Enquest Plc · LSE:ENQ
Enquest — H1 2012 Earnings Presentation
40 slides from Enquest's earnings presentation, Aug 14, 2012
Slide 1: 2012 Half Year Results
2012 Half Year Results Strong Cash Flow In H1 2012 On Track for Future Production Growth
Slide 2: Agenda
Agenda § Overview & Strategy CEO, Amjad Bseisu § Financials CFO, Jonathan Swinney § Operations COO, Nigel Hares § Summary CEO, Amjad Bseisu
Slide 3: EnQuest's Strategy
EnQuest’s Strategy Focused on development and production Realising the untapped potential in maturing assets and in underdeveloped oil fields § Maximising production and exploiting upside potential § Infill drilling Focus on Hubs § Extending field life § Hub focus reduces costs § Relatively low risk
Slide 4: Strong Cash Flow in H1 2012, On Track For Future Production Growth
Strong Cash Flow in H1 2012 On Track For Future Production Growth § Production of 20,253 Boepd § 2012 average full year production expected range between 20,000 Boepd and Production 24,000 Boepd § Six well drilling programme, three production wells now on stream, cash capex of $504m § Execution of t
Slide 5: On Track To Deliver Approximately 20% CAGR
On Track To Deliver Approximately 20% CAGR* Between 2009 and 2014**, based only on net 2P profiles Average net production (Boepd) Guidance range Over 33 ,000 28,000 24,000 23,698 23,000 21,074 20,000 13,613 10,150 2008 2009 2010 2011 2012 2013 2014 * Compound annual growth rate ** Outlook adjusted f
Slide 6: 2012 Operational Results To The End of June
2012 Operational Results To The End of June In line with expectations 2011 2012 Net production (Boepd) 25,210 20,253 14,065 8,895 7,655 5,612 5,533 3,703 Thistle/Deveron The Dons Heather/Broom Total 5
Slide 7: EnQuest's North Sea Assets
EnQuest’s North Sea Assets As at end of June 2012, includes acquisitions announced in 2012 6
Slide 8: The EnQuest Discovery 'Hopper'
The EnQuest Discovery ‘Hopper’ Discovery Project status Unrisked net 2C resources WI’s quoted here are based on MMboe acquisitions agreed in 2012 Kraken (60% WI) Working towards FDP in H1 2013 60+/- Kildrummy (60% WI) Appraisal well in Q4 2012 C/S/T area Working towards FDP in 2013 Cairngorm (100% W
Slide 9: Consolidating IPO Positions & Building New Ones
Consolidating IPO Positions & Building New Ones Where we had grown asset interests to by the end of 2011 Crawford/Porter § Acquired further 32% for carry up to $55.8m. Development decision in 2012 From 19% to 51% Broom § Acquired further 8% for $7.5m From 55% to 63% Crathes § Farmed in to Crathes pr
Slide 10: Consolidating IPO Positions & Building New Ones
Consolidating IPO Positions & Building New Ones How we have grown our interests in 2012, so far… Crawford/Porter § Acquired further 32% for carry up to $55.8m. Development decision in 2012 From 19% to 51% Broom § Acquired further 8% for $7.5m From 55% to 63% Crathes § Farmed in to Crathes prospect,
Slide 11: Alma and Galia On Track For First Oil Q4 2013
Alma and Galia On Track For First Oil Q4 2013 Drilling operations completed on 3 wells to date, good results 10
Slide 12: Alma/Galia $500M Farm Out
Alma/Galia $500M Farm Out Agreed with KUFPEC, building on relationship since 2010 § KUFPEC is taking a 35% stake for approximately 50% of project costs § KUFPEC to invest approximately $500m in cash, comprised of: § KUFPEC’s pro-rata share of costs effective from 1 January 2012 § Up to $182m in futu
Slide 13: Kraken On Track For FDP Submission In H1 2013
