2012 Half Yearly Results 23 August 2012

Transcription

1 2012 Half Yearly Results 23 August 2012

2 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. 23 August 2012 Page 1

3 Agenda Introduction Operations update Exploration update Financial results Outlook Simon Lockett Neil Hawkings Andrew Lodge Tony Durrant Simon Lockett 23 August 2012 Page 2

4 Premier today... is in an even stronger position than six months ago... 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... which is reflected in our first half results 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 $1.3 billion of cash and undrawn facilities; strongly rising cashflows and profitability Historic NAV/share CAGR of 14.2% at constant oil prices 23 August 2012 Page 3

5 Operations update 23 August 2012 Page 4

6 Production update Production averaged 58,400 boepd, up 58 per cent Q2 production in excess of 60,000 boepd Chim Sáo and Gajah Baru performing well Strong Pakistan production due to compression upgrades and successful infill drilling Improved uptime at Balmoral and good production from a new well at Scott Increased share of Wytch Farm production following completion of acquisition 75,000 boepd, once Huntington and Rochelle on-stream 2012 Production (bbls/day) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 Huntington/Rochelle Other UK Pakistan & Mauritania Vietnam Indonesia 10,000 0 Q1 Q2 Q3 Q4 Year end run rate 23 August 2012 Page 5

7 Chim Sáo and Dua Chim Sáo 1H Production averaged 26,000 boepd; higher level of uptime achieved in Q2 Currently producing at 35,000 boepd Water injection has commenced and rates are ramping up to support reservoir pressure Two well supplementary drilling programme into additional reservoirs completed in June first well tied-in; initial production rate of 4,000 boepd second well due on-stream in Q3 Total well capacity in excess of 40,000 bopd 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 August 2012 Page 6

8 Natuna Sea Block A GSA 1 (Anoa) 1H production at maximum capacity Block A s share of deliveries under GSA1 was 47% 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 period but build-up of rates has been slower than anticipated due to end user project delays Gas Swap Agreement (Gajah Baru) Discussions to sell an additional 40 BBtud into the Indonesian domestic market continue 23 August 2012 Page 7

9 Anoa Phase 4, Pelikan and Naga Anoa Phase 4 Project will increase Anoa reserves by ~200 bcf by lowering surface flowing pressures Also increases Anoa capacity above 200 BBtud Construction barge has arrived on location; compression modules currently being installed Second construction campaign prior to first gas in Q Pelikan and Naga Pelikan and Naga will develop ~150 bcf of gas EPCI contract awarded in May Construction of jacket / topsides commenced Construction of pipeline material underway Tendering process to secure a rig for 2013 and 2014 development drilling commenced First gas August 2012 Page 8

10 Huntington and Rochelle Huntington Rochelle Development drilling completed in August To schedule and on budget Better than expected well results Debottlenecking study underway FPSO onshore modifications nearing completion Operator targeting sail away in September for installation in October and first oil in December Drilling of East Rochelle, the first of the two development wells, is in progress Upgrade of Scott Platform remains on track Subsea installation underway following the arrival of the pipe lay vessel Operator expecting first gas in December 23 August 2012 Page 9

11 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 expected to commence in March 2013 First oil targeted for Q with an initial production rate of 24,000 bopd 23 August 2012 Page 10

12 Solan development schedule Government Approval First Oil Platform Tank Drilling Installation, Hook-up and Commissioning FEED Design and Procurement Construct 23 August 2012 Page 11

13 Catcher update Significant licence changes Premier increased stake to 50% and appointed operator Strengthened partnership to progress development Time is needed to achieve consensus within new JV Concept Selection work JV agreed subsurface work programme is in progress to generate resource volume ranges Schedule and cost data for development concepts has been validated through market enquiries Contracting strategies have been developed Concept Selection Recommendation has recently been made to JV Continue to work with JV to expedite approval process and first oil now modelled for early 2016, subject to FPSO contractor discussions FPSO and Subsea Wells 23 August 2012 Page 12

14 Non-operated projects Bream Completed SPA with Skeie in July; increased equity in Bream to 40% FPSO and SURF FEED near completion Operator planning project sanction in October Cost pressures Scope for area development exists Operator targeting 2015 for first oil Frøy Joint Area Studies are underway with other operators to identify and evaluate the preferred options for an area development Block A Aceh EPCI re-tender resulted in higher than anticipated bids Revisiting gas price with buyer 23 August 2012 Page 13

