2002 INTERIM RESTRUCTURING RESULTS PRESENTATION. ESTRUCTURING & 2002 I 16th September 2002

Transcription

1 RESTRUCTURING ESTRUCTURING & 2002 I 16th September INTERIM RESULTS PRESENTATION

2 PRESENTATION Introduction Results & Restructuring Outlook for New Premier Sir David John John van der Welle Charles Jamieson

3 RESULTS

4 RESULTS OVERVIEW Production 50.2 mboepd (2001: 35.3 mboepd) up 42% Turnover 115.2m (2001: 94.5m) up 22% Operating profit 52.7m (2001: 44.6m) up 18% Statutory profit after tax 15.3m (2001: 12.4m) up 23% Proforma (1) profit after tax 20.7m (2001: 17.7m) up 17% Gearing 98% (2001: 122%) down 24% (1) Proforma for Take or Pay

5 PROFIT & LOSS ACCOUNT Production (mboepd) Realised oil price ($/bbl) Realised gas price ($/mcf) Turnover less: share of JVs turnover Group turnover Operating costs Amortisation Gross profit Administration costs Operating profit Operating profit in JVs Total operating profit Net interest Exchange (loss) / gain Profit before tax Taxation Profit after tax Earnings per share - basic and diluted (pence) m 115 (28) 87 (23) (24) 40 (4) (16) (1) 36 (21) m 94 (19) 75 (17) (19) 39 (4) (21) 1 25 (13) Working interest production Hedging - no significant impact ($20 floor, $30 cap) Higher production offsets lower prices Unit opex (incl JVs) 3.29/boe - down 17% Unit DDA (incl JVs) 3.03/boe - down 8% due to lower cost gas production Increased contribution from Myanmar Lower debt following 2001 peak Higher tax due to higher profits, plus UK budget change

6 CASHFLOW 2002 (As reported) m 2002 (Incl. JVs) m 2001 (Incl JVs) m Net cashflow from operations Net interest 62 (9) 80 (11) 62 (14) Increase in line with higher net revenues Taxation (7) (7) (11) Operating cashflow (after interest and tax) Capital expenditure 46 (33) 62 (37) 37 (37) Capital expenditure - focus on exploration Disposals Net cashflow Excl JV JV Total m m m Exchange/other Movement in net debt (20) (20) Exploration Fields Other 5-5 Yetagun interest accrued Opening net debt - (272) (5) (379) (7) (445) JV funding 8 (8) Closing net debt (218) (315) (472) Operating cashflow covers exploration 3.7x (2001: 4.8x) Interest cover now 7.2x (2001: 4.4x)

7 BALANCE SHEET Cash Debt Net debt Shareholders funds 2002 (As reported) (Incl JVs) (Incl JVs) Gearing ratio NA 98 % 122 % (1) (1) 2001 comparative as at 31 December 2001

8 OPERATIONAL HIGHLIGHTS Production ahead of target of mboepd Kyle 4th well on stream 100% production capacity availability in Myanmar/Indonesia Myanmar near DCQ Efficiency drive continues to deliver cost reductions Operating cost savings Administration costs down 17% Reduced unit production costs - down 17% Development projects on target Yetagun upgraded to 300 mmscfd capacity WNG 2nd sale development awaiting GSA signature Bhit/Zamzama on schedule Note: More detail contained in Appendix

9 RESTRUCTURING

10 RESTRUCTURING Transformation into a fully independent E&P company Transfer of Myanmar and just over half of Indonesian West Natuna block A to Petronas and Hess Cancellation of Hess' and Petronas' shares in Premier Significant debt and gearing reduction Effective date 30 September 2002 Subject to various approvals/consents prior to completion

11 BACKGROUND Premier acquires Pict Petroleum and Hess becomes 25% shareholder in Premier Petronas and Hess subscribe at 25p/share for 136m of new equity giving each 25% of Premier. West Natuna development financed Detailed discussions commence with Hess and Petronas on a restructuring Lengthy and complex negotiations successfully conclude and restructuring terms and mechanics agreed 16 September - Announcement made

12 BENEFITS OF RESTRUCTURING Fully independent company able to pursue re-focused strategy aimed at early value realisation as stated in March 2002 Significant NAV per share accretion Reduction in proforma net debt at 30/6/02 from 315m to 111m Reduction in proforma gearing at 30/6/02 from 98% to 39% Increased exposure per share to Premier s ongoing 25+m pa exploration programme Ongoing production of 30-35,000 boepd Reduced country/credit risk profile

13 CONSIDERATION Myanmar Indonesia - Amerada Hess - 23% block A - Petronas - 15% block A Total $ million m ordinary 25p (1) 32.8m convertible 25p (1) Total Yetagun project debt Cash settlement Total (1) converted at $1.45 = 1 as agreed between Premier/Amerada Hess/Petronas

