ophir powerpoint template - seneca college · 2015-08-07 · number of risks and uncertainties...

CORPORATE PRESENTATION July 2015

DISCLAIMER

Corporate Presentation – July 2015 Slide 2

THIS DOCUMENT IS CONFIDENTIAL This document has been prepared and issued by and is the sole responsibility of Ophir Energy plc (the “Company”) and its subsidiaries for selected recipients. It comprises the written materials for a presentation to investors and/or industry professionals concerning the Company’s business activities. By attending this presentation and/or accepting a copy of this document, you agree to be bound by the following conditions and will be taken to have represented, warranted and undertaken that you have agreed to the following conditions. This presentation is strictly confidential and may not be copied, published, distributed or transmitted. If you do not accept these conditions, you should immediately destroy, delete or return this document. The document is being supplied to you solely for your information and for use at the Company’s presentation to investors and/or industry professionals concerning the Company’s business activities. It is not an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company in any jurisdiction nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract commitment or investment decision in relation thereto nor does it constitute a recommendation regarding the securities of the Company. This presentation is for informational purposes only and may not be used for any other purposes. The distribution of this presentation in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this presentation comes should inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a violation of securities laws of any such jurisdictions. This presentation and any materials distributed in connection with this presentation may include certain forward-looking statements, beliefs or opinions, including, without limitation, statements with respect to the Company’s business, financial condition, results of operations, plans, objectives and estimates, including, among others, resource estimates. These statements, which contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect” and words of similar meaning, reflect the Directors’ beliefs and expectations and involve a number of risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance and developments of the Company or industry results to differ materially from those expressed or implied by such forward looking statements, therefore, undue reliance should not be placed on forward looking statements. Past performance of the Company cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date of this presentation and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation, whether as a result of new information or future events. No statement in this presentation is intended to be a profit forecast or should be interpreted to mean that future earnings per share of the Company will necessarily match or exceed its historical published earnings per share. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, no representation or warranty, express or implied, is made and no reliance should be placed, on the fairness, accuracy, correctness, completeness or reliability of that data, and such data involves risks and uncertainties and is subject to change based on various factors. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness. 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Without prejudice to the foregoing, no liability whatsoever (in negligence or otherwise) for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection therewith is accepted by any such person in relation to such information.

AFRICAN-ASIAN PORTFOLIO


Positioned to thrive in uncertain times

STRATEGY

Slide 4

VALUE CREATION THROUGH EXPLORATION

FOCUS ON ROCE THROUGH CAPITAL ALLOCATION AND COST MANAGEMENT

ACTIVE PORTFOLIO AND RISK MANAGEMENT

Corporate Presentation – July 2015

Ophir is BIG E and little p

OPHIR DOES NOT THINK LIKE A TRADITIONAL, FULL CYCLE E&P


• Exploration is focus for creation of shareholder value

•Unique position to deliver high graded portfolio due to strong balance sheet and minimal well commitments

• Self-funded development activity

•Minimal existing capital will be deployed to developments

• Production is a financing stream for E&A activity

• Reserves replacement and production growth are not key metrics

•Assets must break even at low oil price

EXPLORATION DEVELOPMENT

RETURN TO SHAREHOLDERS

PRODUCTION

CASH

A SELF-SUSTAINING EXPLORER DELIVERING SUPERIOR RETURNS TO SHAREHOLDERS

EXPLORATION – A UNIQUE OPPORTUNITY


STAGE 1: ENTRY STAGE 2: SEISMIC STAGE 3: DRILLING

High Signature Bonus

Seismic

Multiple Wells

High costs High cost

Mainly commitment Wells

PROGRESS

PROGRESS Small/No Signature

Bonus

Seismic inherited Costs down c. 50%

Rig costs down c. 30%

Only drill top ranked prospects

TOP

O

F C

YCLE

B

OT

TOM

O

F C

YCLE

DROP

DROP DROP DROP

ALL THREE COST COMPONENTS DROPPED IN PRICE - RISK OF ROCKS IS UNCHANGED

Minimal commitments, low cost entry

HIGH GRADED EXPLORATION PORTFOLIO


2015 MATURING PLAYS FOR HIGH GRADING

12 PLAYS Aru Trough (oil)

EG (oil) G4/50 (oil)

Gabon pre-salt (oil) Gabon post-salt (oil)

Gabon conjugate margin (oil) Kenya (oil/gas) Kerendan (gas)

Makassar Straights (oil/gas) Myanmar (gas) Seychelles (oil)

Western Birds Head (oil)

