Enquest Plc · LSE:ENQ
Enquest — FY2017 Earnings Presentation
37 slides from Enquest's earnings presentation, Mar 20, 2018
Slide 1: EnQuest 2017 Full Year Results
EnQuest 2017 Full Year Results
Slide 2: Amjad Bseisu, Chief Executive
Amjad Bseisu Chief Executive
Slide 3: Agenda
Agenda Overview Amjad Bseisu, CEO Financials Jonathan Swinney, CFO Operations overview: Kraken Richard Hall Head of Major Projects UK and Malaysia Bob Davenport Managing Director - North Sea Summary Amjad Bseisu, CEO
Slide 4: EnQuest performance: A transformational year
EnQuest performance A transformational year 2017 Kraken first oil delivered in Q2; full cycle gross project capital expenditure further reduced Acquisition of interests in Magnus and the Sullom Voe Oil Terminal completed in December Group production averaged 37,405 Boepd in 2017 Cash capital
Slide 5: EnQuest 2018 and beyond
EnQuest 2018 and beyond Well placed to deliver long-term sustainable growth 2018 outlook Guidance range of c.50,000 to 58,000 Boepd; Kraken gross production has averaged around 38,000 Bopd in the first two months of 2018 Unit opex expected to be c.$24/Boe, including costs associated with planned
Slide 6: EnQuest 2018 and beyond cont.
EnQuest 2018 and beyond cont. Well placed to deliver long-term sustainable growth Beyond 2018 Significant potential within the existing portfolio, particularly at Kraken, Magnus and PM8/Seligi Acquisition of the Magnus oil field and Sullom Voe Oil Terminal is aligned with the Group’s asset life
Slide 7: Jonathan Swinney, Chief Financial Officer
Jonathan Swinney Chief Financial Officer
Slide 8: Results summary
Results summary Full year to December 2017 Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US Dollars US Dollars 2017 2016 Change % Production (Boepd) 37,405 39,751 (5.9) Average realised price ($/bbl)1 52.2 63.8 (18.2) Revenue and other
Slide 9: Summary income statement
Summary income statement Year to December 2017 US Dollars 2017 2016 Business Business performance performance $ million $ million Revenue 635.2 849.6 Cost of sales (569.5) (653.5) Gross profit 65.7 196.1 Exploration and evaluation expenses - (0.1) G&A and other (expenses)/income (18.4) 41.1 Profit/(
Slide 10: Post-tax exceptional items
Post-tax exceptional items Year to December 2017 $27.3 million post-tax loss on exceptionals, primarily made up of: Post-tax impairment of oil and gas assets $107.2 million; partially offset by Excess of fair value over cost of $48.7 million 25% acquisition value $10.3 million Thistle decomm
Slide 11: Focus on cost control
Focus on cost control 2014 2015 2016 2017 2018 Actual Actual Actual Actual Outlook Cost of sales ($ million) 654.1 733.4 653.5 569.5 Unit operating cost1 ($/Boe) - Production costs 31.5 23.4 20.4 21.0 c.20.0 Incl. Alma/Galia workovers c.1.5 - Tariff and transportation costs 10.6 6.3 4.2 4.6 c.4.0 -
Slide 12: Reducing cash capital expenditure
Reducing cash capital expenditure Year to December 2017 $m 429 252 113 69 50 34 8 3 9 9 Kraken NNS CNS Malaysia Exploration 2016 2017 11
Slide 13: Reducing cash capital expenditure cont.
Reducing cash capital expenditure cont. Year to December 2017 $m 1,058 751 609 368 c.250 2014 2015 2016 2017 2018 Outlook 12
Slide 14: Group tax position
Group tax position No material UK cash CT/SCT on operational activities expected UK Tax Allowances $m Tax losses at 31 December 2016 2,894 2017 net additions plus RFES 262 Prior year true up (35) Tax losses at 31 December 2017 3,121 Tax allowances carried forward 110 Total tax losses and allowances
Slide 15: Net debt and cash flow
Net debt and cash flow Year to 31 December 2017 77.1 1,991.4 $m 52.0 1,900.9 367.6 1,796.5 (301.8) Opening net Net cash flow Cash capital Net financing & Non-cash Closing net debt Closing net debt debt from operations expenditure other (Excl. interest (Excl. PIK) borrowings) capitalisation & Fx 14
Slide 16: Outlook information
Outlook information 2018 outlook Production guidance between c.50,000 Boepd and 58,000 Boepd Average unit opex anticipated to be c.$24/Boe Cash capital expenditure expected to be c.$250 million G&A to be in the ‘single digit’ millions Unit depreciation charge to be c.$22/Boe Hedged c.7.5
Slide 17: CEO sleepout 2018
CEO sleepout 2018 Event website page is: https://www.actionforchildren.org.uk/how-to-help/fundraising-events/ceo-sleepout Fundraising page URL here: https://www.justgiving.com/fundraising/jonathan-swinney1 16
Slide 18: Operations overview
Operations overview Bob Davenport Richard Hall Managing Director - North Sea Head of Major Projects
Slide 19: Kraken
Kraken Richard Hall @nQuest
Slide 20: Kraken - overview
