CAPITAL MARKETS PRESENTATION 6 th February 2014
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. 6 th February 2014 // Page 1
Introduction “...our strategy is to invest in high -quality developments whilst maintaining balance sheet strength...” Premier Today Going Forward • Robust cash flow and profitability The Board will: • Give priority to balance sheet strength • 800 mmboe reserves and resources • Focus investments on our highest return • Production of 66 kboepd (January 2014) projects • Key exploration campaigns in Indonesia, • Reduce capital exposure to the Sea Lion Norway and Falklands project • NAV >£5 per share (broker consensus) 6 th February 2014 // Page 2
Balance Sheet Strength and Flexibility
Robust balance sheet and funding position • Current net debt of $1.45 bn – Gearing of 41%, well within Board guidelines • Significant headroom on financial covenants today and going forward – Cash flow cover at 2x (covenant of <3x) – Interest cover at 8x (covenant of >4x) • Excellent access to debt markets – $700 m raised in Q4 2013 on competitive terms – Maturities extended (2017 – 2022) – Zero drawings on existing principal bank facility • Continuing strong market appetite from debt investors – Anticipate attractive terms for re-financing during 2014 – Reverse enquiry from investors on MTN programme – Initial favourable indications from export credit funding markets 6 th February 2014 // Page 4
Significant cash flow growth Financial Outlook Cash Flows (Current Oil Prices) • 2014 guidance 58-63 kboepd – Positive start to 2014 production – Changing mix generates higher cash flows • Solan, Catcher fields – Add up to 30,000 bopd of valuable UK barrels – Value per barrel continues to rise • UK production growth monetises high value UK tax loss position – Unlikely to pay UK CT until end of decade 2013 2014 Post Solan Post Catcher 6 th February 2014 // Page 5
Portfolio optionality Prudent Financial Management Significant Flexibility • Planning case $85/bbl • Current oil price $105/bbl • Active disposal programme • Active disposal programme continues • Will seek partner for Sea Lion • Will seek partner for Sea Lion • Production base line of 75 kboepd • Substantial capacity for: • Future discretion on exploration and – Debt reduction, or unsanctioned projects (eg Bream) – Enhanced shareholder distributions, or • >US$1 bn covenant headroom – Incremental investment in quality projects • Gearing in line with current levels 6 th February 2014 // Page 6
Catcher Development
Catcher development overview • Project Sanction – Pre-tax IRR >20% based on $85/bbl • Gross reserves (2P) of 92 mmboe within initial development – Upside of 140 mmboe • Excellent reservoir qualities – 35% porosity and very high permeabilities • Fully defined development scheme – Leased Floating Production Storage and Offloading (FPSO) model – Subsea tie-backs of the Catcher, Varadero and Burgman fields to FPSO – Expected to produce at peak ~50,000 bopd (~6% of the entire UKCS production) – $2.2 bn gross Capex including ~30% of allowances and contingencies – Development drilling of 14 producing wells and 8 water injector wells commencing 2015 • First oil in 2017 and an expected life of field of 10+ years 6 th February 2014 // Page 8
New North Sea hub • Location: Block 28/9 • Water depth: 300 feet • 3 fields as part of initial development • 22 wells to be drilled Catcher area discoveries: • Catcher August 2010 • Varadero January 2011 • Burgman March 2011 • Carnaby June 2012 • Bonneville April 2013 Block 28/9 Premier (Op.) 50.0% Wintershall 20.0% Cairn Energy 30.0% 6 th February 2014 // Page 9
Exploration and appraisal success • All exploration and appraisal wells encountered hydrocarbon bearing sands: – Tay sands in 28/9-1Z, -3, -2, Varadero -4, -4Z, -5A, -6 and -6Z (all fields) Catcher – Cromarty sands in 28/9-1, -1Y and -3 (Catcher only) Burgman Oil Field Field STOIIP RF% Determination Reserves Area Carnaby Catcher 129 38.6 30 Bonneville Varadero 77 21.7 28 Oil Gas Burgman 86 23.3 27 Licence Catcher Area 289 83.6 29 NB Bonneville extends further south, map limited by HD data extent 6 th February 2014 // Page 10
