Enquest Plc · LSE:ENQ
Enquest — Investor Presentation (July 2019)
33 slides from Enquest's investor presentation, July 2019
Slide 1: Investor meetings July 2019
©) DELIVER Investor meetings July 2019
Slide 2: A clear strategy with a focused business model
EnQuest A clear strategy with a focused business model Strategic vision To be the operator of choice for maturing and underdeveloped hydrocarbon assets Focused business model A production and development led E&P business Utilises EnQuest core strengths Strategically aligned Value-accretive
Slide 3: EnQuest priorities: Deliver, de-lever, grow
EnQuest priorities “Deliver, de-lever, grow” Production Deliver Cost control Capital discipline Scheduled bank amortisation De-lever Targeting net debt:EBITDA ratio of 1-2x Develop asset base Grow Consider selective, value enhancing acquisitions 2
Slide 4: 2018 performance: targets met; debt reduction on track
EnQuest 2018 performance Operational and financial targets met; debt reduction on track Net production (Boepd) Unit opex ($/boe) Cash capex ($m) 60,000 55,447 26 26 400 368 Deliver 50,000 300 24 220 ✔ 37,405 23 40,000 200 22 30,000 100 20,000 20 0 2017 2018 2017 2018 2017 2018 Net debt:EBITDA ratio
Slide 5: 2018 performance: Magnus acquisition provides growth and portfolio balance
EnQuest 2018 performance Magnus acquisition provides growth and portfolio balance Grow ✔ Material increase in production Significant 2P and 2C resource additions Net production (Boepd) Reserves and resources (MMboe) 60,000 500 450 50,000 8,432 400 350 198 40,000 9,148 21,369 300 146 151 164 9,062 8,
Slide 6: Results summary: Strong 2018 performance
Results summary Strong 2018 performance Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US Dollars Production Revenue1 Unit opex EBITDA2 55,447 Boepd $1,201 million $23/boe $716 million 48% 89% 10% 136% Cash generated by Cash capex Net f
Slide 7: Cash flow: Strong cash generation
Cash flow Strong cash generation $m Net cash flow from operating activities Improved cash generation: 900 ✔ Delivered 50 800 50 794 Favourable prices (20) 203 Material increase in volumes 700 Improved asset mix 600 Thistle decommissioning option 500 210 Favourable working capital 400 302 3
Slide 8: Capital discipline: lower capex post Kraken development
Capital discipline Materially lower capex requirement post Kraken development $m $m 300 2018 vs 2017 cash 1,200 Cash capex trend 2018 cash capex: capex 1,058 252 ✔ Delivered 1,000 Focused on drilling at Kraken, 250 Magnus, Heather and 2018: $220m 200 2017: $368m 800 751 PM8/Seligi 609 150 600 121
Slide 9: Net debt and cash flow
Net debt and cash flow Improved cash generation facilitating debt reduction $m Movement in net debt 2,200 Debt reduction: 2,100 ✔ Delivered 2,000 1,991 794 Strong cash flow from 1,900 operations 1,800 37 1,774 Offset by 320 1,700 Production enhancing capex 1,600 Higher financing costs 1,500
Slide 10: Debt structure: Long-dated, manageable repayment structure
Debt structure Long-dated, manageable repayment structure $m Debt structure1 $m 5-year repayment profile1 2,500 2,000 72 72 2,000 179 1,500 179 1,500 965 965 1,000 1,000 32 500 965 500 874 799 25 439 205 155 0 0 2019 2020 2021 2022 2023 Facilities Drawn Credit facility Bonds Oz Mgt Other loans Credi
Slide 11: Debt structure: capitalisation and enterprise value
Debt structure EnQuest capitalisation and enterprise value $m 31-Dec-18 30-Apr-19 Interest / Available Drawn CHANGE Drawn Coupon Maturity Rating 1 Tranche A Loan 799 799 (105) 694 USD L+475 Oct-21 Tranche B Loan 75 0 USD L+475 Oct-21 Oz Management facility 1 179 179 USD L+630 Sep-23 Other loans 72 7
Slide 12: Magnus generates strong cash flow
Magnus generates strong cash flow 75% interest cash waterfall1 Cash flow waterfall pre repayment of Cash flow waterfall post repayment of EnQuest’s $100m consideration EnQuest cash consideration 50% 50% 50% 50% Free cash flow Vendor loan EnQuest Profit share Free cash flow Vendor Loan Profit share r
Slide 13: 2019 performance and outlook
EnQuest 2019 performance and outlook Year to date April: Continued delivery and de-leveraging Production up c.25% at 69,973 Boepd Magnus and PM8/Seligi ahead of expectations Deliver Recent Kraken performance materially improved; initiatives ongoing ✔ Full year guidance remains unchanged Gr
Slide 14: 2019 operational delivery to end April: Magnus and pipeline projects
2019 operational delivery to end April Strong performance at Magnus; pipeline projects on schedule Strong performance at Magnus Net production (Boepd) high production efficiency through reservoir 34,766 Northern North Sea management; well interventions and plant de-bottlenecking future prospec
Slide 15: 2019 operational delivery: Kraken improving; PM8/Seligi programmes
2019 operational delivery to end April Kraken improving; PM8/Seligi programmes underway Significant improvement in production in Mar/Apr Net production (Boepd) vs. Jan/Feb Higher production efficiency: power engine 21,43 performance; plant stability; topside power 1 19,77 2 Kraken pumps and spar
