Slide 1: Senegal presentation released by Cairn Energy
12 May 2015 Senegal presentation released by Cairn Energy The Operator of the Senegal JV, Cairn Energy PLC has released the attached presentation from the Capital Markets Day in London on 11 May 2015. FAR looks forward to our AGM in Melbourne this Friday and follow up presentations in Perth, Sydney
Slide 2: Capital Markets Day: Senegal - Building on Success
Capital Markets Day Senegal - Building on Success May 2015 Delivering value from discovery and development
Slide 3: Disclaimer
Disclaimer These materials contain forward-looking statements regarding Cairn, our corporate plans, future financial condition, future results of operations, future business plans and strategies. All such forward-looking statements are based on our management's assumptions and beliefs in the light o
Slide 4: Fire Safety and Evacuation
Capital Markets Day, May 2015 3 Fire Safety and Evacuation Rothschild operates a phased evacuation system. The following announcements SKY will sound via the public PAVILLION address system: Stand by message – stay on your floor and await further instruction Evacuation message – exit the buildin
Slide 5: Strategy
Strategy Simon Thomson Delivering value from discovery and development
Slide 6: Strategy
Capital Markets Day, May 2015 5 Strategy Balanced Mature basin exploration and development Business Model Frontier and emerging basin exploration Core development assets through to free cash flow Fully Funded Value-add exploration and appraisal World class new basin play Up to six wells
Slide 7: Consistent Strategic Delivery for more than 20 Years
Capital Markets Day, May 2015 6 Strategy Consistent Strategic Delivery for more than 20 Years Experienced and successful exploration, appraisal and development operator Operations conducted onshore and offshore, shallow and deepwater, benign and harsh weather environments Focus on highest HSE
Slide 8: Agenda
Capital Markets Day, May 2015 7 Agenda Strategy CEO Simon Thomson Exploration Exploration Director - Richard Heaton Senegal Regional Director, Africa - Rob Jones Discoveries and Appraisal Senegal Exploration Manager - Martin Dashwood Development Senegal Exploitation Manager - Chris Burnside Operatio
Slide 9: Exploration
Exploration Richard Heaton Delivering value from discovery and development
Slide 10: Creating Growth Through Exploration
Capital Markets Day, May 2015 9 Exploration Creating Growth Through Exploration Significant acreage positions with technical and commercial value Range of opportunities with appropriate spectrum of risk Material discoveries and prospectivity in North Atlantic margin plays Mature and emerging bas
Slide 11: Atlantic Margin – Geological Focus
Capital Markets Day, May 2015 10 Exploration Atlantic Margin – Geological Focus illustrative geological reconstruction Countries of the world ~175 million years ago Senegal one licence, three blocks Morocco Mauritania Republic of Ireland Greenland Recent Activity Two operated wells offsh
Slide 12: Regional Setting
Capital Markets Day, May 2015 11 Exploration Regional Setting Exploration strategy focused on multiple play types formed from break-up of supercontinent Pangaea Provides underexplored mature hydrocarbon basins of Foum Draa Mesozoic and Tertiary age with common geologic Juby Morocco Maritime them
Slide 13: Senegal Focus of Interest
Capital Markets Day, May 2015 12 Exploration Senegal Focus of Interest Previous offshore wells Tiof Banda demonstrated oil on the shelf Tortue-1 Kosmos Chinguetti Tevet (Esso 1968-1972, Rufisque dome) Gas Discovery 2015 Mauritania Faucon Total Acreage Deep Sea Drilling Project wells Shell 1977 ~
Slide 14: Basin Opening Discoveries
Capital Markets Day, May 2015 13 Exploration Basin Opening Discoveries Proven hydrocarbon system in new Atlantic Margin basin Forward programme submitted to Government of Senegal last week: Appraisal and exploration drilling - 3 firm wells with potentially 3 or more wells Coring and testing
