Enquest Plc · LSE:ENQ
Enquest — H1 2018 Earnings Presentation
35 slides from Enquest's earnings presentation, Sep 7, 2018
Slide 1: 2018 Half Year Results & Proposed Rights Issue to acquire additional interest in Magnus
2018 Half Year Results & Proposed Rights Issue to acquire additional interest in Magnus
Slide 2: Amjad Bseisu, Chief Executive
Amjad Bseisu Chief Executive 1
Slide 3: Disclaimer
Disclaimer This presentation is not for release, publication or distribution, directly or indirectly, in or into the United States, Canada, Australia, Japan, the Republic of South Africa or any other jurisdiction in which such publication or distribution is unlawful. This presentation does not const
Slide 4: Disclaimer continued
Disclaimer continued This presentation may not be reproduced (in whole or in part), distributed or transmitted to any other person without the prior written consent of the Company and is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distr
Slide 5: Agenda
Agenda H1 2018 Highlights Amjad Bseisu, CEO H1 2018 Financials Jonathan Swinney, CFO H1 2018 Operations Bob Davenport, MD North Sea Summary Amjad Bseisu, CEO 4
Slide 6: Highlights
Highlights @nQuest
Slide 7: EnQuest performance: Highlights H1 2018
EnQuest performance Highlights H1 2018 Group net production up 45.9%, averaging 53,990 Boepd Revenue up 86.0% at $548.3 million; EBITDA up 106.6% at $311.9 million Material increase in cash generated by operations at $318.3 million; cash capital expenditure of $125.8 million Cash and availab
Slide 8: A business model and operational capabilities that deliver
EnQuest performance A business model and operational capabilities that deliver Strong safety performance Extensive 2018 drilling programme of new wells Heather: H-67 well onstream in March PM8/Seligi: SeC-39 and SeC-40 onstream in July; two wells planned for 2019 Magnus: M-62 onstream in M
Slide 9: Financial performance
Financial performance Jonathan Swinney, Chief Financial Officer
Slide 10: Results summary: Half year to June 2018
Results summary Half year to 30 June 2018 Unless otherwise stated, all figures are before exceptional items and depletion of fair value uplift and are in US Dollars US Dollars H1 2018 H1 2017 Change % Production (Boepd) 53,990 37,015 45.9 Average realised price ($/bbl)1 59.5 51.9 14.6 Revenue and ot
Slide 11: Summary income statement
Summary income statement Half year to 30 June 2018 US Dollars H1 2018 H1 2017 Business Business performance performance $ million $ million Revenue 548.3 294.8 Cost of sales (447.5) (248.6) Gross profit 100.8 46.1 G&A and other income/(expenses) 4.4 (12.6) Profit/(loss) from operations before tax an
Slide 12: Cost management: Production growth driving costs
Cost management Production growth driving costs H1 2018 H1 2017 2018 Actual Actual Outlook Cost of sales ($ million) 447.5 248.6 Unit operating cost1 ($/Boe) - Production costs 18.6 20.3 c.20.0 Incl. Alma/Galia workovers c.1.5 - Tariff and transportation costs 4.0 4.6 c.4.0 - Operating costs 22.6 24
Slide 13: Reducing cash capital expenditure
Reducing cash capital expenditure Half year to 30 June 2018 $m 121 74 57 27 15 15 9 10 2 1 Kraken NNS CNS Malaysia Exploration & other 2017 2018 13
Slide 14: Net debt and cash flow
Net debt and cash flow Half year to 30 June 2018 1,991.4 35.6 1,973.4 $m 159.7 1,845.8 125.8 (339.1) Opening net Net cash flow Cash capital Net financing & Non-cash Closing net debt Closing net debt debt from operations expenditure other interest (Excl. PIK) capitalisation & FX 14
Slide 15: Financing agreement for $175 million
Financing agreement for $175 million Ring-fenced at favourable cost Financing agreement with funds managed by Oz Management Ring-fenced on a 15% share of Kraken Repayment out of the cash flows associated with the 15% share over a maximum of five years Lower cost than the current interest on En
Slide 16: Outlook information: Guidance reaffirmed
Outlook information Guidance reaffirmed 2018 outlook reaffirmed Production guidance range of c.50,000 Boepd to 58,000 Boepd Unit opex expected to be c.$24/Boe, including costs associated with planned workovers On track to reduce 2018 gross SVT costs from c.£200m in 2017 to c.£150 million Cas
Slide 17: Operations
Operations Bob Davenport, MD North Sea
Slide 18: Production performance
Production performance Half year to 30 June Boepd1 21,655 18,002 17,099 10,849 8,969 8,225 6,108 97 2 NNS CNS Malaysia Kraken 1 Net working interest. 2017 2018 2 Net production since first oil on 23 June, averaged over the six months to the end of June 2017. 18
Slide 19: Kraken performance: Improving delivery
