Presentation FY2013 Results - Roc Oil...
Transcript of Presentation FY2013 Results - Roc Oil...
2013 FULL YEAR RESULTS PRESENTATIONWednesday, 26 February 2014
Alan Linn
Beibu Gulf, Offshore China
Chief Executive Officer
Anthony NeilsonChief Financial Officer
2013 HIGHLIGHTS
“Consistent delivery of operational performance, underpinning another very positive financial result”
PRODUCTION (working Interest) 2.7 MMBOE (7,263 BOEPD); at the higher end of 2013 production guidance of between 6,500 and 7,500 BOEPD
HEALTH SAFETY & Maintained a high standard of safety and environmental performance across all operated facilities Excellent process safety performanceENVIRONMENT Excellent process safety performance No significant loss of containment incidents (>1 BOE)
FINANCIAL Continuing profitability and US$45.2 million net profit Net cash of US$65.1 million at 31 December
DEVELOPMENT
Beibu development drilling was successfully completed within schedule and budget. All 15 wells on line and achieved an overall production plateau of ~15,000 BOEPD during 4Q13
The Zhao Dong reservoir management programme, including 18 development wells in 2013, was successfully completedcompleted
APPRAISAL Balai Cluster appraisal/pre-development drilling was completed in June Early Production Vessel (EPV) ‘Balai Mutiara’ commenced Extended Well Testing (EWT) in 4Q13 The Field Development Plan (FDP) for the Bentara oil field was submitted for approval in December The Field Development Plan (FDP) for the Bentara oil field was submitted for approval in December
EXPLORATION
Block 09/05 seismic acquisition completed safely within schedule and cost, planning for drilling of at least one exploration well during 2H14 has commenced
Bids were submitted for two offshore blocks in Myanmar and a number of onshore opportunities are also under EXPLORATION Bids were submitted for two offshore blocks in Myanmar and a number of onshore opportunities are also under review
Actively pursuing long term value growth opportunities within core areas - South East Asia, China and Australia
FY13 | PAGE 2
FINANCIAL OVERVIEW
Zhao Dong, Offshore China
Anthony NeilsonChief Financial Officer
FINANCIAL RESULTS
FY13US$M Comment
“Continuing profitability with NPAT US$45.2m”
Sales Revenue 251.0 Average realised oil price of US$104.61/BBL. Sales 2.4 MMBOE
Gross Profit 96.1
Production costs of US$51.0 million (US$19.26/BOE)
Amortisation of US$70.8 million (US$26.71/BOE)
Royalty and other levies of US$35.1 million
Net Profit Before Tax 61.7
Includes exploration expense of US$16.5 million
Profit on sale of Juan de Nova of US$8.0 million
Impairment of investment of BC Petroleum of US$6.9 million mainly relating to non recoverable interest on bank loans
N t P fit ft T 45 2
Includes income tax expense of US$16.5 million, consisting of:
- Current income tax of US$18.7 million Net Profit after Tax 45.2
- Current PRRT in relation to Cliff Head of US$11.0 million
+ Deferred tax benefit of US$12.9 million
Gross cash flow generated from operations of US$154.3 million before:
Net Operating Cash Flow 101.5
- Income taxes and PRRT paid of US$30.9 million
- Exploration expenditure of US$16.5 million
- Payments for non-production phase for BMG of US$1.8 million
Payments for abandonment costs of US$2 3 million- Payments for abandonment costs of US$2.3 million
- Finance cost of US$1.6million
Net Cash 65.1 Undrawn debt facility of US$66.5 million at 31 December 2013FY13 | PAGE 4
KEY FINANCIAL METRICS
FY13 FY12 % Change
Working Interest Production (MMBOE) 2.7 2.4 12Working Interest Production (MMBOE) 2.7 2.4 12
% Government Share of Production 7.8 9.6 (1.8)
