Enquest Plc · LSE:ENQ
Enquest — FY2010 Earnings Presentation
41 slides from Enquest's earnings presentation, Apr 5, 2011
Slide 1: EnQuest PLC 2010 Full Year Results
EnQuest PLC 2010 Full Year Results Main title Sub-title Amjad Bseisu Chief Executive Delivering Growth footer 1
Slide 2: Agenda
Agenda • Overview & Strategy CEO, Amjad Bseisu • Financials CFO, Jonathan Swinney • Operations COO, Nigel Hares • Summary CEO, Amjad Bseisu 2
Slide 3: Highlights of a Great First Year
Highlights of a Great First Year Full Year to 31 December 2010, US dollars • Pro-forma* net 21,074 Boepd export production with realised oil price of $81.3/Boe • Good operational performance across producing fields; overall 2010 drilling programme was completed ahead of schedule and under budget • I
Slide 4: Delivering EnQuest's Strategy in the North Sea
Delivering EnQuest’s Strategy in the North Sea Development and Production § To become the UK's leading independent oil and gas development and production company Vision § To become a technical leader in integrated development § To maximise potential from existing fields and future developments in th
Slide 5: Growing EnQuest's North Sea Licences
Growing EnQuest’s North Sea Licences Increased from 16 to 26 in 2010
Slide 6: 2010 Operational Results
2010 Operational Results Strong production growth, up 55% on prior year Net production (Boepd) 21,074 13,613 11,660 6,406 4,836 4,578 3,849 3,358 Thistle/Deveron The Dons Heather/Broom Total 2009 2010 6
Slide 7: 2011 Net Production Target Set At 26,500 Boepd
2011 Net Production Target Set At 26,500 Boepd 26% growth on 2010 Net production by asset (Boepd) Assets 2008 2009 2010 2011E Thistle/Deveron 2,600 3,849 4,836 The Dons - 3,358 11,660 26% growth Heather/Broom 7,550 6,406 4,578 Total (pro-forma) 10,150 13,613 21,074 26,500 7
Slide 8: Reserves and Resources
Reserves and Resources Achieved 10% 2P growth target, 208% replacement ratio MMboe Proven and Probable Reserves 8.2 88.5 80.5 (7.4) 7.2 Reserves 1 Jan 2010 Production Stratic Revisions of previous Reserves 31 Dec 2010 estimates Contingent Resources 25.0 105.1 72.7 3.8 3.6* Resources 1 Jan 2010 Revis
Slide 9: Growth in 2010
Growth in 2010 • Delivered one acquisition in 2010; Stratic Energy Corporation, increasing 2P reserves by 7.2 MMboe • Farmed out 30% of Elke and Pilot Fields to Kuwait Foreign Petroleum Exploration Company (‘KUFPEC’) - a subsidiary of Kuwait Petroleum Company • First upstream entry into Europe • Org
Slide 10: Delivering Operational Excellence
Delivering Operational Excellence A technical leader in integrated development Drilling • Seven Wells drilled in 2010, including 4 producers, 1 injector, and 2 exploration/appraisal wells • Overall drilling Program completed ahead of schedule and under budget • S5 in Don Southwest drilled in record
Slide 11: Financial Highlights
EnQuest PLC Financial Highlights Jonathan Swinney Chief Financial Officer 11
Slide 12: Summary Income Statement
Summary Income Statement Year ended 31 December Pro-forma* Reported US dollars (pre-exceptionals and fair value (pre-exceptionals and fair value adjustments) adjustments) 2010 2009 2010 2009 $m $m $m $m Revenue 614.4 319.0 583.5 234.0 Cost of sales (406.4) (259.6) (384.5) (193.1) Production & transp
Slide 13: Reported Income Statement
Reported Income Statement Year ended 31 December Year ended 31 December 2010 2009 US dollars Exceptional items and Reported in Business performance depletion of year fair value uplift $m $m $m $m Revenue 583.5 - 583.5 234.0 Cost of sales (384.5) (16.3) (400.8) (193.1) Gross profit 199.0 (16.3) 182.7
