Stability Performance Growth 2019 HALF YEARLY RESULTS- 30 JULY - - PowerPoint PPT Presentation

stability
SMART_READER_LITE
LIVE PREVIEW

Stability Performance Growth 2019 HALF YEARLY RESULTS- 30 JULY - - PowerPoint PPT Presentation

Seplat Petroleum Development Company Plc 2019 Half Yearly Results - 30 July 2019 Stability Performance Growth 2019 HALF YEARLY RESULTS- 30 JULY 2019 1 2019 HALF YEARLY RESULTS IMPORTANT NOTICE DISCLAIMER FORWARD-LOOKING STATEMENTS This


slide-1
SLIDE 1

1

2019 HALF YEARLY RESULTS

Seplat Petroleum Development Company Plc 2019 Half Yearly Results - 30 July 2019

Stability Performance Growth

2019 HALF YEARLY RESULTS- 30 JULY 2019

slide-2
SLIDE 2

2

2019 HALF YEARLY RESULTS

DISCLAIMER

IMPORTANT NOTICE

FORWARD-LOOKING STATEMENTS This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company’s current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth, strategies and the oil and gas business. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in the Company and must not be relied upon in any way in connection with any investment decision.

slide-3
SLIDE 3

3

2019 HALF YEARLY RESULTS

Austin Avuru

  • Chief Executive Officer

Seplat Petroleum Development Company Plc | www. seplatpetroleum.com

Introduction

slide-4
SLIDE 4

4

2019 HALF YEARLY RESULTS

WELL POSITIONED TO BUILD, GROW & DELIVER VALUE

MAPPING SEPLAT’S ROUTE TO VALUE CREATION FOR SHAREHOLDERS

OIL BUSINESS DOMESTIC GAS BUSINESS FINANCIAL STRENGTH OPPORTUNITY RICH

  • H2 weighted production

development work programme

  • Offset decline and deliver

incremental growth

  • Manage for value – sustain

& optimise long term recovery

  • ANOH project progressing to

plan (see CMD materials)

  • Continued strong

performance of Oben

  • Set to become largest

supplier of processed gas in 2021

  • Low leverage (net cash)

& significant undrawn headroom

  • Organic work programme

funded by internal cash flow

  • Low cost production base
  • Organic upside
  • Acquisition opportunities -

NAV and FCF accretive

  • Fire power to capitalise but

maintain price discipline

Sustainable FCF generation to underpin dividend Gas business can more than double in both scale and financial contribution to the business Further diversification through commodity mix and portfolio expansion (acquisitions that offer production and reserves with growth potential)

Planned 2019 exit rate 34,000

(W.I barrels oil per day)

VALUE CREATION AND ENHANCED SHAREHOLDER RETURNS

Oben + ANOH outcome 825 MMscfd

(pro-forma gross processing capacity post ANOH completion in Q1 2021)

Cash at bank US$433 MM

(at 30 June 2019)

2P + 2C reserves & resources 561 MMboe

(at 1 January 2019)

slide-5
SLIDE 5

5

2019 HALF YEARLY RESULTS

Effiong Okon

  • Operations Director

Seplat Petroleum Development Company Pl c | www. seplatpetroleum.com

Operations update

slide-6
SLIDE 6

6

2019 HALF YEARLY RESULTS 14,794 23,474 24,252 29,003 10,091 17,853 25,669 22,974 5,226 4,867 6,571 14,369 15,786 19,070 24,198 25,030

20,020 28,341 30,823 43,372 25,877 36,924 49,867 48,004

10,000 20,000 30,000 40,000 50,000 60,000 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 H1 2019 FY 2019E

boepd

24 -27 kbopd 25 – 28 kboepd Oil production Gas production

UNDERPINNED BY A STRONG PLATFORM OF PRODUCING FIELDS

H1 2019 WORKING INTEREST PRODUCTION & FY 2019 GUIDANCE

  • Average working interest

production for H1 2019 stood at 48,004 boepd (H1 2018: 51,099 boepd)

  • Liquids production of 22,974 bopd

(H1 2018: 25,286 bopd)

  • Gas production of 145 MMscfd

(H1 2018: 155 MMscfd)

  • Production uptime was 88%

(1) Before reconciliation losses, volumes measured at the

LACT unit, Predicated on no major force majeure event in 2019.

