2011 Full-Year Results. 21 February 2012

Transcription

1 2011 Full-Year Results 21 February 2012

2 Forward Looking Statements This presentation contains statements that constitute forward-looking statements. Forward-looking statements appear in a number of places in this presentation and include statements regarding Dragon Oil plc s (the Company or together with its subsidiaries Dragon Oil or the Group ) intent, belief or current expectations with respect to its results of operations and financial condition. These statements reflect the Company s current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of the risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation as anticipated, believed, estimated, expected or intended. 1 By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. The Group is under no obligation, and disclaims any obligation, to update or alter the forwardlooking statements included in this presentation, whether as a result of new information, future events or otherwise after the date of this presentation. The updated field development plans as well as infrastructure and drilling projects are subject to approval by the Turkmenistan Government.

3 Contents Section Slides Dragon Oil since Operational and Corporate Results Financial Results Outlook

4 DRAGON OIL SINCE 2000 Dr Abdul Jaleel Al Khalifa CEO

5 Cheleken Contract Area Unprecedented gross production growth since the commencement of the Production Sharing Agreement in 2000 Organic 2P oil and condensate reserves replacement of 193% against cumulative gross production Capital investment of over US$2bn Refurbishment and extension of inherited infrastructure Construction and installation of new infrastructure offshore and onshore 65 new wells completed 12 Years of Growth and Development Ten-fold increase in gross production 4

6 Over a Decade of Strong Production Growth Gross Average Oil Production (bopd) 80,000 70, Exit Rate at 71,751 bopd Production has increased at CAGR of 21% per over the last 11 years 60,000 50,000 40, ,000 20,000 10,000 -

7 Excellent Reserves Replacement 2P Oil and Condensate Reserves, million barrels Dragon Oil has produced 115 million barrels, but added 222 million barrels of reserves Original Reserves Cumulative Production Reserves Additions 2011 Year End Reserves

8 Offshore Infrastructure Development Seven platforms refurbished and/or extended in the Dzheitune (Lam) field, including structural upgrades and additional slots: 21, 10, 22, 13, 28, 63 and A Six new platforms constructed in the Dzheitune (Lam) field Production platforms A, B and C with eight slots each Gathering stations Block 1 and 2 Accommodation platform km of in-field pipelines installed 40 km 30-inch trunkline completed The Dzeitune (Lam) 22 platform: old and refurbished The Dzeitune Block-1 and Block-2 old and new build The Dzeitune (Lam) B and C platforms 7

9 Onshore Infrastructure Development Central Processing Facility Today s handling capacity of 100,000 barrels of fluids and 220 mscfd of gas Oil Storage Total oil storage capacity of 300,000 barrels Export Capacity Simultaneous loading of two tankers 8 Above: Central Processing Facility. Above: Oil storage tankers. Above: Aladja Jetty.

10 Record Profits Profit for the Year (US$mn)

11 Growing Cash Balance Cash Balance, including A&D (US$mn) 2,000 1,800 1, ,600 1,400 1, , ,

12 2011 OPERATIONAL AND CORPORATE RESULTS Dr Abdul Jaleel Al Khalifa CEO

13 2011 Key Highlights Excellent operational and financial results Reserves and resources growth New 100,000 bopd target announced to be achieved in 2015 with plateau production level maintained for a minimum of five years Diversification begins Farm-in agreement signed for a 55% participating interest in an offshore exploration block in Tunisia 12 Marketing arrangements via Baku, Azerbaijan extended until the end of 2012 for all entitlement production

14 2011 Gross Production Growth Average gross production 2011 exit rate 30% ,500bopd ,211bopd 26% ,751bopd ,013bopd Average bopd ( 000) Growth over the total gross production in the previous corresponding period Group's gross production from the previous period Actual 2011 Actual 2012 Guidance TARGET STRONG GROWTH IN 2012 OF 15%

