24 March 2005 2004 Preliminary Results Presentation Presentation - - PowerPoint PPT Presentation

2004 Preliminary Results Presentation

24 March 2005

Page 2 | 2004 Preliminary Results Presentation

Presentation

Introduction Charles Jamieson Finance and Operational Highlights John van der Welle Business Review Robin Allan Strategy and Outlook Simon Lockett

Page 3 | 2004 Preliminary Results Presentation

Finance and operational highlights

Page 4 | 2004 Preliminary Results Presentation

Finance highlights

• Total operating profit
• Net profit after tax up

57%

• Healthy cashflow
• Strong balance sheet
• Share buy back initiated

$93.0m (2003: $94.5m*) $43.8m (2003: $27.9m*) Net inflow $4.9m Net cash $19.6m £10 million programme Lower turnover offset by lower costs Lower interest charges Cashflow sufficient to cover all operating and capital expenditure Maintained financial flexibility Future purchases in appropriate market conditions

* comparatives for 2003 are with ongoing operations i.e. assets retained post restructuring

Page 5 | 2004 Preliminary Results Presentation

Operational highlights

• Production ahead of

budget

• Developments on track
• Further gas sales

progressed

• Successful exploration

and appraisal

• World class HSE

performance

• Increasing resource base

Strong gas demand in Pakistan, Indonesia offsets UK decline West Natuna (West Lobe) Chinguetti Bhit phase 2, Zamzama phase 2 and West Natuna 6 successes from 11 wells 3 years continuous operation without LTI in Indonesia Independent review confirms booked reserves

Page 6 | 2004 Preliminary Results Presentation

Profit and loss

Production (mboepd) Realised oil price ($/bbl) Realised gas price ($/mcf) Turnover less: share of JV turnover Group turnover Operating costs Amortisation Exploration expenditure written off Gross profit Administration costs Operating profit Operating profit in JV Total operating profit Net interest Exchange losses Profit before tax Taxation Profit after tax Earnings per share - diluted (cents) Year to 31 December 2003 (Ongoing)

Entitlement interest production Gas price flat due to mix change and Indonesia linkage to HSFO Turnover down – more gas production, hedging impact ($23m) Unit opex (incl JV) $5.8/boe - up 5% mainly due to fixed sterling costs and reduced production in UK fields Unit DDA (incl JV) $4.9/boe – no change on 2003 JV represents Pakistan only Interest charge comprises abandonment provision and loan issue costs Effective tax rate broadly flat EPS up 8% versus reported amount for 2003

33.2 27.2 3.28 $m 270 (41) 229 (60) (61) (20) 88 (19) 69 26 95 (20) (2) 73 (45) 28 N/A 31.5 29.9 3.24 $m 252 (56) 196 (51) (57) (14) 74 (16) 58 35 93 (3) (3) 87 (43) 44 52 Year to 31 December 2004

Page 7 | 2004 Preliminary Results Presentation

Cashflow

2004 2003 Excl JV JV Total Total $m $m $m $m Exploration 53 5 58 48 Fields 30 4 34 16 Other 13

• 13

1 JV funding * (33) 33

• 63

42 105 65 * Net payment to Premier by Pakistan JV in 2004

Net cash flow from operations Net interest Taxation Operating cash flow (after interest and tax) Capital expenditure Investment/disposals Net cashflow Exchange/other Movement in net debt Opening net cash Closing net cash 124

• (54)

70 (63)

• 7

2 9 8 17

Lower turnover and

• perating cashflow, partly
• ffset by reduction in

interest Capital expenditure – increased spend on exploration and Chinguetti field development capex

Year to 31 Dec 2004 (As reported) $m Year to 31 Dec 2003 (Ongoing, Incl JV) $m

165

• (55)

110 (105)

• 5

2 7 12 19

Year to 31 Dec 2004 (Incl JV) $m

• Operating cash flow covers exploration 1.9x

203 (29) (38) 136 (65) 19 90 N/A N/A N/A N/A

Page 8 | 2004 Preliminary Results Presentation

Reserve movements

170 190

Reserves/Resources (mmboe)

Opening reserves Production Revisions Discoveries Closing reserves

160 150 Unbooked resources movement Movement Unbooked resources Booked reserves 180 210 200 220

• Increased total booked reserves & unbooked resources
• Booked reserves reviewed by D&M
• Strong foundation for future Cashflows

Acquisition

Page 9 | 2004 Preliminary Results Presentation

Business review

Page 10 | 2004 Preliminary Results Presentation

Production – UK

• Wytch Farm continuing to perform well
• Kyle extended by a new commercial deal with Banff
• Fife field life extension under negotiation
• Current production ~12,000 boepd, reserves 24 mmboe

Page 11 | 2004 Preliminary Results Presentation

Africa

Page 12 | 2004 Preliminary Results Presentation

NW Gemsa Block, Gulf of Suez Basin Premier equity: 37.5%

• Al Amir-1 currently drilling
• Relatively high risk prospect due to seismic

imaging challenges

• 3D seismic programme acquired
• Onshore flat desert terrain, low well cost,

low development cost if successful

• Operator: Vegas (Kriti)

Egypt: NW Gemsa Block

Page 13 | 2004 Preliminary Results Presentation

Egypt: NW Gemsa Block

GAS PIPELINE OIL PIPELINE

Al Amir-1

Page 14 | 2004 Preliminary Results Presentation

Egypt: NW Gemsa Block

Proposed Al Amir-1 Zeit Bay-1

Top S Gharib Top Belayim Top Kareem Top Rudeis Top Lwr. Rudeis Top Pre-rift

Page 15 | 2004 Preliminary Results Presentation

Africa – Mauritania

Page 16 | 2004 Preliminary Results Presentation

• Development approved May 2004
• Reserves of 120 mmbbls (Premier share 9.7 mmbbls)
• Development cost $630 million (Premier share $51 million)
• First oil Q1 2006 building to 75,000 bopd (Premier share 6,000 bopd)

Africa – Mauritania: Chinguetti Development

Page 17 | 2004 Preliminary Results Presentation

Africa – Mauritania: Tevét

Tevét, drilled October 2004, was successful and found target reservoirs of oil and gas on

• prognosis. Likely to be developed

through Chinguetti field.

Banda Chinguetti

3D visulisation of Miocene sands draped over structure

Tevét

Page 18 | 2004 Preliminary Results Presentation

Mauritania: 2004 Exploration - Capitaine & Merou wells

The Capitaine and Merou prospects are in the outboard trend of salt diapirs

Regional view of Base Miocene surface from west

Tiof channel Merou-1 Capitaine-1 Chinguetti – Banda channel

Page 19 | 2004 Preliminary Results Presentation Regional base reservoir TWT map showing deepening to west

Mauritania: 2004 exploration – Capitaine-1

Page 20 | 2004 Preliminary Results Presentation

Mauritania: 2004 exploration – Merou-1

Merou Tiof

Page 21 | 2004 Preliminary Results Presentation

Mauritania: 2005 drilling candidates

New Kiffa 3D Kiffa fast-track volume

• ver Fantar prospect

New Tenit 3D Older 3D being reprocessed merged Baudroie Tapandar Espadon Assetat Tenit fast-track 3D Sotto Fantar SW Fantar SW Kibaro

Page 22 | 2004 Preliminary Results Presentation

Blocks 2, 4A, 5A Premier equity – 38.5% to 42% Operator – Premier

• Prospect sizes 50m to 300m bbls
• 2004 Sinapa-2 oil discovery

Blocks 7B, 7C Premier equity – 25% Operator – Premier

• 2D seismic acquisition work commitment
• Potential for large prospects in ultra-deep

water

Guinea Bissau

Page 23 | 2004 Preliminary Results Presentation

Top Turonian Top Cenomanian Top Albian Top Aptian

Sinapa-1 Sinapa-2 SW NE Top of salt penetrated in Sinapa-1 and Sinapa-2z Sinapa-2z

Guinea Bissau: Sinapa & Esperanca

Page 24 | 2004 Preliminary Results Presentation Ervas El Linguada Espadarte Espinafre Espargos Encharcada Espetada Empada Sardinha Eirozes Sabayon Solha Sinapa-1 Sinapa-2,2z

The results of the Sinapa-2,2z well have significantly reduced the risks

• f the salt diapir flank play in

Guinea Bissau. 2005 programme will include new 3D seismic acquisition followed by exploration and appraisal drilling.