15 Sea Lion transaction rationale Progresses Premier s strategy of growth through investment in high quality development projects Provides a further operated core area for Premier in a new oil prone basin Leverages Premier s strong operatorship and FPSO development capabilities Ongoing exploration opportunities in the North Falklands basin, leveraging Rockhopper s proven exploration expertise Adds approximately 200 mmbbls of net discovered 2C resources at a low upfront cost, together with net risked prospective resources of 175 mmboe Significantly extends Premier s production growth beyond current development projects and is an excellent fit with strongly rising cash flows Fully funded from a combination of existing cash resources, facilities and cashflow from operations; commitment to fund dividend unchanged Pro-forma 2P Reserves and 2C Contingent Resources (mmboe) P Reserves Pro-forma 2P Reserves and 2C Contingent Resources Split by Region Falkland Islands 28% Pakistan & Mauritania 9% 2C Contingent Resources 2P Reserves & 2C Contingent Resources Total ~725 mmboe Falkland Islands Farm-in North Sea 31% Asia 32% Pro-forma 2P Reserves & 2C Contingent Resources 23 August 2012 Page 14

16 Sea Lion 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 Hydraulic submersible pumps (HSPs) for artificial lift and flow assurance Gross plateau rate of kbopd 120 kbopd produced fluids 200 kbwipd 140 kbwpd power fluid for HSPs mmscfd gas handling Assumed capex to first oil of $3.2 billion (purchased FPSO) Subsequent development of satellite fields 23 August 2012 Page 15

17 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 Sea Lion Wax Content 30% 22% Wax Appearance Temperature 82 C C Seabed Temperature 20 C 2 C Reservoir Temperature 150 C 82 C 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 23 August 2012 Page 16 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

18 Logistics No requirement for supply bases in Africa or South America This model successfully used for exploration and appraisal Cost structure assumed in base case 23 August 2012 Page 17

19 Provisional Sea Lion development schedule Concept Selection Project Sanction First Oil STUDY DESIGN EXECUTE PRODUCE Concept Validation Studies FDP Preparation, Submission and Approval Subsea FPSO Wells Offshore Installation, Hook-up & Commissioning 23 August 2012 Page 18

20 Exploration update 23 August 2012 Page 19

21 Exploration vision Deliver material resource and value to the company 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)* 1.6 billion boe of net resource targeted Existing New Existing 1. Known geologies and/or skills in existing areas North Sea 3. New skills and/or geologies in existing areas Existing Asia Rest of World and ENB New 2. Known skills and/or geologies in new areas 4. New skills and/or geologies in new areas New * DeGoyler & MacNaughton estimate 23 August 2012 Page 20 Existing New

22 Prospective resource portfolio increased significantly during 1H 2012 Unrisked prospective resource portfolio 2,723 mmboe* 616 mmboe in prospects 2,093 mmboe in leads Portfolio increased since December 2011 Increased lead and prospect inventory in the Falklands, Iraq and Vietnam APA 2011 and UK deferred 26th Round awards added Risked prospective resource portfolio 453 mmboe 174 mmboe in prospects 268 mmboe in leads Greater focus to lead maturation in 2012/2013 Unrisked Net Prospective Resource (mmboe) Prospects 433 (17%) Drillable 169 (6%) Risked Net Prospective Resource (mmboe) Drillable 55 (12%) Total 2,723 mmboe Appraisal 14 (1%) Appraisal 11 (3%) Leads 2,093 (77%) Portfolio increased by ~ 1 billion boe to 2,723 billion boe (net, unrisked) during 1H 2012 Prospects 119 (26%) Total 453 mmboe Leads 268 (59%) *Excludes PL23 and PL24 in the Falkland Islands, which are subject to licence extension 23 August 2012 Page 21

23 Rest of World North Sea Asia Transforming the exploration portfolio Evaluate Leads Prospects Mature Prospects Drill Drillable Prospects Appraise Block 121 Mackerel Silver Sillago Singa / Kuda Laut Ca Voi Indonesia Buton: Benteng Norway and Inner Moray Firth Swordfish Bonneville. Matang Luno II Vietnam Block 12W: CS Cau Herring Cyclone Lacewing Norway PL378: Grosbeak & Skarfjell Norway PL374S: Blabaer Pre- Development New York Spaniards East Falkland Islands* Iraq Acquire Licence Gate 23 August 2012 Page 22 Peer Assist Net NPV10 $mm <10 <100 >100 >250 Peer Review Net EMV10 $mm (shown as circle inside NPV) <10 >10 >25 >50 K-32 Drill Decision Gate Badhra-6 Parh Badhra South Badhra-7 Appraisal Approval Gate Project Extension Gate * Excludes PL23 and PL24 in the Falkland Islands

