Tullow Oil Plc · LSE:TLW
Tullow Oil — FY2018 Earnings Presentation
34 slides from Tullow Oil's earnings presentation, February 2019
Slide 1: 2018 Full Year Results
Tullow Oil plc 2018 FULL YEAR RESULTS Wednesd Februa TULLOW is
Slide 2: Disclaimer
2018 FULL YEAR 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 reasonable
Slide 3: Driving Forward to Achieve Our Growth Ambitions
2018 FULL YEAR RESULTS DRIVING FORWARD TO ACHIEVE OUR GROWTH AMBITIONS Investing in >150kbopd Investing to grow production, develop our assets production potential discoveries and find new oil Low cost <$10/bbl Significant savings realized; cost- base targeted operating costs discipline embedded acr
Slide 4: CFO Update
Tullow Oil plc - 2018 Full Year Results CFO UPDATE LES WOOD - Chief Financial Officer TULLOW is
Slide 5: Results Summary
2018 FULL YEAR RESULTS 2018 FULL YEAR RESULTS SUMMARY Underlying cash Revenue1 Adjusted EBITDAX Profit after tax2 operating costs $1,859million $10.0/boe $1,600million $85million FY 2017: $1,723 million FY 2017: $11.1/boe FY 2017: $1,346 million FY 2017: $(189) million Capital investment3 Free cash
Slide 6: Relentless Focus on Retaining Cost Discipline
2018 FULL YEAR RESULTS RELENTLESS FOCUS ON RETAINING COST DISCIPLINE $/bbl $m Unit Opex Net G&A 20 250 200 15 150 10 100 5 50 0 0 2015 2016 2017 2018 2019f 2015 2016 2017 2018 2019f $m Financing costs 400 Competitive industry cost base 300 • Targeting further operational efficiencies 200 • Cost cons
Slide 7: Disciplined Capital Investment in Our Business
2018 FULL YEAR RESULTS DISCIPLINED CAPITAL INVESTMENT IN OUR BUSINESS MAXIMISING GROWTH FROM FINDING PRODUCTION DISCOVERED RESOURCES NEW OIL FY 2018 $204m $92m $65m $50m $62m $423m Ghana Non-op Kenya Uganda* Exploration FY 2019 $250m $100m $70m $180m $140m $570m Ghana Non-op Kenya Uganda* Exploratio
Slide 8: A Business Delivering Significant Free Cash Flow
2018 FULL YEAR RESULTS A BUSINESS DELIVERING SIGNIFICANT FREE CASH FLOW $m Free cash flow1 Factors impacting 2018 free cash flow: 1000 Strong underlying operating cash flow $70 800 One-off cash outflow from Seadrill litigation $65 Year-end working capital movements $68 $70 $60 600 Litigation $58 $65
Slide 9: Capital Allocation Framework
2018 FULL YEAR RESULTS CAPITAL ALLOCATION FRAMEWORK DEBT AND LIQUIDITY INVESTING IN OUR BUSINESS SHAREHOLDER RETURNS Balance sheet robust to Apply strict criteria to allocate Demonstrating financial future oil price volatility capital across the portfolio: discipline and business progress Driving ne
Slide 10: Operations Update
Tullow Oil plc - 2018 Full Year Results OQPERATIONS UPDATE ANGUS McCOSS - Exploration & Subsurface Director TULLOW is
Slide 11: Organic Investment Opportunities to Grow Our Business
2018 FULL YEAR RESULTS ORGANIC INVESTMENT OPPORTUNITIES TO GROW OUR BUSINESS MAXIMISING GROWTH FROM FINDING PRODUCTION DISCOVERED RESOURCES NEW OIL East Africa development Exploration in emerging Jubilee and TEN infill wells projects basins Non-op investment West Africa Infrastructure-led exploratio
Slide 12: Maximising Production in West Africa
2018 FULL YEAR RESULTS MAXIMISING PRODUCTION IN WEST AFRICA Growing & sustaining our production business • Ramping up production to 100,000 bopd net in 2019 • Infill, near-field & exploration opportunities to sustain & grow production • Low-cost production $10 opex/bbl • Significant scope for ‘jus
