2012 Half Yearly Results 23 August 2012 Forward looking statements - - PowerPoint PPT Presentation

2012 Half Yearly Results

23 August 2012

23 August 2012 | Page 1

Forward looking statements

This presentation may contain forward-looking statements and information that both represents management's current expectations or beliefs concerning future events and are subject to known and unknown risks and uncertainties. A number of factors could cause actual results, performance or events to differ materially from those expressed or implied by these forward-looking statements.

23 August 2012 | Page 2

Agenda

Introduction Simon Lockett Operations update Neil Hawkings Exploration update Andrew Lodge Financial results Tony Durrant Outlook Simon Lockett

23 August 2012 | Page 3

... is in an even stronger position than six months ago ...

• Stronger production and resource base
• Portfolio of operated developments will

deliver 100,000 boepd

• Acquisition activity positions us for future

growth beyond 100,000 boepd

• Transforming the exploration portfolio
• Existing projects, dividend and future

exploration programme fully funded

Premier today

Historic NAV/share CAGR of 14.2% at constant oil prices

... which is reflected in our first half results

• Production up 58% year-on-year;

pro-forma resources of 725 mmboe

• Solan, Pelikan, Naga and Dua approved;

Catcher moving forward

• Falkland Islands transaction
• Prospective resource portfolio increased

to 2.7 billion boe

• $1.3 billion of cash and undrawn facilities;

strongly rising cashflows and profitability

23 August 2012 | Page 4

Operations update

23 August 2012 | Page 5

Production update

• Production averaged 58,400 boepd, up

58 per cent – Q2 production in excess of 60,000 boepd

• Chim Sáo and Gajah Baru performing well
• Strong Pakistan production due to compression

upgrades and successful infill drilling

• Improved uptime at Balmoral and good

production from a new well at Scott

• Increased share of Wytch Farm production

following completion of acquisition

• 75,000 boepd, once Huntington and Rochelle
• n-stream

80,000

2012 Production (bbls/day)

40,000 20,000 60,000 Q1 Q3 Q2 Year end run rate 70,000 Q4 50,000 30,000 10,000

Huntington/Rochelle Other UK Pakistan & Mauritania Vietnam Indonesia

23 August 2012 | Page 6

Chim Sáo

• 1H Production averaged 26,000 boepd; higher level of

uptime achieved in Q2

• Currently producing at 35,000 boepd
• Water injection has commenced and rates are ramping up

to support reservoir pressure

• Two well supplementary drilling programme into additional

reservoirs completed in June – first well tied-in; initial production rate of 4,000 boepd – second well due on-stream in Q3

• Total well capacity in excess of 40,000 bopd

Dua

• Dua will develop ~10 mmbbls
• Prime Minister approval of FDP received in August
• Long lead items being procured and contracted
• Development drilling to commence in April 2013
• Subsea installation and tie-in in Summer 2013
• First oil 2014

Chim Sáo and Dua

23 August 2012 | Page 7

GSA 1 (Anoa)

• 1H production at maximum capacity
• Block A’s share of deliveries under GSA1 was 47%

against a contractual market share of 37%

• Block A’s share of remaining reserves dedicated to

GSA1 was 64% at start of year (before the Anoa Deep discovery)

GSA 2 (Gajah Baru)

• Production facility has performed very well
• All Singapore demand was met during the period but

build-up of rates has been slower than anticipated due to end user project delays

Gas Swap Agreement (Gajah Baru)

• Discussions to sell an additional 40 BBtud into the

Indonesian domestic market continue

Natuna Sea Block A

23 August 2012 | Page 8

Anoa Phase 4

• Project will increase Anoa reserves by ~200 bcf

by lowering surface flowing pressures

• Also increases Anoa capacity above 200 BBtud
• Construction barge has arrived on location;

compression modules currently being installed

• Second construction campaign prior to first gas

in Q3 2013

Anoa Phase 4, Pelikan and Naga

Pelikan and Naga

• Pelikan and Naga will develop ~150 bcf of gas
• EPCI contract awarded in May

– Construction of jacket / topsides commenced

• Construction of pipeline material underway
• Tendering process to secure a rig for 2013 and

