2016 HALF YEAR RESULTS 15 September 2016 DISCLAIMER THIS DOCUMENT - - PowerPoint PPT Presentation

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2016 HALF YEAR RESULTS 15 September 2016 DISCLAIMER THIS DOCUMENT - - PowerPoint PPT Presentation

2016 HALF YEAR RESULTS 15 September 2016 DISCLAIMER THIS DOCUMENT IS CONFIDENTIAL This document has been prepared and issued by and is the sole responsibility of Ophir Energy plc (the Company ) and its subsidiaries for selected recipients.


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SLIDE 1

2016 HALF YEAR RESULTS

15 September 2016

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SLIDE 2

DISCLAIMER

THIS DOCUMENT IS CONFIDENTIAL This document has been prepared and issued by and is the sole responsibility of Ophir Energy plc (the “Company”) and its subsidiaries for selected recipients. It comprises the written materials for a presentation to investors and/or industry professionals concerning the Company’s business activities. By attending this presentation and/or accepting a copy of this document, you agree to be bound by the following conditions and will be taken to have represented, warranted and undertaken that you have agreed to the following conditions. This presentation is strictly confidential and may not be copied, published, distributed or transmitted. If you do not accept these conditions, you should immediately destroy, delete or return this document. The document is being supplied to you solely for your information and for use at the Company’s presentation to investors and/or industry professionals concerning the Company’s business activities. It is not an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment

  • whatsoever. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the

Company in any jurisdiction nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract commitment or investment decision in relation thereto nor does it constitute a recommendation regarding the securities of the Company. This presentation is for informational purposes only and may not be used for any other purposes. The distribution of this presentation in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this presentation comes should inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a violation of securities laws of any such jurisdictions. This presentation and any materials distributed in connection with this presentation may include certain forward-looking statements, beliefs or opinions, including, without limitation, statements with respect to the Company’s business, financial condition, results of operations, plans, objectives and estimates, including, among others, resource estimates. These statements, which contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect” and words of similar meaning, reflect the Directors’ beliefs and expectations and involve a number of risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance and developments of the Company or industry results to differ materially from those expressed or implied by such forward looking statements, therefore, undue reliance should not be placed on forward looking statements. Past performance of the Company cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date of this presentation and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation, whether as a result of new information or future events. No statement in this presentation is intended to be a profit forecast or should be interpreted to mean that future earnings per share of the Company will necessarily match or exceed its historical published earnings per share. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, no representation or warranty, express or implied, is made and no reliance should be placed, on the fairness, accuracy, correctness, completeness or reliability of that data, and such data involves risks and uncertainties and is subject to change based on various factors. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness. The Company and its members, directors, officers and employees are under no obligation to update or keep current information contained in this presentation, to correct any inaccuracies which may become apparent, or to publicly announce the result of any revision to the statements made herein except where they would be required to do so under applicable law, and any opinions expressed in them are subject to change without notice, whether as a result of new information or future events. No representation or warranty, express or implied, is given by the Company or any of its subsidiaries undertakings or affiliates or directors, officers or any other person as to the fairness, accuracy, correctness, completeness or reliability of the information or opinions contained in this presentation, nor have they independently verified such information, and any reliance you place thereon will be at your sole risk. Without prejudice to the foregoing, no liability whatsoever (in negligence or otherwise) for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection therewith is accepted by any such person in relation to such information.

2016 Half Year Results Slide 2

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SLIDE 3

HIGHLIGHTS

2016 Half Year Results Slide 3

KERENDAN

First gas achieved in line with guidance

BUALUANG

Water debottlenecking completed leading to 4x ROI

FORTUNA

Upstream and off-take solved, progress being made on financing solution

EXPLORATION

Imminent return to high impact exploration drilling

CASH MANAGEMENT

Deleveraged, under- geared and reduced running costs

CASH

$408M of cash, scope to invest across the portfolio

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SLIDE 4

A resource exploration and monetisation company

OUR STRATEGY

2016 Half Year Results Slide 4

To create value for shareholders through having an industry leading exploration success rate and monetising this success to grow NAV per share.