Slide 15: Senegal
Senegal Rob Jones Delivering value from discovery and development
Slide 16: Doing Business in Senegal
Capital Markets Day, May 2015 15 Senegal Doing Business in Senegal Third year of investment with strong relationships at all levels of Government Government Senegal is a stable democracy with an important regional role President Macky Sall (a geologist and geophysicist) came to power 2012 for 7
Slide 17: Operational Infrastructure Dakar
Capital Markets Day, May 2015 16 Senegal Operational Infrastructure Dakar Excellent transport hub International, national airports Dakar Senegal US Embassy Heliport One of the biggest ports in West Africa Key Government offices PETROSEN Senegal Parliament Palais Presidential Minist
Slide 18: Joint Venture Partnership
Capital Markets Day, May 2015 17 Senegal Joint Venture Partnership Strong and active international Joint Venture (JV): Cairn (Operator) 40%, ConocoPhillips 35%, FAR 15% and PETROSEN 10% Focus on highest HSE and security standards ConocoPhillips has extensive depth of knowledge and expertise
Slide 19: Joint Venture Partnership and Governance
Capital Markets Day, May 2015 18 Senegal Joint Venture Partnership and Governance Senegal Evaluation Programme submitted to Government of Senegal Legal system: Petroleum Code allied to PSC; The code establishes investment framework, PSC establishes terms PSC has robust economics with appropr
Slide 20: 2015 Operations
Capital Markets Day, May 2015 19 Senegal 2015 Operations Operations to commence Q4 2015 Total Acreage ~7,490km2 2015 work programme: Three wells (two appraisal, one exploration) and 3D seismic Rig selected Environmental and Social Impact Assessment FAN-1 Discovery Well completed 3D on Ru
Slide 21: From Exploration to Exploitation
Capital Markets Day, May 2015 20 Senegal From Exploration to Exploitation Exploration Evaluation (Appraisal) Exploitation (Development) Assume operatorship mid SNE discovery / appraisal 2013 FAN discovery / appraisal Integrated developments Commence operations Apr 2014 New discoveries
Slide 22: Evaluation Programme Objectives
Capital Markets Day, May 2015 21 Senegal Evaluation Programme Objectives Evaluation Gather sufficient data to produce an “Integrated Exploitation Plan” Determine the geological and petrophysical characteristics of the fields Estimated size and delineation of the field(s) Establish reservoir
Slide 23: Substantial Prospectivity across all Three Blocks
Capital Markets Day, May 2015 22 Senegal Vision Substantial Prospectivity across all Three Blocks FAN-1 and SNE-1 Offer Commercial Potential, Especially In Combination With Near Field Tie-Backs FAN-1 and SNE-1 Discoveries Currently 5 prospects and 18 leads Red seabed lines define contract area Provi
Slide 24: Discovery and Appraisal
Discovery and Appraisal Martin Dashwood Delivering value from discovery and development
Slide 25: The Opportunity
Capital Markets Day, 11 May 2015 24 Discovery and Appraisal The Opportunity Pre Drill Active petroleum system with world class source rocks proven by FAN-1 and multiple plays Deepwater North Fan Prospect FAN-1 and SNE-1 discoveries in Albian aged sandstones Initial belief: 7-8 play types Shelf
Slide 26: Discovery Wells Drilling Schematic
Capital Markets Day, 11 May 2015 25 Discovery and Appraisal Discovery Wells Drilling Schematic Two wells targeted multiple plays FAN – multiple deepwater stacked ‘fans’ of mid-upper Cretaceous and stratigraphic traps SNE – Cenomanian – Albian clastics over Aptian Carbonates – predominately str
Slide 27: SNE-1 Well
Capital Markets Day, 11 May 2015 26 Discovery and Appraisal SNE-1 Well Potentially the world’s largest offshore oil discovery in 2014 Water depth 1,100 metres (m) Oil bearing column ~100m Net oil bearing reservoir 30m (plus 19m gas) Oil recoverable: Gross Contingent Resources NW SE 1C – 15
Slide 28: SNE-1 Key Reservoir and Hydrocarbon Data
