Tullow Oil Plc · LSE:TLW
Tullow Oil — FY2007 Earnings Presentation
55 slides from Tullow Oil's earnings presentation, Mar 12, 2008
Slide 1: Tullow Oil plc - 2007 Results
Tullow Oil plc - 2007 Results 12 March 2008 2007 Results Slide 1
Slide 2: Disclaimer
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 in light of the informa
Slide 3: Contents
Contents Section Page Introduction 4 Finance 6 Production and Development 13 Exploration 23 Conclusions and Q&A 33 Appendix 1 – Strategy 35 Appendix 2 - Africa 38 Appendix 3 - Europe 45 Appendix 4 – South Asia 48 Appendix 5 – South America 53 2007 Results Slide 3
Slide 4: Introduction – Aidan Heavey
Introduction – Aidan Heavey 2007 Results Slide 4
Slide 5: Tullow's business has reached a new level
Tullow’s business has reached a new level • 2007 was an exceptional year for Tullow - World-class projects in Ghana and Uganda - Record Production, Cash Flow and Sales Revenue - Record organic Reserves and Resources growth • Consistent strong performance from underlying business • Continued effectiv
Slide 6: Finance – Tom Hickey
Finance – Tom Hickey 2007 Results Slide 6
Slide 7: 2007 Results Summary
2007 Results Summary 2007 2006 Change Sales revenue £639.2 m £578.8m + 10% Operating profit before exploration activities £253.3m £295.1 m - 14% Net profit £52.6 m £157.4 m - 67% Basic earnings per share 7.33 p 24.23 p - 70% Dividend per share 6.00 p 5.50 p + 9% Capital investment £367.8 m £332.4 m
Slide 8: Operational performance
Operational performance Revenue up 10% to £639m £m 700 Revenue • Production up 13% to 73,100 boepd* £639m • Balanced revenue mix – Oil 58%:Gas 42% Revenue £579m • Realised oil price - $62.7/bbl (2006: $52.2/bbl) 600 • Realised gas price – 37.3p/th (2006: 46.2p/th) - Gas hedging contributed 7.6p/th (
Slide 9: Cashflow, interest and hedging
Cashflow, interest and hedging £m Operating cashflow - £473.8m (2006: £446.7m) 900 • £368m reinvested in capital programmes £8.0m £363.5m • Increasing final dividend to 4.0p/share 800 £116.2m Interest charge - £45.6m (2006: £9.4m) 700 • Material net debt increase to £479.5m - Hardman completion Janu
Slide 10: Investment and Financing
Investment and Financing Capital Investment 600 • Capex principally production focused 2004-06 • Ghana/Uganda success increases 500 exploration/appraisal capex share 2007/9 • Anticipated Ghana project sanction will increase development spend and funding potential 2009+ 400 • 2008 Appraisal programme
Slide 11: Capital programmes
Capital programmes • 2007 programmes driven by success in 2008 £440m Ghana/Uganda • 2008 capital split 40:60 between £370m Development and Exploration/Appraisal, 2007 focused on key assets 0 100 200 300 400 • Capex driven by success in Ghana and Exploration Development Uganda (together 52% of total
Slide 12: Supporting business growth
Supporting business growth • Underlying cashflow generation remains very strong • Significant financial flexibility for long term growth • Ongoing profitable portfolio management • Long term financing preparations already under way • Focus investment of resources on key assets 2007 Results Slide 12
Slide 13: Production and Development – Paul McDade
Production and Development – Paul McDade 2007 Results Slide 13
Slide 14: Production and Development Highlights
Production and Development Highlights Record delivery across the portfolio • World-class Jubilee Field discovered • Successful Ugandan appraisal programme • Strong production growth • Operating costs being actively controlled Building on success • Tullow established as Jubilee Field Operator • Jubil
Slide 15: End 2007 Reserves and Resources Summary and Production
End 2007 Reserves and Resources Summary 700 80 Production • 2007 Average = 73,100 boepd 600 75 • 2008 production forecast = 70-74,000 boepd 500 70 Reserves & Resources • Commercial Reserves – 197 mmboe 400 65 • Contingent Resources – 354 mmboe mboepd mmboe 300 60 Jubilee Field - Ghana 200 55 • 80 mm
Slide 16: World-Class Jubilee Field Discovery - Overview
