R ESTRUCTURING & 2002 I 2002 I NTERIM NTERIM R R ESULTS ESULTS P P RESENTATION R ESTRUCTURING & RESENTATION 16th September 2002
Restructuring & 2002 Interim Results Presentation PRESENTATION • Introduction Sir David John • Results & Restructuring John van der Welle • Outlook for New Premier Charles Jamieson Make a Difference
Restructuring & 2002 Interim Results Presentation R ESULTS Make a Difference
Restructuring & 2002 Interim Results Presentation RESULTS OVERVIEW • Production 50.2 mboepd (2001: 35.3 mboepd) up 42% • Turnover £115.2m (2001: £94.5m) up 22% • Operating profit £52.7m (2001: £44.6m) up 18% • Statutory profit after tax £15.3m (2001: £12.4m) up 23% (1) profit after tax £20.7m (2001: £17.7m) • Proforma up 17% • Gearing 98% (2001: 122%) down 24% (1) Proforma for Take or Pay Make a Difference
Restructuring & 2002 Interim Results Presentation PROFIT & LOSS ACCOUNT 2002 2001 Production (mboepd) 50.2 35.3 Working interest production Realised oil price ($/bbl) 23.38 26.71 Realised gas price ($/mcf) 3.19 2.19 Hedging - no significant £m £m impact ($20 floor, $30 cap) Turnover 115 94 Higher production offsets lower prices less: share of JVs turnover (28) (19) Group turnover 87 75 Unit opex (incl JVs) Operating costs (23) (17) £3.29/boe - down 17% Amortisation (24) (19) Unit DDA (incl JVs) Gross profit 40 39 £3.03/boe - down 8% due to lower cost gas Administration costs (4) (4) production Operating profit 36 35 Increased contribution Operating profit in JVs 17 10 from Myanmar Total operating profit 53 45 Net interest (16) (21) Lower debt following 2001 peak Exchange (loss) / gain (1) 1 Profit before tax 36 25 Higher tax due to higher profits, plus UK budget Taxation (21) (13) change Profit after tax 15 12 Earnings per share - basic and diluted (pence) 1.0 0.8 Make a Difference
Restructuring & 2002 Interim Results Presentation CASHFLOW 2002 2002 2001 (As reported) (Incl. JVs) (Incl JVs) £m £m £m Net cashflow from operations 62 80 62 Increase in line with higher net revenues Net interest (9) (11) (14) Taxation (7) (7) (11) Operating cashflow (after interest and tax) 46 62 37 Capital expenditure - focus on exploration Capital expenditure (33) (37) (37) Disposals 28 28 - Excl JV JV Total £m £m £m Net cashflow 41 53 - Exchange/other 13 16 (20) Exploration 11 6 17 Fields 9 6 15 Movement in net debt 54 69 (20) Other 5 - 5 JV funding 8 (8) - Yetagun interest accrued - (5) (7) 33 4 37 Opening net debt (272) (379) (445) Closing net debt (218) (315) (472) • Operating cashflow covers exploration 3.7x (2001: 4.8x) • Interest cover now 7.2x (2001: 4.4x) Make a Difference
Restructuring & 2002 Interim Results Presentation BALANCE SHEET 2002 2002 2001 (1) (As reported) (Incl JVs) (Incl JVs) Cash 126 144 97 Debt 344 459 476 Net debt 218 315 379 Shareholders’ funds 320 320 312 Gearing ratio NA 98 % 122 % (1) 2001 comparative as at 31 December 2001 Make a Difference
Restructuring & 2002 Interim Results Presentation OPERATIONAL HIGHLIGHTS • Production ahead of target of 45-50 mboepd – Kyle 4th well on stream – 100% production capacity availability in Myanmar/Indonesia – Myanmar near DCQ • Efficiency drive continues to deliver cost reductions – Operating cost savings – Administration costs down 17% • Reduced unit production costs - down 17% • Development projects on target – Yetagun upgraded to 300 mmscfd capacity – WNG 2nd sale development awaiting GSA signature – Bhit/Zamzama on schedule Note: More detail contained in Appendix Make a Difference
Restructuring & 2002 Interim Results Presentation R ESTRUCTURING Make a Difference
Restructuring & 2002 Interim Results Presentation RESTRUCTURING • Transformation into a fully independent E&P company • Transfer of Myanmar and just over half of Indonesian West Natuna block A to Petronas and Hess • Cancellation of Hess' and Petronas' shares in Premier • Significant debt and gearing reduction • Effective date 30 September 2002 • Subject to various approvals/consents prior to completion Make a Difference
Restructuring & 2002 Interim Results Presentation BACKGROUND • 1995 - Premier acquires Pict Petroleum and Hess becomes 25% shareholder in Premier • 1999 - Petronas and Hess subscribe at 25p/share for £136m of new equity giving each 25% of Premier. West Natuna development financed • 2001 - Detailed discussions commence with Hess and Petronas on a restructuring • 2002 - Lengthy and complex negotiations successfully conclude and restructuring terms and mechanics agreed • 16 September - Announcement made Make a Difference
