2017 FULL YEAR RESULTS - ophir-energy.com · •Transaction with Chevron agreed in Myanmar which...

2017 FULL YEAR RESULTS7 March 2018

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2017 Full year results presentation Slide 2

Progressed project in 2017, project financing remains key to FID

FORTUNA STATUS

A number of materialmilestones were

completed in 2017

Frustrating not to have yetsecured project financing

and reached FID

Project economics are excellent and FID willunlock material value

Progressing project fundingsolution


Drilled Ayame-1X well in CDI

Signed Block 5 in Mexico and awarded Block 24 in

Equatorial Guinea

$250m Reserve based lending

facility (plus $100m accordion) secured

FID in May 2017 Project commences

with infill drilling in 2H 2018

Price agreed subject to final approval

in 1H 2018

Financing is remaining

workstream

3 wells successfully completed in

2H 2017

DELIVERY OF 2017 OBJECTIVES


COMPLETE BUALUANG IN-FILL DRILLING

PROGRAMME

COMPLETE KERENDAN GAS PRICE

RENEGOTIATION

FID PHASE IVOF BUALUANG DEVELOPMENT

FID ON FORTUNA FLNG PROJECT

REFINANCE /RESTRUCTURE

DEBT PORTFOLIO

CAPTURE HIGHQUALITY EXPLORATION

ACREAGE

RESTART OPERATED EXPLORATION PROGRAMME

Key:

Completed Pending

Underlines performance of underlying portfolio

ILLUSTRATIVE NAV GROWTH DURING 2017


100

2.3

2.7

6.7

6.6

81.7

1.6

713.8

86.9

50

60

70

80

90

100

No

rma

ised

NA

V In

dex

NAV per share increased by 6.4% in 2017 driven by:

• Asset performance; unlocking incremental value from producing fields

• Increased cost control

• Disciplined capital allocation

• Exploration a cost centre; materially reduced from 2018 onwards

2P reserves growth, 1bn boe of 2C resource

RESERVES AND RESOURCES

43.949.4

4.3

9.8

--

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

2016YE 2017 Production Revisions 2017YE

MM

bo

e

2016-2017 YE 2P Reserves Waterfall

0.00x

5.00x

10.00x

15.00x

20.00x

25.00xPeer comparison 2C:2P1

1 Peer group: Lundin, AkerBP, Tullow, Premier, Soco, Enquest, Genel, Faroe, Seplat, Cairn

Increased 2P reserves

• 2P reserves up 13% year on year to 49.4 MMboe (y/e 2016 43.8 MMboe)

• Reserves replacement ratio of 228%

• Reserves/Production ratio of 12 underpins strong production and cash flow in the medium term

1bn boe of discovered resource

• Largest relative 2C resource inventory relative to peer group

• Latent value which carries commercial risk but well defined technically


0

2

4

6

8

10

12

14

Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18

Kerendan Actual SPH Actual Bualuang Actual

RELIABLE PRODUCTION BASE


Group

• Production averaged 11,700 boepd in 2017

• Uptime of 99%

Bualuang

• Averaged 8,300 bopd

• Infill drilling programme completed

• Water handling capacity increased to 75,000 bpd

Kerendan

• Averaged 2,200 boepd

• Successful ramp up to full DCQ

Sinphuhorm

• Averaged 1,200 boepd

• Variable nominations from offtaker

• Domestic production periodically displaced by spot LNG imports

Ophir Energy Net Production by Field Working Interest Basis (Mboe/d)

0

30,000

2018 2019 2020 2021 2022

Fortuna 2P Kerendan Phases 2 & 3

Bualuang Phase 5 Kerendan 2P

Bualuang 2P Sinphuhorm 2P

Reinvestment opportunities in key assets

STRONG PRODUCTION GROWTH FROM OPERATED ASSETS


Material Growth 2017-2022

• Potential for additional cash from monetisation of residual20% interest in Tanzania

Key Milestones

Fortuna FID

Bualuang Phase IV

Kerendan additional Gas Sales Agreement

boepd

BUALUANG: CASE STUDY OF VALUE CREATION


Value creation through phased development

• Start up in 2008 expected to be15 MMbo field

• Produced over 30 MMbo

• Further 28.3 MMbo of 2P and10.3 MMbo of 2C

• Step out exploration potential

Further phases of production growth

• Infill drilling in 2018 to arrest production decline

• Installation of Charlie platform and exploitation of 12 additional well slots to increase production in 2019 and 2020

