Enquest Plc · LSE:ENQ

Enquest — FY2012 Earnings Presentation

47 slides from Enquest's earnings presentation, Mar 27, 2013

  1. Slide 1: EnQuest 2012 Results

    EnQuest 2012 Results Sustained Strong Cash Flow Generation Major Project Execution On Track Presentation Title 0

  2. Slide 2: Agenda

    Agenda  Overview CEO, Amjad Bseisu  Financials CFO, Jonathan Swinney  Business performance CEO, Amjad Bseisu & major projects Co-founder & Strategy Adviser, Nigel Hares  Operations General Manager, Technical Andrew Thomson  Summary Amjad Bseisu

  3. Slide 3: Repeatable strategy delivering success

    Repeatable strategy delivering success  2012 production above guidance mid-point, due to successful execution of operations programme  Sustained strong cash flow and balance sheet  Excellent reserves record  300% replacement since EnQuest inception  262% replacement in 2012  reserves asset lif

  4. Slide 4: Growth through the realisation of untapped potential

    Growth through the realisation of untapped potential Technical leadership in integrated development Creating development value via: Heather/Broom  Upgrading existing facilities Thistle/Deveron  Newer technology, new seismic Field life extensions  Simplifying processes Maturing fields  Infill dri

  5. Slide 5: 2012: Sustained strong cash flow generation, major project execution on track

    2012: Sustained strong cash flow generation Major project execution on track  Production of 22,802 Boepd in 2012 Production  14 wells successfully drilled, $367m capital investment in producing fields & Reserves  Good drilling and intervention work at Thistle/Deveron and the Dons  11.5% net 2P r

  6. Slide 6: Financials

    Financials @nQuest

  7. Slide 7: Results summary

    Results summary Year to 31 December Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US dollars US dollars 2012 2011 Change % Export production (Boepd) 22,802 23,698 (3.8) Average realised price per barrel ($) 111.6 107.6 3.7 Revenue ($ m

  8. Slide 8: Summary income statement

    Summary income statement Year to 31 December 2012 2012 2012 2011 US dollars Business Exceptional Reported Reported performance items $m’s $m’s $m’s $m’s Revenue 889.5 - 889.5 936.0 Cost of sales (448.2) (10.2) (458.4) (508.8) Gross profit 441.3 (10.2) 431.1 427.2 Exploration and evaluation expenses

  9. Slide 9: Capital expenditure $803m

    Capital expenditure $803m Year to 31 December 2012 US$m 421* * Net of 35% disposed via farm out ** $87m is the carry element 8

  10. Slide 10: Reconciliation of capital expenditure

    Reconciliation of capital expenditure 1000 20 950 128 900 87 125 143 850 800 US$ million 750 967 700 842 650 803 600 550 500 Tangible Oil & Add back farm Less: Carry E&E additions Other Cash outflow on Alma/Galia Farm Cash outflow on gas asset out additions (non- capex out proceeds capex (net of add

  11. Slide 11: Cash flow

    Cash flow Year to 31 December 2012 Strong financial position, $900m credit facility and £145m retail bond US$m Financing & other Cash & equivalents less Cash & equivalents less Cash flow Capex (excludes borrowings) borrowings at borrowings at from operations 31 December 2012 1 January 2012 10

  12. Slide 12: Finance outlook

    Finance outlook Full Year 2013  Current capex expectations of around $750m  Production and transportation costs expected to be in the range $310m to $340m  Depletion anticipated to be approximately $28 per bbl, dependent upon production mix  G&A range between $10m to $15m  Finance costs expecte

  13. Slide 13: Business performance and major projects

    Business performance and major projects

  14. Slide 14: Three years of strong cash flow generation

    Three years of strong cash flow generation 300% reserve replacement ratio Reserves 2010 - 2012 Cash flow 2010 - 2012 72.0 128.5 $1.5bn MMboe MMboe $(0.1)bn 80.5 (24.0) MMboe MMboe Additions to Tax, $90m Production reserves $8m Finance, 2010 to 2012 2010 to 2012 Other $(1.3)bn Dec 09 Cash flow Capex

  15. Slide 15: Expanding our asset base in 2012 and 2013

    Expanding our asset base in 2012 and 2013 With a rich discovery ‘hopper’ West Don Increased to 63.5% Kraken (60%) Appraisal well 2013 SW Heather (55%) Ongoing evaluation Kraken From zero to 60% Cairngorm Cairngorm (100% ) Increased to 100% Appraisal well 2013 Alba Kildrummy From zero to 8% Increased

  16. Slide 16: Business development: Acquisition of 8% of Alba & Entry into Malaysia

    Business development Acquisition of 8% of Alba & Entry into Malaysia ▪ Adding reserves and producing barrels and further diversifying EnQuest’s asset base ▪ Base consideration is £18.75m, plus a deferred £0.5m ▪ Net 2P reserves of 5.9 MMboe to be added ▪ Alba produces heavy oil from Eocene turbidite

