Investor Presentation December 2012 Forward looking statements - - PowerPoint PPT Presentation

Investor Presentation

December 2012

December 2012 | 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.

December 2012 | Page 2

... is in a stronger position today than ever before ...

• Stronger production and resource base
• Portfolio of operated developments will

deliver 100,000 boepd

• Acquisition activity positions us for future

growth beyond 100,000 boepd

• Transforming the exploration portfolio
• Existing projects, dividend and future

exploration programme fully funded

Premier today

Historic NAV/share CAGR of 14.2% at constant oil prices

... which is reflected in our first half results and recent market updates

• Production up 58% year-on-year;

pro-forma resources of 725 mmboe

• Solan, Pelikan, Naga and Dua approved;

Catcher moving forward

• Falkland Islands transaction
• Prospective resource portfolio increased

to 2.7 billion boe

• $1.1 billion of cash and undrawn facilities;

strongly rising cashflows and profitability

December 2012 | Page 3

Operations update

December 2012 | Page 4

Chim Sáo

• Year-to-date production averaged 28.4 kboepd
• Higher level of facility uptime achieved in 2H
• Water injection rates are now at 30 kbpd, providing effective

reservoir pressure support

• Two well supplementary drilling programme into additional

reservoirs completed in June and wells tied-in in Q3

• Total well capacity in excess of 40 kbopd

Dua

• Dua will develop ~10 mmbbls
• Prime Minister approval of FDP received in August
• Long lead items being procured and contracted
• Development drilling to commence in April 2013
• Subsea installation and tie-in in Summer 2013
• First oil 2014

Chim Sáo and Dua

December 2012 | Page 5

GSA 1 (Anoa)

• 1H production at maximum capacity

– Phase 4 expansion and Pelikan projects will access additional reserves and raise capacity

• Block A’s share of deliveries under GSA1 has

averaged 45% year-to-date against a contractual market share of 37%

• Block A’s share of remaining reserves dedicated to

GSA1 was 64% at start of year (before the Anoa Deep discovery)

GSA 2 (Gajah Baru)

• Production facility has performed very well
• All Singapore demand was met during the 1H 2012

and rates have continued to increase in 2H 2012

Gas Swap Agreement (Gajah Baru)

• Discussions to sell an additional 40 BBtud into the

Indonesian domestic market continue

Natuna Sea Block A

December 2012 | Page 6

• Development drilling completed in August

– To schedule and on budget – Better than expected well results – Debottlenecking study underway

• FPSO arrived on location on 3 October

– Two out of the five risers have been installed – Carry over work and commissioning underway

• First oil anticipated before end of 1Q 2013 with the field

expected to produce 25 kbopd after a ramp-up period

• First of two development wells has been drilled to final

casing point

• Horizontal section of the development well expected to

be completed early 1Q 2013

• Subsea pipeline and umbilical installation underway
• Operator expecting first gas in 1Q 2013

Rochelle

Huntington and Rochelle

Huntington

December 2012 | Page 7

Solan

• Premier is Operator with 60% equity
• All significant contracts have been awarded

– Procurement and fabrication of platform (Burntisland Fabrications) – Heavy lift installation (Heerema) – Subsea tank fabrication (Dry Docks World Dubai) – Drilling rig (Awilco)

• Construction of topsides has commenced
• Phase 1 development drilling to commence in March 2013
• First oil targeted for Q4 2014 with an initial production

rate of 24,000 bopd

First Oil Government Approval

2012 2013 2014 Platform T ank Drilling Installation, Hook-up and Commissioning

FEED Design and Procurement Construction

December 2012 | Page 8

Significant licence changes

• Premier increased stake to 50% and appointed operator
• Strengthened partnership to progress development

Concept Selection & Contracting strategy

• Partners have agreed concept selection
• FEED programmes are expected to proceed shortly,

including a funded competitive FEED programme with a shortlist of FPSO providers

• Submission of the FDP to DECC is targeted for mid-

2013

• First oil modelled for early 2016, subject to FPSO

contractor discussions

Catcher update

FPSO and Subsea Wells

December 2012 | Page 9

Sea Lion

Transaction details

• Farm-in for 60% of Rockhopper’s interests in the

Falklands

• Initial payment of $231 million plus an exploration and

development carry of up to $48 million and $722 million, respectively

• Fully funded from existing cash, facilities and cash

flow; commitment to fund dividend unchanged Development plan

• FPSO in 450m water depth; tanker offloading
• Associated gas used as fuel or re-injected
• 22 producers, 13 water injectors and a gas

injector, drilled from 3 subsea centres

• Insulated flowlines and risers
• HSPs for artificial lift and flow assurance
• Gross plateau rate of 80-85 kbopd
• Capex to first oil of ~$3 billion (purchased FPSO)
• Subsequent development of satellite fields

Targeted schedule

• Concept Selection in Q2 2013
• Project Sanction in mid 2014
• First Oil in Q3 2017

December 2012 | Page 10

Fully funded programme

Development Funding

• Dividend, exploration

and all existing projects are fully funded at $85/bbl

• Capacity to increase

spend on exploration and new development projects at higher oil prices

• Forward profile funded

by cash flow and facilities even at $65/bbl

1800

Development capex

(US$ million)

400 200 800 600 1200 1000 1400

*Assumes standby funding is taken up by Rockhopper. Purchased FPSO case.

