Tullow Oil plc · LSE:TLW
Tullow Oil — Investor Presentation (March 2019)
39 slides from Tullow Oil's investor presentation, March 2019
Slide 1: Tullow Oil plc Overview Presentation March 2019
Overview presentation Tullow Oil plc OVERVIEW PRESENTATION March 2019
Slide 2: Disclaimer
Overview presentation 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 i
Slide 3: Introduction
Overview presentation Tullow Oil plc – Overview Presentation INTRODUCTION
Slide 4: Defining Tullow's position in the E&P industry
Overview presentation DEFINING TULLOW’S POSITION IN THE E&P INDUSTRY The pillars of our growth ambitions A balanced E&P business, focused on oil & specialising in emerging markets Slide 4
Slide 5: Our portfolio of assets
Overview presentation OUR PORTFOLIO OF ASSETS NEW VENTURES - exploration EAST AFRICA - development Kenya • Extensive acreage in Africa and South America, in well-known plays • Significant discoveries in South Lokichar basin • Multiple high-impact frontier campaigns planned • Phased development plan
Slide 6: A balanced self-funding E&P company in action
Overview presentation A BALANCED SELF-FUNDING E&P COMPANY IN ACTION DELEVERAGE MAXIMISING & PRODUCTION RE-INVEST GROWTH FROM BALANCE DISCOVERED SHEET RESOURCES FREE INVESTING IN CASH OUR BUSINESS CASH FLOW FLOW FROM FINDING OPERATIONS NEW OIL PORTFOLIO & FINANCIAL SHAREHOLDER MANAGEMENT RETURNS Stro
Slide 7: A strong commitment to sustainability
Overview presentation A STRONG COMMITMENT TO SUSTAINABILITY Local content Developing Social and capacity local skills Investment Climate resilience Ecosystems Safety and wellness Responsible production Good governance Promoting equality Slide 7
Slide 8: Driving forward to achieve our growth ambitions
Overview presentation DRIVING FORWARD TO ACHIEVE OUR GROWTH AMBITIONS Investing in >150kbopd Investing to grow production, develop our assets production potential discoveries and find new oil Low cost <$10/bbl Significant savings realized; cost- base targeted operating costs discipline embedded acro
Slide 9: Financial update
Overview presentation Tullow Oil plc – Overview Presentation FINANCIAL UPDATE
Slide 10: 2018 full year results summary
Overview presentation 2018 FULL YEAR RESULTS SUMMARY Underlying cash Revenue1 Adjusted EBITDAX Profit after tax2 operating costs $1,859million $10.0/boe $1,600million $85million FY 2017: $1,723 million FY 2017: $11.1/boe FY 2017: $1,346 million FY 2017: $(189) million Capital investment3 Free cash f
Slide 11: Relentless focus on retaining cost discipline
Overview presentation RELENTLESS FOCUS ON RETAINING COST DISCIPLINE $/bbl $m Unit Opex Net G&A 20 250 200 15 150 10 100 5 50 0 0 2015 2016 2017 2018 2019f 2015 2016 2017 2018 2019f $m Financing costs 400 Competitive industry cost base 300 • Targeting further operational efficiencies 200 • Cost consc
Slide 12: Continued prudent financial management
Overview presentation CONTINUED PRUDENT FINANCIAL MANAGEMENT Diversified and evolving capital structure Revenue protection through hedging • A balance of funding sources • Proven hedging policy over 10 years • Revolving RBL provides long-term flexibility • Continue to systematically hedge • Successf
Slide 13: Disciplined capital investment in our business
Overview presentation DISCIPLINED CAPITAL INVESTMENT IN OUR BUSINESS MAXIMISING GROWTH FROM FINDING PRODUCTION DISCOVERED RESOURCES NEW OIL FY 2018 $204m $92m $65m $50m $62m $423m Ghana Non-op Kenya Uganda* Exploration FY 2019 $250m $100m $70m $180m $140m $570m Ghana Non-op Kenya Uganda* Exploration
Slide 14: A business delivering significant free cash flow
Overview presentation A BUSINESS DELIVERING SIGNIFICANT FREE CASH FLOW $m Free cash flow1 Factors impacting 2018 free cash flow: 1000 Strong underlying operating cash flow $70 800 One-off cash outflow from Seadrill litigation $65 Year-end working capital movements $68 $70 $60 600 Litigation $58 $65
