2010 Half Yearly Results Presentation 26 August 2010
2010 Half Yearly Results Presentation 26 August 2010
26 August 2010 | Page 1
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.
26 August 2010 | Page 2
Agenda
Progress against strategy Simon Lockett
Financial results Tony Durrant
Exploration update Andrew Lodge
Operations update Neil Hawkings
Summary Simon Lockett
26 August 2010 | Page 3
Gajah BaruWellhead platform jacketbuilt and in place
Progress towards 75,000 boepd
Chim SáoDevelopment drilling under way
HuntingtonField developmentplan submitted
26 August 2010 | Page 4
Delivering Asian projects to meet growing demand
26 August 2010 | Page 5
Progress on the portfolio of development projects
BreamEvaluatingtenderresponses
DuaConcept selectioncompleted
FrøyTender process under way
SolanProject sanction by end 2010
Pelikan,NagaConceptselectioncompleted
NorthSumatraBlock AProgresstowardsPSCextension
26 August 2010 | Page 6
Progress towards 200mmboe of discoveries
Catcher Main andCatcher East60-100mmboe (gross)
Blåbaer15-75mmbo (gross)
Catcher Exploration>150 mmboe (gross) potential remaining
26 August 2010 | Page 7
Progress on acquisition / new ventures
West Orkney Basin, Solan & 15/26c South Darag
26 August 2010 | Page 8
Half yearly financial results
26 August 2010 | Page 9
Production and pricing
Working Interest Production (kboepd)
Entitlement Interest Production (kboepd)
Realised oil price ($/bbl)
Realised gas price ($/mcf)
6 months to30 Jun 2009
6 months to30 Jun 2010
39.7
37.0
53.0
5.0
46.6
42.6
78.1
5.8 Average gas pricing ($/mcf)H1 2010 H1 2009
Singapore 13.8 8.9Pakistan 3.3 3.7
Average Brent oil price was $77.3/bbl (H1 2009: $52.0/bbl)
Highlights
30
0
5
10
20
25
Jan 05
15
Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10
Commodity price comparison$/mmbtu
Henry HubWest Natuna
Full-year 2010 guidance unchanged at around44,000 boepd
26 August 2010 | Page 10
Income statement
Sales and other operating revenuesCost of salesGross profitExcess of fair value over purchase considerationExploration/New BusinessGeneral and administration costsOperating profit Financial ItemsProfit before taxationTaxationProfit/(loss) after tax
6 months to30 Jun 2009
6 months to30 Jun 2010
$m213
(116)97
6(25)
(7)71
(52)19
(46)(27)
$m367
(189)178
-(46)
(8)124(12)112(50)
62
Operating costs per barrel ($/bbl)H1 2010 FY 2009
UK $24.7 $23.2Indonesia $7.1 $10.0Pakistan $1.6 $1.9Group $12.9 $12.2
Includes $20.5 million credit from mark to market revaluation of hedges
Estimated UK tax allowances/losses of $1.05billion outstanding at 30 June 2010
Prior year comparatives are restated for acquisition fair value adjustments made in the 2009 year-end accounts
26 August 2010 | Page 11
Cash flow
Cash flow from operations
Taxation
Operating cash flow
Capital expenditure
(Acquisitions)/disposals
Finance charges
Pre-licence expenditure
Net cash flow
6 months to30 Jun 2010
$m
H1 2010 H1 2009
Development
Exploration
Estimated Capex split ($m)
6 months to30 Jun 2009
$m
69
42
111
142
70
212
Operatingcash flow Capex
Asia
MEP
Estimated H1 2010Regional split ($m)
118
14
80
49
29
144North Sea
212222
142
(29)
113
(111)
(511)
(18)
(7)
(534)
273
(51)
222
(212)
20
(27)
(11)
(8)
26 August 2010 | Page 12
Net debt and financial strength
6 months toJune 2010
$m
(316)
(8)
(12)
(336)
Movement in net debt
Opening net debt
Net cash out flow
Purchase of shares
Closing net debt*
Current outlook• Cash $449 million, undrawn facilities $404 million• Forecast 2010 full year spend of $430 million (development) and $170 million (exploration)• At current prices net debt is expected to peak at around $700 million in mid-2011
* Excludes $65m of cash in escrow for abandonment obligations
At 30 Jun 2010
$m
449
(569)
(216)
(336)
Balance sheet
Cash and cash equivalents*
Bank borrowings
Convertible loan
Net debt*
26 August 2010 | Page 13
Exploration update
26 August 2010 | Page 14
Year to date exploration highlights
Exploration and appraisal drilling• Nine wells drilled, four successful• Discoveries at Catcher, Catcher East
and Blåbaer• Net estimated resource additions
>30mmbo
New ventures• New acreage awarded in West Orkney,
UK and South Darag, Egypt• 11 applications in the UK 26th
Licensing Round• Farmed into UK Block 15/26c (West
Rochelle)
200
100
50
02010 2011
150
2012 2013 2014
250Target cumulative risked additionsActual cumulative risked additions
Global exploration:Forecast resource additions (mmboe)
2009
26 August 2010 | Page 15
Exploration – UK – Oates
Oates (P1620)• Premier 50% equity and operator• Well plugged and abandoned • Pre-drill risk was trap integrity• Post-drill analysis ongoing
– Focus on cause of amplitude response– Lessons learned will be captured and applied– Post drill analysis will be completed within 60 days of P&A
Oates
Bowers
Forties Isopach Map
OatesNW SE
Amplitude Bloom on Far Stacks
Oates
26 August 2010 | Page 16
Exploration – UK – Catcher
Catcher (P1430)• Premier equity 35%• 30° API oil discovery in high quality sands• Catcher Main and Catcher East discoveries• Catcher Main appraised by Catcher SW• Gross reserve estimate: 60-85-100 mmbo
WCatcher Main Catcher East
VaraderoProspect
W E
2 KmDepth Map on Top Reservoir
Catcher Main
Catcher NorthProspect
Catcher East
1 Km
Catcher
26 August 2010 | Page 1726 August 2010 | Page 17
UK 28/9 (P1430)• Premier equity 35%• Overall block potential >300 mmbo recoverable• Low risk, seismic amplitude support• Three exploration wells are planned Q4 2010
Exploration – UK – 28/9 exploration potential
CatcherEast
Rapide
Cougar
Carnaby65mmbo
Bonneville
Burgman45 mmbo
Catcher - Main
CatcherNorth
Varadero40 mmbo
Eocene – Tay Amplitudes
Catcher - MainDiscovery
Carnaby
Catcher North
Varadero
Burgman
CatcherEast
26 August 2010 | Page 18
Exploration outlook
Firm Wells:Rig Contracted
Firm Wells:Rig TBC
Contingent Wells
SeismicProgramme
All well timings aresubject to revision for operational reasons
Unrisked net potential new barrels over next 12 months of 300 mmboe
Anoa DeepNatuna Sea Block A
Exploration well
AppraisalBhit/Badhra
Q2
K25, K18ST, K28KadanwariPakistan
Middle East - Pakistan
BentengButon
Exploration well
West RochelleP1298
2010
BluebellP1466
Q1
CRD Appraisal
Q42011
CatcherP1430UKGrosbeak AppraisalPL378
GnatcatcherPL378
GardrofaPL406 (8/3)Norway
North SeaBiaawak Besar
Belut Laut
Gajah Laut UtaraTunaIndonesia
Seismic104/109-05
Seismic07/03VietnamQ3Q3Asia
Ocean General
Ocean General
Songa Delta
Songa Delta
2010 full year expenditure $170million pre-tax
Geowave Voyager
Viking II
West Callisto
West Callisto
Weatherford 812
Transocean Prospect
26 August 2010 | Page 19
Exploration – UK – West Rochelle
West Rochelle (P1298 & P1615)• Premier equity 50% P1298 (15/26b), 25% P1615 (15/26c)• Farmed into 15/26c to test western extension of the Rochelle
discovery along the Kopervik pinchout margin• Potential gross reserves: 15-25-30 mmboe• Well spudding – end August 2010
RochelleP1298 (15/26b)
P1615 (15/26c)
West Rochelle well
West Rochelle
West RochelleS N
Plenus Marl
Top KopervikBase Kopervik
Top Chalk
Andrew Sst
Lista
BCU
Base Zechstein
26 August 2010 | Page 2026 August 2010 | Page 20
Exploration – Norway – Grosbeak, Gnatcatcher
Gnatcatcher/Grosbeak (PL378)• Premier 20% equity (non-operated)• Successful Grosbeak well completed in July 2009
– Close to nearby infrastructure– Oil in Middle Jurassic sandstones– Estimated reserves 35-80-190 mmboe
• Gnatcatcher resource estimate 31-40-60 mmboe• Moderate to high risk for oil• Q4 2010 Gnatcatcher exploration well and Q1 2011
Grosbeak appraisalGnatcatcher
SW NE
26 August 2010 | Page 21
Appraisal – Vietnam – Block 07/03 – Cá Rồng Đỏ
Cá Rồng Đỏ• Premier 30% equity, reserves estimate 10-60-80 mmbo
gross resource• Appraisal well planned for Q1 2011
CRV
NW
CRD / CRD North EastCRD Discovery
SE
Anomalies associatedwith Hydrocarbons
Anomalies associatedwith Hydrocarbons?
Gas above CRD
26 August 2010 | Page 22
Exploration – Vietnam – Block 07/03
2011 exploration well (Block 07/03)• Premier 30% equity• Two potential drilling candidates
identified on existing 3D, new 3D dataset available in Q1 2011
• Reserves estimate 10-45-70 mmbo• Targeting multiple stacked Tertiary
reservoirs; moderate risk for oil • One exploration well planned for
Q3 2011
26 August 2010 | Page 23
Exploration – Indonesia – Tuna – Belut Laut
Belut Laut (Tuna PSC)• Premier 65% equity, reserves estimate 40-90-200 mmboe• Targeting multiple stacked Tertiary reservoirs in fault dependent
closure – prospect is independent of Gajah Laut Utara• Amplitude supported• Moderate risk for oil • Well planned for Q1 2011
PTD
Top Arang DepthC.I.=100 metres
2500m
Belut Laut
2 Km
PRIMARYTARGET
SE
SECONDARYTARGET
Belut LautPTD 4300m MD (3870m TVD)
NW
26 August 2010 | Page 24
Exploration – Indonesia – Tuna – Gajah Laut Utara
Gajah Laut Utara (Tuna PSC)• Premier 65% equity, reserves estimate 65-160-350 mmboe• Targeting multiple stacked Tertiary reservoirs in major fault
dependent closure • Amplitude supported at crest of trap• Moderate risk for oil • Well planned for Q4 2010
Top Arang DepthC.I.=100 metres
2500m
2 Km
PRIMARYTARGET
W E
SECONDARYTARGET
PTD
Gajah Laut UtaraPTD 4250m MD (3550m TVD)
Gajah Laut Utara
26 August 2010 | Page 25
Exploration – Indonesia – Natuna – Anoa Deep
Anoa Deep (WL-5 extension) (Natuna PSC)• Premier 28% equity, reserves estimate 47-57-90 bcf• Targeting Lama Formation reservoirs in faulted structural closures
directly underlying the West Lobe platform on Anoa field. Lama Formation produces oil and gas in nearby Kakap field
• Moderate risk for gas• Well planned for Q2 2011
Top Lama
Top H
Top A
PTD
Top Lama DepthC.I.=50 feet
5000m
1400 acre
Lowest Closing Contour
WL5
PRIMARYTARGET
SE
SECONDARYTARGET
Anoa Deep
NW
5 Km
26 August 2010 | Page 26
Exploration – Indonesia – Natuna – Biawak Besar
Biawak Besar (Natuna PSC)• Premier 28% equity, reserves estimate 66-79-92 bcf• Targeting Arang formation reservoirs in a stratigraphic trap off
structure from the Iguana gas discovery. Seismic attribute analysis and 3D inversion supports presence of gas
• Play opening well – low risk for gas• Well planned for Q3 2011
PTD3D Seismic Inversion
indicating gas pay
Top Arang DepthC.I.=100 metres
2000m
Iguana Discovery
Biawak Besar-1
Bison Iguana Biawak Besar
PRIMARYTARGET
500m
SENW
26 August 2010 | Page 27
North Sea• UK: Up to four wells planned in greater Catcher
area and a well on West Rochelle• Norway: Gnatcatcher exploration and Grosbeak
appraisal wells. Gardrofa exploration well planned for Q3 2011
SE Asia• Vietnam: Block 07/03 - CRD appraisal and an
additional exploration well. Commitment well on Block 104-109/5
• Indonesia: Two Tuna wells and near field exploration wells in Natuna A. Exploration well on Buton
Middle East-Pakistan• Pakistan: Near field exploration wells
New Ventures• Actively pursuing new opportunities for 2012-2014
drilling
Exploration – Outlook
18-22 exploration and appraisal wells planned over next 12 months
Firm wellsContingent wells
26 August 2010 | Page 28
Operations update
26 August 2010 | Page 29
Operations highlights
• 2010 production on track• Gajah Baru 64% complete and
WHP jacket installed• Chim Sáo 73% complete and
WHP installed• Good progress on Huntington• Catcher added to development
portfolio
26 August 2010 | Page 30
Production update
50,000
Production (working interest)(boepd)
30,000
25,000
10,000
5,000
02006 2007 2008
15,000
20,000
35,000
North Sea / W. AfricaMiddle East-PakistanAsia
2009
40,000
45,000
H1 2010
• Full year production forecast around 44,000 boepd
• Singapore gas demand strong
• Pakistan production strong and negligible impact from floods
• Burghley field will tie-in to Balmoral in September reducing operating costs
26 August 2010 | Page 31
Natuna Block A gas sales forecast
450
Block A gas sales forecastBBtud
400
0
350
ExplorationpotentialIguanaNagaGajah BaruBisonGajah PuteriPelikanAnoaExport capacityGSA2/3/4GSA1
300
50
100
200
250
2006
150
2008
2010
2012
2014
2016
2018
2020
2007
2009
2011
2013
2015
2017
2019
2021
Dou
ble
prod
uctio
n ov
er 3
yea
rs Explorationto increaseproduction
Extra availableexport capacity
Block A development schematic
26 August 2010 | Page 32
• Wellhead platform installation is ongoing• West Callisto rig will start drilling in September• Central Processing Platform construction well under way• Overall project 64% complete
Gajah Baru – on schedule for October 2011
Pics of WHP and CPP jackets and topsideses requested by 23rd Aug
from Bryce Walker:
“No problem Mary. FYI the GB wellhead jacket is due to load out on 8 August so we will definitely have
photos of that but the deck is not due to load out until 28 August.
Regarding installation, based upon the Castoro Otto finishing up on or ahead of schedule on the Topaz
work the jacket installation could be done in late August. Again if that happens we’ll have photos and a
movie. “
26 August 2010 | Page 33
• WHP jacket and topsides installed• ENSCO 107 currently drilling
development wells • Gas export pipeline laid and tie-in
under way• FPSO mooring and mid-water
arches installed• FPSO conversion on track• Premier equity 53.125%
Chim Sáo – on schedule for first oil in July 2011
26 August 2010 | Page 34
Huntington – on schedule for 2012
• Letter of Intent signed with Sevan for provision of Voyageur FPSO• Field development plan submitted to DECC• Target date for project sanction 1 October 2010• Long-lead items being purchased• Rig bids have been received• Earliest possible first oil is late 2011
26 August 2010 | Page 35
North Sumatra Block A (Indonesia)• PSC extension approval process remains ongoing• Optimisation of development plan has continued• First gas 2013
Asia developments
Dua• Internal concept selection complete
Cá Rồng Đỏ• 2009 discovery • Development studies will commence after
upcoming appraisal well
26 August 2010 | Page 36
Norway developments
Frøy• Tenders received for production facilities• Leading option is a Sevan FPSO
bridge-linked to a wellhead platform• Impact of nearby exploration wells being assessed
Bream• Evaluating responses to ITT for production unit
Grosbeak and Blåbær• 2009/2010 discoveries• Development studies will commence after
upcoming appraisal and exploration wells
26 August 2010 | Page 37
UK developments
Catcher• Preliminary studies will commence later this
year leading to concept selection in 2011• Multiple stand-alone facilities options exist
– Fixed platform– FPSO
Solan• Option to participate in a 45 mmbbls fast track
(2012) development at 40% equity• Project sanction decision scheduled for year-end
CatcherOther possible UK developments• Scott satellites• Caledonia• Ptarmigan• Moth
26 August 2010 | Page 38
A path to 100,000 boepd
120
Production(kboepd net)
40
20
0
60
80
100
Development capex($m)
2010 2011 20142012 2013 2015
Future Asia developmentsFuture Norway developmentsFuture UK developmentsHuntingtonChim Sáo, Gajah BaruOn production
600
200
100
0
300
400
500
2010 2011 20142012 2013 2015
Future Asia developmentsFuture Norway developmentsFuture UK developmentsHuntingtonChim Sáo, Gajah BaruOn production
26 August 2010 | Page 39
Summary
26 August 2010 | Page 40
Summary: delivering against strategy
Progress
• Chim Sáo and Gajah Baru on schedule for 2011, Huntington for 2012.
