Faroe Petroleum plc. Norwegian Asset Swap with Equinor 5 December Slide 1

Transcription

1 Faroe Petroleum plc Norwegian Asset Swap with Equinor 5 December 2018 Slide 1 1

2 Disclaimer These materials do not constitute or form any part of any offer or invitation to sell or issue or purchase or subscribe for any shares in Faroe Petroleum plc (the Company ) nor shall they or any part of them, or the fact of their distribution, form the basis of, or be relied on in connection with, any contract with the Company relating to any securities. Any decision regarding any proposed acquisition of shares in the Company must be made solely on the basis of public information on the Company. These materials are not intended to be distributed or passed on, directly or indirectly, to any other persons. They are available to you solely for your information and may not be reproduced, forwarded to any other person or published, in whole or in part, for any other purpose. No reliance may be placed for any purpose whatsoever on the information contained in these materials or on their completeness. Any reliance thereon could potentially expose you to a significant risk of losing all of the property invested by you or the incurring by you of additional liability. No representation or warranty, express or implied, is given by the Company, its directors or employees, or their professional advisers as to the accuracy, fairness, sufficiency or completeness of the information, opinions or beliefs contained in these materials. Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered or incurred as a result of the reliance on such information, opinions or beliefs. Certain statements and graphs throughout these materials are forward-looking statements and represent the Company s expectations or beliefs concerning, among other things, future operating results and various components thereof, including financial condition, results of operations, plans, objectives and estimates (including resource estimates), the Company s anticipated future cash-flow and expenditure and the Company s future economic performance. These statements, which may 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 as they relate to events and depend on circumstances that will occur in the future. Forward-looking statements speak only as at the date of these materials and no representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. The Company expressly disclaims any obligation to update or revise any forward-looking statements in these materials, whether as a result of new information or future events. If you are considering buying shares in the Company, you should consult a person authorised by the Financial Conduct Authority who specialises in advising on securities of companies such as Faroe Petroleum plc. Slide 2

3 Norwegian swap with Equinor More production, less development Transaction Summary Cashless swap with Equinor to acquire four producing assets in return for Njord, Hyme, Bauge (all 7.5%) Effective date of 1 January 2019 Adds 7,000-8,000 boepd in 2019 No material impact on 2P reserves Equinor retains material interests in Alve (53.0%) and Marulk (33.0%) and retains abandonment obligations on Alve and Marulk Acquired Assets Faroe WI% Alve Marulk Ringhorne East Unit Vilje 32.0% 17.0% 14.82% % Total Operator Equinor ENI Point AkerBP 2P reserves* HC Type Gas/Cond Gas/Cond Oil Oil * Faroe s internal estimates based, in part, on the Revised National Budget figures provided annually by operators of oil and gas fields to the Norwegian authorities. Slide 3

4 Transaction rationale Active portfolio optimisation Accelerating growth, rebalancing reserves, reducing capex and unit opex Accelerates production growth towards near-medium term target of 35,000 boepd Preliminary estimate of 2019 Group production at 18,000-22,000 boepd Better portfolio balance between production and development on a reserves-neutral basis Significantly reduces Faroe s capital expenditure Materially reduces Group opex per boe Material tax synergies through utilisation of Faroe s Norwegian tax losses Intention to give careful consideration to the optimal mix of reinvestment in the existing portfolio, potential M&A opportunities and returning capital to shareholders following Transaction completion Slide 4

5 Transaction impact Accelerating growth, rebalancing reserves, reducing capex and unit opex 70,000 Unrisked production profile (boepd)* 60,000 Pre-Deal 2P Reserves** 35% 50,000 40,000 Post-Deal Producing 54% Development 2C Resources 30,000 20,000 2P Reserves 10, * All figures unrisked and based on operator figures and management estimates; production profiles indicative and do not constitute forward guidance ** Faroe existing 2P reserves as at YE-17 plus preliminary management estimates Slide 5

6 Acquired assets summary

7 Asset overview Optimised portfolio with near term catalysts Expands footprint through two new core areas (Alvheim and Norne) Alve, Marulk and Vilje are subsea tie-backs to FPSOs, low unit operating costs Near term activity on acquired assets including: Exploration well on Snadd Outer Outer/Black Vulture prospects (Alve) Marulk development well (Lange) Infill wells on Ringhorne East Further appraisal of recent Agar discovery (UK) ~13 km from Alvheim Opportunity for Faroe to be a positive, proactive partner given material working interests and subsurface expertise Acquired assets unrisked production profile (boepd)* 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Base Potential upsides * All figures unrisked and based on operator figures and Faroe management estimates; production profiles indicative and do not constitute forward guidance Slide 7

