Transcript
HALF YEAR RESULTS 13 August 2015
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2015 Half Year Results Slide 2
Positioned to thrive in uncertain times
STRATEGY
VALUE CREATION THROUGH EXPLORATION
FOCUS ON ROCE THROUGH CAPITAL ALLOCATION AND COST MANAGEMENT
ACTIVE PORTFOLIO AND RISK MANAGEMENT
2015 Half Year Results Slide 3
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Response to the current oil price
STRATEGIC CONTEXT
Well positioned to grow NAV per share:
• Reduced capital expenditure
• Improved efficiencies and overhead cost reductions
• De-levered the Salamander balance sheet and retained financial strength
• Benchmarking projects against $50 per bbl environment
• Self funding developments
• Potential share buybacks
2015 Half Year Results Slide 4
Ophir is BIG E and little p
OPHIR DOES NOT THINK LIKE A TRADITIONAL, FULL CYCLE E&P
• Exploration is focus for creation of shareholder value
•Unique position to deliver high graded portfolio due to strong balance sheet and minimal well commitments
• Self-funded development activity
•Minimal existing capital will be deployed to developments
• Production is a financing stream for E&A activity
• Reserves replacement and production growth are not key metrics
•Assets must break even at low oil price
EXPLORATION DEVELOPMENT
RETURN TO SHAREHOLDERS
PRODUCTION
CASH
A SELF-SUSTAINING EXPLORER DELIVERING SUPERIOR RETURNS TO SHAREHOLDERS
2015 Half Year Results Slide 5
EXPLORATION – A UNIQUE OPPORTUNITY
STAGE 1: ENTRY STAGE 2: SEISMIC STAGE 3: DRILLING
High Signature Bonus
Seismic
Multiple Wells
High costs High cost
Mainly commitment Wells
PROGRESS
PROGRESS Small/No Signature
Bonus
Seismic inherited Costs down c. 50%
Rig costs down c. 30%
Only drill top ranked prospects
TOP
O
F C
YCLE
B
OT
TOM
O
F C
YCLE
DROP
DROP DROP DROP
ALL THREE COST COMPONENTS DROPPED IN PRICE - RISK OF ROCKS IS UNCHANGED
2015 Half Year Results Slide 6
Minimal commitments, low cost entry
HIGH GRADED EXPLORATION PORTFOLIO
2015 MATURING PLAYS FOR HIGH GRADING
12 PLAYS Aru Trough (oil)
EG (oil) G4/50 (oil)
Gabon pre-salt (oil) Gabon post-salt (oil)
Gabon conjugate margin (oil) Kenya (oil/gas) Kerendan (gas)
Makassar Straights (oil/gas) Myanmar (gas) Seychelles (oil)
Western Birds Head (oil)
• Doubled exploration footprint
• 1 deepwater well commitment
• $100 MM of committed E&A spend 2015-2017
• $50 MM to build new portfolio
• Discipline to only drill preferred prospects
• Must be clear path to commercialisation
2014
5 PLAYS 2 Established 3 New tests
FINAL WELLS IN IPO PORTFOLIO
• 8 commitment wells in 2014
• c.$500 MM in commitments to build IPO portfolio
2016/17
DRILLING ON HIGH GRADED
PLAYS
ONLY PROGRESS TOP RANKED PROSPECTS
CAPITAL DISCIPLINE
WALK AWAY FROM PROSPECTS
THAT WON’T WORK
2015 Half Year Results Slide 7
SELF FUND
• Not all barrels are equal
• We explore for high quality barrels that generate cash in a low price environment
• Project equity is a source of capital
No fresh capital deployed to development
SELF FUNDING DEVELOPMENT ASSETS
Slide 8
PRODUCTION
TOTA
L V
OLU
ME
2C
: 9
50
MM
bo
e
EQUATORIAL GUINEA W.I. 80%
KERENDAN W.I. 70%
BUALUANG W.I. 100%
TANZANIA W.I. 20%
CASH FOR E&A
First gas 2022
First gas 2019
First gas 2016 2nd phase of dev.
On production 3rd phase of dev.
