Tullow Oil Plc · LSE:TLW
Tullow Oil — Investor Day (November 2020)
47 slides from Tullow Oil's investor day presentation, Nov 25, 2020
Slide 1: Capital Markets Day
Capital Markets Day Tullow Oil plc | 2020 Capital Markets Day 25 November 2020
Slide 2: 2020 Capital Markets Day Agenda and Presenters
2020 Capital Markets Day Agenda Presenters 1 2 A NEW APPROACH OPERATIONAL TURNAROUND Delivering enhanced value and cashflow Improving production efficiency and reliability 3 4 Rahul Dhir Les Wood GHANA NON-OPERATED Chief Executive Officer Chief Financial Officer Maximise value from large resource In
Slide 3: A year of significant change: Putting Tullow back on track
A year of significant change: Putting Tullow back on track Leadership New CEO, leadership and lean organisation Operational turnaround Focus on asset integrity, process safety, maintenance and reliability Cost focus Ghana operating costs and corporate G&A significantly reduced Capital discipline Fle
Slide 4: Highly experienced, diverse and committed leadership team
Highly experienced, diverse and committed leadership team Rahul Dhir Chief Executive Officer Joined Tullow 2020; formerly Delonex, Cairn India, Morgan Stanley Les Wissam Mike Julia Jean-Medard Amalia Madhan Wood Al-Monthiry Walsh Ross Madama Olivera-Riley Srinivasan Chief Financial Officer Ghana Gen
Slide 5: Unlocking value: New approach delivers material value and cash flow
New approach delivers material value and cash flow Production base with material resource play Significant positions in discovered and emerging basins 2021-30 Operational >95% turnaround uptime target $7bn c. <$11 opex/bbl target operating CF1 171 Net 2C Kenya Unlocking value mmbbls Cost focus c.$2.
Slide 6: Well defined and profitable investment opportunities
Well defined and profitable investment opportunities Attractive portfolio of African production investments 200% >80% c.$11/bbl IRR on Average investment development cost 150% portfolio1 $65/bbl Value accretive producing assets 100% Combined IRR1 → Significant improvement in reliability and profitab
Slide 7: Material producing asset resource
Material producing asset resource Well-defined supply with replenishment potential3 Visible production with acceleration potential3 700 80 75 2P reserves 600 243 Improved recovery, NFE and ILX4 Non-op 500 c.260 60 Volume (mmboe) Production (kbopd) 400 2C resources 3% 402 40 300 from producing 2021-3
Slide 8: Roadmap to creating a resilient, self-funded business
Roadmap to creating a resilient, self-funded business Operational Capital Capital Unlocking turnaround discipline structure value Continued operating Refocused and defined Solid foundations to Revised Kenya performance improvement investment portfolio address debt maturities development concept Sust
Slide 9: Operational turnaround: Improving production efficiency and reliability
Operational turnaround: Improving production efficiency and reliability Wissam Al-Monthiry Tullow Oil plc | 2020 Capital Markets Day
Slide 10: Operational turnaround to deliver value and cash flow
Operational turnaround to deliver value and cash flow Health and safety – Remains our highest priority JV partners Commercial and relationship focus – Government and Joint Venture (JV) collaboration Organisational capability – Team strengthened and integrated Facilities reliability – Enhanced mainte
Slide 11: Focus on enhancing oil production
Focus on enhancing oil production Production efficiency Water injection efficiency • Closely integrated Tullow oversight • Water injection remains a key area of focus on Jubilee • Improvement to processing systems reliability • Greater water injection volumes to sustain reservoir → Defect eliminatio
Slide 12: Improving gas offtake performance
Improving gas offtake performance Opportunity Reliable gas offtake supports oil production Gas rate (mmscf/d ) • Higher gas export improves reservoir management, enhances oil production and minimises emissions >200 mmscf/d including gas commercialisation • Delivers material value for Ghana 2020 Prog
Slide 13: Driving down costs for a low cost operation
Driving down costs for a low cost operation Jubilee1 TEN Cost savings being delivered 450 Asset operating costs (gross) 50 450 Asset operating costs (gross) 50 400 Opex 45 400 Opex 45 Reduction of equipment $406m Opex/bbl Opex/bbl vulnerabilities 40 40 350 350 35 35 300 300 Continuous opportunity $3
Slide 14: Delivering improved drilling performance
Delivering improved drilling performance Driving future drilling costs down by c.20% Top quartile drilling performance Drilling cost per well ($m gross) Simplified well design and 75 reduced completion complexity 60 Continuous improvement Improved rig reliability through <$60m enhanced maintenance a
Slide 15: Ghana: Maximise value from large resource
Ghana: Maximise value from large resource Wissam Al-Monthiry Tullow Oil plc | 2020 Capital Markets Day
Slide 16: Building blocks to unlock value and cash flow
