Enquest Plc · LSE:ENQ
Enquest — FY2020 Earnings Presentation
31 slides from Enquest's earnings presentation, Mar 25, 2021
Slide 1: EnQuest 2020 Full Year Results
EnQuest 2020 Deliver Full Year Results De-lever Grow
Slide 2: Introduction
EnQuest 2020 full year results Introduction Amjad Bseisu Chief Executive 2 EnQuest PLC Full Year Results 2020
Slide 3: Key 2020 messages
Key 2020 messages Strong free cash flow generation and a transformed company - Production within guidance at 59,116 Boepd - CoP drove c.7,000 Boepd reduction from 2019 - UK re-organisation completed - Cost control and capital discipline driving material savings vs 2019 - Opex of c.$329 million, c.$1
Slide 4: Golden Eagle: a high-quality addition to the portfolio
EnQuest 2020 full year results Golden Eagle: a high-quality addition to the portfolio Material value enhancement - >$100 million NPV(10)1 at $50/bbl including initial consideration of $325 million; primarily related to accelerated partial use of EnQuest’s tax losses Impressive HSE performance - Zero
Slide 5: A transformed company, enhanced by Golden Eagle acquisition
EnQuest 2020 full year results A transformed company, enhanced by Golden Eagle acquisition Production focused on the lowest cost assets Net production1 (Boepd) - Core assets of Magnus, Kraken, GKA and Scolty/Crathes and 70,000 68,606 PM8/Seligi Decom 59,116 c.10,000 52,000 50,000 - Golden Eagle expe
Slide 6: EnQuest: a business model for the energy transition
Environmental, social and governance EnQuest: a business model for the energy transition Focused on extending the useful lives of assets in a responsible manner, helping to fulfil energy demand requirements as part of the transition to a sustainable lower-carbon world Maximising value from existing
Slide 7: Lowering emissions through the energy transition
Environmental, social and governance Lowering emissions through the energy transition Focused on - Absolute Scope 1 and 2 emissions reduced; targeting a further 10% reduction by end 20231 absolute (ktCO2e) reductions; 2,000 management 1,600 26% 10% incentives 1,200 linked to three- 800 year target 2
Slide 8: People, communities and governance
Environmental, social and governance People, communities and governance SAFE Results - LTIF of 0.221 – Top quartile performance Strong culture - Strong operational response to COVID-19 and Values - Increased provision of wellbeing support for our workforce Improving - Building a diverse leadership:
Slide 9: Operations overview
EnQuest FY 2020 performance Operations overview Bob Davenport Managing Director – North Sea 9 EnQuest PLC Full Year Results 2020
Slide 10: Production in line with guidance
2020 Production performance Production in line with guidance 2020: 59,116 Boepd1 Summary: 2019: 68,606 Boepd1 - Strong production efficiency and optimised injector-producer management at Kraken Delivered - Robust performance at Magnus - Cessation of production at Heather, Thistle 26,450 and Alma/Gal
Slide 11: Improved uptime on Kraken; robust Magnus performance
Operational delivery Improved uptime on Kraken; robust Magnus performance Kraken Magnus 2020 2020 - High production efficiency of 87% with good subsurface and well - Good production and water injection efficiency performance - Two new wells online in the first quarter - Worcester producer-injector p
Slide 12: Strong Scolty/Crathes performance; CoP decisions reduced production
Operational delivery Strong Scolty/Crathes performance; CoP decisions reduced production Other UK Upstream Decommissioning Scolty/Crathes | Kittiwake | Alba Heather/Broom | Thistle/Deveron | Alma/Galia | The Dons 2020 2020 - Strong performance from Scolty/Crathes - Heather/Broom and Thistle/Deveron
Slide 13: PM8/Seligi impacted by detached riser; good progress on recovery
Operational delivery PM8/Seligi impacted by detached riser; good progress on recovery Malaysia 2021 performance and riser update PM8/Seligi | PM409 - Detached riser at PM8/Seligi impacted production in Q4 - Accelerated restoration efforts have successfully achieved higher than forecast levels of pro
Slide 14: Financial review
EnQuest FY 2020 performance Financial review Jonathan Swinney Chief Financial Officer 14 EnQuest PLC Full Year Results 2020
Slide 15: Full year 2020 performance
Results summary Full year 2020 performance Cash generated Revenue1 Unit opex from operations $857 million $15/Boe $568 million 50% 26% 43% Cash Net debt4 EBITDA2 expenditure3 $551 million $173 million $1,280 million 44% 30% 9% Lower oil price assumptions resulted in non-cash post-tax impairment of $
Slide 16: Focused and controlled spend programme
Cash capital expenditure Focused and controlled spend programme 2020: Cash capital and abandonment expenditure $m - Worcester drilling programme at Kraken concluded in Q2 - Magnus infill campaign concluded in Q1 300 - Decommissioning phase commenced at Alma/Galia and Heather 249 250 11 2021: 200 - L
