HALF YEAR RESULTS PRESENTATION London, 13 September 2018
STRATEGIC PRIORITIES SUSTAINABILI LITY AND MINMISE FRONTIER CONSOLIDATION FREE CASH FLO LOW EXPLORATION Evaluate opportunities that To drive NAV growth Focus on near can accelerate delivery of and returns field exploration business objectives to shareholders LNG ASSETS COSTS Unlock potential value and ensure Downsize London office* and our shareholders share appropriately establish an Asian HQ in value realised *Subject to consultation 2018 Half Year Results Presentation Slide 2
1H HIGHLIGHTS $102 million $43 million $205 million 11,400 boepd Average daily production Revenue Cash flow from Headline price of Santos production asset acquisition* $363 million $75 million $370 million Write down driven Net cash at Gross liquidity by $310 million period end at period end against Fortuna *as at effective date of 1 January 2018 2018 Half Year Results Presentation Slide 3
SANTOS ACQUISITION First step towards reaching goal of material free cash generation Deal rationale Oil Price 1H Production 74 16,000 • Further grow and diversify production base 16,000 72 72 70 • Increase cash generative base of business $ per bbl Boepd 68 14,000 • Move closer to financial sustainability 66 64 13,500 65 62 60 12,000 At acquisition Average YTD At acquisition Actual Key metrics Cash flow YTD Payback 70 37 • Production up 18.5% against forecast at 36 60 35 36 acquisition 61 50 34 $ millions Months 33 • Cash flow up 36% against forecast at 40 45 32 30 31 acquisition 30 20 30 29 • Recovered 30% of acquisition costs already 10 28 0 27 • Payback reduced by 6 months At acquisition On completion At acquisition On completion • $13 million per annum of synergies 2018 Half Year Results Presentation Slide 4
ACQUIRED ASSETS Forward plan to maximise value creation Madura Offshore/Sampang, Indonesia • HSE Continue safe production operations - • Incremental reserves growth Paus Biru-1 exploration well - Review/sanction Meliwis FID - • Longer term upside Negotiate licence extensions - Enable delivery of longer term near field exploration strategy - Block 12W • Continue to build relationship with PetroVietnam • Maximise value creation from assets Further strengthen relationship with operator (Premier) and JV - Ensure active contribution to technical and commercial discussions - Synergies • Combine Indonesian offices, generate at least $13 million per annum of synergies* Appointed a new Indonesian GM, Pak Tenny Wibowo (ex-Santos)* - Opportunity to high grade the team in Indonesia - *subject to regulator approval 2018 Half Year Results Presentation Slide 5
PRODUCTION OPERATIONS New assets diversify production base Chim Sao and Dua Field Madura Offshore and Sampang PSCs • Primarily oil production, sold at premium to Brent • Historically outperformed versus expectations • Gas production • > 9,000 boepd in 1H 2018 (net) • Late stage assets with investment opportunities to: • Opex < $10 per boe • convert 2C to 2P • Ongoing well intervention • extend life of existing fields programme • > 9,000 boepd in 1H (net) 2018 Half Year Results Presentation Slide 6
PRODUCTION OPERATIONS Existing assets performing in line with expectations Kerendan field Bualuang Field • Reliable production asset • Stable production under GSA 1 at 17.5 MMsfcd • Opex ~ $13 / boepd • 7,800 bopd during 1H • Opex ~ $13 / bopd • 3D seismic acquired in 2017 highlights material upside potential which could support new routes to • Development drilling in 2H 2018 to increase market production to over 9,000 bopd • Commenced negotiations for GSA 2 to monetise • New platform with 12 new slots to be installed next phase of contingent resource in 2019 driving production up to over 11,000 bopd 2018 Half Year Results Presentation Slide 7
BUALUANG PHASE 4 High value barrels, rapid payback Charlie platform and associated brownfield IRR > 40% modifications Payback within 18 months Project Scope Progress Report • • A third platform (Charlie) with 12 slots Brownfield work has commenced offshore Construction work onshore has commenced • Expansion of water disposal to 100k bwpd schedule for installation and hook up in June 2019 • Additional crude fired power generation capacity - • Total capex of $138 MM • Additional water disposal well on Bravo platform • Development drilling from July 2019 • 10 slots allocated in the Phase 4 development phase • First oil in October 2019 • 2 slots for near field exploration success or additional contingent resources 2018 Half Year Results Presentation Slide 8
