Tullow Oil Plc · LSE:TLW
Tullow Oil — H1 2013 Earnings Presentation
47 slides from Tullow Oil's earnings presentation, Jul 31, 2013
Slide 1: 2013 Half-Yearly Results
2013 HALF-YEARLY RESULTS Tullow Oil plc 31 July 2013
Slide 2: Disclaimer
2013 HALF-YEARLY 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 reasonabl
Slide 3: Contents
2013 HALF-YEARLY RESULTS Contents Section Page Introduction 4 Finance 6 Development and Operations 13 Exploration and Appraisal 21 Conclusion 40 Appendix 42 Slide 3
Slide 4: Introduction – Aidan Heavey
2013 HALF-YEARLY RESULTS Tullow Oil plc – 2013 Half-Yearly Results Introduction – Aidan Heavey
Slide 5: Running business for the long-term
2013 HALF-YEARLY RESULTS Running business for the long-term • Financial strength and funding of the business has never been stronger • Core oil producing assets continue to generate significant cash flow • Successfully adding commercial reserves and contingent resources • Selectively developing / mo
Slide 6: Finance – Ian Springett
2013 HALF-YEARLY RESULTS Tullow Oil plc – 2013 Half-yearly results Finance – Ian Springett
Slide 7: 2013 half-yearly results summary
2013 HALF-YEARLY RESULTS 2013 half-yearly results summary 1H 2013 1H 2012 Change Sales revenue $1,347m $1,167m +15% Gross profit $764m $679m +13% Administrative Expenses ($89m) ($95m) Profit on disposal - $702m Exploration costs written off ($176m) ($451m) Operating profit $500m $834m -40% Profit af
Slide 8: Net income 1H 2013 v 1H 2012
2013 HALF-YEARLY RESULTS Net income 1H 2013 v 1H 2012 $m 1,000 275 750 72 199 11 702 500 23 567 89 9 250 0 313 0 Net Income Price Volume Operating Other costs Exploration Gain on Net Finance Tax IAS 39 Net Income 1H 2012 costs Write-offs disposal 1H 2013 Gross profit up 13%; increased volumes produc
Slide 9: Sources and uses of funds
2013 HALF-YEARLY RESULTS Sources and uses of funds Cash inflow $1,961m 1H 2013 Net cash inflow $227m • Operating cash flow $1,057m* (1H 2012:$862m*) $m Sources Uses $3m • Disposals nil (1H 2012:$2,568m) 2,000 • Net loan draw down $901m (1H 2012 repayment :$2,050m) $177m 1,500 $901m • Share proceeds
Slide 10: 2013 capital expenditure
2013 HALF-YEARLY RESULTS 2013 capital expenditure $2.0 billion capex for full year 2013 2013 $900m $250m $850m $2,000m • Ghana: Jubilee Phase 1A & TEN developments • Uganda: Appraisal activities • Kenya: Exploration drilling • Other Africa: Maintaining mature production 2012 $756m $338m $776m $1,870
Slide 11: Tullow's exploration-led value growth strategy
2013 HALF-YEARLY RESULTS Tullow’s exploration-led value growth strategy Additional cash flow from new production Exploration and Monetisation ~$4bn debt facilities High Margin Appraisal Options & Production Selective $1bn + p.a. Portfolio Development Cash flow Management Fully Funded Costs & Dividen
Slide 12: Strong Balance Sheet
2013 HALF-YEARLY RESULTS Strong Balance Sheet • Improved 2013 revenues, operating cash flow and income (exc. 1H12 disposal profits) • Strong, well funded balance sheet - Debt facilities $4 billion; net debt $1.7 billion; un-utilised debt capacity $1.7 billion - Increasing operational cash flow and p
Slide 13: Development and Operations – Paul McDade
2013 HALF-YEARLY RESULTS Tullow Oil plc – 2013 Half-yearly results Development and Operations – Paul McDade
Slide 14: High quality African focused oil production
2013 HALF-YEARLY RESULTS High quality African focused oil production Group Working Interest Production Ghana – Jubilee operated Current production production Future production 100 Other licence areas Europe 40 90 Asia 35 80 70 Ghana 30 Rest of Africa kboepd 60 25 kboepd 50 20 40 15 30 10 20 5 10 0 0