Kraken - overview Focus areas since 2017 Half Year Results were: Crew familiarisation Process control instrumentation Plant stability Performance of facilities and reservoir has been good Total gross project capex further reduced; now c.$2.3 billion, 28% lower than original sanctioned co
Slide 21: Performance
Performance 240 days since last LTI Process and water injection facilities uptime has been strong in January and February Average water injection rate for February was around 66,000 Bwpd Average gross production rate for February was around 40,000 Bopd with peaks of over 50,000 Bopd All we
Slide 22: Subsurface highlights
Subsurface highlights Good understanding of a productive reservoir Kraken outline and development well locations High quality Heimdal sands that exhibit excellent reservoir properties High confidence in extensive subsurface imaging across the field area supported by significant well data Western
Slide 23: Wells
Wells 21 wells completed and on-stream - 11 x Producers and 10 x Injectors; DC4 drilling commences Q4 2018 Total footage drilled: 218,930ft (41.5 miles) Gross Reservoir interval drilled: 57,391ft World record: Longest Optipac (alternate-path) gravel pack - 4,347ft (Jun 2017) Drilling progr
Slide 24: NNS, CNS and Malaysia
NNS, CNS and Malaysia Bob Davenport
Slide 25: Production performance
Production performance Year to 31 December 2017 Boepd1 2017 production: 37,405 Boepd 18,885 15,627 11,718 9,148 8,938 8,131 4,709 0 2 3 4 NNS CNS Malaysia Kraken 1 Net working interest. 2016 2017 2 2017 includes net production since acquisition of Magnus from 1 December 2017, averaged over the 12 mo
Slide 26: Northern North Sea
Northern North Sea Effective well and reservoir management; new drilling in 2018 2017 performance Improved H2 production following successful production enhancement activities: Resolution of water injection issues at Thistle, Heather and Dons; and Completed barrel-adding well work at Thistle
Slide 27: Central North Sea
Central North Sea Plans in progress to address 2017 production issues 2017 performance Alma/Galia ESP issues and storm-related outages impacted production; more reliable field uptime in H2 High levels of plant uptime from Greater Kittiwake Area fields Scolty/Crathes wax-related production defe
Slide 28: Malaysia
Malaysia Effective asset management; EnQuest’s first wells in 2018 2017 performance Excellent safety performance, zero LTIs Stable production: improved reliability on key rotating machinery; planned shutdown completed ahead of schedule Successful low-cost well interventions added c. 2,000 Bopd
Slide 29: Amjad Bseisu, Chief Executive
Amjad Bseisu Chief Executive
Slide 30: EnQuest 2018 and beyond
EnQuest 2018 and beyond Well placed to deliver long-term sustainable growth Guidance Production range of c.50,000 to 58,000 Boepd Unit opex c.$24/Boe Cash capital expenditure c.$250 million Increased cash flow should enable EnQuest to reduce debt Significant potential within the existing
Slide 31: Q&A: Well set for substantial growth
Well set for substantial growth Q&A Strong CAGR (c.16.5% to 2018 mid-point) Average net production (Boepd) 60000 50,000 - 58,000* 50000 40000 30000 20000 10000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 * Guidance range for 2018 is an average of between 50,000 Boepd and 58,000 Boepd 30
Slide 32: Appendices
Appendices @nQuest
Slide 33: EnQuest: 8 Hubs
EnQuest: 8 Hubs A strong platform for growth Heather/Broom Kraken Thistle/Deveron The Dons Magnus Alma/Galia Greater Kittiwake Area PM8/Seligi 32
Slide 34: Strong reserves growth in first eight years
Strong reserves growth in first eight years Reserve life c. 17 years Net 2P reserves 2010 to end of 2017 209 210 MMboe MMboe 81 (80) MMboe MMboe Net 2P reserves Production Additions to Net 2P reserves at end 2017 start 2010 2010 to 2017 reserves 2010 to end 2017 33
Slide 35: EnQuest's North Sea asset base
EnQuest’s North Sea asset base As at 31 December 2017 Licence Block(s) Name P073 21/12a Goosander P193 211/7a, 211/12a Magnus P2131 16/26a Alba P236 211/18a Thistle & Deveron P236 211/18a Don SW & Conrie P236 / P1200 211/18b & 211/13b West Don P238 21/18a, 21/19a & 21/19b Kittiwake, Grouse, Mallard,
Slide 36: Group tax position: Effective tax rate reconciliation
Group tax position Effective tax rate reconciliation ETR % $m’s Loss Before Tax (244) UK CT Rate 40 (98) PRT (1) 4 RFES 38 (93) UK and overseas tax rate differences 0 1 Permanent items (11) 26 Prior year adjustments (6) 14 Other (4) 10 Tax Credit 56 (136) Exceptional Tax Items 19 (47) 2017 Tax Charg
Slide 37: 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