2018 HALF-YEARLY RESULTS

Transcription

1 2018 HALF-YEARLY RESULTS 30 JULY HALF YEARLY RESULTS

2 INTRODUCTION Austin Avuru- Chief Executive Officer HALF YEARLY RESULTS

3 H AT A GLANCE PRODUCTION WITHIN GUIDANCE, STRONG PROFITABILITY, CASH FLOW & BALANCE SHEET OPERATIONAL FINANCIAL GAS BUSINESS WI production within guidance 51,071 boepd (Guidance 48,000 55,000 boepd) Profitability sustained US$121 million (Profit before tax) 97% 565% 57% H1 2017: 25,877 boepd H1 2017: US$(26) million loss before tax Increased gas revenues US$85 million H1 2017: US$54 million 23% Low operating costs US$4.50/boe (Production opex) 131% Strong cash generation US$245 million (Cash flow from operations) 53% Net WI domestic market supply 155 MMscfd H1 2017: US$5.85/boe H1 2017: US$106 million H1 2017: 101 MMscfd 75% Capital Investment US$21 million (Work programme on track) H1 2017: US$12 million Dividend reinstated US$0.05/share (US$29 million paid out) Seplat WI gas processing capacity 443 MMscfd 103% 2017: Nil YE 2017: 218 MMscfd HALF YEARLY RESULTS

4 KEY NEAR & MEDIUM TERM BUSINESS OBJECTIVES POSITIONED FOR RETURN TO LONG TERM PROFITABILITY AND TO CAPITALISE ON GROWTH OPPORTUNITIES OPTIMISE & GROW PRODUCTION DIVERSIFICATION SCALE UP THE GAS BUSINESS Large inventory of production drilling opportunities in the current portfolio to offset natural decline and offer incremental production growth. Aim to implement multi-well production drilling campaign year-on-year Prioritise diversification of crude oil export routes (Amukpe to Escravos pipeline now expected to be completed in Q4 2018), increase portfolio effect through full development of OML 53 oil and further grow the gas business Full utilisation of existing capacity at the Oben hub. Finalise framework with partners for delivery of upstream and midstream elements and ensure intermodal aspects are sufficiently de-risked to take FID MAXIMISE FREE CASH FLOW SUSTAINABLE DIVIDEND VALUE ACCRETIVE ACQUISITIONS Maximise free cash flow by allocating capital to highest cash return, short cycle investment opportunities together with a focus on cost efficiency In addition to capital growth aim to consistently return core dividend (target US$0.05/share) to shareholders each year (absent any major force majeure event) with discretionary final dividend Capital structure provides firepower to capture inorganic opportunities. Consolidate and grow onshore position and consider entry into the offshore with a focus on opportunities that offer near term reserves, production and cash flow OVER-RIDING FOCUS ON DELIVERING SUSTAINABLE SHAREHOLDER RETURNS HALF YEARLY RESULTS

5 OPERATIONS UPDATE Effiong Okon- Operations Director HALF YEARLY RESULTS

6 H12018 WORKING INTEREST PRODUCTION & FY2018 GUIDANCE UNDERPINNED BY A STRONG PLATFORM OF PRODUCING FIELDS boepd 60,000 50,000 40,000 Oil production Gas production 43,372 14,369 36,923 51,099 25,813 FY guidance range 48,000-55,000 boepd kboepd Average working interest production in H stood at 51,099 boepd (H1 2017: 26,383 boepd) - Liquids production of 25,286 bopd (H1 2017: 9,507 bopd) (1) - Gas production of 155 MMscfd (H1 2017: MMscfd) Production uptime in H was 76% 30,000 20,000 10,000 20,020 5,226 14,794 30,823 28,341 6,571 4,867 23,474 24,252 29,003 25,877 15,786 10,091 19,070 17,853 25, kbopd Average reconciliation losses of around 8% FY 2018 working interest production guidance unchanged FY 2018 working interest production guidance Oil 24,000 29,000 bopd (1) Gas Total MMscfd 48,000 55,000 boepd 0 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017E H FY 2018E (1) Before reconciliation losses, volumes measured at the LACT unit, Predicated on no major force majeure event in remainder of HALF YEARLY RESULTS

