15 September 2005 2005 Interim Results Presentation Presentation - - PowerPoint PPT Presentation

2005 Interim Results Presentation

15 September 2005

Page 2 | 2005 Interim Results Presentation

Presentation

Strategy and Operations Simon Lockett Exploration Review Robin Allan Financial Results Tony Durrant

Page 3 | 2005 Interim Results Presentation

Half year highlights

• Production ahead of expectation at 34,800 boepd
• Developments on track in Mauritania and Indonesia
• Record gas export from Pakistan and continuing to grow
• Strong profitability & cashflow
• 6 E&A wells to come in 2005
• At least 5 high impact wells to be drilled in 2006
• Continued excellent HSES record
• Reviewed strategy

Page 4 | 2005 Interim Results Presentation

Premier’s business strategy

• Delivering significant

growth potential from our existing high quality reservoirs

• High impact exploration

– Technical themes

• Acquisitions focussed in

the places we know well

• A re-organised business

to achieve 50,000 boepd

Page 5 | 2005 Interim Results Presentation

South Asia – enhancing the Pakistan gas business

• Significant gas market demand is generating opportunities to expand existing production
• Zamzama phase 2 nearing sanction
• Bhit/Badhra gas sales at an advanced stage
• Potential Kadanwari infill wells and extra gas sales from Qadirpur
• Close to signing Ratna PSC – development potential
• 2 high impact exploration wells – Anne & Cachar, plus selective E&A close to existing production
• New venture activity focussed on Pakistan production and development opportunities

2000 4000 8000

Pakistan Base Production (boepd)

Zarghun Zamzama Bhit & Badhra Kadanwari Qadirpur 6000 10000 12000 16000 2005 2006 2007 2008 2009 14000

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SE Asia – leveraging our knowledge in Natuna Sea

• Existing gas offtakes much higher than Daily Contract Quantities
• Production and reserves upside from further gas sales to Singapore (Gajah Baru)
• Infill oil potential in Anoa & Kakap
• Additional medium term development potential in Dua, Tupai & Gajah Abu Abu
• High impact exploration from Blackbird, plus 6 other E&A wells
• Searching-out new ventures - centred on Indonesia & Vietnam

2000 4000 8000

Indonesia Base Production (boepd)

6000 10000 14000 2005 2006 2007 2008 2009 Kakap Anoa 12000

Page 7 | 2005 Interim Results Presentation

North Sea – returning to growth

• Focus on upside reserves and production opportunities in UK producing fields
• Building and enhancing the exploration portfolio:
• Pre-qualified for 2005 Norwegian bid rounds and signed-up bidding consortia
• 21st Round licence Palomino farmed out – due to spud in December
• 22nd Round prospects being prepared for drilling in 2006/7
• New ventures targeting high impact exploration in Norway and existing producing UK assets

2000 4000 8000

UK Base Production (boepd)

Fife Area Scott / Telford Kyle Wytch Farm 6000 10000 12000 2005 2006 2007 2008 2009

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Africa - building a new core business

• Chinguetti 85% complete, on stream early 2006
• Appraisal and development studies on Tiof, Tevet & Al Amir
• 2 high impact exploration wells in Guinea Bissau plus 4-6 other E&A wells
• New ventures focus is on exploration of salt related plays

1000 2000 4000

Mauritania Base Production (boepd)

Chinguetti 3000 5000 6000 2006 2007 2008 2009

Page 9 | 2005 Interim Results Presentation

Delivering growth from existing projects

• Incremental Projects

– Gas production in Pakistan

– Zamzama Phase 2 – Accelerated production from Kadanwari & Qadirpur – Bhit acceleration and Badhra development

– Wytch Farm incremental development, infill drilling & enhanced recovery – Increased Kyle Palaeocene production – Anoa & Kakap infill / workover opportunities

• Development potential

– Further fields in Block A (Indonesia) – Gajah Baru & others

– Second gas sale to Singapore

– Further fields in Mauritania – Tiof/Tevet – Discovered fields in undeveloped acreage

– Al Amir - Egypt – Dua - Vietnam – Ratna - India

Page 10 | 2005 Interim Results Presentation

Building the business

40000

Growth Plan (boepd)

2005 2006 2007 2008 20000 30000 50000 2009 60000 Unrisked potential Risked incremental projects plus developments Base business 55000 45000 35000 25000

