allows for unconditional deal completion, giving the company an advantage in the market.
- The company's cash position is well above their previously stated minimum, providing flexibility for debt management and M&A activity.
Misses
- There were no specific misses mentioned in the earnings call summary provided.
Q&A Highlights
- Chris Spencer confirmed the company's production guidance of 80,000 barrels per day.
- The increase in base dividend is attributed to DNO's strong balance sheet and steady production outlook.
- Spencer highlighted the possibility of special dividends or share buybacks in case of debt repayment from the Kurdistan government.
- The company's stance on the PSC terms in Baghdad is to uphold existing contracts, with openness to negotiation under the right circumstances.
DNO ASA's second-quarter earnings call underscored the company's robust financial health and strategic focus on the North Sea. Despite challenges in Kurdistan, DNO is poised to leverage its strong cash position to pursue valuable M&A opportunities and sustain its growth trajectory. The company's commitment to maintaining a conservative financial strategy while rewarding shareholders with increased dividends reflects confidence in its steady production outlook and long-term prospects.
Full transcript - DNO ASA (DTNOF) Q2 2024:
Jostein Lovas: Good afternoon ladies and gentlemen and welcome to DNO's Second Quarter 2024 Earnings Call on this very pleasant day in August. My name is Jostein Lovas, and I'm Communication Manager here at DNO. The plan for today's call is to start with a brief presentation, which will begin by DNO's Managing Director, Chris Spencer; and our CFO, Haakon Sandborg. After the presentation, we will open up for questions in the Q&A session. Please note that the Q&A session is for investors and analysts, and any media requests will be dealt with separately. During the presentation, all other participants in this call will be in a listen-only mode. [Operator Instructions] And with that, let's start the presentation. I will hand over to Chris.
Chris Spencer: Thank you very much Jostein and once again welcome to everyone joining this call this afternoon here in Oslo. Let me just start by explaining the picture that you are looking at. In DNO, we had a wonderful milestone during the quarter, actually, on the 20th of June. In 2004, some 20 years ago, the Tawke PSC first edition, and I will call it that, was signed in -- and is from that that DNO has built the tremendous business that we have down in Kurdistan. It was a wonderful occasion. I had the privilege of being down in the region and we had some wonderful events and also together with our partners in the Kurdistan regional government and the Ministry of Natural Resources, who we obviously worked with very closely throughout those 20 years. Thank you. Turning to the quarterly report. As we said in our stock exchange announcement this morning, another set of solid quarterly results, a doubling of the net profit, which Haakon will go into in a bit more detail later, since we have a couple of accounting effects we've had to deal with this quarter. Underlying all of that was an increase in production both in Kurdistan and the North Sea. The West Africa pretty stable and West Africa continues just to be a nice, stable cash flow to the group. So, I'll come back to Tawke production a bit more on the next slide. The other big event down in Kurdistan is the well that we're drilling on the Baeshiqa license. And there we reached total depth TD during the quarter, and we're just about -- now about to start right at the beginning of that 72-day testing program. Turning to the North Sea, we had another discovery in our Troll and Gjøa area, which we have a slide on in a few minutes' time. And as we've previously announced, that Arran acquisition completed during Q2, and we signed the Norne area deal in Q2, which would complete in Q3. Excellent additions to the portfolio and giving us a nice outlook in terms of production in the North Sea. Probably the biggest event of the quarter other than the 20-year celebration in Kurdistan, of course, was the issue of a new five-year bond. We're very, very pleased with the response we had from the market. On that we've traditionally been very proactive in refinancing our debt and this is an example of that. We upsized from the original $300 million to $400 million and we've achieved an excellent coupon rate, in fact it’s the lowest margin between the sort of prevailing market interest rates and the nominal rate that we've had on DNO bond. So, we're extremely pleased with that result and further enhances an already strong balance sheet. And that's reflected with the exit with $940 million of cash on the balance sheet and $158 million in net cash, which is actually pretty similar, as Haakon will show it to you at the end of the previous -- or the last few quarters, really. Now, with all that background, I'm pleased to say that our Board has decided to increase the dividend by some 25%. The dividend was reintroduced back at the late -- in late 2021. This is the first increase since then. And as we've said in our announcement, that's because the Board, when it makes a move on dividend, it wants it to be a sustainable move. Thank you, Jostein. So, touch briefly on the main messages from Kurdistan. Well, now we've established the -- through Q1, we effectively feel we've established the local sales as a consistent method of monetizing our oil, albeit at lower prices than we would wish. And on the back of that, we increased spending and we should have probably said here increased quarter-to-quarter, quarter-on-quarter stepping, so in Q2, we increased a little bit relative to Q1 and to optimize the production in the Tawke license. And I make that comment because now, as we say later on the slide, we're actually going to mobilize a rig to go and drill the first new well on there since early 2023. And thanks to the excellent performance of our Kurdistan business unit team, we've had a real laser-focus on costs this year. All of this new activity we're going to be able to deliver within the budget that we had set for 2024 for the Tawke PSC. So, that's why may be a distinction between increased spending numbers just quarter-on-quarter not increased compared to what we thought we would not spent. Having said that, there will be a slight rejigging from OpEx to CapEx, but the total budget for the year remains the same, whereas the production is going to come in probably around the 80,000 mark through the whole year. We were a little under in the first half, 78,000, I think, on the operating level, and we hope to be a little over in the second half. So, a great performance from the teams in the field in Arabia and support teams in Dubai. I touched on this earlier, the export pipeline regrettably remains shut. However, we have now got a pretty well machine where we're selling to local traders. We've got the prices into the upper $30s per barrel, which is obviously low compared to Brent and international pricing. However, we had payment in advance to our international bank accounts. So, we have removed the payment risk that we used to have from time-to-time because --. And then finally, we're all very excited by the Baeshiqa-3 well. Great performance from our drilling team to get down to TD on this well. And as I mentioned a few minutes ago, we're just starting that testing program these days. I hope to have something to report next time we have one of these calls. Thank you. Turning to the North Sea, and we have two wells that we drilled so far, Hummer Heisenberg we told you last time around. And last quarter, we had the Cuvette, where these are smaller -- which was a lovely success, gas condensate discovery right in the heart of this crooked area. And with -- I don't know if it key to get this developed tied back. So, these should be -- although it's a smaller than some of our other discoveries, these should be very valuable barrels. So, they're actually -- is actually gas is valuable equivalent, I should say. We're a little disappointed with the rig schedules that have been against us from Kjøttkake and Horatio, but that's where it goes in the North Sea sometimes we are really looking forward to those wells, but they slip now probably into 2025, maybe one might start in December. That has the flip side, of course, of reducing our expected exploration spend this year, but it just moves into the next calendar year. But importantly, after a disappointment in the first half where we had both the delay to the Trym start-up on the back of the well-publicized delays to the restart of the Danish Herald System, but also were delayed to our Andvare development. Now looking ahead, those give us a nice -- should give us a nice bump in production as we move from now into 2025, and that is also complemented by the two acquisitions that we've done that I touched on the previous slide, which we'll be adding to our North Sea production as well. So, although we have a traditional summer shutdowns in one or two of the fields right at the moment, the outlook for North Sea production over the next few quarters is very strong. So, those were the comments that I had from the operational aspects. I hand over to my colleague, Haakon, to take us through the key financials.
Haakon Sandborg: Yes. Thanks, Chris, and hello, everyone. Right. So, I'll do a brief financial review for the second quarter. And as usual, let's start with these key figures. As shown here, revenues dropped by $46 million to $137 million in Q2 and this was mainly due to lower sales in the North Sea coming from lower lifted volumes in the quarter. North Sea revenues thereby dropped by $43 million to $80 million in the quarter. In addition, our Kurdistan revenues declined by $3 million to $57 million, and that was basically on lower net entitlement production, but with an offset for higher oil prices in the period. The operating loss of $3 million that you see in this quarter is partly driven by the lower North Sea revenue due to the lower liftings. But it should be noted that we thereby are building an underlift position in Q2 that will be lifted and converted into revenue in the following quarters. In addition to explain that operating loss, we had the following the Arran acquisition. We recognized a deferred tax asset of $62 million from U.K. tax losses, and that in turn led to a $41 million impairment of goodwill. Together, you should see that these two entries have a positive impact of $20 million on net income, though they have been recorded in different lines in the profit and loss statement as required by IFRS accounting rules. Also, we had an increase in exploration expenses reflected from higher seismic costs in this quarter. Next one, please. When we move to cash flow, you see that we had a good increase in operational cash flow this time to $139 million in Q2, up from $100 million in the first quarter. Now, net working capital change, admittedly had a positive impact of $62 million in the quarter, explained by an increase in trade and other payables. And the