- Premier reported strong 2013 annual results with cash flows of $833 million, up from $808 million in 2012. Cash on hand was $449 million.
- Production for 2013 was 57.7 thousand barrels of oil equivalent per day, up from 58.2 thousand in 2012.
- Six discoveries were made from seven exploration wells drilled in 2013, adding 40 million barrels of oil equivalent of resources.
- The company will focus investments on high-return projects while maintaining a strong balance sheet and reducing capital exposure to the Sea Lion project off the Falkland Islands.
2. Forward looking statements
This presentation may contain forward-looking statements and information that
both represents management's current expectations or beliefs concerning future
events and are subject to known and unknown risks and uncertainties.
A number of factors could cause actual results, performance or events to differ
materially from those expressed or implied by these forward-looking statements.
27 February 2014 // Page 1
3. Agenda
Introduction, Highlights, Production
Business Units review
Exploration update
2013 financial results
Summary / Outlook
Simon Lockett
Robin Allan
Andrew Lodge
Tony Durrant
Simon Lockett
27 February 2014 // Page 2
4. Introduction
Premier today
• Robust cash flow and profitability
• 800 mmboe reserves and resources
• Key exploration campaigns in
Indonesia, Norway and Falklands
• NAV >£5 per share (broker
consensus)
• Production increased to 68 kboepd
year to date
• Cash dividend and buyback
programme
Going forward
The Board will:
• Give priority to balance sheet strength
• Focus investments on our highest
return projects
• Reduce capital exposure to the Sea
Lion project
“...our strategy is to invest in high-quality developments
whilst maintaining balance sheet strength...”
27 February 2014 // Page 3
5. Highlights
• Strong and rising cash flows of
$833m ($808m*)
• Cash of $449m ($187m*)
• Facilities increased to $1.2bn
($900m*) – extended maturities at
attractive rates
• Recommended dividend of 5p/sh
• Up to £75m buyback
• Successful asset sales in 2013 –
further disposals planned in 2014
*2012
27 February 2014 // Page 4
• Production currently 4 kboepd ahead
of budget
• Dua, Pelikan and Naga expected
in 2014
• Solan – progressing towards
sail-away
• Catcher – final sanction imminent
• Sea Lion – TLP and phased
development concept selected
• 6 discoveries from 7 exploration wells
• Focusing on emergent exploration
plays
6. Production
Delivery capacity is the lower of field well
capacity, facilities capacity or the expected market
demand for output
Operating efficiency is the actual production rate
divided by the delivery capacity
27 February 2014 // Page 5
8. North Sea
Production
• 14.9 kboepd (2012: 12.1 kboepd)
• Strong production from Wytch Farm and
Scott/Telford
• Huntington production reached 35 kboepd
Development
• Solan, Catcher and Bream
• Kyle redevelopment due on-stream in Q3
2014 – $55m insurance claim settled
Exploration
• Discoveries at Luno and Bonneville
• Farmed into Bagpuss/Blofeld
• Increased position on Mandal High
• 23 licences divested
27 February 2014 // Page 7
9. North Sea – Solan
Development drilling
• Reservoir reached on prognosis
• Pressure data indicates good reservoir
connectivity
• 2nd phase of drilling to start in April 2014
Platform and subsea
• Tank, topsides and jacket over 80% complete
Key milestones
• Installation planned July & August 2014
• First oil Q4 2014
Project metrics
• 24 kbopd gross post ramp up
• Capex $26/bbl; Opex $18/bbl
• 60% equity – rapid project payback from
75% of cash flows
27 February 2014 // Page 8
Topsides in Methil, Scotland
Subsea tank in Dubai, UAE
Jacket in Methil, Scotland
10. North Sea – Catcher
• First oil 2017
• Capex ~$24/bbl
• 2P reserves of 92 mmboe
– Upside of 140 mmboe
• Development drilling starts 2015
• Rig and well systems contracts awarded
Update
• Field Development Plan submitted to
DECC, project budget to partners
• Negotiations with FPSO provider
concluding
Catcher area development scheme
27 February 2014 // Page 9
11. North Sea – Bream Area
Development concept
• 2C resource estimate: 70 mmboe
• Mackerel – 17km tie-back to
Bream FPSO
• Herring prospect – upside potential
Key milestone
• Year-end partner
sanction decision
Bream
Mackerel
Herring
27 February 2014 // Page 10
12. North Sea – looking forward
• Optimise levels of operating efficiency
• Rising cash flow from new developments returning >20% IRR
• Maximize the benefit of our UK CT losses and allowances of $2.3bn
• Exploration reduced to a smaller number of key wells
• Current disposal programme of non-core assets