FY 2019 working interest production guidance

Oil 24,000 – 27,000 bopd (1) Gas 146 - 164 MMscfd (25,000 – 28,000 boepd)

Total 49,000 – 55,000 boepd

FY 2019 guidance range 49,000-55,000 boepd

slide-7
SLIDE 7

7

2019 HALF YEARLY RESULTS

DEVELOPMENT ACTIVITIES SET TO STEP UP IN H2 2019

H1 2019 ACTIVITIES AND H2 2019 OUTLOOK

WESTERN ASSETS - OML’s 4, 38, 41 & OPL 283 EASTERN ASSETS – OML 53 & OML 55

H1 2019 activities H2 2019 activities

OMLs 4,38 & 41

  • Workover of one oil well in Sapele
  • Sapele integrated gas processing facility project

technical service agreement and design review

  • Liquid treatment facility upgrades to enable

dry crude delivery from Sapele and Amukpe to Forcados Terminal

OPL 283

  • Preparation work for development of the

Igbuku field; Concept selection and FEED

OMLs 4,38 & 41

  • Amukpe to Escravos pipeline expected to be commissioned

in Q4 2019;

  • Drill up to 6 new oil production wells; 1 new gas well;

1 rig based re-entry of an existing oil well

  • Progress work on Sapele integrated gas processing facility

upgrade

  • Liquid treatment facility upgrades (Sapele and Amukpe)

OPL 283

  • Preparation work for development of the Igbuku field;

Concept selection and FEED

H1 2019 activities H2 2019 activities

OML 53

  • Development of the Ohaji South oil reserves;

brought onstream two oil production wells (Ohaji South 3 & 4)

  • 1 rig based workover of an existing oil production

well at the Jisike field

  • Early Production Facility (EPF) at Ohaji South and

framing of crude oil storage tank in Jisike

OML 55

  • Received US$17 million towards recovery of the

US$330 million discharge sum OML 53

  • Location preparation and camp site engineering works for Ohaji

South drilling campaign

  • Drill a new oil production well at Ohaji South
  • Upgrade of the EPF at Ohaji South
  • Install PD meter at Jisike Flow Station

OML 55

  • Continued monetisation of liftings towards full recovery
  • f the US$330 million discharge sum
slide-8
SLIDE 8

8

2019 HALF YEARLY RESULTS

HIGHEST IMPACT VALUE ADDING WORK PROGRAMME

2019 WORK PROGRAMME SUMMARY

`

2019

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

OML 4 , 38 & 41 OML 53 Major Project Delivery Major Project Kick-off

Sapele 03 Sapele 02 Sapele 01 Sapele 03 Sapele 02 Ovhor 01 Sapele 29 Oben Ovhor 02 Appraisal well Oghareki Ohaji South 01 Jisike 06 workover Ohaji South 01 Ohaji South 02 Appraisal well Appraisal well

Development Project completion Project award Project completed Delayed

Sapele Field Liquid Treatment Facility Amukpe to Escravos Pipeline Oben Booster Compression Phase 2 & 3 Ohaji South Development, Phase 1 Sapele 01 Sapele 04 Mosogar re-entry Ovhor 06 workover Sapele 04

slide-9
SLIDE 9

9

2019 HALF YEARLY RESULTS

Seplat Petroleum Development Company Plc | www. seplatpetroleum.com

Roger Brown

  • Chief Financial Officer

Finance update

slide-10
SLIDE 10

10

2019 HALF YEARLY RESULTS

SEPLAT HAS DELIVERED EXCELLENT FINANCIAL OUTCOMES

Increased gas revenues

US$1 $139 mill illio ion

Profitability sustained

US$120 120 mill illio ion

(Profit before tax)

Low operating costs

US$47 milli lion

(US$5.

