Tullow Oil Plc · LSE:TLW
Tullow Oil — FY2013 Earnings Presentation
53 slides from Tullow Oil's earnings presentation, Feb 12, 2014
Slide 1: 2013 Full Year Results
2013 FULL YEAR RESULTS 12 February 2014
Slide 2: Disclaimer
2013 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: Agenda
2013 FULL YEAR RESULTS Agenda Section Page Introduction 4 Finance 6 Development and Operations 13 Exploration and Appraisal 18 Conclusion 26 Appendix 28 Slide 3
Slide 4: Aidan Heavey
2013 FULL YEAR RESULTS TULLOW OIL PLC – 2013 FULL YEAR RESULTS AIDAN HEAVEY
Slide 5: Delivering against our strategy
2013 FULL YEAR RESULTS Delivering against our strategy 2013 2014 + High Margin Production $1.9 billion Cash flow growth Cash flow 2013 Cash Flow Ghana – 2016 East Africa – 2018 Exploration & Appraisal 220mmboe Targeting 200mmboe p.a. 2013 Resource Adds Opening a new basin every 2-3 years Monetisatio
Slide 6: Ian Springett
2013 FULL YEAR RESULTS TULLOW OIL PLC – 2013 FULL YEAR RESULTS IAN SPRINGETT
Slide 7: 2013 full year results summary
2013 FULL YEAR RESULTS 2013 full year results summary 2013 2012 Change Sales revenue $2,647m $2,344m +13% Gross profit $1,440m $1,345m +7% Administrative Expenses ($219m) ($191m) Profit on disposal $30m $702m Exploration costs written off1 ($871m) ($671m) Operating profit $381m $1,185m -68% Profit a
Slide 8: Net income 2013 v 2012
2013 FULL YEAR RESULTS Net income 2013 v 2012 $m 1,250 1,000 74 52* 306 108 750 200 211 3 1 500 531 666 250 216 0 Net Income Price Volume Operating Other costs Exploration Net Finance Tax (excl. Gain on Net Income 2012 costs (*Other cash Write-offs Uganda CGT) disposal (net 2013 costs) of tax) Gross
Slide 9: Sources and uses of funds
2013 FULL YEAR RESULTS Sources and uses of funds $m Cash inflow $2,945m 3,500 2013 Net cash inflow $22m • Operating cash flow $1,998m* (2012:$1,785m*) Sources Uses • Disposals $80m (2012:$2,570m) 3,000 $6m $80m $269m • Net loan draw down $861m $252m (2012 repayment :$1,843m) 2,500 $861m $393m • Shar
Slide 10: 2014 capital expenditure
2013 FULL YEAR RESULTS 2014 capital expenditure $2.2 billion capex for full year 2014 2014 $770m $310m $1,120m $2,200m • Ghana: Jubilee Phase 1A & TEN developments ($790m) • Kenya: Exploration and appraisal drilling ($310m) • Uganda: Appraisal drilling and development progress towards FID ($200m) 20
Slide 11: Highly diversified funding strategy
2013 FULL YEAR RESULTS Highly diversified funding strategy Business Strategy Funding Strategy Financing Initiatives Additional cash flow from new production Commercial Bank High ~$4bn debt facilities Facilities Operating Cash Exploration Monetisation Margin Options & Selective Flow and Appraisal $3.
Slide 12: Paul McDade
2013 FULL YEAR RESULTS TULLOW OIL PLC – 2013 FULL YEAR RESULTS PAUL McDADE
Slide 13: Strong record of resource additions & reserves replacement
2013 FULL YEAR RESULTS Strong record of resource additions & reserves replacement 2P Commercial Reserves and 2C Contingent Resources Total Resource Potential as of 31 December 2013 as of 31 December 2013 South & East Africa 2P Commercial Reserves 41% 382.4 mmboe 1,409 Europe, South America & Asia 6.
