Faroe Petroleum Corporate Presentation March 2017 Faroe - - PowerPoint PPT Presentation
Faroe Petroleum Corporate Presentation March 2017 Faroe - - PowerPoint PPT Presentation
Faroe Petroleum Corporate Presentation March 2017 Faroe Petroleum plc Company Presentation September 2016 Building the leading pan-North Sea independent Faroe Petroleum: strong recovery play in E&P sector Faroe in unique strategic
Building the leading pan-North Sea independent
Faroe Petroleum: strong recovery play in E&P sector
Cash + Increasing Cashflow + Unused Debt = Opportunity to deliver accelerated growth
Faroe in unique strategic position for material value growth
- Excellent diversified portfolio, full-cycle, approved operator (Norway & UK)
- Greatest exposure to Norway of any UK-quoted E&P company
Existing assets capable of trebling production in the next five years
- Strong investment plan underway with considerable upside
Development and financing flexibility
- Diversified asset base & strong balance sheet provide flexibility for the future
Strong balance sheet
- Currently approximately £100m cash (no debt under RBL)
- Undrawn $250m (£200m) RBL facility
- Increased operating cash-flow – ave. unit opex lowered post-DONG asset deal
- Raised £66m in July/August in oversubscribed placing for DONG asset acquisition and to advance 2016 Brasse discovery
Taking advantage of the downturn
- DONG asset acquisition in 2016 was highly value accretive
- Significant cost reduction - Brasse among cheapest recent wells in North Sea; development costs on Oda substantially reduced
Exploration and business development remain key
- Outstanding Brasse discovery continues Faroe’s strong exploration track record - Faroe historic finding costs <$1.5/boe
- In prime position to exploit further M&A opportunities
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Continuing our track record of delivery
2P Reserves (mmboe)1 W.I. Production (mboepd)2
4x increase
between 2012-2016
2.5x increase
between 2012-2016
1.
Company estimates for year end reserves
2.
Economic production 3
Taking Faroe to the next level – on track
Supported by 2P reserves of 81mmboe plus Brasse
Note: this chart relates to existing, defined projects; it is illustrative and not forward guidance
Average 2016 Actual Oda Njord Future Project Brasse Pil and Bue
Sources: Management estimates
17.4 kboepd 40 - 50 kboepd
5 year
- utlook
Tambar / Brage
Tambar / Brage
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Brage (Faroe 14.3%)
Incremental project to deliver 2018 production growth
Overview
- Large STOOIP (1,000 mmbbls)
- Net 2P Reserves at 5.5 mmboe at 1 Jan 2016
- Net 2016 production c. 2,400 boe/d
- Wintershall 35.2% and operator
- Opex reductions through improvement projects
Brage infill wells underway
- Drilling rig warm-stacked until Q2 2017
- Portfolio of new infill targets
- 4D seismic technology and modelling to improve
infills
- Three new targets to be sanctioned in Q2 - to
increase production from H2 2017
A-18 C A-7 B Outstanding performance of the last two infill wells in Brage, A-18C and A-7B
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Brasse (Faroe 50% and operator)
Robust, simple development project with excellent address
- PL740 Brasse oil and gas discovery July 2016
- Simple structure – similar quality to Brage
- Good reservoir communication
- Preliminary estimates of 43-80 mmboe recoverable
volumes:
- recoverable oil: 28-54 mmbbl
- recoverable gas: 89-158 bcf
- Close to 3 potential hosts - approximately 13 kilometres
south of Brage and equidistant to Oseberg platforms
- Brasse appraisal well confirmed for mid 2017
- Planning for Concept Selection by year end 2017
- First oil anticipated 2019/2020
Oseberg A Oseberg South
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Brasse Extension (Faroe 50% and operator)
Possible 2017/18 exploration well
3D map showing Top Sognefjord
31/7-1 31/7-1 A 31/7-1 31/7-1 A
Brasse
Bra rage Tro roll ll Eas ast
Brasse Extension - New acreage Jan 2017
Tro roll ll Wes est
- The Brasse exploration wells 31/7-1 & 31/7-1 A were also an
- perational success
- delivered in the Top Decile Performance for Dry Hole
