Tullow Oil plc · LSE:TLW
Tullow Oil — Investor Presentation (September 2016)
37 slides from Tullow Oil's investor presentation, September 2016
Slide 1: Overview presentation Tullow Oil plc September 2016
Overview presentation Tullow Oil plc September 2016
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 21 319mmboe 951mmboe 305,634 2C Contingent Sq km acreage Countries 2P Reserves Resources Figures at HY 2016 Established record of delivering successes • The business has developed organically and through acquisitions
Slide 5: The Tullow strategy
Overview presentation The Tullow strategy Additional cash flow from new production Monetisation High Margin Exploration Selective Options & Production and Development Portfolio Cash flow Appraisal Management Costs & Dividends Additional Surplus Cash Exploration, Cash Distribution • Capital focus on
Slide 6: 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 East Africa • First oil achieved in August 2016 Development • FPSO gross capacity of 80,000 bopd (net WI ~35,000 bopd) • Progressing two i
Slide 7: Well-positioned for growth
Overview presentation Well-positioned for growth Decisive action taken Financially robust Fit for new oil era Re-set to deal with Step change for Tullow Flexible portfolio with low oil prices: with TEN first oil: major growth potential: Moved early and decisively; Increase in oil production and Prof
Slide 8: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 9: Proactive financial management
Overview presentation Proactive financial management Realising the benefits of early actions Significant cost savings • Gross G&A of $215m, down 32% from 1H 2015 • Net admin expenses of $69m, down 31% from 1H 2015 • Good progress on underlying operating costs Capex reductions • Capex c.$1.0bn foreca
Slide 10: 2016 Half Year Results Summary
Overview presentation 2016 Half Year Results Summary 1H 2016 ($m) 1H 2015 ($m) Sales revenue 541 820 Gross profit 182 342 Administrative expenses (69) (100) Restructuring costs (7) (25) Loss on disposal (3) (44) Exploration costs written off 1 (59) (88) Impairment of property, plant and equipment -
Slide 11: Generated first half profit in a challenging environment
Overview presentation Generated first half profit in a challenging environment 200 115 100 85 53 30 30 0 (68) 49 -100 63 29 $m (144) 18 32 -200 IMPACT OF JUBILEE $m Lower volumes (175) 109 (196) -300 30 Higher opex costs (18) Reduced DD&A 62 55 -400 Tax 46 TOTAL (85) -500 June 2015 Price Volume Hedg
Slide 12: Jubilee turret insurance expectations
Overview presentation Jubilee turret insurance expectations Spread moor Install Claims Loss Root Cause FPSO Deepwater notified to adjusters Analysis Temporary Permanent Offloading insurers appointed commenced heading heading Buoy ✓ ✓ ✓ Feb 2016 Feb 2016 Apr 2016 2016 2017 2018 Costs (Tullow net) – H
Slide 13: Industry leading hedge position
Overview presentation Industry leading hedge position Hedge strategy unchanged • Tullow has proactively hedged production to protect revenues over the last 10 years • Significant liquidity benefit through protecting future revenues and generating RBL debt capacity • Prudent during periods of higher
Slide 14: Managing balance sheet, debt diversification and liquidity
Overview presentation Managing balance sheet, debt diversification and liquidity Committed Debt Facilities Drawings $bn Overall • $1.0bn facility headroom plus free cash at mid-year $1.3bn 6 0.3 liquidity 2016 ($1.3bn including the $300m convertible bond) Headroom incl. convertible 0 1.0 $1.0bn bond
Slide 15: Significant Capex reduction in 2017 post TEN project
Overview presentation Significant Capex reduction in 2017 post TEN project 2500 Jubilee Turret 2016 Capex of c.$1bn Exploration • Includes Jubilee turret project c.$35m East Africa 2000 • Final year of TEN first oil capex of c.$600m West Africa non-op (incl Europe) TEN Jubilee 2017 Capex reduction 1
Slide 16: Financial strategy provides flexibility for future growth
Overview presentation Financial strategy provides flexibility for future growth • Continuing to drive down Opex and G&A • Significant hedging in place for 2H 2016 and 2017 Financial • Capex flexibility post TEN; 2017 potential below c.$300m resilience • Jubilee turret project being managed; insuranc
Slide 17: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 18: Significant West African oil production growth post TEN
Overview presentation Significant West African oil production growth post TEN 1H 2016 West Africa oil production: 51,800 bopd FY 2016 guidance: 62-68,000 bopd • Jubilee turret project impacting physical production West Africa Oil Production 120 Jubilee Turret Ghana CWA 100 80 60 40 20 0 2015 1H 2016
Slide 19: West Africa portfolio: low underlying opex and flexible capex
Overview presentation West Africa portfolio: low underlying opex and flexible capex Ghana underlying operated Opex/bbl 15 Strong underlying opex performance in Ghana • Underlying Ghana opex reduced to ~$9/bbl in 1H 2016 10 - Contract renegotiations and efficiency improvements Opex $/bbl • Targeting
