H1 2019 Results 29 AUGUST 2019
GENERAL & 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 30 June 2018 therefore includes only four and a half months results contribution from the EPI business. The unaudited results for the period ended 30 June 2018 as previously disclosed have been adjusted as they were based on provisional assigned fair values of the EPI business. On completion of the business combination accounting for the year ended 31 December 2018, the associated judgements and fair values were concluded. So, the June 2018 comparative financial results and associated metrics include this position. 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. 2
Introduction SAM LAIDLAW, EXECUTIVE CHAIRMAN
SIGNIFICANT STRATEGIC PROGRESS DEMONSTRATING RESILIENCE AND BUILDING GROWTH Delivering current returns • Strong cash flow despite lower commodity price environment • Continued cost reduction and efficiency improvements Delivering medium-term production growth Delivering value and growth • Touat gas plant fully operational, exports imminent • Good progress with our key operated Fenja, Duva/Gjøa P1 and Seagull developments • Announced acquisition of a 20% interest in the East Sepinggan PSC, with Merakes field due onstream in 2020 Creating long-term growth opportunities • Expanded our exploration footprint in the prolific Kutei Basin through a farm-in to the East Ganal PSC and the award of the West Ganal PSC • Repositioned our exploration portfolio, with licence awards in all regions of the business • Higher impact exploration activity set to commence, with material wells planned in Norway, the UK, Germany and Indonesia Building resilience into the business • Established a diverse global portfolio of long-life and low-cost production, with a balanced exposure to commodity prices • Portfolio delivers resilient growth in a lower commodity price environment • Robust balance sheet and active hedging strategy protects the downside and enables us to capture value accretive growth opportunities 4
Operational update JIM HOUSE, CEO
FINANCIAL AND OPERATING RESULTS SOLID H1 2019 PERFORMANCE, DESPITE LOWER COMMODITY PRICES HSE 1 Opex 2 Cash flow 4 Production EBITDAX TRIR 5 2.08 149 kboepd $10.3/boe $880m $613m 613m H1 2018 H1 2018 3 H1 2018 3 H1 2018 3 H1 2018 3 3.59 166 kboepd $767m $585m $10.9/boe 1. 12 month rolling average as of June 2019 5. Total Recordable Injury Rate (TRIR) is defined as the number of recordable injuries per 1 million hours worked. It is calculated on a 12 month rolling average as 6 6 follows: TRIR = (fatalities + lost work day cases + restricted work day case + medical treatment cases) 2. Opex includes royalties x 1,000,000 3. With the exception of TRIR, H1 2018 reflects the period from 15 February to 30 June 𝑂𝑣𝑛𝑐𝑓𝑠 𝑝𝑔 ℎ𝑝𝑣𝑠𝑡 𝑥𝑝𝑠𝑙𝑓𝑒 4. Cash flow operations, after tax
DIVERSE GEOGRAPHICAL PORTFOLIO ROBUST OPERATIONAL PERFORMANCE IN Q2 2019 ASIA PACIFIC NORWAY NETHERLANDS Production 13% of portfolio Production 50% of portfolio Production 14% of portfolio Production 0.3 kboepd higher in Q2 2019 Q2 production down 5.5 kboepd to 20.2 Q2 production lower at 19.2 kboepd due to at 72.5 kboepd vs Q1 2019 kboepd due to unplanned shutdowns of L5a- JK off initial plateau and minor curtailments D and Q13a platforms Strong operational performance and Infill well drilling at JNE-9 and JKK-12, along production efficiency Brought forward planned maintenance at with workover at JKK-5 Q13 to coincide with shutdown Three infill wells at Fram to add Signed agreement to acquire interests in incremental production in H2 Production expected to return to plan in Q4 Kutei Basin and awarded West Ganal PSC UK GERMANY NORTH AFRICA Production 11% of portfolio Production 9% of portfolio Production 3% of portfolio Q2 production of 16.8 kboepd higher on Q1, Production flat in Q2 at 12.5 kboepd due to Production flat at 4.4 kboepd in Q2, reflecting strong Cygnus performance lower production efficiency following workover and infill campaigns Cygnus produced at record levels above 320 Acquisition from Wintershall Dea adds Shorter shutdown at Bed-3, workover mmcf/d in May approximately 600 boepd campaign at Ashrafi and AESW infill well Cygnus A5 production well online in June, Agreement builds on strategy to develop Touat gas project operational (Algeria), producing at around 50 mmscf/d projects in Northwest Germany exports to commence imminently 7
PRODUCTION UPDATE 2019 PRODUCTION WEIGHTED TOWARDS H2 Delivering material production growth through Increasing production throughout H2, with Touat investment in the portfolio 1 reaching plateau and infill well drilling at Fram Lower levels of production in Q2 and Q3, but significant kboepd kboepd increase expected in Q4 2019 175 175 Production from Touat to commence imminently and contribute 170 170 around 5 kboepd on a full year net entitlement basis (8 kboepd on a working interest basis) 165 165 Three infill wells at Fram to come online in H2, adding 160 160 incremental production 155 Netherlands production to return to plan in Q4. The Q13a 155 150 platform recommenced in early August and start-up operations 150 are currently underway at L5a-D 145 Acquisition of German interests from Wintershall Dea to add 145 140 600 boepd 140 135 Full year production expected to be 150-155 kboepd, with 130 135 production to exceed 170 kboepd by the end of the year Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019* Q4 2019* Source: Company information 8 1 Forecasts subject to change and external factors
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