Enquest Plc · LSE:ENQ
Enquest — H1 2014 Earnings Presentation
55 slides from Enquest's earnings presentation, Aug 13, 2014
Slide 1: EnQuest 2014 Half Year Results
EnQuest 2014 Half Year Results Kraken FPSO host vessel 0
Slide 2: Agenda
Agenda Overview Amjad Bseisu, CEO Financials Jonathan Swinney, CFO Operations Neil McCulloch, North Sea President Major projects Amjad Bseisu & summary 1
Slide 3: EnQuest Strategy
EnQuest Strategy Sustainable growth model continuing to deliver Production from 1 January to 30 June 2014 averaged 25,292 Boepd, up 18% on the same period last year 2014 production guidance maintained at an average of between 25,000 Boepd to 30,000 Boepd Business development in 2014 has added
Slide 4: Realising value through capability
Realising value through capability Technical leadership in integrated development • Upgrading existing facilities Thistle/Deveron • Newer technology, new seismic Heather/Broom Field life Greater Kittiwake Area extensions • Simplifying processes PM8/Seligi • Infill drilling, subsurface skill in ident
Slide 5: Top quartile results for production efficiency
Top quartile results for production efficiency UK North Sea production efficiency task force (O&G UK), 2013 operator rankings EnQuest Top quartile UKCS task force target of 80% production efficiency 4
Slide 6: EnQuest's growing North Sea asset base, at 30 June 2014
EnQuest’s growing North Sea asset base, at 30 June 2014 Now four UK hubs with GKA, with Alma/Galia five UK hubs 5 5
Slide 7: Malaysia: PM8/Seligi acquisition now completed
Malaysia: PM8/Seligi acquisition now completed 5,000 Boepd net production, 11.0 MMboe net 2P reserves Seligi EnQuest’s third Malaysian project: In June 2014, EnQuest completed the third acquisition of ExxonMobil’s interest in the Seligi oil field and the PM8 PSC : Cash consideration of US$28 milli
Slide 8: Greater Kittiwake Area opportunity
Greater Kittiwake Area opportunity 50 km tie-back radius & competitor infrastructure 7
Slide 9: Financials
Financials @nQuest
Slide 10: Results summary
Results summary Half year to 30 June Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US dollars US dollars H1 2014 H1 2013 Change % Export production (Boepd) 25,292 21,455 17.9 Average realised price per barrel ($) 110.0 108.7 1.2 Revenu
Slide 11: Focus on cost efficiency
Focus on cost efficiency EnQuest historical operating costs Vs doubling in UKCS costs over last 5 yrs $/bbl 40.0 Cost of operations Unit production costs 35.0 5.4 Impact of GKA acquisition, $5.4/bbl 30.0 $:£ exchange rate also added c.$2.5/bbl 2.5 25.0 20.0 15.0 26.3 26.9 27.4 27.2 27.5 23.5 10.
