Enquest Plc · LSE:ENQ
Enquest — Enquest Plc Ord — H1 2022 Earnings Presentation
25 slides from Enquest's earnings presentation, Sep 6, 2022
Slide 1: EnQuest 2022 Half Year Results
Page EnQuest 2022 Half Year Results 6 September 2022
Slide 2: Introduction
6 September 2022 Page 2 Introduction Amjad Bseisu Chief Executive
Slide 3: Strong free cash flow driving debt reduction; provides platform to grow
6 September 2022 Page 3 Strong free cash flow driving debt reduction; provides platform to grow Achieved LTIF of 0.01 in first half of 2022 Production at 49,726 Boepd2 Successfully executing well programmes at Magnus and PM8/Seligi Deliver On track to meet guidance Strong free cash flow of c.$332 mi
Slide 4: Portfolio opportunity set aligned to capabilities
6 September 2022 Page 4 Portfolio opportunity set aligned to capabilities Maximising value from existing assets Magnus Kraken GEAD PM8/Seligi - Multi-year low-cost well - Infill and western area - Multi-year well - Multi-year low cost well programmes drilling programmes programmes - Gas opportunity
Slide 5: Providing creative solutions through the energy transition
6 September 2022 Page 5 Providing creative solutions through the energy transition Electrification CO2 storage Green Hydrogen UPSTREAM INFRASTRUCTURE & NEW ENERGY DECOMMISSIONING Responsibly optimising production, leveraging existing infrastructure and delivering energy security and decarbonisation
Slide 6: Infrastructure and New Energy: three key focus areas
6 September 2022 Page 6 Infrastructure and New Energy: three key focus areas EnQuest management of emissions1 MT CO2e Carbon capture and storage Scope 1 and 2 emissions reductions to date - Import CO2 from stranded emitters and leverage existing infrastructure, pipeline and reservoirs to store up to
Slide 7: Financial review
6 September 2022 Page 7 Financial review Salman Malik Chief Financial Officer
Slide 8: Half year 2022 financial performance
6 September 2022 Page 8 Half year 2022 financial performance Revenue1 Unit opex Cash generated from Free cash flow2 operations c.$944 million c.$23/Boe c.$523 million c.$332 million 82% 18% 82% 130% Cash capital Cash decommissioning FCF/Boe3 Net debt4 expenditures expenditures c.$55 million c.$28 mi
Slide 9: Debt reduction driven by free cash flow of c.$332 million
6 September 2022 Page 9 Debt reduction driven by free cash flow of c.$332 million Movement in net debt Ongoing accelerated reduction of RBL facility $m $m 415 FCF $332 million 1.6 115 90 1,222 (523) End Dec 2021 End Jun 2022 End Aug 2022 Extended maturity of Sterling retail bond $m 257 136 163 0.9 5
Slide 10: Strengthening financial position; increased exposure to oil high prices
6 September 2022 Page 10 Strengthening financial position; increased exposure to oil high prices Current hedging programme Net debt ($ million) Net debt: Adjusted 2.5 2.3 1.4 1.6 0.9 0.5 - c.3.4 MMbbls hedged for 2H22; average floor price of c.$60/bbl EBITDA and ceiling price of c.$79/bbl 2,000 Targ
Slide 11: Full year 2022 outlook unchanged; 2H22 impacted by phasing
6 September 2022 Page 11 Full year 2022 outlook unchanged; 2H22 impacted by phasing Net production1 Cash capital expenditure (Boepd) ($m) 60,000 200 165 110 160 51,000 120 49,726 50,000 80 55 46,187 40 44,000 0 40,000 June 2022 YTD Expected 2H 2022 2022 June 2021 YTD June 2022 YTD 2022 Guidance Guid
Slide 12: Positioned to create shareholder value
6 September 2022 Page 12 Positioned to create shareholder value TODAY Financial priorities Improving Balance Sheet 1 Continue to de-lever Strong operating capability 2 Reset capital structure Material tax loss position 3 Capital discipline and optimising capital programme Maximising value from 4 Unl
Slide 13: Operations overview
