Faroe Petroleum March Slide 1

Transcription

1 Faroe Petroleum March Slide 1

2 Disclaimer These materials do not constitute or form any part of any offer or invitation to sell or issue or purchase or subscribe for any shares in Faroe Petroleum plc (the Company ) nor shall they or any part of them, or the fact of their distribution, form the basis of, or be relied on in connection with, any contract with the Company relating to any securities. Any decision regarding any proposed acquisition of shares in the Company must be made solely on the basis of public information on the Company. These materials are not intended to be distributed or passed on, directly or indirectly, to any other persons. They are available to you solely for your information and may not be reproduced, forwarded to any other person or published, in whole or in part, for any other purpose. No reliance may be placed for any purpose whatsoever on the information contained in these materials or on their completeness. Any reliance thereon could potentially expose you to a significant risk of losing all of the property invested by you or the incurring by you of additional liability. No representation or warranty, express or implied, is given by the Company, its directors or employees, or their professional advisers as to the accuracy, fairness, sufficiency or completeness of the information, opinions or beliefs contained in these materials. Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered or incurred as a result of the reliance on such information, opinions or beliefs. Certain statements and graphs throughout these materials are forward-looking statements and represent the Company s expectations or beliefs concerning, among other things, future operating results and various components thereof, including financial condition, results of operations, plans, objectives and estimates (including resource estimates), the Company s anticipated future cash-flow and expenditure and the Company s future economic performance. These statements, which may 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 as they relate to events and depend on circumstances that will occur in the future. Forward-looking statements speak only as at the date of these materials and no representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. The Company expressly disclaims any obligation to update or revise any forward-looking statements in these materials, whether as a result of new information or future events. If you are considering buying shares in the Company, you should consult a person authorised by the Financial Conduct Authority who specialises in advising on securities of companies such as Faroe Petroleum plc. Slide 2

3 Introduction to Faroe Petroleum Building a leading pan-north Sea independent E&P company Established North Sea full cycle E&P independent Founded in 1997, entered the UKCS in 2004 and NCS in 2006 Headquartered in Aberdeen, offices in Stavanger and London 40 oil & gas assets: 29 in Norway, 8 in UK, 3 in Ireland Recognised technical and operational organisation with 80 employees Quoted on AIM, market cap 390m 1 Material, low cost production from diversified portfolio 97.7 mmboe 2P reserves per 31 December production guidance of 12-15,000 boepd (20 14,300 boepd) 2018 average opex expected between $23-27/boe 78.6 mmboe 2C resources On target for significant production growth Operator of Brasse discovery, targeting FID in H Fenja development PDO submitted December 20 Njord, Bauge, Fenja, Oda and Tambar projects all on schedule Continuously evaluating M&A opportunities to accelerate growth Conservative financial strategy, strong balance sheet H1 20 revenues of 80m, EBITDAX of 44m, operational cashflow 66m Year end unaudited cash at 149m and net cash at 75M $250m RBL + $100m (accordion), currently undrawn $100m senior unsecured bond issued November 20 Strong support from institutional shareholder base Open to asset farm-downs where appropriate Njord Area Brage Area Ula Area UKCS Area 1 as at the close of business on 23 February as adjusted for the sale of.5% of Fenja which remains subject to approval by Norwegian Authorities Slide 3

4 Delivery through the drill bit Reserves evolution 2P Reserve Growth (mmboe) % Discoveries (Transfer from 2C) 61 16% Discoveries (Maria swap) 19 25% Existing portfolio & acquisitions (net of production) Reserves Evolution Slide 4

5 Faroe Petroleum Unique strategic position High quality, diversified pan-north Sea asset base Material production growth from existing portfolio Active portfolio management driving shareholder returns Exploration remains core value creator Strong balance sheet provides financial flexibility ~ $500m liquidity 12 principal fields across 4 hubs/areas 2P reserves: 98 mmboe, 79% oil (YE) 1 Production: 14,300 (FY) 2 Funded growth potential to >35,000 boepd Further upside to increase to >50,000 boepd from existing portfolio DONG assets acquired at bottom of cycle Fenja part-divestment agreed UK and Norway acquisition focus Significant 2P reserves from exploration Five high quality E&A wells planned for 2018 Actively adding to acreage position YE net cash of 75 million 3 Successful $100 million bond (Nov-) $250 million RBL remains undrawn 1 Adjusted for the disposal of a.5% participating interest in Fenja which remains subject to regulatory approvals 2 Preliminary 20 net economic production 3 Unaudited. Gross cash 149 million YE. Slide 5

6 Production (boepd) Visible, organic production growth Fully funded for organic projects, additional infill upside 50,000 Contingent Resources incl. infills Gross Margin $/boe Producing fields, Oda, Njord Future, Bauge, Fenja, Brasse Unit Opex 2018 Fully funded production growth plus identified upside in existing portfolio 2022 Strong growth trajectory from subsea tie back developments Note: this chart relates to existing, defined projects; it is illustrative and not forward guidance Slide 6

