RELIMINARY R R ESULTS P RESENTATION 2002 P ESULTS P RESENTATION 25 - - PowerPoint PPT Presentation

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RELIMINARY R R ESULTS P RESENTATION 2002 P ESULTS P RESENTATION 25 - - PowerPoint PPT Presentation

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2002 P RELIMINARY RELIMINARY R R ESULTS P RESENTATION 2002 P ESULTS P RESENTATION 25 MARCH 2003 2002 Preliminary Results Presentation PRESENTATION Introduction Sir David John Results and Restructuring John van der Welle Exploration Update

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2002 P 2002 PRELIMINARY

RELIMINARY R

RESULTS

ESULTS P

PRESENTATION

RESENTATION

25 MARCH 2003

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PRESENTATION

Introduction Results and Restructuring Exploration Update Business Development Summary and Outlook Sir David John John van der Welle Neil Hodgson Robin Allan Charles Jamieson

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RESULTS

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FINANCIAL HIGHLIGHTS

  • Production 53.6 mboed (2001: 40.9 mboed)

up 31%

  • Turnover £263.1m (2001: £ 213.8m)

up 23%

  • Operating profit(1) £117.2m (2001: £88.6m)

up 32%

  • Net profit after tax £25.0m (2001: £20.3m)

up 23%

  • Pre-exceptional net profit after tax £38.1m (2001: £20.1m)

up 90%

  • Operating cashflow after interest, tax £136.1m (2001: £94.6m)

up 44%

  • Net debt £249.5m (2001: £379.3m)

down 34%

  • Gearing 80% (2001: 122%)

down 42%

(1) Before exceptional items

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4 YEAR RECORD

Unit Operating Costs

2 2.5 3 3.5 4 4.5 1999 2000 2001 2002

£/boe

Net Debt (Including JV’s)

200 250 300 350 400 450 500 1999 2000 2001 2002

£m

Reported Profit After Tax

  • 40
  • 30
  • 20
  • 10

10 20 30 1999 2000 2001 2002

£m

Working Interest Production

20 25 35 40 45 50 55 60 1999 2000 2001 2002

mboepd

30

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  • Production up 31% on 2001

– 7% above target range of 45-50 mboepd – Record levels of over 60 mboepd in Nov/Dec – Higher volumes in Myanmar and Indonesia

  • Cost reduction drive continues

– Unit opex down 18% at £3 per boe

  • Development projects on target/budget

– Yetagun capacity upgrade – Bhit/Zamzama

  • Top quartile HSE performance on operated assets

OPERATIONAL HIGHLIGHTS

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PROFIT & LOSS ACCOUNT

Production (working interest) (mboepd) Realised oil price ($/bbl) Realised gas price ($/mcf) Turnover less: share of JVs turnover Group turnover Operating costs and royalties Amortisation Exceptional ceiling test write down Exploration expenditure written off Gross profit Administrative costs Operating profit Operating profit in JVs Total operating profit Exceptional profit on disposal Net interest and exchange movements Profit before tax Taxation Profit after tax Profit after tax (before exceptional items) Earnings per share - basic and diluted (pence)

2001

53.6 24.3 3.44 263 (64) 199 (54) (53) (13) (5) 74 (8) 66 38 104

  • (31)

73 (48) 25 38 1.6

£m 2002

40.9 25.2 2.97 214 (47) 167 (53) (44) (42)

  • 28

(7) 21 26 47 42 (40) 49 (29) 20 20 1.3

£m

Higher production and strong gas prices Unit opex (incl. JVs) £3.0/boe - down 18% Unit DDA (incl. JVs) £3.14/boe - in line with 2001 Increased contributions from Myanmar and Pakistan Reduced interest rates and repayment of debt in Myanmar Higher taxes due to higher profits and impact of Budget 2002

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CASHFLOW

Net cash flow from operations Net interest Taxation Operating cash flow (after interest and tax) Capital expenditure Disposals Net cash flow Exchange Movement in net debt Yetagun interest accrued Opening net debt Closing net debt 124 (17) (21) 86 (54) 30 62 29 91

  • (272)

(181) 184 (26) (22) 136 (73) 30 93 38 131 (2) (379) (250)

Reduced capital expenditure, and greater focus on exploration Increase in line with higher net revenues

Excl JV JV Total £m £m £m Exploration 22 13 35 Fields 17 18 35 Other 3

  • 3

JV funding 12 (12)

  • 54

19 73

2002 (As reported) £m 2001 (Incl. JVs) £m

Exchange gains on $ debt due to $ weakening against £

152 (34) (23) 95 (80) 73 88 (13) 75 (9) (445) (379)

