Tullow Oil Plc · LSE:TLW
Tullow Oil — FY2021 Earnings Presentation
29 slides from Tullow Oil's earnings presentation, Mar 9, 2022
Slide 1: Tullow Oil plc | 2021 Full Year Results
Tullow Oil plc Tullow Oil plc | 2021 Full Year Results 9 March 2022
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: 2021 Full Year Results Agenda and Presenters
2021 Full Year Results Agenda Presenters Rahul Dhir Overview Financial Chief Executive Officer Les Wood Operations Conclusion Chief Financial Officer Tullow Oil plc | 2021 Full Year Results Slide 3
Slide 4: Overview
OVERVIEW Tullow Oil plc | 2021 Full Year Results
Slide 5: Transformational 2021 is a solid foundation for future growth
Transformational 2021 is a solid foundation for future growth Transformational 2021 Positioning for growth in 2022 Clear path to value creation ✓ Balance sheet refinanced → Investment in Jubilee to increase → Business plan set to deliver c.6% CAGR production production growth 2021-25 ✓ Notable produ
Slide 6: Financial
FINANCIAL Tullow Oil plc | 2021 Full Year Results
Slide 7: Delivering our stated financial strategy
Delivering our stated financial strategy Comprehensive refinancing completed $1.8bn Bond issue >$700m We have the Material portfolio management Completed asset sales financial stability >$125m and flexibility to Significant cost base reduction Annual cash G&A savings reduce our debt, invest in our a
Slide 8: Strong financial performance in 2021
Strong financial performance in 2021 Financial performance 2020 2021 Production (kboepd) 74.9 59.2 Strong EBITDAX and cash Realised price ($/bbl) 50.9 62.7 flow generation Revenue ($m) 1,396 1,273 Adjusted EBITDAX ($m) 804 961 Operating Cash Flow ($m) 598 711 Capital Investment ($m) 288 263 Continue
Slide 9: Disciplined capital allocation framework
Disciplined capital allocation framework Continued focus on net debt reduction Deleveraging Gearing target of <1.5x Targeting near-term production growth Focused investment >90% towards producing assets Prudent financial High returns Deep inventory of investment opportunities framework Identified pr
Slide 10: Prudent commodity price risk management
Prudent commodity price risk management 2022 Hedge Portfolio Summary Hedged vs. Unhedged Price Realisation $100 c.40% exposure to upside 1 Unhedged $90 Ceiling $80 Realised Price ($/bbl) c.$78/bbl Hedged $70 Oil price ($/bbl) c.25% c.15% c.60% Breakeven sales volume sales volume sales volume $60 $53
Slide 11: Significant free cash flow upside in current oil price environment
Significant free cash flow upside in current oil price environment Material cash flow drivers year-to-date 2022 free cash flow oil price sensitivities ($m) • $89/bbl average realised oil price in January and 200 February c.40 150 positive impact from high oil price at the start of the year c.60 100
Slide 12: Asset base expected to deliver underlying cash flow growth
Asset base expected to deliver underlying cash flow growth Sources and uses of cash ($m) Business plan to deliver 2021 Actuals 2025 Potential Step up in production and further 1200 1200 cost reduction 1100 1100 1000 1000 Continued strong oil price can 900 900 further boost operating cash flow Free c
Slide 13: Deleveraging accelerated
Deleveraging accelerated Sources and uses of cash 2022-25 ($75/bbl flat nominal) Value focused capital allocation (%) Existing Exploration wells 4.0 c.10% c.10% Ability to adjust capital spend to Infill 3.0 c.20% respond to oil price movements c.$1.6bn $bn 2.0 Defined projects c.60% 1.0 Exploration
Slide 14: Operations
OPERATIONS Tullow Oil plc | 2021 Full Year Results
Slide 15: Commitment to health and safety
Commitment to health and safety Health and safety Safety Performance Marked improvement in EHS performance, despite Lost time injury rate (LTIR) Total recordable injury rate (TRIR) IOGP LTIR IOGP TRIR increased activity levels, achieved through: 1.27 • Implementation of a safety improvement plan • A
Slide 16: Focus on a sustainable future
Focus on a sustainable future Sustainable value creation in 2021 2030 Net Zero Pathway (Scope 1 & 2) Shared Prosperity • $207 million local supplier spend in 2021, 5-year total $1.2 billion • First 100% Ghanaian owned, crewed and flagged vessel - Flat Confidence, contracted to support offshore opera
