Tullow Oil plc · LSE:TLW
Tullow Oil — Investor Presentation (June 2017)
37 slides from Tullow Oil's investor presentation, June 2017
Slide 1: Tullow Oil plc Overview presentation
Overview presentation Tullow Oil plc June 2017
Slide 2: Disclaimer
Overview presentation Disclaimer This presentation contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst Tullow believes the expectations reflected herein to be reasonable i
Slide 3: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 4: A leading global independent exploration & production company
Overview presentation A leading global independent exploration & production company Established record of delivering successes • The business has developed organically and through acquisitions since 1985 Diversified world-class asset base • Focus on Africa and South America • Over 100 licences acros
Slide 5: Flexible, disciplined, proven E&P company
Overview presentation Flexible, disciplined, proven E&P company Action taken Solid business base Focus on growth Business reset Low-cost High-impact and restructured production exploration assets Deleveraging under Team with Significant potential way through organic track record cash flow from free
Slide 6: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 7: Rights issue – Reducing debt and enabling growth
Overview presentation Rights issue – Reducing debt and enabling growth Rights Issue rationale: Tullow believes its gearing is too high • Worked hard to reduce costs and re-set the business • Brought TEN on stream and entered into Uganda farm-down • Started generating free cash-flow from December 201
Slide 8: Debt reduction enables focus on value-enhancing growth
Overview presentation Debt reduction enables focus on value-enhancing growth Projected illustrative steps to <2.5x gearing • Year end 2016 gearing of 5.1x • Reduced gearing achieved through: 5.1x • Increased FCF from higher production and potential Significant reduction in oil price rise gearing by
Slide 9: Deleveraging accelerates opportunities for growth
Overview presentation Deleveraging accelerates opportunities for growth West Africa: East Africa: New Ventures: Extend revenues Build value Frontier exploration • Target upside in operated • Further E&A in Kenya to • High impact opportunities and non-operated fields prove up resource base in low-cos
Slide 10: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 11: Proactive financial management
Overview presentation Proactive financial management Self-help delivery Deleveraging started Prudent financing Cash cost savings Free cash flow in 2017 Liquidity headroom Significant G&A cash savings TEN production onstream $345m RBL accordion secured Underlying op costs down 5% Hedging underpins ca
Slide 12: Disciplined capital allocation targeting areas of future growth
Overview presentation Disciplined capital allocation targeting areas of future growth 1800 Ghana 2016 Capex of c.$0.9bn 1600 West Africa non-op (incl Europe) Exploration • c.20% down from initial forecast of $1.1bn East Africa 1400 Uganda (offset by farm-down) 2017 Capex of c.$0.5bn 1200 • Significa
Slide 13: Hedging strategy provides protection to oil price volatility
Overview presentation Hedging strategy provides protection to oil price volatility Prudent approach provides significant benefits to the business • Tullow has proactively hedged production to protect revenues over the last 10 years • Significant liquidity benefit through protecting future revenues a
Slide 14: Managing balance sheet, debt diversification and liquidity
Overview presentation Managing balance sheet, debt diversification and liquidity $bn Liquidity • c.$1.2bn facility headroom and free cash in May Committed Debt Facilities Drawings 2017 6 • Minimum $0.5bn headroom going forward 5 RBL • Successful routine redetermination March ‘17 0.8 3 • $345m accord
Slide 15: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 16: A sustainable future production base
Overview presentation A sustainable future production base Key production and development Countries with ongoing operations Key oil producing countries TEN field Kenya • Estimated 750m bbls of discovered • First oil achieved in August 2016 resources in Kenya, with estimated • FPSO gross capacity of
Slide 17: Significant pipeline of high-margin production growth
Overview presentation Significant pipeline of high-margin production growth Actual and forecast future oil production 2016 Production Future estimated potential production • West Africa oil production: 65,500 bopd* CWA 150 • Europe gas production: 6,200 boepd Jubilee BI insurance Ghana 2017 Guidance
Slide 18: TEN on stream following successful project delivery
Overview presentation TEN on stream following successful project delivery Successful project execution and completion • Project delivered on time and on budget • FPSO tested in excess of design capacity (80,000 bopd) • Production data supports oil in place and reserves TEN field on stream DRILLING •
Slide 19: Strong Jubilee performance; remediation work underway
Overview presentation Strong Jubilee performance; remediation work underway Turret remediation project Interim • Temporary heading completed spread moor ✓ • All equipment installed • Tugs removed 100 kbopd capacity Long-term • Turret modifications for long-term operations spread moor • Ongoing evalu
Slide 20: Jubilee & TEN – Material, long-life and low-cost fields