Slide 15: Deleveraging the balance sheet remains a priority
Overview presentation DELEVERAGING THE BALANCE SHEET REMAINS A PRIORITY Net debt ($bn) Gearing ratio (times) 5.0 5 Net debt Gearing 4.0 4 Continued strengthening the balance sheet 3.0 3 • Significant deleveraging achieved year-on-year @ $50/bbl • Gearing now within target 2.0 2 range of 1x-2x • Focu
Slide 16: Capital allocation framework
Overview presentation CAPITAL ALLOCATION FRAMEWORK DEBT AND LIQUIDITY INVESTING IN OUR BUSINESS SHAREHOLDER RETURNS Balance sheet robust to Apply strict criteria to allocate Demonstrating financial future oil price volatility capital across the portfolio: discipline and business progress Driving net
Slide 17: West Africa
Overview presentation Tullow Oil plc – Overview Presentation WEST AFRICA
Slide 18: Maximising production in West Africa
Overview presentation MAXIMISING PRODUCTION IN WEST AFRICA Growing & sustaining our production business • Ramping up production to 100,000 bopd net in 2019 • Infill, near-field & exploration opportunities to sustain & grow production • Low-cost production $10 opex/bbl • Significant scope for ‘just
Slide 19: Production operations across West Africa
Overview presentation PRODUCTION OPERATIONS ACROSS WEST AFRICA Ghana infill programme delivering results • New wells meeting/exceeding expectations • Seven new wells planned in 2019 • 180,000 bopd gross production forecast 2019 • Focus on operating efficiency & uptime Revival of West Africa non-op
Slide 20: Ghana reserves & resources: fields in early life
Overview presentation GHANA RESERVES & RESOURCES: FIELDS IN EARLY LIFE TEN & Jubilee Fields Significant reserves & resource base • Fields in early life; only 25% of reserves & resources produced • Progressively maturing 2C into 2P, with further nearfield opportunities being pursued Slide 20
Slide 21: Ghana long-term production outlook
Overview presentation GHANA LONG-TERM PRODUCTION OUTLOOK 200,000 Prospective 3P Reserves Production rate (bbl oil per day) 2C Resources TEN 2P Reserves 150,000 Jubilee 2P Reserves 100,000 50,000 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Investme
Slide 22: Central & West Africa performance
Overview presentation CENTRAL & WEST AFRICA PERFORMANCE Booked net resource Reliable long-term production with capex flexibility 35,000 Potential business 30,000 Côte d’Ivoire development Net Production (boe/day) opportunities 25,000 20,000 Equatorial Guinea 15,000 10,000 Gabon 5,000 Forecast 0 2004
Slide 23: East Africa
Overview presentation Tullow Oil plc – Overview Presentation EAST AFRICA
Slide 24: Developing our discoveries: East Africa production hub
Overview presentation DEVELOPING OUR DISCOVERIES: EAST AFRICA PRODUCTION HUB Group net oil production growth 150 KENYA UGANDA MATERIAL OIL DISCOVERIES 560mmbo 1.7bbo 125 Gross 2C resource Gross 2C resource 100 PRODUCTION SCALE 60100,000 230,000 kbopd bopd gross production bopd gross production 75 G
Slide 25: Uganda - project update
Overview presentation UGANDA - PROJECT UPDATE Key milestones to FID Partner & • Total operate Tilenga Operator roles • CNOOC operate Kingfisher defined • Tullow non-operator Upstream • FEED & Tilenga ESIA Completed • EPC contracts ready for award • CPF & well pad locations finalised • 90% land acqui
Slide 26: Developing Kenya's discovered resources
Overview presentation DEVELOPING KENYA'S DISCOVERED RESOURCES South Lokichar development plan Agete Erut • Discovered resources support development via Etom export pipeline to Lamu TWIGA 9 wells Ekales 1 pad • Phased development approach planned CPF Water & Power • Incremental developments to follow