Slide 15: West Africa – high quality non-operated portfolio of assets
2013 HALF-YEARLY RESULTS West Africa – high quality non-operated portfolio of assets Gabon 1H 2013 Dev Capex • Portfolio of 10 fields with net production >13,000 bopd Mauritania / Congo 18% • Continuous campaign of development and appraisal activity • Currently ongoing well activities across 5 field
Slide 16: Jubilee field on track to exit year at over 120,000 bopd
2013 HALF-YEARLY RESULTS Jubilee field on track to exit year at over 120,000 bopd Current production stable • Existing wells stable and productivity stable post acid jobs • Initial Phase 1A wells onstream and performing to target • Well capacity now ~130,000 bopd • Production stable at ~110,000 bopd
Slide 17: TEN development – approval received and project underway
2013 HALF-YEARLY RESULTS TEN development – approval received and project underway Recent well results encouraging • Enyenra-6A confirms deeper OWC • Nt-04 confirms OWC and supports water injection plans • Base case reserves of initial development ~300mmboe PoD approved; contract awards in progress •
Slide 18: Early South Lokichar Basin success
2013 HALF-YEARLY RESULTS Early South Lokichar Basin success Significant early drilling success • 100% exploration success from first 3 wells in Blocks 13T/10BB • Successful testing of Ngamia-1 and Twiga South-1 - Net oil pay estimates doubled - Cumulative flow potential of over 5,000 bopd per well •
Slide 19: Moving closer to regional export pipeline
2013 HALF-YEARLY RESULTS Moving closer to regional export pipeline Ugandan appraisal underpins resources • Successful appraisal activity supports discovered resources of 1.7bn • Further seismic, drilling and testing ongoing • Development studies progressing • MOU principles agreed, final details bei
Slide 20: High quality portfolio of production and developments
2013 HALF-YEARLY RESULTS High quality portfolio of production and developments • Strong production delivery from West African production portfolio • TEN first oil in mid-2016 whilst managing exposure to development capex • Kenya/Uganda progressing towards integrated pipeline development • Significan
Slide 21: Exploration & Appraisal – Angus McCoss
2013 HALF-YEARLY RESULTS Tullow Oil plc – 2013 Half-Yearly Results Exploration & Appraisal – Angus McCoss
Slide 22: Oil exploration strategy focused on Africa & Atlantic Margins
2013 HALF-YEARLY RESULTS Oil exploration strategy focused on Africa & Atlantic Margins Norwegian North Atlantic Continental Shelf Exploration Campaign & Business Development Central Atlantic Central Atlantic Major Exploration Margin East African Campaign Launched Rift Basins Guyanas East African Tra
Slide 23: Exploration delivers volumes & value
2013 HALF-YEARLY RESULTS Exploration delivers volumes & value 700 30% Jobi-3/4/5 Low volume, High volume, Jobi East-1, high value high value Gunya-A 600 25% Leading Independents 500 Nigiri-2 Tullow Net MMboe 20% 400 IRR 15% Jobi-1, Rii-1 300 Enyenra-2A, 3A Zaedyus-1 10% Kenya 200 Majors 2013 Twenebo
Slide 24: Exploration campaigns compete & evolve to grow value
2013 HALF-YEARLY RESULTS Exploration campaigns compete & evolve to grow value 2005 Adapting to outcomes & reproducing successes 2015+ East Africa East African Rift Basins • Uganda: prolific oil basin opened Kenya • Uganda: $2.9B dilution proceeds Uganda • Kenya & Ethiopia: multiple rift basins Ethio
Slide 25: Industry-leading exploration acreage position
