Investor Presentation December 2016
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. December 2016 | P1
2016 ytd highlights 90% 1 84% High production efficiency 2014 2016 ytd >80 kboepd 2 69 kboepd 58 kboepd Solan Step change in production E.ON 2015A 2016 ytd 2016 YE run rate 3 17 kboepd 15 kboepd Continued portfolio upgrading E.ON acquisition case 2016 2H 4 $35/boe Cost reductions delivered $25/boe 2014 cash cost breakeven 2016 cash cost breakeven $4 bn 5 $3.4 bn Undrawn Refinancing in progress Drawn Debt Total Facilities (incl LCs) December 2016 | P2
Asia – providing cash flow for the business Indonesia • >90% production efficiency • Strong demand (45% of GSA 1, record GSA 2 delivery) • $9/boe opex • Increase demand post 2020 – Quick payback, high return projects – Bison, Iguana, Gajah Puteri • Longer term growth opportunities Low cost, – Tuna, 3rd party business high return opportunities to maintain / grow Vietnam production • >90% production efficiency • $10/boe opex • Further cost reductions – Renegotiation of vessel and helicopter contracts – Revised terms for FPSO agreed • High return, low cost projects include infill drilling in 2017 December 2016 | P3
UK North Sea – growth story UK overview Huntington (100% op) Solan (100% op) • 79% production efficiency • 95% production efficiency • Production currently restricted at • UK drives production growth: • Production exceeding budget 10-13 kbopd • Cost reductions continue to be E.ON Catcher secured Solan Base Catcher (50% op) • On track for first oil 2017 • 24% cost reduction secured Elgin-Franklin (5.2%) 2015A 2016 2016 E 2017 2018 • Long life field ytd FY • Rates of >130 kboepd (gross) • Strong operating base • On-going infill drilling and well • Tax advantaged position intervention programme Wytch Farm (30.1%) • Long life field Tolmount (50% op) • Low cost, high return project • Infill opportunities • Significant area upside • Tolmount East +250 bcf • Tolmount Far East +150 bcf Babbage (47%) • 93% uptime • Moving to unmanned • Cobra potential tie-back December 2016 | P4
Continued cost reduction Falling cash cost break even Significantly lower forward committed capex ($/boe) ($mm) 40 1400 Exploration & pre-dev projects Sanctioned developments 35 1200 Production maintenance & abex 30 1000 25 800 20 600 15 400 10 200 5 0 0 2014 2016F 2014 2015 2016 2017 Operating costs ($/boe) Lower underlying 0perating costs ($mm) Potential for further 600 Solan, Huntington savings 2014 2015 2016 1H 2016F E.ON • FPSO renegotiations 500 Underlying UK 37.2 30.0 31.2 25 • Synergies post E.ON 400 integration Indonesia 10.0 10.0 9.5 10 300 • Collaboration with Pakistan 3.3 3.7 3.3 4 other operators 200 Vietnam 14.6 11.7 9.1 9 • Opex optimisation 100 • FX benefits Group 18.5 15.5 16.5 15.9 0 FY 2014 2016 Forecast December 2016 | P5
Catcher – ahead of plan Drilling Subsea Burgman BP3 producer well Tay reservoir • 8 wells drilled with excellent operational • Templates, flowline bundles, midwater performance arches and gas export pipeline installed • Pre-drill predictions for reservoir • Buoy and moorings system installed quality and flow rates at • Hook up of risers & umbilicals completed or above prognosis • Installation complete • Drilling programme by Q4 2016 below budget • Subsea programme below budget December 2016 | P6
Module lifts onto Catcher FPSO completed • Outfitting of FPSO progressing well • 13/13 modules lifted onto FPSO • ~2,000 people working on the vessel • On track for summer 2017 FPSO sailaway December 2016 | P7
Catcher schedule • Plateau rates of 50 kboepd (gross) Capex - 20% reduction in costs secured * 350 Sanctioned budget • $1.7bn total project cost Actual/current forecast 300 250 • Potential savings from reduced well count, $mm 200 150 contingency release and FX 100 50 0 2014 2015 2016 2017 2018 Hull mated Module Lifts Topsides integration FPSO Onshore FPSO buoy transit to pre-comm and Catcher and comm hook-up field 2016 2H 2017 Drilling at Drilling at Catcher First oil Burgman (4 wells ) (2 wells ) Installation BP3 & BP 5 Installation Drilling at of Buoy completed of risers Varadero and Mooring (4 wells) System * Assumes $1.25/£to end2017, then $1.3/£ and 22 wells drilled December 2016 | P8
