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Transcript of Se Annual Report 2011
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Salamander Energy PLC Annual Report 2011
Energising Asia
SALAMANDER ENERGY
PURE ASIAN ENERGY
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Contents
Overview
1 Highlightsoftheyear2 SalamanderEnergyataglance
Business review
4 GreaterBualuang6 GreaterKerendan8 NorthKutei10 ChairmansandChiefExecutivesreview12 Keyperformanceindicators13 Operationalreview19 Statementofprovedandprobablereserves20 Financialreview24 Riskmanagement27 Corporatesocialresponsibility34 Boardofdirectorsandadvisers36 Seniormanagement
Corporate governance
37 Directorsreport43 Corporategovernancestatement50 Remunerationreport60 Directorsresponsibilitiesstatement
Financial statements
61 IndependentAuditorsReport63 Statementofaccountingpoliciesandgeneralinformation72 Consolidatedstatementofcomprehensiveincome73 Consolidatedbalancesheet74 Consolidatedstatementofchangesinequity75 Consolidatedcashflowstatement76 Notestotheconsolidatedfinancialstatements97 ParentCompanybalancesheet98 ParentCompanystatementofchangesinequity99 ParentCompanycashflowstatement100 NotestotheParentCompanyfinancialstatements104 GlossaryIBC CorporatedirectoryIBC Ouroffices
About us
Who we are, what we do
Salamander Energy is an Asia-focused independentoil and gas exploration andproduction company
Strategy
TheCompanyaimstocreatesustainableshareholdervaluebyexpandinganddevelopingitsportfolioofupstreamoilandgasassets.Inordertoachievethis,theCompanyintendstopursuethefollowingstrategies.
Pursue organic-led future growth with scope for add-on acquisitions
TheGroupoperatesanchorassetsineachcorearea,whichareinprovenbasinswithgrowthcharacteristics,andwheretechnicalrisksareviewedaslowduetomanagementsknowledgeofthegeologyandpetroleumsystem.Productionandreservegrowthistargetedfromcurrentdevelopments,discoveriesandlowriskstep-outexplorationprospectsineachofthecoreareas.TheCompanyalsointendstotargetpotentiallytransformationalexplorationprospectssuchasthoseinBlockG4/50inThailandandthoseprospectsintheNorthKuteithatcontainlargevolumesofprospectiveresourcesandwheretheGroupbelievesithasastrongunderstandingofthelocalgeology.
Create value through hubpositions in core areas
TheCompanyhasdevelopedhubpositionsineachofitscoreareas.Ineachcorearea,theGrouphasamajorityequitystakeandoperatorship.Throughbuildinganacreagebankaroundeachanchorasset,theCompanycantargetexplorationandappraisalclosetoexistingassets.
Throughexploringandappraisingprospectsanddiscoveriesaroundcoreproductionanddevelopmentassetsinthesecoreareas,theCompanywillseektobenefitfromexploitingtechnical,operationalandfinancialsynergies.
Maintain regional focus
TheCompanyhasapureregionalfocusonSouth-EastAsia,whichprovidesanumberofstrategicbenefitstotheCompany,includinganabilitytoanticipateandrespondtochangesinthelocaloperating,assettradingandeconomicenvironment,extensiveandfocusedtechnicalknowledge,anunderstandingofmanyofthehydrocarbonbasinsintheSouth-EastAsianregion,andtheabilitytobenefitfromtheCompanysnetworkofcontactsandrelationshipsacrosstheregion.
TheCompanybelievesitslocalknowledgeandrelationshipsprovideasustainablecompetitiveedge,increasingitschancesofprofitablyexploitingitscurrentportfolioandofcapturingnewopportunities.
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1 Overview SalamanderEnergyPLC AnnualReport2011
Highlights of the year
Operations Financial
925 $19475.3 $408
MMboe of prospective resource in top 15 prospects
MM of post-tax operating cash flow
MMboe of 2P reserves MM of revenue
2PReservesincreasedby13.6%to75.3MMboe(2010:66.3MMboe)
Averagedailyproductionof18,600boepd(2010:20,300boepd)
BualuangEastTerraceoildiscovery,8MMboaddedto2Preserves
MaturedprospectinventoryinNorthKutei,independentCPRpointsto676MMboeofgrossmeanprospectiveresourcesinfourhigh-gradedprospects
Portfolio management
Re-alignedportfoliotofocusonthreecoreareas
Disposedofmature,lowmargin,non-coreinterestsinOffshoreNorthwestJava(ONWJ)andSoutheastSumatra(SES)PSCs
DeepenedinterestinKerendandevelopment,GreaterKerendanarea,Indonesia
ExpandedacreagepositioninGreaterBualuangarea,GulfofThailand,throughG4/50farm-in
Revenueincreasedby26.2%to$408.0million(2010:$323.4million)
Recordpre-taxoperatingcashflow,beforeworkingcapitalchanges,increasedby68%to$293.6million(2010:$174.4million)
Recordpost-taxoperatingcashflowincreasedby82%to$193.9million(2010:$106.5million)
Profitbeforetaxof$112.6million(2010:lossof$113.7million)
Lossaftertaxof$45.5million(2010:$169.5million)
Year-endcashandfundsbalanceof$85.8million(2010:$99.2million)
Netdebtof$210.1million(2010:$190.2million)
Outlook
2012averagedailyproductionrateforecasttobe12,00013,000boepdfollowingdisposalofnon-coreproducingassets
BualuangBravoPlatformonscheduleforinstallation3Q2012
Ensco-53rigmobilisedfordevelopmentandexplorationdrillinginGreaterBualuangarea
TutungAlpha-3spudded,gasappraisaldrillingahead
Signed12monthcontractforAtwoodMakojack-upriginGreaterBualuangareafrom3Q2012
ExplorationdrillinginNorthKuteitocommence4Q2012
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2 Overview SalamanderEnergyPLC AnnualReport2011
Salamander Energy at a glance ThailandProduction (Net WI) Liquids Gas Total (bopd) (mcfd) (boepd)
Sinphuhorm 39 7,921 1,359 Bualuang 7,785 7,785
Total 7,821 7,921 9,144
1P reserves 2011 2010
Liquids(MMbbls) 26.1 14.8Gas(Bcf) 32.4 35.2
Total(MMboe) 31.5 20.6
2P reserves 2011 2010
Liquids(MMbbls) 34.7 27.6Gas(Bcf) 101.0 105.1
Total(MMboe) 51.5 45.1
Revenue 2011 2010
Liquids($MM) 265.9 182.8Gas($MM) 25.5 21.1
Total($MM) 291.4 203.9
Indonesia
Production (Net WI) Liquids Gas Total (bopd) (mcfd) (boepd)
SES 1,408 703 2,111 ONWJ 1,240 1,291 2,531Kambuna 1,181 3,628 4,809
Total 3,829 5,622 9,451
1P reserves 2011 2010
Liquids(MMbbls) 1.4 7.2Gas(Bcf) 83.6 43.1
Total(MMboe) 16.8 14.8
2P reserves 2011 2010
Liquids(MMbbls) 1.9 9.2Gas(Bcf) 120.7 68.4
Total(MMboe) 23.8 21.2
Revenue 2011 2010
Liquids($MM) 73.5 78.6Gas($MM) 42.7 43.8
Total($MM) 116.2 122.4
2P Reserves MMboem
+9.02011: 75.32010:66.32009:64.82008:67.7
Production boepd
-1,7002011: 18,6002010:20,3002009:13,6002008:9,600
Revenue millionm
+84.62011: $408.02010:$323.42009:$157.12008:$100.8
Post-tax operating cash flow million
+87.42011: $193.92010:$106.52009:$53.62008:$25.5
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1
1 Greater Bualuang
Oil production, development and exploration
Lowrisk,highvalueexplorationinover6,000sqkmsteppingawayfromtheBualuangoilfield.TheBualuangoilfieldandEastTerracehave34.2MMboeof2Preserves.Productionisforecasttogrowsignificantlyin2013followinga16welldevelopmentdrillingprogrammestartingin2H2012.
AtwoodMakorigcontracted for12monthsfrom3Q2012
Over20prospectsonB8/38
5,000sqkmof3Dseismic onG4/50,over20leads identifiedonold2D
4explorationwellsin2012
Lowrisk,highvaluebarrels
2 Greater Kerendan
Gas development and exploration
AcreagepositionbasedonKerendangasfielddevelopmentwithupsidetothebookedreservepositionfromtheKerendanfield,satelliteexplorationandnewacreageopportunities.
Booked19MMboeof2P reservesonKerendanfield
Further23.4MMboeof certifiedresourceawaiting commercialisation, developmentdrillingin2H 2012tostartthisprocess
c.1Tcfoflowriskstep outexplorationtobetested in2H2012
Potentialtosendgasinto highervalueEastKalimantan gasmarkets
3 North Kutei
Oil and gas appraisal and exploration
AngklungdiscoveryopenedanewplayintheNorthKuteibasinwithmulti-Tcfofgasandhundredsofmillionsofbarrelsofoilpotential.
676MMboeofgrossmeanunriskedprospectiveresourcepotentialindependentlycertifiedin4mostdrillreadyprospects
Oilandgaspotential
CloseproximitytoBontangLNGplantprovidesreadymarketatexcellentprice
Drillingexpectedtocommence4Q2012
Key
Areasoffocus Otherassets Offices
Bangkok
Singapore
Jakarta
2 3
3 Overview SalamanderEnergyPLC AnnualReport2011
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FurtherinformationBusinessreview.Pages14/15Corporateresponsibility.Page31
4 Business review SalamanderEnergyPLC AnnualReport2011
alamanderoperatestwolicencesintheGreaterBualuangarea,B8/38andG4/50.TheGrouphasa100%*equityinterestin
theselicences,whichcoverover6,000sqkm.TheB8/38licencecontainstheBualuangoilfieldandanumberofstep-outexplorationprospects.G4/50surroundstheB8/38licenceandtheGroupbelievesittobehighlyprospectiveexplorationacreagewithover20potentialleadsmappedfromtheold2Ddata.
TheGrouphasdeliveredconsistentreservesgrowthontheBualuangfieldwithultimatelyrecoverableprovenandprobablereservesgrowingfrominitialestimatesof15MMboto43.5MMboasat31December2011.Thisincludes8MMbofromtheEastTerracediscoverymadeduring2011.TheGroupcanalsoseeadditionalresourcesinreservoirsaboveandbelowthemainproducingreservoir.
2012willseefurtherinvestmentintheBualuangfieldwiththeinstallationoftheBravoWellheadPlatformthatwillprovideafurther16drillingslots.TheGrouphassignedatwelvemonthcontractfortheAtwoodMakorigwiththerigexpectedonlocationin3Q2012.TheAtwoodMakowilldrillsixteendevelopmentwells,commencingin3Q2012,thatwillseeproductiongrowtoapproximately15,000boepdin2013.
TheGroupplanstofurtherexploititsunderstandingoftheregionalhydrocarbonplaybydrillingstep-outexplorationprospects,bothinB8/38andG4/50.TheGrouphasdrilledoneexplorationwelltodatethatresultedintheBualuangEastTerraceoildiscovery.ThiswillbefollowedupbytheFarEastandNWTerraceClusterprospectsintheB8/38licenceduring2Q2012.InG4/50,theGroupcompletedanextensive3Dseismicsurveyin1Q2012anditwillbeprocessingandinterpretingthisdatain1H2012beforestartingtodrillexplorationwellswiththeAtwoodMakorigstartingin2H2012andrunningthrough2013.HavingarigonlongtermcontractwillalsoprovidetheGroupwiththeabilitytorapidlyappraiseanyexplorationsuccess.
TheGroupbenefitsfromanumberofoperationalandfinancialsynergiesbyoperatingacrosssuchalargeswatheofacreage,oneexamplebeingtheabilitytooffsetexplorationcostsagainstincometaxgeneratedfromtheBualuangfield.
Insummary,SalamanderhasaproventrackrecordofcreatingvalueintheGreaterBualuangarea.Withanexpandedacreagepositioninthisarea,Salamanderhastheopportunitytoapplyitstechnicalknowledgeandcreatematerialvaluethroughthediscoveryandexploitationofnewoilfields.
* Moecoretainsa50%backinright
Greater Bualuang S
Production(boepd)
2012: 8,500(F)2011:7,8002010:8,1002009:8,900
Reserves(MMboe)
2011: 34.22010:26.52009:22.52008:15
Salamander has a proven track record of creating value in the Greater Bualuang area. With an expanded acreage position in this area, Salamander has the opportunity to apply its technical knowledge and create material value through the discovery and exploitation of new oil fields.
