Neal Shah: Yeah, sure, Matt. And yes, that’s about right in terms of the $100 million to $150 million of cash flow, free cash per quarter, post getting Winterfell and Tortue online at a quarterly pace in that sort of $75 rent, 70 TI sort of realm. And, yeah, I think in terms of the price sensitivity, generally, and it’ll stay roughly the same, is about $100 million of free cash flow for the year for every $5 change in the oil price. And so, $25 million plus or minus a quarter. If you move to $80 rent, and then $200 million for the year, $50 million a quarter at 85 rent. So, it is — yeah, and, we currently have sort of full access to the upside. So, we can fully participate in that.
Q – Matthew Smith: Perfect. Well, that’s very clear. Thanks for your time and happy to pass it on.
Andy Inglis: Great. Thanks, Matt.
Operator: Thank you. Our next question is from the line of Mark Wilson with Jefferies. Please go ahead.
Mark Wilson: Thank you for that. Good afternoon, gentlemen. My question is regarding the main drivers of production increase into the second half with your reiterated group guide at 71, 72. We know that Tortue comes on first LNG in the fourth quarter. Can I just check if that is how you then start to report the gas from Tortue? Or is it in the third quarter as it comes across the FPSO that that would be my first question.
Neal Shah: Yes. So Mark will record on an entitlement basis similar to how we report, but on for just the quarterly production. But in terms of sales it will be done similar to how we do in Ghana and EG where it’s driven by cargoes. And so overall entitlement production will be driven by it basically LNG that goes into the FLNG vessel and condensate that goes into the FPSO as a sort of entitlement volumes. But for sales volumes will ultimately be tied to cargoes the same way we are doing cargoes in Ghana and EG.
Mark Wilson: Got it. Okay. Understand that. Okay. So FPSO for — in 3Q and then entitlement in 4Q. My second question I guess another big driver for production would be Jubilee and you just spoke to it there Andy to some degree. So taking all those various points into account you still expect that field can average 100 for the rest of the year or even higher?
Andy Inglis: Again as I said you know, Mark we’re doing what we said we would do which is to deliver that outcome we need to see the incremental benefit of the infill wells for the final two to finish and then optimize the system for the new well configuration and that’s ongoing. So that’s the first sort of variable that we need to get right. The second is clearly you know maintaining the reliability and a good start to the year and we need to continue it. And then I think the fundamental part then is really around bodies replacement and the distribution of that water again because we’re changing the patterns of offtake, because of the new wells coming in the optimization of that patent of the new sort of reservoir offtake partners is critical.
So I think there’s a lot to work on Mark to deliver that outcome. Yes. The first half is in all of that is to get the wells drilled and online and we’ve got sort of one more to go so you know this it’s you know there’s work to do clearly and then we’ll keep you up to-date on progress as we go through the quarter.
Mark Wilson: Okay. Thank you for that. And last question for me. As my understanding on the Yakaar-Teranga is working towards getting the pre-feed out of the way and then that’s when you’ll be looking it to see what the where the market is that for farm-outs? Is that a fair representation?
Andy Inglis: Yes it is absolutely, Mark. So you know we sort of talk about the future there which is really what your question was about. I think that we’ve got a piece of work now where we’re doing the we’re completing the pre-FEED. One of the pre-FEED done by the middle of the year. With the pre-FEED we’ve got the technical validation of concept and then we’ve got a cost base to then discuss with the new administration. Clearly this is about creating a new partnership for Yakaar Teranga. Our objective is for the 5% them in a line partner around a third ourselves a third new partner the third. So we have to work with the new government to bring that partner in and they’re clearly going to have to say in that. And we need to have a fiscal arrangement which enables us to create the economics that support a low-cost gas and LNG export scheme.
Now with those two pieces in place you can then work on the financing. The intent is to have the FLNG vessel financed. So there’s a series of steps here that this technical work done to be done which is sort of the milestone in pre-FEED that work to be done on alignment with the new administration around fiscals and new partner and then there’s work to be done there for on financing. You bring all those four together then you can start work on the real world which is on feed but we won’t be starting feed until we’ve got those things done. So again I think we’ve made a lot of progress so far on the pre-FEED. And post the election we can now start working on those next items.
