Enquest Plc · LSE:ENQ
Enquest — FY2013 Earnings Presentation
47 slides from Enquest's earnings presentation, Mar 26, 2014
Slide 1: EnQuest 2013 Results
EnQuest 2013 Results Production up 6% Significant 66 MMboe reserves increase Strong cash flow generation 0
Slide 2: Agenda
Agenda • Overview Amjad Bseisu, CEO • Financials Jonathan Swinney, CFO • Business performance Amjad Bseisu & major projects • Operations David Heslop, MD UKCS • Summary Amjad Bseisu 1 1
Slide 3: Repeatable strategy delivering success
Repeatable strategy delivering success • Good production of 24,222 Boepd in 2013, a 6% increase. Due to successful operational and reservoir performance, including delivery of nine wells • Sustained strong cash flow and balance sheet • Excellent reserves growth, 450% replacement since EnQuest incept
Slide 4: Realising value through capability
Realising value through capability Technical leadership in integrated development Heather/Broom • Upgrading existing facilities Thistle/Deveron • Newer technology, new seismic Greater Kittiwake Area Field life • Simplifying processes extensions • Infill drilling, subsurface skill in identifying Matu
Slide 5: Significant reserves growth and cash flow generation
Significant reserves growth and cash flow generation Developments set to deliver material production growth • Production of 24,222 Boepd in 2013 Production • 9 wells successfully delivered, c.$300m capital investment in producing fields & Reserves • Highest Thistle production since ‘90s, successful
Slide 6: Financials
Financials @nQuest
Slide 7: Results summary
Results summary Year to 31 December Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US dollars US dollars 2013 2012 Change % Export production (Boepd) 24,222 22,802 6.2 Average realised price per barrel ($) 109.7 111.6 (1.7) Revenue ($ m
Slide 8: Strategic focus on cost efficiency
Strategic focus on cost efficiency EnQuest historical operating cost profile $/bbl 40.0 35.5 35.0 1.4 31.9 32.3 0.6 1.0 29.4 28.9 6.9 30.0 0.2 4.4 3.9 2.9 5.0 25.0 20.0 15.0 26.3 26.9 27.4 27.2 23.5 10.0 5.0 0.0 2009 2010 2011 2012 2013 Cost of operations SVT Other transportation costs Maintained
Slide 9: Group taxation position
Group taxation position ETR % $m’s UK tax losses $m’s Profit before tax 331 Recognised at 31 December 2012 604 2013 net taxable losses 284 UK corporation tax rate 62 205 PRT 6.6 21 RFES 89 North Sea Tax Reliefs (16.6) (55) Leasing arrangement 61 Leasing arrangement (11.5) (38) Previously unrecognise
Slide 10: $984 million cash capital expenditure
$984 million cash capital expenditure Year to 31 December 2013 US$m 461 172 109 69 57 37 34 24 21 Alma/Galia Kraken Thistle/Deveron Dons Heather/Broom Alba E&E G&A Other 9
Slide 11: Capex reconciliation
Capex reconciliation US$m 1,309 (27) (340) 8 984 34 Kraken firm carry $240m Expenditure $(75)m Kraken contingent carry $80m Alma/Galia carry $95m Tangible oil & gas Alba acquisition Less: carry additions Exploration & Other Cash outflow on asset additions (non-cash) evaluation capex (net of farm out
Slide 12: Cash flow
Cash flow Year to 31 December 2013 Strong financial position, credit facility up to $1.7bn and £155m retail bond US$m 563 90 (984) (50) (381) Tax, interest paid, other Cash & equivalents less Cash & equivalents less Cash flow Capex finance costs paid borrowings at borrowings at from operations 31 De
Slide 13: Finance outlook
Finance outlook Full Year 2014 • Capex expectations of around $1bn • Production and transportation costs expected to be in the range $415m to $435m • Including c.$60m for GKA and c.$25m for Alma/Galia, our new production hubs • Depletion anticipated to be approximately $33 per bbl, dependent upon pr
Slide 14: Business performance & major projects
Business performance & major projects 13
Slide 15: Four years of strong cash flow generation
Four years of strong cash flow generation 450% reserve replacement ratio, reserve life over 20 years Net 2P reserves 2010 - 2013 Cash flow 2010 - 2013 147.0 194.8 MMboe MMboe $2.1bn $(0.2)bn Tax, Finance, Other 80.5 (32.7) MMboe MMboe Production Additions to 2010 to 2013 reserves $8m Cash flow 2010
Slide 16: Expanding our asset base in 2013 and 2014