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465
Greater Bualuang, Thailand Oilproduction,developmentandexploration
B8/38Block(100%),operator 1 NorthWestProspect 2 NorthWestFault TerraceCluster 3 Bualuang,oilfield 4 NorthEastFault TerraceCluster 5 EastTerrace 6 FarEastProspect G4/50Block(100%*),operator
* Moecoretainsa50%back-inright
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5 Business review SalamanderEnergyPLC AnnualReport2011
1OceanSovereignrigdrillingBualuangEastTerraceexplorationwell,FPSOinbackground.
2BualangBravoWellheadPlatformunderconstruction.
3WesternPatriotcompleting3DseismicsurveyinG4/50licence.
4MapofG4/50attertiarylevelshowingleadareasidentifiedfrom2Ddata.
3
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6 Business review SalamanderEnergyPLC AnnualReport2011
alamanderoperatestheBangkanaiPSCintheBaritobasin,CentralKalimantan,havingacquireda69%operatedinterestinthisPSC
in4Q2010anddeepeneditsinterestto80%in4Q2011.ThelicencecontainstheKerendangasfielddevelopmentandanumberofadditionalstep-outexplorationtargets.
TheKerendangasfieldcontains280Bcfofcertifiedresource.During2011theGroupsignedagassalesagreement(GSA)forthesupplyof120BcfofgasleadingtotheGroupbooking19MMboeof2Preserves.ThegasisbeingsoldtoPLNforlocalpowergeneration.A320MWpowerplantisbeingconstructed3kmfromtheKerendanfieldwiththecapacitytohandlethreetimesthevolumeoftheinitialGSA.Giventhisreadymarketforthegas,theGrouphopestocommencetheprocessofcommercialisingtheremaining160Bcfofcertifiedcontingentoncompletionofits2012developmentdrilling.
Furthermore,thereisoveroneTcfofexplorationupsideontheBangkanaiPSC.ThemostimmediateprospectsfordrillingareWestKerendanandSungaiLahei,whicharescheduledtobedrilledin2H2012.IntheeventtheGroupdiscoversupwardsof1TcfofgasintheGreaterKerendanareathenitwillbeeconomicaltobuildapipelinetoEastKalimantanwheretherearemultiplecommercialisationoptionsatahigherpricethanthosethatcanberealisedfromlocalpower.
TheGrouphasalsobeenawardedtwoJointStudyAreasadjacenttotheBangkanaiPSC.ThesepresentitwithpotentialacreageadditionsinanareawheretheGroupisdevelopingitsunderstandingoftheregionalpetroleumgeologyandwherethereisaclearmarketforincrementalgasvolumestobecommercialised.
SalamanderspositionintheGreaterKerendanareaexhibitsanumberofthecharacteristicstheGrouplooksforwhenenteringanewregion:hardresourcewithupsidedevelopmentpotentialtoanchorposition;explorationandappraisalupside;andtheopportunitytoexpandintosurroundingacreage.
Greater Kerendan S
FurtherinformationOperationalreview.Page15Corporateresponsibility.Page32
The Kerendan gas field contains
280 Bcf of certified resource.
During 2011 the Group signed a
GSA for the supply of 120 Bcf of
gas leading to the Group booking
19 MMboe of 2P reserves.
Greater Kerendan, Indonseia Gasdevelopmentandexploration
NEBangkanaijointstudy(100%) WestBangkanaijointstudy(100%) BangkanaiPSC(80%),operator Kerendangasfield
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7 Business review SalamanderEnergyPLC AnnualReport2011
1
1StagingareaatLuweHulu.
2CrosssectionoftheKerendangasfield.
3SalamanderemployeesinspectingtheaccessroadtotheWestKerendanlocation.
4AnisochronshowingtheOligoceneplatformrimfacies.A KerendanfieldB WestKerendanlocation
Platform rim Platform marginPlatform interior
Kerendan 2 Kerendan 1 Kerendan 3
Lagoonal wackestonesand packstones(not porous)
Acidic basinal waters expelled from compacting shales
Middle carbonate build-up
Lower carbonate with shale
Reefal boundstones and adjacent packstones
Porous grainstones: Moldic and micro-porosity low permeability
Platform rim wackestones to packstone low porosity
Porous due to late vuggy dissolution, high permeability
3
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A
B
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FurtherinformationOperationalreview.Pages16/178 Business review
SalamanderEnergyPLC AnnualReport2011
heGrouphasadominantacreagepositionintheNorthKuteiBasinthroughoperatedinterestsintheBontangPSC(100%)andthe
SoutheastSangattaPSC(75%).TheKuteiisoneofthemostprolificbasinsinIndonesia,yetitsnorthernsectionhasbeenlightlyexploredandSalamanderisthefirstoperatoractivelytoexploreinthispartofthebasinforover25years.
In2010,SalamandermadetheAngklung-1discoverythatflowedgasfromPliocenesandstones.TheAngklungdiscoverywasaplay-openingwellasitprovedthepresenceofreservoirqualitysandstonesintheNorthKutei.Furthermore,itvalidatedtheGroupshypothesisthatthebrightamplitudeanomaliesvisibleonthe3DseismiccorrespondwithgasinPliocenesandstones.
Multiplefollow-upprospectshavebeenidentifiedfromthe3DseismicontheBontangPSCandSESangattaPSCs.AnindependentreportbyISISPetroleumConsultantsconcludedthattheGroupsfourmostdrillreadyprospectshavegrossmeanunriskedresourcepotentialof676MMboe.TheGroupplanstodrilluptoeightexplorationwellsacrossitsacreagetoproveupresourcesstartingin4Q2012.
Thereareanumberofoptionsforcommercialisationofgasintheeventoffurtherexplorationsuccess.TheBontangLNGplant,whichislessthan100kmfromtheGroupsprospects,providesanattractivecommercialisationoptionwithtwoofeighttrainsidleandrecentexportpricesof$17perMcf.Inadditiontherearemultiplelocalindustrialandpowergenerationmarketswhichwouldbeexpectedtorealiseinexcessof$7perMcf.Asthedominantacreageholder,SalamanderisuniquelypositionedtoexploitthisemergingnewplayintheNorthoftheKuteibasin.Arigisexpectedonlocationin2H2012,whentheGroupwillembarkonamulti-wellprogramme.
North Kutei TAn independent report by ISIS concluded that the Groups four most drill ready prospects have mean unrisked resource potential of 676 MMboe.
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3
6
17
4 5
North Kutei, Indonesia Gasappraisalandexploration
SESangattaPSC(75%),operator 1 NorthKendang 2 RehabNose 3 SouthKendang
BontangPSC(100%),operator 4 Angklungdiscovery 5 Kecapi 6 Bedug 7 Tutungdiscovery
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9 Business review SalamanderEnergyPLC AnnualReport2011
9 Business review SalamanderEnergyPLC AnnualReport2011
1MigrationmodellingacrosstheBontangPSC.
2ProspectmapacrossBontangandSESangattaPSC.
3Angklung-1wellflaringgasduringtesting.
4CanyonandchannelmappingintheBontangPSC.
1
3
Tutungdiscovery
Angklungdiscovery
NorthKendang
Kecapi
Calung
AngklungNorth
Kolingtang
Bedug SouthKendang
Kecrik
Goong
RehabNose
Rehab
MuiraBesar
Rampak
SESangatta3D
Mahesi
Kledi
Doli-Doli
BedugSouth
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10 Business review SalamanderEnergyPLC AnnualReport2011
Chairmans and Chief Executives review
The Board believes that Salamanderhas never been better positioned to create and capture value for shareholders and we look forward to the year ahead with a keen sense of anticipation.
uring2011theGroupcommencedahigh-gradingofitsportfoliowiththeaimoffocusingonareaswhereithaslarge,
operatedinterestswithmaterialupsideexposureandhighquality,anchorassets.TheseareasincludetheGreaterBualuangarea,intheGulfofThailand;theNorthKuteiareaandtheGreaterKerendanarea,bothinIndonesia.InalloftheseareastheGroupspositionisbasedaroundacoreassetwithupsidepotentialaswellaslowriskstep-outexplorationandappraisalopportunitiesandthechancetoaddnewacreageinareaswherewehaveadetailedknowledgeofthehydrocarbonsystems.
Thisre-alignmentisanaturalprogressioninportfoliodevelopmentastheGroupmatures,andfollowsourearlierdrillingprogrammesacrossadiverserangeofassetsinSoutheastAsia.HavingidentifiedthethreecoreareasaroundwhichtofocustheGroupsfuturegrowth,thesecondhalfoftheyearsawtheGroupdivestsmall,non-operatedinterestsintheONWJandSESPSCs.Thesewerehighlytaxed,highcostbarrelswhichgeneratedrelativelylimitedfreecashflowandwereinlongtermdecline.TheGroupusedthesefundstoexpandinitscoreareaswiththefarm-intotheG4/50blockintheGreaterBualuangarea,ThailandandincreasingitsinterestintheGreaterKerendanarea,throughtheacquisitionofadditionalequityintheBangkanaiPSC.BothoftheseareasofferhigherpotentialreturnsandmoretangiblegrowthopportunitiesthantheONWJandSESPSCs.
WiththeGroupsrenewedfocus,assetsoutsideofthesehigh-gradedareasarenowconsiderednon-coreandtheGroupmaydetermineinthefuturewhereappropriatetoharvestcashflow,divestorwithdrawfromthesepositions.
Markets
Despitedifficultglobaleconomicconditions,theGroupsprincipalmarketsofIndonesiaandThailandcontinuetogrow,withtheIMFforecastingGDPgrowthin2012of6.3%inIndonesiaand4.8%inThailand.Thedemandfornewgas-firedpowerprojectsinIndonesiaremainsstrong.ThisisanimportantmarketfortheGroupasitexploresforgasintheGreaterKerendanandNorthKuteiareas.DemandforgasremainsexceptionallystrongintheNorthKuteiarea,wherethepresenceoftheBontangLNGplanthasledtothegrowthofanumberoflocalmarketsforgas,includingpetrochemicals,fertiliser,powerandLNG.Withtheoilpriceremainingconsistentlyabovethe$100perbarrellevelsinceearly2011,theGroupsmarketscanbedescribedasbuoyant.
D
Charles JamiesonChairman
James MenziesChiefExecutiveOfficer
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FurtherinformationFinancialreview.Page20Operationalreview.Page13Corporateresponsibility.Page27
11 Business review SalamanderEnergyPLC AnnualReport2011
Highlights
Ontheoperationalside,productionaveraged18,600boepdfortheyear,despitethesaleoftheONWJandSESPSCsinthesecondhalfof2011.Productioncomprised84%liquidsand16%gaswhileaveragerealisationsduringtheyearwere$104.45perbarrel(2010:$73.16perbarrel)and$5.47perMcf(2010:$5.12/Mcf).
Evenallowingfordisposals,theGroupgrewits2P(provedandprobable)reservesby9.0MMboe(13.6%)duringtheyear,reportinga2Pfigureof75.3MMboeatyearend,representingareservereplacementratioof235%.Alongsidethis,theGroupsprovedreservebasegrewby37%to48MMboe(64%ofthe2Pfigure),reflectingthecontinuedsuccessfuldevelopmentoftheGroupsflagshipBualuangoilfield.
Sincethedrillingoftheplay-openingAngklung-1wellattheendof2010,ourtechnicalteamshavebeenworkinghardthroughout2011todefinetheprospectivityinouracreageintheNorthKuteiarea,offshoreIndonesia.Thewellhasopenedanexcitingnewoil&gasplaylocatedoffshoreEastKalimantan,closetotheBontangLNGplant,anareawithastrongmarketforgas.WearethereforepleasedtohavehadanindependentthirdpartyCompetentPersonsReport(CPR)reportcommissionedandrecentlycompleted,analysingthepotentialofouracreage.ThisCPRreporthighlightsthepotentialforover676MMboeofgrossmeanprospectiveoilandgasresourcesinthetopfourhigh-gradedprospectsinouracreage.Wearecontinuingourtechnicalworkonouroperatedblocksandlookforwardtotestingtheprospectivityofthisnewplayarea.
Onthefinancialfront,theincreaseinaveragerealisationsdroverevenuetorecordlevelsof$408.0million(2010:$323.4million)andwearepleasedtoreportarecordpost-taxoperatingcashflowof$193.9million(2010:$106.5million)andrecordprofitbeforetaxof$112.6million(2010:lossof$113.7million).TheGroupreportedayear-endcashandcashequivalentsposition,includingrestrictedbankdeposits,of$85.8million(2010:$99.2million).
Corporate responsibility
TheGrouprecognises,andtakesseriously,theneedforittobearesponsiblecorporatecitizen.TheChiefExecutiveoverseestheimplementationoftheGroupspoliciesinthisareafromAnti-BriberyandCorruption(ABC)throughtoHealthandSafety,community
engagementandemploymentpractices.Afocusareain2011wastheimplementationofanewcodeofconductreflectingthenewABClegislationandtheroll-outofacomprehensivetrainingprogrammetoeducateallemployeesontheirresponsibilitiesinthisarea.TheGrouphasalsoembarkedonareviewofitsinternalpoliciesandreportingstructurewithregardstocorporateresponsibilitymattersinordertoenhanceitsperformanceinthisareaandthiswillbeconcludedin2012.MoredetailscanbefoundintheCorporateResponsibilitysectionofthisreport.