Capital Markets Day, 11 May 2015 27 Discovery and Appraisal SNE-1 Key Reservoir and Hydrocarbon Data SNE-1 Shelf Well SNE-1 MDT Pressure Profile Gas Gross 107m Net Pay 19m GAS 0.12 psi/ft Average Porosity (PHIE) 25% Average Hydrocarbon Saturation 70% Oil ~100m Oil Gross 96m 0.31 psi/ft
Slide 29: SNE Field Forward Programme
Capital Markets Day, 11 May 2015 28 Discovery and Appraisal SNE Field Forward Programme SNE-1 Appraisal Objectives Drilling of optimum appraisal wells Coring and testing of the reservoir: A Determine reservoir continuity and SNE-1 connectivity Discovery Well Establish productivity of the res
Slide 30: Appraisal Location Considerations
29 Discoveries and Appraisal Appraisal Location Considerations Issues to consider and rank in choosing appraisal well locations SNE-1 Discovery Reservoir compartmentalisation Depth conversion Seismic attribute HIGH Hydrocarbon contacts Reservoir quality calibration Flow assurance Expected Impa
Slide 31: SNE-1 Appraisal Target Considerations
Capital Markets Day, 11 May 2015 30 Discovery and Appraisal SNE-1 Appraisal Target Considerations Central Location Velocity control – depth mapping DST of key reservoir zones North Flank Evaluate all reservoir zones Core (and/or DST) North Flank Evaluate oil potential in upper zones
Slide 32: FAN-1 Well
Capital Markets Day, 11 May 2015 31 Discovery and Appraisal FAN-1 Well FAN-1 Water depth 1,427m W E Hydrocarbon bearing interval >500m Multiple stacked deepwater Cretaceous fan sands Net oil bearing reservoirs 29m Gross Oil (STOIIP) in place: P90 – 250 mmbbls W FAN-1 E P50 – 950 mmbbls P10
Slide 33: FAN-1 Forward Programme
Capital Markets Day, 11 May 2015 32 Discovery and Appraisal FAN-1 Forward Programme FAN Appraisal Seismic reprocessing and reservoir characterisation Ongoing analysis of rock and fluid samples, well log data Remapping of the field boundaries and surfaces Evaluation Programme submitted Po
Slide 34: Development
Development Chris Burnside Delivering value from discovery and development
Slide 35: From Discovery to Development
Capital Markets Day, 11 May 2015 34 Development From Discovery to Development Evaluation programme aims to confirm volumes, connectivity and productivity Preliminary foundation development concept for SNE Standalone FPSO (Floating Production Storage and Offtake vessel) with expansion capabilit
Slide 36: Key Reservoir Influences on Development Design
Capital Markets Day, 11 May 2015 35 Development Key Reservoir Influences on Development Design Key Characteristics of SNE-1 Discovery SNE-1 MDT Pressure Profile Good quality, saturated oil 32° API with GOR ~750 scf/stb GAS ~100m oil column with textbook pressure 0.12 psi/ft profile Vertical
Slide 37: Development Concept – Potential Foundation Project
Capital Markets Day, 11 May 2015 36 Development Development Concept – Potential Foundation Project Concept will depend on a number of factors: Fluid type(s) Scale of resources and location Operating philosophy Reservoir management plans SNE base case exploitation scheme FPSO with tanker ex
Slide 38: Development Concept – Potential Evolution
Capital Markets Day, 11 May 2015 37 Development Development Concept – Potential Evolution Potential Evolution Options FPSO may handle several deepwater fields within 30-40 km radius Satellite discoveries may be efficiently tied-back to extend production plateau Sizeable deepwater discoveries m
Slide 39: Front-End Loading for Development
Capital Markets Day, 11 May 2015 38 Development Front-End Loading for Development JV Development FEL studies commencing in 2015 in parallel with appraisal drilling Early identification of production risks and opportunities to improve value Flow-assurance screening Wax, asphaltenes, hydrates, s
Slide 40: Operations
Operations Paul Mayland Delivering value from discovery and development
Slide 41: Overview
Capital Markets Day, May 2015 40 Operations Overview Objective is to drill the second phase of wells in Senegal safely, more efficiently and at lower cost than first phase Deliver the planned well objectives and meet the data requirements Build on lessons learnt from 2014 campaign: achieved >1
