27 th August 2009 2009 Half-Yearly Results Presentation Forward - - PowerPoint PPT Presentation

2009 Half-Yearly Results Presentation 27th August 2009

27th August 2009 | Page 2

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.

27th August 2009 | Page 3

Agenda

2009 highlights Simon Lockett Finance Tony Durrant Operations update Neil Hawkings Exploration update Andrew Lodge Summary Simon Lockett

27th August 2009 | Page 4

2009 highlights – a transformational first half

• Oilexco: a favourable price and a step change in North Sea
• Additional equity in Block 12W; material interest in key project
• Reserves and resources increased by 17%

Acquisitions Exploration

• Success in Vietnam on Block 07/03
• Premier’s first well in Norway also a success
• Focus in 2010 returns to South-East Asia
• Production up 4% at 39,700 boepd
• Step up following Oilexco acquisition, Shelley now on-stream
• Record Pakistan production and strong performance from Anoa

Production Development

• Asian developments progressing well
• Lower cost estimates as result of re-tendering/re-designing
• Huntington – concept selection targeted by end 2009
• Extended debt facilities and successful rights issue
• Fully funded forward development plan
• Flexibility to take advantage of further opportunities

Finance

• OGP survey results: Premier best performing company for TRIF* in Drilling
• Production TRIF* performance in top quartile
• Premier TRIF* <1 per million man hours, 350% improvement over 5 years

HSE

* Total Recordable Injury Frequency

27th August 2009 | Page 5

Strategy

Strategy

• Targeting production

growth to 75,000 bopd by end 2013

• Exploration

programme within disciplined spend

• Acquisitions focus on
• ur three core areas
• Conservative financing

plan

Progress

• Projecting 60,000-

65,000 boepd at end 2011 post start up of Gajah Baru and Chim Sao

• Up to 15 exploration

and appraisal wells

• ver next 15 months
• Oilexco and Block 12

(Vietnam) completed; non-core divestitures underway

• Demonstrated ability

to access debt and equity markets

90

Production forecast (kboepd net)

50 40 20 10

2009 2010 2011

30 60

2014 2012 2013 2015

70 80

North Sea developments Asian developments Existing production

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Half-yearly financial results

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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 6 months to 30 Jun 2008 38.0 33.1 110.0 6.6 $m 386 (139) 247

• (32)

(11) 204 (13) 191 (119) 71 6 months to 30 Jun 2009 39.7 37.0 53.0 5.0 $m 214 (117) 97 60 (25) (7) 125 (52) 73 (46) 27 Average gas pricing ($/mcf) 1H 2009 1H 2008 Singapore $8.94 $16.16 Pakistan $3.86 $3.28 Average Brent oil price was $52 (1H 2008: $110/bbl) Operating costs per barrel ($/bbl) 2009 2008 UK $16.1 $21.7 Indonesia $ 7.6 $ 6.5 Pakistan $ 1.6 $ 1.3 Average $ 8.2 $ 9.6 Includes mark to market adjustment on hedging of $44.2 million (pre-tax) Includes write-off of $17.9m for PSC B, Mauritania Includes $22.7m of additional depreciation in respect of Chinguetti downgrade

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Oilexco acquisition accounting (at completion)

$million 501 10 511 Nil 569 144 (10) (126) 577 66 (6) 60 Purchase consideration Acquisition expenses (external) Cost of Acquisition Allocation: Exploration and evaluation assets Oil and gas properties Deferred tax assets Net current assets Decommissioning obligations Fair value Excess of fair value over purchase consideration Less acquisition expenses (internal) Net effect on the income statement

27th August 2009 | Page 9

Hedging

• Policy remains to underwrite value of projects by putting in

low cost floors

• 2009 Hedging Transactions:

– Existing $40/$100 floor/cap revised to $50/$80 for 2010 and 2011 for half existing oil production – New hedging in place for Oilexco acquisition; 50% production at floor of ~$53/bbl for 2H 2009-2011

• Hedging impact

$m Cash premia paid 12.5 Mark-to-market movement (non-cash) 31.7 Charge to income statement 44.2

• Group-wide ~25% of 2009-2011 oil and gas production has

an average floor of $52/bbl (oil) and $45/boe (gas) production – Pakistan gas is unhedged

27th August 2009 | Page 10

Cash flow

260 (69) 191 (74)

• (7)

110 Cash flow from operations Taxation Operating cash flow Capital expenditure ONSL acquisition cost Finance charges, net Pre-licence expenditure Net cash flow 6 months to 30 Jun 2009 $m

H1 2009 H1 2008 Development Exploration

Estimated Capex split ($m)

6 months to 30 Jun 2008 $m 142 (29) 113 (111) (511) (18) (7) (534)