6 September 2022 Page 13 Operations overview Richard Hall Managing Director – Global Operations and Developments
Slide 14: Golden Eagle, high uptime and project delivery increased production
6 September 2022 Page 14 Golden Eagle, high uptime and project delivery increased production Group summary – production up 7.7%: - Kraken production towards top end of 49,726 guidance, reflecting top quartile FPSO 23,690 uptime 46,187 - Magnus production reflects a seawater lift 19,527 pump and well
Slide 15: Kraken ahead of guidance; Magnus focused on well work and maintenance
6 September 2022 Page 15 Kraken ahead of guidance; Magnus focused on well work and maintenance Kraken Magnus 1H 2022 1H 2022 - Strong FPSO performance - Production efficiency of 73% - Production and water injection efficiency of 92% and 95%, - Well intervention programme ongoing respectively - Two w
Slide 16: Golden Eagle approaching payback; GKA project successfully executed
6 September 2022 Page 16 Golden Eagle approaching payback; GKA project successfully executed Golden Eagle Other UK Upstream Greater Kittiwake Area | Scolty/Crathes | Alba 1H 2022 1H 2022 - Production efficiency of 95% - GKA including Scolty/Crathes - Planned 4 day shutdown completed in 2 days - Prod
Slide 17: Successful project and well execution at PM8/Seligi
6 September 2022 Page 17 Successful project and well execution at PM8/Seligi Malaysia PM8/Seligi | PM409 1H 2022 - Production efficiency of 93% - Riser pipeline replaced ahead of schedule - Planned workover programme completed in July on budget and ahead of schedule; production in line with expectat
Slide 18: Repurposing and decommissioning infrastructure
6 September 2022 Page 18 Repurposing and decommissioning infrastructure Repurposing SVT | Upstream assets 1H 2022 - Developing plans to repurpose the SVT site to progress decarbonisation opportunities at scale - Leverage existing infrastructure, including deep water jetties, pipelines and offshore f
Slide 19: Looking forward
6 September 2022 Page 19 Looking forward Amjad Bseisu Chief Executive
Slide 20: A strategy to deliver value
6 September 2022 Page 20 A strategy to deliver value BUSINESS STRATEGY GROW DELIVER DE-LEVER Progress organic opportunities Maximise value from Progress towards 0.5x net debt to existing business EBITDA target Leverage M&A competitive advantages (e.g. tax losses) Operational excellence Further stren
Slide 21: Q&A Our strategic pillars
6 September 2022 Page 21 Q&A Operational Value Excellence Enhancement Deliver Our strategic pillars De-lever Grow Differential Financial Capability Discipline
Slide 22: Operator of choice for maturing hydrocarbon assets
6 September 2022 Page 22 Operator of choice for maturing hydrocarbon assets Production breakdown1 Annual production CAGR of c.10% since IPO 80,000 Malaysia 6.3 kboed 13% 60,000 40,000 UK 43.4 kboed 87% 20,000 0 1 Year to date June 2022 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 23: Significant tax losses available to offset CT/SCT
6 September 2022 Page 23 Significant tax losses available to offset CT/SCT UK Tax losses $m Tax losses at 31 December 2021 3,011.0 2022 net decrease (383.3) Tax losses at 30 June 2022 2,627.7 - 2022 decrease driven by tax losses utilised against taxable profits in the period - No material CT/SCT cas
Slide 24: Effective tax reconciliation
6 September 2022 Page 24 Effective tax reconciliation % $m Profit Before Tax 182.6 Notional UK Corporation Tax 40.0% (73.0) UK and overseas tax rate differences (4.1) Permanent items (19.4) Deferred tax asset recognised1 107.9 Other 9.6 Tax Credit 7.0% 21.0 1 Non-cash recognition of undiscounted def
Slide 25: Forward-looking statements
6 September 2022 Page 25 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, reserves and other trend information. These statem