Westrengthenedtheseniormanagementteamduring2011,creatingthenewpositionsofGroupTechnicalDirectorandExplorationManager,Indonesia,reinforcingourpositionashavingoneoftheleadingandmostcapableoperatingteamsintheregion.WewerealsodelightedtowelcomeDrJonathanCopusasChiefFinancialOfficer;theBoardhasbeenimpressedbythecontributionhehasalreadymadeinhisshorttimewithus.SincetheperiodendwehavefurtherstrengthenedtheBoardwiththeappointmentofDrCarolBellasaNon-executiveDirector.Wewouldalsoliketothankallourstafffortheircontinueddedication,professionalattitudeandenthusiasm.
Outlook
Followingthestrategicrationalisationin2011andthematerialgrowthintheGroupsreservebase,the2012drillingprogrammewillseeSalamanderdirectingitsresourcestooperatinginitscorefocusareaswhereithasdiscoveries,islookingtoprogressfielddevelopmentsandconductlowriskstepoutexploration.Wethereforealreadyhaveadetailedunderstandingofthehydrocarbonsystemsinourcorebasinsandthisisreflectedintherelativelylowrisknatureoftheprogramme.Asaresult,weareincreasinglyconfidentthatwecancapturematerialvaluethroughthedrill-bit.Meanwhile,thecorebusinesscontinuestogrowwithproductionexpectedtorisetoover20,000boepdin2014.
Withamorefocusedapproach,theGroupwillseektoaccelerateitsplansacrossitscoreareas.TheBoardbelievesthatSalamanderhasneverbeenbetterpositionedtocreateandcapturevalueforshareholdersandwelookforwardtotheyearaheadwithakeensenseofanticipation.
Charles Jamieson James Menzies Chairman ChiefExecutive
23March2012 23March2012
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12 Business review SalamanderEnergyPLC AnnualReport2011
Key performance indicators
KPI
Working interest production
Finding, development and acquisition cost per barrel (3yearaverage)
Operating costs
Operating cash flow
Reserves replacement (3yearaverage)
Lost time injury frequency (permillionmanhours)
2011: 18,600 boepd 2010:20,300boepd2011: $20.22 per boe 2010:$24.29perboe2011: $15.46 per boe 2010:$15.11perboe2011: $52.51 per boe 2010:$29.63perboe
2011: 140% 2010:279%
2011: 0.85 2010:0.4
Comment
Loweryear-on-yearproductionfollowingthesaleofinterestsintheONWJandSESPSCsduring2H2011
Representsanallincostofthereservesbase.2011sawtheadditionoflowcostreservesfromtheKerendanfieldandreflectsreservesupgradesandexplorationsuccessontheBualuangfield/EastTerrace
Opexperbblwasbroadlyinlinewith2010
Operatingcashflowperbblgrewstronglyasaresultofincreasinggasrealisations,higheroilpricesandanincreaseintheproportionofoilintheproductionmix
TheGroupmateriallyincreasedreservesduring2011
ThreeLTIswerereportedin2011.TheLTIFRisinlinewiththeOGPaverage
Outlook
Productionin2012isexpectedtoaverage12,00013,000boepd.Productionisforecasttorisetoover20,000boepdin2014
TheGroupislookingtoaddreservesclosetoinfrastructurethroughdevelopment/explorationactivityinanumberofcoreareasOpexperbblisexpectedtostaybroadlyflatin2012beforefallingin2013asproductionfromBualuangrises
ThedisposalofthelowmarginONWJ/SESproductionshouldalsoimprovecashflowonaunitbasis
SuccessfuldevelopmentdrillingontheKerendanfieldcouldleadtocommercialisingfurthergasresourceandfurtherreservebookings
TheGrouptargetszeroLTIseveryyearandhasanactiveHSEplantohelptrytoachievethis
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13 Business review SalamanderEnergyPLC AnnualReport2011
Operational review heGrouphadabusyyearoperationallyin2011completingover3.5millionmanhoursworkedonoperatedprojects,participating
inthedrillingof14wellsandshooting3,000kmof2Dseismicdataand2,700sqkmof3Dseismicdata.28.3MMboeof2PreserveswereaddedthroughthecommercialisationofgasfromtheKerendanfield,thediscoveryofoilintheBualuangEastTerraceprospectandupwardrevisionofreservesintheBualuangmainfield.Inaddition,thedisposalofthelowmarginONWJandSESPSCsreleasedcapitalforinvestmentintheGroupsthreecoreareas,namelyGreaterBualuang,GreaterKerendanandtheNorthKutei.
Productionfortheyearaveraged18,600boepdandin2012itisexpectedtoaveragebetween12,000and13,000boepd.ThereductionisprincipallyaresultofthesaleoftheONWJandSESPSCs.GrowthisexpectedinthecomingyearsthroughincreasedvolumesfromtheBualuangfieldandcommencementofproductionfromtheKerendanandSouthSembakungdevelopmentswhichareexpectedtodriveaveragedailyproductiontoover20,000boepdin2014.
Operationally,aswellasfocusingondeliveringandmaintainingproduction,theGroupdevelopeditsplansfortheactivitiesinitscoreareasin2012.IntheGreaterBualuangareainThailand,theconstructionoftheBualuangBravoplatformbeganinmid-2011anditisscheduledforinstallationin3Q2012.TheBravoplatformwillprovide16productionwellslotsandwillallowthefullfielddevelopmentoftheBualuangmainreservoirandtheEastTerracediscoverytoproceedandsoincreaseproductionfrom2013onwards.
IntheNorthKuteiinIndonesia,theGroupacquired,processedandinterpreteda3DseismicsurveyoverpartoftheSESangattalicenceandhasmappedanumberoflargeoilandgasprospects.ItalsocompletedadetailedtechnicalreviewoftheacreageincorporatingdatafromtheAngklung-1wellthathasfurtherimprovedtheunderstandingofthehydrocarbonsysteminthispartofthebasin.Thishasformedthebasisofplanningforanextensivedrillingcampaignstartingin2012thathastransformationalpotentialforSalamanderwiththeinitialfourprospectstargetingagross676MMboeofmeanprospectiveresource.
TThe prospect density seen inB8/38 and anticipated in G4/50 will provide numerous drillable targets with high value potential and low well costs.
Mike BuckChiefOperatingOfficer
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14 Business review SalamanderEnergyPLC AnnualReport2011
Finally,intheKerendanfield,theGroupfinisheditsre-evaluationofthepreviousoperatorsworkprogramme,completedrequisiteupgradestotherigandobtainedtheoutstandingenvironmentalpermits.ThiswillenabletheGrouptoexecuteanexplorationanddevelopmentdrillingcampaignin2012thatwillfulfiltherequirementsofthesignedKerendangassalesagreementandtargetadditionalmaterialreservesinsatelliteprospectswhichhavelowriskcharacteristics.HSE
Thenumberofman-hoursworkedonoperatedprojectsincreasedby40percentcomparedto2010.TheBoardplacesahighemphasisonmaintaininghighstandardsofHSEperformancethroughoutitsoperationsandwiththecurrentandforecastincreaseinoperatedman-hours,theBoardinstructedtheHSEadvisertoconductareviewoflosttimeinjuriesandHSEculturewithintheCompany.ThereviewconcludedthattheGroupsHSEmanagementsystem,andtheHSEcultureevidentattheoperatingsites,iswelldevelopedcomparedtootheroperatorsintheregion.SincethecompletionofthereportHSEperformancehasbeenexcellentwithnorecordableincidentssinceSeptember2011.Reserves and resources
TheGroupentered2011with66.3MMboeof2Preserves.DuringtheyeartheGroupaddedreservesduetoanupgradeattheBualuangfield,thepartialinclusionoftheBualuangEastTerracediscovery,andthefirstreservebookingsagainsttheKerendanfield.SetagainstthiswasthedisposaloftheGroupsinterestintheONWJandSESPSCsplustheproductionof6.6MMboenettoSalamander.Asaresultofthesemovementsasat31December2011theGroups2Preserveswere75.3MMboe,a13.6%increaseonthepreviousyearandayearonyearreservesreplacementratioof235%.
Thailand
Greater Bualuang TheGroupsactivitiesduring2011intheGreaterBualuangareaincluded:anexplorationsuccesswiththeBualuangEastTerraceoildiscovery;anappraisalofthedeeperT2reservoirconfirmingitscommercialpotential;furtherdevelopmentdrillingontheBualuangfield;startofconstructionoftheBualuangBravoplatform;andtheentrythroughfarm-intotheG4/50acreagesurroundingtheGroupsexistingB8/38block.AtyearendtheGroupalsobookedadditional8MMboof2PreservesontheBualuangfield,bothasaresultofincreasedrecoveryfactoronthemainfieldandtheincorporationofreservesfoundintheEastTerrace.
B8/38 (100%, Operator)ProductionfromtheBualuangfieldaveraged7,800bopdduringtheyearunderreview.FollowingadelayinthearrivaloftheOceanSovereignjack-uprig,duetotherigownerhavingtoresolveadministrativeissuesandthensomedamagetotherigduringjackingupoperations,Phase5ofBualuangdevelopmentdrillingwassuccessfullycompletedinSeptember.Thisprogrammecompriseddrillingofthreenewhorizontalwells,theside-trackingoftwoexistingproductionwellsandthework-overofonewaterdisposalwell.Thedelayduetotheproblemswiththerigresultedintotalproductionfromthefieldbeinglowerthanhadbeenanticipatedatthestartof2011buttheperformanceofthewellsoncedrilledwasinlinewiththepre-drillexpectations.
Tofacilitatefutureproductiongrowth,theGrouphassanctionedtheBravowellheadplatform.ThissixteenslotplatformwillbebridgelinkedtotheBualuangAlphaplatform,andisscheduledforinstallationduring3Q2012.TheplatformisbeingbuiltbyThaiNipponSteelandiscurrentlyprogressingonschedule.Thereisasmalldevelopmentdrillingprogrammeplannedfor1H2012usingtheEnsco-53rig,butthemajorityofdevelopmentdrillingin2012willtakeplaceinthesecondhalf,oncetheBravoplatformhasbeeninstalled.ThiswillseetendevelopmentwellsdrilledonthemainBualuangfieldwhichwillfacilitateproductiongrowthin2013.TheGrouphassigneda12monthextendablecontractforthenewbuildAtwoodMakojack-uprigwillmobilisein3Q2012.AveragedailyproductionfromBualuangin2012isexpectedtobeapproximately8,500bopd.
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15 Business review SalamanderEnergyPLC AnnualReport2011
Reserves and resources continued
Thailand continued
Inthemiddleof2011,theGroupmadetheBualuangEastTerraceoildiscoverythathasresultedintheadditionof8MMbototheGroups2Preserves.TheEastTerracewillbebroughtonstreamwithsixwellsdrilledfromtheBravoPlatformin1H2013.
TheEnsco-53Jack-Uprigiscurrentlymobilisingtolocation.DuetoitsdelayedarrivaltheGrouphaselectedtoswitchtheorderofthedrillingprogrammeandcommencewiththedrillingofthetwoplanneddevelopmentwells.Thiswillenableittoincreaseproductionandtakeadvantageofcurrenthighoilprices.ExplorationdrillingwillfollowthecompletionofthetwodevelopmentwellswiththeBualuangNWTerraceandBualuangFarEastexplorationwellsexpectedtobecompletedbyearlyJune.
G4/50 (100%1, Operator)During2H2011theGroupacquireda100%interestintheG4/50blockintheGulfofThailand.G4/50isaverylargeblock(5,800sqkm)surroundingtheGroupsB8/38licenceandwasthegoldenblockofthelastexplorationlicensingroundinThailand,receivingmorebidsthananyotherblock.TheproximitytotheB8/38licencemeanstheGrouphasadetailedunderstandingofthegeologyoftheblockandthehydrocarbonsystemthatitcontains.Theblockconsistsoffivesub-basins,twoofwhicharecoveredby2,500sqkmofexisting3Dseismic.InFebruary2012,theGroupconcludedtheacquisitionofa3,000sqkm3Dseismicsurveyovertwooftheothersub-basins.TheGroupsinterpretationoftheexisting2Dand3Ddatasetsshowsalargenumberofleadswhich,whencombinedwiththenew3D,areexpectedtogeneratemultipleprospectsmaturefordrilling.Thesewillbetargetedforexplorationdrillingfrom2H2012onwardsusingtheAtwoodMakojack-uprig.
Therearefinancialandoperationalsynergiesfromoperatingacrossalargerswatheofacreage.Fromafinancialperspective,theGroupisabletooffset50%ofitsexplorationcostsagainstincometaxincurredonproductionfromtheBualuangfield.TheprospectdensityseeninB8/38andanticipatedinG4/50willprovidenumerousdrillabletargetswithhighvaluepotentialandlowwellcosts.
Other assets
TheSinphuhormgasfield(9.5%)inThailandremainsareliableproductionassetandaveragedailyproductionin2011was83MMscfdwithaverage
realisationsof8.96perMcf.ProductionwasimpactedslightlyattheyearendasdisruptioncausedbytheextensivefloodinginThailandpromptedafallinelectricitydemand.During2012,productionisexpectedtoaverage92MMscfdasdemandreturnstonormallevels.
TheGroupdrilledtheDaoRuang-2appraisalwell(50%,operator)in1H2011ontheeasternflankofthelargeDaoRuangstructure.Despiteencounteringgasshows,ontestthewellfailedtoflowatasustainedcommercialrate.TheDaoRuang-3appraisalwellwasalsodrilledtargetingthenorthernflankofthestructure.Thisalsoencounteredgasshows,butthewelldataindicatedthatthewellwouldhavelimitedpotentialasaproducerandsoitwasnottested.Afterextensivepostwellevaluationswerecompletedthetwowellswerepluggedandabandonedassub-commercialgasdiscoveries.
PosttheperiodendtheGroupcompletedthesuccessfulappraisaloftheDongMundiscoveryinBlockL27/43(27%)withtheDongMun-3sidetrack(DM-3ST).Thewellflowtestedatarateof15MMscfdandhasbeensuspendedasafutureproducer.TheOperatorisnowpreparingtofileforcommerciality.
1 Moecoretainsa50%backinright
Indonesia
Greater Kerendan TheGroupaddedtoitsoperatedpositionintheBangkanaiPSC,oneofitsthreecoreareasofactivity,during2011byacquiringafurther11%oftheequitytotakeitsworkinginterestto80%.TheBangkanaiPSCisanchoredaroundtheKerendangasfielddevelopment.TheGroupsignedaGasSalesandPurchaseAgreementduring1H2011forthesupplyofupto20MMscfdofgasatapriceof$4.79perMMbtu.Thiscommercialised120BcfofgaswhichwillbesenttoanewbuildPLNoperatedpowerplant3kmfromthefield.AsaresultofsigningtheGSAtheGrouphasbooked19.0MMboeof2PreservesagainsttheKerendanfieldatyearend2011.Thereisafurther160BcfofcontingentresourcecertifiedontheKerendanfieldwhichtheGroupwillseektocommercialiseoncompletionoffurtherdevelopmentdrillingin2012.ThePLNoperatedpowerplantisbeingbuilttoreceiveoverthreetimesthevolumescurrentlycontractedsotherewillbeareadymarkettocommercialisefurtherresources.ThePLNpowerplantwillbeconnectedbytransmissionlinescurrentlyunderconstructiontothemainKalimantanelectricitygrid.
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Reserves and resources continued
Indonesiacontinued
TheDrillCo-1rigbeganmobilisationinMarch2012andisexpectedtobefullyriggeduponlocationandspuddinginJune.ItwillcompleteadevelopmentdrillingprogrammeontheKerendanfieldconsistingofthreewells.Meanwhile,thegasprocessingfacilitieshavereceivedIndonesiangovernmentapprovalandwillbeconstructedandreadytodeliverfirstgasbytheendof2013.
InadditiontothemainKerendanfield,theBangkanaiPSCcontainsanumberofexplorationleadsandprospects,oneofwhich,theWestKerendanprospect,isscheduledtobedrilledduring4Q2012.WestKerendanispartofthesamereefalbuild-upthatreservoirstheKerendanfieldandisestimatedtocontain335BcfofmeanpotentialresourceintheOligoceneBeraicarbonatehorizon,theproductivezoneoftheKerendanfield.BeneaththeBeraiobjectiveinWestKerendanthereisadeeperEoceneclastictargetinalargefourwaydipclosedstructurecalledSungaiLahei.TheWestKerendanexplorationwellwillbedeepenedtoinvestigatethepotentialofSungaiLahei,whichisestimatedtohavemeanresourcepotentialof580Bcf.TheSungaiLaheistructurewaspenetratedbyUnocalsKerendan-2wellinthe1980sandalthoughnottestedthewelllogsrevealthatthereisgaspayinearlyOligocenesandsclosetoTD.WestKerendan-1willdrillthesamestructureup-dipfromKerendan-2andisdesignedtopenetrateseveralhundredmetresofEocenesection.
WhilstthereisscopetosendincreasedvolumesofgastothenearbyPLNpowerplant,iftheexplorationpotentialintheBangkanaiPSCisrealiseditwillbefeasibletobuildapipeline220kmtoBalikpapantotieintotheEastKalimantanpipelineinfrastructurewheretherearemultiplecommercialisationoptionsatahigherpricethanthosethatcanberealisedfromlocalpowergeneration.
TheGrouphasalsoenteredintoJointStudyAgreementsfortheNorthEastBangkanaiandWestBangkanaiareasthatprovideitwithanopportunitytoexpanditsacreagepositioninthebasin.
North Kutei
During2011theGrouphasbeencompletingitstechnicalreviewofitsNorthKuteiacreageinlightoftheplay-openingAngklung-1explorationsuccessattheendof2010andincorporatingthenewlyacquired3DseismicovertheSESangattalicence.TheNorthKuteiisoneoftheGroupsthreecoreareas,withpotentialmeanrecoverableresourcesofc.3Tcfofgasand400millionbarrelsofoil.
WiththeAngklung-1wellhavingtestedhighgasflowratesfromverygoodqualityPliocenechannelsandsprovidingpositivecalibrationforthe3Dseismic,theGroupisconfidentthatthenumerousamplitudeanomaliesapparentontheseismicdataintheBontangandSESangattaPSCsequatetogas-bearingPliocenesandstones.Theseareslopechannelfeatureswithstackedreservoirpotential,providingmultipleobjectivesforeachexplorationwell.
ThereisalsoevidenceoffurtherupsideintheformofanoilandgasplayinthedeeperMiocenesandstones.TheAngklung-1wellintersected125metresofoilsaturatedMiocenesandsbutthesesandswerepoorlydevelopedastheylieoutsidethemainchannelcomplexesandsohaverelativelypoorqualityreservoirintheAngklungwell.However,thenewseismichasallowedamuchbetterimagingoftheMiocenesectionandthetrapsmapped,alongwiththeevidenceforactiveoilseepsacrossthebasin(includingaseepthatappearstobecomingfromtheboundingfaultofthegiantKendangstructureontheSESangattalicence)highlightthepotentialoftheMioceneplayinthisunder-exploredpartofthebasin.
Tobeginunlockingvalue,theGroupwouldliketocommittoacontractforariganddrilluptoeightwellsacrossthebasininordertoproveupresources.ThefirsttargetsarelikelytobeKecapi,Bedug,KendangNorthandKendangSouth.TheGrouphasidentifiedapproximately20prospectsandleadsthatwouldprovidefollowonpotential.ThisrepresentsanattractiveexplorationopportunitywithatangibleroutetocommercialisationandtheGrouphasbeenindiscussionswithselectedpotentialpartnersconcerningafarm-outofitspositioninitstwooperatedPSCs.Aspartofthatprocess,theGrouphashadanindependentassessmentoftheresourcepotentialintheNorthKuteicompletedbyISISPetroleumConsultants.ISISprovidesthefollowingresourceestimatesfortheinitialprospects:
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Intheeventoffurtherdrillingsuccess,therearemultiplecommercialisationoptionsforgasinthearea.TheBontangLNGplantislessthan100kmfromtheGroupsNorthKuteiprospectsandprovidesaveryattractivecommercialisationpossibilitywithrecentexportcargoesrealising$17/Mcf.Theplantcurrentlyhastwoofitseighttrainsidleandis1Bcfperdayshortoffeedstock.InadditiontotheLNGpotential,eitherforexportorforusedomesticallyinIndonesia,localindustrialandpowergenerationpotentialexistsinEastKalimantanandcouldbeexpectedtorealiseinexcessof$7/Mcf.
AlsoontheBontangPSC,theGroupiscurrentlydrillingtheTutungAlpha-3appraisalwellonitsTutunggascondensatediscovery.TheMBCenturyRig28isexpectedtocompletethedrillingduringthesecondquarterof2012.MarketresearchrevealsalatentdemandforgasinthisareaofEastKalimantanandsoeventhepotentiallymodestreservesatTutungcouldbedevelopedunderattractivecommercialarrangements.
Other assets
TheKambunagasandcondensatefield(50%,operator)inIndonesiaaveraged9,600boepdduring2011.Thiscomprised34MMscfdofgasand2,400bcpd.Thefieldhasnowstartedtoenterthenaturaldeclinephase.Compressionfacilitieswereinstalledin1Q2012thatwillallowtheproductiontocontinueandsoextendthelifeofthefield.ItisexpectedthatproductionfromtheKambunafieldwillaverageapproximately4,200boepdduring2012.
TheGroupsolditsfivepercentnon-operatedinterestsintheONWJandSESPSCsin2H2011for$57.7million.Theselicencesrepresentedlowmargin,hightax,highcostbarrels,infieldsthatareinlongtermdecline.Therefore,thedecisionwastakentodivestoftheseassetsandreinvestthecapitalintotheGroupscoreareaswherethereshouldbeahigherreturnoninvestment.ProductionfromthesePSCs,averagedovertheyear,madeanetcontributionof4,600boepdtotheGroups2011production.
TheSouthSembakungfielddevelopment(21%)continuedtomakeprogresswiththreedevelopmentwellscompletedduring2011.Workhasalsobeenlargelycompletedontheprocessingfacilitiesandproductionisonscheduletocommencein2013.
IntheBengara-1PSC(41%)intheTarakanBasinofNortheastKalimantan,Indonesia,theSouthSebuku-2appraisalwellwasdrilledin4Q2011andencounteredover15metresofnetgas-bearingsandstonesintheTabulformation.Drillstemtests(DSTs)wereconductedacrossthreeofthegas-bearingzonesandflowedatanaggregaterateof10.9MMscfd.TheoperatorispreparingaPlanofDevelopmentforsubmissiontotheIndonesianregulatorwithaviewtoitbeingapprovedbeforetheendof2012.
Reserves and resources continued
North Kutei continued Mean Unrisked P90 Unrisked P50 Unrisked P10 Unrisked Prospective Prospective Prospective Prospective Prospect Licence HC Type Resource Resource Resource Resource
Kecapi BontangPSC Gas(Bcf) 245 119 233 389 Oil(MMbo) 3 0.1 3 6
Bedug BontangPSC Gas(Bcf) 293 124 268 491 Oil(MMbo) 15 2 12 30
SouthKendang SESangattaPSC Gas(Bcf) 1190 579 1063 1953 Oil(MMbo) 108 37 102 188
NorthKendang SESangattaPSC Gas(Bcf) 766 353 708 1239 Oil(MMbo) 134 65 125 208
Total (MMboe) 676
Total Net Salamander (MMboe) 534
Conversionfactor6Bscf/MMboeSalamanderhas100%workinginterestinBontangPSCand75%inSESangattaPSCAllprospectiveresourcefiguresaregrossunlessotherwisestated
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Reserves and resources continued
Vietnam
InBlock101-100/04(30%,operator),offshoreNorthernVietnam,theGroupdrilledtheCatBa-1Xexplorationwell.Thewellencountered38metresofnethydrocarbonpayinTertiaryclastics,thesecondaryobjectiveofthewell.Theprimaryobjectivesectionwasdry.Thein-placeresourcevolumesencounteredbythewellwerejudgedtobebelowthelevelsneededforcommercialdevelopmentandsothewellwaspluggedandabandonedasasub-commercialoilandgasdiscovery.
Subsequentlyin2012theGroupfiledforwithdrawalfromallofitslicencesinVietnamandstartedtheprocessofclosingdownitsoperationsincountry.
Summary
TheGroupmadeconsiderableprogressingrowingitsreservebasein2011.Notonlydidreservesincreaseonanabsolutebasis,butthevalueperbarrelofthesereservesalsogrew.ThisreflectsSalamandersstrategyofrealigningtheportfoliototransfercapitaltowhereitwillgeneratethemostpotentialvalueforshareholders,specificallythroughfocusonthethreecoreareasofGreaterBualuang,GreaterKerendanandtheNorthKutei.Withthedivestmentofnon-coreproducingassetsproductionshrankyearonyear;however,growthisforecastpointforwardwithachangingproductionmix,alsoleadingtogreatercashgeneration.