Sales Volume (MMBOE) 2.4 2.1 12
Sales Revenue (US$M) 251.0 242.1 4
Operating Cash Flow (US$M) 101.5 126.3 (20)
Average Realised Oil Price (US$/BBL) 104.6 113.6 (8)
Production Costs (US$/BOE) 19.3 15.1 27
Amortisation (US$/BOE) 26.7 30.0 (11)
Exploration & Development Expenditure Incurred $ 76 7 94 3 (19)(US$M) 76.7 94.3 (19)
FY13 | PAGE 5
SEGMENT RESULTS
“All operating assets are performing reliably and generating an average gross profit of US$36 per BOE”
US$M Zhao Dong BeibuGulf1 Cliff Head Blane Enoch2 Total
Sales 134.7 57.2 41.1 18.1 - 251.0
Production Costs 20.3 6.5 13.5 3.6 7.1 51.0
Amortisation 48.8 11.7 6.1 4.3 - 70.8
Gross Profit/(Loss) 43.7 29.0 21.6 9.0 (7.2) 96.1
US$/BOE
Gross Profit 29.83 49.00 55.70 43.61 n/a 36.25
Production Costs 13.86 10.92 34.97 17.32 n/a 19.26
Amortisation 33.29 19.71 15.66 20.82 n/a 26.71
Realised Oil Price 103.81 103.50 106.40 110.56 n/a 104.61
1. Beibu production commenced in March 20132. Enoch remains shut-in awaiting reinstatement of production trees. Production costs include some one-off rectification costs. Expected to be brought back
online 1H14
FY13 | PAGE 6
PROFIT & LOSS
US$M FY13 FY12 % Change
“Continuing profitability supported by reliable operating performance”
Sales 251.0 242.1 4
Gross Profit 96.1 106.2 (9)
EBITDAX + I i t 160 0 175 2 (9)EBITDAX + Impairment 160.0 175.2 (9)
Exploration Expense (16.5) (18.1) (9)
EBITDA + Impairment 143.5 157.1 (9)
Amortisation/Depreciation + Impairment (78.1) (71.7) (9)
EBIT 65.4 85.4 (23)
NPAT 45 2 61 0 (26)NPAT 45.2 61.0 (26)
+ Gross profit in FY13 is lower than FY12 with higher revenue of US$8.9 million being offset mainly by an increase in production costs from first year of Beibu of US$6.5 million and one off Enoch subsea tree p yremediation costs incurred of US$7.2 million
+ Profit also includes the following items:
• Impairment of investment in BC Petroleum of US$6.9 million relating to non recoverable interest costs; p $ g ;and
• Profit on sale of Juan de Nova of US$8.0 millionFY13 | PAGE 7
PROFIT & LOSS – KEY MOVEMENTS
US$m80
61.0 ‐19.2
28.2 ‐15.3
‐3.2 1.53.4 ‐6.9 5.3 ‐4.6
‐4 8
60
70
80
4.845.2
30
40
50
10
20
02012 NPAT Decrease in
Sale price Variance
Increase in Sales Volume and Stock movement
Increase in Production
costs
Increase in Royalties and other levies
Decrease exploration
costs expensed
Decrease in restoration
costs provision
Impairment of BCP
Decrease in Income tax
Decrease in Foreign curreny
translation reserve gain
Other 2013 NPAT
+ Increasing sales offset by lower realised sales price; introduction of Beibu’s first year of production costs and one-off Enoch remediation costs
+ Impairment of US$6 9 million taken for BCP to account for non recoverable expenditure in BCP mainly relating to
g
FY13 | PAGE 8
+ Impairment of US$6.9 million taken for BCP to account for non recoverable expenditure in BCP, mainly relating to BCP project finance interest which is a non recoverable cost in the RSC capital guarantee
CASH FLOW
$
“Current net cash position provides capacity for funding existing projects and new opportunities”
In US$M FY13 FY12
Opening Cash 56.8 39.6
Net Cash from Operating Activities 101.5 126.3
N t B i (15 0)Net Borrowings - (15.0)
Development Expenditure (59.6) (59.4)
Exploration Expenditure (Initially Capitalised) - (19.4)
Proceeds from sale of e ploration and de elopmentProceeds from sale of exploration and development assets 8.0 1.8
Acquisition of additional 5% of Cliff Head - 0.6
Investment in Associates (BC Petroleum) (40.7) (17.4)
Other (0.9) (0.3)
Closing Cash 65.1 56.8
+ Continuing positive net cash position of US$65.1 million at 31 December 2013.
