2003 Interim Results Presentation 18 September 2003
Presentation Introduction Sir David John Results and Restructuring John van der Welle Operations Simon Lockett Exploration and Business Development Robin Allan Summary and Outlook Charles Jamieson 2003 Interim Results Presentation 2
Results and Restructuring 2003 Interim Results Presentation 3
Results Highlights • Record production and profits • Producing assets performing well • Strong operating cash generation • Disposal of non-core assets • Restructuring completed • West African Fusion deal • Exciting new exploration programme underway 2003 Interim Results Presentation 4
Financial Highlights (pre-restructuring) • Production 62.0 mboed (2002: 50.2 mboed) up 24% • Turnover £146.1m (2002: £115.2m) up 27% • Operating profit £81.1m (2002: £52.7m) up 54% • Net profit after tax £44.0m (2002: £15.3m) up 188% • Operating cashflow after interest, tax £97.1m (2002: £61.9m) up 57% • Net debt £173.4m (31 December 2002: £249.5m) down 31% • Gearing 49% (31 December 2002: 80%) down 31% 2003 Interim Results Presentation 5
Accounting for the Restructuring • Economic effective date 30 September 2002 - ignored • Completion date 12 September 2003, i.e. post mid-year, pre-interims announcement – key accounting date • Results include profits etc. from assets sold to 30 June 2003 (for interims) and 12 September 2003 (for full year) • FRS 3 requires split of “ continuing/discontinued” operations • But FRS 3 classes all Indonesian profits as “ continuing” despite part sale • Therefore additional “ ongoing operations” profits column included to reflect retained Indonesia interest 2003 Interim Results Presentation 6
Profit & Loss Account (pre-restructuring) Half year to Half year to Half year to 30 June 2003 30 June 2003 30 June 2002 Ongoing Reported Production (mboepd) 35.3 62.0 50.2 Working interest production Realised oil price ($/bbl) 26.36 26.65 23.38 Realised gas price ($/mcf) 2.98 3.40 3.19 Higher production, higher prices £m £m £m Turnover 83 146 115 Unit opex (incl JVs) £2.16/boe - down 34% less: share of JVs turnover (11) (44) (28) mainly due to higher low Group turnover 72 102 87 cost Far East production Operating costs (14) (16) (23) Unit DDA (incl JVs) Amortisation (18) (26) (24) £2.94/boe - down 11% due Exploration expenditure written off (4) (4) - to lower charges in the UK and Indonesia Gross profit 36 56 40 Administration costs (4) (4) (4) JVs represent Pakistan and Myanmar (reported column), Operating profit 32 52 36 Pakistan only (ongoing Operating profit in JVs 6 29 17 column) Total operating profit 38 81 53 Continuing reduction in debt Profit on sale of investment 1 1 - Net interest (8) (12) (16) Higher tax due to higher profits Exchange (loss) / gain 1 1 (1) Profit before tax 32 71 36 Using new consolidated shares Taxation (19) (27) (21) Profit after tax 13 44 15 Earnings per share - basic and diluted (pence) 27.2 9.7 2003 Interim Results Presentation 7
Cashflow (pre-restructuring) Half year to Half year to Half year to 30 June 2003 30 June 2003 30 June 2002 (As reported) (Incl JVs) (Incl JVs) £m £m £m Net cashflow from operations 91 127 80 Increase in line with higher net revenues Net interest (9) (13) (11) Sale of AWE shares Taxation (16) (17) (7) Capital expenditure - focus Operating cashflow (after interest and tax) 66 97 62 on exploration Capital expenditure (35) (38) (37) Disposals 13 13 28 Excl JV JV Total £m £m £m Net cashflow 44 72 53 Exchange/other 8 9 16 Exploration 12 4 16 Fields 8 8 16 Movement in net debt 52 81 69 Other 6 - 6 JV funding 9 (9) - Yetagun interest accrued - (4) (5) 35 3 38 Opening net debt (181) (250) (379) Closing net debt (129) (173) (315) • Operating cashflow covers exploration 6.1x (2002: 3.7x) • Interest cover now 9.8x (2002: 7.2x) 2003 Interim Results Presentation 8
Restructuring • $670 million transfer of Myanmar and Indonesian assets • Cancellation of Hess’ and Petronas’ shares • Announced 16 September 2002 • Indonesia Government approval March 2003 • Myanmar Government approval June 2003 • US sanctions announced July 2003 • Completed 12 September 2003 2003 Interim Results Presentation 9