7 Material production & reserves from diversified portfolio ULA hub area Growth area for Faroe given Oda development, Tambar EOR and further investment opportunities Pursuing cost reductions and incremental barrels Operators (Ula/Tambar) (Oselvar) Net 2P Net prod. mmboe, Jan 2018 boepd, ,440 (Oda) Greater NJORD hub area Njord Future project to exploit >340mmboe of gross reserves Njord A platform on track for restart in 2020 Fenja PDO submitted December 20 Operators (Njord Area) (Fenja) Net 2P Net prod. mmboe, Jan 2018 boepd, restart TRYM Faroe-operated subsea tieback with low unit Opex Materially de-risked following Tyra redevelopment plan Contributing material production until suspension in mid-2019 with planned restart in 2022 BRASSE hub area NCS producer with initial STOOIP of ~1,000 mmboe Faroe-operated Brasse discovery nearby with targeted development sanction in H Brage decommissioning liabilities retained in part by Petoro UKCS Tax efficient production from portfolio of mature assets Tax loss position enables value-accretive M&A Blane field (UKCS) included in Ula hub Operator Operators (Brage) (Brasse) Operators (Schooner & Ketch) (East Foinaven) Net 2P Net prod. mmboe, Jan 2018 boepd, ,540 Net 2P Net prod. mmboe, Jan 2018 boepd, 20 1,830 Net 2P Net prod. mmboe, Jan 2018 boepd1 20 2,490 Slide 7

8 Asset summary

9 Brage hub area: BRASSE - flagship operated project - 50% Robust, simple subsea development project with excellent address Brasse: (Faroe 50% and operator) PL740 Brasse oil and gas discovery July 2016 similar to Brage Matured to 2P reserves within 18 months from discovery 2P reserves of 30.7 mmboe net Recoverable oil: 25mmbbl; recoverable gas: 34 bcf Two potential hosts - 13 km to Brage & Oseberg Central platforms Brasse 20 appraisal campaign successful: Already proves southern extent of discovery, and commerciality of field Very good reservoir properties and in communication with discovery DST flowed at a maximum stable rate of 6,187 bopd Successful side-track confirmed high quality sands Concept Selection planned for 2018; first oil anticipated 2020/21 Preliminary plan assumes a subsea tie back development Preliminary net capex estimated at 240m for a five well development scenario 1 1 The actual capex levels will depend on development concept and commercial terms for tie-in Slide 9

10 Ula hub area Significant upside from further infill drilling and WAG scheme Ula, Tambar, Oda and Blane Ula Renewed exploitation drive underway led by AkerBP New 4D seismic, infill targets maturing Tambar Two new infill wells drilled, due on stream Q Retrofit gas lift system in existing wells Oda Subsea tie-back to Ula First oil expected in 2019 Upside potential Oselvar candidate for redevelopment Blane infill well being considered Exploration Cassidy in H2 Significant reduction in unit opex targeted Ula platforms Slide 10

11 Njord hub area: NJORD + HYME + BAUGE + FENJA Attractive projects with excellent upside Njord: (Faroe 7.5%) + Fenja (Faroe 7.5%*) Significant resource base Gross reserves on Faroe licences estimated to be more than 340 mmboe (gross) via Njord hub Njord Future Project Njord A dry dock phase completed Bauge to be developed as a subsea tie-back to Njord Planned to come back on stream in 2020 Fenja subsea tie back development to Njord Three horizontal producers supported by water and gas injectors FDP submitted December 20 Partial cash sale (.5%) to Suncor ($54.5m) Bauge (7.5%) Njord Hub (7.5%) Fenja (7.5%)* Hyme (7.5%) Njord (Faroe 7.5%) Fenja (Faroe 7.5%)* Njord A facility at the Aker Stord yard * as adjusted for the sale of.5% of Fenja which remains subject to approval by Norwegian Authorities Slide 11

12 Exploration benefiting from significantly lower costs Tax-efficient exploration offers material value uplift Balanced exploration strategy with strict internal criteria for drilling and exploration Benefiting from lower exploration costs Brasse among cheapest wells drilled on the NCS in recent times Exploration spend deductible for tax purposes (and eligible for a tax rebate from the Norwegian State at the rate of 78%) Successful track record that has added delivered significant development projects from exploration, notably Maria (2010), Fogelberg (2010), Oda (2011), Fenja (2014), and Brasse (2016) Two E&A wells currently being drilled: Fogelberg Iris/Hades Four high-quality E&A wells committed for H and H Rungne Faroe operated Pabow Cassidy Yoshi Many further targets being matured to drilling decisions to deliver sustainable long term drilling programme Slide 12

13 Exploration & Appraisal Production & Development Key catalysts 2018 Value-driving events over next ~12 months Q1 Q2 Q3 Q4 H1 Tambar infills Brage infills Brasse DG2 and PDO Fenja PDO approval 1 Oda first oil Iris/Hades Fogelberg Rungne Cassidy Pabow Brasse Extension 2 Yoshi 1 CP to divestment 2 Uncommitted Slide 13