Slide 12: Group taxation position
Group taxation position No material UK cash tax on operational activities expected before 2020 ETR % $m’s UK tax allowances $m’s PBT 79 Recognised at 31 Dec 2013 1,088 1H 2014 net additions plus RFES 340 UK CT Rate 62 49 Prior year adjustment 25 PRT 24 19 Tax losses at 30 June 2014 1,453 RFES (76) (
Slide 13: $482 million cash capital expenditure
$482 million cash capital expenditure Six months to 30 June 2014 US$m 208 102 53 38 37 27 17 Alma/Galia Kraken Thistle/Deveron Dons Heather/Broom E&E Other 12
Slide 14: Cash flow
Cash flow Six months to 30 June 2014 US$m Strong financial position, $1.7bn credit facility, £155m retail bond, $650m high yield bond 318 (64) (381) (482) (58) (590) (50) (64) (717) Cash & equivalents less Cash flow Capex Acquisitions Prepayments Financing & other Cash & equivalents less borrowings
Slide 15: Finance outlook
Finance outlook Full Year 2014 Capex expectations of around $1.2bn Production and transportation costs expected to be in the range $535m to $555m Including c.$50m for PM8/Seligi and reflecting the increased SVT costs Depletion anticipated to be similar to the first half on a per barrel bas
Slide 16: Operations
Operations 15
Slide 17: 2014 Production results by hub
2014 Production results by hub Year to date Net production (Boepd) 2013 2014 25,292 21,455 11,349 9,281 9,789 5,046 4,246 4,041 814 1,276 0 905 Thistle/Deveron The Dons Heather/Broom Alba Kittiwake Total 16
Slide 18: Thistle / Deveron
Thistle / Deveron Delivering production levels not seen since the ‘90s 2014 Production in H1 2014 almost double H1 2013. Strong production efficiency Ongoing interventions campaign Additional perforations of A55/02 Integrity work to recover A43/12 production Integrity work on non-produci
Slide 19: The Don fields
0 17 -1 -11750 0 -1150 The Don fields 200 -11 -11 80 0 -11450 30 0 -11250 -1 -11 14 00 -1 -1 13 13 0 Continuing very strong production efficiency -1 50 0 12 0 50 85 -11 -1120 0 50 11 -11400 -1 -11 009 Don North East Area (‘Don NE’) (60%) 2014: existing fields S6 50 12 -1 ‘Ythan’ FDP submitted, pla
Slide 20: Heather / Broom
Heather / Broom Highest production efficiency for over 5 years 2014 & beyond Production broadly in line with H1 2013 Following commencement of rig operations in Q1 2014, the workover of the H56 well was successfully completed in Q2 2/0 Else 5- and a new injection well drilled (Rosea, H64). The
Slide 21: Greater Kittiwake Area
Greater Kittiwake Area Now integrated into EnQuest operations Mallard tree before and after cleaning Completed GKA acquisition on 1 March 2014 Benefits from improvements should start to come through later in H2 2014 Mallard workover under way to reinstate production Evaluating potential of r
Slide 22: 2014 EnQuest outline programme
2014 EnQuest outline programme Planning delivery of over 15 wells Development Q1 Q2 Q3 Q4 Drilling Thistle Ongoing interventions campaign Heather 2 sidetracks & 2 workovers Dons 1 producer (‘TJ’) GKA 1 workover (‘Mallard’) Alma/Galia 4 producers Alba 2 producers Exploration/ Cairngorm Avalon Kraken
Slide 23: Major projects & summary
Major projects & summary @nQuest
Slide 24: Alma/Galia
Alma/Galia Sailaway in spring 2015, first oil mid-year The FPSO is now substantially complete and commissioning has begun Three wells have been completed and a fourth is in the process of being completed for production Subsea work has been completed with the exception of mooring and riser pull
Slide 25: Kraken proceeding on time and on budget
Kraken proceeding on time and on budget A conventional development programme High level of capex confidence Good progress on evaluation of drilling rig options The Kraken FPSO host vessel is at the yard in Singapore (c110th such FPSO in that yard); hull conversion and marine system refurbish
Slide 26: Delivering strong compound annual growth rates
Delivering strong compound annual growth rates 25% for reserves & 15% for production Net 2P reserves (MMboe) 194.8 115.2 128.5 80.5 88.5 2009 2010 2011 2012 2013 Average net production (Boepd) 5,000 Guidance Range 25,000 23,698 22,800 24,222 21,074 13,613 25 2009 2010 2011 2012 2013 2014
Slide 27: EnQuest's producing hubs
EnQuest’s producing hubs From 3 to 6 in approx. one year, a growing & increasingly diversified portfolio Thistle/Deveron The Don fields Heather/Broom Greater Kittiwake Area PM8/Seligi (Malaysia) Alma/Galia 26
Slide 28: Delivering sustainable growth
Delivering sustainable growth On course for six hubs and 50,000 Boepd in UKCS Exploiting our existing reserves Dons, Thistle/Deveron, Heather/Broom, Alba Making selective acquisitions Commercialising & developing discoveries Greater Kittiwake Area, Didon/Zarat, PM8/Seligi Alma/Galia Converting conti
Slide 29: Q&A
Q&A Thistle/Deveron Dons Northern Producer Heather/Broom Alma/Galia EnQuest Producer 28
Slide 30: Largest UK Independent Producer in the UK North Sea
Largest UK Independent Producer in the UK North Sea Government data (DECC) for UK North sea independent producers Total Production for the year ending April 2014 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 - EnQuest Ithaca Tullow Oil Fairfield Premier Oil First Oil Endeavour 29
Slide 31: Summary income statement
Summary income statement Half year to 30 June 2014 2014 2014 2013 US dollars Business Exceptional Reported Reported performance items $m’s $m’s $m’s $m’s Revenue 503,844 - 503,844 455,863 Cost of sales (339,507) (35,625) (375,132) (287,223) Gross profit 164,337 (35,625) 128,712 168,640 Exploration a
Slide 32: Balance sheet
Balance sheet 30 June 2014 31 December 2013 US dollars $m’s $m’s ASSETS Property, plant and equipment 3,334.4 2,871.2 Non-current assets Goodwill 166.6 107.8 Intangible oil and gas assets 197.5 130.9 Investments 2.4 2.4 Deferred tax asset 24.1 14.7 Other financial assets 21.9 21.9 3,746.9 3,148.9 Cu
Slide 33: Expanding our UK asset base in 2013 and 2014
Expanding our UK asset base in 2013 and 2014 Delivering sustainable growth Don North East 60% Don NE/Ythan ‘Out of round’ licence FDP submission ongoing Kraken Appraisal well 2014 Cairngorm Appraisal well Cairngorm Farmed out 55% Awarded two licences in the Norwegian Sea Alba Acquired Avalon 8% From
Slide 34: Kraken overview
Kraken overview Field summary 2 fields located in Block 9/2b 350km NE of Aberdeen Field area ~12 x 3.5 km Water Depth of 110m Heavy Oil (14 Deg API) but good flow properties Low sulphur content and not waxy FDP approved by DECC with two heavy oil tax allowances confirmed Developing 1
Slide 35: Kraken subsurface
Kraken subsurface STOIIP, reserves & recovery factor FDP STOIIP Produced RF% North 68 20 30% Central 85 38 45% South 268 89 33% Kraken Area 421 147 35% Conservative Recovery Factor Viscosity in cP Kraken Ultimate Recovery Factor from Heavy oil Fields 34
Slide 36: Kraken subsurface
Kraken subsurface Gross production profile & reserves – FDP MMstb South Central North Total Produced 89 38 20 147 Fuel 10 Sales 137 Gross Produced Oil stb/d 35
Slide 37: Alba
Alba 8% non-operated, 1,276 Boepd H1 2014 2014 Drill two new producers One well online One currently being completed Acquisition of new 4D seismic survey Key input for maturing future drilling targets Replacement of subsea water injection pipeline 2015 1 Planned Platform Well Rei
Slide 38: Alma / Galia
Alma / Galia ALMA GALIA N-Dev W2 W1 GA K3 GB K1 K4 GE EQ Development wells 2015 Planned producer K5 Future producer Potential future producer K2 K6 Alma abandoned at low water cut of 70% EQ Development wells Prudent base case with upside Drilled / completed producer The right facilities for th