Cost/Meter
- without HSE incident in 55 days
- In January 2017, Faroe was awarded PL740B Brasse extension
- the possible northward extension of the Brasse Discovery on
the eastern side of the Brage Field is an attractive exploration target
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Core Ula hub (Faroe 20%)
Significant upside from further infill drilling and WAG reinjection scheme
Field development
- Net 2P Reserves at 8.3 mmboe at 1 Jan 2016
- AkerBP 80% and operator
- Three bridge-linked steel jacket platforms, seven producing
wells, four Water Alternating Gas (“WAG”) wells
- Host facility for the Blane, Oselvar and Tambar fields and the
future host of the Oda (Butch) development
- Oil exported via Ekofisk to Teesside
- Gas used in WAG injection for increased oil recovery
- Operatorship has been transferred to Aker BP following the
merger of DetNorske with BP Norway
- Renewed exploitation drive underway led by AkerBP
Upside potential
- Additional associated gas from Tambar and Oda will allow
increased WAG injection scheme
- Several infill targets to be matured to project execution
- Triassic reservoir underexploited, only 1 well drilled to date
- Satellite production, infill drilling and increased WAG scheme is
expected to result in a significant reduction in Ula unit opex
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Tambar (Faroe 45%)
Gas lift and new infill wells
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Overview
- AkerBP 55% and operator
- Net 2P Reserves at 6.4 mmboe at 1 January 2016
- Net 2016 production c. 2,200 boe/d
Artificial lift
- Retrofit gas lift system (straddle) in K-1, K-3 and K-6
- Conversion of existing pipeline to gas lift service
Potentially significant production increase
- K-3 and K-6 wells ceased producing at approx. 4,000 bopd each
- New gas lift installation to restore production from K-3 and K-6 wells
- Will prolong field life and provide additional gas for WAG on Ula
K3 K5 K6
8” Production 10” UGIP pipeline Umbilical w/ power & control
Tambar
16 km
Ula P-D-Q
K1
Oda (formerly Butch) (Faroe 15%)
Simple, high-return oil development via Ula hub infrastructure
High value project
- Centrica 40% and operator, AkerBP 15% and Suncor 30%
- 66m water depth - excellent quality reservoir, light oil
- Subsea tie-back to the Ula platform via Oselvar infrastructure
- Two production wells and one water injection well
- FDP submission lodged November 2016
- All major contracts awarded
- Gross capex expected at c.$645m
- Plateau production of c.35,000 boepd gross (c.5,250 boepd
net to Faroe)1
- 2P Reserves of 42 mmboe (6.3 mm boe net to Faroe)2
- First oil expected in 2019
Extracting synergies in the Ula hub
- Faroe to capture
- Oda compensation payment to Oselvar (Faroe 55%)
- Oda tariff payment to Ula (Faroe 20% vs 15% of tariff)
1 Based on 100% uptime 2 CPR Jan 2016 (Senergy) 10
Njord Future Project (Faroe 7.5%) + Pil & Bue (Faroe 25%)
Attractive projects with excellent upside
Njord Future Project on track for project sanction H1 2017
- Njord A successfully towed to Aker Stord yard
- Dry dock period in H1 2017 to install new transverse pontoons
- Topside modifications and life extension thereafter
- Bauge (formerly Snilehorn) to be developed as a subsea tie-back
exploiting synergy with Hyme
- Planned to come back on stream in 2020
Pil & Bue - Njord chosen as host facility
- Subsea tie-back development to Njord
- Three horizontal producers supported by water and gas injectors
- Three competing concepts were considered leading to the
selection of a subsea installation tied back to the Njord platform
- The solution will be matured through the Front End Engineering
Design (FEED) stage towards a formal field development plan
The Njord A facility at the Aker Stord yard
Njord Snilehorn & Hyme Pil & Bue
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Njord, Hyme, Bauge, Pil, Bue and exploration
Material 2P reserves and future production
- Faroe has material position in the prolific Halten
Terrace area
- Material reserves estimated to be more than 300
mmboe (gross)1 in Faroe’s portfolio in the area
