Genel Energy PLC · LSE:GENL
Genel Energy — Investor Presentation (December 2015)
38 slides from Genel Energy's investor presentation, December 2015
Slide 1: Investor presentation December 2015
Investor presentation December 2015
Slide 2: Disclaimer
These materials are being supplied to you by Genel Energy plc (the “Company”) solely for your information and for use at this presentation. All numbers and charts included in this presentation are from Company data unless specified otherwise. These materials may not be reproduced in any form, redist
Slide 3: Genel at a glance and investment case
GENEL AT A GLANCE INVESTMENT CASE Leading UK listed E&P focused on the Kurdistan Fast growing oil business Region of Iraq (KRI) 57% production growth in 2014 c.30% in 2015 (at midpoint of guidance range) World-class KRI asset base Low cost and resilient KRI asset base Taq Taq and Tawke
Slide 4: KRI pipeline delivers growing contribution to Iraq exports
650,000 20% 600,000 18% 550,000 16% 500,000 450,000 14% 400,000 12% bopd 350,000 10% 300,000 8% 250,000 200,000 6% 150,000 4% 100,000 2% 50,000 0 0% Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 SOMO - Ceyhan KRG - Ceyhan KRG as a % of Iraq exports (RHS) Northern Iraq as a %
Slide 5: Regional pipeline infrastructure
REGIONAL PIPELINE INFRASTRUCTURE Tank Farm = 10 mmbbls capacity Allocated to KRI = 5 mmbbls capacity 40” pipeline with 700,000 bopd capacity Tawke field, >250,000 bopd of pipeline capacity 700,000 bopd of pipeline capacity Taq Taq 46” Pipeline with 1mm bopd of capacity Khurmala Dome Avana Dome Bai H
Slide 6: Genel Energy KRI licenses
GENEL ENERGY KRI LICENSES Khurmala to Fishkhabour, 700,000 bopd capacity pipeline Taq Taq to Khurmala 150,000 bopd capacity pipeline
Slide 7: Low cost onshore oil and gas; commercial breakeven
■ Low cost onshore oil and gas Breakeven of non-producing and recently on-stream oil assets Taq Taq and Tawke life of field F&D costs < $3/bbl 160 Taq Taq and Tawke opex < $2/bbl 150 Marginal heavy oil Miran and Bina Bawi life of field capex and opex < $5/boe (1) 140 and deep 130 water, ■ Low
Slide 8: Forward strategy driven by optimising value, not near-term production growth
Taq Taq Tawke Gross average production of 123,300 bopd for the first nine Gross average production of 134,600 bopd for the first nine months of 2015, +27% year-on-year months of 2015, +55% year-on-year 9M 2015: 63% sold via KRI pipeline, 25% to Bazian refinery, 9M 2015: 82% sold via KRI pipe
Slide 9: 2015 Genel net WI production guidance at 85-90 kbopd
Net to Genel, production growth in 2014 = 57% YoY Mid-point of 2015 guidance would deliver another c.30% YoY growth in oil production Gross Taq Taq production (kbopd) Gross Tawke production (kbopd) 135 123 104 91 75 75 66 52 45 39 33 12 2010 2011 2012 2013 2014 9M 2015 2010 2011 2012 2013 2014 9M 20
Slide 10: Temporary domestic market sales channel
To cover transition to regular payments for exports, KRG implemented a temporary domestic market sales channel Gross revenues from Taq Taq (ex Bazian) and Tawke domestic sales split 50:50 between contractor/KRG KRI domestic market demand of up to c.270,000 bopd: KRG owned Erbil (Kalak) and B
Slide 11: Miran and Bina Bawi - a world-class resource
Miran and Bina Bawi – a world-class resource 11.4 tcf of gross mean raw gas, 8.4 tcf of gross mean sales gas 34 mmbbls mean oil reserves & resources, 45 mmbbls mean first-stage condensate resources Onshore location and scale deliver industry leading cost structure Combined life of field up
Slide 12: Miran and Bina Bawi raw gas and liquids volumes
Raw gas (tcf) Liquids (mmbbls)(1) 19tcf 20 80 142mmbls 18 70 16 7 60 14 11tcf 79mmbls 50 12 50 10 40 60 4 48mmbls 8 6tcf 30 32 6 12 2 20 30 4 17 7 23 10 21 2 4 13 11 7 4 0 0 1 Low Low Oil Mean Mean Oil High High Oil Low Mean High Condensate Condensate Condensate Bina Bawi Raw Gas Miran Raw Gas Bina
Slide 13: Gas commercial structure: upstream, MidstreamCo and Turkey/KRG GSA