$5.41/ 1/bo boe Production Opex)

Capital Investment

US$ S$28 mill illio ion

H1 2018: US$121 million

H1 2018: US$41 million (US$4.50/boe)

H1 2018: US$21 million

Dividend paid

US$ S$0.05/share

(US$29 million paid out in H1 2019)

H1 2018: US$0.05/share

Strong cash generation

US$ S$255 mill illio ion

(Cash flow from operations)

H1 2018: US$245 million H1 2018: US$85 million

EBITDA

US$ S$224 224 mill illio ion

H1 2018: US$229 million

Gross debt

US$ S$350 mill illio ion

H1 2018: US$550 million

Net cash position

US$ S$83 mill illio ion

H1 2018: Net debt US$40 million

H1 2019 FINANCIAL DASHBOARD

slide-11
SLIDE 11

11

2019 HALF YEARLY RESULTS

H1 2019 FINANCIAL SUMMARY

US$ million H1 2019 H1 2018 change

Revenue 355 342 4% Cost of sales (148) (168) (12)% Gross profit 207 174 19% G&A (42) (38) 11% Fair value gain/(loss)-net 6 (7) Operating profit / (loss) 139 158 (12)% Net finance costs (19) (37) (49)% Profit/(Loss) before deferred tax 121 105 15% Profit/(Loss) for the period 122 49 149% Capex incurred 28 21 Cash flow from operations 255 245 4% Cash at bank 433 510

A PROFITABLE BUSINESS WITH STRONG CASH FLOW GENERATION AND ROBUST BALANCE SHEET

H1 2019 H1 2018 Gross Oil Sales 216 257 Gas sales and tolling 139 85 Total Revenue 355 342

  • Capex reflects limited development activity in H1 2019 due to delays in

mobilization of the rig

  • Development activities to scale up in H2 2019
  • H1 2019 profit after tax of US$122 million including profit from discontinued
  • perations (ANOH) of US$3 million after adjusting for deferred tax of US$1.3

million; driven by increased gas processing revenues from tolling and managed costs

  • Includes the cost of oil hedges and unrealised losses charged to the P&L
  • Reduced cash balance reflects equity contribution to AGPC and ANOH

deconsolidation

  • Liquidity buffer preserved
  • After adjusting US$40 million reversal of previously recognised interest on NPDC

receivables

  • Positive impact of deleveraging has resulted in a year-on-year reduction in

finance costs

  • Gas tolling is revenue received from NPDC for processing its share of the gas

extracted from 2015 to 2018. In prior periods, the Group had not recognised the related income or receivable for the service because the basis for determining the fees was yet to be concluded with NPDC

  • Royalties, Crude Handling and DDA reflect lower oil prices and production
slide-12
SLIDE 12

12

2019 HALF YEARLY RESULTS

SIMPLE STRUCTURE DRAWING ON SEPLAT BRAND AND PARTNERS TO COVER US$700 MILLION DEVELOPMENT COST

AGPC – FUNDING UPDATE

Senior Debt/Performance Bond/Vendor Finance

up to US$280 million

AGPC

Senior Debt

KEY

Equity Holdings

Seplat Plc US$210 million NGC US$210 million

PROPOSED FINANCE STRUCTURE EQUITY: ANOH DECONSILIDATED FROM SEPLAT TO AGPC DEBT: MARKET LIQUIDITY & INDICATIVE PRICING

Type of Funding USD Price Amount Available US$m Potential Lenders Period Local Banks 6.00- 9.00% 500+ UBA, Zenith, Fidelity, FCMB, FBN, Access, Union, Nova 5-7 years International Banks 4.50- 6.00% 200+ SCB, RMB, BHGE, Standard Bank, Nedbank 5-7 years Export/Vendor Finance 90 SACE, CDP, GE Deferred payment structure Total Sources of Debt 790+

Q1 2019 Q2 2019 Q3 2019 TOTAL TOTAL PENDING NGC US$100 m US$50 m US$60 m US$150 m US$60 m SEPLAT US$47.5 m US$50 m US$60 m US$97.5 m US$60 m SEPLAT HISTORICAL US$52.5 m

  • US$52.5 m
  • CUMULATIVE

US$200 m US$300 m US$420 m US$120 m % INJECTED 48% 71% 100%

slide-13
SLIDE 13

13

2019 HALF YEARLY RESULTS

STRONG FREE CASH FLOW GENERATION AND DILIGENT MANAGEMENT OF GROUP LIQUIDITY

CASH RECONCILIATION – H1 2019

585 433

17 255 28 154 103 10 100 29

100 200 300 400 500 600 700 800 900

Cash Dec 2018 (including restricted cash) Receipts from OML 55 Cash from

  • perations

PP&E AGPC cash deconsolidated* ANOH equity contribution Net interest plus restricted cash Loan reapayments Dividend paid Cash 30 June 2019 (including restricted cash)

