Faroe Petroleum Corporate Presentation June Slide 1

Transcription

1 Faroe Petroleum Corporate Presentation June 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 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 July 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 3

4 Faroe Petroleum overview Building the leading pan-north Sea independent E&P company A high quality, diversified North Sea asset base Hub-focused strategy to unlock synergies Material growth from existing portfolio Potential to more than treble production in next 5 years Accelerating growth through acquisition DONG asset acquisition in 2016 increased production 65% Exploration remains a core value creator Brasse discovery largest in Norway in 2016 Strong balance sheet YE16 cash 97m, undrawn $250m debt facility Total average production ,395 boepd (2015: 10,530 boepd) Balanced product mix 58% liquids 42% gas Average 2016 operating cost per boe $25 Set to decrease 1 Economic production which includes actual production acquired during a period - accounting production reflects production acquired only from the acquisition completion date Slide 4

5 Strategic summary Positioned for organic & inorganic growth Strategically well positioned Diversified pan North Sea portfolio Outstanding Norwegian position Focus on full cycle with hub and spoke synergies Long track record of delivery Very experienced team Financial flexibility Robust balance sheet Prudent financial management Committed forward programme fully financed Growth focused Strong growth from existing portfolio Exploration potential to deliver significant upside Actively pursuing growth-acceleration opportunities Slide 5

6 Track record of delivery Combining full cycle projects with M&A to create significant value Year end P Reserves 2016 Average Production 81 mmboe 17,395 boepd increase between increase between Year Reserve Growth Year Production Growth Slide 6

7 Production boe/d Delivering material organic growth in production & cashflow Visible growth route to over 50,000 boepd over coming 5 years Fogelberg (33%) 40 Pil (25%) Brasse (50%) Current fields Oda (15%) Njord Future and Bauge (7.5%) Tambar (45%) Brage (14%) Developments committed Developments to be sanctioned Development contingent on appraisal Slide 7

8 Nimble value creator - focused on the spokes and the hubs Focused strategy delivering value through synergistic approach hub strategy delivers enhanced technical insight multiple synergies lower unit costs spoke focus brings Compressed timelines Simple developments Leverage to supply chain Slide 8

9 Transformational 2016 acquisition in Norway Significant value creation + rapid payback July 2016: Announced deal to acquire 20 mmboe (2P reserves) from DONG for $70.2m December 2016: Acquisition completes with $27m payment, reflecting production outperformance (FY16 = 9,810 boepd) June 2017: Full pay back Outlook: Transfer of 2C Resources into 2P Reserves Infill drilling on Tambar in 2018 to increase production markedly Extension of Trym production Further compensation receipts scheduled to Oselvar Ula Tambar Oselvar Trym Total Faroe W.I. 20% 45% 55% 50% Operator BP BP Faroe Faroe 2P Reserves* 8.3 mmboe 6.4 mmboe 1.3 mmboe 3.8 mmboe 19.8 mmboe Trym 2C Resources* 7 mmboe 2 mmboe -- 2 mmboe 11 mmboe 2016 Production 1,637 boepd 2,017 boepd 1,241 boepd 4,915 boepd 9,810 boepd * CPR Jun 16 Slide 9

10 Exploration drive benefiting from much lower costs Tax-efficient exploration offers material value uplift Prospect Equity Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Brasse appraisal * 50% Brasse appraisal II *** 50% Goanna ** 30% Fogelberg Appraisal ** 33% Iris / Aerosmith ** 30% Brasse extension *** 50% SE Tor *** 85% Rungne *** 30% Oshun *** 20% * ongoing ** committed *** possible 1.5 bn boe unrisked prospective resource in portfolio Strong in-house team with excellent track record High success rate - focus on monetisation Exploration 2016: an award-winning year for Faroe Slide 10

11 Asset summary

12 Core hub areas Attractive projects with excellent upside Focus on value growth to realise synergies Greater NJORD hub area Njord Future Project (including new Bauge) on track for 2020 Pil & Bue FEED underway FDP expected late 2017/18 Further exploration upside BRAGE hub area Brasse 2017 appraisal campaign ongoing Brasse development feasibility studies underway Drilling of Brage in-fill wells ULA hub area Tambar gas lift and infill wells projects underway Further upside to exploit infill, Triassic Ula, exploration Slide 12