– Includes Luno and Scott area
27 February 2014 // Page 11
13. Pakistan
Production
• 14.9 kboepd (2012: 15.6 kboepd)
• Gas demand and cash flows remain strong
• Improving recovery
– Infill wells established new zones in
Badhra, Bhit and Kadanwari
– Adding compression at Badhra, Bhit
and Qadirpur
Exploration
• Success at K-32 and Badhra B North-2
– 8 consecutive E&A successes
• 5 E&A wells planned in 2014
27 February 2014 // Page 12
Kadanwari
Bhit
14. Vietnam
Production and development
• 2 year payback
• 14.1 kboepd (2012: 15.2 kboepd)
– Reduced due to gas export pipeline
damaged by 3rd party
• Year to date production of 18 kboepd (net)
• ~$6/bbl premium to Brent oil price
• Dua on-stream mid-2014
– Subsea development tied back to FPSO
– Development drilling underway
Exploration
• Block 121 – 2D seismic planned for 2014
Portfolio management
• Sale of Block 07/03 for $45m cash
– $55m contingent upside
27 February 2014 // Page 13
West Telesto on Dua
Dua template installation
15. Indonesia
Production
• Singapore demand remains above
minimum contract volumes
• 13.7 kboepd (2012: 14.2 kboepd)
• Average price of $17/mcf achieved
(GSA1)
– Contractual share increased to
39.4%
– Year to date actual ~47%
Development
• Anoa Phase 4 successfully completed
• Pelikan and Naga onstream 2014 2H
– Platforms loaded out and installed
– Development drilling to commence
shortly
Exploration
• Matang gas discovery in 2013
• Kuda/Singa Laut results 2014 1H
• Follow-up drilling to Lama play discovery at
Anoa Deep
27 February 2014 // Page 14
16. Concept selection highlights
• Tension leg platform with permanent drilling rig selected
– Minimal subsea infrastructure
– Better economics than a new build FPSO scheme
• Phased development
– Phase 1 recovers 293 mmstb over 25 years
from 32 wells
– Phase 2 development plan will
incorporate results from exploration
Schedule
• Award of FEED Contracts in Q2 2014
• Farm down process prior to sanction
Falkland Islands – Sea Lion
27 February 2014 // Page 15
20. Indonesia – Kuda/Singa Laut
• 2 wells planned to drill the
Kuda/Singa Laut prospect
• Kuda Laut is a four way dip
closure targeting Miocene sands
• Singa Laut is the adjoining
three-way structure with
reservoirs in the lower Miocene
and Oligocene
• Low risk for gas, high risk for
commercial oil
• Gross prospective resource:
10-37-99 mmbbls
NW Belut Laut-1
TD 4977m
MMU
L.Terumbu
Arang
Gabus
27 February 2014 // Page 19
Chim Sáo analogue
SE
Kuda Laut
Singa Laut
21. Indonesia – Lama play
27 February 2014 // Page 20
• Proven by Premier’s Anoa Deep
in 2012 – 17mmscfd
• Identified look-a-like
opportunities from shows in
existing wells
• 5 prospects and leads
– Ratu Gajah Q1 2014
– Anoa Deep appraisal Q4 2014
• Gross prospective resource
on block ~2 TCF
Kuskus lead
Ratu Gajah
East
prospect
Ratu Gajah
prospect
Anoa North
High impact potential from the “missed” gas pay zones
Anoa West
22. Indonesia – Ratu Gajah well
• Gross prospective resource:
60-225-700 bcf
• Follow up potential at Ratu Gajah
East
• Originally drilled in 1984 – not flow tested
– Gas readings, high resistivity and mud losses,
same as Anoa Deep
– Similar in Babar-1 and Koko-1 wells Raja Gajah-1
Ratu Gajah
Top Sand A (Top Lama)
depth map
Babar-1
Koko-1
Ratu Gajah-1
proposed location
Ratu Gajah
East prospect
Re-drilling an existing gas discovery
27 February 2014 // Page 21
23. Norway – Luno II
• First oil discovery on south west margin
of Utsira High
• Luno II Central segment to be
appraised in Q2 2014
• Further exploration potential remains on
PL 359 – including Luno II North
Central 1
Discovery
North 2
North 1
Johan SverdrupLuno/Apollo
Ragnarrock
PL 359
BCU Time Map
C.I. 100ms
10km
Luno II discovery
16/4-6 16/5-5Luno II
appraisal
Luno II Central Luno II S.Luno II North
(Prospect)
BCUTop Chalk
Balder
Basement
27 February 2014 // Page 22
Appraising a material discovery
24. Norway – Mandal High
• Built on acreage position around Mandal High
– 20% equity in PL663 – 2013
– 70% and 50% in PL725 and PL726 – 2014
– Drill or drop options
• >500 mmboe of gross unrisked prospective
resources
• Myrhauk
– Rig contracted; spud Q4 2014
– Gross prospective resource:
10-50-135 mmboe
– Critical risk: reservoir presence
27 February 2014 // Page 23
Myrhauk Prospect
MANDAL HIGH
3 way dip closure with
up-dip pinch-out trap
NESW
Play opening test
25. 27 February 2014 // Page 24
• Over 9 bnbbls discovered in the
Muglad, Albertine and Lokichar
Basins
• Look-a-like plays identified in the
Anza Basin
• Farmed into Block 2B to drill the
Badada prospect
– 55% equity
• Targeting Tertiary reservoirs similar
to Albertine and Lokichar Basins
• Gross unrisked prospective
