Tullow Oil plc · LSE:TLW
Tullow Oil — Investor Presentation (October 2017)
40 slides from Tullow Oil's investor presentation, October 2017
Slide 1: Tullow Oil plc Overview Presentation October 2017
Tullow Oil plc OVERVIEW PRESENTATION October 2017 TULLOW a j |
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
Tullow Oil plc - Overview presentation INTRODUCTION TULLOW Ot
Slide 4: A Leading Global Independent Exploration & Production Company
Overview presentation A LEADING GLOBAL INDEPENDENT EXPLORATION & PRODUCTION COMPANY Established record of delivering successes • The business has developed organically and through acquisitions since 1985 Diversified world-class asset base • Focus on Africa and South America • Over 85 licences across
Slide 5: Production & Development Asset Base
Overview presentation PRODUCTION & DEVELOPMENT ASSET BASE TEN field East Africa Development • First oil achieved in August 2016 • Estimated 750m bbls of discovered • FPSO gross capacity of 80,000 bopd resources in Kenya; targeting 80- 120k bopd gross production (net WI ~35,000 bopd) • Gross producti
Slide 6: A New Management Team – The First 90 Days
Overview presentation A NEW MANAGEMENT TEAM – THE FIRST 90 DAYS Management change Listening & reflecting Planning & actions New CEO & CFO Gauging perceptions Objectives set for the from our investors short to medium-term Extended Executive team Collecting feedback Driving business from our staff per
Slide 7: A Balanced E&P Business Focused on Returns
Overview presentation A BALANCED E&P BUSINESS FOCUSED ON RETURNS Business foundations Disciplined approach Future value generation Highly experienced Monetisation team Maximising revenue Proven operating from production capability Enhance & replenish Portfolio portfolio Low-cost production managemen
Slide 8: Key Short to Medium-Term Objectives
Overview presentation KEY SHORT TO MEDIUM-TERM OBJECTIVES Continued strengthening of Balance Sheet Free cash flow Funding Portfolio Management Maximise free cash flow Progress monetisation options through increased production, Complete RBL refinancing to achieve maximum value at efficient capital al
Slide 9: Well Positioned for the Future
Overview presentation WELL POSITIONED FOR THE FUTURE Strong business foundations Delivering shareholder returns Experienced, broader Disciplined investment focused management team on returns High-quality, low-cost asset Enhancing & replenishing base with growth potential asset base Selective high-im
Slide 10: Financials
Tullow Oil plc - Overview pre FINANCIALS
Slide 11: Financial Strategy Built on Firm Foundations
Overview presentation FINANCIAL STRATEGY BUILT ON FIRM FOUNDATIONS Financial foundations Disciplined approach Future value generation Strong team with key relationships Minimum $0.5bn Re-set business with liquidity headroom Strong balance sheet a low cost base RCF extended Delivering significant Del
Slide 12: 2017 Half Year Results Summary
Overview presentation 2017 HALF YEAR RESULTS SUMMARY Underlying cash Revenue Adjusted EBITDAX Profit/(Loss) after tax operating costs $788 million $11.9/boe $544 million $(309)million (1) 1H 2016: $541 million 1H 2016: $13.4/boe 1H 2016: $330 million 1H 2016: $29 million Capital investment Free cash
Slide 13: A Step Change in Gearing in 1H 2017
Overview presentation A STEP CHANGE IN GEARING IN 1H 2017 1H 2017 gearing reduced to 3.3x Good progress in the first half 5.1x • Net debt reduced by $1bn to $3.8bn • Reduced gearing achieved through: - Equity proceeds of $0.7bn 3.3x - Free cash flow of $0.2bn - EBITDAX increased by $0.2bn 2.5x Net d
Slide 14: Balance Sheet, Debt Profile and Liquidity
Overview presentation BALANCE SHEET, DEBT PROFILE AND LIQUIDITY $bn Liquidity • c.$1.2bn facility headroom and free cash at Committed Debt Facilities Drawings 1 Oct 2017 6 • Minimum $0.5bn headroom going forward RBL • Successful routine redetermination March ‘17 5 3 • Commitments and available credi
Slide 15: Hedging Strategy