24 Asia Block A Aceh & Andaman Sea LEARNINGS LEARNINGS 12W 07/03 NSBA Phu Khanh Basin Tuna Block 121 Anoa Deep success Play opener More than 4 wells planned 2013/2014 Buton Success Establish commerciality Matang to be drilled in Q Chim Sáo North West (CS-3X) drilled 2 exploration wells planned in the Nam Con Son basin in 2013 Buton Oligocene learnings transferred to frontier geographies Andaman Sea JSA Block 121 in Vietnam 23 August 2012 Page 23

25 Pakistan assets Net Cumulative Initial Reserves (bcf) Premier has added 600 bcf of net reserves through conventional exploration Exploration focussed on the Kirthar Frontal Fold-belt and Foreland basin The basin is now mature for conventional exploration Value adding near-field exploration continues (K-30 and Badhra-7) Can unconventional resources reset the curve? 2012 pilot project on Kadanwari August 2012 Page 24

26 Kenya L10A & L10B Potential to extend East African successful plays into offshore Kenya (Tertiary rifts and Cretaceous fans) 2,535 km 2 of 3D and 1030 km 2D acquired Preliminary dataset highlights prospectivity New 3D over Inboard play planned for Q Potential well(s) in 2H 2013 SW NE Inboard Play Outboard Play 23 August 2012 Page 25

27 Iraq SW Approximate position of Block 12 NE Premier (30%) has agreed to join Bashneft on Block 12 8,000 km 2 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 Gravity Map Block August 2012 Page 26

28 North Sea Pushing the plays wider Premier has the regional database to pursue amplitude supported Tertiary prospects throughout the Central North Sea (CNS) Eocene prospects: Carnaby (drilled) and Cyclone (remains to be drilled) 2014 drilling will target Inner Moray Firth Inner Moray Firth Cyclone Luno II Pushing the Plays Deeper HPHT Triassic test at Lacewing Learnings will be applied to UK and Norway Jurassic test at Luno II Carnaby Eocene Turbidite Sand Fairway Lacewing Cyclone Lacewing Ragnarrock Luno/Apollo Johan Sverdrup Balder PL 359 Luno II Prospect Cyclone amplitude response on far stack data 10km BCU Time Map C.I. 100 ms 23 August 2012 Page 27

29 Norway Acquired three operated Norwegian concessions from Nexen for $5.5 million in 2011 Luno II Builds on Premier s knowledge in the CNS Consistent with the Play Master approach Adjacent to Premier-operated Freki Licence (PL 567, Premier 60%) PL 567 Jurassic plays on the margin of the Mandal High identified Premier operates four licences Adds > 250 mmboe to Premier s net un-risked lead portfolio Prospect maturation via seismic reprocessing and geological studies PL 539 is a key focus for prospect maturation Potential 2014 drilling targets 23 August 2012 Page 28

30 PL539 Myrhauk Lead Myrhauk Trym Field Myrhauk 3/7-4 SW Mandal High NE SE NW Mandal High PL 539 Targeted for early 2014 drilling Jurassic onlap to a basement high Premier equity 40% Target play below BCU Target play below BCU 2km 2km 23 August 2012 Page 29

31 Falkland Islands PL032/033 Unrisked prospect and lead portfolio >1 billion boe (175 mmboe risked) Cretaceous fan and delta plays Deep Jurassic gas potential New 3D acquired and under evaluation PL023/024 Unrisked lead portfolio >2 billion boe (100 mmboe risked) No CPR assessment Requires licence extension Yet to be evaluated by Premier Sea Lion 14/10-9 At least 3 wells planned for August 2012 Page 30