Slide 17: Delivering reliable production performance
Delivering reliable production performance Wells Uptime Five wells brought on stream in 2021: two Jubilee producers, one High efficiency from Ghana FPSO’s, averaging >97% Jubilee gas injector, one TEN gas injector and Simba infill well Six new wells to be drilled in Ghana in 2022 Embedding efficienc
Slide 18: Operational turnaround: opex and drilling
Operational turnaround: opex and drilling Sustainable reduction in operating costs ($m) 2021 wells: average cost reduction of >20% Jubilee1 TEN 75 500 200 Rig non- 400 productive time 60 300 below 5% 100 compared c.$10m 200 to 18% in reduction c.10% 52 previous from cost campaign simplified reductio
Slide 19: Significant Ghana resource potential
Significant Ghana resource potential Jubilee gross oil volumes (mmbbls) TEN gross oil volumes (mmbbls) 2.0 billion bbls in c. c.1.5 billion bbls in place with only 17% place with only 7% recovered to YE21 recovered to YE21 1,971 RF 47% 245 RF 35% 1,500 342 RF 31% RF 17% 264 RF 13% 339 RF 7% 99 101 1
Slide 20: Highly profitable largely undeveloped areas east of Jubilee core
Highly profitable largely undeveloped areas east of Jubilee core Significant recovery potential (mmbbls) JNE 6% JSE 11% Infill EUR 9% Produced Excluding undefined 47% contingent and prospective resource projects Existing wells 27% Defined projects in the largely undeveloped areas east of Jubilee cor
Slide 21: Jubilee production growth from addition of undeveloped areas
Jubilee production growth from addition of undeveloped areas Capex allocation 2022-25 (%) Gross production growth 2021-25 (kbopd) c.7% CAGR Jubilee NE Infill c.30% Jubilee SE c.50% 100 kbopd c.87 kbopd Existing wells Jubilee NE c.10% c.10% Jubilee SE Infill c.$ 700 million net Tullow capex 2022-25 E
Slide 22: TEN investment focused on material resource potential
TEN investment focused on material resource potential Significant recovery potential (mmbbls) 10 km TEN Development & Production Area Defined projects 31% Produced EUR 36% Excluding undefined contingent and prospective resource projects Infill 12% Existing wells 21% Enyenra and Ntomme Significant in
Slide 23: TEN production growth from new defined projects
TEN production growth from new defined projects Capex allocation 2022-25 ($m) Gross production growth 2021-25 (kbopd) 50 kbopd Prospective Defined projects Infill c.25% c.70% c.9% CAGR1 Defined projects Existing wells c.5% c.32 kbopd Infill c.$ 550 million net Tullow capex 2022-25 Existing wells JV
Slide 24: Low risk, stable production from non-operated portfolio
Low risk, stable production from non-operated portfolio Capex allocation 2022-25 ($m) Net production 2021-25 (kboepd) Prospective c.17 kboepd Stable production base Defined projects c.60% c.25% Prospective Existing wells c.15% Defined c.$250 million net Tullow capex 2022-25 projects Solid and reliab
Slide 25: Catalysts to unlock value
Catalysts to unlock value Jubilee: Stable gas supply and tangible benefits Realising value from Kenya • Delivering >100mmscfd, c.30% of Ghana thermal power generation • Expect to fulfil Foundation Gas (200BCF) by YE22, yielding >$2bn to Ghana • 585 million bbls net 2C resource life of field • GSA di
Slide 26: Exploration refocused to deliver value
Exploration refocused to deliver value West Africa: Guyana: Enhancing value of core producing areas Unlocking prospective resource base in emerging basins Focus on near-field and infrastructure-led exploration Beebei-Potaro exploration well, targeting the Cretaceous opportunities around producing fi
Slide 27: Conclusion
CONCLUSION Tullow Oil plc | 2021 Full Year Results
Slide 28: A transformed business positioned to deliver growth
A transformed business positioned to deliver growth Rich portfolio of high return opportunities Operating performance and cost › c.$1.6bn capex 2022-25 › O&M transformation › Investment in Jubilee to increase production › Strong drilling performance › Reposition TEN for future growth › High EBITDAX
Slide 29: Tullow Oil plc
Tullow Oil plc 9 Chiswick Park, 566 Chiswick High Road London W4 5XT United Kingdom Tel: +44 (0)20 3249 9000 Email: ir@tullowoil.com Web: www.tullowoil.com Follow Tullow on: