Harbour Energy Plc · LSE:HBR

Harbour Energy — Premier Oil — H1 2019 Earnings Presentation

23 slides from Harbour Energy's earnings presentation, August 2019

  1. Slide 1: 2019 Half-Year Results

    August 2019 2019 Half-Year Results 01 October 2018

  2. Slide 2: 2019 1H highlights

    Highlights 2019 1H highlights Free cash flow generation ($m) 1. 400 Significant 300 debt 200 reduction $ >300 100 182 0 2019 1H 2019F 2. 3. 4. 5. Record 1H Zama Tolmount New licence production successfully on schedule, capture appraised below budget August 2019 P1

  3. Slide 3: Delivery against 2019 targets

    Highlights Delivery against 2019 targets Record 84.1 kboepd; very high Group operating efficiency Production Guidance of 75-80 kboepd reiterated Premier’s next growth project progressing under budget DELIVER Tolmount On schedule for first gas end 2020 Strengthening $182m free cash flow generation; 3

  4. Slide 4: Strengthened commitment to ESG

    Highlights Strengthened commitment to ESG  Climate Change Examples of actions being taken to reduce future emissions Committee established  Tolmount will be powered by a gas micro-  Climate Change Policy turbine aligned with TCFD recommendations  Solan will be gas powered following P3 completion

  5. Slide 5: Financial priorities and highlights

    Finance Financial priorities and highlights Priorities $121m 2019 1H net profit  Continued debt reduction, targeting leverage ratio of 1.5x  Maintain low cost base and capital discipline 43% of 2019 2H hedged at  Fund selected projects without compromising balance sheet $69/bbl  Protect downside

  6. Slide 6: 2019 1H Financials

    Finance 2019 1H Financials Higher Catcher production delivered a step up in operating cash flow and profits 2019 1H 2018 1H Realised pricing Production (kboepd) 84.1 76.2 2019 1H 2018 1H Operating cost/boe 10.3 11.3 Oil (pre hedge) ($/bbl) 67.4 66.5 Lease costs/boe 6.3 5.9 Oil (post hedge) ($/bbl) 6

  7. Slide 7: Maintaining financial discipline and flexibility

    Finance Maintaining financial discipline and flexibility Capital discipline Active hedging programme  P&D expenditure focused on high return,  Supported higher cash margins in 1H quick payback projects  Protects debt reduction and capital investment  Financing partnerships to reduce balance prog

  8. Slide 8: Cash flow performance

    Finance Cash flow performance  Year end 2019 net debt is expected to be c. $2bn, representing: >$700 million – Accounting leverage ratio of 2x EBITDAX Expected debt – Covenant leverage ratio of 2.3x reduction 2018-191 – FCF yield of 48% – FCF/Net debt of 16%  Substantial outperformance against 201

  9. Slide 9: Strong 1H performance

    Production Strong 1H performance Catcher (50% op) Huntington (100% op) Elgin Franklin (5.2% non-op)  35.1 kboepd (net)  6.8 kboepd (net)  6.5 kboepd (net)  99% operating efficiency  Scale squeeze  Interventions, infills  Plateau extended to 2021  Power Buoy installed  Field life extended to

  10. Slide 10: Top tier operating efficiency

    Production Top tier operating efficiency UK operating efficiency UKCS operating efficiency trend %  UKCS operating efficiency 95 improved for sixth PMO UK OE consecutive year 71 73 74 75 64 65  PMO 3 year average (2016-2018) 80% 60 compared to UKCS of 74%  PMO 2019 1H UK operating efficiency of 9

  11. Slide 11: Incremental investments generating $650m NPV

    Production Incremental investments generating $650m NPV Approved investments  Converting resources Asset Activity Timing into the production Elgin Franklin Infill programme Ongoing base Chim Sáo Well intervention campaign 2019 Ravenspurn North 2 Infill wells 2019/20 Solan Third development well (P3