Expanding our asset base in 2013 and 2014 Don North East 60% Don North East ‘Out of round’ licence FDP submission Kraken Appraisal well 2014 Cairngorm Appraisal well Cairngorm Farmed out 55% Awarded two licences in the Norwegian Sea Alba Acquired Avalon 8% From zero to 50% Avalon Appraisal well 2014
Slide 17: Alma/Galia
Alma/Galia First oil set to add c13,000 Boepd to EnQuest’s daily production • Extended life of FPSO vessel up to 15 years; with the extended field life, gross reserves increased to 34 MMboe • Subsea infrastructure in place with, trees and manifolds hooked up, pipelines and umbilicals in place and ri
Slide 18: Kraken on track
Kraken on track • A conventional development programme • High level of definition • Carried out FEEDs for FPSO and subsea integrated equipment ahead of sanction • Detailed project gate processes, including well construction and subsurface • High level of capex confidence • Contracts for over 60% of
Slide 19: Greater Kittiwake Area, near Scolty/Crathes & Avalon
Greater Kittiwake Area, near Scolty/Crathes & Avalon Additional reserves, production and a new hub • Acquired 50% of: • Kittiwake, Grouse, Mallard, Gadwall and Goosander • Completed Q1 2014 • EnQuest to operate • Production opportunities through infill drilling and further prospects in the area • Th
Slide 20: International South East Asia & North Africa
International South East Asia & North Africa • EnQuest’s first steps outside the UKCS • International production acquisition, providing an operating platform in Tunisia • a low cost entry point • 100 MMboe of gross contingent resources and additional • exploration opportunity with potential explorat
Slide 21: Cairngorm appraisal well
Cairngorm appraisal well Recently reached its target • Assessment of the results of the Cairngorm appraisal well is underway • Preliminary analysis indicates a 173ft hydrocarbon column was encountered, with evidence of good reservoir properties in the fractured granite • With the results of the prev
Slide 22: Operations
Operations @nQuest
Slide 23: Production efficiency: EnQuest in top UKCS quartile
Production efficiency: EnQuest in top UKCS quartile Source: O&G UK research Relative company performances: oil portfolios Production efficiency performance by operator for all oil assets 22
Slide 24: 2013 production results by hub
2013 production results by hub 6% increase on 2012, good performance from existing hubs 2012 2013 Net production (Boepd) 24,222 22,802 10,992 11,014 8,058 7,925 3,752 4,339 - 944 Thistle/Deveron The Dons Heather/Broom Alba Total Delivery of 9 wells in 2013, production underpinned by high operational
Slide 25: Thistle / Deveron
Thistle / Deveron Strong H2 2013 delivered production levels not seen since the ‘90’s 2013 • Drilled A60 (WFB-P1), 80ft high to prognosis, started production in August, strong performance A59 w/o Area 6 I1 • Workover of A53/60 injector well completed and increased injection rate A56 w/o • Workover o
Slide 26: Thistle Life extension projects
Thistle Life extension projects Power & Electricity Upgrade Project Required to provide reliable power and Thistle life remove electrical equipment obsolescence Dons Area D Turbine operational extension projects Jacket Integrity Project Modifications required to ensure jacket protection for another
Slide 27: Strong production from Thistle/Deveron
Strong production from Thistle/Deveron 26
Slide 28: The Don fields
The Don fields 2013 • Don Southwest • S12Z producer drilled • S13 injector drilled • West Don W1 Conrie – S7 • W6 injector brought on line in 1Q delivering a significant oil production W2 increase W5 W3Z • Record water injection rates of S6 S13 58,000 bwpd S9 S12Z S10Y S5 2014 & beyond S3Z • New ‘TJ
Slide 29: Don North East Area (Don NE) (60%)
-115 2 00 -11 -11 Don North East Area (‘Don NE’) (60%) 80 0 -11450 30 0 -11250 -1 -11 14 00 -1 -1 13 13 00 -1 50 12 50 -1120 0 Licence for blocks 211/18e & 211/19c, drilling opportunities 50 11 -11400 -1 -11 90 0 S6 50 12 -1 00 18 00 -1 19 850 -1 -11 1°34'E 1°35'E 1°36'E 1°37'E -1 16 50 S9 -11200 00
Slide 30: Heather / Broom
Heather / Broom 2013 • Overall production up 16% on 2012 • Strong year of production from Broom • Strong operating efficiency from Heather 2/0 Else 5- • Rig reactivation completed and operating 15 H42 H33 • Accommodation upgrade completed in February Erica 2/05-21 H61Z 2/0 2/0 (BW3) 5-6 H46 5-5 Rose
