Premier Oil Investor Presentation 2017-02-17, 2016 Highlights - High Operating Efficiency, Step Change in Production, Continued Portfolio Upgrading, Cost Reductions, Refinancing in Progress.
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.
February 2017 | P1
3. Cost reductions delivered
High operating efficiency
Step change in production
Continued portfolio upgrading
Refinancing in progress
2016 highlights
1
2
3
4
5
2016 2017E
91% >90%
2015 2016 2016 Q4
58 kboepd
71.kboepd
>80 kboepd
E.ON acquisition case 2016 2H
15 kboepd
17 kboepd
2014 opex 2016 opex
$18.5/boe
$15.7/boe
Drawn Debt Total Facilities (incl LCs)
$3.4 bn
$4 bn
Undrawn
February 2017 | P2
4. Indonesia
• >90% operating efficiency
• Strong demand (44% of GSA 1, record
GSA 2 delivery)
• $10/boe opex
• Increase demand post 2020
– Quick payback, high return projects
– Bison, Iguana, Gajah Puteri
• Longer term growth opportunities
– Tuna, 3rd party business
Asia – providing cash flow for the business
Vietnam
• >90% operating efficiency
• <$9/boe opex
• Further cost reductions
– Renegotiation of vessel and
helicopter contracts
– Revised terms for FPSO agreed
• High return, low cost projects include
infill drilling in 2017
Low cost,
high return
opportunities to
maintain / grow
production
February 2017 | P3
5. UK North Sea – growth story
Wytch Farm (30.1%)
• Long life field
• Infill opportunities
Solan (100% op)
• Production currently restricted at
10-13 kbopd
• Cost reductions continue to be
secured
UK overview
• Improved uptime
• UK drives production growth:
• Strong operating base
• Tax advantaged position
Babbage (47%)
• High uptime
• Moving to unmanned
• Cobra potential tie-back
Elgin-Franklin (5.2%)
• Long life field
• Rates of >130 kboepd (gross)
• On-going infill drilling and well
intervention programme
Huntington (100% op)
• Strong reservoir performance
• 2016 production significantly
above budget
Catcher (50% op)
• On track for first oil 2017
• 29% cost reduction secured
Tolmount (50% op)
• Low cost, high return project
• Significant area upside
• Tolmount East +250 bcf
• Tolmount Far East +150 bcf
February 2017 | P4
2015A 2016A 2017E 2018E
UK production
6. • Templates, flowline bundles, midwater
arches and gas export pipeline installed
• Buoy and moorings system installed
• Hook up of risers & umbilicals completed
• Subsea programme
below budget
Subsea
• 9 wells drilled with excellent operational
performance
• Pre-drill predictions for reservoir
quality and flow rates at
or above prognosis
• Drilling programme
below budget
Catcher – ahead of plan
Burgman
BP3 producer well
Tay
reservoir
Drilling
February 2017| P5
7. February 2017 | P6
Module lifts onto Catcher FPSO completed
• Outfitting of FPSO progressing well
• 13/13 modules lifted onto FPSO
• ~2,000 people working on the vessel
• On track for summer 2017 FPSO sailaway
8. Catcher schedule
20172016 2H
• Plateau rates of 50 kboepd (gross)
• $1.6bn total project cost
• Potential further savings from contingency
release and FX
• Forward cost exposure reduced significantly
BP3 & BP 5
completed
Drilling at
Varadero
(4 wells)
Installation
of Buoy
and Mooring
System
Module Lifts
Installation
of risers
Hull mated
Onshore
pre-comm
and comm
Drilling at
Burgman
(2 wells)
FPSO
transit to
Catcher
field
FPSO buoy
and
hook-up
First oil
February 2017 | P7
Drilling at
Catcher
(4 wells)
* Assumes $1.25/£ to end 2017, then $1.3/£ and 20 wells drilled
Topsides integration
Capex - 29% reduction in costs secured *
$mm
0
50
100
150
200
250
300
350
2014 2015 2016 2017
Sanctioned budget
Actual/current forecast
