to deliver portfolio value De-lever Grow 2019 Capital Markets Day - - PowerPoint PPT Presentation

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to deliver portfolio value De-lever Grow 2019 Capital Markets Day - - PowerPoint PPT Presentation

Oct 19, 2022 270 likes •690 views

Differential capabilities Deliver to deliver portfolio value De-lever Grow 2019 Capital Markets Day Differential capabilities to deliver portfolio value Contents EnQuest at a glance - Operator of choice for maturing hydrocarbon assets

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SLIDE 1

De-lever Deliver Grow

Differential capabilities to deliver portfolio value

2019 Capital Markets Day

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SLIDE 2

Contents

EnQuest PLC Capital Markets Day 2019 2

Differential capabilities to deliver portfolio value Amjad Bseisu Chief Executive Jonathan Swinney Chief Financial Officer Bob Davenport Managing Director – North Sea EnQuest at a glance

  • Operator of choice for maturing hydrocarbon assets

Investment proposition

  • Proven track record, improving balance sheet and

differential capabilities to create value

Value creation

  • Portfolio opportunities

Financial performance

  • Portfolio performance, cash flow generation and

capital discipline driving down debt

Concluding remarks

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SLIDE 3

EnQuest at a glance

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SLIDE 4

Malaysia 8.4 kboepd 12% UK 60.1 kboepd 88%

Operator of choice for maturing hydrocarbon assets

EnQuest PLC Capital Markets Day 2019 4

8 offshore hubs (14 fields in UK; 8 in Malaysia) Sullom Voe Terminal

20,000 40,000 60,000 80,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Actual/forecast Guidance range

Production breakdown1 Production CAGR expected to be c.17% since IPO

1 Year to date October 2019 2 2019 guidance range of 63,000 to 70,000 Boepd

The Dons Heather/ Broom Thistle/ Deveron Kraken Magnus Alma/ Galia PM8/ Seligi Greater Kittiwake Area

2

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SLIDE 5

Safe Results through continuous improvement Lost Time Incident performance remains strong across all assets Proactive safety driven shutdowns carried out at Thistle and Heather

  • Plans to return to safe operations in

the first half of 2020

  • Heather: compressor repairs
  • Thistle: removal of redundant COS tanks; accelerated

partner-funded decommissioning programme

EnQuest PLC Capital Markets Day 2019 5

1 Lost Time Injury Frequency per million exposure hours

Safety is at the heart of our performance

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2015 2016 2017 2018

EnQuest LTIF1

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SLIDE 6

Focused on emissions

EnQuest PLC Capital Markets Day 2019 6

EnQuest actions

  • 80% reduction planned at SVT
  • Invested in gas supply for power at Thistle and Northern

Producer installations

  • Invested in tri-fuel generator at Kraken

Regulation

Aligning disclosure

UK

  • EU Emissions Trading System
  • Flaring limits

Malaysia

  • Flaring limits
  • Flaring c.45% below regulatory limits
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SLIDE 7

Investment proposition

EnQuest PLC Capital Markets Day 2019 7

Proven track record Differential capability Significant value creation opportunities Improving strategic position Tax advantage

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SLIDE 8

Asset life extension

Driving efficiencies and asset life extension

EnQuest PLC Capital Markets Day 2019 8

1 As of 30 June 2019

Proven track record

Improving operational efficiencies

  • Targeting production efficiency of 80%+
  • Strong track record

Driving costs down

  • Reduced unit opex by c.50% since 2014 to c.$20/boe1

For illustrative purposes only

Dons Thistle GKA PM8/Seligi Magnus

16 years 16 years 7 years 10 years 12 years

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SLIDE 9

EnQuest PLC Capital Markets Day 2019 9

Significant growth in reserves

7

Operated production hubs

63

wells drilled and completed by EnQuest

c.235

MMboe of net 2P reserves added

c.89

MMboe produced (net)

North Sea operation breakdown Malaysia operation breakdown

14

  • perated
  • ffshore

platforms

63

idle wells returned to production by EnQuest

c.28

MMboe of net 2P reserves added

c.12

MMboe Produced (net)