• Doubled exploration footprint

• 1 deepwater well commitment

• $100 MM of committed E&A spend 2015-2017

• $50 MM to build new portfolio

• Discipline to only drill preferred prospects

• Must be clear path to commercialisation

2014

5 PLAYS 2 Established 3 New tests

FINAL WELLS IN IPO PORTFOLIO

• 8 commitment wells in 2014

• c.$500 MM in commitments to build IPO portfolio

2016/17

DRILLING ON HIGH GRADED

PLAYS

ONLY PROGRESS TOP RANKED PROSPECTS

CAPITAL DISCIPLINE

WALK AWAY FROM PROSPECTS

THAT WON’T WORK

SELF FUND

• Not all barrels are equal

• We explore for high quality barrels that generate cash in a low price environment

• Project equity is a source of capital

No fresh capital deployed to development

SELF FUNDING DEVELOPMENT ASSETS


PRODUCTION

TOTA

L V

OLU

ME

2C

:

11

52

MM

bo

e

EQUATORIAL GUINEA W.I. 80%

KERENDAN W.I. 75%

BUALUANG W.I. 100%

TANZANIA W.I. 20%

CASH FOR E&A

First gas 2022

First gas 2020

First gas 2016 2nd phase of dev.

On production 3rd phase of dev.

2P RESERVES

SELF FUND

2014 2015 2016 2017 2018 2019 2020

Providing value and basis for significant production growth

DIVERSIFIED ASSET PORTFOLIO

Material resource base offering significant and predictable cash flow

• Current production from assets on- and offshore Thailand

• Near-term production onshore Indonesia – first gas in 2016

• Further expansion of Kerendan and Bualuang

• Medium-term production from Equatorial Guinea FLNG – production start estimated for 2019

• World class pre-development stage asset in Tanzania with proven commerciality

Ker

end

an

Fort

un

a

FLN

G

Tanzania LNG

10

-12

m

bo

epd

Total production in 2020 above 35 mboepd

Sala

man

der

ac

qu

ired

‘15

Bu

alu

ang

Exp

ansi

on

Additional volumes if current equity in Fortuna FLNG is retained

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019 2020

- Sinpuhorn - Buluang - Kerendan - Block R

Cash Flow Composition by Asset


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Low levels of commitment spend, strong balance sheet, high degree of flexibility

CAPEX AND COSTS

Slide 10

• 2015 capex 53% down on 2014

- 2015 capex forecast $250-300 MM

• E&A capex down c. 60% on 2014

• $250 MM of cost savings

- Capex revisions

- G&A reductions: closing 5 offices

- Acquisition synergies

• High degree of financial flexibility

- Only $35 MM of commitment spend in 2015

- Total E&A commitment spending of $100 MM through end 2017; c. 9% of YE 2014 cash

- $150 MM carrying cost to FID for LNG projects

• Fully funded for 3 years on current plan

- Flexibility to scale back capex if required

- Combination of cash, debt and cashflow

Discretionary 85%

Commitment 15%

Pre-Development 35%

Development 25%

E&A 40%

2015 CAPEX – E&P Vs P&D

2015 CAPEX - Discretionary vs Commitment


DEVELOPMENTS

Four key things required to make an LNG project work

LNG OVERVIEW

MILESTONES

LAND / MIDSTREAM

JV PARTNER ALIGNMENT

FISCAL TERMS

RESOURCES

4 • Land identified but yet to be formally awarded

• Chartering agreement to be finalised

3 • Project team working well • All companies well respected

• Ophir & GEPetrel

2 • Agreed • Agreed

1 • 15 TCF • 3 trains of LNG

• 3.4 TCF • 2.2 Mtpa project

Award of Land Bringing in Upstream partner

BUYERS

TANZANIA EQUATORIAL GUINEA





Why FLNG appropriate solution

• Biogenic gas, 99.7% methane – clean and

simple

• Benign meta-oceanic conditions

Why Ophir can be the Upstream operator

• Operator’s role in Upstream development

relatively straightforward

- Drill, complete and tie-back to vessel

• $1.5bn of Midstream capex turned into opex

• c. $0.8bn of Upstream capex to first gas

• Self fund once farmed out

- Only progress to FID if equity has been reduced

Slide 13

FLNG IS RIGHT SOLUTION IN EG, UPSTREAM COMPONENT WITHIN OPHIR’S ABILITY TO OPERATE


FLNG VALUE CHAIN (PRICES INDICATIVE)

Slide 14

UPSTREAM PSC

Government

MIDSTREAM SHIPPERS LNG BUYERS

FOB DES NETBACK

$ CASHFLOW

LNG (GAS) FLOW

$8.5/MMbtu

$5.0/MMbtu

$10.00/MMbtu

$1.5/mmbtu

$3.5/mmbtu

CASH Paid by LNG Buyer to OPHIR/SONAGAS for LNG

Cargo at FOB Price Delivered LNG

Cargo price

LNG Buyer pays for Shipping

CASH Paid for Liquefaction Tariff by Contractor (Ophir/GEPetrol) &

Government to FLNG operator

Netback Price used in PSC for calculating and valuing

Royalty, Cost Recovery and Profit Gas

Royalty 7%-17%

GEPetrol Profit Share

MMIE Profit Share

Income Tax paid by Ophir

Cost Recovery (Ophir/GEPetrol)

