Enquest Plc · LSE:ENQ
Enquest — Enquest Plc Ord — FY2022 Earnings Presentation
37 slides from Enquest's earnings presentation, Apr 5, 2023
Slide 1: 2022 Full Year Results
Page EnQuest 2022 Full Year Results
Slide 2: Introduction
5 April 2023 Page 2 Introduction Amjad Bseisu Chief Executive Officer
Slide 3: Track record of strategic delivery
5 April 2023 Page 3 Track record of strategic delivery Production1 (Kboed) 2018 39 Deliver Delivering on 21% execution 2022 47 EnQuest net debt 2 ($million) 2018 1,774 2.5x Strengthening De-lever balance sheet 60% 2022 717 0.7x 2P/2C Reserves1 (MMboe) Reserves and Grow resources 2018 356 64% growth
Slide 4: An enhanced business model
5 April 2023 Page 4 An enhanced business model Electrification CO2 storage Green hydrogen UPSTREAM INFRASTRUCTURE & NEW ENERGY DECOMMISSIONING Responsibly optimising production, leveraging existing infrastructure and delivering energy security and decarbonisation
Slide 5: Track record of asset life extension
5 April 2023 Page 5 Track record of asset life extension Asset life extension Successful reserves replacement Dons > 10 years (MMboe) 450 1.6x RRR Thistle c.10 years 350 GKA c.10 years 250 190 PM8/Seligi 150 19 years 81 Magnus 50 > 10 years Net 2P (2009) Reserves Production Net 2P (2022) -50 additio
Slide 6: Upstream: core capabilities drive value
5 April 2023 Page 6 Upstream: core capabilities drive value Demonstrated cost management Operational excellence Magnus unit operating costs1 Continuous focus on safety LTIF2 ($/Boe) 2018 0.43 2015 60 57% 2022 0.57 2022 UKCS average: 1.27 2018-22 26 PM8 / Seligi unit operating costs1 Top quartile pro
Slide 7: Significant opportunity set
5 April 2023 Page 7 Significant opportunity set - Multi-year low-cost - Infill and western area drilling well programmes - EOR potential - c.33 MMboe 2C - c.35 MMboe 2C resources resources Magnus Kraken Maximising value from existing operating Kraken - Multi-year well - Multi-year low cost well asse
Slide 8: Demonstrating decommissioning capability
5 April 2023 Page 8 Demonstrating decommissioning capability Decommissioning cost breakdown Largest multi-asset well P&A campaign in NNS - 24 wells plugged and abandoned on budget in 2022 - 13 wells at Heather, 11 wells at Thistle 16% Exemplary project delivery - Repeatability of recent project mana
Slide 9: Recognised for decommissioning excellence
5 April 2023 Page 9 Recognised for decommissioning excellence OEUK award for Excellence in Decommissioning - Northern Producer off-station project was fastest floating asset removal in North Sea - Minimised post-CoP opex - Facilitated reduction in diesel usage and CO2 emissions Received three awards
Slide 10: Repurposing SVT into a new energy hub
5 April 2023 Page 10 Repurposing SVT into a new energy hub 1,000 Acre Brownfield Industrial COMAH Site Pipeline Connections to Offshore Storage Sites and Mainland UK Shetland has Five Decades of Energy Industry Experience 10GW+ Onshore & Offshore Wind Potential Multiple CO2 Storage Sites Accessible
Slide 11: Infrastructure and New Energy: Key Focus Areas
5 April 2023 Page 11 Infrastructure and New Energy: Key Focus Areas EnQuest management of emissions1 Carbon capture and storage - Import CO2 from stranded emitters and leverage existing MT CO2e infrastructure, pipeline and reservoirs to store up to 10 mtpa CO2 - Applied for two CCS licences in UK’s
Slide 12: Performance review
5 April 2023 Page 12 Performance review Salman Malik Chief Financial Officer
Slide 13: Record revenue and free cash flow drives deleveraging
5 April 2023 Page 13 Record revenue and free cash flow drives deleveraging Revenue1 Unit opex Cash generated from Free cash flow2 operations c.$1,839 million c.$23/Boe c.$1,026 million c.$519 million 39% 11% 36% 31% Cash capital Cash decommissioning FCF/Boe3 EnQuest net debt4 expenditures expenditur