US$ million Hedging strategy aimed at providing cash flow assurance

  • FY 2019 hedging – 4.00 MMbbls at

US$50.0/bbl

*Included US$100 million provided by NGC

slide-14
SLIDE 14

14

2019 HALF YEARLY RESULTS

STEPPING UP CAPITAL EXPENDITURES IN H2 2019

SEPLAT’S CAPEX REMAINS DISCRETIONARY WITH THE FLEXIBILITY TO “DIAL UP” OR “DIAL DOWN” SPEND AS APPROPRIATE

228 64 6 7 14 90 67 54 29 1 2 41 50 49 39 59 45 24 33 60 34

50 100 150 200 250 300 350

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Initial FY2019 Revised FY2019 Drilling Facilities & engineering / other Gas projects

Capex (US$ million)

  • Decision taken to defer exploration/appraisal wells in favour of focusing on short term

production

  • H2 weighted drilling programme means production impact from

these expenditures will be felt from Q4 2019 into 2020

  • Investments into facilities and engineering projects to ensure long term asset integrity
  • Gas project investments primarily focused on upgrading the Sapele gas plant

2019 CAPEX GUIDANCE REVISED TO US$150 MILLION

slide-15
SLIDE 15

15

2019 HALF YEARLY RESULTS

DISCIPLINED ALLOCATION OF CAPITAL WITH FURTHER DELEVERAGING IN Q1 2019

UNDERPINNED BY A ROBUST CAPITAL STRUCTURE

350 2018 2019 2020 2021 2022 2023 62.5 75.0 75.0 37.5 350 350 433 300

Senior notes due 2023 (9.25%) RCF due 2022 (Libor +6%) Senior notes RCF Cash 30 June 2019

US$225 million

current headroom

Debt facilities US$ million Drawn down US$ million 37.5

DIVERSE CAPITAL STRUCTURE & HEADROOM TO FUND GROWTH CURRENT DEBT MATURITY PROFILE (US$ MILLION)

Senior Notes RCF Currently Undrawn Repayment schedule if RCF was fully drawn

SEPLAT IS IN A POSITION OF FINANCIAL STRENGTH AND IS WELL FUNDED TO CAPITALISE ON GROWTH OPPORTUNITIES

slide-16
SLIDE 16

16

2019 HALF YEARLY RESULTS

Austin Avuru

  • Chief Executive Officer

Seplat Petroleum Development Company Plc | www. seplatpetroleum.com

Conclusion

slide-17
SLIDE 17

17

2019 HALF YEARLY RESULTS

A COMPELLING COMBINATION OF FACTORS TO MAKE SEPLAT A NIGERIAN SUCCESS STORY

OUTLOOK

RELIABLE

and predictable low unit cost production base

VISIBILITY ON MORE THAN DOUBLING

size and financial contribution of gas business

SELF FUNDED

forward organic work programme

CAPITAL ALLOCATION

to highest cash return

  • pportunities

STEP CHANGE

potential from acquisition opportunities

SAFE AND SECURE

  • perations and

workplace for all staff

LOCAL CONTENT

and capacity development

DIVERSIFICATION

  • f oil export routes

and asset base

SUCCESSFUL AND PROVEN

community relations model

SUSTAINABILITY IMPACT

displacing diesel with gas for power

DIVIDEND YIELD

for shareholders

slide-18
SLIDE 18

2019 Half Yearly Results

Seplat Petroleum Development Company Plc | www. seplatpetroleum.com

Questions & Answers

slide-19
SLIDE 19

19

2019 HALF YEARLY RESULTS

London Office

Seplat Petroleum Development Company Plc Address: 4th Floor, 50 Pall Mall, London SW1Y 5JH Phone: +44 (0)20 3725 6500

Head Office

Seplat Petroleum Development Company Plc Address: 25A, Lugard Avenue, Ikoyi, Lagos, Nigeria. Phone: +234 (0)1 277 0400 Email: info@seplatpetroleum.com ir@seplatpetroleum.com Web: www.seplatpetroleum.com