  12. Slide 12: Delivers a new base profile

    Production Delivers a new base profile  Investment characteristics – Low cost, rapid payback projects (typically less than 1 year) – High return on capital (IRR>20%) – Robust at low oil prices  Maintains production at 75-80 kboepd out to 2024 Indicative production profile Growth projects Awaiting

  13. Slide 13: Tolmount – on track

    Development Tolmount – on track Gross Gross resource Net Capex Payback Peak Production 500 Bcf $120 m <1 year 58 kboepd Tolmount: Premier’s next UK growth project kboepd (net, Premier 50% op.) Tolmount Tolmount East 20 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Platform construction Pi

  14. Slide 14: Tolmount East – drilling ahead

    Development Tolmount East – drilling ahead  Spudded 8 August; results expected Targeting up to October 2019 300 Bcf gross  Testing extension to Tolmount structural closure above gas water contact  On success, tied back to Tolmount for first gas in 2023 – Benefits from low tariff structure – Quick

  15. Slide 15: Block 7 Zama oil field successfully appraised

    Development Block 7 Zama oil field successfully appraised  Sales process underway for Premier’s 25% interest in Block 7 – Highly-marketable asset – Materially strengthens balance sheet  Optimal time to monetise – Appraisal campaign completed – Significant resource upgrade P50-P10 resource (gross)

  16. Slide 16: Disciplined approach to exploration and appraisal

    Exploration Disciplined approach to exploration and appraisal 650 mmboe of net prospective unrisked resource to be drilled in the next three years  Target under-explored, emerging plays in proven hydrocarbon provinces Alaska – Expanded South Andaman Sea position – Successful entry into the Alaska N

  17. Slide 17: Material acreage position in Mexico beyond Block 7

    Exploration Material acreage position in Mexico beyond Block 7 Block 30 (Sureste Basin) (Premier 30%, non op)  Block-wide 3D seismic survey completed  Wahoo flat spot similar to Zama  Drilling activity targeted for end 2020/early 2021  Significant follow on potential Blocks 11 & 13 (Burgos Basin

  18. Slide 18: Andaman Sea: low cost entry, new regional play

    Exploration Andaman Sea: low cost entry, new regional play  Expanded position in the South Andaman Sea Multi-TCF gas play gross potential – Low upfront costs – No well commitments  3D survey completed; encouraging initial results – Prospectivity of DHIs on 2D seismic confirmed – Further upside ide

  19. Slide 19: Alaska: prolific super basin, renewed industry interest

    Exploration Alaska: prolific super basin, renewed industry interest Cost effective entry into an emerging play in a proven oil province Alaska North Slope  Historical focus has been on the deeper Jurassic/Triassic Ellesmerian Play  Under-explored conventional Cretaceous Brookian play unlocked thro

  20. Slide 20: Area A, Alaska North Slope

    Exploration Area A, Alaska North Slope Malguk-1 discovery (1991)  Jurassic/Triassic target  251 feet of conventional light oil pay >1bn bbls STOIIP found in the Torok sandstones in the shallower Brookian Play but not flow tested Appraisal well (Q1 2020)  Test reservoir deliverability of Torok san

  21. Slide 21: Sea Lion – the opportunity

    Development Sea Lion – the opportunity  World scale development  Conventional new build FPSO/subsea development – Substantially de-risked – Best available technology  Tier 1 supply chain in place – Value engineering complete – Vendor funding agreed  Project optimised – Reserves increased to 250

  22. Slide 22: Key takeaways and 2H outlook

    Summary Key takeaways and 2H outlook Key takeaways • Strong positive free cash flow driving debt reduction • Much improved credit metrics, in line with peers • Multiple opportunities for low cost investment in producing assets • Portfolio management to crystallise development asset value • Building

  23. Slide 23: August 2019

    August 2019 www.premier-oil.com Premier Oil Plc 23 Lower Belgrave Street London SW1W 0NR T: +44 (0)20 7730 1111 E: premier@premier-oil.com

Premier Oil — H1 2019 Earnings Presentation on 6ix