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  • Slide by RJ Adam

Premier oil Presentation Transcript

  • 1. CAPITAL MARKETS PRESENTATION 6th February 2014
  • 2. Falkland Islands’ office fire evacuation IF YOU DISCOVER A FIRE: • Operate the fire alarm by breaking the glass of the nearest call point. Call points are located at each exit door. • Leave the building by the nearest available Fire Exit and proceed to the assembly point on ELIZABETH BRIDGE. ON HEARING THE ALARM: • The Evacuation signal is a continuous high-pitched siren. • Close windows in your immediate vicinity. • Leave the building by the nearest available fire exit closing fire doors behind you. • Proceed to the assembly area at ELIZABETH BRIDGE. • DO NOT ATTEMPT TO USE THE LIFTS (FOR SAFETY THESE ARE NOT AVAILABLE FOR NORMAL USE WHEN THE ALARM OPERATES). • DO NOT STOP TO COLLECT PERSONAL BELONGINGS. • DO NOT RE-ENTER THE BUILDING UNTIL INSTRUCTED BY THE EMERGENCY SERVICES VIA THE CO-ORDINATING FIRE MARSHAL. 6th February 2014 // Page 1
  • 3. 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. 6th February 2014 // Page 2
  • 4. Introduction “...our strategy is to invest in high-quality developments whilst maintaining balance sheet strength...” Premier Today Going Forward • Robust cash flow and profitability The Board will: • 800 mmboe reserves and resources • Give priority to balance sheet strength • Production of 66 kboepd (January 2014) • Focus investments on our highest return projects • Key exploration campaigns in Indonesia, Norway and Falklands • NAV >£5 per share (broker consensus) 6th February 2014 // Page 3 • Reduce capital exposure to the Sea Lion project
  • 5. Balance Sheet Strength and Flexibility
  • 6. Robust balance sheet and funding position • Current net debt of $1.45 bn – Gearing of 41%, well within Board guidelines • Significant headroom on financial covenants today and going forward – Cash flow cover at 2x (covenant of <3x) – Interest cover at 8x (covenant of >4x) • Excellent access to debt markets – $700 m raised in Q4 2013 on competitive terms – Maturities extended (2017 – 2022) – Zero drawings on existing principal bank facility • Continuing strong market appetite from debt investors – Anticipate attractive terms for re-financing during 2014 – Reverse enquiry from investors on MTN programme – Initial favourable indications from export credit funding markets 6th February 2014 // Page 5
  • 7. Significant cash flow growth Financial Outlook Cash Flows (Current Oil Prices) • 2014 guidance 58-63 kboepd – Positive start to 2014 production – Changing mix generates higher cash flows • Solan, Catcher fields – Add up to 30,000 bopd of valuable UK barrels – Value per barrel continues to rise • UK production growth monetises high value UK tax loss position – Unlikely to pay UK CT until end of decade 6th February 2014 // Page 6 2013 2014 Post Solan Post Catcher
  • 8. Portfolio optionality Prudent Financial Management Significant Flexibility • Planning case $85/bbl • Current oil price $105/bbl • Active disposal programme • Active disposal programme continues • Will seek partner for Sea Lion • Will seek partner for Sea Lion • Production base line of 75 kboepd • Substantial capacity for: • Future discretion on exploration and unsanctioned projects (eg Bream) – Debt reduction, or • >US$1 bn covenant headroom – Incremental investment in quality projects • Gearing in line with current levels 6th February 2014 // Page 7 – Enhanced shareholder distributions, or
  • 9. Catcher Development
  • 10. Catcher development overview • Project Sanction – Pre-tax IRR >20% based on $85/bbl • Gross reserves (2P) of 92 mmboe within initial development – Upside of 140 mmboe • Excellent reservoir qualities – 35% porosity and very high permeabilities • Fully defined development scheme – Leased Floating Production Storage and Offloading (FPSO) model – Subsea tie-backs of the Catcher, Varadero and Burgman fields to FPSO – Expected to produce at peak ~50,000 bopd (~6% of the entire UKCS production) – $2.2 bn gross Capex including ~30% of allowances and contingencies – Development drilling of 14 producing wells and 8 water injector wells commencing 2015 • First oil in 2017 and an expected life of field of 10+ years 6th February 2014 // Page 9
