2001 interim results · exploration and replenishment of portfolio • 2001 programme – indonesia...

20012001 IINTERIMNTERIM RRESULTSESULTS PPRESENTATIONRESENTATION17th September 2001

2001 Interim Results Presentation

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•Key Issues

•Results

•Operations

•Summary

PRESENTATION

Charles Jamieson

John van der Welle

Richard Liddell

Charles Jamieson


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RESULTS OVERVIEW

• Production 35.3 mboed (2000 : 25.9 mboed) up 36%

• Operating profit £44.6 million (2000 : £17.8 million) up 151%

• Profit before tax £24.8 million (2000 : £12.6 million) up 97%

• Net profit £12.4 million (2000 : restated £7.9 million) up 57%

• Gearing 149% (2000 : 153%) down 4%


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PORTFOLIO MANAGEMENT - SUMMARY

• Restructuring of Pakistan business– New joint venture with Kufpec– Increased production, reduced capex

• Disposal of non-core Indonesian interest (Pangkah)– Raises cash– Reduced future capex

• Proceeds of $135 million realised

• Pro forma gearing reduced by 42% to 107%

• Reduction in future capex of $85 million

• Exceptional accounting gain of £35 million


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KEY ISSUES FOR INVESTORS

• Shareholder structure

• Production

• Portfolio management / cash flow / gearing

• Commercialisation of gas reserves

• Exploration and replenishment of portfolio


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SHAREHOLDER STRUCTURE

“It is widely acknowledged by analysts and other commentators that Premier’s share price does not adequately reflect the value of our oil and gas reserves or the potential of the business. I said in my interim statement to you in September that the Board and alliance shareholders Amerada Hess and Petronas were aware of the perceived depressive effect of the 50% alliance shareholding on the share price and were working together to find a way forward for the best interests of all shareholders. I remain confident that we can find a suitable way.”

Sir David John Annual Report 2000


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PRODUCTION IN 2001

•Forecast physical production for 2001 revised to 40,000 boepd from 50,000 boepd:

– 3,500 boepd covered by Yetagun and WNG take or pay

– 1,700 boepd re: delayed Kyle production

– 1,700 boepd re: changed Chestnut arrangements (Brovig - Amerada Hess)

– 1,700 boepd re: Fife, Fergus and Flora fields partially covered by business interruption insurance

– 1,400 boepd other production losses in UK and slower ramp up of WNG0

10000

20000

30000

40000

50000

60000

2001

Net

Boe

pd

Shortfall in Production

Fife, Fergus, Flora

Production Delay Kyle

Chestnut

ToP due 2002

Forecast PhysicalProduction


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PORTFOLIO MANAGEMENT - DETAILS

INDONESIA

• Pangkah– Sale to Amerada Hess for $30m

PAKISTAN

• Shell– Termination of joint venture– Acquisition of 49.9% of PSP shares– Reduction in interest in Bhit to 12% (from 20%)

• Kufpec– New 50/50 joint venture with Kufpec– Consideration $105m + 15.8% Kadanwari


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Before Movement After

Qadirpur 4.75% - 4.75%

Kadanwari 7.89% +7.89% 15.79%

Zamzama –pre commerciality 11.88% - 11.88%

Zamzama –post commerciality 9.38% - 9.38%

Bhit 20% -14% 6%

Cash - +$105m $105m

PREMIER INTEREST IN PAKISTAN


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COMMERCIALISATION OF GAS RESERVES

• Pakistan– Zamzama - allocation of 350 mmscfd (gross)

- negotiations concluded by end of year• Indonesia

– WNG - negotiations in progress for sales to Malaysia- signature targeted first quarter 2002

• Indonesia– Pangkah - sold for $30 million

Indonesian and Pakistan reserves at or near commercialisationrepresent ~100 million boe, 95% of unbooked reserves


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EXPLORATION AND REPLENISHMENT OF PORTFOLIO

•2001 programme– Indonesia - Pangkah programme - Q1– Pakistan - Kadanwari West - Q3

