Tullow Oil plc · LSE:TLW
Tullow Oil — Investor Presentation (December 2014)
56 slides from Tullow Oil's investor presentation, December 2014
Slide 1: Tullow Oil plc
December 2014 Overview Presentation Tullow Oil plc December 2014
Slide 2: Disclaimer
December 2014 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 b
Slide 3: Overview Presentation
December 2014 Overview Presentation OVERVIEW PRESENTATION
Slide 4: Good progress made to date during 2014
December 2014 Overview Presentation Good progress made to date during 2014 West Africa • Stable Jubilee production – c.103,000 bopd • TEN development on time and on budget • Onshore discovery at Igongo in Gabon East Africa • Kenya discoveries support development plans • MoU signed with Government of
Slide 5: The Tullow strategy
December 2014 Overview Presentation The Tullow strategy Additional cash flow from new production Monetisation High Margin Exploration Selective Options & Production and Development Portfolio Cash flow Appraisal Management Costs & Dividends Additional Surplus Cash Exploration, Cash Distribution • Inc
Slide 6: Core West African production on track to meet FY 2014 target
December 2014 Overview Presentation Core West African production on track to meet FY 2014 target KENYA West African production South Lokichar Basin Development studies underway; single basin has • 1H 2014 actual: 63,900 boepd potential to produce in excess of 100,000 bopd gross. • FY 2014 guidance:
Slide 7: Industry-leading exploration acreage position
December 2014 Overview Presentation Industry-leading exploration acreage position Balanced spread of E&A campaigns provides robust feedstock to sustain Tullow’s average annual addition of 200mmboe mean resources Slide 7
Slide 8: Overview Presentation
December 2014 Overview Presentation OVERVIEW PRESENTATION
Slide 9: Business and funding strategy
December 2014 Overview Presentation Business and funding strategy Business Strategy Funding Strategy Financing Initiatives Additional cash flow from new production Commercial Bank Facilities Pre Tax Operating High Monetisation Exploration Selective Cash Flow Margin Options & $3.5bn RBL Production an
Slide 10: 2014 Half-yearly results summary
December 2014 Overview Presentation 2014 Half-yearly results summary 1H 2014 1H 2013 Comments Sales revenue $1,265m $1,347m Unchanged from 1H 2013 after adjusting for Bangladesh Gross profit $673m $764m asset sale and Gabon production deferral Administrative Expenses ($120m) ($89m) Loss on disposal
Slide 11: Net income 1H 2014 v 1H 2013
December 2014 Overview Presentation Net income 1H 2014 v 1H 2013 $m 400 300 2 84 43 27* 55 200 313 100 226 0 107 115 95 53 -100 1H 2013 Price Volume Operating Other costs Exploration Net Finance Tax Loss on 1H 2014 costs (*Other cash Write-offs (*Other cash disposal Costs) costs) Slide 11
Slide 12: Sources and uses of funds
December 2014 Overview Presentation Sources and uses of funds Cash inflow $1,672m $m 1H 2014 Net cash inflow $59m 2,000 • Operating cash flow $728m* (1H 2013:$1,030m*) • Net loan draw down $944m $944m (1H 2013:$901m) 1,500 $219m $161m Cash outflow $1,613m $37m $1,196m • Cash Capex $1,196m (1H 2013:C
Slide 13: Debt capital structure has evolved in 1H14
December 2014 Overview Presentation Debt capital structure has evolved in 1H14 Debt maturity profile Key metrics $mm Commitment size Maturity $mm 30 June 2014 RBL 3,500 Dec 2019 Cash and cash equivalents 411 Corporate Facility 750 Apr 2017 Debt outstanding 6% Senior Notes 650 Nov 2020 RBL Facilities
Slide 14: Capital expenditure
December 2014 Overview Presentation Capital expenditure $2.1 billion capex for full year 2014 • Ghana: Jubilee Phase 1A & TEN developments ($760m) • Kenya: Exploration and appraisal drilling ($310m) 2014 $720m $220m $1,160m $2,100m • Uganda: Appraisal drilling and development progress towards FID ($
Slide 15: Highlights
December 2014 Overview Presentation Highlights Financial performance Strong Revenue and Cash Flow generation from core West African production Strong balance sheet Second successful $650m bond issue, re-financing of $750m corporate RCF plus new $300m LC facility Portfolio management Sale of non-core
Slide 16: Overview Presentation