key contributors here were prepayments from customers under our sales contracts in the North Sea as well as a positive working capital contribution from our sales and lifting arrangements from the Tawke license. Otherwise, to be mentioned, we had no NCS tax payments or refunds in the first half of this year and based on the current exploration program and development CapEx, we will only have a minor Norway tax payments, if any, in the second half of 2024. We had high investments over $121 million in Q2, mostly -- well, partly due to the acquisition of license interest in the Arran Gas field in the U.K. at $60 million, combined with $61 million in organic development CapEx, mainly for the Berling, Brage, and [Indiscernible] licenses in the North Sea as well as we had some capitalized exploration mostly for the Cuvette discovery. So, this means that we are following up on our prior strategy of building significant new North Sea production, both through extensive organic development, but also through M&A transactions. And under finance, we had a net inflow of $318 million, driven by the new bond placement in the quarter. I'll discuss that a bit further on the next slide. We also paid a quarterly dividend of $23 million in Q2 under finance items. It should be in order that we have a strong free cash flow in Q2 at $76 million if you net out the Arran acquisition. So, on this basis, we saw an all-in increase of cash to -- over $337 million, up to quite a high level of $943 million at the end of the quarter. Next one. For our capital structure, and Chris touched on that, but we have for many years followed a conservative financial strategy of quite proactive management of debt maturities and maintaining a strong balance sheet. So, in line with this strategy, we completed another successful $400 million bond placement in May. And I think maybe you took some of my points, Chris, it's well-received, oversubscribed, and with a very competitive rate compared to some of the other placements in the period. And maybe more importantly, this is a five-year bond, and that prudently extends the maturity profile of our interest-bearing debt. And concurrent with the new bond, we also bought back $50 million in our existing DNO04 bond that reduced the outstanding amount to get that bond to $350 million. And that was done partly in order to start early on addressing the maturity of that bond that comes in September 2026. And following these bond transactions, combined with the solid cash flow in the second quarter, our increased cash position at $943 million, now clearly adds to our financial flexibility and to our capacity for additional inorganic growth. As you see here, we remain in a stable net cash position at $158 million, while our equity ratio dropped to 42% in Q2, and that was due to the increased size of the balance sheet following the debt placement. So, I'd say in summary, we have had a very good second quarter, both for operations and finance, and we are now well underway into the second half of this year. That ends my comments, and I'll hand back to you then, Chris.
Chris Spencer: Thanks Haakon. So, just summing up. As Haakon said another solid set of results from DNO this quarter and an extremely strong balance sheet. The outlook is of increasing North Sea production as we move from 2024 into 2025. Steady production in Ivory Coast and of course, in Kurdistan even in a local sales scenario. And this was the background to the Board decision. As we said in the announcement, the Board directed aims for a sustainable dividend level and with these three points I just made that formed the backdrop to the decision to increase the dividend by 25%. Of course, we all in DNO remain -- in terms of our Kurdistan business, we also remain focused on debt recovery from the sales we made to KRG in 2022, 2023. And we keep pushing for reopening ITP, but they're always not counting on those when they decided to increase the dividend. We believe that's a sustainable decision. Those were the last thoughts I had. I turn it back to you Jostein for the Q&A.
A - Jostein Lovas: Thank you, Chris and Haakon for the presentation. And we are ready to start the Q&A session. And the first question comes from Øyvind Hagen. Øyvind, please go ahead.
Øyvind Hagen: Yes, I was unable to unmute myself. But now I believe you can hear me.
Chris Spencer: Yes.
Øyvind Hagen: Excellent. Just one question on the cash position and the inorganic growth opportunities that you're mentioning. Could you talk a little bit more about what kind of opportunities you are seeing? And then what regions you focused most of your efforts?
Chris Spencer: Certainly, I can take that, Øyvind. Yes, the priority number one remains the North Sea and in that context, Norway. We keep the opportunistic eye out on the U.K., whereas, as you know, we have a couple of very mature assets, but also one or two exploration blocks. So, we have a small business in the U.K. now, and that also enabled us to do that Arran transaction that we're very pleased with. So, we are opportunistic as it's the case of the U.K., but the main focus is Norway, where I think we discussed last quarter that were really pleased with the development portfolio we have. And obviously, to optimize the financing account, it would be lovely to put some more production on top of that business. So, that's the priority. We have also talked about a third leg for the company, and that remains something we would like to do, but it's been a lower priority than building on the North Sea business in recent times.