Kraken On Track For FDP Submission In H1 2013 Sustainable reserves and production growth, asset diversification § In Q1 2012, EnQuest acquired 20% from Canamens § EnQuest then acquired a further 25% from P1573 Nautical and a further 15% from First Oil § Over 99.9% shareholder support for the First O
Slide 14: Jonathan Swinney, Chief Financial Officer
Jonathan Swinney Chief Financial Officer 13 13
Slide 15: Results Summary
Results Summary Half year to 30 June Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US dollars US dollars 2012 2011 Change % Export production (Boepd) 20,253 25,210 (19.7) Average realised price per barrel ($) 111.58 106.72 4.6 Revenue
Slide 16: Summary Income Statement
Summary Income Statement Half year to 30 June 2012 2012 2011 US dollars Business performance Reported* Reported $m’s $m’s $m’s Revenue 440 440 511 Cost of sales (236) (240)* (288) Gross profit 204 200* 223 Exploration and evaluation expenses (9) (9) (5) General and administration expenses (8) (8) (8
Slide 17: Group Taxation Position
Group Taxation Position ETR % $m’s UK tax losses $m’s Profit before tax 185 Recognised at 31 December 2011 180 H1 2012 net losses 276 UK corporation tax rate 62.0 114 RFES 25 PRT 9.8 18 Prior year true up 20 RFES (7.7) (14) Leasing structures 79 Leasing structures (26.6) (49) Tax losses at 30 June 2
Slide 18: Capital Expenditure $605m
Capital Expenditure* $605m Half year to 30 June 2012 US$m 352 89 63 44 32 10 10 5 Thistle/Deveron Dons/Conrie Heather/Broom Alma/Galia Kraken E&A Acquisitions** Other * Includes accrued expenditure ** Includes $36m re acquisition of a 20% interest in Kraken and $27m re acquisition of an 18.5% intere
Slide 19: Cash Flow
Cash Flow Half year to 30 June 2012 Strong financial position, new $900m facility US$m 240 (504) (11) 379 93* (11) Cash & equivalents Cash flow from Purchase of tax losses Capex Financing & other Cash & equivalents less borrowings at 1 operations & tax paid less borrowings at 30 January 2012 June 20
Slide 20: Finance Outlook
Finance Outlook Full Year 2012 § Capex expectations of around $800m § Absolute total production and transportation costs to be broadly similar to 2011 § Depletion, dependent upon production mix, but anticipated to be similar to 2011, on a per barrel basis § G&A, similar to 2011 § Finance costs • Gui
Slide 21: Nigel Hares, Chief Operating Officer
Nigel Hares Chief Operating Officer
Slide 22: 2012 Operational Results To The End of June
2012 Operational Results To The End of June In line with expectations 2011 2012 Net production (Boepd) 25,210 20,253 14,065 8,895 7,655 5,612 5,533 3,703 Thistle/Deveron The Dons Heather/Broom Total ▲ New wells A57 & A58 ▼ Natural decline of S5 ▼ Natural decline, BR2 ▲ Improved water injection ▼ Pip
Slide 23: Thistle / Deveron
Thistle / Deveron Area6 – I1 H1 2012 A46 § A58 (Dev-P1) well completed and on Area6 – P1 NWFB – P2 production, productivity at the higher end of A56 pre-drill estimates A56 w/o NFB – I1 § Well workover programme § Engineering design of facilities projects Dev-P1 § 150,000 bwpd water injection WFB –
Slide 24: Dons/Conrie
Dons/Conrie H1 2012 § S10 drilled, replaces S1 § S11 drilled, new well 211/18a – W1 211/18a – S7 § 10 day pipeline outage 211/18a – W2 LL 211/18a – W2 211/18a – S6 H2 2012 211/18a – S9 § S11 already on stream, S10Y 211/18a – S5 performing as anticipated 211/18a – S3Z § S2Z workover 211/18a – S8Z 211
Slide 25: Heather/Broom
Heather/Broom H1 2012 § Lost 20 days production in June due to Else injector Additional third party Ninian pipeline maintenance 2016 Opportunities Erica 2017 onwards H2 2012 injector 2015 § Rig reactivation programme well underway Rosea Viking injector & § Complete rig upgrade injector H62 W/O 2013
