Enquest Plc · LSE:ENQ

Enquest — Investor Day (November 2013)

57 slides from Enquest's investor day presentation, Nov 15, 2013

  1. Slide 1: EnQuest Capital Markets Day

    EnQuest Capital Markets Day Delivering sustainable growth in reserves and production 15 November 2013

  2. Slide 2: Agenda

    Agenda  Introduction and IMS Amjad Bseisu, CEO  The Kraken Development  Overview video  Richard Hall, Head of Major Projects  Andrew Thomson, GM Technical  Alasdair MacInnes, Kraken Development Manager  Jonathan Swinney, CFO  Summary Amjad Bseisu, CEO

  3. Slide 3: Repeatable strategy delivering success

    Repeatable strategy delivering success  2013 production up 7.2% to end Oct’  Strong performance at all producing assets, especially Thistle  Good operations progress, good development drilling results and good reservoir performance  On track for guidance of 22,000 Boepd to 24,500 Boepd  Kraken

  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 GKA extensions  Simplifying processes  Infill drilling, subsu

  5. Slide 5: EnQuest's North Sea assets

    EnQuest’s North Sea assets At 30 June 2013, plus Avalon farm in, GKA acquisition, Kraken sanction 44

  6. Slide 6: 2013 Production results by hub

    2013 Production results by hub Up 7.2% to end of Oct’ year-on-year Net production (Boepd) 2012 2013 23,129 21,569 11,031 10,203 7,845 6,941 4,315 3,521 - 842 Thistle/Deveron The Dons Heather/Broom Alba Total 5

  7. Slide 7: EnQuest Production – Thistle/Deveron

    EnQuest Production – Thistle/Deveron All figures EnQuest net production (bopd) unless otherwise stated 20,000 A59 w/o due 3rd DOE pump complete online September September 18,000 16,000 A60/55 online August with good 14,000 productivity 12,000 A53/60 WI W/O 10,000 A57/58 Lower Ness perforations Plann

  8. Slide 8: Production efficiency: EnQuest in top UKCS quartile

    Production efficiency: EnQuest in top UKCS quartile Source: O&G UK research Relative company performances: oil portfolios Figure 7: Production efficiency performance by operator for all oil assets 7

  9. Slide 9: Alma/Galia

    Alma/Galia EnQuest Producer FPSO now in UK finishing yard, closer to the field  In the field, subsea infrastructure is now in place with trees and manifolds hooked up, pipelines and umbilicals in place and risers and mooring systems pre-installed awaiting the arrival of the FPSO  The EnQuest Produ

  10. Slide 10: Greater Kittiwake Area, near Scolty/Crathes & Avalon

    Greater Kittiwake Area, near Scolty/Crathes & Avalon 4.7MMboe reserves, additional production and a new hub  Acquired 50% of:  Kittiwake  Grouse  Mallard  Gadwall  Goosander ▪ EnQuest to operate  The GKA fields have been developed as subsea tie-backs to a steel platform located at Kittiwake;

  11. Slide 11: Beyond the UKCS

    Beyond the UKCS Malaysia & Tunisia Malaysia  Targets being matured for new exploration drilling in 2014  Prospects include Kitabu and Maligan, with operator’s estimates of prospective resources at 71 MMboe and 132 MMboe respectively Tunisia  Acquiring 70% operating interest in the producing Didon

  12. Slide 12: Cairngorm appraisal well

    Cairngorm appraisal well Drilling started, scheduled to finish around end of the year  Cairngorm discovery, located on the platform margin of the Viking graben  Well 16/3a-11z drilled in 1990 encountered a 105m oil column in fractured granite with a most likely Oil-Down-To associated with rock typ

  13. Slide 13: The Kraken development: EnQuest's sixth hub

    The Kraken development EnQuest’s sixth hub, 137 MMboe gross  Secures medium term reserves and production growth  82.2 MMboe net 2P reserves, increase of Kraken North c.60MMboe (20MMboe already booked)  First oil in 2016/2017  Anticipated to more than double production levels  Long field life, 2