Øyvind Hagen: Excellent. Thank you. And just one quick question on Kurdistan as well. Over the past few months, have you seen any developments towards, say, a solution to the export issue? Or is it still a bit of a deadlock?
Chris Spencer: We have seen efforts we've made efforts, and we've seen efforts, but it remains deadlocked I think is a fair comment. Yes, -- and where exactly the deadlock is very difficult for us to diagnose, but we spend a lot of time speculating on that as our colleagues and other oil companies do, but really, it's very much up to the government's -- the regional government, the Federal government in Baghdad and indeed, the Turkish government obviously has a role to play. In our view, if there always a will, there is a way. But so far, those this hasn't happened. And I guess we wish we parting around why.
Jostein Lovas: Okay. Then we'll move on to the next one and that will be Teodor Sveen-Nilsen. Teodor, please unmute yourself.
Teodor Sveen-Nilsen: Good afternoon. Can you hear me here.
Chris Spencer: Yes.
Teodor Sveen-Nilsen: Perfect. Congrats on a strong set of numbers. Three questions from me. I noticed that the realized oil price in Kurdistan increased from $32 to $36 per barrel quarter-on-quarter. Just on what's the driver behind that increase? And what kind of realized oil price have you seen this far in third quarter? Second question is on the Tawke production, I see that you're increasing activity there. What kind of production should we expect from Tawke throughout the year? And maybe in case from an exit rate this year would be useful. The third question is on NCS. You reported underlift -- pretty substantial underlift this quarter. Should we expect that underlift on the left to be reversed third quarter or fourth quarter? Thanks.
Haakon Sandborg: Yes, Chris. The first one was said start on the driver for the increase in the local sales prices in Kurdistan.
Chris Spencer: Thanks. So, I think the increase in prices we've achieved from Q1 to Q2 is a mixture of things. First of all, the local market obviously has been ramping up since local sales started in earnings last summer. So, I think part of it is stabilization of that market and finding routes to market for the refined products and so forth. And the other element -- how well, it's difficult to break it out is that also traditionally for the -- such as the Kurdistan land, the average Kurdistan crude is on the heavier side. So, in the summer months when the market for asphalt internationally is stronger, that has traditionally been a stronger pricing for these heavier crudes. So, it could be partly that as well. So, how you -- how we look at those two effects is very difficult that I know we'll find that out as we head back into the winter. But certainly, although there are still the occasional disruptions in the local market, such as we experienced last week with the initiative of the government to begin some of the smaller, more polluting pumping plants in the region. The -- our ability to sell has really stabilized significantly over the last six months. We haven't stated specifically what we're selling for at the moment, but I think we touch on high -- upper 30s, I think we've put on the slide, Teodor, that gives you a good feel for where we're at.
Haakon Sandborg: The second, was then, we're looking at the Tawke production in the second half of the year [Indiscernible] sort of full for the year, and what sort of things can you--
Chris Spencer: And again, I think in the slides, Teodor Sveen, well, we're sticking with our guidance of 80,000 operated production for the year because the first half was a couple of thousand barrels a day under. That means the second half has to be a couple of thousand barrels over. So, that's what we're sharing on that.
Haakon Sandborg: Good. The third you had there was on the underlift that we have seen in the third quarter, will it be reversed -- in the second quarter, will it be reversed in the third and fourth quarter? We'll certainly see. We can see now that we will have an overlift in the third quarter, but it's going to even out everything from Q2. Well, it remains to be seen, but we do expect a overlift for the coming -- or the quarter that we are in now for the third quarter. It sort of ebbs and flows there, of course, in the business.
Teodor Sveen-Nilsen: Okay. Thank you. And one follow-up on the Tawke gross production. So, saw -- I got the answer that we shouldn't expect an increase from now despite your investments. Is that correct? Or are you just very conservative in the way you replied?
Chris Spencer: Time is show.
Teodor Sveen-Nilsen: Okay. That’s clear. Thank you.
Chris Spencer: Thank you.
Jostein Lovas: Okay. So, the next question will come from Nikolas Stefanou. Nikolas, please unmute yourself.
Nikolas Stefanou: Hi Jos, it's Nik here. Can you hear me?