0

10

20

30

40

50

60

Re

serv

es

(Mm

boe

)

Bualuang Reserves Evolution (Gross)

Probable P2

Proven P1

Cum Prod

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Au

g-0

8

Dec

-08

Ap

r-09

Au

g-0

9

Dec

-09

Ap

r-10

Au

g-1

0

Dec

-10

Ap

r-11

Au

g-1

1

Dec

-11

Ap

r-12

Au

g-1

2

Dec

-12

Ap

r-13

Au

g-1

3

Dec

-13

Ap

r-14

Au

g-1

4

Dec

-14

Ap

r-1

5

Au

g-1

5

Dec

-15

Ap

r-1

6

Au

g-1

6

Dec

-16

Ap

r-1

7

Au

g-1

7

Dec

-17

Wat

er

Pro

du

ctio

n (S

TB)

Oil

Pro

du

ctio

n (S

TB)

Bualuang Field: Average Oil and Water Production

Bualuang1st Oil

Drilling Phase 3

Drilling Phase 4

Drilling Phase 5

Drilling Phase 5.5

FPSO Anchor Mooring Failure

BA-08i Start-up

Debottlenecking Project

Asset IntegrityShutdown

Well intervention

3 infill wells start-up

Oil Production BOPD Water Production BWPD

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KERENDAN: FOCUSED ON SELLING MORE GAS


• Steady production from phase 1

• Gas price renegotiation closed out- Price of $5.65 per mmbtu agreed in principle

• 3D survey has confirmed potential of the field, and identified further upside

• Two further phases of gas commercialisation- Aiming to sign a second GSA for phase 2 in 2018

- Aim to complete a tender for phase 3 sales

• Potential to grow production from 3,500 boepd to over 14,000 boepd (gross)

• Step out oil and gas exploration potential

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Focus on Infrastructure Led Exploration (ILEX)

REFOCUSED EXPLORATION


• Infrastructure led on Bualuang and Kerendan

• Exploration acreage in EG next to producing oil fields, farm-out ongoing

• Counter-cyclically built biggest acreage position in Mexican offshore of any listed independent player

• Transaction with Chevron agreed in Myanmar which will result in equity in Block A-5 and access to infrastructure

• Exited 8 deepwater licences in past 12 months

FINANCIAL UPDATE

Tony Rouse, CFO

FULL YEAR FINANCIAL SUMMARY


Units FY 2017 FY 2016 COMMENTS

NET SOURCES OF FUNDS:

Revenue $’millions 188.5 107.2 Bualuang $52/bbl (FY16: $38) and Kerendan $5.30/Mscf (FY16: N/A)

Kerendan Take-or-Pay $’millions - 16.5 Accrued Kerendan Take-or-Pay Revenues Nil (FY16 $16.5m)

Cost of production (operating expenses,

royalty and inventories)$’millions (70.0) (42.7) Unit opex $12.8/boe (FY16: $13.4/boe)

Investment Income $’millions 4.2 4.4 Net income from Sinphuhorm $4m (FY16: $4m)

Current income Tax Charge $’millions (32.6) (23.7) Bualuang investment in Phase 4 development reducing taxation charge

Net funds flow from production $ ‘millions 90.1 61.7 Income from production $21/boe (FY16: $16/boe) reflects higher prices

NET USES OF FUNDS:

Capex (less disposals) $’millions 101.1 155.6 Exploration $41m (FY16: $76) and asset monetisation $60m (FY16: $80)

Net administration cost $’millions 11.3 13.4 Further lowering of cost base - gross reduction of 60% in three years

Net Finance Costs $’millions 13.2 14.3 Further reducing negative cash carrying costs

Net uses of funds $’millions 125.6 183.3 Further reducing cash outlay

FINANCING:

Closing Net Cash $’millions 117.1 160.1 Net cash outlay $43m (FY16: $195m)

Closing Borrowings $’millions 106.7 200.3 Continued deleveraging with RBL repayment $94m in 2017

Undrawn Facilities $’millions 203.5 10.3 RBL refinanced in 2017 - $203.5m undrawn

Closing Gross Liquidity $’millions 427.3 370.7 Total liquidity with undrawn RBL $427m (YE16: $371m)

