Enquest Plc · LSE:ENQ

Enquest — H1 2016 Earnings Presentation

46 slides from Enquest's earnings presentation, Sep 8, 2016

  1. Slide 1: EnQuest 2016 Half Year Results

    EnQuest 2016 Half Year Results

  2. Slide 2: Amjad Bseisu, Chief Executive

    Amjad Bseisu Chief Executive 1

  3. Slide 3: Agenda

    Agenda  Overview Amjad Bseisu, CEO  Financials Jonathan Swinney, CFO  UK North Sea Neil McCulloch, President North Sea  Kraken Richard Hall, Head of Major Projects  Malaysia Amjad Bseisu, CEO & summary 2

  4. Slide 4: 2016 EnQuest Half Year Results: Delivering on priorities amid low oil prices

    2016 EnQuest Half Year Results Delivering on priorities amid continuing low oil prices  Strong production growth, 42,520 Boepd, up 43% on H1 2015  Unit opex down to $23/bbl, ahead of target  Kraken on track for first oil in H1 2017, gross capex down c.$150m  Continuing focus on strengthening the

  5. Slide 5: 2016 Half Year Results

    2016 Half Year Results Record production levels and structural cost cutting Production  UK up 22% before inclusion of new Alma production: Malaysia up 20% 42,520 Boepd  Following workovers, 5-31 August Alma averaged 18,785 Boepd gross  2016 guidance range now 42,000 to 44,000 Boepd, 18% up on 201

  6. Slide 6: Jonathan Swinney, Chief Financial Officer

    Jonathan Swinney Chief Financial Officer 5

  7. Slide 7: Results summary

    Results summary Half year to 30 June Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US dollars US dollars H1 2016 H1 2015 Change % Export production (Boepd) 42,520 29,665 43 Average realised price per barrel ($)1 62 87 (29) Revenue ($ m

  8. Slide 8: Summary income statement

    Summary income statement Half year to 30 June H1 2016 H1 2015 US dollars Business Business performance performance $m’s $m’s Revenue 391.3 444.0 Cost of sales (273.6) (335.6) Gross profit 117.7 108.4 Exploration and evaluation expenses (0.0) (0.0) General and administration expenses (5.4) (5.2) Othe

  9. Slide 9: Focus on cost efficiency

    Focus on cost efficiency Unit operating costs on course for full year average in low $20s/bbl post Kraken Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US dollars H1 2016 H1 2015 Change % Cost of sales ($ million) 273.6 335.6 (19) Unit

  10. Slide 10: $262 million cash capital expenditure

    $262 million cash capital expenditure Outflow in H1 2016: Non-Kraken capex is small scale US$m 172 29 22 21 7 1 1 9 Kraken Alma/Galia Thistle/Deveron Heather/Broom GKA Dons Scolty/Crathes Malaysia Other 9

  11. Slide 11: Cash flow

    Cash flow Half year to end June 2016 US$m Funding facilities: $1.7bn credit facility, £155m retail bond, $650m high yield bond (1,548) 183 (262) (1,681) (54) Cash & equivalents less Net cash flow Capex Cash & equivalents less borrowings per Financing & other from operations borrowings per 01.01.16 b

  12. Slide 12: Group taxation position

    Group taxation position No material UK cash CT/SCT on operational activities expected UK Tax Allowances $m’s Recognised at 31 December 2015 2,536 2016 net additions plus RFES 198 Tax losses at 30 June 2016 2,734 Tax allowances carried forward 332 Total UK tax allowances 3,066 Tax losses and allowanc

  13. Slide 13: Outlook

    Outlook 2016  Unit opex expected to be around the lower end of the previous guidance range of $25/bbl to $27/bbl  2016 full year cash capex reduces to a range of $670 m to $720m  EBITDA will further benefit from hedging, with 5.5 million barrels in place at the start of H2 2016, at an average of

  14. Slide 14: Neil McCulloch, President, North Sea

    Neil McCulloch President, North Sea 13

  15. Slide 15: H1 production results to 30 June 2016

    H1 production results to 30 June 2016 42,520 Net production (Boepd) H1 2015 H1 2016 10000 40000 8,966 9000 35000 8,152 8000 7,777 7,690 29,665 30000 7000 6,601 6,419 6,433 6,114 25000 6000 5000 20000 4000 3,615 3,738 15000 3000 2,915 10000 2000 1,236 1,281 1,249 5000 1000 0 0 Thistle/Deveron The Don