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SLIDE 5

EXPLORATION AND MONETISATION

2016 Half Year Results Slide 5

NAV per share growth Core Value Growth $ returns to shareholders

= +

CAPITAL DISCIPLINE THROUGHOUT THE CYCLE

  • Building a self sustaining explorer
  • Delivering $200M-$300M p.a. in free cash flow
  • Excess free cash flow returned to shareholders
  • One-off returns linked to monetisation events
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SLIDE 6

Asset quality and fiscal terms are key

MARGIN IS EVERYTHING (NOT PRICE)

2016 Half Year Results

Slide 6

80 70 60 50 40 30 20 10 Breakeven ($/bbl) 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000

Cumulative Peak Production (kbls/d)

DEEPWATER HEAVY OIL TRADITIONAL ULTRA DEEPWATER “SHALE OIL”

Source: Goldman Sachs Global Investment Research

Continue to find low cost resource and monetise at a higher price Exiting plays/assets that don’t work at low cost and entering assets/plays that do Only high quality assets below the shale threshold with: transformational potential; minimal commitments; and fiscal terms that enable value creation Re-engineering value chains where appropriate to improve margins Pacing our exploration and high-grading the plays. We will not rush to drill NAV/share growth is our key metric and we will benchmark against this more explicitly going forward

High quality assets with preferential fiscal terms Positive margins Exit, re-engineer or renegotiate fiscal terms Negative margins

Our response to create value

1. 2. 3. 4. 6.

Equatorial Guinea Tanzania

5.

Thailand & Indonesia

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SLIDE 7

How we have tightened our model

How we manage our resources: Assets

  • High grading the exploration portfolio
  • Value driven Asset Development Plans
  • Emphasis on transformational assets that

can compete below the ‘shale ceiling’

Capital

  • IRR & scale drive all investment decisions
  • Internal competition for capital
  • We will not prioritise growth over value

People

  • People are key resource, deploy where

they create most value

  • Closely align organisational behaviour with

shareholders interests; NAV comp scheme

Slide 7

2016 Half Year Results

NAV PER SHARE GROWTH IS OUR OBJECTIVE

Create Value for Shareholders

Assets People Capital

Governance

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SLIDE 8

OPHIR’S DRIVERS OF NAV GROWTH

2016 Half Year Results Slide 8

Resource Monetisation Exploration Funding

  • c. 11,000 boepd, $75M p.a. of cash from operations
  • 996 MMboe of 2C resource being progressed to monetisation
  • Further upside potential identified in Bualuang
  • Entered new plays in Myanmar, Malaysia, Indonesia,

CDI and Gabon

  • Maturing low cost, high impact exploration opportunities
  • Expect to drill 3-5 frontier operated plays in 2017-2018
  • $408M of cash ($207M of net cash) on balance sheet

(as at 30 June 2016)

  • Forecast $200M of cash from production 2016-2018
  • Only $93M of future commitment spend across portfolio
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SLIDE 9

RESOURCE MONETISATION

Bill Higgs

COO

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SLIDE 10

MONETISATION

2016 Half Year Results Slide 10

Monetise resource in one of three ways:

MONETISATION WILL GENERATE RETURNS TO SHAREHOLDERS

Sell discovered resource

Farm down

Maximise production margins

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SLIDE 11

Monetisation of 2P Reserves

BUALUANG – CREATING VALUE TODAY

2016 Half Year Results Slide 11

Water debottlenecking project completed

  • Water disposal capacity increased

to > 75,000 bwpd

  • Water handling capacity increased

50% to 75,000 bwpd

  • Production over 10,000 bopd - still ramping up
  • Increased by 2,000 bopd since end August

