25 th March 2010 2009 Annual Results Presentation Forward looking - - PowerPoint PPT Presentation

2009 Annual Results Presentation 25th March 2010

25th March 2010 | 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.

25th March 2010 | Page 2

Agenda

Progress against strategy Simon Lockett 2009 financial results Tony Durrant Operations update Neil Hawkings Exploration update Andrew Lodge Summary Simon Lockett

25th March 2010 | Page 3

2009 highlights

• 21% increase in production and 23% increase in reserves

and resources

• Continuing good progress on development projects

– Chim Sao, Gajah Baru on track for 2011

• Acquisitions in UK and Vietnam successfully integrated
• Five successes out of nine exploration and appraisal wells
• Strong cash flow, despite lower average commodity prices
• Record profits after tax of US$113 million

25th March 2010 | Page 4

Delivering against strategy

Progress

• Chim Sao and Gajah Baru on

schedule for 2011

• Froy, Bream, Bugle progress

towards development sanction in 2010

• Added 29 mmboe. Up to 11

exploration and appraisal wells

• ver next nine months targeting

330 mmboe

• Oilexco and Block 12 (Vietnam)

successfully integrated; non- core asset sales underway

• Investment programme fully

funded; acquisition capacity Strategy

• Attain 75 kboepd from

existing projects

• Commercialise contingent

resource base

• Add 200 mmboe of

2P reserves from the exploration portfolio

• Make value-adding

acquisitions in three core areas

• Maintain a conservative

balance sheet

Production 2005-2009 (kboepd)

Target

• Build three quality businesses which deliver 100 kboepd

from 400 mmbbls of reserves

Operating Cashflow 2005-2009 ($million) 2P Reserves 2005-2009 (mmboe) Acquisitions 2005-2009 Oil price ($/bbl)

25th March 2010 | Page 5

2009 financial results

25th March 2010 | Page 6

Production and income statement

Working Interest Production (kboepd) Entitlement Interest Production (kboepd) Realised oil price ($/bbl) Realised gas price ($/mcf) Sales and other operating revenues Cost of sales Gross profit Excess of fair value over purchase consideration Exploration/New Business General and administration costs Operating profit Financial Items Profit before taxation Taxation Profit after tax 12 months to 31 Dec 2008 12 months to 31 Dec 2009 36.5 31.8 94.5 6.6 $m 655 (318) 337

• (59)

(17) 262 16 278 (179) 98 44.2 40.2 66.3 5.2 $m 621 (361) 260 6 (77) (18) 170 (90) 80 33 113 Average gas pricing ($/mcf) 2009 2008 Singapore $11.0 $15.2 Pakistan $3.2 $3.5 Average Brent oil price was $61.7/bbl (2008: $97.3/bbl) Operating costs per barrel ($/bbl) 2009 2008 UK $23.2 $20.6 Indonesia $10.0 $8.6 Pakistan $1.9 $1.5 Group $12.2 $9.5 Includes non-cash mark to market adjustment

• n hedging of $61.1 million (pre-tax)

Tax credit arises due to UK tax allowances acquired with Oilexco Highlights

25th March 2010 | Page 7

Hedging

• Policy unchanged: secure cashflows via floors or

forwards to fund investment programme even at low oil prices

• 2009 Impact

No cash payments under collars $ Cash premia paid (Oilexco-related) 12.5 Mark-to-market movement 48.6 Charge to income statement 61.1

Outlook

• 41% liquids 2010 - 2012 has collar of $49 - $84/bbl
• 22% Indonesian gas 2010 - 1H 2013 has collar
• f $47 - $94/bbl
• 1.3 mmbbls 2010 production sold forward at

average $76/bbl

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Overseas UK PRT CT Prior period revisions Current charge Deferred tax credits Tax charge for the year 12 months to 31 Dec 2008 $m 12 months to 31 Dec 2009 $m 111.6 34.0 47.5 (0.2) 192.9 (13.6) 179.3

Group taxation position

73.0 23.2 (23.4) (24.6) 48.2 (81.3) (33.1) Allowances acquired Carried back to 2008 Utilised in 2009 Premier allowances brought forward Recognised as deferred tax asset Currently unrecognised Tax allowances carried forward UK Tax Allowance Position at 31 Dec 2009 $m 1199 (47) (59) 37 1130 875 275 1130