8 Asset summary: Alve Norne core area Asset overview Partners Net 2P HC Type Equinor (53.0%, op) Faroe (32.0%) INEOS (15.0%) 7.7 Gas/Cond Asset location Discovered 1990, 16 km SW of Norne Upper Jurassic (Tilje, Ile, Tofte, Not and Garn) Production started 2009, 3 producers Small Gjøk discovery located on-licence Further exploration upside tested in 2019 (dual target Snadd Outer Outer/Black Vulture) * All figures unrisked and based on operator figures and Faroe management estimates Slide 8

9 Asset summary: Marulk Norne core area Asset overview Partners Net 2P HC Type Equinor (33.0%) ENI (20.0%, op) Faroe (17.0%) 2.3 Gas/Cond Discovered 1992, 30 km south west of Norne Production currently from Lysing formation Production started 2012 with 2 producers Planned development of deeper Lange formation in mid-2019 with well now committed Lange development first exploitation of reservoir regionally, upside potential Asset details Top Lysing Top Lange Top Lysing depth * All figures unrisked and based on operator figures and Faroe management estimates Slide 9

10 Asset summary: Ringhorne East Balder/Ringhorne core area Asset overview Partners Net 2P HC Type Asset details Point (77.38%, op) Faroe (22.62%)* 4.7** Oil Jurassic shallow marine sandstones with excellent reservoir quality Three producers, oil export only 4D seismic shot summer of 2018 to support two initial infill opportunities expected 2020 *All figures unrisked and based on operator figures and Faroe management estimates ** Volumes listed associated with Faroe s entire position in Ringhorne East. Volumes associated with the acquired interest (14.82%) equate to 3.1 mmboe Slide 10

11 Asset summary: Vilje Alvheim core area Asset overview Partners Net 2P HC Type AkerBP (46.904%, op) Faroe (28.853%) PGNiG (24.243%) 4.4 Oil Asset detail Top Heimdal Depth Map Simple 4-way structure in Heimdal (turbidite) Three producers, aquifer and gas lift support One of several satellites to AkerBP operated Alvheim FPSO Reserves have increased several times since PDO due to outperformance of reservoir * All figures unrisked and based on operator figures and management estimates; production profiles indicative and do not constitute forward guidance. Slide 11

12 Outlook & summary

13 Firm Exploration 2C Res 2P Reserves Key near term catalysts Driving growth through organic investment WI% Op H1 H2 H1 H2 H1 H2 Brage 14.3% Wintershall infills infills Brasse 50.0% Faroe DG2 PDO EPCI Fenja 7.5% Neptune PDO drilling Marulk 17.0% ENI drilling Oda 15.0% Spirit first oil Tambar 45.0% AkerBP infills gas lift Iris/Hades 20.0% OMV appraisal PDO Agar 25.0% AzCat appraisal Brasse East 50.0% Faroe drilling Cassidy 15.0% Spirit drilling Snadd OO/BV 32.0% Equinor drilling Pabow 20.0% Equinor drilling Bergknapp* 30.0% Wintershall drilling Bold: added through business development in 2018 * Previously Yoshi Slide 13

14 Agar discovery (UK) Recent discovery near Alvheim core area Licence P1763: Faroe 25%, Azinor 25% operator, Cairn 50% Successful Agar discovery in November 2018 Gross recoverable resources: 15 to 50 mmboe Operator s capex estimates supports commerciality of proven volumes solid flow rates expected High value appraisal upside potential substantiated by Faroe s tax losses and UK fiscal regime Alpha prospect (FP 12.5%) significantly de-risked following Agar result: further upside of mmboe 9/14a-15A Agar 9/14a-6 Dry 9/14a-17B(Z) 9/14a-10Z 9/14a-10 Glassel Dry Agar Discovery Map/cartoon Alpha Prospect Slide 14

15 Cassidy exploration well - Norway Licence PL405: Faroe 15%, Spirit 40% (Op), Suncor 30%, AkerBP 15% Spudded 4 th December with Mærsk Innovator Located north of Oda in similar salt dome setting Oil prospect: mill boe gross unrisked resource Potential subsea development piggy back to Oda Slide 15

16 Delivering value for all shareholders Strongly positioned a well funded, sustainable business Supporting growth with M&A Multiple transactions in 2018: Fenja partial-sale Fogelberg farm-down Effective portfolio management Agar farm-in Equinor swap Generating significant cash flow Equinor swap to add 7-8,000 boepd in 2019 Significant capex savings Fully funded development Material opex reduction programme Near-to-medium term target of 35,000 boepd Successful exploration track record Discoveries at Iris/Hades & Agar in 2018 alone Top quartile licence round performer Nine applications in Norway APA 2018 One application in UK 31 st Round delivering material, near term value growth Slide 16