Activities on water debottlenecking project

Water Debottlenecking – Key Metrics Objective Increase core value Cost $20 million Payback 12-18 months ROI 4 X Project IRR > 35%

KEY METRICS FY 2016

14.9 13.6

3.5 2.7

Cash flow per bbl: Opex per bbl: Capex per bbl: Tax per bbl:

At an oil price of $43 per bbl

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SLIDE 12

Monetising contingent resource

BUALUANG – ADDITIONAL VALUE TOMORROW

2016 Half Year Results Slide 12

Phase 4 development

  • Ocean bottom 3D highlighted potential additional 2P, 2C

and prospective resources

  • Identified 10-15 potential commercial opportunities for

drilling

  • FID of optimised development in 2017

Bualuang Ocean Bottom Seismic – T2 Reservoir level

2 4 6 8 10 12 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 '000bbl/day Phase 4 Base

Production forecast

12

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SLIDE 13

Monetisation of 1P reserves

SINPHUHORM

Mature and stable gas producing asset

  • Net production of 2,000 boepd
  • Gas price has some indexation to oil
  • Expect higher level of cash generation in 2H
  • 1. Held through 27.2% shareholding in APICO, a company owning 35% of the Sinphuhorm asset

2016 Half Year Results Slide 13

KEY METRICS FY 2016

Cash flow per boe: Opex per bbl: Capex per bbl: Tax per bbl:

At an oil price of $43 per bbl

2.0 1.6 6.1 9.0

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SLIDE 14

Monetising 122 Bcf of 2P, focus now on monetisation of additional 320 Bcf of net 2C

KERENDAN FIRST GAS

2016 Half Year Results Slide 14

Phase 1 on-stream 3Q 2016

  • Initial volumes c. 5 MMscfd; ramp up to 20

MMscfd around year end when last towers are hooked up

  • Take or pay since 11 January 2016, $8M

accrual in 1H (at current gas price)

  • Improved gas price expected to be agreed

before year end

Unlocking upside

  • NAV growth driven by commercialising

contingent resource

  • Commercialisation of West Kerendan-1
  • Complete onshore 3D survey in 2H 2016 to

secure additional State resource booking and improve field definition

Kerendan gas processing facilities

KEY METRICS FY 2017

14.7

Cash flow per boe: Opex per boe:

15.7

At a contract price of $4.79 per mmbtu

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SLIDE 15

Bookends of the value chain in place

FORTUNA FLNG

2016 Half Year Results Slide 15

  • Fixed price EPCIC bids

received and locked in until mid-2017

  • Cost estimate c. $450M v

$900M in 2014 (same development concept)

  • Licence extended until end

2017

  • Discussions with Golar on

track

  • Progressing funding

solutions

  • FEED complete
  • Working towards being in

position to FID in 4Q

  • 4 HoA signed with significant

players in global LNG market

  • Credit ratings from AA to BBB
  • Variety of off-take structures,

which include Brent indexation

Upstream Midstream Offtake

tbc

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SLIDE 16
  • New Government has awarded the land

for the site of the LNG plant

  • Strategic project for President
  • New operator (Shell) to re-commence

exploration drilling in 4Q 2016

  • Evaluating lower cost solution

Government Engagement Activity

TANZANIA REGAINING MOMENTUM

  • Costs c. $20M per annum (net) to hold

until FID

  • Sold 20% to Pavilion Energy for $1.3 bn

(March 2014)

  • Remaining holding of 20%

Prior Transaction Low Holding Cost

2016 Half Year Results Slide 16

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SLIDE 17

FUNDING & BALANCE SHEET

Tony Rouse

CFO

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SLIDE 18

FINANCIAL SUMMARY

UNITS 1H 2016 1H 2015* FY 2015 COMMENTS

NET SOURCES OF FUNDS:

Revenue $’millions 52.1 86.5 161.1 Cost of production (operating expenses, royalty and taxation) $’millions (30.1) (49.5) (72.5) Total net sources of funds from production $’millions 22.0 37.0 88.6