Outlook

• Significant UK carry forward of allowances
• UK cash taxes not anticipated until at least 2014

25th March 2010 | Page 9

Cash flow

Cash flow from operations Taxation Operating cash flow Capital expenditure (Acquisitions)/disposals Finance charges, net Pre-licence expenditure Net cash flow 12 months to 31 Dec 2009 $m

2009 2008 Development Exploration

Estimated Capex split ($m)

12 months to 31 Dec 2008 $m

127 90 217 195 108 303 Operating cashflow Capex Asia MEP

Estimated 2009 Regional Capex split ($m)

143 26 134 47 97 204 North Sea 303 348

555 (203) 352 (217) 3

• (16)

122 419 (71) 348 (303) (643) (55) (20) (673)

Outlook

• Forecast full-year 2010 spend of $400m (development) and $150m (exploration)

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Net debt and financial strength

$m 117 (673) 240 (316) Movement in net debt Opening net cash Net cash out flow Equity issued Closing net debt*

Outlook

• Cash on hand, in escrow and undrawn facilities of US$649 million
• Bank facilities extended to 2012; credit approval received for new five year

facility of $150m

• At $60/bbl, peak net debt of around $650 million in 2011 with rapid payback

* Excludes $70m of cash in escrow for abandonment obligations

$m 251 (353) 213 (316) Current balance sheet Cash and equivalents* Bank borrowings Convertible loan Current net debt*

25th March 2010 | Page 11

Operations update

25th March 2010 | Page 12

Operations highlights

• Oilexco integration complete
• GSA2 project sanction
• Chim Sáo acquisition
• Chim Sáo project sanction

25th March 2010 | Page 13

Production update

50,000

Production (working interest) (boepd)

30,000 25,000 10,000 5,000 2006 2007 2008 15,000 20,000 35,000

North Sea / W. Africa Middle East-Pakistan Asia

2009 40,000 45,000 Forecast 2010

• Full year production 44,200 boepd
• Continuing increases in gas demand

from Singapore and Pakistan

• Gas compression and infill drilling

projects ongoing in Pakistan

• Balmoral facilities projects completed
• Shelley performed at the lower end
• f expectations
• Good performance from Wytch Farm

and Kyle but mixed results from Scott infill drilling

25th March 2010 | Page 14

Reserves and resources

500

2005

450 400 350 150 200 250 300

2006 2007

100 50

Reserves and contingent resources (mmboe)

Production Additions & Revisions Oilexco End 2009 2008

2C contingent resources 2P reserves

213 255

25th March 2010 | Page 15 25th March 2010 |

• WHP jacket being installed in April
• ENSCO 107 drilling rig contracted and mobilising in June
• Platform topsides to be installed in July
• FPSO conversion underway – vessel in Keppel shipyard
• Project overall 65.8% complete at end March
• Premier equity 53.125%

Chim Sáo – on schedule for first oil in July 2011

25th March 2010 | Page 16

• Wellhead platform jacket progressing well
• Rig tender complete and drilling starts in

September

• Wellhead platform to be installed in September
• Central Processing Platform construction underway
• Overall project 43% complete
• Premier equity 28.67%

Gajah Baru – on schedule for October 2011

25th March 2010 | Page 17

North Sumatra Block A

• PSC extension approval process remains ongoing
• Optimisation of development plan has continued
• First gas: Alur Rambong - 2012, Alur Siwah - 2013

Huntington and North Sumatra Block A

Huntington

• Focus has moved to FPV/FPSO development
• Negotiations with providers well underway
• Earliest possible first oil is late 2011

25th March 2010 | Page 18

Appraised development portfolio targeting 2013

Frøy

• Alternative development

solutions being studied

• Preliminary tenders

expected in April

• Synergies with nearby

fields being explored Bugle

• Waiting on drilling results from Bugle North
• Integrate with other Scott subsea tie-backs

Bream

• Successfully appraised in 2009
• Targeting development approval this year;

Gardrofa could impact positively

25th March 2010 | Page 19

Production and development forecast

90

Production forecast* (kboepd net)

50 40 20 10 2010 2011 30 60 2014 2012 2013 70 80

Risked appraised developments Huntington Asian developments On production

2P reserves development capex forecast ($m)