Slide 27: Kenya – stepping stones to FID
Overview presentation KENYA – STEPPING STONES TO FID To achieve FID in 2019, the following tasks must be completed: Complete pipeline & Submit Environmental upstream Front End and Social Impact Engineering & Design Assessment Finalise agreements Finalise Heads of Terms over land title for for critic
Slide 28: Exploration
Overview presentation Tullow Oil plc – Overview Presentation EXPLORATION
Slide 29: Exploration criteria for value creation
Overview presentation EXPLORATION CRITERIA FOR VALUE CREATION Targeted exploration Light conventional oil COMMERCIAL SCREENING Low cost simple wells Tested at $50/bbl Low complexity deep water Low cost of development HIGH MARGIN OIL Value accretive Onshore and shallow water Onshore rifts Manageable
Slide 30: Finding new oil – executing our exploration programme
Overview presentation FINDING NEW OIL – EXECUTING OUR EXPLORATION PROGRAMME 2019 2020 2021 GUYANA #1 priority SURINAME Ranked highly CÔTE D’IVOIRE COMOROS Material entries PERU MAURITANIA/ Prospect NAMIBIA/ JAMAICA evaluation WEST & EAST Near Field AFRICA Firm Drilling Firm Seismic Airborne Survey D
Slide 31: 2019 drilling focus on Guyana
Overview presentation 2019 DRILLING FOCUS ON GUYANA Shelf-edge acreage in industry hot-spot Multiple prospects >4BBO Gross mean up-dip of giant oil un-risked resources discoveries High-quality 3D seismic processed ORINDUIK KANUKU ORINDUIK JETHRO CARAPA JOE prospect selected for 2Q 2019 drilling pros
Slide 32: Guyana: Orinduik-Kanuku blocks
Overview presentation GUYANA: ORINDUIK-KANUKU BLOCKS • Multiple Cretaceous and Tertiary leads & prospects • Tullow’s acreage sits up dip of giant Liza discoveries Transformational opportunity with multiple follow-up potential Slide 32
Slide 33: Spotlight on Côte d'Ivoire
Overview presentation SPOTLIGHT ON CÔTE D’IVOIRE >1.5 BBO Low-cost Using both Carried work High-value Light footprint Gross mean un-risked exploration in proven & programme; barrels & low execution across resources core West Africa innovative 60% operated breakeven 8,000 sq km oil province technolog
Slide 34: Spotlight on Comoros
Overview presentation SPOTLIGHT ON COMOROS ~7 BBO 17 Leads 16,063 sq km 35% equity Large, operated, offshore oil play in East Africa Simple drilling and attractive fiscal terms Managed cost exposure in frontier acreage Flexible options to leverage seismic market Rapid deal-making with like-minded pa
Slide 35: Maturing exploration acreage for future drilling
Overview presentation MATURING EXPLORATION ACREAGE FOR FUTURE DRILLING • Suriname: low-cost oil plays; Araku-1 drilled in 2017; further prospects being evaluated • Mauritania: low-cost shelf-edge oil plays, 3D seismic acquired; potential 2020 drilling • Peru*: Farm-in to Block Z-38; Marina prospect
Slide 36: 2019 Outlook
Overview presentation Tullow Oil plc – Overview Presentation 2019 OUTLOOK
Slide 37: 2019 Outlook
Overview presentation 2019 OUTLOOK GENERATE DISCOVER significant free cash flow oil in Guyana RETURN GROW $100m MAINTAIN net production minimum cost discipline dividend ACHIEVE Uganda & COMPLETE Kenya FIDs Uganda farm-down A strong foundation for growth in the years ahead Slide 37
Slide 38: 2019 data overview
Overview presentation 2019 DATA OVERVIEW Group average working interest production - 2019 forecast Operating data 2019 FY 2019 Forecast forecast OIL PRODUCTION (bopd) OPERATING COSTS 1 ($/boe) Ghana 73,000 Equatorial Guinea 14.5 Jubilee 34,000 Côte d’lvoire 15.5 TEN 39,000 Gabon 2 23.5 Ghana Jubilee
Slide 39: Tullow Oil plc
Overview presentation Tullow Oil plc 9 Chiswick Park 566 Chiswick High Road London, W4 5XT Follow Tullow on: United Kingdom Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 Email: ir@tullowoil.com Web: www.tullowoil.com Slide 39