+ Undrawn debt facility of ~US$66.5 million at 31 December 2013.
+ Equity contribution of US$40 7 million to BCP for completion of Balai Cluster pre-development work + Equity contribution of US$40.7 million to BCP for completion of Balai Cluster pre development work.
FY13 | PAGE 9
SIGNIFICANT CASHFLOW FROM OPERATIONS
US$M
140126.3 -36.0
0.7 -11.0
16.1 101.5 100
120
-2.5 -2.3 10.3
60
80
20
40
0Opening Cash flow
from OperationsDecrease in Cash generated from
Operations
Decrease in Derivative payments
Increase in Exploration costs
Increase in Net Finance costs
Increase in Abandonment
costs
Decrease in BMG NPP Costs
Decrease in Income Tax paid
Closing Cash from Operations
+ Reduction in cash generated from operations mainly relates to receipt timing of cash from sales liftings, with an extra lifting received in 2012 vs 2013
+ Exploration costs form part of operating cash flows and have increased primarily through seismic acquisition in 09/05 (China)
FY13 | PAGE 10
09/05 (China)
+ Reduction in taxes paid mainly due to lower taxes paid in UK following Enoch well head remediation costs during 2013
BALANCE SHEET
US$M 31 Dec 2013 31 Dec 2012
“Net assets increase by 22%”
Cash Assets 65.1 56.8
Capitalised Exploration Expenditure 0.6 1.1
Oil d G A t 227 2 237 3Oil and Gas Assets 227.2 237.3
Net Deferred Tax Liability (0.5) (13.4)
Investment in Associates (BCP Malaysia 48%) 67.2 33.4
Provisions (78.2) (77.7)
Net Other Asset / (Liability) (15.1) (18.9)
Total Equity 266 3 218 6Total Equity 266.3 218.6
+ Written down value of investment in BCP of US$67.2 million is based on the discounted cash flows from expected future recoverable costs and cash flows, of the Bentara oil project subject to FDP approval
FY13 | PAGE 11
HEDGING & TAXES
Hedging+ No hedging activity occurred during the period to 31 December 2013+ No hedging activity occurred during the period to 31 December 2013
Taxes, levies and royalties+ Total tax expense of US$16 5 million relates to:+ Total tax expense of US$16.5 million relates to:
• Current tax payable of US$29.4 million comprising:
o UK income taxes of US$3.2 million (62% income tax rate)
o China income tax of US$15.2 million (25% income tax rate)
o PRRT payable in Cliff Head US$11.0 million (40% tax rate)
• Offset by a tax credit of US$12.9 million relating to the unwinding of the deferred tax position
+ No benefit has been booked for tax losses in the Group
+ Royalties and other levies (US$35.1 million) mainly relate to the Chinese Special Oil Income Levy (“windfall tax”) which is levied on the price of oil over a certain threshold
FY13 | PAGE 12
ROC ASSET UPDATEOBJECTIVES & STRATEGYOBJECTIVES & STRATEGY
Cliff Head, Offshore Western Australia
Alan Linn Chief Executive Officer
HSEC PERFORMANCE
2 2013 LTIFR
“From an overall process safety and asset integrity perspective ROC operated assets recorded their best ever performance in 2013”
Health & Safety+ ROC Asset Integrity Management system integration progressing
efficiently in all operated facilities+ LTIFR of 1.0 for FY2013 (APPEA five year average is 1.0)
T L t Ti I j i (LTI) t i d t Zh D APPEA 5 year rolling average (1.0)
1• Two Lost Time Injuries (LTI) were sustained at Zhao Dong • Safety improvement programme was implemented
+ Total Recordable Injury Frequency Rate (TRIFR) was 2.1 versus the APPEA five-year average of 5.4
