Tullow Oil Plc · LSE:TLW
Tullow Oil — Investor Day (November 2018)
60 slides from Tullow Oil's investor day presentation, Nov 29, 2018
Slide 1: Tullow Capital Markets Day, 29 November, London
TULLOW CAPITAL MARKETS DN@AUT:) 29 November - London
Slide 2: Disclaimer
2018 Capital Markets Day 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 reasonabl
Slide 3: CEO Introduction
2018 Capital Markets Day Capital Markets Day 2018 CEO INTRODUCTION Paul McDade, Chief Executive Officer
Slide 4: Today's Presenters From Our Executive Team
2018 Capital Markets Day TODAY’S PRESENTERS FROM OUR EXECUTIVE TEAM CEO INTRODUCTION GROWTH THROUGH DISCOVERED RESOURCES Paul McDade Mark MacFarlane Chief Executive Officer Executive Vice President, East Africa DRIVING OUR EXPLORATION MAXIMISING PRODUCTION & SUB-SURFACE CAPABILITY Angus McCoss Gary
Slide 5: A New Executive Team Delivering on Our Objectives
2018 Capital Markets Day A NEW EXECUTIVE TEAM DELIVERING ON OUR OBJECTIVES CONTINUED STRENGTHENING OF BALANCE SHEET FREE CASH FLOW BALANCE SHEET PORTFOLIO MANAGEMENT Maximising free cash flow Strengthened balance Progress monetisation through: sheet through: options: Increased production Significant
Slide 6: Our Ambition to Generate Sustainable Value
2018 Capital Markets Day OUR AMBITION TO GENERATE SUSTAINABLE VALUE Balancing the interests of our investors, host countries and people
Slide 7: Defining Tullow's Position in the E&P Industry
2018 Capital Markets Day DEFINING TULLOW’S POSITION IN THE E&P INDUSTRY The four pillars of our growth ambitions Africa Oil Sustainable Progressive A balanced E&P business, focused on oil & specialising in emerging markets Slide 7
Slide 8: Driving Our Exploration & Sub-Surface Capability
2018 Capital Markets Day Capital Markets Day 2018 DRIVING OUR EXPLORATION & SUB-SURFACE CAPABILITY Angus McCoss, Exploration Director
Slide 9: A Distinctive & Collaborative Way of Working
2018 Capital Markets Day A DISTINCTIVE & COLLABORATIVE WAY OF WORKING Exploration & Sub-Surface Slide 9
Slide 10: Balanced E&P Business
2018 Capital Markets Day BALANCED E&P BUSINESS Balance: Portfolio-Programme-People E - #1: Finds new oil A - Early appraisal of discoveries E - Exploration: seasoned basin openers D - Pre-drill development concepts A - Appraisal: just in time & optimised P - Discovery well testing D - Development: a
Slide 11: Utilising Smart Technology
2018 Capital Markets Day UTILISING SMART TECHNOLOGY Innovative early adoption Plate tectonic models New tools for old challenges Leverage proven technologies Effective cross-application Low cost experimentation Multi-physics whilst drilling GIS for efficient & safe logistics Slide 11
Slide 12: Applied Geophysical Technology
2018 Capital Markets Day APPLIED GEOPHYSICAL TECHNOLOGY FTG: cost effective reconnaissance Centre of excellence in Dublin World class geophysical group Knowledge across asset life cycle Bespoke acquisition & processing Maximizing ‘bang for buck’ JiFi & 4D locates Jubilee upside resources Shallow sei
Slide 13: Delivering Value Through Digitalisation
2018 Capital Markets Day DELIVERING VALUE THROUGH DIGITALISATION Bold digitalisation goals Culture of innovation Smart people + smart data e-Enabled collaboration Digitally enhanced performance New plays from Tullow’s data lake Offshore production digital analytics Smart factory drilling Slide 13
Slide 14: Value to Our Business
2018 Capital Markets Day VALUE TO OUR BUSINESS Distinctive & collaborative way of working • Balanced E&P with full-cycle opportunity set • Collaboration with agility, leveraging skills with deep learning • Value creation applying leading-edge technology GROWTH FROM MAXIMISING FINDING NEW OIL DISCOVE