Slide 13: Production Operations Across West Africa
2018 FULL YEAR RESULTS PRODUCTION OPERATIONS ACROSS WEST AFRICA Ghana infill programme delivering results • New wells meeting/exceeding expectations • Seven new wells planned in 2019 • 180,000 bopd gross production forecast 2019 Significant Ghana reserves & resource base • Fields in early life; onl
Slide 14: Developing Our Discoveries: East Africa Production Hub
2018 FULL YEAR RESULTS DEVELOPING OUR DISCOVERIES: EAST AFRICA PRODUCTION HUB Group net oil production growth 150 KENYA UGANDA MATERIAL OIL DISCOVERIES 560mmbo 1.7bbo 125 Gross 2C resource Gross 2C resource 100 PRODUCTION SCALE 60100,000 230,000 kbopd bopd gross production bopd gross production 75
Slide 15: Finding New Oil – Executing Our Exploration Programme
2018 FULL YEAR RESULTS FINDING NEW OIL – EXECUTING OUR EXPLORATION PROGRAMME 2019 2020 2021 GUYANA #1 priority SURINAME Ranked highly CÔTE D’IVOIRE COMOROS Material entries PERU MAURITANIA/ Prospect NAMIBIA/ JAMAICA evaluation WEST & EAST Near Field AFRICA Firm Drilling Firm Seismic Airborne Survey
Slide 16: 2019 Drilling Focus on Guyana
2018 FULL YEAR RESULTS 2019 DRILLING FOCUS ON GUYANA >4BBO Gross mean un-risked resources ORINDUIK KANUKU Shelf-edge acreage in JETHRO CARAPA industry hot-spot prospect selected for 2Q 2019 drilling prospect selected for 3Q 2019 drilling Multiple prospects up-dip >100 mmbo 1,350m >200 mmbo 70m of gi
Slide 17: Conclusion
—" a Tullow Oil ple - 2018 Full Year Results CONCLUSION PAUL McDADE - Chief Executive Officer TULLOW } |
Slide 18: 2019 Outlook
2018 FULL YEAR RESULTS 2019 OUTLOOK GENERATE DISCOVER significant free cash flow oil in Guyana RETURN GROW $100m MAINTAIN net production minimum cost discipline dividend ACHIEVE Uganda & COMPLETE Kenya FIDs Uganda farm-down A strong foundation for growth in the years ahead Slide 18
Slide 19: Defining Tullow's Position in the E&P Industry
2018 FULL YEAR RESULTS DEFINING TULLOW’S POSITION IN THE E&P INDUSTRY The pillars of our growth ambitions A balanced E&P business, focused on oil & specialising in emerging markets Slide 19
Slide 20: Appendix
A D) D) Tullow Oil plc - 2018 Full Year Results ENDIX TULLOW is
Slide 21: Our Portfolio of Assets
2018 FULL YEAR RESULTS OUR PORTFOLIO OF ASSETS NEW VENTURES - exploration EAST AFRICA - development Kenya • Extensive acreage in Africa and South America, in well-known plays • Significant discoveries in South Lokichar basin • Multiple high-impact frontier campaigns planned • Phased development plan
Slide 22: A Balanced Self-Funding E&P Company in Action
2018 FULL YEAR RESULTS A BALANCED SELF-FUNDING E&P COMPANY IN ACTION DELEVERAGE MAXIMISING & PRODUCTION RE-INVEST GROWTH FROM BALANCE DISCOVERED SHEET RESOURCES FREE INVESTING IN CASH OUR BUSINESS CASH FLOW FLOW FROM FINDING OPERATIONS NEW OIL PORTFOLIO & FINANCIAL SHAREHOLDER MANAGEMENT RETURNS Str
Slide 23: Continued Prudent Financial Management
2018 FULL YEAR RESULTS CONTINUED PRUDENT FINANCIAL MANAGEMENT Diversified and evolving capital structure Revenue protection through hedging • A balance of funding sources • Proven hedging policy over 10 years • Revolving RBL provides long-term flexibility • Continue to systematically hedge • Success
Slide 24: Ghana Production: A Long-Term Source of Cash Generation