2013 2012 2015 2014 2016 2017

* * 1800

Investment Profile

(US$ million)

400 200 800 600 1200 1000 1400

2013 2012 2015 2014 2016 2017

1600

Acquisitions / disposals Exploration expenditure Development Capex Sea Lion Existing Assets

Note: Assumes exploration expenditure of $250 mm pa from 2014.

1600

December 2012 | Page 11

Exploration update

December 2012 | Page 12

Exploration 1H 2012 and vision

* DeGoyler & MacNaughton estimate ** Excludes PL23 and PL24 in the Falkland Islands and the UK 27th Round awards

Vision

• 1.6 billion boe resources over life of plan, at a finding cost of < $3/boe
• Opportunity to invest up to $500mm per annum from 2015
• Focus on geologies (Rift or Frontal fold belts) in existing or new areas
• Building on $2.7 billion of NPV from Premier discoveries (since 2005)*

2012 year-to-date

• Success at Carnaby in the Catcher area, Anoa Deep on Natuna

Sea Block A and Badhra B North-1 appraisal well in Pakistan

• Unrisked prospective resource portfolio increased to 2,723 mmboe

(453 mmboe risked)** – Increased lead and prospect inventory in the Falklands, Iraq and Vietnam – APA 2011, UK deferred 26th Round awards added Portfolio increased by ~ 1 billion boe to 2,723 billion boe (net, unrisked) during 1H 2012

1.6 billion boe of net resource targeted

Existing New Existing

• 1. Known geologies

and/or skills in existing areas

• 3. New skills and/or

geologies in existing areas

Existing New

• 2. Known skills and/or

geologies in new areas

• 4. New skills and/or

geologies in new areas

New Existing New

Asia Rest of World and ENB North Sea

December 2012 | Page 13

Norway PL378: Grosbeak & Skarfjell

.

Norway PL374S: Blabaer

Appraise Drill Evaluate

Acquire Licence Gate Drill Decision Gate Appraisal Approval Gate Project Extension Gate

Rest of World North Sea Asia

Pre- Development

Mackerel K-32 Badhra-7 New York Lacewing Silver Sillago Singa / Kuda Laut Matang Badhra-6 Parh

Vietnam Block 12W: CS Cau

Leads Prospects Mature Prospects

Herring

Drillable Prospects

Bonneville

Indonesia Buton: Benteng

Ca Voi Luno II

<10 <100 >100 >250 Net NPV10 $mm >10 >25 >50 <10 Net EMV10 $mm

(shown as circle inside NPV) Badhra South

Transforming the exploration portfolio

Falkland Islands* Block 121 Norway and Inner Moray Firth

Swordfish

Iraq

Peer Review Peer Assist

* Excludes PL23 and PL24 in the Falkland Islands

December 2012 | Page 14

Asia

12W 07/03 Tuna Buton Block A Aceh & Andaman Sea

LEARNINGS

Block 121 NSBA Phu Khanh Basin

• Anoa Deep success

– Play opener – More than 4 wells planned 2013/2014

• Buton Success

– Establish commerciality

• Matang to be drilled in Q4 2012
• 2 exploration wells planned in the

Nam Con Son basin in 2013

• Oligocene learnings transferred to

frontier geographies – Andaman Sea JSA – Block 121 in Vietnam

LEARNINGS

December 2012 | Page 15

Ca Voi prospect

Ca Voi (Whale) Prospect (Vietnam Block 121)

• Premier 40% equity (subject to Government approval)
• First test of the Oligocene clastics play in the Phu Khanh

Basin – Primary target is the Ca Voi prospect, a four-way dip closed structure below the Mid Miocene Unconformity – The Oligocene syn-rift sands are a proven hydrocarbon bearing reservoir in the region, including Premier’s Nam Con Son and Natuna Fields

• Risk assessment: high (a true

frontier wildcat)

• Gross prospective resource

assessment: 40-100-200 mmbo

• Well planned for 1H 2013
• Significant follow on potential

December 2012 | Page 16

L10A & L10B

• Potential to extend East African successful

plays into offshore Kenya (Tertiary rifts and Cretaceous fans)

