Tullow Oil Plc · LSE:TLW
Tullow Oil — H1 2012 Earnings Presentation
40 slides from Tullow Oil's earnings presentation, Jul 25, 2012
Slide 1: 2012 half-yearly results
2012 half-yearly results Tullow Oil plc 25 July 2012
Slide 2: Disclaimer
2012 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
2012 half-yearly results Contents Section Page Introduction 4 Finance 6 Development and Operations 12 Exploration and Appraisal 21 Conclusion 33 Appendix 35 Slide 3
Slide 4: Introduction – Aidan Heavey
2012 half-yearly results Tullow Oil plc – 2012 half-yearly results Introduction – Aidan Heavey
Slide 5: Repeatable strategy delivering success
2012 half-yearly results Repeatable strategy delivering success • Record results & strong balance sheet • High impact exploration success continues • Increasing production profile • Strong pipeline of exploration & development opportunities • Proven team focused on growth Slide 5
Slide 6: Finance – Ian Springett
2012 half-yearly results Tullow Oil plc – 2012 half-yearly results Finance – Ian Springett
Slide 7: 2012 half-yearly results summary
2012 half-yearly results 2012 half-yearly results summary 1H 2012 1H 2011 Change Sales revenue $1,167m $1,062m +10% Operating profit $834m $608m +37% Net profit $567m $347m +63% Basic earnings per share 60.3c 36.9c +63% Dividend per share 4.0p 4.0p 0% Capital investment1 $926m $648m +43% Cash genera
Slide 8: Net income 1H 2012 v 1H 2011
2012 half-yearly results Net income 1H 2012 v 1H 2011 $m 1,250 1,000 750 397 701 24 23 49 500 105 60 2 125* 567 250 347 0 Net Income Price Volume Costs Gain on Exploration Net Finance Tax IAS 39 Net Income 1H 2011 (*non-cash) disposal Write-offs 1H 2012 Net Income up 63%; significant gain on Uganda
Slide 9: Sources and uses of funds
2012 half-yearly results Sources and uses of funds $m 1H 2012 Net cash inflow $129m Cash inflow $3,574m Sources $15m Uses • Operating cash flow $862m* (1H 2011:$777m*) $165m • Disposals $2,568m (1H 2011:$0m) $204m • Share proceeds $15m (1H 2011:$8m) $898m Cash outflow $3,336m $2,568m • Net loan repa
Slide 10: 2012 capital expenditure
2012 half-yearly results 2012 capital expenditure $2 billion capex for full year 2012 2012 $735m $300m $965m $2,000m • Ghana: Jubilee and Phase 1A & TEN developments • Uganda: Lake Albert drilling • Other Africa: Maintaining mature production & high impact exploration 2011 $445m $591m $396m $1,432m
Slide 11: Strong Balance Sheet
2012 half-yearly results Strong Balance Sheet • Record results and successful financing strategy have transformed the balance sheet • Strong, well funded balance sheet - Debt facilities $4 billion; net debt $695 million - Increasing operational cash flow • Significant value growth opportunities - Pr
Slide 12: Development and Operations – Paul McDade
2012 half-yearly results Tullow Oil plc – 2012 half-yearly results Development and Operations – Paul McDade
Slide 13: Strong production performance in 1H 2012
2012 half-yearly results Strong production performance in 1H 2012 Group working interest production Current production Oil production North Sea Future production boepd (x000) Africa Ghana Asia Europe 20 Other licence areas Gas production 16 12 8 Pakistan Bangladesh kboepd 4 boepd (x000) boepd (x000)
Slide 14: Jubilee field – benefitting from a fast track phased approach
2012 half-yearly results Jubilee field – benefitting from a fast track phased approach Fast tracking delivered significant benefits • First oil delivered 40 months after discovery • Captured contract market window • Early revenue - c.$4bn gross delivered to date • FPSO performance has exceeded expec
Slide 15: Jubilee Phase 1A and near field development options
2012 half-yearly results Jubilee Phase 1A and near field development options Phase 1A development underway • PoD approved by GoG in early 2012 • 5 producers; 3 water injectors; subsea expansion • Estimated $1.1bn budget; 18 month project • Four wells successfully drilled on prognosis • First oil on
Slide 16: Successful appraisal underpins TEN development