13 Production data 2016 and YTD 2017 Steady field performance Pil (25% W.I.) Production (boepd) 2016 May17 YTD Blane Schooner & Ketch Njord & Hyme Ringhorne East Brage Ula Tambar Oselvar Trym Other Group Slide 13

14 Brage hub area: BRAGE Incremental project to deliver 2018 production growth Brage: (Faroe 14.3%) Overview Large STOOIP (1,000 mmbbls) Net 2P Reserves at 5.0 mmboe at 1 Jan 2017 Wintershall 35.2% and operator Opex reductions through improvement projects Brage infill wells underway Three new targets sanctioned Portfolio of new infill targets 4D seismic to improve infills MAP Outstanding performance of the last two infill wells in Brage, A-18C and A-7B A-18 C A-7 B Slide 14

15 Brage hub area: BRASSE Robust, simple subsea development project with excellent address Brasse: (Faroe 50% and operator) PL740 Brasse oil and gas discovery July 2016 similar to Brage Preliminary estimates of mmboe recoverable volumes: recoverable oil: mmbbl; recoverable gas: bcf 2 potential hosts - 13 km to Brage & Oseberg Central platforms Brasse 2017 appraisal campaign ongoing: Already proves southern extent of discovery, and commerciality of field Very good reservoir properties and in communication with discovery Flow test (DST) results expected soon Concept Selection planned for 2018; first oil anticipated 2020/21 Brasse extension Subsea development schematic Host Brasse Brasse Slide 15

16 Brage hub area: BRASSE Attractive projects with excellent upside Brasse: (Faroe 50% and operator) Troll East Troll East 31/7-1 31/7-1 A Brasse Extension: New acreage Jan-17 3D map showing Top Sognefjord Slide 16

17 Ula hub area: ULA Significant upside from further infill drilling and WAG reinjection scheme Ula: (Faroe 20%) Overview AkerBP 55% and operator Net 2P Reserves at 6.5 mmboe at 1 January 2017 Field development Net 2P Reserves at 6.5 mmboe at 1 Jan 2017 (Ula only) Host facility for the Blane, Oselvar/Oda and Tambar fields Oil exported to Teesside, gas used for IOR Renewed exploitation drive underway led by AkerBP Upside potential Additional gas from Tambar & Oda 4D seismic project being planned Several infill targets maturing Triassic reservoir underexploited Significant reduction in unit opex planned Ula Hub (20%) Oselvar (55%) Oda (15%) Tambar (45%) Blane (30.5%) Slide 17

18 Ula hub area: TAMBAR Gas lift and new infill wells Tambar: (Faroe 45%) Overview AkerBP 55% and operator Net 2P Reserves 9.8 mmboe at 1 January 2017 Installing artificial lift Retrofit gas lift system (straddle) in existing wells Conversion of existing pipeline to gas lift service Potential for significant production increase Gas lift Installation to increase reserves Prolonged Tambar field life will provide additional gas for WAG on Ula Slide 18

19 Ula hub area: ODA 1 Simple, high-return oil development via Ula hub infrastructure Oda: (Faroe 15%) High value project Centrica 40% and operator, AkerBP 15% and Suncor 30% 66m water depth - excellent quality reservoir, light oil Subsea tie-back to the Ula platform via Oselvar infrastructure Two production wells and one water injection well FDP approved May All major contracts awarded - Gross capex expected at c.$645m Plateau production of c.35,000 boepd gross (c.5,250 boepd net) Net 2P Reserves at 6.9 mmboe at 1 January 2017 First oil expected in 2019 Extracting synergies in the Ula hub Faroe to capture - Oda compensation payment to Oselvar (Faroe 55%) - Oda tariff payment to Ula (Faroe 20% vs 15% of tariff) 1 Former field name Butch Ula Hub (20%) Subsea tieback of Oda to Ula platform Oselvar (55%) Oda (15%) Tambar (45%) Blane (30.5%) Slide 19