Slide 42: Rig Selection
Capital Markets Day, May 2015 41 Operations Rig Selection Numerous unsolicited offers / enquiries from drilling contractors / operators following recent dramatic fall in oil price : rates and terms significantly improved from 2013 / 2014 Strong preference for a unit already operating with establ
Slide 43: JV Capability
Capital Markets Day, May 2015 42 Operations JV Capability Current JV brings many benefits and capabilities that can be applied to potential future development(s) Commitment to HSSE and sustainable development Cairn, as Operator, has worked on several projects historically in emerging provinces w
Slide 44: Benchmark Project Timelines in West Africa
Capital Markets Day, May 2015 43 Operations Benchmark Project Timelines in West Africa Historical Development 2004 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Timelines in West Africa Project Country Operator Kuito Angola Chevron Girassol
Slide 45: Development / Cost Analogues; Gumusut-Kakap, Malaysia
Capital Markets Day, May 2015 44 Operations Development / Cost Analogues; Gumusut-Kakap, Malaysia Gumusut field was discovered in Malaysia’s deepwater Block J in December 2003 Discovery well drilled in ~ 1,000m of water, 6 subsequent appraisal wells (including side tracks) followed STOIIP ~ 1
Slide 46: Development / Cost Analogues; Baobab, Ivory Coast
Capital Markets Day, May 2015 45 Operations Development / Cost Analogues; Baobab, Ivory Coast Baobab field was discovered in Cote d’Ivoire Block CI-40 in March AFRICA 2001 Ivory Coast (Cote d’Ivoire) Discovery well was drilled in ~1,500m of water, limited appraisal followed (1-2 wells) STOIIP
Slide 47: Adding Value
Adding Value Richard Heaton Delivering value from discovery and development
Slide 48: Future Exploration Programme
Capital Markets Day, May 2015 47 Adding Value Future Exploration Programme Confirmation of source rock and burial history from new data Remapping key reservoir and source intervals RUFISQUE LEAD 1 FAN-1 Redefining basin model Discovery Redefining plays, creating new prospect and RUFISQUE LEA
Slide 49: Proposed 3D Survey - Summary
Capital Markets Day, 11 May 2015 48 Discovery and Appraisal Proposed 3D Survey - Summary Leads Identified in Rufisque Offshore and Sangomar Offshore Blocks Proposed survey ~2,000km2 Enable easterly closure mapping of Shelf Edge prospects and define prospects for future drilling 40-800m water d
Slide 50: Exploration Potential Targets
Capital Markets Day, May 2015 49 Adding Value Exploration Potential Targets To date, recognised eight different play types across all Senegal acreage Unconformity Subcrop Remnant Topography Karst and Fractured Fault Closures Limestone Play Basin Floor Slope Carbonate Margin Canyon Fill Salt Related
Slide 51: Bellatrix Prospect
Capital Markets Day, May 2015 50 Adding Value Bellatrix Prospect Prospect on immediate northern flank of SNE discovery Cenomanian through Albian prospective reservoirs Cairn Current Gross resource range recoverable (mmbbls) P90 35 mean 157 P10 333 Remnant Topography A N S A A’ A’ Delivering valu
Slide 52: Sirius Prospect
Capital Markets Day, May 2015 51 Adding Value Sirius Prospect Prospect located along trend to SNE-1 Albian-age prospective reservoirs Similar association with seismic velocity push-down Cairn Current Gross resource range recoverable (mmbbls) P90 52 mean 177 P10 343 Unconformity Subcrop N S A A
Slide 53: Probability Of Geological Success
Capital Markets Day, May 2015 52 Adding Value Cairn Prospects and Leads Inventory Currently 5 prospects and 80% Cairn Prospects and Leads - Probability of Commercial Success 18 leads Bellatrix LEADS Sum of gross 70% PROSPECTS Soleil mean risked 'Bubble' Size (Area) Is Proportional To Gross Unris
Slide 54: Discoveries, Appraisal and Exploration