Slide 16: 2019 outlook
2019 outlook On track to meet targets; debt reduction remains the priority GroupProduction production (net) KrakenCash production capex(gross) Net debt:EBITDA 63,000-70,000 Boepd 30,000-35,000 Bopd Below 2x1 c.20% Operating expense Cash Hedging capex Hedging c.$600 million c.$275 million c.12.5 MMbb
Slide 17: Longer-term development options
Longer-term development options Three world-class assets: Magnus, Kraken and PM8/Seligi 2P reserves of 245 MMbbls, an increase of 17% over 2017 Significant resource base in existing fields; delivered largely through drilling Magnus: 75% acquisition added c.40 MMboe to year end 2C resources Krake
Slide 18: Magnus: A giant field
Magnus A giant field Magnus is one of 3 giant oil-fields in NNS; c.2bn boe HIIP c.50% RF; large volume of remaining mobile oil Secured early wins: plant de-bottlenecking, drilled 2 wells; barrel-adding well interventions Improved reservoir understanding utilising recent seismic Unlocking f
Slide 19: Magnus opportunity
Magnus opportunity Significant 2P reserves and 2C resources 2P reserves 2 low-cost, platform drilled infill wells planned in late 2019 Continuation of successful well interventions Plant debottlenecking and improved water handling capacity 2C resources Identified low-cost annual 2-well drill
Slide 20: Kraken: upside opportunity in the Western Flank
Kraken FDP drilling complete; upside opportunity in the Western Flank 2P reserves NW Area - Drilling and subsea infrastructure complete Barra DC3 Central West Focus on Production Efficiency and cost management 2C resources Maureen Western Flank has c.100 MMbbls STOIIP Worcestershire area hig
Slide 21: PM8/Seligi: giant field with upside potential
PM8/Seligi A giant field with significant upside potential J18/20 Reservoir Outline with Initial Fluid Contacts Hotel c.2bn boe STOIIP; 12 stacked reservoirs; c.35% RF 0 Targets Alpha 9 Targets Historically strong production performance through well Bravo 7 Targets Echo interventions; only 2 new
Slide 22: Sub-sea tie-back opportunities: Eagle discovery
Sub-sea tie-back opportunities Eagle discovery 2C resources EnQuest 100% High quality Fulmar reservoir discovered in 2016 through a single exploration well Analysis shows reservoir with a vertical thickness of 67ft excellent reservoir properties no oil water contact was encountered, repr
Slide 23: Sub-sea tie-back opportunities: Don NE and Ythan
Sub-sea tie-back opportunities Don NE and Ythan near field Don NE - 2C resources 14-1 100% EnQuest Development concept and economics under evaluation Dons P2137 - Accumulations and Top Brent Depth Contours June 2018 single producer in an undeveloped fault 6821600 6821600 421200 421600 422000 4
Slide 24: 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, reserves and other trend information. These statements and forecasts involv
Slide 25: Appendices
Appendices @nQuest
Slide 26: Strong reserves growth in first nine years
Strong reserves growth in first nine years Reserve life c. 13 years MMboe Net 2P Reserves 400 350 263 300 250 245 (99) 200 150 100 81 50 0 Net 2P reserves Reserve additions Production Net 2P reserves start 2010 2010-2018 2010-2018 end 2018 25
Slide 27: Well set for substantial growth
Well set for substantial growth Q&A Strong CAGR (c.17.2% to 2019 mid-point) Average net production (Boepd) 70000 63,000 - 70,000* 60000 50000 40000 30000 20000 10000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 * Guidance range for 2019 is an average of between 63,000 Boepd and 70,000 Bo
Slide 28: EnQuest: 8 Hubs
EnQuest: 8 Hubs A strong platform for growth Heather/Broom Kraken Thistle/Deveron The Dons Magnus Alma/Galia Greater Kittiwake Area PM8/Seligi 27
Slide 29: Operational growth beyond 2019
Operational growth beyond 2019 Selected portfolio opportunities Deliver 2P Reserves Late-life asset / Platform Well Plant Sub-sea Infill drilling life extension drilling intervention improvements tie-back Magnus ✔ ✔ ✔ ✔ ✔ Kraken ✔ ✔ ✔ PM8/Seligi ✔ ✔ ✔ Thistle/Deveron ✔ ✔ ✔ ✔ Heather/Broom ✔ ✔ ✔ ✔ Gr
Slide 30: Group tax position
Group tax position No material UK cash CT/SCT on operational activities expected UK Tax Allowances $m Tax losses at 31 December 2017 3,121.3 2018 net additions plus RFES 42.8 Prior year true up (38.8) Tax losses at 31 December 2018 3,125.3 Tax allowances carried forward 100.0 Total tax losses and al
Slide 31: Kraken subsurface
Kraken subsurface @nQuest
Slide 32: Kraken field water cut evolution
Kraken field water cut evolution Field data indicates effective reservoir sweep Voidage recovery through water flood provides Water cut trend the primary approach to maximising reserves 80% of the field volumes are now at voidage Coning Channelling Efficient sweep Positive water cut trend 3
Slide 33: Kraken reserves
Kraken reserves Life of field reserves substantially unchanged Kraken well locations Field-wide STOIIP and reservoir properties remain largely unchanged since FDP High-quality seismic Extensive drilling completed Confirmed pressure communication Injection and producer well performance is b