Slide 31: 2014 EnQuest outline programme
2014 EnQuest outline programme Planning delivery of over 15 wells Development Q1 Q2 Q3 Q4 Drilling Thistle Ongoing interventions campaign Heather 2 sidetracks & 2 workovers Dons 1 producer (DSW) GKA 1 workover Alma/Galia 3 producers & 1 injector Alba 2 producers Exploration/ Cairngorm Avalon Kraken
Slide 32: Summary
Summary @nQuest
Slide 33: Delivering strong compound annual growth rates
Delivering strong compound annual growth rates 25% for reserves & 15% for production Net 2P reserves (MMboe) 194.8 115.2 128.5 80.5 88.5 2009 2010 2011 2012 2013 Average net production (Boepd) 5,000 Guidance Range 25,000 23,698 22,800 24,222 21,074 13,613 32 2009 2010 2011 2012 2013 2014
Slide 34: Delivering sustainable growth
Delivering sustainable growth On course for six hubs and 50,000 Boepd in UKCS Exploiting our existing reserves Dons, Thistle/Deveron, Heather/Broom, Alba Making selective acquisitions Commercialising & developing discoveries Greater Kittiwake Area, Didon/Zarat Alma/Galia Converting contingent resour
Slide 35: Q&A
Q&A ©nQuest — 12" WATER INJECTION ~ FLOWLINE: CONTROL UMBILICAL 12” PRODUCTION FLOWLINE HSP POWER FLUID j eececerety COCO PRODUCTION/INJECTION (COMBINED MANIFOLD) — |PELINE END TERMINATION RUCTURES 12" WATER INJECTION FLOWLINE _= HSP POWER FLUID CONTROL UMBILICAL _=— 12 PRODUCTION FLOWLINE pc2 Del I
Slide 36: EnQuest's North Sea assets at the end of 2013
EnQuest’s North Sea assets at the end of 2013 Plus the GKA acquisition and Don North East 3535
Slide 37: Largest UK Independent Producer in the UK North Sea
Largest UK Independent Producer in the UK North Sea Government data (DECC) for UK North sea independent producers Total Production for the year ending November 2013 1,400,000 1,200,000 Total Production in Mass Units (tonnes) 1,000,000 800,000 600,000 400,000 200,000 - EnQuest Ithaca Fairfield Tullow
Slide 38: Kraken overview
Kraken overview Field summary • 2 fields located in Block 9/2b • 350km NE of Aberdeen • Field area ~12 x 3.5 km • Water Depth of 110m • Heavy Oil (14 Deg API) but good flow properties • Low sulphur content and not waxy • FDP approved by DECC with two heavy oil tax allowances confirmed • Developing 1
Slide 39: Alma / Galia
Alma / Galia ALMA GALIA N-Dev W2 W1 GA K3 GB K1 K4 GE K5 K2 K6 EQ Development wells EQ Development wells 2014 Planned producer Drilled / completed producer Future producer Drilled producer (planned completion 2014) Potential future producer Future producer Future Water Injector 38
Slide 40: Alba
Alba 8% non-operated, 944 Boepd in 2013* 2013 • 2 wells drilled and completed 2014 • Planned drilling operations • 2 producers • Acquisition of new 4D seismic survey • Key input for maturing future drilling targets • Replacement of subsea water injection pipeline Source : Chevron * Net production si
Slide 41: Income Statement
Income Statement Year to 31 December 2013 2012 US dollars Exceptionals, Business Depletion of performance fair value uplift $m’s $m’s $m’s $m’s Revenue 961.2 - 961.2 889.5 Cost of sales (532.3) (8.5) (540.8) (458.4) Gross profit 428.9 (8.5) 420.4 431.1 Exploration and evaluation expenses (8.6) - (8.
Slide 42: Balance Sheet
Balance Sheet As at 31 December 2013 2012 US dollars $m’s $m’s ASSETS Property, plant and equipment 2,871.2 1,816.6 Non-current assets Goodwill 107.8 107.8 Intangible oil and gas assets 130.9 97.5 Investments 2.4 2.3 Deferred tax asset 14.7 23.1 Other financial assets 21.9 19.5 3,148.9 2,066.8 Curre
Slide 43: Alma/Galia Infrastructure
Alma/Galia Infrastructure 42 42 42
Slide 44: Thistle, Conrie and The Dons Infrastructure
Thistle, Conrie and The Dons Infrastructure 4343
Slide 45: Heather / Broom Infrastructure
Heather / Broom Infrastructure 4444
Slide 46: Greater Kittiwake Area (GKA) Infrastructure
Greater Kittiwake Area (GKA) Infrastructure 45
Slide 47: Forward Looking Statements
Forward Looking Statements This presentation may contain certain forward looking statements with respect to EnQuest’s expectation and plans, strategy, management’s objectives, future performance, production, costs, revenues, reserves and other trend information. These statements and forecasts involv