2017 Full Year Results 8 March 2018
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. March 2018 | P1
2017 highlights 1 Comprehensive refinancing completed Previous maturities Revised maturities 2017 2018 2019 2020 2021 2022 3 Tolmount funding secured 400-800 mmbblsZama 2 discovery, Mexico 4 First oil achieved from Catcher March 2018 | P2
2017 performance Production 5% 75 kboepd Opex 4% $16.4/boe Capex 58% $275m Reserves and resources 8% 902 mmboe Operating cash flow 15% $496m Net debt 2% $2,724m March 2018 | P3
Asia production portfolio Chim Sáo (op, 53.125%) Natuna Sea Block A (op, 28.67%) Producing >30 kboepd • Active well intervention programme • GSA1 market share increasing • Ongoing reservoir optimisation • Improving gas price • Infill drilling opportunities • BIGP first gas 2019 • Crude sold at premium to Brent • Optimise exploitation of Lama gas Long life, low opex assets March 2018 | P4
UK production portfolio • Reserves • One of the Huntington (op, 100%) Elgin-Franklin (5.2%) upgrade UK’s largest • FPSO lease producing fields extended • Long field life • Cost reductions (COP 2035+) secured • Active well • Current intervention production programme >10 kboepd • Exploration UK upside production >50 kboepd 2019-22 • Lower opex • Targeting Solan (op, 100%) B Block (op, various) (manning deferral of COP project to 2021 underway) • Continuing • Infill drilling positive cash opportunities flow • Potential 3rd party business Tax advantaged cash flows March 2018 | P5
Financial highlights and outlook 2018 P&D capex 2017 highlights ($m) 120 • Comprehensive refinancing completed • Positive free cash flow of $71m 80 • Operating costs of $16.4/boe • P&D and exploration capex 58% lower at 40 $275m • $300m non-core disposals announced 0 Q1 Q2 Q3 Q4 • Cash and undrawn facilities of >$500m 2018 outlook 2018 FCF Profile • Early exchange of convertible bonds • Stable operating cost base at $17-18/boe • P&D and exploration capex of $300m • Debt reduction accelerates through year • Return balance sheet to investment grade metrics by year-end 2018 1H 2H 1H 2H $60/bbl $70/bbl March 2018 | P6
2017 Financials 12 months to 12 months to Realised prices 2017 2016 31 Dec 2017 31 Dec 2016 Oil (post hedge) 52.1 52.2 Production (kboepd) 75.0 71.4 ($/bbl) Opex per Barrel ($/boe) 16.4 15.8 UK gas (p/therm) 47.2 47.6 Indonesia gas 8.4 7.8 P&L and cash flow $m $m ($/mmscf) Sales revenue 1,102 983 Production (kboepd) Net (loss)/profit (254) 123 40 2017 2016 30 Operating cash flow 496 431 20 Interest and fees (309) (152) 10 Capex (275) (663) 0 Abandonment (26) (16) UK Indonesia Vietnam Pakistan Decom pre-funding (17) (61) Opex ($/boe) 30 Disposals/(Acquisitions) 202 (119) 2017 2016 Net cash flow 71 (580) 20 10 Balance sheet Accounting net debt 2,724 2,765 0 UK Indonesia Vietnam Pakistan March 2018 | P7
Portfolio management • Seek opportunities with strategic fit within existing geographic units – Focus on operated long-life assets – Material working interest – Critical mass locally – UK tax optimisation – Covenant accretive • Dispose of non-core assets to accelerate debt repayment 2017 highlights • Completed sale of Wytch Farm interests for $200m – Non-operated, reducing opportunity set – Released $75m LCs – Book gain on disposal of $133m • Announced $65.6m sale of Pakistan $300m – Non-operated, small stakes; declining production of non-core • Announced sale of interest in ETS for up to $31.6m disposals – E.ON legacy asset; non-core announced • Sale of interest in Kakap • Rationalisation of UK exploration licences March 2018 | P8
Capital expenditure and abandonment 2017 P&D capex and exploration ($m) P&D capex and exploration spend 300 • 2017: $275m, 60% lower than 2016 – $126m Catcher drilling and subsea – $17m Chim Sáo infill wells 200 – $38m exploration, includes Zama well 58% • 2018 guidance of $300m lower 100 – $170m Catcher drilling and tie-in of than 2016 Phase 2 wells, FPSO first oil payment – $32m BIGP EPCI, drilling LLIs - • 2019 significantly lower committed capex UK BIGP Chim Sao Catcher Tolmount, Pakistan Exploration producing Sea Lion 2018 P&D capex and exploration ($m) Abex 300 • 2018 guidance of $80m (pre-tax), principally across UK assets • Continuing to defer COP dates across 200 portfolio – Huntington, B Block, Ravenspurn 100 North, Chim Sáo, Babbage • UK tax history shelters UK abandonment costs - UK producing BIGP Chim Sao Catcher Tolmount, Exploration Sea Lion March 2018 | P9