2014 development drilling commenced

• First gas 2014

23 August 2012 | Page 9

• Development drilling completed in August

– To schedule and on budget – Better than expected well results – Debottlenecking study underway

• FPSO onshore modifications nearing completion
• Operator targeting sail away in September for

installation in October and first oil in December

• Drilling of East Rochelle, the first of the two

development wells, is in progress

• Upgrade of Scott Platform remains on track
• Subsea installation underway following the

arrival of the pipe lay vessel

• Operator expecting first gas in December

Huntington Rochelle

Huntington and Rochelle

23 August 2012 | Page 10

Solan

• Premier is Operator with 60% equity
• All significant contracts have been awarded

– Procurement and fabrication of platform (Burntisland Fabrications) – Heavy lift installation (Heerema) – Subsea tank fabrication (Dry Docks World Dubai) – Drilling rig (Awilco)

• Construction of topsides has commenced
• Phase 1 development

drilling expected to commence in March 2013

• First oil targeted for

Q4 2014 with an initial production rate of 24,000 bopd

23 August 2012 | Page 11

Solan development schedule

First Oil Government Approval

FEED Design and Procurement Construct 2012 2013 2014 Platform Tank Drilling Installation, Hook-up and Commissioning

23 August 2012 | Page 12

Significant licence changes

• Premier increased stake to 50% and appointed operator
• Strengthened partnership to progress development
• Time is needed to achieve consensus within new JV

Concept Selection work

• JV agreed subsurface work programme is in progress to

generate resource volume ranges

• Schedule and cost data for development concepts has

been validated through market enquiries

• Contracting strategies have been developed
• Concept Selection Recommendation has recently been

made to JV

• Continue to work with JV to expedite approval process

and first oil now modelled for early 2016, subject to FPSO contractor discussions

Catcher update

FPSO and Subsea Wells

23 August 2012 | Page 13

Non-operated projects

Bream

• Completed SPA with Skeie in July; increased

equity in Bream to 40%

• FPSO and SURF FEED near completion
• Operator planning project sanction in October

– Cost pressures – Scope for area development exists

• Operator targeting 2015 for first oil

Frøy

• Joint Area Studies are underway with other
• perators to identify and evaluate the

preferred options for an area development Block A Aceh

• EPCI re-tender resulted in higher than

anticipated bids – Revisiting gas price with buyer

23 August 2012 | Page 14

Sea Lion – transaction rationale

• Progresses Premier’s strategy of growth through

investment in high quality development projects

• Provides a further operated core area for Premier

in a new oil prone basin

• Leverages Premier’s strong operatorship and

FPSO development capabilities

• Ongoing exploration opportunities in the North

Falklands basin, leveraging Rockhopper’s proven exploration expertise

• Adds approximately 200 mmbbls of net discovered

2C resources at a low upfront cost, together with net risked prospective resources of 175 mmboe

• Significantly extends Premier’s production growth

beyond current development projects and is an excellent fit with strongly rising cash flows

• Fully funded from a combination of existing cash

resources, facilities and cashflow from operations; commitment to fund dividend unchanged

Pro-forma 2P Reserves and 2C Contingent Resources Split by Region

North Sea 31% Falkland Islands 28% Pakistan & Mauritania 9% Asia 32%

Pro-forma 2P Reserves and 2C Contingent Resources (mmboe)

800 600 400 200

2P Reserves 2C Contingent Resources 2P Reserves & 2C Contingent Resources Falkland Islands Farm-in Pro-forma 2P Reserves & 2C Contingent Resources

Total ~725 mmboe

23 August 2012 | Page 15

• FPSO in 450m water depth; tanker offloading
• Associated gas used as fuel or re-injected
• 22 producers, 13 water injectors and a gas

injector, drilled from 3 subsea centres

• Insulated flowlines and risers
• Hydraulic submersible pumps (HSPs) for artificial

lift and flow assurance

• Gross plateau rate of 80-85 kbopd

– 120 kbopd produced fluids – 200 kbwipd – 140 kbwpd power fluid for HSPs – 60-90 mmscfd gas handling