resource on block >1.5 bnbbls
• Badada prospect
– Robust closure confirmed by
new 2D
– Critical risk: source maturity
and charge
Kenya – Southern Anza Basin
Source: Taipan Resources
Play opening test of the South Anza Basin
26. • Under-explored, emerging plays in
proven deep water basins offshore
NE Brazil
– Plays targeted are above
and within Cretaceous rifts
– Access to >1 bnbbls unrisked gross
resources
• Awarded 3 blocks in Brazil’s 11th Bid Round
– 5 year exploration periods
– 3D seismic being acquired in 2014/15
in each block
• Cost mitigation by multi-client seismic
acquisition and future rig share
• Potential pre-drill farm down to
manage capital exposure
• Earliest well late 2016
Brazil exploration – new country entry
Exposure to high impact emerging plays
27 February 2014 // Page 25
27. • High quality dataset
• Unrisked mean gross prospective
resource of 1bn bbls (250 mmbbls
risked)
• Four E&A wells to be completed by
end of 2015
– Upside in Sea Lion west
flank/Chatham
– Development-changing potential in
Zebedee and Jayne East
– Large fan complex – Elaine/Isobel
area
• Rig tenders being evaluated
– Follow-up exploration and appraisal
wells possible through options
Lower F2 amplitude extraction F3G amplitude extraction
Jayne
East
Elaine- Isobel
Orinoco
Zebedee
Sea Lion
fan outline
30km
Falklands – high impact drilling in 2015
27 February 2014 // Page 26
28. • Reducing E&A investment in the UK North Sea
Reducing exposure
to mature basins
• Active disposal and relinquishment programme of
assets that do not meet internal metrics
• Management of equity exposures pre-drill
Capital efficiency
• Drilling in Indonesia, Kenya and Norway in 2014
• Maturing prospects across Brazil, Kenya, Iraq, Vietnam
and Norway for drilling in 2015/2016
• Falklands matured for drilling in 2015
Exploration business model
Focus on high
impact
opportunities in
emerging plays
27 February 2014 // Page 27
30. Income Statement
12 months to
31 Dec 2012
Operating costs (US$/bbl)
2013 2012
UK $43.3 $41.9
Indonesia $10.9 $11.2
Pakistan $2.5 $2.3
Vietnam $20.9 $13.7
Group $19.7 $16.2
Highlights12 months to
31 Dec 2013
Working Interest production (kboepd)
Entitlement production (kboepd)
Realised oil price (US$/bbl) - pre hedge
Realised gas price (US$/mcf) - pre hedge
Sales and other operating revenues
Cost of sales
Gross profit
Exploration/New Business
General and administration costs
Operating profit
Financial items
Profit before taxation
Tax credit/(charge)
Profit after taxation
57.7
51.6
111.4
8.3
US$m
1,409
(742)
666
(187)
(24)
455
(95)
360
(108)
252
58.2
52.4
109.0
8.3
US$m
1,540
(1,035)
505
(133)
(20)
352
(67)
285
(51)
234
• 32% of 2014 production sold forward
at average equivalent of US$104/boe
• Currently unhedged for 2015
Hedging
Includes impairment charges of
US$179m (pre-tax)
Effective tax rates (%)
2013 2012
Overseas 38 42
Group 18 30
27 February 2014 // Page 29
31. Cash Flow Statement
Cash flow from operations
Taxation
Operating cash flow
Capital expenditure
Partner funding (Solan)
(Acquisitions)/disposals, net
Finance and other charges, net
Dividends
Pre-licence expenditure
Net cash out flow
12 months to
31 Dec 2012
$m
1,041
(233)
808
(772)
-
(211)
(163)
-
(29)
(366)
12 months to
31 Dec 2013
$m
1,061
(228)
833
(878)
(186)
61
(91)
(40)
(30)
(331)
2013 2012
Exploration $207 $187
Development $658 $569
Other $14 $16
Total $878 $772
Capital expenditure ($m)
Highlights
Development costs include pre development projects
• 2014 guidance of $1bn of development
and $180m of exploration (pre-tax)
27 February 2014 // Page 30
32. Cash
Bank debt
Bonds and loan notes
Convertibles
Net debt position
Gearing
Cash and undrawn facilities
187
(500)
(578)
(220)
(1,110)
36%
1,100
449
(686)
(992)
(224)
(1,453)
41%
1,600
• Average interests costs are 4.7% (fixed)
and 1.9% over LIBOR (floating)
• Split 75/25 between fixed/floating
• Continue to switch to longer maturity
bond market instruments
1 Maturity value of US$245 million
At 31 Dec 2012
US$m
At 31 Dec 2013
US$m
1
2 Net debt/net debt plus equity
2
Liquidity and balance sheet position
3 Excludes uncommitted letter of credit facilities of $275 million
Repayment of drawn facilities
and committed LCs
3
27 February 2014 // Page 31
33. Forward Financial Profile
27 February 2014 // Page 32
• The business is managed using $85/bbl base case
–Asset cash flows supplemented by disposal programme
–Discretion around exploration spend / unsanctioned projects
–Self-imposed covenant headroom / maximum gearing levels
• At current oil prices, substantial capacity for:
–Debt reduction
–Enhanced shareholder distributions
–Incremental investment projects