Enquest Plc · LSE:ENQ
Enquest — Investor Day (November 2019)
40 slides from Enquest's investor day presentation, Nov 21, 2019
Slide 1: Differential capabilities to deliver portfolio value
Differential capabilities Deliver to deliver portfolio value De-lever Grow 2019 Capital Markets Day
Slide 2: Contents
Differential capabilities to deliver portfolio value Contents EnQuest at a glance - Operator of choice for maturing hydrocarbon assets Amjad Bseisu Chief Executive Investment proposition - Proven track record, improving balance sheet and differential capabilities to create value Bob Davenport Value
Slide 3: EnQuest at a glance
€Q ©nQuest EnQuest at a glance
Slide 4: Operator of choice for maturing hydrocarbon assets
Operator of choice for maturing hydrocarbon assets Production breakdown1 Production CAGR expected to be c.17% since IPO 80,000 Malaysia 8.4 kboepd 12% 60,000 40,000 20,000 UK 60.1 kboepd 88% 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2 Actual/forecast Guidance range Sullom Voe Terminal
Slide 5: Safety is at the heart of our performance
Safety is at the heart of our performance Safe Results through continuous improvement EnQuest LTIF1 0.8 Lost Time Incident performance remains strong 0.7 across all assets 0.6 Proactive safety driven shutdowns carried out at Thistle and Heather 0.5 - Plans to return to safe operations in 0.4 the fir
Slide 6: Focused on emissions
Focused on emissions Regulation EnQuest actions UK - 80% reduction planned at SVT - EU Emissions Trading System - Invested in gas supply for power at Thistle and Northern Producer installations - Flaring limits - Invested in tri-fuel generator at Kraken Malaysia - Flaring limits - Flaring c.45% belo
Slide 7: Investment proposition
Proven track record Investment proposition Improving strategic position Differential capability Significant value creation opportunities Tax advantage 7 EnQuest PLC Capital Markets Day 2019
Slide 8: Driving efficiencies and asset life extension
Driving efficiencies and asset life extension Improving operational efficiencies Asset life extension - Targeting production efficiency of 80%+ Dons 16 years - Strong track record Thistle 16 years Driving costs down - Reduced unit opex by c.50% since 2014 to c.$20/boe1 GKA 7 years PM8/Seligi 10 year
Slide 9: Significant growth in reserves
Significant growth in reserves North Sea operation breakdown Malaysia operation breakdown c.89 c.12 7 Operated MMboe produced (net) 14 operated MMboe Produced (net) production offshore hubs platforms 63 c.235 wells drilled and 63 idle wells returned c.28 completed by MMboe of net 2P to production MM
Slide 10: Progress on our strategic priorities
Progress on our strategic priorities Annual net production1 - Production guidance unchanged (Boepd) - Kraken performance improving 80,000 70,000 - Industry leading drilling performance 60,000 68,501 63,000 40,000 55,447 Deliver - Best-in-class sub-sea project performance 20,000 37,405 0 2017 2018 YT
Slide 11: An industry leader in drilling: 46 of 104 wells in UKNS
An industry leader in drilling: 46 of 104 wells in UKNS1 UKNS well costs1 (£ million) Per well 50 45 40 35 30 25 20 15 10 5 0 46 EnQuest wells drilled Industry median EnQuest 1 Between January 2015 to March 2019 Source: Company data; Rushmore Reviews (April 2019) 11 EnQuest PLC Capital Markets Day 2
Slide 12: An industry leader in drilling: 46 of 104 wells in UKNS
An industry leader in drilling: 46 of 104 wells in UKNS1 UKNS well costs1 (£ million) Cumulative 2,000 Bottom quartile 1,600 Industry median 46 wells drilled 1,200 saving c.£450 Top Quartile million 800 EnQuest compared to industry median 400 0 46 EnQuest wells drilled 1 Between January 2015 to Marc
Slide 13: In-house drilling capability
In-house drilling capability Technical and Low-cost Culture of commercial drilling continuous Focus capability improvement Full project Standardise responsibility and simplify – design to completion 13 EnQuest PLC Capital Markets Day 2019 Differential capability
Slide 14: Best-in-class sub-sea project performance