51 23 74 70 41 111

Forecast full-year 2009 spend of $230m (development) and $140m (exploration)

Development Exploration Asia MEP

Estimated 2009 Regional Capex split ($m)

32 9 19 15 36 North Sea 41 70

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Net debt and funding programme

$m 117 (534) 237 (3) (183) Current balance sheet Opening net cash Net cash out flow Equity issued Non cash movements Closing net debt* Forward plans

• ONSL bridge facility ($175m) being extended in

size and maturity to match main facility

• On completion of financing, expected cash and

undrawn facilities of around $500million

• Available funding and covenant headroom to

meet capex requirements at $45/bbl

* Includes $71m of restricted cash

600

Development capex forecast (2P reserves) ($m)

200 100

2009 2010 2011

300

2014 2012 2013 2015

400 500

North Sea developments Asian developments Existing production

27th August 2009 | Page 12

Operations update

27th August 2009 | Page 13

Production update

50000

Production (Working Interest) (boepd)

30000 25000 10000 5000 2006 2007 2008 15000 20000 35000

North Sea Asia Middle East-Pakistan

Forecast full year 2009

• Deliveries from expanded plants meeting

strong Pakistan gas demand

• Good production performance from Anoa

meeting strong Singapore gas demand – Kakap production impacted by gas compression issues

• Balmoral area production currently

impacted by acceleration of shutdowns and system bottlenecks

• Shelley now on-stream
• Good performance on Wytch Farm and

Kyle but Scott impacted by plant issues

• Average full year production projected to

be around 46kboepd

40000 45000

27th August 2009 | Page 14

MEP – Pakistan – producing fields

• Capitalising on completed plant expansions to

take advantage of strong local gas demand

• Ongoing infill development drilling and

compression projects to maintain rates

• Qadirpur (27.2 mmscfd, net)

– Plant capacity enhancement (end 2008) – Compression project and tie-in to local power plant planned for 2010

• Kadanwari (7.6 mmscfd, net)

– K-14 successful and tied in

• Zamzama (41.5 mmscfd, net)

– Infill wells 6 and 7 onstream and tie-in of Zamzama North

• Bhit/Badhra (20.3 mmscfd, net)

– Improved production from phase 2 plant

• Kadanwari gas price capped at $8.50/mmbtu;

licence extended to 2022 from 2017

Kadanwari Bhit Zamzama Qadirpur

16000

Pakistan Production (boepd)

12000 10000 4000 2000 2006 2007 2008 6000 8000 14000 1H 2009

27th August 2009 | Page 15

Asia – Indonesia – West Natuna Block A

• Continued strong demand from Singapore market
• Consistent overperformance on Anoa allowing 3 well

development programme to be postponed to 2010

• FEED work underway on Anoa compression project
• Conceptual studies commenced on future GSA1 field

developments

27th August 2009 | Page 16 Gajah Baru

• Delivering significant cost reductions:

– Latest capital expenditure estimate $196mm net to Premier – Positioned to capture lower rig rates and development drilling costs

• First gas 2011 meets contractual obligations with gas buyer in Singapore
• Overall project progress around 20%
• Transportation agreements supporting Batam GSAs targeted for H2 2009

Asia – Indonesia – West Natuna Block A

27th August 2009 | Page 17

• FEED completed in February, further optimisation studies ongoing
• Latest cost estimate $210mm net to Premier
• EPCI and rig tenders being prepared with bids targeted for year end
• PSC signature for North Sumatra Block A delayed awaiting Indonesian government
• First gas expected from Alur Rambong in 2011 and from Alur Siwah in 2012

Asia – Indonesia – North Sumatra Block A

27th August 2009 | Page 18

Chim Sáo

• Petro-Vietnam announced intention to back in for 15%
• Acquisition of additional 21.25% from Delek for $72 million
• Construction work on jacket 37% complete at 30 June
• Latest capital expenditure estimate $450mm net
• Two FPSO solutions, both with finance available, are in

final stages of negotiations

• First oil targeted for mid-2011

Block equities (post PV back-in) Premier Oil plc 53.125% PetroVietnam 15.000% Santos 31.875%

Asia – Vietnam – Block 12W

27th August 2009 | Page 19

North Sea – UK – Balmoral Area

• Average daily contribution of 12,600 boepd
• Riser renewal work accelerated from 2010

into 2009

• Debottlenecking work nearing completion

– Gas lift system – Produced water system – Subsea Pump

• Infill drilling now planned for 2010
• Burghley development progressing

– Commercial arrangements completed – Well being drilled – Platform tie-in work under way – Opex-sharing commences in 2010