Jostein Lovas: Yes.
Nikolas Stefanou: All right. Great. Thanks so much for the opportunity to ask my questions and congrats on the strong set of results. So, I have three questions to ask. So, first of all, I just want to go back to the Tawke guidance. I think the partner Genel -- well it was like last week, I think the guidance for Tawke was that it will be at similar levels as the first quarter. So, are you -- so is the guidance for the second quarter pretty much similar to the first one? Or -- because I think you just made a comment that it might be slightly higher than the first quarter like -- sorry, first -- on the first half of the year. So, if you could just like clarify that question. And then the other one is on the dividend. I was surprised to see an increase on the base dividend before the pipeline opened. So, I'm just wondering, can you maybe talk a bit about how you thought of that versus, say, kind of like a special dividend or maybe some buybacks, which could arguably be more kind of like sustainable like within free cash flow. And then the final question is from some kind of like remarks that have been on the press by Baghdad. It seems that what Baghdad want is to change the PSC terms, you guys have in Kurdistan. And I think APIKUR said that, that was one of the kind of like a red lines that the PSC terms need to [Indiscernible] in order to resume exports. I'm just wondering if from kind of like from your side of things, is that still a red line? Or maybe would you be willing to kind of like gave up some of the sort of like some of the fiscal term benefits to get high realizations? Thank you.
Haakon Sandborg: Right. The first one was on the Tawke discussion about the production levels in the second half.
Chris Spencer: Yes, the Tawke -- you're talking about guidance and if I assume you're talking about production guidance.
Nikolas Stefanou: Yes. Correct.
Chris Spencer: Yes. So, I'm afraid I'm not as familiar with Genel's numbers as you are. So, I'm not sure exactly what they said. But as I said, to Teodor what we put in our slides today is, I mean, the result is 78,000 barrels a day gross in the first half, and we're still sticking with our 80,000 on average for the year guidance.
Nikolas Stefanou: Okay.
Chris Spencer: Well, I'll have to get back of the dividend one, and Haakon will answer supplement. But as I tried to cover in my closing remarks, we have -- we think, as you commented, another quarter of very solid results with local sales in Kurdistan, and particularly the cash flow we're pleased with. We've got a really strong balance sheet and the net cash, obviously, we took a lot more debt on, but the net cash has been very stable now for a year or so. And with the outlook that I described of steady production in Kurdistan and the Ivory Coast, and that's Kurdistan in our local sales scenario combined with North Sea production that we see increasing nicely from 2024 to 2025. The Board is -- was satisfied that they could make a sustainable move in the dividend. And that was the background for that decision. I think when you talk about special dividends or share buybacks, that we -- I think would be more linked with a special event. So, if we were to see the $300 million of debt repaid to us from Kurdistan government, that's something we continue to work on. That would, in my mind, be a special event that could figure a special dividend or the base dividend we want to be a sustainable one. Haakon, anything to add?
Haakon Sandborg: Yes, you touched on it, I think, Chris. But of course, we have a very good -- strong balance sheet now. We're comfortable where we are with the production in Kurdistan and they're getting paid on impairment basis. So, we think we're in a strong position long-term here and we do want to use a big part of our cash to invest in new production. And that could give us additional free cash flow and additional growth in production. So, you've seen that with the acquisitions of the Arran license interest and the Norne license interest in this quarter, in the second quarter. So, I think if you are successful in some of the things we're working on, we could acquire more production and thereby also increase the dividend capacity going forward as we grow the production. So, that's some of the thinking going into both the balance sheet that we have now and also the higher dividend level that we have on the Board has decided for this quarter. The third question was on the production sharing contract terms in Baghdad.
Chris Spencer: Baghdad. Statements by Baghdad. Yes, thank you. That's obviously on everyone's minds. So, APIKUR have clearly set out the position for the IOCs as to what it takes for us to put oil into a reopened ITP. And you touched on one of the points there. Obviously, respect for our contracts and the commercial terms as such that is an important one as is paying surety of payment for future deliveries and past deliveries. So, those are the conditions that we have set. We would love to sit there around the table with the key parties and get involved in a negotiation -- getting a negotiation to unlock this issue. And if ever such an invitation come, then I might start to think about your hypotheticals. But until that happens, this is the position that we have and we're not going to start negotiating before we have the right counterpart across the table. So, that I think, is my comment on that question.