Ophir Profit Share


0

20

40

60

80

100

120

0

2

4

6

8

10

12

14

16

Ad

dit

ion

al d

em

and

(m

mtp

a)

De

live

red

pri

ce $

/MM

btu

FOB Break Even $/mmbtu Shipping to Toyko Bay $/mmbtu Cumulative mmtpaAdditional demand required by 2025

EG costs reduction of c.$1/MMbtu following Golar appointment not reflected here

LOW BREAKEVEN COSTS FOR LNG PROJECTS

1 Data taken from IHS Waterborne – General assumption that upstream requires 15% and Liquefaction 12% US Liquefaction based on $4/mmbtu HH and a tolling fee of between $3.00-4.00/mmbtu

Breakeven cost stack of projects yet to take FID

Slide 15 Corporate Presentation – July 2015

EXPLORATION

THAILAND – NEAR-FIELD EXPLORATION DRILLING

Step out from Bualuang oil field

• G4/50 surrounds production licence

• Blanket 3D over licence

• 18 locations have approved EIAs

• 2 wells in 2H 2015

Ophir reviewing prospect inventory

• Locations to be approved mid year

• 2 wells to be drilled in Q4

• Follow up drilling dependent on initial results

Low cost drilling

• Less than $10 MM per well

• Offset 50% of cost against Bualuang production tax

Duen Chai West

Bua Nin

Soy Siam

Rak

NW2

B8/38-2 Deep


GABON – HIGH-GRADING EXPLORATION PROSPECTS

Building on learnings from 2014

• Saw all elements of hydrocarbon system

• Update geological model

• Apply learnings to interpretation of new 3D data

New oil play emerging

• Awarded Nkouere and Nkawa blocks outboard of previous acreage

• Conjugate margin play

• Analogous to Bara discovery, offshore Brazil

3D seismic survey shot in 4Q 2014

• Shot over 10,000 sq km 3D survey

• No drilling commitment

• Seismic interpretation and prospect hi-grading in 2015

• Possible drilling in 2016

Looking for prospects between 250 – 500 MMbo


MYANMAR – LEADING DEEPWATER EXPLORATION

95% operated interest in Block AD-03

• Located in Rakhine Basin

• On trend with 9 Tcf Shwe gas field

• Pipeline to China (current price c.$9/mcf)

• No drilling commitment

3D seismic survey commenced March 2015

• Committed to shoot 2,500 sq km

• 3D prices down by 65%

• Shooting a 10,000 sq km survey

First mover advantage

• Only company capturing seismic in current weather window

• 6-12 months ahead of other companies in terms of work programme

Preliminary mapping on existing 2D indicates prospects of up to 40 Tcf


SUMMARY AND OUTLOOK

• Development assets self funding

• Cost and capex reduction of $250 MM in 2015/16

• YE ‘15 cash expected to be $700 MM - $750 MM

• Fully funded until end 2017 on current work programme

• Unique opportunity to access high quality portfolio with minimal commitments

• Disciplined approach to capital allocation – focus on ROCE

• Sustain a world class exploration track record

FORTUNE FAVOURS THE BRAVE!


For further information contact:

Head of IR and Corporate Communications [email protected]

Geoff Callow

Level 4 123 Victoria Street London SW1E 6DE UNITED KINGDOM

Tel: +44 (0)29 7811 2400 Fax: +44 (0)20 7811 2421

EQUATORIAL GUINEA

Slide 22

Fortuna Complex

Viscata

Lykos

Undrilled Silenus Hub prospects

Silenus East

Estrella De Mar

Tonel

Oreja Marina

Six commercial gas discoveries have been made within Block R Appraisal Area (green):

• 2002 Exxon: Estrella de Mar

• 2008 Ophir: Fortuna, Lykos

• 2012 Ophir: Tonel, Viscata

• 2014 Ophir: Silenus East

Exploration Area (red):

• Possible 7TCF (Unrisked and high risk)

Recoverable Resources (TCF):

1C 2C 3C

Ophir Discovery 2.4 2.7 3.2

Ophir Discovery + Risked Silenus Hub

3.0 3.4 4.1





BLOCK R – SCHEMATIC CROSS SECTION

Slide 23

Silenus


$970m

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Cash YE'14 OCF Capex Other Cash YE 2015

~ $150m

$700m - $750m of cash YE 2015

$250m-$300m

Fully funded for next 3 years, high degree of financial flexibility

BALANCE SHEET

Slide 24

Only $35m of E&A

commitment spend


ophir powerpoint template - seneca college · 2015-08-07 · number of risks and uncertainties...

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