• Solan, Frøy, Bream, Duaprogressing towards development sanction in 2011.
• Blåbaer and Catcher successes in 2010. Active second half drilling programme.
• Solan option. Value to be found in financing smaller companies through development and will be pursued.
• Committed investment programme fully funded; acquisition capacity.
Strategy
• Attain 75 kboepd from existing projects
• Commercialise contingent resource base
• Add 200 mmboe of2P reserves from the exploration portfolio
• Make value-adding acquisitions in threecore areas
• Maintain a conservative balance sheet
Target
• Build three quality businesses which deliver 100 kboepdfrom 400 mmbbls of reserves
Production by region H1 2010(kboepd)
15.220.1
11.3
46.6
North Sea / West AfricaAsiaMiddle East-Pakistan
Cashflow by region H1 2010($million)
49
29
144222
26 August 2010 | Page 41
Appendix
26 August 2010 | Page 42
HSE performance – a top priority
• Recordable Incident Rate trend is downwards
• Performance is top quartile in the industry• Challenge for staff is to sustain this
performance
• TRIF = Lost Time Injury (LTI) + Reduced Work Day Case (RWDC) + Medical Treatment Case (MTC) frequency per million man-hours
• There was 1 LTI and 0 RWDC incidents in 2008• There were 2 LTI and 0 RWDC incidents in 2009
• Association of Oil and Gas Producers Benchmarking Survey, 2009
6
Total recordable injury frequency (TRIF)
5
4
3
2
1
02003 2004 2005 2006 2007 2008 2009
Premier TRIF
12
Total recordable injury ratePer million hours worked by company with contractors
11
9
10
8
7
6
5
4
3
2
1
0
Top Quartile
26 August 2010 | Page 43
Strike Line
P1181 Lacewing Prospect • Equity: Premier 57%• Reservoir: Triassic• Reserves range: 21-71-135 mmboe• Net well cost: $35 million• Plan to drill Q3/Q4 2011 subject to further peer review
Exploration – UK – Lacewing
Lacewing 23/22b-4
Lacewing
26 August 2010 | Page 44
P1466 Bluebell Prospect (15/24c,15/25f)• Equity: Premier 100%• Reservoir: Palaeocene Forties reservoir• Reserves range: 9 -19 - 31 mmboe• Net well cost: $12.5 million• Well spud date: has to be drilled by March 2011• Valuable tieback opportunity for Brenda/Balmoral – could help
unlock Ptarmigan discovery
Exploration – UK – P1466 Bluebell
Top Forties Depth SS, CI=5 m
Top Forties Lambda Rho Extraction
Top Forties Lambda Rho Extraction Near Offset
Lamda Rho, HC Indicator
Bluebell
Bluebell
Bluebell Well Location
Bluebell Site Survey
Bluebell
26 August 2010 | Page 4526 August 2010 | Page 45
Exploration – UK – West Orkney Basin
P1577: West Orkney Basin• Premier 100%• 1,700 km2 acreage covering West Orkney Basin depo-centres• Shallow water, low cost environment• Frontier Rift Basin exploration opportunity• Target is Pre-rift Devonian system preserved in Mesozoic rifts
• Petroleum system proven - exhumed oil accumulations on Orkney• Key uncertainty is presence and preservation of traps• Material unrisked play potential, presently high risk
• Work programme commensurate with risk reduction• 6 year concession with a drill or drop option• Purchase 6,000 km of existing 2D data• Reprocess selected lines
• Go Forward plans• Firm: Purchase, reprocess and interpret data 2010/2011• Optional: Acquire 3D seismic data 2012 and Drill 2013• PhD studentship starting September 2010
A’A
Orkney Islands;Inverted Devonianbasins, withBreached oilfields
Metamorphic highs; exposed at seabed