2P RESERVES
SELF FUND
2015 Half Year Results
FINANCIALS
Strong balance sheet augmented by cash generation from operations
FINANCIAL HIGHLIGHTS
Income Statement
• Low field operating costs
Balance Sheet
• De-levered Salamander whilst retaining strong balance sheet
• Gross gearing 14.7%, net gearing -18.2%
Cash Flow Statement
• Net cash outflow of $266 million includes:
- Payments relating to 2014 drilling $161 m
- Share buyback $50 m
- Tax incurred in 2014 $78 m
- Deleveraging of Salamander portfolio $184 m
• Close to cash neutral in 1H 2015 – underlying operating cashflow v cap-ex
HY’15 HY’14
INCOME STATEMENT
Revenue ($ millions) 86.50 -
Realised Oil Price ($/bbl) 60.48 -
Field Operating Costs ($/boe) 7.36 -
(Loss) / Profit before taxation ($ millions) (123.30) 589.4
BALANCE SHEET
Capital expenditure / investments: ($ millions)
Acquisitions ($ millions) (1,128) -
Exploration and appraisal ($ millions) (51) (230)
Production and development ($ millions) (12) -
CASH & EQUIVALENTS ($ millions) 708 1,507
1,507
NET CASH ($ millions) 392 1,507
CASH FLOW STATEMENTS
Cash generated from operations ($ millions) 69.4 (12.7)
Share buy-back ($ millions) (56.1) -
(Decreased) / increase in cash ($ millions) (266.5) 527.0
2015 Half Year Results Slide 10
Stripping cost out of the combined entities
SYNERGIES OF $60 MILLION PER ANNUM
• $60 million per annum of savings
• Closing five offices including Perth, London (ex-Salamander HQ), Singapore
• Combined headcount reduced by c. 35%
• Extracting efficiencies from on-going operations
Breakdown of Synergies
Salamander
Niko
Headcount/Costs
Offices / Other
2015 Half Year Results Slide 11
Low level of commitment spend, robust production base
• FY 2015 Capex forecast unchanged
• Capex FY 2016 expected to be lower than 2015
• FY 2015 underlying operating cash flow from producing assets forecast at $110-$130 million
• High degree of financial flexibility
- Only $35 MM of commitment spend in 2015
- Total E&A commitment spending of $100 MM through end 2017
- $100 MM carrying cost for LNG projects to end ‘16
• Reposition debt portfolio
• Fully funded for at least 3 years on current plan
- Cash at HY 15 of $708 million, net cash $392 million
- Flexibility to scale back capex if required
- Combination of cash, debt and cash flow
FINANCIAL FLEXIBILITY
0
10
20
30
40
50
60
OCF OCF + Debt OCF + Debt + Capex
2015 breakeven oil price from current producing assets
2015 Half Year Results Slide 12
OPERATIONS
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Seamless integration and efficiencies driving performance
ACHIEVING PRODUCTION EXPECTATIONS
Production guidance increased
• FY 2015 production forecast 11,000-12,500 boepd
• Sinphuhorm outperformed in 1H
• Dry winter resulted in increased demand to replace shortfall due to lack of hydro-electric power
• Bualuang production outperformed in 1H
• Operating team drove increased efficiencies from existing infrastructure
• Bottleneck in 2H due to reaching limits of water handling capacity
• Elected to defer planned water disposal well until after exploration drilling
• Production uplift deferred back to 1Q 2016
2015 Half Year Results Slide 14
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18
Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16
Ophir Energy Net Production All Fields - Working Interest Basis - Mboe/d
YTD Actual
Target
Focus: Commercialising our gas resources
LARGE RESERVES AND RESOURCE BASE
Slide 15
Significant 2P reserves base from Thai and Indonesian assets
• 60 MMboe 2P – over 10 years of production at current levels
• Underpins strong production and cash flow in the medium term
• Over 55% is high margin gas, which is sold on long-term contracts
Large 2C resources base from Thai, Indonesian and African LNG assets
• Strong economics from Thai and Indonesian 2C by leveraging on existing infrastructure at Bualuang, Sinphuhorm and Kerendan
• High value African LNG to drive longer term production and growth
