Enquest Plc · LSE:ENQ
Enquest — H1 2010 Earnings Presentation
39 slides from Enquest's earnings presentation, Jun 30, 2010
Slide 1: EnQuest PLC Half Year Results 2010
EnQuest PLC Half Year Results 2010 Chief Executive Amjad Bseisu EnQuest Delivers Strong First Half Raises 2010 Production Guidance
Slide 2: Agenda
Agenda • Overview & Strategy Amjad Bseisu • Financials Jonathan Swinney • Operations Nigel Hares • Summary Amjad Bseisu 2
Slide 3: EnQuest's Strategy
EnQuest’s Strategy UKCS focused production and development To become one of the UK's leading independent oil and gas production and development companies Vision To become a technical leader in integrated development To maximise potential from existing fields and future developments in the UKCS
Slide 4: Operational Results
Operational Results Strong production performance in H1 Net production (boepd) 18,708 11,707 9,144 6,828 4,504 5,060 3,998 881 Thistle/Deveron The Dons Heather/Broom Total H1'09 H1'10 4
Slide 5: 2010 Asset Production & Increased Guidance
2010 Asset Production & Increased Guidance 62°N Annualised net production by asset 211/1a, 2a & 3a 0 km 100 (boepd) W. Don & Don SW 211/17 Thistle Heather & Broom Assets 2008 2009 2010E Shetland 3/11a Heather/Broom 7,550 6,400 60°N 47% yoy Peik Thistle/Deveron 2,600 3,850 growth Orkney The Dons - 3,
Slide 6: Strong Operational Performance
Strong Operational Performance • Thistle/Deveron • Production ahead of expectations, highest since Feb’ 2005 • Drilling expected to commence in Q3, for first time in over 20 years • The Dons • Up and over now installed • Outstanding drilling performance • Two additional Don Southwest producer wells
Slide 7: Reported Financials for Half Year to June 2010
Reported Financials for Half Year to 30 June 2010 US dollars • Strong cash flow and balance sheet • Cash generated from operations was $133m • Free cash flow of $68m • $76m cash & cash equivalents at 30 June 2010 • Reported pre-exceptionals profit before tax $83m Strong positive momentum post IPO la
Slide 8: Transition
Transition • Post IPO business transformation proceeding well • Rigorous performance management • Integration on track • Adjacent PEDL/Lundin offices in Aberdeen shortly to merge • Integration of office functions well advanced: IT/Systems etc • EnQuest workforce including offshore and contractors to
Slide 9: Business Development
Business Development • Encouraged by high level of dialogue with sellers • Attracted by EnQuest’s technical capability and financial strength • Being pro-active but rigorous and selective • Active in 26th licensing round • Announced • KUFPEC Farm-In to Elke • Stratic acquisition 9
Slide 10: Agreed Acquisition of Stratic
Agreed Acquisition of Stratic • Increases EnQuest’s North Sea 2P reserves by 7.27 million boe • Price equates to US$11.2 per barrel of 2P reserves • Adjusted for tax losses • Consolidates position in West Don to 45% • Providing c.900 net boepd extra production on completion • Provides 19% interest i
Slide 11: Financial Highlights
EnQuest Financial Highlights Chief Financial Officer Jonathan Swinney
Slide 12: Acquisition Accounting Summary
Acquisition Accounting Summary • EnQuest acquisition of Lundin North Sea (‘LNS’) is a corporate re- structure for accounting purposes • LNS is the continuing entity and the accounting acquirer of Petrofac Energy Developments (PEDL) • Income statement and cash flow for half year to 30 June 2010 • Com
Slide 13: Acquisition Accounting Goodwill
Acquisition Accounting Goodwill US dollars Fair value recognised on acquisition $m Unaudited Assets (including fair value uplift) 633.2 Liabilities (218.7) Total identifiable net assets at fair value 414.5 Purchase consideration transferred 513.2 (345,629,616 shares at 97.5p and £1:$1.5228) Goodwill
Slide 14: Reported Income Statement
Reported Income Statement Half year ended 30 June 2010 Half year ended 30 June 2010 2009 US dollars Exceptional costs and Reported in Business performance depletion of period fair value uplift $m $m $m $m Unaudited Unaudited Unaudited Unaudited Revenue 224.5 - 224.5 96.7 Cost of sales (137.4) (6.8)
Slide 15: Summary Income Statement
Summary Income Statement Half year ended 30 June Pro-forma* Reported US dollars (pre-exceptionals and fair value (pre-exceptionals and fair value adjustments) adjustments) Half Year ended 30 June Half Year ended 30 June 2010 2009 2010 2009 $m $m $m $m Unaudited Unaudited Unaudited Unaudited Revenue
Slide 16: Pro-Forma Financial Performance Indicators
Pro-Forma Financial Performance Indicators Pre-exceptionals and fair value adjustments US dollars H1’10 H1’09 Change $m $m Unaudited Unaudited % Production (boepd) 18,708 11,707 59.8 Average realised price per barrel ($) 78.18 54.96 42.2 Revenue ($m) 255.4 106.9 138.9 Cost of sales ($m) 162.7 88.1 8
Slide 17: Reported Balance Sheet
Reported Balance Sheet Half year consolidated balance sheet 30 June 2010 31 December 2009 US dollars $m $m Unaudited Unaudited ASSETS Non-current assets Property, plant and equipment 1,025.5 518.6 Goodwill 98.6 - Intangible assets 48.3 71.6 Loan receivable from related party - 21.4 Deferred tax asse