Tolmount – illustrative development solution Indicative metrics (gross) Timetable to sanction • 450 Bcf • Concept select by year-end • Capex <$600m – Standalone, normally • Opex: c.$7/boe unmanned or subsea • Peak production : 200 mcfd tie-back to nearby • First gas 2020 facilities • Project optimisation – Capex reducing – Potential 3rd party funding • FID targeted for 2017 High return project in a low gas price environment December 2016 | P9
Southern Gas Basin: portfolio of opportunities Tolmount (50% op) Ravenspurn Deep (5% carried interest) • Discovered Oct 2011 • BP/Perenco long-reach well planned • 2 appraisal wells in 2013 for late 2016 • 450 bcf of resource • Largest UK gas discovery since Breagh in 1997 • Significant upside (E.Tolmount, Malin) Artemis (100% op) Babbage (47% op) • 150 Bcf discovery • Infill opportunities Minerva • 3 wells drilled • Potential tie back to Newton (50% op) Tolmount or Minerva 30km radii Cobra (50% op) • 250 Bcf gas discovery • Potential tie back to Babbage Portfolio of opportunities which are economic at <30p/therm December 2016 | P10
Sea Lion Phase 1 – reducing breakeven price • Licence extended to 2020 • FEED progressing well – Facilities capex and opex cost estimate reductions from FEED contractors’ collaboration – Logistics and drilling cost estimate reductions following extensive market engagement – $45/bbl current estimated breakeven price • Forward programme to sanction depends on project economics and successful farm-down Estimated capex to first oil now $1.5bn December 2016 | P11
Mexico – potential for material value creation • Sureste Basin is a prolific hydrocarbon province (62 bn bbls of proven oil) Zama Prospect • Awarded 2 high quality blocks in 2015 licensing round • Current carried 10% interests; option to increase to 25% − Shallow water (<150m) Flat Spot − Same salt flanks and sub- salt plays as the US Gulf of Mexico Delivery of Tender for a First First Confirm final reprocessed 3D moored, semi- exploration exploration drilling seismic across 2 sub rig for well on well on candidates blocks Block 7 Block 7 Block 2 2016 2H 2017 - 2018 December 2016 | P12
Net debt & refinancing update • Revised Refinancing term sheet provided by private lenders on 11 November − Preservation of the full amount of existing facilities including undrawn amounts − Alignment of all maturities to 2021 or later − Amendment of the group’s financial covenants − Provision of a comprehensive security package to lenders − Enhanced economics to lenders − Certain governance controls • Premier will now engage with Convertible and Retail bondholders • Aim to have creditors locked up to the final terms by year-end • Implementation during Q1 2017 Debt type Description Facility size Maturity Net debt of Bank debt RCF & LC US$2.5bn 2019 $2.8bn, marginally Bank debt Term Loan US$300m Dec. 2017 Private down from Q3 lenders US Bonds Private Placement US$380m No maturity before 2018 Cash and undrawn German Bonds Schuldschein US$130m 2018 & 2020 facilities of UK Bonds Convertible US$245m 2018 Publically c. $600m traded debt UK Bonds Retail bond GBP150m 2020 December 2016 | P13
Outlook +c.10 kboepd per annum 1 Continuing production growth 2016 2017 2018 $2.25bn 2 $1.7bn Catcher delivery Sanctioned budget Forecast 3 >50% IRR Select highest return projects 30% 20% for sanction Infills Tolmount Sea Lion $20/boe 4 $15-17/boe $12/boe Maintain competitive cost base 2016 Solan Catcher 5.2x 5 Net debt/ EBITDAX Deliver debt reduction 3x 2016 2018 December 2016 | P14
December 2016 www.premier-oil.com Premier Oil Plc 23 Lower Belgrave Street London SW1W 0NR Tel: +44 (0)20 7730 1111 Fax: +44 (0)20 7730 4696 Email: premier@premier-oil.com
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