Slide 15: Finding New Oil
2018 Capital Markets Day Capital Markets Day 2018 FINDING NEW OIL Ian Cloke, EVP New Ventures
Slide 16: A Business Approach to Exploration
2018 Capital Markets Day A BUSINESS APPROACH TO EXPLORATION Superior Focused Smart deals Discipline Efficiency execution Refined $300m from Rigorous, Savings through Simple wells portfolio of deals consistent & agile working, delivered safely, high-value completed disciplined turnkey responsibly, on
Slide 17: Strategy in Action – Cormorant Well
2018 Capital Markets Day STRATEGY IN ACTION – CORMORANT WELL $70 $65m original net exposure Focused only on shallow target $60 $50 Simplified well design $40 Farmed down to 35% with past costs & carry $30 Lean, low-cost, $20 responsible operation $10 $3m $3m Superior delivery reducing finalnet final
Slide 18: Exploration Criteria for Value Creation
2018 Capital Markets Day EXPLORATION CRITERIA FOR VALUE CREATION Targeted exploration Light conventional oil COMMERCIAL SCREENING Low cost simple wells Tested at $50/bbl Low complexity deep water Low cost of development HIGH MARGIN OIL Value accretive Onshore and shallow water Onshore rifts Manageab
Slide 19: Resetting Our Exploration Portfolio
2018 Capital Markets Day RESETTING OUR EXPLORATION PORTFOLIO August 2013 17 countries 87 licences 346,064 sq km Exit from non-core acreage Slide 19
Slide 20: Building a Leading Exploration Portfolio
2018 Capital Markets Day BUILDING A LEADING EXPLORATION PORTFOLIO November 2018 JAMAICA MAURITANIA 10 countries 29 licences 206,091 sq km GUYANA / SURINAME CÔTE D’IVOIRE Guyana – 2 Blocks 8 Blocks onshore 7.5% equity increase and offshore Suriname – 1 Block COMOROS NAMIBIA PERU 3 Blocks 6 Blocks ZAM
Slide 21: Multiple High-Impact Campaigns Over Next Three Years
2018 Capital Markets Day MULTIPLE HIGH-IMPACT CAMPAIGNS OVER NEXT THREE YEARS Gross 2019 2020 2021 Unrisked #1 priority GUYANA 4 bbo SURINAME 3 bbo Top ranked CÔTE D’IVOIRE 1.5 bbo PERU 2.3 bbo New entries COMOROS 7 bbo MAURITANIA Under NAMIBIA evaluation JAMAICA 2 bbo ZAMBIA URUGUAY WEST & EAST Nea
Slide 22: Spotlight on Côte d'Ivoire
2018 Capital Markets Day SPOTLIGHT ON CÔTE D’IVOIRE >1.5 BBO Low-cost Using both Carried work High-value Light footprint Gross mean un-risked exploration in proven & programme; barrels & low execution across resources core West Africa innovative 60% operated breakeven 8,000 sq km oil province techno
Slide 23: Spotlight on Comoros
2018 Capital Markets Day SPOTLIGHT ON COMOROS ~7 BBO 17 Leads 16,063 sq km 35% equity Large, operated, offshore oil play in East Africa Simple drilling and attractive fiscal terms Managed cost exposure in frontier acreage Flexible options to leverage seismic market Rapid deal-making with like-minded
Slide 24: Spotlight on Guyana
2018 Capital Markets Day SPOTLIGHT ON GUYANA (60% operated equity) >4BBO Kumaka Gross mean un-risked resources (37.5% equity) Shelf-edge Leveraging a Increased equity in Acquired 3D seismic Sharing Ghana acreage in decade of Kanuku, up-dip of giant at bottom of operational expertise to industry hot-
Slide 25: Spotlight on Guyana: 2019 Drill Candidates
2018 Capital Markets Day SPOTLIGHT ON GUYANA 2019 drill candidates Transformational opportunity with multiple follow-up potential Slide 25
Slide 26: Outlook for Our New Ventures Business
2018 Capital Markets Day OUTLOOK FOR OUR NEW VENTURES BUSINESS Active drilling plans • Testing five high impact areas in the next three years Reset portfolio • Acreage in current and emerging hotspots Gained entry at low cost • Quality validated by the calibre of farm-in partners Rigorous & discipli