EXPLORATION: NEAR FIELD THE FOCUS B8/38 Bualuang North Prospect • Step-out well 5km north of Bualuang platforms Kerendan • Targeting reservoirs already producing in main field Gas Field Bualuang North Prospect Bualuang • Well cost US$4.8MM on a dry hole basis (US$1.5 million post-tax) B8/38 OPHIR 100% Oil Field • Spud October 2018 • Pmean STOIIP 36.7 MMSTB with 50% GPOS • Development drilling in mid-2020 at end of T2.6 Depth Map T2.6 Depth Map Charlie drilling programme Original Velocity Solution Revised Velocity Solution Revised depth • First oil Q3 2020 solution has potential to bring North T2.6 Bualuang into Reservoir T2.6 Closure Reservoir main field above OWC Closure with revised closure above above OWC velocity OWC model 2018 Half Year Results Presentation Slide 9
FORWARD PRODUCTION PROFILE Production Profile* Current investment programme delivers 40000 25,000 boepd in 2019/2020 Base case Upside Delivery of risked upside could drive production over 25,000 boepd Upside opportunities include: • Bualuang Phase 5 • Bualuang North 20000 • Kerendan Phases 2 and 3 • Meliwis development • Paus Biru nearfield exploration 0 2017 2018 2019 2020 *2018 numbers on a pro-forma basis from effective date of 1 January 2018 2018 Half Year Results Presentation Slide 10
HALF YEAR FINANCIAL SUMMARY Units HY 2018 HY 2017 COMMENTS NET SOURCES OF FUNDS: Revenue (including hedges) $’millions 102.1 88.3 ― Bualuang $67/bbl (HY17: $50/bbl) and Kerendan $5.43/Mscf(HY17: $5.23/Mscf) Kerendan take-or-pay $’millions (0.1) 2.0 ― Cost of production (operating $’millions (30.5) (36.0) ― Unit opex $11/boe (HY17: $12/boe) expenses, royalty and inventories) Investment Income $’millions 1.8 2.6 ― Net income from Sinphuhorm $2m (HY17: $3m) Income Tax Charge $’millions (30.4) (17.0) ― Increase in SRB (lower capex) and higher revenue from Bualuang Total net sources of funds from $ ‘millions 42.9 39.9 ― Income from production $23/boe (HY17: $21/boe) production NET USES OF FUNDS: Capex (including pre-licence costs) (1) $’millions 49.7 45.4 ― Exploration $35m (HY17: $26m) and P&D $14m (HY17: $19m) Net administration cost $’millions 6.5 5.8 ― Minimising corporate cost base - gross reduction of 60% in three years Net finance costs $’millions 6.5 7.0 ― Interest in 1H18 only relates to NOK bond. 1H 17 included old RBL Total net uses of funds $’millions 62.7 58.2 ― FINANCING: Closing net cash $’millions 75.3 129.9 ― Net cash outlay $42m (HY17: $30m) Closing borrowings $’millions 104.7 106.6 ― Undrawn facilities $’millions 190.7 177.5 Available facility of $191m (YE17: $204m; HY17: $178m) Closing gross liquidity $’millions 370.7 414.0 ― Total liquidity with undrawn RBL $371m (YE17: $427m, HY17: $414m) Note 1 - capex is adjusted to eliminate non-cash movements for decommissioning of $0.5m (HY17: $0.5m) 2018 Half Year Results Presentation Slide 11
2018 GUIDANCE Focus on delivering free cash flow REVENUE (BRENT ASSUMPTION: $73/BBL) Production: 27,500 boepd* Net Operating Cash Flow 41% Fund flow from production: $210 million* 24% Operating Costs Royalty 5% 2018 Hedging Programme Taxation 28% • Purchased swap at average of $60/bblfor 3,200 bpd Administration 2% • Purchased call at average of $68/bblfor 3,200 bpd • Post 6 Sept additional hedging includes Swap at average of $70/bbl for 2,000 bpd - Call at an average of $78/bbl for 2,000 bpd - CAPITAL EXPENDITURE (EXCLUDING ACQUISITION COSTS) Capital expenditure: $145 million* • Bualuang Phase 4: $45 million Exploration 46% • Mexico exploration: $24 million 8% Pre-development • Kerendan civil works & water wells: $10 million Production 45% Investment Fortuna 1% • New Asian assets: $25 million Net debt: $110 million Gross liquidity: $260 million *on a pro-forma basis for Santos assets from effective date of 1.1.18 2018 Half Year Results Presentation Slide 12
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