  16. Slide 16: Strategic priorities in a low oil price environment

    Strategic priorities in a low oil price environment  Kraken and Scolty/Crathes on track, under budget  Production performance on track Delivery  Alma/Galia delivering to potential  Upper quartile drilling performance  Production efficiency remains strong Streamlining  Significant opex reductio

  17. Slide 17: Alma/Galia

    Alma/Galia Good uptime from EnQuest Producer FPSO Following interventions, gross production averaged 18,785 Boepd between 5 - 31 August H1 2016  All six Alma/Galia production wells onstream early Q2 2016  Extended ramp up period followed by strong August production H2 2016  Focus on further incre

  18. Slide 18: Greater Kittiwake Area: 'Right assets' in the 'right hands'

    Greater Kittiwake Area ‘Right assets’ in the ‘right hands’ H1 2016  Production up 28%, improved production efficiency  Gadwall performing well after sidetrack operations  Drilled Eagle discovery well H2 2016  Focus on delivering Scolty/Crathes  Maximising production  Further evaluation of Eagl

  19. Slide 19: Scolty/Crathes

    Scolty/Crathes Ahead of schedule, under budget  First oil now around 2016 year end  Wells successfully drilled - good subsurface outcomes  Hook up and commissioning ongoing  Extends GKA field life to late 2020s 18

  20. Slide 20: Thistle/Deveron

    Thistle/Deveron High production efficiency, investment returned from 2015 drilling programme H1 2016  Production up 17% on H1 2015  Drilling programme complete H2 2016  Late life extension process changeover and optimisation Awaiting John Telford feedback and additional text 19 19

  21. Slide 21: Dons, Ythan & Conrie

    Dons, Ythan & Conrie H1 2016 Dons/Conrie  Wells performing better than expected Ythan  Production above expectations  Completed chemical treatment to enhance production  No further wells required in short term H2 2016  Project underway to improve production efficiency 2020

  22. Slide 22: Heather/Broom

    Heather/Broom Excellent operational uptime, delivering positive margins H1 2016  Excellent production efficiency – high 90%s YTD  Heather production up 69% from H1 2015 H2 2016  Routine maintenance/integrity work  Well intervention integrity scopes 21

  23. Slide 23: 2016 H1 - Well Delivery Performance

    2016 H1 - Well Delivery Performance Sustained excellent operational efficiency  Top quartile cost performance 2014 -2016 Rig Operations Time Breakdown  Kraken – Drill Centre 1 completed two months ahead of schedule  Stena Spey – top quartile performance throughout 2016  First subsea Electrical S

  24. Slide 24: Institutionalising Low Cost Base

    Institutionalising Low Cost Base Supply Chain Cost Efficiency Road Map 2015 2016 2017 2018 H1 H2 H1 H2 H1 H2 H1 H2 2014 Operations Excellence $42/bbl Consolidate Procurement Open Book Contracts 2015 $30/bbl Supplier Forum 'Should be' Cost Modeling H1 2016 $23/bbl Alternate Sourcing Integrated Logist

  25. Slide 25: Summary

    Summary  Significant progress on delivering growth projects  Strong results for H1 2016, having streamlined cost base  Capital discipline strong on existing sanctioned projects and future programme curtailed to Kraken drill-out and maintenance 24

  26. Slide 26: Richard Hall, Head of Major Projects

    Richard Hall Head of Major Projects 25

  27. Slide 27: Kraken Development

    Kraken Development Progress update Overall schedule  On schedule for sailaway in H2 2016 and first oil in H1 2017 Subsea  The entire 2016 subsea/SURF programme has been successfully completed Drilling  Making excellent progress; DC1 is complete, 4 producers and 4 injectors (one from DC2) are avai

  28. Slide 28: Kraken Development

    Kraken Development FPSO at the Keppel yard in Singapore, nearing mechanical completion  The FPSO is nearing mechanical completion, the focus is now on pre-commissioning and commissioning activities.  Three of the four engines are now mechanically complete. The fourth engine will soon be complete t