Slide 27: Growth From Discovered Resources
2018 Capital Markets Day Capital Markets Day 2018 GROWTH FROM DISCOVERED RESOURCES Mark MacFarlane, EVP East Africa
Slide 28: Uganda & Kenya - Developing Transformational Discoveries
2018 Capital Markets Day UGANDA & KENYA - DEVELOPING TRANSFORMATIONAL DISCOVERIES KENYA UGANDA MATERIAL OIL 560mmbo 1.7bbo DISCOVERIES 2C resource 2C resource E&A Development Farm down equity Uganda DEVELOPMENT Value over volume Non-operated position STRATEGY Kenya Phased approach Minimise/zero ca
Slide 29: Uganda Is a Best-in-Class Project
2018 Capital Markets Day UGANDA IS A BEST-IN-CLASS PROJECT Key project metrics ~100 mmbo ~$3.5 billion net 2P reserves value of farm-downs by Tullow in to be booked Uganda since 2012 at FID ~$4.50/bbl First Oil unit 2022… 2.5bn bbls upstream material 3C …at no cost to technical upside Capex Tullow F
Slide 30: Uganda - Project Update
2018 Capital Markets Day UGANDA - PROJECT UPDATE Key milestones to FID Partner & • Total operate Tilenga Operator roles • CNOOC operate Kingfisher defined • Tullow non-operator Upstream • FEED & Tilenga ESIA Completed • EPC contracts ready for award • CPF & well pad locations finalised • 90% land ac
Slide 31: Kenya - A Progressive Approach to Onshore Field Development
2018 Capital Markets Day KENYA - A PROGRESSIVE APPROACH TO ONSHORE FIELD DEVELOPMENT A new strategy to commercialise Kenya discoveries Shift from Assess and Accelerate Design phased Gain full E&A to verify resource commercialisation development support of development base of discoveries concept Gove
Slide 32: Project Oil Kenya – Key Building Blocks to Project Delivery
2018 Capital Markets Day PROJECT OIL KENYA – KEY BUILDING BLOCKS TO PROJECT DELIVERY • Alignment in Fiscal, • Facilitated revenue • Oil in place analysis • Optimised CPF design • 18”, 821km buried, Commercial & Legal sharing agreement complete to minimise cost heated pipeline terms • Critical techni
Slide 33: Kenya – Stepping Stones to FID
2018 Capital Markets Day KENYA – STEPPING STONES TO FID To achieve FID in 2019, the following tasks must be completed: Complete pipeline & Submit Environmental upstream Front End and Social Impact Engineering & Design Assessment Finalise agreements Heads of Terms for over land title for critical com
Slide 34: Creating Tullow's Next Production Hub
2018 Capital Markets Day CREATING TULLOW’S NEXT PRODUCTION HUB Group oil production growth 200 MATERIAL OIL DISCOVERIES ~2.3bn bbls 2C resources 150 EXECUTING Single focus on delivery & DEVELOPMENT STRATGY execution kbopd 100 REALISING Material step up in growth PRODUCTION SCALE for Tullow productio
Slide 35: Maximising Production
2018 Capital Markets Day Capital Markets Day 2018 MAXIMISING PRODUCTION Gary Thompson, EVP West Africa
Slide 36: Cash Generation From Existing Assets
2018 Capital Markets Day CASH GENERATION FROM EXISTING ASSETS WEST AFRICA BUSINESS • Scope to grow net production beyond 100,000 bopd PRODUCTION • Return to a multi-year drilling campaign in Ghana GROWTH • Revival of Central & West Africa portfolio • Significant scope for continued reserves & resour
Slide 37: Ghana Business Delivered Organically
2018 Capital Markets Day GHANA BUSINESS DELIVERED ORGANICALLY Significant asset base early Robust business delivering Business reset & in production lifecycle growing production sustained cost discipline Net Reserves/Resources Net Production Opex/boe 80,000 $12 400 $10 60,000 300 $8 MM bbl Oil 40,00
Slide 38: Ghana Reserves & Resources
2018 Capital Markets Day GHANA RESERVES & RESOURCES Jubilee & TEN Jubilee Oil (gross) TEN Oil (gross) Slide 38