Page 11 | 2005 Interim Results Presentation

Exploration Strategy

• > 4 high impact wells p.a.
• Technical themes in places we know well
• Focus on core areas
• $50m p.a. exploration expenditure

Page 12 | 2005 Interim Results Presentation

Exploration review

• Wells drilled to date
• 2 successful, 1 sub-commercial discovery & 4 dry

– Tiof 6 – successful appraisal; excellent flow-rate – Al Amir – discovery well in new reservoir for region – Lakkhi – sub-commercial discovery – Sotto & Espadon – failed to find reservoir – Maliri & Iboga – found reservoir but no hydrocarbons

Page 13 | 2005 Interim Results Presentation

2005 JUL AUG SEP OCT NOV DEC

AFRICA

Guinea Bissau : Eirozes-1 : Espinafre-1 Mauritania : Tevet Appraisal : Sotto, Espadon : Labeidna, +1 Exp Well Gabon : Iris-1 : Themis-1 Egypt : Al Amir-1, Al Fagr-1 : Al Amir-2 appraisal Pakistan : Maliri-1 : Indus Offshore India : : Jaipur / Cachar Philippines : Exp Well Indonesia : Macan Tutul-1 : Lembu Peteng-1 : Lukah-1 (Kakap) : Tupai, 1 Exp Well Vietnam : 12E & 12W Exp. Well : 12E Dua App. Well : 7,8/97 Exp. Well

ASIA

2005 JUL AUG SEP OCT NOV DEC 2006 JAN FEB MAR APR MAY JUN 2006 JAN FEB MAR APR MAY JUN Planned wells Firm wells UK : Palomino Well 2005 JUL AUG SEP OCT NOV DEC

UK

2006 JAN FEB MAR APR MAY JUN

12 month drilling plan

Page 14 | 2005 Interim Results Presentation

Exploration review

Wells in the next 9 months

Mauritania Tevet, Labeidna & one additional well Guinea-Bissau Eirozes, Espinafre Egypt Al Fagr, Al Amir appraisal UK Palomino Indonesia Macan Tutul, Lembu Petang, Lukah Vietnam Blackbird, Dua

Page 15 | 2005 Interim Results Presentation

Africa

Page 16 | 2005 Interim Results Presentation

Mauritania

Page 17 | 2005 Interim Results Presentation

Africa – Mauritania exploration programme – 5 wells

Espadon Sotto Colin (2006 well?) Kibaro (2006 well?) Jallak (2005 well?) Tevet-2 / Tevet Deep (2005 well) Labeidna (2005 well) N’Dor (2005 well?) Equivalent north-sea block

Page 18 | 2005 Interim Results Presentation

Africa – Mauritania exploration programme – Tevet

• Tevet appraisal

– Appraising the existing Miocene discovery - targeting a separate channel thick on the southern side of the field. – Water Depth: 470m – Target Depth: 2550 mSS – The well also goes through a shallower Miocene high amplitude channel complex (lead 117).

• Tevet Deep

– Cretaceous channel complex – high risk – Target Depth: 3650 mSS

Page 19 | 2005 Interim Results Presentation

50m contours

Mauritania - Labeidna

Maximum OWC at shallower CN4 reservoir level

Miocene depth showing Labeidna diapir

Labeidna-A Labeidna-A

Page 20 | 2005 Interim Results Presentation

Guinea Bissau

Page 21 | 2005 Interim Results Presentation

Blocks 2, 4A, 5A Premier equity – 38.5% to 42% Operator – Premier

• Large prospects
• 2004 Sinapa-2 oil discovery

Blocks 7B, 7C Premier equity – 25% Operator – Premier

• Work commitments completed
• 2006 drilling decision

Guinea Bissau

Page 22 | 2005 Interim Results Presentation

Africa – Guinea Bissau: 2006 high-impact drilling

Ervas El Linguada Espadarte Espinafre Espargos Encharcada Empada Sardinha Sabayon Solha Sinapa-1 Sinapa-2,2z Espetada Eirozes New 3D Seismic

The results of the Sinapa-2,2z well have significantly reduced the risks

• f the salt diapir flank play in

Guinea Bissau. In 2005 new 3D seismic over Eirozes has been acquired, to be followed by exploration drilling in early 2006. Eirozes has mean potential reserves of 300 million barrels.