Overview presentation HEDGING STRATEGY Prudent approach provides significant benefits to the business • Tullow has proactively hedged production to protect revenues over the last 10 years • Significant liquidity benefit through protecting future revenues and preserving RBL debt capacity • Cumulative
Slide 16: Considerable Capex Flexibility
Overview presentation CONSIDERABLE CAPEX FLEXIBILITY Disciplined capital allocation • Capital allocated to strike the right balance between deleveraging and growth • All investment screened against strict commercial and technical criteria • Minimise commitments to maximise flexibility in response to
Slide 17: 2017 Capital Allocation
Overview presentation 2017 CAPITAL ALLOCATION 1800 Ghana 2017 Capex of c.$0.4bn 1600 West Africa non-op (incl Europe) • FY 2017 capex forecast lowered from Exploration $0.5bn to $0.4bn East Africa 1400 Uganda (offset by farm-down) • Low Ghana spend due to absence of drilling 1200 • Exploration and A
Slide 18: Rigorous Focus on Costs
Overview presentation RIGOROUS FOCUS ON COSTS Underlying 1H 2017 cash operating costs compared to production A leaner, more efficient business 60,000 60 Exit/Decom Core • $415m delivered of targeted $500m cash cost savings 50,000 50 • Now targeting $650m savings over same three year period 40,000 40
Slide 19: Foundations for Growth
Overview presentation FOUNDATIONS FOR GROWTH Actual and forecast future oil production Good progress made in the first half Ghana • On a pathway to <2.5x gearing 150 Jubilee BI insurance • Sustained cost reductions CWA 125 Future estimated potential production • Ongoing capex flexibility kbopd 100 C
Slide 20: West Africa
Tullow Oil ple - Overview presentation WEST AFRICA TULLOW j |
Slide 21: West Africa – Cash Generating Production Business
Overview presentation WEST AFRICA – CASH GENERATING PRODUCTION BUSINESS Business fundamentals • Material production base from Ghana • Low operating costs, targeting c.$8/bbl • Significant resource base underpins future production Reaching full production potential • TEN production optimisation deliv
Slide 22: Ghana – Material, Long-Life and Low-Cost Fields
Overview presentation GHANA – MATERIAL, LONG-LIFE AND LOW-COST FIELDS Operating cost reductions Ghana underlying cash operating costs/bbl 15.0 • Underlying cash opex of ~$8.7/bbl in 1H 2017 Opex/bbl • Targeting underlying cash opex in 2018+ of ~$8/bbl Opex $/bbl 10.0 Strong resource base $/bbl • Sig
Slide 23: Jubilee Field Update
Overview presentation JUBILEE FIELD UPDATE Turret remediation project Interim • Temporary heading completed spread moor ✓ • All equipment installed • Tugs removed Stabilise turret • Turret modifications for long-term bearing operations • Downtime of 5 - 8 weeks around year end Rotation & • Rotation
Slide 24: TEN Field Update
Overview presentation TEN FIELD UPDATE Successful project execution and completion • Project delivered on time and on budget • FPSO tested in excess of design capacity (80,000 bopd) • Production data supports oil in place and reserves 2017 Production • 1H 2017 average gross production – 48,000 bopd
Slide 25: East Africa
Tullow Oil ple - Overview presentation EAST AFRICA
Slide 26: East Africa – Discoveries Leading to Material Production
Overview presentation EAST AFRICA – DISCOVERIES LEADING TO MATERIAL PRODUCTION Business fundamentals • Over 2 billion bbls of resources discovered • Low-cost material resource developments • Track record of monetisation Progressing developments • Working towards Uganda deal completion and FID around
Slide 27: Uganda Development
Overview presentation UGANDA DEVELOPMENT Farm-down to Total announced • $900m consideration: - $200m cash - $100m on completion, $50m at FID, $50m at first oil - $700m in deferred consideration • Deferred consideration exceeds Tullow’s estimated share of upstream and pipeline capex to 1st oil • Supp
Slide 28: Kenya Development