Capital Markets Day, May 2015 53 Adding Value Discoveries, Appraisal and Exploration SNE-1 discovery: Gross Contingent Resources 1C: 150mmbo 2C: 330mmbo 3C: 670mmbo FAN-1 discovery: Large in place volume (STOIIP P50: 950mmbbls) Hub development will optimise value in blocks Shelf explorat
Slide 55: Economics and Funding
Economics and Funding James Smith Delivering value from discovery and development
Slide 56: Senegal Overview
Capital Markets Day, May 2015 55 Economics and Funding Senegal Overview SNE-1 2C contingent resource of 330mmbls, part of a broader potential of gross mean risked resource of > 1 bn bbls Current economic analysis focuses on standalone SNE development: commercial threshold using various metrics >
Slide 57: Notional Development Scenario
Capital Markets Day, May 2015 56 Economics and Funding Notional Development Scenario For 330mmbbls Standalone SNE Field 2,000 120 120,000 Development expenditure: 1,800 Dependent on concept solution and scale of resources 100 100,000 terms) 1,600 Preliminary estimates US$17-26/bbl, in terms) lin
Slide 58: Economic Scenarios
Capital Markets Day, May 2015 57 Economics and Funding Economic Scenarios For 330 mmbbls Standalone SNE Field 18 40% 16 10% return breakeven, 35% oil price: <US$40/bbl* 14 / bbl $/bbl 12 30% $/bbl FID,US$ at FID / bbl atatFID, at FID, 10 IRRIRR 25% NPV/bbl 8 Cairn Cairn NPV Cairn 6 20% Cairn 4 15% 2
Slide 59: Economics Set in Context
Capital Markets Day, May 2015 58 Economics and Funding Economics Set in Context Project Breakeven Price Benchmarking 140 Price (Real 2015) 120 100 Indicative 330mmbbls SNE-1 Oil$/bbl development 80 Oil Price, Breakeven 60 Breakeven 40 20 0 Benchmarked against Goldman Sachs top 400 global projects an
Slide 60: Funding to End 2017
Capital Markets Day, May 2015 59 Economics and Funding Funding to End 2017 1,200 1,000 800 US$m 600 400 200 - Cash RBL drawdowns Catcher devex Kraken devex Commited E&A Further three Operational for devex (incl Senegal firm wells in Senegal cashflow at programme) forward curve Delivering value from
Slide 61: Cairn Financial Strategy
Capital Markets Day, May 2015 60 Economics and Funding Cairn Financial Strategy Delivering value from discovery and development within a balanced portfolio Greatest value potential from exploration and appraisal in Senegal, but sustained by strong balance sheet and North Sea developments coming
Slide 62: Conclusion
Conclusion Simon Thomson Delivering value from discovery and development
Slide 63: Senegal Summary and Vision
Capital Markets Day, May 2015 62 Conclusion Senegal Summary and Vision Foundation for long term multi-field, multi-phase Exploitation Plan to maximise value: Achieve Commerciality Phasing Investments: 3-6 further (tested) wells by H2 2016 Additional 3D seismic in 2015 Planning for further we
Slide 64: Conclusion
Capital Markets Day, May 2015 63 Conclusion Focus on potentially world class asset in Senegal Creating growth 2015 fully funded Appraisal and Exploration programme through exploration Future material exploration in emerging and mature basins Future cash flow Kraken and Catcher on track for 2
Slide 65: Presenters
Capital Markets Day, May 2015 64 Presenters Simon Thomson Chief Executive Simon Thomson joined Cairn in 1995 as a lawyer. He was appointed as Chief Executive in July 2011 having been Legal and Commercial Director since 2006 and holding various posts across the organisation including head of assets.
Slide 66: Presenters
Capital Markets Day, May 2015 65 Presenters Paul Mayland Rob JE Jones Chief Operating Officer Regional Director - Africa Paul holds a B.Eng (1st Class) Engineering Rob is a Regional Director of Africa at Cairn Energy with whom he has worked for 16 years. He was and M.Eng in Petroleum Engineering and
Slide 67: Contacts
Capital Markets Day, May 2015 66 Contacts David Nisbet Kate Trevenen Group Corporate Affairs Investor Relations Co-ordinator E-mail: E-mail: david.nisbet@cairnenergy.com kate.trevenen@cairnenergy.com Tel: +44 (0)7711 146 068 Tel: +44 (0)131 475 3094 www.cairnenergy.com Follow us on Twitter D