Information represents performance to end 2018

Proven track record

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SLIDE 10

37,405 55,447 68,501

20,000 40,000 60,000 80,000

2017 2018 YTD Oct 2019 FY 2019 Outlook

  • Production guidance unchanged
  • Kraken performance improving
  • Industry leading drilling performance
  • Best-in-class sub-sea project performance

EnQuest PLC Capital Markets Day 2019 10

Progress on our strategic priorities

  • Net debt down $213 million since end 2018
  • Credit facility now $535 million;

$45 million early repayment

  • LTM net debt: EBITDA c.1.7x; ahead of target
  • FCF yield of over 65%; rapid de-leveraging
1 Net working interest
  • 198 MMboe low-cost, highly economic

2C resources

  • Tax advantage

Improving strategic position 1,991 1,774 1,561

1,000 1,500 2,000

End Dec 2017 End Dec 2018 End Oct 2019 70,000

50 38 68 42

20 40 60 80

Magnus Kraken PM8/Seligi Other UK

Deliver De-lever Grow

63,000

Annual net production1 (Boepd) Net debt ($ million) Existing 2C resources focused in 3 major assets (MMboe)

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SLIDE 11

An industry leader in drilling: 46 of 104 wells in UKNS1

1 Between January 2015 to March 2019

Source: Company data; Rushmore Reviews (April 2019) EnQuest PLC Capital Markets Day 2019 11

UKNS well costs1 (£ million)

Differential capability

5 10 15 20 25 30 35 40 45 50 46 EnQuest wells drilled Industry median EnQuest

Per well

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SLIDE 12

An industry leader in drilling: 46 of 104 wells in UKNS1

1 Between January 2015 to March 2019

Source: Company data; Rushmore Reviews (April 2019) EnQuest PLC Capital Markets Day 2019 12

46 wells drilled saving c.£450 million

compared to industry median

Bottom quartile Industry median Top Quartile

EnQuest

400 800 1,200 1,600 2,000 46 EnQuest wells drilled

UKNS well costs1 (£ million)

Cumulative

Differential capability

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SLIDE 13

EnQuest PLC Capital Markets Day 2019 13

In-house drilling capability

Low-cost drilling capability

Technical and commercial Focus Standardise and simplify Full project responsibility – design to completion Culture of continuous improvement

Differential capability

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EnQuest in-house capability

  • Greater scope
  • Schedule efficiency
  • Lower cost

Upper quartile cost and schedule performance

  • Kraken multi-well development
  • Scolty/Crathes and Dunlin bypass pipelines

EnQuest PLC Capital Markets Day 2019 14

Best-in-class sub-sea project performance

Based on UK Oil and Gas data

TIME – in comparison to optimum performance

Optimum performance EnQuest

COST – in comparison to optimum performance

Oil and Gas UK Efficiency Task Force study (2015-2018)

Differential capability

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SLIDE 15

EnQuest PLC Capital Markets Day 2019 15

Unlocking the future

  • High-grade and develop resources
  • Short-cycle investment to generate cash flow

and returns

  • Assess inorganic opportunities

50 38 68 42

10 20 30 40 50 60 70 80 Magnus Kraken PM8/Seligi Other UK

Existing resources focused in 3 major assets

Differential capability

(MMboe)

Repeatable performance In-house capability On time and low-cost drilling and sub-sea project completion Wide

  • pportunity

set High-grade value enhancing activity

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SLIDE 16

Investment proposition

EnQuest PLC Capital Markets Day 2019 16

Proven track record Differential capability Significant value creation opportunities Improving strategic position Tax advantage

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SLIDE 17

EnQuest PLC Capital Markets Day 2019 17

Magnus: value improvement

Unit opex ($/boe)

59 80

50 60 70 80 90 2017 2019 Fcst

60 20

20 40 60 80 2015 2019 Fcst c.67%

Driving down unit costs

  • Lean operating model
  • Right-sized workforce
  • Effective supply chain and contractor management
  • Integrated work programme planning
  • Low-cost well interventions
  • Revised reservoir management strategy

