Annual Meeting of Shareholders. May 25, 2016

Transcription

1 Annual Meeting of Shareholders May 25, 2016

2 Cautionary Language Regarding Risks, Forward-Looking Statements and Other Matters This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of These forward-looking statements are based on our current expectations about our company, our properties, our estimates of required capital expenditures and our industry. Words such as "expect, "will," "anticipate," "indicate," "estimate," "believes," "plans" and similar expressions are intended to identify such forward-looking statements. It is important to note that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: the preliminary nature of well data, including permeability and gas content, and commercial viability of the wells; risk and uncertainties associated with exploration, development and production of oil and gas; drilling and production risks; our lack of operating history; limited and potentially inadequate cash resources; expropriation and other risks associated with foreign operations; anticipated pipeline construction and transportation of gas; matters affecting the oil and gas industry generally; lack of oil and gas field goods and services; environmental risks; changes in laws or regulations affecting our operations, as well as other risks described in our Annual Report on Form 10-K, Quarterly Reports filed on Form 10-Q, and subsequent filings with the Securities and Exchange Commission ( SEC ). Erin Energy undertakes no obligation to publicly update or revise any forward-looking statements. We use certain terms in this presentation such as contingent resources, prospective resources, leads, oil in place and similar terms that the SEC s guidelines strictly prohibit us from including in filings with the SEC. Our Probable (2P) and Possible (3P) reserves may not meet SEC rules and Guidelines (including those relating to pricing) for such reserves. These terms include reserves with substantially less certainty, and no discount or other adjustment is included in the presentation of such reserve numbers. U.S. investors are urged to consider closely the disclosure in our Form 10-K for the year ended December 31, 2015 and in our other filings with the SEC, available on our website at from us at 1330 Post Oak Blvd., Suite 2250, Houston, Texas 77056, Attn: Investor Relations, or by calling us at (713) You may get these documents for free by visiting EDGAR on the SEC web site at or by calling the SEC at SEC Annual Shareholder Meeting Presentation May

3 Company at a Glance Diverse sub-saharan Africa portfolio, well positioned to provide exceptional value for shareholders NIGERIA Offshore Acres Interest Partner Status OML , % - Production OML , % - Exploration GAMBIA Offshore Acres Interest Partner Status Block A2 320, % - Exploration Block A5 343, % - Exploration KENYA Corporate Offices Operations Production Houston-based independent E&P company listed on NYSE MKT & JSE Production & Exploration Projects with Full Operatorship Diverse Portfolio with 9 Premium Assets across 4 Countries $496m (1) Market Cap Production 9,000 bopd 16.1 mmbbls 2P Reserves (Net) Onshore Acres Interest Partner Status Block L1B 2,246, % - Exploration Block L16 900, % - Exploration Offshore Acres Interest Partner Status Block L27 2,619, % - Exploration Block L28 2,577, % - Exploration GHANA Offshore Acres Interest Partner Status Expanded 373,000 30% - Exploration Shallow 30% Ultramar Energy Appraisal Water 25% GNPC Tano Block 15% Base Energy (1) As at 11-May-2016, Bloomberg 3

4 2015 Overview Positive results despite challenging economic climate Operational Oyo-7 and Oyo-8 wells tied in ~1.6mmbbls oil net production 6,400bbls per day average production, following Oyo-7 and Oyo-8 tie-ins Ghana: significant progress ESWT block technical evaluation The Gambia: 3D seismic data acquired; exploration period on blocks A2 and A5 extended to 2018 Kenya: 2D seismic data acquired, processed, next phase of exploration begun on onshore blocks L1B and L16 Financial $68.4 million revenue 32% increase in net proved reserves to 12.0mmbbls >1.4mmbbls crude sales Capital development 2016 Drill Oyo-9 development well to increase production Drill G prospect to unlock Miocene formation Annual Shareholder Meeting Presentation May

5 Reserves - MMstb Increasing Reserves Year-end 2015 proved reserves Increase due to better production performance from production wells Oyo-7 and Oyo-8 Transfer (net) due movement between P1 and P2 category Negative revision due to lower commodity price 2015 average price of $53.51 vs. $ in Year End 2015 Proved Reserves YE2015 Transfers Performance Oil Price CumProd YE2014 Annual Shareholder Meeting Presentation May

6 Share Performance Erin s share price performance relative to peers and Brent Crude Source: FactSet, 19-May-16 Peers Index include: Tullow (-68%), Ophir (-78%), Kosmos (-52%), Seplat (-49%), Cobalt (-76%), Erin (-71%) 6