- Zarghun North - Q4– Significant seismic programmes in Area IV in Indonesia and

Dumbar in Pakistan

•Planned 2002 exploration programme– Pakistan - 2 Dumbar wells– Indonesia - Natuna Block A Area IV oil well– Myanmar - MF1 well– Guinea Bissau - well– Kirthar (near Bhit) - well


Make a DifferenceFigure 00

This is an under explored area - only 10 wells have been drilled offshore Guinea Bissau

None of these wells has tested the play type being evaluated by Premier

Most wells recorded live oil shows, one tested oil

If successful a number of additional prospects are present on the acreage

Exploration success would provide the opportunity to establish a new core area

GUINEA-BISSAU


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RESULTS


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RESULTS OVERVIEW AND PORTFOLIO MANAGEMENT

• Production 35.3 mboed (2000 : 25.9 mboed) up 36%

• Operating profit £44.6 million (2000 : £17.8 million) up 150%

• Profit before tax £24.8 million (2000 : £12.6 million) up 97%

• Net profit £12.4 million (2000 : restated £7.9 million) up 57%

• Gearing 149% (2000 : 153%) down 4%

• Impact of take or pay accounting - SORP

• Financial impact of portfolio management


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PROFIT & LOSS ACCOUNT

Production (mboepd)Realised oil price ($/bbl)Realised gas price ($/mcf)

Turnoverless: share of JVs turnoverGroup turnoverOperating costsAmortisationGross profitAdministration costsOperating profit / (loss)Operating profit in JVsTotal operating profit / (loss)Net interestExchange gain Profit / (loss) before taxTaxationProfit / (loss) after taxEarnings per share - basic and diluted (pence)

* restatement is for FRS19 (Deferred tax) adopted in 2000

2000(restated)*

25.921.382.16

54(5)49

(12)(17)

20(4)162

18(8)

313(5)

80.5

£m

2001

35.326.712.19

94(19)

75(17)(19)

39(4)351045

(21)1

25(13)

120.8

£m

Excludes Yetagun ToP(SORP)

1999 hedging - no impact in 2001

Higher production and higher prices

Unit opex (incl JV’s) £3.96/boe - up 4%

Unit DDA (incl JV’s) £3.30/boe - down 9% due to lower cost gas production

Increased contributions from Myanmar and Pakistan

Higher debt and cessation of capitalisation on Yetagun and WNG

Higher UKCT due to higher revenues, plus onset of Yetagunproduction


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CASHFLOW

Net cashflow from operationsNet interestTaxationOperating cashflow (after interest and tax)Capital expenditureDisposals (net)Net cashflowExchange/otherMovement in net debtYetagun interest accruedOpening net debtClosing net debt

36(14)(11)11

(29)-

(18)(17)(35)

-(323)(358)

25(11)(10)

4(64)

-(60)(15)(75)

-(171)(246)

Much reduced capitalexpenditure -completion of major developments

Increase in line withhigher net revenues

ExplorationFieldsOther

Group£m520429

JV£m35-8

Total£m8

254

37

2001(As reported)

£m

2001(Incl. JVs)

£m

2000(As reported)

£m

62(14)(11)37

(37)--

(20)(20)

(7)(445)(472)

Mainly exchange losses on $ debt


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BALANCE SHEET

2001(incl. JVs)

£m

CashDebtNet debtShareholders’ fundsGearing ratio

61533472317149

2001(As reported)

£m

36391355NANA%

100346246NANA

2000(As restated)

£m

Gearing well within debt covenants


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IMPACT OF SORP ON TAKE OR PAY - YETAGUN

Deferred turnover

Reported net profitDeferred profitProfit including deferred profit

2001HY£m

8.4

12.45.3

17.7

11.8

6.18.9

15.0

2000FY£m

Cumulative deferred profit of £14.2 million equivalent to 77% of reported net profit


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30/6 Pangkah Sale Pakistan Restructure Proforma 30/6£m £m £m £m

Fixed assets 696 (21) (39) 636Net current assets 47 21 73 141Long term creditors (426) - 1 (425)& provisions

Net assets 317 - 35 352

Cash 36 131

Net debt 472 377

Gearing 149% 107%

FINANCIAL IMPACT OF PORTFOLIO MANAGEMENT


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OPERATIONS


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OPERATIONS HIGHLIGHTS

• West Natuna Gas project delivery

• Rapid response to operations challenges

• Premier delivering operations performance


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WEST NATUNA GAS PROJECT

• AGX Platform installed May 2001

• On time and under budget

• Development cost $265m (gross)

• Production operations established The AGX main deck being lifted from the transportation barge onto the AGX Jacket.