December 2014 Overview Presentation OVERVIEW PRESENTATION
Slide 17: Finding oil in 2014
December 2014 Overview Presentation Finding oil in 2014 2014 E&A Commercial Technical Dry Hole Outcomes Discovery Discovery • We continue to find our own oil EAST AFRICA • Cost-effective feedstock for value creation Exploration Ewoi-1 Emong-1 Shimela-1 Ekosowan-1 Amosing-1 Gardim-1 • Campaign approa
Slide 18: Campaign approach to finding oil in Africa & the Atlantic
December 2014 Overview Presentation Campaign approach to finding oil in Africa & the Atlantic We find oil in Africa & the Atlantic Value added through finding our own New Oil Drilling Out Successful Core Plays & Basins Exploration Business Campaigns focus delivery Development • High success rates in
Slide 19: Balancing investment across the portfolio
December 2014 Overview Presentation Balancing investment across the portfolio We find oil in Africa & the Atlantic Frontier Core 5 1 South Atlantic Margins 4 East African Rift Basins Low cost options give exposure to upside 10 Bbo STOIIP found in 40 Bbo potential 3 Older turbidites beneath shelf (l
Slide 20: Shifts of emphasis within exploration portfolio for value
December 2014 Overview Presentation Shifts of emphasis within exploration portfolio for value Uruguay Ghana Liberia, Sierra Leone Guyana Suriname Gabon Namibia Netherlands Uganda Guinea Norway Ethiopia Mauritania Kenya Madagascar Higher cost / Lower non-technical risk Lower cost / Higher non-technic
Slide 21: Exploring for high value oil
December 2014 Overview Presentation Exploring for high value oil Higher profitability associated with higher oil reserve mix Oil finding principles 100% • Focus on finding high value producible light oil 80% • Oil is multiples more valuable than gas High Value Oil 60% • Oil is easier to commercialis
Slide 22: How we explore: our process works
December 2014 Overview Presentation How we explore: our process works 2015 E&A Capex $300M Risked upside* Monte Carlo simulation of Prospect & Lead Inventory (P10 = 4.3 Bbo) within full potential of plays & basins (6.6 Bbo) Slide 22
Slide 23: Cost efficient exploration $3.3/boe (2007-2013)
December 2014 Overview Presentation Cost efficient exploration $3.3/boe (2007-2013) 900 Potential “Kick” in East African Rift Basins 3 core campaigns < $3.3/boe 800 Creaming Curve • East African Rift Basins $1.95/boe Net Contingent Resources Additions from E&A (mmboe) - Investing in a major winner 7
Slide 24: Net contingent resource additions from E&A
December 2014 Overview Presentation Net contingent resource additions from E&A 900 Ekales-1 & Agete-1 • 200mmboe / year, steady average performance 800 • Strong run of success in Uganda & Ghana Twiga-1 & Etuko-1 • New basins campaigns deliver continuity Ngamia-1 700 • Low cost Kenya & Norway extend
Slide 25: E&A Highlights
December 2014 Overview Presentation E&A Highlights Good progress year to date Successful Exploration & Appraisal outcomes in first half of 2014, continuing to add value to portfolio Campaign approach Campaign approach hedges annual variability, phases risk & focuses delivery Shift of emphasis Invest
Slide 26: Overview Presentation
December 2014 Overview Presentation OVERVIEW PRESENTATION
Slide 27: Core West African production on track to meet FY 2014 target
December 2014 Overview Presentation Core West African production on track to meet FY 2014 target 2014 West African production • 1H 2014 actual: 63,900 boepd • FY 2014 guidance: 64-68,000 boepd TEN development on track • First oil mid-2016 • Gross capacity of 80,000 bopd Ghana – Jubilee field West Af
Slide 28: West African production generating strong cash flows
December 2014 Overview Presentation West African production generating strong cash flows • Significant incremental investment activity across non-operated assets • Strong pre-tax operating cash flow generation across West African portfolio in 1H 2014 Equatorial Guinea • Okume Complex infill drilling
Slide 29: Ghana projects on track to enhance production and cash flow
December 2014 Overview Presentation Ghana projects on track to enhance production and cash flow Ghana gross production profile 250 • Jubilee production on track to meet 2014 FY TEN being developed (80:20 oil:gas) TEN Upside (45:55 oil:gas) production guidance of 100,000 boepd 200 - Jubilee 2014 YTD
