Tullow Oil Plc · LSE:TLW
Tullow Oil — FY2015 Earnings Presentation
35 slides from Tullow Oil's earnings presentation, Feb 10, 2016
Slide 1: 2015 Full Year Results
2015 FULL YEAR RESULTS Tullow Oil plc 10 February 2016
Slide 2: Disclaimer
2015 FULL YEAR RESULTS 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
Slide 3: Aidan Heavey
2015 FULL YEAR RESULTS TULLOW OIL PLC – 2015 FULL YEAR RESULTS AIDAN HEAVEY
Slide 4: Early actions taken to position Tullow for future growth
2015 FULL YEAR RESULTS Early actions taken to position Tullow for future growth Decisive action taken Financial flexibility Fit for the future Re-set to deal with Step change for Tullow Portfolio with major low oil prices: with TEN first oil: growth potential: Moved early and decisively; Increase in
Slide 5: Ian Springett
2015 FULL YEAR RESULTS TULLOW OIL PLC – 2015 FULL YEAR RESULTS IAN SPRINGETT
Slide 6: 2015 Full Year Results summary
2015 FULL YEAR RESULTS 2015 Full Year Results summary 2015 ($m) 2014 ($m) Sales revenue 1,607 2,213 Gross profit 591 1,096 Administrative expenses (194) (192) Restructuring costs (41) - Loss on disposal (57) (482) Goodwill impairment (54) (133) Exploration costs written off1 (749)2 (1,657) Impairmen
Slide 7: Early action mitigates impact of low oil prices
2015 FULL YEAR RESULTS Early action mitigates impact of low oil prices Strong focus on cash from operations $99/bbl • Increased to 67 kbopd in 2015 $98/bbl West African production • TEN to deliver growth to around 100 kbopd in 2017 Oil hedging • Reaping benefits of long term hedging programme • $365
Slide 8: Industry leading hedge position
2015 FULL YEAR RESULTS Industry leading hedge position Hedge strategy • Tullow has proactively hedged production to protect revenues for more than 10 years • Significant liquidity benefit through protecting future revenues and generating RBL debt capacity • Prudent during periods of higher developme
Slide 9: Managing balance sheet and liquidity
2015 FULL YEAR RESULTS Managing balance sheet and liquidity $bn Overall • $1.9 billion facility headroom and free Committed Drawings cash at year-end 2015 Debt Facilities liquidity 1.0 RBL • March 2016 semi-annual redetermination • Debt capacity determined by underlying $1.9bn Present Value (PV) of
Slide 10: Potential to reduce capex to c.$300m at low oil prices
2015 FULL YEAR RESULTS Potential to reduce capex to c.$300m at low oil prices Major reduction in Capex • Working to reduce 2016 capex to c.$900m • Final year of committed TEN first oil capex fixed at $600m • Potential to reduce Group capex from 2017 onwards to c.$300m $m $200m Incremental capex opti
Slide 11: Capex flexibility and operating cash flow sensitivities
2015 FULL YEAR RESULTS Capex flexibility and operating cash flow sensitivities $bn • Significant operating cash flow continues to be delivered at low oil prices; underpinned by $90/bbl hedges $80/bbl • Capex flexibility creates surplus operating cash flow $70/bbl from fourth quarter 2016 $70/bbl ena
Slide 12: Key differentiators
2015 FULL YEAR RESULTS Tullow continues to be resilient to low oil prices Growing oil production Growing to c.100 kbopd in 2017; TEN onstream Revenues protected Significant hedging in place 2016 and 2017 Low cost operations Continuing to drive down Opex & G&A Key differentiators Capex flexibility Po
Slide 13: Paul McDade
2015 FULL YEAR RESULTS TULLOW OIL PLC – 2015 FULL YEAR RESULTS PAUL McDADE
Slide 14: Strong delivery across West Africa production portfolio
2015 FULL YEAR RESULTS Strong delivery across West Africa production portfolio Strong FY 2015 West Africa oil production: 66,600 bopd FY 2016 West Africa oil production guidance: 73-80,000 bopd 2017 West Africa oil production growing to around: 100,000 bopd ‘000 bopd • FY 2015 Europe actual gas prod
Slide 15: Low cost West Africa portfolio to deliver c.100,000 bopd
2015 FULL YEAR RESULTS Low cost West Africa portfolio to deliver c.100,000 bopd Ghana operated Opex/bbl Material reduction in Ghana Opex • Realising synergies from operating Jubilee & TEN in Ghana • Reducing per barrel Opex to around $8/bbl Opex $/bbl Reaping the reward of historical investments • H
Slide 16: Jubilee - long term asset with flexible investment opportunities
2015 FULL YEAR RESULTS Jubilee - long term asset with flexible investment opportunities Strong performance continues in 2016 • FY15 average gross production: 103 kbopd • FY16 guidance: 101 kbopd • Gas export system operating reliably • Water injection system upgrades ongoing • Planned 2 week FPSO ma
Slide 17: TEN on schedule to deliver first oil - July/August 2016
2015 FULL YEAR RESULTS TEN on schedule to deliver first oil - July/August 2016 Project over 85% complete • FPSO conversion complete - FPSO sailed 23 January 2016; “zero” carry over - Arrival offshore Ghana early March 2016 - Mooring piles and lines pre-installed for FPSO arrival • DRILLING Subsea Fa
Slide 18: East Africa development making steady progress
