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HALF YEAR RESULTS 13 August 2015

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Page 1: Ophir PowerPoint Template

HALF YEAR RESULTS 13 August 2015

Page 2: Ophir PowerPoint Template

DISCLAIMER

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. The Company and its members, directors, officers and employees are under no obligation to update or keep current information contained in this presentation, to correct any inaccuracies which may become apparent, or to publicly announce the result of any revision to the statements made herein except where they would be required to do so under applicable law, and any opinions expressed in them are subject to change without notice, whether as a result of new information or future events. No representation or warranty, express or implied, is given by the Company or any of its subsidiaries undertakings or affiliates or directors, officers or any other person as to the fairness, accuracy, correctness, completeness or reliability of the information or opinions contained in this presentation, nor have they independently verified such information, and any reliance you place thereon will be at your sole risk. 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.

2015 Half Year Results Slide 2

Page 3: Ophir PowerPoint Template

Positioned to thrive in uncertain times

STRATEGY

VALUE CREATION THROUGH EXPLORATION

FOCUS ON ROCE THROUGH CAPITAL ALLOCATION AND COST MANAGEMENT

ACTIVE PORTFOLIO AND RISK MANAGEMENT

2015 Half Year Results Slide 3

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Response to the current oil price

STRATEGIC CONTEXT

Well positioned to grow NAV per share:

• Reduced capital expenditure

• Improved efficiencies and overhead cost reductions

• De-levered the Salamander balance sheet and retained financial strength

• Benchmarking projects against $50 per bbl environment

• Self funding developments

• Potential share buybacks

2015 Half Year Results Slide 4

Page 5: Ophir PowerPoint Template

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

2015 Half Year Results Slide 5

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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

2015 Half Year Results Slide 6

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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

2015 Half Year Results Slide 7

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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

Slide 8

PRODUCTION

TOTA

L V

OLU

ME

2C

: 9

50

MM

bo

e

EQUATORIAL GUINEA W.I. 80%

KERENDAN W.I. 70%

BUALUANG W.I. 100%

TANZANIA W.I. 20%

CASH FOR E&A

First gas 2022

First gas 2019

First gas 2016 2nd phase of dev.

On production 3rd phase of dev.

2P RESERVES

SELF FUND

2015 Half Year Results

Page 9: Ophir PowerPoint Template

FINANCIALS

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Strong balance sheet augmented by cash generation from operations

FINANCIAL HIGHLIGHTS

Income Statement

• Low field operating costs

Balance Sheet

• De-levered Salamander whilst retaining strong balance sheet

• Gross gearing 14.7%, net gearing -18.2%

Cash Flow Statement

• Net cash outflow of $266 million includes:

- Payments relating to 2014 drilling $161 m

- Share buyback $50 m

- Tax incurred in 2014 $78 m

- Deleveraging of Salamander portfolio $184 m

• Close to cash neutral in 1H 2015 – underlying operating cashflow v cap-ex

HY’15 HY’14

INCOME STATEMENT

Revenue ($ millions) 86.50 -

Realised Oil Price ($/bbl) 60.48 -

Field Operating Costs ($/boe) 7.36 -

(Loss) / Profit before taxation ($ millions) (123.30) 589.4

BALANCE SHEET

Capital expenditure / investments: ($ millions)

Acquisitions ($ millions) (1,128) -

Exploration and appraisal ($ millions) (51) (230)

Production and development ($ millions) (12) -

CASH & EQUIVALENTS ($ millions) 708 1,507

1,507

NET CASH ($ millions) 392 1,507

CASH FLOW STATEMENTS

Cash generated from operations ($ millions) 69.4 (12.7)

Share buy-back ($ millions) (56.1) -

(Decreased) / increase in cash ($ millions) (266.5) 527.0

2015 Half Year Results Slide 10

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Stripping cost out of the combined entities

SYNERGIES OF $60 MILLION PER ANNUM

• $60 million per annum of savings

• Closing five offices including Perth, London (ex-Salamander HQ), Singapore

• Combined headcount reduced by c. 35%

• Extracting efficiencies from on-going operations

Breakdown of Synergies

Salamander

Niko

Headcount/Costs

Offices / Other

2015 Half Year Results Slide 11

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Low level of commitment spend, robust production base

• FY 2015 Capex forecast unchanged

• Capex FY 2016 expected to be lower than 2015

• FY 2015 underlying operating cash flow from producing assets forecast at $110-$130 million