  14. Slide 14: Kraken summary

    Kraken summary Richard Hall Head of Major Projects

  15. Slide 15: The Kraken Development

    The Kraken Development  Video of the Kraken development plans  Project overview Richard Hall, Head of Major Projects  Subsurface Andrew Thomson, GM Technical  Field development Alasdair MacInnes, Kraken Development Manager  Economics Jonathan Swinney, CFO

  16. Slide 16: Kraken overview

    Kraken overview Delivering sustainable growth in reserves and production  EnQuest’s sixth hub (after GKA)  Working interest of 60%  Over 80MMboe of net 2P reserves  First oil in 2016/17 - net peak production in excess of 30,000 boepd  Heavy oil with good flow characteristics  A conventional de

  17. Slide 17: Kraken overview

    Kraken overview  Block 9/2b  2 Fields  Water Depth of 110m  350km NE of Aberdeen  Heavy Oil Development, 14 Deg API  Developing 137 MMbbls reserves  Field area – 12 x 3.5 km approx  25 wells 16

  18. Slide 18: Development concept selection

    Kraken overview Development concept selection  Primary options - FPSO (ship), FPSO (Sevan), Fixed platform, Jack-up (TGP500)  FPSO – large process, areal extent of field, relatively remote location  Lease – downside protection  Minimum up-front capex – protect cash flow  Duty holder is FPSO Con

  19. Slide 19: Development plan and field layout

    Kraken overview Development plan and field layout  4 integrated ‘Template/Manifold’ Type Drill Centres:  1 combined service manifold at the 4th drill centre  14 horizontal producers, 1000m  All manifolds can accommodate  11 horizontal injectors, 1000m expansion / step out  2 single service int

  20. Slide 20: Conversion FPSO

    Kraken overview: Conversion FPSO Bumi Armada Berhad - hull secured Nominated Vessel MV Prisco Alcor  Double hull DNV classed Suezmax tanker  Length 275m Breadth 50m Depth 22.5m  Delivered by HHI in September 2007  First 5 year Special Survey completed July 2012 19

  21. Slide 21: SPS template – proven design

    Kraken overview SPS template – proven design SPS Manifold spreader bar lift 20

  22. Slide 22: SPS template (typical)

    Kraken overview SPS template (typical) 21

  23. Slide 23: Drilling and well planning

    Kraken overview Drilling and well planning  Drilling commences 2015  First oil 2016/17  Drilling continues to 2019  4 producers & 3 injectors at first oil  14 producers & 11 injectors total  Horizontal wells with gravel packs in producers 22

  24. Slide 24: Development Capex well established

    Kraken overview Development Capex well established  > 60% of Capex already awarded via firm contracts Drilling & Operator Wells Costs 23% 16% Subsea - Facilities - SPS FPSO 21% 15% Subsea - SURF 25% Operator Costs Net CAPEX to 1st Oil: $1.4 bn 11% Subsea - Drilling & SPS Wells 17% 43% Subsea - SURF

  25. Slide 25: Development expenditure – Opex field life cost

    Kraken overview Development expenditure – Opex field life cost (excludes FPSO lease)  High Opex confidence using EnQuest asset benchmarking and “bottom-up” estimates OPEX Without Work-Overs: c.$15 per barrel Export Services & 10% Logistics 24% On & Offshore Labour & Maintenance, Support Mods & 34%

  26. Slide 26: Development Plan

    Kraken Development Plan 2017 1st Oil 25

  27. Slide 27: Conventional development plan approach

    Kraken overview Conventional development plan approach EnQuest is pursuing a conventional approach to Kraken development execution:  New seismic/ 6 appraisal wells  Extensive subsurface analysis  Formal FEEDs for the FPSO and subsea integrated equipment ahead of sanction  Leased FPSO contracting

