Tullow Oil Plc · LSE:TLW
Tullow Oil — H1 2019 Earnings Presentation
33 slides from Tullow Oil's earnings presentation, Jul 24, 2019
Slide 1: 2019 Half Year Results
Tullow Oil plc 201? HALF YEAR RESULTS Wednesday 24 July 2019 TULLOW is
Slide 2: Disclaimer
2019 HALF YEAR RESULTS 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
Slide 3: Summary of 2019 Progress and Performance
2019 HALF YEAR RESULTS SUMMARY OF 2019 PROGRESS AND PERFORMANCE West Africa 89-93,000 Production forecast revised but low-cost production production forecast (bopd) assets continue to provide a solid base Cash flow ~$400m Business set to deliver another year of generation underlying full year free c
Slide 4: Working Responsibly as We Grow Our Business
2019 HALF YEAR RESULTS WORKING RESPONSIBLY AS WE GROW OUR BUSINESS The focus of our growth ambitions ENVIRONMENTAL STEWARDSHIP • Avoid, reduce & mitigate GHGs • Deliver positive biodiversity impacts • Independent & robust ESIA best practices RESPONSIBLE OPERATIONS • Drive top quartile EHS performanc
Slide 5: CFO Update
Tullow Oil plc - 2019 Half Year Results CFO UPDATE LES WOOD - Chief Financial Officer TULLOW a j ]
Slide 6: Results Summary
2019 HALF YEAR RESULTS 2019 HALF YEAR RESULTS SUMMARY Underlying cash Revenue1 Adjusted EBITDAX Profit after tax2 operating costs $872 million $9.0/boe $1,623 million $103 million 1H 2018: $905 million 1H 2018: $10.9/boe 1H 2018: $1,579 million 1H 2018 : $55 million Capital investment3 Free cash flo
Slide 7: Disciplined Capital Investment in Our Business
2019 HALF YEAR RESULTS DISCIPLINED CAPITAL INVESTMENT IN OUR BUSINESS MAXIMISING GROWTH FROM FINDING PRODUCTION DISCOVERED RESOURCES NEW OIL 1H $140m $33m $40m $16m $35m $248m 2019 Ghana Non-op Kenya Uganda* Exploration 1H 2018: $145m FY $250m $100m $75m $60m $145m $570m 2019 Ghana Non-op Kenya Ugan
Slide 8: Sustainable Free Cash Flow Generation
2019 HALF YEAR RESULTS SUSTAINABLE FREE CASH FLOW GENERATION Free cash flow1 $m 700 $225m $423m $570m capex capex capex Factors impacting 2019 free cash flow: 600 Uganda $58/bbl Revised Group production forecast 500 $543m $68/bbl One-off cash inflow from Uganda $65/bbl 400 farm-down & FID $411m 300
Slide 9: Capital Allocation Framework
2019 HALF YEAR RESULTS CAPITAL ALLOCATION FRAMEWORK DEBT AND LIQUIDITY INVESTING IN OUR BUSINESS SHAREHOLDER RETURNS Balance sheet robust to Apply strict criteria to allocate Sustain financial future oil price volatility capital across the portfolio: discipline and continue business progress Driving
Slide 10: Operations Update
<. Ahi ARASH HH) Tullow Oil plc - 2019 Half Year Results OPERATIONS UPDATE Angus McCoss - Exploration & Subsurface Director TULLOW a f ]
Slide 11: Solid Production Base from African Assets
2019 HALF YEAR RESULTS SOLID PRODUCTION BASE FROM AFRICAN ASSETS Confidence in underlying production business • Assets continue to deliver strong free cash flow • 2019 production impacted by TEN completions • Revised oil production guidance of 89 – 93 kbopd • Long-term production growth from East Af
Slide 12: Ghana Production Operations
2019 HALF YEAR RESULTS GHANA PRODUCTION OPERATIONS Significant reserves & resource base • Focus on maximising and sustaining long-term production • Infill drilling programme continues with Maersk Venturer • 7 new wells onstream and meeting production expectations • EN-14P suspended; now drilling Jub
Slide 13: Continued Revival of Our Non-Operated Portfolio
2019 HALF YEAR RESULTS CONTINUED REVIVAL OF OUR NON-OPERATED PORTFOLIO Portfolio provides a platform for growth • Capex of ~$100m per year delivering ~25,000 bopd net production • Gabon exceeding expectations e.g. Simba-1 • Additional growth potential in a region Tullow knows well • Near-field explo
Slide 14: Uganda Development – Project at an Advanced Stage
2019 HALF YEAR RESULTS UGANDA DEVELOPMENT – PROJECT AT AN ADVANCED STAGE 1.7bbo 230,000 Gross 2C bopd gross resource production PROJECT UPDATE Major technical aspects completed: • FEED studies • Tilenga ESIA approval • Geophysical and Geotechnical studies along entire East Africa Pipeline (EACOP) ro
Slide 15: Project Oil Kenya – Steps to FID
2019 HALF YEAR RESULTS PROJECT OIL KENYA – STEPS TO FID PROJECT UPDATE 560 mmbo 60-80,000 Gross 2C bopd gross Significant progress made in 2019: resource production • EOPS - Trucking 2,000 bopd, first export in Q3, well performance as expected • FEED - Completed for upstream & pipeline • Land - All
Slide 16: Finding New Oil – Executing Our Exploration Programme
2019 HALF YEAR RESULTS FINDING NEW OIL – EXECUTING OUR EXPLORATION PROGRAMME 2019 2020 2021 GUYANA Currently drilling PERU Forecast 2020 drilling SURINAME CÔTE D’IVOIRE Seismic 2H 2019 COMOROS ARGENTINA New entries Drilling in 1H 2019* NAMIBIA adjacent block Firm Drilling Firm Seismic Airborne Surve
Slide 17: Guyana Programme Testing Three Play Types
2019 HALF YEAR RESULTS 2019 GUYANA PROGRAMME TESTING THREE PLAY TYPES ORINDUIK KANUKU JETHRO JOE CARAPA Drilling ongoing Drilling planned to commence August 2019 Drilling planned to commence September 2019 >100 ~$30m >100 ~$11m >200 ~$20m mmbo 1,350m net well cost mmbo 650m net well cost mmbo 70m ne
Slide 18: Conclusion
Tullow Oil plc - 2019 Half Year Results B |CONCLUSION Paul McDade - Chief Executive Officer TULLOW a is
Slide 19: Outlook for 2019
2019 HALF YEAR RESULTS OUTLOOK FOR 2019 GENERATE DISCOVER strong free cash flow oil in Guyana DELIVER RETURN solid $100m MAINTAIN production minimum cost discipline dividend PROGRESS Uganda & Kenya OPERATE COMPLETE FIDs responsibly Uganda farm-down Strong free cash flow generation provides a solid p
Slide 20: Appendix
Tullow Oil plc - 2019 Half Year Results APPENDIX TULLOW a j ]
Slide 21: Our Portfolio of Assets
2019 HALF YEAR RESULTS OUR PORTFOLIO OF ASSETS NEW VENTURES - exploration EAST AFRICA - development • Extensive acreage in Africa and South America, in Kenya well-known plays • Significant discoveries in South Lokichar basin • Multiple high-impact frontier campaigns planned • Phased development plan
Slide 22: A Balanced Self-Funding E&P Company in Action
2019 HALF YEAR RESULTS A BALANCED SELF-FUNDING E&P COMPANY IN ACTION DELEVERAGE MAXIMISING & PRODUCTION RE-INVEST GROWTH FROM BALANCE DISCOVERED SHEET RESOURCES FREE INVESTING IN CASH OUR BUSINESS CASH FLOW FLOW FROM FINDING OPERATIONS NEW OIL PORTFOLIO & FINANCIAL SHAREHOLDER MANAGEMENT RETURNS Str
Slide 23: Relentless Focus on Retaining Cost Discipline
2019 HALF YEAR RESULTS RELENTLESS FOCUS ON RETAINING COST DISCIPLINE $/bbl $m Unit Opex Net G&A 20 250 200 15 150 10 100 5 50 0 0 2015 2016 2017 2018 2019f 2015 2016 2017 2018 2019f $m Financing costs 400 Competitive industry cost base 300 • Targeting further operational efficiencies 200 • Cost cons
