2019 HALF YEAR RESULTS
2019 HALF 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 in light of the information available to them at this time, the actual outcome may be materially different owing to factors beyond the Group’s control or within the Group’s control where, for example, the Group decides on a change of plan or strategy. The Group undertakes no obligation to revise any such forward-looking statements to reflect any changes in the Group’s expectations or any change in circumstances, events or the Group’s plans and strategy. Accordingly no reliance may be placed on the figures contained in such forward looking statements. Slide 2
2019 HALF YEAR RESULTS SUMMARY OF 2019 PROGRESS AND PERFORMANCE West Africa 89-93,000 Production forecast revised but low-cost production assets continue to provide a solid base production forecast (bopd) Cash flow ~$400m Business set to deliver another year of generation strong underlying free cash flow underlying full year free cash flow Investment in $570m Heads of Terms signed with Government growth of Kenya; Guyana drilling campaign capital investment 1.8x Robust balance Disciplined management of our balance sheet and continued de-leveraging sheet mid-year 2019 gearing Shareholder $100m Board approves $33m interim dividend, in line with Capital Returns Policy returns minimum annual dividend Slide 3
2019 HALF YEAR RESULTS WORKING RESPONSIBLY AS WE GROW OUR BUSINESS The focus of our growth ambitions ENVIRONMENTAL STEWARDSHIP • Avoid, reduce & mitigate GHGs • Deliver positive biodiversity impacts • Independent & robust ESIA best practices RESPONSIBLE OPERATIONS • Drive top quartile EHS performance • Focus on managing water & waste • Minimising impact of operations EQUALITY & TRANSPARENCY • Lead on ESG transparency • Drive gender & ethnic equality targets • Lead on EITI & VPSHR SHARED PROSPERITY • Supporting education in STEM • Opportunities for local people and businesses • Shared infrastructure A responsible operator delivering social & economic benefits EITI = Extractive Industries Transparency Initiative. VPSHR = Voluntary Principles on Security and Human Rights. STEM = Science, technology, engineering and mathematics Slide 4
2019 HALF YEAR RESULTS
2019 HALF YEAR RESULTS 2019 HALF YEAR RESULTS SUMMARY Underlying cash Revenue 1 Adjusted EBITDAX Profit after tax 2 operating costs $9.0 /boe $1,623 million $872 million $103 million 1H 2018: $905 million 1H 2018: $10.9/boe 1H 2018: $1,579 million 1H 2018 : $55 million Capital investment 3 Gearing 4 Free cash flow Net debt $248 million $181 million $2.9 billion 1.8 times 1H 2018 : $145 million 1H 2018 : $390 million 1H 2018 : $3.1 billion 1H 2018 : 2.0 times 1. Revenue excludes $29 million additional revenue from Corporate Business Interruption insurance (1H 2018: $129 million) 2. Profit/(loss) includes non-cash exploration write-offs of $81 million (pre-tax) 3. Capital investment excludes Uganda capex expected to be recovered on completion of the farm down 4. Calculated on a last 12 months basis Good 1H 2019 financial performance, with solid full year outlook Slide 6
2019 HALF YEAR RESULTS DISCIPLINED CAPITAL INVESTMENT IN OUR BUSINESS MAXIMISING GROWTH FROM FINDING PRODUCTION DISCOVERED RESOURCES NEW OIL 1H $35m $248m $140m $33m $40m $16m 2019 Uganda * Exploration Ghana Non-op Kenya 1H 2018: $145m FY $570m $250m $100m $75m $60m $145m 2019 Ghana Non-op Uganda * Exploration Kenya FY 2018: $423m Up to • Annual Invest up to $600m in high value assets $600m outlook • Flexibility to lower capex if required with a sustained low oil price * Excluded from totals as expected to be recovered on completion of the farm-down with the exception of $2m in 2019 representing Tullow own costs. Uganda FY2019 capex reduced to $60m from original $180m budget to reflect end 2019 FID target. Capital investment focused on high-value opportunities Slide 7
2019 HALF YEAR RESULTS SUSTAINABLE FREE CASH FLOW GENERATION Free cash flow 1 $m $225m $423m $570m 700 capex capex capex Factors impacting 2019 free cash flow: 600 Uganda $58/bbl Revised Group production forecast $543m 500 $68/bbl One-off cash inflow from Uganda $65/bbl 400 farm-down & FID $411m Oil price 300 2H ($5/bbl in 2H 2019 +/- $75m FCF) 200 Working capital movements (+/- $100m) 100 1H 0 2 2017 2018 FY 2019f 2019f inc. Uganda Assets continue to deliver strong underlying free cash flow 1 Free cash flow: Cash flow after all costs, capex and financing but before dividends and debt paydown. 2 2018 underlying free cash flow of ~$600m impacted by litigation Slide 8
