finding petroleum conferencenovember 2010 if you don’t have the right people you don’t grow! if...
TRANSCRIPT
Finding Petroleum Conference November 2010
If you don’t have the right people you don’t grow!
If you don’t grow you go!
November 2010 | Page 2
• Corporate strategy, goals and exploration strategy
• The past is the key to the future?
– Benchmarking
• If you don’t grow you go!
• Exploration organisation in a mid cap company
• Developing oil finders
Agenda
November 2010 | Page 3
Target
• Build three quality businesses which deliver 100 kboepd from 400 mmbbls of reserves
Strategy
• Attain 75 kboepd from 2P reserves
• Commercialise contingent resource base
• Add 200 mmboe of 2P reserves from exploration
• Make value-adding acquisitions in three core areas
• Maintain a conservative financing plan
Target and strategy
Exploration is a fundamental part of Premier’s growth strategy
November 2010 | Page 4
Corporate (London)
• Executive, Geoscience Technology and exploration new business
North Sea
• Norway based team
• Near field primarily handled through Development
Asia
• NV team in Singapore
• Exploration asset teams in Vietnam and Indonesia
MEP
• London based team with asset support in Pakistan
Target ,strategy and Organisation
Exploration organisation is consistent with the business focus
November 2010 | Page 5
• Premier has a competitive advantage in value creating exploration of Rifts and Fold-belts / Forelands
• Premier will continue to explore the rift basins of SE Asia and the North Sea and will look to exploit its competitive advantages in selected rifts and fold-belt basins of Africa, the Middle East and Central Asia
• Premier Geoscience resources have expertise in these basin types
Premier – petroleum basin focus
November 2010 | Page 6
Exploration strategy
The goal is to deliver 200 mmboe 2P reserves through the drill bitfocussing on areas where we have demonstrated skills and expertise
Longer-term programme
• Rift Basins: new acreage in the North Sea, Asia and Middle East
• Frontal Fold-belt plays: new acreage in the Middle East and Asia
North Sea / West AfricaAsiaMiddle East-Pakistan
Geography Geology
RiftsFrontal Fold Belts
Near-term programme
• Asia: Nam Con Son Basin (Vietnamand Indonesia)
• North Sea: UK Central North Sea and Norwegian North Sea
$ spend
November 2010 | Page 7
Exploration challenges
1. Access to new opportunities in themes of choice
2. Maintaining exploration focus/discipline
3. Managing the natural tension between growth ambitions and the production/development of existing resources
4. Building a geoscience organisation for the future
5. Delivering the 200 mmboe from the existing inventory
November 2010 | Page 8
Annual discoveriesCumulative annual discoveriesHistoric performanceRecent growthFuture target
• Premier began exploring in 1986, initially via entry into SE Asia
• To date Premier has discovered net 800 mmboeat an overall commercial success rate of 22%
• The commercial discoveries have been made in two basin types:
1) Rifts: Southeast Asia and Norway
2) Frontal Fold-belts: Pakistan
• The success rate in these basin types is ~40%
• Since 2000 the exploration success has been dominated by Rift Basin exploration in Asia and latterly in Norway and the UK
• 200 mmboe net reserves additions are targetedby 2015- we are moving in the right direction
Exploration – historic performance and future target
1000
Premier Discoveries 1986-2009 (net mmboe)
500
400
200
100
01985 1990
300
600
700
1995 2000 2005 2010
Annual discoveriesCumulative annual discoveriesHistoric performance
800
900
2015
November 2010 | Page 9
Exploration – people performance
Premier in the 90’s• In the peak episode of exploration success
Premier had 40 geoscientists, in Asia and London
• A few key consultants were employed
Premier in 2003/2004• In the period of restructuring and low oil
prices this number significantly reduced with reliance on consultants
Premier today• In 2010 the organisation has now grown
(London, Norway and Asia)
• Long term consultants have largely been replaced by Premier employees - primarily through recruitment from major oil companies with Play and Basin focused experience plus lateral transfers
• Key “long term" consultants have been retained -specialist knowledge and Premier history
Annual discoveriesCumulative annual discoveriesHistoric performanceRecent growthFuture target
1000
Premier Discoveries 1986-2009 (net mmboe)
500
400
200
100
01985 1990
300
600
700
1995 2000 2005 2010
Annual discoveriesCumulative annual discoveriesHistoric performance
800
900
2015
8 (20%)
32 (80%)
Exploration Manpower 1999Total Geoscientists: 40