Upstream MidstreamCo Miran and Bina Bawi, 100% operated and owned by Genel Energy(1) Responsible for the gas treatment facilities at Miran and Bina Bawi Delivery of raw gas at 1,200 mmscfd to KRG on take-or-pay basis Genel leading on EPC tender and securing equity and debt financing Raw ga
Slide 14: Genel to own 100% of Miran and Bina Bawi PSCs
Genel to own 100% interest in Miran and Bina Bawi PSCs 75% operated interest in Miran 80% operated interest in Bina Bawi (post completion of OMV stake acquisition in September 2015) KRG’s 25% interest in Miran and 20% interest in Bina Bawi to be transferred to Genel Production Sharing Cont
Slide 15: Gas Supply Agreement
Gas Supply Agreement (GSuA): Terms under which raw gas (after removal of first stage condensate) is sold to the KRG Turkey GSA/crude oil sales backed guarantee provided by the KRG Genel commits to deliver raw gas on the following basis: A two year build-up period at volumes of 600-1,200 mi
Slide 16: MidstreamCo, Genel's role, EPC tender and financing
MidstreamCo A company (“MidstreamCo”) will be contracted by the KRG on a build, own, operate and transfer (“BOOT”) basis for the gas treatment facilities MidstreamCo will receive a tolling fee from the KRG on a toll-or-pay basis for the gas processed through the facilities Mid-Stream Gas Com
Slide 17: Upstream gas and oil development capex
Capex for the upstream gas development: $2.9 billion, $1 billion to be incurred before first gas Source: KRI 2014 The Oil Capex for the upstream oil development: $400 million, $60 million to be & Gas Year, company estimates. incurred before first oil Note: Field level upstream Gross midstream
Slide 18: Further activity shaped by oil price and export payments
Further activity to be shaped by oil price outlook/evolution of export payments Appraisal wells on Peshkabir, Ber Bahr and Chia Surkh planned for 2016 Morocco: working with government with respect to forward plan on Sidi Moussa and Mir Left Somaliland: seismic acquisition on Odewayne and
Slide 19: Q3 and 9M 2015 sales and production
Q3 2015 sales and production Export via Domestic Refinery Total Total Genel net (bopd) pipeline sales sales sales production production Taq Taq 71,000 13,100 29,100 113,200 113,100 49,800 Tawke 120,600 21,100 3,500 145,200 145,200 36,300 Total 191,600 34,200 32,600 258,400 258,300 86,100 9M 2015 sal
Slide 20: H1 2015 financial results
Significant production growth $ million H1 2015 H1 2014 YoY Higher volumes due to increased production capacity at both Taq Taq and Tawke and exports via KRI-Turkey pipeline, Average production (kbbl/d) 88,800 63,000 +41% Overall H1 15 realisation $42/bbl (42% decrease on H1 14): Pipeline ex
Slide 21: Cash movement and net debt
$230m senior 600 unsecured bonds issued in Net debt of March 2015 $216m 50 12 24 102 489 196 19 500 474 90 400 Taq Taq and Tawke local Reflects payment for 2014 activity sales incurred in 2015 15 • c.$70m for Africa $m 300 • c.$30m for KRI • $71m Taq Taq and Tawke 200 development spend • $10m Miran
Slide 22: H1 2015 capex of $93 million
H1 2015 capex of $93 million $150 – 175 million 70% reduction on H1 2014 Majority of spend on increasing production capacity at Taq Taq and Tawke $93 million 2015 guidance of $150-175 million Narrowed from $150-200 million at October 2015 trading statement Optimisation of KRI activity on
Slide 23: A strong balance sheet remains a key element of our strategy
Existing debt $730 million 7.5% senior unsecured bond with 2019 maturity At end September 2015, net receivable in respect of unpaid KRI production stood at $409 million Some level of receivable (typically 3-4 months of revenue) will be a feature once export payments normalise Working capit
Slide 24: H1 2015 cash sources and uses; bond covenants
H1 2015 cash sources and uses ($m, pre W/C) 60 50 Bond covenants – significant headroom at H1 2015 Covenant End H1-15 40 Net debt/EBITDAX < 3.0 0.5 30 Equity ratio > 40% 82% 20 Liquidity(1) > $75m $443m 10 0 Domestic proceeds KRI opex Corporate & other Interest cost (1) $75m through June 2018, $100m
Slide 25: Summary investment case