2002 (Incl. JVs) £m

  • Operating cash flow funds exploration costs 3.9x cover (2001: 4.8x )
  • Interest cover now 7.1x (2001: 4.5x)
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RESTRUCTURING

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  • Transformation into a fully independent E&P company
  • Transfer of Myanmar and just over half of Indonesian West

Natuna block A to Petronas and Hess

  • Cancellation of Hess' and Petronas' shares in Premier
  • Effective date 30 September 2002
  • Subject to various approvals/consents prior to completion
  • Independently verified core NAV up to 43p per share

(31 December 2002 proforma)

  • Debt and gearing reduced to £47m and 17%

(31 December 2002 proforma)

RESTRUCTURING DEAL

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Completion imminent:

  • Achieved

– Signature of framework agreement and 16 September 2002 $210m bridge facility – EGM – shareholder approval 5 November 2002 – Yetagun partners’ participation agreed February 2003 – Indonesia Government approval March 2003

  • Pending

– Written Myanmar Authorities approval – Court sanction and completion expected early second quarter 2003

COMPLETION

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PROFORMA BALANCE SHEET

28 (75) (47) 271 17 Cash (including JVs) Debt (including JVs) Net debt (including JVs) Shareholders’ funds Gearing ratio % (139) 342 203 (41) N/A 167 (417) (250) 312 80 Proforma Balance Sheet at 31 December 2002 £m Impact of Restructuring £m Balance Sheet at 31 December 2002 £m %

Transformed finances

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VALUATION ROLL FORWARD

Core Net Asset Value of Proven and Probable reserves (excluding exploration and appraisal, technical reserves and other upsides)

Before Restructuring $ million

Assets sold at consideration (1) 670.0 670.0 Value of assets remaining (5) 580.6 580.6 593.7 (1) 593.7 (1) Total assets 1250.6 580.6 1263.7 593.7 Other investments 16.4 16.4 16.4 16.4 Net debt (401.7) (75.8) (444.5) (120.7) Net asset value 865.3 521.2 835.6 489.4 Total number of shares (in millions) 1588.5 778.7 1587.3 777.5 Net asset value per share (in pence) (4) 35.1 43.2 34.0 40.6 Accretion in net asset value per share 23% 20%

10% discount factor 10% discount factor

After Restructuring $ million Before Restructuring $ million After Restructuring $ million

(1) Assets valued at D&M valuation except for assets sold where restructuring value applied as per Circular (2) 30 September 2002 valuation as per Circular (3) 31 December 2002 valuation - year-end reference date (4) NAV per share converted at $1.55=£1, close Friday 13 September, as per Circular (5) Oil price of $20 in 2003 escalating at 3% pa

31 December 2002 (3) 30 September 2002 (2)

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14 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2003 2004 2005 boepd

Annualised (2)

POST RESTRUCTURING RESERVES AND PRODUCTION

Premier 2P Reserves 203 mmboe

UK 16%

Working Interest Production

Indonesia Pakistan UK

Indonesia 52% Pakistan 32%

Notes

(1) Proforma total reserves at 31 December 2002 (2) Proforma 2003 production assumes completion

31 March for illustration

Assets sold Retained assets

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EXPLORATION

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EXPLORATION DRILLING UPDATE

  • Playmaker
  • High Impact

– UK – 204/16-1 – Indonesia – Area IV – Pakistan – Dumbar – Kirthar

204/16-1 204/16-1 Benir-2 Hallel-1 Zirkani-1 Benir-2 Hallel-1 Zirkani-1 Kuda Nil-1 Binturong-1 Kuda Nil-1 Binturong-1

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PAKISTAN EXPLORATION 2003 UPDATE: DUMBAR

  • Benir-2 encountered gas in the

Cretaceous Pab Formation

  • Zirkani-1: A large (1.8 TCF

unrisked) simple gas prone structure, proven reservoir and trapping style to the north (Bhit and Zamzama Fields)

Zirkani-1 Zirkani-1 Benir-2 Benir-2 Badhra Field Badhra Field Bhit Field Bhit Field Zamzama Field: 2.4 TCF P2 Reserves (Premier Discovery 1998) Zamzama Field: 2.4 TCF P2 Reserves (Premier Discovery 1998) Bhandak-A Bhandak-A

Gas fields Prospects/Leads

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GUINEA BISSAU EXPLORATION 2003: SINAPA

Bissau

Guinea-Bissau

Senegal Guinea

Block 5a Premier

Sinapa Sinapa

Atlantic Ocean Sinapa-2 Location Sinapa-2 Location

Dome Flore 800m BOIP Discovery Dome Flore 800m BOIP Discovery Area of prospective shelfal salt diapir play Area of prospective shelfal salt diapir play

Block 2 Premier

Block 4a Premier

3 D R a n d

  • m

L i n e

Esperança Esperança

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GABON EXPLORATION 2003 PHENIX

  • Currently finalising negotiations

converting Phenix TEA into a PSC

  • Expect to spud Dusafu well 4th

quarter 2003 Most likely first drilling candidate:- Dusafu prospect. A Medium Risk Pre-salt “ Playmaker” .

