My name is Nadia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Africa Oil Management Presentation on the Strategic Farm-Out of Impact's Namibian Interests. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be question and answer session. If you would like to ask a question during this time, simply press star one one on your telephone keypad. If you would like to withdraw your question, please press star one one again. Please note that at any time, participants on the webcast can submit their questions using the Q&A box on the webcast interface. Please note that this event is being recorded. The recording will be available for playback on the company's website. I would now like to pass the meeting to Mr. Shahin Amini, Africa Oil's Investor Relations Manager. Please go ahead, Mr. Amini. Thank you, Nadia. On behalf of management, I thank you for joining us today for the presentation on the strategic farm-out of Impact Namibian assets. On the call today, we have our President and Chief Executive Officer, Dr. Roger Tucker, and our Chief Financial Officer, Mr. Pascal Nicodème. I would like to remind everyone that remarks made during this session are subject to forward-looking statements, including comments on the exploration, appraisal, and development outlook for the assets offshore Namibia. These involve significant risk factors and assumptions and have been fully described in the company's continuous disclosures of reports. The information discussed is made as of today's date and time, and Africa Oil assumes no obligation to update these unless as required by law. I will now turn the meeting to Roger. Roger? Thank you very much, Shahin. Before getting into what is for us an extremely exciting transaction that we've completed, I just wanted to put this transaction in the framework of what we've been telling the market, and many of you will have been through presentations with me for the past two or three months. So we're redescribing Africa Oil, repositioning Africa Oil to be focused on the four principal assets, which I've emphasized, which are Nigeria, Equatorial Guinea, Namibia, and Block 3B/4B in South Africa. What we've said is that the company has differentiated very significantly by being assets, key assets, which are of very significant potential and are all of interest and at a scale to be of interest to the majors. Our production interests in Nigeria are operated by Chevron and Total, producing 200,000 barrels a day. Our Equatorial Guinea interests, which are currently being farmed out, are of a scale which will be interesting to majors. Our Block 3B/4B is an exploration block, which is going through a farm-out and is of a scale which will be interesting to majors. The biggest difficulty that the challenge that we faced was bridging the gap in the development phase, which was the Namibia position. This transaction that we have done does bridge that gap, in that we will, at no further cost to ourselves, be able to participate in what is going to be a world-class development with a full carry through to the production phase. It is a significant value-enhancing opportunity, which fits with the strategy we outlined to you over the last two months. So next slide. As I said, this is actually an extraordinary transaction that we've managed to pull off. We do manage to maintain a 9.5% interest in Impact in blocks 2912 and 2913B. Impact's remaining interest in both those blocks is fully carried with no cap for all joint venture costs, including exploration and appraisal, which is a critical thing for us, continuing these blocks right through to first production. Impact, in addition, will be reimbursed for its past costs on the piece that it is farming out to Total, and that is approximately $99 million. However, this $99 million have been picked up in the market, but in the context of the scale of this carry, that is actually a fairly trivial number. Next slide, Shahin. In terms of why this is so important, it significantly de-risks the portfolio of Africa Oil. The Namibia position is fully funded now until first oil. We retain exposure to the exploration and appraisal and the development in the two blocks. And as I'll show you a little later on, the exploration side of this is of significant importance to us because we see very, very interesting upside in the block. We recover our full cost, as I mentioned, the historic expenditure. And it significantly enhances Africa Oil's capital and balance sheet flexibility to accelerate the strategy delivery that we highlighted to you before. So I will say that this is the first step down the strategic direction that we're trying to take the company on. A fifth point, but I think a very important point, the fact that the counterparty is Total, who are, of course, the operator of the blocks in question, we think further enhances and underlines the strategic importance of this asset to Total, and the likelihood that they're going to go ahead and pursue this as a development. And we think the counterparty here is of critical importance to underline the value of the assets. Next. In terms of then where we are, we've said to you before, the block in red is that which we found out. We do have the Venus discovery on that. Total have said that it's at least 1-2 billion barrels, and it will be developed. You therefore should be able to work out the value of this carry because you know the cost of the wells, which are about $130 million each. You know the cost of an FPSO, and on a single FPSO basis, if that was the only thing to be developed in this block, you can work out that this is a very, very significant carry that we have managed to negotiate here. But the most important thing for us is that we're currently drilling a well just to the north, which is called Mangetti, and the results