Slide 20: Jubilee turret project under way
Overview presentation Jubilee turret project under way Spread moor Install Identification Revised Long-term FPSO Deepwater of operating solution Temporary Permanent Offloading issue procedures designed heading heading Buoy ✓ ✓ ✓ Feb 2016 April 2016 June 2016 2016 2017 2018 Costs Gross Capex c.$85m c
Slide 21: Jubilee – long-term asset with flexible investment opportunities
Overview presentation Jubilee – long-term asset with flexible investment opportunities Performance in 2016 • 1H 2016 average gross production: 63 kbopd • FY 2016 guidance: 74 kbopd (2H 2016: 85 kbopd) • Gas exports continue to onshore processing facility Greater Jubilee Full Field Development • GJFF
Slide 22: TEN Project – industry leading project execution
Overview presentation TEN Project – industry leading project execution First Oil achieved on 18 August 2016 • Production steadily ramping up • Project delivered on time and within budget Exceptional project delivery • Focused and empowered Tullow project team • DRILLING Robust project execution and
Slide 23: Firming-up Kenya's oil resources ahead of development
Overview presentation Firming-up Kenya’s oil resources ahead of development Appraisal to continue • South Lokichar resource - 750 mmbo; 1 bnbo upside • Successful extended well tests in Amosing & Ngamia • Water injection testing 3Q 2016 • 3D seismic highlights additional upside in Amosing & Ngamia •
Slide 24: Progressing Uganda's Lake Albert basin development
Overview presentation Progressing Uganda’s Lake Albert basin development Upstream developments progressing towards FEED 30% Annual percentage life of field capex of 25% • Project definition is mature; de-risked resource of 1.7 billion barrels Uganda upstream development 20% • Targeting 200 to 230 kb
Slide 25: Portfolio with significant future production potential
Overview presentation Portfolio with significant future production potential TEN Project delivery Industry leading project execution, first oil on 18 August 2016 Significant resource upside, low cost incremental Ghana upside options investment options across Jubilee and TEN Jubilee Turret project Ex
Slide 26: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 27: Exploring in the current environment
Overview presentation Exploring in the current environment Strategy steadily evolves • Exploration continues to be central to Tullow’s value growth strategy • Strong portfolio & attractive programmes adapted for current environment & long- term upside Focus on material low-cost oil plays • Exciting
Slide 28: 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: 500mmbo prospect in four-way closure, good seismic amplitude support • Araku estimated well cost of c.$14 million net t
Slide 29: 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 • Preparing to acquire 3D seismic • Jubilee-like setting up-dip of Liza oil discovery • Kaieteur estimated well cost of c.$15 million net to Tullow (non-op 30%) • Shallow water concept
Slide 30: 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 • 1.7 billion barrels of oil discovered Kenya North • Basin margin play unsuccessful at Engomo-1 Turkana Basin • Independent plays away from bas
Slide 31: Kenya: E&A drilling programme in South Lokichar Basin
Overview presentation Kenya: E&A drilling programme in South Lokichar Basin Material proven oil basin • 9 oil accumulations discovered • 750mmbo resource base confirmed by tests Significant upside potential • Billion barrel basin potential • 20 oil prospects & leads yet to drill • Further new plays
Slide 32: Africa: Long-term future upside & portfolio replenishment
Overview presentation Africa: Long-term future upside & portfolio replenishment LAKE MWERU WANTIPA BASIN • Mauritania: exploration shifted to low-cost shelf-edge oil plays • Zambia: extension of East African Rift Basin Play; reconnaissance started • Namibia: material turbidite oil play in low-cost s
Slide 33: Latin America: Significant positions in under-explored region
Overview presentation Latin America: Significant positions in under-explored region • Jamaica: early stage of frontier exploration, interpreting new 2D seismic data • Guyana: attractive acreage up-dip of material Liza-1 oil discovery • Suriname: amplitude-supported low-cost offshore oil plays • Urug
Slide 34: Exploration is central to our growth
Overview presentation Exploration is central to our growth Game-changing opportunities Guyana-Suriname: low-cost, multiple prospect potential Africa: Growth options Oil prone acreage in Namibia, Mauritania and Zambia Kenya: Discovering more oil South Lokichar new E&A campaign starts Q4 2016 Ghana: E
Slide 35: Overview presentation
Overview presentation OVERVIEW PRESENTATION
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