• Assumed capex to first oil of $3.2 billion

(purchased FPSO)

• Subsequent development of satellite fields

Sea Lion – development plan

23 August 2012 | Page 16

Chim Sáo vs Sea Lion

• The wax content of the Sea Lion crude is

significantly less than the Chim Sáo crude

• However, the reservoir and seawater

temperatures at Sea Lion are significantly lower than Chim Sáo Chim Sáo

• Downhole Pour Point Depressant (PPD)

injection

• Vacuum insulated tubing risers
• Crude oil storage and transportation at 55°C
• Insulated flowlines
• Round trip pigging to clear any wax deposition
• Gas injection for artificial lift

Chim Sáo Sea Lion Wax Content 30% 22% Wax Appearance Temperature 82°C 62-72°C Seabed Temperature 20°C 2°C Reservoir Temperature 150°C 82°C

Sea Lion

• In addition to the measures used at Chim Sáo:

– Selection of HSPs rather than gas lift – Heating of the power fluid to the HSPs – A higher degree of insulation to the production flowlines

• Costs built into base case

Wax management

23 August 2012 | Page 17

Logistics

• No requirement for supply bases in Africa or South America
• This model successfully used for exploration and appraisal
• Cost structure assumed in base case

23 August 2012 | Page 18

STUDY DESIGN EXECUTE PRODUCE

Concept Selection Project Sanction First Oil

Provisional Sea Lion development schedule

2012 2013 2014 2015 2016 2017 2018

Concept Validation Studies FDP Preparation, Submission and Approval Subsea FPSO Wells Offshore Installation, Hook-up & Commissioning

23 August 2012 | Page 19

Exploration update

23 August 2012 | Page 20

Exploration vision

Deliver material resource and value to the company

• 1.6 billion boe resources over life of plan, at a finding cost of < $3/boe
• Opportunity to invest up to $500mm per annum from 2015
• Focus on geologies (Rift or Frontal fold belts) in existing or new areas
• Building on $2.7 billion of NPV from Premier discoveries (since 2005)*

1.6 billion boe of net resource targeted

Existing New Existing

• 1. Known geologies

and/or skills in existing areas

• 3. New skills and/or

geologies in existing areas

Existing New

• 2. Known skills and/or

geologies in new areas

• 4. New skills and/or

geologies in new areas

New Existing New

Asia

Rest of World and ENB

North Sea

* DeGoyler & MacNaughton estimate

23 August 2012 | Page 21

• Unrisked prospective resource portfolio – 2,723

mmboe* – 616 mmboe in prospects – 2,093 mmboe in leads

• Portfolio increased since December 2011

– Increased lead and prospect inventory in the Falklands, Iraq and Vietnam – APA 2011 and UK deferred 26th Round awards added

• Risked prospective resource portfolio – 453 mmboe

– 174 mmboe in prospects – 268 mmboe in leads – Greater focus to lead maturation in 2012/2013

Prospective resource portfolio increased significantly during 1H 2012

Risked Net Prospective Resource (mmboe)

Appraisal 11 (3%) Drillable 55 (12%) Prospects 119 (26%) Leads 268 (59%) Total 453 mmboe

Unrisked Net Prospective Resource (mmboe)

Appraisal 14 (1%) Drillable 169 (6%) Prospects 433 (17%) Leads 2,093 (77%) Total 2,723 mmboe

Portfolio increased by ~ 1 billion boe to 2,723 billion boe (net, unrisked) during 1H 2012

*Excludes PL23 and PL24 in the Falkland Islands, which are subject to licence extension

23 August 2012 | Page 22

Norway PL378: Grosbeak & Skarfjell

.

Norway PL374S: Blabaer

Appraise Drill Evaluate

Acquire Licence Gate Drill Decision Gate Appraisal Approval Gate Project Extension Gate

Rest of World North Sea Asia

Pre- Development

Spaniards East Mackerel K-32 Badhra-7 New York Lacewing Silver Sillago Singa / Kuda Laut Matang Badhra-6 Parh

Vietnam Block 12W: CS Cau

Leads Prospects Mature Prospects

Herring

Drillable Prospects

Bonneville

Indonesia Buton: Benteng

Ca Voi Cyclone Luno II

<10 <100 >100 >250 Net NPV10 $mm >10 >25 >50 <10 Net EMV10 $mm

(shown as circle inside NPV) Badhra South

Transforming the exploration portfolio

Falkland Islands* Block 121 Norway and Inner Moray Firth

Swordfish

Iraq

Peer Review Peer Assist

* Excludes PL23 and PL24 in the Falkland Islands

23 August 2012 | Page 23

Asia

1 3 2 4 12W 07/03 Tuna Buton Block A Aceh & Andaman Sea

LEARNINGS

Block 121 NSBA Phu Khanh Basin

• Anoa Deep success

– Play opener – More than 4 wells planned 2013/2014

• Buton Success

– Establish commerciality

• Matang to be drilled in Q4 2012
• Chim Sáo North West (CS-3X)

drilled

• 2 exploration wells planned in the

Nam Con Son basin in 2013

• Oligocene learnings transferred to

frontier geographies – Andaman Sea JSA – Block 121 in Vietnam

LEARNINGS

23 August 2012 | Page 24

• Premier has added 600 bcf of net reserves

through conventional exploration

• Exploration focussed on the Kirthar Frontal

Fold-belt and Foreland basin – The basin is now mature for conventional exploration – Value adding near-field exploration continues (K-30 and Badhra-7)

• Can unconventional resources reset

the curve? – 2012 pilot project on Kadanwari

Pakistan assets

700

Net Cumulative Initial Reserves (bcf)

400 200 500

1990

600 100 300

1995 2000 2005 2010

1 3 2 4

23 August 2012 | Page 25

L10A & L10B

• Potential to extend East African successful plays

into offshore Kenya (Tertiary rifts and Cretaceous fans)

• 2,535 km2 of 3D and 1030 km 2D acquired
• Preliminary dataset highlights prospectivity
• New 3D over Inboard play planned for Q4 2012
• Potential well(s) in 2H 2013

Kenya

1 3 2 4

Outboard Play Inboard Play

SW NE

23 August 2012 | Page 26

Approximate position of Block 12

1 3 2 4

Block 12

Gravity Map

• Premier (30%) has agreed to join Bashneft on Block 12
• 8,000 km2 block in the foreland of the Zagros fold belt up dip from

producing fields

• Multiple stacked reservoirs targeted
• Gross prospective resource potential in excess of 1 billion bbls
• Forward plan to acquire seismic over the block in 2013

SW NE

Iraq

23 August 2012 | Page 27

Pushing the plays wider

• Premier has the regional database to pursue amplitude

supported Tertiary prospects throughout the Central North Sea (CNS)

• Eocene prospects: Carnaby (drilled) and Cyclone

(remains to be drilled)

• 2014 drilling will target Inner Moray Firth

Pushing the Plays Deeper

• HPHT Triassic test at Lacewing

– Learnings will be applied to UK and Norway

• Jurassic test at Luno II

1 3 2 4

North Sea

Cyclone amplitude response

• n far stack data

Balder

Cyclone

Cyclone

Eocene Turbidite Sand Fairway

Carnaby

Lacewing

Lacewing Luno II Inner Moray Firth

PL 359

BCU Time Map

C.I. 100 ms

10km Johan Sverdrup Luno/Apollo Ragnarrock Luno II Prospect

23 August 2012 | Page 28

Norway

• Acquired three operated Norwegian

concessions from Nexen for $5.5 million in 2011

• Builds on Premier’s knowledge in the CNS

– Consistent with the Play Master approach – Adjacent to Premier-operated Freki Licence (PL 567, Premier 60%)

• Jurassic plays on the margin of the Mandal

High identified

• Adds > 250 mmboe to Premier’s net

un-risked lead portfolio

• Prospect maturation via seismic

reprocessing and geological studies

• Potential 2014 drilling targets

1 3 2 4

PL 567 PL 539 is a key focus for prospect maturation

Premier operates four licences Luno II

23 August 2012 | Page 29

PL 539

• Targeted for early

2014 drilling

• Jurassic onlap to a

basement high

• Premier equity 40%

2km 2km

SW 3/7-4 NE SE NW

Myrhauk Trym Field Myrhauk

Mandal High Mandal High Target play below BCU Target play below BCU

1 3 2 4

PL539 Myrhauk Lead

23 August 2012 | Page 30

PL032/033

• Unrisked prospect and lead portfolio >1 billion

boe (175 mmboe risked)

• Cretaceous fan and delta plays
• Deep Jurassic gas potential
• New 3D acquired and under evaluation

PL023/024

• Unrisked lead portfolio >2 billion boe

(100 mmboe risked)

• No CPR assessment
• Requires licence extension
• Yet to be evaluated by Premier

Falkland Islands

Sea Lion 14/10-9

At least 3 wells planned for 2014

23 August 2012 | Page 31

2012 New Venture activity

North Sea (Rift theme)

• UK and Norway Licence Rounds
• EnCounter partnership

Asia (Rift and Frontal Fold Belt themes)

• Andaman Sea
• East Vietnam
• Frontier Basins of East Indonesia

Rest of the World (Rift and Frontal Fold Belt themes)

• East Mediterranean (Cyprus) and Egypt
• Pakistan and Iraq
• Falkland Islands / Southern Africa

1 3 2 4

23 August 2012 | Page 32

Q3 Q4 Q1 Q2 Vietnam Block 121 Ca Voi 100 High Indonesia Block A Aceh Matang 40 Moderate PL359 Luno II 120 Moderate PL378 Skarfjell Appraisal P1655 Spaniards East 30 Moderate P1784 Cyclone 30 Moderate P1181 Lacewing 58 High P1430 Bonneville 10 Low P1887 Norfolk Kadanwari K-32 7 Low

Bhit-Badhra

Badhra South Deepening-1 38 High Kenya L10A & L10B Inboard 3D seismic Mauritania Commitment well TBC TBC Norway UK Middle East - Africa - Pakistan Pakistan Asia 2012 2013 P50 gross unrisked resource (mmboe) Risk North Sea

Weatherford 812 Bredford Dolphin Maersk Resiliant Wilphoenix Wilphoenix SLB Rig-23 Century Rig 28

Exploration drilling programme

Contingent Wells Firm Wells: Rig Contracted Firm Wells: Rig TBC All well timings are subject to revision for operational reasons Wells to watch

The three key wells in the next 12 months are Luno II, Lacewing and Ca Voi, targeting at least ~100 mmboe of net unrisked prospective resources

Seismic acquisition

23 August 2012 | Page 33

Exploration – delivering the strategy

Key deliverables over the next 18 months...

Established areas

• Drill effective plays tests at Luno II and Lacewing
• Mature drillable prospects for 2103/2014 drilling

– Mandal High (Norway) – Inner Moray Firth (UK) – Lama Play (Indonesia) New areas

• Drill an effective play test in the Phu Khanh

Basin (Vietnam)

• Mature drillable prospects in Kenya and the Falklands
• Secure 2 high impact new ventures

1.6 billion boe of net resource targeted

23 August 2012 | Page 34

Financial results

23 August 2012 | Page 35

Record profitability

6 months to 30 June 2011 Operating costs ($/bbl) 1H 2012 1H 2011 UK $33.5 $34.2 Indonesia $9.1 $9.6 Pakistan $1.9 $2.1 Vietnam $15.3 – Group $14.7 $14.0 Highlights 6 months to 30 June 2012 Working Interest production (kboepd) Entitlement production (kboepd) Realised oil price ($/bbl) – pre hedge Realised gas price ($/mcf) – pre hedge Sales and other operating revenues Cost of sales Gross profit Exploration/New Business General and administration costs Operating profit Financial items Profit before taxation Taxation Profit after tax 36.9 33.8 109.7 8.3 $m 342 (200) 142 (91) (9) 42 (9) 33 56 89 58.4 52.4 110.5 9.0 $m 744 (394) 350 (92) (13) 245 (50) 195 (49) 146

• 28% of 2012 production hedged at

$100/bbl

• 1H 2012 impact of $19.3 million

post-tax

• Forward sales for 2013 averaging

$110/bbl – currently 10% of production hedged Hedging

23 August 2012 | Page 36

Group taxation position

Overseas UK PRT CT Current charge* Deferred tax credits Tax charge/credit for the year

6 months to 30 Jun 2011 $m

16.0 33.1 (0.6) 48.5 (104.5) (56.0) Tax losses/allowances brought forward Losses/allowances for the period RFES Small field allowances Tax losses/allowances carried forward* UK Tax Losses/Allowances Position 1,360 175 68 46 1,649

6 months to 30 Jun 2012 $m

75.6 14.1 (3.6) 86.1 (37.3) 48.8

* fully recognised as deferred tax asset

Tax charge

* Current tax charge – 35% of operating profit

30 Jun 2012 $m

No UK CT cash taxes until 2018

23 August 2012 | Page 37

Rising cash flows

Cash flow from operations Taxation Operating cash flow Capital expenditure Disposals/(acquisitions), net Finance and other charges, net Pre-licence expenditure Net cash flow 6 months to 30 June 2011 $m

2012 Development Exploration

Estimated capex split ($m)

207 111 318

Regional split ($m)

246 (4) 242 (297) (87) (24) (10) (176) 6 months to 30 June 2012 $m 466 (141) 325 (318) 25 (103) (15) (86)

North Sea $180m Asia $124m Total $318m MEAP $14m

Full year capex forecast of $650 million (development) and $180 million (exploration)

23 August 2012 | Page 38

Strong liquidity position

Cash Bank debt Bonds Convertibles Net debt position Gearing (net debt/net debt + equity) Cash and undrawn facilities at 31 Dec 2011 $m 309 (484) (341) (228) (744) 36% 1,116 at 30 Jun 2012 $m 290 (316) (573) (232) (831) 31% 1,300

• Additional bank and bond debt raised in 1H 2012 of $585 million raising cash and

undrawn facilities (after some debt repayment) to $1,400 million

• No requirement for bank refinancing until 2015

23 August 2012 | Page 39

Fully funded programme

Development Funding

• Dividend, exploration

and all existing projects are fully funded at $85/bbl

• Capacity to increase

spend on exploration and new development projects at higher oil prices

• Forward profile funded

by cash flow and facilities even at $65/bbl

1800

Development capex

(US$ million)

400 200 800 600 1200 1000 1400

*Assumes standby funding is taken up by Rockhopper. Purchased FPSO case.

2013 2012 2015 2014 2016 2017

* * 1800

Investment Profile

(US$ million)

400 200 800 600 1200 1000 1400

2013 2012 2015 2014 2016 2017

1600

Acquisitions / disposals Exploration expenditure Development Capex Sea Lion Existing Assets

Note: Assumes exploration expenditure of $250 mm pa from 2013.

1600

23 August 2012 | Page 40

Outlook

23 August 2012 | Page 41

• Strong growth in cash flow generation

– $2.6 billion per annum once Catcher

• n-stream
• Higher impact exploration

– Luno II, Lacewing and Ca Voi – 2013/14 programmes in Kenya, Norway and Falklands

• Continuing acquisition activity

– Financial strength and access to capital

• ffers continuing opportunities
• Dividend commitment
• Portfolio focussed on value creation

What can you expect from Premier?

Rapidly rising production and cash flow (kboepd)

2011 Huntington 2012 Sea Lion Catcher 40 75 60 100+ 100

Historic NAV/share CAGR of 14.2% at constant oil prices

23 August 2012 | Page 42

www.premier-oil.com 23 August 2012