LARGE 2P + 2C BASE SKEWED TOWARD HIGH MARGIN GAS IN THE LONG TERM
Reserves (MMboe) 1P 2P 3P
Bualuang 17.6 24.9 31.1
Sinphuhorm 5.1 17.9 17.9
Kerendan 16.5 16.8 16.8
Total Reserves (MMboe) 39.2 59.6 65.8
Resources (MMboe) 1C 2C 3C
Bualuang 6.7 15.5 31.3
Sinphuhorm & Dong Mun 5.0 18.0 126.8
Kerendan 3.6 62.3 144.3
Equatorial Guinea 283.3 353.2 400.0
Tanzania 366.7 501.0 483.3
Total Resources (MMboe) 665.3 950.0 1185.7
Total Reserves and Resources (MMboe) 704.5 1009.6 1251.5
2P + 2C BY GEOGRAPHY 2P + 2C BY PRODUCT
Thailand 7%
Indonesia 8%
Equatorial Guinea 35%
Tanzania 50%
Oil 4%
Gas 96%
2015 Half Year Results
Four key things required to make an LNG project work
LNG OVERVIEW
MILESTONES
LAND / MIDSTREAM
JV PARTNER ALIGNMENT
FISCAL TERMS
RESOURCES
4 • Land identified but yet to be formally awarded
• Chartering agreement to be finalised
3 • Project team working well • All companies well respected
• Ophir & GEPetrol
2 • Agreed • Agreed
1 • 15 TCF • 3 trains of LNG
• 3.4 TCF • 2.2 Mtpa project
Award of Land Bringing in Upstream partner
BUYERS
TANZANIA EQUATORIAL GUINEA
2015 Half Year Results Slide 16
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Upstream component within Ophir’s ability to operate
FLNG IS RIGHT SOLUTION IN EG
Slide 17
Why FLNG appropriate solution • Biogenic gas, 99.7% methane – clean and simple
• Benign meta-oceanic conditions
Why Ophir can be the Upstream operator
• Operator’s role in Upstream development relatively straightforward
- Drill, complete and tie-back to vessel
- Manage reservoir performance over time
• $1.5bn of Midstream capex turned into opex
• c. $0.8bn of Upstream capex to first gas
• Self fund once farmed out
- Only progress to FID if equity has been reduced
Third Party validation of FLNG solution:
• High-quality upstream FEED consortia
• Leading midstream FLNG supplier
• Credible gas buyers (4Q)
• Equity investors (FID)
Fortuna Gas Field DST
2015 Half Year Results
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Simple solution, proven technology
GOLAR LNG
• Heads of Terms concluded
• Lower cost conversion for Phase 1 development
• Proven concept - Golar Hilli conversion (Cameroon) >40% complete (Keppel,
Singapore)
• Proven technology - Black & Veatch PRICO process - 4 trains
• Golar Gandria vessel conversion early 2016 for Block R
• $3.50/mmbtu liquefaction + ~$0.25/mmbtu for mods
• Golar’s strategy is to export the US low cost tolling model to independent producers
Golar Gandria
Golar FLNG Conversion
2015 Half Year Results Slide 18
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Deliver into Asia for c. $7/mmbtu
COST COMPETITIVE ON A GLOBAL BASIS
• World class resources
• Simple technical solution
• Simple commercial structure
• Government support
• Offshore – light footprint
• Timing – fast to market
• Option for mid-2020s step-up
0.00
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NP
V 1
0%
Bre
ak E
ven
DES
Jap
an
FOB Cost (Breakeven)(US$/mmBtu)
Shipping Cost (US/$mmBtu)
2015 Half Year Results Slide 19
FLNG VALUE CHAIN (PRICES INDICATIVE)
Slide 20
UPSTREAM PSC
Government
MIDSTREAM SHIPPERS LNG BUYERS
FOB DES NETBACK
$ CASHFLOW
LNG (GAS) FLOW
$8.5/MMbtu
$5.0/MMbtu
$10.00/MMbtu
$1.5/mmbtu
$3.5/mmbtu
CASH Paid by LNG Buyer to OPHIR/SONAGAS for LNG
Cargo at FOB Price Delivered LNG
Cargo price
LNG Buyer pays for Shipping
CASH Paid for Liquefaction Tariff by Contractor (Ophir/GEPetrol) &
Government to FLNG operator
Netback Price used in PSC for calculating and valuing
Royalty, Cost Recovery and Profit Gas
Royalty 7%-17%
GEPetrol Profit Share
MMIE Profit Share
Income Tax paid by Ophir
Cost Recovery (Ophir/GEPetrol)
Ophir Profit Share
2015 Half Year Results
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Mechanical completion of facilities in August, material upside to be unlocked
KERENDAN
Slide 21
Phase 1 mechanical completion
• Gas processing facilities to be completed this month
