Genel Energy Plc · LSE:GENL
Genel Energy — Investor Presentation (April 2016)
42 slides from Genel Energy's investor presentation, April 2016
Slide 1: Investor presentation April 2016
Investor presentation April 2016
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 / Investment Case
GENEL AT A GLANCE INVESTMENT CASE Low cost and resilient KRI asset base UK listed E&P focused on the Kurdistan Region of Oil: opex < $2/bbl Iraq (KRI) Gas: Miran & Bina Bawi upstream capex and opex < $3/boe Producing oil assets forecast to deliver a cash breakeven at a Brent oil price of c
Slide 4: KRI exports and contractor export payments
Contractor export payments(2) $75m $75m $75m $75m $56m $36m $59m 650,000 600,000 KRI export pipeline shut in 550,000 between 17 February and 10 500,000 March 2016 450,000 400,000 bopd 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep
Slide 5: Export payment mechanism announced 1 February 2016
Export payment mechanism announced by Ministry of Natural Resources on 1 February 2016 Monthly payment to Contractor calculated as a proportion of monthly field revenue as a proxy for entitlement MNR aims to process monthly payments within 10 working days of the following month Field revenue
Slide 6: 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 7: Genel Energy KRI Licenses
GENEL ENERGY KRI LICENSES(1) Khurmala to Fishkhabour, 700,000 bopd capacity pipeline Taq Taq to Khurmala 150,000 bopd capacity pipeline (1) Genel is in the process of relinquishing its interests in the Ber Bahr and Dohuk licences
Slide 8: Forward strategy driven by optimising value, not near-term production growth
Taq Taq Tawke Gross average production of 116,000 bopd in 2015, +13% year- Gross average production of 135,000 bopd in 2015, +48% year- on-year on-year 2015 sales split: 63% sold via KRI-Ceyhan pipeline, 27% to 2015 sales split: 85% sold via KRI-Ceyhan pipeline, 12% domestic Bazian refinery,
Slide 9: 2016 Genel Net WI Production Guidance at 60-70 kbopd
Gross Taq Taq production (kbopd) Gross Tawke production (kbopd) 135 116 104 91 75 75 66 52 45 39 33 12 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Local Bazian Export Local Topping Plant Export 2016 GENEL NET WI PRODUCTION GUIDANCE AT 60-70 KBOPD
Slide 10: KRI portfolio activity
Taq Taq 2016 Development of Reservoir Qamchuqa Activity RIG Jan Feb March April May June July Aug Sep Oct Nov Dec activity plan Fracture Systems Management Workover Pilaspi test & production P O O Rigless Workover TT-07 P O O Rig-1 Firm Sidetrack-1 P P O Rig-1 Budget Sidetrack-2 P O P Rig-1 Workover
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 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 and MidstreamCo
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% interest in 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 KRG’s 25% interest in Miran and 20% interest in Bina Bawi to be transferred to Genel Production Sharing Contract (PSC) Amendment Agreements Contractor responsibilities
Slide 15: Gas Supply Agreement (GSuA)
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: Upstream and midstream term sheets signed
Upstream and midstream term sheets signed Revised terms enhance original agreements and deliver alignment along the value chain Term sheets to be converted into binding documentation during Q2 2016 Acquired OMV’s stake in Bina Bawi Upfront payment of $5 million, contingent payments of $145
Slide 17: Upstream, Midstream and Financing next steps