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RAPID RESPONSE TO OPERATIONS CHALLENGES

Assets under management –rapid acquisition of development and production capability

Proportion of production from Premier operations - Premier in control

• Creativity delivers world class developments• Production operator track record established

0

100

200

300

400500

600

700

800

900

1996 1997 1998 1999 2000

$mm

Gro

ss

0%10%20%30%40%50%60%70%80%90%

100%

2000 2001 2002 2003 2004 2005

Non Operated Operated


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DELIVERING OPERATIONS PERFORMANCE


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SUMMARY


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SUMMARY

2001 Objective Delivery

Improved financial returns– higher production up 36%– increased profits up £4.6m

Strengthened balance sheet– improved cash flow up £42m– reduced gearing down 42% after portfolio

management

Commercialisation of reserves WNG 2nd sale well advancedZamzama GSA expected

Portfolio management Pakistan restructuringPangkah sale

New venture activities Guinea-Bissau

20012001 IINTERIMNTERIM RRESULTSESULTS PPRESENTATIONRESENTATION17th September 2001


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APPENDIX


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Premier interestsOil fieldsGas fields

Scotland

England

Wales

Eire

NorthernIreland

Wareham

Scott, Rob Roy,Ivanhoe, Hamish,Telford 15/21a & 15/21b

Flora Block31/26a, 31/26c

Fergus 39/2

Fife 31/26a

Galahad,Mordred48/12a & 48/13b

Wytch Farm

Kyle

ChestnutIn Production:• Kyle • Wytch farm • Fife Area• 15/21 Area including Scott • Galahad• Chestnut EWT

Potential Developments:• Chestnut full field• Perth• Ettrick

UKNWE


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PAKISTAN

•US$ revenue generating business with significant gas upside•Nearing commercialisation of Zamzama

Premier interests Gas fields

KadanwariGhauspurQadirpur

Dadhar

Bolan

Kirthar DaduKNS

Dumbar

ZarghunDiscovery

Bhit Field BadhraDiscovery

PakistanZamzamaDiscovery

PakistanSignificant gas reservesThree gas fields onproduction - 4000 boepdOne field in development

KadanwariMiano tie-in extends field life

QadirpurIncreased production capacityto 340 mmscfdAgreed development for 400 mmscfd

Bhit and BadhraIn developmentFirst gas end 2002

ZamzamaReserves ~2tcfEWT in production from March 2001Full field GSA negotiations nearing completion


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Thailand

Myanmar

Wang Noi

Surat Thani Khanom

Ratchaburi M13 M12

Yadana

M14 Mergui

YANGON

PHUKET

Andaman Sea

BANGKOK

Gulf of Thailand

Yetagun

• 1990 - Premier takes M12/13 licences

• 1992 - Gas discovered

• 1997 - GSA signed with PTT

• 1997 - Premier takes operatorship

• May 2000 - First gas

MYANMAR


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INDONESIA

Malaysia

Port Dickson

Kerteh

DumaiSINGAPORE

Port Klang

Duyong

West Natuna

October 1996 - Premier purchased Chevron's 66.7% interest in Block A

December 1996 - Premier took over Discovery Petroleum NL thereby gaining an 18.75% interest in Kakap

January 1999 - Signed Gas Sales Agreement with Singapore

January 2001 - First gas into Singapore

July 2001 - Start date of main gas contract

1Q 2002 - target for signature of 2nd gas sale

Kuala Lumpur

2001 interim results · exploration and replenishment of portfolio • 2001 programme – indonesia...

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