Costs, debt, capex falling; cash flow increasing

STRONG FINANCIAL CONTROL

2017 Full year results presentation

$31m

$13m$11m

$0

$5

$10

$15

$20

$25

$30

$35

$40

2015 2016 2017

Net G&A costs ($ million)

$113m

$62m

$90m

$0

$20

$40

$60

$80

$100

$120

2015 2016 2017

Funds flow from production ($ million)

Mill

ion

$355m

$160m

$117m

$0

$50

$100

$150

$200

$250

$300

$350

$400

2015 2016 2017

Net cash ($ million)

Mill

ion

Slide 14

$206m

$156m

$101m

$0

$50

$100

$150

$200

$250

2015 2016 2017

Capex ($ million)

Exploration

Mill

ion

Mill

ion

Maintaining capacity for discretionary investment

2018 GUIDANCE


Production: 11,500 boepd

• Bualuang 8,500 bopd, Kerendan 2,000 boepd

Funds flow from production: $90 million

• Bualuang $84 million, Kerendan $6 million

2018 Hedging Programme

• Purchased swap at average of $59/bbl for 3,200 bpd

• Purchased call at average of $68/bbl for 3,200 bpd

Capital expenditure: $150 million

• Fortuna FID: $55 million

• Bualuang Phase IV: $40 million

• Mexico exploration: $15 million

• Kerendan civil works & water wells: $10 million

Net cash

• Expect to end year in net cash position

Gross liquidity of $320 million

Net Operating Cash Flow 44%

Operating Costs 28%

Royalty 7%

Taxation 17%

Administration 4%

OPERATING CASH FLOW

CAPITAL EXPENDITURE

Exploration 23%

Pre-development 3%

Production 37%

Investment Fortuna 37%

Strong balance sheet, low cost sustainable production and limited commitments

FULLY FUNDED FIVE YEAR BUSINESS PLAN

Significant cash position & liquidity• Closing net cash $117 million; Liquidity $427 million

• Low liquidity and gearing ratios with loan to value

• Refinanced Reserves Based Lending Facility into new seven year $250 million facility (with $100 million accordion)

• Planned 2018 refinance of Nordic bond

Robust operating cash flow from high margin assets• Solid production base generating c. $100 million cash flow p.a

going forward

• Fortuna on-steam early-2022 providing long-term sustainable cash flow

Funded work programme for next few years• Committed spend of only $75 million (Mexico, Indonesia

and Malaysia)

• Investment to maximise cash flow from producing assets

• $150 million investment into Fortuna over three years from FID

• Remaining discretionary funds allocated to highest returning opportunities (E&A, P&D, share buy-back)

2017 Full year results presentation

2018-2021 Sources and uses of funds

Slide 16

Year-end 2017 Liquidity

Operating Cash Flow (Existing Portfolio)

Debt Service

Commitments

Fortuna

P&D

Discretionary

$0.0bn

$1.0bn

Sources Uses

EXPLORATION

Oliver QuinnDirector – Exploration & Africa

REFOCUSED EXPLORATION PORTFOLIO


Deepwater exploration:• 3 blocks awarded in

licence rounds 2016-18

• Drilling from 4Q 18/1Q 19

Infrastructure led exploration• Step out exploration

around Bualuang

Deepwater exploration:• Cross-assignment with Chevron

(subject to government approval)

• 45% interest in blocks AD-03 and A-5

• Potential drilling in 2019

Infrastructure led exploration• EG24: exploration licence

awarded in 2017

• Farm-out ongoing

• Adjacent to producing oil fields

Infrastructureled exploration• Step out exploration

around Kerendan

Deepwater exploration• West Papua/Aru

• Drill or drop decision in1H 2018

MEXICO:LEADING POSITION IN A WORLD CLASS BASIN


• Mexico open to foreign investment for first time in 75 years

• Ophir has non-operated positions in three licences, Blocks 5, 10 and 12

• Opportunity to access a proven, underexplored hydrocarbon province

• Ophir’s interest in Mexico is equivalent to over 300 US GOM blocks (average US GOM block is 25km2)

• Among independents, Ophir holds the second largest position and the largest of any international E&P

-- 2,000 4,000 6,000 8,000 10,000

Block – 5 Overview

MEXICO


A

A’