of that will be through in the next week or so. We're also drilling a Venus-2A appraisal well, which is drilling to the north of Venus as well. But for us, the great excitement and the sort of historic DNA, if you like, of Africa Oil, is now in the south of the block, where 3D seismic is currently being shot. It isn't down there. And we have two very significant features, Damara and South Damara, which on 2D seismic look extremely attractive in terms of their amplitude anomalies, et cetera. We are going to be completely carried through through everything, and we will be in this all the way through to the production production phase. Next slide. With that, we're going to pass over to the principal terms of the transaction, which I'm going to pass over to Pascal, and then we'll get into the Q&A, where I'm sure you've got multiple load of questions. Thank you, Roger. So, yeah, let me go through quickly the main terms of this farm-out transaction. So Impact is going to farm down 10.5% in Block 2913B, which contains the Venus discovery, and 9.4% also in Block 2912. So that ultimately Impact will hold 9.5% in both licenses. So the deal is effective 1st of January 2024, which means that TotalEnergies is basically going to pay from the January cash call. And conditions to closing are very customary for this sort of transaction, with third party approval required by Namibian authorities and the two other joint venture parties, which are QatarEnergy and the NAMCOR, National Oil Company of Namibia. So, in consideration for that farm-down, we are receiving a non-cash carry loan from the effective date until the first oil sales proceeds are received by Impact. And that would cover all joint venture costs, which means exploration, appraisal, and development. The repayment of that carry loan is going to be in kind. We are basically getting a fixed portion of Impact after-tax cash flow converted into barrels, and which will be so after the tax or any tax costs, including capital expenditures, are going to be deducted from these proceeds before repaying the carry loan. So, we are planning to offtake the oil together with TotalEnergies in order to have access to more regular cargos, which is going to minimize Impact's working capital requirements. But also, we are going to benefit from TotalEnergies marketing and sales capacities. So that's a benefit for Impact. And as Roger mentioned, Impact is also getting reimbursed for their past costs on those blocks, which amounts approximately to $99 million. So I think this arrangement is very favorable to Impact and its shareholders. It's been a very—it will be a very efficient way to fund this asset going forward until first oil. And as you probably know, I mean, the access to capital is key for companies like us at the moment, and I think this solves the funding dilemma we have for this asset going forward. Next slide, please. So just to reaffirm then, that what we've stated in the past. We stated that we wanted to consolidate, streamline, and financially de-risk the portfolio. We've been saying that ever since I started with the company. And on an ongoing forward basis, as I mentioned, we are in the process of farming out 3B-4B in South Africa and EG-31 and EG-18 in Equatorial Guinea. We believe that we are trading at a significant discount to the underlying value of the company, and you are aware that we put an NCIB plan in place, which is fully ready to be deployed. And at the moment, we are trying to minimize the amount of capital that will be coming out of the company over the next two or three years by doing these farm-outs. And so we are actively reviewing that share buyback program as we speak. We have always said that we don't need to be leaping into new opportunities, and that the quality asset base underlying this business gives us significant additional organic growth opportunities, and we are actively pursuing those opportunities in parts which I outlined to you in the past. But we are always going to be disciplined. You're not going to see us jumping out of where we said that we're initially going to be focused. This transaction and the strength in the existing balance sheet means that it's of critical importance to us that we maintain balance sheet strength. As the strapline says, this transaction is absolutely ideal for us because it keeps us in a very exciting asset and completely de-risks the Africa Oil growth portfolio. We're in bed with a partner of incredible scale in Total, and we've got every confidence in them as an operator to operate this incredibly complex development that we're getting into. With that, I think we terminate and open up the floor for questions. Thank you, Roger. Thank you, Pascal. Nadia, over to you. Thank you so much. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star one one on your telephone keypad. If you wish to withdraw your question, please press star one one again. Alternatively, you are welcome to submit your questions via the webcast. Now we're going to take our first question. Just give us a moment. The first question comes from the line of Matt Cooper from Peel Hunt. Your line is open. Please ask your question. Thank you very much, and congratulations on the farm-out. I'm just going to firstly ask, what the current plan is for the two rigs following Venus-2A and Mangetti-1X? Well, the current plan is that drilling will continue. And obviously, the actual location of the drilling is going to be dependent on the results. Now, it may be that Total decides to drill a further appraisal well on Venus to accelerate the development—well, that will be decision. It does depend on, and it's a very active work rate. It does depend on the results of those two wells. But us here, we would like to see the 3D shot in the south of the block, and then to