Upstream Field Development Plan contract expected to be awarded in Q2 2016 Midstream Pre-FEED – expected to complete by end H1 2016 - Pre-FEED will focus on site selection and technical design for the gas processing facilities at Miran and Bina Bawi and provides detail on procurement which w
Slide 18: 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 19: Further activity shaped by oil price outlook and export payments
Further activity to be shaped by oil price outlook/evolution of export payments Chia Surkh-12 well spudded in March 2016 Peshkabir-2 well scheduled for Q3 2016 Morocco (Sidi Moussa licence, Genel 60% operated WI) - Farm-out process commenced - Consider options regarding future Sidi Mouss
Slide 20: Peshkabir-2 and Chia Surkh-12 wells
Chia Surkh-10 and Chia Surkh-11 (2013) Peshkabir-1 (2012) CS-10 and CS-11 encountered light oil and gas in Jeribe/Euphrates Drilled on flank of structure, based on sparse 2D data, 27-29 API oil Oligo-Miocene with flow rates between 7-12,000 bopd and 15-46 from Jurassic on test mmcfd of gas
Slide 21: 2015 sales and production by destination
2015 sales and production Export via Domestic Refinery Total Total Genel net (bopd) pipeline sales sales sales production production Taq Taq 73,000 12,300 31,000 116,300 116,100 51,100 Tawke 114,100 16,700 3,600 134,400 135,200 33,800 Total 187,100 29,000 34,600 250,700 251,300 84,900 Note: Differen
Slide 22: Cash flow and net debt 2015
700 Operating cash flow of $71m 74 36 $230m senior unsecured 18 bonds issued in Net debt of 600 23 March 2015 $239m 74 46 (less issue discount) 93 500 489 196 455 141 400 Taq Taq and Tawke $m Three payments received between local sales ($50 Payment of costs incurred Sept & Dec 2015 million received
Slide 23: 2015 capex of $157 million; 2016 capex guidance
2015 capex of $157 million >75% reduction on 2014 Majority of 2015 spend on development at Taq Taq and Tawke 2016 capex guidance of $80-120 million unchanged $50-90 million on Taq Taq & Tawke Contingent activity will move into firm as monthly export payments continue – moving capex to up
Slide 24: 2016 guidance
Guidance Production 60-70,000 bopd Accrued revenue Brent oil price guidance Production costs $1.25 - 1.75/bbl $35/bbl $160 – 220 million $45/bbl $200 – 275 million Revenue ranges reflect current production guidance and both firm and contingent work programmes in 2016 G&A $1.00 – 1.25/bbl Capex $80 –
Slide 25: 2016 revenue guidance and uses of cash scenarios
2016 revenue guidance ($m) 2016 uses of cash scenarios ($m)(1) 300 $200-275m Interest Opex Capex - TT & Tawke G&A Capex - Miran & BB Capex - other 250 $160-220m 200 150 100 50 0 @ $35/bbl Brent @ $45/bbl Brent Low production/spend High production/low Low production/high High production/spend spend s
Slide 26: Bond buy-back successfully implemented in March 2016
Bond buy-back successfully implemented in March 2016 $55.4 million of nominal value repurchased at 63% plus accrued interest Provides liquidity and allows orderly exit for forced sellers Bonds currently quoted at 63(1) compared with pre buy-back price of 52 Pro-forma end-2015 net debt of $
Slide 27: Appendix
(As Genel Energy
Slide 28: Reserves and resources 2P and 2C by asset
1,750 +5% 1,526 1,500 +25% 1,455 1,284 1,250 1,031 1,000 mmboe 750 -44% 500 429 242 250 0 2014 2015 2014 2015 2014 2015 2P 2C 2P + 2C Taq Taq Tawke Miran Bina Bawi Chia Surkh Peshkabir Others (1) Incorporates disclosures on Tawke and Peshkabir from DNO ASA Annual Statement of Reserves 2015. Miran an
Slide 29: Taq Taq McDaniel reserves 2011 vs 2015
McDaniel, 30 June 2011 McDaniel, 31 December 2015 Original Recoverable Reserves 1P 2P 3P Original Recoverable Reserves 1P 2P 3P Pilaspi 11 17 22 Pilaspi 4 7 11 Shiranish 220 460 792 Shiranish 128 237 470 Kometan 50 93 124 Kometan 66 66 67 Qamchuqa 75 113 139 Qamchuqa 46 46 52 Total Original Recovera
