rd march 2006 - premieroil.prod-mid-euw3.investis.com
TRANSCRIPT
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2005 Preliminary Results Presentation 23rd March 2006
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Page 2 | 2005 Preliminary Results Presentation
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.
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Page 3 | 2005 Preliminary Results Presentation
Preliminary results presentation
Strategy & Outlook Simon Lockett
Projects Update Robin Allan
Financial Highlights Tony Durrant
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Page 4 | 2005 Preliminary Results Presentation
Strategy & outlook
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Page 5 | 2005 Preliminary Results Presentation
Premier’s business strategy
• Targeting 50,000 boepd in medium term
• Reorganised business
• Build on quality prospect inventory for 2007 and beyond
• Minimum of 4 high impact wells per annum within disciplined spend
Strategy
• Acquisitions focus on core areas
• Exciting 2006 exploration programme, already delivering results
• Portfolio of new and incremental development projects
• Rising production in 2006
Progress
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Page 6 | 2005 Preliminary Results Presentation
Asia – building on our Natuna Sea position
20004000
8000
Asia Production(boepd)
0
6000
1000012000
18000
2006 2007 2008 2009
1400016000
Potential new projectsBooked reserves
• Use technical and commercial expertise from operations in the Natuna Sea to deliver new exploration opportunities and production projects across the region.
2005 2006• Vietnam prospect delivery • Lembu-Peteng and Macan Tutul• Indonesia HSE performance • Vietnam high-impact wells• West Lobe project progress • Singapore gas sales progressing
• Ratna
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Page 7 | 2005 Preliminary Results Presentation
West Africa – building a new core business
• Develop a pipeline of high impact drillable prospects and capitalise on Mauritania position
2005 2006• Congo and SADR acreage acquisitions • Guinea Bissau drilling• Chinguetti development complete • Chinguetti Phase 2• Tiof, Tevet and Banda appraised • Tiof development decision
• Progress Government of Mauritania issues
2000
3000
5000
West Africa Production(boepd)
0
Potential new projectsBooked reserves
4000
7000
2006 2007 2008 2009
6000
1000
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Page 8 | 2005 Preliminary Results Presentation
North Sea – returning to growth
2000
4000
8000
North Sea Production(boepd)
0
6000
16000
2006 2007 2008 2009
14000
10000
12000
Potential new projectsBooked reserves
• Build on Norway position by seeking out high impact exploration opportunities and maximise the value from existing UK producing assets
2005 2006• Norway acreage additions • UK exploration - Peveril• Kyle offtake reconfiguration • Frøy development progress• Wytch Farm infill drilling • Wytch Farm EOR
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Page 9 | 2005 Preliminary Results Presentation
Middle East & Pakistan –enhancing the Pakistan gas business
20004000
8000
Pakistan Production(boepd)
0
6000
1000012000
18000
2006 2007 2008 2009
Potential new projectsBooked reserves
1400016000
• Capitalise on a leading position in Pakistan’s rapidly growing gas market, and build a position in Egypt & the Middle East
2005 2006• Al Amir discovery • Al Amir appraisal• Zamzama 2 sanction • Indus E exploration (Anne)• Bhit/Qadirpur additional sales progress • Bhit/Qadirpur plant upgrades
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Page 10 | 2005 Preliminary Results Presentation
5 Year production potential
Production Profile by Region(boepd)
2006
60000
0
70000
2007 2008 2009 2010
50000
40000
30000
20000
10000
South AsiaM/East & PakistanWest AfricaNorth Sea
Production Profile(boepd)
2006
60000
0
70000
2007 2008 2009 2010
50000
40000
30000
20000
10000
(NB: Only includes discovered hydrocarbons (no exploration success assumed or acquisitions))
Potential new projectsBooked reserves
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Page 11 | 2005 Preliminary Results Presentation
Operational highlights
• Production ahead of budget at 33,300 boepd
• Developments on track in 2006
• Further gas sales progressed
• Resource base increased to 232 mmboe
• Successful exploration and appraisal year
• World class HSE performance
Strong gas demand in Pakistan, Indonesia offsets UK decline. Rising profile in 2006.
West Natuna (West Lobe) expected 3Q 2006Chinguetti onstream in February 2006.
Zamzama phase 2 signed.Good progress in Pakistan and West Natuna.
Net additions from discoveries and new licence awards.New acreage added for future exploration.
5 successes from 10 wells in 2005.Excellent start to 2006 in 2 operated wells.