• 2,535 km2 of 3D and 1030 km 2D acquired
• Preliminary dataset highlights prospectivity
• New 3D over Inboard play to be acquired in Q4

2012

• Potential well in 2H 2013

Kenya

Outboard Play Inboard Play

SW NE

December 2012 | Page 17

Approximate position of Block 12

Block 12

Gravity Map

SW NE

Iraq

• Premier (30%) has agreed to join Bashneft on Block 12
• 8,000 km2 block in the foreland of the Zagros fold belt up dip from

producing fields

• Multiple stacked reservoirs targeted
• Gross prospective resource potential in excess of 1 billion bbls
• Forward plan to acquire seismic over the block in 2013

December 2012 | Page 18 Pushing the plays wider

• Premier drilled five exploration wells targeting the Tertiary sands in

the UK Central North Sea – Success at Carnaby, within the Greater Catcher Area

• Tertiary prospect drilling now focussed on the Greater Catcher

Area with Bonneville planned to spud in March 2013

• Ongoing maturation of the Inner Moray Firth prospects

Pushing the Plays Deeper

• Higher impact exploration programme focuses on deeper

Mesozoic plays – HPHT Triassic test at Lacewing; Learnings will be applied to UK and Norway – Jurassic test at Luno II

North Sea

PL 359

BCU Time Map

C.I. 100 ms

10km Johan Sverdrup Luno/Apollo Ragnarrock Luno II Prospect

Lacewing

Luno II Carnaby Inner Moray Firth

December 2012 | Page 19

Norway

• Acquired three operated Norwegian concessions

from Nexen for $5.5 million in 2011

• Builds on Premier’s knowledge in the CNS

– Consistent with the Play Master approach – Adjacent to Premier-operated Freki Licence (PL 567, Premier 60%)

• Jurassic plays on the margin of the Mandal High

identified

• Adds > 250 mmboe to Premier’s net

un-risked lead portfolio

• Prospect maturation via seismic reprocessing

and geological studies

• Potential 2014 drilling targets

2km

SW 3/7-4 NE

Myrhauk Trym Field

Mandal High Target play below BCU PL 567 PL 539 is a key focus for prospect maturation Premier operates four licences Luno II

December 2012 | Page 20

PL032/033

• Unrisked prospect and lead portfolio >1 billion

boe (175 mmboe risked)

• Cretaceous fan and delta plays
• Deep Jurassic gas potential
• Recently acquired 3D under evaluation

PL023/024

• Licences extended to November 2013,

pending further seismic interpretation work

Exploration in the Falkland Islands

Sea Lion 14/10-9

Planning at least 3 wells for 2014

December 2012 | Page 21

2012 New Venture activity

North Sea (Rift theme)

• UK and Norway Licence Rounds
• EnCounter partnership

Asia (Rift and Frontal Fold Belt themes)

• Andaman Sea
• East Vietnam
• Frontier Basins of East Indonesia

Rest of the World (Rift and Frontal Fold Belt themes)

• East Mediterranean (Cyprus) and Egypt
• Pakistan and Iraq
• Falkland Islands / Southern Africa

December 2012 | Page 22

Q4 Q1 Q2 Q3 Q4 Block 121 Ca Voi 120 High Block 07/03 Ca Duc 45 High Block A Aceh Matang 40 Moderate Tuna Block Kuda Laut & Singa Laut 100 Moderate Norway PL359 Luno II 120 Moderate P1181 Lacewing 58 High P1430 Bonneville 10 Low K-32 7 Low K-36 5 Low Badhra South Deepening-1 38 High Badhra BN-1 8 Low Badhra-6 Parh 58 Moderate Inboard 3D seismic Contingent well TBC TBC Mauritania Tapendar TBC TBC Kenya L10A & L10B North Sea Middle East - Africa - Pakistan Pakistan Kadanwari

Badhra-Bhit

Asia 2013 P50 gross unrisked resource (mmboe) Risk Vietnam Indonesia

Weatherford 812 Bredford Dolphin Maersk Resiliant SLB Rig-23 Century Rig 28 Ocean General Ocean General Ocean General Weatherford 812 SLB Rig-23 SLB Rig-23 WilPhoenix

Exploration drilling programme

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

The three key upcoming wells are Luno II, Lacewing and Ca Voi, targeting at least ~100 mmboe of net unrisked prospective resources

Seismic acquisition

December 2012 | Page 23

Outlook

December 2012 | Page 24

• Strong growth in cash flow generation

– $2.6 billion per annum once Catcher

• n-stream
• Higher impact exploration

– Luno II, Lacewing and Ca Voi – 2013/14 programmes in Kenya, Norway and Falklands

• Continuing acquisition activity

– Financial strength and access to capital

• ffers continuing opportunities
• Dividend commitment
• Portfolio focussed on value creation

What can you expect from Premier?