Africa – Guinea Bissau: 2005

Page 25 | 2004 Preliminary Results Presentation Premier PGB04-25 Clearer fault plane Higher frequencies and better amplitudes Veritas VFGB00-16

Egomor and Peixe Boy Permits

Page 26 | 2004 Preliminary Results Presentation

Dussafu Licence Premier equity – 25% Operator – Sasol Iris & Themis Marin Premier equity – 18% Operator – Fusion/Sterling Pre-Salt Plays

• Premier focusing on Pre-salt Gamba

Sandstone play

• Unlocking the potential of this area by

application of newly proven 3D imaging technology

Gabon

Page 27 | 2004 Preliminary Results Presentation Dussafu-1 Well Location Mytilus-1 Projected

Gabon: Dussafu

Dussafu Prospect

Page 28 | 2004 Preliminary Results Presentation

Gabon: Iris Marin & Themis Marin

Page 29 | 2004 Preliminary Results Presentation

N

NGTSM-1 PLM-1 DKM-1

Gabon: Iris Marin – 3D Perspective

Page 30 | 2004 Preliminary Results Presentation

FABM-1 ARM-1 NEM-1A

N

Gabon: Themis Marin – 3D Perspective

Page 31 | 2004 Preliminary Results Presentation

Asia

Page 32 | 2004 Preliminary Results Presentation

Production – Pakistan

• Growing onshore gas production
• Onshore and offshore exploration planned
• Bhit and Zamzama Phase 2 scheduled for 2006/7
• Long-term gas contracts, in dollars
• Kadanwari step-out now onstream
• Current Pakistan production ~12,000 boepd,

reserves 64 mmboe

12,000 2001

Pakistan Gas production

8,000 4,000 2002 2003 2004 BOEPD

Page 33 | 2004 Preliminary Results Presentation

2005 – Pakistan

Jhangara Licence Premier equity – 50% Operator – Premier

• Concession to be signed 27th April 2005
• Maliri-1 well to drill in Q3 2005

Offshore Indus Premier equity – 12.5% Operator – Premier

• 2005/6 well on the Anne Prospect – timing

subject to rig availability

Page 34 | 2004 Preliminary Results Presentation

Pakistan: Jhangara – Maliri

Maliri Prospect

Page 35 | 2004 Preliminary Results Presentation

Pakistan: Indus offshore

The Indus fan is the world’s second largest submarine fan. This deepwater block is untested frontier territory with potential provided by anticlines related to the adjacent Murray Ridge and shale diapirs.

Page 36 | 2004 Preliminary Results Presentation

Pakistan: 3D visualisation of a shallow channel

High sinuosity backfill channel

Page 37 | 2004 Preliminary Results Presentation

Asia – India

Page 38 | 2004 Preliminary Results Presentation 20 Kilometres

Duliajan

Naga Thrust Front K u m s a i T h r u s t F r

• n

t Margherita Thrust Front D i s a n g T h r u s t F r

• n

t

Oil Seeps

Digboi Field

Kharsang Field Nahorkatiya Field

Kusijan Field Jorajan Field

Margherita Deomali

2005 – India: Jaipur Block AAP-ON-94/1 location

Digboi

Page 39 | 2004 Preliminary Results Presentation

Line PO-02-03

Jorajan-10 (proj.) Proposed Lakkhi-1

Lakkhi Prospect

2005 – India: Lakkhi prospect

Page 40 | 2004 Preliminary Results Presentation BANGLADESH

Masimpur Prospect

India: Cachar Block playmaker potential

Page 41 | 2004 Preliminary Results Presentation

India: Masimpur anticline (1930s BOC Map)

Page 42 | 2004 Preliminary Results Presentation

Philippines

Ragay Gulf – 37.5%: Operator – Premier

• Signed 14th January 2004
• 2D seismic underway - chasing reef play
• Drilling in 2006

Page 43 | 2004 Preliminary Results Presentation

Philippines: Ragay Gulf

SC Area (10,865 km²)

Page 44 | 2004 Preliminary Results Presentation

Asia – Philippines: Ragay Gulf Block

2D Shallow water Seismic Programme 2Q 2005

Page 45 | 2004 Preliminary Results Presentation

Production operations – Indonesia

• West Natuna Gas (WNG) project – Premier operated
• 650km pipeline network to Singapore
• Production commenced 2001 – 27 year gas contract
• Indonesia production ~11,000 boepd, reserves 79 mmboe