Assets performance

  • Simplify
  • Control systems; produced water debottlenecking
  • Improved reliability
  • Power, water injection and compression
  • Increased capacity
  • Produced water; low pressure capability

Significant value creation opportunity

Production efficiency (%)

c.35%

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SLIDE 18

Magnus Sand LKCF NW Magnus

M

TR1/TR2 Prospect

EnQuest PLC Capital Markets Day 2019 18

Magnus: maximising the opportunities

A material asset with a long life

  • c.2 billion boe HIIP1
  • Current CoP2 date 2035

Maximising the asset value

  • Material well programme over 4-5 years
  • 2019 2P drilling targets; c.$15m per well
  • Payback <10 months
  • NPV(10) at $60/bbl: c.$50 million
  • IRR >50%
  • Multiple future 2C targets
  • Revised reservoir strategy
  • c.250 MMboe of additional movable oil

Legend

2P Target 2C Target Exploration Target Magnus Platform Oil Producer Water Injector

M 2 Hydrocarbons initially in place 1 Cessation of production

Significant value creation opportunity

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SLIDE 19

65 127

76 (14) 40 80 120 160 Acquired 1.1.17 Additions Production 31.12.18

EnQuest PLC Capital Markets Day 2019 19

Magnus: increasing reserves and resources

5,000 10,000 15,000 20,000 25,000 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Latest forecast Acquisition case 2018 CPR

1 Competent Persons Report prepared by Gaffney, Cline & Associates included in prospectus in September 2018 2 Compared to Competent Persons Report

254 503 >700 200 400 600 800 1000 Acquisition case NPV(10) 1.1.17 $75/bbl CPR1 case NPV(10) 1.7.18 $60/bbl Latest forecast NPV(10) 1.1.20 $60/bbl

  • Strong capabilities expected to deliver >40% increase

in produced oil2

NPV driven upwards >$450 million ($ million) Oil production profile (Bopd) Reserves and resources more than doubled (MMboe)

1

Significant value creation opportunity

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SLIDE 20

90 95

50 60 70 80 90 100 2014 2019 Fcst

EnQuest PLC Capital Markets Day 2019 20

PM8/Seligi: strong, consistent performance

Driving down unit costs

  • Effective supply chain management
  • Low cost well interventions increasing production

Asset performance

  • Gas compression reliability >97%
  • Process simplification
  • Increased maintenance and inspection programme

31 18

10 20 30 40 2014 2019 Fcst

Unit opex ($/boe)

c.5% c.42%

Significant value creation opportunity

Production efficiency (%)

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SLIDE 21

10,000 20,000 30,000 40,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Before EnQuest operatorship After EnQuest Operatorship

EnQuest PLC Capital Markets Day 2019 21

PM8/Seligi: idle well intervention success

  • Integrated programme planning and execution
  • Low-cost production enhancement and reservoir

surveillance activities

  • >650 well strings entered since 2014
  • 2015-2019: added 10 MMbbls at <$8/bbl
1 Gross working interest

Boepd1 PM8/Selgi idle well contribution (Bopd1)

Significant value creation opportunity

5,000 10,000 15,000 20,000 Base 2015 PE/IWR 2016 PE/IWR 2017 PE/IWR 2018 PE/IWR 2019 PE/IWR

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PM8/Seligi: prioritising high value activities

EnQuest PLC Capital Markets Day 2019 22

A material asset that adds diversity to our portfolio

  • >2 billion boe HIIP
  • PSC terms ends 2033

Targeted development plans to unlock full potential

  • Ongoing low-cost idle well and intervention activities;

targeting 2020 at $8/boe

  • High-graded target reservoir intervals
  • Multiple 2C resource drilling opportunities
  • Well cost c.$10-15 million1 / $7-10/boe
  • Gas injection oil sweep strategy

For illustrative purposes only

LEGEND OIL PLATFORM 2C TARGET

South China Sea

South Raya North Raya Yong

PM8

Serudon Lawang Langat

SELIGI

Significant value creation opportunity

1 Gross working interest
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EnQuest PLC Capital Markets Day 2019 23

  • Strong capabilities expected to deliver >150% increase

in produced oil

  • Well regarded by our partner Petronas

PM8/Seligi: increasing resources, production and value

73 197 150 (26)