World-Class Jubilee Field Discovery - Overview History • Three Ghana licences signed in 2006 • Jubilee Field discovery – June 2007 • Core area appraised - Q3 2007 • 3D/4D Seismic – Q4 2007 • Operatorship structure in place – Q1 2008 Excellent production characteristics • Large continuous accumulatio
Slide 17: 2008 appraisal to test major upside potential
2008 appraisal to test major upside potential Exploratory Appraisal Objectives • Confirm areal extent of Jubilee Field • Determine potential for updip gas • Reduce current reserve range uncertainty • Gather additional well and fluid data Appraisal Activities • 3D/4D seismic completed - Filled data g
Slide 18: Jubilee Development – 2010 first oil target
Jubilee Development – 2010 first oil target Development concept • Phased FPSO/subsea development • Initial focus on “core area” development - Production 60 to 120 kbopd - Sanction expected in 2008 - First oil targeted in 2010 • Field upside may require multiple FPSO’s Development project initiated •
Slide 19: Uganda - Early Production System
Uganda - Early Production System Appraisal Programme completed • 3D seismic acquired and processed • Appraisal wells Nzizi-2,Mputa-3 & 4 drilled • Well testing on Mputa-3 and 4 Field production facilities • Conceptual facilities design complete • Tender process underway • Contract award post sanctio
Slide 20: Development activity across African portfolio
Development activity across African portfolio 2008 2009 2010 Country Project 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q African P&D Portfolio Ghana • Production at record levels - 40,300bpod Appraisal and development drilling >20 wells Ongoing Drilling Phase 1 Phase 1&2 Jubilee Field • Strong “pipeline” of
Slide 21: Stronger outlook for group gas business
Stronger outlook for group gas business Southern North Sea - Gas • Stable 2007 production • Gas pricing recovering to 2006 levels • Capital investment levels under review - Thurne & Kelvin projects delivered - Wissey first gas 2008 - Hewett Rot, Boulton and Murdoch infill – 2008 - Bure N, K4, Harris
Slide 22: Gearing up for major operational expansion
Gearing up for major operational expansion • Jubilee Field development being fast tracked • Uganda EPS sanction to deliver 2009 first oil • Stronger outlook for SNS UK/Dutch gas business • Development portfolio delivering across the business • Strong reserves replacement and overall growth in resour
Slide 23: Exploration – Angus McCoss
Exploration – Angus McCoss 2007 Results Slide 23
Slide 24: 56% global exploration success rate in 2007
56% global exploration success rate in 2007 UK 4 wells India 3 Harrison 415km 2D 2 Peveril 2 Acer 2 Doris (’08) Mauritania Gabon 1 wells Suriname 568sq km 3D 5 wells 2 M’Pano 3 Uitkijk-2 Uganda 3 Uitkijk-3 3 wells 3 Uitkijk-4 2 Uitkijk-1 Ghana 3 Nzizi-2 2 Uitkijk-5 4 wells 3 MPuta-3 3 MPuta-4 3 Maho
Slide 25: Significant new plays opened in Ghana
Significant new plays opened in Ghana • West Africa Transform Margin Campaign delivers two major new plays - Turonian play - Jubilee Field - Campanian play - Odum-1 discovery • Plan to drill Teak and Tweneboa in next 12 months Lead Gross Upside (mmbo) MAASTRICHTIAN Teak 750 TURONIAN Mahogany Twenebo
Slide 26: Uganda – major progress on four exploration fronts
Uganda – major progress on four exploration fronts Kaiso Tonya • 3D seismic confirms oil field dimensions and reveals additional prospectivity. • Successful Mputa-Nzizi appraisal wells secure valuable development and production data • Technical viability of field development validated Butiaba • 2D s
Slide 27: Ngassa drilling options
Ngassa drilling options Ngassa Well Location A • Lower environmental impact Fault • Very long-reach 70 degrees well Lake • Need to drill through fault zone A Albert • High quality 2D seismic Fault Good 2D Ngassa Well Location B 70 degrees incl • Initially poor quality 2D seismic C • Risked drilling
Slide 28: High impact programme in Butiaba, Blocks 1 & 2