Proforma Balance Sheet (post restructuring) Proforma Balance Balance Sheet at Impact of sheet at 30 June 2003 restructuring 30 June 2003 £m £m £m Cash (including JVs) 102 (57) 45 Debt (including JVs) (275) 214 (61) Net debt (including JVs) (173) 157 (16) Shareholders’ funds 352 (54) 298 Gearing ratio 49 NA 5 % % Transformed balance sheet 2003 Interim Results Presentation 10
Post Restructuring Reserves & Production Premier 2P Reserves 204 mmboe (1) Working Interest Production 60,000 Assets Sold in Restructuring Retained Assets 50,000 Oil Barrels of oil equivalent per day 18% 40,000 30,000 20,000 10,000 Gas 82% 0 2003 2004 2005 2006 2007 Strong future cash generation Notes (1) Proforma total reserves at 30 June 2003 2003 Interim Results Presentation 11
O PERATIONS Operations 2003 Interim Results Presentation 12
Post Restructuring Reserves & Production Premier 2P Reserves 204 mmboe (1) Working Interest Production 60,000 Indonesia 2 nd Gas Sale 10% Assets Sold in Restructuring Indonesia 2 nd Gas Sale Mauritania 3% Mauritania 50,000 Indonesia Unbooked Pakistan Barrels of oil equivalent per day 13% UK Indonesia 41% 40,000 UK 15% 30,000 20,000 10,000 Pakistan 31% 0 2003 2004 2005 2006 2007 Notes (1) Proforma total reserves at 30 June 2003 2003 Interim Results Presentation 13
Production Operations - UK • 16,200 boepd, an expected 10% decline on the previous year • Wytch Farm decline rate reduced through infill drilling of multilateral sidetracks improving the gross field rate 6,000 bopd to around 50,000 bopd • Kyle increased by a third to 6,000 boepd net to Premier due to uninterrupted production 2003 Interim Results Presentation 14
Production Operations - Indonesia • 22,800 boepd up from 17,500 boepd last time • Higher than expected demand from the gas buyers in Singapore • Two years continuous operations without an LTI • Commercial discussions ongoing to sell excess gas to Singapore 2003 Interim Results Presentation 15
Production Operations - Pakistan • 6,900 boepd, an increase of 25% on last year • Bhit fully commissioned ahead of schedule and on budget • Zamzama development to deliver up to 320 mmscfd, onstream on time and budget • Commissioning of the Qadirpur expansion plant ongoing • Current production around 9,000 boepd 2003 Interim Results Presentation 16
E XPLORATION & B USINESS D EVELOPMENT Exploration and Business Development 2003 Interim Results Presentation 17
Business Development Update UK Asia UK Asia • UK licence P1048 • Pakistan • UK licence P1048 • Pakistan farm in (Reach) – preparing for Chung 1Q farm in (Reach) – preparing for Chung 1Q • 21st round licence – new Tertiary delta licence offshore • 21st round licence – new Tertiary delta licence offshore award • India award • India • Sale of minor assets – completed Jaipur seismic, planning • Sale of minor assets – completed Jaipur seismic, planning to Atlantic Petroleum for well 1Q to Atlantic Petroleum for well 1Q UKCS Pakistan India UKCS Pakistan India for £5m + – planning seismic survey in Cachar for £5m + – planning seismic survey in Cachar • Philippines • Philippines – new licence entry imminent – new licence entry imminent • Australia • Australia – disposal of AWE shares for £13m – disposal of AWE shares for £13m SADR SADR Mauritania Mauritania Philippines Guinea Bissau Philippines Guinea Bissau Gabon Indonesia Gabon Indonesia Africa Africa • Guinea Bissau • Guinea Bissau – farm out near completion – farm out near completion Australia Australia – 1 well in 1Q – 1 well in 1Q • Gabon Iris & Themis Marin • Gabon Iris & Themis Marin – 3 well programme 1H (Dussafu, Iris & – 3 well programme 1H (Dussafu, Iris & Themis Marin) Themis Marin) • Mauritania PSC A&B • Mauritania PSC A&B – PSC B 1st of 3 well programme spudded – PSC B 1st of 3 well programme spudded • SADR • SADR – Favourable UN resolution – Favourable UN resolution 2003 Interim Results Presentation 18
UK 39/2b, 39/7 - 30%: Operator - Tullow • Blocks adjacent to our Fife Area interests • 2003/4 seismic reprocessing and studies work programme • Potential to add value to Fife asset P1048 - 50%: Operator - Premier (20/10b, 21/6a, 20/15a & 21/11b) • Criollo-1 well • 1st Q 2004 UK Portfolio Management • Prospect 145m bbls • Premier has sold equity in non-core assets to Atlantic Oil and Gas for £5m + (3.75% of Rob • Block potential 500m bbls Roy, Hamish and Ivanhoe, 15% of Chestnut, 3.75% of Perth and 8.27% of Ettrick). 2003 Interim Results Presentation 19
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