Hedging Hedging policy • 30-50% of future oil and gas volumes on a rolling 12-18 month basis • Minimum required under lender agreement is 20% Liquids hedging • Progressively increased as oil price rose • 50% of 2018 oil production hedged 60% of oil production UK gas hedging exposed to • 29% of UK gas production hedged at 47p/therm upside Oil hedging 2018 1H 2018 2H Swaps / Forwards Volumes 40% 40% Average price $56.4/bbl $60.1/bbl Options Volumes 20% 7% Average floor price $54.7/bbl $60.6/bbl March 2018 | P10
Net debt Estimated leverage ratios using accounting net debt as at year-end 2018 1 6x 5x 4x Investment 3x grade equivalent 2x 1x - YE17 YE18 Premier European peers US Peers • Net debt of $2.72bn, reduced from year-end 2016 position • Early conversion of Convertible Bonds in January 2018 • Average cost of debt c. 7% – >50% fixed • Non-amortising debt • Targeting covenant net debt/EBITDAX ratio of 2.5x by end Q1 2019 (at $65/bbl) 1 Bloomberg, company estimates March 2018 | P11
Catcher – the journey to first oil What we achieved in 2017 • FPSO hull and topsides completed and integrated • Sailaway of FPSO from Keppel yard • HSE Acceptance of Safety Case • Drilling and completion of 6 wells • Successful tie-in of wells and deployment of subsea control pods • Hook up of STP buoy to FPSO • Successful pull in of all risers, umbilicals and installation of swivel stack First Oil achieved 23 Dec 17 March 2018 | P12
2017 successful full cycle delivery of Catcher • Experienced project management team in delivery of FPSO projects On schedule • World class contractors Forecast total capex 30% below budget • Early operations involvement in project Plateau production increased by 20% • Collaborative and strong relationship with key contractors Industry leading • Deployment of industry leading outcome on HSE technology e.g. Geosteering • Experienced well delivery team • Subsurface design optimisation • Favourable market conditions March 2018 | P13
Catcher Area commissioning status Oil Oil Booster Booster Gas Gas Gas lift Gas lift 60 kbopd 60 kbopd Dec Jan Feb Mar Apr treatment treatment gas gas treatment treatment and export and export 2018 2017 2018 2018 2018 production production plant plant compression compression plant plant compression compression Operations Operations 1.3 mmbbls • Good uptime; oil plant up and stable • Good uptime; oil plant up and stable produced • Water injection commissioned • Water injection commissioned since first oil • Catcher, Varadero on-stream • Catcher, Varadero on-stream • Burgman ready to produce • Burgman ready to produce Sold at a premium • Initial deliverability >60 kbopd • Initial deliverability >60 kbopd to Brent • Peak rate performance test Q2 • Peak rate performance test Q2 March 2018 | P14
Catcher Area upside Catcher North: Laverda: • Potential for reserves upside Joint development Tie-back via Varadero with Laverda – Conservative initial recovery factor assumed – Positive production test results – Well-connected sands with good pressure support – Reservoir quality and sand quantity above predictions made at sanction Varadero Infill • Infill drilling opportunities – 4D seismic acquisition FPSO targeted for 2019 Catcher Infill: • Tie-back of near field discoveries Multiple future Cromarty and Tay targets identified – Laverda, Catcher North Burgman Infill: Burgman Far East target Supported by seismic and well results March 2018 | P15
Tolmount – high value project Adds significant resource – 540 bcf Indicative production profile boe equivalent (100 mmboe) (kboepd) 60 Provides next phase of UK 50 growth – 50 kboepd peak production 40 30 Low capex requirement – $100m 20 (Premier’s share) 10 Low life of field total project cost – 0 $20/boe Tolmount Generates significant tax advantaged cash flows; >$1bn of net 48 km to terminal cash flow Potential Area Recovery of c. 1Tcf Holderness Holderness Inshore MCZ Inshore MCZ Holderness Holderness Offshore MCZ Offshore MCZ Onshore Onshore Terminal Terminal March 2018 | P16
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