• High degree of financial flexibility

- Only $35 MM of commitment spend in 2015

- Total E&A commitment spending of $100 MM through end 2017

- $100 MM carrying cost for LNG projects to end ‘16

• Reposition debt portfolio

• Fully funded for at least 3 years on current plan

- Cash at HY 15 of $708 million, net cash $392 million

- Flexibility to scale back capex if required

- Combination of cash, debt and cash flow

FINANCIAL FLEXIBILITY

0

10

20

30

40

50

60

OCF OCF + Debt OCF + Debt + Capex

2015 breakeven oil price from current producing assets

2015 Half Year Results Slide 12

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OPERATIONS

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Seamless integration and efficiencies driving performance

ACHIEVING PRODUCTION EXPECTATIONS

Production guidance increased

• FY 2015 production forecast 11,000-12,500 boepd

• Sinphuhorm outperformed in 1H

• Dry winter resulted in increased demand to replace shortfall due to lack of hydro-electric power

• Bualuang production outperformed in 1H

• Operating team drove increased efficiencies from existing infrastructure

• Bottleneck in 2H due to reaching limits of water handling capacity

• Elected to defer planned water disposal well until after exploration drilling

• Production uplift deferred back to 1Q 2016

2015 Half Year Results Slide 14

0

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8

10

12

14

16

18

Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16

Ophir Energy Net Production All Fields - Working Interest Basis - Mboe/d

YTD Actual

Target

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Focus: Commercialising our gas resources

LARGE RESERVES AND RESOURCE BASE

Slide 15

Significant 2P reserves base from Thai and Indonesian assets

• 60 MMboe 2P – over 10 years of production at current levels

• Underpins strong production and cash flow in the medium term

• Over 55% is high margin gas, which is sold on long-term contracts

Large 2C resources base from Thai, Indonesian and African LNG assets

• Strong economics from Thai and Indonesian 2C by leveraging on existing infrastructure at Bualuang, Sinphuhorm and Kerendan

• High value African LNG to drive longer term production and growth

LARGE 2P + 2C BASE SKEWED TOWARD HIGH MARGIN GAS IN THE LONG TERM

Reserves (MMboe) 1P 2P 3P

Bualuang 17.6 24.9 31.1

Sinphuhorm 5.1 17.9 17.9

Kerendan 16.5 16.8 16.8

Total Reserves (MMboe) 39.2 59.6 65.8

Resources (MMboe) 1C 2C 3C

Bualuang 6.7 15.5 31.3

Sinphuhorm & Dong Mun 5.0 18.0 126.8

Kerendan 3.6 62.3 144.3

Equatorial Guinea 283.3 353.2 400.0

Tanzania 366.7 501.0 483.3

Total Resources (MMboe) 665.3 950.0 1185.7

Total Reserves and Resources (MMboe) 704.5 1009.6 1251.5

2P + 2C BY GEOGRAPHY 2P + 2C BY PRODUCT

Thailand 7%

Indonesia 8%

Equatorial Guinea 35%

Tanzania 50%

Oil 4%

Gas 96%

2015 Half Year Results

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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 & GEPetrol

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

2015 Half Year Results Slide 16

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Upstream component within Ophir’s ability to operate

FLNG IS RIGHT SOLUTION IN EG

Slide 17

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

- Manage reservoir performance over time

• $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

Third Party validation of FLNG solution:

• High-quality upstream FEED consortia

• Leading midstream FLNG supplier

• Credible gas buyers (4Q)

• Equity investors (FID)

Fortuna Gas Field DST

2015 Half Year Results

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Simple solution, proven technology

GOLAR LNG

• Heads of Terms concluded

• Lower cost conversion for Phase 1 development

• Proven concept - Golar Hilli conversion (Cameroon) >40% complete (Keppel,

Singapore)

• Proven technology - Black & Veatch PRICO process - 4 trains

• Golar Gandria vessel conversion early 2016 for Block R

• $3.50/mmbtu liquefaction + ~$0.25/mmbtu for mods

• Golar’s strategy is to export the US low cost tolling model to independent producers

Golar Gandria

Golar FLNG Conversion

2015 Half Year Results Slide 18

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Deliver into Asia for c. $7/mmbtu

