Q1 2020 Results 27 MAY 2020
GENERAL AND DISCLAIMER Except as the context otherwise indicates, ’Neptune’ or ‘Neptune Energy’, ‘Group’, ‘we’, ‘us’, and ‘our’, refers to the group of companies comprising Neptune Energy Group Midco Limited (‘the Company’) and its consolidated subsidiaries and equity accounted investments. ‘EPI’ refers to the business of ENGIE E&P International S.A. (now renamed Neptune Energy International S.A.) and its direct or indirect subsidiaries. In this report, unless otherwise indicated, our production, reserves and resources figures are presented on a basis including our ownership share of volumes of companies that we account for under the equity accounting method, in particular, for the interest held in the Touat project in Algeria through a joint venture company. Production for interests held under production sharing contracts is reported on an appropriate unit of production basis. The discussion in this report includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to materially differ from those expressed or implied by the forward-looking statements. While these forward-looking statements are based on our internal expectations, estimates, projections, assumptions and beliefs as at the date of such statements or information, including, among other things, assumptions with respect to production, future capital expenditures and cash flow, we caution you that the assumptions used in the preparation of such information may prove to be incorrect and no assurance can be given that our expectations, or the assumptions underlying these expectations, will prove to be correct. Any forward-looking statements that we make in this report speak only as of the date of such statement or the date of this report. This report contains non-GAAP and non-IFRS measures and ratios that are not required by, or presented in accordance with, any generally accepted accounting principles (‘GAAP’) or IFRS. These non-IFRS and non-GAAP measures and ratios may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS or GAAP. Non-IFRS and non-GAAP measures and ratios are not measurements of our performance or liquidity under IFRS or GAAP and should not be considered as alternatives to operating profit or profit from continuing operations or any other performance measures derived in accordance with IFRS or GAAP or as alternatives to cash flow from operating, investing or financing activities.
Introduction SAM LAIDLAW, EXECUTIVE CHAIRMAN
SAFETY PARAMOUNT RESILIENT PERFORMANCE; WITH GROWTH IN THE PORTFOLIO Cost reductions People and operations Projects Good progress delivering cost and capex reduction Strong Q1 operational performance, despite New project schedules in response to COVID-19 and measures; targeting $300-400 million in 2020 challenges of COVID-19 and lower commodity prices lower commodity prices – Realised a significant proportion of cost reductions – Materially higher quarterly production – Some project delays related to COVID-19; 2020 capex reduced as a result of deferred activity – Identifying further potential reductions in both – Limited impact from COVID-19 on our operations capex and opex – New project schedules lower production outlook in – Programmes in place to support employees, 2021 and 2022 – Managing value over volume contractors, suppliers and local communities – Agreed to terminate the acquisition of Edison E&P’s UK and Norwegian subsidiaries saving ~$460 million in 2020 Robust financial position Consistent growth profile ▪ Expect to achieve production growth from existing projects until 2023 ▪ Strengthened liquidity to ~$1.7 billion through increase in RBL borrowing base ▪ Production shifted into higher expected price environment ▪ Free cash flow in 2020 protected through hedging and cost reductions ▪ Targeting 200 kboepd in the medium term ▪ Lower expected leverage 4
Operational update JIM HOUSE, CEO
