2017 FULL YEAR RESULTS. 7 March 2018

Transcription

1 2017 FULL YEAR RESULTS 7 March 2018

2 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 p ersons 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 bysuch 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 s tatements. 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 s uch information Full year results presentation Slide 2

3 FORTUNA STATUS Progressed project in 2017, project financing remains key to FID A number of material milestones were completed in 2017 Frustrating not to have yet secured project financing and reached FID Project economics are excellent and FID will unlock material value Progressing project funding solution 2017 Full year results presentation Slide 3

4 DELIVERY OF 2017 OBJECTIVES COMPLETE BUALUANG IN-FILL DRILLING PROGRAMME FID ON FORTUNA FLNG PROJECT COMPLETE KERENDAN GAS PRICE RENEGOTIATION FID PHASE IV OF BUALUANG DEVELOPMENT 3 wells successfully completed in 2H 2017 Financing is remaining workstream Price agreed subject to final approval in 1H 2018 FID in May 2017 Project commences with infill drilling in 2H 2018 REFINANCE / RESTRUCTURE DEBT PORTFOLIO CAPTURE HIGH QUALITY EXPLORATION ACREAGE RESTART OPERATED EXPLORATION PROGRAMME $250m Reserve based lending facility (plus $100m accordion) secured Signed Block 5 in Mexico and awarded Block 24 in Equatorial Guinea Drilled Ayame-1X well in CDI Key: Completed Pending 2017 Full year results presentation Slide 4

5 Normaised NAV Index ILLUSTRATIVE NAV GROWTH DURING 2017 Underlines performance of underlying portfolio NAV per share increased by 6.4% in 2017 driven by: Asset performance; unlocking incremental value from producing fields Increased cost control Disciplined capital allocation Exploration a cost centre; materially reduced from 2018 onwards Full year results presentation Slide 5

6 MMboe RESERVES AND RESOURCES 2P reserves growth, 1bn boe of 2C resource YE 2P Reserves Waterfall YE 2017 Production Revisions 2017YE Increased 2P reserves 2P reserves up 13% year on year to 49.4 MMboe (y/e MMboe) Reserves replacement ratio of 228% Reserves/Production ratio of 12 underpins strong production and cash flow in the medium term 25.00x 20.00x 15.00x 10.00x 5.00x Peer comparison 2C:2P 1 1bn boe of discovered resource Largest relative 2C resource inventory relative to peer group Latent value which carries commercial risk but well defined technically 0.00x 1 Peer group: Lundin, AkerBP, Tullow, Premier, Soco, Enquest, Genel, Faroe, Seplat, Cairn 2017 Full year results presentation Slide 6

7 RELIABLE PRODUCTION BASE Ophir Energy Net Production by Field Working Interest Basis (Mboe/d) Group Production averaged 11,700 boepd in 2017 Uptime of 99% Bualuang Averaged 8,300 bopd Infill drilling programme completed Water handling capacity increased to 75,000 bpd Kerendan Actual SPH Actual Bualuang Actual 0 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Kerendan Averaged 2,200 boepd Successful ramp up to full DCQ Sinphuhorm Averaged 1,200 boepd Variable nominations from offtaker Domestic production periodically displaced by spot LNG imports 2017 Full year results presentation Slide 7

8 STRONG PRODUCTION GROWTH FROM OPERATED ASSETS Reinvestment opportunities in key assets Material Growth Potential for additional cash from monetisation of residual 20% interest in Tanzania 30,000 boepd Fortuna 2P Kerendan Phases 2 & 3 Bualuang Phase 5 Kerendan 2P Bualuang 2P Sinphuhorm 2P Key Milestones Fortuna FID Bualuang Phase IV Kerendan additional Gas Sales Agreement Full year results presentation Slide 8