2013 HALF-YEARLY RESULTS Industry-leading exploration acreage position Balanced spread of E&A campaigns provide robust feedstock to sustain Tullow’s average annual addition of 200MMboe mean resources Slide 25
Slide 26: Industry-leading exploration acreage position
2013 HALF-YEARLY RESULTS Industry-leading exploration acreage position South American Atlantic Margins • 1 out of 4 French Guiana wells successful, next well to delineate Zaedyus water leg • Mid-term focus turns to Suriname operated venture & to remaining French Guiana prospectivity Central Atlantic
Slide 27: Campaign of East African Tertiary Rift Basins
2013 HALF-YEARLY RESULTS Campaign of 12 East African Tertiary Rift Basins Campaign concept proved in Lake Albert Rift Basin, Uganda Tullow Oil’s 12 East African Tertiary Rift Basins Follow-on Prospect Uganda Ethiopia Follow-on Prospect Lake Albert Chew Bahir Omo West Omo Kasamene-1 Follow-on P
Slide 28: Technology steps up from FTG to AEI
2013 HALF-YEARLY RESULTS Technology steps up from FTG to AEI (Ambient Enhanced Inversion) Ambient enhancement Active methods Well Logs Seismic Surveys Electro-Magnetic Laboratory Borehole Seismic Earthquakes Gravity High Sensitivity Low Sensitivity High Resolution Low Resolution Local Measurement Re
Slide 29: Kenya – Ethiopia: World class petroleum province potential
2013 HALF-YEARLY RESULTS Kenya – Ethiopia: World class petroleum province potential Three scales of exploration in multiple basins 1. Ngamia-1 & Twiga South-1 appraisal testing doubles pay (25 sq km) • 10kbopd total combined flow rate potential from these 2 wells 2. South Lokichar Basin drill-out :
Slide 30: Kenya: South Lokichar Basin exceeds threshold for development
2013 HALF-YEARLY RESULTS Kenya: South Lokichar Basin exceeds threshold for development Ekales (Drilling) Agete North Agete South Rift Bounding Fault Play: Twiga S-1 Etom 75m net pay “String of pearls” Amosing (down flank) 5kbopd potential Ekosowan like Kingfisher in Lake Albert Ngamia-1 Ewoi 200
Slide 31: Kenya: Early success in South Lokichar Rift Basin de-risks basins
2013 HALF-YEARLY RESULTS Kenya: Early success in South Lokichar Rift Basin de-risks basins Drilling Drilling Drilling Drilling Drilling Drilling Drilling Drilling Drilling 2014+ 2013+ 2014+ 2015+ 2014+ 2012+ 2013+ 2014+ 2014+ Slide 31
Slide 32: Industry-leading exploration acreage position
2013 HALF-YEARLY RESULTS Industry-leading exploration acreage position Balanced spread of E&A campaigns provide robust feedstock to sustain Tullow’s average annual addition of 200MMboe mean resources Slide 32
Slide 33: Conclusions – Aidan Heavey
2013 HALF-YEARLY RESULTS Tullow Oil plc – 2013 Half-Yearly Results Conclusions – Aidan Heavey
Slide 34: Running business for the long-term
2013 HALF-YEARLY RESULTS Running business for the long-term • Financial strength and funding of the business has never been stronger • Core oil producing assets continue to generate significant cash flow • Successfully replacing commercial reserves and contingent resources • Selectively developing /
Slide 35: Appendix
2013 HALF-YEARLY RESULTS Tullow Oil plc – 2013 Half Yearly Results Appendix
Slide 36: Converting Resources - portfolio management and development
2013 HALF-YEARLY RESULTS Converting Resources - portfolio management and development Year End Group Reserves and Resources 2012 YE Reserves and Resources 1,203 mmboe 2,000 • Commercial Reserves - 388 mmboe 1,800 1,600 - TEN transferred to Reserves - 112 mmbo 1,400 • Contingent Resources - 815 mmboe
Slide 37: Mozambique offers exciting opportunities with play diversity