Page 23 | 2005 Interim Results Presentation

Egypt

Page 24 | 2005 Interim Results Presentation

Al Amir Appraisal Al Fagr Wildcat

Egypt: 2005 / 2006 exploration & appraisal

Page 25 | 2005 Interim Results Presentation

Egypt: Al Amir -1

The Al Amir-1 discovery well contains 4 anhydrite zones of which one was tested (750 bopd). Studies are ongoing to better understand the reservoir and it’s distribution prior to drilling an appraisal well

Log showing the upper two anhydrite reservoir zones Microscope view of oil staining and porosity in anhydrite reservoir zone

Page 26 | 2005 Interim Results Presentation

South Asia

Page 27 | 2005 Interim Results Presentation

Pakistan

Page 28 | 2005 Interim Results Presentation

• Anne-1

– The Anne well is being drilled down-flank to target best channel package and to confirm an economic oil volume. (i.e. attic likely to be sub-commercial)

Pakistan: Anne-1 – a new Tertiary delta play

Page 29 | 2005 Interim Results Presentation

India

Page 30 | 2005 Interim Results Presentation BANGLADESH

Masimpur Prospect

India: Cachar Block playmaker potential

Page 31 | 2005 Interim Results Presentation

Southeast Asia

Page 32 | 2005 Interim Results Presentation

Vietnam

Page 33 | 2005 Interim Results Presentation

Blocks 12E & W Premier equity - 75% Operator – Premier Blocks 7,8/97 Premier equity – 45% to 67.5% Operator – Premier

Asia – Vietnam

• 2D acquired 2004
• Dua Field 3D acquired 2005
• Drilling 1st Q 2006
• 2D acquired 2004
• Drilling late 2006?

Page 34 | 2005 Interim Results Presentation 12E-LX-1X Spill Point

Vietnam – Block 12E Blackbird Prospect

Page 35 | 2005 Interim Results Presentation

Dua Reservoir Sands

Dua-1X Dua Structure

Basement (& other) picks clear

Asia – Vietnam: Block 12E the Dua field

Page 36 | 2005 Interim Results Presentation

Exploration Strategy

• > 4 high impact wells p.a.
• Technical themes in places we know well
• Focus on core areas
• $50m p.a. exploration expenditure

Page 37 | 2005 Interim Results Presentation

Exploration – set up to deliver high-impact wells

2006 Material Plays

Guinea Bissau: Eirozes 1000

Unrisked Net Reserves (MMBOE) Unrisked NPV@$50 ($M)

Guinea Bissau: Espinafre Vietnam: Blackbird Vietnam: Dua

Page 38 | 2005 Interim Results Presentation

2005 JUL AUG SEP OCT NOV DEC

AFRICA

Guinea Bissau : Eirozes-1 : Espinafre-1 Mauritania : Tevet Appraisal : Sotto, Espadon : Labeidna, +1 Exp Well Gabon : Iris-1 : Themis-1 Egypt : Al Amir-1, Al Fagr-1 : Al Amir-2 appraisal Pakistan : Maliri-1 : Indus Offshore India : : Jaipur / Cachar Philippines : Exp Well Indonesia : Macan Tutul-1 : Lembu Peteng-1 : Lukah-1 (Kakap) : Tupai, 1 Exp Well Vietnam : 12E & 12W Exp. Well : 12E Dua App. Well : 7,8/97 Exp. Well

ASIA

2005 JUL AUG SEP OCT NOV DEC 2006 JAN FEB MAR APR MAY JUN 2006 JAN FEB MAR APR MAY JUN Planned wells Firm wells UK : Palomino Well 2005 JUL AUG SEP OCT NOV DEC

UK

2006 JAN FEB MAR APR MAY JUN High Impact Wells

12 month drilling plan

Page 39 | 2005 Interim Results Presentation

Financial highlights

Page 40 | 2005 Interim Results Presentation

Financial highlights

• Operating profit up 51%
• Profit after tax up 60%
• Healthy cashflow
• Strong balance sheet
• Share buy back initiated

$60.8m (2004: $40.2m) $20.5m (2004: $12.8m) $54.2m (2004: $70.7m) Net debt $9.7m £10 million programme Stable production with higher oil and gas prices No first half dry-hole write-off Operating cashflow twice covers exploration expenditure Strong balance sheet and new debt facility Scope for future purchases