Slide 14: Exceptional Items and Fair Value Uplifts
Exceptional Items and Fair Value Uplifts US dollars • Non-cash items • $25m Scolty impaired in H1 • $35m Peik and Burdock impaired in H2 • $16m Depletion of PEDL fair value uplift • Cash items • $8m Demerger and listing expenses • $5m Stratic acquisition • $8m Well abandonment expenses 14
Slide 15: Pro-Forma Financial Performance Indicators
Pro-Forma Financial Performance Indicators Year ended 31 December US dollars 2010 2009 Change Export production (Boepd) 21,074 13,613 55% Average realised price per barrel ($) 81.26 65.14 25% Revenue ($ million) 614.4 319.0 93% Cost of sales ($ million) 406.4 259.6 57% Production and transportation
Slide 16: Balance Sheet
Balance Sheet As at 31 December 2010 2009 US dollars $m $m ASSETS Non-current assets Property, plant and equipment 1,136.4 518.6 Goodwill 101.9 - Intangible assets 12.3 71.6 Asset held for sale 18.7 - Loan receivable from related party - 21.4 Deferred tax asset 8.9 0.2 1,278.2 611.8 Current assets I
Slide 17: Pro-forma Capex of $196.3m in 2010
Pro-forma Capex of $196.3m in 2010 US$m 70.8 59.1 41.5 24.9 Thistle/Deveron The Dons Heather/Broom Exploration & Appraisal 17
Slide 18: Reported Cash Flow
Reported Cash Flow For the year ended 31 December 2010 US$m 267.7 (4.1) (154.9) 11.2* 41.4 7.9 (86.3) Cash & Pre-tax cash flow Tax paid Capex Repayment of Financing & Cash & equivalents at 1 from operations Stratic loans & Other equivalents at 31 January borrowings 31 Dec * Includes $ 21.6m cash bal
Slide 19: Finance Summary & 2011 Outlook
Finance Summary & 2011 Outlook 2010 • Production delivery and oil price drove a very good financial performance in 2010, ahead of our expectations 2011 • Capex expectations of c.$300 million • $250 million on development drilling and facilities • $50 million on exploration and appraisal • Unit produ
Slide 20: Review of Operations
EnQuest PLC Review of Operations Nigel Hares Chief Operating Officer
Slide 21: Strong 2010 Operational Results
Strong 2010 Operational Results Operatorship driving delivery of results Net production (Boepd) 21,074 13,613 11,660 6,406 4,836 4,578 3,849 3,358 Thistle/Deveron The Dons Heather/Broom Total 2009 2010 21
Slide 22: Operations Highlights: Thistle / Deveron
Operations Highlights Thistle / Deveron • Production on plan • Improved power generation and higher water injection volumes • Delivered highest production rates since February 2005 • Drilling operations • New rig ($70 million upgrade), commissioned and good performance • Workover of well A46 added 6
Slide 23: Thistle/Deveron Drilling Locations
Thistle/Deveron Area6-I1 Drilling Locations A46 Area6-P1 NWFB-P2 NWFB-P1 NFB-I1 DEV-P1 WFB-P2 A53 w/o DEV-P2 EFB-P3 DEV-I1 EFB-P1 EFB-P2 A33 w/o A55 2P Reserves Phase 1 Drilled Undrilled Phase 2 Contingent Resources 23
Slide 24: Operations Highlights: The Don Fields
Operations Highlights The Don Fields • Production over three times 2009 levels; driven by three new production wells, delivered faster than expected • Transferred from tanker loading to export via Thistle • Commissioned water injection system successfully • Drilling • Good drilling performance; reco
Slide 25: The Don Fields
West Don The Don Fields Don NE 211/18a-W1 Conrie 211/18a-S7 Don SW 211/18a-W2 211/18a-S6 211/18a-W3&W3z 211/18a-S5 211/18a-W4 211/18a-S1 211/18a-S9 211/18a-S3z 211/18a-S8Z 211/18a-S8 211/18a-S4 211/18a-S2z 211/18a-28 “H well” Key Injector Producer Oil reservoir section Injection reservoir section Se
