2010 Annual Results Presentation 24 th March 2011
24 th March 2011 2010 Annual Results Presentation
Forward looking statements This presentation may contain forward-looking statements and information that both represents management's current expectations or beliefs concerning future events and are subject to known and unknown risks and uncertainties. A number of factors could cause actual results, performance or events to differ materially from those expressed or implied by these forward-looking statements. 24th March 2011 | Page 2
Agenda Highlights and progress against strategy Simon Lockett 2010 financial results Tony Durrant Exploration update Andrew Lodge Operations update Neil Hawkings Summary Simon Lockett 24th March 2011 | Page 3
2010 highlights • On track for production of 75,000 boepd in 2012 • Development portfolio building towards 100,000 boepd in 2014 • 8 out of 14 exploration and appraisal wells successful • Operating cashflow up 25% to $436.0 million • Record profits after tax of $129.8 million • $1.1 billion of UK tax allowances - mitigating the impact of proposed tax changes • Cash and undrawn bank facilities of $1.2 billion 24th March 2011 | Page 4
Building three quality E&P businesses Strategy • Grow near-term production to 75 kboepd from existing 2P reserves of 261 mmboe • Deliver further growth by commercialising contingent resource base of 228 mmboe • Add 200 mmboe through exploration by focusing on core geologies • Make value-adding acquisitions in three core areas • Maintain a conservative financing plan Creating an overall business with 400 mmboe of reserves and 100 kboepd production in the medium term 24th March 2011 | Page 5
2010 financial results 24th March 2011 | Page 6
Production and income statement 12 months to 12 months to Highlights 31 Dec 2010 31 Dec 2009 Working Interest Production (kboepd) 44.2 Average Brent oil price was $79.5/bbl 42.8 (2009: $61.7/bbl) Entitlement Interest Production (kboepd) 40.2 38.3 Realised oil price ($/bbl) 66.3 79.7 Average gas pricing ($/mcf) 2010 2009 Realised gas price ($/mcf) 5.2 6.3 Singapore $13.9 $11.0 Pakistan $3.5 $3.2 Includes impairment charges of $m $m $65.3 million (2009: $24.0 million) Sales and other operating revenues 621 764 Cost of sales (361) Operating costs per barrel ($/bbl) (531) 2010 2009 Gross profit 260 233 UK $28.7 $23.2 Excess of fair value over purchase consideration 6 - Indonesia $8.5 $10.0 Exploration/New Business (77) (87) Pakistan $2.0 $1.9 General and administration costs (18) (18) Group $13.9 $12.2 Operating profit 170 128 Financial Items (90) 2010 includes non-cash mark to market (27) gain on hedging of $39 million (pre-tax) Profit before taxation 80 101 Tax credit arises due to UK tax allowances Taxation credit 33 29 acquired with Oilexco Profit after tax 113 130 24th March 2011 | Page 7
Group taxation position 12 months to 12 months to UK Tax Allowance Position 31 Dec 2010 31 Dec 2009 at 31 Dec 2010 $m $m $m Overseas 56.9 73.0 Allowances remaining at 1/1/10 1,098 UK Net additions in 2010 14 PRT 25.9 23.2 1,112 CT nil (23.4) Recognised as deferred tax asset 972 Prior period revisions (21.3) (24.6) Currently unrecognised 140 Current charge 61.4 48.2 Tax allowances carried forward 1,112 Deferred tax credits (90.4) (81.3) Tax credit for the year (29.0) (33.1) Outlook • UK cash corporate taxes not anticipated until at least 2016 • Mitigates impact of proposed tax changes • UK allowances of $140 million not yet recorded 24th March 2011 | Page 8
Cash flow 12 months to 12 months to Estimated Capex split ($m) 31 Dec 2010 31 Dec 2009 2010 2009 $m $m Development 349 195 Cash flow from operations 505 419 Exploration 165 108 (69) (71) 514 303 Taxation 436 Operating cash flow 348 Balance sheet ($m) (514) Capital expenditure (303) 2010 2009 (Acquisitions)/disposals, net 13 (643) Cash 300 251 Finance and other charges, net (70) (55) Net Debt 406 245 Undrawn facilities 902 398 Pre-licence expenditure (19) (20) Net cash flow (154) (673) Outlook • Forecast full-year 2011 spend of $500m (development) and $200m (exploration) • Peak net debt of around $800 million in 2012 using $75/barrel 24th March 2011 | Page 9
Forward economics 80 $79/bbl $75/bbl $100/bbl OPEX 70 Tax Cash Margin 60 50 $/boe 40 30 20 10 0 2010A 2012E 2014E 2012E 2014E New projects lead to improved cash margins 24th March 2011 | Page 10
Exploration update 24th March 2011 | Page 11