Best-in-class sub-sea project performance EnQuest in-house capability Oil and Gas UK Efficiency Task Force study (2015-2018) - Greater scope - Schedule efficiency - Lower cost TIME – in comparison to optimum performance Upper quartile cost and schedule performance - Kraken multi-well development - S
Slide 15: Unlocking the future
Unlocking the future High-grade value - High-grade and develop resources enhancing activity In-house (MMboe) Existing resources focused in 3 major assets capability 80 70 60 50 68 40 50 Wide 30 42 38 opportunity Repeatable 20 set performance 10 0 Magnus Kraken PM8/Seligi Other UK On time and low-cos
Slide 16: Investment proposition
Proven track record Investment proposition Improving strategic position Differential capability Significant value creation opportunities Tax advantage 16 EnQuest PLC Capital Markets Day 2019
Slide 17: Magnus: value improvement
Magnus: value improvement Assets performance Driving down unit costs - Simplify - Lean operating model - Control systems; produced water debottlenecking - Right-sized workforce - Effective supply chain and contractor management - Improved reliability - Power, water injection and compression - Integr
Slide 18: Magnus: maximising the opportunities
Magnus: maximising the opportunities TR1/TR2 Prospect A material asset with a long life NW Magnus - c.2 billion boe HIIP1 - Current CoP2 date 2035 Maximising the asset value - Material well programme over 4-5 years - 2019 2P drilling targets; c.$15m per well M Legend - Payback <10 months 2P Target -
Slide 19: Magnus: increasing reserves and resources
Magnus: increasing reserves and resources Oil production profile NPV driven upwards >$450 million (Bopd) ($ million) 1000 25,000 800 >700 600 20,000 400 503 200 15,000 254 0 1 Acquisition case CPR1 case Latest forecast NPV(10) 1.1.17 NPV(10) 1.7.18 NPV(10) 1.1.20 10,000 $75/bbl $60/bbl $60/bbl Reser
Slide 20: PM8/Seligi: strong, consistent performance
PM8/Seligi: strong, consistent performance Asset performance Driving down unit costs - Gas compression reliability >97% - Effective supply chain management - Process simplification - Low cost well interventions increasing production - Increased maintenance and inspection programme Production efficie
Slide 21: PM8/Seligi: idle well intervention success
PM8/Seligi: idle well intervention success - Integrated programme planning and execution Boepd1 Before EnQuest operatorship After EnQuest Operatorship 40,000 - Low-cost production enhancement and reservoir surveillance activities 30,000 - >650 well strings entered since 2014 20,000 - 2015-2019: adde
Slide 22: PM8/Seligi: prioritising high value activities
PM8/Seligi: prioritising high value activities A material asset that adds diversity to our portfolio Serudon Lawang - >2 billion boe HIIP Langat - PSC terms ends 2033 Yong Targeted development plans to unlock full potential North Raya - Ongoing low-cost idle well and intervention activities; targeti
Slide 23: PM8/Seligi: increasing resources, production and value
PM8/Seligi: increasing resources, production and value Oil production profile NPV driven upwards >$200 million (Bopd) ($ million) 30,000 250 200 25,000 150 >200 100 20,000 50 0 67 0 Acquisition case Acquisition case Latest forecast 15,000 NPV(10) NPV(10) NPV(10) 1.1.20 $60/bbl $90/bbl $60/bbl 10,000
Slide 24: Kraken: strong performance and pricing
Kraken: strong performance and pricing - Improving production efficiency Average production (Bopd)1 - last 2 months at >90% 50,000 - Steady water cut evolution 40,000 30,000 - Cargo pricing improved 20,000 - Heavy oil demand 10,000 - - Low-sulphur crude Jan Feb Mar Apr May Jun Jul Aug Sep Oct - Prod
Slide 25: Kraken: material upside
Kraken: material upside Barra Western Flank - Worcester approved - Targeting c.6 MMbbls1 at c.$15/bbl Maureen - Payback c.13 months - NPV(10) at $60/bbl: c.$100 million - IRR >50% - Pembroke appraisal Antrim - Antrim and Barra evaluation Pembroke EOR polymer flood Maureen evaluation Worcester 1 Gros
Slide 26: Significant offshore opportunities
Significant offshore opportunities Magnus - Multi-year drilling programme - c.250 MMbbls of movable oil PM8/Seligi - Multi-year drilling and intervention programme - >3tcf of gas in Seligi - Requires commercial agreements Kraken - Multiple western flank opportunities being assessed - Further upside
Slide 27: SVT: strategically located oil and gas midstream hub
SVT: strategically located oil and gas midstream hub One of Europe’s largest oil and gas terminals - Constructed 1975 – 1981 - 1,000 acre site; c.8 mbbls crude storage - Self sufficient power generation - EnQuest operate 340km gas pipelines 27 EnQuest PLC Capital Markets Day 2019 Significant value c
Slide 28: SVT: services required for decades to come
SVT: services required for decades to come 40-year exemplary track record (Bopd) 80 - Safe and environmentally sensitive service - >30 offshore fields crude delivered via 70 Brent, Ninian, SGP & Clair pipelines 60 - c.100 mmscfd per day WoS Gas Aggregated current field forecasts 50 for existing SVT
Slide 29: SVT: substantial operations optimisation since assuming operatorship
SVT: substantial operations optimisation since assuming operatorship Base opex profile (%) 100 c.80 c.75 c.60 c.40 c.20 SVT Simplification and Transformation 2017 2018 2019 2020 2025 2035+ EnQuest transition Core Core Business ‘Future Simplified Stabilised crude (Q4) opex reduction opex reduction Fi
Slide 30: Financial performance
©nQuest Financial performance
Slide 31: Sustainable reduction in unit opex
Sustainable reduction in unit opex 2014 2015 2016 2017 2018 2019 $42/boe Spread rate C.£3 million C.£1 million C.£3 million Software licence reduction Manpower Kraken Engineering services optimisation Wells C.£2 million C.£1 million C.£3 million saved Multi-skilling C.£1 million Wells Operations Wel
Slide 32: Capital discipline: investment targeting high-value activities
Capital discipline: investment targeting high-value activities Delivery of past projects Cash capex $ million - Kraken c.$2.1 billion vs c.$3.2 billion budget 1,200 - Pipeline projects on budget and ahead of schedule 1,000 1,058 Future spending - Focus on low-cost, high-return and quick payback 800
Slide 33: Rapid deleveraging through significant cash generation
Rapid deleveraging through significant cash generation 2019 FCF1 yield of over 65% LTM net debt: EBITDA 1.7x FCF1 Net debt $ million $ million 250 2,000 c.22% 1,991 200 215 210 150 1,774 100 50 1,500 1,561 0 (50) (100) (116) (150) 1,000 2017 2018 YTD Oct 2019 End Dec 2017 End Dec 2018 End Oct 2019 1
Slide 34: Significant value creation through acquisitions
Significant value creation through acquisitions $ million PM8 Seligi >200 - Acquired in 2014 for $27 million cash; paid back in 12 months 0 67 Acquisition case Acquisition case Latest forecast NPV(10) NPV(10) NPV(10) 1.1.20 $60/bbl $90/bbl $60/bbl $ million GKA >100 - Acquired in 2015 for $30 millio
Slide 35: Delivering shareholder value
Delivering shareholder value Production Cost control Free cash flow1 generation Deliver Capital discipline Strengthen the balance sheet Continued net debt reduction De-lever Cash flow focus Develop asset base NPV accretion Selective, value enhancing acquisitions Grow High returns 1 Free cash flow: n
Slide 36: Concluding remarks
€Q ©nQuest Concluding remarks
Slide 37: A strategy that will deliver shareholder returns
A strategy that will deliver shareholder returns Drilling and Mature assets sub-sea projects Low cost 2C UK tax asset resources 37 EnQuest PLC Capital Markets Day 2019
Slide 38: Clear roadmap ahead
Clear roadmap ahead Magnus: c.250 MMbbls movable oil Deliver Strengthen Kraken: Appraising Maureen our our Balance Creative transaction structures drilling opportunity promises Sheet Acquisition of maturing assets PM8/Seligi: Significant potential gas development Utilisation of tax advantage Organic
Slide 39: Investment proposition
Proven track record Investment proposition Improving strategic position Differential capability Significant value creation opportunities Tax advantage 39 EnQuest PLC Capital Markets Day 2019
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, reserves and other trend information. These statements and forecasts involv