TheBualuangEastTerracediscoverywasmaterial,andpartofthediscoveredresourcehasbeenaddedtotheGroups2Preserves.The2012explorationandappraisalprogrammeisfocussedonthreelowriskareaswheretheGroupissteppingoutfromexistingfieldsordiscoveries.Hencethe2012drillingprogrammehasalowerriskprofilecomparedtorecentyearsandwilltargetc.290MMboeofmeanunriskedresourcepotential.
Mike Buck ChiefOperatingOfficer
23March2012
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Statement of proved and probable reserves (working interest basis)
TheGroupsprovenandprobable(2P)commercialworkinginterestreservesat31December2011wereasfollows: Thailand Indonesia Total Oil Gas Oil Gas Oil Gas MMbo Bcf MMbo Bcf MMbo Bcf MMboe1
At1Jan2011 27.6 105.0 9.0 69.0 36.6 174.0 66.3Additions 8.0 1.4 97.4 9.3 97.4 27.1Disposals (6.9) (33.5) (6.9) (33.5) (12.5)Revisions 1.8 (0.9) (0.2) (1.5) 1.7 (2.4) 1.1Production (2.8) (2.9) (1.4) (10.7) (4.2) (13.6) (6.7)
At31Dec2011 34.6 101.2 1.9 120.7 36.5 221.9 75.3
1 Allgasreservesareconvertedat6.0Bcf/MMboexceptKambuna,whichisconvertedat4.8Bcf/MMbo,andKerendan,whichisconvertedat5.5Bcf/MMbo.
2PcommercialreservesarebasedonreportsproducedbytheGroupsindependentengineer,RPSEnergy,andsupplementedbytheGroupwherenecessarywithadditionalandmorerecentinformation.
TheGroupprovidesforamortisationonitsoilandgaspropertiesonanetentitlementsbasis,whichreflectstheshareoffutureproductionestimatedtobeattributabletotheGroupunderthetermsofthePSCsrelatedtoeachfield.Totalprovedandprobableentitlementreserveswere66.0MMboeat31December2011(31December2010:54.0MMboe).
The2011reservesreplacementratiowas235%(2010:121%).
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20 Business review SalamanderEnergyPLC AnnualReport2011
Financial review
Units 2011 2010 2009 2008
Realisedprices: Oilandliquids $/bbl 104.45 73.16 51.37 60.52 Gas $/mscf 5.47 5.12 4.03 4.99Revenue $millions 408.0 323.4 157.1 100.8Operatingcostsperboe $/boe 15.46 15.11 13.99 10.64Profit/(loss)beforetaxation $millions 112.6 (113.7) (3.0) (75.5)Lossaftertaxation $millions (45.5) (169.5) (13.5) (66.5)Capitalexpenditures: Acquisitions $millions 7.5 116.7 7.1 510.5 Explorationandappraisal $millions 84.6 73.5 34.3 112.7 Developmentandproduction $millions 99.0 24.2 79.0 91.4Netdisposalproceeds $millions 45.7 Netdebt1 $millions 210.1 190.2 119.3 45.8Gearing2 % 42 39 23 21Pre-taxoperatingcashflow3 $millions 293.6 174.4 40.4 26.8
1 Seenote21totheconsolidatedfinancialstatementsforfurtherdetails2 Gearingisdefinedasdebtdividedbydebtplusbooknetequity3 Beforemovementsinworkingcapital
orSalamander,2011wasayearcharacterisedbyportfolioreorganisationaroundtheGroupsthreecoregeographic
areasoffocus.Inparallelwiththisactivity,astrongcommoditymarketenvironmentdroveamaterialexpansionincashgeneration,whichinturnprovidesasolidplatformfromwhichtheGroupcanreinvestacrossitsproduction,developmentandexplorationoperations.
AlthoughdisposaloftheONWJandSESPSCinterestsledyearonyeartoadeclineinproduction,volumesdisposedofwerelowmargin,hightax,highcost,andproducedfromfieldsinlongtermdecline.Incontrast,withintheretainedbusiness,Salamanderenhancedvaluethroughproductionoptimisation,explorationsuccess,thebookingofnewreserves,andanagreementtonarrowfurtherthediscounttoDubaiatwhichBualuangcrudeissold.
In1H2011,Salamanderrefinanceditsdebtfacilities;acombinedSeniorandJunior$325million,seven-year,reservebasedlending(RBL)facilitywasputinplacewithagroupofeightbanks.Statement of Comprehensive Income
Revenue, realisations and production
Revenuegrewin2011to$408.0million(2010:$323.4million),71%ofwhichwasgeneratedin
FSalamander has entered into a busy2012 programme of activity across its three core areas of focus and capital will be allocated to enhance the Groups core production and development value as well as to test a range of high-impact exploration and appraisal opportunities with moderate to low geological risk.
Dr Jonathan CopusChiefFinancialOfficer
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Statement of Comprehensive Income continued
Revenue, realisations and production continued
Thailand,29%inIndonesia(2010:63%and37%respectively).83%ofSalamandersrevenuewasderivedfromoil;thebalanceingas(2010:80%oil,20%gas).Therewerenosignificanthedginggains/losses.
Oilandgasrealisationsaveraged$104.45/bbland$5.47/Mcfrespectivelyacross2011(2010:$73.16/bbland$5.12/Mcf).Higheroilrealisationsin2011reflectrobustcommoditymarkets,butalsothecontinuednarrowingofthediscounttoDubaiatwhichSalamandersellsitsBualuangcrude(Dubailess$1.97/bblin2011;Dubailess$3.98/bblin2010).Indetail,theDubai-Brentspreadwidenedin2011(4.5%averagediscountin2011,versus1.8%in2010);however,bothcrudescurrentlytradeatapproximatepar.Againstthatbackdrop,at1January2012,SalamandersBualuangsalesdiscountclosedfurther,theGrouphavingagreedwithPTTa$1.10/bblDubaidiscountuntil31December2013.
Forgas,highercrudeoilpricesenhancedthedemand-ledupwardtrendofThaiandIndonesiandomesticgasprices,buttheyear-on-yearrateofgrowthinSalamandersaveragegasrealisationslowedversus2010(7%2011versus27%2010).Atthefieldlevel,2011Kambunarealisationsaveraged$5.04/Mcf(2010:$4.51/Mcf);Sinphuhormrealisations(indexedtohighsulphurfueloil)averaged$8.96/Mcf(2010:$7.07/Mcf).
Underpinningrevenue,Groupproductionaveraged18,600boepdacross2011.Volumesfell8%versus2010(20,300boepd)principallyduetoSalamandersdecisioninthefourthquartertosellitslowmarginOffshoreNorthWestJavaandSouthEastSumatraproductionoperations.Adjustingforthesedisposals,underlyingoutputwasbroadlyflatyearonyear,productionfromtheBualuangfieldbeingtemperedbydelaystoPhase5developmentdrillingduetothelatearrivaloftheOceanSovereignjack-uprig.
Cost of sales
Costofsalesequalled$205.5millionin2011;thiswasmateriallybelowthe$320.8milliontotalreportedfor2010.Breakingthisdown,directoperatingcoststotalled$104.9million;broadlyflaton2010($102.5million).AgainstlowerGroupproduction,unitopexroseto$15.46/boe(2010:$15.11/boe).Beyonddirectoperatingcosts,year-on-yearcomparisonsareobscuredbyanumberofnon-cashadjustmentsin2010.
In2011,followingreserveupgradesonBualuang,amortisationdeclinedto$109.0million($16.07/boe).The2010resultsalsoincludedanimpairmentchargeof$48.6million,forwhichthereisnoequivalentinthecurrentyear.
Alsowithincostofsales,between2010and2011,Salamanderreportedafavourable$47.5millionswinginoilinventories(2011:$34.8millionnegativeversus2010:$12.7millionpositive).UnderlyingtheGroups2011positionwasacargoofproducedoil,heldwithintheBualuangFPSOatyearend,butnotsolduntilJanuary2012.
Nettingrevenuewithcostofsales,grossprofitin2011totalled$202.5million(2010:$2.6million.
Exploration expenses
Salamanderstotalexplorationexpensesfellin2011to$57.8million(2010:$95.9million).Withinthisfigure,costswrittenoffinclude:historicKambunaexplorationactivity(Indonesia);DaoRuang-2and-3(NorthEastThailand);CatBa(Vietnam);andpre-licenceexplorationexpenses.
Profit on disposal of assets
Duringtheyear,theGroupdisposedofitsOffshoreNorthWestJavaandSouthEastSumatraassetsinIndonesia,bookingaprofitondisposalof$6.8million.
Administrative expenses
Administrativeexpensesrosein2011to$14.6million(2010:$12.7million),thislargelyreflectingtheGroupgearingupforincreasedfuturedrillingactivity.
Finance revenue and expense
InMay2011,Salamandercompletedtherefinanceofitsdebtfacilities;a$325millioncombinedseniorandjuniorsevenyear,ReserveBasedLending(RBL)facilitybeingputinplacewithagroupofeightbanks.Followingthisactivity,financecostsrosein2011to$22.2million(2010:$15.5million),primarilyduetothewriteoffofunamortisedfeesof$5.5millioninrespectofthepreviousRBLfacilities.
ItistheGroupspolicytoundertakelimitedoilpricehedgingtoprotectthecashflowsfundingitsfuturecapitalexpenditureprogrammes.Inrespectof2011,theGroupenteredintoanoilpricehedgingprogrammeof4,000bpdforputoptionswithastrikepriceof$60/bbl,andinrespectto2012,theGroupenteredintoanoilpricehedgingprogrammeof1,800bpdatanaverageswappriceof$103/bbland1,800bpdputoptionsatastrikepriceof$70/bbl.Other
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2011smostnotableexplorationsuccesswastheEastTerracediscovery(B8/38,WesternGulfofThailand),whereaninitial8.0millionbarrelsofthefieldsestimated12millionbarrelsofcommerciallyrecoverableoilresourceswereindependentlycertifiedas2Preservesatend2011.
In2012,Salamanderisscheduledtodrilluptonineexplorationandappraisalwells;activityintheGulfofThailandandEastKalimantanwilltestfollow-upprospectivitythatSalamanderconsiderstohavebeensignificantlyde-riskedbysuccessesontheBualuangEastTerraceandAngklung.
Cash and net debt
Atend-2011,Salamanderstotalgrossdebtequalled$295.8million(end-2010:$289.5million).Ofthisfigure,bankborrowingstotalled$195.8million(principallya$325million,sevenyear,reservesbasedlendingfacility,refinancedinMay2011)(2010:$189.5million)withtheremainderbeinga$100millionconvertiblebond(issuedMarch2010).
Againstthiswerecashandfundsof$85.8million,$25.4millionofwhichlayinrestrictedbankdeposits(end-2010:$99.2million,ofwhich$9.4millionwasrestricted).Withinthe2011restrictedfigurewasa$21.4millionbankguaranteerelatingtothepre-fundingofthe3DseismicsurveyontheG4/50licence(WesternGulfofThailand).ThisactivitywascompletedinlateFebruary2012,withthereleaseoffundsbacktoSalamanderduring1H2012.
Takentogether,Salamandersend-2011totalnetdebtequalled$210.1million(2010:$190.2million),theGroupsgearingrisingto42%(end2010:39%).Cash flow statement
Operating cash flow
Turningtocashflow,in2011,beforetaxationandmovementsinworkingcapital,Salamandergeneratedcashfromoperationsof$293.6million,a68.3%riseover2010(2010:$174.4million).Underlyingthissharpyear-on-yearriseisSalamandersSeptember2010acquisitionofanadditional40%oftheBualuangoilfield,Salamandersinterestrisingto100%.
Salamanders2011full-yearcashtaxationpaymentstotalled$102.1million(2010:$18.7million).ThiswasdrivenbyBualuangsfirstfullyearofSpecialRemuneratoryBenefitpayments,whichyearonyeararecalculatedagainstSalamandersexpandedBualuangworkinginterest.In2011SRBpaymentstotalled$65.2million(2010:$36.3million).
Statement of Comprehensive Income continued
Finance revenue and expense continued
financiallossestotalled$2.1million(2010:$7.4milliongain);thisispredominantlyattributabletothemark-to-marketaccountingoftheGroupshedging(seenote25).
In2011,Salamanderreportedapre-taxprofitof$112.6million(2010:lossof$113.7million).
Taxation
ArisingpredominantlyfromincreasedBualuangrevenues,totalcurrenttaxationchargesroseto$121.4million(2010:$71.6million).Inaddition,deferredtaxationchargesamountedto$36.7million(2010:netcreditof$15.7million).AreconciliationoftheGroupstaxchargetoprofitbeforetaxissetoutinnote10totheFinancialStatements.Lookingforward,asSalamanderexpandsitslevelsofexplorationandappraisalactivityoverboththeB8/38andG4/50licences,theGroupwilllooktooptimiseanyfiscalsynergiesagainstBualuangproduction.
Salamandersnetlossfor2011totalled$45.5million;equivalentto29pencelosspershare(2010:$169.5million;110pencelosspershare).
