Enquest Plc · LSE:ENQ
Enquest — FY2019 Earnings Presentation
33 slides from Enquest's earnings presentation, Apr 9, 2020
Slide 1: EnQuest 2019 Full Year Results
EnQuest 2019 Full Year Results Deliver De-lever Grow
Slide 2: Introduction
EnQuest 2019 full year results Introduction Amjad Bseisu Chief Executive 2 EnQuest PLC Full Year Results 2019
Slide 3: Key 2020 messages: Well placed to manage a low oil price
Key 2020 messages Well placed to manage a low oil price Full year production guidance is c.57,000 to c.63,000 Additional cost reductions identified to lower breakeven: - 2020: Savings of c.$190 million opex / c.$110 million capex; Deliver Full year cash flow breakeven c.$33/Boe - 2021: Cash flow bre
Slide 4: 2020 Outlook: Decisive action taken
2020 Outlook Decisive action taken Opex reduction plans Capex reduction plans - Decision not to re-start at Heather and Thistle/Deveron fields - Continue drilling activity at Kraken in 2020 - Remove discretionary spend - Remove discretionary spend 2020: c.$190m reduction to c.$335 million 2020: c.$1
Slide 5: Key 2019 messages: Strong 2019 performance
Key 2019 messages Strong 2019 performance 2019 highlights Delivered production within guidance Unit opex reduced by c.10% Deliver Cash capex below guidance Voluntarily accelerated bank amortisations Net debt lowered by c.20% De-lever Net debt:EBITDA ratio materially ahead of target Matured c.18 MMbo
Slide 6: Operational and financial targets met
EnQuest FY 2019 performance Operational and financial targets met Net production1 Production increased c.24% to (Boepd) 68,606 Boepd1 70,000 68,606 50,000 55,447 Deliver Unit opex decreased by c.10% to $21/Boe 30,000 2018 2019 Cash capex of c.$238 million Unit opex ($/Boe) - Kraken DC4 and Malaysia
Slide 7: Operational and financial targets met (continued)
EnQuest FY 2019 performance Operational and financial targets met (continued) Net debt:EBITDA ratio1 Group net debt is $1,413 million; 8 20% lower vs year end 2018 7 6.6 De-lever Net debt:EBITDA ratio1 at 1.4x, below target of 2.0x by year end 6 5 Senior credit facility reduced by $325 million durin
Slide 8: Operational and financial targets met (continued)
EnQuest FY 2019 performance Operational and financial targets met (continued) Annual net production1 Material increase in production to (Boepd) 68,606 Boepd1 80,000 68,606 - Kraken outperformed expectations 70,000 Grow 8,653 - Strong performance at Magnus, 60,000 55,447 Scolty/Crathes and PM8/Seligi
Slide 9: Year end 2019 2P reserves and 2C resources
EnQuest FY 2019 performance Year end 2019 2P reserves and 2C resources 2P reserves Year end 2019 2C resources of 173 MMboe MMboe MMboe 100 400 80 254 122 300 76 60 11 200 202 40 37 38 100 11 20 81 12 0 0 Net 2P reserves start Net reserve additions Production Net 2P reserves end Kraken Magnus Malaysi
Slide 10: Committed to a sustainable future
Environment, social and governance Committed to a sustainable future - Actions underway - Kraken cargoes sold directly to shippers as component of IMO 2020 compliant fuel reducing carbon footprint - Flaring reduced by 45% in Malaysia Environment - ESG group established to identify emissions reductio
Slide 11: Operations overview
EnQuest FY 2019 performance Operations overview Bob Davenport Managing Director – North Sea 11 EnQuest PLC Full Year Results 2019
Slide 12: Production performance
Production performance Growth of c.24%; towards the top of the guidance range Production growth: 2019: 68,606 Boepd1 2018: 55,447 Boepd1 - Strong production efficiency, particularly at our three key/world-class assets Delivered - Additional equity interest, well work and plant de-bottlenecking at Ma
Slide 13: Strong Magnus performance; improved uptime and pricing on Kraken
2019 operational delivery Strong Magnus performance; improved uptime and pricing on Kraken Northern North Sea Kraken Magnus | Thistle/Deveron | The Dons | Heather/Broom - Strong Magnus performance - Significant improvement in FPSO uptime; production - High production efficiency; reservoir management
Slide 14: Successful pipeline replacement; PM8/Seligi IWR success
2019 operational delivery Successful pipeline replacement; PM8/Seligi IWR success Central North Sea Malaysia Scolty/Crathes | Kittiwake | Alma/Galia | Alba PM8/Seligi | Tanjong Baram | PM409 - Strong production performance at Scolty/Crathes following - At PM8/Seligi, high production efficiency; 11 i
Slide 15: Maintaining safe operations: COVID-19 response
Maintaining safe operations A proactive approach to COVID-19 – Onshore and Offshore Prevent Detect Control Mitigate - Reduce site POB to create - Share details on signs and - Regular cleaning - Clear plans on patient isolation bed space symptoms isolation - Physical separation in - Pre-mobilisation
Slide 16: Financial review
EnQuest FY 2019 performance Financial review Jonathan Swinney Chief Financial Officer 16 EnQuest PLC Full Year Results 2019
Slide 17: Results summary: Strong FY 2019 performance