  28. Slide 28: Major contracts in place

    Kraken overview Major contracts in place Major Contracts have been tendered and awarded/ close to award  Subsea Production System(SPS) awarded in May and is progressing on schedule, with steel cut on initial templates and machining commenced on subsea xmas tree (XT) forgings  FPSO Letter of Intent

  29. Slide 29: Subsurface

    Subsurface Andrew Thomson General Manager Technical

  30. Slide 30: Kraken subsurface: Introduction

    Kraken subsurface Introduction  State of the art Geostreamer 3D seismic acquired and interpretation completed:-  Can “see” the sand  sands are 30 – 120 ft thick  Palaeocene Heimdal III sands, deep water gravity flow deposit  Not underlain by water  Later phase of injectite formation  High por

  31. Slide 31: Summary of Kraken appraisal to date

    Kraken subsurface Summary of Kraken appraisal to date  Kraken has moderately viscous oil 9/2b-6 (Enquest 2013) ▪ 78 – 161 cp Samples 125cP Oil  Other heavy oil comparisons:  Alba 7 cp  Captain 50-150 cp 9/2b-2 (Nautical 2007)  Mariner Maureen 67 cp Found oil in Heimdal -I & -III. 78 cP oil, Not

  32. Slide 32: 9/2b-5Z reservoir penetration & test

    Kraken subsurface 9/2b-5Z reservoir penetration & test 31

  33. Slide 33: 9/2b-6 well – Kraken North appraisal

    Kraken subsurface 9/2b-6 well – Kraken North appraisal Drilling Reservoir Section CPI  Encountered range of subseismic injectite features, 1’ – 25’ TVT, without problem  Generally less complex than prognosed H3 Injectite Prognosed vs actual  Overall reservoir section very close to prognosed depth

  34. Slide 34: Kraken development layout

    Kraken development layout Horizontal injector : Producer waterflood Development based upon 14 producers & 11 injectors Gravel packed producers - 1000m max length Standalone screen injectors – 1400m max length 33

  35. Slide 35: STOIIP, reserves & recovery factor

    Kraken subsurface STOIIP, reserves & recovery factor FDP STOIIP Produced RF% North 68 20 30% Central 85 38 45% South 268 89 33% Kraken Area 421 147 35% Conservative Recovery Factor Viscosity in cP Kraken Ultimate Recovery Factor from Heavy oil Fields 34

  36. Slide 36: Gross production profile & reserves – FDP

    Kraken subsurface Gross production profile & reserves – FDP MMstb South Central North Total Produced 89 38 20 147 Fuel 10 Sales 137 Gross Produced Oil stb/d 35

  37. Slide 37: Upside Potential – Western Feature 2

    Kraken subsurface Upside Potential – Western Feature 2, to be drilled H2 2014 WF2 (overlaying) WF1 Outline only Underlying surface – Heimdal I Depth Map WF-2 Map showing overlapping Heimdal features Well Objectives Appraise Heimdal 3 structure with mid case of 23 MMbbls STOIIP Appraise Heimdal 1 str

  38. Slide 38: Field development

    Field development Alasdair MacInnes Kraken Development Manager

  39. Slide 39: Kraken field development overview

    Kraken field development overview

  40. Slide 40: Overall flow balance – basis of design

    Kraken field development Overall flow balance – basis of design C3  Efficient process design  Proven design  Proven equipment  High redundancy built in  High operational uptime capability through field life  25 year design life 39

  41. Slide 41: FPSO topsides layout

    Kraken field development FPSO topsides layout Aft Laydown EOR Flare Oil Power WI & PF Oil Metering E-House Generation Pumps Separation KO Drum VFD Steam Mid-ships PW & SW Turret Fwd LER House Boilers Laydown Treatment Chemical Injection / Utilities  Defined FPSO topsides layout 40

  42. Slide 42: SPS scope of supply – established technology

    Kraken field development SPS scope of supply – established technology  Proven design  Track record of system supply  Repeatable arrangement  Proven installation method  25 year design life  Ongoing contract for delivery 41