Kraken performance Improving delivery H1 2018 Average gross production slightly below expectations at c.31,000 Bopd Adverse weather and reservoir under-voidage Maintenance and system modifications have improved water injection rates; gross production improved to an average of c.33,000 Bopd in
Slide 20: Kraken outlook
Kraken outlook Optimising performance; assessing additional resource Kraken outline and development H2 2018 activities well locations Maximising plant stability and uptimes Acceptance Certificate issued in September Managing reservoir voidage via water injection DC4 drilling expected to comm
Slide 21: Northern North Sea
Northern North Sea Strong performance; successful integration of Magnus & SVT H1 2018 High levels of plant uptime and water injection efficiency Strong contribution from Magnus Excellent performance from the Heather H-67 well Dunlin bypass export line sanctioned Thistle idle-well abandonme
Slide 22: Central North Sea
Central North Sea Planned production enhancements on track H1 2018 Average production levels lower than H1 2017, but above H2 2017 Steady production at Alma/Galia Scolty/Crathes production managed via low cost lift gas treatments Replacement pipeline sanctioned at Scolty/Crathes H2 2018 acti
Slide 23: Malaysia
Malaysia Effective asset management; two new wells onstream H1 2018 High levels of production efficiency at both PM8/Seligi and Tanjong Baram Low cost idle well intervention activities delivered ahead of schedule; continues to arrest PM8/Seligi natural decline Drilled two wells at Seligi field
Slide 24: Amjad Bseisu, Chief Executive
Amjad Bseisu Chief Executive
Slide 25: EnQuest outlook
EnQuest outlook Well placed to deliver long-term sustainable growth 2018 and beyond Strong performance in H1 2018; all 2018 guidance reaffirmed Continue to prioritise debt reduction Significant potential within the existing portfolio; particularly at Magnus, Kraken and PM8/Seligi Average net p
Slide 26: Magnus acquisition: A compelling option
Magnus acquisition A compelling option Magnus acquisition: a material growth opportunity with attractive economics Expected to add c.60 MMboe (2P reserves) / c.10 MMboe (2C resources) as at 1/1/18 Expected to add c.$500 million of NPV(10)* inclusive of consideration, loan repayment and cash flow
Slide 27: Appendices
Appendices @nQuest
Slide 28: Subsurface opportunity
Subsurface opportunity The “right asset” in the “right hands” Project Oil recovery* MMbbls Base 46.7 M62z 1.7 M63 4.6 2018 Well work 1.0 Voidage Management 2.6 Canute 4.1 T10/T11 2.1 Base case 62.5 Potential 2C 2020+ c.16 Canute T10/T11 Infill, workovers and voidage Base 2P * Source: CPR. Modelling
Slide 29: Acquiring additional equity
Acquiring additional equity Funding near term infill well opportunities Anticipated 2019 drilling programme Wells target separate areas; defined from both analytical and reservoir simulation studies M-62 Payback expected within two years; IRRs > 100% T10/T11 Canute: 2P reserves of 3.9 MMbbls @
Slide 30: EnQuest differential capability
EnQuest differential capability A strong track record Operational excellence - Differential capability - Value enhancement - Financial discipline 30
Slide 31: EnQuest: 8 Hubs
EnQuest: 8 Hubs A strong platform for growth Heather/Broom Kraken Thistle/Deveron The Dons Magnus Alma/Galia Greater Kittiwake Area PM8/Seligi 31
Slide 32: Strong reserves growth in first eight years
Strong reserves growth in first eight years Reserve life c. 17 years Net 2P reserves 2010 to end of 2017 209 210 MMboe MMboe 81 (80) MMboe MMboe Net 2P reserves Production Additions to Net 2P reserves at end 2017 start 2010 2010 to 2017 reserves 2010 to end 2017 32
Slide 33: EnQuest's North Sea asset base
EnQuest’s North Sea asset base As at 30 June 2018 Licence Block(s) Name P073 21/12a Goosander P193 211/7a, 211/12a Magnus P2131 16/26a Alba P236 211/18a Thistle & Deveron P236 211/18c Don SW & Conrie P236 / P1200 211/18b & 211/13b West Don Kittiwake, Grouse, Mallard, Gadwall P238 21/18a, 21/19a & 21
Slide 34: Group tax position
Group tax position No material UK cash CT/SCT on operational activities expected UK Tax Allowances $m Tax losses at 31 December 2017 3,121 2018 net additions plus RFES 18 Tax losses at 30 June 2018 3,139 Tax allowances carried forward 100 Total tax losses and allowances at 30 June 2018 3,239 No ma
Slide 35: Group tax position: Tax credit reconciliation
Group tax position Tax credit reconciliation Tax credit $m’s Profit Before Tax 0.1 UK CT Rate 0.1 RFES (31.4) UK and overseas tax rate differences 11.5 Permanent items (7.2) Prior year adjustments (0.9) Other 5.0 Tax Credit (23.0) Exceptional Tax Items (1.2) HY 2018 Tax Credit (24.2) 35