0
2013 TRIFR
Environment+ Zero significant oil spill incidents reported (>1 barrel)
Community
0Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13
YTD LTIFR 12 month rolling average LTIFR
5678
2013 TRIFRCommunity+ Engage with communities at all stages of projects
+ Support for local communities with underlying focus on educational partnerships and fishing communities
APPEA 5 year rolling average (5.4)
1234
partnerships and fishing communities
+ Seek to provide work experience and employment opportunities where possible
0Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13
YTD TRIR 12month rolling average TRIFRFY13 | PAGE 14
RESERVES SUMMARY
Economic Interest Reserves and Resources (MMBOE)
37.8MMBOE1402P Reserves, 12 2MMBOE
23.6MMBOE
20
25
30
35
UK
Australia
China
12.2MMBOE
2C Resources,
23 6MMBOE
Best Estimate Prospective Resources,
37.8MMBOE1
2014
12.2MMBOE
Key metrics
2013 reserve replacement ratio2 22%5
10
15
20 23.6MMBOE
Reconciliation of Opening Reserves (MMBOE)
2013 reserve replacement ratio 22%
Three year reserve replacement ratio2 55%
Reserves & Resources (2P & 2C) life3 ~15 years
02P Reserves 2C Resources Best Estimate (Risked)
Prospective Resource 1
15 0 (2 7)16 0 Notes to the reserves summary1. The estimated quantities of petroleum that may potentially be recovered by the
application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.
15.0 (2.7)
0.6 (0.7)12.2
10.0
12.0
14.0
16.0
2. The reserves replacement ratio is the reserves (Developed and Undeveloped) change during the period, before the deduction of production, divided by production during the periods.
3. The ‘reserves and resources’ life is the 2P reserves (Developed and Undeveloped) plus the 2C resources divided by production during the year on an economic interest basis
4. Economic interest adjustment relates to production taken by host governments in China2.0
4.0
6.0
8.0
Full details of ROC Reserves and Resources Statement in accordance with chapter 5 and the SPE-PRMS guidelines can be found on page 66 of the 2013 Annual Financial Report
FY13 | PAGE 15
0.0
Opening 2P Reserves at 1 January 2013
2013 Production Reserves revision Economic interest adjustment
Closing 2P Reserves at 31 December 2013
4
PRODUCTION ASSETS (net to ROC)
Av. Working interest
“Production 7,263 BOEPD; delivering at high end of full year guidance”
ASSET production BOEPD 2013
PERFORMANCE AND OPERATIONAL STRATEGY
CHINA
Reliable operating performanceZhao Dong 4,017 2 rig drilling program in 2H13 underpinning production with18
development wells drilled
Beibu Gulf1 1 621
First oil in March 2013 Final phase of development drilling completed in August and total
of 15 wells drilledBeibu Gulf1 1,621 of 15 wells drilled Target production plateau achieved during Q3 ~15,000 BOPD
(gross)
AUSTRALIA
Cliff Head 1,061 Production inline with forecast
UK
Whilst production was impacted by maintenance to host Ula
Blane 565 platform during the year, not related to the Blane field, full year production average was in line with forecast. Supported by positive reserve replacement
Enoch - Restoration works were completed, in 2013 and the new
production tree was installed and testedEnoch production tree was installed and tested Production expected to recommence in 1H14
TOTAL 7,263
1. Beibu production commenced in March 2013, result is averaged for full yearFY13 | PAGE 16