Slide 30: Principal change from McDaniel 2011 CPR is revised fracture porosity
Principal change from McDaniel 2011 CPR is a revised estimate of fracture porosity in Cretaceous Shiranish reservoir Original Recoverable 2P Reserves McDaniel McDaniel Reservoir Change Comment 2011(1) 2016(2) Pilaspi 17 7 (10) • More conservative recovery factor • Reduced fracture porosity results
Slide 31: Lower well density on flanks; side-track campaign
Lower well density on flanks of the structure Side-track campaign on flanks of structure Production concentrated on crest Side-track wells to target zones of high fracture porosity Water level rising faster at the crest compared to the flanks and potential unswept micro fractures in the Sh
Slide 32: Manage offtake – less on crest, more on flanks
Irregular free water level rise Actions: Potential for unswept zones 1. Reduce rate of field offtake (implemented) 2. Manage offtake – less on crest more on flanks 3. Drill horizontal wells on flanks Shiranish Shiranish Qamchuqa Qamchuqa Kometan Kometan FWL FWL AQUIFER Unswept oil in Qamchuqa
Slide 33: Reservoir Saturation Tool Results
Reservoir Saturation Tool Results Reservoir Saturation Tool Remaining Oil Saturation results confirm unswept oil in the Qamchuqa matrix Currently assessed as prospective resources of 20-40 mmbbls Depleted Plan being developed to Zone recover unswept oil
Slide 34: Africa Exploration Portfolio
AFRICA EXPLORATION PORTFOLIO(1) NORTH ATLANTIC OCEAN Sidi Moussa MOROCCO Morocco Sidi Moussa licence • 60% operated working interest • 7,624 km2 ATLANTIC OCEAN Odewayne Block Block SL-10B/13 Somaliland 2 licences, 41,000km2 • SL-10B/13 (75% W.I.) • Odewayne (50% W.I.) (1) Genel is currently in the p
Slide 35: Summary Financials - Income Statement
SUMMARY FINANCIALS - INCOME STATEMENT US$m 2011 2012 2013 2014 2015 2016(1) Average production (boepd) 42 45 44 69 85 60-70 Growth 147% 7% -2% 57% 22% Average realisation ($/bbl) 52 56 66 73 39 Revenues 24 333 348 520 344 $200-275m(2) Production cost (3) (40) (46) (62) (36) $1.25-1.75/bbl G&A (65) (
Slide 36: Summary Financials - Cash Flow
SUMMARY FINANCIALS - CASH FLOW US$m 2011 2012 2013 2014 2015 Operating cash flow (pre working capital) (41) 263 263 415 262 Working capital 13 31 42 (280) (191) Cash generated from operations (28) 294 305 135 71 Interest (paid)/received 5 13 (94) (18) (45) Taxation paid - - 3 (2) (1) Net cash from o
Slide 37: Summary Financials - Balance Sheet
SUMMARY FINANCIALS - BALANCE SHEET US$m 2011 2012 2013 2014 2015 Non-current assets 2,076 3,106 3,637 3,695 2,967 Current assets 1,927 1,051 716 793 534 Total assets 4,003 4,156 4,353 4,487 3,502 Non-current liabilities (78) (80) (75) (564) (843) Current liabilities (83) (156) (173) (190) (84) Total
Slide 38: PSC terms comparison by license
Genel Paying Interest 55% 25% 100% 40% 100% Genel Working Interest 44% 25% 100% 50% 100% KRG carried interest 20% 20% 0% 20% 0% 5% (crude oil and first stage 5% (crude oil and first stage State royalty 10% 10% 10% condensate only) condensate only) Cost recovery limit Crude oil and assoc. natural Cru
Slide 39: Contractor's share of Profit Oil determined by R-factor
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 40: Cost recovery: 40-55% of Net Production
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 41: 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 42: Investor Relations contact
Phil Corbett Head of Investor Relations +44 20 7659 5119 investor.relations@genelenergy.com www.genelenergy.com