  17. Slide 17: Thistle Late Life Extension projects

    Thistle Late Life Dons Area Extension projects Power & Electricity Upgrade Project Required to provide reliable power and remove electrical equipment obsolescence Jacket Integrity Project Modifications required to ensure jacket protection for another 15 years Topsides Structural Integrity Projects T

  18. Slide 18: Alma/Galia

    Alma/Galia On track for first oil in Q4 2013 2012  Field Development Plan approvals  Successful batch drilling of six wells  The three that had reached the reservoir all met or exceeded expectations  Purchase and re-fit of EnQuest Producer  FPSO modifications well underway  Other key project e

  19. Slide 19: Kraken on track for FDP submission in Q2 2013

    Kraken on track for FDP submission in Q2 2013 Reserves, resources, appraisal well  EnQuest acquired a 60% W.I. in 2012  A conventional rather than a heavy oil development  EnQuest formally assumed operatorship in September 2012 and is working with partners to deliver FDP in H1 2013, with first oi

  20. Slide 20: Operations

    Operations @nQuest

  21. Slide 21: 2012 Production results by hub

    2012 Production results by hub Above mid-point of guidance Net production (Boepd) 2011 2012 23,698 22,802 12,770 10,992 8,058 5,436 5,492 3,752 Thistle/Deveron The Dons Heather/Broom Total ▲ New wells A58 & A59 ▼ Natural decline of S5 ▼ Natural decline, BR2 ▲ Improved water injection ▼ Pipeline shut

  22. Slide 22: Thistle / Deveron

    Thistle / Deveron 2012 Area6 – I1  A58 (Dev-P1) well completed and on production, productivity at the higher end of pre-drill estimates A59  150,000 bwpd water injection  10 day pipeline outage A56  Area 6-P1 (ESP) production well A22 w/o A56 w/o  Heavy lift late August, 30 MW generator to star

  23. Slide 23: Dons/Conrie

    Dons/Conrie 2012  Don South West  S10 drilled, on production as expected  S11 drilled, continues to perform well  S2Z workover successful W1  West Don Conrie – S7  W2 abandoned ahead of plan  W5 (sidetrack of W2) drilled & on W2 production W5 W3Z S6  W1 workover successful OB  W6 injector d

  24. Slide 24: Heather/Broom

    Heather/Broom Heather / Broom 2012 • Anticipated natural decline in BR2 • Increase in Heather production, as a result of well work activity including 3 conversions to 2/0 Else injection 5- 15 H42 H33 • Lost 20 days production due to 3rd party Erica 2/05-21 H61Z 2/0 export outage (Ninian) (BW3) 2/0 5

  25. Slide 25: 2013 EnQuest outline programme

    2013 EnQuest outline programme Three drilling strings (two platform rigs, one mobile rig) Q1 Q2 Q3 Q4 Thistle Drilling (1 well) Heather Producer workover Dons Drilling (3 wells) Alma/Galia 3 production well completions, 1 injector well First oil Kraken FDP submission Exploration/ Kraken Cairngorm Sa

  26. Slide 26: Summary

    Summary @nQuest

  27. Slide 27: 2012 Results summary

    2012 Results summary Production and project execution on track Operations &  14 well drilling programme, $803m capital investment developments  Production of 22,802 Boepd  Alma/Galia development on track for first oil in Q4 2013  Kraken development on track for FDP submission in Q2 2013  Taken

  28. Slide 28: Outlook

    Outlook Demonstrating the sustainability of EnQuest’s growth  2013 guidance range between 22,000 Boepd and 27,000 Boepd  12 wells being delivered in 2013  including three production wells on existing fields and three on Alma/Galia Production  plus three exploration/appraisal wells  Current grou

  29. Slide 29: Q&A

    Q&A Thistle/Deveron Dons Northern Producer Heather/Broom Alma/Galia EnQuest Producer 28

  30. Slide 30: EnQuest's North Sea assets - end 2012

    EnQuest’s North Sea assets - end 2012 Includes Alba acquisition announced in 2013 and UK 27th round offers Licence Block / Sub area Name P902 2/4a Broom P242 2/5 Broom/Heather P1077 9/2b & 9/2c Kraken P213 16/26 Alba P1200 211/13b West Don West Don, Don SW, P236 211/18a Conrie, Thistle & Deveron P47

  31. Slide 31: On Track To Deliver Approximately 20% CAGR

    On Track To Deliver Approximately 20% CAGR1 Between 2009 and 2014, based only on net 2P profiles Average net production (Boepd) Over 33,0002 5,000 22,000 23,698 22,802 21,074 13,613 10,150 2008 2009 2010 2011 2012 2013 2014 1 Compound annual growth rate 2 To be updated following Alma/Galia results 3