NET USES OF FUNDS:

Capex $’millions 96.4 105.4 208.8 Net Administration $’millions 9.3 19.4 31.3 Net Interest Cost $’millions 7.5 7.3 17.0 Total Net Uses of Funds $’millions 113.2 132.1 257.1

FINANCING

Closing Net Cash $’millions 206.9 392.0 354.9 Closing Debt $’millions 200.3 316.2 259.7 Closing Cash $’millions 407.2 708.2 614.6

2016 Half Year Results Slide 18 *1H 2015 numbers only include four month contribution from ex-Salamander assets

Bualuang realisation $34.17/bbl Net return of $15/bbl and low break-even of $15/bbl Reducing admin cost - 65% in period 2015/16 Negative cash carry Deleveraging of debt portfolio Gearing of 11% (D/D+E)

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SLIDE 19

1H 2016 FUNDS FLOW

2016 Half Year Results Slide 19 $517.4m $383.0m $97.2m $22.0m $96.4m $59.4m $16.2m $24.3m

$0m $100m $200m $300m $400m $500m $600m $700m

Operating Cash/Funds Cash Flow from Production Capex Admin Cost Net Interest Cost Debt Repayment Other Closing Cash/Funds Cash Flow Statement 614.6 (17.6) (112.5) (9.3) (8.5) (59.4) 0.0 407.3 Working Capital (97.2) 39.6 16.1 0.0 1.0

  • 16.2

(24.3) Funds Flow 517.4 22.0 (96.4) (9.3) (7.5) (59.4) 16.2 383.0

FY 2016 outlook:

  • Revenue $130M - $150 M
  • Cash flow from production

$50M -$70M

  • Capex $140M - $170M
  • Net cash $175M - $225M
  • Cash $400M - $450M

Cost reduction initiatives:

  • Gross G&A reduced by 53%

since March 2015

Fortuna:

  • Will be monetised in a way

that protects our balance sheet, manages our risk exposure and maximises NAV/share

$9.3m $7.5m

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SLIDE 20

USES OF FUNDS

2016 Half Year Results Slide 20

E&A spend 1H $38M

  • CDI – contribution to back costs (3D seismic)
  • Myanmar – well planning and EIA
  • Malaysia – entry costs for Block 2A

Resource monetisation spend 1H $42M

  • Tanzania – Blocks 1 and 4
  • EG –Fortuna FEED
  • Thailand – Bualuang water debottlenecking

Material areas of spend in 2H 2016

  • Thailand – completion of water debottlenecking ($11M)
  • Indonesia – West Papua / Aru seismic ($11M)
  • Tanzania – 2 well programme on Blocks 1 & 4 ($20M)

Reduced FY 2016 forecast from $150M - $200M to $140M - $170M

E&A $38M Monetisation $42M Other $28M

CAPEX – 1H 2016

E&A 40% Monetisation 43% Other 17%

CAPEX – FY 2016

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SLIDE 21

Reduced running costs Deleveraged the business to lower negative cash carry Under-geared asset base has unutilised debt capacity

FINANCE OUTLOOK

2016 Half Year Results Slide 21

Cash Management

Sufficient liquidity to invest for value creation

Sustainability

Bualuang development funded from cash flow & debt Provision up to $150M for investment in Fortuna Sufficient liquidity to re-commence exploration drilling Objective is to live within our means Fortuna cash flow from 2020 Opportunities to accelerate business plan

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SLIDE 22

EXPLORATION

Bill Higgs

COO

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SLIDE 23

Strategy to consistently deliver risked returns

SUSTAINABLE EXPLORATION TO DELIVER RISKED RETURNS

2016 Half Year Results Slide 23

We have a proven track record Disciplined in capital allocation Disciplined in exploration practice

  • 66% commercial success rate
  • Drilled 7 play opening wells, 2 successes
  • Involved in discovery of 3 Bnboe
  • Excellent HSE record
  • Invest consistently through the cycle
  • Viable at $50 per bbl and below
  • Material positions with running room
  • Clear line of sight on monetisation
  • Drill 2-3 play opening wells per annum, offering
  • ur investors c. 15-30% of annual independent wild cats
  • Play-based analysis to focus asset capture and

portfolio high-grading

  • A portfolio to deliver risked returns
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SLIDE 24

Prioritising valuable plays

EXPLORATION PORTFOLIO HIGH-GRADED

Slide 24

Aru Trough (oil) Kerendan (gas) EG (oil) Gabon post-salt (oil) Myanmar (gas) Gabon pre-salt (oil) Seychelles (oil) G4/50 (oil) Western Birds Head (oil) Makassar Straights (oil/gas) Gabon Conjugate Margin (oil) Kenya (oil) Cote D’Ivoire (oil) Sarawak (gas)

High Graded Retained but still working Exited

Ophir has reviewed c. 150 data rooms in the past 3 years This provides benchmarking and calibration of existing portfolio plus selective new entries

2016 Half Year Results

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SLIDE 25

Two Wells in 4Q 2016/1Q 2017

TANZANIA EXPLORATION DRILLING

  • Planned Wells:
  • Block 1 – Kitatange, CoS - 40%, Mean recoverable

volume 1.1 Tcf

  • Block 4 – Bunju, CoS – 36%, MSV 1.4 Tcf

Highlights INCREASING DEVELOPMENT OPTIONS REDUCING DEVELOPMENT COST

Targets > 1 Tcf Net cost:

  • c. $20 million

PROBABLE 2017 DRILLING

2016 Half Year Results Slide 25

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SLIDE 26

1st well in operated campaign, high impact oil exploration

COTE D’IVOIRE

2016 Half Year Results Slide 26

  • Extensive regional play fairway evaluation

has been conducted over past 18 months

  • Entry into an extension of a proven

petroleum system in adjacent block CI-514

  • CI-513
  • Ophir 45% (op.) African Pet. 45%, PetroCI 10%
  • 1,446km2, 1000-3000m water depth
  • 1 well drilling commitment by Q1 2018
  • Worked closely with the CDI government to

agree fiscal terms for a new PSC that enables deepwater exploration in the current oil price environment

Highlights HIGH QUALITY ROCKS, EXCELLENT FISCAL TERMS

Play potential Multi-Hundred Million barrels Prospect size Mean 240 MMbo Forward committed spend:

  • c. $15 million

PROBABLE 2017 DRILLING

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SLIDE 27

COTE D’IVOIRE - AYAME PROSPECT

Slide 27

High graded, high impact oil exploration

AYAME WEST LOWER FAN ISOPACH

Pre-stack depth migration in depth and AVO reconnaissance volume

2016 Half Year Results

A Volumetrics Prospective Resources MMbo COS% Prospect P90 P50 P10 Pmean Lower Reservoir 5 112 697 241 28

A A’

AYAME WEST LOWER FAN AYAME WEST UPPER CHANNEL

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SLIDE 28

EG EXPLORATION

2016 Half Year Results Slide 28

  • Area of Mutual Interest (AMI) agreed

with Exxon

  • Extension of Niger Delta oil play into an

area previously unexplored

  • Acquisition of 3D over western part of

the block completed and being processed

  • Drill/drop decision in 2017

AMI Area

Full fold data Image area

Highlights

EXTENSION OF PROVEN PLAY INTO UNEXPLORED ACREAGE

Play potential: Multi-hundred Million barrels Forward committed spend:

  • c. nil

OPTION FOR 2017 DRILLING

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SLIDE 29

Conjugate margin becoming better understood

GABON – NEW OUTBOARD PLAY

2016 Half Year Results Slide 29

  • Underexplored frontier deepwater basin with stratigraphic traps

Focus Area

Highlights EMERGING OIL PLAY Play potential: Multi-billion barrel Prospect B Mean 1.8 Bnbo (CoS 16.2%) Forward committed spend: Nil OPTION FOR 2017 DRILLING

Prospect B – Reservoir Attribute

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SLIDE 30

Intense Industry Activity in 2015-2016

MYANMAR – BLOCK AD-03

2016 Half Year Results Slide 30

  • Underexplored frontier deepwater basin with stratigraphic

traps expected within the Bengal Fan deepwater channels

  • Petroleum system biogenic charge proven by the Schwe field
  • Intense industry activity
  • Ongoing acquisition of approximately 50,000km2 of 3D seismic surveys
  • Two recent gas discoveries at the margins of the play
  • Early mover advantage within untested play fairway
  • Ophir acquired the block wide 10,000km2 Mrauk 3D in Q2 2015
  • Opportunity to test stacked pay with single well

Highlights FIRST WELL BE TO DRILLED IN DEEP-WATER PLAY Play potential: Multi - TCF Prospect A: Mean 2.5TCF (CoS 19%) Prospect B: Mean 1.5TCF (CoS 21%) Forward committed spend: Nil OPTION FOR 2017 DRILLING

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SLIDE 31

Trepang 3D seismic acquisition in 2016

EAST INDONESIA ARU BASIN

2016 Half Year Results Slide 31

  • Material position in a underexplored

deepwater exploration play

  • Potential for large, multi-hundred million barrel

resources

  • in the success case multiple follow-on potential
  • West Papua
  • Ophir (op) 49.9%, Statoil 40%, Tately 10.1%
  • Aru
  • Ophir (op) 60%, Statoil 40%
  • All work programme commitments for the

existing periods have been fulfilled

  • Acquisition of the ~3,400km2 Trepang 3D in

2016 will give full modern 3D coverage across the play

  • Allow high grading of the portfolio to support

the decision to move into the next permit term and drill exploration wells Highlights Play potential: Multi-hundred Million barrels Forward committed spend:

  • c. $12 million

OPTION FOR 2017 DRILLING

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SLIDE 32

New PSDM reprocessing provides greater prospect clarity

WEST PAPUA/ARU - OMAH PROSPECT

Slide 32 2016 Half Year Results

X X’

Depth Struct Map at Near Mid Mio Carb CI 100m

  • Unsmoothed

surface and depocentres

  • Structure top

at 4020m; Leak point at 4810m

  • Omah remains a robust, clearly defined prospect
  • Recent FIS data from Cikar-1 interprets oil
  • 2016/2017 focus on assessing the best play test of

available prospects

X X’

Near Mid Mio Carb Omah Prospect

2km 6km

5.0km

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SLIDE 33

EXPLORATION AND MONETISATION PRINCIPLES

2016 Half Year Results Slide 33

Sustainable through the cycle Disciplined Exploration Shareholder Returns

  • Sufficient, stable cash flow to support annual drilling

programme and reserves monetisation

  • Maintain top-quartile exploration performance
  • Internal competition for capital
  • Drilling 2-3 high-graded wildcat wells per annum
  • Dividend from commodity price windfalls
  • Special dividends on monetisation of exploration

success

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SLIDE 34

CORPORATE PRIORITIES 2016-2017

2016 Half Year Results Slide 34

ALL LINKED TO MAKING SHAREHOLDER RETURNS Continue journey to sustainability

Achieve a monetisation solution for Fortuna

Maintain balance sheet strength Recommence exploration drilling

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SLIDE 35

Geoff Callow

geoff.callow@ophir-energy.com

For further information contact: Head of IR and Corporate Communications Investor.relations@ophir-energy.com

Geoff Callow

Level 4 123 Victoria Street London SW1E 6DE UNITED KINGDOM Tel: +44 (0)29 7811 2400 Fax: +44 (0)20 7811 2421