Enquest Plc · LSE:ENQ
Enquest — FY2021 Earnings Presentation
33 slides from Enquest's earnings presentation, Mar 24, 2022
Slide 1: 2021 Full Year Results
Page EnQuest 2021 Full Year Results 24 March 2022
Slide 2: Introduction
24 March 2022 Page 2 Introduction Amjad Bseisu Chief Executive
Slide 3: Strong free cash flow driving debt reduction; Golden Eagle acquisition adds significant value
24 March 2022 Page 3 Strong free cash flow driving debt reduction; Golden Eagle acquisition adds significant value Production at 44,415 Boepd1,2 Successfully completed the Golden Eagle, Bressay and Bentley acquisitions Achieved top quartile LTIF of 0.213 Deliver Significant reduction in Scope 1 and
Slide 4: Emissions performance well ahead of Company and industry targets
24 March 2022 Page 4 Emissions performance well ahead of Company and industry targets Company target: 10% reduction in emissions Industry targets: UK North Sea Transition Deal over three-years1 linked to Focused reward on absolute - Scope 1 and 2 CO2 equivalent emission reduction targets2: - Scope 1
Slide 5: EnQuest: Creating value in the energy transition
24 March 2022 Page 5 EnQuest: Creating value in the energy transition Upstream - Proven capability and strong cash generation Decommissioning – A natural next phase - EnQuest’s core business – proven track record - Extensive in-house expertise aiming to deliver safe, cost- - Maximising production ef
Slide 6: EnQuest: Creating value in the energy transition cont.
24 March 2022 Page 6 EnQuest: Creating value in the energy transition cont. Infrastructure and New Energy Sullom Voe Terminal - Exploring strategic operational and financial partnerships - Minimal capital expenditure Existing brownfield 1,000 acre industrial acreage COMAH1 site - Focused on three ma
Slide 7: Performance review
24 March 2022 Page 7 Performance review Jonathan Swinney Chief Financial Officer
Slide 8: Full year 2021 financial performance
24 March 2022 Page 8 Full year 2021 financial performance Revenue1 Unit opex Cash generated from Free cash flow5 operations c.$1,320 million c.$21/Boe c.$757 million c.$397 million 54% 35% 33% 89% Cash EBITDA2 expenditures3 Net debt4 c.$743 million c.$117 million c.$1,222 million 35% 32% 4% Unless o
Slide 9: Executed a focused activity programme
24 March 2022 Page 9 Executed a focused activity programme Capex: $52 million Abex: $66 million - Production enhancement and topside maintenance programmes - Heather well P&A programme at Magnus - Thistle platform preparation, subsea integrity campaign and - Kraken tether repair hydrocarbon removal
Slide 10: Free cash flow of c.$397 million enabled Golden Eagle acquisition and debt reduction
24 March 2022 Page 10 Free cash flow of c.$397 million enabled Golden Eagle acquisition and debt reduction Net cash flow from operations up 29% Movement in net debt $m - Simplified balance sheet FCF $397 million - Repaid Sculptor capital facility early 21 1,280 674 - Repaid Magnus Vendor loan early
Slide 11: Continued debt reduction
24 March 2022 Page 11 Continued debt reduction Focused on debt reduction Net debt ($ million) - Continued early voluntary repayments Net debt: 2.5 1.4 2.3 1.6 EBITDA - End February 2022 net debt reduced to $1,090 million 2,000 - RBL drawdown at c.$330 million in March 1,774 1,800 - c.$85 million ear
Slide 12: 2022 performance and outlook: increased activity set
24 March 2022 Page 12 2022 performance and outlook: increased activity set Net production1,2 (Boepd) Production 60,000 50,408 51,000 44,415 - February YTD at 50,408 Boepd 40,000 44,000 - Full year Group guidance of 44,000 to 51,000 20,000 0 2021 February 2022 YTD 2022 Guidance Opex Operating expense
Slide 13: Operations overview
24 March 2022 Page 13 Operations overview Bob Davenport Managing Director – North Sea
Slide 14: Production
24 March 2022 Page 14 Production 2021: 44,415 Boepd1 Summary: 2020: 59,116 Boepd1 - Kraken production in line with guidance, reflecting high FPSO uptime 26,450 - Magnus production impacted by well integrity and topside issues 21,964 - Golden Eagle completion date of 22 October 2021, with 1,701 Boepd
Slide 15: Kraken in line with guidance; Magnus impacted by operational challenges
24 March 2022 Page 15 Kraken in line with guidance; Magnus impacted by operational challenges Kraken Magnus 2021 2021 - Strong FPSO performance; production efficiency of 88% and - Volumes impacted by well integrity and topside issues, an water injection efficiency of 89% unplanned third-party outage
Slide 16: Golden Eagle acquisition completed; GKA project successfully executed
24 March 2022 Page 16 Golden Eagle acquisition completed; GKA project successfully executed Golden Eagle Other UK Upstream Greater Kittiwake Area | Scolty/Crathes | Alba 2021 2021 - Acquisition completed on 22 October 2021 - GKA including Scolty/Crathes - High uptime and strong well performance from
Slide 17: PM8/Seligi riser reinstatement completed
24 March 2022 Page 17 PM8/Seligi riser reinstatement completed Malaysia PM8/Seligi | PM409 2021 - Performance in line with expectations: - Accelerated initial production recovery activities - Innovative production optimisation solutions - EnQuest project team executed work under difficult COVID-19 r
Slide 18: Demonstrating decommissioning capability
24 March 2022 Page 18 Demonstrating decommissioning capability Decommissioning Heather/Broom | Thistle/Deveron | Alma/Galia | The Dons 2021 - The Dons ceased production in March as planned - Ongoing activities at Heather/Broom: - Well abandonment programme - Engagements with potential topside remova
Slide 19: Leveraging drilling capability to deliver new production in 2022
24 March 2022 Page 19 Leveraging drilling capability to deliver new production in 2022 North Sea Malaysia Magnus PM8/Seligi - Deliver low-cost, quick-payback wells - Deliver low-cost, quick-payback wells - 3 infill wells - 4 infill wells - 2 well workovers - 4 well workovers Golden Eagle - 2 infill
Slide 20: Looking forward
24 March 2022 Page 20 Looking forward Amjad Bseisu Chief Executive
Slide 21: Upstream asset opportunity set
24 March 2022 Page 21 Upstream asset opportunity set Magnus - 2 billion Boe of in place resources; c. 50% recovered to date - Multi-year infill drilling and well workover programme planned - Low-cost, quick-payback wells - Cost per well c. $12-14 million - Track record of production-enhancing well w
Slide 22: Upstream asset opportunity set cont.
