Tullow Oil plc · LSE:TLW
Tullow Oil — Investor Presentation (May 2016)
37 slides from Tullow Oil's investor presentation, May 2016
Slide 1: Overview presentation Tullow Oil plc May 2016
Overview presentation Tullow Oil plc May 2016
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: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 4: A leading global independent exploration & production company
Overview presentation A leading global independent exploration & production company 22 321mmboe 975mmboe 73,400 boepd 2C Contingent Countries 2P Reserves Resources production Figures at FY 2015 Established record of delivering successes • The business has developed organically and through acquisitio
Slide 5: The Tullow strategy
Overview presentation The Tullow strategy Additional cash flow from new production Monetisation High Margin Exploration Selective Options & Production and Development Portfolio Cash flow Appraisal Management Costs & Dividends Additional Surplus Cash Exploration, Cash Distribution • Capital focus on
Slide 6: Future project pipeline making significant progress
Overview presentation Future project pipeline making significant progress Future Development Projects Countries with ongoing operations Key oil producing countries TEN Development East Africa Development • >90% project completed • Kenya appraisal programme • On track for first oil Jul/Aug16; complet
Slide 7: Early actions taken to position Tullow for future growth
Overview presentation Early actions taken to position Tullow for future growth Decisive action taken Financial flexibility Fit for the future Re-set to deal with Step change for Tullow Portfolio with major low oil prices: with TEN first oil: growth potential: Moved early and decisively; Increase in
Slide 8: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 9: 2015 Full Year Results summary
Overview presentation 2015 Full Year Results summary 2015 ($m) 2014 ($m) Sales revenue 1,607 2,213 Gross profit 591 1,096 Administrative expenses (194) (192) Restructuring costs (41) - Loss on disposal (57) (482) Goodwill impairment (54) (133) Exploration costs written off1 (749)2 (1,657) Impairment
Slide 10: Early action mitigates impact of low oil prices in 2015
Overview presentation Early action mitigates impact of low oil prices in 2015 Strong focus on cash from operations 100 $99/bbl • Increased to 67 kbopd in 2015 $98/bbl West African production • TEN to deliver growth to around 100 kbopd in 2017 80 Oil hedging • Reaping benefits of long term hedging pr
Slide 11: Industry leading hedge position
Overview presentation Industry leading hedge position Hedge strategy • Tullow has proactively hedged production to protect revenues for more than 10 years • Significant liquidity benefit through protecting future revenues and generating RBL debt capacity • Prudent during periods of higher developmen
Slide 12: Managing balance sheet and liquidity
Overview presentation Managing balance sheet and liquidity $bn 7 Overall • End April 2016 net debt of c.$4.5bn and facility Debt capacity available Drawings headroom and free cash at c.$1.3bn under Committed Facilities liquidity • April 2016 semi-annual redetermination 6 RBL 1.0 successfully complet
Slide 13: Potential to reduce capex to c.$300m at low oil prices
Overview presentation Potential to reduce capex to c.$300m at low oil prices 2,500 Major reduction in Capex Exploration East Africa • Reduced 2016 Capex by $100m to 2,000 West Africa Non-op (incl Europe) $1bn; further reductions expected TEN • Final year of committed TEN first Jubilee oil capex fixe
Slide 14: Capex flexibility and operating cash flow sensitivities
Overview presentation Capex flexibility and operating cash flow sensitivities $bn • Significant operating cash flow continues to be delivered at low oil prices; underpinned by $90/bbl hedges $80/bbl • Capex flexibility creates surplus operating cash flow $70/bbl from fourth quarter 2016 $70/bbl enab
Slide 15: Key differentiators
Overview presentation Tullow continues to be resilient to low oil prices Growing oil production Growing to c.100 kbopd in 2017; TEN onstream Revenues protected Significant hedging in place 2016 and 2017 Low cost operations Continuing to drive down Opex & G&A Key differentiators Capex flexibility Pot
Slide 16: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 17: Strong delivery across West Africa production portfolio
Overview presentation Strong delivery across West Africa production portfolio Strong FY 2015 West Africa oil production: 66,600 bopd 2017 West Africa oil production growing to around: 100,000 bopd ‘000 bopd *FY 2016 West Africa guidance: Ghana production under review due to turret issue • FY 2015 Eu
Slide 18: Low cost West Africa portfolio to deliver c.100,000 bopd
Overview presentation Low cost West Africa portfolio to deliver c.100,000 bopd Tullow West Africa net development capex Material reduction in Ghana Opex 1400 • Realising synergies from operating Jubilee & TEN in Ghana 1200 • Reducing per barrel Opex to around $8/bbl in 2018 from $10/bbl in 2015 1000
Slide 19: Jubilee: long-term asset with flexible investment opportunities
Overview presentation Jubilee: long-term asset with flexible investment opportunities Strong performance in 2015 • FY15 average gross production: 103 kbopd • FY16 guidance: under review • Gas export system operating reliably • Water injection system upgrades ongoing • Planned 2 week FPSO maintenance
Slide 20: TEN on schedule to deliver first oil in July/August 2016