9. Tolmount – next phase of growth
Indicative metrics (gross)
• 450 Bcf
• Capex <$600m
• Opex: c.$7/boe
• Peak production : 200 mcfd
• First gas 2020
High return
project in a
low gas price
environment
Timetable to sanction
• Concept select Q1
– Standalone, normally
unmanned or subsea
tie-back to nearby facilities
• Project optimisation
– Capex reducing
– Potential 3rd party funding
• FID targeted for 2017/early
2018
• Partial sales process underway
February 2017 | P8
10. Southern Gas Basin: portfolio of opportunities
Babbage (47% op)
• Infill opportunities
Ravenspurn Deep (5% carried interest)
• BP/Perenco long-reach well planned
for late 2016
Newton (50% op)
Cobra (50% op)
• 250 Bcf gas discovery
• Potential tie back to Babbage
30km radii
Portfolio of opportunities which are economic at <30p/therm
February 2017 | P9
Minerva
Tolmount (50% op)
• Discovered Oct 2011
• 2 appraisal wells in 2013
• 450 bcf of resource
• Largest UK gas discovery since Breagh in 1997
• Significant upside (E.Tolmount, Malin)
11. February 2017 | P10
• Licence extended to 2020
• Good progress on FEED in 2016
– Facilities capex and opex cost estimate
reductions from FEED contractors’
collaboration
– Logistics and drilling cost estimate
reductions following extensive market
engagement
– $45/bbl current estimated breakeven price
• Forward focus on commercial and fiscal work
streams & securing a financing solution for
the development
Estimated
capex to
first oil now
$1.5bn
Sea Lion Phase 1 – reducing breakeven price
12. • Sureste Basin is a prolific
hydrocarbon province
(62 bn bbls of proven oil)
• Exercised option to increase to
25% in Block 7
− Shallow water (<150m)
− Same salt flanks and sub-
salt plays as the US Gulf of
Mexico
− Large Zama well to spud
early Q2
Mexico – potential for material value creation
2017 - 20182016 2H
Delivery of
reprocessed 3D
seismic across 2
blocks
Confirm final
drilling
candidates
Tender for a
moored, semi-
sub rig for
Block 7
First
exploration
well on
Block 7
First
exploration
well on
Block 2
February 2017 | P11
Flat Spot
Zama
Prospect
13. Net debt & refinancing update
February 2017 | P12
Debt type Description Facility size Maturity
Bank debt RCF & LC US$2.5bn 2019
Bank debt Term Loan US$300m Dec. 2017
US Bonds Private Placement US$380m No maturity before 2018
German Bonds Schuldschein US$130m 2018 & 2020
UK Bonds Convertible US$245m 2018
UK Bonds Retail bond GBP150m 2020
Private
lenders
Publically
traded debt
• Long form term sheet agreed and circulate to lenders for formal credit committee
approval
− Preservation of the full amount of existing facilities including undrawn amounts
− Alignment of all maturities to 2021 or later
− Amendment of the group’s financial covenants
− Provision of a comprehensive security package to lenders
− Enhanced economics to lenders
− Certain governance controls
• Aim to have creditors locked up to the final terms during February
• Negotiations with convertible bondholders ongoing
Net debt of
$2.8bn, marginally
down fromQ3
Cash and undrawn
facilities of
c. $600m
14. 2016 2018
Infills Tolmount Sea Lion
$2.25bn
$1.6bn
Sanctioned budget Forecast
Maintain competitive cost base
Continuing production growth
Catcher delivery
Select highest return projects
for sanction
Deliver debt reduction
Outlook
1
2
3
4
5
20%
>50%
30%
2016 Solan Catcher
$15.7/boe
5.2x
3x
$12/boe
$20/boe
February 2017 | P13
2016 2017 2018
IRR
Net debt/
EBITDAX
15. Premier Oil Plc
23 Lower Belgrave Street
London
SW1W 0NR
Tel: +44 (0)20 7730 1111
Fax: +44 (0)20 7730 4696
Email: premier@premier-oil.com
www.premier-oil.com
February 2017