Blk - 5OPHIR 23.3%

Zama Discovery

Rnd 2.4 Blk 29 award

Regional seismic tie from Zama discovery into Block 5

• Large block located in heart of Sureste Basin play fairways

• Zama discovery (30km south) proves working petroleum system

• Numerous salt related structural traps being identified

• Trap scale potential 100 - 350 MMbo range

• Seismic interpretation and regional geosocial work ongoing

• Operator preparing for 2019 drilling

Block - 24

EQUATORIAL GUINEA


A

A’

EG-24OPHIR

80or40%

Blk WKosmos

EG-21Kosmos

Blk SKosmos

Okume

Ceiba

Hyper-extended Continental Crust

Upper Cretaceous Sand fairways form structural closures

over Kribi High

Mature Oil Source Rocks

Position of Okume/Ceiba

Complex

Updip stratigraphic trapping potential

A A’

-2sec

-4sec

-6sec

EG-24

~5km

• New PSC ratified and farm-out near completion

• 3 Year Initial Term with Seismic Acquisition Commitment

• Both structural and stratigraphic traps within Upper Cretaceous fairway

• Proven oil up-dip in Okume/Ceiba Complex

• Block area 3500km2

• Water depth 2000 – 3000m

• Seismic acquisition planning well advanced

• Prospectivity scale200-400 MMbo

• Option to drill in Second Term

B8/38 Bualuang North Lead

THAILAND


• New seismic has uplifted both imaging and depth solutions

• Northern end of Bualuang Field potentially shallower

• OWCs spill northward into the North Bualuang closure

• Significant low risk upside resource potential if part of main field

• Evaluating merits of drilling in upcoming well campaign

• Being evaluated at 2018 drilling option

• Potential addition to Phase IV development

Kerendan Gas Field

B8/38 OPHIR100%

Bualuang Oil Field

Bualuang North Prospect

Revised depth solution has

potential to bring

North Bualuang into main field closure above

OWC

T2.6 Depth Map Original Velocity Solution

T2.6 Depth Map Revised Velocity Solution

T2.6 Reservoir

Closure above OWC

T2.6 Reservoir

Closure above OWC with revised

velocity model

Bangkanai and West Bangkanai hub

INDONESIA


• Proven wet gas in Oligocene carbonates in Kerendan Field

• Oil proven in Miocene sands and live surface seeps

• New FTG survey has illuminated addition potential below volcanics

• New 3D seismic over Kerendan field will uplift carbonate play

• New 2D seismic over Artois Lead will uplift trap definition

• 9 leads identified, carbonate and clastics plays with both oil and gas potential

• Artos Miocene oil lead has100 MMbo scale

• Proven Miocene oil over Kerendan field being evaluated with new 3D seismic

• Carbonate leads have150-400 Bcf scale 20km

Kerendan Gas Field(area c. 100Km2)

Artos Lead2D seismic acquisition

ongoing

Kerendan Gas Field

OUTLOOK

Nick CooperCEO


FORWARD WORK PROGRAMME


2018 2019 2020 2021 2022

Bualuang

Kerendan

Fortuna

Tanzania

Myanmar

West Aru/Papua

Mexico

EG-24

POTENTIALEXPLORATION DRILLING

PHASE IV

GAS PRICERENEGOTIATION

PHASE 2

FID

HGA

DRILLING DECISION

DRILLING DECISION

SIGN BLOCK 10/12 LICENCE

BLOCK 5 PROSPECT MATURATION

COMPLETE FARM OUT

3D SEISMIC

INTERPRETATION AND PROSPECT MAPPING

POTENTIAL WELLS

POTENTIAL WELL

BLOCK 5 DRILLING

POTENTIAL DRILLING

BLOCK 10/12DRILLING

PHASE V

PHASE 3

FIRST GASPHASE 2 FID

INFILL DRILLING

POTENTIALEXPLORATION DRILLING

GROUP OUTLOOK


Strong liquidity position with undrawn

credit lines

Solid productionbase with growth

potential

Rebuilding a more focused

exploration portfolio

Delivering Fortuna

FID is priority

Focused on monetising c. 1 Bnboe

of 2C resource

For further information contact:

Head of IR and Corporate [email protected]

Geoff Callow

Level 4123 Victoria StreetLondon SW1E 6DEUNITED KINGDOM

Tel: +44 (0)29 7811 2400Fax: +44 (0)20 7811 2421

2017 FULL YEAR RESULTS - ophir-energy.com · •Transaction with Chevron agreed in Myanmar which...

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