FOCUSED ON VALUE CREATION

Transcription

1 FOCUSED ON VALUE CREATION 2015 Full Year Results 10 March 2016

2 Price rebased to 100 SECTOR CHALLENGES About lack of value creation as much as oil price Lack of value creation Explorers hit hardest Production Peers - Aggregated, (76%) Exploration Peers - Aggregated, (53%) Brent, (59%) Oil price fall Producers hit hardest 0 Jul-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Causes High finding costs and very few examples of prompt and profitable monetisation Increased level of commitments as governments increased their ask Indiscipline amongst exploration companies in terms of capital allocation Haste, part driven by equity markets, to chase catalysts and drill new plays early rather than build collective understanding as play de-risks over time Growth was prioritised over value Source: Bloomberg as of 8 th March 2016 Note: Prices are adjusted to reflect stock splits, rights offerings, stock dividends and abnormal cash dividends Production peers: Genel, Soco, Tullow, Premier, Enquest, Gulf Keystone, Seplat, Maurel et Prom Exploration peers: Ophir, Cairn, Kosmos, Cobalt, Africa Oil, FAR, Faroe 2015 Full Year Results Slide 2

3 Breakeven ($/bbl) HOW TO CREATE VALUE IN CURRENT MARKET Responding to the New Normal Brent break-even of non-producing (pre-sanction and under development) oil assets DEEPWATER ,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 Source: Goldman Sachs Global Investment Research HEAVY OIL TRADITIONAL ULTRA DEEPWATER Cumulative Peak Production (kbls/d) SHALE OIL Exit, re-engineer or renegotiate fiscal terms High quality assets with preferential fiscal terms Our response to create value Continue to find low cost resource and monetise at a higher price Exiting plays/assets that don t work at low cost and entering assets/plays that do Only high quality assets below the shale threshold with: transformational potential; minimal commitments; and fiscal terms that enable value creation Pacing our exploration and high-grading the plays. We will not rush to drill NAV/share growth is our key metric and we will benchmark against this more explicitly going forward 2015 Full Year Results Slide

4 MONETISING DISCOVERED RESOURCE Track record of monetising success Ophir 40% 2P Reserves Booking in 2016 Discovered Gross 200 mmboe Eq. Guinea 3 Bnboe 1.5 bnboe Tanzania 500 mmboe Tanzania 200 mmboe Eq. Guinea 500 mmboe Tanzania BG 60% Farm-out Pavilion 20% $1.3 bn Schlumberger 40% Farm-out Future monetisation 20% Covered Capex through to Pavilion Repositioned balance sheet & Share buyback Funded EG to 1 st gas without leverage 2015 Full Year Results Slide 4

5 DELIVERING ON KEY OBJECTIVES 2015 Achievements Delivered material G&A savings and synergies.. Integrated production assets..... Delivered forecast cash flow..... Signed HoTs with midstream partner, gas off-takers and upstream partner on Fortuna FLNG project Completed Kerendan gas facilities..... Agreed contractual start date for Kerendan field. Complete gas price renegotiation... Refinanced debt portfolio Objectives Reduce G&A cost by further 15% Deliver cash from operations of $ MM FID on Fortuna FLNG project First gas on Kerendan gas field Complete Kerendan gas price renegotiation Mature Myanmar, CDI and Aru Trough prospects to drill ready status Refinance/restructure debt portfolio Continue high-grading exploration portfolio High-graded exploration portfolio Full Year Results Slide 5

6 OUR BUSINESS MODEL How do we allocate capital CASH EXPLORATION DEVELOPMENT PRODUCTION Exploration is focus for creation of shareholder value Unique position to deliver high graded portfolio due to strong balance sheet and minimal well commitments RETURN TO SHAREHOLDERS Self-funded development activity Minimal existing capital will be deployed to developments Production is a financing stream for E&A activity Reserves replacement and production growth are not key metrics Assets must break even at low oil price PLACE TO WIN THE GAME HARD TO BEAT COST OF CAPITAL POSSIBLE TO BEAT COST OF CAPITAL Capital Allocation High Minimal Selective A SELF-SUSTAINING EXPLORER DELIVERING SUPERIOR RETURNS TO SHAREHOLDERS 2015 Full Year Results Slide 6

