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12005 Interim Results Presentation
September 20052005 Interim Results Presentation
September 2005
2
Highlights
Profit before Tax
020406080100
H1
05
H1
04
2004
2003
2002
2001
US$
mill
ion
FINANCIAL
• Pre-tax profit up 388% to US$97.2m (US$19.9m)
• EPS up 564% to US 59.9c (US 9.0c)
• OCF up 179% to US$108.6m (US$39.8m)
• Interim dividend of 2.5 p per share
Cash Flow from Operations
020406080100120
H1
05
H1
04
2004
2003
2002
2001
US
$ m
illio
n
OPERATIONAL
• Average WI production up 95% to 29,100 bopd
• 24 successful development wells since Jan
• 3D interpretation under way (Congo, Turkmenistan)
Production - Working Interest
05,000
10,00015,00020,000
25,00030,000
H1
05
H1
04
2004
2003
2002
2001
Bar
rels
per
day
Congo
Nebit Dag
CORPORATE
• 8 year extension of M’Boundi license + sale of 3.5% interest in M’Boundi and Kouilou to SNPC
• Signature of North Hurghada Marine PSC
• 26% stake in HOEC more than doubled in value
3
Income StatementH1 2005 H1 2004 +/- % Comment
US$m US$m
Turnover 168.1 63.1 166% Sales volumes + 88%, avge price + 48%
Gross Profit 104.6 26.8 291% Net of US$14.3m hedge losses, (US$4.7m unrealised)Depreciation tripled to US$32.0m (higher per bbl rates)
G&A expenses (6.4) (6.6) -2%Other opex (0.5) 0.0 Write off of pre-license costsShare of associate's profit 0.5 0.0
Operating Profit 98.1 20.2 386% US$9.9m of EBIT deferred owing to 255k bbl underliftNet Interest (0.9) (0.3)
Pretax profit 97.2 19.9Tax (14.2) (7.7) Turkmen profits tax (20%)
Net profit after tax 82.9 12.3 575%Dividends (7.6) 0.0 2004 dividend
Retained Earnings 75.4 12.3 514%
EPS - basic cents 59.9 9.0 564%EPS - diluted cents 57.9 8.6 573%
Effective tax rate 15% 38%
Gross profit H1 2005
62%
38%
Turkmenistan
Congo
Gross profit H1 2004
79%
21%Turkmenistan
Congo
4
Per Barrel Analysis
H1 2005 H1 2004 H1 2005 H1 2004 H1 2005 H1 2004US$/bbl . US$/bbl US$/bbl . US$/bbl US$/bbl . US$/bbl
Average realised Brent 50.78 34.90 51.82 35.10 49.60 34.37Avge discount to Brent (6.89) (5.20) (6.20) (6.29) (7.65) (2.30)Avge realised oil sales price 43.89 29.70 45.62 28.81 41.95 32.07Hedge losses (3.55) (6.97) (3.55) (6.97) (3.55) (6.97)Net oil price 40.34 22.73 35.87 15.55 30.75 22.80
Production costs 3.36 3.96 2.41 3.09 4.67 5.86G&A ( excl. incentive schemes, shipping) 1.27 1.21 1.27 1.21 1.27 1.21DD&A 7.91 4.96 4.97 3.41 11.55 8.62Tax 3.54 3.60 6.40 5.12 0.00 0.00
16.08 13.73 15.05 12.83 17.49 15.69
Gross Margin 24.26 9.00 20.82 2.72 13.26 7.11Gross Cash Margin ( excl DD&A) 32.17 13.96 25.79 6.13 24.81 15.73
Avge discount to BrentBreakeven Brent price 22.97 18.93 21.25 19.12 25.14 17.99Cash Breakeven Brent price 15.06 13.97 16.28 15.71 13.59 9.37
Group Turkmenistan CongoEntitlement basis
5
Per Barrel Trend
Group Operating Cost per barrel (working interest)
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
H1 05H1 042004200320022001
cost
per
bar
rel (
US
$)
Group Operating Cash Flow per barrel before hedging (entitlement)
$0.00$4.00$8.00$12.00$16.00$20.00$24.00$28.00$32.00
H1 05H1 042004200320022001
OCF
per
bar
rel (
US
$)
6
Cash Flow
H1 2005 H1 2004 +/- % CommentUS$m US$m
Cash generated by operations 110.3 38.9 183%Tax paid (1.6) 0.0
Net Cash from operating activities 108.6 38.9 179% $20m working capital increase (trade debtors)Capital expenditure (85.0) (42.7) 99%Investment in associate (26.0) 0.0 HOEC Initial Investment (26%)Deposit in blocked account (25.1) 0.0 HOEC tender offer : release imminent
Net cash flow before finance (27.5) (3.7) 641%
Issue of share capital 1.6 1.0Movement in net debt 10.9 0.2
Decrease in cash (15.1) (2.5)
Capex by region H1 2005
48%49%
3% TurkmenistanCongoEgypt
Capex by function H1 2005
97%
3% 0% DevelopmentExplorationOther
7
Balance Sheet
H1 2005 H1 2004 +/- % CommentUS$m US$m
Non-current assets 322.2 209.2 54%
Inventory 1.3 0.9Debtors 85.5 17.0 403% Includes US$25m HOEC escrow accountCash 24.7 34.7 Will be increased by US$25m escrow release
Current Assets 111.5 52.6
Creditors (38.9) (24.4) 60%Fair value of oil price derivatives (15.2) (13.0) will get released to P&L in H2 against realised hedge lossesShort Term Debt (10.7) (0.7)
Current Liabilities (64.8) (38.1)
Debt > 1 year (5.6) (6.3)Deferred Tax (23.2) (11.2)Minorities
Net Assets 340.0 206.2 65%
Share Capital 134.4 132.8Reserves 205.6 73.4
340.0 206.2
Total Debt (16.3) (7.0)Net Cash 8.4 27.7
8
Turkmenistan : Location Map
KAZAKHSTAN
RUSSIA
TURKMENISTAN
IRAN
UZBEKISTAN
AZERBAIJAN
IRAQ
ARMENIA
GEORGIA
Aral Sea
Caspian Sea
BURUN
KUYDZHIK
KYZYLKUM
ERDEKLI
GOGRAN’DAG
EKIZAK
BUGDAYLI KORPEDZHE
KAMYSHLDZHA
OKAREM
BARSAGELMES
KOTURTEPE CHELEKEN
KUMDAG
KOMSOMOL E. CHELEKEN
NEBIT DAG LAM
ZHDANOV
KARATEPE
S. BUGDAYLI
NEBIT DAGPSA
Operator : BurrenWkg Intrst : 100%Area : 1050 sq. km
9
Turkmenistan : Activity
• H1 2005 average production (working interest*) : 15,150 bopd (+ 50%)– Current working interest production 15,650 bopd
• 12 development wells in year to date : 5 deep, 7 shallow– 1 more in 2005 before exploration drilling starts
• Exploration drilling starts Q4 2005– Seismic interpretation & mapping completed in November
– 2 deep drilling rigs by year end, 3rd to follow in 2006
– 8 deep exploration wells targeted by end 2006
• Water injection pilot (5,000 bwpd) in operation by year-end
* excludes Initial Oil
10
Burun Field Production 1997-2005
Burun Production Since 1997
0
5,000
10,000
15,000
20,000
25,000
1997 1998 1999 2000 2001 2002 2003 2004 2005
Oil
Prod
(bbl
s/d)
0
5,000
10,000
15,000
20,000
25,000New Well ProdW/O ProdGL Prod
PSA production commences
Burren acquires 100% and becomes Operator
Main development drilling starts
Burun well Numbers Since 1997
0
20
40
60
80
100
120
140
160
1997 1998 1999 2000 2001 2002 2003 2004 2005
Wel
l Num
ber
0
20
40
60
80
100
120
140
160New WellsOriginal WellsGL Wells
11
Burun New Facilities : September 2005
Injection Pumps Compressors #3, #4
Produced Water Treatment
New Separators (in the back) Tanks (oil and water)
12
Turkmenistan : Prospectivity – Upside Potential
Prospect values are estimated potential
recoverable reserves derived from ongoing
technical work
Burun South Flank40 mmbo
Nebit Dag Deep120 mmbo
Nebit Dag South30 mmbo
Nebit Dag East86 mmbo
Burun Field
129mm bbls booked reserves* + 276mm bbls potential reserves* (*Working Interest Basis)
13
Congo (Brazzaville) : Location Map
Operator : M&P
Wkg Intrst : 37%
Area : 2800 sq. km
Operator : M&P
Wkg Intrst : 35%
Area : 2600 sq. km
14
Congo : Activity
• H1 2005 average production (working interest) : 13,950 bopd net (+ 187%)– Current WI production : 18,500 bopd (3 new wells onstream in Sept)
• 17 new M’Boundi wells in year to date: – 14 on production, 1 imminent, 3 shut-in
– 25 target total new wells for year : 4 rigs in operation
• Exploration drilling on M’Boundi extensions to commence by end of 2005– 3D/2D seismic interpretation completed during Q4
– Minimum 7 exploration wells (M’Boundi & Kouilou) by end 2006
• Water injection pilot (20,000 bwpd) operational in Q2 2006
• New FOB sales terms to commence in Nov 2005 - $6.0 bbl improvement
15
Congo : Production
CONGO - 2004/5 Production Shares
05000
10000150002000025000300003500040000450005000055000
16/08
/2004
13/09
/2004
11/10
/2004
08/11
/2004
06/12
/2004
03/01
/2005
31/01
/2005
28/02
/2005
28/03
/2005
25/04
/2005
23/05
/2005
20/06
/2005
18/07
/2005
15/08
/2005
12/09
/2005
Week Commencing
Bar
rels
per
day
Gross ProductionContractor ShareBurren Share
16
MBD Well Activity September 2005
Well Status
Currently Drilling
Wells drilled on Production
Wells drilled not on Production
MBD-1004Tested 4200bopd
MBD-1901Tested 5000bopd
MBD-1802Tested 2000bopd
MBD-1902Drilling
MBD-1005Drilling
MBD-1803Drilling
MBD-1103Drilling
MBD-1102Tested 2500bopd
52,000 bopd from34 wells
17
Congo : SNPC sale
• Sale of 3.5% for $35m + 8 yr extension to M’Boundi + Noumbi ratification
• Positives :– Certainty of license to 2025 (previous first expiry date 2017 + 5 year extension)– Additional 8 yrs to 2030 has value on STOIIP growth and /or higher recovery factor– Ratification of La Noumbi was by no means certain in absence of a deal
• Perceived up-front loss of value likely to be more than recovered in future– 5% increase in STOIIP + 25% recovery factor US$100m net NAV gain
18
M’Boundi : License Extension
M'Boundi Production vs RF
0102030405060708090
100
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
Year
Fiel
d Pr
oduc
tion
mbo
pd
RF 30%RF 25%RS Audit 2004 - RF 21%
Extension: 2022-2030
25 - 50 million barrels
Net gain / loss in NAV (net to Burren) with changing assumptions
$40/bbl long term Brent10% discount rateNAV / WI bbl : US$5.8
Source : Burren estimates 31.12.04 audit assumptions
US$m
12.6 21% 22% 23% 24% 25%0% -48.4 -20.2 8.1 36.3 64.55% -18.8 10.9 40.5 70.2 99.8
10% 10.9 42.0 73.0 104.1 135.115% 40.5 73.0 105.5 138.0 170.420% 70.2 104.1 138.0 171.8 205.7In
crea
se in
S
TOO
IP
Recovery Factor
19
Congo : Prospectivity – Upside Potential
Dongou52mmbo
Prospect values are estimated potential
recoverable reserves derived from ongoing
technical work
•M’Boundi Extensions•North 50mmbo•South 60mmbo
LA NOUMBI
KOUILOU
M’Bemba Updip
40mmbo
N M’Boundi40mmbo
Basin Margin Terraces60mmbo
Tchivouba10mmbo
NE Tchissakata
50mmbo
SW Tchissakata
20mmbo
116mm bbls booked reserves* + 120mm bbls potential reserves* (*Working Interest Basis )
20
Egypt : Location Map
North Lagia1,457 km²
N. HurghadaMarine
242 km²
East Kanayis4,300 km²
Total acreage 6,000 km²
21
Egypt : Activity
• Deep drilling rig mobilising in November
• 4 well exploration drilling programme on East Kanayis to end 2006– Locations & order of drilling being finalised
– Plus re-entry of Qattara Rim well.
• PSC signed in August for North Hurghada Marine block (shallow Gulf of Suez)– North Lagia block (onshore Gulf of Suez) expected to be signed before year-end
• Cairo office staffed and fully operational
22
Egypt : East Kanayis Prospectivity
Prospect values are estimated potential
recoverable reserves derived from ongoing
technical work
Cretaceous Prospects29 mmbo
Jurassic Prospects65 mmboe
94mm bbls potential reserves* (*Working Interest Basis )
23
India : Hindustan Oil Exploration Co (“HOEC”)
• Stake remains at 26% after closing of tender offer– Open offer take-up minimal as expected (offer price Rs 92 vs. market price Rs 170)– Options into additional 15% likely to lapse / default (price rise)
• Company will require debt and equity finance to complete PY-1– Burren prepared to support financially and technically
• Strategy unchanged, execution modified– India remains a strategic target and HOEC remains chosen investment vehicle– PY-1 project remains the core attraction: 2009 onwards FCF ~ US$50m p.a.– Medium term goal to achieve 51% control, but not at any price– Timescale likely to be longer than originally envisaged
24
2005/6 : Exploration Drilling
Prospect Burren Interest Wells
Potential Gross Recoverable
Reserves
Potential Working Interest Reserves
(mmbbls) (mmbbls)
TurkmenistanSouth Burun 100% 40 40Nebit Dag Deep 100% 120 120Nebit Dag East 100% 86 86Nebit Dag South 100% 30 30
8 276 276Congo
M'Boundi south ext'n 31.5% 60 19M'Boundi north ext'n 31.5% 50 16Dongou 31.5% 52 16M'Bemba 31.5% 40 13North M'Boundi 31.5% 40 13Basin Margin 31.5% 60 19Tchivouba 31.5% 10 3NE Tchissakata 31.5% 50 16SW Tchissakata 31.5% 20 6
7 382 120Egypt
East Kanayis Shallow 100% 29 29East Kanayis Deep (boe) 100% 65 65
4 94 94India (HOEC) HOEC Intrst
CY-OSN - 97/1 80%19 752 490
25
Geographic Sphere of Interest
26
2005/6 Looking Forward
• Continue development of 246mm bbls booked reserves – Group WI production to reach 37,000 bopd at y/end (31,000 bopd avge for FY 2005)
• Exploration drilling in Turkmenistan, Congo and Egypt– c. 20 wells over period to end 2006 – Capex c. US$65m– Targeting 490 mm bbls potential gross prospect reserves on WI basis– Total of 6 rigs drilling by end 06 : 3 in Turkmenistan, 2 in Congo, 1 in Egypt
• Several new organic growth possibilities under review– Within current geographic focus areas
27
Summary
On course for a 4th successive year of more than doubled profits from organic growth alone
Continuing emphasis on low cost operation
Maintain development of core assets, but increase exploration activity
Strategy unchangedStick to frontier marketsOrganic growth led : driven by investment return, not empire creationBalance development growth potential and exploration upsideStrive to unlock gas value in geographic regions
28
Appendices
29
Burun Field : Historic Production Profile
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Calendar
Dai
ly P
rodu
ctio
n of
Oil,
Wat
er (m
3/d)
and
Gas
(Mm
3/d)
0
2
4
6
8
10
12
14
16
Cum
ulat
ive
Oil
(MM
m3)
96 : PSA signed. Monument operator. Burren 35%
98 : PSA productioncommences
00 : Burren acquires 100%and becomes Operator
04 : Development drilling
Oil
Gas
Water
Burun Field: 100-200mmcfd potential+ 5,000-10,000 bcpd of condensate
30
Burun Field – 2005 Drilling Programme
D DW 9 DDW10
4250
4750
4500
4250
4250
4000
4750
4500
4250
4500
4750
Apsheron Trend Strike Slip Fault
Burun Field – South Flank
Burun Field – North Flank
Nebit Dag Deep
B125
B062
B124
B129
B191
B127
B128
B183
B061B243
B060
B058 B059 B240
B232zB242
KEYShallow Well Location (planned)Deep Well Location (planned)Deep Well (drilled 2003-2005)Proven + ProbablePossible
Apsheron Drilling
B063
B126
B198
September 2005
B235
B248
B244
B245
B064
B188
B196
B189B195
B145
B146
B147
B148
B247
B246
B078z
B150
31
Gas Export
Gas Pipeline Infrastructure Caspian & Black Sea Region
32
HOEC Production, Development & Exploration Assets
33
HOEC Cauvery Basin Assets
PY-1 Gas Field
PY-3 Associated Gas
CY-OSN-97/1Oil & Gas
Exploration Prospects
Planned Gas Pipeline
CauveryBasin
34
Principal Shareholders
As at 30 August 2005 # shares(million) %
Baring Vostok Capital Partners 18.3 13.1%
Tacoma E&P 15.6 11.2%
Barclays Global Investors 15.4 11.1%
Sunfloat Shipping 10.7 7.7%
Balor Holdings* 5.2 3.7%
Management 0.9 0.7%
Free float 72.9 52.4%
Total 139.0 100.0%
* Finian O'Sullivan has beneficial interest
Management + Balor own 7.5% of diluted equity