15 2011 Drilling Results 2011 drilling programme comprised 13 new wells One well and a sidetrack of an existing well already completed in 2012 Well Rig Completion date Depth (metres) Type of completion Initial test rate (bopd) 28/152 NIS March 3,768 Dual 3,463 B/153 Iran Khazar March 3,668 Dual 2,428 28/154 NIS May 1,830 Single 3,081 B/155 Iran Khazar June 2,800 Dual /156 NIS June 2,000 Single 3,038 B/157 Iran Khazar July 2,900 Single 1,767 28/158 NIS August 1,786 Single 2, B/159 Iran Khazar September 2,900 Single 2,223 13/160 Rig 40 September 2,791 Single 1,257 28/161 NIS October 3,670 Dual 3,176 A/162 Iran Khazar November 2,970 Single 1,096 28/164 NIS December 1,865 Single 3,018 13/163* Rig 40 December 2,703 Single 1,584 13/140A Rig 40 January ,237 Sidetrack 2,123 A/165 Iran Khazar January ,060 Dual 2,272

16 Reserves and Resources Proved and Probable Remaining Recoverable Reserves As at 31 December 2011 As at 31 December 2010 Oil and Condensate million barrels Gas TCF Oil and Condensate million barrels Gross field reserves to 1 st May C Resources Gross oil and condensate contingent resources Gross gas contingent resources Gas TCF % RESERVES REPLACEMENT AGAINST 2011 GROSS PRODUCTION

17 Dzheitune (Lam) West The original boundaries of the Dzheitune (Lam) West area have been extended based on encouraging drilling results since 2007 f Wells producing from the top sand in the Dzheitune (Lam) West show little decline, indicating strong water support f 15% of the reserves in the Dzheitune (Lam) West have been produced 16 f Latest simulation study shows very low water production f The Dzheitune (Lam) D and E platforms are planned for this area

18 2011 Infrastructure Highlights Completed projects Dzheitune (Lam) C platform Dzheitune (Lam) Block-1 and Block-2 gathering stations Structural upgrades on four platforms Six slots on the Dzheitune (Lam) A platform Geophysical and geotechnical evaluation of locations for 10 future platforms 17

19 Diversification Dublin London Tunisia Turkmenistan Africa, Central Asia, the Middle East and selectively southeast Asia Corporate and asset acquisitions Dubai TARGET 18 Farm-in agreement for a 55% participating interest in the Bargou Exploration Permit, offshore Tunisia Dragon Oil pre-qualified to participate in the 4 th bidding round in Iraq Oil and gas reservoirs, shallow water, offshore and onshore operations Assets with appraisal upside, short or long production history, exploration ventures

20 Gas Monetisation Short-term arrangement to reduce flaring of available gas Long-term gas sales agreement, targeted towards export markets, involving the supply of dry gas Infrastructure completed to bring gas onshore Compressor station is commissioned Wet gas is being supplied into the system Gas Treatment Plant completion Strip condensate for sale

21 Investment in People Future Talent 91% of our total manpower come from Turkmenistan Dragon Oil created a roadmap for talented high potential employees and offers a rewarding career within the organisation Training and Development Advanced in-house training programmes developed to support national employees Knowledge transfer to current talent through partnerships with educational institutes in the region 20 Awaiting new photography to place a picture here

22 Investment in Communities Desalination Plant Community Support Polyclinic Dragon Oil desalination plant with a capacity of supplying 1,500 m 3 of drinking water per day for the residents of Hazar and operations Refurbishment projects at a local school and nursery Sponsorship of social and sports events IHSAN project to improve sanitary facilities in three girls secondary school in Basra, Iraq To build a US$5mn polyclinic in Hazar to serve the local community 21

23 2011 FINANCIAL RESULTS Tarun Ohri Director of Finance

24 2011 Financial Highlights Revenue Net profit Cash Balance US$1+bn 68% US$1.5bn US$648mn Net of A&D Spectacular gross production growth Strong realised oil prices Final dividend of US cents 11 per share for full-year dividend amounts to US cents 20 Internal financing of capital expenditure Dividends Diversification opportunities 23

25 2011 Results Summary Significant growth in EPS (up 68%) Strong cash balance enabling us to continue with the Cheleken Contract Area development, execute value-enhancing acquisitions and increase dividends Unleveraged position US$m Change Revenue 1, % Operating profit % Net profit % Basic earnings per % share (US cents) Dividend per share % (US cents) Capital employed 2, , % Net cash from 1, % operating activities Net cash used in (914.4) (721.9) 27% investing activities Cash balance (excl. A&D) 1, , % Debt nil nil 24

