Successful E&P company focused on the wider North Sea
Strong track record of delivering growth 10x increase in production since 2009: 7–9 mboepd 2016
30x increase in 2P reserves since 2009: 61 mmboe*
Outstanding exploration record, low finding cost
Successful monetisation of exploration discoveries
Norwegian near-term development projects on-track
Robust balance sheet at low commodity prices: a prudent approach £75.5mm cash balance (31 March 2016)
$30mm debt drawn under an RBL facility
Opex/boe $23 (2015) provided positive cash flow
Norwegian focussed operations Politically stable OECD jurisdiction with very attractive fiscal regime
incentives for exploration, appraisal, development and decommissioning
Offshore Norway is underexplored and underexploited vs. UK
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Faroe Petroleum overviewValue focused independent E&P company
* CPR Jan 16
Consolidating a core hub areaAcquisition of DONG Energy’s Norwegian North Sea production portfolio
3
Transaction overview:
Faroe has agreed to acquire a package of assets from DONG Energy for cash consideration of $70.21mm, effective 1 Jan-16 1
Package includes tax balances of $109mm with a tax value of $84mm (undiscounted)
2015 unit opex of $19/boe for the package 2
Investment programme in hub area being planned to realisematerial upside and extend field life
Ula Tambar Oselvar Trym Total
Faroe W.I. 20.0% 45.0% 55.0% 50.0%
Operator BP BP Faroe Faroe
2P Reserves*
8.3mmboe
6.4mmboe
1.3mmboe
3.8mmboe
19.8mmboe
2C Resources*
7mmboe
2mmboe -- 2
mmboe11
mmboe
2016 4 mthsProduction
2,200 boepd
2,593boepd
1,125boepd
4,064boepd
9,982 boepd
$7,033per boe
2016 4 months production
$3.5per boe
2P Reserves
$2.3per boe
2P + 2C Resources
* CPR Jun 16
1 Acquisition subject to the waiver of pre-emption rights, governmental approvals and other third party consents2 Calculated by Faroe based on information made available by Dong. Excludes insurance costs
113
227
2015 2015 Pro-formaDONG
+101%
60
126
2015 2015 Pro-formaDONG
4
Faroe taking advantage of a ‘buyers market’
Majors, utilities and large independents looking to rationalise portfolios
Faroe, as pre-qualified operator in Norway, with balance sheet strength and flexibility is one of a limited number of possible buyers
Significantly increases Faroe's scale
Doubles current production
33% increase in 2P reserves* - acquired assets all on production
Deepening in a core area by buying into the Ula hub brings operating synergies with Faroe's producing Blane field and planned Butch development
Becoming Norwegian production operator opens new opportunities for Faroe
Adds material cash flow immediately
New cash flow and debt capacity will materially strengthen the company’s finances
Profits from acquired production will provide valuable tax shelter for planned development programme
Acquisition funded through equity to maintain balance sheet strength and flexibility
Significant upside in acquired assets and hub area
Multiple projects to increase production across the Ula field hub
Investment programme for new assets – to be funded from cash flow - includes Tambar artificial lift project
Upside value is not included in consideration price
Transaction rationaleA transformational deal for Faroe: perfect strategic fit
Revenue1 (£mm)
EBITDAX1 (£mm)
+110%
* CPR June 16
1 Average realised oil price of $50/bbl and $47/bbl in 2015 for Faroe and the Dong assets respectively
2 4
24 24 28
30
61
81
1 Jan2009
1 Jan2010
1 Jan2011
1 Jan2012
1 Jan2013
1 Jan2014
1 Jan2015
1 Jan2016
9
1 1
3
7 6
9
11
2009 2010 2011 2012 2013 2014 2015 2016 PF
Continuing our track record of delivery Consistent growth in reserves and production
5
2P Reserves (mmboe) W.I. Production (mboepd)
15 – 17
40x increasebetween
2010-2016
16x increasebetween
2009-2016
Faroe
DONG Assets
Faroe
DONG Assets
(1) 2P Reserves as per 1 January provided in the yearly CPRs(2) The CPR estimates of 2P reserves of the Faroe’s assets and the new DONG assets
8
7 - 9
(2)
(1)
7
10
2010 2011 2012 2013 2014 2015 2016 2016 PF
Faroe Assets DONG Assets Butch Njord, Hyme andSnilehorn
Pil and Bue 2021
Creating value through production growthNew cashflow enhances growth potential in Faroe’s existing portfolioNote: this chart is illustrative and not forward guidance and from existing, defined projects