5 years of continuous improvement as an Operator
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Page 12 | 2005 Preliminary Results Presentation
Projects update
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Page 13 | 2005 Preliminary Results Presentation
Asia – building on our Natuna Sea position
• Indonesia drilling update
• Singapore gas sales & associated development
• Vietnam high-impact wells
• Ratna progress
20004000
8000
Asia Production(boepd)
0
6000
18000
2006 2007 2008 2009
14000
1000012000
Potential new projectsBooked reserves
16000
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Indonesia drilling update
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Page 15 | 2005 Preliminary Results Presentation
Macan Tutul-1
Indonesia drilling update
Natuna Sea Block A PSC
2006 success in - Macan Tutul-1- Lembu Peteng-1
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Lembu Peteng-1
Indonesia drilling update
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Lembu Peteng-1Ibu Lembu-1
Indonesia drilling update
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Singapore gas sales & associated development
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Page 19 | 2005 Preliminary Results Presentation
Singapore gas sales & associated development
Gas Sales• Excellent demand in 2005• Progressing GSA2 negotiations
Anoa West Lobe• On schedule and on budget• First gas in Q3 2006
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Vietnam high-impact wells
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Page 21 | 2005 Preliminary Results Presentation
Blocks 12E & W Operator – Premier• Dua• Blackbird• Swan • Falcon, Peacock and Quit:
follow-on prospects
Dua Structure
Proposed12E-CS-1X
Blackbird Structure
Quit
Peacock
Falcon
Swan
Dua
Blackbird
Vietnam high-impact wells
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Page 22 | 2005 Preliminary Results Presentation
Existing Well 12E-LX-1Xoff-structure
Premier 12E-CS-1XPlanned at crest
12E-LX-1XThick sands with residual oil;
drilled close to mapped contact
Oil Water Contact
Blackbird Prospect
Vietnam high-impact wells
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Page 23 | 2005 Preliminary Results Presentation
Dua-1X
12-A-1X
Dua-1XDiscovery
Dua-2X
PremierDua-4X
Dua-1X (1974)Flowed 1500 bopd from (damaged)
Lower Miocene ‘Dua’ Sands
5km
Confirming Dua oil
Vietnam high-impact wells
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Ratna progress
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Ratna progress
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West Africa
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West Africa – building a new core business
2000
3000
5000
West Africa Production(boepd)
0
Potential new projectsBooked reserves
4000
7000
2006 2007 2008 2009
6000
1000
• Congo high impact exploration
• S.A.D.R. high impact exploration
• Guinea Bissau high-impact wells
• Mauritania – Chinguetti onstream, next steps
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Congo high impact exploration
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Page 29 | 2005 Preliminary Results Presentation
Block Marine IX
Highly prospective block, with significant reserve potential.
Premier 58.5% – Operator
Frida ProspectFrida Prospect
Kitina150 m bbls
Moho110 m bbls
N’Kossa280 m bbls
Congo high impact exploration
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Page 30 | 2005 Preliminary Results Presentation
Top Lower Albiandepth map with
Miocene channeldepth overlay
Tertiary Channel
2.0
1.0
3.0
4.0
Frida Prospect
Congo high impact exploration
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S.A.D.R. high impact exploration
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S.A.D.R. high impact exploration
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Guinea Bissau high-impact wells
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Page 34 | 2005 Preliminary Results Presentation
Total mean un-risked reservesin the top prospects is
>1.5 billion barrels (gross)
A $50/bbl oil price economics generates $7 NPV/bbl 135 mbbls
100 mbbls
180 mbbls
80 mbbls
151 mbbls
Espinafre70 mbbls
Sinapa-1 Sinapa-2,2z175 mbbls
30 mbbls 230 mbbls
110 mmbbls
Eirozes250m bbls
300 mmbbls
190 mbbls
Guinea Bissau high-impact wells
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Page 35 | 2005 Preliminary Results Presentation
North
Eirozes-1Proposed Well
(WD= 120 metres)
Eirozes Prospect: mean reserves 250 MM bbls
TopAlbianSand
Salt
South
Guinea Bissau high-impact wells
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Page 36 | 2005 Preliminary Results Presentation
Espinafre Prospect: mean reserves 70 MM bbls
North
Top Albian Sand
Salt
South
Espinafre-1Proposed Well
(WD= 34 metres)
Guinea Bissau high-impact wells
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Mauritania – Chinguetti onstream, next steps
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Page 38 | 2005 Preliminary Results Presentation
Mauritania – Chinguetti onstream, next steps
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Page 39 | 2005 Preliminary Results Presentation
Mauritania – Chinguetti onstream, next steps
Jalakk
Tiof SW
N’Dor
Bogue S
Fantar SW
Kibaro
Awatt
Colin
EquivalentNorth Sea block
Tevet-2 / Tevet Deep 2005 Cretaceous discovery
Labeidna 2005 Miocene discovery
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North Sea – returning to growth
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North Sea – returning to growth
20004000
8000
North Sea Production(boepd)
0
6000
16000
2006 2007 2008 2009
14000
1000012000
Potential new projectsBooked reserves
• Norway acreage additions
• Frøy development progress
• UK progress – Wytch Farm & Kyle
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Page 42 | 2005 Preliminary Results Presentation
Norway acreage additions
Reprocessing 3D34/2, 34/5 – 15%
Reprocess 3D34/4 (N) – 30%
Reprocess 3D35/12, 36/10 – 40%
Reprocess 3D16/1 (E), 16/4- 30%
100 sq.km 3D aqFrøy Area – 50%
2005 APA Round: Awarded 5 E&P
Work programme commitment level low, ALL work programmes targeting 2007 drilling.
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Page 43 | 2005 Preliminary Results Presentation
Frøy development progress
• STOIIP 239 MMstb
• Historical Production38 MMstb
• Future resources20-40 m bbls
• Target development approval – early 2007
• Planned first oilmid-2009
Frøy Field
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Page 44 | 2005 Preliminary Results Presentation
Kyle• Offtake reconfigured to a single FPSO• Targeting un-tapped Palaeocene reserves
UK progress – Wytch Farm & Kyle
Wytch Farm• Infill drilling continues• Key projects are:
– Low-salinity water injection EOR– 98/7 development
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Page 45 | 2005 Preliminary Results Presentation
Middle East & Pakistan
• Bhit & Zamzama progress
• Qadirpur & Kadanwari progress
• Egypt - Al Amir appraisal
• Pakistan – Anne high impact exploration
20004000
8000
Production(boepd)
0
6000
18000
2006 2007 2008 2009
14000
1000012000
Potential new projectsBooked reserves
16000
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Pakistan – Bhit & Zamzama progress
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Zamzama• Phase 2 approved in 2005 – work in progressBhit - Badhra• GSA to increase rates close to completion• Seismic recently acquired to evaluate Badhra upside
Pakistan – Bhit & Zamzama progress
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Page 48 | 2005 Preliminary Results Presentation
Kadanwari• High gas prices and strong offtake• 2006 drilling to exploit reservoir upside
and utilise plant capacity
Qadirpur• Further plant expansion to proceed• GSA to increase rates being negotiated• Possible power plant to sell further gas• Deeper reservoir to be drilled
Pakistan – Qadirpur & Kadanwari progress
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Page 49 | 2005 Preliminary Results Presentation
Egypt - Al Amir appraisal
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Page 50 | 2005 Preliminary Results Presentation
South Gharib Fm
Al Amir-2
Egypt - Al Amir appraisal
Zone-1 top oil
Zone-2
Zone-3 Zone-4
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Pakistan – Anne high impact exploration
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Page 52 | 2005 Preliminary Results Presentation
Pakistan – Anne high impact exploration
The Anne well is being drilled down-flank to target best channel
package and to confirm an economic
oil volume.
(i.e. attic likely to besub-commercial)
Anne-1 EW
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Page 53 | 2005 Preliminary Results Presentation
Exploration – 2006 exploration well plans
Guinea Bissau: Eirozes-1Espinafre-1
Mauritania : Dore-1 (dry): Colin-1: Kibaro-1
Gabon : Themis-1
Egypt : Al Amir-2 AppraisalPakistan : Anne-1
Indonesia : Tupai-1 : Ganesha-1: Macan Tutul (gas discovery): Lembu Peteng-1: Lukah-1
Vietnam : Blackbird-1 : Dua
India : Masimpur-3
UK : Peveril
West Africa 2006JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Asia
North Sea
M/East & Pakistan
Appraisal wells
Exploration wells
Rigs contracted for all wells except marked
High impact wells
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2005 Financial Highlights
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Page 55 | 2005 Preliminary Results Presentation
Financial highlights
• Operating profit up 112%
• Profit after tax up 75%
• Healthy cashflow
• Strong balance sheet
• Share buy back initiated
$125.7m(2004: $59.3m)
$38.6m(2004: $22.1m)
$118.9m(2004: $109.6m)
Net debt $26.2m
£10 million programme
Rising oil and gas prices, stable production
Rising profits offset by higher taxation charge
Cashflow covers all operating and capital expenditures at current prices
Significant cash inflow in January 2006
Average purchase cost of £5.55 per share
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Income Statement
Working Interest Production (mboepd)Entitlement Interest Production (mboepd)Realised oil price ($/bbl)Realised gas price ($/mcf)
Sales and other operating revenuesCost of salesExploration expensePre licence exploration costsGeneral and administration costsOperating profit Interest income and exchange gainsInterest and other finance expenseProfit before taxationTaxationProfit after tax
Earnings per share - basic (cents)Earnings per share - diluted (cents)
Prepared in accordance with IFRS
Year to31 Dec 2005
Year to31 Dec 2004
33.328.7
48.383.82
$m359
(176)(21)(17)(20)126
6(7)
125(86)
39
47.046.6
34.731.5
29.923.24
$m252
(135)(28)(13)(17)
592
(8)54
(32)22
26.826.1
Highlights
Underlying operating costs steady at <US$6 per barrelReduced dry hole costs
Low interest charges with strong balance sheetFull year of profit oil and gas in IndonesiaFull utilisation of past losses in Pakistan
Based on 82.1million shares
Includes one-off costs of US$3 million
Rising gas prices (especially in Singapore)
Full benefit of current high prices in 2006
Targeting 10% increase by year-end 2006
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Page 57 | 2005 Preliminary Results Presentation
Cashflow
Net cash flow from operationsNet interest TaxationOperating cash flowCapital expenditurePre licence exploration costsNet share issues/(purchases)Other movementsMovement in net cash
Opening net cash/(debt)Closing net cash/(debt)
Prepared in accordance with IFRS
Year to31 Dec 2004
$m
Year to31 Dec 2005
$m
207(2)
(86)119
(133)(17)(20)
6(45)
19(26)
165-
(55)110(92)(12)
2(2)6
1319
Exploration spend covered 2.3 X
Buy back of ordinary shares (£10 million) and purchase of shares for ESOP trust
2005 2004
Development
133 92
Exploration 51 46
82 34Acquisitions 13
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Page 58 | 2005 Preliminary Results Presentation
Gas pricing – improving economics
Brent & HSFO Prices(Index)
90
210
190
170
150
130
110
2004 2005 ‘06
PKP Gas Prices($/mmbtu)
150
7
25 40 60
5
4
3
2
1
6
5510 20 30 35 45 50
KadanwariBhitQadirpurZamzamaPKP
BrentHSFO
2005: US$7.90 per mscf (2004: US$4.96 per mscf)2005: US$2.20 per mscf (2004: US$2.13 per mscf)
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Page 59 | 2005 Preliminary Results Presentation
10% Increase in Total Resources
100
140
Reserves/Resources(mmboe)
Openingreserves/resources
Production Net Revisions Resourceadditions
Closingreserves/resources
80
0
Unbooked resources movementBooked reserves movementUnbooked resourcesBooked reserves
120
180160
200
• Booked reserves independently reviewed• Resource additions include Dua & Froy. • No resources yet booked for Banda or Swan discoveries
Divestment
220240
604020
210
232
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Page 60 | 2005 Preliminary Results Presentation
Future Field Capex by Region($ million)
140
0
180
100
80
60
40
20
West AfricaSouth AsiaM. East & PakistanNorth Sea
120
160
Future Field Capex($ million)
2006
140
0
180
2007 2008 2009
100
80
60
40
20
120
160Potential new projectsBooked reserves
Potential future field Capex
2006 2007 2008 2009
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Page 61 | 2005 Preliminary Results Presentation
Exploration spend
• Targeted at around $50m per annum
• Pre-licence exploration costs estimated at additional $10m per annum
• Will require active portfolio management in current environment to meet target– Attractive farm-in offers under consideration
10
20
40
Exploration Spend($M)
0
30
60
2003 2004 2005 2006 E
50
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Page 62 | 2005 Preliminary Results Presentation
Financial outlook
• Balance sheet effectively ungeared
• Strong and stable cashflows will fund planned capital programme at $50/bbl– including annual exploration spend at $50m
• Hedging programme through 2010 with floors around $40/bbl protects downside
• Corporate credit facility of $275m largely undrawn
• Financially strong to fund new development projects and acquisitions
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Page 63 | 2005 Preliminary Results Presentation
Summary
• Exciting year ahead
• Close out gas sales contracts in Indonesia/Pakistan
• Actively target acquisitions in core areas
• High impact exploration in Guinea Bissau & Vietnam
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Page 64 | 2005 Preliminary Results Presentationwww.premier-oil.com March 2006