50 100 150 200 250 Acquired 1.1.14 Additions Production 31.12.18

67 >200

50 100 150 200 250 Acquisition case NPV(10) $60/bbl Acquisition case NPV(10) $90/bbl Latest forecast NPV(10) 1.1.20 $60/bbl

NPV driven upwards >$200 million ($ million) Oil production profile (Bopd) Reserves and resources more than doubled (MMboe)

5,000 10,000 15,000 20,000 25,000 30,000 Actual/latest forecast Acquisition case

Significant value creation opportunity

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SLIDE 24

24

Kraken: strong performance and pricing

  • Improving production efficiency
  • last 2 months at >90%
  • Steady water cut evolution
  • Cargo pricing improved
  • Heavy oil demand
  • Low-sulphur crude
  • Produced >24 MMbbls1 since first oil

50 60 70 80 90 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Actual 2P reserves assumption

Average production (Bopd)1 Water cut (%)

EnQuest PLC Capital Markets Day 2019

  • 10,000

20,000 30,000 40,000 50,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Actual 2P reserves assumption

Significant value creation opportunity

1 Gross working interest
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SLIDE 25

Western Flank

  • Worcester approved
  • Targeting c.6 MMbbls1 at c.$15/bbl
  • Payback c.13 months
  • NPV(10) at $60/bbl: c.$100 million
  • IRR >50%
  • Pembroke appraisal
  • Antrim and Barra evaluation

EOR polymer flood Maureen evaluation

EnQuest PLC Capital Markets Day 2019 25

Kraken: material upside

1 Gross working interest

Significant value creation opportunity

Barra Pembroke Antrim Worcester Maureen

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Magnus

  • Multi-year drilling programme
  • c.250 MMbbls of movable oil

PM8/Seligi

  • Multi-year drilling and intervention programme
  • >3tcf of gas in Seligi
  • Requires commercial agreements

Kraken

  • Multiple western flank opportunities being assessed
  • Further upside potential
  • Maureen
  • EOR

EnQuest PLC Capital Markets Day 2019 26

Significant offshore opportunities

Significant value creation opportunity

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SLIDE 27

SVT: strategically located oil and gas midstream hub

EnQuest PLC Capital Markets Day 2019 27

  • Constructed 1975 – 1981
  • 1,000 acre site; c.8 mbbls crude storage
  • Self sufficient power generation
  • EnQuest operate 340km gas pipelines

One of Europe’s largest oil and gas terminals

Significant value creation opportunity

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SVT: services required for decades to come

EnQuest PLC Capital Markets Day 2019 28

10 20 30 40 50 60 70 80

EoS WoS

Significant value creation opportunity

Aggregated current field forecasts for existing SVT pipelines

  • Safe and environmentally sensitive service
  • >30 offshore fields crude delivered via

Brent, Ninian, SGP & Clair pipelines

  • c.100 mmscfd per day WoS Gas

40-year exemplary track record

(Bopd)

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SVT: substantial operations optimisation since assuming operatorship

EnQuest PLC Capital Markets Day 2019 29

100 c.80 c.75 c.60 c.20 c.40

2017 2018 2019 2020 2025 2035+

EnQuest transition (Q4) Core

  • pex reduction

Core

  • pex reduction

Business ‘Future Fit’ complete Simplified processing and utilities Stabilised crude service only

SVT Simplification and Transformation

Base opex profile (%)

Significant value creation opportunity

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Financial performance

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Sustainable reduction in unit opex

2014 2015 2016 2017 2018 2019

Spread rate reduction Wells C.£1 million Aviation C.£3 million Manpower C.£2 million Wells C.£1 million Kraken C.£1 million Operations C.£1 million Production enhancement C.£3 million Engineering services C.£3 million saved Wells C.£5 million Transition C.£6 million Aviation Software licence

  • ptimisation

Multi-skilling Technology Operational solutions $42/boe $30/boe $25/boe $26/boe $23/boe c.$22/boe