- Net 2P reserves at 34.9 mmboe
- Net 2C resources at 13.7 mmboe
- Significant exploration position
- Highly prospective area with good success rate
- Faroe discoveries include Maria, Fogelberg, Bauge
(Snilehorn), Pil and Bue
- Additional new Njord NF2 and NF3 discoveries
announced in October 2016: potential tie-back developments (c 6km) to Njord field
- Added key new licence PL888 Canela in January 2017
from APA round
- Faroe established and well regarded player
1 CPR Jun 16 (incl Fogelberg)
PL644 Aerosmith
Faroe 20%
PL586 Pil
Faroe 25%
PL749 Seychelles
Faroe 20%
PL794 Rosapenna
Faroe 20%
PL793 Portrush
Faroe 20%
PL107C NF2
Faroe 7.5%
PL753 Zircon
Faroe 30%
PL384C Bister / Dobby
Faroe 7.5%
PL888 Canela
Faroe 40%
PL836 Yoshi
Faroe 30%
Njord
Faroe 7.50%
Hyme & Snilehorn
Faroe 7.50%
PL433 Fogelberg
Faroe 25% 12
Exploration and appraisal activity continues
Outstanding low-cost opportunities in world class exploration region
Excellent exploration performance
- 2 discoveries in 3 wells in 2016 (Brasse & Njord North Flank)
- Brasse (2016) latest example of best in class exploration record
- All planned exploration wells are in Norway – benefiting from
low rig rates and 78% tax rebate incentive
- Four new licences awarded in Norwegian APA January 2017
- Further attractive E&A well opportunities are being matured:
Aerosmith, Goanna, Yoshi, Rungne, Oshun, Cassidy, SE Tor, Canela
Boné/Dazzler
Faroe 20%
Aerosmith
Faroe 20%
Cassidy
Faroe 20%
SE Tor
Faroe 20%
Rungne
Faroe 30%
Yoshi
Faroe 30%
Oshun
Faroe 30%
Njord Core Area Brage Core Area Ula Core Area Schooner and Ketch Core Area Kvalross
Goanna
Faroe 30%
Canela
Faroe 40%
Pabow
Faroe 20%
Brasse extension
Faroe 50% 13
Prospect Equity Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Boné *
20.0%
Brasse appraisal **
50.0%
Brasse extension ***
50.0%
Aerosmith **
20.0%
Goanna ***
30.0%
Oshun ***
20.0% * ongoing ** committed *** possible
2017 2018
Boné/Dazzler (Faroe 20%)
High impact exploration well ongoing
- Boné and Castberg are found in similar settings relative to the deep Bjørnøya Basin
- Abundant source rocks in Jurassic and Cretaceous are located adjacent to the prospect
- Reservoir and seal are the main risks
- Boné well ongoing – Eni operator
Frontier exploration with exciting potential
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A diversified portfolio – with hub focus
Delivering growth from material North Sea asset base
Focus on value growth in core areas
Active full cycle investment programme ahead with exploration, appraisal, infill wells and development
- Ula core area
- Commitment to Tambar gas lift and infill wells
- Brage core area
- Commitment to Brage in-fill wells
- Brasse appraisal well confirmed for mid 2017
- Possible exploration well on Brasse extension
- Completion of Brasse feasibility studies
- Greater Njord core area
- Njord Future FDP including Bauge (formerly Snilehorn)
- Pil and Bue final concept select and FEED early 2017
- Exploration - low rig rates - strong prospect inventory
- Well programme continues with Boné/Dazzler well in Barents
Sea, well spudded early 2017
- Further 2017/2018 wells committed & maturing
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Robust financial position
- Currently approximately £100m cash (no debt under RBL)
- New seven year $250million Reserve Based Lending facility (plus $100million accordion) in December 2016 with existing and
new lenders – the seven year facility was undrawn at 2016 year-end
- New NOK1,000m revolving credit facility (plus NOK500m accordion) arranged in December 2016 - maturity 31 December 2019
Capex
- 2016 exploration and appraisal capex was approximately £46million pre-tax (£11million post-tax), development and production
capex was approximately £12million (unaudited)
- 2017 exploration and appraisal capex is estimated to be approximately £45million pre-tax (£10million post-tax), development
and production capex approximately £90million, split as follows:
- Njord Area:
£30million
- Ula Area:
£49million
- Brage Area:
£11million
Hedging - hedging programme in place to underpin value
