The unconventional opportunity in Argentina. Company presentation July 2018

Transcription

1 The unconventional opportunity in Argentina Company presentation July 2018

2 Disclaimer This document has been prepared and issued by, ( Phoenix ). For the purposes of this notice, the presentation (the Presentation ) shall include the slides that follow, hard copies of this document and any materials issued in connection with the Presentation. This Presentation does not comprise a prospectus relating to Phoenix or any subsidiary of Phoenix or an offer, invitation or recommendation to purchase or subscribe for any securities of Phoenix or any of the business or assets described herein. No reliance may be placed for any purpose, whatsoever on the information contained in the Presentation or the completeness or accuracy of such information. No guarantee, representation or warranty, express or implied, is given by or on behalf of Phoenix as to the fairness, sufficiency, accuracy or completeness of the information or opinions contained in the Presentation and the accompanying verbal presentation and Phoenix accepts no liability for any loss whatsoever arising from any use of this Presentation or its contents or any such information or opinions (including in the case of negligence or otherwise). This Presentation should not be considered as the giving of investment advice. Each party to whom this Presentation is made available must make its own independent assessment of Phoenix after making such investigations and taking such advice as may be deemed necessary. For the purposes of the United Kingdom s Financial Services and Markets Act 2000 ( FSMA ), the Presentation is exempt from the general restriction in section 21 of FSMA on the communication of invitations or inducements to engage in investment activity on the grounds that they are directed at (i) persons having professional experience in matters relating to investment and who are investment professionals (as defined in article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Financial Promotion Order ); or (ii) high net worth companies unincorporated associations and other bodies (as defined in article 49 of the Financial Promotion Order) or (iii) other persons to whom it may be lawfully communicated (all such persons together being referred to as "Relevant Persons. The Presentation must not be acted on by persons who are not Relevant Persons. This Presentation does not constitute, or form part of or contain any offer or invitation to sell or issue, or any offer to subscribe for, underwrite or otherwise acquire, or dispose of, any securities in Phoenix in any jurisdiction in which such offer or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction. The distribution of the Presentation in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about and observe any such restrictions. The Presentation is not for distribution in, nor does it constitute an offer of securities for sale in any jurisdiction where such distribution or offer is unlawful. Neither the Presentation nor any copy may be taken or transmitted into the United States of America, its territories or possessions, or to any US person as defined in Regulation S under the US Securities Act 1933, as amended. The past performance of Phoenix and its securities is not, and should not be relied on as, a guide to the future performance of PGR and its securities. The information contained in this Presentation includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements involve numerous assumptions, risks, uncertainties and other factors and the actual results may vary. These forward-looking statements may be identified by the use of forward-looking terminology, such as the terms "intends", "expects", "will", or "may", or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions and include estimates, forecasts and statements as to management's expectations. These forward-looking statements include all matters that are not historical facts. Factors that may cause actual results and events to vary include, but are not limited to, general economic and/or business and/or political conditions, changes in law and/or regulation, Phoenix's ability to develop its strategy, competition, and future changes to current plans and strategy. There can be no assurance that the results and events contemplated by the forward-looking statements contained in this Presentation will, in fact, occur. These forward-looking statements made by Phoenix or on behalf of Phoenix speak only as of the date they are made. Phoenix does not undertake any obligation to revise these forward-looking statements after the date of this Presentation. COMPANY PRESENTATION

3 About Phoenix We are investing in the long-term development of Argentina and the future of energy. COMPANY PRESENTATION