COST COMPETITIVE ON A GLOBAL BASIS

• World class resources

• Simple technical solution

• Simple commercial structure

• Government support

• Offshore – light footprint

• Timing – fast to market

• Option for mid-2020s step-up

0.00

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14.00

NP

V 1

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Bre

ak E

ven

DES

Jap

an

FOB Cost (Breakeven)(US$/mmBtu)

Shipping Cost (US/$mmBtu)

2015 Half Year Results Slide 19

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FLNG VALUE CHAIN (PRICES INDICATIVE)

Slide 20

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

2015 Half Year Results

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Mechanical completion of facilities in August, material upside to be unlocked

KERENDAN

Slide 21

Phase 1 mechanical completion

• Gas processing facilities to be completed this month

• GSA for 120 Bcf at $5.03 per mcf, seeking price revision to > $7 per mcf post completion of facilities

• PLN 73% complete on transmission lines; 81% complete on power plant

Material upside to be unlocked

• 160 Bcf in Kerendan, 300 Bcf in West Kerendan not covered by GSA

• Indonesia reserves auditor completing independent report for regulator (SKKMigas) as a pre-cursor to further gas sales

• Power plant planned to be upgraded to 350 MW (c. 70 MMscf/d)

IncreasedPLN Capacity

Existing GSA: 123 Bcf

Kerendan 2C: 109 Bcf

West Kerendan 2C: 146 Bcf

Total 2C resource in excess of power plant capacity

Gas Engines arriving at PLN Power Plant

2015 Half Year Results

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EXPLORATION

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Low cost wells offering short term return on investment

THAILAND – NEAR-FIELD EXPLORATION DRILLING

Slide 23

Step outs from Bualuang oil field

• Well costs of c. $10 million each

• Both prospects would be commercial for fast track MOPU development

Soy Siam

• Soy Siam is mapped as a single fault block with access to charge from both the Bualuang and South western sub-basins

• Prognosed reservoir targets are equivalent to the producing reservoirs in the Bualuang field

• Pmean 25.3 mmbo, CoS 21%

Parichat

• Parichat cluster made up of 4 fault blocks with multiple stacked reservoir targets

• SW fault block to be drilled first – lowest risk 32% POS

• Success case appraisal of Parichat SE planned

• Pmean 24.9 mmbo, lowest risk 32% POS

Parichat Cluster

Soy Siam

2015 Half Year Results

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Maximum optionality at minimum cost

EXPLORATION – BUILDING A WORLD CLASS PORTFOLIO

• Forward commitment: $7.8 million

• Potential: Basin opening >500 mmboe oil & gas play

• Forward commitment: nil

• Potential: Basin opening, multi TCF gas play

Aru Trough, Eastern Indonesia Rakhine Basin, Myanmar

2015 Half Year Results Slide 24

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• Ophir’s strategic focus is value creation through the drill-bit

• Building a strong and cost efficient production base is key to preserve business model

• Ophir has a well balanced portfolio – significant exploration portfolio combined with a large reserves and resources base

• Material low cost producing assets and large gas developments offer significant cash flow and predictable production growth

• Strong balance sheet – fully funded for at least the next three years

• Significant financial flexibility – limited commitments and leverage combined with flexibility to sell assets to reduce capex and provide additional source of capital

SUMMARY AND OUTLOOK

2015 Half Year Results Slide 25

POSITIONED FOR MATERIAL GROWTH AND VALUE CREATION

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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

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Soy Siam Prospect

G4/50 - GULF OF THAILAND

• Soy Siam is mapped as a single fault block with access to charge from both the Bualuang and South western sub-basins

• Prognosed reservoir targets are equivalent to the producing reservoirs in the Bualuang field

Top N20 Depth Map

Potential Recoverable Oil (MMbls)

P90 P50 P10 Mean

7.0 24.0 68.6 25.3

Soy Siam

COS: 21%

2015 Half Year Results Slide 27

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Parichat SW

GULF OF THAILAND

• Parichat cluster made up of 4 fault blocks with multiple stacked reservoir targets

• SW fault block to be drilled first – lowest risk 32% POS

• Success case appraisal of Parichat SE planned

Top N20 Depth Map

2 Km

Parichat NE

Parichat NW

Parichat SW

Parichat SE

2015 Half Year Results Slide 28

Potential Recoverable Oil (MMbls)

P90 P50 P10 Mean

1.7 6.5 19.1 8.9

Parichat SW

Potential Recoverable Oil (MMbls)

P90 P50 P10 Mean

4.1 19.3 52.8 24.9

Full Parichat Cluster

POS: 32%