  29. Slide 29: Malaysia

    Malaysia 28

  30. Slide 30: Malaysia: 20% increase in production over H1 2015

    Malaysia: 20% increase in production over H1 2015 PM8/Seligi: material production gains from efficiency and low cost well work ▪ EnQuest assumed operatorship October 2014 ▪ Average daily Malaysian production increased over 20% and production efficiency improved from 82% to 92% by focusing on:  Faci

  31. Slide 31: Malaysia

    Malaysia Strong performance from efficiency, investing in medium-term growth PM8/Seligi 2016  PM8/Seligi production of 8,152 Boepd in H1 2016 was up 5% on H1 2015  Performance is supported by strong production efficiency and the ongoing idle well restoration programme – and includes the impact of

  32. Slide 32: Summary

    Summary 31

  33. Slide 33: Institutionalising a new structurally lowered cost base

    Institutionalising a new structurally lowered cost base  EnQuest’s business model is right for this environment  Low cost capability  High operating efficiency  Excellent execution  EnQuest has reinvented itself  A now permanently lower cost base  New innovative ways of working  Continuing p

  34. Slide 34: Delivering strong compound annual growth rates

    Delivering strong compound annual growth rates 31% increase in 2015, c.18% in 2016, then further substantial increases beyond Average net production (Boepd) 50000 Q&A 50,000+ 44,000 45000 2,000 40000 42,000 36,567 35000 30000 25000 20000 15000 10000 5000 0 2009 2010 2011 2012 2013 2014 2015 2016 Pos

  35. Slide 35: EnQuest's North Sea asset base

    EnQuest’s North Sea asset base As at 30th June 2016 Licence Block(s) Name P073 21/12a Goosander P213 16/26a Alba P236 211/18a & b Thistle, Deveron, Don SW, Conrie, West Don P238 21/19a & 21/19b Grouse, Mallard, Gadwall P242 / P902 2/4a & 2/5a Broom & Heather P351 21/18a Kittiwake P475 21/19s Thistle

  36. Slide 36: Proven track record adding value in maturing basins

    Proven track record adding value in maturing basins PM8/Seligi gross production GKA production from January 2014 until 30 June 2016 40,000 EnQuest assumed 30,000 operatorship October 2014 20,000 10,000 0 Thistle gross production Heather net production 35

  37. Slide 37: Greater Kittiwake Area opportunity

    Greater Kittiwake Area opportunity 50 km tie-back radius & competitor infrastructure 36

  38. Slide 38: PM8/Seligi

    PM8/Seligi A producing hub with capacity for future growth PM8 fields  5 producing fields: Lawang, Langat, Serudon, Yong, North Raya  4 unmanned platforms – supported from Seligi  10 producing, 25 idle oil well strings  All production flows to Seligi, lift gas from Seligi Seligi field  2 manned

  39. Slide 39: PM8/Seligi: Multiple avenues for growth

    PM8/Seligi Multiple avenues for growth Serudon near Pantai field development cluster development PM8 gas development Peta & Peta-Kiri cluster development East Raya cluster development Seligi field  Idle well restoration  Workovers  Infill drilling  Waterflooding 38

  40. Slide 40: All wells drilled to date in line with expectations

    All wells drilled to date in line with expectations Well B2 Dataset: BBK2012 – PGS Extended Far JJB Pseudo Density Geosphere canvas at TD 10/8/15 Depth 39

  41. Slide 41: Installation of STP buoy and Drill Centre 1 risers

    Installation of Submerged Turret Production (STP) buoy and Drill Centre 1 (‘DC1’) risers Buoy/turret lift from transportation vessel STP buoy/turret pre-ballasting DC1 riser and buoyancy module installation 40

  42. Slide 42: Revised Kraken infrastructure

    Revised Kraken infrastructure Three drill centres 41 41

  43. Slide 43: Thistle, Conrie and The Dons infrastructure

    Thistle, Conrie and The Dons infrastructure 42

  44. Slide 44: Heather / Broom infrastructure

    Heather / Broom infrastructure 4343

  45. Slide 45: Greater Kittiwake Area (GKA)

    Greater Kittiwake Area (GKA) A key hub  Platform installed 1990 (CRINE)  16 well slots (rig removed)  Oil capacity 36,000 Boepd (pumps 27,500)  Water injection 50,000 Boepd  Oil via Forties Pipeline System  Gas to Fulmar 44

  46. Slide 46: 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

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