2013 HALF-YEARLY RESULTS Mozambique offers exciting opportunities with play diversity • Oil seeps to west & oil shows to north in recent Ironclad-1 • Rifted transform margin with broad play diversity – Large structural highs – Carbonate potential – Onlapping stratigraphic traps – 2 possible kitchens
Slide 38: Mauritania core campaign drilling this year
2013 HALF-YEARLY RESULTS Mauritania core campaign drilling this year Significant play diversity in Mauritania acreage • 80 prospects with risk spread through multiple plays • Light oil & gas-condensate already proven in the basin • Testing new & deeper plays for bigger & better reservoirs Four ind
Slide 39: West Africa Transform Margin campaign extended to Guinea
2013 HALF-YEARLY RESULTS West Africa Transform Margin campaign extended to Guinea Guinea • Acquired significant operated acreage position; 1.5 times existing WATM acreage • Play diversity offsets exploration risks; large structural-stratigraphic traps & carbonate leads • Sylli and Eos prospects comp
Slide 40: Guyanas: extensive Jubilee play potential plus upside plays
2013 HALF-YEARLY RESULTS Guyanas: extensive “Jubilee play” potential plus upside plays • Jubilee play campaign continues across the Atlantic; Multiple Ghana-scaled prospective fan systems • New 3D seismic surveys reveal exciting drilling targets in Suriname and French Guiana Slide 40
Slide 41: Focus on Suriname operated exploration for Jubilee play
2013 HALF-YEARLY RESULTS Focus on Suriname operated exploration for Jubilee play • Jubilee play campaign continues across the Atlantic, after Tullow’s successful Zaedyus-1 basin opener • Multiple Ghana-scaled prospective fan systems overlying Ivorian-style Albian fault block plays • New 3D seismic s
Slide 42: North Atlantic exploration shifts into exciting drilling phase
2013 HALF-YEARLY RESULTS North Atlantic exploration shifts into exciting drilling phase Greenland - highly prospective acreage Norway - relatively unexplored vs UK • 1,800 sq km 3D seismic acquired • Spring Energy: experienced exploration team • Evaluation of licence to continue to 2015 • Very attra
Slide 43: 63% global E&A success ratio year to date
2013 HALF-YEARLY RESULTS 63% global E&A success ratio year to date Seismic Key Acquisition NORWAY - 2 wells Processing/ Carlsberg-1 Mjosa-1 CONGO (BRAZZAVILLE) - 4 wells Re-processing 2,600 sq km 3D PSTM Mboundi - 2101A † Multi client survey MAURITANIA 600 km 2D PSDM Mboundi - 2005 ST 1,000
Slide 44: 12 month Exploration and Appraisal programme (Jul 2013)
2013 HALF-YEARLY RESULTS 12 month Exploration and Appraisal programme (Jul 2013) mmboe Country Block Prospect/Well Interest Gross Mean Net Mean Spud Date WEST & NORTH AFRICA Côte d’Ivoire CI-103 Paon-2A 30% (op)1 287 86 Q4 2013 This continuation of the early stage Côte d’Ivoire campaign is directly
Slide 45: 12 month Exploration and Appraisal programme (Jul 2013)
2013 HALF-YEARLY RESULTS 12 month Exploration and Appraisal programme (Jul 2013) mmboe Country Block Prospect/Well Interest Gross Mean Net Mean Spud Date SOUTH & EAST AFRICA Tultule 25 13 Aug 2013 Ethiopia South Omo Shimela 50% (op) 88 44 Q4 2013 Kesami 23 12 H1 2014 Ekales 53 27 July 2013 Agete (Tw
Slide 46: 12 month Exploration and Appraisal programme (Jul 2013)
2013 HALF-YEARLY RESULTS 12 month Exploration and Appraisal programme (Jul 2013) mmboe Country Block Prospect/Well Interest Gross Mean Net Mean Spud Date EUROPE, SOUTH AMERICA & ASIA The Netherlands E11 Vincent 60% (op) 32 19 Q3 2013 PL 537 Wisting Central 20% 138 28 Q3 2013 PL 537 Wisting Main 20%
Slide 47: Tullow Oil plc
2013 HALF-YEARLY 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: chris.perry@tullowoil.com