9 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Oil Production (STB) Water Production (STB) Reserves (Mmboe) BUALUANG: CASE STUDY OF VALUE CREATION Bualuang Reserves Evolution (Gross) Probable P2 Proven P1 Cum Prod Value creation through phased development Start up in 2008 expected to be 15 MMbo field 20 Produced over 30 MMbo 10 0 Further 28.3 MMbo of 2P and 10.3 MMbo of 2C Step out exploration potential 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Bualuang Field: Average Oil and Water Production Bualuang 1 st Oil Drilling Phase 3 Drilling Phase 4 Drilling Phase 5 Drilling Phase 5.5 FPSO Anchor Mooring Failure BA-08i Start-up Asset Integrity Shutdown Debottlenecking Project Well intervention 3 infill wells start-up 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Further phases of production growth Infill drilling in 2018 to arrest production decline Installation of Charlie platform and exploitation of 12 additional well slots to increase production in 2019 and 2020 Oil Production BOPD Water Production BWPD 2017 Full year results presentation Slide 9

10 KERENDAN: FOCUSED ON SELLING MORE GAS Steady production from phase 1 Gas price renegotiation closed out - Price of $5.65 per mmbtu agreed in principle 3D survey has confirmed potential of the field, and identified further upside Two further phases of gas commercialisation - Aiming to sign a second GSA for phase 2 in Aim to complete a tender for phase 3 sales Potential to grow production from 3,500 boepd to over 14,000 boepd (gross) Step out oil and gas exploration potential 2017 Full year results presentation Slide 10

11 REFOCUSED EXPLORATION Focus on Infrastructure Led Exploration (ILEX) Infrastructure led on Bualuang and Kerendan Exploration acreage in EG next to producing oil fields, farm-out ongoing Counter-cyclically built biggest acreage position in Mexican offshore of any listed independent player Transaction with Chevron agreed in Myanmar which will result in equity in Block A-5 and access to infrastructure Exited 8 deepwater licences in past 12 months 2017 Full year results presentation Slide 11

12 FINANCIAL UPDATE Tony Rouse, CFO

13 FULL YEAR FINANCIAL SUMMARY Units FY 2017 FY 2016 COMMENTS NET SOURCES OF FUNDS: Revenue $ millions Bualuang $52/bbl (FY16: $38) and Kerendan $5.30/Mscf (FY16: N/A) Kerendan Take-or-Pay $ millions Accrued Kerendan Take-or-Pay Revenues Nil (FY16 $16.5m) Cost of production (operating expenses, royalty and inventories) $ millions (70.0) (42.7) Unit opex $12.8/boe (FY16: $13.4/boe) Investment Income $ millions Net income from Sinphuhorm $4m (FY16: $4m) Current income Tax Charge $ millions (32.6) (23.7) Bualuang investment in Phase 4 development reducing taxation charge Net funds flow from production $ millions Income from production $21/boe (FY16: $16/boe) reflects higher prices NET USES OF FUNDS: Capex (less disposals) $ millions Exploration $41m (FY16: $76) and asset monetisation $60m (FY16: $80) Net administration cost $ millions Further lowering of cost base - gross reduction of 60% in three years Net Finance Costs $ millions Further reducing negative cash carrying costs Net uses of funds $ millions Further reducing cash outlay FINANCING: Closing Net Cash $ millions Net cash outlay $43m (FY16: $195m) Closing Borrowings $ millions Continued deleveraging with RBL repayment $94m in 2017 Undrawn Facilities $ millions RBL refinanced in $203.5m undrawn Closing Gross Liquidity $ millions Total liquidity with undrawn RBL $427m (YE16: $371m) 2017 Full year results presentation Slide 13

14 Million Million Million Million STRONG FINANCIAL CONTROL Costs, debt, capex falling; cash flow increasing $120 $100 $80 $60 $40 Funds flow from production ($ million) $113m $90m $62m $250 $200 $150 $100 Capex ($ million) $206m $156m Exploration $101m $20 $50 $ $ $40 $35 $30 $25 $20 $15 $10 $5 $0 Net G&A costs ($ million) $31m $13m $11m $400 $350 $300 $250 $200 $150 $100 $50 $0 Net cash ($ million) $355m $160m $117m Full year results presentation Slide 14