  32. Slide 32: Income Statement

    Income Statement Year to 31 December 2012 2011 US dollars Exceptionals, Business Depletion of performance fair value uplift $000’s $000’s $000’s $000’s Revenue 889.5 - 889.5 936.0 Cost of sales (448.2) (10.2) (458.4) (508.8) Gross profit 441.3 (10.2) 431.1 427.2 Exploration and evaluation expenses (

  33. Slide 33: Balance Sheet

    Balance Sheet As at 31 December 2012 2011 US dollars $000’s $000’s ASSETS Property, plant and equipment 1,816.6 1,274.0 Non-current assets Goodwill 107.8 107.8 Intangible oil and gas assets 97.5 24.3 Asset held for sale - 1.3 Investments 2.3 6.7 Deferred tax asset 23.1 12.6 Other financial assets 19

  34. Slide 34: Group taxation position

    Group taxation position ETR % $m’s UK tax losses $m’s Profit before tax 403 Recognised at 31 December 2011 180 2012 net taxable losses 198 UK corporation tax rate 62 250 RFES 42 PRT 5 19 North Sea Tax Reliefs (8) (30) Acquisitions 19 Leasing structures (19) (77) Prior year true up 41 Decommissioning

  35. Slide 35: Track Record of Sustainable Delivery and Growth

    Track Record of Sustainable Delivery and Growth Reserve replacement ratio of 300% over three years MMboe Full year 2010 Full year 2011 Full year 2012 21.5 128.51 115.2 35.1 88.5 (8.2) 15.4 80.5 (8.4) (7.4) Net 2P Production Reserve Net 2P Production Reserve Net 2P Production Reserve Net 2P reserves

  36. Slide 36: Largest UK Independent Producer in the UK North Sea

    Largest UK Independent Producer in the UK North Sea Government data (DECC) for UK North sea independent producers Total Production for the year ending November 2012 1,100,000 1,000,000 Total Production in Mass units (tonnes) 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - E

  37. Slide 37: Thistle, Conrie and The Dons Infrastructure

    Thistle, Conrie and The Dons Infrastructure 36

  38. Slide 38: Heather / Broom Infrastructure

    Heather / Broom Infrastructure 37

  39. Slide 39: Kraken on track for FDP submission in Q2 2013

    Kraken on track for FDP submission in Q2 2013 Development Scheme Option Prior To EnQuest’s Operatorship 3838

  40. Slide 40: Cairngorm Well Block 16/3d

    Cairngorm Well Block 16/3d Flank Well 1 2 16/3d 16/2b NW SE 39

  41. Slide 41: Alma/Galia

    Alma/Galia Project on schedule for Q4 2013 start up 40

  42. Slide 42: Alma Subsurface

    Alma Subsurface -10 -105 52 00 5 -1047 -104 5 -1 50 04 25 -1 -10400 -100375 -1 3 -10032550 300 -10 -10-1 -10 2202275 5 50 500205 17 -102 5 -9878-59-999 00 -101 50 -9 5 0 12 0 -1 00 5 80 -10 1 -982 -9 484000 484400 484800 485200 485600 486000 486400 486800 505 487200 -977 -97 -9725 -9700 575487600 48

  43. Slide 43: Alma Seismic

    Alma Seismic SW 30/24-2 30/24-1 3 0/24-5 30/24-3 30/25a-2 NE 42

  44. Slide 44: Alma: Extensive In-House Subsurface Work

    Alma Extensive In-House Subsurface Work Reinterpretation of  Seismic  Petrophysics  Layering Re Build of models  Static  Simulation Integrated Team  ESP design  Well Trajectories 43

  45. Slide 45: Alma Development

    0 0 0 -9 -985 45 -94 -9 -9300 -9 6229200 0 00 -925 -98 0 Alma Development -980 0 -9 -9 75 70 0 Wells Trajectory Schematic -8 50 6228800 60 7 -8 0 30/25a-02 -9 4 50 00 -9 4 0 0 -94 -9 65 0 0 -8 60 65 -9 50 0 00 0 -955 -94 -95 6228400 -9350 0 90 Development wells optimised to 0 -9 -8 -895 3 00 0 60 00

  46. Slide 46: Galia STOIIP & Reserves

    Galia STOIIP & Reserves Only 50% Water Cut Galia Main 2 Well Sampled 30/24-15 Galia 1 Bubble Point Pressure 1900 psia Main 1 Differential Gas-Oil Ratio 631 scf/stb outline 9 29 Galia East 3 30Z outline Formation Volume Factor 1.33 b/stb 0 04 Oil Viscosity 0.49 Degrees 30Y 15 API Gravity 38 Degrees F

  47. Slide 47: Forward Looking Statements

    Forward Looking Statements This presentation may contain certain forward looking statements with respect to EnQuest’s expectation and plans, strategy, management’s objectives, future performance, production, costs, revenues and other trend information. These statements and forecasts involve risk and

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