Tullow Oil Plc · LSE:TLW
Tullow Oil — FY2014 Earnings Presentation
38 slides from Tullow Oil's earnings presentation, Feb 11, 2015
Slide 1: 2014 Full Year Results
2014 Full Year Results Tullow Oil plc 11 February 2015
Slide 2: Disclaimer
2014 Full 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: Contents
2014 Full Year Results Contents Section Page Introduction 4 Finance 6 Development and Operations 14 Exploration and Appraisal 22 Conclusion 30 Appendix 32 Slide 3
Slide 4: Aidan Heavey
2014 Full Year Results TULLOW OIL PLC – 2014 FULL YEAR RESULTS AIDAN HEAVEY
Slide 5: Business reset for current market conditions
2014 Full Year Results Business reset for current market conditions • Strong production and development business • Reduced exploration budget focusing on low cost plays and long term options • Reducing costs and dividend suspension provides increased flexibility • Funded through TEN first oil • Focu
Slide 6: Ian Springett
2014 Full Year Results TULLOW OIL PLC – 2014 FULL YEAR RESULTS IAN SPRINGETT
Slide 7: Taking action to operate in a low oil price environment
2014 Full Year Results Taking action to operate in a low oil price environment Allocating capital to high-margin cash generating West Africa assets • Prioritising future production and development activities in West Africa; low break-even prices • Significant reduction to high-cost exploration and a
Slide 8: 2014 Full year results summary
2014 Full Year Results 2014 Full year results summary 2014 2013 Sales revenue $2,213m $2,647m Gross profit $1,096m $1,493m Administrative expenses ($192m) ($219m) (Loss)/profit on disposal ($482m) $30m Goodwill impairment ($133m) - Exploration costs written off 1 ($1,657m) ($871m) Impairment of prop
Slide 9: Net income 2014 v 2013
2014 Full Year Results Net income 2014 v 2013 500 250 216 186 0 248 18* -250 13 33 -500 787 -750 1,640 $m -1,000 -1,250 543 -1,500 -1,750 512 505 -2,000 133 -2,250 16 Review of three year forward investment plan and past capitalised costs in current market environment results in significant non-cash
Slide 10: 2015 Capex guidance
2014 Full Year Results 2015 Capex guidance 2015 capex of $1.9bn • Ghana: Jubilee & TEN developments - $1,300m 2015 $200m $1,700m $1,900m • Other Africa: maintaining mature production and near field drilling activities - $200m • Uganda and Kenya: Pre-development activities supporting FID - $170m 2014
Slide 11: Strong liquidity position through TEN first oil
2014 Full Year Results Strong liquidity position through TEN first oil Debt maturity profile Key metrics $m Commitment size Maturity $m 31 Dec 2014 31 Dec 2013 RBL 3,500 Oct 2019 Cash and cash equivalents 319 353 Corporate Facility 750 Apr 2017 Debt 6% Senior Notes 650 Nov 2020 RBL Facilities 1,987
Slide 12: Oil Hedging
2014 Full Year Results Oil Hedging Hedge strategy • Hedge strategy is approved by the Board and reviewed quarterly • Hedges are executed rateably on a three year forward rolling basis • Hedge by purchasing a mix of Dated Brent options (puts, collars, 3-way collars) Current Portfolio • Approximately
Slide 13: Outlook remains strong during period of low oil price
2014 Full Year Results Outlook remains strong during period of low oil price High margin production Stable Jubilee performance, with further upside delivers significant cash flow TEN production due on-stream mid-2016 ramping up through year end Assets economic even West Africa assets are economic do
Slide 14: Paul McDade
2014 Full Year Results TULLOW OIL PLC – 2014 FULL YEAR RESULTS PAUL McDADE
Slide 15: Strong production and development business
2014 Full Year Results Strong production and development business Strong production and development business robust to low oil prices • Production: significant near-term production growth of high margin oil • Operating costs: low opex cost per barrel with potential for further reductions • Increment
Slide 16: Group production – significant growth potential
2014 Full Year Results Group production – significant growth potential West Africa oil production KENYA South Lokichar Basin • 2014 actual: 65,300 bopd* • Development studies underway • Single basin has potential to • FY 2015 guidance: 63-68,000 bopd produce up to 100,000 bopd gross. 120 UGANDA Lake
Slide 17: Stable low-cost portfolio of non-operated oil production
2014 Full Year Results Stable low-cost portfolio of non-operated oil production • Portfolio of 24 non operated fields across 5 countries • Low operating cost c.$15/bbl and cash break-even c.$30-40/bbl • Increased focus on efficient operations and cost reduction • Attractive capital investment opport
Slide 18: World-class Jubilee field continues to perform strongly
2014 Full Year Results World-class Jubilee field continues to perform strongly Strong 2014 production and cost performance • Jubilee exceeded production guidance at 102,000 bopd • High FPSO operating efficiency underpinned 2014 performance • Low operating cost ~$10/bbl and cash break-even c.$15-20/b
Slide 19: TEN development to deliver significant cash flow in 2016
2014 Full Year Results TEN development to deliver significant cash flow in 2016 Base case development • 300 mmboe reserves being developed – 80% oil • 24 well development - 10 wells on-stream at start up • Gross development capex of $4.9 billion • Leased FPSO, facility capacity of 80,000 bopd Signif
Slide 20: Progressing East Africa regional development
2014 Full Year Results Progressing East Africa regional development East Africa upstream developments • Good progress on development studies & resource base - Uganda and South Lokichar gross oil resources total c.2.3 billion barrels - Kenya appraisal drilling & EWT ongoing • Focused on capex reducti
