Full Year 2019 Results 31 MARCH 2020
GENERAL AND DISCLAIMER Except as the context otherwise indicates, ’Neptune’ or ‘Neptune Energy’, ‘Group’, ‘we’, ‘us’, and ‘our’, refers to the group of companies comprising Neptune Energy Group Midco Limited (‘the Company’) and its consolidated subsidiaries and equity accounted investments. ‘EPI’ refers to the business of ENGIE E&P International S.A. (now renamed Neptune Energy International S.A.) and its direct or indirect subsidiaries. This report includes the results of the acquired EPI business consolidated since 15 February 2018, which is the acquisition date as that is when Neptune acquired control over EPI. Comparative data for Neptune for the corresponding reporting period ended 31 December 2018 therefore includes only ten and a half months results contribution from the EPI business. In this report, unless otherwise indicated, our production, reserves and resources figures are presented on a basis including our ownership share of volumes of companies that we account for under the equity accounting method, in particular, for the interest held in the Touat project in Algeria through a joint venture company. Production for interests held under production sharing contracts is reported on an appropriate unit of production basis. The discussion in this report includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to materially differ from those expressed or implied by the forward-looking statements. While these forward- looking statements are based on our internal expectations, estimates, projections, assumptions and beliefs as at the date of such statements or information, including, among other things, assumptions with respect to production, future capital expenditures and cash flow, we caution you that the assumptions used in the preparation of such information may prove to be incorrect and no assurance can be given that our expectations, or the assumptions underlying these expectations, will prove to be correct. Any forward-looking statements that we make in this report speak only as of the date of such statement or the date of this report. This report contains non-GAAP and non-IFRS measures and ratios that are not required by, or presented in accordance with, any generally accepted accounting principles (‘GAAP’) or IFRS. These non-IFRS and non-GAAP measures and ratios may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS or GAAP. Non-IFRS and non- GAAP measures and ratios are not measurements of our performance or liquidity under IFRS or GAAP and should not be considered as alternatives to operating profit or profit from continuing operations or any other performance measures derived in accordance with IFRS or GAAP or as alternatives to cash flow from operating, investing or financing activities.
Introduction SAM LAIDLAW, EXECUTIVE CHAIRMAN
COVID-19 AND OIL PRICES RESILIENCE PLAN IN PLACE Activated our pandemic emergency plan to protect our people and assets Projects People Operations Protecting project delivery and asset values The health and safety of our people, and all those Maintaining operational continuity, while reducing through enhanced cooperation who work with us, is our number one priority non-critical activities – No impact at our operations – Reviewed our project pipeline and identified areas – Acted quickly and have implemented our of risk – Merakes delayed until mid-2021 pandemic emergency plan – Altered shift patterns; reduced non-critical activities – Mitigation plans are in place for critical path – Working with the authorities, our partners and – Stopped or reduced travel activities global health providers – Increased screening capability at all entry points to – Evaluating supply chains for impacts – Extra precautions are in place for our offshore our operations workers – Focus on collaboration, cooperation and – Continuous dialogue with our industry peers communication across projects, JV partners and – Repatriated all non-essential Neptune employees – ~$50 million of operating cost reductions (opex and suppliers and contractor personnel from Algeria G&A in 2020) – ~$250-350 million of capex reductions (~25%) in 2020 Resilience through commodity price cycles Operated assets provide Hedged operating cash Fully-funded development Long-life and low-cost Strong balance sheet and flows control of activities projects assets liquidity 4
COMMODITY MARKETS DIVERSIFICATION, HEDGING AND LOW COST STRUCTURE TO PROTECT CASH FLOWS 2020 post-tax hedge ratio as at Cash breakeven costs in 2020 (2) Benchmark oil & gas prices March 2020 (3) p/therm (1) $/bbl 90 90 $/boe Brent oil price 89% 89% 90% 84% 80 80 70 70 68% 63% 60 60 56% 54% 53% 52% 50 50 40 40 36% 36% 27% 30 30 UK gas price 19% 17% 20 20 10 10 0 0 Q1 Q2 Q3 Q4 FY Oil Gas Total Production diversification balances our exposure Some projects may slow and expenditures deferred to different geographies and commodity markets Low breakeven cost Disciplined approach to capital allocation, with projects and hedging provides Our existing assets are long-life and low-cost screened at a range of commodity prices, including: protection from – a low case of $25/bbl Near-term cash flows are protected by our hedging strategy weaker commodity – price curves over the lifecycle of a development We have a strong balance sheet, cash prices flow generation, low leverage and significant liquidity While leverage is expected to increase in 2020, projects coming onstream are low-cost and our capex Additional cost saving measures are being targeted commitments will drop 1. NBP 5 2. Breakeven costs are shown before financing ($1.9/boe) and tax ($0.3/boe) and exclude our equity accounted entities. Our forecast all-in cash breakeven cost in 2020 is $31.4/boe. Assumes $50 million of opex and G&A savings and $300 million reduction in capex. 3. Aggregate post-tax hedge ratio for Q2, Q3 and Q4 as at March 2020 (Q1 2020, reflects 31 December 2019 position). Oil includes gas production sold as LNG and priced in relation to oil prices.
