Tullow Oil Plc · LSE:TLW
Tullow Oil — FY2016 Earnings Presentation
37 slides from Tullow Oil's earnings presentation, Feb 8, 2017
Slide 1: Tullow Oil plc 2016 Full Year Results
2016 FULL YEAR RESULTS Tullow Oil plc 8 February 2017
Slide 2: Disclaimer
2016 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: Aidan Heavey
2016 FULL YEAR RESULTS TULLOW OIL PLC – 2016 FULL YEAR RESULTS AIDAN HEAVEY
Slide 4: High-quality portfolio with major growth potential
2016 FULL YEAR RESULTS High-quality portfolio with major growth potential Action taken Solid business base Focus on growth Business reset High-margin Transformational and restructured production exploration assets Deleveraging under Team with Significant future way through organic track record cash
Slide 5: Les Wood
2016 FULL YEAR RESULTS TULLOW OIL PLC – 2016 FULL YEAR RESULTS LES WOOD
Slide 6: Proactive financial management
2016 FULL YEAR RESULTS Proactive financial management Self-help delivery Deleveraging started Prudent financing Cash cost savings Free cash flow in 2017 Liquidity headroom Significant G&A cash savings TEN production onstream $345m RBL accordion secured Underlying op costs down 5% Hedging underpins c
Slide 7: Full Year Results summary
2016 FULL YEAR RESULTS 2016 Full Year Results summary Income statement 2016 ($m) 2015 ($m) Sales revenue 1,270 1,607 Other operating income - lost production insurance proceeds 90 - Gross profit 547 591 Administrative expenses (116) (194) Restructuring costs (12) (41) Loss on disposal (3) (56) Goodw
Slide 8: Disciplined capital allocation targeting areas of future growth
2016 FULL YEAR RESULTS Disciplined capital allocation targeting areas of future growth 1800 Ghana 2016 Capex of c.$0.9bn 1600 West Africa non-op (incl Europe) Exploration • c.20% down from initial forecast of $1.1bn East Africa 1400 Uganda (offset by farm-down) 2017 Capex of c.$0.5bn 1200 • Signific
Slide 9: Hedging strategy provides protection to oil price volatility
2016 FULL YEAR RESULTS Hedging strategy provides protection to oil price volatility Prudent approach provides significant benefits to the business • Tullow has proactively hedged production to protect revenues over the last 10 years • Significant liquidity benefit through protecting future revenues
Slide 10: Managing balance sheet, debt diversification and liquidity
2016 FULL YEAR RESULTS Managing balance sheet, debt diversification and liquidity $bn Committed Debt Facilities Drawings Liquidity • $1.0bn facility headroom and free cash at year-end 6 • Minimum $0.5bn headroom going forward 1.0 c.$1.0bn RBL • Successful routine redeterminations Headroom • c.$200m
Slide 11: Paul McDade
2016 FULL YEAR RESULTS TULLOW OIL PLC – 2016 FULL YEAR RESULTS PAUL McDADE
Slide 12: Significant pipeline of high-margin production growth
2016 FULL YEAR RESULTS Significant pipeline of high-margin production growth Actual and forecast future oil production 2016 Production Future estimated potential production • West Africa oil production: 65,500 bopd* 2020s+ inc. East Africa 150 • Europe gas production: 6,200 boepd CWA Ghana 2017 Guid
Slide 13: TEN on stream following exceptional project delivery
2016 FULL YEAR RESULTS TEN on stream following exceptional project delivery Successful project execution and completion • Project delivered on time and on budget • Benchmarking shows industry-leading project execution • Commissioning completed on schedule • FPSO tested in excess of design capacity (
Slide 14: Strong Jubilee performance; remediation work underway
2016 FULL YEAR RESULTS Strong Jubilee performance; remediation work underway Turret remediation project Interim • Temporary heading nearing completion spread moor ✓ 100 kbopd • All equipment installed • Final pull of anchors expected by end of Feb capacity Long-term • Turret modifications for long-t
Slide 15: Jubilee & TEN – Material, long-life and low-cost fields
2016 FULL YEAR RESULTS Jubilee & TEN – Material, long-life and low-cost fields Operating cost reductions on track Ghana underlying operated Opex/bbl 15.0 • Underlying opex reduced to ~$9/bbl in 2016 Opex/bbl • Targeting opex in 2018+ of ~$8/bbl Opex $/bbl 10.0 Strong resource base $/bbl • Significan
Slide 16: Uganda farm-down supports Lake Albert development FID
2016 FULL YEAR RESULTS Uganda farm-down supports Lake Albert development FID Farm-down to Total announced • $900m consideration: - $200m cash - $100m on completion, $50m at FID, $50m at first oil - $700m in deferred consideration • Deferred consideration exceeds Tullow’s estimated share of upstream
Slide 17: Kenya: Firming-up oil resources ahead of development
2016 FULL YEAR RESULTS Kenya: Firming-up oil resources ahead of development Continuing to de-risk and build on resources • South Lokichar E&A programme recommenced in Q4 2016 • Upcoming appraisal wells to test upside in Amosing & Ngamia • Successful water injection tests support water flood & recove
Slide 18: Angus McCoss
2016 FULL YEAR RESULTS TULLOW OIL PLC – 2016 FULL YEAR RESULTS ANGUS McCOSS
Slide 19: Exploration central to long-term growth strategy
2016 FULL YEAR RESULTS Exploration central to long-term growth strategy • Focus on low-cost, high-margin, light oil plays • Portfolio of high-impact prospects suited to current environment • Working on our seismic and geological assets to create & high-grade prospects • Adding attractive exploration
Slide 20: 2017 Africa & South America planned exploration activity
2016 FULL YEAR RESULTS 2017 Africa & South America planned exploration activity JAMAICA MAURITANIA KENYA Walton Morant (100%) C3 (90%), C-10 (76.5%) Block 12A (50%) 2D Seismic Q1 ‘17 3D Seismic Q2 ‘17 2D Seismic Q1 ‘17 Block 10BB/13T (50%) 3D Seismic Q1 ’17 South Lokichar Basin (50%) SURINAME 4 + 4
Slide 21: Kenya: E&A drilling programme in South Lokichar Basin
2016 FULL YEAR RESULTS Kenya: E&A drilling programme in South Lokichar Basin Material proven oil basin • 12 exploration prospects drilled • 10 oil accumulations discovered • 22 appraisal wells drilled for delineation & testing • 750 mmbo mean resource estimate Significant upside potential • Estimate
Slide 22: Guyana-Suriname: excellent position in new oil province
2016 FULL YEAR RESULTS Guyana-Suriname: excellent position in new oil province • Liza-1 deepwater oil discovery significantly de-risks the basin & Tullow’s regional acreage • Araku: Estimated 500mmbo prospect in four-way structural closure, good seismic amplitude support • Araku-1 well cost estimate
Slide 23: Guyana: prospects up-dip of Liza-1 discovery, in shallow water
2016 FULL YEAR RESULTS Guyana: prospects up-dip of Liza-1 discovery, in shallow water Exploration activity commenced • 3D seismic programme to commence in Q1 2017 • Jubilee-like setting up-dip of Liza oil discovery • Estimated well cost of c.$15 million each net to Tullow (non-op 30%) • Shallow wate
Slide 24: Africa: Shallow water plays and Cretaceous turbidite leads
2016 FULL YEAR RESULTS Africa: Shallow water plays and Cretaceous turbidite leads Mauritania Namibia • Shallow water plays focused around oil kitchen • Multiple Cretaceous leads in high-quality 3D seismic • Low-cost, high-impact prospects based on 3D seismic • Shallow water (500m) low-cost opportuni
Slide 25: Aidan Heavey
2016 FULL YEAR RESULTS TULLOW OIL PLC – 2016 FULL YEAR RESULTS AIDAN HEAVEY
Slide 26: High-quality portfolio with major growth potential
2016 FULL YEAR RESULTS High-quality portfolio with major growth potential Action taken Solid business base Focus on growth Business reset High-margin Transformational and restructured production exploration assets Deleveraging under Team with Significant future way through organic track record cash
Slide 27: Tullow Oil plc – 2016 Full Year Results
2016 FULL YEAR RESULTS TULLOW OIL PLC – 2016 FULL YEAR RESULTS
Slide 28: A leading global independent exploration & production company
2016 FULL YEAR RESULTS A leading global independent exploration & production company Established record of delivering successes • The business has developed organically and through acquisitions since 1985 • Management team with decades of industry experience Diversified world-class asset base • Focu
Slide 29: The Tullow strategy
2016 FULL YEAR RESULTS The Tullow strategy Additional cash flow from new production Monetisation High Margin Exploration Selective Options & Production and Development Portfolio Cash flow Appraisal Management Costs & Dividends Additional Surplus Cash Exploration, Cash Distribution • Capital focus on
Slide 30: A sustainable future production base
2016 FULL YEAR RESULTS A sustainable future production base Key production and development Countries with ongoing operations Key oil producing countries TEN field • First oil achieved in August 2016 • FPSO gross capacity of 80,000 East Africa bopd (net WI ~35,000 bopd) Developments • Gross productio
Slide 31: Affirmation of Jubilee insurance cover
2016 FULL YEAR RESULTS Affirmation of Jubilee insurance cover Revised Remediation Spread operating solution moor FPSO Install Deepwater Identification Temporary Permanent of issue procedures designed heading heading Offloading Buoy* ✓ ✓ ✓ Feb 2016 April 2016 June 2016 2016 2017 2018 Turret remediati
Slide 32: New venture campaigns focused on long-term value
2016 FULL YEAR RESULTS New venture campaigns focused on long-term value Commercial Screening Off-limits Exploration Tested at $50/bbl Low cost of supply Ultra-deepwater Value accretive Deepwater gas High Margin Oil Shale oil Arctic Capital & Risk Screening Onshore Rifts East Africa Light Oil Over-he
Slide 33: Onshore East Africa: exploring regional oil play
2016 FULL YEAR RESULTS Onshore East Africa: exploring regional oil play Location Activity Uganda Lake Albert • 17+ oil fields discovered (90% success) Basin • Estimated 1.7 billion barrels of oil discovered Kenya North • Basin margin play unsuccessful at Engomo-1 Turkana Basin • Independent plays aw
Slide 34: South America: Significant positions in under-explored region
2016 FULL YEAR RESULTS South America: Significant positions in under-explored region • Jamaica: early stage of frontier exploration, interpreting new 2D seismic data • Guyana: attractive acreage up-dip of material Liza-1 oil discovery; acquiring 3D seismic in Q1 2017 • Suriname: amplitude-supported
Slide 35: Africa: Long-term future upside & portfolio replenishment
2016 FULL YEAR RESULTS Africa: Long-term future upside & portfolio replenishment LAKE MWERU WANTIPA BASIN • Mauritania: exploration shifted to low-cost shelf-edge oil plays, 3D seismic planned for Q2 2017 • Zambia: extension of East African Rift Basin Play; FTG planned for Q2 2017 • Namibia: materia
Slide 36: Ghana acreage
2016 FULL YEAR RESULTS Ghana acreage Slide 36
Slide 37: Tullow Oil plc
2016 FULL YEAR RESULTS 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 Email: ir@tullowoil.com Web: www.tullowoil.com