Results summary Strong FY 2019 performance Unless otherwise stated all figures are on a Business performance basis and are in US Dollars Comparative figures for the income statement relate to the period ended 31 December 2018 and the Balance Sheet as at 31 December 2018. Production Revenue1 Unit ope
Slide 18: Operating cash flow: Strong cash generation
Operating cash flow Strong cash generation Improved cash generation: Net cash flow from operations $m - Slightly higher realised oil prices 1,200 - Reflecting the positive impact of the Group’s commodity hedge programme - Material growth in volumes from the Group’s highest 269 84 margin fields 1,000
Slide 19: Disciplined and focused investment programme
Cash capital expenditure Disciplined and focused investment programme 2019 capex underpins production: FY 2019: $238 million FY 2018: $220 million - Kraken DC4 drilling programme concluded in Q1 - Scolty/Crathes and Dunlin bypass sub-sea project completions 121 - Magnus infill campaign commenced in
Slide 20: Strong cash generation driving debt reduction
Net debt Strong cash generation driving debt reduction Debt reduction: Movement in net debt $m - Delivered 1,800 - Net debt down by 20% 1,774 962 - Net debt:EBITDA 1,600 - Achieved 1.4x1 7 1,400 - Magnus contingent consideration 282 1,413 - $52m repayment of vendor loan - $22m relates to profit shar
Slide 21: Long-dated, manageable repayment structure
Debt structure Long-dated, manageable repayment structure Debt structure (end Dec 2018)1 Debt structure (end Dec 2019)2 Future expected repayment profile (balances at end Feb 2020)3 $ million $ million $ million 2,500 2,500 1,200 72 72 1,000 2,000 2,000 179 179 64 64 800 1,500 1,500 123 123 965 965
Slide 22: Summary
EnQuest 2019 full year results Summary Amjad Bseisu Chief Executive 22 EnQuest PLC Full Year Results 2019
Slide 23: Key 2019 messages: Strong 2019 performance
Key 2019 messages Strong 2019 performance 2019 highlights Delivered production within guidance Unit opex reduced by 10% Deliver Cash capex below guidance Voluntarily accelerated bank amortisations Net debt lowered by 20% De-lever Net debt:EBITDA ratio materially ahead of target Matured c.18 MMboe fr
Slide 24: Key 2020 messages: Well placed to manage a low oil price
Key 2020 messages Well placed to manage a low oil price Full year production guidance is c.57,000 to c.63,000 Additional cost reductions identified to lower breakeven: - 2020: Savings of c.$190 million opex / c.$110 million capex; Deliver Full year cash flow breakeven c.$33/Boe - 2021: Cash flow bre
Slide 25: Q&A
Q&A
Slide 26: A clear purpose and strategy with a focused business model
Appendix A clear purpose and strategy with a focused business model Purpose - With hydrocarbons expected to remain a key element of the global energy mix for many years, EnQuest is focused on enhancing hydrocarbon recovery and extending the useful lives of assets in a profitable and responsible mann
Slide 27: Operator of choice for maturing hydrocarbon assets
Appendix Operator of choice for maturing hydrocarbon assets Production breakdown1 Production CAGR of c.17% since IPO 80,000 Malaysia 8.6 kboepd 13% 60,000 40,000 UK 60.0 kboepd 87% 20,000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Sullom Voe Terminal 8 offshore hubs (14 fields in UK; 8
Slide 28: Post-tax non-cash impairments of $562.3 million
Appendix Post-tax non-cash impairments of $562.3 million Impairment Driven by $397.5 million tangible oil and gas assets Change in long-term oil price assumptions - Mainly Heather/Broom, Thistle, the Dons Revision in production profiles and Alma/Galia Anticipated cessation of production $149.6 milli
Slide 29: No material UK cash CT/SCT on operational activities expected
Appendix No material UK cash CT/SCT on operational activities expected UK Tax allowances $m Tax losses at 31 December 2018 3,125.3 2019 net utilisation (219.3) Prior year adjustment (2.6) Tax losses at 31 December 2019 2,903.4 Tax allowances carried forward 23.8 Total tax losses and allowances at 31
Slide 30: Effective tax rate reconciliation
Appendix Effective tax rate reconciliation UK Tax allowances % $m Loss Before Tax (729.1). Notional UK Corporation Tax 40.0 (291.6) 2019 RFES (84.3) UK and overseas tax rate differences 22.5 Permanent items 89.7 Other (16.1) 2019 Tax Charge/(Credit) 38.4 (279.8) 30 EnQuest PLC Full Year Results 2019
Slide 31: IFRS 16 Leases – minimal impact on financial statements
Appendix IFRS 16 Leases – minimal impact on financial statements - Immaterial increase in EBITDA / decrease in PBT EBITDA PBT - Operating cost is replaced with DD&A and finance $8.6 million $5.1 million interest charge - At 1 January 2019 - Kraken FPSO finance lease reclassified to “right-of- New le
Slide 32: Significant growth in reserves
Appendix Significant growth in reserves North Sea operation breakdown Malaysia operation breakdown c.110 c.14 7 Operated MMboe produced (net) 13 operated MMboe Produced (net) production offshore hubs platforms 68 c.221 wells drilled and 74 idle wells returned c.33 completed by MMboe of net 2P to pro
Slide 33: Forward-looking statements
Appendix 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 forecas