high-grade at least one exploration well, frankly, next year down the south. Sorry, next year, this year, down in the south. Okay. Does that answer your question? Yeah, yeah, that's helpful. And just to check, so is it possible that the next exploration well, post Mangetti one, could be back-to-back on one of the existing wells? Or do you need a bit more time for drilling another exploration well? There's a lot of stuff, Matt, there's a lot of stuff going on in the area. And one of the rigs may go off and drill another well somewhere else, which you can probably maybe think about, but it could be back-to-back, yeah. Okay, great. Yeah. And then in terms of the farm-down, first question, do you pay any interest on that current loan? Okay. Yeah, so, I mean, as you said, the carry, the consideration for the farm-down itself, what we, so there is no additional cash cost situation, the carry down, down the farm-down that has been signed with TotalEnergies. Okay. And just in terms of that $99 million of past costs, did you expect that to be redistributed back to the shareholders in Impact? It's going to go obviously into Impact. But we are looking at other things that can happen to migrate our portfolio into a cleaner position. But in theory, it will be redistributed. There is a whole series of other activities going on in relation to what we do with Impact Africa, et cetera, et cetera, et cetera, in that. But in principle, it will go back to Shell, yeah. Got it. And then finally, just when do you expect the farm-out to close, and is there any potential of any tax implications with the farm-out? We don't expect any complication in terms of completion. You probably saw that, Total has announced that they were considering a back-to-back with QatarEnergy on that deal. So, we expect the approval from QatarEnergy to be forthcoming. And, given Total's relation with the Namibian authority, we also expect the approval from NAMCOR and the government to be very quick to obtain. In terms of taxes, no, we don't expect any tax to be payable at the moment. Great. So, hopefully completion, some point in 2Q, 3Q, something like that? Yeah. There is a nine-month long update in the farm-out agreement that we expect to be able to complete with. Critically, the costs are being covered from the first of January. Yes. Yeah. Yeah, yeah. So that's like today. Great. Okay, that's great. And, congratulations again on the farm-out. Thank you. Thank you, Matt. Thank you. Now we're going to take our next question. Just give us a moment. The next question comes from the line of Tom Erik Kristiansen from Pareto. Your line is open. Please ask your question. Congratulations on the deal. Can you please talk a bit about how big you see the remaining exploration potential being on the blocks if you take what I may call it this year, but the period until you actually reach first oil. How many wells could be drilled down? Kind of what is the total potential? And then secondly, this obviously frees up a lot of capital for you. Do you have any strategic priorities on that? Thinking buybacks, more M&A, and if you say more M&A, can you speak a bit more about the opportunities you see to consolidate the Impact interest into something bigger? Thanks. Well, we were at the exploration side, first of all. I think on some of the previous presentations that we've done, we have shown sort of AVO amplitude images of the area to the south. Now, actually, we're obviously deeply invested, so we're going to be able to show a little bit more of that stuff. But in the Damara and South Damara area, the areas of the amplitude anomalies exceed the size of those that we have around Venus. Now, there's obviously a huge amount of work to be done on delineating those. And as I said, we haven't got 3D sizing, but we've got a fairly dense grid of 2D that we would be extremely hopeful that there are going to be several Venus-scale drillable features in those two areas. In terms of the cash on the balance sheet and what we're going to do with it, I've indicated that we are actively reviewing share buybacks. And we are actively in discussions at the moment with the principal shareholder, and that's one of the critical things that comes out of this, is we now have a newly found relationship with HCI in Impact. And we may well do some short-term activity in potentially trying to increase our position in Impact. But nothing is guaranteed at the moment, and we will need some cash for that, but we are actively looking at that as a potential option now that we've got this deal over the line. Does that answer the question? I've got to be very diffuse on this, as you can imagine, as this deal has only just gone through. But we are actively looking at another way of deploying capital into this asset. Thank you very much. That was very clear. Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star one one on your telephone keypad. At this moment, I would now like to hand the call over to Mr. Shahin Amini for any written questions. Thank you, Nadia. There are quite a lot of questions. I want to be absolutely clear that all the questions about specific operational data points from Namibia, such as well results, flow rates, size of the reserve base. I'm sorry, we're just not going to tackle that in this session. This session will focus on the transaction, and we will update you in due course on an operational update. Obviously, that will be fully aligned and coordinated with our investing company, Impact, and the operators of our energies. So on that note, I will go to a couple of questions on the deal itself. And there's a question for you, Roger and Pascal. Can you provide more color around the carry or multi development? How does that work if, say, parallel developments on these blocks? All capital expenditures are