2012 half-yearly results Successful appraisal underpins TEN development TEN appraisal program underpins PoD mmboe P90 P50 P10 • Successful appraisal of Enyenra, Ntomme and Tweneboa TEN Contingent Resources * 200 360 600 • Interference testing confirms good reservoir Oil/Gas Ratio (%) 80:20 70:30 60:
Slide 17: Uganda – Lake Albert Development Plan
2012 half-yearly results Uganda – Lake Albert Development Plan Lake Albert Development Concept • Development concept work completed • Base case contingent and prospective resource of 1.8bn bls with upside potential of >2bn bls • Expected production potential in excess of 200 kbopd • Upstream Capex o
Slide 18: East Africa Regional Development Opportunities
2012 half-yearly results East Africa Regional Development Opportunities Kenya/Ethiopia EA1A Rift Basins Crude Export 20-30kbd Refinery Pipeline Lamu Oil c.$ 1.5 – 2.5 bn Crude Export Export Pipeline & Sale EA1 EA2 Product Pipeline Uganda Export Pipeline (~ 200+kbd) Mombasa Oil EA2 Refinery upgrade K
Slide 19: Significant development investment activity in 2012
2012 half-yearly results Significant development investment activity in 2012 Current development activities 2012 D&O capex spend • Gabon - Significant ongoing development activity, involved in ~60 wells Rest of - Net production back to over 14,000 bopd Portfolio Ghana • Equatorial Guinea $435m $480m
Slide 20: Significant progress across the development portfolio
2012 half-yearly results Significant progress across the development portfolio • TEN project moving towards sanction • Jubilee productivity issue resolved and Phase 1A first oil second half 2012 • Uganda deal completed and development plan presented to Government • Conceptual development and pipelin
Slide 21: Exploration & Appraisal – Angus McCoss
2012 half-yearly results Tullow Oil plc – 2012 half-yearly results Exploration & Appraisal – Angus McCoss
Slide 22: Exploration campaigns gather momentum over next 12 months
2012 half-yearly results Exploration campaigns gather momentum over next 12 months North Atlantic Exploration Studies & Business Development Central Atlantic Central Atlantic Major Exploration Margin East African Campaign Launched Rift Basins Guyanas East African Transform Margin Transform Margin Eq
Slide 23: Exploration enterprise – value creation & monetisation
2012 half-yearly results Exploration enterprise – value creation & monetisation Development & Operations Exploration Core Campaigns Developments Business Discovery & follow-up Appraisal Development Basin Entry •East African Rifts: •Ghana drill-out & appraisal Kenya, Ethiopia •Uganda drill-out & appr
Slide 24: East Africa exploration campaigns in 2012
2012 half-yearly results East Africa exploration campaigns in 2012 Onshore Rift Basins • Core Campaigns in Kenya and Ethiopia − Multiple rift basins analogous to Lake Albert Rift Basin − Ngamia-1 finds 1.1 kilometre gross oil bearing section − Over 100 metres net oil pay in Upper Lokhone Sands − Geo
Slide 25: Kenya – Ethiopia Rift Basins exploration core campaign
2012 half-yearly results Kenya – Ethiopia Rift Basins exploration core campaign • Three scales of exploration ongoing simultaneously in multiple basins: 1. Appraisal & testing of Ngamia-1 2. Drill-out of South Lokichar Basin 3. High-grading multiple basins through wildcat drilling − Paipai-1 (Q4 201
Slide 26: Kenya: South Lokichar Rift Basin – Ngamia follow up
2012 half-yearly results Kenya: South Lokichar Rift Basin – Ngamia follow up • South Lokichar Rift Basin potential similar to Lake Albert • Two de-risked rift basin sub-plays being explored − Rift bounding fault “string of pearls” – Ngamia, Kongoni, Twiga, Swala etc − analogous to Kingfisher − Rift
Slide 27: South America: E&A follow-up in core campaign
2012 half-yearly results South America: E&A follow-up in core campaign French Guiana exploration & appraisal • Zaedyus-2 appraisal well drilling up-dip & deepening to test exploration objectives • Wildcat exploration well to test material Priodontes turbidite fan prospect • 3D seismic acquisition on