Balance Sheet
Capital expenditure
Although2011wasalowerprofileyearforexplorationnewsflow,absolutelevelsofactivitywerenotthatdissimilar,theGroupdrillingfiveexplorationandappraisalwellsin2011versussixin2010.
Capitalexpendituresin2011totalled$191.1millioncomparedto$214.4million.2011includedtheacquisitionofafurther11%oftheGreaterKerendanasset,Bangkanai,atacostof$7.5million,whereas2010includedtheacquisitionoftheremaining40%oftheGulfofThailandasset,Bualuang,atacostof$107.5million,andtheinitial69%acquisitionofBangkanaiasacostof$9.2million.Inaddition,capitalexpenditureinThailandamountedto$93.3million(2010:$3.1million)andIndonesiaof$87.0million(2010:$95.6million).
Financial review continued
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23 Business review SalamanderEnergyPLC AnnualReport2011
Cash flow statement continued
Operating cash flow continued
Postmovementsinworkingcapitalandtaxation,netcashgeneratedfromoperatingactivitiesequalled$193.9million,an82.1%riseover2010(2010:$106.5million).Expressedonaunitbasis,netcashfromoperatingactivitiesexpandedto$34.69/entitlementboein2011(2010:$17.99/boe).Atconstantcommodityprices,thistrendofimprovementshouldcontinuepostthedisposaloflowmarginproductioninOffshoreNorthwestJavaandSouthEastSumatra.
Investing cash flow
Netcashusedininvestingactivitiesroseto$203.3million(2010:$159.0million).Headline2011developmentoutflowstotalled$108.2million(2010:$117.4million),theinvestmentbroadlydistributedbetween:Thailand$51.8million(2010:$97.1million)andIndonesia$52.4million(2010:$20.0million).
TheGroupsolditsIndonesiaONWJandSESassetsduring2011,withaneffectivedateof30June2011,for$55.0million,plus/minusworkingcapitalmovements.Netproceedsfromthedisposalsin2011totalled$45.7million,afteradjustingforcashmovementsbetweentheeffectivedateandclosingdateofthetransaction.ThisprincipallyrelatedtothesaleofSalamanders5%non-operatedinterestsintheOffshoreNorthwestJavaandSoutheastSumatraPSCs.
2011explorationoutflowstotalled$123.3million(2010:$48.2million).Thisamountincludes$30.4millionofAngklungwellcosts(successfullydrilledin4Q2010,withsomecostspaidin2011).BeyondAngklung,Salamanders2011explorationexpenditurewasdistributed:Thailand$38.8million(2010:$6.3million),Indonesia$30.4million(2010:$45.2million),Vietnam$15.6million(2010:creditof$3.3millionfromfarm-outproceeds)andLaoPDR$3.8million(2010:nil).In2010asubstantialportionoftheGroupsexplorationcostswerecarriedbythirdparties.
Financing cash flow
Netcashusedinfinancingactivitiesroseto$19.5million(2010:inflowof$95.1million);however,theyear-on-yearevolutionreflectsveryspecificfinancingactivities:higherinterestcostsof$13.9millionin2011(2010:$9.4million)relatedtotherefinancingoftheGroupsReserveBasedlending
facilityandSalamanderreceivingcashinflowsof$97.3millionduring2010inrespectofissuanceofaconvertiblebond.
Across2011,Salamandersoperationsledtoa$28.9millionoutflowofcash,whichcomparestoa$42.7millioncashinflowin2010.
Financial outlook
Salamanderhasenteredintoabusy2012programmeofactivityacrossitsthreecoreareasoffocusandcapitalwillbeallocatedtoenhancetheGroupscoreproductionanddevelopmentvalueaswellastotestarangeofhigh-impactexplorationandappraisalopportunitieswithmoderatetolowgeologicalrisk.
Reflectingthe2H2011disposaloftheproducingONWJandSESassetsinIndonesia,managementreiterates2012productionguidanceintherange12,000to13,000boepd.Thisraterepresentsadropinyear-on-yearproductionfollowingdisposals;however,theforecastcashflowimpactislimitedduetothelowmarginnatureofthebarrelssold.Byimprovingtheunitcashmargingeneratedbyitsbasebusiness,Salamanderhasalsoincreaseditsleveragetothecurrentrobustcrudeandgaspriceenvironment,asituationthatisenhancedbythecontinuednarrowingofthediscounttoDubaiatwhichBualuangcrudeissold,andtherelativestrengtheningofDubaiversusBrent.
Havingstarted2012withcashbalancesof$85.8million,capitalexpenditureforthecurrentyearisbudgetedtototalc.$225million;thisisevenlysplitbetweenproduction&developmentandexploration&appraisalactivities.InThailand,wherethemajorityofGroupcapexistobeinvested,theGroupwilltargettaxsynergiesacrossitsenlargedGreaterBualuangposition,withbothSRBandincometaxforecasttofallin2012.Elsewhere,Salamanderremainsinfarm-outdiscussionswithregardtoitsNorthKuteiposition,andoptionsaroundnon-coreassetsalsoremainunderreview.Asalways,theGroupcontinuestoassessthephasingofitsworkprogrammesandallfundingoptionsacrossitsgrowingportfolio.
Dr Jonathan Copus ChiefFinancialOfficer
23March2012
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Risk management heidentificationandmitigationofrisksareofcriticalimportancetotheGroupasitcontinuestoexpandandoperatethe
majorityofitsactivities.
EffectiveriskmanagementisessentialiftheGroupistodeliveritsstrategicandoperationalobjectiveswhilstmaintainingitsexcellentHSErecord.TheGroupsExecutiveDirectorsmonitortheGroupskeyrisksandreceiveregularreportsonfinancial,operationalandHSEperformance.TheGroupsExecutiveDirectorsthenreporttotheAuditCommitteeonasixmonthlybasis,andprovidemorefrequentupdatesonanyparticularrisksasrequired.
TheAuditCommitteeprovidesoversightwhilstultimateauthorityremainswiththeBoardofDirectors.TheGroupoperatesinternationallyandisaffectedbyawiderangeofrisks.Someoftheserisks,suchaspoliticalstabilityinthecountriesinwhichweoperate,theabilitytoattractandretainthebestemployeesandchangesinlocallawsarefacedbyallcompanies.
AsummaryofthekeyrisksfacedbytheGroup,ascurrentlyidentified,togetherwiththemeasurestakentomitigateagainsttheserisks,isprovidedoverleaf.
TEffective risk management isessential if the Group is to deliver its strategic and operational objectives whilst maintaining its excellent HSE record.
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Strategic risks
Description
Aninappropriateorpoorlyexecutedstrategymayleadtoafailuretocreateshareholdervalueormeetshareholdersexpectationsforvalueaccretion
Operational risks
Description
AnissuethathasanimpactonGroupoperationsinthatitaffectsoperationaldelivery,corporatereputationand/orrevenue
Specific areas of risk
Unbalancedportfoliomix
Poorallocationofcapital
Lackofeitherorganicoracquisitionopportunities
Deterioratingmacro-economicconditions
Specific areas of risk
Drillingoperations
Oil/liquidsspill
Localcommunityissue
Rigavailability
Assetperformance
Sustainedexplorationfailure
Insurablerisk
Mitigants
SEAsiaisforecastbytheIMFtoremainahighgrowthregionin2012.TheBoardmonitorsregionaleconomic,politicalandenergymarkettrendsandforecastsandtakesaccountofthesewhenreviewing/planningtheGroupsforwardstrategy
TheGroupprioritisescapitalallocationtowardsitsthreefocusareas,whichareinprovenbasinswithgrowthcharacteristics,andwheretheDirectorsbelievetechnicalrisksarelowduetothemanagementsknowledgeofthegeologyandpetroleumsystem
AllM&AactivityissubjecttoBoardapprovalandmeasuredagainstconsistentinvestmentandstrategiccriteria.Assetsareonlyacquiredwhichareexpectedtomateriallyaddvalueand/orimprovethequalityoftheassetbase
Mitigants
TheGrouphasdefinitiveoperatingprocedurestobefollowedatalltimes.Regulartrainingandmonitoringareconductedtoensuretheseproceduresarebothfollowedandunderstood
Fullcommunityengagementoccursthroughallphasesofaprojectlifecycle
TheGrouphasadiversifiedportfolioofproduction,developmentandexplorationthatreducesexposuretofailureofanyoneasset/project/well
Toensurethatallexplorationandappraisalwellsareconsistentlyanalysed,rankedandriskedarobusttechnicalpeerreviewprocessisinplacebeforeprojectsarerecommendedforBoardapproval
TheBoardhasappointedanindependentTechnicalAdvisoryCommitteetoreviewonaquarterlybasistheGroupstechnicalworkinitsthreecoreareasandreportitsfindingsbacktotheBoard
TheGroupisinsuredagainstphysicalrisktoassetsinlinewithindustrypractice.Inadditioncertainoperationalinterruptioninsurancesareputinplace
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HSE risks
Description
Financial risks
Description
TheGroupisunabletomeetitsfinancialcommitmentsthrougheitherassetunderperformanceand/orfinancialconstraints
External risks
Description
Market,industryorpoliticalrisksthatmayimpactonGroupoperationsand/orcashflows
Specific areas of risk
Injuredpersonnel
Accidentintheworkplace
Leaks/spillagecausingenvironmentalincident
Specific areas of risk
Liquidityrisk
Oilprice
Capitalandoperatingcosts
FXexposure
Creditandcounterpartyrisk
Interestraterisk
Debtlevelsandcapitalstructure
Specific areas of risk
Fiscalregime
Investorsentiment
Corporategovernance
Legal,regulatoryandlitigation
Mitigants
AcomprehensiveHSEmanagementsystemisinplaceacrosstheGroupandmonitoredatBoardlevelthroughperformancereporting.ProceduresarecompliantwiththeEquatorPrinciplesandareregularlymonitoredbytheIFC/WorldBankHSEspecialists.AllpoliciesandproceduresareavailabletoallemployeesthroughtheGroupIntranetsiteandregularlyreinforcedbyseniormanagement
Fullcommunityengagementoccursthroughallphasesofaprojectlifecycle
Spillrecoveryandcrisismanagementprotocolsinplaceanddrillscarriedouttotestproceduresandreinforcethem
Fullmonitoringofthelocalecosystem(e.g.reefs,waterqualityetc)toensurethereisnoimpactasaresultofGroupoperations
Mitigants
BudgetsaresetannuallyandtheGroupsfinancialperformanceisreportedtoandmonitoredbyseniormanagementandtheBoardonamonthlybasiswithvariancefrombudgethighlighted.Allkeyfinancialandoperatingmetricsaremeasuredandmonitoredinthismanner
TheGroupbelievesitprudenttomaintainaconservativeapproachtoleverageandactivelymanagesitsbalancesheettoensureanefficientcapitalstructure
ThediversenatureoftheGroupsassetbase,includingfixedpricegasandoilproductionunderaPSCregime,partiallyhedgeoilpricevolatility.TheGroupalsohedgesagainstoilpricefallsonoccasiontominimisedownsiderisktocashflowandthecurrentprogrammeisdetailedinthefinancialreview
Mitigants
TheGroupseekstofosterandmaintainstronglinkswithallexternalstakeholders.Regularinteractionoccurswithhostcountrygovernments,regulators,industrypartners,shareholdersandlocalcommunityrepresentatives
TheGroupsetsouttheprinciplesbywhichitoperatesintheGroupCodeofConductthatcanbefoundonthewebsite(www.salamander-energy.com).InsummarytheGroupiscommittedtocomplyingwithvariouslawsandregulationsitissubjecttoaroundtheworldaswellastheCombinedCode
TheGrouphasrolledoutaprogrammetobriefandtrainemployeesontheirresponsibilitytocomplywiththeUKBriberyAct
Appropriatelytrainedandexperiencedstaffareemployedwhocanappropriatelyidentify,assessandrespondtoexternalrisks
Risk management continued
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Corporate responsibility
Our approach
Weaimtobeaworldclassoilandgasbusiness,andwerecognisethatourapproachtoCorporateResponsibility(CR)isanimportantaspectofthisoverallgoal.OurmainareasofCRimpactandopportunitycompriseenvironmentalmatters,healthandsafetyissues,ouremployees,ourlocalcommunitiesandourapproachtobusinessconduct.Theachievementofouroverallbusinessaimisclearlylinkedtoourabilitytomanagealloftheseareaseffectively.
Weappreciate,andtakeseriously,ourresponsibilitiestoconductouroperationssafelyandinfullco-operationwiththecommunitiesinwhichweoperate.
Weensurethatthehealthandsafetyofouremployeesisprotected;thatourimpactontheenvironmentisminimised;andthatwecanbesensitivetotheneedsof,andprovidelongtermsustainablebenefitsfor,thecommunitiesinwhichweoperate.Weconductallofourbusinessinafairmannerandcomplyfullywiththerelevantlegal,regulatoryandinternationalaccordrequirementswhichapplytoourbusinesses.TheseincludetheUKBriberyAct,theInternationalLabourOrganisationDeclarationonFundamentalPrinciplesandRightsatWork,theUNUniversalDeclarationonHumanRights,theOECDGuidelinesforMultinationalEnterprises,theInternationalFinanceCorporationEnvironmentalandSocialPerformanceStandardsandtheEquatorPrinciples.TheGroupbenchmarksitsHSEperformanceagainsttheOilandGasProducers(OGP)average.
TheGroupCRSteeringCommitteecontinuallyreviewsitsapproachtothisimportantareaandseekstoenhanceourproceduresaccordingly.
Performance highlights
CO2andgreenhousegas(GHG)emissionseffectivelymaintainedat2010ratedespiteincreaseinactivity
Flaringandventingreducedby69%throughimprovedprocess;wellbelowtheOGPaverage
TonnesofoiltoenvironmentperunitofproductionwellbelowtheOGPaverage
OilinproducedwaterperunitofproductionwellbelowtheOGPaverage
CompletedanindependentreviewofHSEcultureinoperationsandfoundwearebetterthanaveragewhencomparedwithotheroperatorsintheregion
CompletedGroup-wideroll-outandtrainingprogrammearoundUKBriberyAct
Management systems
Salamanderadoptsarigorous,top-downapproachtoCorporateResponsibility.During2011theGroupstrengthenedtheleadershipteamthroughtheappointmentofaGroupTechnicalDirector.Withthis,andtheappointmentofanewChiefFinancialOfficer,theorganisationalstructureoftheGroupwasupdated.TheGroupCFOisresponsibleforthelegalandfinancialfunctionswithinwhichresponsibilityfortheriskregisterlies.TheGroupCOOisresponsibleforHSE,CP&LandHRfunctionsaswellastheassetsandtheGroupTechnicalDirectorisresponsibleforthetechnicalservicesprovidedtotherestoftheGroup.AlloftheserolesreportdirectlytotheGroupChiefExecutive.
TheSeniorManagementTeammeetsquarterlytodiscussmanagementlevelissuesandHealth,SafetyandEnvironmentarealwayskeyagendaitems.TheGroupHSEAdvisorreportsdirectlytotheGroupCOOandeachofouroperatedassetshasadedicatedHSEandCSRteamtomonitoractivityandensureGroupguidelinesarebeingfollowed.AseparateCSRsteeringcommittee,chairedbytheGroupChiefExecutive,meetsbi-annuallytodiscusstheGroupsinvestmentincommunitybasedprojects.Thecommitteemonitorsprojectperformanceagainstagreedobjectives.CSRCommitteesarealsoconvenedinthecountrieswhereweoperateandreporttotheGroupSteeringCommittee.
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Management systems continued
TheGroupcompletesastakeholdermappingexerciseonenteringanewlicence.Theresultsofthisareusedbyourlocalcommunitydevelopmentofficerstodeterminewithwhomtoengage.Theengagementprogrammewilltypicallyincludelocalrecruitment,communicationoftheGroupsplannedactivity,meetinglocalofficialsandconductingtownhallstylemeetings.Thisprocesshelpstoidentifycommunitydevelopmentprojectsthatmeettheneedsofstakeholders.
TheUKBriberyActbecamelawinJuly2011.ThescopeoftheActembracesalloftheGroupsactivities.TheGrouphasundertakenacomprehensiveinternaltrainingprogrammewiththeGroupCFOandGeneralCounselconductingpresentationsinallofficestoeducateemployeesastothenewlawsandtheirimplications.Furthertothiseveryemployeehascompletedanonlinetrainingprogrammedesignedtoimproveunderstandingofthepracticalimplicationsofthislaw.Particularattentionwaspaidtotheissueoffacilitationpayments,whicharespecificallyprohibitedunderthislegislation.
TheCompanymaintainswhistle-blowingprocedureswhichpermitemployeestoreportanyconcernstheymayhaveinconfidencetoourseniormanagementteam.Health and safety
Policy highlights
SalamanderEnergywilloperateinaccordancewiththefollowingprinciples.
Wewillpromoteaculturewithinthecompanyinwhichallemployeesshareacommitmenttoahealthyandsafeworkplace
Wewillcomplywithapplicablelawsandregulationsandapplyrecognisedinternationalstandardswherelawsandregulationsarenotinplace
Ensurethatemployeesandcontractorsareproperlytrainedandawareoftheimportanceofhealthandsafetymatters
Performance
TheGrouphasarigoroussetofHSEstandards,proceduresandguidelinesthataremadeavailabletoallemployeesviatheGroupsIntranet.Itismadecleartoallemployeesandcontractorsthattheyareexpectedtoadheretothesestandardswhenengaginginanybusinessrelatedactivityonbehalfofthecompany.TheExecutiveDirectorsreinforcethismessagewithHSEreviewtripsbeingconductedatleastannuallyandtheirfindingsarereportedbacktotheBoardofDirectors.
Thenumberofman-hoursoperatedincreasedby40%during2011whencomparedto2010.2011wastheCompanysbusiestyearonitsoperatedprojects.Itwasdisappointingthatthreelosttimeinjurieswererecorded.ThisrepresentsaLTIFRof0.85fortheyearwhichisinlinewiththeOGPaveragefordrillingoperations,butbehindtheGroupsgoalofzeroLTIs.Althoughallthreeincidentswererelativelyminor,theGroupcompletedfullreviewsintoeachLTIandhasensuredthatappropriateactionhasbeentakentomitigateagainstreoccurrence.
AnindependentinvestigationwascarriedoutinconjunctionwiththeIndonesianauthoritiesduringtheperiod,intoanincidentontheKambunacondensatepipelinemanifoldstation,whereagasleakoccurredduringboosteroperations.Thecauseswereidentifiedandallrecommendationshavebeenfullyimplemented.
AsaresultofthehigherthananticipatedLTIFRandTRIFRinthefirsteightmonthsof2011,theBoardinstructedtheHSEAdvisortoconductareviewofthecircumstancesbehindeachincidentandtodeterminewhethertheincreasedincidencewasaconsequenceofflawsintheHSEmanagementsystemandiftherewasasuitableandacceptableHSEculturedevelopingwithintheCompany.ThefindingsofthereviewwerethatthereisnofundamentalflawwiththeGroupsHSEmanagementsystem,theHSEcultureevidentattheoperatingsitesisbetterthanaveragewhencomparedwithotheroperatorsintheregionandthecultureisstilldeveloping.
FollowingthereviewlinemanagershavebeenremindedoftheirresponsibilitytoproactivelypromotetheHSEcultureandithasbeenmadeakeyperformanceindicatorfortheoperatingofficestoincreasethenumberofformalHSEvisitsandpresentationsthattakeplace.AdditionallytheCompanysmanagementencouragesknowledgesharingaroundtheGrouptosupportimprovedperformance.
Corporate responsibility continued
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Performance
Group health and safety KPIsGroup-wide 2011 2010 Comment
LostTimeInjury(LTI) 3 1 Therewerenofatalitiesrecorded
LostTimeInjuryFrequency(LTIF) 0.85 0.40 LTIFrateremainsclosetotheOGPdrillingaverage
TotalRecordableInjury(TRI) 12 5 Increasedasman-hoursworkedincreased
TotalRecordableInjuryRate 3.41 1.99 InvestigationcompletedintospikeinTRIRduringthefirstthree(TRIR) quartersof2011sincewhenzeroTRIshavebeenrecorded
Hoursworked(millions) 3.5 2.5 40%increaseinman-hours
Group environmental KPIsGroup-wide 2011 2010 Comment
CO2emissions(tonnes) 83,076 54,996 Increasedasadirectresultofincreasedlevelofoperatingactivity
CO2emissions(tonnesper 77 74 Marginalincreaseonaperunitbasisdespite400%increaseinthousandtonnesproduction) fuelusageduringbusyexplorationcampaigns,balancedbythe effectoftwonewvapourrecoveryunitsinstalledatKambuna field.WellbelowOGPaverageof133
GHGemissions(tonnesper 80 78 WellbelowOGPaverageof158thousandtonnesproduction)
Flaringandventing(MMscf) 47.0 151.3 69%reductioninflaringdrivenbyintroductionoftwonew vapourrecoveryunitsatKambunafield
Flaringandventing(tonnesper 0.99 4.62 WellbelowOGPaverageof15.5thousandtonnesofproduction)
Oilandchemicalspills 15 5 8verysmall(afewlitres)spillsresultingfromcorrosionintheold pipelineusedtoexportKambunacondensate.Thecondensate evaporatesquicklywhichassistsclean-upoperationsand minimisesanyenvironmentalimpact
Oilandchemicalspills 1.11 0.30 Increaseasresultofpipelinecorrosioncausesidentifiedandtotalspilt(tonnes) actionbeingtakentorectify
Oilandchemicalspillsreleasedto 1,293 327 Increaseasresultofpipelinecorrosioncausesidentifiedandtheenvironment(tonnes) actionbeingtakentorectify
Tonnesofoiltotheenvironmentper 1.02 0.26 RemainswellbelowOGPaverageof4.5milliontonnesofproduction
Producedwaterdischarged(tonnes) 19,900 2,951 DrivenbypressuredeclineinKambunafieldasit reachesmaturity
Oilinproducedwater 0.80 0.15 DrivenbypressuredeclineinKambunafieldasitdischarged(tonnes) reachesmaturity
Oilinproducedwater 0.74 0.20 WellbelowOGPaverageof9.1(tonnespermilliontonnesproduction)
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Health and safety continued
Performance continued
InthesixmonthssincethecompletionofthereviewtherehavebeennolosttimeinjuriesorrecordableincidentsonanyGroupoperationdespitecontinuedhighlevelsofoperatingactivity,suggestingthattheincreasedemphasisonHSEhashadadirectandpositiveimpactontheworkingculture.
Targets for 2012
Zerofatalities
ZeroLTIs
TRIR20%belowOGPaverage
Environment
Policy highlights
SalamanderEnergywilloperateinaccordancewiththefollowingprinciples.
Wearecommittedtoprotectingandconservingtheenvironmentinwhichwework
WewilladheretotheInternationalFinanceCorporationsPerformanceStandardsonSocialandEnvironmentalSustainability
Westrivetomeetthechallengespresentedtotheoilandgasindustrybyclimatechangematters
Westrivetoseeviablewaystominimisetheenvironmentalimpactofouroperations,reducewastegeneration,conserveresourcesandrespectbiodiversity
Wewillcomplywithapplicablelawsandregulationsandapplyrecognisedinternationalstandardswherelawsandregulationsarenotinplace
Performance
Thelevelofoperatedactivityincreasedsignificantlyin2011andtheGroupsuccessfullymaintaineditsemissionsataconstantrateonaunitbasisdespitea400%increaseinfuelusage.TheprimedriverforthisperformancewastheinstallationofnewvapourrecoveryunitsattheKambunafield,NorthSumatra,whichresultedina69%reductioninflaring.TheGroupisconstantlyseekingwaystoimproveitsemissionsperformance.Aspartofitsforward
developmentoftheBualuangoilfield(seeOperatingReview)theGroupwilluseproducedgasasfuelonthenewproductionprocessingfacilities.Allproducedwaterisalreadyre-injectedintothereservoirsothereisnosurfacedisposalofproducedwater.Cuttingsgeneratedduringdrillingoperationsarerecoveredandsentashoreforincineration.WiththesemeasuresinplaceandtheuseofproducedgasplannedourtargetisforBualuangtobeaminimalemissionsinstallationin2014.
TheGroupsperformanceonflaringandventing,oilspilttotheenvironmentandoilinproducedwateriswellwithintheGroupsgoalofbeingundertheOGPaverages.
TheGroupiscommittedtominimisingtheenvironmentalimpactofitsoperations.Weobtainalltherelevantenvironmentalpermitspriortocommencementofouroperationsandproceduresareinplacetomonitoron-goingoperations.ExamplesincludemonitoringseawaterqualityintheGulfofThailandandsoilqualityandminerallevelsinonshorelocationsinIndonesia.Targetsfor2012:
KeepCO2andGHGemissionsbelowOGPaverage
Continuetoseekwaysofpollutionprevention,emissionreductionandimprovingtheenvironmentalperformanceofouroperations
ContinuetoworktowardsmakingouroperationsatBualuangminimalemissionsin2014
Business conduct
Policy highlights
SalamanderEnergywilloperateinaccordancewiththefollowingprinciples.