15 2018 GUIDANCE Maintaining capacity for discretionary investment Production: 11,500 boepd Bualuang 8,500 bopd, Kerendan 2,000 boepd Funds flow from production: $90 million Bualuang $84 million, Kerendan $6 million 2018 Hedging Programme Purchased swap at average of $59/bbl for 3,200 bpd Purchased call at average of $68/bbl for 3,200 bpd Capital expenditure: $150 million Fortuna FID: $55 million Bualuang Phase IV: $40 million Mexico exploration: $15 million Kerendan civil works & water wells: $10 million Net cash Expect to end year in net cash position Gross liquidity of $320 million OPERATING CASH FLOW CAPITAL EXPENDITURE Net Operating Cash Flow 44% Operating Costs 28% Royalty 7% Taxation 17% Administration 4% Exploration 23% Pre-development 3% Production 37% Investment Fortuna 37% 2017 Full year results presentation Slide 15

16 FULLY FUNDED FIVE YEAR BUSINESS PLAN Strong balance sheet, low cost sustainable production and limited commitments Significant cash position & liquidity Closing net cash $117 million; Liquidity $427 million Low liquidity and gearing ratios with loan to value Refinanced Reserves Based Lending Facility into new seven year $250 million facility (with $100 million accordion) Planned 2018 refinance of Nordic bond Robust operating cash flow from high margin assets Solid production base generating c. $100 million cash flow p.a going forward Fortuna on-steam early-2022 providing long-term sustainable cash flow Funded work programme for next few years Committed spend of only $75 million (Mexico, Indonesia and Malaysia) Investment to maximise cash flow from producing assets $150 million investment into Fortuna over three years from FID Remaining discretionary funds allocated to highest returning opportunities (E&A, P&D, share buy-back) Sources and uses of funds Operating Cash Flow (Existing Portfolio) Year-end 2017 Liquidity Sources Discretionary P&D Fortuna Commitments Debt Service Uses $1.0bn $0.0bn 2017 Full year results presentation Slide 16

17 EXPLORATION Oliver Quinn Director Exploration & Africa

18 REFOCUSED EXPLORATION PORTFOLIO Deepwater exploration: 3 blocks awarded in licence rounds Drilling from 4Q 18/1Q 19 Deepwater exploration: Cross-assignment with Chevron (subject to government approval) 45% interest in blocks AD-03 and A-5 Potential drilling in 2019 Infrastructure led exploration Step out exploration around Bualuang Infrastructure led exploration EG24: exploration licence awarded in 2017 Farm-out ongoing Adjacent to producing oil fields Infrastructure led exploration Step out exploration around Kerendan Deepwater exploration West Papua/Aru Drill or drop decision in 1H Full year results presentation Slide 18

19 MEXICO:LEADING POSITION IN A WORLD CLASS BASIN Mexico open to foreign investment for first time in 75 years Ophir has non-operated positions in three licences, Blocks 5, 10 and 12 Opportunity to access a proven, underexplored hydrocarbon province Ophir s interest in Mexico is equivalent to over 300 US GOM blocks (average US GOM block is 25km 2 ) -- 2,000 4,000 6,000 8,000 10,000 Among independents, Ophir holds the second largest position and the largest of any international E&P 2017 Full year results presentation Slide 19

20 MEXICO Block 5 Overview Blk - 5 OPHIR 23.3% Rnd 2.4 Blk 29 award Zama Discovery A A Large block located in heart of Sureste Basin play fairways Zama discovery (30km south) proves working petroleum system Numerous salt related structural traps being identified Trap scale potential MMbo range Seismic interpretation and regional geosocial work ongoing Operator preparing for 2019 drilling Regional seismic tie from Zama discovery into Block Full year results presentation Slide 20