4 Leadership and governance Non-executives Executive management Sir Michael Rake, non-executive chairman Former chairman of BT Group plc and Worldpay Group plc Director of S&P Global Chairman of Majid Al Futtaim Holdings Anuj Sharma, chief executive officer 20 years experience in the oil and gas industry Headed Mercuria s upstream investments in Argentina prior to Phoenix Operational and investment experience in US shale industry INDEPENDENT NON-EXECUTIVE DIRECTORS Philip Wolfe, chief financial officer 28 years experience in the oil and gas industry Former CFO & board member, Soma Oil & Gas Head of oil & gas, EMEA at UBS and global head of oil & gas at HSBC John Bentley Garrett Soden David Jackson Javier Alvarez NON-EXECUTIVE DIRECTORS Mercuria (1) representatives Shareholder representative Matthieu Milandri Guillaume Vermersch Nicolás Mallo Huergo Javier Vallesi, chief operating officer 23 years operational experience in Argentine oil and gas industry 12 years with Trefoil Subsurface engineering and reservoir management experience with YPF and Bridas (now Pan American Energy) 1. Mercuria Energy Trading Group owns 80.85% of the issued share capital of Phoenix. COMPANY PRESENTATION 1

5 A leading independent Argentinian E&P company PHOENIX S GROWTH POTENTIAL 560,000 Net Vaca Muerta acres 7.5% of entire Vaca Muerta acreage 11,070 Boepd conventional production 1% of Argentine production LISTING INFORMATION London Stock Exchange Buenos Aires Stock Exchange Issued share capital AIM:PGR BCBA:PGR 2.76bn 1 As per WD Von Gonten & Company, NSAI, OPC and Francisco Guilsano reports. 2 As per Gaffney, Cline & Associates year end 2017 reserves audit report. COMPANY PRESENTATION 2

6 Strategic priorities Control and consolidate Explore and develop Profitable production Realise value Operatorship is key to implement our strategy and to our success The combination transaction provided scale and consolidated our unconventional acreage position We continue to strategically add additional acreage with exposure to Vaca Muerta and other unconventional formations Exploration and development activity focused on appraising and developing our unconventional acreage Applying the latest and best US shale technologies Migrating our significant resource base to reserves High margin production from conventional oil assets Balancing existing conventional production with unconventional developments Reduction of unit cost through growth and synergies Creating shareholder value through production and capital growth Disciplined approach to capital allocation Opportunistic inorganic growth through farm-ins, joint ventures, partnerships and portfolio rationalisations COMPANY PRESENTATION 3

7 The 2015 elections returned a progressive and pro-business government that is focused on economic growth and stability. This progressive administration provides the foundation for real change in the fortunes of Argentina. Why Argentina? COMPANY PRESENTATION

8 Why Argentina? Political change continues to drive reforms Pro-business agenda Normalising economic imbalances Deregulation of capital markets Equity markets growing FDI and portfolio flows increasing IMF reaches staff-level agreement on three year US$50 billion stand-by arrangement 25% Corporate tax reduced to 30% in 2018 and to 25% in 2020 G20 Chair Fast track to OECD membership COMPANY PRESENTATION 4

9 Argentina an established oil and gas industry OIL PRODUCTION GAS PRODUCTION UPSTREAM PLAYERS WELL ESTABLISHED SERVICE INDUSTRY COMPANY PRESENTATION 5

10 Vaca Muerta is a world-class unconventional resource play with current production in excess of 90,000 boepd and a production expectation of more than 110,000 boepd in 2018, double 2016 production. Unconventional oil and gas has the potential to transform the future of Argentina s economy. Vaca Muerta COMPANY PRESENTATION

11 Vaca Muerta a world class shale play ABOVE GROUND FACTORS ESTABLISHED OIL AND GAS INDUSTRY (SINCE 1920S) Established infrastructure Skilled and trained personnel with deep understanding of assets Developed oilfield service sector with international and domestic players POSITIVE REGULATORY ENVIRONMENT Federal government actively encourages investment in industry, and has deregulated the oil price Provincial governments in Neuquén, and more recently in Mendoza, introduced supportive regulations for unconventional oil and gas, and proactive permitting RECOVERABLE SHALE GAS RESOURCES (TCF) Industrial, labour and fiscal reforms driving efficiency gains and lowering costs RECOVERABLE SHALE OIL RESOURCES (BN BBL) BELOW GROUND FACTORS Depth typically 2,000 3,000 metres Characteristics Vaca Muerta Wolfcamp Eagle Ford Marcellus Oil and liquid rich gas Oil Oil and liquid rich gas Area (million acres) Total organic content (%) Thickness of shale horizon (ft) ~1,000 ~900 ~250 ~200 Reservoir pressure (kpsi) Gas Not to scale Lateral up to 3,000 metres COMPANY PRESENTATION 6