500 300 250 150 50 2010 2011 200 350 2014 2012 2013 400 450

Huntington Asian developments On production

100

*Assumes early Huntington case

Excludes new project capex

25th March 2010 | Page 20

Exploration update

25th March 2010 | Page 21

2009 Exploration highlights

• 29 mmboe added; finding cost <$4/boe
• Nine exploration and appraisal wells drilled, 55% success rate

– Success on key exploration wells Grosbeak, Cá Rồng Đỏ – Successful Bream appraisal

• New acreage captured in UK

and Egypt

• Central North Sea database

from Oilexco integrated

• Exploration strategy redefined

25th March 2010 | Page 22

• Premier began exploring in 1986, initially via entry

into SE Asia

• To date Premier has discovered net 800 mmboe at

an overall commercial success rate of 22%

• The commercial discoveries have been made in

two basin types: 1) Rifts: Southeast Asia and Norway 2) Frontal Fold-belts: Pakistan

• The success rate in these basin types is ~40%
• Since 2000 the exploration success has been

dominated by Rift Basin exploration in Asia and latterly in Norway

• 200 mmboe net reserves additions are targetted
• ver the next five years

Exploration – Historic performance and future target

1000

Premier Discoveries 1986-2009 (net mmboe)

500 400 200 100

1985 1990

300 600 700

1995 2000 2005 2010

Cumulative annual discoveries Historic performance

800 900

2015

Cumulative annual discoveries Historic performance Future target

25th March 2010 | Page 23

Add 200 mmboe bookable net reserves by 2015 from unrisked portfolio of >1bnboe

Exploration – Targets

2010-2012

• Unrisked prospect resource: 780 mmboe
• Risked resource target: 144 mmboe
• 12 Exploration and appraisal wells planned

in 2010

• Material prospects targeted
• Drilling candidates from existing portfolio

2012 to 2014

• Resource additions must come from the lead

inventory maturation and success case follow up

• Unrisked lead resource: 786 mmboe
• Risked resource target: 78 mmboe
• New ventures are required to secure the

2013/14 delivery and ensure longer term growth

250 200 100 50 2010 2011 150 300 2012 2013 2014 350 500

Lead inventory - unrisked Lead inventory - risked Prospect inventory - unrisked Prospect inventory - risked Cum risked additions

Global exploration: Forecast resource additions (mmboe)

400 450

25th March 2010 | Page 24

Exploration strategy

Longer-term programme

• Rift Basins: new acreage in the North Sea,

Asia and Middle East

• Frontal Fold-belt plays: new acreage in the

Middle East region

The goal is to deliver 200mmboe bookable 2P reserves through the drill bit focusing on areas where we have demonstrated skills and expertise

North Sea / West Africa Asia Middle East-Pakistan

Geography Geology

Rifts Frontal Fold Belts

Near-term programme

• Asia: Nam Con Son Basin (Vietnam

and Indonesia)

• North Sea: UK Central North Sea and

Norwegian North Sea $ spend

25th March 2010 | Page 25

Exploration outlook 2010

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

Unrisked net potential of 330 mmboe; $150mm expenditure pre-tax

Blåbaer PL374S (34/2,5) Norway Oates P1620 Catcher P1430 Bugle Appraisal P815 UK Grosbeak Appraisal PL378 Gnatcatcher PL378 Gardrofa PL406 (8/3)

North Sea

Lead B Buton Prospect B Prospect A Tuna Indonesia Seismic 104/109-05 Seismic (contingent) 07/03 Vietnam

Q4 Q3 Q2 Q1 2010

Asia

Transocean GSF Arctic IV Galaxy II (STC) Maersk Guardian Bredford Dolphin

25th March 2010 | Page 26

• Active 2010 programme targeting

40-150 mmboe net to Premier:

Gnatcatcher Moth/Lacewing Gardrofa Blåbaer Bugle Appraisal Bream Oates Catcher

Premier’s rift basin expertise is being applied to the North Sea

Exploration – North Sea

Exploration Drilling 10-25 mmboe Grosbeak 7-39 mmboe Bugle Appraisal Drilling 18-33 mmboe Catcher 25-107 mmboe Oates 15-115 mmboe Gardrofa 31-60 mmboe Gnatcatcher 15-75 mmboe Blåbaer Gross Potential Prospect