7 NAV PER SHARE GROWTH IS OUR OBJECTIVE How we have tightened our model Create Value for Shareholders Assets Tightened the way we manage our assets, capital and people: Assets High grading the exploration portfolio Value driven Asset Development Plans Emphasis on transformational assets that can compete below the shale ceiling Capital Governance IRR & scale drive all investment decisions Internal competition for capital We will not be prioritise growth over value Capital People People People are key resource, deploy where they create most value Closely align organisational behaviour with shareholders interests 2015 Full Year Results Slide 7

8 2015 FINANCIAL HIGHLIGHTS DESCRIPTION FY15 $ MM FY14 $ MM COMMENT Income Statement: Revenue Impairment of P&D assets (168.9) - Ten months production from Bualuang at 10.4 Mbopd realising $56.32/bbl Pre-tax fair values assessed against lower oil price environment (post-tax $106m) Exploration write-offs & impairments (183.1) (333.8) Exit low value opportunities Profit/(loss) after tax (329.3) 54.9 Balance Sheet: Includes non-cash charges of $370m for amortisation, impairments and deferred tax Acquisitions 1, Pre-tax fair value for acquisition of Salamander Capital Expenditure Fortuna FEED; Myanmar and Indonesia G&G ; and Thailand drilling Net Cash ,172.8 Debt of $260m and cash of $615m Cash Flow Statement: Operating cash flow (pre-tax) (5.8) Pre-tax cash flow from Bualuang not of Corporate G&A Cash and funds ,172.8 Fully funded through to Full Year Results Slide 8

9 2015 FUNDS FLOW $1,400m $1,200m CASH BALANCE $1,173M $1,000m $192m $111m $210m $800m $600m $270m CASH BALANCE $614M $981m $400m $570m $200m $0m Cash Brought Forward Producing Assets Capex Finance Other Cash Carried Forward Includes Salamander assets on a full year proforma basis 2015 Full Year Results Slide 9

10 16E Net Debt (Cash) / 16E CFFO (x) CAPACITY TO GROW Strong balance sheet relative to sector (6.0) (4.0) Under levered with equity value Ophir EMEA E&Ps Leverage European Independents (1) European IOCs (2.0) Independents 4.0 IOCs 6.0 Highly levered with equity value 8.0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 16E Debt / (Market Cap. 16E Debt) Highly levered business models Source: Capital IQ as at March 1, 2016 (1) Africa Oil and Cairn Energy have negative CFFO and no debt 2015 Full Year Results Slide 10

11 FINANCIAL OUTLOOK TO FORTUNA FIRST GAS $120m $100m $80m $60m $40m $20m $0m Other Firm Spend Commitment expenditure Cash Balance at 1 Jan: $614m Firm + Commitment spend ( ): $210m EG First Gas Driving down capex 2015 capex was 70% down on 2014 Reduced 2016 forecast $ MM Reduced G&A cost base by 37% Underlying costs reduced by $60 MM Targeting a further 15% saving in 2016 High degree of financial flexibility $100 MM of commitment spend Fortuna FLNG funded to first gas Tanzania low value option to monetise 2016 cash flow from production $ MM Fully funded to EG first gas Commitment spend significantly less than cash balances Additional spend used to accelerate exploration drilling Estimated year end 2016 cash $ MM Not necessary to incur additional debt to fund devex 2015 Full Year Results Slide 11

12 MODEL PERFORMING TO PLAN Portfolio delivering as expected CASH EXPLORATION DEVELOPMENT PRODUCTION Exploration is focus for creation of shareholder value Unique position to deliver high graded portfolio due to strong balance sheet and minimal well commitments RETURN TO SHAREHOLDERS Self-fund development activity Minimal existing capital will be deployed to developments Production of 13,000 boepd for FY 2015 Outperformed expectations Assets break even at $15 per bbl 2P reserves robust of 54.9 MMbo Capital Allocation High Minimal Selective PREDICTABLE PRODUCTION PERFORMANCE 2015 Full Year Results Slide 12

13 PRODUCTION: DELIVERING FREE CASH FLOW Safely completed operations Established a regional production and project management hub Strong HSE and operational reliability enabled us to out-perform on production metrics Reservoirs continue to perform as expected no reserves surprises Focus on cash flow generation and returns on future investments for this low break-even and mixed (oil/gas) portfolio 99% 0 5% $ Production Uptime Lost Time Incidents Production Outperformance Per Boe Breakeven oil price MMbo of 2P reserves 2015 Full Year Results Slide 13