Rapidly rising production and cash flow (kboepd)

2011 Huntington 2012 Sea Lion Catcher 40 75 60 100+ 100

Historic NAV/share CAGR of 14.2% at constant oil prices

December 2012 | Page 25

Appendix

December 2012 | Page 26

Record profitability

6 months to 30 June 2011 Operating costs ($/bbl) 1H 2012 1H 2011 UK $33.5 $34.2 Indonesia $9.1 $9.6 Pakistan $1.9 $2.1 Vietnam $15.3 – Group $14.7 $14.0 Highlights 6 months to 30 June 2012 Working Interest production (kboepd) Entitlement production (kboepd) Realised oil price ($/bbl) – pre hedge Realised gas price ($/mcf) – pre hedge Sales and other operating revenues Cost of sales Gross profit Exploration/New Business General and administration costs Operating profit Financial items Profit before taxation Taxation Profit after tax 36.9 33.8 109.7 8.3 $m 342 (200) 142 (91) (9) 42 (9) 33 56 89 58.4 52.4 110.5 9.0 $m 744 (394) 350 (92) (13) 245 (50) 195 (49) 146

• 28% of 2012 production hedged at

$100/bbl

• 1H 2012 impact of $19.3 million

post-tax

• Forward sales for 2013 averaging

$110/bbl – currently 10% of production hedged Hedging

December 2012 | Page 27

Group taxation position

Overseas UK PRT CT Current charge* Deferred tax credits Tax charge/credit for the year

6 months to 30 Jun 2011 $m

16.0 33.1 (0.6) 48.5 (104.5) (56.0) Tax losses/allowances brought forward Losses/allowances for the period RFES Small field allowances Tax losses/allowances carried forward* UK Tax Losses/Allowances Position 1,360 175 68 46 1,649

6 months to 30 Jun 2012 $m

75.6 14.1 (3.6) 86.1 (37.3) 48.8

* fully recognised as deferred tax asset

Tax charge

* Current tax charge – 35% of operating profit

30 Jun 2012 $m

No UK CT cash taxes until 2018

December 2012 | Page 28

Rising cash flows

Cash flow from operations Taxation Operating cash flow Capital expenditure Disposals/(acquisitions), net Finance and other charges, net Pre-licence expenditure Net cash flow 6 months to 30 June 2011 $m

2012 Development Exploration

Estimated capex split ($m)

207 111 318

Regional split ($m)

246 (4) 242 (297) (87) (24) (10) (176) 6 months to 30 June 2012 $m 466 (141) 325 (318) 25 (103) (15) (86)

North Sea $180m Asia $124m Total $318m MEAP $14m

Full year capex forecast of $650 million (development) and $180 million (exploration)

December 2012 | Page 29

Strong liquidity position

Cash Bank debt Bonds Convertibles Net debt position Gearing (net debt/net debt + equity) Cash and undrawn facilities at 31 Dec 2011 $m 309 (484) (341) (228) (744) 36% 1,116 at 30 Jun 2012 $m 290 (316) (573) (232) (831) 31% 1,300

• Additional bank and bond debt raised in 1H 2012 of $585 million raising cash and

undrawn facilities (after some debt repayment) to $1,400 million

• No requirement for bank refinancing until 2015

December 2012 | Page 30

Wax management

Chim Sáo vs Sea Lion

• The wax content of the Sea Lion crude is

significantly less than the Chim Sáo crude

• However, the reservoir and seawater

temperatures at Sea Lion are significantly lower than Chim Sáo Chim Sáo

• Downhole Pour Point Depressant (PPD) injection
• Vacuum insulated tubing risers
• Crude oil storage and transportation at 55°C
• Insulated flowlines
• Round trip pigging to clear any wax deposition
• Gas injection for artificial lift

Chim Sáo Sea Lion Wax Content 30% 22% Wax Appearance Temperature 82°C 62-72°C Seabed Temperature 20°C 2°C Reservoir Temperature 150°C 82°C

Sea Lion

• In addition to the measures used at Chim Sáo:

– Selection of HSPs rather than gas lift – Heating of the power fluid to the HSPs – A higher degree of insulation to the production flowlines

• Costs built into base case

December 2012 | Page 31

Logistics

• This model successfully used for exploration and appraisal
• Cost structure assumed in base case

December 2012 | Page 32

North sea and Asia assets

December 2012 | Page 33

www.premier-oil.com December 2012