Restructuring & 2002 Interim Results Presentation BENEFITS OF RESTRUCTURING • Fully independent company able to pursue re-focused strategy aimed at early value realisation as stated in March 2002 • Significant NAV per share accretion • Reduction in proforma net debt at 30/6/02 from £315m to £111m • Reduction in proforma gearing at 30/6/02 from 98% to 39% • Increased exposure per share to Premier’s ongoing £25+m pa exploration programme • Ongoing production of 30-35,000 boepd • Reduced country/credit risk profile Make a Difference
Restructuring & 2002 Interim Results Presentation CONSIDERATION $ million Myanmar 400 Indonesia - Amerada Hess - 23% block A 163 - Petronas - 15% block A 107 Total 670 25p (1) 777.0m ordinary shares @ 282 25p (1) 32.8m convertible shares @ 12 Total 294 Yetagun project debt 152 Cash settlement 224 Total 670 (1) converted at $1.45 = £1 as agreed between Premier/Amerada Hess/Petronas Make a Difference
Restructuring & 2002 Interim Results Presentation VALUATION METRICS Core Net Asset Value of Proven and Probable reserves at 30 September 2002 (excluding exploration and appraisal, technical reserves and other upsides) 10% discount factor 12.5% discount factor Before After Before After Restructuring Restructuring Restructuring Restructuring $ million $ million $ million $ million Assets sold at consideration (1) 670.0 670.0 Value of assets remaining (1) 593.7 593.7 555.3 555.3 Total assets 1263.7 593.7 1225.3 555.3 Other investments 16.4 16.4 16.4 16.4 Net debt (444.5) (120.7) (444.5) (120.7) Net asset value 835.6 489.4 797.3 451.1 Total number of shares (in millions) 777.0 777.0 1586.8 1586.8 Net asset value per share (in pence) (2) 34.0 40.6 32.4 37.5 Accretion in net asset value per share 20% 16% (1) Assets valued at D&M valuation except for assets sold where restructuring value applied (2) NAV per share converted at $1.55=£1, close Friday 13 September (3) Oil price of $20 in 2003 escalating at 3% pa Make a Difference
Restructuring & 2002 Interim Results Presentation PROFORMA BALANCE SHEET Proforma Balance Balance Sheet at Impact of sheet at 30 June 2002 restructuring 30 June 2002 £m £m £m Cash (including JVs) 144 89 233 Debt (including JVs) 459 (115) 344 Net debt (including JVs) 315 (204) 111 Shareholders’ funds 320 (36) 284 Gearing ratio 98 NA 39 % % Make a Difference
Restructuring & 2002 Interim Results Presentation RESTRUCTURING - KEY STEPS • Approvals/consents required - independent shareholders (EGM), lenders, governments, Court • Creation of New Premier listed holding company under Scheme of Arrangement • Cancellation of Hess' and Petronas' ordinary and anti-dilution convertible shares under Companies Act Reduction of Capital • Transfer of interests in Myanmar (including project debt) and part of interest in Indonesia after internal reorganisation • Timetable (estimated) – Sign framework agreement and $210m bridge facility September 2002 – Circular October 2002 – EGM November 2002 – Government approvals December 2002 – Court sanction after Government approvals – Completion after Court sanction – Debt refinancing after Completion Make a Difference
Restructuring & 2002 Interim Results Presentation NEW PREMIER RESERVES AND PRODUCTION New Premier Working Interest Production 2P Reserves 218 mmboe 40,000 UK 35,000 14% Indonesia 55% 30,000 25,000 boepd 20,000 15,000 10,000 Pakistan 31% 5,000 Indonesia Pakistan UK 0 2003 2004 2005 Make a Difference
Restructuring & 2002 Interim Results Presentation NEW PREMIER SUMMARY Post Existing Restructuring Production (mboepd) 45-50 30-35 Reserves (mmboe) 514 218 % UK & Indonesia 54% 69% Oil/gas reserve mix 14% Oil 20% Oil Capex 2003-5 £136m £65m Proforma net debt £315m £111m Proforma net assets £320m £284m Proforma gearing 98% 39% NAV 10% 34.0p/sh 40.6p/sh Make a Difference
Restructuring & 2002 Interim Results Presentation O UTLOOK FOR NEW PREMIER Make a Difference
Restructuring & 2002 Interim Results Presentation PREMIER STRATEGY • High impact explorer and commercial dealmaker • Steady state base business - consistent 5-8 year cashflow to fund business development • Cycle out/farm down assets when significant growth potential has been exploited • Realise early value for shareholders Make a Difference
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