Progress towards 200 mmboe of discoveries Exploration and Appraisal Drilling Global exploration: Forecast resource additions (mmboe) • 14 wells drilled, 8 successful 250 • Discoveries at Catcher, Catcher East, Target cumulative risked additions Varadero, Blåbaer and West Rochelle Actual cumulative proved and probable discovered resources Actual cumulative plus possible resources • 27 mmboe reserves and resources added 200 – Upside to 50 mmboe with appraisal New Ventures 150 • Licence round awards: – 19 blocks awarded in UK 100 • Farm-ins: – UK block 15/26c (West Rochelle) 50 – UK block 15/13b (Eagle) – North Red Sea Block 1 (Cherry) • Under negotiation: 0 2009 2010 2011 2012 2013 2014 – 2 blocks in Kenya 24th March 2011 | Page 12
Exploration drilling 2011 • > 300 mmboe 2011 Asia Q1 Q2 Q3 Q4 unrisked resource Vietnam 07/03 CRD Appraisal Ocean General 104/109-05 Jackfruit Aquamarine • 2011 full year Ocean General Indonesia Tuna Gajah Laut Utara exploration Belut Laut Ocean General expenditure Buton Benteng Natuna Sea Block A Anoa Deep West Callisto ~ $200 million Biawak Besar West Callisto pre-tax Block A Aceh Matang-1 North Sea Norway PL406 (8/3) Gardrofa Bredford Dolphin PL378 Grosbeak Appraisal Songa Delta UK P1430 Burgman Galaxy II Carnaby P1466 Bluebell Middle East - Pakistan Firm Wells: Rig Contracted Pakistan Kadanwari K-25ST Weatherford 812 K-28 Weatherford 812 Firm Wells: Rig TBC K-29 Weatherford 812 K-27 SE-1 Weatherford 812 Contingent Wells Weatherford 812 Bhit/Badhra Badhra-6 (Parh) All well timings are Badhra Appraisal subject to revision for Egypt North Red Sea Cherry Stena Forth operational reasons 12 to 15 exploration and appraisal wells already planned in 2012 24th March 2011 | Page 13
Appraisal – Vietnam – Block 07/03 – Cá R ồ ng Đ ỏ Cá R ồ ng Đỏ • Premier 30% equity • Gross resource estimate 10-60-80 mmboe • CRD-2X appraisal well spudded 10 February 2011 Well status • TD at 3785 metres • Drill stem testing hydrocarbons discovered in Oligocene sands CRD-2X CRD-1X SE NW CRV CRD-1X CRD-2X Anomalies associated with Gas Cau Sequence Top Cau Depth Map 24th March 2011 | Page 14
Exploration – Indonesia – Tuna Block Belut Laut / Gajah Laut Utara • Reserves estimate 40-90-200 and 65-160-350 mmboe respectively • Targeting multiple stacked Miocene and Oligocene reservoirs in fault dependent closures – Belut Laut prospect is independent of Gajah Laut Utara • Belut Laut is amplitude supported – Belut Laut: low risk for gas, moderate risk for oil – Gajah Laut Utara: moderate risk for oil and gas • Back to back wells planned for Q2 2011 following CRD well Gajah Laut Utara Belut Laut PTD 4250m MD (3550m TVD) PTD 4300m MD (3870m TVD) W E NW SE PRIMARY PRIMARY TARGET TARGET SECONDARY TARGET SECONDARY PTD PTD TARGET 2 Km 2 Km 24th March 2011 | Page 15
Exploration – Indonesia – Natuna – Biawak Besar Biawak Besar (Natuna PSC) • Premier 28.67% equity • Reserves estimate 66-79-92 bcf • Targeting Miocene reservoirs in a stratigraphic trap, off structure from the Iguana gas discovery • Seismic attribute analysis and 3D inversion supports presence of gas • Play opening well – low risk for gas • Planned for Q4 2011 Bison Iguana Biawak Besar NW SE Iguana Discovery Biawak Besar-1 Top Arang Depth PRIMARY TARGET C.I.=100 metres PTD 3D Seismic Inversion 2000m indicating gas pay 500m 24th March 2011 | Page 16
Exploration – Vietnam – Block 104-109/05 Block 104-109/05 • Premier 50% equity • Exploration well to test prospect with reserves range estimate of 30-60-140 mmboe • High risk for oil, moderate risk for gas • Planned for Q3 2011 W E Base Tertiary T300 T400 T500 T600 Coals T700 T1000 Base Tertiary 24th March 2011 | Page 17
Exploration – UK – Block 28/9 – Summary Block 28/9 (P1430) Eocene – Tay Amplitudes Catcher North • Combined Eocene and Palaeocene play Varadero • Shallow (1350m) • Amplitude supported • Six penetrations drilled to date on Catcher, Catcher East Varadero and Burgman Catcher Main – Excellent reservoir quality Block 28/9 Carnaby Burgman – High oil saturations (80-90%) – 24 ° to 31 ° API oil, low viscosity • Catcher North, thin Cromarty sands conform to low amplitudes on seismic data • Exploration well campaign ongoing – Burgman currently being sidetracked Varadero – Carnaby well deferred Burgman • Development planning on going Catcher – New 3D seismic is planned on the block in 2011 24th March 2011 | Page 18
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