NEPTUNE INVESTMENT PROPOSITION DEMONSTRATING A TRACK RECORD OF CASH FLOW GENERATION AND GROWTH Since the acquisition of EPI in early 2018, we have delivered operational improvements and growth throughout the business Neptune Energy portfolio* Generated significant earnings Mid-term and cash flows over the past Pro-forma Sanctioned Exploration TRIR (2) target Opex two years 2P reserves (5) projects (3) potential (6) production (4) 2.1 664 mmboe 9 200 kboepd $10.3/boe 2,307 mmboe EBITDAX Engie E&P International in 2017 (1) $3.5 Billion (9) Sanctioned Exploration TRIR (2) 2P reserves Production Opex projects (3) potential (6) 4.9 555 mmboe 2 154 kboepd $10.5/boe 804 mmboe Operating cash flow $2.5 Billion (9) Our acquisition strategy has added high quality and complementary assets in our core regions 4 material $1 billion 115 mmboe ~60 kboepd * Our acquisition of the North Sea assets from transactions (7) invested (7) Production (8) 2P reserves Energean Oil & Gas is contingent on the completion of Energean’s transaction with Edison 1. The performance of Engie E&P International in 2017 6. Mean net prospective resources 2. Total Recordable Injury Rate (TRIR) 6 7. Apache UK Central North Sea assets ($70m), VNG Norge ($437m), ENI Merakes interest ($235m), Energean Oil & Gas North Sea assets ($250m)* 3. 2017 includes Touat and Njord; Neptune has added Duva, Gjøa P1, Fenja, Nova*, Dvalin*, Seagull, Merakes 8. Includes assets already in production (7 kboepd) and projects in development - Seagull (15 kboepd), Merakes (15 kboepd), Fenja (10 kboepd), Nova (7 kboepd) and Dvalin (5 kboepd) 4. Neptune production outlook following completion of project pipeline and includes Energean Oil & Gas North Sea assets 9. Cumulative EBITDAX and post-tax operating cash flows since 12 February 2018 5. Pro-forma 2P reserves includes Energean Oil & Gas North Sea assets
GROWTH STRATEGY CONTINUED STRONG CASH FLOW SUPPORTING DEVELOPMENT Reserves M&A Yet to find 90% Two material Increase recovery reserves replacement in bolt-on acquisitions from existing assets announced in 2019 (2) 2019 Yet to find (4) Refreshed exploration 200 kboepd Increasing proportion Added >100 mmboe portfolio and of developed reserves of low cost reserves increased investment and resources (3) 2C production (4) Converted ~100 mmboe Continue to of contingent resources Strengthened manage portfolio into reserves in acreage position opportunities 2018/19 (1) in core areas Increasing the depth and quality of our portfolio 2P production (4) through targeted investments 2022 1. Total additions in 2018 and 2019 3. 2P reserves and 2C resources added in 2019, including the Energean Oil & Gas North Sea assets 7 2. ENI Indonesia assets and Energean Oil & Gas North Sea assets. Completion of the Energean transaction is contingent on Energean’s 4. Illustrative production profile. Some contingent resources may not be developed and production may vary from period to period transaction with Edison
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