2015 FULL YEAR RESULTS East Africa development making steady progress 2015 activities underpin Kenya development resource base • 9 appraisal wells drilled; 2 EWTs completed • Significant result at Etom-2 using new 3D seismic • Success to date supports gross recoverable resource base of 600mmbo • Ups
Slide 19: Growing portfolio of low cost oil
2015 FULL YEAR RESULTS Growing portfolio of low cost oil 2P Commercial Reserves and 2C Contingent Resources Total Resource Potential as of 31 December 2015 as of 31 December 2015 East Africa 2P Commercial Reserves 49% 321.8 mmboe 1,297 New Ventures 4.0bn 2C Contingent Resources mmboe 8% boe 974.7 mm
Slide 20: Key differentiators
2015 FULL YEAR RESULTS Business differentiated by strong delivery and quality assets Production West Africa on track to deliver c.100k bopd in 2017 Delivery Operating costs Reducing Opex per barrel in Ghana Incremental capex options Significant future flexibility in timing of investments Key differe
Slide 21: Angus McCoss
2015 FULL YEAR RESULTS TULLOW OIL PLC – 2015 FULL YEAR RESULTS ANGUS McCOSS
Slide 22: Sustaining exploration upside at low cost
2015 FULL YEAR RESULTS Sustaining exploration upside at low cost Exploration capital expenditure $m Material acreage access – building & rejuvenating • Focus on low-cost material oil plays in Africa & Latin America • Entry with partners for collaboration, risk-sharing & cost-sharing • Seeking better
Slide 23: Kenya: Identifying upside in South Lokichar Basin
2015 FULL YEAR RESULTS Kenya: Identifying upside in South Lokichar Basin Material proven oil basin • 9 oil accumulations discovered • 600mmbo resource base confirmed by tests Significant upside potential • 20 oil prospects & leads yet to drill • Further new plays being studied Good geology: value at
Slide 24: Onshore East Africa: Finding low-cost oil
2015 FULL YEAR RESULTS Onshore East Africa: Finding low-cost oil 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 basin mar
Slide 25: West Africa: Long-term future upside
2015 FULL YEAR RESULTS West Africa: Long-term future upside • Near field upside in Ghana: 3D/4D seismic, quantitative interpretations & reservoir modelling • Major basins with proven oil systems & shelf edge plays – lower cost to develop • Seismic evaluation ongoing to high-grade prospects for futur
Slide 26: Latin America: Long-term future upside
2015 FULL YEAR RESULTS Latin America: Long-term future upside • Basins with proven oil systems & shelf edge plays – lower cost to develop • Seismic evaluation ongoing to high-grade prospects for future selective drilling • Pursuing alternative funding including strategic farm-downs Strong acreage po
Slide 27: Aidan Heavey
2015 FULL YEAR RESULTS TULLOW OIL PLC – 2015 FULL YEAR RESULTS AIDAN HEAVEY
Slide 28: Early actions taken to position Tullow for future growth
2015 FULL YEAR RESULTS Early actions taken to position Tullow for future growth Decisive action taken Financial flexibility Fit for the future Re-set to deal with Step change for Tullow Portfolio with major low oil prices: with TEN first oil: growth potential: Moved early and decisively; Increase in
Slide 29: Tullow Oil plc - 2015 Full Year Results
2015 FULL YEAR RESULTS TULLOW OIL PLC – 2015 FULL YEAR RESULTS
Slide 30: Net income 2015 v 2014
2015 FULL YEAR RESULTS Net income 2015 v 2014 $m 2014 Price Hedging Volume Cash DD&A Admin Restructuring Disposals Goodwill E&E Impairment Provision Other Net Tax 2015 Operating Expenses Costs Impairment Write for onerous Financing Costs offs contracts Lower realised oil and gas prices, provision fo
Slide 31: Sources and uses of funds
2015 FULL YEAR RESULTS Sources and uses of funds Cash inflow $2,388m 2015 Net cash inflow $44m $m Sources Uses • Operating cash flow $1,316m* (2014:$1,516m*) $56m • Net loan draw down $977m (2014:$1,198m) $232m • Disposals $56m (2014:$21m) • Cash tax received $35m (2014: $34m, cash tax paid) $977m •
Slide 32: Future project pipeline making significant progress
2015 FULL YEAR RESULTS Future project pipeline making significant progress Future Development Projects Countries with ongoing operations Key oil producing countries TEN Development East Africa Development • >85% project completed • Kenya appraisal programme • On track for first oil Jul/Aug16; comple
Slide 33: TEN to deliver significant Group cash flow from 2H 2016
2015 FULL YEAR RESULTS TEN to deliver significant Group cash flow from 2H 2016 Base case development • 300 mmboe reserves being developed - 80% oil • 24 well development • Gross development capex of c.$5 billion • Leased FPSO, facility capacity of 80,000 bopd Significant progress towards first oil •
Slide 34: Suriname: Exciting material prospects in Blocks 47 & 54
2015 FULL YEAR RESULTS Suriname: Exciting material prospects in Blocks 47 & 54 • Block 54 farmed-down (Tullow Oil 30% op) converting licence equity into carries • Demerara Plateau 3D seismic survey reveals exceptionally high-quality large prospects Game-changer opportunity with follow-up scale Slide
Slide 35: Tullow Oil plc
2015 FULL YEAR RESULTS 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: ir@tullowoil.com Web: www.tullowoil.com