  • 11. New North Sea hub • Location: Block 28/9 • Water depth: 300 feet • 3 fields as part of initial development • 22 wells to be drilled Catcher area discoveries: • Catcher August 2010 • Varadero January 2011 • Burgman March 2011 • Carnaby June 2012 • Bonneville April 2013 Block 28/9 Premier (Op.) Wintershall 20.0% Cairn Energy 6th February 2014 // Page 10 50.0% 30.0%
  • 12. Exploration and appraisal success Varadero Catcher Burgman • All exploration and appraisal wells encountered hydrocarbon bearing sands: – Tay sands in 28/9-1Z, -3, -2, -4, -4Z, -5A, -6 and -6Z (all fields) – Cromarty sands in 28/9-1, -1Y and -3 (Catcher only) STOIIP Oil Reserves RF% Catcher 129 38.6 30 Oil Varadero 77 21.7 28 Gas Burgman 86 23.3 27 Catcher Area 289 83.6 29 Field Determination Area Carnaby Bonneville Field Licence NB Bonneville extends further south, map limited by HD data extent 6th February 2014 // Page 11
  • 13. Good understanding of the rocks Region of deposition of original Cromarty and Tay sands Joseph C. DeVay et al, 2000, AAPG Memoir 72 / SEPM Special Publication No. 68 • Late Palaeocene/early Eocene turbidite sand systems Tay Cromarty 6th February 2014 // Page 12 • High porosity (~35%) and permeability (Darcy permeabilities) sands deposited in Cromarty and Tay intervals • Post depositional re-mobilisation and injection of sands, leading to high degree of vertical connectivity
  • 14. Seismic will assist with well placement Catcher Cromarty Catcher East (Tay) GOC Balder OWC Catcher Cromarty Chalk Polarcus HD seismic (far stack coloured inversion) • Excellent quality seismic imaging at the reservoir level due to shallow depths and simple overburden • High quality, fine line spacing (high density) seismic was shot in 2011 • Oil-filled sands in the Tay and Cromarty have AVO response and are clearly identifiable 6th February 2014 // Page 13 Catcher East (Tay)
  • 15. Catcher development overview 6th February 2014 // Page 14
  • 16. Catcher area development scheme
  • 17. Reservoir depletion optimised Oil pore volume thickness map VI3 VP3 CTP7 CCP5 CTI1 VP4 CCP3 VI2 VI1 VP2 CCI2 VP1 CTP1 CCP6 BP2 BP1 BI3 BI2 BP4 BI1 BP3 BP5 6th February 2014 // Page 16 Producers Injectors • 22 well development including 14 producers and 8 injectors • Wells target thickest oil sands to maximise rate and recovery • Wells positioned to allow effective sweep • Two phases of drilling on each field allows: – Optimisation of production profile – Learnings from drilling shorter wells to be applied to later longer wells
  • 18. Rig and well systems contracts awarded • Wells drilled over six - 4 slot templates from a Heavy Duty Jack-Up • Subsea well system with HP riser • Subsea trees run from Jack-Up (similar to Huntington development) • Ability to workover wells with an intervention vessel, Jack-Up or Semi-Submersible 6th February 2014 // Page 17
  • 19. FPSO build • Concluded a highly competitive tender process – 3 international companies – Re-fit versus new build • Formal announcement of preferred bidder imminent • 750,000 bbls oil storage • Designed for Functional Spec • 125,000 bpd liquids – Oil – 60,000 bopd – Gas – 60 mmscfd – Sea water injection 75,000 bpd – Future tie-ins – Spare risers included in current design 6th February 2014 // Page 18
  • 20. Production profile 6th February 2014 // Page 19
  • 21. Upside – near field discoveries and exploration Exploration (Laverda) • 25 mmbbls STOIIP • Low cost tie-back to Catcher development Catcher North (CTP2 well) • 2-4 mmbbls reserves • Possible subsea tie-back or ERD from Catcher drill centre Laverda Catcher North (CTP2) Carnaby (Burgman extension) • Discovered August 2012 by 28/9-5A • 28 mmbbls STOIIP Bonneville • Discovered April 2013 by 28/9a-6 and -6Z wells – Drilled at >70 as a “test” for Catcher • 30 mmbbls STOIIP Varadero Catcher Burgman Carnaby Oil Bonneville Gas Licence Area synergies • Capacity of the vessel could support other area discoveries 6th February 2014 // Page 20 NB Bonneville extends further south, map limited by HD data extent
  • 22. Cost parameters 6th February 2014 // Page 21