12 Vaca Muerta a world class shale play US$7.6Bn Invested in Vaca Muerta TOTAL VACA MUERTA PRODUCTION (BOEPD) 4, , , , , Source: G&G Energy Consultants TOTAL DRILLED AND COMPLETED WELLS IN VACA MUERTA (CUMULATIVE) Source: G&G Energy Consultants COMPANY PRESENTATION 7

13 Asset overview We are investing in the long-term development of Argentina and the future of energy. COMPANY PRESENTATION

14 Overview of Phoenix s assets Neuquina basin Austral basin Cuyana basin Gross acres 2,499,389 1,162,876 70,385 Working interest acres 1,028, ,567 68,164 Operated working interest acres 627,380 60,294 Basin production2017 (net WI) 5,026 3,900 2,136 Wells drilled Capital expenditure 2017 (US$ million) COMPANY PRESENTATION 8

15 Overview of Phoenix s assets Neuquina basin HIGH LEVEL MAP OF NEUQUINA UNCONVENTIONAL ACREAGE Licences Working interest % Vaca Muerta net acreage Puesto Rojas area (1) 100 / 67.7 / ,000 Mata Mora 90 50,000 Corralera 90 51,000 Other (2) 90 / 40 37,000 CONVENTIONAL PRODUCTION BOEPD (2017) Puesto Rojas area (3) 2,832 Chachahuen (YPF operated) 1,976 Other licences (4) 218 Total Neuquina basin 5, Includes acreage at Puesto Rojas, Cerro Mollar Norte, Cerro Mollar Oeste, La Paloma, La Brea, Vega Grande Rio Atuel (66.7)% and Mallargüe (20%). 2. Includes acreage at La Tropilla I and El Manzano Oeste. 3. Include production from Puesto Rojas, Cerro Mollar Norte, Cerro Mollar Oeste, La Brea and Vega Grande. 4. Includes Cajon de los Caballos and El Manzano Oeste COMPANY PRESENTATION 9

16 Puesto Rojas area WD Von Gonten assessment of 3C+3Pr resources of 1 Bnboe Nine vertical wells drilled in D seismic completed on southern portion of Puesto Rojas and La Brea (Q1 2018) Nine vertical wells planned for 2018, plus first horizontal Targeting Vaca Muerta and Tight Agrio Estimated 2018 capex up to US$100 million UNCONVENTIONAL ACREAGE 424,000 Net Acres Vaca Muerta / Unconventional COMPANY PRESENTATION 10

17 Mata Mora Secured 90% stake and operatorship in Q NSAI assessment of 3C+3Pr WI resources of 540 MMboe Two horizontal wells planned to be drilled in Q3 and completed Q Nabors high-spec drill rig contracted Estimated 2018 Capex up to US$40 million UNCONVENTIONAL ACREAGE 50,000 Net Acres Vaca Muerta / Unconventional COMPANY PRESENTATION 11

18 Corralera Secured 90% stake and operatorship in Q Two horizontal wells planned to be drilled on Corralera Sur and Noreste blocks in UNCONVENTIONAL ACREAGE 51,000 Net Acres Vaca Muerta / Unconventional COMPANY PRESENTATION 12