Slide 21: Strong record of resource additions & commercialisation
2014 Full Year Results Strong record of resource additions & commercialisation 2P Commercial Reserves and 2C Contingent Resources Total Resource Potential as of December 31, 2014 as of December 31, 2014 South & East Africa 2P Commercial Reserves 43% 345.0 mmboe 1,254 Europe, South America & Asia 5.2
Slide 22: Angus McCoss
2014 Full Year Results TULLOW OIL PLC – 2014 FULL YEAR RESULTS ANGUS McCOSS
Slide 23: Adapting our E&A strategy to current environment
2014 Full Year Results Adapting our E&A strategy to current environment Focus on high margin oil • Extend production in core assets • Realise upside – “Big fields get Bigger” Adding Value Campaign Feedback - positive & negative during all phases of the cycle Near Field Exploration & High Appraisal M
Slide 24: Low-cost high-value E&A investment options
2014 Full Year Results Low-cost high-value E&A investment options Caribbean-Guyanas Norway Atlantic Margin Plays Atlantic Margin Plays 1. Licence activity 1. Licence activity - Prospecting & - Johan Sverdrup charge farming down fairway (APA 2014) 2. Frontier wildcatting 2. Frontier wildcatting - Spa
Slide 25: Ghana: focus on high margin oil – Big Fields get Bigger
2014 Full Year Results Ghana: focus on high margin oil – “Big Fields get Bigger” Material resource base : long-term value growth Industry experience: “Big oil fields get Bigger” • Development geoscience & engineering targeting the upside Integrating use of new technologies • Value growth through inn
Slide 26: Africa Atlantic Margin: shift to simple lower-cost plays
2014 Full Year Results Africa Atlantic Margin: shift to simple lower-cost plays Shelf edge plays: lower-cost to develop • Vast acreage positions - Mauritania to Namibia • Oil plays proven - diversity in prospect inventory Experience, lessons & know how • Keep it simple - basic plays - no complex wel
Slide 27: Caribbean-Guyanas Atlantic Margin: shift to shelf
2014 Full Year Results Caribbean-Guyanas Atlantic Margin: shift to shelf • Three major basins with proven oil systems • Shelf edge plays – lower cost to develop – Spari (non-op) drilling Q3 2015 • Seismic evaluation ongoing to high-grade prospects for future selective drilling Strong industry intere
Slide 28: Norway Atlantic Margin: cost-effective upside
2014 Full Year Results Norway Atlantic Margin: cost-effective upside Tullow Oil JV Johan Sverdrup JV Prospects in Oil Fairway Giant Oil Field Barents Sea - Frontier • Major oil finds at Wisting & Hanssen. Hassel & Bjaaland target cluster potential up to 500mmbo Norwegian Sea - Near Infrastructure •
Slide 29: Upside in Kenya: Basin testing wildcats & new play testers
2014 Full Year Results Upside in Kenya: Basin testing wildcats & new play testers Northernmost Area Central Core Area Southernmost Area • West Turkana Basin: Engomo-1 wildcat testing basin, multiple follow-up prospectivity ongoing • South Lokichar Basin Axis Play: under evaluation, exploratory drill
Slide 30: Aidan Heavey
2014 Full Year Results TULLOW OIL PLC – 2014 FULL YEAR RESULTS AIDAN HEAVEY
Slide 31: Business reset for current market conditions
2014 Full Year Results Business reset for current market conditions • Strong production and development business • Focusing exploration on low cost plays and long term options • Dividend suspension reflects prudent capital allocation in current environment • Significant liquidity through TEN first o
Slide 32: Tullow Oil plc – 2014 Full Year Results
2014 Full Year Results TULLOW OIL PLC – 2014 FULL YEAR RESULTS
Slide 33: Sources and uses of funds
2014 Full Year Results Sources and uses of funds Cash inflow $2,738m $m 2014 Net cash outflow $38m 3,000 • Operating cash flow $1,516m* (2013:$1,901m*) Sources Uses $21m • Disposals $21m (2013:$80m) $3m $389m 2,500 • Net loan draw down $1,198m (2013:$861m) $34m • Share proceeds $3m (2013:$6m) $1,198
Slide 34: Current & Planned 2015 Exploration & Appraisal Programme
2014 Full Year Results Current & Planned 2015 Exploration & Appraisal Programme Gross mean Net mean Country Block/Licence Prospect/Well Interest mmboe mmboe Spud Date WEST & NORTH AFRICA Gabon Nziembou Igongo-2 40% 4 2 2H 2015* SOUTH & EAST AFRICA 10BA Engomo (formerly Kiboko) 50% (op) 50 25 In prog
Slide 35: East Africa: Establishing a new Oil Province
2014 Full Year Results East Africa: Establishing a new Oil Province E&A campaign delivery – parallel approach South Lokichar Basin drill-out, appraisal & testing • Discovered over 600 mmbo Pmean gross resources • Twiga-2: natural flow at 3,270 bopd with no depletion • 9 out of 11 wildcat wells disco
Slide 36: Finding oil in 2014
2014 Full Year Results Finding oil in 2014 2014 E&A Commercial Technical Dry Hole • We continue to find our own oil Outcomes Discovery Discovery EAST AFRICA • Cost-effective feedstock for value creation Exploration Ewoi-1 Emong-1 Ekosowan-1 Shimela-1 • Campaign approach hedges annual variability Amo
Slide 37: Strategic E&A value options as cash becomes available
2014 Full Year Results Strategic E&A value options as cash becomes available Finding Commercial Oil: New Frontiers & Frontier Exploration Core E&A Exploration Business Higher-Risk Lower-Risk Balanced investment Development Campaigns Campaigns across E&A portfolio Drill out basins & mature East Afric
Slide 38: Tullow Oil plc
2014 Full Year Results Download the Tullow Investor Relations and Media App from the Apple and Android stores: 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.tull