Page 41 | 2005 Interim Results Presentation

2005 Production

• Outperforming expectations
• Strong gas demand in Indonesia and

Pakistan

• Higher gas volumes in Pakistan
• 1H production in Indonesia

impacted by customer maintenance programmes

• Wytch Farm infill drilling mitigating

natural decline; Kyle performing strongly

• Chinguetti onstream in 2006

20000

(boepd)

H1 2004 H1 2005 10000 30000 2005 Total 40000 Mauritania Indonesia Pakistan UK 35000 25000 15000 5000 2006

Page 42 | 2005 Interim Results Presentation

Income Statement

Working Interest Production (mboepd) Entitlement Interest Production (mboepd) Realised oil price ($/bbl) Realised gas price ($/mcf) Sales and other operating revenues Cost of sales Exploration expense General and administration costs Operating profit Interest income and exchange gains Interest and other finance expense Profit before taxation Taxation Profit after tax Earnings per share - basic (cents) Earnings per share - diluted (cents) Prepared in accordance with IFRS Half Year to 30 June 2004

After hedging costs of $15.7m Pre-licence costs Due to increase in net debt Effective tax rate 54% (2004: 39%)

35.2 32.7 31.45 3.33 $m 137.3 (67.8) (22.7) (6.6) 40.2 1.5 (1.7) 40.0 (27.2) 12.8 15.5 15.2 34.8 30.2 38.08 3.38 $m 149.3 (73.7) (5.7) (9.1) 60.8 3.8 (2.6) 62.0 (41.5) 20.5 24.9 24.7 Half Year to 30 June 2005 Year to 31 Dec 2004 34.7 31.5 29.90 3.24 $m 251.8 (134.6) (40.9) (17.0) 59.3 2.0 (7.8) 53.5 (31.4) 22.1 26.8 26.3

Page 43 | 2005 Interim Results Presentation

Cashflow – strong cashflow and balance sheet

Net cash flow from operations Net interest Taxation Operating cash flow Capital expenditure Share issues/repurchases Currency translation differences Movement in net debt Opening net cash/(debt) Closing net cash/(debt)

Prepared in accordance with IFRS

93.9 (0.1) (39.6) 54.2 (62.0) (21.5)

• (29.3)

19.6 (9.7)

Half Year to 30 June 2005 $m Year to 31 Dec 2004 $m

94.3 1.2 (24.8) 70.7 (60.4) 3.8 1.2 15.3 12.7 28.0

Half Year to 30 June 2004 $m

164.7 (0.2) (54.9) 109.6 (104.5) 1.9 (0.1) 6.9 12.7 19.6

First full period of Indonesian profit oil Development - $34m Exploration - $28m Share buyback - $14m Shares for ESOP trust - $8m

Page 44 | 2005 Interim Results Presentation

Commodity price hedging

• Reconfirm policy of using hedging to underwrite the implementation of the forward

strategy

• Historical hedges expired on 30 June 2005

– Losses of $15.7m included in 1H 2005 – Full benefit of current high prices will flow through in 2H 2005

• New collars in place for period 2006-2010

– Cover 9 million barrels (approx 50% of oil production) – Average floor price of $37.42/bbl with a cap of $100/bbl – Cost of $3.63m (pre-tax) to be amortised over period

• Expected limited impact on income statement

– Out-of-the-money collars less sensitive to short term price fluctuations – Hedges have been designated as “effective” under IAS39

Page 45 | 2005 Interim Results Presentation

Forward financial outlook

• Strong cashflows, underwritten by hedging, will fund planned

exploration and development capex programme even at low oil prices

• New corporate credit facility of $275 million closed yesterday with

improved terms, for acquisition and new development financing

• Profitability robust even at low oil prices
• Strength of financial position allows aggressive pursuit of

business plan

Page 46 | 2005 Interim Results Presentation

Summary

• Strategy reviewed
• Strong base business
• Further potential in existing business being effectively exploited
• Focus on high impact exploration wells to deliver significant

reserves additions

• Target acquisitions where we can add value
• Organisation focussed
• Accelerated growth

Page 47 | 2005 Interim Results Presentation www.premier-oil.com | 2005 Interim Results Presentation