High impact programme in Butiaba, Blocks 1 & 2 Butiaba 2D seismic highly successful • High density of prospects • More leads currently being mapped • Many prospects amplitude supported • Seeps indicate oil with chance of gas • Prospect depth 600m to 1,000m Butiaba campaign • Plan to drill prospects
Slide 29: Mauritania – Senegal Exploration Campaign
Mauritania – Senegal Exploration Campaign • Fundamental re-evaluation of basin-wide petroleum Banda appraisal systems • Identification of major new plays • Rejuvenation of prospect inventory • Extracting value from established Miocene plays - Banda NW gas appraisal - Near infrastructure oil explorat
Slide 30: Strategic step-out in Strat Trap play from UK to Netherlands
Strategic “step-out” in Strat Trap play from UK to Netherlands July 2007 Carboniferous stratigraphic traps core play fairway • Stratigraphic Traps Core Play • UK CMS Area consistent exploration success since 2001 • Diminishing materiality of UK plays Tullow non-operated End 2008 Tullow operated • Sa
Slide 31: 12 Month Exploration programme – 36 wells planned
12 Month Exploration programme – 36 wells planned Europe 2 wells Pakistan Mauritania 2 wells 2 wells Côte d’Ivoire 1 well India 4+ wells Suriname 5 wells Uganda French Guiana 9+ wells 1 well Ghana 6+ wells Gabon Tanzania 2 wells 2 wells 2007 Results Slide 31
Slide 32: Exploration programme
Exploration programme Country Licence/Block Prospect/Campaign Interest Gross Upside Date/Status EUROPE Netherlands SNS 2 Prospects 30-60% 50 mmboe 2009 AFRICA 4-well+ Jubilee Exploratory Ghana Jubilee Field 22.9-49.95% 1,000 mmbo 2008 Appraisal Ghana Deepwater Tano Tweneboa Prospect 49.95% 500 mmbo
Slide 33: Conclusion – Aidan Heavey
Conclusion – Aidan Heavey 2007 Results Slide 33
Slide 34: Tullow's business has reached a new level
Tullow’s business has reached a new level • Consistent strong performance from underlying business • Continued effective portfolio management • Strong team in place to deliver business expansion • High-impact opportunities to deliver future growth Preparing for the next phase of growth 2007 Results
Slide 35: Appendix 1 - Strategy
Appendix 1 - Strategy 2007 Results Slide 35
Slide 36: The Tullow Footprint
The Tullow Footprint Africa Europe Europe Angola Netherlands Congo (Brazzaville) Portugal • ~28,000 boepd Congo (DRC) Côte d'Ivoire United Kingdom • 3 countries Equatorial Guinea • 39 licences Gabon Ghana • 20 producing fields Madagascar Mauritania Africa Namibia Senegal • ~40,000 boepd Tanzania Uga
Slide 37: Tullow's long term growth strategy
Tullow’s long term growth strategy PRODUCTION and DEVELOPMENT ● A track record of production growth and asset enhancement ● Strong reserves and resources growth over the last three years ● Gearing up for a major expansion in African operations EXPLORATION ● Near-infrastructure and high impact explor
Slide 38: Appendix 2 - Africa
Appendix 2 - Africa 2007 Results Slide 38
Slide 39: Africa: developing a truly pan-African business
Africa: developing a truly pan-African business A continent with many opportunities • A number of largely-unexplored basins • Mature basins where majors are exiting • Significant areas currently unlicensed Strong knowledge base • Over 20 years of experience in Africa • Detailed understanding of Afri
Slide 40: Mauritania/Senegal: maturing the next campaigns
Mauritania/Senegal: maturing the next campaigns Overview • Tullow has a material position in Mauritania • 9 blocks in Mauritania/Senegal - Producing Chinguetti oil field - Tiof and Tevet oil discoveries - Banda and Pelican gas discoveries - Significant exploration potential Key operational highlight
Slide 41: Record production from African assets in 2007
Record production from African assets in 2007 Equatorial Guinea Okume • Production performance exceeding expectations at over 70,000 bopd • 22 wells drilled to date Ceiba • Production enhanced by four new wells and sustained above 40,000 bopd • Further infill drilling planned for 2009 Congo (Brazzav