Overview presentation Jubilee & TEN – Material, long-life and low-cost fields Ghana underlying cash operating costs/bbl Operating cost reductions 15.0 • Underlying cash opex reduced to ~$9/bbl in 2016 Opex/bbl Opex $/bbl • Targeting underlying cash opex in 2018+ of ~$8/bbl 10.0 $/bbl Strong resource
Slide 21: Additional cash flow from future Uganda production
Overview presentation Additional cash flow from future Uganda production Farm-down to Total announced • $900m consideration: - $200m cash - $100m on completion, $50m at FID, $50m at first oil - $700m in deferred consideration • Deferred consideration exceeds Tullow’s estimated share of upstream and
Slide 22: Preparing Kenya asset for development
Overview presentation Preparing Kenya asset for development Continuing to de-risk and build on resources • South Lokichar E&A programme ongoing • Appraisal wells to test upside in Amosing & Ngamia • Successful water injection tests support water flood & recovery Progressing Full Field Development (F
Slide 23: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 24: Exploration central to long-term growth strategy
Overview presentation Exploration central to long-term growth strategy • Focus on low-cost, high-margin, light oil plays • Portfolio of high-impact prospects suited to current environment • Working on our seismic and geological assets to create & high-grade prospects • Adding attractive exploration
Slide 25: New venture campaigns focused on long-term value
Overview presentation New venture campaigns focused on long-term value Commercial Screening Off-limits Exploration Tested at $50/bbl Low cost of supply Ultra-deepwater Value accretive Deepwater gas High Margin Oil Shale oil Arctic Capital & Risk Screening Onshore Rifts East Africa Light Oil Over-hea
Slide 26: Substantial E&A activity in 2017 – laying foundations for growth
Overview presentation Substantial E&A activity in 2017 – laying foundations for growth JAMAICA MAURITANIA KENYA Walton Morant (100%) C3 (90%), C-10 (76.5%) Block 12A (40%) 2D Seismic 3D Seismic 2D Seismic Block 10BB/13T (50%) 3D Seismic South Lokichar Basin (50%) SURINAME 4 + 4 well programme Block
Slide 27: Onshore East Africa: exploring regional oil play
Overview presentation Onshore East Africa: exploring regional oil play Location Activity Uganda Lake Albert • 17+ oil fields discovered (90% success) Basin • Estimated 1.7 billion barrels of oil discovered Kenya North • Basin margin play unsuccessful at Engomo-1 Turkana Basin • Independent plays awa
Slide 28: E&A in Kenya to prove up resources
Overview presentation E&A in Kenya to prove up resources Proven oil basin • 13 exploration prospects drilled • 11 oil accumulations discovered • 21 appraisal wells drilled for delineation & testing • Tullow estimates 750 mmbo mean resource* Significant upside potential • Estimated billion barrel bas
Slide 29: Guyana-Suriname: excellent position in new oil province
Overview presentation Guyana-Suriname: excellent position in new oil province • Liza-1 deepwater oil discovery significantly de-risks the basin & Tullow’s regional acreage • Araku: Estimated 500mmbo prospect in four-way structural closure, good seismic amplitude support • Araku-1 well cost estimated
Slide 30: Guyana: prospects up-dip of Liza-1 discovery, in shallow water
Overview presentation Guyana: prospects up-dip of Liza-1 discovery, in shallow water Exploration activity commenced • 3D seismic programme to commence in Q1 2017 • Jubilee-like setting up-dip of Liza oil discovery • Estimated well cost of c.$15 million each net to Tullow (non-op 30%) • Shallow water
Slide 31: High-impact South America prospects
Overview presentation High-impact South America prospects • Jamaica: early stage of frontier exploration, interpreting new 2D seismic data • Guyana: attractive acreage up-dip of Liza-1 oil discovery; acquiring 3D seismic in 2017 • Suriname: low-cost offshore oil plays; drilling Araku in 2H 2017 • Ur
Slide 32: Africa: Shallow water plays and Cretaceous turbidite leads
Overview presentation Africa: Shallow water plays and Cretaceous turbidite leads Mauritania Namibia • Shallow water plays focused around oil kitchen • Multiple Cretaceous leads in high-quality 3D seismic • Low-cost, high-impact prospects based on 3D seismic • Shallow water (500m) low-cost opportunit
Slide 33: High-impact African leads and prospects
Overview presentation High-impact African leads and prospects LAKE MWERU WANTIPA BASIN • Mauritania: exploration focus shifted to low-cost shelf-edge oil plays, 3D seismic planned for 2017 • Zambia: extension of East African Rift Basin Play; preparing for High Gravity survey in 2017 • Namibia: mater
Slide 34: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 35: Affirmation of Jubilee insurance cover
Overview presentation Affirmation of Jubilee insurance cover Revised Remediation Spread operating solution moor FPSO Install Deepwater Identification Temporary Permanent of issue procedures designed heading heading Offloading Buoy* ✓ ✓ ✓ Feb 2016 April 2016 June 2016 2016 2017 2018 Turret remediatio
Slide 36: Ghana acreage
Overview presentation Ghana acreage Slide 36
Slide 37: Tullow Oil plc
Overview presentation Tullow Oil plc 9 Chiswick Park 566 Chiswick High Road London, W4 5XT United Kingdom Follow Tullow on: Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 Email: [email protected] Web: www.tullowoil.com