14 VALUATION METRICS Core Net Asset Value of Proven and Probable reserves at 30 September 2002 (excluding exploration and appraisal, technical reserves and other upsides) 10% discount factor Before Restructuring $ million After Restructuring $ million 12.5% discount factor Before Restructuring $ million After Restructuring $ million Assets sold at consideration (1) Value of assets remaining (1) Total assets Other investments Net debt (444.5) (120.7) (444.5) (120.7) Net asset value Total number of shares (in millions) Net asset value per share (in pence) (2) Accretion in net asset value per share 20% 16% (1) Assets valued at D&M valuation except for assets sold where restructuring value applied (2) NAV per share converted at $1.55= 1, close Friday 13 September (3) Oil price of $20 in 2003 escalating at 3% pa

15 PROFORMA BALANCE SHEET Balance Sheet at 30 June 2002 m Impact of restructuring m Proforma Balance sheet at 30 June 2002 m Cash (including JVs) Debt (including JVs) Net debt (including JVs) Shareholders funds Gearing ratio % 89 (115) (204) (36) NA %

16 RESTRUCTURING - KEY STEPS Approvals/consents required - independent shareholders (EGM), lenders, governments, Court Creation of New Premier listed holding company under Scheme of Arrangement Cancellation of Hess' and Petronas' ordinary and anti-dilution convertible shares under Companies Act Reduction of Capital Transfer of interests in Myanmar (including project debt) and part of interest in Indonesia after internal reorganisation Timetable (estimated) Sign framework agreement and $210m bridge facility September 2002 Circular October 2002 EGM November 2002 Government approvals December 2002 Court sanction after Government approvals Completion after Court sanction Debt refinancing after Completion

17 NEW PREMIER RESERVES AND PRODUCTION New Premier 2P Reserves 218 mmboe 40,000 Working Interest Production UK 14% Indonesia 55% 35,000 30,000 25,000 boepd 20,000 15,000 Pakistan 31% Indonesia Pakistan UK 10,000 5,

18 NEW PREMIER SUMMARY Production (mboepd) Existing Post Restructuring Reserves (mmboe) % UK & Indonesia Oil/gas reserve mix Capex Proforma net debt Proforma net assets Proforma gearing NAV 10% % 14% Oil 136m 315m 320m 98% 34.0p/sh % 20% Oil 65m 111m 284m 39% 40.6p/sh

19 OUTLOOK FOR NEW PREMIER

20 PREMIER STRATEGY High impact explorer and commercial dealmaker Steady state base business - consistent 5-8 year cashflow to fund business development Cycle out/farm down assets when significant growth potential has been exploited Realise early value for shareholders

21 GROWTH TRACK RECORD mmboe of 2P reserves booked (an increase of 140%) Production replacement of over 400% Top quartile exploration finding costs of $1/boe

22 EXPLORATION & BUSINESS DEVELOPMENT STRATEGY Geographical focus Existing areas (South & South East Asia, North West Europe) West Africa Other - opportunistic Good rocks, good terms - playmakers Emphasis on oil or gas that can be commercialised Tradeable oil or gas assets

23 PREMIER S EXISTING BUSINESS UNIT EXPLORATION Pakistan Indonesia

24 PKP: PAKISTAN EXPLORATION Two PKP operated exploration wells to be drilled in 2002: Benir-2: Dumbar block spudded 30/6/02 Zirkani-1: Dumbar block to spud Q4 Pakistan PKP interests Gas fields Additionally one non - operated exploration well to be drilled in 2002: Halel : Kirthar block Q4

25 PAKISTAN EXPLORATION: DUMBAR EXPLORATION LICENSE Zirkani-1 Benir-2 Dumbar EL Two exploration wells will be drilled in 2002 in the Dumbar block; Benir-2 spudded 30/6/02 and Zirkani-1 will spud October 2002 Large simple gas prone structures, proven reservoir and trapping style to the north (Bhit and Zamzama Fields). Gas fields Prospects/Leads

26 INDONESIA EXPLORATION Kerteh Natuna A Area IV Malaysia Kuala Lumpur The exploration drive in 2002 is to test prospects in Area IV, Natuna Sea. Singapore Two large, independent oil prone exploration prospects have been identified on seismic data acquired in 2001.

27 INDONESIA: NATUNA SEA BLOCK A, AREA IV EXPLORATION Malaysia Block A Indonesia NW Natuna Sea Block I Premier NW Natuna Sea Block II Conoco Kuda Nil-1 will spud mid October 02. Most likely unrisked reserves 130 mmbbls oil gross Kakap Northern Gulf Area IV Binturong-1 will spud late November 02. Most likely unrisked reserve also 130 mmbbls oil gross Kakap Southern Gulf Block A Block A Binturong-1 Kuda Nil-1 Oil fields Gas fields Prospects/Leads

28 PREMIER S NEW VENTURES 2002/3 UKCS: West of Shetland North East India Guinea Bissau Gabon Existing Business Unit New Venture Country

29 GUINEA BISSAU EXPLORATION Senegal Sinapa-1 well drilled Q1; P&A with oil shows. Guinea-Bissau Bissau Encountered oil above a salt diapir, then mechanical difficulties prevented the main Albian target from being penetrated. Block 2 Premier Block 4A Premier Block 5a Premier Sinapa As the play is still untested our intention is to return Q1/ and drill the Sinapa-2 well, also possibly drilling one of 12 similar structures on Sinapa and the adjacent Esperança blocks. Esperança Atlantic Ocean Guinea Premier holds 78.5% (55% post government back-in) equity in all 3 blocks.