19 2018 work programme UNCONVENTIONAL 2018 Capital Expenditure Basin Block Q1 Q2 Q3 Q4 US$ million (2) Neuquina Puesto Rojas area (1) 75 Mata Mora 40 Corralera 3 KEY SEISMIC DRILLING COMPLETIONS Laguna el Loro 7 BUSINESS DEVELOPMENT CONVENTIONAL Neuquina Cuyana Puesto Rojas area (1) TOTAL Chachahuen (3) 20 Atamisqui / Tupungato Austral (3) Santa Cruz Sur / Tierra del Fuego 5 15 HORIZONTAL WELL TOTAL Includes Puesto Rojas, Cerro Mollar Norte, Cerro Mollar Oeste, La Paloma, La Brea, Vega Grande Rio Atuel and Malargüe.. 2. Includes US$10 million licence fees for Neuquén bid round and Mata Mora / Corralera renegotiation. 3. Chachahuen operated by YPF; Austral basin assets operated by ROCH S.A. COMPANY PRESENTATION 13

20 Financial overview COMPANY PRESENTATION

21 Financial overview SUMMARY FINANCIALS (US$ MILLION) FY 2017 (1) Q Revenues Adjusted EBITDAX (2) Capital expenditure Total debt Cash on hand Net debt FINANCIAL POSITION Strong financial backing from Mercuria Group US$160 million convertible revolving credit facility (3) Net debt of US$84.4 million at 31 March 2018 Available cash and undrawn facilities of US$100 million at 31 March 2018 Additional debt capacity in the local bank market 1. FY2017 includes Trefoil for full year and former Andes since 10 August Adjusted EBITDA in FY2017 excludes one-time charges of US$32.9 million. 3. Convertible at 45 pence per share through maturity in December Interest rate of 3 months LIBOR plus 4%. COMPANY PRESENTATION 14

22 Netback analysis by basin Q unaudited (1) (US$ million) NEUQUINA AUSTRAL CUYANA TOTAL Oil revenues Gas revenues Gross revenues Royalties & turnover tax (4.9) (1.7) (2.2) (8.8) Net revenues Operating costs (5.3) (6.4) (5.5) (17.1) Netback (US$/boe) Realised oil price US$/bbl Realised gas price US$/MMbtu Realised price US$/boe Royalties & turnover tax US$/boe (11.75) (5.61) (12.07) (9.73) Net revenues US$/boe Operating costs US$/boe (12.59) (20.61) (30.46) (18.84) Netback US$/boe Oil & gas sales volume Oil bopd 4,670 1,126 1,990 7,787 Gas boepd 3 2,297 2,301 Total volume boepd 4,674 3,423 1,990 10, Unaudited management information COMPANY PRESENTATION 15

23 Conclusion COMPANY PRESENTATION 16

24 Appendix COMPANY PRESENTATION

25 Announced investments in the Vaca Muerta Buyer Seller Announced Value (US$ Million) US$/Acre Commentary Jul ,240 12,900 Sep ,000 Apr ,800 Continuation of previous joint operations Initial outlays of US$1.24 billion Initial 16 well programme 50:50 joint venture with YPF operating Four-year 50:50 exploration project to drill and analyse 7 vertical and 2 horizontal wells Dec N/A Two investments of US$250 million and US$300 million from the partners Includes both drilling and processing facilities Mar ,000 Petronas contributing US$475 million of US$550 million over 3 annual phases 30 wells planned in 3 year pilot 50:50 JV (YPF operator) Feb ,950 Pilot programme agreed in the block located northeast of Loma Campana 50:50 JV (Shell operator) Apr N/A Apr ,900 Aug ,730 Feb ,610 MOU for development of the area in which partners will invest US$300 million in the AP East block and US$200 million in AP West Agreement includes unitisation of blocks and redistribution of P.I.s MOU to develop field with the drilling of 26 wells and construction of new infrastructure 49:51 JV (YPF operator) Joint exploration of Bajo del Toro block with the drilling 8 wells and construction of related infrastructure 50:50 JV (YPF operator) 59% of PELSA, that holds a 73% operating stake in three exploration concessions, majority of assets cover conventional operations in the Neuquen basin, with acreage in the Vaca Muerta Jun 2018 N/A N/A 30% stake in two ExxonMobil affiliates with various interests in licenses for seven blocks across Vaca Muerta COMPANY PRESENTATION Appendix

26 Thank you