September Creating an Indigenous Upstream Champion

Transcription

1 September 2011 Creating an Indigenous Upstream Champion

2 Agenda Introduction About FHN FHN Today Asset Overview Conclusion Slide 2

3 Introduction

4 First Hydrocarbon Nigeria Limited Established in 2009 to take advantage of the opportunities available to local E&P companies Majority owned by Nigerian institutions and individuals - Planned listing on the NSE - Re-enforces Government's push for increased local participation in the upstream sector Geared towards becoming an indigenous upstream champion Partnership with Afren - Proven Track Record - Leading Partner to Nigerian indigenous partners Strong board and proven management OML 26 acquisition a major step in achieving the strategic vision - Large scale reserves and resource base - Current production with major redevelopment plan in place Slide 4

5 A new breed of indigenous company Strong Board and Management Afren independent international partner of choice m Significant Opportunity set and access Proven fundraising ability Indigenous structure with clear capital markets strategy Slide 5

6 About FHN

7 Established Board and Management team BOARD Chairman Egbert Imomoh Chairman Adebayo Ayorinde Director Ahonsi Unuigbe Executive Director/CFO Labi Ogunbiyi - CEO Osman Shahenshah Director Faiz Imam Director Tosin Runsewe Director Magaji Inuwa Director Bert Cooper Director Chief Oladele Fajemirokun - Director Senator Udoma - Director Natalie Dickson General Counsel Jonathan Long Director MANAGEMENT TEAM Patrick Ogunjimi Technical Director Yemi Ajao Commercial Manager Adolphus Afemari Technical Manager Adeola Akinrinmade Finance Manager Tari Kosuowei Comm. Affairs Manager Kelechi Ojukwu Asset Manager Peter Agodo Community Affairs Coord. Slide 7

8 Ownership Structure 45% ownership Afren 55% held by Nigerian Institutions & Investors FHN was created in 2009 with support from Nigerian financial institutions (GTBank Plc ( GTBank ) and FCMB Plc ( FCMB )) FHN is 45% owned by Afren Nigeria Holdings (Nigeria) Limited, an Afren Plc owned subsidiary FHN is 55% held by Nigerian institutions and investors such as African Capital Alliance Future financing rounds must uphold the indigenous status Slide 8

9 FHN today - FHN s Proven Fundraising Ability US$mm May-11 Jul-11 Sep-11 Up to US$230 million syndicated debt facility Facility to fund OML 26 The facility has been fully financed by Nigerian Banks reflecting the increasing capacity of, and appetite for the local banking system to finance upstream oil & gas transactions US$50 million mezzanine facility Strong international endorsement of the FHN business model US$108 million bridge financing facility To fund onshore acquisitions Fully committed to by Nigerian banks Up to US$75 million of equity raised since inception Nigerian individuals and institutions including the Board of Directors and African Capital Alliance Slide 9

10 Afren as Technical Service Provider 9 assets in partnership with 6 indigenous partners including FHN OPL 310 OML 26 OPL 907/917 Track record at Okoro and Ebok projects fast track development to production Okoro Ofa Ebok Okwok OML 115 Slide 10

11 The Afren FHN Advantage Established track record Production and reserves growth Differentiated strategy m Solid financial position and proven capital raising ability Portfolio growth and diversification Consistent delivery Slide 11

12 FHN Today

13 Net WI mmboe FHN Today Growth Oriented Strategy Growing reserves and production & creating value through: Focus on our competitive advantage Leverage Afren s track record and technical expertise Capital raising capabilities Local partnership and relationship Net Reserves Growth Identification, access and monetisation of the numerous opportunities in the Nigerian oil and gas industry IOCs divestment opportunities Material marginal fields Low cost exploration to prove up upsides in well known basins (low risk exploration) OML 26 has an exploration potential of 615 mmboe A disciplined approach to capital structure and valuation Avoid excessive leverage Financial discipline Slide 13

14 Asset Overview

15 Significant Portfolio acquired Onshore Nigeria Acquisition by FHN of a 45% interest in OML 26 Large scale re-development opportunity at Ogini and Isoko Existing infrastructure in place Appraisal upside at Aboh, Ovo and Ozoro Multiple low risk exploration opportunities Initial production target of 50,000 bopd 940 mmboe total gross reserves and resources Currently producing * 2% Ogini and Isoko Phases 1,2 & 3 re-development* 18% Aboh, Ovo, Ozoro 2C 15% Prospective Resources 65% * Independently estimated by Energy Resource Consultants (ERC) as at 1 January 2010 Slide 15