Building blocks to unlock value and cash flow Operational turnaround Options to increase field recovery, develop near-field and ILX Safely maximise production discoveries and commercialise the efficiency significant gas resources Cost focus Delivering a sustainable low- Plans in place to develop dis
Slide 17: Substantial Ghanaian resource base across two areas
Substantial Ghanaian resource base across two areas Only 393 mmbbls produced Wells: 25 producers, c.14% recovery 18 water inj. and four gas inj. Two FPSOs and subsea More than >550mmbbls gross infrastructure in place yet to be produced Potential to increase RF2 to Near-field opportunities unlock add
Slide 18: Well-defined, high return drilling opportunities
Well-defined, high return drilling opportunities Comprehensive review completed Highly efficient investments with short paybacks and high returns Economies of scale identified Minimal additional infrastructure required Revised investment phasing to maximise recovery Unit development costs of c.$12/b
Slide 19: Defined set of opportunities to sustain production
Defined set of opportunities to sustain production Rich drilling options1 Defined projects 26 10-15 Jubilee 2022 kbopd Producer/ injector pair wells planned South East initial production over 2021-30 rate per well 140 2023 Two producers online mmbbls oil Jubilee 2024+ 1-2 > 90% North East Follow-on
Slide 20: Additional opportunities to deliver upside
Additional opportunities to deliver upside Significant opportunity to Maximising recovery1 commercialise gas resource1 Additional oil recovery in Jubilee c.1TCF of recoverable gas resource → Targeting more than 40% ultimate recovery in Jubilee → Around 100mmbbls of additional recovery potential Alre
Slide 21: Near-field and infrastructure-led opportunities
Near-field and infrastructure-led opportunities Ghana Côte d’Ivoire • Several near-field prospective opportunities identified • Underexplored block adjacent to TEN field infrastructure • Low risk, commercially attractive, accelerated tie-in targets • Westward extension of proven plays in TEN/Jubilee
Slide 22: Non-op: Investing in stable, sustainable production
Non-op: Investing in stable, sustainable production Rahul Dhir Tullow Oil plc | 2020 Capital Markets Day
Slide 23: Non-op: Stable production from existing resource base
Non-op: Stable production from existing resource base Sustainable production Stable cash flow; 22 - 25 kboepd Self-funded portfolio Strong JV Proven execution Côte d’Ivoire Equatorial Guinea partnerships capability Gabon Access to Near field infrastructure opportunities Mature fields with defined op
Slide 24: Non-op: Diverse set of low-risk projects
Non-op: Diverse set of low-risk projects Defined investment options and projects1 Expanding six key assets >40 wells Two new 14 1-3 40-150 Gabon mobile production units mmbbls oil year payback % IRR Espoir Phase IV infill campaign Six wells 4 Two c.80 mmbbls oil year payback % IRR Côte d’Ivoire Okum
Slide 25: Kenya and emerging basins: Material value to unlock
Kenya and emerging basins: Material value to unlock Rahul Dhir Tullow Oil plc | 2020 Capital Markets Day
Slide 26: Unlocking value across the portfolio
Unlocking value across the portfolio Kenya Kenya Guyana 37.5% to 60.0% Côte d’Ivoire 50.0% to 100.0% Four blocks Kenya Two blocks 60.0% to 90.0% → Material recoverable 3D repro. Billion barrels 1.5 Gross STOIIP Two blocks resource base 3D seismic repro Suriname → Licences extended 50.0% to 100.0% Mi
Slide 27: Kenya development concept under review
Kenya development concept under review Ingredients for a profitable low-cost project Material high • Shallow, productive reservoirs 1.5 billion bbls quality onshore • Light waxy crude resource base STOIIP (gross) • Large onshore acreage position • Conditional on approval of budgets Licences December
Slide 28: Kenya project redesign for low oil prices
Kenya project redesign for low oil prices Phasing Well count Additional discovered fields; More drilling; increased plateau rate and duration lower unit cost Licence extensions will provide time to evaluate options Production Opex Feedback Increased rates by Kenya Lower opex via from farm down proce
Slide 29: Guyana/Suriname: Material positions in emerging basins
Guyana/Suriname: Material positions in emerging basins Generating value through opportunity identification and maturation Industry hot spot with multi- billion-barrel discoveries Leveraging core expertise in turbidite plays Strong relationships with host governments Suriname – GVN-1 well with signif
Slide 30: Suriname: Goliathberg-Voltzberg North-1
Suriname: Goliathberg-Voltzberg North-1 Block 47 Tullow 50% (op) GVN-1 paying interest c.36% Planning for 1Q21 spud Block 62 Tullow 80% (op) Upper Cretaceous turbidite play Dual targets in excess of 400mmboe (gross)1 Testing extension of working hydrocarbon system Potential to de-risk >1bnboe (gross
Slide 31: Guyana: Material equity in prospective blocks
Guyana: Material equity in prospective blocks TLW 60% (op) TLW 37.5% (non-op) Inboard of >8bnboe discoveries in Large portfolio of prospects – total over Guyana-Suriname basin 2bnboe net recoverable High grading drill candidates for Kanuku 2022 Three plays proven on Tullow acreage and Orinduik 2022+