  • 23. Catcher tax attributes Bare-boat Charter • Industry-wide discussions are ongoing with HMT regarding the possible introduction of taxation on bare-boat charter income Small Field Allowances • The Small Field Allowance shelters £150 m taxable profits from the Supplementary Charge (SCT) saving tax at 32% for each qualifying field with P50 reserves <45 mmbbls • The Catcher, Burgman and Varadero fields will separately qualify for the Small Field Allowance, resulting in total gross allowance for the development of £450 m Tax synergies • Premier has CT/SCT losses and allowances of $2.4 bn at 31 December 2013 • No UK CT expected to be payable until at least 2019 6th February 2014 // Page 22
  • 24. Major milestones • Premier’s Board has approved the project – Formal Sanction on completion of the contracts and receipt of JV and Government approvals • The FDP will be submitted to DECC next week – Environmental Statement already submitted • All major contracts are near to completion – In final stages with acceptable Ts&Cs • Targets and plans in place to deliver upside potential – Reservoir recovery rates and future tie-backs • Project team in place and will deliver first oil in the summer of 2017 6th February 2014 // Page 23
  • 25. Falklands Projects
  • 26. Falkland Islands Location • Situated on the southern part of the South American Plate on the Falkland Plateau • 220km from the Falkland Islands in the North Falkland Basin • Water depth 450m Mid Atlantic Ridge Nazca Plate Premier Oil FOGL Argos Regulatory environment • Petroleum legislation modelled on UK • Falkland Islands Government is responsible for regulation and has advice from UK DECC, HSE, BGS Fiscal terms • Attractive fiscal terms: – 26% corporation tax – 9% royalty South American Plate NFB Falkland Plateau Falkland Islands SFB Drake Passage Antarctic Plate Falkland Oil and Gas Noble Energy Scotia Plate Borders & Southern Antarctic Peninsula Antarctic Plate Weddell Sea 6th February 2014 // Page 25
  • 27. Premier’s Falkland Islands portfolio Licence PL032 • Premier 60%, operator; Rockhopper 40% • Contains Sea Lion discovery made in 2010, extensively appraised in 2011 • Chatham exploration prospect Licence PL004 • Premier 36%, operator; FOGL 40%; Rockhopper 24% • Contains Casper, Casper South, Beverley • Exploration includes Zebedee (PL004b), Jayne East (PL004c) and Isobel/Elaine (PL004a) Phased Development • Phase 1 – Sea Lion (PL032) • Phase 2 – Satellite fields and southern extent of Sea Lion Exploration Upside • Four well programme scheduled for 2015 6th February 2014 // Page 26 PL032 PL004b PL004c PL004a
  • 28. Sea Lion structural and depositional setting PL032 SL30 SL20 SL10 Casper Casper South Beverley Zebedee Jayne E Syncline Axis PL004b Stratigraphically trapped in overlapping deep water lacustrine fans - younger to the south 6th February 2014 // Page 27 PL004c
  • 29. Key appraisal wells 6th February 2014 // Page 28
  • 30. Dataset and key reservoir and fluid parameters Extensive appraisal dataset • Discovered by well 14/10-2 and appraised by 8 wells (plus 2 sidetracks to core) • 3D data full stack reflectivity seismic (2007 and 2010, merged in 2011/12) • Well data – Extensive suite of high quality well data – ~500 MDT pressures and samples from all wells (gas, oil and water) – Extensive core inventory: 455m core – 2 DSTs: 14/10-5 & 14/10-2; 13 Mini DST’s (IPTT): 14/10-4, 14/10-5, 14/10-6, 14/10-7, 14/10-9, 14/15-4a Key Parameters Oil gravity 28 API Wax content 23% - 35% Gas/oil ratio 270 – 420 scf/stb Reservoir oil viscosity Average porosity Average permeability 5 – 6 cP 21% 160 mD Oil-water contact 2476 mSS Gas-oil contact (seen in Casper & Casper South fans) 2402 mSS Discovered oil in place (with/without SL20 gas cap) Discovered free gas in place (with/without SL20 gas cap) 6th February 2014 // Page 29 1.2 / 1.4 billion stb 1.9 / 1.6 Tscf
  • 31. Sea Lion Phase 1 development – TLP Offtake Tanker Floating Storage & Offloading Concept Selection Highlights Permanent Drilling Rig Minimal Subsea Infrastructure Phased Development Improved Economics Gas Disposal Wells 6th February 2014 // Page 30 Tension Leg Platform
  • 32. Phase 1 reservoir development plan • Active waterflood with multiple pore volumes of water injection over field life (~5 bbl per bbl of oil recoverable) • 32 development wells – 19 producers and 11 water injectors – 2 subsea gas injection wells – 12 wells pre-drilled • Recovers 293 mmstb over 25 years • Assumes a gas cap is present in the west – Well scheme will be adjusted if absent – 60 mmbbls upside • Surplus gas will be injected into gas caps 6th February 2014 // Page 31
  • 33. TLP oil producer well design Water Injection Wells • Inclined trajectories • Cased and perforated • Hydraulically fractured • Heated water • Conventional Gas Lift • Downhole Wax Inhibitor • Electrical Tubing Heating • Horizontal up to 1500 m • Cemented Liner • Cased and Perforated 6th February 2014 // Page 32
  • 34. TLP analogues Sea Lion (Pre-FEED) Olympus (MARS B) Premier Shell Region S. Atlantic GoM WD (ft) 1,372 3,000 Oil (mbpd) 120 100 Gas (mmscfd) 165 180 Manning Level 175-200 192 Slots 32-36 24 Date Installed TBA 2013 Benchmark Payload (short tons) 45,000 42,200 Displacement (short tons) 118,000 109,000 Hull Weight (short tons) 28,400 35,800 300 x 300 300 x 400 Development Name Operator Deck Dimensions (ft) 6th February 2014 // Page 33 Other Analogue TLPs • Snorre 1992 • Ursa 1998 • Big Foot 2014
  • 35. Project organisation 6th February 2014 // Page 34
  • 36. TLP build Living Quarters Topsides Fabrication and Integration • U.S. • Korea • Singapore • Dubai Utility Module Drilling Module Process Module Hull Fabrication • Korea • China • Singapore • Japan 6th February 2014 // Page 35 Flare Boom Hull Survival Craft Support Structure
  • 37. TLP transportation 6th February 2014 // Page 36
  • 38. Operations and logistics Exploration drilling support model • Drilling base in Stanley from which supply boats and helicopters support the rig • Regular freighter supplies from the UK to the drilling base • Fortnightly charter flight from the UK for personnel on 28/28 rota • Maximum of circa 100 people offshore 1. Pre-drilling • Similar model to exploration drilling • More personnel, more equipment and a bigger onshore drilling base • Maximum of circa 120 people offshore 2. Production and TLP drilling • Production base is a relatively small increment to the drilling base • Maximum of circa 200 people offshore • Premier will be Duty Holder but supported by two major contractors: – Production operations contractor; – Drilling operations contractor 3. Production only • Much lower level of supply boat activity • Normally circa 120 people offshore • Activity peaks during planned maintenance shutdowns • Revert to Phase 2 during infill drilling and workovers Planning status • Discussions underway with potential logistics providers • Modelling of materials and personnel requirements is under way • Working operations and logistics cost model has been developed 6th February 2014 // Page 37
  • 39. Design phase milestones 18 month “Design” phase • Concept Selection to the start of execution (award of the EPC contract(s)) • Award of FEED Contracts in Q2 2014 • Shortlisting of EPC bidders in Q4 2014 – Updated cost estimates available • Q4 2014 onwards – formalised financing and farm down process • Submit draft FDP at end 2014 • EPC tenders in Q1 2015 • Sanction in Q2 2015 6th February 2014 // Page 38
  • 40. Phase 1 development costs Indicative costs subject to FEED • Surface Facilities Capex – TLP – Subsea and risers – Project management and other costs $3.5 bn $2.4 bn $0.45 bn $0.65 bn • Drilling Capex $1.7 bn • Total Phase 1 Capex $5.2 bn • Spend to first oil $3.8 bn • 25 year annual Opex – Includes FSU rental and well interventions $260m per year All numbers are un-escalated $ 2013 6th February 2014 // Page 39
  • 41. Economics and financing Economics • Discount of $6.50 to Brent is assumed to account for oil quality and transportation • Sea Lion Phase 1 yields an IRR of around 20% at an oil price of $85/bbl (real) Project Funding Strategy • Corporate funding remains an option • Given attractive terms, base case assumes construction-related project financing for 60% of TLP cost • Reduces pre first oil “equity” requirement to approx. $2.5 bn (gross) – Illustratively a 30% farm down would reduce Premier’s share to approx. $1.8 bn 6th February 2014 // Page 40