7 Financial Performance Erin s financial performance is expected to improve significantly with the introduction of it s organic development plan Financial Snapshot 2014A 2015A 2016E 2017E 2018E 2019E Oil Price US$/bbl Net Revenue US$'000 53,844 68, , , , ,114 EBITDA US$'000 (69,569) (337,883) 24, , , ,469 Capital Expenditure US$'000 (128,510) (84,039) (94,018) (99,265) (103,870) (8,028) Free Cash Flow (Before Debt & Equity) US$'000 (332,057) (81,894) (94,201) 48,855 22, ,772 Total Debt US$' , , , , ,999 30,000 Total Cash US$'000 25,143 8,363 3,466 22,556 21, ,756 Net Debt / EBITDA x -1.9x -0.6x 8.5x 0.9x 0.6x - Total Net Production Mbbls 364 1,564 2,473 4,274 4,165 5,455 Production Cost per Barrel US$/bbl Operations include Oyo 7&8, Oyo 9, Oyo 10&11 and a G-Prospect single well tie-back (and excludes M&A) 7

8 Key Performance Catalysts (2016 Focus) Oyo-9 Production expected 1Q 2017 ~7,000 BOPD tied back to existing infrastructure No fixed operating cost (attached to Armada Perdana FPSO) Significantly reduces breakeven cost per barrel Capital requirement of ~$62m Oyo-10 Production expected 1H 2018 ~5,000 BOPD tied back to existing infrastructure No fixed operating cost (attached to Armada Perdana FPSO) Significantly reduces breakeven cost per barrel Capital requirement of ~$66m G-Prospect Exploration well to tap into Miocene formation with ~158 MMBBLS P50 Resources (1) Drilling expected 1H 2017 Capital requirement of ~$40m High chance of success in relation to benchmarked projects (35%) M&A Considering strategic acquisitions Focus on production assets Targeting 10,000 20,000 BOPD Balance Sheet Balance Sheet currently constrained restructuring will allow Erin to raise development capital (debt & equity) easier Zenith refinancing negotiations Related Party Notes potential for equity conversion (Reduced debt by $50m) Accounts Payable restructuring negotiations with vendors underway (1) Source: DeGolyer and MacNaughton 8

9 Value Creation Growth Strategy Significantly increase shareholder value by growing production and reserves Production Growth Strategy Grow Existing Production Increase production from Oyo by drilling additional wells Explore near field opportunities and tie back to Oyo FPSO Grow production to 30,000 60,000 bopd in the next 5 years Asset Acquisition Supplement production by acquiring strategic production assets with good production/reserve potential New Developments Accelerate the development of the discovered fields in Ghana Organic Reserves Growth Exploring, appraising and development of high materiality exploration prospects Reserves Growth Strategy Asset Acquisition Reserves associated with asset acquisition Grow 2P reserves to 185 MMstb Technical Excellency Improved production recovery process and cost leadership 9

10 Strategic Corporate Goals Matrix of Erin s strategic goals Nigeria Ghana Gambia Kenya / M&A / Other Short Term ( ) Increase Production (12,000 16,000 BOPD) Stabilise Cash Flow Drill & Complete Oyo-9 Drill G Prospect* Await resolution of boundary issue Explore option to improve development economics Plan 3D seismic acquisition Complete processing of 3D seismic Farm-out process Explore portfolio options in Kenya Farm down interest Request for extension Restructure Zenith loan Convert debt to equity Medium Term ( ) Drill Oyo-10 to maintain production Explore G Prospect tie back & appraisal Near Field exploration well drilling Seismic acquisition, processing & interpretation Consider development decision Assess exploration potential Appraisal of fields High grade prospect inventory Secure partners 1 st exploration well (nonoperating) Kenya Carried interest Explore M&A Opportunities Reduce net debt Increase equity and liquidity Long Term (2019 +) Drill Oyo-11 to maintain production Explore tie in of Near Field G Field development Develop 3 discovered Tano Fields Drill further exploration wells Operational partner (Erin non-operated) Appraisal drilling Plan of development / FEED Conclude M&A Significantly reduce net debt Increase equity & liquidity Manage accounts payable * With Equity Capital Raise 10

11 Contact us For more information: NYSE MKT: ERN I JSE: ERN Main Investor Relations US SA Media Erin Energy Corporation Corporate Headquarters South Africa Office 1330 Post Oak Blvd., Suite 2250 Katherine & West Houston, Texas West Street, Unit 10 Sandton, 2196, Johannesburg 11