Slide 39: Jubilee Resources
2018 Capital Markets Day JUBILEE RESOURCES • Jubilee remains a world class asset with a significant 2P Reserves base • 2C Contingent Resources primarily located in Jubilee & Mahogany • Material 3P + 3C upside will be continually assessed as drilling campaign progresses • Significant potential for or
Slide 40: TEN Resources
2018 Capital Markets Day TEN RESOURCES • Strong production performance from TEN with bulk of reserves still to be produced • Material 2C Resources to be tied-back to TEN FPSO • Significant 3P + 3C upside potential • Portfolio of near-field exploration opportunities • Additional exploration opportuni
Slide 41: Ghana Long-Term Production Outlook
2018 Capital Markets Day GHANA LONG-TERM PRODUCTION OUTLOOK 200,000 Prospective 3P Reserves Production rate (bbl oil per day) 2C Resources TEN 2P Reserves 150,000 Jubilee 2P Reserves 100,000 50,000 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Inves
Slide 42: Cost Discipline & Performance: Wells
2018 Capital Markets Day COST DISCIPLINE & PERFORMANCE: WELLS Well Engineering -$52m Average well cost difference of 2018 wells vs. previous campaign 97% 26 Re-tendered / 2018 drilling rig re-negotiated service operational up-time company contracts since 2014 -1.75 Days Top Quartile Reduction in ave
Slide 43: Project Delivery & Innovation: Subsea
2018 Capital Markets Day PROJECT DELIVERY & INNOVATION: SUBSEA Innovation in TEN Additional Subsea Engineering Development Opportunities Source: Enpro Subsea Inline-Tee’s concept as a cost-effective alternative to production manifolds saving ≈ $35m each Rig-less well interventions at lower costs wit
Slide 44: Efficiency & Uptime: FPSO Performance
2018 Capital Markets Day EFFICIENCY & UPTIME: FPSO PERFORMANCE Surface Facilities 2018 Production efficiency 100% 90% 80% 70% Jubilee TEN Peer Average 60% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Jubilee turret remediation nearing completion and returning to steady-state operations Jubilee gas handli
Slide 45: Digital Operations
2018 Capital Markets Day DIGITAL OPERATIONS INVESTING IN THE FUTURE Digital & Analytics Proven offshore digital & analytics Suite The Goal Already incorporates 7 FPSO’s in Improve production & safety performance MODEC fleet Drive uptime through failure prediction Multiple deep learning models alread
Slide 46: Central & West Africa Portfolio
2018 Capital Markets Day CENTRAL & WEST AFRICA PORTFOLIO Booked net resource NON-OPERATED ASSETS YE 2017 Solid production base 28% of 2018 Group production Focus on low-investment/high-value Stable 5+ year production profile ~$16 opex/boe Diversified & low risk Booked net resource 3 countries / 26 l
Slide 47: Central & West Africa Performance
2018 Capital Markets Day CENTRAL & WEST AFRICA PERFORMANCE Reliable long-term production with capex flexibility 35,000 Potential business 30,000 Côte d’Ivoire development Net Production (boe/day) opportunities 25,000 20,000 Equatorial Guinea 15,000 10,000 Gabon 5,000 Forecast 0 2004 2005 2006 2007 2
Slide 48: Central & West Africa Revival
2018 Capital Markets Day CENTRAL & WEST AFRICA REVIVAL Tchatamba Reserves growth despite consistent production 160% 16 14 2C Resources 2P Reserves Production CWA 2P reserves replacement in 2018 Volume of Oil (MM bbl) 12 (12.5 mmboe added in 2018) 10 8 70% 6 4 CWA 2P+2C resources increase in 2018 2 (
Slide 49: West Africa Business Summary
2018 Capital Markets Day WEST AFRICA BUSINESS SUMMARY Investment overview • Diversified portfolio of low-cost, long-life assets that continues to deliver strong cashflows • Continued investment in Non-Operated Portfolio delivering low-risk value and diversification • Near term growth to ~100kbopd ne