Slide 14: Strong cash flow supported by pipeline of future oil projects
2013 FULL YEAR RESULTS Strong cash flow supported by pipeline of future oil projects West Africa non-operated oil production • 2013 actual prod: 84,200 boepd Mauritania Congo (Brazz) Cote d'Ivoire Eq Guinea Gabon • 2014 prod guidance: 79-85,00 boepd 35 30 • Material growth potential 2016+ 25 20 kbop
Slide 15: West Africa – growing future high value oil production
2013 FULL YEAR RESULTS West Africa – growing future high value oil production Non-operated production remains strong • Portfolio continues to deliver strong cash flow 2013 West African • Future investment opportunities remain attractive Revenue EG Jubilee – long term cash flow generation 14% Gabon 1
Slide 16: East Africa – major onshore Tertiary Rift Basin projects
2013 FULL YEAR RESULTS East Africa – major onshore Tertiary Rift Basin projects Kenya – Operated world-class onshore oil project • Favourable conditions allowing for rapid progress • Clear plan towards 2015/16 development sanction • Pipeline leadership offers regional benefits Uganda – Focus on enha
Slide 17: Significant potential to deliver high margin production growth
2013 FULL YEAR RESULTS Significant potential to deliver high margin production growth Additional cash flow from new production Exploration and Monetisation ~$4bn debt facilities High Margin Appraisal Options & Production Selective $1bn + p.a. Portfolio Development Cash flow Management Fully Funded C
Slide 18: Angus McCoss
2013 FULL YEAR RESULTS TULLOW OIL PLC – 2013 FULL YEAR RESULTS ANGUS McCOSS
Slide 19: Oil exploration strategy focused on Africa & Atlantic Margins
2013 FULL YEAR RESULTS Oil exploration strategy focused on Africa & Atlantic Margins Norwegian North Atlantic Continental Shelf Exploration Campaign & Business Development Central Atlantic Central Atlantic Major Exploration Margin East African Campaign Launched Rift Basins Guyanas East African Trans
Slide 20: Industry-leading exploration acreage position
2013 FULL YEAR RESULTS Industry-leading exploration acreage position Balanced spread of E&A campaigns provides robust feedstock to sustain Tullow’s average annual addition of 200mmboe mean resources Slide 20
Slide 21: Net contingent resource additions from E&A
2013 FULL YEAR RESULTS Net contingent resource additions from E&A 900 Ekales-1 & Agete-1 • 200mmboe / year, steady performance 800 • Strong run of success in Uganda & Ghana Twiga-1 & Etuko-1 • New basins campaigns deliver continuity Ngamia-1 700 • Low cost Kenya & Norway extend the trends Jobi-3/4/5
Slide 22: Kenya – Ethiopia: World-class oil province potential
2013 FULL YEAR RESULTS Kenya – Ethiopia: World-class oil province potential Three scales of exploration in multiple basins 1. Oil field appraisal & testing • 10kbopd total combined flow potential from 2 wells • Supporting accelerated development, focused on achieving material light oil production 2.
Slide 23: Multiple basins with new oil province potential
2013 FULL YEAR RESULTS Multiple basins with new oil province potential Possible campaign scenarios 8/12 basins successful 12 • Pioneering basins: Gross Potential in Billion Barrels 10 - Lake Albert, Uganda (1.7Bbo) - South Lokichar, Kenya, 7/7 (>600mmbo) 8 4/12 basins - Oil shows in South Omo, Ethio
Slide 24: Mauritania campaign: Frégate-1 establishes new oil play
2013 FULL YEAR RESULTS Mauritania campaign: Frégate-1 establishes new oil play Frégate-1 • Pioneering wildcat achieves important technical breakthrough • New oil play in deepwater Late Cretaceous turbidites • Up to 30m net gas-condensate and oil pay in multiple sands • Further assessment & analysis
Slide 25: E&A is providing high value oil feedstock
2013 FULL YEAR RESULTS E&A is providing high value oil feedstock Additional cash flow from new production Exploration and Monetisation ~$4bn debt facilities High Margin Appraisal Options & Production Selective $1bn + p.a. Portfolio Development Cash flow Management Fully Funded Costs & Dividends Addi
Slide 26: Aidan Heavey
2013 FULL YEAR RESULTS TULLOW OIL PLC – 2013 FULL YEAR RESULTS AIDAN HEAVEY
Slide 27: Delivering against our strategy
2013 FULL YEAR RESULTS Delivering against our strategy 2013 2014 + High Margin Production $1.9 billion Cash flow growth Cash flow 2013 Cash Flow Ghana – 2016 East Africa – 2018 Exploration & Appraisal 220mmboe Targeting 200mmboe p.a. 2013 Resource Adds Opening a new basin every 2-3 years Monetisatio