32 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 23 August 2012 Page 31

33 Exploration drilling programme P50 gross unrisked Asia Q3 Q4 Q1 Q2 resource (mmboe) Risk Vietnam Block 121 Ca Voi 100 High Indonesia Block A Aceh Matang Century Rig Moderate North Sea Norway PL359 Luno II Bredford Dolphin 120 Moderate PL378 Skarfjell Appraisal P1655 Spaniards East Wilphoenix 30 Moderate P1784 Cyclone Wilphoenix 30 Moderate UK P1181 Lacewing Maersk Resiliant 58 High P1430 Bonneville 10 Low P1887 Norfolk Middle East - Africa - Pakistan Pakistan Kadanwari K-32 Weatherford Low Bhit-Badhra Badhra South Deepening-1 SLB Rig High Kenya L10A & L10B Inboard 3D seismic Mauritania Commitment well TBC TBC All well timings are subject to revision for operational reasons Firm Wells: Rig Contracted Firm Wells: Rig TBC Contingent Wells Wells to watch Seismic acquisition The three key wells in the next 12 months are Luno II, Lacewing and Ca Voi, targeting at least ~100 mmboe of net unrisked prospective resources 23 August 2012 Page 32

34 Exploration delivering the strategy Key deliverables over the next 18 months... Established areas Drill effective plays tests at Luno II and Lacewing Mature drillable prospects for 2103/2014 drilling Mandal High (Norway) Inner Moray Firth (UK) Lama Play (Indonesia) New areas Drill an effective play test in the Phu Khanh Basin (Vietnam) Mature drillable prospects in Kenya and the Falklands Secure 2 high impact new ventures 1.6 billion boe of net resource targeted 23 August 2012 Page 33

35 Financial results 23 August 2012 Page 34

36 Record profitability Working Interest production (kboepd) Entitlement production (kboepd) Realised oil price ($/bbl) pre hedge Realised gas price ($/mcf) pre hedge 6 months to 30 June months to 30 June Highlights Operating costs ($/bbl) 1H H 2011 UK $33.5 $34.2 Indonesia $9.1 $9.6 Pakistan $1.9 $2.1 Vietnam $15.3 Group $14.7 $14.0 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 $m 744 (394) 350 (92) (13) 245 (50) 195 (49) 146 $m 342 (200) 142 (91) (9) 42 (9) Hedging 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 23 August 2012 Page 35

37 Group taxation position Tax charge 6 months to 30 Jun 2012 $m 6 months to 30 Jun 2011 $m UK Tax Losses/Allowances Position 30 Jun 2012 $m Overseas Tax losses/allowances brought forward 1,360 UK PRT Losses/allowances for the period 175 CT (3.6) (0.6) RFES 68 Current charge* Small field allowances 46 Deferred tax credits (37.3) (104.5) Tax charge/credit for the year 48.8 (56.0) Tax losses/allowances carried forward* 1,649 * Current tax charge 35% of operating profit * fully recognised as deferred tax asset No UK CT cash taxes until August 2012 Page 36

38 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 2012 $m 466 (141) 325 (318) 25 (103) (15) 6 months to 30 June 2011 $m 246 (4) 242 (297) (87) (24) (10) Estimated capex split ($m) Development Exploration Regional split ($m) 2012 (86) (176) Asia North Sea $124m MEAP $14m Total $318m $180m Full year capex forecast of $650 million (development) and $180 million (exploration) 23 August 2012 Page 37

39 Strong liquidity position Cash Bank debt Bonds Convertibles Net debt position Gearing (net debt/net debt + equity) Cash and undrawn facilities at 30 Jun 2012 $m 290 (316) (573) (232) (831) 31% 1,300 at 31 Dec 2011 $m 309 (484) (341) (228) (744) 36% 1,116 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 August 2012 Page 38

40 Fully funded programme Development Funding Dividend, exploration and all existing projects are fully funded at $85/bbl Investment Profile (US$ million) Acquisitions / disposals Exploration expenditure Development Capex Development capex (US$ million) Sea Lion Existing Assets * * 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 Note: Assumes exploration expenditure of $250 mm pa from *Assumes standby funding is taken up by Rockhopper. Purchased FPSO case. 23 August 2012 Page 39

41 Outlook 23 August 2012 Page 40

42 What can you expect from Premier? Strong growth in cash flow generation $2.6 billion per annum once Catcher on-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 offers continuing opportunities Rapidly rising production and cash flow (kboepd) Dividend commitment Portfolio focussed on value creation Huntington Catcher Sea Lion Historic NAV/share CAGR of 14.2% at constant oil prices 23 August 2012 Page 41

43 23 August 2012 Page August 2012