Slide 50: Funding Our Growth
2018 Capital Markets Day Capital Markets Day 2018 FUNDING OUR GROWTH Les Wood, Chief Financial Officer
Slide 51: Sector and Oil Price Outlook Creates Opportunities
2018 Capital Markets Day SECTOR AND OIL PRICE OUTLOOK CREATES OPPORTUNITIES Growing long term global oil demand Flexible capital allocation creates the is an opportunity for low opportunity for growth against the cost oil-focussed operators backdrop of a volatile oil price Million Oil Price barrels/
Slide 52: A Balanced Self-Funding E&P Company
2018 Capital Markets Day A BALANCED SELF-FUNDING E&P COMPANY DELEVERAGE MAXIMISING & PRODUCTION RE-INVEST GROWTH FROM BALANCE DISCOVERED SHEET RESOURCES FREE INVESTING IN CASH OUR BUSINESS CASH FLOW FLOW FROM FINDING OPERATIONS NEW OIL PORTFOLIO & FINANCIAL SHAREHOLDER MANAGEMENT RETURNS Strong free
Slide 53: Cost Base Reset for the Long Term
2018 Capital Markets Day COST BASE RESET FOR THE LONG TERM $m $m Net G&A Financing costs 250 400 200 300 150 200 100 100 50 0 0 2015 2016 2017 2018f 2019f 2015 2016 2017 2018f 2019f $/bbl Unit Opex 20 Continued cost discipline 15 • Competitive industry cost base • Cost conscious culture embedded 10
Slide 54: Continued Prudent Financial Management
2018 Capital Markets Day CONTINUED PRUDENT FINANCIAL MANAGEMENT Diversified and evolving capital structure Revenue protection through hedging • A balance of funding sources • Proven hedging policy over 10 years • Revolving RBL provides long-term flexibility • Continue to systematically hedge • Stron
Slide 55: Capital Allocation Framework
2018 Capital Markets Day CAPITAL ALLOCATION FRAMEWORK DEBT AND LIQUIDITY INVESTING IN OUR BUSINESS SHAREHOLDER RETURNS Balance sheet robust to Apply strict criteria to allocate Demonstrating financial future oil price volatility capital across the portfolio: discipline and business progress Driving
Slide 56: Deleveraging the Balance Sheet Remains a Priority
2018 Capital Markets Day DELEVERAGING THE BALANCE SHEET REMAINS A PRIORITY Net debt ($bn) Gearing ratio (times) 5.0 5 Net debt Gearing DEBT & GEARING 4.0 4 Balance sheet robust to future oil price volatility 3.0 3 Driving net debt below $2 billion in near term @ $50/bbl Retain flexibility with longe
Slide 57: Attractive Opportunities for Capital Investment
2018 Capital Markets Day ATTRACTIVE OPPORTUNITIES FOR CAPITAL INVESTMENT Annual investment outlook INVESTING IN OUR BUSINESS Apply strict criteria to MAXIMISING $200m - $300m $50m - $100m PRODUCTION Ghana Non-op allocate capital across the portfolio: GROWTH FROM Maximising production: DISCOVERED Ful
Slide 58: Financial Progress Enables Shareholder Returns
2018 Capital Markets Day FINANCIAL PROGRESS ENABLES SHAREHOLDER RETURNS FREE CASH • Strong free cash flow generation outlook SHAREHOLDER RETURNS FLOW 1 • Balance across debt, investment and returns Demonstrating financial discipline and business progress RETURNS • Established for 2019 financial year
Slide 59: A Balanced E&P Delivering Growth & Returns
2018 Capital Markets Day A BALANCED E&P DELIVERING GROWTH & RETURNS • Reset business delivering substantial free cash flow Cash generation • Balanced capital allocation to maximise returns • Significantly strengthened balance sheet Debt & Gearing • Deleveraging remains a priority • Disciplined capit
Slide 60: Tullow Oil plc
2018 Capital Markets Day Tullow Oil plc 9 Chiswick Park 566 Chiswick High Road London, W4 5XT Follow Tullow on: United Kingdom Tel: +44 (0)20 3249 9000 Fax: +44 (0)20 3249 8801 Email: ir@tullowoil.com Web: www.tullowoil.com Slide 60