2016 HALF YEAR RESULTS
15 September 2016
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.
15 September 2016
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
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
2016 Half Year Results Slide 3
First gas achieved in line with guidance
Water debottlenecking completed leading to 4x ROI
Upstream and off-take solved, progress being made on financing solution
Imminent return to high impact exploration drilling
Deleveraged, under- geared and reduced running costs
$408M of cash, scope to invest across the portfolio
A resource exploration and monetisation company
2016 Half Year Results Slide 4
2016 Half Year Results Slide 5
CAPITAL DISCIPLINE THROUGHOUT THE CYCLE
Asset quality and fiscal terms are key
2016 Half Year Results
Slide 6
80 70 60 50 40 30 20 10 Breakeven ($/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
Equatorial Guinea Tanzania
Thailand & Indonesia
How we have tightened our model
How we manage our resources: Assets
can compete below the ‘shale ceiling’
Capital
People
they create most value
shareholders interests; NAV comp scheme
Slide 7
2016 Half Year Results
Create Value for Shareholders
Governance
2016 Half Year Results Slide 8
CDI and Gabon
(as at 30 June 2016)
Bill Higgs
COO
2016 Half Year Results Slide 10
MONETISATION WILL GENERATE RETURNS TO SHAREHOLDERS
Monetisation of 2P Reserves
2016 Half Year Results Slide 11
Water debottlenecking project completed
to > 75,000 bwpd
50% to 75,000 bwpd
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
Monetising contingent resource
2016 Half Year Results Slide 12
Phase 4 development
and prospective resources
drilling
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
Monetisation of 1P reserves
Mature and stable gas producing 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
Monetising 122 Bcf of 2P, focus now on monetisation of additional 320 Bcf of net 2C
2016 Half Year Results Slide 14
Phase 1 on-stream 3Q 2016
MMscfd around year end when last towers are hooked up
accrual in 1H (at current gas price)
before year end
Unlocking upside
contingent resource
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
Bookends of the value chain in place
2016 Half Year Results Slide 15
received and locked in until mid-2017
$900M in 2014 (same development concept)
2017
track
solutions
position to FID in 4Q
players in global LNG market
which include Brent indexation
Upstream Midstream Offtake
tbc
for the site of the LNG plant
exploration drilling in 4Q 2016
Government Engagement Activity
until FID
(March 2014)
Prior Transaction Low Holding Cost
2016 Half Year Results Slide 16
Tony Rouse
CFO
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)
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
(24.3) Funds Flow 517.4 22.0 (96.4) (9.3) (7.5) (59.4) 16.2 383.0
FY 2016 outlook:
$50M -$70M
Cost reduction initiatives:
since March 2015
Fortuna:
that protects our balance sheet, manages our risk exposure and maximises NAV/share
$9.3m $7.5m
2016 Half Year Results Slide 20
E&A spend 1H $38M
Resource monetisation spend 1H $42M
Material areas of spend in 2H 2016
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
Reduced running costs Deleveraged the business to lower negative cash carry Under-geared asset base has unutilised debt capacity
2016 Half Year Results Slide 21
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
Bill Higgs
COO
Strategy to consistently deliver risked returns
2016 Half Year Results Slide 23
portfolio high-grading
Prioritising valuable plays
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
Two Wells in 4Q 2016/1Q 2017
volume 1.1 Tcf
Highlights INCREASING DEVELOPMENT OPTIONS REDUCING DEVELOPMENT COST
Targets > 1 Tcf Net cost:
PROBABLE 2017 DRILLING
2016 Half Year Results Slide 25
1st well in operated campaign, high impact oil exploration
2016 Half Year Results Slide 26
has been conducted over past 18 months
petroleum system in adjacent block CI-514
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:
PROBABLE 2017 DRILLING
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
2016 Half Year Results Slide 28
with Exxon
area previously unexplored
the block completed and being processed
AMI Area
Full fold data Image area
Highlights
EXTENSION OF PROVEN PLAY INTO UNEXPLORED ACREAGE
Play potential: Multi-hundred Million barrels Forward committed spend:
OPTION FOR 2017 DRILLING
Conjugate margin becoming better understood
2016 Half Year Results Slide 29
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
Intense Industry Activity in 2015-2016
2016 Half Year Results Slide 30
traps expected within the Bengal Fan deepwater channels
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
Trepang 3D seismic acquisition in 2016
2016 Half Year Results Slide 31
deepwater exploration play
resources
existing periods have been fulfilled
2016 will give full modern 3D coverage across the play
the decision to move into the next permit term and drill exploration wells Highlights Play potential: Multi-hundred Million barrels Forward committed spend:
OPTION FOR 2017 DRILLING
New PSDM reprocessing provides greater prospect clarity
Slide 32 2016 Half Year Results
X X’
Depth Struct Map at Near Mid Mio Carb CI 100m
surface and depocentres
at 4020m; Leak point at 4810m
available prospects
X X’
Near Mid Mio Carb Omah Prospect
2km 6km
5.0km
2016 Half Year Results Slide 33
programme and reserves monetisation
success
2016 Half Year Results Slide 34
Achieve a monetisation solution for Fortuna
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