Half grabens with possible Devonian source and reservoirs and proven Zechstein seal
Terraces with probable Devonian source and reservoirs and probable Zechstein seal
West Orkney Basin Structure Top Devonian
Orkney Isles
Half grabens with Pre-rift section: Potenential for Devonian source and reservoirs plus Zechstein seal
26 August 2010 | Page 4626 August 2010 | Page 46
Exploration – Norway – Bream, Gardrofa
Bream (PL406)• Brent age oil discovered 1971, close to Yme Field• In 2009,17/12-4 and its sidetracks wells appraised
this discovery, testing 2,516 boepd• Operated by BG, Premier equity 20%• Estimated reserves 39-50-63 mmboe• Plan of development under review
Gardrofa (PL407)• Premier’s first operated licence in Norway• Premier equity 40%• Untested trap flanking a Salt dome feature• Estimated reserves 15-70-115 mmboe• Moderate risk for oil• Well planned for third quarter 2011
9/1-1 Gardrofa Prospect Well Location
Success at Gardrofa will lead to a new core area for Premier in Norway
26 August 2010 | Page 4726 August 2010 | Page 47
Blåbaer
Blåbaer (PL374)• Premier 15% equity, operated by BG• Well 34/5-1 proved 65m of gross oil bearing Cook
Formation• The 34/5-1 Sidetrack, drilled into a separate fault
block was dry• The gross resource range remains within the
15mmbo to 75mmbo predicted pre-drill• A decision on the future delineation of the
discovery is subject to ongoing evaluation
Exploration – Norway – Blåbaer
C.I. 10m
Sidetrack
2 Km2 Km
26 August 2010 | Page 48
Exploration – Vietnam – Block 104-109/05
2011 Exploration Well (Block 104-109/05)• Premier 50% equity• 445km² of 3D acquired Q3 2010• Potential drilling candidates to be matured on
new 3D• Reserves estimates to be determined• Targeting multiple stacked Tertiary reservoirs • High risk for oil • 1 Exploration well planned for Q3 2011
Area of acquired 3D coverage
W NE Leads E
Faulted Structuresto be imaged by 3D
26 August 2010 | Page 49
Exploration – Indonesia – Buton
meters
‘B’
Buton PSC• Premier equity 30%• Japex operator• Lead B reserve estimates 35-100-300 mmboe• High risk for oil, in fold belt theme• Benteng prospect first to be drilled• Drilling planned Q1 2011
BentengNW SE
0 5000
26 August 2010 | Page 5026 August 2010 | Page 50
K28
2010/2011 drilling in Pakistan
SW NE
E-Sand
K25 Compartment:• Premier 15.79% equity• Reserves estimate
1-2-4 mmboe• Targeting E-sand reservoir in
step-out compartment north of K-19 producing compartment
• Lateral seal risk on the northern plunge
• Well spudded on 2nd August 2010
K18
K18
ST
K18ST Compartment:• Premier 15.79% equity• Reserves estimate
0.5-2-5 mmboe• Targeting E-sand reservoir in
adjacent step-out compartment east of K-18 depleted compartment
• Moderate fault seal risk present
• Well planned in Q4 2010
K28 Compartment:• Premier 15.79% equity• Reserves estimate
9 mmboe• Targeting E-sand
reservoir in step-out compartment south of K10 block
• Moderate fault seal risk present
• Well planned in 2Q 2011
Badhra Area-B Appraisal well:• Premier 6% equity; Reserves
estimate 22 mmboe• Targeting Mughalkot reservoir
channel sands• Moderate to high reservoir
presence and quality risk • Reprocessing is ongoing to
improve image to mitigate reservoir risk
• Well is contingent upon reprocessing results
• Well planned in Q2 2011
K25
SW NE
E-Sand
K18ST
SW NE
E-Sand
Badhra Area-A
Badhra Area-B
26 August 2010 | Page 51www.premier-oil.com 26 August 2010