Nikolas Stefanou: Very clear. Thank you.
Jostein Lovas: Okay. So, I think we have another question coming from Sander Solheim Nilsen. Sander, let me unmute you. Please.
Sander Solheim Nilsen: Yes, hello. I was just wondering that with the declining entitlement share in Kurdistan and you have a lot of cash, I was just wondering going forward, if you plan to ramp up or accelerate investments in Kurdistan going forward? As I see it now, you have probably some headroom in the cost pool. And then maybe a second question. I was just wondering if maybe it's too early to say, but is it possible to say something on your expectations regarding the Baeshiqa well? Thank you.
Chris Spencer: Thank you. Yes, we are ramping up carefully in Kurdistan. We wanted to have comfort that the sales system global sales is working before we started to go back into investment. It seems to be doing so. So, we are ramping up carefully. And as we touched on the slides, we are planning to bring a rig back to the Tawke PSC to start drilling new wells again in the second half. So, yes, we are ramping up our investment, but we're doing it carefully. Obviously, the macro -- the political picture in the whole region is very tense at the moment. And so we think we should be cautious in terms of the amount of shareholder money we put into the region, but we're a long-term partner. We've been through many ups and downs. And so we -- I think DNO before my time as well has ridden the ups and downs very well and we're using that experience this time around as well. In terms of Baeshiqa, yes, I'm afraid it is simply too early to tell you anything. You'll have to wait until I know something.
Sander Solheim Nilsen: Thank you.
Jostein Lovas: So, there seems to be only one hand up there, and that's Teodor again. And I think if nobody else is raising their hand, we'll round it off after Teodor's question. So, Teodor.
Teodor Sveen-Nilsen: Yes. Thanks for taking my question again. Just one question on the balance sheet. And you already discussed that you have very strong cash position, strong gross cash position. Previously, you have this talk and you have indicated that you're aiming for a minimum cash position of $300 million. That cash position has now been well above $300 million for many, many quarters, and it's $900 million. So, I just wonder, has that number increased in terms of your desired minimum cash position or is there anything looking on the M&A side?
Haakon Sandborg: I'll start and then Chris can help me. Well, Teodor, you're right, we've said that many times and it's really a reflection of the risks, uncertainties we have seen in Kurdistan, the fluctuations we have been going through and that we have the capacity to manage those in a good way with a minimum cash position at all times around $300 million. So, we have not sort of left that idea. I think that's pretty much intact, but it's exactly that amount or a bit less that could be discussed. But we are carefully making sure that we have adequate cash and liquidity to meet any unforeseen situation or risk in our main operations in Kurdistan. Why are we having all this cash sitting here now? Basically because we wanted to, as I said, one of the reasons is to be very comfortable on our debt maturities going forward. One other reason is the M&A side, as you alluded to. So, we certainly want to grow our North Sea business and looking actively for new opportunities, that will serve many purposes, increase production, diversify our portfolio, and increase dividend capacity, et cetera. So, we have many good uses for the cash that we have on the balance sheet now. So, believe me, we are working hard on opportunities. I can't go in and discuss exactly what we're looking at, but it has been mostly North Sea lately. So, anything to add to that Chris maybe?
Chris Spencer: I think it's just, I think those are excellent points. Those are the key points when it comes to M&A, we've also seen in the processes, obviously, you're involved in more processes than you succeed in. And we definitely note that most sellers are concerned about completion risk. And therefore, to be a company that has the ability to complete deals unconditionally is a great advantage in the market. There's a lot of companies who are not in that position. We can do that now. And that was perhaps just adding on to the M&A part that you touched on. So, I think that summarizes our thinking there. We also add, I mean, it's a sort of, it's what everyone says, but we have run at a higher cash position than we probably would aim for over the last couple of years, because we have kept our discipline in the M&A market. So, even though, we have a lot of money, we are working very hard to make sure it doesn't burn a hole in our pockets. We want to ensure any investment lays the basis for further value creation for our shareholders.
Teodor Sveen-Nilsen: Okay. Thank you.
Chris Spencer: Thanks Teodor.
Jostein Lovas: It seems like we must have given really good and fulfilling answers to your questions, because there are no further questions and we wouldn't want to keep you for longer than necessary, but end the call here. Thanks to all for participating. See you again next quarter.
Haakon Sandborg: Thank you.
Chris Spencer: Thank you.
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