Slide 39: Alma
Alma Subsurface -10 -105 52 00 5 -1047 -104 5 -1 50 04 25 -1 -10400 -100375 -1 3 -10032550 300 -10 -10-1 -10 2202275 5 50 500205 17 -102 5 -9878-59-999 00 -101 50 -9 5 0 12 0 -1 00 5 80 -10 1 -982 -9 484000 484400 484800 485200 485600 486000 486400 486800 505 487200 -977 -97 -9725 -9700 575487600 48
Slide 40: Alma
Alma New Seismic SW 30/24-2 30/24-1 3 0/24-5 30/24-3 30/25a-2 NE 39
Slide 41: Alma Development
0 0 0 -9 -985 45 -94 -9 -9300 -9 6229200 0 00 -925 -98 50 Alma Development -980 0 -9 7 -9 70 0 Wells Trajectory Schematic -8 50 6228800 60 7 -8 0 30/25a-02 -9 4 50 00 -940 0 -94 -9 65 0 0 -8 60 6 50 -9 50 00 0 -955 -9 4 -95 6228400 -9350 00 Development wells optimised to 0 -9 9 -8 -895 3 00 0 60 00
Slide 42: Galia
Galia STOIIP & Reserves Only 50% Water Cut Galia Main 2 Well Sampled 30/24-15 Galia 1 Bubble Point Pressure 1900 psia Main 1 Differential Gas-Oil Ratio 631 scf/stb outline 9 29 Galia East 3 30Z outline Formation Volume Factor 1.33 b/stb 0 04 Oil Viscosity 0.49 Degrees 30Y 15 API Gravity 38 Degrees F
Slide 43: Cairngorm appraisal well
Cairngorm appraisal well Further evaluation of results ongoing 42
Slide 44: Avalon Discovery
Avalon Discovery EnQuest operated discovery well (21/6b-8) encountered 85 ft gross oil column EnQuest (50%) Core acquired confirming Darcy sands 21/6b-8 Samples indicate 23 API oil Development options being progressed 1 km 43
Slide 45: International South East Asia & North Africa
International South East Asia & North Africa EnQuest’s first steps outside the UKCS International production acquisition, providing an operating platform in Tunisia a low cost entry point 100 MMboe of gross contingent resources and exploration opportunity with potential additional explorat
Slide 46: Thistle life extension projects
Thistle life extension projects Power & Electricity Upgrade Project New D turbine commissioned Topsides Structural Interim Projects New PC2 crane commissioned and operating as of Q2 2014. New PC1 destruct underway Topsides Structural Integrity Projects MOD 6A laydown area Destruct completed Construc
Slide 47: The Don fields
The Don fields Drilling map W1 Conrie – S7 W2 W5 W3Z S6 S13 S9 S12Z S10Y S11 S8Z W4 Legend S2Z TJ Producing Water Injector Drilled in 2013 W6 2014 Development S4 Legend West Don Drilling Plan Don Southwest and Conrie Drilling Plan 46 46 46 46
Slide 48: Thistle, Conrie and The Dons Infrastructure
Thistle, Conrie and The Dons Infrastructure 47
Slide 49: Heather / Broom Infrastructure
Heather / Broom Infrastructure 4848
Slide 50: Alma/Galia infrastructure
Alma/Galia infrastructure Proven fields Alma abandoned at low water cut of 70% Prudent base case with upside The right facilities for the fields Dedicated completions for Devonian/Rotliegend/Zechstein Variable speed drive ESPs 49 Water injection 4949
Slide 51: Greater Kittiwake Area Opportunity
Greater Kittiwake Area Opportunity Avalon Scolty Crathes Kittiwake Eagle Production Platform (or FPSO) 50
Slide 52: GKA Infrastructure
GKA Infrastructure ©Q__ GREATER KITTIWAKE AREA
Slide 53: Kraken Infrastructure
Kraken Infrastructure @nQuest NOTE * ALL FLOWLINES TRENCHED AND ROCK DUMPED * ALL STRUCTURES FISHING FRIENDLY DESIGN uncrion / CONTROL UMBNUCAL JUMPER PrELINE END Temranaron é Syeucruses ia Phe od Der ai J /S THEN FLEXIBLE JUMPERS PRODUCTION SQ. KRAKEN DEVELOPMENT - BLOCK 9/2b . PIPELINE EHO TERMINA
Slide 54: Tanjong Baram Infrastructure
Tanjong Baram Infrastructure 53
Slide 55: 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, reserves and other trend information. These statements and forecasts involv