27th August 2009 | Page 20

North Sea – UK – Shelley

• Development stalled by Oilexco

administration

• Post-acquisition:

– Contract re-negotiated with Sevan – Innovative short duration risk sharing contract – Hook up completed and onstream August 6th – Since start-up production has averaged

• ver 8000 bopd with some well downtime

– Reservoir performance is uncertain

27th August 2009 | Page 21

• Successful infill wells 2 and 3 leading to

fourth well

• Expect full plant availability in H2 2009
• Partnership actively developing long term

3rd party business strategy

• Near term satellite developments include:

– Bugle – Rochelle – Blackhorse

North Sea – UK – Scott Area

27th August 2009 | Page 22

North Sea – UK – Huntington

• Premier equity in Block 22/14b is 40%
• Concept selection process ongoing:

– targetted for end 2009 – tie backs to hosts eg ETAP – FPSO/FPV options

• First production forecast for 2012
• Unitisation process underway to establish:

– equity in unit area / voting arrangements / unit operatorship

27th August 2009 | Page 23

North Sea pre-development portfolio

Grosbeak Frøy Bream Moth Fife Huntington Scott satellites Caledonia

• North Sea pre-development portfolio

has significantly increased due to: – Exploration success in Norway – Acquisition of Oilexco

• Contingent resource base of

75 mmboe

27th August 2009 | Page 24

Reserves and resources

500

Reserves and resources (mmboe)

2005 450 400 350 150 200 250 300 2006 2007 2008 Proforma 30 June 2009

2C reserves 2P reserves

100 50 181 265

27th August 2009 | Page 25

Production and development forecast

90

Production forecast (kboepd net)

50 40 20 10

2009 2010 2011

30 60

2014 2012 2013 2015

70 80

North Sea developments Asian developments Existing production

600

2P reserves development capex forecast ($m)

200 100

2009 2010 2011

300

2014 2012 2013 2015

400 500

North Sea developments Asian developments Existing production

27th August 2009 | Page 26

Exploration update

27th August 2009 | Page 27

Exploration strategy

• Currently focused on the growth of the company’s resource base through

“Greenfield” discoveries in areas of expertise.

• In 2009/2010 this Greenfield focus is on three basins:

– Asia: Nam Con Son Basin (Vietnam and Indonesia) – North Sea: Northern North Sea (Norway) – West Africa: Congo Basin (Congo)

• In addition to Greenfield drilling, “Nearfield” exploration wells are planned in

Premier’s existing core areas.

27th August 2009 | Page 28

Asia – Vietnam – Block 07/03

• First well completed in June 2009
• Flow test from two zones 3,265 bopd plus 8.1 mmscfd

through 48/64” choke

• Premier 30% equity and operator
• Discovery in sandstone reservoirs of the Thong Mang

Cau, Upper Dua and Cau formations

Cau Middle Dua Approx Basement NCS carbonate

2.5 km

NW SE

M Miocene Unconformity Wellbore TMC & Upper Dua Sandstones Cau Sandstones

27th August 2009 | Page 29

Tuna

• 65% operated interest
• Discovery in Vietnam has reduced the risk on

Tuna acreage

• 3D seismic planned for Q4 2009
• Two-well programme beginning Q3 2010

NW SE Gajah Laut

10km

Asia – Indonesia – Tuna

27th August 2009 | Page 30

West Africa – Congo – Marine IX

Frida

• Operated by Premier
• Well spudded 23 July 2009
• Target depth reached on 22 August 2009; no

hydrocarbons encountered

• Well will be plugged and abandoned
• Results being integrated to determine potential
• f Ida (contingent well Q4 2010)

Frida

27th August 2009 | Page 31

MEP – Pakistan – Bado Jabal

• Vertical well spudded Q1 2009
• Targeting the deeper Lower Goru (Early Cretaceous)

and Chiltan (Jurassic) Limestone horizons

• Reserves target 1 tcf
• Premier’s equity 6%

27th August 2009 | Page 32

North Sea exploration and appraisal portfolio

Grosbeak Moth

• Evaluation of acquired Oilexco

portfolio ongoing

• Two licences awarded from the 25th

Licensing Round: – Block 15/23e is adjacent to the Bugle area, near the Scott Field – Block 29/7b includes a pre-existing discovery near the Kyle Field

• Active programme:

– Grosbeak/Gnatcatcher – Bream/Gardrofa – Greater Luno – Blåbaer – Bugle North – Moth

Gardrofa Greater Luno Blåbaer Bugle North Bream

27th August 2009 | Page 33

North Sea – UK – Bugle North

Bugle North (15/23d, 15/23e)

