Enquest Plc · LSE:ENQ
Enquest — Merger or Acquisition (January 2017)
24 slides from Enquest's merger presentation, Jan 24, 2017
Slide 1: Acquisition of Magnus Oil Field & Sullom Voe Oil Terminal
Acquisition of Magnus Oil Field & Sullom Voe Oil Terminal The ‘Right Assets’ in the ‘Right Hands’ 24 January 2017
Slide 2: Amjad Bseisu, Chief Executive
Amjad Bseisu Chief Executive
Slide 3: Agenda
Agenda Acquisition Introduction Amjad Bseisu, CEO Transaction summary Jonathan Swinney, CFO Transaction timetable Acquisition assets Neil McCulloch, COO Operations update Outlook and conclusion Amjad Bseisu, CEO 2
Slide 4: Magnus and SVT acquisition: The 'Right Assets' in the 'Right Hands'
Magnus and SVT acquisition The ‘Right Assets’ in the ‘Right Hands’ 3
Slide 5: Strategic rationale
Strategic rationale EnQuest is a life extension expert, with the right integrated technical skills, operational scale and high level of operating efficiency Well placed to extend the lives of Magnus and SVT Will provide new opportunities for the assets and benefit to the wider UKCS basin The
Slide 6: Magnus opportunity
Magnus opportunity Recognises EnQuest as an Operator of Choice for maturing North Sea assets PM8/Seligi gross production Greater Kittiwake Area gross production EnQuest assumed Shutdown for operatorship maintenance May October 2014 & Nov 2016 Thistle gross production Heather net production 16,000 5,
Slide 7: 'Cashless' and financially 'riskless'
Highlights: Acquisition of 25% of Magnus oil field ‘Cashless’ and financially ‘riskless’ Operatorship and acquisition of an initial 25% interest in Magnus oil field and 3% of Sullom Voe terminal Base consideration $85 million, subject to working capital and other adjustments 2P reserves of 63.
Slide 8: Jonathan Swinney, Chief Financial Officer
Jonathan Swinney Chief Financial Officer
Slide 9: Transaction highlights
Transaction highlights Acquisition of 25% of Magnus and 3% of SVT Base consideration of $85m, subject to working capital and other adjustments Consideration deferred and reimbursed from positive cumulative cash flows BP to pay for EnQuest’s share of transition costs BP will provide a guarant
Slide 10: Supplementary details
Supplementary details Effective economic date is 1 January 2017 EnQuest to also acquire 29% of BP’s existing interest in Northern Leg Gas Pipeline and the Ninian Pipeline System, when exercising its option for the remaining 75% of Magnus EnQuest has taken on limited decommissioning liability i
Slide 11: Indicative timeline for initial 25% transaction
Indicative timeline for initial 25% transaction During 2017: Transition; regulatory approvals and safety cases Novation of contracts By end of 2017: EnQuest to become SVT Operator and Licence Operator EnQuest owns 25% of Magnus Completion of staff transfer to EnQuest 10
Slide 12: The Kraken FPSO - Neil McCulloch, Chief Operating Officer
The Kraken FPSO Now in the North Sea, at the yard in Rotterdam Neil McCulloch Chief Operating Officer
Slide 13: Transaction assets overlaid on EnQuest's existing nearby assets
Transaction assets overlaid on EnQuest’s existing nearby assets. EnQuest’s northern North Sea assets 12
Slide 14: Magnus overview
Magnus overview Mature, single-owner asset with significant remaining potential Facilities The Magnus platform is located in Block 211/12A and is the most northerly installation in the UKCS Closest neighbours are Northern Producer (~12 mi) and Thistle (~19 mi) Magnus started operations in 1983
Slide 15: Magnus operating cost and efficiency
Magnus operating cost and efficiency Focus and economies of scale 2015 EnQuest has developed a focused operating philosophy EnQuest has safely reduced costs from $42/bbl in 2014 to $23/bbls in the first half of 2016 Over the same period EnQuest has achieved top quartile Operating Efficiency
Slide 16: Magnus subsurface opportunity
Magnus subsurface opportunity Unlock the potential by getting the asset in the right hands Magnus Opportunity Underinvested production opportunities Quick optimisation gains likely Improvements identified for water alternating gass (‘WAG’) scheme – enhanced reservoir management and gas supply
Slide 17: SVT overview
SVT overview A strategic infrastructure hub SVT was commissioned in 1978 and receives East of Shetland (EoS) oil via two pipelines: Brent Pipeline System (‘BPS’) services Brent, Thistle, Northern Producer, Alwyn, TENCCA Ninian Pipeline System (‘NPS’) services Ninian, Magnus, Heather EoS oil
Slide 18: The SVT prize
The SVT prize Reduction in costs for NNS assets SVT life extension = Thistle, Don, Heather, Magnus life extension Reduced cost per barrel for EnQuest Magnus, Thistle, Dons, Heather SVT cost reduction = increased EnQuest NAV EnQuest anticipates net £10m yearly saving after two years of op
Slide 19: Operations update
Operations update 2016 Highlights Production averaged 39,751 Boepd in 2016, up 8.7% on 2015, with production in the UK North Sea up 11.3% Production at the end of the year was affected by the maintenance shutdown of the Brent Pipeline System which took longer than anticipated and severe weather
Slide 20: Kraken Development
Kraken Development Progress update Overall schedule The Kraken FPSO is on schedule and under budget, on track for delivery of first oil in Q2 2017 FPSO is in Rotterdam for inspection and certification, prior to sailing offshore to hook up the STP buoy mooring system, risers and umbilicals Hand
Slide 21: Amjad Bseisu, Chief Executive
Amjad Bseisu Chief Executive
Slide 22: 2017 Outlook
2017 Outlook EnQuest’s production in 2017 will is expected to average in the range of 45,000 Boepd to 51,000 Boepd for the full year and will be dependent on the timing of Kraken first oil EnQuest is on course to further reduce average unit opex, in 2017 in the range of $21/bbl to 25/bbl includi
Slide 23: Conclusion
Conclusion EnQuest is the natural owner of Magnus and SVT Cashless and riskless transaction Operatorship of SVT takes control of a very important asset The EnQuest operating model is well suited to Magnus and SVT EnQuest will extract incremental value and extend field life Long-term upside
Slide 24: 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, reserves and other trend information. These statements and forecasts involv