26 2011 Income Statement US$m Change Comments Revenue 1, % Increase primarily attributable to a 40% increase in the average realised crude oil price at US$101 per barrel and a 6% increase in the volume of crude oil sold Cost of sales (266.5) (264.7) (1%) Increase primarily due to increased depletion charge, offset by lower marketing costs and movement in the lifting position Administrative expenses (net) (28.0) (28.2) 0% Admin costs (net of other income) remained similar with an increase in head office costs offset by one-off charges in the previous year Operating profit % Higher operating profit primarily on account of higher revenue Finance income (42%) Decreased due to lower interest yields despite higher cash maintained during Income tax expense (223.3) (128.6) (74%) Higher tax expense as a result of higher profit before tax Net profit %

27 2011 Cash Flow Cash and term deposits total US$1 806m as at 2011 year-end and include: Term deposits of less than three months US$88m Term deposits of more than three months of US$1,718m Includes abandonment and decommissioning fund of US$279m Net cash from operations up 71% Capital expenditure in 2011 was US$351m and US$407m cash outflow after movement in payables Cash maintained with international and UAE banks Cash flow in 2011 (US$m) Net cash from operations 1,016 Interest received on bank deposits Investing: PPE additions of $351m Financing: dividends of $118m, share buyback of $38m and issue of share capital of $1m ,337 1,806 Opening cash Closing cash

28 2011 Balance Sheet US$m Comments Non-current assets Property, Plant & Equipment and intangible assets 1, ,176.4 Increase is due to due to capital expenditure and reclassification of drilling supplies, offset mainly by the depletion and depreciation charge during the year Current assets Inventories, trade & other receivables Increase due higher trade receivable offset by a decrease in inventories owing to reclassification of drilling supplies to PPE Cash & term deposits 1, ,336.7 Increase primarily due to cash generated from operations 27 Total assets 3, ,658.3 Total equity 2, ,092.9 Increase attributed to profit for the period Liabilities Non-current liabilities Primarily reflects the deferred tax liabilities. Maintained zero-debt position Current liabilities Higher due to increase in the A&D and current tax liability offset by a decrease in trade & other payables and overlift creditors Total equity & liabilities 3, ,658.3

29 2011 Capital Expenditure Total capital expenditure for 2011: The Dzheitune (Lam) B platform. Drilling (53%): 13 wells completed 186 Infrastructure (47%) Dzheitune (Lam) C platform Dzhygalybeg (Zhdanov) A platform Infrastructure upgrades 28 US$mn Infrastructure Drilling

30 OUTLOOK Dr Abdul Jaleel Al Khalifa CEO

31 Strong Outlook for 2012 Production Complete between 13 and 15 wells and a number of workovers Target annual production growth of 15% Rigs Caspian Driller expected for delivery in 1H 2012 Additional platform-based rig is currently being sourced to be mobilised in 2H Platforms Dzhygalybeg (Zhdanov) A platform due in 2H 2012 Infrastructure Spend Infrastructure capex of US$250 million Plans to award a contract to build the Dzheitune (Lam) D and E platforms

32 And Medium Term Production Target 10-15% of production growth on average per annum for Complete 15 to 20 development wells per year in New Target Reach the 100,000 bopd production target in 2015 Water injection pilot project to evaluate options to enhance oil recovery 31 Rigs and Platforms Additional rigs planned to be deployed in the medium term At least four platforms planned US$1 billion estimated infrastructure capex in to be funded from operational cash flow Gas and Diversification Progress gas monetisation Actively pursue the diversification strategy

33 Investor and analyst enquiries Dragon Oil plc Anna Gavrilova agavrilova@dragonoil.com ir@dragonoil.com Media Enquiries Citigate Dewe Rogerson Martin Jackson Kate Lehane Joint Corporate Brokers Davy John Frain Joint Corporate Brokers Nomura International plc Andrew Forrester