• Premier 41% equity and operatorship
• Nearfield exploration opportunity
• Reserves estimate 5-7-10 mmboe
• Adjacent Bugle discovery flowed 7,398 bopd and 9.06 mmscfd gas
• Drilling planned for Q2 2010

27th August 2009 | Page 34

Moth

• 50% equity in 23/21
• 57.5% operated equity in

23/22b

• 70% operated equity in

7/7d and 7/10a

• Moth discovery max flow

rate 24.4 mmscfd gas and 2460 bopd

• Appraisal of Moth and

potentially a deep pre- Cretaceous target are under evaluation

• Timings subject to partner

approvals

North Sea – UK – Moth

Moth Appraisal (Planned)

27th August 2009 | Page 35

North Sea – Norway – Block 35/12, 36/10

Grosbeak/Gnatcatcher

• Successful Grosbeak well completed in July 2009
• Operated by Wintershall
• Close to nearby infrastructure
• Hydrocarbons in both Upper Jurassic and Middle

Jurassic sandstones

• Estimated 35-190mmboe
• Premier 20% equity

Gnatcatcher SW NE

27th August 2009 | Page 36

North Sea – Norway – Bream/Gardrofa

Bream (17/12)

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

discovery, testing 2,516 boepd

• Operated by BG
• Estimated reserves 39-50-63mmboe

Gardrofa (8/3)

• Premier’s first operated licence in

Norway

• Maersk Guardian will drill well in 2010
• Estimated reserves 20-40-90 mmboe
• Potential value-add opportunity to the

Bream discovery

27th August 2009 | Page 37

Blåbaer Jordbaer

34/2-4 34/2-3 34/2-2

Blåbaer (34/2,5)

• Premier 15% equity
• Operated by BG
• Reserves estimate 15-30-75 mmboe
• Drilling planned for late 2009/early 2010

North Sea – Norway – Blåbaer

27th August 2009 | Page 38

North Sea – Norway – Greater Luno

Greater Luno (16/1[part], 16/4)

• 30% interest
• Operated by Lundin
• Targeting Jurassic sandstones related to the

Luno discovery (95mmboe) on adjacent Lundin-operated block; Luno extension currently drilling

• Statoil farm-in to Lundin equity in April 2009
• Estimated reserve range 30-150-250 mmboe
• Drilling planned for Q4 2009

27th August 2009 | Page 39

Exploration outlook

2009 Q3 Q4 2010

Asia

Vietnam: 07/03 104-109/05 Indonesia: Tuna Natuna Sea Block A

• N. Sumatra A

Buton

West Africa

Congo: Marine IX

North Sea

Norway: PL359 (16/1,4) PL374S (34/2,5) PL406 (8/3) UK: 15/23d, 15/23e 28/9, 28/10c

Middle East/Pakistan

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

Q1 Q2 Q3 Q4

Beta Anoa Deep Ida Gardrofa Greater Luno Blåbaer Bugle North Appraisal Catcher Bado Jabal (Badhra Deep) K-19

27th August 2009 | Page 40

Summary

27th August 2009 | Page 41

What next?

Tactics and execution

• North Sea Business Unit

– Build on capability now organisation is integrated

• Progress Asian programme

– Development projects proceeding – Capturing cost reduction opportunities

• Drill out significant exploration programme

– Follow up on Vietnam success – Actively explore in Indonesia and Norway

• Seek new greenfield opportunities
• Take advantage of active acquisition market in North Sea and Asia

– Selective focus to ensure value – Asset sales to focus portfolio

• Maintain liquidity in cash or undrawn facilities

– Underwritten by hedging Strategy

• Targeting production growth

to 75,000 bopd by end 2013

• Exploration programme within

disciplined spend

• Acquisitions and divestitures;

focus on core areas

• Continue to operate

conservative financing strategy

27th August 2009 | Page 42

Appendix

27th August 2009 | Page 43

HSE performance

• Recordable Incident Rate has been

declining

• Performance is top quartile in the industry
• Challenge is sustainability
• TRIF = Lost Time Injury (LTI) + Reduced Work Day Case (RWDC) +

Medical Treatment Case (MTC) frequency per million man-hours

• There was 1 LTI and 0 RWDC incidents in 2008
• There have been no LTI or RWDC in the first half of 2009

Association of Oil and Gas Producers Benchmarking Survey, H1 2009

20

Total recordable injury rate - Production

Per million hours worked by company with contractors 18 14 16 12 10 8 6 4 2 20

Total recordable injury rate - Drilling

Per million hours worked by company with contractors 18 14 16 12 10 8 4 6 2 6

Total recordable injury frequency (TRIF)

5 4 3 2 1 2003 2004 2005 2006 2007 2008 1H 2009

Premier TRIF

27th August 2009 | Page 44 www.premier-oil.com

27th August 2009