Slide 24: Developing Kenya's Discovered Resources
2019 HALF YEAR RESULTS DEVELOPING KENYA'S DISCOVERED RESOURCES South Lokichar development plan • Discovered resources support development via export pipeline to Lamu • Phased development approach planned • Incremental developments to follow initial Foundation Stage, utilising installed infrastructur
Slide 25: Exploration Criteria for Value Creation
2019 HALF YEAR RESULTS EXPLORATION CRITERIA FOR VALUE CREATION Targeted exploration Conventional light sweet oil COMMERCIAL SCREENING Low cost simple wells Tested at $50/bbl Low complexity operations Low cost of development HIGH MARGIN OIL Value accretive Low socio-environ. impact Onshore rifts Mana
Slide 26: Guyana Exploration Campaign Commenced
2019 HALF YEAR RESULTS GUYANA EXPLORATION CAMPAIGN COMMENCED >4BBO Gross mean un- risked resources Multiple prospects Transformational Shelf-edge acreage in up-dip of giant oil basin-wide opportunity industry hot-spot discoveries Slide 26
Slide 27: Guyana: Orinduik-Kanuku Blocks
2019 HALF YEAR RESULTS GUYANA: ORINDUIK-KANUKU BLOCKS • Multiple Cretaceous and Tertiary leads & prospects • Tullow’s acreage sits up dip of giant Liza discoveries Transformational opportunity with multiple follow-up potential Slide 27
Slide 28: Exploration Drilling Confirmed for 2020 Programme
2019 HALF YEAR RESULTS EXPLORATION DRILLING CONFIRMED FOR 2020 PROGRAMME Suriname: Trigger well with significant follow on potential MARINA 350m 1H 2020 • Goliathberg-Voltzberg North prospect water depth drilling prospect • Located on flank of Demerara High • Testing dual targets in Cretaceous turbi
Slide 29: Building New Acreage Across Exploration Portfolio
2019 HALF YEAR RESULTS BUILDING NEW ACREAGE ACROSS EXPLORATION PORTFOLIO Argentina: Successful bid-round • Entry to three offshore blocks in Malvinas West Basin • Shallow water Tertiary and Cretaceous turbidite plays • Geological studies & 2D seismic reprocessing in 2019; 3D seismic acquisition plan
Slide 30: Spotlight on Côte d'Ivoire
2019 HALF YEAR RESULTS SPOTLIGHT ON CÔTE D’IVOIRE >1.5 BBO Low-cost Using both Carried work High-value Light footprint Gross mean un-risked exploration in proven & programme; barrels & low execution across resources core West Africa innovative 60% operated breakeven 8,000 sq km oil province technolo
Slide 31: Spotlight on Comoros
2019 HALF YEAR RESULTS SPOTLIGHT ON COMOROS ~7 BBO 17 Leads 16,063 sq km 35% equity Large, operated, offshore oil play in East Africa Simple drilling and attractive fiscal terms Managed cost exposure in frontier acreage Flexible options to leverage seismic market Rapid deal-making with like-minded p
Slide 32: Data Overview
2019 HALF YEAR RESULTS 2019 DATA OVERVIEW Group average working interest production - 2019 forecast Operating data 2019 FY 2019 Forecast forecast OIL PRODUCTION (bopd) OPERATING COSTS 1 ($/boe) Ghana 64,000 Equatorial Guinea 15 Jubilee 34,000 Côte d’lvoire 17 TEN 30,000 Gabon 2 28 Ghana Jubilee prod
Slide 33: Tullow Oil plc
2019 HALF YEAR RESULTS Tullow Oil plc 9 Chiswick Park 566 Chiswick High Road London, W4 5XT Follow Tullow on: United Kingdom Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 Email: ir@tullowoil.com Web: www.tullowoil.com Slide 33