Current Production
DONGAssets
Butch
Njord FutureProject
Pil andBue
7 – 9mboepd
25 - 35mboepd
5 yearoutlook
6
Sources: Management estimates
Core Ula hub: UlaSignificant upside from further infill drilling and WAG reinjection scheme
7
Faroe W.I. 20.0%
Operator BP
Partners# BP (80.0%)
2P Reserves Gross (Net)1 42 (8.3) mmboe
2C Resources Gross (Net) 1 34 (7) mmboe
2016 4 months Production Gross2 (Net) 11,000 (2,200) boepd
Field development
3 bridge-linked steel jacket platforms, 7 producing wells, 4 Water Alternating Gas (“WAG”) wells
Host facility for the Blane, Oselvar and Tambar fields and the future host of the Butch development
Oil exported via Ekofisk to Teesside
‒ Gas used for WAG injection for increased oil recovery
Operatorship to be transferred to Aker BP following the proposed merger of Det Norske with BP Norway
‒ Expected to result in renewed exploitation drive
Upside potential
Additional associated gas from Tambar and Butch will allow increased WAG injection scheme
Several infill targets identified, which can be matured to project execution
‒ Triassic reservoir underexploited, only one well drilled to date
Satellite production, infill drilling and increased WAG scheme is expected to result in a significant reduction in Ula unit opex
# Acquisition of Ula is conditional on waiver of pre-emption rights1 CPR Jun 162 Grossed up based on Faroe’s working interest
Faroe W.I. 45.0%
Operator BP
Partners BP (55.0%)
2P Reserves Gross (Net) 1 14 (6.4) mmboe
2C Resources Gross (Net) 1 5 (2) mmboe
2016 4 months Production Gross2 (Net) 5,762 (2,593) boepd
Core Ula hub: TambarLow cost production asset with upside from infill drilling
8
Field development
Unmanned wellhead platform located 16km southeast of Ula
‒ Products transported through Tambar pipeline to Ula for processing
3 production wells, no water injection
‒ Field currently suffers from a lack of artificial lift
Aker BP new operator
Low cost production
Opex per barrel < $20 (including tariff paid to Ula)
Upside potential
Tambar Artificial Lift (TAL) project involves the installation of gas lift in wells to improve the production
‒ Project is at concept select gate, requires approval by Faroe
Two infill wells defined to improve recovery
1 CPR Jun 162 Grossed up based on Faroe’s working interest
Core Ula hub: OselvarMature producing field
9
Faroe W.I. 55.0%
Operator Faroe
Partners CapeOmega (45.0%)
2P Reserves Gross (Net) 1 2 (1.3) mmboe
2016 4 months Production Gross2 (Net) 2,045 (1,125) boepd
Field Development
3 well subsea tie-back to the Ula platform (23km to the northeast)
Production currently scheduled to cease in 2018 to accommodate the Butch development
Compensation payment to be paid by Butch partners (including Faroe at 15%) to Oselvar partners (Faroe 55%), with potential upside adjustments for production and oil price performance
Upside Potential
Compensation payment expected to make a material contribution towards abandonment costs
Limited decommissioning with potential for cost savings
‒ Potential to recover further value through sale and/or reuse of subsea kit
Faroe to consider subsurface potential for future recommencement
1 CPR Jun 162 Grossed up based on the Faroe’s working interest
Core Ula hub: Butch synergy (existing portfolio)Simple, high-return oil development via Ula hub infrastructure
10
* CPR Jan 2016 (Senergy)
Development Project
Located in 66m water depth
‒ Excellent quality reservoir, light oil
Subsea tie-back to the Ula platform via Oselvar infrastructure
2 production wells and 1 water injection well
FEED project on track for completion during Q3 2016
FDP submission currently planned for end 2016
Gross capex expected at c.$645m
Plateau production of c.35,000 boepd gross (c.5,250 boepd net to Faroe)1
First oil expected in 2019
Extracting synergies in the Ula hub
Faroe to capture 55% of Butch compensation payment to Oselvar (Faroe 55%) and 20% of tariff paid to Ula partners (Faroe 20%)
Faroe W.I. 15.0%
Operator Centrica (40.0%)
Partners Suncor (30.0%), Tullow Oil (15.0%)
2P Reserves Gross (Net)* 42 (6.3) mmboe*
1 Based on 100% uptime
Operated Trym gas fieldLow cost production with upside potential
11