Fast growing oil business c.30% oil production growth year-on-year at midpoint of 2015 guidance range Low cost and resilient KRI asset base Taq Taq and Tawke: F&D cost < $3/bbl, opex < $2/bbl Progress on payment normalisation KRG has reiterated its commitment to pay IOCs for exports from
Slide 26: Appendix
Slide 27: Board of directors
Tony • Group CEO of BP from 2007 to 2010 Nathaniel • Non-Executive Director of Barrick Gold Hayward • Previous roles at BP include Group Rothschild Corp Chairman Treasurer and Chief Executive for • Member of the Belfer Center’s Upstream Activities International Council at the JFK at • Non-executive
Slide 28: Senior management
Murat Özgül • Joined Genel as CCO in 2008 Stephen Mitchell • Joined Genel in November 2011 Chief Executive • Prior to joining Genel was the CEO of General Counsel • Previously VP Legal with BHP Billiton Officer INTA Spaceturk plc (6 years), Group General Counsel • Led the merger of Genel Energy at R
Slide 29: Summary financials - income statement
SUMMARY FINANCIALS - INCOME STATEMENT US$m 2011 2012 2013 2014 H1 2015 2015(1) Average production (boepd) 42 45 44 69 89 85 – 90 Growth 147% 7% -2% 57% 41% Average realisation ($/bbl) 52 56 66 73 42 Revenues 24 333 348 520 199 350 – 375 Production cost (3) (40) (46) (62) (24) $1.25-1.75/bbl G&A (65)
Slide 30: Summary financials - cash flow
SUMMARY FINANCIALS - CASH FLOW US$m 2011 2012 2013 2014 H1 2015 Operating cash flow (pre working capital) (41) 263 263 415 150 Working capital 13 31 42 (280) (150) Cash generated from operations (28) 294 305 135 (1) Interest (paid)/received 5 13 (94) (18) (17) Taxation paid - - 3 (2) (1) Net cash fr
Slide 31: Summary financials - balance sheet
SUMMARY FINANCIALS - BALANCE SHEET US$m 2011 2012 2013 2014 H1 2015 Non-current assets 2,076 3,106 3,637 3,695 3,696 Current assets 1,927 1,051 716 793 918 Total assets 4,003 4,156 4,353 4,487 4,614 Non-current liabilities (78) (80) (75) (564) (759) Current liabilities (83) (156) (173) (190) (88) To
Slide 32: Africa exploration portfolio
AFRICA EXPLORATION PORTFOLIO NORTH ATLANTIC OCEAN Mir Left Sidi Moussa Juby Maritime MOROCCO Morocco 3 licences, 12,761km2 combined • Juby Maritime (37.5% W.I.) • Sidi Moussa (60% W.I.) • Mir Left (75% W.I.) CÔTE D’IVOIRE ATLANTIC OCEAN San Pedro Odewayne Block ATLANTIC OCEAN Block CI-508 Adigala Bl
Slide 33: Reserves and resources
Reserves and resources Reserves and resources (pro-forma 100% interests in Miran and Bina Bawi) 2,500 2,500 2,132 2,000 2,000 1,500 1,500 mmboe mmboe 1,031 1,000 1,000 659 674 429 437 500 500 0 0 2P Reserves 3P reserves 2C resources 2P Reserves 3P reserves 2C resources Taq Taq Tawke Miran Bina Bawi
Slide 34: PSC terms by license
Genel Paying Interest 55% 25% 100% 40% 60% 40% 100% Genel Working Interest 44% 25% 100% 40% 40% 50% 100% KRG carried interest 20% 20% 0% 20% 20% 20% 0% 5% (crude oil and 5% (crude oil and State royalty 10% 10% first stage 10% 10% 10% first stage condensate only) condensate only) Cost recovery limit
Slide 35: Profit oil determined by R-factor formula
Contractor’s share of Profit Oil is determined by an R-factor formula Reset every 6 months 𝐶𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑣𝑒 𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑠 𝑅 − 𝑓𝑎𝑐𝑡𝑜𝑟 = 𝐶𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡𝑠 R-factor < 1 30% 1< R-factor < 2.5 Between 15-30% R-factor > 2.5 15% Early in the field life –…
Slide 36: Cost recovery under PSCs
40-55% of Net Production (Gross Production minus Royalty) is available for Contractors to recover costs Unrecovered costs may be carried forward and recovered in future periods Equipment and facilities become the property of the Government once the Contractor recovers the cost What costs are
Slide 37: PSC production and revenue sharing example
Contractor Interest (80%) Production & Revenue Government Interest (20%) Production Gross Production 100 bbls 100bbls Contractor Working Interest 80 bbls Royalty Production 40-55% of Net Production is available for Contractors 10bbls Contractor Entitlement Production 15 bbls to recover development N
Slide 38: Investor Relations contact
Phil Corbett Head of Investor Relations +44 20 7659 5119 [email protected] www.genelenergy.com