CORPORATE PRESENTATION July 2015
CORPORATE PRESENTATION July 2015
DISCLAIMER
Corporate Presentation – July 2015 Slide 2
THIS DOCUMENT IS CONFIDENTIAL This document has been prepared and issued by and is the sole responsibility of Ophir Energy plc (the “Company”) and its subsidiaries for selected recipients. It comprises the written materials for a presentation to investors and/or industry professionals concerning the Company’s business activities. By attending this presentation and/or accepting a copy of this document, you agree to be bound by the following conditions and will be taken to have represented, warranted and undertaken that you have agreed to the following conditions. This presentation is strictly confidential and may not be copied, published, distributed or transmitted. If you do not accept these conditions, you should immediately destroy, delete or return this document. The document is being supplied to you solely for your information and for use at the Company’s presentation to investors and/or industry professionals concerning the Company’s business activities. 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As a result, you are cautioned not to place any undue reliance on such forward-looking statements. Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, no representation or warranty, express or implied, is made and no reliance should be placed, on the fairness, accuracy, correctness, completeness or reliability of that data, and such data involves risks and uncertainties and is subject to change based on various factors. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness. 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Without prejudice to the foregoing, no liability whatsoever (in negligence or otherwise) for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection therewith is accepted by any such person in relation to such information.
AFRICAN-ASIAN PORTFOLIO
Corporate Presentation – July 2015 Slide 3
Positioned to thrive in uncertain times
STRATEGY
Slide 4
VALUE CREATION THROUGH EXPLORATION
FOCUS ON ROCE THROUGH CAPITAL ALLOCATION AND COST MANAGEMENT
ACTIVE PORTFOLIO AND RISK MANAGEMENT
Corporate Presentation – July 2015
Ophir is BIG E and little p
OPHIR DOES NOT THINK LIKE A TRADITIONAL, FULL CYCLE E&P
Corporate Presentation – July 2015 Slide 5
• 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
EXPLORATION – A UNIQUE OPPORTUNITY
Corporate Presentation – July 2015 Slide 6
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
Minimal commitments, low cost entry
HIGH GRADED EXPLORATION PORTFOLIO
Corporate Presentation – July 2015 Slide 7
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
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
Corporate Presentation – July 2015 Slide 8
PRODUCTION
TOTA
L V
OLU
ME
2C
:
11
52
MM
bo
e
EQUATORIAL GUINEA W.I. 80%
KERENDAN W.I. 75%
BUALUANG W.I. 100%
TANZANIA W.I. 20%
CASH FOR E&A
First gas 2022
First gas 2020
First gas 2016 2nd phase of dev.
On production 3rd phase of dev.
2P RESERVES
SELF FUND
2014 2015 2016 2017 2018 2019 2020
Providing value and basis for significant production growth
DIVERSIFIED ASSET PORTFOLIO
Material resource base offering significant and predictable cash flow
• Current production from assets on- and offshore Thailand
• Near-term production onshore Indonesia – first gas in 2016
• Further expansion of Kerendan and Bualuang
• Medium-term production from Equatorial Guinea FLNG – production start estimated for 2019
• World class pre-development stage asset in Tanzania with proven commerciality
Ker
end
an
Fort
un
a
FLN
G
Tanzania LNG
10
-12
m
bo
epd
Total production in 2020 above 35 mboepd
Sala
man
der
ac
qu
ired
‘15
Bu
alu
ang
Exp
ansi
on
Additional volumes if current equity in Fortuna FLNG is retained
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2016 2017 2018 2019 2020
- Sinpuhorn - Buluang - Kerendan - Block R
Cash Flow Composition by Asset
Corporate Presentation – July 2015 Slide 9
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Low levels of commitment spend, strong balance sheet, high degree of flexibility
CAPEX AND COSTS
Slide 10
• 2015 capex 53% down on 2014
- 2015 capex forecast $250-300 MM
• E&A capex down c. 60% on 2014
• $250 MM of cost savings
- Capex revisions
- G&A reductions: closing 5 offices
- Acquisition synergies
• High degree of financial flexibility
- Only $35 MM of commitment spend in 2015
- Total E&A commitment spending of $100 MM through end 2017; c. 9% of YE 2014 cash
- $150 MM carrying cost to FID for LNG projects
• Fully funded for 3 years on current plan
- Flexibility to scale back capex if required
- Combination of cash, debt and cashflow
Discretionary 85%
Commitment 15%
Pre-Development 35%
Development 25%
E&A 40%