CHINA – ZHAO DONG
Zhao Dong Oil Fields, Bohai Bay (C&D Oil Fields ROC: 24.5% & Operator; C4 Oil Field ROC: 11 667% unitised & Operator; Zhanghai ROC: 39 2% & Operator) 11.667% unitised & Operator; Zhanghai ROC: 39.2% & Operator)
+ Production rates for the year supported by the 2 rig development drilling program in 2H13
+ 18 wells drilled in 2013 with a total development cost incurred + 18 wells drilled in 2013 with a total development cost incurred of US$33.9 million
+ Field opex of ~US$13.86/bbl+ The new electrical cable installation completed from shore to p
platform and will be commissioned in 1H14+ The incremental development plan (IDP) was submitted to
PetroChina for review and approval. The plan includes operational and development activities up to 2018 when the operational and development activities up to 2018 when the existing PSC expires, and detailed plans for continuous economic development of the fields from 2018 to 2023, which requires a PSC extension
FY13 | PAGE 17Zhao Dong drilling rig
CHINA - BEIBU GULF
WZ 6-12 and WZ 12-8 West Oil Field Production & Development (ROC: 19 6%)(ROC: 19.6%)
+ Development fully completed ahead of schedule and budget
+ First oil production commenced in March 2013, with all 15 wells on production by August
+ Forecast production achieved ~15,000 BOPD (gross)+ FY13 capex of US$26 8 million making the total
WZ 12-8 WestWZ 12-8 East
+ FY13 capex of US$26.8 million, making the total development cost for the project ~US$80 million (net to ROC)
+ Field opex ~US$11/bbl for 2013+ Following success in developing Beibu exploration
potential in late 2012 additional near field prospects have been identified with potential drilling opportunities being evaluated
Phase II development plan for WZ 12-8 East Exploration (ROC: 40%, pre CNOOC back-in of up-to 51%)
+ Feasibility study underway with decision expected on next steps during 2014
FY13 | PAGE 18
Drilling deck at Beibu
CHINA – 09/05
Block 09/05, Bohai Bay (ROC:100% & Operator)
335k 2 bl k l t d 15k th f th Zh D + 335km2 block, located 15km north from the Zhao Dong blocks
+ Initial three year exploration period includes the acquisition of ~162km2 of 3D seismic and two exploration wells
+ 3D seismic acquisition was completed within budget and without incident in 2013
+ Seismic data is being used to refine the exploration + Seismic data is being used to refine the exploration potential in the licence and finalise the initial drilling location(s) for at least one exploration well in 2H14
+ Best estimate risked prospective resources within the bl k i t l 30 b (100%) f th block are approximately 30 mmboe (100%) further revisions are expected on completion of the 3D seismic evaluation
+ Farm out option agreement signed with Horizon Oil Limited (HZN).
+ Gross exploration expenditure of ~US$12.5 million (net to ROC US$7.3 million); US$5.2 million paid by HZN as part of farm-in option agreementp p g
FY13 | PAGE 19Seismic acquisition
MALAYSIA - Balai Cluster
Balai Cluster Risk Service Contract, Offshore Sarawak, Malaysia (ROC: 48% equity investment in BCP)
+ Completed drilling of fifth and final well in pre-development phase in June
+ EPV Balai Mutiara commissioned and commenced EWT on Balai field in November
+ FDP for the Bentara oil field was submitted to PETRONAS in December December.