Faroe W.I. 50.0%
Operator Faroe
Partners Bayerngas (50.0%)
2P Reserves Gross (Net) 1 8 (3.8) mmboe
2C Resources Gross (Net) 1 4 (2.1) mmboe
2016 4 mnths Production Gross2 (Net) 8,128 (4,064) boepd
Field Development
Subsea tie-back to Mærsk operated Harald facility in the Danish sector
Export via Mærsk operated Tyra platform
‒ Shut-down in Q4 2018 unless a solution found for Tyra subsidence
Acquisition case and 2P case assumes cessation of production in 2018
Upside Potential
Further lowering of the inlet pressure at the gas compressor at Haraldwill allow for extended production and higher reserves
In event of production extending beyond 2018, 2C Resources would be converted to 2P producing reserves
Compensation from Harald partners in case the Harald field is decommissioned before Trym stops producing
Trym
Harald
Tyra
DK
N
1 CPR Jun 162 Grossed up based on Faroe’s working interest
SummaryAttractive value play in the North Sea, enhanced by the transaction
12
Acquisition of DONG assets is transformational
Bilateral deal secures production portfolio in core hub area
Material impact on production, reserves, cash flow and debt capacity
Significant increase in scale
Deal creates material asset base
Balanced and diversified portfolio with stronger production base
New cashflow enhances growth potential in Faroe’s existing portfolio
Continued exposure to significant exploration in Norway
Financially robust
Balance sheet strength and flexibility maintained
Cash generative, low cost operations
Prospect EquityQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Brasse 50 %
Brasse sidetrack 50 %
Njord NF2 7.5%
Dazzler/Bonè 20 %
Oshun 20 %
Dobby 7.5%
Aerosmith/Iris 20 %
Fogelberg appraisal 25 %
Cassidy 15 %South East Tor 85 %
2016 2017 2018
E&A Drilling activityExploration and appraisal focussing on near field opportunities
14
All exploration wells are in Norway – benefiting from 78% tax rebate incentive
Further attractive exploration well opportunities are being matured including Rungne, Frisbee and Yoshi
Faroe continues to build its portfolio of exploration licences organically
‒ 5 APA exploration licences won in Norway in January 2015 and a further 6 in January 2016
Economic robustness is a crucial element of pre-commitment screening work
committedexpected possible
The Brage area (Faroe 14.3% in producing Brage field)
Very prospective area
Significant infrastructure including Oseberg, Brage and oil and gas export pipelines
PL740 Brasse discovery
Faroe holds 50% and is operator, Point Resources AS 50%
Main Brasse well (31/7-1) encountered a gross oil column of c.21 metres and a gross gas column of c.18 metres
Side track well (31/7-1A) encountered a gross oil column of c.25 metres and a gross gas column of approx. 6 metres
Good quality Jurassic reservoir sandstones analogous to the effective reservoir in the Brage producing oil field
Preliminary estimates of recoverable volumes: recoverable oil: 28-54 mmbbl recoverable gas: 89-158 bcf in aggregate oil equivalents: 43-80 mmboe
Oil and gas quality expected to be similar to Brage
Close to infrastructure - approximately 13 kilometres south of Brage and equidistant to Oseberg fields
E&A Drilling activityBrasse discovery
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BrasseDiscovery
Greater Njord Area Key area for next phase of organic growth
GNA has remaining reserves around 300mmboe*
Njord/Hyme/Snilehorn over 200 mmboe* gross (Faroe over 15mmboe net)
Pil 95 mmboe* gross (Faroe 24 mmboe net)
Bue and Boomerang offer further upside
Njord Future Project: Njord, Hyme, Snilehorn
Njord facility to be refurbished and upgraded
‒ Production stopped June 2016
FDP of scheduled for early 2017
First production targeted for 2020/21
Pil, Bue and Boomerang (Faroe 25%) – 2014 and 2015 Faroe discoveries
Pil development maturing towards concept selection
‒ Njord and Draugen identified as possible tie-back opportunities
‒ Redeployment of FPSO a stand alone alternative
Maturing prospects for possible follow-on exploration opportunities
Njord – Statoil operated Draugen – Shell operated
16* CPR Jan 2016 (Senergy)
Njord
Draugen
Snilehorn& Hyme
Pil & Bue
Graham StewartChief Executive Officer
• Instrumental in founding Faroe Petroleum in 1998
• Over 25 years’ experience in oil and gas technical and commercial affairs
• Previously finance director and commercial director at Dana Petroleum 1997 to 2002
• Experience with Schlumberger, DNV Technica, Petroleum Science & Technology Institute
• Offshore Engineering degree (Heriot-Watt University) and MBA (University of Edinburgh )
Helge Hammer Chief Operating Officer
• Joined Faroe Petroleum in 2006
• Over 25 years’ technical & business experience, incl. Shell (Norway, Oman, Australia and Holland)
• Managing Director of wholly owned Norwegian subsidiary, Faroe Petroleum Norge AS
• Previously Asset Manager and Deputy Managing Director at Paladin Resources
• Economics degree (Institut Françaisdu Pétrole, Paris)
• Petroleum Engineering degree (NTH University of Trondheim)
Jonathan Cooper Chief Financial Officer
• Joined Faroe Petroleum as Chief Financial Officer in July 2013
• Former Finance Director of Gulf Keystone Petroleum and Sterling Energy and CFO of Lamprell plc
• Former Director of the Oil and Gas Corporate Finance Team of Dresdner Kleinwort Wasserstein
• Broad range of experience from mergers and acquisitions, public offerings and financing
• Chartered accountant by training having qualified with KPMG
• PhD Mechanical Engineering (University of Leeds)
Executive team
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Disclaimer
These materials do not constitute or form any part of any offer or invitation to sell or issue or purchase or subscribe for any shares inFaroe Petroleum plc (the “Company”) nor shall they or any part of them, or the fact of their distribution, form the basis of, or be reliedon in connection with, any contract with the Company relating to any securities. Any decision regarding any proposed acquisition ofshares in the Company must be made solely on the basis of public information on the Company. These materials are not intended tobe distributed or passed on, directly or indirectly, to any other persons. They are available to you solely for your information and maynot be reproduced, forwarded to any other person or published, in whole or in part, for any other purpose.
No reliance may be placed for any purpose whatsoever on the information contained in these materials or on their completeness.Any reliance thereon could potentially expose you to a significant risk of losing all of the property invested by you or the incurring byyou of additional liability. No representation or warranty, express or implied, is given by the Company, its directors or employees, ortheir professional advisers as to the accuracy, fairness, sufficiency or completeness of the information, opinions or beliefs containedin these materials. Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered or incurred as a result ofthe reliance on such information, opinions or beliefs.
Certain statements and graphs throughout these materials are “forward-looking statements” and represent the Company’sexpectations or beliefs concerning, among other things, future operating results and various components thereof, including financialcondition, results of operations, plans, objectives and estimates (including resource estimates), the Company’s anticipated futurecash-flow and expenditure and the Company’s future economic performance. These statements, which may contain the words“anticipate”, “believe”, “intend”, “estimate”, “expect” and words of similar meaning, reflect the directors’ beliefs and expectations andinvolve a number of risks and uncertainties as they relate to events and depend on circumstances that will occur in the future.Forward-looking statements speak only as at the date of these materials and no representation is made that any of these statementsor forecasts will come to pass or that any forecast results will be achieved. The Company expressly disclaims any obligation toupdate or revise any forward-looking statements in these materials, whether as a result of new information or future events.
If you are considering buying shares in the Company, you should consult a person authorised by the Financial Conduct Authoritywho specialises in advising on securities of companies such as Faroe Petroleum plc.
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