• Prospect maturation and new venture

activity in preparation for 2011 drilling

25th March 2010 | Page 27

Exploration – Norway – Greater Luno

Greater Luno (Pl 359)

• Premier 30% equity
• Operated by Lundin
• Well status: plugged and abandoned with minor shows
• Pre-drill risk: reservoir presence and effectiveness
• Post Drill analysis

– No Jurassic Reservoir present – No effective reservoir in Basement – Demonstrates lateral seal to Hinault lead – Hinault under evaluation for future drilling

16/4-5 Well Location Greater Luno Hinault

25th March 2010 | Page 28

Blåbaer

Blåbaer (PL374)

• Premier 15% equity
• Operated by BG
• Reserves estimate 15-30-75 mmboe
• Well status: oil discovered in primary target,

being appraised via sidetrack drilling

• Jordbaer project moving forward, also
• perated by BG

Exploration – Norway – Blåbaer

C.I. 10m

Sidetrack

2 Km 2 Km

25th March 2010 | Page 29

Exploration – UK – Bugle Appraisal

Bugle North (P815)

• Premier 50%
• Operated by Nexen
• Well costs equally shared between 15/23d and 15/23c partnerships
• High value near field exploration opportunity
• Gross reserves estimate 7-17-39 mmboe
• Adjacent Bugle discovery flowed 7,398 bopd and 9.06 mmscfd gas
• Well Status: drilling

Galley Dirk

S

BCU

15/23d Bugle North 15/23d-13,13Z N

Base Galley

Inline-2273 ThinMan Impedance Volume

1 Km Bugle North

25th March 2010 | Page 30

Exploration – UK – Oates

Oates (P1620)

• Premier 50% equity and operator
• Reserve estimate 25-65-107 mmboe
• Amplitude supported stratigraphic trap
• Low to moderate risk for oil and gas
• Drilling planned June 2010
• Follow up potential exists at Bowers

(10-65 mmboe unrisked reserves)

Oates Bowers

Forties Isopach Map Oates NW SE Amplitude Bloom on Far Stacks

25th March 2010 | Page 31

Exploration – Norway – Bream, Gardrofa

Bream (PL 406)

• Brent age oil discovered 1971, close to Yme Field
• In 2009,17/12-4 and its sidetracks wells appraised

this discovery, testing 2,516 boepd

• Operated by BG, Premier equity 20%
• Estimated reserves 39-50-63 mmboe
• Plan of development under review

Gardrofa (PL407)

• Premier’s first operated licence in Norway
• Premier equity 40%
• Untested trap flanking a Salt dome feature
• Estimated reserves 15-70-115 mmboe
• Moderate risk for oil
• Well planned for August 2010

9/1-1 Gardrofa Prospect Well Location

Success at Gardrofa will lead to a new core area for Premier in Norway

25th March 2010 | Page 32

Exploration – Norway – Grosbeak, Gnatcatcher

Gnatcatcher/Grosbeak (PL 378)

• Premier 20% equity (non-operated)
• Successful Grosbeak well completed in July 2009

– Close to nearby infrastructure – Oil in Middle Jurassic sandstones – Estimated reserves 30-90-170 mmboe

• Gnatcatcher resource estimate 31-40-60 mmboe
• Moderate to high risk for oil
• Q3 2010 Gnatcatcher exploration well and Q4 2010

Grosbeak appraisal

Gnatcatcher SW NE

25th March 2010 | Page 33

Exploration – Indonesia – Tuna

Singa / Kuda Laut Cacing Laut Gajah Laut Utara

Tuna PSC

• Premier 65% equity
• Target equity pre-drill 40%
• Numerous drillable prospects being defined on 3D
• Reserves estimate 30-100-200 mmboe, per

prospect

• Moderate risk for oil and gas
• 2 wells planned for Q3 / Q4 2010

25th March 2010 | Page 34

South Darag

• Premier 100%, subject to government approvals
• Located in the Gulf of Suez rift basin, close to

existing production facilities

• Three year initial term
• Planned exploration drilling in 2013
• Block wide resource potential: 50-250 mmboe
• Three leads identified with 30-100 mmbo potential
• Moderate risk for oil