Slide 30: Visible future growth – TEN development overview
December 2014 Overview Presentation Visible future growth – TEN development overview Base development case • 300 mmboe reserves being developed • 24 well development • Gross development capex of $4.9 billion • Leased FPSO, capacity of 80,000 bopd Mid-2016 start up • 10 wells on stream at start up; 8
Slide 31: Visible future growth - TEN Project on track
December 2014 Overview Presentation Visible future growth - TEN Project on track Execution schedule with strategic milestones 2013 2014 2015 2016 • Over 2 million man-hours ACTIVITY Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 worked to date General Milestones All Major Contracts Awarded Mobilise 1s
Slide 32: Non-operated – sustaining high margin production
December 2014 Overview Presentation Non-operated – sustaining high margin production • Good technical work has delivered investment opportunities High value incremental • High return investments compete strongly for capital within investments can sustain Tullow’s portfolio net production around • Me
Slide 33: Non-operated case study: Gabon
December 2014 Overview Presentation Non-operated case study: Gabon Gabon net production profile 16,000 14,000 • High value infill drilling has offset decline 12,000 10,000 • Tullow technical influence impacting boepd 8,000 Operator decisions 6,000 4,000 2,000 0 2006 2010 2014 2018 2022 2025 Profile
Slide 34: Non-operated case study: Equatorial Guinea
December 2014 Overview Presentation Non-operated case study: Equatorial Guinea • Use of 4D seismic data to optimise infill drilling - First iteration in 2010 (learning ahead of use at Jubilee & TEN) - Next campaign planned for late 2014/15 (Ceiba) • Outstanding results achieved on Ceiba - Initial 20
Slide 35: Guinea phase of West African Margin Campaign
December 2014 Overview Presentation Guinea phase of West African Margin Campaign Targeting the elusive upside of the Jubilee play • Regional geology points to turbidite sands deposited by an ancient delta of the Niger River • Potential scale of opportunity on a par with Ghana • Fatala selected for d
Slide 36: Central Atlantic Margin Campaign
December 2014 Overview Presentation Central Atlantic Margin Campaign Mauritania Outboard Plays Mauritania deepwater turbidites (1st phase) • Fregate-1 discovers over 30m light oil & condensate • Commercialisation options under review (high costs) • Follow-up potential of new oil play being high-grad
Slide 37: Overview Presentation
December 2014 Overview Presentation OVERVIEW PRESENTATION
Slide 38: Progressing oil resources towards development in East Africa
December 2014 Overview Presentation Progressing oil resources towards development in East Africa • Full life cycle regional scale E&P business • Two basins discovered; over 300,000 bopd gross potential • Large yet-to-find from basin opening campaigns • GoU, GoK & partners aligned for earliest possib
Slide 39: East Africa Business highlights
December 2014 Overview Presentation East Africa Business highlights • Full life cycle regional scale E&P business • Two basins discovered with over 300,000 bopd potential • Large yet-to-find upside from basin opening exploration campaign • Governments and partners aligned for earliest possible first
Slide 40: East Africa regional crude oil export pipelines
December 2014 Overview Presentation East Africa regional crude oil export pipelines • Regional pipeline agreed - Governments across region supportive 600 km • Significant progress on technical design 860 km - Routing and environmental screening completed - Conceptual design studies completed - Burie
Slide 41: Kenya – Ethiopia: World-class oil province potential
December 2014 Overview Presentation Kenya – Ethiopia: World-class oil province potential E&A campaign delivery – parallel approach 1. South Lokichar Basin drill-out, appraisal & testing • Discovery of over 600 mmbo Pmean gross resources • Flow tests confirm good productivity • 9/11 wildcat wells dis
Slide 42: Kenya development plans rapidly advancing in South Lokichar