21 EQUATORIAL GUINEA Block - 24 A EG-24 OPHIR 80or40% Blk W Kosmos Blk S Kosmos Ceiba EG-21 Kosmos A Okume New PSC ratified and farm-out near completion 3 Year Initial Term with Seismic Acquisition Commitment Both structural and stratigraphic traps within Upper Cretaceous fairway Proven oil up-dip in Okume/Ceiba Complex A A EG-24 Block area 3500km 2 Water depth m Seismic acquisition planning well advanced Prospectivity scale MMbo Option to drill in Second Term -2sec -4sec -6sec Upper Cretaceous Sand fairways form structural closures over Kribi High Updip stratigraphic trapping potential Position of Okume/Ceiba Complex Mature Oil Source Rocks Hyper-extended Continental Crust ~5km 2017 Full year results presentation Slide 21

22 THAILAND B8/38 Bualuang North Lead Kerendan Gas Field B8/38 OPHIR 100% Bualuang North Prospect Bualuang Oil Field New seismic has uplifted both imaging and depth solutions Northern end of Bualuang Field potentially shallower OWCs spill northward into the North Bualuang closure Significant low risk upside resource potential if part of main field Evaluating merits of drilling in upcoming well campaign T2.6 Depth Map Original Velocity Solution T2.6 Depth Map Revised Velocity Solution Being evaluated at 2018 drilling option Potential addition to Phase IV development Revised depth solution has potential to bring T2.6 Reservoir Closure above OWC North Bualuang into main field closure above OWC T2.6 Reservoir Closure above OWC with revised velocity model 2017 Full year results presentation Slide 22

23 INDONESIA Bangkanai and West Bangkanai hub Kerendan Gas Field Proven wet gas in Oligocene carbonates in Kerendan Field Oil proven in Miocene sands and live surface seeps New FTG survey has illuminated addition potential below volcanics New 3D seismic over Kerendan field will uplift carbonate play New 2D seismic over Artois Lead will uplift trap definition 9 leads identified, carbonate and clastics plays with both oil and gas potential Artos Miocene oil lead has 100 MMbo scale Proven Miocene oil over Kerendan field being evaluated with new 3D seismic Carbonate leads have Bcf scale 20km Kerendan Gas Field (area c. 100Km 2 ) Artos Lead 2D seismic acquisition ongoing 2017 Full year results presentation Slide 23

24 OUTLOOK Nick Cooper CEO 2017 Full year results presentation Slide 24

25 FORWARD WORK PROGRAMME Bualuang INFILL DRILLING POTENTIAL EXPLORATION DRILLING PHASE IV PHASE V Kerendan GAS PRICE RENEGOTIATION PHASE 2 POTENTIAL EXPLORATION DRILLING PHASE 3 Fortuna FID PHASE 2 FID FIRST GAS Tanzania HGA Myanmar DRILLING DECISION POTENTIAL WELLS West Aru/Papua DRILLING DECISION POTENTIAL WELL Mexico SIGN BLOCK 10/12 LICENCE BLOCK 5 PROSPECT MATURATION BLOCK 5 DRILLING BLOCK 10/12 DRILLING EG-24 COMPLETE FARM OUT 3D SEISMIC INTERPRETATION AND PROSPECT MAPPING POTENTIAL DRILLING 2017 Full year results presentation Slide 25

26 GROUP OUTLOOK Solid production base with growth potential Delivering Fortuna FID is priority Focused on monetising c. 1 Bnboe of 2C resource Rebuilding a more focused exploration portfolio Strong liquidity position with undrawn credit lines 2017 Full year results presentation Slide 26

27 Level Victoria Street London SW1E 6DE UNITED KINGDOM Tel: +44 (0) Fax: +44 (0) For further information contact: Geoff Callow Head of IR and Corporate Communications Geoff.callow@ophir-energy.com