2015 CAPEX – E&P Vs P&D
2015 CAPEX - Discretionary vs Commitment
Corporate Presentation – July 2015
DEVELOPMENTS
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 & GEPetrel
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
Corporate Presentation – July 2015 Slide 12
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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
• $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
Slide 13
FLNG IS RIGHT SOLUTION IN EG, UPSTREAM COMPONENT WITHIN OPHIR’S ABILITY TO OPERATE
Corporate Presentation – July 2015
FLNG VALUE CHAIN (PRICES INDICATIVE)
Slide 14
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
Corporate Presentation – July 2015
0
20
40
60
80
100
120
0
2
4
6
8
10
12
14
16
Ad
dit
ion
al d
em
and
(m
mtp
a)
De
live
red
pri
ce $
/MM
btu
FOB Break Even $/mmbtu Shipping to Toyko Bay $/mmbtu Cumulative mmtpaAdditional demand required by 2025
EG costs reduction of c.$1/MMbtu following Golar appointment not reflected here
LOW BREAKEVEN COSTS FOR LNG PROJECTS
1 Data taken from IHS Waterborne – General assumption that upstream requires 15% and Liquefaction 12% US Liquefaction based on $4/mmbtu HH and a tolling fee of between $3.00-4.00/mmbtu
Breakeven cost stack of projects yet to take FID
Slide 15 Corporate Presentation – July 2015
EXPLORATION
THAILAND – NEAR-FIELD EXPLORATION DRILLING
Step out from Bualuang oil field
• G4/50 surrounds production licence
• Blanket 3D over licence
• 18 locations have approved EIAs
• 2 wells in 2H 2015
Ophir reviewing prospect inventory
• Locations to be approved mid year
• 2 wells to be drilled in Q4
• Follow up drilling dependent on initial results
Low cost drilling
• Less than $10 MM per well
• Offset 50% of cost against Bualuang production tax
Duen Chai West
Bua Nin
Soy Siam
Rak
NW2
B8/38-2 Deep
Slide 17 Corporate Presentation – July 2015
GABON – HIGH-GRADING EXPLORATION PROSPECTS
Building on learnings from 2014
• Saw all elements of hydrocarbon system
• Update geological model
• Apply learnings to interpretation of new 3D data
New oil play emerging
• Awarded Nkouere and Nkawa blocks outboard of previous acreage
• Conjugate margin play
• Analogous to Bara discovery, offshore Brazil
3D seismic survey shot in 4Q 2014
• Shot over 10,000 sq km 3D survey
• No drilling commitment
• Seismic interpretation and prospect hi-grading in 2015
• Possible drilling in 2016
Looking for prospects between 250 – 500 MMbo
Slide 18 Corporate Presentation – July 2015
MYANMAR – LEADING DEEPWATER EXPLORATION
95% operated interest in Block AD-03
• Located in Rakhine Basin
• On trend with 9 Tcf Shwe gas field
• Pipeline to China (current price c.$9/mcf)
• No drilling commitment
3D seismic survey commenced March 2015
• Committed to shoot 2,500 sq km
• 3D prices down by 65%
• Shooting a 10,000 sq km survey
First mover advantage
• Only company capturing seismic in current weather window
• 6-12 months ahead of other companies in terms of work programme
Preliminary mapping on existing 2D indicates prospects of up to 40 Tcf
Slide 19 Corporate Presentation – July 2015
SUMMARY AND OUTLOOK
• Development assets self funding
• Cost and capex reduction of $250 MM in 2015/16
• YE ‘15 cash expected to be $700 MM - $750 MM
• Fully funded until end 2017 on current work programme
• Unique opportunity to access high quality portfolio with minimal commitments
• Disciplined approach to capital allocation – focus on ROCE
• Sustain a world class exploration track record
FORTUNE FAVOURS THE BRAVE!
Slide 20 Corporate Presentation – July 2015
For further information contact:
Head of IR and Corporate Communications [email protected]
Geoff Callow
Level 4 123 Victoria Street London SW1E 6DE UNITED KINGDOM
Tel: +44 (0)29 7811 2400 Fax: +44 (0)20 7811 2421
EQUATORIAL GUINEA
Slide 22
Fortuna Complex
Viscata
Lykos
Undrilled Silenus Hub prospects
Silenus East
Estrella De Mar
Tonel
Oreja Marina
Six commercial gas discoveries have been made within Block R Appraisal Area (green):
• 2002 Exxon: Estrella de Mar
• 2008 Ophir: Fortuna, Lykos
• 2012 Ophir: Tonel, Viscata
• 2014 Ophir: Silenus East
Exploration Area (red):
• Possible 7TCF (Unrisked and high risk)
Recoverable Resources (TCF):
1C 2C 3C
Ophir Discovery 2.4 2.7 3.2
Ophir Discovery + Risked Silenus Hub
3.0 3.4 4.1
Corporate Presentation – July 2015
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BLOCK R – SCHEMATIC CROSS SECTION
Slide 23
Silenus
Corporate Presentation – July 2015
$970m
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Cash YE'14 OCF Capex Other Cash YE 2015
~ $150m
$700m - $750m of cash YE 2015
$250m-$300m
Fully funded for next 3 years, high degree of financial flexibility
BALANCE SHEET
Slide 24
Only $35m of E&A
commitment spend
Corporate Presentation – July 2015