Overview presentation KENYA DEVELOPMENT Continuing to de-risk and build on resources • South Lokichar E&A programme and analysis ongoing • Successful water injection tests support water flood & recovery Progressing Full Field Development • Targeting 80 - 120,000 bopd gross production via pipeline •
Slide 29: South Lokichar Basin Exploration & Appraisal
Overview presentation SOUTH LOKICHAR BASIN EXPLORATION & APPRAISAL Proven oil basin • 14 exploration prospects drilled • 11 oil accumulations discovered • Over 20 appraisal wells drilled for delineation & testing • Tullow estimates 750 mmbo mean resource* Significant upside potential • Multiple oil
Slide 30: East Africa: Exploring Regional Oil Play
Overview presentation EAST AFRICA: EXPLORING REGIONAL OIL PLAY Location Activity Uganda Lake Albert Basin • 17+ oil fields discovered (90% success) • Estimated 1.7 billion barrels of oil discovered Kenya North Turkana Basin • Basin margin play unsuccessful at Engomo-1 • Independent plays away from b
Slide 31: New Ventures
om aT! Tullow Oil ple - Overview presentation NEW VENTURES TULLOW is
Slide 32: New Ventures – Value Generating Exploration Portfolio
Overview presentation NEW VENTURES – VALUE GENERATING EXPLORATION PORTFOLIO Business fundamentals • Approach focused on building value • Oil-focused acreage in known geology & geographies • Strict commercial and technical screening of prospects High-impact exploration opportunities • Lessons learnt
Slide 33: Exploration: Central to Long-Term Growth Strategy
Overview presentation EXPLORATION: CENTRAL TO LONG-TERM GROWTH STRATEGY • Focus on low-cost, high-margin, light oil plays • Portfolio of high-impact prospects suited to current environment • Working on our seismic and geological assets to create & high-grade prospects • Adding attractive exploration
Slide 34: New Ventures: Campaigns Focused on Long-Term Value
Overview presentation NEW VENTURES: CAMPAIGNS FOCUSED ON LONG-TERM VALUE Commercial screening Off-limits Exploration Tested at $50/bbl Ultra-deepwater Low cost of supply Value accretive Deepwater gas High margin oil Shale oil Arctic Capital & risk screening Onshore rifts East Africa light oil Over-h
Slide 35: Exploration & Appraisal Activity in 2017
Overview presentation EXPLORATION & APPRAISAL ACTIVITY IN 2017 JAMAICA MAURITANIA KENYA Walton Morant (100%) C3 (90%), C-10 (76.5%) Block 12A (50%) 2D Seismic 3D Seismic 2D Seismic Block 10BB/13T (50%) 3D Seismic SURINAME South Lokichar Basin (50%) E&A programme Block 54 (30%) Araku wildcat GUYANA K
Slide 36: South America: High-Impact Prospects
Overview presentation SOUTH AMERICA: HIGH-IMPACT PROSPECTS • Jamaica: early stage of frontier exploration, interpreting new 2D seismic data • Guyana: attractive acreage up-dip of Liza-1 oil discovery; acquired 3D seismic in 2017 • Suriname: low-cost offshore oil plays; drilling Araku in Q4 2017 • Ur
Slide 37: Guyana-Suriname: Excellent Position in New Oil Province
Overview presentation GUYANA-SURINAME: EXCELLENT POSITION IN NEW OIL PROVINCE • Liza-1 deepwater oil discovery significantly de-risks the basin & Tullow’s regional acreage • Araku: Estimated 500mmbo prospect in four-way structural closure, good seismic amplitude support • Araku-1 well cost estimated
Slide 38: Guyana: Prospects Up-dip of Liza-1 Discovery
Overview presentation GUYANA: PROSPECTS UP-DIP OF LIZA-1 DISCOVERY Exploration activity commenced • 3D seismic programme completed • Jubilee-like setting up-dip of Liza oil discovery in shallow water • Estimated well cost of c.$14 million each net to Tullow (non-op 30%) • Shallow water prospects & l
Slide 39: Africa: High-Impact Leads and Prospects
Overview presentation AFRICA: HIGH-IMPACT LEADS AND PROSPECTS • Mauritania: exploration focus shifted to low-cost shelf-edge oil plays, 3D seismic acquisition in 2017 • Zambia: extension of East African Rift Basin Play; High Gravity survey commenced in August 2017 • Namibia: material turbidite oil p
Slide 40: 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 40