14 MODEL PERFORMING TO PLAN Portfolio delivering as expected CASH EXPLORATION DEVELOPMENT PRODUCTION Added five new plays Exiting five plays RETURN TO SHAREHOLDERS Fortuna FLNG on track to make FID in mid-2016 Used project equity as source of funding Production of 13,000 boepd for FY 2015 Outperformed expectations Kerendan development completed and ready for start up Assets break even at $15 per bbl 2P reserves robust of 54.9 MMbo Capital Allocation High Minimal Selective 2 FULLY FUNDED DEVELOPMENTS 2015 Full Year Results Slide 14

15 DELIVERING 2 FULLY FUNDED DEVELOPMENTS Development 1: Fortuna FLNG Overview JUST 4 development wells for first gas - Includes contingency of 2wells Standard subsea infrastructure Upstream Development - Manifold, Flowlines, Risers Four phase development with a total of 17 wells 440 mmscfd design flowrate Water depth ~ 1800m Reservoir depth ~ m Leased FLNG vessel - Day rate-based charter agreement Midstream Development 2.2mmtpa LNG capacity per vessel - One vessel at start-up Second vessel on site by 2025 Black & Veatch liquefaction process - Proven, simple process Daily Production, mmcf/d (100% Basis) Vessel 1 Vessel 2 Gas Sales Agreements 400 Downstream Activity - Signed HoTs with 7 buyers in Variety of offtake structures - Shortlisted 3 off-takers in 1Q New interested parties still emerging Full Year Results Slide 15

16 DELIVERING 2 FULLY FUNDED DEVELOPMENTS Development 1: Fortuna FLNG Why FLNG works Pure gas stream Low capex to 1 st gas Competitive into Europe and Asia Milestones to FID Close Schlumberger transaction Sign Umbrella agreement Sign Chartering agreement Sign final GSAs Presidential ratification On Track to FID in Mid Full Year Results Slide 16

17 DELIVERING 2 FULLY FUNDED DEVELOPMENT PROJECTS Development 2: Kerendan Phase 1 Mechanically completed facilities Agreed official start date ( ) Sending commissioning gas to PLN Further value creation Complete 3D seismic survey Renegotiate gas price Commercial negotiation on additional offtake Reserves booking Incremental production and cash flow Incremental gas-to-power and potential micro LNG project On Track to deliver first commercial production 2H Full Year Results Slide 17

18 MODEL PERFORMING TO PLAN CASH EXPLORATION DEVELOPMENT PRODUCTION Added five new plays Exiting five plays Shot c. 11,000 sq km of 3D seismic RETURN TO SHAREHOLDERS Fortuna FLNG on track to make FID in mid-2016 Used project equity as source of funding Kerendan development completed and ready for start up Production of 13,000 boepd for FY 2015 Outperformed expectations Assets break even at $15 per bbl Capital Allocation High Minimal Low A SELF-SUSTAINING EXPLORER DELIVERING SUPERIOR RETURNS TO SHAREHOLDERS 2015 Full Year Results Slide 18

19 Breakeven ($/bbl) THE NEW BREAKEVEN LANDSCAPE Assets have to come in below US shale 110 DEEPWATER TRADITIONAL HEAVY OIL ULTRA DEEPWATER Gabon pre-salt Gabon post-salt Seychelles Kenya Western Birds Head SHALE OIL Aru Trough Cote D Ivoire Sarawak Basin Myanmar ,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 Cumulative Peak Production (kbls/d) Source: Goldman Sachs Global Investment Research 2015 Full Year Results Slide 19

20 EXPLORATION PORTFOLIO HIGH-GRADED Prioritising valuable plays NEW PLAY ENTRIES Cote D Ivoire (oil) Deepwater Sarawak (gas) 2015/16 HIGH GRADED EXPLORATION EXPLORATION PORTFOLIO PORTFOLIO Aru Trough (oil) EG (oil) G4/50 (oil) Myanmar (gas) Gabon post-salt (oil) Gabon pre-salt (oil) Gabon Conjugate Margin (oil) Makassar Straights (oil/gas) Kerendan (gas) Kenya (oil) Seychelles (oil) Western Birds Head (oil) PLAYS EXITED Kenya (oil), Gabon post-salt (oil), Gabon pre-salt (oil), Seychelles (oil), Western Birds Head (oil) 2015 Full Year Results Slide 20