7 (47%)
8 (53%)
Exploration Manpower 2004Total Geoscientists: 15
8 (15%)
47 (85%)
Exploration Manpower 2010Total Geoscientists: 55
ConsultantsExplorationGeoscientists (staff)
November 2010 | Page 10
Exploration scenarios for the future portfolio
• Scenarios identified has two key drivers and four potential worlds
• All four worlds have existed over the last 10 years of the industry and volatility will continue
• The current world is one where only the fittest will survive
– Companies with a portfolio of low cost “big” assets can afford to cherry pick and survive in a low oil price world
• Individual companies, dependent on their asset base, capital structure, talent and influence can either ride the wave or deal with choppy waters
x
X 2010 environment
November 2010 | Page 11
Exploration growth strategy:key factors – ideal exploration company (Woodmac)
CORPORATE ALIGNMENT
CORE COMPETENCIES
GEOGRAPHICAL FOCUS AND CONSISTENCY
FOLLOW ON GROWTH OPPORTUNITIES
ABOVE GROUND RISK
PARTNERING / RELATIONSHIPS
TALENT MANAGEMENT
SUCCESSFUL TECHNOLOGY APPLICATION
FIRST MOVER / FAST FOLLOWER
WILLINGNESS TO EXIT
0 50 100
Ideal explorer
Organisation aligned behind the role of Exploration but offers enough challenge
Playing to strengths key, but mustn’t stifle innovation
Consistent focus on core geographies, to learn and evolve ideas
Ideally follow on but must be a balanced portfolio of options
Can be used to create competitive space Too much high risk can limit value
Leveraging relationships into opportunities can be key
Skills and knowledge development
Less key given multiple providers, unless cutting edge
Key to establishing value and headroom, but you can’t change the rocks
Must allow time to test the play, but recognise irretrievable value destruction
Source: Woodmac
November 2010 | Page 12
Exploration growth strategy:key factors – minding the gap
CORPORATE ALIGNMENT
CORE COMPETENCIES
GEOGRAPHICAL FOCUS AND CONSISTENCY
FOLLOW ON GROWTH OPPORTUNITIES
ABOVE GROUND RISK
PARTNERING / RELATIONSHIPS
TALENT MANAGEMENT
SUCCESSFUL TECHNOLOGY APPLICATION
FIRST MOVER / FAST FOLLOWER
WILLINGNESS TO EXIT
0 50 100
Ideal explorer Premier (EMF assessment 2009)
Exploration Director appointment
Board and Exco alignment
Thematic approach
Core BU’s and thematic approach
Pay based approach
Partner alignment
Improved regional data
Recruitmentand career development
Less reliance on consultants
Exit non strategic arease.g. Philippines
November 2010 | Page 13
• Material exploration success creates value
• Stay focussed to areas of expertise (Cairn model) and don’t give up!
– Premier has successfully explored rifts and frontal fold belts
• Acquisitions can jump start exploration success, but keep the people not just the assets (Tullow)
– Consider acquisitions in focus areas, for both subsurface and human resources
– Oilexco was a success in this respect
• Taking above ground risk with low geologic risk can create share value (Heritage model)
– Premier has a proven track record in this type of exploration (Vietnam and historically, Pakistan and Myanmar)
• Improvement is required in Premiers performance to ensure value creation and investor recognition-People and process
Benchmarking lessons
November 2010 | Page 14
Functional charter: exploration
MISSION AND GOALS
Function • To deliver reserves growth and value in line with Corporate mid-term targets through high quality focussed exploration in areas and themes of expertise
• To bring together the strengths of the Exploration sub-functions and BU Exploration teams to build a streamlined exploration portfolio through coordinated effort and cooperation
APPROACH
Supporting the Plc • Definition and implementation of the global exploration strategy
• Secure the funding consistent with the exploration goals and financial guidelines/constraints
• Make Group exploration portfolio decisions, from new acreage capture through to dilution and/or disposal
• Create and maintain an exploration business management system
Supporting BU’s • Maximise the effectiveness of the exploration organisation by sharing and disseminating exploration best practice, and coordinating objectives through the Exploration Management Forum
• To support initiatives, while providing guidance and direction on Corporate goals through the Corporate Exploration Organisation
• To encourage and facilitate implementation of consistent and realistic evaluation procedures across the BU's through regular Peer Assists and Peer Reviews, and provision of supporting resource and Corporate Guidelines for exploration procedures