Mayumba

Oil fields Prospects/Leads Atlantic Ocean

Phenix TEA Phenix TEA Dusafu Dusafu

Gabon Congo

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2003 EXPLORATION DRILLING PLAN Q2-Q4

  • Pakistan

– Zirkani-1 (drilling) – Bhandak-1 (contingent) – Dumbar-1 (contingent) – Badhra-2 re-entry (operating) – Kadanwari West

  • Guinea Bissau

– Sinapa – Esperanca

  • Gabon

– Dusafu

  • NE India

– Jaipur (provisional)

Jaipur Jaipur Zirkani-1 Bhandak-1 Dumbar Badhra-2 re-entry Kadanwari West Zirkani-1 Bhandak-1 Dumbar Badhra-2 re-entry Kadanwari West Dusafu Dusafu Sinapa Sinapa

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BUSINESS DEVELOPMENT

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  • Delivery of exploration success

– “ Play-makers” – Quality

  • Commercial deal-making:

– Value adding through smart acquisitions – Optimising the portfolio:

  • Lower R/P ratio
  • Managing portfolio risk
  • Realising value

STRATEGY IMPLEMENTATION

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  • Exploit competitive

advantage

  • Grow organically from

exploration

  • Seek out and acquire

properties where we can add value

BUSINESS DEVELOPMENT – SOUTH AND SOUTH-EAST ASIA

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BUSINESS DEVELOPMENT - UK

  • Twin strategy:

– Maintain / build our North Sea production – Selective exploration

  • Premier competitive edge:

– Long experience – Extensive data-base – Favourable tax position

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Vast range of opportunities:

  • Foothold in Gabon, Guinea Bissau
  • Opportunities in an advanced state
  • Focus is on “ playmakers” and

value-additive production acquisitions

BUSINESS DEVELOPMENT – WEST AFRICA

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GEOGRAPHIC FOCUS

Premier’s strategy will remain principally focused on our 3 core areas:

  • UK: Growing and

extending the business to retain a significant UK base

  • South and South East Asia:

Leveraging on experience

  • West Africa: Building a

material business

Existing Business Unit Geographic Focus Area

UK UK South and South East Asia South and South East Asia West Africa West Africa

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SUMMARY AND OUTLOOK

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2002 ACHIEVEMENTS

  • 2002 – A watershed year – culmination of 4 years of

financial and operational achievement.

  • Very strong 2002 performance

– Production ahead of expectation at 54 mboepd – Increased cashflow and profits – Reduced net debt

  • Restructuring - completion imminent

– Solid base business – 35 mboepd – 200 mmboe of developed reserves – Gearing <20%

Fully independent after 8 years

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PREMIER STRATEGY

  • High impact explorer and commercial dealmaker
  • Base business - e.g. 35-50,000 boepd
  • Cycle out/farm down assets when significant growth potential

has been exploited

  • Realise early value for shareholders
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OUTLOOK

  • Premier goals

– Increasing value – Closing value gap

  • By

– Significant exploration success – Active portfolio management

Financial / operational strength + independence = flexibility and opportunity

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2002 P 2002 PRELIMINARY

RELIMINARY R

RESULTS

ESULTS P

PRESENTATION

RESENTATION

25 MARCH 2003

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APPENDIX

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PLANNED EXPLORATION ACTIVITY

Aug Sept Oct Nov Dec Jan Feb

2003

Jan Feb Mar Apr May Jun Jul

CONTINGENT APPRAISAL APPRAISAL CONTINGENT

Pakistan: Zirkani-1 Pakistan: Bhandak-1 Pakistan: Dumbar-1 Indonesia: Binturong-1 Guinea Bissau: Esperanca-1 Gabon: Dusafu-1 Guinea Bissau: Sinapa-2 Pakistan: Badhra-3 & Badhra-2 re-entry Pakistan: Kadanwari West Pakistan: Hallel-1

PSC SEISMIC

India: Jaipur-1 India: Cachar

CONTINGENT

2004

APPRAISAL SEISMIC SEISMIC

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PRODUCTION ANALYSIS

2001 (mboepd) 18.5 5.6 11.2 18.3 53.6 60.0 UK Pakistan Myanmar Indonesia Total % Gas

Notes

(1) Working interest production (2) 2003 YTD is first two months

2002 (mboepd) 18.4 5.7 6.6 10.2 40.9 47.0 2003 YTD (mboepd) 18.3 6.2 14.2 23.5 62.2 66.5