going to be funded until first oil. So if several developments are carried out in parallel, they would be funded until the first cargo is physically sold and the proceeds are received to us. Okay. And if there's no development, or if something happens in the future, do you have to repay? The loan is not repayable, so, we are not taking any technical risk in relation to development. Are there any guarantees from Africa Oil to Impact for this carry? No, the loan is purely on Impact. It's non-recourse. In terms of repayments, once you achieve commercial oil production, how long could this carry take to be repaid? So we expect this to be a few years, three to four years to get repaid. It's really a net entitlement that we are going to allocate to that to get the loan paid out. Of course, Impact will get cash flows- Yes. from day one. From the first cargo, they will receive the cash flow. As well as repaying the carry loan. Excellent. Thank you. Okay. On that note, a couple of strategic questions that you may want to tackle, Roger. One specifically on. You know, now that this is out and you're talking about, you know, focus on the rest of the portfolio, any comments on the, Africa Energy and Eco Atlantic? Well, I mentioned the Africa Energy portfolio doesn't really fit with us going forward. If you like, but Impact doesn't fit with us going forward, and we're actively looking at what we do with those two portfolios. Eco we have been associated with in 3B/4B, and we are in active discussions to farm that down and get a really significant carry through that. And at that point, we will be looking at options, if you like, to exit amicably from the Eco portfolio. And so you can expect to see those things rolling out within the next three months, I would imagine. So we're still in the cleanup phase. Okay. Specifically, you already tackled the share buybacks, but I still want to comment on this. Any expectations to increase the baseline dividend? We don't think that we are going to increase the baseline dividend. I think, there is, of course, flexibility in the shareholder return program, but we will tackle this flexibility with share buyback. Of course, given what we perceive to be a significant discount to our share price, and the share buyback is the primary Yeah. Okay. Very good. Excellent. And so I suppose I really wanted to keep the focus on, on this transaction. So on that question, you have already tackled this, but I think because a few questions received, the tax implications for this transaction with Total. So, there is no going to be taxable on the transaction. The carry is not going to be taxable, and we are, by definition, not making a capital gain on the transaction. Sorry, it's a farm-out, not a sale. It's a loan which is going to be repaid. So it is net taxable. I want to tackle one question myself. Is the company still in blackout? I just want to remind everyone that yes, of course, this was a material deal, and we were in blackout. Our corporate policy is that we allow one full trading day after we've planned also for a press release. So we will be in blackout until end of business today, unless something else happens, which we don't expect. So on that note, we expect to come out of blackout at the end of trading in Toronto today. And I know why people are asking that. They want to know whether we will be doing share buybacks or not. Just to emphasize, we have the policy in place, and we have resolved this big issue in relation to Impact, so we are ready to deploy that, but we won't go into any further details on that. Okay, there's a couple of comments rather than questions, but I think it's important to tackle these, in order for people to understand the deal. One participant has said, well, you've effectively given half away for $99 million and a carry loan. To me, that is unfair, but I want you to tackle that head-on, because I'm asking- Yeah, I think the important thing to consider is actually the NPV of the carry, which comes with a consideration for the farm-out. Yes. In the analysis of the deal, you have to take into account basically the number of developments and the FPSO that are going to be installed on the fields and farm collection. Because the capital expenditures that are going to be paid by Total on behalf of Impact is the actual consideration for the loan. And of course, if you add the discounting effect, we are just going to repay the loan in five to seven years down the line. So there is a very significant NPV effect on that carry loan. Very good. And very good. Thank you. On that note, Nadia, do you want to see if there are any follow-up questions from the telephone line, please? Would you just give us a moment? Now we have a question from Lydia Rainforth, from Barclays. Your line is open. Please ask your question. Thank you, and good afternoon, everyone. Congratulations on the transaction, and clearly there is a recognition of significant value of the assets there. Can you just talk through, when you were thinking about the structure and value optimization, what the challenges were in getting this done? Because clearly it helps TotalEnergies, I think, from actually from a financing perspective, because it allows them to get everything done quickly and on their terms. So it's just kind of, were there any challenges in getting this done? In terms of the remaining stake that Impact has, is that because that's where, just in terms of the level that you chose, as to was that your choice, or is that the idea that that gives you the, effectively, the value kind of going forward, that there's more upside as the block gets developed? Thanks. Well, that's an interesting question because, this, this transaction was actually developed within AOC, and it's been executed by, Impact, obviously. And it, it was