  • 42. Phase 2 development Phase 2 • Development of Casper, Casper South – Plus the southern extent of Sea Lion • Single manifold subsea tie-back to the TLP • More detailed development studies underway • Development plan will incorporate results from exploration – Could change the scheme to be a second TLP 6th February 2014 // Page 41
  • 43. Further Sea Lion scale opportunities Lower F2 amplitude extraction • High quality dataset F3G amplitude extraction • Size of exploration prize: – 1,000 mmbbls prospective resources – 250 mmbbls risked Sea Lion fan outline Jayne East Zebedee 30km Orinoco Elaine- Isobel 6th February 2014 // Page 42 • Four E&A wells to be complete 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
  • 44. Zebedee – high impact near field 3D visualisation of Casper South and Zebedee sands Fan input • Zebedee prospect – Onlaps the Sea Lion field – Onlapped by the Casper South discovery • Extends the proven SLMC (F2 sequence) play • Gross prospective resource (F2) – 28-46-150 mmboe (low risk) • Multiple reservoir (F1 & F3) also targeted • Gross prospective resource (F1, F2, F3) – 28-165-400 mmboe 14/15-4a Zebedee (proposed location) F1 F2 Casper South discovery Zebedee prospect (F2 fan) F2 Sea Lion discovery Casper South discovery F3 F3 F3 2 km 6th February 2014 // Page 43 14/15-2
  • 45. Jayne East – high impact near field Amplitude extraction – F2 lower fan Jayne East Zebedee • Equity increased to 36%, partner equity interests now aligned and fully funded • Well to test five potential reservoirs levels across the F2 and F3 sequences – Beverly, Casper SE and Zebedee East (F2) – Jayne East and Ida (F3) • Gross prospective reserves: – 14-37-87 mmboe • Overall risk assessment – moderate Jayne East (proposed location) – Key risk: updip seal F2 F3 6th February 2014 // Page 44
  • 46. Isobel/Elaine – another Sea Lion? • Equity increased to 36%, partner equity interests now aligned and fully funded • Stacked targets exclusively within F3 sequence • Gross prospective resources: – 7-44-226 mmboe • Overall risk assessment - moderate – Key risks: reservoir and updip seal Single stratigraphic layer within Elaine/Isobel complex Isobel Deep A PL 03 A PL 05 B PL 04a B Irene 5km Elaine Isobel Isobel Deep 2 km 6th February 2014 // Page 45
  • 47. Key Messages
  • 48. Key messages • Balance sheet strength, financial flexibility supported by asset disposals • Catcher: high quality project, attractive returns • Sea Lion: high quality project, will seek partner before sanction “...our strategy is to invest in high-quality developments whilst maintaining balance sheet strength...” 6th February 2014 // Page 47
  • 49. Q&A
  • 50. Appendix
  • 51. Subsea – In-field manifolds (3-off) • Common design for each manifold structure • 9-slot assemblies (6x production + 3x water injection) • Slab sided structures with piled foundations (estimated 230 tonnes) • Fishing friendly • Incorporates production test header c/w subsea multiphase flow meter • All production and water injection piping fabricated from super duplex Field Production Slots Water Inject Slots Catcher 5 2 Varadero 4 3 Burgman 5 3 6th February 2014 // Page 50
  • 52. Subsea – riser base structures (3-off) • Similar design for each riser base tie-in structure • Open sided (estimated weight 100 tonnes) • Dropped object protection only (i.e. all structures are located within FPSOs 500m safety zone so not exposed to fishing) • Gravity base foundations • Include SSIVs for production, gas lift & gas export riser systems 6th February 2014 // Page 51
  • 53. Subsea – bundle option • Three similar bundle systems planned for tie-back of the developments • Each bundle circa 3.5km in length, comprising a 38” outer carrier pipe designed to house the 12” production, 10” water injection and 4” gas lift flow-lines plus steel tubed E/H control and chemical injection lines • Manifolds and riser-base tie-in structures integrated into the bundle towheads 6th February 2014 // Page 52
  • 54. Subsea – gas export structure • Slope sided to resist trawl gear snagging loads and promote over trawl-ability • Approximate weight of 110 tonnes • Supports connection of a temporary subsea pig receiver c/w DB&B isolation • Supports entry of a future tie-in c/w DB&B • All valves diver / ROV actuated 6th February 2014 // Page 53
  • 55. www.premier-oil.com