16 OML 26 Isoko Field 56km East of Warri Ogini Field 63km East of Warri Onshore Nigeria, Delta State 2 developed fields (Ogini and Isoko) 3 undeveloped fields (Aboh, Ovo and Ozoro) Crude export is via the Forcados terminal through a 29km pipeline to the SPDC JV operated Eriemu manifold OML 26 Slide 16

17 Ogini Field Summary Ogini Field OML 26 Discovered: 1964 Production start up: wells have been drilled. There are 11 currently producing drainage points Simple roll-over anticline structure. Sedimentology consists mostly of truncated channels and barrier bars 95% of volumes contained within D and E Series reservoirs GOR scf/bbl. Reservoirs have strong aquifer support Only 7% of estimated STOIIP produced to date Main field characteristics: The rock properties are good. The average porosity for the producing reservoirs ranges from 21% to 33%, permeability from 450 to 4500 Md API oil Slide 17

18 Isoko Field Summary Isoko Field OML 26 Discovered: 1959 ERC E2000 TWT interpretation West East Production start up: wells drilled. 5 are active with 1 currently producing drainage point and 4 wells shut-in HEP structure back to time ERC Equipoise re-pick NW to SE trending crestal structure 85% of volumes contained in the E Series reservoirs Moderate solution GOR ( scf/bbl). The reservoirs are hydrostatically pressured and underlain by large aquifer, which form the prominent drive mechanism Main field characteristics: The rock properties are good. The average porosity for the producing reservoirs is 30%, permeability from 3,000 to 4,000 Md Medium to light gravity API oil Slide 18

19 Ogini & Isoko Fields Phased Development Plan Phase 1 Phase 2 Phase 3 Drill 6 producers + 1 water disposal well Refurbish existing production facilities 30,000 bopd liquids handling capacity 16,000 bopd production uplift expected Conduct detailed G&G Study Analyse existing and new production data Net capex: c.us$ 70m Net cash flow: c.us$ 30m Expand production capacity Drill 15 additional producers 40,000 bopd expected production rate Net capex: c.us$ 170m Net cash flow: c.us$ 230m Further expand facilities Drill 18 infill-wells 50,000 bopd expected production rate Net capex: c.us$ 136m Net cash flow: c.us$ 280m Impact on gross boepd 50 Impact on gross boepd 50 Impact on gross boepd Yrs Phase 1 Yrs 1-3 Phase 2 Yrs 4-6 Phase 3 Yr 7 0 Phase 1 Yrs 1-3 Phase 2 Yrs 4-6 Phase 3 Yr 7 0 Phase 1 Yrs 1-3 Phase 2 Yrs 4-6 Phase 3 Yr 7 Slide 19

20 Discovered un-developed Aboh, Ovo and Ozoro Fields OZORO-2 Gross 2C 100% Remaining Hydrocarbons* 10 Oil (mmbbls) 0 Condensate (mmbbls) 19 Natural Gas (bcf) 13 Total (mmboe) Asset Type: Shut-in field, produced >1 mmbbls oil in the past Discovered: wells drilled to date ABOH-1 Gross 2C 100% Remaining Hydrocarbons* 8 Oil (mmbbls) 10 Condensate (mmbbls) 308 Natural Gas (bcf) 70 Total (mmboe) Asset Type: Un-developed field Discovered: wells drilled to date OVO Aboh-1 OML26 Gross 2C 100% Remaining Hydrocarbons* 5 Oil (mmbbls) 5 Condensate (mmbbls) 296 Natural Gas (bcf) 61 Total (mmboe) Asset Type: Un-developed field Discovered: well drilled to date *Operator s estimates Slide 20

21 Conclusions

22 The Ongoing Opportunity Set Further Portfolio Rationalisation by Major IOCs Focus on large scale projects (>500 mmbbls) and deepwater frontiers Strict internal capital allocation process impedes investment in small to medium size assets Materiality thresholds Re-activation of Shut In Production Several instances where production is shut in or producing below capacity (no value being created) Major IOCs reviewing portfolios and onshore/shallow water strategy Indigenisation; accelerated by use it or lose it and IOC divestment programmes Apparent Opportunities Acquire near term development assets Indigenous solutions required to ensure optimal production is restored Participate in relevant licensing rounds Become a consolidator in the M&A space Slide 22

23 Conclusions Successful fundraising track record and solid financial position Near term capital markets strategy Best of breed in partnership with Afren m Major acquisitions under review and negotiation with existing production to add to portfolio Established to adapt to changing regulatory framework and opportunity set Existing major onshore portfolio, with growing production, as well as significant appraisal and exploration upside Slide 23