2019 HALF YEAR RESULTS CAPITAL ALLOCATION FRAMEWORK DEBT AND LIQUIDITY INVESTING IN OUR BUSINESS SHAREHOLDER RETURNS Apply strict criteria to allocate Balance sheet robust to Sustain financial capital across the portfolio: future oil price volatility discipline and continue business progress Maximising production: Driving net debt below Immediate cashflow $2 billion in near term Capital Returns High returns, short payback Policy established Retain flexibility Growth from with longer term Sustainable annual discovered resources: gearing of 1x-2x ordinary dividend of Future cash flow no less than $100m Medium-term payback Ensuring headroom for Additional returns future opportunities Finding new oil: in periods of strong FCF Significant value New resources, capital growth 2019 interim dividend ¢2.35/share ( $33m) Other opportunities Balanced capital allocation focused on maximising shareholder returns Slide 9
2019 HALF YEAR RESULTS
2019 HALF YEAR RESULTS SOLID PRODUCTION BASE FROM AFRICAN ASSETS Confidence in underlying production business • Assets continue to deliver strong free cash flow • 2019 production impacted by TEN completions • Revised oil production guidance of 89 – 93 kbopd • Long-term production growth from East Africa Mauritania Ghana Group oil production Côte 150 d’Ivoire Eq. Guinea Uganda Ghana Kenya Jubilee BI insurance Gabon 125 Non-op Portfolio Future estimated production 100 Comoros Kbopd 75 Namibia 50 25 0 2017 2018 2019f Future growth potential inc. East Africa Slide 11
2019 HALF YEAR RESULTS GHANA PRODUCTION OPERATIONS Significant reserves & resource base • Focus on maximising and sustaining long-term production • Infill drilling programme continues with Maersk Venturer • 7 new wells onstream and meeting production expectations • EN-14P suspended; now drilling Jubilee producer J-23P • Continued focus on operating efficiency and uptime • Rounded gross figures based on reserves and contingent resources as of 30 June 2019 Slide 12
2019 HALF YEAR RESULTS CONTINUED REVIVAL OF OUR NON-OPERATED PORTFOLIO Portfolio provides a platform for growth • Capex of ~$100m per year delivering ~25,000 bopd net production • Gabon exceeding expectations e.g. Simba-1 • Additional growth potential in a region Tullow knows well • Near-field exploration opportunities being matured • Bolt-on business development across existing portfolio Sierra Leone Kbopd 35 Potential business 30 Booked net resources development opportunities 25 20 Namibia 15 10 5 0 2017 2018 2019 2020 2021 2022 2023 Gabon Equatorial Guinea Côte d'Ivoire * Rounded net figures based on reserves and contingent resources as of 30 June 2019 Slide 13
2019 HALF YEAR RESULTS UGANDA DEVELOPMENT – PROJECT AT AN ADVANCED STAGE 1.7bbo 230,000 Gross 2C bopd gross resource production PROJECT UPDATE Major technical aspects completed: • FEED studies • Tilenga ESIA approval • Geophysical and Geotechnical studies along entire East Africa Pipeline (EACOP) route • Land acquisition for CPF • Contracts ready for Award Remaining milestones: • Pipeline & Kingfisher ESIAs • Finalisation of key commercial agreements • Completion of farm-down with Total & CNOOC Operator continuing to target end 2019 FID Slide 14
2019 HALF YEAR RESULTS PROJECT OIL KENYA – STEPS TO FID PROJECT UPDATE 60-80,000 560 mmbo bopd gross Gross 2C Significant progress made in 2019: production resource • EOPS - Trucking 2,000 bopd, first export in Q3, well performance as expected • FEED - Completed for upstream & pipeline • Land - All land gazetted. National Lands Commission surveys for valuation & acquisition under way • Contracts - Tender process underway for well construction • ESIA - On track for submission in Q3 2019 • Water – Confirmed water source • Heads of Terms - Signed in June, key commercial principals agreed Remaining deliverables for FID: • ESIAs - Finalisation & approval • Water - Water supply agreements • Contracts - Tender/evaluation/negotiation/award • Pipeline - Financing, land acquisition & title • Long-form commercial agreements - Upstream & pipeline • Field development plan - Submission & approval Multiple milestones delivered in 2019, working towards FID 2H 2020 Slide 15
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