Slide 42: Gabon: production stable, developments ongoing
Gabon: production stable, developments ongoing Overview • Region where Tullow can apply its expertise in revitalising mature assets • Interests in ~40% of all licensed acreage - 12 producing fields - Two new developments - 5 exploration licences - Back-in rights to 10 additional licences Key Operati
Slide 43: Kudu: focus on Gas-to-Power development
Kudu: focus on Gas-to-Power development Overview • Offshore gas field with over 3 TCF of 2P resources • 70% working interest • Namibia need to develop at least 300MW of indigenous power • Currently working with Namibians on gas-to power options Key Operational Highlights • Appraisal well drilled in
Slide 44: Tanzania and Madagascar: feeding the next campaigns
Tanzania and Madagascar: feeding the next campaigns Madagascar Tanzania • Leads identified and ranked, new seismic • Completed 2D seismic acquisition in Ruvuma Basin planned for mid-2008 • Completed environmental impact assessments • Numerous high risk/high reward leads defined, will for 2D acquisit
Slide 45: Appendix 3 - Europe
Appendix 3 - Europe 2007 Results Slide 45
Slide 46: SNS Gas Basin: Adding value in a challenging market
SNS Gas Basin: Adding value in a challenging market Market environment • Strengthening gas prices in UK • Contractor environment remains tight • Onerous UK tax regime for gas Activity outlook to sustain production • Wissey on schedule for August 2008 • Hewett infill planned for Q3 2008 • Bure North
Slide 47: Portugal: potential extension of Mauritanian play
Portugal: potential extension of Mauritanian play Overview • 3 blocks in Alentejo Basin awarded in 2007 • Tullow 80%, with 2 local Portuguese partners • Basin is undrilled, oil shows encountered in wells in the onshore Lusitania Basin • Geological analogue to Mauritania • Regional seismic data shows
Slide 48: Appendix 4 – South Asia
Appendix 4 – South Asia 2007 Results Slide 48
Slide 49: South Asia: Reinvesting for growth
South Asia: Reinvesting for growth A growth region for Tullow • Region of growing energy demand • Major high-impact exploration potential • Relatively low-cost exploration/operations • Limited competition for assets Developments to fund exploration • 5 exciting high impact exploration licences • Dev
Slide 50: India: 4-well campaign in proven rift basin
India: 4-well campaign in proven rift basin Exciting region with high impact potential • CB-ON/1 on trend between two proven basins to the north and south • 2006/2007 seismic has identified a number of prospects Programme expected to commence Q2 2008 • Four firm wells followed by two contingent • Ex
Slide 51: Bangladesh: strong production growth
Bangladesh: strong production growth Overview • Current energy demand is significant • Established gas pricing provides stability Key Operational Highlights • Block 9 - Bangora delivering 70mmscfd - Facility upgrade to 120 mmscfd and tie-back of Bangora-3 planned for 2008 • Block 17/18 - Total assum
Slide 52: Pakistan: production growth and exploration
Pakistan: production growth and exploration Overview • Five exploration blocks • Security issues have delayed work Production • Chachar came on stream in August • Further wells and workovers planned for 2008 to increase production • Sara-Suri modestly increased through compression High Impact Explor
Slide 53: Appendix 5 – South America
Appendix 5 – South America 2007 Results Slide 53
Slide 54: South America: High impact potential in 2008
South America: High impact potential in 2008 French Guiana • Tullow operated offshore licence - 77.5% • Preparing to drill substantial Matamata prospect in 2008 • Likely to seek a farm-in partner Suriname • Five wells drilled in 2007 on Uitkijk licence, hydrocarbons encountered • Development potenti
Slide 55: Tullow Oil plc
Tullow Oil plc 3rd Floor, Building 11 Chiswick Park, 566 Chiswick High Road London, W4 5YS Tel: +44 20 8996 1000 Fax+44 20 8994 5332 Investor Relations Contact Chris Perry: chris.perry@tullowoil.com 2007 Results Slide 55