+ Final investment decision (FID) is expected in 1Q14+ Approval is sought for development of the Bentara oil field
utilising existing facilities with minimal additional capex
FDP focus area
required and able to commence production in 2Q14+ Investment in BCP
• Recoverable value of investment in BCP is assessed as US$67 2 million at year end based on DCF analysisas US$67.2 million at year end based on DCF analysis
• The FDP submitted in Dec-13 only includes the Bentara oil field, and we have included an impairment of US$6.9 million in the accounts relating mainly to interest on BCP bank loan which is non reimbursable interest on BCP bank loan which is non reimbursable under the RSC capital guarantee provision
EPV connection tests with Balai WHP FY13 | PAGE 20
2014 OBJECTIVES AND GUIDANCE
OBJECTIVE MEASURE
Continue implementation of ROC’s process safety and asset integrity management
Operational
HSEContinue implementation of ROC s process safety and asset integrity management systems
Achieve five year OGP averages (Asia & Australasia) for TRIFR and LTIFR
Deliver Production Between 6,500-7,500 BOEPD (working interest basis, net to ROC)Production , , ( g , )
G th
Reserve replacement Maintain reserve replacement
GrowthBusiness Development and Growth
Add contingent and prospective resources to the portfolio by developing / maturing existing assets in the portfolio and/ or adding at least one new prospective asset(s)
Financial
Profitability (NPAT) Continuing profitability of the business
Development and Exploration Expenditure incurred of <US$60m including Cost Control
Development and Exploration Expenditure incurred of <US$60m, including Malaysia BCP funding
Opex <US$21/bbl (P&L) excluding contribution to abandonment fund
People CommittedPersonnel
Continue to maintain a committed and motivated team, aligned with delivering company objectives
FY13 | PAGE 21
SUMMARY AND LOOKING AHEAD
+ Delivered strong operating and financial performance+ Strong balance sheet + Third year of successive profitability+ Substantial opportunity to grow value of the business leveraging existing
portfolio of assets and operational capacity+ C ti d f A t li Chi d S th E t A i+ Continued focus on Australia, China and South East Asia+ Actively pursuing further value growth opportunities in the focus region
CHINA
Zhao Dong development drilling programme in 2014 (15-20 wells) 09/05 exploration drilling 12-8 East feasibility study and continued exploration potential
assessments Notification on Zhao Dong extension to 2023 CNOOC d P t Chi ff h bid d CNOOC and PetroChina offshore bid round
MALAYSIA Pursue mature field redevelopment opportunities Access and bid upon attractive exploration licenses BCP final investment decision and move to production
AUSTRALIA
Access and progress attractive Perth basin opportunities BMG farm down or divestment opportunities, while continuing to
identify attractive asset development options, given the improving east coast gas market pricing
Bid on attractive Myanmar offshore licence rounds and pursue farm in
FY13 | PAGE 22
OTHER Bid on attractive Myanmar offshore licence rounds and pursue farm in
opportunities Progress sale of UK assets
Zhao Dong
For further information:For further information:Renee JacobInvestor Relations & Corporate Affairs+61 2 8023 2000rjacob@rocoil com [email protected]
www.rocoil.com.au
The information in this presentation is an overview and does not contain all information necessary for investment decisions. In making investment decisions investors should relyon their own examination of ROC and consult with their own legal, tax, business and/or financial advisers in connection with any acquisition of securities.The information contained in this presentation has been prepared in good faith by ROC. However, no representation or warranty expressed or implied is made as to the accuracy,correctness, completeness or adequacy of any statements, estimates, opinions or other information contained in this presentation. To the maximum extent permitted by law, ROC,its directors, officers, employees and agents disclaim liability for any loss or damage which may be suffered by any person through the use or reliance on anything contained in or, , p y g y y g y y y p g y gomitted from this presentation.Certain information in this presentation refers to the intentions of ROC, but these are not intended to be forecasts, forward looking statements or statements about future mattersfor the purposes of the Corporations Act or any other applicable law. The occurrence of events in the future are subject to risks, uncertainties and other factors that may causeROC's actual results, performance or achievements to differ from those referred to in this presentation. Accordingly, ROC, its directors, officers, employees and agents do not giveany assurance or guarantee that the occurrence of the events referred to in this presentation will actually occur as contemplated.The reserve and resource information contained in this presentation is based on information compiled by Bill Billingsley (Chief Reservoir Engineer and a full time employee ofp p y g y ( g p yROC). Mr Billingsley BSc (Chem) MSc (Petroleum Engineering) DIC (Imperial College), who is a member of the Society of Petroleum Engineers, has more than 18 years relevantexperience within the industry and consents in writing to the information in the form and context in which it appears.Consistent with recent changes in the ASX listing rules adopted 1/12/13 the reserves and resources numbers presented are on an “economic entitlement” basis.
FY13 | PAGE 23