24 March 2022 Page 22 Upstream asset opportunity set cont. Kraken - 3D seismic assessment underway to optimise future drilling - Drilling opportunities including side-track and western area Bressay and Bentley - Potential hub utilising existing infrastructure - Bressay has c.115 MMbbls (net) 2C - Be
Slide 23: Upstream asset opportunity set cont.
24 March 2022 Page 23 Upstream asset opportunity set cont. Golden Eagle PM8/Seligi - Multi-year drilling programme planned - Multi-year infill drilling and well workover programme planned - Cost per well c. $10 million - 4 infill wells and 4 workovers in 2022 - 3 subsea infill wells in 2022/23, then
Slide 24: Core strengths underpin strategic delivery
24 March 2022 Page 24 Core strengths underpin strategic delivery Strategic Financial Discipline Financial Discipline Differential Capability Differential Capability Differential Capability Pillars Operational Excellence Value Enhancement Operational Excellence Operational Excellence Value Enhancemen
Slide 25: Q&A Our strategic pillars
24 March 2022 Page 25 Q&A Operational Value Excellence Enhancement Deliver Our strategic pillars De-lever Grow Differential Financial Capability Discipline
Slide 26: Operator of choice for maturing hydrocarbon assets
24 March 2022 Page 26 Operator of choice for maturing hydrocarbon assets Production breakdown1 Annual production CAGR of c.10% since IPO 80,000 Malaysia 5.0 kboed 11% 60,000 40,000 UK 39.4 kboed 89% 20,000 0 1 Year to date December 2021 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 202
Slide 27: Significant contribution to Scope 3 emission reductions
24 March 2022 Page 27 Significant contribution to Scope 3 emission reductions Contributing Comparative North Sea emissions to Scope 3 - Kraken cargoes sold directly to the shipping fuel market. (kgCO2e/Boe) 70 reductions - Key environmental benefits: 64 - avoids emissions related to refining; and 60
Slide 28: Focused on SAFE results underpinned by strong governance
24 March 2022 Page 28 Focused on SAFE results underpinned by strong governance People and communities Governance - Health, safety and wellbeing of employees top priority Focused on absolute - Robust risk management framework reductions; management - LTIF of 0.211 – top quartile performance - Board C
Slide 29: Material reserves and resources
24 March 2022 Page 29 Material reserves and resources 2P reserves of 194 MMboe 2C resources of 402 Mmboe MMboe MMboe 400 140 131 120 273 160 115 300 100 80 86 200 194 60 40 100 33 34 81 20 3 0 0 Net 2P reserves start Net reserve additions Production Net 2P reserves end Kraken Magnus Bressay Bentley
Slide 30: No material UK cash CT/SCT on operational activities
24 March 2022 Page 30 No material UK cash CT/SCT on operational activities UK Tax losses $m Tax losses at 31 December 2020 3,183.9 2021 net decrease (181.5) Prior year true up 8.6 Tax losses at 31 December 2021 3,011.0 - 2021 decrease driven by tax losses utilised against taxable profits in the year
Slide 31: Effective tax reconciliation
24 March 2022 Page 31 Effective tax reconciliation % $m Profit Before Tax 352.4 Notional UK Corporation Tax 40.0% (141.0) RFES 113.6 UK and overseas tax rate differences (48.4) Permanent items 1.4 Deferred tax asset recognised 104.5 Other (5.6) Tax Credit 7.0% 24.5
Slide 32: Prior Year Restatement – Deferred Tax
24 March 2022 Page 32 Prior Year Restatement – Deferred Tax 31 Dec 2020 Deferred Tax Asset previously reported 503,946 Additional Tax Losses recognised for period to 31 December 2020 155,857 Deferred Tax Asset as restated 659,803 - Restatement arises due to a difference in the calculation of the def
Slide 33: Forward-looking statements
24 March 2022 Page 33 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 statement