15,000 2001

Indonesia Gas production Daily Contract Quantity

10,000 5,000 2002 2003 2004 BOEPD

Page 46 | 2004 Preliminary Results Presentation

Indonesia: Natuna Sea Block A PSC location map

Gajah Puteri appraisal Macan Tutul-1 Lembu Peteng-1

Page 47 | 2004 Preliminary Results Presentation

Indonesia: Macan Tutul – 2005 exploration well

Macan Tutul Anoa Field

High amplitude Arang reservoir targets

S N

Page 48 | 2004 Preliminary Results Presentation

Indonesia: Gajah Puteri appraisal – 2005 candidate

Interpretation of reprocessed 3D seismic indicates that the Gajah Puteri gas and condensate discovery may connect to the undrilled Ganesha area to the east

Ganesha lead appraisal target

Gajah Puteri-1 Gajah Puteri-2

Page 49 | 2004 Preliminary Results Presentation

Indonesia: Lembu Peteng location to KH facilities

Lembu Peteng-1

Page 50 | 2004 Preliminary Results Presentation

Blocks 12E & W Premier equity - 75% Operator – Premier Blocks 7,8/97 Premier equity – 45% to 67.5% Operator – Premier

Asia – Vietnam

Page 51 | 2004 Preliminary Results Presentation

18 month plan

2005 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

AFRICA

Guinea Bissau : 3D : Eroizes-1 : Espinafre-1 Mauritania : Tiof Appraisal : Tevet Appraisal : Exploration Wells Gabon : Iris-1 : Themis-1 : Dussafu-2 Egypt : Al Amir-1 Pakistan : Maliri-1 : Indus Offshore India : Jaipur-1 : Cachar Philippines : 2D Indonesia : Macan Tutul-1 : Bepak Lembu Vietnam : Dua 3D : 12E & 12W Exp. Well : 12E Dua App. Well : 7,8/97 Exp. Well

ASIA

2005 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2006 JAN FEB MAR APR MAY JUN 2006 JAN FEB MAR APR MAY JUN Contingent wells Firm wells Seismic acquisition

Page 52 | 2004 Preliminary Results Presentation

Business development strategy

Exploration led, commercially driven

• $50m p.a. exploration expenditure
• 12 to 18 well programme p.a.
• 1/3 of wells offer step change growth opportunity
• Focus on Africa and Asia

Page 53 | 2004 Preliminary Results Presentation

Strategy and outlook

Page 54 | 2004 Preliminary Results Presentation

Areas of operation and strategy

• High impact explorer and

commercial dealmaker

• Continuing to build the base

business

• High grade the portfolio

through farm down/cycle out when maximum growth potential has been achieved

• Realise value

for shareholders

Page 55 | 2004 Preliminary Results Presentation

Reserves and production

UK Indonesia Pakistan Mauritania Unbooked (2)

Total 2P resources ~210 mmboe (1)

• Booked reserves 177 mmboe:

80% gas; 20% oil 10,000 20,000 30,000 40,000 2004 2005 2006 2007 2008

Working interest production (barrels of oil equivalent per day)

(1) Total resources defined as booked and unbooked 2P WI

reserves including fields awaiting commercialisation

(2) Unbooked resources relate to Indonesia and Mauritania

50,000 2009

Tevet (contingent) Tiof (contingent) Chinguetti Indonesia Pakistan UK

Page 56 | 2004 Preliminary Results Presentation

Summary and outlook

• Good business performance in 2004

– Profits up 57% – 6 successful E&A wells from 11 in 2004 – Strong demand growth in overseas gas assets – Resources secure (finance, skills, management)

• Strategy

– Continuous exposure to significant exploration upside – Enhanced focus on capturing commercial deals – Unlock further value in Premier business

Page 57 | 2004 Preliminary Results Presentation

Appendix

Page 58 | 2004 Preliminary Results Presentation

Future field capex programme

20 30 50

Development CAPEX (committed only) ($ million)

2005 2006 2007 2008 2009 10 Chinguetti Indonesia Pakistan UK 40 70 60 80

Page 59 | 2004 Preliminary Results Presentation

International Financial Reporting Standards

• Effective from 1.1.05 (2004 comparatives restated)
• Premier project team working with OIAC
• Subject to further work by IASB and endorsement by EU
• Areas affected:

– accounting for fixed assets – deferred tax – joint ventures – employee costs (including pension benefits) – oil and gas hedges

• Revised 2004 comparatives to be published before interims

(September 2005)

Page 60 | 2004 Preliminary Results Presentation

Worldwide licence interests

WORLDWIDE LICENCE INTERESTS AT 22 MARCH 2005

23.75 Shell Indus E 2365-1 Exploration Licences Zarghun South 3.75 MGCL* Bolan 42.50 Premier Ragay Gulf Philippines Bhit 6.00 ENI* Kirthar Zamzama 9.38 BHP* Dadu Qadirpur 4.75 OGDCL* Qadirpur Kadanwari 15.79 ENI* Tajjal Production Leases Pakistan 8.12 Chinguetti PSC B 9.23 Woodside Block 4 & 5 PSC B 4.62 Woodside Block 3, 4 & 5 PSC A Mauritania Anoa 28.67 Premier Natuna Sea Block A Kakap 18.75 Star Energy Kakap Indonesia 49.00 Premier Block CR-ON-90/1 Cachar 38.00 Premier Block AAP-ON-94/1 Jaipur India 23.75 Premier Block 7c Peixe Boy 23.75 Premier Block 7b Egomor 42.00 Premier Blocks 4a & 5a Esperanca 38.50 Premier Block 2 Sinapa Guinea Bissau 18.00 Fusion Themis 18.00 Fusion Iris 25.00 Sasol Dussafu Gabon 37.50 Vegas Oil & Gas NW Gemsa Egypt Field Equity % Operator Block Licence continued over…

Page 61 | 2004 Preliminary Results Presentation

Worldwide licence interests

The group holds a 29.9 per cent interest in Fusion Mauritania A Ltd and FP Mauritania A BV (Mauritania A) with the balance being owned by Sterling Energy plc. Mauritania A will become a wholly owned subsidiary on completion of the acquisition which will occur once the Mauritanian Government approves a field development plan for a field in PSC A, or earlier with partners' approval. Premier Oil Mauritania B Ltd and FP Mauritania B BV (Mauritania B) hold a 9.23 per cent interest in PSC B (Operator: Woodside). The Mauritanian Government exercised its right to participate in the Chinguetti oil development effective 9 November 2004. Therefore Mauritanian B will reduce its interest to 8.12 per cent on the effective assignment of part of its interest to Group Project Chinguetti., the entity representing the interests of the Mauritanian Government. * Licences held through a joint venture ** Unitised share of 12.38 per cent *** Unitised share of 0.82 per cent

† Unitised share of 1.79 per cent †† Unitised share of 3.00 per cent

75.00 Premier Offshore 12E Vietnam 75.00 Premier Offshore 12W 25.00 Tullow Oil 43/22b, 23, 43/27b, 28, 43/29 P1235 25.00 Tullow Oil 44/21c & 44/26b P1184 30.00 Tullow Oil 39/2b & 39/7 P1152 Mordred †† 10.00 Superior Oil 48/12a P142 Galahad 10.00 Superior Oil 48/12a, 13b P142 50.00 Premier 42/10 & 42/15 P1229 87.50 Premier 23/22b P1181 87.50 Premier 21/7b P1177 50.00 Premier 20/10b, 20/15a, 21/6a & 21/11b P1048 Non-Chestnut Field Area 30.00 Premier 22/2a P354 Scott † 3.75 Nexen 15/21a P218 Telford *** 3.75 Nexen 15/21a P218 Kyle 40.00 CNR 29/2c P748 Wytch Farm (Offshore) ** 12.50 BP 98/6a, 98/7a P534 Wytch Farm/Wareham ** 12.50 BP L97/10 PL089 12.38 BP 98/11 P1022 Fergus 35.00 Amerada Hess 39/1c, 39/2a, 39/2c P802 Fife 15.00 Amerada Hess 39/1a P802 35.00 Amerada Hess 31/26c P758 16.00 Amerada Hess 176/20, 204/16 P1029 Angus, Fife, Flora 15.00 Amerada Hess 31/21a, 31/26a, 31/26f, 31/26g, 31/27a P288 1.25 Amerada Hess 14/25a P257 United Kingdom

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