- Approximately 90% of 2017 gas production hedged on a post-tax basis at average price of 40p/therm predominantly with puts
(5.9million therms sold forward in Q1 at an average price of 55p/therm)
- Approximately 30% of 2017 post-tax oil production hedged at $54/bbl with puts
Production
- 2017 production range expected 12,000-15,000 boepd reflecting temporary loss of Njord and Hyme, shutdowns for investment
projects and risk of capacity constraints at Trym
- Unit opex expected in 25-29 $/boe range in 2017 – should come down as new production is brought on stream
Financials
Financial discipline and strong balance sheet
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Summary
Strong recovery play in E&P sector - well placed for growth
Solid and proven business model delivering sustainable value growth, through drill-bit and transactions
- Exploration-led strategy continues - underpinned by production and Norwegian tax rebate – recent material Brasse discovery
- Balanced and diversified portfolio - world-class technical team
Asset base delivering solid value
- 2P reserves of 81.3mmboe plus 2C resources of 90.9mmboe, one of largest on AIM
- The portfolio has potential to deliver 40-50,000 boe/d within 5 years: at $60/barrel (and equivalent gas price) 50,000 boe/d
generates revenues >$1bn
Financially robust and operationally strong at low commodity prices
- Robust balance sheet, prudent financial management, excellent debt headroom
- Production-generated, tax efficient cash flow – benefit from low unit opex
Forward programme is material and benefits from significantly lower costs and Norwegian State tax incentives
- Continuing high impact E&A programme in Norway on track, fully funded: Boné frontier well ongoing, more to come
- Continuing D&P programme focussed
Planned growth
- Strong balance sheet ensures we are positioned to pursue multiple routes to achieve value growth
- All committed programme investments fully funded
- Actively pursuing growth in 2P and value near term through potential further acquisition/consolidation opportunities
Diversified portfolio, high upside, funded programme - material value growth opportunities
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Graham Stewart Chief Executive Officer
- Instrumental in founding Faroe
Petroleum in 1998
- Over 25 years’ experience in oil and
gas technical and commercial affairs
- Previously finance director and
commercial director at Dana Petroleum 1997 to 2002
- Experience with Schlumberger, DNV
Technica, Petroleum Science & Technology Institute
- Offshore Engineering degree (Heriot-
Watt University) and MBA (University
- f Edinburgh )
Helge Hammer Chief Operating Officer
- Joined Faroe Petroleum in 2006
- Over 25 years’ technical & business
experience, incl. Shell (Norway, Oman, Australia and Holland)
- Managing Director of wholly owned
Norwegian subsidiary, Faroe Petroleum Norge AS
- Previously Asset Manager and
Deputy Managing Director at Paladin Resources
- Economics degree (Institut Français
du Pétrole, Paris)
- Petroleum Engineering degree (NTH
University of Trondheim) Jonathan Cooper Chief Financial Officer
- Joined Faroe Petroleum as Chief
Financial Officer in July 2013
- Former Finance Director of Gulf
Keystone Petroleum and Sterling Energy and CFO of Lamprell plc
- Former Director of the Oil and Gas
Corporate Finance Team of Dresdner Kleinwort Wasserstein
- Broad range of experience from
mergers and acquisitions, public
- fferings and financing
- Chartered accountant by training
having qualified with KPMG
- PhD Mechanical Engineering
(University of Leeds)
Executive team
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- r forecasts will come to pass or that any forecast results will be achieved. The Company expressly disclaims any obligation to
update or revise any forward-looking statements in these materials, whether as a result of new information or future events. If you are considering buying shares in the Company, you should consult a person authorised by the Financial Conduct Authority who specialises in advising on securities of companies such as Faroe Petroleum plc.
Disclaimer
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