Slide 14: Maintaining focus on core business delivery
5 April 2023 Page 14 Maintaining focus on core business delivery 2022 2022 % Difference Guidance Actual 44.0 - 51.0 Focus on operational excellence and delivery of Production 47.3 kboed On target kboed low-cost well programmes Operating Expenditure c.$430m $396m 9% Cost focus and favourable foreign
Slide 15: Lower debt with extended maturities
5 April 2023 Page 15 Lower debt with extended maturities EnQuest net debt ($ million) Debt maturity profile EnQuest net debt: 2.5 1.4 2.3 1.6 0.7 0.5 - GBP 7% retail bond stub due October 2023 Adjusted EBITDA Target - RBL amortisation completed by April 2027 2,000 - GBP 9% retail bond maturity Octob
Slide 16: EPL has changed the UK landscape
5 April 2023 Page 16 EPL has changed the UK landscape We are managing the challenges introduced by EPL… …and pursuing opportunities - Non-cash impairments and eliminated 2022 statutory profits - Incentivised investments in oil and gas and decarbonisation - Reduced capital availability under the Grou
Slide 17: Inorganic growth - track record of disciplined M&A
5 April 2023 Page 17 Inorganic growth - track record of disciplined M&A $100m c. $460m < 12 months Magnus Cash Net cash flow to Payback consideration EnQuest to end of 2022 Golden c. $250m c.14 months Highly accretive, Eagle $250m Net cash flow to Payback Cash consideration¹ EnQuest to end of 2022 q
Slide 18: Clear financial priorities focused on deleveraging
5 April 2023 Page 18 Clear financial priorities focused on deleveraging 2024 Financial Priorities H2 2022 2023 onwards 1 Reset capital structure ✓ 2 Continue to de-lever ✓ 3 Cost discipline and optimising capital programme ✓ 4 Unlock accretive M&A and growth in energy transition ✓ 5 Shareholder retu
Slide 19: A focused work programme for 2023
5 April 2023 Page 19 A focused work programme for 2023 2023 Guidance 42.0 - 46.0 Reflects focused drilling and maintenance programmes Production kboed Operating Maintaining a strong focus on costs in an inflationary Expenditure c.$425m environment Capital Expenditure c.$160m 3-well campaign at Magnu
Slide 20: Operations overview
5 April 2023 Page 20 Operations overview Richard Hall Managing Director – Global Operations and Developments
Slide 21: Innovative well programmes and strong uptime
5 April 2023 Page 21 Innovative well programmes and strong uptime Group summary – production1 up 6.4%: 47,259 - Successful well programmes at Magnus and PM8/Seligi - Improved uptime at Magnus 6% - Top quartile production efficiency at Kraken - Full year of Golden Eagle production 44,415 - Natural de
Slide 22: Kraken top quartile uptime; Magnus wells programme
5 April 2023 Page 22 Kraken top quartile uptime; Magnus wells programme Kraken Magnus 2022 2022 - Strong FPSO performance; production and water injection - Improved uptime of 66% efficiency of 93% - Simultaneous workover and drilling activities undertaken - Good subsurface and well performance offse
Slide 23: High uptime at Golden Eagle and GKA
5 April 2023 Page 23 High uptime at Golden Eagle and GKA Golden Eagle Other UK Upstream Greater Kittiwake Area | Scolty/Crathes | Alba 2022 2022 - Strong production efficiency of 95% - Strong uptime of 87% at GKA including Scolty/Crathes; planned - Lower than forecast production performance shutdown
Slide 24: PM8/Seligi well campaign drives increased production
5 April 2023 Page 24 PM8/Seligi well campaign drives increased production Malaysia PM8/Seligi | PM409 2022 - [Improved] production efficiency of 86% - Three horizontal wells brought onstream during 2022 - Four-well workover campaign completed - Award-winning three-well P&A campaign executed 2023 - P