Overview presentation TEN on schedule to deliver first oil in July/August 2016 Project over 90% complete • FPSO conversion complete - FPSO sailed 23 January 2016; “zero” carry over - Arrived early March; moored by mid-March - Ongoing commissioning and connection • DRILLING Subsea Fabrication (99%) &
Slide 21: TEN to deliver significant Group cash flow from 2H 2016
Overview presentation TEN to deliver significant Group cash flow from 2H 2016 Base case development • 300 mmboe reserves being developed - 80% oil • 24 well development • Gross development capex of c.$4 bn to first oil • Leased FPSO, facility capacity of 80,000 bopd Significant progress towards firs
Slide 22: East Africa: developments making steady progress
Overview presentation East Africa: developments making steady progress Export pipeline decision • East Africa Governments to develop separate export pipelines in Kenya and Uganda • Uganda pipeline through Tanzania to port of Tanga • Kenya - a range of options for the independent development, includi
Slide 23: Kenya: Identifying upside in South Lokichar Basin
Overview presentation Kenya: Identifying upside in South Lokichar Basin Material proven oil basin • 9 oil accumulations discovered • Potential to increase recoverable resources up to 750 million barrels of oil • Potential upside of 1 billion barrels of oil in the South Lokichar Basin Significant ups
Slide 24: Growing portfolio of low cost oil
Overview presentation Growing portfolio of low cost oil 2P Commercial Reserves and 2C Contingent Resources Total Resource Potential as of 31 December 2015 as of 31 December 2015 East Africa 2P Commercial Reserves 49% 321.8 mmboe 1,297 New Ventures 4.0bn 2C Contingent Resources mmboe 8% boe 974.7 mmb
Slide 25: Key differentiators
Overview presentation Business differentiated by strong delivery and quality assets Production West Africa on track to deliver c.100k bopd in 2017 Delivery Operating costs Reducing Opex per barrel in Ghana Incremental capex options Significant future flexibility in timing of investments Key differen
Slide 26: Overview presentation
Overview presentation OVERVIEW PRESENTATION
Slide 27: Sustaining exploration upside at low cost
Overview presentation Sustaining exploration upside at low cost Exploration capital expenditure $m Material acreage access – building & rejuvenating • Focus on low-cost material oil plays in Africa & Latin America • Entry with partners for collaboration, risk-sharing & cost-sharing • Seeking better
Slide 28: Onshore East Africa: Finding low-cost oil
Overview presentation Onshore East Africa: Finding low-cost oil Location Activity Uganda Lake Albert • 17+ oil fields discovered (90% success) Basin • 1.7 billion barrels of oil discovered Kenya North • Basin margin play unsuccessful at Engomo-1 Turkana Basin • Independent plays away from basin marg
Slide 29: West Africa: Long-term future upside
Overview presentation West Africa: Long-term future upside • Near field upside in Ghana: 3D/4D seismic, quantitative interpretations & reservoir modelling • Major basins with proven oil systems & shelf edge plays – lower cost to develop • Seismic evaluation ongoing to high-grade prospects for future
Slide 30: Latin America: Long-term future upside
Overview presentation Latin America: Long-term future upside • Basins with proven oil systems & shelf edge plays – lower cost to develop • Seismic evaluation ongoing to high-grade prospects for future selective drilling • Pursuing alternative funding including strategic farm-downs Strong acreage pos
Slide 31: Tullow Oil plc – 2015 Full Year Results
Overview presentation TULLOW OIL PLC – 2015 FULL YEAR RESULTS
Slide 32: Key financial metrics
Overview presentation Key financial metrics Adj. EBITDAX ($mm) Capital investment ($mm) 1 2,020 1,847 1,908 1,870 1,779 1,800 1,720 1,565 1,432 1,235 1,008 800 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 FYF 2015 Net debt / Adj. EBITDAX (x) Total Assets ($mm) 4.1 11,509 11,422 11,348 10,6
Slide 33: Low cost production and competitive cost base
Overview presentation Low cost production and competitive cost base Realized oil price per bbl ($)1 Operating costs per boe ($)2 Brent avg. 79.5 111.3 111.7 108.7 98.9 52.4 18.6 16.5 108.0 108.0 105.7 97.5 14.6 15.1 13.5 78.0 12.5 67.0 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Depl
Slide 34: Net income 2015 v 2014
Overview presentation Net income 2015 v 2014 $m 2014 Price Hedging Volume Cash DD&A Admin Restructuring Disposals Goodwill E&E Impairment Provision Other Net Tax 2015 Operating Expenses Costs Impairment Write for onerous Financing Costs offs contracts Lower realised oil and gas prices, provision for
Slide 35: Sources and uses of funds
Overview presentation Sources and uses of funds Cash inflow $2,388m 2015 Net cash inflow $44m $m Sources Uses • Operating cash flow $1,316m* (2014:$1,516m*) $56m • Net loan draw down $977m (2014:$1,198m) $232m • Disposals $56m (2014:$21m) • Cash tax received $35m (2014: $34m, cash tax paid) $977m •
Slide 36: Suriname: Exciting material prospects in Blocks 47 & 54
Overview presentation Suriname: Exciting material prospects in Blocks 47 & 54 • Block 54 farmed-down (Tullow Oil 30% op) converting licence equity into carries • Demerara Plateau 3D seismic survey reveals exceptionally high-quality large prospects Game-changer opportunity with follow-up scale Slide
Slide 37: Tullow Oil plc
Overview presentation Tullow Oil plc 9 Chiswick Park 566 Chiswick High Road London, W4 5XT United Kingdom Follow Tullow on: Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 Email: ir@tullowoil.com Web: www.tullowoil.com