Slide 18: Reported Cash Flow
Reported Cash Flow For the half year ended 30 June 2010 US$m 131.6 133.3 (2.1) 11.0 * 12.7* 76.4 (73.7) 7.9 Cash & Pre-tax operating Tax paid Capex Financing & Other Cash & equivalents cash flow equivalents 1 January 30 June * Includes $16.1m re acquisition of subsidiary and ($4.5m) of finance costs
Slide 19: Pro-forma Capex of $95.3m in the Half Year
Pro-forma Capex of $95.3m in the Half Year US$m 40.7 36.8 16.2 1.5 Thistle/Deveron The Dons Heather/Broom Exploration & Appraisal 19
Slide 20: Exceptionals
Exceptionals US dollars • Non-cash items • $25.0m Scolty exploration write off • $6.8m Depletion of PEDL fair value uplift • Cash item • $9.6m Cost incurred at the time of flotation 20
Slide 21: Finance Summary & Full Year Outlook
Finance Summary & Full Year Outlook • Production delivery was overriding factor driving good financial performance – ahead of our expectations • Full year capex in line with our expectations and likely to be around $240m • DD&A • Increased due to higher production from Don Southwest and to adjustmen
Slide 22: Operations
EnQuest Operations Chief Operating Officer Nigel Hares
Slide 23: EnQuest Producing Assets
EnQuest Producing Assets Operatorship driving delivery of results 2 Net reserves (MMbbl) Contingent Resources 3 Field (first oil) Operator¹ Working interest 2P (MMbbl) 2C BP 1% Thistle/Deveron 99% EnQuest 31.6 14.9 (1978) Heather EnQuest 100% 20.5 16.6 (1978) Dyas UK 8% Challenger Minerals 8% Broom
Slide 24: Net Production (boepd)
Net Production (boepd) H1'09 H1'10 18,708 11,707 9,144 6,828 5,060 4,504 3,998 881 Thistle/Deveron The Dons Heather/Broom Total 24
Slide 25: Operations Highlights Thistle/Deveron
Operations Highlights Thistle/Deveron • Production ahead of plan • Improved power generation and hence higher water injection volumes • Workover of well A46 adds 600 boepd • June monthly average production of 5,454 boepd, highest since February 2005. Peak rates of 6,500 boepd • Drilling operations •
Slide 26: Thistle/Deveron Drilling Locations
Thistle/Deveron Area6-I1 Drilling Locations Area6-P1 A46 NWFB-P2 NWFB-P1 NFB-I1 DEV-P1 WFB-P2 A53 w/o DEV-P2 EFB-P3 DEV-I1 EFB-P1 EFB-P2 A33 w/o SFB-P1 Phase 1 Phase 2 Contingent Resources 26
Slide 27: Operations Highlights The Don Fields
Operations Highlights The Don Fields • Production well ahead of plan • Transferred from tanker loading to export via Thistle • Commenced water injection successfully • S2Z well initial production over net 9,000 boepd and ahead of plan • S5 initial production over net 13,000 boepd started production
Slide 28: Don Southwest Area Well Locations
Don Southwest Area Well Locations S6 Horst Injector S1 (DR4) Horst Prod S5 Production S3 (DR5) Horst Appraisal S3Z (DR5Z) Injection S2 (DR2) and S2Z (DR2Z) Prod S4Z (DR3Z) Appraisal S4 (DR3) Injection Area H Appraisal 28
Slide 29: West Don Area Well Locations
West Don Area Well Locations •211/18a-W3 Inj •211/18a-W1 Prod •211/18a-W2 Prod •211/18a-W4 Prod •Ariel Appraisal 29
Slide 30: Operations Highlights Heather / Broom
Operations Highlights Heather / Broom • Production close to plan year to date • BR7 NWT well and sidetrack disappointing, tophole suspended for future use • Broom pipeline improvement project • Pipeline laid and trenched • Pipeline tie in due Q3 30
Slide 31: 2010 Drilling Programme
2010 Drilling Programme Performance contributes to increased guidance J F M A M J J A S O N D Thistle • Don Southwest S5 A46 Jet Pump • Budget days 53 Thistle Abandonments • Actual days 41 Thistle SFB-P1 Thistle • Don Southwest S6 NWFB-P1 Broom • Budget days 55 BR7 • Actual days 33 Don Southwest Are
Slide 32: Conclusions
EnQuest Conclusions Chief Executive Amjad Bseisu
Slide 33: Targeting Production Growth
Targeting Production Growth bbl/d 40,000 2P production Organic Business Development 35,000 30,000 Increased 2010 Guidance 25,000 20,000 15,000 10,000 5,000 0 2009 2010 2011 2012 2013 2014 Source: 2P Production taken from Competent Person’s Report (Gaffney, Cline & Associates); Organic and Business D
Slide 34: Summary
Summary • Delivery against targets • Increase in full year production guidance to net 20,000 boepd • Active drilling programme in H2’10 • Thistle rig ready for first drilling in over 20 years • Strong financials • Confidence that this is the right time and the right place for EnQuest’s business mode
Slide 35: The Assets
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Slide 36: Technical Skills, Operational Scale, Financial Strength
Technical Skills Operational Scale Financial Strength
Slide 37: Appendix
EnQuest Appendix
Slide 38: Definition of "Pro-forma" in these Materials
Definition of “Pro-forma” in these Materials Detailed ‘pro-forma’ note; in April 2010 the newly incorporated independent entity EnQuest PLC acquired the demerged UK North Sea assets of Petrofac Limited and Lundin Petroleum AB respectively. This transaction has been accounted for as a pooling of inte
Slide 39: 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 and other trend information. These statements and forecasts involve risk and