approved, if you like, to try to pursue at the board meeting in Toronto, AOC, on the fifth of December. And it was at that time known as the 10-10 deal, because the original plan was to do, do it 10-10. We offered it to, to, to Total 10-10, and they came back and wanted to do it at, 11-9, and we ended up in the halfway house. But it's very near what we wanted in the, in the first place, and it's no more than, w e did all of the economic evaluations on it, and it worked, at this level in a very optimal way for us. We certainly didn't want to go any lower, and managed to get it through on that basis. But there was no more science to it than making sure that it actually worked. It kept us in a position that was material, and it wasn't material for Total as well. Does that answer the question? It Yeah, that's perfect, and that makes a lot of sense. Thank you very much. Thank you. Now we're going to take our next question. Just give us a moment. The question comes from line of Truels Lundquist, private investor. Your line is open. Please ask your question. Excuse me, Truels, your line is open. Dear participants, once again, if you wish to ask a question, please press star one one on your telephone keypad. Dear speakers, there are no further questions over the lines. Okay, this is an important one. A few people have come back on the cost of this loan or carry. I think there's some confusion whether there is interest. So if I may, and Pascal, correct me if I'm wrong. You could presume that the cost of this carry is already included upfront in the interest, and there is no additional. Let's be very specific. Yes. There's no additional cash cost- That's correct. To this loan. That's correct. Hopefully that clarifies the situation. I think you're right. Very good. Roger, do you care to say anything about this, Equinor, deal on OML 128? We're focused on this transaction. That is an active situation at the moment, and actually we're in a meeting on that issue just this morning, and that is all we can say at the moment. Yeah. I believe some market participants had a specific date because of the preemption period, but obviously, we've also highlighted that sometimes these preemption periods, it's not as black and white. They don't necessarily have to run out, deadlines can shift. So the process is still ongoing. But that said, nothing else to say. Thank you. Very good. All right. Well, look, I do bear with me. I'm trying to work my way through a lot of questions here. There are questions around what is your expected timing to the first oil and all of the capping systems. I think it's too early to answer those questions. Again, we tell people, "Let's wait for guidance from the operator, TotalEnergies." And again, this question, I'm going to put it back to you, and you've answered this, Pascal. If there's, say, 2 developments on the 2 blocks in parallel- Uh-huh. Do you guys have pay for-? It's a similar carry for both blocks. Yeah. We would totally basically pay for the cash flows on both blocks. Yeah, but until you get the first oil- On either block. On any of those? Any of the blocks. Yeah. And then- It's off. On one block, we pay the carry. Okay. When we start production. Very good. Excellent. Okay, well, look, actually a former colleague of mine, glad to see Jamie has submitted a question, so I feel that happened today. So, there was a question on Equinor, which, Roger, you already tackled, and we do have some other good news. There's something about the Galp making a discovery as well, which obviously would be positive. Perhaps, Roger, I mean, you're a geo, you know, you started your career as an exploration geologist. Do you want to provide any color on the regional and the excitement that we all feel? Please speak to that. So the thing about this Orange Basin is, you know, as I said in some of the previous presentations we've done, the world's rig is a marking, sort of marching down there. And it does continue, as I mentioned before, right the way down to our Block 3B/4B in South Africa. And what is interesting about the Galp discovery or the Galp announcement today, which unfortunately was on the same day that we made this announcement, is that it, it's showing that there is a different, a different play, like a different reservoir they seem to be, seems to be in. I obviously can't comment on how much they found, what reservoir it's, it's in. But yet again, it is further affirmation, if it turns out to be a big discovery, that this is a supercharged basin with multiple reservoirs. And it's obviously good news. It's good they didn't announce it yesterday. Sorry, tomorrow, rather than today, the same day that we're announcing. But, yeah, good discovery. All right. Okay, well, look, I think we've tackled all the main points on the transaction itself. And again, just to say to everyone on the operational, on Mangetti and Venus One and Two, we just have to wait a bit longer, and we'll coordinate with TotalEnergies. On that note, I'll remind everyone that our next event is our fourth quarter 2023 results webcast. We are releasing those results at end of February, and I expect at some point we'll have another opportunity to put Pascal and Roger in front of you. Roger, any final words before we say goodbye and disconnect? No, I think that everyone should also. I'm not advertising them, but Total have a market day on, I think, this February the seventh, where some more information around this asset may be revealed, and that is probably something everyone who's interested in Africa Oil should also have a look at. All right. Thank you so much. And Nadia, I leave the final word for you. Thank you so much, dear participants. That does conclude our conference for today. Thank you for all your participation. You may now all disconnect. Have a nice day.