• GSA for 120 Bcf at $5.03 per mcf, seeking price revision to > $7 per mcf post completion of facilities
• PLN 73% complete on transmission lines; 81% complete on power plant
Material upside to be unlocked
• 160 Bcf in Kerendan, 300 Bcf in West Kerendan not covered by GSA
• Indonesia reserves auditor completing independent report for regulator (SKKMigas) as a pre-cursor to further gas sales
• Power plant planned to be upgraded to 350 MW (c. 70 MMscf/d)
IncreasedPLN Capacity
Existing GSA: 123 Bcf
Kerendan 2C: 109 Bcf
West Kerendan 2C: 146 Bcf
Total 2C resource in excess of power plant capacity
Gas Engines arriving at PLN Power Plant
2015 Half Year Results
EXPLORATION
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Low cost wells offering short term return on investment
THAILAND – NEAR-FIELD EXPLORATION DRILLING
Slide 23
Step outs from Bualuang oil field
• Well costs of c. $10 million each
• Both prospects would be commercial for fast track MOPU development
Soy Siam
• Soy Siam is mapped as a single fault block with access to charge from both the Bualuang and South western sub-basins
• Prognosed reservoir targets are equivalent to the producing reservoirs in the Bualuang field
• Pmean 25.3 mmbo, CoS 21%
Parichat
• Parichat cluster made up of 4 fault blocks with multiple stacked reservoir targets
• SW fault block to be drilled first – lowest risk 32% POS
• Success case appraisal of Parichat SE planned
• Pmean 24.9 mmbo, lowest risk 32% POS
Parichat Cluster
Soy Siam
2015 Half Year Results
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Maximum optionality at minimum cost
EXPLORATION – BUILDING A WORLD CLASS PORTFOLIO
• Forward commitment: $7.8 million
• Potential: Basin opening >500 mmboe oil & gas play
• Forward commitment: nil
• Potential: Basin opening, multi TCF gas play
Aru Trough, Eastern Indonesia Rakhine Basin, Myanmar
2015 Half Year Results Slide 24
• Ophir’s strategic focus is value creation through the drill-bit
• Building a strong and cost efficient production base is key to preserve business model
• Ophir has a well balanced portfolio – significant exploration portfolio combined with a large reserves and resources base
• Material low cost producing assets and large gas developments offer significant cash flow and predictable production growth
• Strong balance sheet – fully funded for at least the next three years
• Significant financial flexibility – limited commitments and leverage combined with flexibility to sell assets to reduce capex and provide additional source of capital
SUMMARY AND OUTLOOK
2015 Half Year Results Slide 25
POSITIONED FOR MATERIAL GROWTH AND VALUE CREATION
For further information contact:
Head of IR and Corporate Communications Investor.relations@ophir-energy.com
Geoff Callow
Level 4 123 Victoria Street London SW1E 6DE UNITED KINGDOM
Tel: +44 (0)29 7811 2400 Fax: +44 (0)20 7811 2421
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Soy Siam Prospect
G4/50 - GULF OF THAILAND
• Soy Siam is mapped as a single fault block with access to charge from both the Bualuang and South western sub-basins
• Prognosed reservoir targets are equivalent to the producing reservoirs in the Bualuang field
Top N20 Depth Map
Potential Recoverable Oil (MMbls)
P90 P50 P10 Mean
7.0 24.0 68.6 25.3
Soy Siam
COS: 21%
2015 Half Year Results Slide 27
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Parichat SW
GULF OF THAILAND
• Parichat cluster made up of 4 fault blocks with multiple stacked reservoir targets
• SW fault block to be drilled first – lowest risk 32% POS
• Success case appraisal of Parichat SE planned
Top N20 Depth Map
2 Km
Parichat NE
Parichat NW
Parichat SW
Parichat SE
2015 Half Year Results Slide 28
Potential Recoverable Oil (MMbls)
P90 P50 P10 Mean
1.7 6.5 19.1 8.9
Parichat SW
Potential Recoverable Oil (MMbls)
P90 P50 P10 Mean
4.1 19.3 52.8 24.9
Full Parichat Cluster
POS: 32%
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