2018 FULL YEAR RESULTS GHANA PRODUCTION: A LONG-TERM SOURCE OF CASH GENERATION TEN production (bopd) Jubilee production (bopd) Net Year Gross Net Year Gross Net (incl. insurance) 2018 64,500 30,400 2018 78,000 27,700 36,300 2019f 83,000 39,000 2019f 96,000 34,000 35,000 Slide 24
Slide 25: Ghana Long-Term Production Outlook
2018 FULL YEAR RESULTS GHANA LONG-TERM PRODUCTION OUTLOOK 200,000 Prospective 3P Reserves Production rate (bbl oil per day) 2C Resources TEN 2P Reserves 150,000 Jubilee 2P Reserves 100,000 50,000 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Investm
Slide 26: Central & West Africa Performance
2018 FULL YEAR RESULTS CENTRAL & WEST AFRICA PERFORMANCE Booked net resource Reliable long-term production with capex flexibility 35,000 Potential business 30,000 Côte d’Ivoire development Net Production (boe/day) opportunities 25,000 20,000 Equatorial Guinea 15,000 10,000 Gabon 5,000 Forecast 0 200
Slide 27: Uganda - Project Update
2018 FULL YEAR RESULTS UGANDA - PROJECT UPDATE Key milestones to FID Partner & • Total operate Tilenga Operator roles • CNOOC operate Kingfisher defined • Tullow non-operator Upstream • FEED & Tilenga ESIA Completed • EPC contracts ready for award • CPF & well pad locations finalised • 90% land acqu
Slide 28: Developing Kenya's Discovered Resources
2018 FULL YEAR RESULTS DEVELOPING KENYA'S DISCOVERED RESOURCES South Lokichar development plan Agete Erut • Discovered resources support development via Etom export pipeline to Lamu TWIGA 9 wells Ekales 1 pad • Phased development approach planned CPF Water & Power • Incremental developments to follo
Slide 29: Kenya – Stepping Stones to FID
2018 FULL YEAR RESULTS KENYA – STEPPING STONES TO FID To achieve FID in 2019, the following tasks must be completed: Complete pipeline & Submit Environmental upstream Front End and Social Impact Engineering & Design Assessment Finalise agreements Finalise Heads of Terms over land title for for criti
Slide 30: Exploration Criteria for Value Creation
2018 FULL YEAR RESULTS EXPLORATION CRITERIA FOR VALUE CREATION Targeted exploration Light conventional oil COMMERCIAL SCREENING Low cost simple wells Tested at $50/bbl Low complexity deep water Low cost of development HIGH MARGIN OIL Value accretive Onshore and shallow water Onshore rifts Manageable
Slide 31: Guyana: Orinduik-Kanuku Blocks
2018 FULL YEAR RESULTS GUYANA: ORINDUIK-KANUKU BLOCKS • Multiple Cretaceous and Tertiary leads & prospects • Tullow’s acreage sits up dip of giant Liza discoveries Transformational opportunity with multiple follow-up potential Slide 31
Slide 32: Spotlight on Côte d'Ivoire
2018 FULL YEAR RESULTS SPOTLIGHT ON CÔTE D’IVOIRE >1.5 BBO Low-cost Using both Carried work High-value Light footprint Gross mean un-risked exploration in proven & programme; barrels & low execution across resources core West Africa innovative 60% operated breakeven 8,000 sq km oil province technolo
Slide 33: A Strong Commitment to Sustainability
2018 FULL YEAR RESULTS A STRONG COMMITMENT TO SUSTAINABILITY Local content Developing Social and capacity local skills Investment Climate resilience Ecosystems Safety and wellness Responsible production Good governance Promoting equality Slide 33
Slide 34: Tullow Oil plc
2018 FULL YEAR RESULTS Tullow Oil plc 9 Chiswick Park 566 Chiswick High Road London, W4 5XT Follow Tullow on: United Kingdom Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 Email: ir@tullowoil.com Web: www.tullowoil.com Slide 34