Slide 28: Mauritania: new Central Atlantic Margin core campaign
2012 half-yearly results Mauritania: new Central Atlantic Margin core campaign Significant play diversity in Mauritania acreage 80 Prospects • 80 prospect inventory, with risk spread through core play diversity, within Central Atlantic petroleum systems Mature Play − Stratigraphic Traps: similar
Slide 29: West Africa Transform Margin core campaign
2012 half-yearly results West Africa Transform Margin core campaign Campaign finds oil but ‘hub class’ needed • Sierra Leone & Liberia: - Oil & gas condensate system proven - Thick sands only have oil shows (breached traps) - Oil bearing reservoirs have low net-to-gross - Satellite class discoveries
Slide 30: Exploration enterprise – value creation and monetisation
2012 half-yearly results Exploration enterprise – value creation and monetisation Development & Operations Exploration Core Campaigns Developments Appraisal Business Discovery & follow-up •Ghana drill-out & appraisal Development Basin Entry •East African Rifts: •Uganda drill-out & appraisal Kenya, E
Slide 31: E&A in support of key developments
2012 half-yearly results E&A in support of key developments Accelerated appraisal & West of Nile exploration in Uganda • Accelerated appraisal targets material un-drilled fault blocks & field limits - Success in Ngege, Jobi & Ngiri • West of Nile drilling targets a prospect cascade: Omuka (spud Nove
Slide 32: Exploration campaigns gather momentum over next 12 months
2012 half-yearly results Exploration campaigns gather momentum over next 12 months North Atlantic Exploration Studies & Business Development Central Atlantic Central Atlantic Major Exploration Margin East African Campaign Launched Rift Basins Guyanas East African Transform Margin Transform Margin Eq
Slide 33: Conclusion – Aidan Heavey
2012 half-yearly results Tullow Oil plc – 2012 half-yearly results Conclusion – Aidan Heavey
Slide 34: Repeatable strategy delivering success
2012 half-yearly results Repeatable strategy delivering success • Record results & strong balance sheet • High impact exploration success continues • Increasing production profile • Strong pipeline of exploration & development opportunities • Proven team focused on growth Slide 34
Slide 35: Appendix
2012 half-yearly results Tullow Oil plc – 2012 half-yearly results Appendix
Slide 36: Creating shareholder value
2012 half-yearly results Creating shareholder value • High-impact exploration portfolio Consistent and repeatable strategy • Ghana; Jubilee production, • Sustainable long term value growth progressing T.E.N project • Balance exploration, major projects & funding • Uganda: farm-down completed ; new p
Slide 37: 77% global E&A success ratio year to date
2012 half-yearly results 77% global E&A success ratio year to date MAURITANIA UK – 1 well PAKISTAN -1 well BANGLADESH Seismic Key 739 sq km 739 sq km 3,780 sq km Ketch-10 Jabbi-1 620 sq km Acquisition 3D 3D PSTM 3D PSDM 3D PSDM Airborne Surveys Processing/ GABON – 3 wells SIERRA LEONE – 2 wells
Slide 38: 12 month Exploration and Appraisal programme
2012 half-yearly results 12 month Exploration and Appraisal programme mmboe Country Block Prospect Interest Mean Gross Upside * Spud Date WEST & NORTH AFRICA Côte d’Ivoire CI-103 Calao-1 45% (op) 150 400 2013 Gabon Kiarsseny 2 Exploration Wells 52.78% (op) 15 / 60 30 /150 Q1 2013 Okure-1 (prev Twen.
Slide 39: 12 month Exploration and Appraisal programme (cont.)
2012 half-yearly results 12 month Exploration and Appraisal programme (cont.) mmboe Country Block Prospect Interest Mean Gross Upside* Spud Date EUROPE, SOUTH AMERICA & ASIA K8 K8-FC-W (308) 9.95% 3 5 In progress The Netherlands E11 Vincent-1 60% (op) 20 40 Q1 2013 E15c Cornelis E15c-1 48% (op) 30 6
Slide 40: Tullow Oil plc
2012 half-yearly results Tullow Oil plc 9 Chiswick Park 566 Chiswick High Road London, W4 5XT United Kingdom Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 Follow Tullow on: Email: chris.perry@tullowoil.com