14 Finances

15 Strong financial foundation to unlock value Diversified capital structure and financial flexibility Hedging Healthy cash balance Strong cash flow Financial flexibility & discipline Tax efficient Fully funded programme Significant debt headroom Exploration success driving development capex Seek to manage exposure to individual projects Operatorship important factor Strong balance sheet crucial Prudently increase leverage through development phase Target financial ratios below mandated levels Reduce uncertainty where possible Active hedging programme Maintain cash buffer Financial flexibility Diversified funding sources Ability to move quickly and access opportunities Slide 15

16 Capital structure and liquidity - approx. $500m Maximizing debt availability Reserves based lending facility $250 million facility Maturity July 2023, amortisation starts 2020 Currently undrawn with availability of $235 million Total Liquidity 1 ( million) $100 million accordion available 2 Fenja to be added to borrowing base on a 1P basis upon PDO approval Undrawn RBL As production grows, so does debt capacity Exploration financing facility million 149 Cash (YE) NOK 1 billion available until 31 Dec 2019 Efficient funding for upcoming active drilling programme Bond loan 39 Fixed 8% coupon, maturity April 2023 Unsecured and covenant light Portfolio management to ensure balance Fenja farmdown proceeds Fenja farm down (announced Feb. 2018) from 25% to 7.5% realises $54.5m cash and reduces net share of capex by approx. $220m 1 At $/ FX rate of 1.40 and excluding the EFF and RBL accordion 2 Subject to credit approval Slide 16

17 2018 guidance Summary Item Unit 2018 guidance Njord Area Production boe/d 12,000 15,000 Opex* $/boe Capex million ~5 Brasse Area Exploration cost (pre-tax) million ~80 Decommissioning cost million ~13 Ula Area * Set to reduce to mid-teens per boe as new developments are brought on stream Slide

18 Summary Diversified portfolio, high upside, funded programme - material value growth Solid and proven pan-north Sea model with world class team delivering sustainable value growth Greatest exposure to Norway of all LSE quoted E&Ps Strong exploration programme continues and is sustainable - underpinned by production and Norwegian tax rebate Material Brasse discovery on track for near-term development Faroe is operator with 50% Asset base delivering solid value 2P reserves of 97.7mmboe plus 2C resources of 78.6mmboe, one of largest on AIM Portfolio has funded growth potential to deliver over 35,000 boepd Further upside to increase delivery to >50,000 boepd from existing portfolio Robust balance sheet (with no drawn RBL debt) and operationally strong at low commodity prices Robust balance sheet, undrawn RBL debt facility, new $100m senior unsecured bond, prudent financial management Tax efficient cash flow from production Profitable at low commodity prices - low unit opex (mid-20s $/boe), set to fall further as new wells & fields brought on stream Material forward programme locks in significantly lower costs and Norwegian State tax incentives Active programme ahead with significant investment focused on adding and growing reserves, production and cash flow 78% of E&A costs in Norway recovered from State; tax credits shield 90% of Norwegian investments Investing at bottom of cycle significant organic and M&A investment driving growth Strong balance sheet ensures all committed programme investments are fully funded - capturing low costs Actively pursuing near term growth in value and scale through deals - acquisitions, swaps and divestments Slide 18

19 Appendices

20 Rebased vs FPM (p/share) Strong support from institutional shareholders Share price performance and shareholder overview 12 Month share price performance Major shareholder split* Aviva: 6.6% Blackrock: 9.0% JP Morgan: 5.1% Invesco: 4.1% Delek: 15.4% Other institutional 47.4% Retail: 12.4% 95 Shareholder geographic split* Rest of the World: 18% United Kingdom 71% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 18 Brent FTSE AIM O&G Faroe Petroleum Feb 18 North America: 3% Nordic/ Europe: 8% * Source: RD:IR as at 14 February 2018 Slide 20

21 Faroe s executive team Graham Stewart Chief Executive Officer Instrumental in founding Faroe Petroleum in 1998 Over 30 years experience in oil and gas technical and commercial affairs Previously finance director and commercial director at Dana Petroleum 1997 to 2002 Experience with Schlumberger, DNV Technica, Petroleum Science & Technology Institute Offshore Engineering degree (Heriot- Watt University) and MBA (University of Edinburgh ) Helge Hammer Chief Operating Officer Joined Faroe Petroleum in 2006 Over 30 years technical & business experience, incl. Shell (Norway, Oman, Australia and Holland) Managing Director of wholly owned Norwegian subsidiary, Faroe Petroleum Norge AS Previously Asset Manager and Deputy Managing Director at Paladin Resources Economics degree (Institut Français du Pétrole, Paris) Petroleum Engineering degree (NTH University of Trondheim) Jonathan Cooper Chief Financial Officer Joined Faroe Petroleum as Chief Financial Officer in 2013 Former Finance Director of Gulf Keystone Petroleum and Sterling Energy and CFO of Lamprell plc Former Director of the Oil and Gas Corporate Finance Team of Dresdner Kleinwort Wasserstein Broad range of experience from mergers and acquisitions, public offerings and financing Chartered accountant by training having qualified with KPMG PhD Mechanical Engineering (University of Leeds) Slide 21