7 UPSTREAM OPERATIONS UPDATE & 2018 WORK PROGRAMME FIELD DEVELOPMENT ACTIVITIES SET TO STEP UP IN H OML s 4, 38, activities W Drilling of one new gas production well at Oben (will also test exploration/appraisal sequence in deep section) and one gas well workover NAG booster compression Confirmation received from DPR for renewal of licenses for 20 years subject to Ministerial consent OPL activities Anagba-1 appraisal well result will support unitisation discussions for OPL 283 partners to receive a share of production from wells at the Ashaka field on adjacent OML 60 (NAOC operated) Igbuku 3D seismic acquisition, processing and interpretation Amukpe to Escravos Export Pipeline (AEEP) Completion of 160,000 bopd pipeline expected by end 2018 Forcados Terminal Export route has remained open with levels of maintenance and repair work within budgeted range Oil production well W Oil production well workover Warri Refinery Export Route Two upgraded jetties can enable sustained exports of 30,000 bopd (gross) if required in the future OML activities Re-entry and completion of two Ohaji South oil wells, one oil well workover at Jisike and flowline installation Number of unappraised discoveries under evaluation and significant gas potential across wider block (beyond ANOH) OML 55 W Lifted a monetized equivalent of 221 Kbbls of oil which resulted in a receipt of US$15 million in H Gas production well Exploration well / tail W Gas production well workover Flowlines HALF YEARLY RESULTS

8 MIDSTREAM GAS BUSINESS UPDATE & WORK PROGRAMME TOTAL OPERATED PROCESSING CAPACITY AT ANOH COMPLETION WILL BE CAPABLE OF SUPPORTING ~3,000MW POWER GENERATION Oben Hub Commissioning phase of the 459MW Azura-Edo IPP expected to complete in Q after which deliveries will move to the contracted level of 116 MMscfd under take-or-pay terms Aiming to take contracted gas sales to a sustained level of 400 MMscfd gross Additional processing capacity of 125 MMscfd earmarked for expansion / 3rd party usage Install second condensate train at Oben and upgrade the Sapele gas plant OMLs 4, 38, 41 Pillar (OPL 283) OB3 gas pipeline under construction 120Km & 48 diameter pipeline OML 53 (ANOH Project) ANOH Hub (Planned) Will connect large scale gas reserves in the Eastern Delta into Nigeria s main demand centres via Oben Phase I to comprise 300 MMscfd gas processing plant on OML 53 Leverage experience gained at Oben to derive repeatability gains and optimal configuration Progressing towards formalising incorporated joint venture relationship between Seplat and government In light of this Seplat FID needs to be aligned with NNPC approvals FID expected in Q HALF HALF YEARLY RESULTS

9 FINANCE UPDATE Roger Brown- Chief Financial Officer HALF YEARLY RESULTS

10 QUARTERLY PERFORMANCE TRENDS IMPROVED FINANCIAL PERFORMANCE REFLECTS STRONG PRODUCTION, COST EFFICIENCY AND OIL PRICE TAILWIND Revenue US$ million EBITDA US$ million Oil 84 Gas Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q2 18 oil revenue reflects uptime of 71% (Q1: 82%) 28 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Quarterly EBITDA has averaged US$96 million over the LTM Gross Debt US$ million Net debt Cash Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Successfully refinanced the balance sheet in March 2018 Profit / (Loss) Before Tax US$ million Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Business profitability is sustained through H HALF YEARLY RESULTS

11 H FINANCIAL SUMMARY A PROFITABLE BUSINESS WITH STRONG CASH FLOW GENERATION AND ROBUST BALANCE SHEET US$ million H H Revenue Cost of sales (168) (78) Gross profit G&A (38) (36) Fair value loss & FX loss (7) (10) Operating profit / (loss) Net finance costs (37) (34) Profit/(Loss) before deferred tax 105 (28) Profit/(Loss) after tax 49 (28) Capex incurred Cash flow from operations NPDC receivables Cash at bank H H Gross Oil Sales Gas sales Total Revenue Higher royalties reflect increased oil prices and production uptime DD&A and crude handling charges reflect increased production following resumption of exports via the Forcados terminal US$28 million under lift recognised as other income G&A costs stable year on year Includes the cost of oil hedges and corresponding losses charged to the P&L H profit before deferred tax of US$105 million driven by higher production oil price realisation, increased gas sales and lower unit production opex H profit after tax of US$49 million after adjusting for deferred tax of US$56 million Capex reflects limited development activity in H as Company awaited refinancing outcome Development activities to scale up in H NPDC legacy receivables cleared with NPDC current on cash calls Strengthened balance sheet and preserved liquidity buffer HALF YEARLY RESULTS