SW

New Business/Exploration – Egypt – South Darag

NE

25th March 2010 | Page 35 North Sea

• UK: Four exploration wells planned including

appraisal of Moth and testing of the deeper Triassic Lacewing prospect

• Norway: Drilling dependent on 2010 results

SE Asia

• Vietnam: Block 07/03 - CRD Appraisal and an

additional exploration well

• Vietnam: 104-109/5 - Commitment well
• Indonesia: Near field exploration wells in

Natuna A and NSBA, further drilling on Tuna Middle East Pakistan

• Pakistan: One near field exploration well

West Africa

• Congo: Contingent well on the Ida prospect

New ventures

• Actively pursuing new opportunities for 2011 drilling

Exploration – 2011 Outlook

12 Exploration & appraisal wells are planned, targeting net 250 mmboe of unrisked resource potential

Firm wells Contingent wells

25th March 2010 | Page 36

Summary

25th March 2010 | Page 37

Delivering against strategy

Progress

• Chim Sao and Gajah Baru on

schedule for 2011

• Froy, Bream, Bugle progress

towards development sanction in 2010

• Added 29 mmboe. Up to 11

exploration and appraisal wells

• ver next nine months targeting

330 mmboe

• Oilexco and Block 12 (Vietnam)

successfully integrated; non- core asset sales underway

• Investment programme fully

funded; acquisition capacity Strategy

• Attain 75 kboepd from

existing projects

• Commercialise contingent

resource base

• Add 200 mmboe of

2P reserves from the exploration portfolio

• Make value-adding

acquisitions in three core areas

• Maintain a conservative

balance sheet

Production 2005-2009 (kboepd)

Target

• Build three quality businesses which deliver 100 kboepd

from 400 mmbbls of reserves

Operating Cashflow 2005-2009 ($million) 2P Reserves 2005-2009 (mmboe) Acquisitions 2005-2009 Oil price ($/bbl)

25th March 2010 | Page 38

Road map

End 2012

• Run-rate production of 75 kboepd with

related cash flow expansion

• Follow-on portfolio of development

projects to add 10-15 kboepd

• Significantly increased reserve base
• Fully evaluated Nam Con Son basin
• pportunity
• Replenished exploration portfolio in new

areas of existing geological knowledge

• Three quality growing businesses

End 2010

• Stable production from established

assets

• Development drilling commenced on

key projects in Indonesia and Vietnam

• New project approvals
• Twelve well exploration programme

completed

• 10-20 prospects brought to drillable

status for 2011 / 2012 programme

We expect to make further acquisitions in our core areas

25th March 2010 | Page 39

Appendix

25th March 2010 | Page 40

End 2009 2P reserves and contingent resources

468.1 52.4 252.6 163.1 Total Reserves & Contingent Resources 2C Contingent Resources 2P Reserves 48.3 5.3 0.0 43.0 Development pending 74.1 0.0 35.3 38.7 Un-clarified or

• n hold

90.6 0.0 61.0 29.6 Development not currently viable 213.0 5.3 96.3 111.3 Total Contingent Resources 47.1 0.0 25.3 21.8 MEP 156.3 42.3 80.6 33.4 Asia 255.2 51.8 Total Reserves 54.9 12.7 Justified for development 105.8 0.0 Approved for development 94.4 39.1 On production Total North Sea/ W Africa

These figures do not include prospective resources

25th March 2010 | Page 41

Exploration – Indonesia – Buton

meters

‘B’

Buton PSC

• Premier equity 30%
• Japex operator
• Lead B reserve estimates 35-100-300 mmboe
• High risk for oil, in fold belt theme
• Prospect maturation ongoing
• Drilling planned Q4 2010 / Q1 2011

Lead B NW SE

0 5000

25th March 2010 | Page 42

Exploration – UK – Catcher

2 Km

Catcher (P1430)

• Premier equity 50%, target equity 35% pre-drill
• Encore operator
• Reserves estimates 18-25-33 mmboe
• High risk for oil
• Drilling planned April 2010

Catcher W Top Cromarty depth Map E

Balder Chalk Top Cromarty Phase Change 2 Km Blocks 28/9 & 10c

25th March 2010 | Page 43 www.premier-oil.com

25th March 2010