30 GABON EXPLORATION World-class play system formed by: mature pre-salt syn-rift lacustrine source rocks overlain by transgressive Gamba sheet sand, with excellent reservoir quality and plumbing to the source rock Atlantic Ocean Setté Cama Gabon Gamba reservoir overlain by marine shales and halite, forming excellent seal Mayumba Recent discovery of Etame oil field has confirmed the play Premier has farmed-in to Sasol s Phenix TEA, earning 25% equity. Etame Oil Field Phenix TEA

31 UKCS: WEST OF SHETLANDS Marjun discovery well, Faroes 6004/16-1Z Premier has farmed in to BG s equity in Amerada Hess operated 204/ /16 Amerada Foinaven Clair Well 204/16-1 spudded 1/9/02, and will test the extension of the 2001 Faroes P001 Marjun discovery. 204/16 Amerada Foinaven Loyal Schiehallion Sullom Voe Shetlands Premier will earn between 16 and 20.8% depending on the actual costs incurred

32 NE INDIA EXPLORATION Bhutan China India Several low cost entries into oil and gas exploration opportunities have been finalised and are currently awaiting Indian Government approval. Oil play in Assam: Jaipur Block Bangladesh Gas & oil play in Cachar/Tripura: Cachar Block Myanmar

33 2H 2002 DRILLING SCHEDULE Pakistan : Benir-2 Pakistan : Zirkani-1 Pakistan : Halel-1 UKCS : 204/16-1 Indonesia : Kuda Nil-1 Indonesia : Binturong June July Aug. Sept. Oct. Nov. Dec. - Low / Medium Risk - Gross 750 bcf - Premier Net 37.5% - Low / Medium Risk - Gross 1800 bcf - Premier Net 37.5% - Medium / High Risk - Gross 500 bcf - Premier Net 6% - Low Risk Marjun Field appraisal - Premier Net % - Medium Risk - Gross 130 mmbbls - Premier Net 28.7% - Medium Risk - Gross 130 mmbbls - Premier Net 28.7%

34 PREMIER - THE INVESTMENT CASE Focus on exploration & commercial dealmaking Leverage to significant value add/share price appreciation Base production business - consistent cash flow to fund exploration and commercial success High potential portfolio of playmaker exploration prospects Commitment to realising early value Potential for significant re-rating after resolution of principal issues currently acting negatively on the share price Top quartile exploration record, reputation & experience Base business in place without significant capex requirement >300 mmboe net un-risked potential being drilled in the next 6 months Cycle out / farm down assets when growth potential has been exploited Shareholders resolution. Exit from Myanmar. Reduction of debt

35 RESTRUCTURING & 2002 INTERIM RESULTSESULTS PRESENTATION 16th September 2002

36 APPENDIX

37 OPERATIONS

38 2002 PERFORMANCE DELIVERY Efficiency drive continues to deliver cost reductions Operating cost savings Administration costs down 17% Reduced unit production costs - down 17% Development projects on target Production ahead of target Generating strong revenue stream

39 OPERATIONS HIGHLIGHTS MYANMAR 100% production capacity availability Production rates near DCQ Further ramp-up of DCQ to 260 mmscfd in Q4 Capacity upgrade ahead of target - now able to deliver 300mmscfd Health & Safety excellence - 2 years without a significant accident Efficiency improvements and cost reductions continue INDONESIA Second largest producer for Premier Singapore gas demand ramp-up continues 100% production capacity availability WNG 2nd sale GSA awaiting signature - development project on target Health & Safety excellence - 1 year without a significant accident Efficiency improvements and cost reductions continue

40 OPERATIONS HIGHLIGHTS PAKISTAN Production up 34% Dumbar first well spudded rigorous environmental management leads to successful start to drilling Zamzama continues to over-perform EWT production well over expectations Government approval for next phase signed in March development project to expand to 350 mmscfd by September 2003 on target Bhit development on target for first gas end 2002 Qadirpur expansion on track further upside being negotiated

41 OPERATIONS HIGHLIGHTS UK Production up on last year - in spite of Kyle gas line blockage Kyle gas pipeline returned to service 4th Kyle well brought on stream Fife Area successful Angus development Continued success with Wytch Farm in-fill drilling campaign Efficiency and cost drive delivers operating cost reductions ALBANIA Innovative early production project First production January 2003 Sound basis for viable life of field solution Go forward decision late 2003