FINANCIAL AND OPERATING RESULTS STRONG OPERATING AND ROBUST FINANCIAL PERFORMANCE HSE KPIs Operating KPIs Financial KPIs Leverage (7) Operating Production Net debt Production TRIR (1) PSER (2) Opex (4) Capex (6) cash flow (3) efficiency to (5) EBITDAX 162.1 Q1 2020 2.3 1.95 86% $8.9/boe $355m $233m 0.99x kboepd 147.9 Q4 2019 2.1 2.19 85% $9.2/boe $373m $225m 0.93x kboepd 151.8 NR (2) Q1 2019 1.9 91% $10.1/boe $362m $153m 0.50x kboepd 1. Total Recordable Injury Rate (TRIR) is defined as the number of recordable injuries per 1 million hours worked. It is calculated on a 12-month rolling average as follows: 4. Opex including royalties 6 TRIR = (fatalities + lost workday cases + restricted workday case + medical treatment cases) 5. Cash flow from operations, after tax and excluding acquisition costs x 1,000,000 𝑂𝑣𝑛𝑐𝑓𝑠 𝑝𝑔 ℎ𝑝𝑣𝑠𝑡 𝑥𝑝𝑠𝑙𝑓𝑒 6. Development capex, excluding acquisitions, exploration and equity accounted entities 2. Process Safety Event Rate (PSER) is a three-tiered measurement of process safety events per million hours worked. We commenced measuring PSER in April 2019. 7. Net debt (excluding Subordinated Neptune Energy Group Limited Loan and Touat Project finance facility) to EBITDAX (excluding our share of net income from 3. Includes equity accounted entities Touat), as defined by the RBL and shareholder agreement
DIVERSE GEOGRAPHICAL PORTFOLIO STRONG OPERATIONAL PERFORMANCE IN Q1 2020 ASIA PACIFIC NORWAY NETHERLANDS Q1 production: 68.1 kboepd (42.0% of portfolio) Q1 production: 19.2 kboepd (11.9% of portfolio) Q1 production: 25.5 kboepd (15.7% of portfolio) ▪ ▪ Strong production due to start-up of the Troll Production impacted by shutdowns and Indonesia C Gas Module and recommencement of the delayed compressor project; positive ▪ Strong production, with annual volumes Mossmoran Ethylene plant contribution from new wells front-loaded; second pipeline tie-in project completed ▪ ▪ Rescheduled shutdown programme with Start-up of the cross border Sillimanite field deferrals until 2021 contributing to UK and Netherlands ▪ Curtailments at the start of Q2 production Australia ▪ Acquisition of 3D seismic UK GERMANY NORTH AFRICA Q1 production: 19.3 kboepd (11.9% of portfolio) Q1 production: 12.7 kboepd (7.8% of portfolio) Q1 production: 17.3 kboepd (10.7% of portfolio) ▪ ▪ Algeria Strong production reflecting high export Reported production higher due to change ▪ availability in Group conversion factors; underlying Touat production higher with fewer start- performance below plan due to offtake up related issues; plant now operating at ▪ Material discovery at Isabella – post well constraints plateau capacity studies underway, with results to be ▪ incorporated in appraisal plan Discoveries at Schwegenheim, Ringe-6 and Egypt Adorf-Z15. Ringe-6 and Adorf-Z15 to be ▪ Production in Egypt ahead of plan brought onstream in 2020 ▪ 3D seismic acquired in Gulf of Suez 7
NEAR-TERM PRODUCTION OUTLOOK OPTIMISING OUR SHUTDOWN SCHEDULES Planned shutdowns to impact Group production in Q2 and Q3 Quarterly production outlook – Revised shutdown schedule kboepd – Deferred extended shutdowns until 2021 – Reduction in non-critical activities FY guidance range – Minimise COVID-19 risks 145-160 kboepd – Planned shutdowns at key assets to have a material impact on Group production volumes – Norway: Gjøa (May, July and August), Snøhvit (May) – UK: Cygnus (June/July) – Smaller impact from shutdowns in the Netherlands and Germany 162 – Minimal reduction in production due to mandated oil cuts in Norway Q1 2020 Q2 2020 Q3 2020 Q4 2020 – Limited impact from the agreement to terminate the acquisition of Edison E&P’s UK and Norwegian subsidiaries from Energean Oil & Gas – Full year production guidance unchanged at 145-160 kboepd 8
HIGH QUALITY GROWTH PIPELINE REVISED PROJECT SCHEDULES - NORWAY G jø a area Njord area – COVID-19 and a slower pace of development has delayed first production from – Gjøa P1 is largely unaffected with first production expected in late 2020/early Njord until H2 2021 2021 – Fenja drilling plans reduced in 2020, with the main campaign to commence in – Development drilling and subsea campaigns essentially unchanged mid-2021 – Topside work for Duva deferred until 2021 to ensure operational continuity at – Subsea and topside work at Fenja delayed by around 12 months to coincide with Gjøa due to COVID-19 delivery of the Njord project – First production from Duva deferred by four to six months – First production from Fenja expected in early 2022 Gjøa P1 Duva Njord Fenja 7 9 25 10 Neptune non-op (22.5% (1) ) Neptune op (30%) Neptune op (30%) Neptune op (30%) kboepd kboepd kboepd kboepd Operator (Equinor) 2020 2021 2020 2021 2020 2020 2021 2020 2021 2022 Engineering Engineering Subsea Subsea Drilling Drilling Topside Topside Production Production 1. Neptune has a 22.5% working interest in Njord and a 12.5% interest in the Hyme and Bauge satellites Original plan for first production 9 Revised plan for first production P1 Gjøa first production plan unchanged
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