• Provide functional input and resources to BD,NV and portfolio maturation projects, as requested
Non-BU Business (growth) • To identify, evaluate and deliver quality new strategic exploration area in new geographies to the Group, consistent with the Exploration strategy
November 2010 | Page 15
ChiefGeophysicist
ChiefGeophysicist
Special ProjectsSpecialist
Special ProjectsSpecialist
OperationsGeophysicist
OperationsGeophysicist
Chief DevelopmentGeologist
Chief DevelopmentGeologist
Group ExplorationCoordinator
Group ExplorationCoordinator
ChiefGeoscientist
ChiefGeoscientist
LicenceAdministrator
LicenceAdministrator
ExplorationDirector
ExplorationDirector
Geoscience technology team structure
Direct
Indirect
November 2010 | Page 16
• NB. Exploration Manager is primarily focused to license, people and external stake holder management– Not internal Coaching / leadership
• Lead Geoscientist can be NV or existing asset focussed, subject to business plan requirements– Coaching and technical leadership role
ExplorationDirector
ExplorationDirector
Exploration NewVenture Leader
Exploration NewVenture Leader
Lead Geoscientist(in either group)
Lead Geoscientist(in either group)
Current AssetsLeader
Current AssetsLeader
LicenceAdministrator
LicenceAdministrator
Business UnitManager
Business UnitManager
ExplorationManager
ExplorationManager
Evaluation TeamEvaluation TeamEvaluation TeamEvaluation Team
BDSupport
BDSupport
OperationsTeam
OperationsTeam
Business PlanBusiness Plan
Strategic Exploration Areas
Study Areas Test Areas Core & Emerging
Play Maps
Regional Basin Master
Direct
Indirect
Functional
Exploration team structure – Asia and North Sea
November 2010 | Page 17
Percentage man hours spentper key exploration activity
November 2010 | Page 18
• Nautilus Program
• Annual field trips- Global involvement
• Training junior geoscientists
• Overseas staff- UK MSc’s
• ExploHub
• Specialised internal courses ( with external expert support)
– Play analysis
– Seismic attributes- Geophysical Forum formed
• Learning on the job
– The fundamental way to learn
– Requires coaches and mentors
Developing the oil finders
November 2010 | Page 19
Mission statement:To provide a unique exploration training environment that will prepare exploration geoscientists for the challenge of discovering the Earth’s remaining hydrocarbon resources.
ExploHub
November 2010 | Page 20
To develop oil finders take time
•1978 to 1990– Geophysicist in BP– Learning to explore– Specialising in Sequence Stratigraphy
•1990 to 2000– Exploration manager in BHP– Significant discoveries in Pakistan
•2000 to 2009– VP Exploration in Hess– Discoveries in Europe, North Africa
and Australia/Asia
•2009 to Present– Exploration Director Premier
Andrew Lodge – a career in exploration!(Cum mmboe)
1600
0
1400
1200
600
800
400
Eur
ope
200
1000
Eur
ope
Eur
ope
Afr
ica
Afr
ica
Asi
a
Asi
a
Asi
a
Asi
a
Asi
a
Asi
a
Afr
ica
Afr
ica
Afr
ica
Asi
a
Afr
ica
Asi
a
Asi
a
S.
Am
eric
a
Eur
ope
Eur
ope
Asi
a
1978 1990 2000 2009
Premier recuits a samml number graduates
November 2010 | Page 21
Premier recruits people with various experience levels
• Graduate recruitment
• Occasional recruitment, primarily to nationals in existing Business units
• Primarily external training development
• Lead Geoscientists
• 10 to 12 year major company experience
• People primed to turn learning's to reality
• Coaches and Leaders of the futures
• 20 year Plus+ geoscientists
• Employed in key expert or functional roles- Premier employees and long term consultants- have had success in multiple plays or basins
• Premier seeks to develop all exploration geoscientists to contribute to organic growth of the company
Andrew Lodge – a career in exploration!(Cum mmboe)
1600
0
1400
1200
600
800
400
Eur
ope
200
1000
Eur
ope
Eur
ope
Afr
ica
Afr
ica
Asi
a
Asi
a
Asi
a
Asi
a
Asi
a
Asi
a
Afr
ica
Afr
ica
Afr
ica
Asi
a
Afr
ica
Asi
a
Asi
a
S.
Am
eric
a
Eur
ope
Eur
ope
Asi
a
1978 1990 2000 2009
**
*
November 2010 | Page 22
Exploration strategy
The goal is to deliver 200 mmboe of reserves through the drill bitfocussing on areas where we have demonstrated skills and expertise
Longer-term programme
• Rift Basins: new acreage in the North Sea, Asia and Middle East
• Frontal Fold-belt plays: new acreage in the Middle East and Asia
North Sea / West AfricaAsiaMiddle East-Pakistan
Geography Geology
RiftsFrontal Fold Belts
Near-term programme
• Asia: Nam Con Son Basin (Vietnamand Indonesia)
• North Sea: UK Central North Sea and Norwegian North Sea
$ spend
Talent management is afundamental to success• Premier is focussed to growth of reserves, value AND its people
……but it will time and effort to succeed