EnQuest PLC Capital Markets Day 2019 31

Centralised procurement Challenging OEMs Reduced Tier 1 contractor reliance Category management Post contract management Innovation Collaboration Standardisation Alternate sourcing

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SLIDE 32

Delivery of past projects

  • Kraken c.$2.1 billion vs c.$3.2 billion budget
  • Pipeline projects on budget and ahead of schedule

Future spending

  • Focus on low-cost, high-return and quick payback

infill drilling

  • 2020 well completions IRR >50%
  • Payback generally c.12 months

EnQuest PLC Capital Markets Day 2019 32

Capital discipline: investment targeting high-value activities

1,058 751 609 368 220

200 400 600 800 1,000 1,200 2014 2015 2016 2017 2018

Cash capex $ million

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SLIDE 33

EnQuest PLC Capital Markets Day 2019 33

Rapid deleveraging through significant cash generation

1,991 1,774 1,561

1,000 1,500 2,000 End Dec 2017 End Dec 2018 End Oct 2019

(116) 215 210

(150) (100) (50) 50 100 150 200 250 2017 2018 YTD Oct 2019

1 Free cash flow: net change in cash and cash equivalents less net (repayments)/proceeds from loan facilities. 2018 adjusted for impact of rights issue

FCF1 $ million Net debt $ million

c.22%

2019 FCF1 yield of over 65% LTM net debt: EBITDA 1.7x

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EnQuest PLC Capital Markets Day 2019 34

Significant value creation through acquisitions

GKA

  • Acquired in 2015 for $30 million cash
  • Scolty/Crathes original drilling and

sub-sea tie-back development cost; paid back within 24 months

Magnus

  • Acquired 75% in 2018 for $100 million cash;

paid back 10 months

  • 2018 wells paid back in <8 months

PM8 Seligi

  • Acquired in 2014 for $27 million cash;

paid back in 12 months

1 Competent Persons Report prepared by Gaffney, Cline & Associates included in prospectus in September 2018

67 >200 Acquisition case NPV(10) $60/bbl Acquisition case NPV(10) $90/bbl Latest forecast NPV(10) 1.1.20 $60/bbl $ million c.(40) 46 >100

Acquisition case NPV(10) $60/bbl Acquisition case NPV(10) $90/bbl Latest forecast NPV(10) 1.1.20 $60/bbl $ million

254 503 >700

Acquisition case NPV(10) 1.1.17 $75/bbl CPR case NPV(10) 1.7.18 $60/bbl Latest forecast NPV(10) 1.1.20 $60/bbl $ million

1

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Delivering shareholder value

EnQuest PLC Capital Markets Day 2019 35

Production Cost control Capital discipline Strengthen the balance sheet Develop asset base Selective, value enhancing acquisitions

Grow

Free cash flow1 generation Continued net debt reduction Cash flow focus NPV accretion High returns

Deliver De-lever

1 Free cash flow: net change in cash and cash equivalents less net (repayments)/proceeds from loan facilities. 2018 adjusted for impact of rights issue
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Concluding remarks

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EnQuest PLC Capital Markets Day 2019 37

A strategy that will deliver shareholder returns

Mature assets Low cost 2C resources Drilling and sub-sea projects UK tax asset

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SLIDE 38

Magnus: c.250 MMbbls movable oil Kraken: Appraising Maureen drilling opportunity PM8/Seligi: Significant potential gas development Creative transaction structures Acquisition of maturing assets Utilisation of tax advantage

Inorganic Organic

EnQuest PLC Capital Markets Day 2019 38

Clear roadmap ahead

Strengthen

  • ur Balance

Sheet Deliver

  • ur

promises Leverage our capabilities to deliver growth

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SLIDE 39

Investment proposition

EnQuest PLC Capital Markets Day 2019 39

Proven track record Differential capability Significant value creation opportunities Improving strategic position Tax advantage

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SLIDE 40

This presentation may contain certain forward-looking statements with respect to EnQuest’s expectation and plans, strategy, management’s objectives, future performance, production, costs, revenues, reserves and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this presentation should be construed as a profit forecast. Past share performance cannot be relied on as a guide to future performance.

EnQuest PLC Capital Markets Day 2019 40

Forward looking statements