20 Njord hub area: NJORD + HYME + BAUGE + PIL + BUE Attractive projects with excellent upside Njord: (Faroe 7.5%) + Pil & Bue: (Faroe 25%) Njord Future Project FDP approval expected shortly In dry dock for hull reinforcements and modifications Bauge to be developed as a subsea tie-back to Njord Planned to come back on stream in 2020 Pil & Bue - Njord chosen as host facility Subsea tie-back development to Njord Three horizontal producers supported by water and gas injectors Front End Engineering Design (FEED) ongoing FDP planned for end 2017/ early 2018 Bauge (7.5%) Bue (25%) Njord Hub (7.5%) Hyme (7.5%) Njord (Faroe 7.5%) Pil & Bue (Faroe 25%) Pil (25%) The Njord a facility at the Aker Stord yard Blane (30.5%) Slide 20

21 Njord hub area: SIGNIFICANT RESOURCE BASE Material 2P reserves, future production and significant prospect inventory Faroe has material position in prolific Halten Terrace area Gross reserves on Faroe licences estimated to be more than 340 mmboe (gross) via Njord hub Net 2P reserves at 42.3 mmboe Significant exploration position Highly prospective area with good success rate Faroe discoveries include Maria, Fogelberg, Bauge (Snilehorn), Pil, Bue, NF2 and NF3 Faroe established and well regarded player Slide 21

22 Finances

23 Financial summary highlights and outlook Strong balance sheet, undrawn RBL, good hedging, production cash flow Healthy cash balance o 114m at 19/6/17 (unaudited) o mainly PUTs o 87% 2017 gas production at 40p/therm o 34% 2017 Oil at $54 bbl % of production on a Post tax basis Hedging Tax efficient o o 78% tax rebate for Norwegian E&A over 90% cost recovery for developments in Norway o 26m (2016) EBITDAX Strong cash flow Significant debt headroom o o o zero RBL drawn $250m 7 year RBL ($100m accordion) NOK 1bn EFF Fully funded investment prog o E&A 45m ( 11m after tax) o CAPEX 90m Prudent financial management strong balance sheet, financial flexibility Slide 23

24 2017 guidance Unchanged from 2016 results presentation (March 2017) Guidance item FY 2017 Actual to 31/5/2017 (unaudited) Comments Production 13,000 15,000 boepd 15,100 boepd Trym production not constrained as anticipated D&P capex c. 90 million 11.4 million Timing H2 weighted Exploration & Appraisal 45m ( 11m post-tax) 18.3 million Cash opex $25-27 boe approx. $25 boe Normalised for producing assets Slide 24

25 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 London quoted E&Ps Strong exploration programme continues - underpinned by production and Norwegian tax rebate Recent material Brasse discovery under appraisal more Norwegian exploration wells scheduled Asset base delivering solid value 2P reserves of 81.3mmboe plus 2C resources of 90.9mmboe, one of largest on AIM Portfolio has potential to deliver over 40,000 boepd organically Robust balance sheet (with no debt) and operationally strong at low commodity prices Robust balance sheet, prudent financial management, excellent undrawn debt headroom Tax efficient cash flow from production Profitable at low commodity prices - low unit opex (mid-20s $/boe), set to fall further as new wells and 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 and production 78% of E&A costs in Norway recovered from State; tax credits shield 90% of Norwegian investments Planned growth pushing ahead capturing low costs Strong balance sheet ensures all committed programme investments are fully funded Actively pursuing growth in 2P and value near term through potential further M&A/consolidation opportunities Strong recovery play in E&P sector very well placed for growth Slide 25

26 Share price Slide 26

27 Faroe Petroleum s shares Shareholder structure Number of shares in issue Average traded volume per day in 2016 Aviva: 7% Blackrock: 8% JP Morgan: 8% Other institutional 45% Fidelity: 9% 366.5m 1.3m Delek: 15% Retail: 8% Quoted on AIM, London Shares in free float approx. Geographically 87%* Rest of the World: 16% US: 2% Nordic/ Europe: 6% United Kingdom 76% *Source: RDIR Blue chip shareholder base Slide 27

28 Appendices

29 Group Income Statement Revenue 94, ,980 Cost of sales (96,666) (99,838) Asset Impairment (2,823) (45,108) Gross loss (4,710) (31,966) Other (expenses) / income (8,412) 13,867 Exploration and evaluation expenses (33,468) (89,537) Administrative expenses (10,189) (3,718) Operating loss (56,779) (111,354) Finance revenue 6, Finance costs (11,139) (11,855) Loss on ordinary activities before tax (61,495) (122,300) Tax credit 28,686 69,382 Loss for the year (32,809) (52,918) Slide 29