Slide 25: A productive decommissioning campaign
5 April 2023 Page 25 A productive decommissioning campaign UK Decommissioning Heather/Broom | Thistle/Deveron | Alma/Galia | The Dons 2022 - Heather and Thistle: - P&A of 24 wells; largest multi-asset campaign in NNS - Heather ‘heavy-lift’ contracts awarded - The Dons: - Subsea infrastructure remova
Slide 26: Repurposing infrastructure
5 April 2023 Page 26 Repurposing infrastructure Sullom Voe Terminal 2022 - Delivered top-quartile operational and HSE performance - Executed several operational risk reduction projects 2023 - Right-sizing terminal facilities for expected future throughput - Developing plans to repurpose the SVT site
Slide 27: Looking forward
5 April 2023 Page 27 Looking forward Amjad Bseisu Chief Executive Officer
Slide 28: Pursuing capability-led M&A opportunities
5 April 2023 Page 28 Pursuing capability-led M&A opportunities Operating capability Advantaged tax position in the UK - Improve production efficiency - c.$2.5 billion of recognised tax losses - Lower costs and emissions Unlocking Decommissioning excellence Innovative structures to drive value value
Slide 29: Proven capabilities underpin our aspiration
5 April 2023 Page 29 Proven capabilities underpin our aspiration A B D Excellence in operating Proven capabilities to add Top tier performance Track record in sourcing & safely and extending life reserves and lower costs, across Decommissioning executing creative M&A of mature O&G assets expertise o
Slide 30: Thank you
CnQuest Thank you
Slide 31: Our proof points
5 April 2023 Page 31 Our proof points • >10 years extension in Magnus life • Protected barrels by sourcing critical Excellence in operating from acquisition Experience in repurposing spares from around the world • Proven ability to vastly improve PE; A safely and extending life of E assets, in circu
Slide 32: EnQuest at a Glance
5 April 2023 Page 32 EnQuest at a Glance UK North Sea Malaysia Upstream Magnus Undeveloped offshore licence Midstream Producing asset Decommissioning Dons Thistle/Deveron PM8/Seligi Heather/Broom 4 UK production hubs PM409 Kuala Kraken, Magnus, The Greater Kittiwake Area and Golden Eagle Sullom Voe
Slide 33: Operator of choice for maturing hydrocarbon assets
5 April 2023 Page 33 Operator of choice for maturing hydrocarbon assets Production breakdown1 Annual production CAGR of c.10% since IPO 80,000 Malaysia 6.5 kboed 14% 60,000 40,000 UK 40.8 kboed 86% 20,000 0 1 Year to date December 2022 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 34: Core capabilities: Drilling and subsea tie-backs
5 April 2023 Page 34 Core capabilities: Drilling and subsea tie-backs Oil and Gas UK Efficiency Task Force study (2015-2018) TIME – in comparison to optimum performance EnQuest Optimum performance COST – in comparison to optimum performance Between January 2015 to October 2022 Based on UK Oil and Ga
Slide 35: No material UK cash CT/SCT on operational activities
5 April 2023 Page 35 No material UK cash CT/SCT on operational activities UK Tax losses $m Tax losses at 31 December 2021 3,011.0 2022 net decrease (513.3) Tax losses at 31 December 2022 2,497.7 - 2022 decrease driven by tax losses utilised against taxable profits in the year - No material CT/SCT ex
Slide 36: Effective tax reconciliation
5 April 2023 Page 36 Effective tax reconciliation % $m Profit Before Tax 203.2 Notional UK Corporation Tax 40.0% (81.3) Energy Profits Levy (225.8) UK and overseas tax rate differences (27.7) Permanent items (45.7) Deferred tax asset recognised 127.0 Other 9.1 Tax charge 120.0% (244.4)
Slide 37: Forward-looking statements
5 April 2023 Page 37 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