Tullow Oil Plc · LSE:TLW
Tullow Oil — Non-Deal Roadshow (April 2015)
40 slides from Tullow Oil's roadshow presentation, April 2015
Slide 1: SRI Roadshow
TULLOW OIL PLC SRI ROADSHOW Sandy Stash, Vice President, Safety Sustainability & External Affairs James Arnold, Head of Investor Relations April 2015 SRI Road Show
Slide 2: Disclaimer
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 reasonable in light of the informa
Slide 3: Agenda
Agenda Section Page Our sustainability approach 4 Material issues 7 Shared Prosperity 8 Organisation & Culture 12 Governance & Risk Management 16 Responsible Operations 19 Business Overview 25 SRI Road Show Slide 3
Slide 4: Our Approach
OUR APPROACH SRI Road Show
Slide 5: A responsible approach to managing our business
A responsible approach to managing our business Approach to Corporate Responsibility ‘How we run our business’ comprised of key components to Corporate Responsibility • Shared Prosperity • Organisation & Culture • Governance & Risk Management • Responsible Operations SRI Road Show Slide 5
Slide 6: Integrated Risk and Governance Framework
Integrated Risk and Governance Framework Risk Management BOARD OF DIRECTORS EXECUTIVE COMMITTEE REGIONAL & BUSINESS UNITS • 12 Members Includes the Executive Directors and • Five Executive Directors regional business and corporate function • Seven non-executive Directors leaders CORPORATE FUNCTIONS
Slide 7: Non-Technical risk map: Tullow's material Issues
Non-Technical risk map: Tullow’s material Issues Contract Immature Border Land access National sanctity regulatory disputes Major /FPIC/ Grievance Content Low -- Importance to Tullow Business --High frameworks accident/ Management spill Contractor Water management Regulatory use Human Rights & compl
Slide 8: Shared Prosperity
SHARED PROSPERITY SRI Road Show
Slide 9: Shared Prosperity: Transparency
Shared Prosperity Transparency • 2014 is the third year we have reported payments to governments • Payments to governments were lower in 2014 due to a reduction in payments in kind caused by lower production entitlements per barrel in West and North Africa and lower income taxes as a result of highe
Slide 10: Shared Prosperity: Local participation
Shared Prosperity Local participation • $225 million - Tullow spend with local suppliers • 2,240 local suppliers working directly for Tullow in Ghana, Kenya and Uganda • 83% of staff are nationals in the African countries where we operate Nationals Employed (%) 88 92 94 86 77 78 86 87 85 12 13 14 12
Slide 11: Shared Prosperity: Social investment
Shared Prosperity Social investment • $10.6 million in discretionary investments • Tullow Group Scholarship Scheme remains flagship project - 340+ students sponsored from Ghana, Uganda, Kenya, Mauritania, Côte d’Ivoire, Gabon, Suriname and Ethiopia - 2014: invested $4.6 million, bringing total expen
Slide 12: Organisation & Culture
ORGANISATION & CULTURE SRI Road Show
Slide 13: Organisation & Culture
Organisation & Culture Major simplification project • $500 million of cost savings over 3 years • Less activity leading to redeployment and reduced resourcing levels involving redundancies • Review includes our organisational approach, designed to simplify and improve Tullow’s operational efficiency
Slide 14: Organisation & Culture: Succession and diversity
Organisation & Culture Nationals in Country Succession planning Leadership Teams • 90% of all senior roles have named succession 10 7 9 12 options • 45% of 2014 job vacancies were filled internally 10 Diversity 7 5 • In 2014, women continued to make up 29% 8 (583/2,042) of our total workforce • Boar
Slide 15: Organisation & Culture: Training and development
Organisation & Culture Training and development • $8 million – invested in our employee training and development • Long-term development assignments to talented employees to facilitate career growth and international experience SRI Road Show Slide 15
Slide 16: Governance & Risk Management
GOVERNANCE & RISK MANAGEMENT SRI Road Show
Slide 17: Governance & Risk Management: Anti-bribery & corruption
Governance & Risk Management Anti-bribery & corruption • 100% transparency as assessed by Transparency International in reporting on our anti-corruption programme • 94% of workforce attended Code of Business Conduct awareness sessions • 26 staff left the organisation due to breaches of the Code of B
Slide 18: Governance & Risk Management: Political risk
Governance & Risk Management Political risk • Cote d’Ivoire and Ghana maritime boundary dispute • Feb 2015, Côte d’Ivoire applied to ITLOS for provisional measures to order Ghana to suspend ongoing operations in the disputed area • Full determination on the dispute is expected by ITLOS at the end of
Slide 19: Responsible Operations
RESPONSIBLE OPERATIONS SRI Road Show
Slide 20: Responsible Operations: Safety performance
Responsible Operations Lost Time Injury Frequency (LTIF) Rates EHS score card • In 2014, we fully achieved 13/16 indicators 0.9 0.85 0.38 0.70 0.81 0.58 0.42 0.43 0.48 0.45 which translates to a score of 41/48 0.8 Occupational safety performance 0.7 • Established a strategy to improve safety perform
Slide 21: Responsible Operations: Emergency preparedness
Responsible Operations Emergency preparedness • Risk-based exercises conducted, including a major subsea containment blowout scenario, testing our response capability at all levels in the organisation • Revised Oil Spill Preparedness and Planning Standard to ensure Tullow Oil is suitably prepared, r
Slide 22: Responsible Operations: Security and human rights
Responsible Operations Security and human rights • Security plans align with Voluntary Principles on Security and Human Rights • Progress on security and human rights management plans: - Input from the Government of Kenya, Institute for Human Rights and Business (IHRB); the Kenya Oil and Gas Associa
Slide 23: Responsible Operations: Water use