Mark Wilson: And that’s really appreciate. Then it did occur to me in that answer that maybe the differences between Yakaar-Teranga and Perella [ph] and the respective governments would be interested –interesting to comment on. It did look like Perella was moving faster towards the development concept arguably when you last extended PSC and then Yakaar-Teranga now has moved to this the set that you have now. So the respective differences would be interested to hear your comment on?
Andy Inglis: Yeah, look, I actually don’t think there’s a difference. You know, both governments are anxious to enable the development of their gas resources to benefit the country. And I think — I think the Mauritanian government has been equally clear about it. It’s objected to move forward with Perella, you know, post the exit of BP. So I don’t think there’s any fundamental differences there, Mark, and therefore, it’s about how can we participate to help them on those agendas and come up with compelling investment opportunities.
Mark Wilson: Okay. Thank you very much. I’ll hand it over.
Andy Inglis: Great. Thanks.
Operator: Thank you. Our next question comes from the line of Neil Mehta with Goldman Sachs Asset Management. Please go ahead.
Neil Mehta: Yeah. This is Neil Mehta with Goldman Sachs Equity Research. Today, a couple of questions I have here. The first is just your perspective on deleveraging as you get into that free cash flow inflection that Neal referred to, and those are really big numbers. Now, how do you think about reducing the debt on the balance sheet? What are the priorities, and, and what’s the target level, and how quickly can you get there?
Andy Inglis: Yeah, thanks, Neil. I’ll let the other Neal answer that.
Neal Shah: Hey, Neil. Yeah, so I think, our objective on leveraging it hasn’t changed. We want to get to less than one and a half times on a sustainable basis through this cycle. And so the free cash flow that we generate once the products are online are going to be allocated towards that and probably initially preferentially towards the RBL, just given its floating rate and sort of our highest cost interest piece at the moment. And so, yes, we’ve got some work to do on debt reduction, and that’s been a clear priority for the free cash flow. And, again, I think from our perspective, you’d see sort of the front end of that free cash flow clearly directed towards the RBL. And then once we get to less than that one and a half times in a normalized oil price environment, then it comes around sort of the competing priorities in terms of some allocation towards debt repayments versus capital returns.
So, yeah, that’s a discussion to have in the future. But, as of today, we’ll continue to focus on just getting to that less than one and a half times the normalized price first.
Neil Mehta: That makes sense. I wanted to give you an opportunity to talk about the convertible bond issuance because it created a lot of volatility around the stock, but I think a lot of it was just to manage near-term interest expenses around floating rate debt. So just your perspective on why you thought that was the most cost-effective approach to financing and how should we think about that over the long term?
Neal Shah: Yeah, and so, — again, we’ve had a number of discussions around the convertible bond with both debt and equity holders over the last couple of months since we executed that back in March. And, again, I think for us it’s around where our current bonds were trading and how do we optimize access to the debt capital markets without, at a sort of the lowest cost available. And the issue that we’ve had for the past 18 months when you look back into 2022 and 2023 is really where Ghana has traded and therefore the impact to our secondary levels on the bonds and therefore a new issuance. And the regular bond market would have been quite expensive just from a regular new issue market and therefore trying to get ahead of the liquidity and maturity wall, something that we’ve always tried to be proactive about.
And so thought that was, the best instrument at the time to, manage the maturity schedule. And as you can see in the presentation, with that and the RBL, we’ve really cleared the runway for the next couple of years for us to execute and continue to pay down debt. And so it’s really around taking the balance sheet off of the agenda, focusing on the organic delivery of the business plan, and using sort of the most efficient tool at the time to try to execute that. So, that was really the background there.
Neil Mehta: Thanks, Neal.
Neal Shah: Sure.
Operator: Thank you. Our next question is from the line of Subash Chandra with The Benchmark Company. Please go ahead.
Subash Chandra: All right. Thank you. Yeah, following up, I guess, on Neil and a couple of the other questions with regards to free cash flow. It’s sort of the organizing principle beyond the next year to sort of be in that $500 million, $600 million maintenance CapEx number and then everything beyond that, obviously pay the RBL off and then payouts et cetera? Or are there some appetites that you might have deferred pending getting GTA on either organic or acquisition oriented that might get us to a different spend level down the road?