21 MYANMAR BLOCK AD-03 Intense Industry Activity in Play potential: Multi-TCF Forward committed spend: Nil Key wells and seismic surveys OPTION FOR 1H 2017 DRILLING Underexplored frontier deepwater basin with stratigraphic traps expected within the Bengal Fan deepwater channels Petroleum system biogenic charge proven by the Schwe field Intense industry activity - ongoing acquisition of approximately 50,000km 2 of 3D seismic surveys - two recent gas discoveries at the margins of the play Ophir acquired the block wide 10,000km2 Mrauk 3D in Q Final processed data due in April months ahead of the other deepwater operators Flexible operational approach to leverage early acquisition programme and deliver value through commercialisation options Full Year Results Slide 21

22 COTE D IVOIRE Technical lead entry facilitated by new PSC terms Play potential: Multi-Hundred Million Barrels Forward committed spend: c. $15 million OPTION FOR 2H 2017 DRILLING Extensive regional play fairway evaluation has been conducted over past 18 months Entry into an extension of a proven petroleum system in the adjacent block CI- 514 CI Ophir 45% (op.) African Pet. 45%, PetroCI 10% - 1,446km2, m water depth - 1 well drilling commitment by Q Worked closely with the CDI government to agree fiscal terms for a new PSC that enables deepwater exploration in the current oil price environment 2015 Full Year Results Slide 22

23 EAST INDONESIA WEST PAPUA IV / ARU Trepang 3D seismic acquisition in 2016 Play potential: Multi-Hundred Million Barrels Forward committed spend: c. $12 million OPTION FOR 1H 2018 DRILLING Material position in a underexplored deepwater exploration play - potential for large, multi-hundred million barrel resources - in the success case multiple follow-on potential West Papua Aru - Ophir (op) 49.9%, Statoil 40%, Tately 10.1% - Ophir (op) 60%, Statoil 40% All work program commitments for the existing periods have been fulfilled Acquisition of the ~3400km2 Trepang 3D in 2016 will give full modern 3D coverage across the play - allow high grading of the portfolio to support the decision to move into the next permit term and drill exploration wells 2015 Full Year Results Slide 23

24 MALAYSIA OFFSHORE SARAWAK Ophir Entry into Deep Water Sarawak Play potential: Multi-TCF Forward committed spend: Nil OPTION FOR 2H 2018 DRILLING Extensive regional play fairway evaluation has been conducted over past 18 months to high-grade blocks Entry into extension of known petroleum system. SK-2A - Murphy 40% (op.) Ophir 40%, Petronas 20% - 2,400km 2, m water depth - 3D Seismic only commitment in current period which has been completed. - Potential 1 well drilling commitment in subsequent period Q Q Multiple opportunities exist for commercialisation through tie-back to existing infrastructure with access to domestic and export markets Full Year Results Slide 24

25 Basecase 2016 to 2020 THE SELF SUSTAINING BUSINESS MODEL Base business plan will transform Ophir, other opportunities to grow further CASH EXPLORATION DEVELOPMENT PRODUCTION 2016 Possibly test one play (G4/50) Continue to high-grade portfolio SHAREHOLDER RETURNS Kerendan on stream Fortuna FID Production c. 11,000 boepd 2P ~ 54 MMbo Cashflow c. $70 million Options to have tested plays in Myanmar, CDI, Sarawak and Aru Trough Continue to high-grade and add new plays/more acreage in existing high-graded plays Complete Fortuna development FID second vessel at Fortuna FID Bualuang/Kerendan expansions Tanzania disposal Production c. 30,000 boepd 2P ~ 250 MMbo Cashflow c. $200 million $$ s c. 30, Forecast Potential cash from monetisation of exploration success boepd of production c. 250 MMboe of 2P Reserves c. $200 million of cash flow 2015 Full Year Results Slide 25

26 2016 OUTLOOK Relentless focus on Value Creation VALUE can be created in a low commodity price environment STRONG FINANCIAL position DELIVERING TO PLAN operationally in production, development and exploration Base plan will see material production, reserves and cash flow GROWTH by 2020 Financial and operational delivery means we can take advantage of additional growth OPPORTUNITIES in what is a strong buyers market A BUSINESS ALIGNED WITH SHAREHOLDERS INTERESTS 2015 Full Year Results 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 Investor.relations@ophir-energy.com