  43. Slide 43: Well design - lower completion

    Kraken field development Well design - lower completion  Conventional horizontal well design  EnQuest track record of well delivery  No 6 Well demonstrated and proved drilling feasibility 42

  44. Slide 44: Hydraulic Submersible Pumps principle of operation

    Kraken field development Hydraulic Submersible Pumps principle of operation  Proven design  Track record of operating  11 year run life  Repeatable arrangement  Operating experience with similar crude  Robust in operation  Full testing programme undertaken – dedicated test loop  Contract awa

  45. Slide 45: Development organisation in place

    Kraken field development Development organisation in place Head of Major Projects Richard Hall Kraken Development Manager Alasdair MacInnes Commercial/ Project HSEQ Subsurface Facilities Engineering Drilling Contracts Services Commercial HSEQ Subsurface Facilities Project Projects Senior Drilling Ma

  46. Slide 46: Financials

    Financials Jonathan Swinney Chief Financial Officer

  47. Slide 47: Kraken economics: 60% EnQuest working interest

    Kraken economics 60% EnQuest working interest  Gross production of 137 MMboe, net 82 MMboe  Net capex to first oil is c.$1.4bn; gross capex to first oil c.$1.8bn  Net capex for the project of c.$2.2bn for 60% WI and including carry of c.$320m  Gross capex for the project approximately $3.2bn  2

  48. Slide 48: Main gross assumptions, as per FDP

    Kraken development Main gross assumptions, as per FDP Kraken South Kraken Central Kraken North Kraken Area total year oil prod water prod gas prod oil prod water prod gas prod oil prod water prod gas prod year oil prod water prod gas prod (stb/d) (b/d) (MMscf/d) (stb/d) (b/d) (MMscf/d) (stb/d) (b/d)

  49. Slide 49: Kraken economics: 60% EnQuest working interest

    Kraken economics 60% EnQuest working interest  Total opex over 25 year life of c$2.8bn excluding FPSO leasing  Equates to c.$20 per bbl over the life of the field, c.$5 per bbl at plateau production  Including FPSO leasing opex c$30 per bbl  FDP case, anticipated net IRR, in the high teens – ove

  50. Slide 50: EnQuest corporate funding and finance outlook

    EnQuest corporate funding and finance outlook  EnQuest has entered into a new lending facility  Committed 6 year $1.2bn facility underwritten by BNP Paribas and Scotiabank with accordion feature of a further $500m available with banks’ consent  Full availability dependent on overall reserves; acc

  51. Slide 51: Summary

    ZKRAKEN Summary Amjad Bseisu CEO

  52. Slide 52: Kraken summary

    Kraken summary  First new field development  A proven field with large volumes in place and upside potential  Regulatory approvals and major contracts in place  Robust full cycle economics and long field life  Using established technology  Leveraging EnQuest’s core competencies

  53. Slide 53: Delivering sustainable growth

    Delivering sustainable growth Successfully implementing our strategy Exploiting our existing reserves Dons, Thistle/Deveron, Heather/Broom, Alba Making selective acquisitions Commercialising & developing discoveries Greater Kittiwake Area, Didon/Zarat Alma/Galia Converting contingent resources into

  54. Slide 54: Q&A

    Q&A 53

  55. Slide 55: The EnQuest Team

    The EnQuest Team Biographies Amjad Bseisu, Chief Executive Amjad holds a BSc Honours degree in Mechanical Engineering and an MSc and D.ENG degree in Aeronautical Engineering. From 1984 to 1998, Amjad worked for the Atlantic Richfield Company (ARCO), eventually becoming president of ARCO Petroleum Ve

  56. Slide 56: The EnQuest Team

    The EnQuest Team Biographies Richard Hall, Head of Major Projects Richard Hall graduated with a BSc in Chemical Engineering and spent the first 10 years of his career gaining experience with Operating oil companies (Amoco, Hess and Murphy Petroleum) in offshore field operations, engineering, project

  57. Slide 57: 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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