Slide 28: Tullow Oil plc – 2013 Full Year Results Appendix
2013 FULL YEAR RESULTS TULLOW OIL PLC – 2013 FULL YEAR RESULTS
Slide 29: 18 month Exploration and Appraisal programme
2013 FULL YEAR RESULTS 18 month Exploration and Appraisal programme mmboe Country Block Prospect/Well Interest Gross Mean Net Mean Spud Date WEST & NORTH AFRICA Nziembou Igongo 40% 9 4 Q2 2014 Gabon Arouwe Sputnik East 35% 206 72 Q2 2014 In addition to our planned exploration wells, Tullow’s explora
Slide 30: 18 month Exploration and Appraisal programme
2013 FULL YEAR RESULTS 18 month Exploration and Appraisal programme mmboe Country Block Prospect/Well Interest Gross Mean Net Mean Spud Date SOUTH & EAST AFRICA Shimela 25 13 Q1 2014 Ethiopia Omo 50% (op) Gardim 33 17 Q2 2014 Twiga South-2 15 8 In progress Twiga South-3 25 13 Q2 2014 Ekales-2 13 7 1
Slide 31: 18 month Exploration and Appraisal programme
2013 FULL YEAR RESULTS 18 month Exploration and Appraisal programme mmboe Country Block Prospect/Well Interest Gross Mean Net Mean Spud Date EUROPE, SOUTH AMERICA & ASIA The Netherlands E11 Vincent 60% (op) 18 11 In progress PL 405 Butch East 15% 166 25 In progress PL 405 Butch SW 15% 93 14 Q2 2014
Slide 32: 2013 Exploration and Appraisal activities
2013 FULL YEAR RESULTS 2013 Exploration and Appraisal activities Seismic Key GABON - 12 wells NORWAY - 6 wells Acquisition OMBG-102 OMKO-201ST M’oba-1 Carlsberg-1 320 sq km 2482 km 2D 3D PSDM Processing/ OMBG-201 Onal-403 KCM-1 Mjosa-1 Re-processing Onal-1603 Onal-1604 KPM-1
Slide 33: Industry-leading exploration acreage position
2013 FULL YEAR RESULTS Industry-leading exploration acreage position Balanced spread of E&A campaigns provides robust feedstock to sustain Tullow’s average annual addition of 200mmboe mean resources Slide 33
Slide 34: Industry-leading exploration acreage position
2013 FULL YEAR RESULTS Industry-leading exploration acreage position East African Rift Basins • 7 out of 7 successes discover >600mmbo in South Lokichar Basin – exceeds threshold volumes for development • Preparing for basin testing wildcats in the Chew Bahir, North Turkana, North Lokichar and North
Slide 35: High margin production and competitive cost base
2013 FULL YEAR RESULTS High margin production and competitive cost base Realized oil price per bbl ($)1 Operating costs per boe ($)2 16.5 108.0 108.0 105.7 14.6 13.5 12.5 78.0 2010 2011 2012 2013 2010 2011 2012 2013 Depletion, depreciation and amortization per boe ($) Operating cash flow per boe ($)
Slide 36: West Africa – high quality non-operated portfolio of assets
2013 FULL YEAR RESULTS West Africa – high quality non-operated portfolio of assets 2013 Dev Capex Mauritania / Congo (Brazz) Portfolio continues to deliver strong cashflow 27% Gabon 30% • Revenue of ~$1bn p.a. being sustained by ~$200m investment • Successful completion of Ceiba infill programme $20
Slide 37: Jubilee – world class asset delivering long term cash flow
2013 FULL YEAR RESULTS Jubilee – world class asset delivering long term cash flow Strong reservoir performance • Existing well production capacity >130mbd • Final Phase 1A wells to be completed as required Production increase awaiting Gas export • Gas export facilities review indicates 2H 2014 avail
Slide 38: TEN – next operated deepwater project underway
2013 FULL YEAR RESULTS TEN – next operated deepwater project underway Project execution underway and on track • West Leo rig secured and first two development wells drilled • Centennial Jewel tanker-FPSO conversion underway in Singapore • All subsea contracts awarded and major equipment ordered • En
Slide 39: Kenya – Tullow operated world class onshore oil project
2013 FULL YEAR RESULTS Kenya – Tullow operated world class onshore oil project Favourable conditions allowing for rapid progress • Supportive & enabling business environment and Government • Tullow operatorship and aligned joint venture partnership • Uganda experience being leveraged to accelerate a
Slide 40: Uganda – Enhancing project as regional plan develops
2013 FULL YEAR RESULTS Uganda – Enhancing project as regional plan develops Major review reduces project costs • Enhancement of project design delivers significant savings • Multi-billion dollar upstream development capex savings ⁻ Further cost saving projects underway • Final appraisal drilling and
Slide 41: Campaign of East African Tertiary Rift Basins