Weaimtotreatallourstakeholdersfairlyandwithintegrity
Wewillnottolerateanyformofbriberyandcorruptionwithinourbusinessactivitiesorwithinbusinessactivitiesofthosewhoperformservicesonourbehalf
Wewillcomplywithapplicablelawsandregulations(inparticulartheUKBriberyAct)andapplyrecognisedinternationalstandardswherelawsandregulationsarenotinplace
Corporate responsibility continued
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ThecompanyismindfulofencouragementthatUKlistedcompaniesarereceivingtodemonstrategreaterdiversityamongstitsemployeesataseniorlevelandintendstoadopttherelatedreportingrequirementsindicatedbytherevisedUKCorporateGovernanceCodewithinournextannualreport.
Performance
Atyear-end2011theGroupdirectlyemployed212employees.Oftheseemployees33%werefemaleand90%oftheworkforcewascomprisedofstafffromthehostcountriesofouroperations.
Local communities
Policy highlights
SalamanderEnergyiscommittedtooperationinaccordancewiththefollowingprinciples:
WewillupholdtheprinciplesoutlinedintheUNUniversalDeclarationonHumanRights
Wewillbehaveresponsiblyandwithsensitivitytowardsthelocalcommunitiesintheareasinwhichweoperate
Wewillprovidesustainablebenefitsandavoidthecreationofadependencyculture
Performance
BuildingstrongrelationshipswithlocalcommunitiesisoftheutmostimportancetotheGroupinordertopreserveitslicencetooperate.TheGroupadoptsapro-activeapproachtoitscommunityrelations,seekingtoengagewithlocalstakeholdersearlyintheoperationalplanningstageandrecognisinganyconcerns/issues.TheGroupemploysanumberofspecialistgovernmentliaisonandcommunityliaisonofficers,usuallypeoplewhoarefromtheareaofouroperationsandhaveadetailedunderstandingofthelocal,nationalandregionalenvironmentalandsocialsensitivities.
During2011,inrecognitionoftheimportanceoftheGreaterBualuangareatotheGroupsfuturegrowth,aconcertedeffortwasmadetofurtherdeveloprelationshipswithlocalcommunitieswhohavepreviouslyobjectedtoanumberofoperatorsoffshoreactivitieselsewhereintheGulfofThailand.AnewheadofCSRforThailandwasrecruitedwhoisaspecialistinthisareahavingpreviouslyworkedforamajoroilandgascompanyonCSRprogrammesrelatedtoitsoperationsintheGulfofThailand.Throughnumerousengagementswiththelocalcommunity,principallythroughtownhallmeetings
Business conduct continued
Performance
During2011theGroupupdateditsCodeofBusinessConducttoreflecttheimplementationintolawoftheUKBriberyAct.AspartofitsresponsetotheActtheGroupalsoimplementedanexplicitAnti-BriberyandCorruptionPolicy.Bothdocumentsareavailabletoreadatwww.salamander-energy.com.AspartoftheGroupsroll-outofthenewCodeofConductandAnti-BriberyandCorruptionPolicytheGroupsChiefFinancialOfficerandGroupGeneralCounselvisitedalloftheoperatingofficestodeliverpresentationsoutliningtheGrouppolicyandtheimplicationsforouremployees.AspartoftheGroupsplanstoheightenawarenessofthesepoliciesandthebehaviourexpected,allemployeeswererequiredtocompleteanonlinetrainingprogramme.
Employees
Policy highlights
SalamanderEnergyiscommittedtoupholdingtheprinciplesoutlinedintheInternationalLabourOrganisationDeclarationonFundamentalPrinciplesandRightsatWork.Theseincludethefourfundamentalprinciplesandrightsatworkwhichareoutlinedbelow.
Freedomofassociationandtheeffectiverecognitionoftherighttocollectivebargaining
Eliminationofallformsofforcedorcompulsorylabour
Effectiveabolitionofchildlabour
Eliminationofdiscriminationinrespecttoemploymentandoccupation
TheGroupisanequalopportunityemployerandiscommittedtoachievingandmaintainingaworkforcethatrepresentsthepopulationasawholeandiscompliantwithapplicablelocallawsandcontractualobligations.TheCompanyseekstoemployindividualswhoarequalifiedonthebasisofmeritandabilitytofillitsworkpositionsregardlessofgender,ethnicorigin,colour,disability,maritalstatus,race,religion,nationality,age,responsibilityfordependantsorsexualorientation.Eachemployee,consultantandcontractorisexpectedtoabidebytheCompanysEqualOpportunitiesPolicyatallstagesofemployment.
Allemployeesandconsultantsarerecruitedandpromotedfairlyonthebasisoftheirabilityforthejob.
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32 Business review SalamanderEnergyPLC AnnualReport2011
Local communities continued
Performance continued
withthekeylocalstakeholders,theGroupwasabletoincreaseawarenessandunderstandingofitsactivitiesandtheinitiativesundertakentomitigateagainstanydamagetothelocalenvironment.ThisprocessresultedinarequestfortheGrouptorunfirstaid,CPRanddivingworkshopsaslocalfishermenrecognisedthatthesafetyoftheirownoffshoreactivitieswasabigriskforthem.Theinitialworkshopwasasuccesswithover70attendeesandtheGroupplanstorunsimilarworkshopsagaininthefuture.Plansarebeingdevelopedinconjunctionwiththelocalcommunitiesandauthoritiesforfurtherprojectsinthearea,onesuchbeingthecreationofartificialreefsthatassistcoralgrowth,providenewfish spawninggroundsandattractdivers,thusprotectingnaturalreefs.AsaresultofitsdevelopingrelationshipwithlocalstakeholderstheGroupwasabletocompleteitsrecent3DseismicsurveyintheG4/50licencewithoutdisruption.
ThefloodsinThailandduringthefourthquarterof2011causedwidespreaddevastationandaspartofthecommunitySalamandercontributedtothereliefeffort.NotonlydidtheGroupprovidea$16,000financialdonationtothereliefeffortbutalargenumberofemployeesgaveuptheirtimetohelp.
InIndonesia,theGroupcontinuedtobuildonitsstrongcommunityrelations.Therearewell-establishedcommunityoperationsinplaceintheKambunaandNorthKuteiareas.ThesehavenowbeenrunningforseveralyearsandtheGroupspresencehasresultedinincreasedemploymentopportunitiesforlocalpeopleandimprovedinfrastructurethroughinvestmentintoprojectstosupportandfosterlocaldevelopment.TheGroupalsosupportslocalculturalfestivals,whichhashelpedintegrateitintothelocalcommunityandgeneratessupportforitsoperationalactivities.ThestrengthofourreputationwashighlightedinthewakeofthepipelinefirenearthevillageofPangkalanBatu.DespitefourhomesbeingburneddowntheGroupsresponsetotheincident,includingtheconstructionoffournewhomes,waswellreceivedbythelocalcommunityandreceivedpositivecommentinthelocalmedia.
2011wastheGroupsfirstyearasanoperatorintheGreaterKerendanarea.HerethechallengewastoestablishtheGroupwithinthelocalcommunity.Aspartofoursocialmappingwecompleteddiscussionswithawiderangeofstakeholdersanditquicklybecameapparentthatthelocalcommunitywouldlikelocalaccessroadsrepairedsotheycanusethemfortransportduringthedryseasonwhentheriver(theprimaryformoflocaltransport)isimpassable.TheGroupcompletedroadrepairsneartwovillages,LuweHuluandMuaraPari.ThemainsourceofincomeintheareaisfromrubberfarmingandfollowingdiscussionswithvillagersinKerendanvillageSalamanderopenedarubbernurseryinthevillagethathasbecomeafocalpointforvillagelife.TheseprogrammeshavehelpedbuildtheGroupsreputationwiththevillagersandensuredthatoperationshave,todate,proceededwiththefullsupportofthecommunity.
Summary
Withoperatedman-hoursexpectedtocontinuetoincreasethereisnoroomforcomplacencyintheGroupsapproachtoCRandHSE.Followingthefirsthalfof2011,whentheGroupsHSEperformancewasbelowexpectations,itispleasingtoseethatourinternaldrivetoreinforceourprocessesandprocedureshasledtoamarkedimprovementinperformanceinthesecondhalfoftheyear.Thiswillcontinuetobeanareaoffocusforusin2012.Wecontinuetostrivetoreduceemissionsandareontargetforourprincipalproducingasset,theBualuangoilfield,tobeaminimalemissionsfacilityby2014.
OurlocalteamsaredoinganexcellentjobinbuildingrelationshipswithlocalstakeholdersandthishelpstheGroupdeliverprojectsthatcanbenefitthelocalcommunityandensurethatweretainsupportandunderstandingforouroperations.
Finally,westrivetobeagoodemployerandcorporatecitizenandadheretotheInternationalFinanceCorporationEnvironmentalandSocialPerformanceStandardsandothergloballyrecognisedstandardsofcorporateconduct.
Corporate responsibility continued
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33 Business review SalamanderEnergyPLC AnnualReport2011
1WatersamplingintheBabalanRiver,NorthSumatra.
2AirqualitysamplingatKambuna.
3Rubbernursery,Kerendanvillage,CentralKalimantan.
4First-aidtrainingforfisherman,Chumphonprovince,Thailand.
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Dr Carol BellNon-executiveDirector
Michael PaviaNon-executiveDirector
James MenziesChiefExecutiveOfficer
34 Business review SalamanderEnergyPLC AnnualReport2011
Board of Directors and advisers
Charles Jamieson
Chairman(N)
CharlesJamiesonisSalamandersChairmanandafounderofSalamander.HeholdsanMBAfromINSEADandisacharteredaccountant.PriortojoiningSalamander,hespentover25yearswithPremierOilplcwhereheheldanumberofposts,includingFinanceDirectorandChiefExecutiveOfficer.HeiscurrentlyalsoChairmanofVostokEnergyplc.
James Menzies
Chief Executive Officer JamesMenziesisafounderofSalamanderanditsChiefExecutiveOfficer.HeholdsaBSc(Hons)inGeologyandanMScinGeophysicsandPlanetaryPhysics.AfteraperiodasageophysicistatSchlumbergerandERC,hespentelevenyearsatLASMOplcholdingavarietyofpostsincludingSeniorGeophysicistinVietnam,ChiefGeophysicistinIndonesia,HeadofCorporateDevelopmentandHeadofStrategyandCorporateAffairs.HespentfouryearsasaSeniorPartneratLambertEnergyAdvisorypriortothefoundingofSalamander.HeiscurrentlyaNon-executiveDirectorofTransunionPetroleumLimited.Mike Buck
Chief Operating Officer MikeBuckisSalamandersChiefOperatingOfficer.HeholdsaBSc(Hons)inGeologywithGeophysicsandanMScinPetroleumGeology(dist.).Hespent20yearswithLASMOplcasaGeophysicistinIndonesiaandtheUKContinentalShelf,ChiefGeophysicistinColombia,ExplorationManagerinVietnamandExplorationandGeneralManagerinLibya.HethenspentfouryearswithENIasManagingDirectorinTehranandManagingDirectorinPakistan.Overallhehas30yearsofinternationalexplorationandproductionexperience.
John CrowleNon-executiveDirector
Struan RobertsonSeniorIndependentNon-executiveDirector
James ColemanNon-executiveDirector
Dr Jonathan CopusChiefFinancialOfficer
Charles JamiesonChairman
Mike BuckChiefOperatingOfficer
Robert CatheryNon-executiveDirector
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35 Business review SalamanderEnergyPLC AnnualReport2011
Dr Jonathan Copus
Chief Financial Officer JonathanCopusisSalamandersChiefFinancialOfficerandwasappointedtotheBoardinOctober2011.HebeganhisoilandgascareerworkingasanexplorationgeologistforShellInternationalinitsDeepwaterE&PteambasedinHollandandHouston.Hethenleftindustry,workingformorethan10yearsasahighlyrankedoilandgasequityresearchanalyst,mostrecentlywithDeutscheBank,wherehewasaDirectoroftheOilandGasEquityResearchteam.JonathanhasaPhDfromtheUniversityofCambridgeandaFirstClassBScinGeologyfromtheUniversityofDurham.Struan Robertson
Senior Independent Non-executive Director(#N) (R) (A)
StruanRobertsonisSalamandersSeniorIndependentNon-executiveDirector.HewaseducatedattheUniversityofNatalandtheUniversityofCapeTown,followedbyWhartonBusinessSchool.Hespentover23yearsatBPplcwhereheheldanumberofposts,includingCEOofOilTradingInternational,ExecutiveChairmanofBPAsiaPacific,basedinSingapore,andDownstreamSeniorVicePresidentforTechnologyandMarketing,basedinLondon.Between2000and2004hewasGroupChiefExecutiveofWatesGroupLtd.HeiscurrentlyNon-executiveChairmanofEredeneCapitalPLCandholdsnon-executivedirectorshipswithHendersonTRPacificInvestmentTrustplcandGroup5Ltd,listedinJohannesburg.
Dr Carol Bell
Non-executive Director CarolBellisanInd