Responsible Operations Water use • 98% of Group water usage is seawater used for reservoir injection in Ghana (2014: 9,872,189 mᵌ) • Fresh and brackish water usage represents 2% of our total water usage Strategic water source for development project • Hydrological and hydrogeological review of poten
Slide 24: Business Overview
BUSINESS OVERVIEW SRI Road Show
Slide 25: Business reset for current market conditions
Business reset for current market conditions • Strong production and development business • Reduced exploration budget focusing on low cost plays and long term options • Reducing costs and dividend suspension provides increased flexibility • Funded through TEN first oil • Focused on delivering our p
Slide 26: Strong production and development business
Strong production and development business Strong production and development business robust to low oil prices • Production: significant near-term production growth of high margin oil • Operating costs: low opex cost per barrel with potential for further reductions • Incremental investments: low cas
Slide 27: Low-cost high-value E&A investment options
Low-cost high-value E&A investment options Caribbean-Guyanas Norway Atlantic Margin Plays Atlantic Margin Plays 1. Licence activity 1. Licence activity - Prospecting & - Johan Sverdrup charge farming down fairway (APA 2014) 2. Frontier wildcatting 2. Frontier wildcatting - Spari in Suriname - Zumba
Slide 28: Taking action to operate in a low oil price environment
Taking action to operate in a low oil price environment Allocating capital to high-margin cash generating West Africa assets • Prioritising future production and development activities in West Africa; low break-even prices • Significant reduction to high-cost exploration and appraisal activities • T
Slide 29: 2015 Capex guidance
2015 Capex guidance 2015 capex of $1.9bn • Ghana: Jubilee & TEN developments - $1,300m 2015 $200m $1,700m $1,900m • Other Africa: maintaining mature production and near field drilling activities - $200m • Uganda and Kenya: Pre-development activities supporting FID - $170m 2014 $800m $1,220m $2,020m
Slide 30: Debt Capital Structure - Strong liquidity through TEN
Debt Capital Structure - Strong liquidity through TEN Debt maturity profile Key metrics $m Commitment size Maturity $m 31 Dec 2014 28 Feb 2015 RBL 3,700 Oct 2019 Cash and cash equivalents 319 407 Corporate Facility 1,000 Apr 2017 Debt outstanding 6% Senior Notes 650 Nov 2020 RBL Facilities 1,987 2,3
Slide 31: Oil Hedging
Oil Hedging Hedge strategy • Hedge strategy is approved by the Board and reviewed quarterly • Hedges are executed rateably on a three year forward rolling basis • Hedge by purchasing a mix of Dated Brent options (puts, collars, 3-way collars) Current Portfolio • Approximately 60% of 2015 oil entitle
Slide 32: Group production – significant growth potential
Group production – significant growth potential West Africa oil production KENYA South Lokichar Basin • 2014 actual: 65,300 bopd* • Development studies underway • Single basin has potential to • FY 2015 guidance: 63-68,000 bopd produce up to 100,000 bopd gross. 120 UGANDA Lake Albert Rift Basin 100
Slide 33: World-class Jubilee field continues to perform strongly
World-class Jubilee field continues to perform strongly Strong 2014 production and cost performance • Jubilee exceeded production guidance at 102,000 bopd • High FPSO operating efficiency underpinned 2014 performance • Low operating cost ~$10/bbl and cash break-even c.$15-20/bbl • Strong pre-tax ope
Slide 34: TEN development to deliver significant cash flow in 2016
TEN development to deliver significant cash flow in 2016 Base case development • 300 mmboe reserves being developed – 80% oil • 24 well development - 10 wells on-stream at start up • Gross development capex of $4.9 billion • Leased FPSO, facility capacity of 80,000 bopd Significant progress towards
Slide 35: Progressing East Africa regional development
Progressing East Africa regional development East Africa upstream developments • Good progress on development studies & resource base - Uganda and South Lokichar gross oil resources total c.2.3 billion barrels - Kenya appraisal drilling & EWT ongoing • Focused on capex reductions - Tullow’s current
Slide 36: East Africa: Establishing a new Oil Province
East Africa: Establishing a new Oil Province E&A campaign delivery – parallel approach South Lokichar Basin drill-out, appraisal & testing • Discovered over 600 mmbo Pmean gross resources • Twiga-2: natural flow at 3,270 bopd with no depletion • 9 out of 11 wildcat wells discover producible oil • 4
Slide 37: Norway Atlantic Margin: cost-effective upside
Norway Atlantic Margin: cost-effective upside Tullow Oil JV Johan Sverdrup JV Prospects in Oil Fairway Giant Oil Field Barents Sea - Frontier • Major oil finds at Wisting & Hanssen. Hassel & Bjaaland target cluster potential up to 500mmbo Norwegian Sea - Near Infrastructure • Zumba - Upper Jurassic
Slide 38: Caribbean-Guyanas Atlantic Margin: shift to shelf
Caribbean-Guyanas Atlantic Margin: shift to shelf • Three major basins with proven oil systems • Shelf edge plays – lower cost to develop – Spari (non-op) drilling Q3 2015 • Seismic evaluation ongoing to high-grade prospects for future selective drilling Strong industry interest in Greater Gulf of M
Slide 39: Outlook remains strong during period of low oil price
Outlook remains strong during period of low oil price High margin production Stable Jubilee performance, with further upside delivers significant cash flow TEN production due on-stream mid-2016 ramping up through year end Assets economic even West Africa assets are economic down to much lower oil pr
Slide 40: Tullow Oil plc
Download the Tullow Investor Relations and Media App from the Apple and Android stores: Tullow Oil plc 9 Chiswick Park 566 Chiswick High Road London, W4 5XT United Kingdom Follow Tullow on: Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 SRI queries: csp@tullowoil.com IR queries: ir@tullowoil.com