Good understanding of the rocks Region of deposition of original Cromarty and Tay sands Joseph C. DeVay et al, 2000, AAPG Memoir 72 / SEPM Special Publication No. 68 • Late Palaeocene/early Eocene turbidite sand systems • High porosity (~35%) and permeability (Darcy Tay permeabilities) sands deposited in Cromarty and Tay intervals • Post depositional re-mobilisation and injection of sands, Cromarty leading to high degree of vertical connectivity 6 th February 2014 // Page 11
Seismic will assist with well placement Catcher Cromarty Catcher East (Tay) GOC Balder OWC Catcher East (Tay) Catcher Cromarty Chalk Polarcus HD seismic (far stack coloured inversion) • Excellent quality seismic imaging at the reservoir level due to shallow depths and simple overburden • High quality, fine line spacing (high density) seismic was shot in 2011 • Oil-filled sands in the Tay and Cromarty have AVO response and are clearly identifiable 6 th February 2014 // Page 12
Catcher development overview 6 th February 2014 // Page 13
Catcher area development scheme
Reservoir depletion optimised • 22 well development including 14 Oil pore volume thickness map producers and 8 injectors • Wells target thickest oil sands to maximise rate and recovery • Wells positioned to allow VP3 VI3 effective sweep CTP7 • Two phases of drilling on each CCP5 CTI1 VP4 field allows: CCP3 VI2 – Optimisation of production VI1 VP2 CCI2 VP1 profile CTP1 – Learnings from drilling shorter CCP6 BP2 wells to be applied to later BP1 BI3 longer wells BI2 BP4 Producers BI1 Injectors BP3 BP5 6 th February 2014 // Page 15
Rig and well systems contracts awarded • Wells drilled over six - 4 slot templates from a Heavy Duty Jack-Up • Subsea well system with HP riser • Subsea trees run from Jack-Up (similar to Huntington development) • Ability to workover wells with an intervention vessel, Jack-Up or Semi-Submersible 6 th February 2014 // Page 16
FPSO build • Concluded a highly competitive tender process – 3 international companies – Re-fit versus new build • Formal announcement of preferred bidder imminent • 750,000 bbls oil storage • Designed for Functional Spec • 125,000 bpd liquids – Oil – 60,000 bopd – Gas – 60 mmscfd – Sea water injection 75,000 bpd – Future tie-ins – Spare risers included in current design 6 th February 2014 // Page 17
Production profile 6 th February 2014 // Page 18
Upside – near field discoveries and exploration Exploration (Laverda) Laverda • 25 mmbbls STOIIP • Low cost tie-back to Catcher development Catcher North (CTP2 well) • 2-4 mmbbls reserves Catcher • Possible subsea tie-back or North (CTP2) ERD from Catcher drill centre Varadero Carnaby (Burgman extension) Catcher • Discovered August 2012 by 28/9-5A • 28 mmbbls STOIIP Burgman Bonneville • Discovered April 2013 by 28/9a-6 and -6Z wells – Drilled at >70 ° as a “test” for Catcher Carnaby Oil Bonneville • 30 mmbbls STOIIP Gas Licence Area synergies • Capacity of the vessel could support other NB Bonneville extends further south, map limited by HD data extent area discoveries 6 th February 2014 // Page 19
Cost parameters 6 th February 2014 // Page 20
Catcher tax attributes Bare-boat Charter • Industry-wide discussions are ongoing with HMT regarding the possible introduction of taxation on bare-boat charter income Small Field Allowances • The Small Field Allowance shelters £150 m taxable profits from the Supplementary Charge (SCT) saving tax at 32% for each qualifying field with P50 reserves <45 mmbbls • The Catcher, Burgman and Varadero fields will separately qualify for the Small Field Allowance, resulting in total gross allowance for the development of £450 m Tax synergies • Premier has CT/SCT losses and allowances of $2.4 bn at 31 December 2013 • No UK CT expected to be payable until at least 2019 6 th February 2014 // Page 21
Major milestones • Premier’s Board has approved the project – Formal Sanction on completion of the contracts and receipt of JV and Government approvals • The FDP will be submitted to DECC next week – Environmental Statement already submitted • All major contracts are near to completion – In final stages with acceptable Ts&Cs • Targets and plans in place to deliver upside potential – Reservoir recovery rates and future tie-backs • Project team in place and will deliver first oil in the summer of 2017 6 th February 2014 // Page 22
Falklands Projects
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