December 2014 Overview Presentation Kenya development plans rapidly advancing in South Lokichar Explore, appraise and develop simultaneously • Exploration and appraisal drill out by end 2015 - 600 mmbo Pmean gross resources discovered to date • Appraisal Area of Interest (AOI) established • Extended
Slide 43: Exploring Kenya & Ethiopia’s significant resource potential
December 2014 Overview Presentation Exploring Kenya & Ethiopia’s significant resource potential The following basins will be tested in 2014/2015 Spud date Central Kerio Basin: Kodos Completed North Kerio Basin: Epir In progress North Turkana Basin: Engomo 4Q 2014 North Lokichar Basin 1H 2015 Kerio V
Slide 44: Focus on driving down Kenya well costs
December 2014 Overview Presentation Focus on driving down Kenya well costs Kenya well costs Since 2004 50 • 104 exploration and appraisal wells & sidetracks - 77 as operator • 40 wells tested both production & injection 40 Total well costs (US$ million)* • 57,700 sq km of FTG surveys – all as operat
Slide 45: Kenya overview: volumes, maps & cross-sections
December 2014 Overview Presentation Kenya overview: volumes, maps & cross-sections Slide 45
Slide 46: Three basin opening Kenya wells in 2H 2014
December 2014 Overview Presentation Three basin opening Kenya wells in 2H 2014 Central Kerio Basin: Kodos Completed North Kerio Basin: Epir In progress Turkana North Basin: Engomo 4Q 2014 Slide 46
Slide 47: Shortening appraisal timelines in Kenya
December 2014 Overview Presentation Shortening appraisal timelines in Kenya ASSET 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Kingfisher EA2 Buliisa EA1 Buliisa Kaiso Tonya Kaiso Tonya Kingfisher Buliisa FID Uganda Energy Africa purchase South Lokichar Sth. Lokichar FID Kenya Tu
Slide 48: Uganda – development status
December 2014 Overview Presentation Uganda – development status Project definition being finalised 250 • Appraisal programme completed • Development costs reduced by 30% 200 200 • Kingfisher PL awarded, all EA2 Field Gross Production (kbopd) Development plans submitted to GoU , remaining EA1 plans t
Slide 49: Uganda development optimisation and Capex savings
December 2014 Overview Presentation Uganda development optimisation and Capex savings • Development optimisation and Capex reduction $3bn Capex cost reduction 4% programme in 2013/14 Reduction in 9% Facilities Capex Reduction in • Capex reduced from c.$11bn to c.$8bn Well & Pad Costs - Tullow’s c.$6
Slide 50: Frontier exploration opportunities in Namibia
December 2014 Overview Presentation Frontier exploration opportunities in Namibia Namibia reachable turbidites • Older turbidites beneath shelf (low cost) • Oil system established by Wingat-1 (HRT) • New 3D survey highlights 2015 prospect • Albatross prospect; 422 mmbo (gross unrisked mean), 1093 mm
Slide 51: Overview Presentation
December 2014 Overview Presentation OVERVIEW PRESENTATION
Slide 52: Near infrastructure & Frontier opportunities in North Atlantic
December 2014 Overview Presentation Near infrastructure & Frontier opportunities in North Atlantic Barents Sea - Frontier • Major oil finds continue at Wisting prospect cluster • Hassel & Bjaaland target cluster potential up to 500 mmbo Norwegian Sea - Near Infrastructure • Zumba - Upper Jurassic ex
Slide 53: Overview Presentation
December 2014 Overview Presentation OVERVIEW PRESENTATION
Slide 54: Guyanas: extensive “Jubilee play” potential plus upside plays
December 2014 Overview Presentation Guyanas: extensive “Jubilee play” potential plus upside plays • Non-operated E&A lacks success after Zaedyus-1, turns to de-risked oil plays and new attractive lower geo-pressured prospects on Eastern Slope • Regional campaign shifts to operated Suriname venture &
Slide 55: Next growth – frontier exploration examples 2015
December 2014 Overview Presentation Next growth – frontier exploration examples 2015 Guyanas Margin • Significant oil charge proven by Zaedyus-1 (72 m pay) • Industry interest continues to ramp-up • Commanding acreage spread with play diversity • Equity being managed to mitigate exposures • Goliathb
Slide 56: Tullow Oil plc
December 2014 Overview Presentation Download the Tullow Investor Relations and Media App from the Apple and Android stores: 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