Slide 26: The Alma and Galia Development
The Alma and Galia Development On track for first oil Q4 2013 § Modification and life extension works on the EnQuest Producer, the FPSO, now well underway § All subsea material and installation contracts placed § First construction campaign to be performed in Q3 2012 § Galia FDP approval anticipated
Slide 27: Alma Drilling
Alma Drilling 6ft high 18ft high 56ft high 30/24C-K2 Zech Z4 Z3 B10 Z2 Z1 Zechstein B04B B09 B08 B04A Rotliegend Virgin (R1) Oil -8948ft B07 Swept Rotliegend (R2) Partially swept Devonian 26
Slide 28: Alma/Galia
Alma/Galia Project on schedule for Q4 2013 start up 27
Slide 29: Kraken On Track For FDP Submission In H1 2013
Kraken On Track For FDP Submission In H1 2013 § In H1 2012, EnQuest has been working through the concept selection phase of the Kraken development § Significant technical facilities and P1573 subsurface work underway P1574 § New 3D seismic survey material has been acquired with initial interpretatio
Slide 30: The Kraken Discovery
The Kraken Discovery Development Scheme Option Prior To EnQuest’s Operatorship FPSO Shuttle tanker offload Multiple Drill Centres Ketos Development tied back with DC4 29
Slide 31: 2012 EnQuest Outline Programme
2012 EnQuest Outline Programme Three drilling strings (one platform rig, two mobile rigs) Q1 Q2 Q3 Q4 Thistle Drilling (2 wells, 3 workovers) Heather Rig reactivation Rig operations Dons Drilling (4 wells) Alma/Galia Drilling (batch drilling of 6 wells) Crawford/Porter Development decision Crathes/S
Slide 32: EnQuest PLC Summary
EnQuest PLC Summary Amjad Bseisu, CEO 31
Slide 33: Summary
Summary Strong cash flow in H1 2012. On track for future production growth Operations § Six well drilling programme, $504m of cash capex invested § Production on track for full year annual average target § Between 20,000 Boepd to 24,000 Boepd § Alma/Galia development on track for first oil in Q4 201
Slide 34: Technical Skills Operational
A substantial exploitation company in 2012 and beyond.. Technical Operational Focus on Hubs Skills Scale Near Field Appraisal and Exploration Business Development Financial Strength 33
Slide 35: Income Statement
Income Statement Half year to 30 June 2012 2011 US dollars Depletion of Business performance fair value uplift $000’s $000’s $000’s $000’s Revenue 440,086 - 440,086 511,425 Cost of sales (235,992) (4,091) (240,083) (288,199) Gross profit 204,094 (4,091) 200,003 223,226 Exploration and evaluation exp
Slide 36: Balance Sheet
Balance Sheet As at 30 June 2012 2011 US dollars $000’s $000’s ASSETS Non-current assets Property, plant and equipment 1,724,723 1,273,558 Goodwill 107,760 107,760 Intangible oil and gas assets 123,402 24,347 Asset held for sale 1,254 1,254 Investments 6,734 6,734 Deferred tax asset 19,583 12,617 1,
Slide 37: Total Production in Mass units (tonnes)
Largest UK Independent Producer in the UK North Sea Government data for UK north sea independent producers Total Production for the year ending April 2012 1,100,000 1,000,000 Total Production in Mass units (tonnes) 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - EnQuest Tul
Slide 38: Thistle, Conrie and The Dons Infrastructure
Thistle, Conrie and The Dons Infrastructure 37
Slide 39: Heather / Broom Infrastructure
Heather / Broom Infrastructure 38
Slide 40: Forward Looking Statements
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 and other trend information. These statements and forecasts involve risk and