12 US$ million CASH RECONCILIATION H DILIGENT MANAGEMENT OF GROUP LIQUIDITY Free cashflow US$224 million Hedging strategy aimed at providing cash flow assurance H hedging 3.60 MMbbls at US$40.0/bbl H hedging 3.00 MMbbls at US$50.0/bbl Cash 31 Net proceeds December 2017 from refinancing Receipts from OML 55 Cash from operations PP&E Loan repayments (1) Net interest Dividend paid Cash 30 June 2018 (1) Includes US$75 million early cash settlement of crude oil prepayment undertaken with Mercuria HALF YEARLY RESULTS

13 US$ million CAPITAL EXPENDITURES REINSTATED WORK PROGRAMME DESIGNED TO START CAPTURING THE HIGHEST CASH RETURN OPPORTUNITIES 350 US$321 million 2018 CAPEX: US$21 million spent in H Selectively considered production drilling opportunities: US$230 million OMLs 4,38,41: One gas production well, one gas well workover, NAG booster compression, second condensate train at Oben; upgrades to Sapele gas plant OML53: Two oil production well recompletions at Ohaji South; one oil production well workover at Jisike and flow line installation US$152 million US$52 million 45 US$33 million US$100 million FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Drilling Facilities & engineering / other Gas projects HALF YEARLY RESULTS

14 DEBT REFINANCING OPTIMISING OUR BALANCE SHEET TO SUPPORT GROWTH Successfully refinanced the balance sheet proceeds used to repay and cancel existing indebtedness Previous US$300 million RCF refinanced with a new US$300 million RCF due 2022 Debut US$350 million bond issuance diversifies capital base Refinancing significantly strengthens liquidity position Allows for work programme to be scaled up and focus switch to delivery of growth strategy (organic and inorganic) Pre Refinancing Debt Maturity Profile (US$ million) Debt capital structure and liquidity (US$ million)* Debt facilities Senior notes due 2023 (9.25%) 300 RCF due 2022 (Libor +6%) Drawn down Post Refinancing Debt Maturity Profile (US$ million)* Senior notes RCF Cash 30 June 2018 US$100m Headroom 40 Net debt year term facilty RCF Senior notes RCF US$200 million drawn RCF fully drawn Year end balance Year end balance HALF YEARLY RESULTS * Based on US$200 million debt drawn on 4 year RCF

15 CONCLUSIONS A WELL CAPITALISED, EXPERIENCED INDIGENOUS OPERATOR IN AFRICA S MOST PROLIFIC OIL & GAS OPPORTUNITY SET H results demonstrate ability to generate strong cash flow and profitability from the asset base On track to deliver 2018 production guidance in both oil and gas. The gas business is now contributing a significant portion to the bottom line Continued to strengthen the balance sheet post Q refinancing with net debt at low levels H will see a step up in field development activities across the existing portfolio with OML 53 coming into focus Slower than expected progress has led to revised timeline for delivery of the Amukpe to Escravos pipeline and FID at the ANOH project Fundamentals of the business remain very strong with management firmly focused on delivering Seplat s organic and inorganic growth strategy HALF YEARLY RESULTS

16 Q&A 2018 HALF YEARLY RESULTS HALF YEARLY RESULTS

17 Head Office Seplat Petroleum Development Company Plc Address: 25A, Lugard Avenue, Ikoyi, Lagos, Nigeria. Phone: +234 (0) Web: London Office Seplat Petroleum Development Company Plc Address: 4th Floor, 50 Pall Mall, London SW1Y 5JH Phone: +44 (0) HALF YEARLY RESULTS