Slide 17: Strong free cash flow driving debt reduction
Net debt Strong free cash flow driving debt reduction Net debt reduced by 9% reflecting strong free cash flow Movement in net debt of $211 million: $m - Lower net cash flow from operations, primarily reflecting lower oil prices 1,400 1,413 522 - Magnus contingent consideration - $21m repayment of ve
Slide 18: New facility to fund the acquisition and simplify EnQuest's capital structure
Debt structure New facility to fund the acquisition and simplify EnQuest’s capital structure Initial consideration of $325 million Key milestones - Funded through a combination of a new senior secured debt - Debt book building process facility, interim period cash flows and an equity raise - Prospec
Slide 19: Summary
EnQuest 2020 full year results Summary Amjad Bseisu Chief Executive 19 EnQuest PLC Full Year Results 2020
Slide 20: Well placed to deliver value
EnQuest 2020 full year results Well placed to deliver value Strengthened strategic Significant value creation Proven track record position opportunities Deliver De-lever Grow - Target production efficiency of 80%+ - Delivered business transformation in 2020 - Existing 2P reserves of 189 MMboe - Focu
Slide 21: Proven track record / Q&A
Proven track record Net production (Boepd) 14% CAGR 59,116 13,613 2009 2020 Unit opex ($/Boe) 57% reduction 35 Q&A 2009 15 2020 2P reserves (MMboe) 133% increase 189 81 2009 2020
Slide 22: A clear purpose and strategy with a focused business model
Appendix A clear purpose and strategy with a focused business model Purpose - Providing creative solutions through the energy transition Strategic vision - To be the operator of choice for maturing and underdeveloped hydrocarbon assets Focused business model - A production and development led E&P bu
Slide 23: 2021 guidance
Appendix 2021 guidance1 - Group production: 46,000 to 52,000 Boepd - Kraken production (gross): 30,000 to 35,000 Boepd Deliver - Operating expenditure of c.$265 million - Cash capex and abex of c.$120 million - c.5 MMbbls hedged at floor of c.$55/bbl and ceiling of c.$64/bbl De-lever - Signed agreem
Slide 24: Operator of choice for maturing hydrocarbon assets
Appendix Operator of choice for maturing hydrocarbon assets Production breakdown1 Annual production CAGR of c.14% since IPO 80,000 Malaysia 6.4 kboepd 11% 60,000 40,000 UK 52.7 kboepd 89% 20,000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1 Year to date December 2020 Sullom Voe Ter
Slide 25: Material reserves and resources base
Appendix Material reserves and resources base 2P reserves of 189 MMboe excluding Golden Eagle 2C resources of 279 MMboe excluding Golden Eagle MMboe MMboe 400 140 120 252 144 115 300 100 80 87 18 200 189 60 40 100 35 35 81 20 5 0 7 0 2 Net 2P reserves Net reserve Production Net 2P reserves Golden Ea
Slide 26: Strong cash generation in a challenging environment
Appendix Strong cash generation in a challenging environment Cash generation: Net cash flow from operations $m - Realised oil prices down 37% reflecting lower market prices 1,000 - Lower volumes offset by operating cost optimisation following CoP 962 453 decisions - Favourable working capital moveme
Slide 27: Post-tax non-cash charges
Appendix Post-tax non-cash charges Impairment Driven by $259.2 million tangible oil and gas assets Reduction in oil price assumptions - Primarily at Kraken Deferred tax de-recognition Driven by $371.1 million de-recognition of the undiscounted deferred tax asset Reduction in oil price assumptions 27
Slide 28: No material UK cash CT/SCT on operational activities expected
Appendix No material UK cash CT/SCT on operational activities expected UK Tax losses $m Tax losses at 31 December 2019 2,903.4 2020 net increase 281.9 Prior year adjustment (1.4) Tax losses at 31 December 2020 3,183.9 - No material cash tax expected to be paid on UK operation activities for the fore
Slide 29: Effective tax rate reconciliation
Appendix Effective tax rate reconciliation % $m Loss Before Tax (566.0) Notional UK Corporation Tax (40.0)% (226.4) 2020 RFES (106.7) UK and overseas tax rate differences 20.7 Permanent items (3.4) Tax losses not recognised 371.1 Other 4.6 2020 Tax Charge/(Credit) 10.6% 59.8 29 EnQuest PLC Half Year
Slide 30: Deferred tax de-recognition
Appendix Deferred tax de-recognition (Charged)/credited to Remeasurements At 31 December At 1 January 2020 income statement on and exceptional Note 2020 $ million ordinary activities items $ million $ million $ million UK deferred corporation tax: Fixed assets and allowances (1,006) 51 163 (792) Dec
Slide 31: Forward-looking statements
Appendix 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 forecas