This article first appeared on GuruFocus .
Release Date: August 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Production averaged over 5,000 barrels of oil per day in Q2, driven by successful infill drilling and improved infrastructure uptime.
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A fortuitous lifting of nearly 1 million barrels in April generated a $112 million post-tax cash injection, boosting the balance sheet.
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The company returned $50 million to shareholders in June, demonstrating a commitment to capital distribution.
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Cash balance increased to $85.2 million by end of Q2, with no debt, reflecting a strong financial position.
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The PNGF Sud asset has a long production life (9 years from reserves, extendable to 14-15 years with 2C resources) and low operating costs ($12/barrel).
Negative Points
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Q3 production is expected to be softer due to a falloff in production efficiency and several key wells requiring workovers.
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The company is currently in an overlift position, needing to pay back about 100,000 barrels per month, which will delay the next lifting until around May 2027.
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The ERCCRM indictment of a subsidiary for historic corruption allegations remains a legal overhang, with a trial starting in November and potential appeals extending to Q4 2028.
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The Aje redevelopment project in Nigeria is facing challenges, leading to a farm-down or divestment process due to legal issues in Norway that hinder project financing.
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CapEx is expected to increase to around $20 million in 2027 for infill drilling, which will require careful cash management.
Q & A Highlights
Q: Why are you holding on to so much cash? A: Jens Pace (CEO) explained that the $85 million cash balance is primarily due to the lumpy timing of oil liftings. The company must be prepared for a long wait before its next lifting and oil sale, currently anticipated around May next year. They need to retain cash to run the company, fulfill license obligations, and cover increased CapEx for the 2027 infill drilling program. The board remains focused on distributing excess cash, likely through a repayment approved at the next AGM in May.
Q: When do you expect the next lifting to take place? A: Jens Pace (CEO) stated that the exact timing depends on the queue at the JENO terminal. They anticipate the next lifting to occur in May, but it could be slightly earlier or later. They are working with the terminal operator and their oil trader, ADNOC, to finalize the schedule.
Q: Why are you continuing to invest in Aje if you are selling out? A: Jens Pace (CEO) clarified that the modest investments in Aje are focused on enhancing project definition, which adds value and will be useful for any incoming partner. They cannot simply stop work and leave the asset stranded. If a transaction is agreed in Q4, they will discuss with the incoming party what work is useful to continue, but in the meantime, they will keep adding value to the project.
Q: How do you expect CapEx to develop going into the next year? A: Jens Pace (CEO) noted that CapEx is driven by the infill drilling program, with no major infrastructure investments planned. This year's CapEx will be around $10 million, but next year it will increase to approximately $20 million, similar to 2025 levels. The final figure will be confirmed at the operating committee meeting with operator Perenco in November.
Q: Can you give any specifics so we can understand the strength of the company's case in defense of the corruption allegation? And any ballpark value for the Aje assets? A: Jens Pace (CEO) declined to comment on the legal case details, stating it would be inappropriate before trial, but reiterated the company contests the indictment. Regarding Aje, he described it as an attractive asset with half a TCF of gas and sizable liquids, with 2C resources of 70 million barrels of oil equivalent. The project is ready for development with local infrastructure for gas and offshore loading for liquids, and they expect this value to be recognized in the market.
Q: Can you talk about how Perenco plans to further develop the PNGF Sud license and efforts to boost production capacity? A: Jens Pace (CEO) explained that Perenco specializes in mature field management, using an operating ethos that works well. They prefer accessible wellheads on platforms in shallow water, allowing effective workovers. There are opportunities in the multi-stacked reservoirs to address inefficient oil sweep areas. The infill drilling program and perimeter extension wells have been successful, and they expect a long tail of low-cost, effectively managed production.
Q: What were the key financial highlights for the half year? A: Jens Pace (CEO) highlighted that production averaged over 5,000 barrels of oil per day in Q2, benefiting from the 2025 infill drilling program and improved infrastructure uptime. They lifted and sold nearly a million barrels in April, realizing a $112 million post-tax cash injection in May. This supported a $50 million capital repayment to shareholders in June. The company ended the quarter with $85.2 million in cash, no debt, revenue of $163 million, and EBITDA of just under $90 million for the half year.
Q: What is the status of the overlift and when will it be balanced? A: Jens Pace (CEO) explained that the April lifting included an overlift of nearly half a million barrels, which they are now paying back at a rate of about 100,000 barrels per month. They expect to be back in balance by October this year, after which they will start building inventory for the next lifting.
Q: What is the outlook for production and reserves? A: Jens Pace (CEO) noted that Q3 will be a softer quarter due to workovers on key wells, but Perenco has added a workover crew to address the situation. They anticipate production to improve and exceed 30,000 barrels per day in 2027 with additional infill drilling. Net reserves are just under 16 million barrels, providing about nine years of production at current rates, extendable to 14-15 years with 2C resources of 9.6 million barrels.
Q: What is the timeline for the legal case and its potential impact? A: Jens Pace (CEO) stated that the hearing for the ERCCRM indictment of an indirect subsidiary will start in November this year. The initial outcome is expected around March next year, but will likely be subject to appeals. If the process runs to a Supreme Court hearing, a final outcome could be as late as Q4 2028. The company categorically contests the indictment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