Slide 32: Environment, Social and Governance: Retaining a strong focus
Environment, Social and Governance: Retaining a strong focus Julia Ross Tullow Oil plc | 2020 Capital Markets Day
Slide 33: Focused on reducing GHG emissions
Focused on reducing GHG emissions Net Zero (Scope 1 and 2) commitment – possible decarbonisation levers 5 Year Plan Options for decarbonisation roadmap 2020 Gas emissions utilisation baseline and gas reinjection Carbon reduction options Higher 2020 emissions intensity, from increased flaring in Ghan
Slide 34: Creating lasting social and economic benefits
Creating lasting social and economic benefits Social investment in Ghana Strategic local content in Ghana → $1.5bn spent with local suppliers since 2015 >500 3,000 → c.30% of supply chain expenditure has been educational with indigenous companies over last three years bursaries scholarships c.25% Ta
Slide 35: Strong internal and external transparency and governance
Strong internal and external transparency and governance First oil company to publicly support c. $3.4bn contract transparency socio-economic contribution 2015-19 Leading disclosure on Modern Slavery in Transparency in the Supply Chain Report Socio-economic contribution ($m) Human Rights Policy embe
Slide 36: Financials: Underpinned by a robust financial framework
Financials: Underpinned by a robust financial framework Les Wood Tullow Oil plc | 2020 Capital Markets Day
Slide 37: Oil market context: a volatile backdrop
Oil market context: a volatile backdrop 80 1H20 60 Dramatic crash and rebound Tullow plans based on $45/bbl in 2021, $55/bbl flat nominal in 2022+ following OPEC+ deal Oil price ($/bbl) Hedging 40 remains a key risk management tool 20 $55/bbl External range (sources below) in line with low end of Da
Slide 38: New approach underpinned by a robust financial framework
New approach underpinned by a robust financial framework Strengthened Disciplined Focused on balance sheet… capital allocation… value creation… → Drive Net Debt to $1.0bn - → >90% of investment → Prioritise investments with 1.5bn focused on producing high returns and short → Gearing at lower end of
Slide 39: Delivering a sustainable lower cost business
Delivering a sustainable lower cost business A lean organisation Pursuing lower steady state operating costs Annual cash cost savings of >$125m G&A ($m) $400 Group operating costs ($m & $/boe) 25 Gross G&A Net operating costs Unit opex Headcount reduced by c.60% Net G&A 369 $350 351 20 Outsourcing o
Slide 40: Disciplined capital allocation
Disciplined capital allocation Increasing allocation towards producing assets Maintaining a flexible capex range ($m) 500 Ghana Non-op Kenya Exploration 400 >90% 80% 60% 325 50% 290 Flexible range 300 60 150-450 2019 2020f 2021 2022+ 5 85 Producing assets Other investments 80 200 20 65 Ability to re
Slide 41: Effectively managing decommissioning liabilities
Effectively managing decommissioning liabilities • Innovative contracting and collaboration strategies yield costs savings • Increased scope and COVID-19 effect on operations offset by cost savings • Tullow-operated decommissioning obligations in the UK will be completed in 2020 • Expenditure offset
Slide 42: Material proceeds delivered from Uganda sale
Material proceeds delivered from Uganda sale Sale of Ugandan assets Efficient execution $500m → Good collaboration with the Reduced net Government and Total Paid at completion: debt to $2.4bn 10 November → Closed 7 months from signing $75m → Tax agreement up front All future Uganda Payment on Uganda
Slide 43: New approach supports deleveraging and value creation
New approach supports deleveraging and value creation Sources and uses of cash ($bn) $1bn1 $2.4bn1 $4bn2 2021-30 Liquidity Net Cash $10 headroom debt flow $9 $8 $65/bbl $7 $55/bbl Debt service and $6 shareholder returns A clear path to deliver net debt in range of $1-1.5bn and $5 gearing at lower en
Slide 44: Conclusion
Conclusion Rahul Dhir Tullow Oil plc | 2020 Capital Markets Day
Slide 45: New approach delivers material value and cash flow
New approach delivers material value and cash flow Operational Significant value underpinned by a large resource base turnaround c.$7bn operating CF1 emerging basins Discovered and Focus on costs to maintain high margins at low prices Cost focus c. $4bn cash flow available Delivering sustainable sel
Slide 46: Q&A
Q&A To ask a question, please dial into the conference call and enter the “Event Plus Passcode” shown below: Free phone (UK): 0800 694 1461 Tel: +44 (0) 203 009 5709 Event Plus Passcode: 27 09 187 Rahul Dhir, Les Wood, Wissam Al-Monthiry and Julia Ross Tullow Oil plc | 2020 Capital Markets Day
Slide 47: Tullow Oil plc
Tullow Oil plc 9 Chiswick Park, 566 Chiswick High Road London W4 5XT United Kingdom Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 Email: ir@tullowoil.com Web: www.tullowoil.com Follow Tullow on: