151208CapitalMarketsDay EnQuest
151208CapitalMarketsDay EnQuest
151208CapitalMarketsDay EnQuest
8 December 2015
0
Amjad Bseisu
Chief Executive
Agenda
2
2015 H2 operations update
Strong production. Alma/Galia performing well. Reduction in costs
3
Strategic priorities in a low oil price environment
1) Delivering on execution
44
Strategic priorities in a low oil price environment
2) Restructuring EnQuest’s operating cost base
55
Strategic priorities in a low oil price environment
3) Strengthening the balance sheet - good operational performance
Investment approvals now include low cost fast payback projects eg Thistle 2015
Average development cost/barrel around established hubs in 2015 was c.$18/bbl
Will be significantly lower in 2016
Net debt is planned to increase during 2016 ahead of Kraken first oil
Capex will be materially reduced in 2017 and then again beyond that
Net debt expected to decline significantly after 2017
66
Production results year to end November 2015
Strong production, up 26% year on year, 41,360 Boepd in H2 so far - up 39% Vs H1
9,061 9,136
35,022
9000 8,609 35000
8,401
8000 7,818
30000
27,815
7000
25000
6000
5000 20000
4,450
4,046 3,925
4000
15000
3,0624
3000
10000
2000
1,2821 1,227 1,176
5000
1000
3902
2533
0 0
Thistle/Deveron The Dons area Heather/Broom Kittiwake Alma/Galia Alba PM8/Seligi Tanjong Baram
Total EnQuest
1 Net production since the completion of the acquisition at the start of Mar’ 2014, averaged over the eleven months to the end of Nov’ 2014
2 Net production since first oil on 27 October, averaged over the eleven months to the end of November 2015
3 Net production since first production in June, averaged over the eleven months to the end of November 2015
4 Net production since the start of H2 2014, averaged over the eleven months to the end of November 2014 7
Jonathan Swinney
Chief Financial Officer
Guidance to the market
Unit production and transportation operating expenditure will now be $31-32/bbl; ahead of target
Further work required during the final commissioning processes and start up of the EnQuest Producer
9
Guidance to the market
Outlook
Production guidance between 44,000 Boepd and 48,000 Boepd for 2016
Cash capex in 2016 is expected to be approximately $700 - $750m, predominantly focused on Kraken
2017 capex expected to reduce materially and further decline in subsequent years
Debt repayment expected in H2 2017 with net debt expected to decline significantly thereafter
10
Neil McCulloch
President North Sea
Strategic priorities in a low oil price environment
Institutionalising low unit costs, maintaining margins for high future cash flow growth
12
EnQuest Producer
Project to producing asset
13
Alma and Galia
Performance in line with expectations
Galia
Alma (GP1)
K3Z (AP1)
1
5
Alma
K5 (AP2) 1
7
16
GKA
Transformed performance after taking operatorship
17
Scolty/Crathes sanctioned
Synergies with Kittiwake realised
18
Significant Prospectivity Around GKA
19
Thistle / Deveron
High production efficiency, cash-flow returned from drilling programme
improvements from power upgrades and further systems • 2015 Producers (Online)
20
Dons / Conrie
successfully W6 2015
S4
Development
Legend
West Don Drilling Plan Don Southwest and Conrie Drilling Plan
21 21
21
Ythan onstream a year after taking licence
Performance Ahead of Expectations
NE Extension
2/0 Else
5-
15 H42
H33
Erica
2/05-21 H61Z 2/0
2/0
(BW3) 5-6
H46 5-5 H64
H41 2/05-23 2/0
2/05- (BR4) 5- H66
Viking 17
2/05-20
19Y H62Y
(BR1)
2/05-25 H60
(BR2) H07
H38
H63
Furzey 2/05-27
H56
2/05-20 (BR8)
High production efficiency of mid-80s% (BX5) H55
H37 H65
Wells drilled in 2014 have doubled Heather field’s rate H20 H49
23
North Sea OPEX/BOE 2015
10
Enhanced contract and
procurement practices – Access to
lower global costs via Dubai-based
0 procurement team, contract
renegotiations, and ongoing
communication with Supplier Forum
Actual to ensure Supply Chain aligned with
our priorities
Guidance
24
Northern North Sea (NNS) Infrastructure
25
Outstanding drilling performance
ESTIMATED FINAL WELL COST vs. Budget vs. RUSHMORE UPPER QUARTILE (£MM Gross)
Wells commenced in 2015 (rushmore data 2010-2015)
60 180
50 150
40 120
30 90
£MM
20 60
10 30
0 0
Galia Gadwall Alma W1 A61 A62 A59 A63 A64 A58 Kraken B2 Total
Rushmore Top
23.8 16.2 23.8 9.5 9.5 4.0 9.5 9.5 4.0 20.6 130.1
Quartlile Cost £MM
Budget £MM 19.3 27.9 24.4 8.2 8.0 4.3 9.8 7.9 3.6 27.4 140.8
Estimated
17.0 24.3 17.9 6.7 7.4 2.6 7.2 4.9 2.9 20.9 111.8
Final Cost £MM
Cum Rushmore
23.8 39.9 63.7 73.2 82.6 86.6 96.1 105.5 109.5 130.1
* Rushmore Reviews
Top Quartile Cost £MM are a source of global offset well data, with the data provided directly from the
Cum AFE £MM
Operators, 19.3 47.2quality
with independently 71.6control.
79.8 87.8 92.1 101.9 109.8 113.4 140.8
Cum Estimated
17.0 41.3 59.2 65.9 73.3 75.9 83.1 88.0 90.9 111.8
Final Cost £MM 26
Wells delivery excellence
Achieved through:
Continuous improvement
27
Summary
28
Richard Hall
Head of Major Projects
30
Kraken overview
Field summary
30
Kraken development
Development plan and field layout
4 integrated ‘Template/Manifold’ Type Drill Centres 14 horizontal producers up to 1000m All manifolds can accommodate
expansion / step out
2 single service integrated 4 slot 11 horizontal injectors up to 1400m
manifolds at 3 drill centres Subsea XT tie ins conducted by ROV
from drilling rig or construction vessel
1 combined service manifold
at the 4th drill centre Aug/Sep 15 - Buoy Installation
31
Kraken development
Key deliverable of buoy achieved on schedule
32
Kraken development
FPSO module location
33
FPSO Armada Kraken
Construction continues
E-House & laydown installed on main deck Helideck & loading hose/reel installed 34
Kraken development
FPSO overall view
35
35
Kraken development
FPSO swivel
36
Kraken development
FPSO overall view
37
Kraken development
M70A & B power generation
38
Kraken development
M30B separation
39
Kraken development
FPSO 2016 forecast module lifting dates
Lifted
40
Kraken development
“Deep Energy” installing pipeline end termination (April 2015)
41
Installation of Submerged Turret Production (STP)buoy
and DC1 risers
Buoy/turret lift from transportation vessel
43
Kraken development
Wells/drilling
D3
D2
B2
Topholes – complete
7 @ DC1, 6 @ DC2
17½” – complete
7 @ DC1, 6 @ DC2
12¼” – to date
1 @ DC1, 2 @ DC2
8½” – to date
1 @ DC1, 1 @ DC2
45
All wells drilled to date in line with expectations
Well B2
Dataset:
BBK2012 – PGS Extended Far JJB Pseudo Density
Geosphere canvas at TD 10/8/15
Depth 46
Kraken development
Schedule of work for 2016
DC3
Batch drill and run intermediate casing in five wells
DC2
Batch drill to top of reservoir in four wells
Drill reservoir and complete one well
Well Clean-up
Clean-up 1st Production Well immediately after completion. Undertake well test.
Clean-up 2nd, 3rd & 4th Production Wells as a batching program, subject to findings of 1st clean-up
47
Kraken development
Schedule to first oil
48
Kraken development
Total project capex (gross basis)
$3,500
WELLS CONTINGENCY
$3,000 (Deterministic)
P50 CONTINGENCY
$2,500 Sanction Current
WBS
DRILLING & WELLS ($mm) ($mm)
(excluding WHs & XTs)
$2,000
MAN-POWER + G&A 243 232
$mm
INSURANCES
$1,500 STUDIES 45 37
PRE-OPS + PRE-
PRODUCTION
SUBSEA - SURF & SPS 1,098 1,112
$1,000 FACILITIES (FPSO)
FACILITIES (FPSO) 242 162
SUBSEA - SURF & SPS PRE-OPS + PRE-
$500 16 11
PRODUCTION
STUDIES
INSURANCES 43 15
$0
MAN-POWER + G&A DRILLING & WELLS
1,268 1,097
(excluding WHs & XTs)
$2,500
$2,000
$mm
$1,500
$1,000
$500
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J…
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$-
49
Kraken development
Capex reductions achieved through planning and project execution
Highly detailed review of discovery, appraisal Qualified and experienced project team and
and offset wells plus “dress rehearsal” prior to project management
starting wells campaign by drilling of Prudent levels of intervention but not “Step-In”
geotechnical pilot hole – responsibility and liability remain with
Extensive subsurface appraisal work contractor
Rigid management of change procedures
50
Kraken development
Project status
51
Bob Davenport
General Manager, Malaysia
Malaysia
Ground floor opportunities aligned with our strategy
PM8/Seligi
June 2014 – Acquired operatorship and 50%
working interest in the Seligi field and PM8 assets
Signed agreement with PETRONAS to extend
PSC term until 2033
October 2014 – Assumed operatorship
Tanjong Baram
March 2014 – Awarded a Risk Services Contract
(RSC) for development and production of the
Tanjong Baram field
June 2015 – Achieved first production
53
Malaysia
Right place, right time, right owner
600
Oil production (mbd)
400
200
0
1980 1990 2000 2010 2020
54
EnQuest Malaysia
World class resource with significant remaining upside
1.5
1.0
0.5
0.0
HIIP Produced 2P 2C Target
Reserves Reserves Resource
55
PM8/Seligi Asset
PM8/Seligi
A producing hub with capacity for future growth
PM8 fields
5 producing fields: Lawang, Langat,
Serudon, Yong, North Raya
4 unmanned platforms – supported from
Seligi
10 producing, 25 idle oil well strings
All production flows to Seligi, lift gas from
Seligi
Seligi field
2 manned and 7 unmanned platforms
44 producing, 206 idle oil well strings
Oil export to Tapis
Seligi A facility
57
PM8/Seligi
Improved performance with minimum spend
25 100%
20 80%
15 60%
10 40%
5 20%
0 0%
59
PM8/Seligi
Improving compressor reliability for higher production efficiency
Excess
Train A Train A
hours
Excess
Train B
hours
Seized Train B Overhaul ongoing
Excess
Train C Train C
hours
90%
80%
70%
60%
50%
60
PM8/Seligi
Well interventions have already added 3,000 Boepd from idle wells
2015 campaign
Added 3,000 Boepd gross by restoring idle wells to
production
Focus on mechanical jobs only – sand cleanout,
gas lift reinstatement, surface valve repairs
Reservoir surveillance to support future work
Reinstated 6 well test facilities
Future campaigns will also include new zone
perforations and water shut-off
Well interventions have very quick payback
200
2,000
246 229
100
1,000
0 0
October 2014 November 2015
PM8
gas development
Seligi field
Idle well restoration
Workovers
Infill drilling
Waterflooding
62
PM8/Seligi
Forward work plans to convert contingent resource to production*
Oil in place,
Seligi reservoir RF to date Seligi options for improving recovery
MMbbl
Idle well restorations
J-18/20 715 42%
Workovers and recompletions
J-15/16 389 31%
Infill drilling – all reservoirs
L-20 207 26%
Waterflooding J-15/16/18/20 reservoirs
K-20 198 23%
Horizontal drilling – Minor ‘J’, ‘K’ and
K-10 113 33%
‘L’ reservoirs
Other Reservoirs 255 2%
64
Seligi field
J-18/20 reservoir: surveillance drives recompletions, infill drilling
and waterflooding
Potential locations
65
Seligi field
J-15/16 reservoir pilot to evaluate Seligi waterflooding potential
Pilot Area
66
Seligi field
Targeting ‘K’, ‘L’ and minor ‘J’ reservoirs for infill and horizontal drilling
68
The PM8/Seligi production sharing contract
Revenue-Over-Cost PSC model
Royalty is 10%
The remaining oil is split between cost
and profit oil based on R/C ratio
Cost oil is used to pay EnQuest’s
costs
Profit oil and unused cost oil is divided
among EnQuest and Malaysia
Profit oil is subject to supplemental
tax, which increases at higher oil price
Corporate tax rate 38%
EQ EQ
Cost
Cumulative share share
oil
R/C ratio unused profit
ceiling
cost oil oil
R/C ≤ 1.0 70% 80% 80%
1.0 < R/C ≤ 1.4 60% 80% 70%
1.4 < R/C ≤ 2.0 50% 70% 60%
2.0 < R/C ≤ 2.5 30% 60% 50%
2.5 < R/C ≤ 3.0 30% 50% 40%
R/C > 3.0 30% 40% 30%
69
The PM8/Seligi production sharing contract
A natural hedge against oil price
EnQuest EnQuest
EnQuest
entitlement share EnQuest
entitlement
c. 74% c. 72% share
c. 69%
c. 59%
72
Tanjong Baram field
First oil production in only 14 months
73
Tanjong Baram fiscal terms
Based on the risk services contract (RSC) model
Cost
Reimbursed from allocated revenue (70%) EnQuest recovers costs in-kind
reimbursement
EnQuest is paid a remuneration fee based EnQuest takes profit in-kind after royalty and
Profit
on performance cost recovery
Taxes Petroleum income tax rate 25% Corporate income tax rate 38%
74
EnQuest Malaysia
World class resource; sustainable growth
75
Summary
Strategic priorities in a low oil price environment
Operating on the assumption of lower for longer
Delivering on execution
Streamlining operations
Institutionalising lower opex/barrel, leveraged for high future cash flow growth
77 77
EnQuest is the company to turn maturing assets around
Turning field decline into production growth and economic field life extension
3,000
2,000
1,000
0
2009 2011 2013 2015
6 wells drilled by EnQuest from 2010 -2013
4 wells in 2014/15 78
4 further wells drilled in 2015, 2 workover
Repositioned for resilience now and for sustainable growth
Delivering strong compound annual growth rates
15% to end 2014, expecting c.24% in 2015, c.33% in 2016, then further substantial increases beyond
Average net production (Boepd)
50000
50,000+
4,000
45000
44,000
40000
3,000
35000
33,000
30000
25000
20000
15000
10000
5000
0
2009 2010 2011 2012 2013 2014 2015 2016 Post
Guidance range for 2015 is an average of between 33,000 Boepd and 36,000 Boepd Kraken
Guidance range for 2016 is an average of between 44,000 Boepd and 48,000 Boepd 79
Q&A
80
Delivering sustainable growth
On course for over 50,000 Boepd
Scolty/Crathes
Alma/Galia
Kraken
PM8/Seligi
Greater Kittiwake
Area, PM8/Seligi Converting
contingent
Making selective resources into
acquisitions reserves
81
EnQuest’s growing North Sea asset base
As at 30th June 2015
The Dons
Production and
Thistle / Deveron
developments
Discoveries
Other licences
Heather/Broom
Kraken
Alba
Alma/Galia 82
Thistle, Conrie and The Dons infrastructure
83
Heather / Broom infrastructure
8484
The EnQuest Team
Biographies
85
The EnQuest Team
Biographies
86
Forward Looking Statements
This presentation may contain certain forward looking statements with respect to EnQuest’s
expectation and plans, strategy, management’s objectives, future performance, production,
costs, revenues, reserves and other trend information. These statements and forecasts
involve risk and uncertainty because they relate to events and depend upon circumstances
that may occur in the future. There are a number of factors which could cause actual results
or developments to differ materially from those expressed or implied by these forward
looking statements and forecasts. The statements have been made with reference to
forecast price changes, economic conditions and the current regulatory environment.
Nothing in this presentation should be construed as a profit forecast. Past share
performance cannot be relied on as a guide to future performance.
No representation or warranty, express or implied, is or will be made in relation to the
accuracy or completeness of the information in this presentation and no responsibility or
liability is or will be accepted by EnQuest PLC or any of its respective subsidiaries, affiliates
and associated companies (or by any of their respective officers, employees or agents) in
relation to it.
87