2013 FULL YEAR RESULTS Campaign of 12 East African Tertiary Rift Basins Campaign concept proved in Lake Albert Rift Basin, Uganda Tullow Oil’s 12 East African Tertiary Rift Basins Follow-on Prospect Uganda Ethiopia Follow-on Prospect Lake Albert Chew Bahir Omo West Omo Kasamene-1 Follow-on Pro
Slide 42: Kenya: South Lokichar Basin exceeds threshold for development
2013 FULL YEAR RESULTS Kenya: South Lokichar Basin exceeds threshold for development Ekales Agete Amosing Rift Bounding Fault Play: Twiga S-1 Emong 75m net pay “String of pearls” Etom (down flank) 5kbopd potential Ekosowan like Kingfisher in Lake Albert Ngamia-1 Ewoi 200m net pay Ekunyuk
Slide 43: Ethiopia: Northern area of potential new petroleum province
2013 FULL YEAR RESULTS Ethiopia: Northern area of potential new petroleum province Area 1 of 4 (North) 1. West Omo Basin • Leads for seismic surveying 2. Omo Basin extending south to Turkana Basin • Epolot lead in north • Sabisa-1 oil shows 3. Chew Bahir Basin • Seismic anomalies to test • Shimela &
Slide 44: Kenya: North Central area of potential new petroleum province
2013 FULL YEAR RESULTS Kenya: North Central area of potential new petroleum province Area 2 of 4 (North Central) 1. Turkana Basin • Prospective ‘string of pearls’ along western edge of basin • Thick sedimentary succession • Two wells planned for 2014 Kenya Turkana North Lokichar 2014 Slide 44
Slide 45: Kenya: South Central area of potential new petroleum province
2013 FULL YEAR RESULTS Kenya: South Central area of potential new petroleum province Area 3 of 4 (South Central) 1. North Lokichar Basin • Tausi ready to drill 2. North Kerio Basin • Aze ready to drill 3. South Kerio Basin • Dyepa ready to drill 4. South Lokichar Basin • >600 mmbo discovered 5. Turk
Slide 46: Kenya: Southern area of potential new petroleum province
2013 FULL YEAR RESULTS Kenya: Southern area of potential new petroleum province Area 4 of 4 (Southern) 1. Kerio Valley Basin • Gravity data high graded Kerio • 2D seismic data acquired • Leads identified for follow up • One well planed for 2015 2. Suguta & Suguta West Basins • Legacy data under revi
Slide 47: West Africa Transform Margin campaign extended to Guinea
2013 FULL YEAR RESULTS West Africa Transform Margin campaign extended to Guinea Guinea • Acquired significant operated acreage position, 1.5 times existing WATM acreage • Fatala prospects (Jubilee play) selected for wildcat well drilling Q2 2014 • Play diversity, large structural-stratigraphic traps
Slide 48: Guyanas: extensive “Jubilee play” potential plus upside plays
2013 FULL YEAR RESULTS Guyanas: extensive “Jubilee play” potential plus upside plays • Non-operated E&A lacks success after Zaedyus-1, turns to de-risked oil plays and new attractive lower geo-pressured prospects on Eastern Slope • Regional campaign shifts to operated Suriname venture & to lower-cos
Slide 49: Focus on Suriname operated exploration for material oil plays
2013 FULL YEAR RESULTS Focus on Suriname operated exploration for material oil plays • Proven oil basin with strong play diversity • Kaiman (Turonian-Santonian turbidite play) in Block 31 de-risked by Aitkanti oil discovery; multiple follow-on prospects • Goliathberg (Jubilee play) in Block 47 to be
Slide 50: North Atlantic exploration shifts into exciting drilling phase
2013 FULL YEAR RESULTS North Atlantic exploration shifts into exciting drilling phase 1. Wisting • Major oil discovery and a play opener for the Hoop area • Positive AVO and CSEM anomalies • Appraisal program 2014-2015 2. Durne • DoD May 2014 • Major oil prospect • Favorable position on the flank of
Slide 51: North Atlantic exploration shifts into exciting drilling phase
2013 FULL YEAR RESULTS North Atlantic exploration shifts into exciting drilling phase Area 2 of 3 (Norwegian Sea) 1. Zumba • New play in the region • Stratigraphic trap with well defined geophysical anomaly • Close to existing infrastructure 2. Hagar • Fault bounded new play • High risk, high reward
Slide 52: North Atlantic exploration shifts into exciting drilling phase
2013 FULL YEAR RESULTS North Atlantic exploration shifts into exciting drilling phase Area 3 of 3 (North Sea) 1. Gotama • Near Field (Troll) exploration • Multi-level reservoir targets • Well defined geophysical anomaly • Several follow-up candidates 2. Lupus • Paleocene stratigraphic trap • Major l
Slide 53: Tullow Oil plc
2013 FULL YEAR RESULTS Download the Tullow Investor Relations and Media App from the Apple and Android stores: 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: chris.perry@tullowoil.com