Slide 26: Operations Highlights: Heather / Broom
Operations Highlights Heather / Broom • Production close to plan • 2Q 2010 BR7 NWT well and sidetrack disappointing, tophole suspended for future use • Broom pipeline improvement project • Pipeline successfully installed, enhanced capacity • Completed extensive project to evaluate remaining drilling
Slide 27: Heather Infill Drilling
Heather Infill Drilling Nine infill location targets selected for initial 2012-2014 drilling campaign • 20 potential infill targets Else • 9 targets selected for initial programme, Rubrum 4000m with 14 MMboe reserves n vo 3000m De NWH A B2 • $40 million rig upgrade Ruby H Erica 2000m Viking Wanderer
Slide 28: 2011 Drilling Programme
2011 Drilling Programme Underpinning targeted 26% increase in production Well drilling start dates, by quarter First Quarter, 2011 Second Quarter, 2011 DSW Area E, Exploration (Conrie) DSW S9 – INJ Thistle, EFB-P1 DSW Area 26, Appraisal DSW, S8-Prod Thistle, NWFB-P1 Third Quarter, 2011 Fourth Quarte
Slide 29: Potential Development of Discoveries
Potential Development of Discoveries 29
Slide 30: Summary
EnQuest PLC Summary Amjad Bseisu Chief Executive
Slide 31: 2010 Summary
2010 Summary Performed well, growing momentum • Delivered strong production growth in 2010, at 21,074 Boepd, up 55% on 2009 and above target • Continued focus on further building and enhancing operation and execution skills • Good operational performance and excellent results from active seven well
Slide 32: Outlook Summary
Outlook Summary On track to deliver sustainable growth • Focused operational programme in 2011 • Eight wells being drilled • Total capex of $300m • Targeting production of 26,500 Boepd, 26% growth • Reactivation of Heather drilling rig • Looking at 26th round field for possible development • Working
Slide 33: Technical Skills, Operational Scale, Financial Strength
Technical Skills Operational Scale Financial Strength
Slide 34: Appendix
| EnQuest Appendix
Slide 35: Significant Opportunities Remain in the UKCS
Significant Opportunities Remain in the UKCS Combined majors’ North Sea UK remaining reserves¹ UKCS projected reserves and resources MMboe 20% of remaining reserves — 821MMboe 4,500 Cumulative reserves 210 smaller fields (79% of total number of fields) Estimated at 15–24 billion boe 4,000 Billion bo
Slide 36: EnQuest Producing Assets
EnQuest Producing Assets Operatorship driving delivery of results Decommissioning liability % Field (first oil) Operator Working interest BP 1% Thistle/Deveron 99% Existing obligations remain with EnQuest (1978) former owners Heather EnQuest 100% 37.5% (1978) Dyas UK 8% Challenger Minerals 8% Broom
Slide 37: Thistle / Deveron Infrastructure
Thistle / Deveron Infrastructure 37
Slide 38: The Don Fields Infrastructure
The Don Fields Infrastructure 38
Slide 39: Heather / Broom Infrastructure
Heather / Broom Infrastructure 39
Slide 40: 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 and other trend information. These statements and forecasts involve risk and
Slide 41: Definition of "Pro-forma" in these Materials
Definition of “Pro-forma” in these Materials Detailed ‘pro-forma’ note; in April 2010 the newly incorporated independent entity EnQuest PLC acquired the demerged UK North Sea assets of Petrofac Limited and Lundin Petroleum AB respectively. This transaction has been accounted for as a pooling of inte