Company Presentation. 5 February 2016

Transcription

1 Company Presentation 5 February 2016

2 Faroe overview Introduction Faroe s exploration-led and production-backed strategy is delivering exceptional results Material exposure to Norwegian exploration upside - benefiting from tax refund incentive Substantial potential being realised across portfolio Material, well balanced and tax efficient production with low operating costs Strong balance sheet, with low gearing Faroe has built an outstanding diversified portfolio High quality large exploration acreage position in Norway Ongoing fully funded multi-well drilling programme Balanced portfolio of assets Faroe s world class sub-surface competence is at the heart of its success Faroe is robust and well positioned for growth in a low oil price environment Faroe well capitalised and on track to become a leading E&P player in the North Sea 2

3 Faroe s growth model Building core value and scale Maintain significant portfolio of Prospective Resources Participate in Licence Rounds excellent track record of awards Proactive approach to farm-ins/farm-outs Grow 2C Contingent Resources High-graded, high-quality programme of E&A wells Optimum working interests and better than 1 in 3 success rate Grow 2P Reserves Progress discoveries to FDP sanction Participate selectively in development projects Swap 2C contingent for 2P reserves where appropriate Grow Production Exploit market opportunities through acquisitions & swaps Invest in our producing fields Prudent financial management Ensure balance sheet strength at all times Building core value and scale Faroe successfully executing its strategy 3

4 Robust company going forward Faroe well positioned to grow in lower oil price environment Financially robust Cash on the balance sheet ( 91m at 31 Dec-15) Significant head-room in existing debt facilities Material cost reductions drilling, operations, G&A Production generating cash-flow even at much lower oil price levels Average economic production of 10,530 boepd in 2015 (at top of guidance range) with 58% liquids, 42% gas Full year 2016 guidance 7,000-9,000 boepd (Njord/Hyme off stream at the end of May-16) Hedging in place to underpin budget 65% of gas production (post tax) at between 45-50p/therm Production balanced between oil and gas and between Norway and the UK Modest near-term capital expenditure Limited 2016 capital expenditure expected 20m Development decisions on Njord and Butch expected end 2016 E&A programme continues with potential for significant value creation 5 wells E&A programme in 2015 ( 61m pre-tax and 15m post-tax) Shango and Boomerang - discoveries Portrush, Bister and Blink - dry wells 3 well E&A 2016 E&A programme, fully funded ( 50m pre-tax and 12m post-tax) Kvalross, Barents Sea (drilling) Brasse, Norwegian Sea (near field) Njord N Flank, Norwegian Sea (near field) Faroe has strong balance sheet, good upside, financial headroom and real growth potential 4

5 Exploration and appraisal Drilling programme: E&A continuing - benefiting from lower costs in 2016 All near term exploration wells are in Norway benefiting from 78% tax rebate incentive Several prospects identified for possible 2017 drilling, both operated and non-operated The most mature targets are: Cassidy, Norwegian North Sea Butch look-alike (15%) South-East Tor, Norwegian North Sea - existing discovery significant upside (85%) Edinburgh, Norwegian North Sea cross border prospect (ca 10% of well cost - 35% of Norwegian licence) Screening work ongoing with emphasis on economic robustness ahead of drilling decisions Very active programme fully funded with significant upside potential 5

6 Exploration/appraisal Kvalross frontier exploration well currently drilling PL611 - Faroe 40% - Wintershall operator Awarded in May 2011 in the Norwegian 21st Licensing Round Located in the Barents Sea to the south of OMV s significant Wisting discovery Two targets: Lower Triassic Kvalross prospect with very significant oil and gas resources potential in Klappmyss clinoform reservoirs within a mega-closure the Early Triassic Kvaltann prospect, a Snadd Formation sandstone channel sitting directly above the Kvalross Prospect with substantial oil potential as proven in the Wisting shallow discovery to the north Well 7224/2-1 commenced drilling on 11 Jan-16, using the Transocean Arctic drilling rig Targeting estimated un-risked prospective resources of 108-1,173 mmboe* (gross) 6 * CPR Jan 2016 (Senergy)

7 Exploration and appraisal Brasse near field exploration well - expected 2016 The Brage area Very prospective area Contains the giant Oseberg field and large oil fields such as Brage and Veslefrikk Krafla is a recent exploration success 79 wildcat exploration wells since % technical success rate PL740 Brasse prospect 2013 APA licence Faroe 50% and operator, Core Energy 50% Undrilled structure located in close proximity to large oil fields Recent infill well A18C in Brage encountered good quality Fensfjord reservoir at the south end of the field may extend onto Brasse Multiple other levels are also prospective: Sognefjord, Statfjord, Brent and Cook Targeting estimated un-risked prospective resources of mmboe* (gross) (not including the Draupne pinch-out case or the stacked potential in Sognefjord, Fensfjord and Brent) Expect to drill in summer * CPR Jan 2016 (Senergy)

8 Exploration and appraisal Njord North Flank exploration well expected in Q The Njord area Very prospective area Contains the Njord field and Draugen field Snilehorn, Pil, Bue and Boomerang are recent exploration successes PL107C North Flank prospect (NF2) 2009 APA licence 107C Faroe 7.5%, Statoil operator Main plays; Ile and Tilje Formations 3-way down faulted structural trap, with crest of structure in PL107. Targeting estimated un-risked prospective resources of 7-59 mmboe* (gross) Expect to drill in summer * CPR Jan 2016 (Senergy)

9 Producing and Development assets Building production base and growing reserves Diversified production base with infill and near-field upside potential to boost production Brage (Faroe: 14.26%) Butch (Faroe: 15%) Njord/Hyme/ Snilehorn (Faroe: 7.5%) Pil (Faroe: 25%) Oil field in Norwegian North Sea Wintershall-operated Two successful infill wells in 2015 new programme being planned Development project in Norwegian North Sea Centrica-operated FEED project ongoing - FDP submission planned for end of 2016 Oil and gas field in the Norwegian Sea Statoil-operated Production to be suspended in May - Njord Future project underway Oil and gas field in the Norwegian Sea VNG-operated Feasibility confirmed for both subsea satellite and stand alone solutions 2P Reserves (1 Jan-16) Pil (N) Blane (UK) Others Ringhorne East (N) Total: 57.4 mmboe Pil Njord/Hyme/ Snilehorn (N) Schooner/ Ketch (UK) Brage (N) Butch (N) Njord Area Ringhorne East (Faroe: 7.8%) Oilfield in Norwegian North Sea - Exxon-operated Low operating cost, stable production Brage Blane (Faroe: 30.5%) Schooner & Ketch (Faroe: 60%) Oilfield in Central Graben UK - Repsol-operated Low operating cost, stable production Gas fields in the UK Southern Gas Basin Faroe-operated Stable gas production gas sold into the UK market Blane Schooner & Ketch Ringhorne East Butch Strong balanced production, well performing assets, low opex per boe 9

10 Butch (Norway) Excellent value creation opportunity Butch discovery (Faroe 15%) Southern North Sea, 66m water depth Close to infrastructure: Ula and Gyda Excellent quality reservoir, light oil Centrica operator Development project planning work ongoing Project passed concept selection in H Selected concept: Subsea tie-back to Ula via Oselvar Two production wells and one water injection well Expected on stream in plateau production of approx. 35,000 boepd gross Front End Engineering and Design project on track Subsea and drilling costs major part of capex to benefit from reduced market rates FDP submission planned for

11 Greater Njord Area (Norway) Strategic position Njord, Hyme and Snilehorn: Njord and Hyme producing in excess of forecast but declining due to drill stop Facility needs lifetime extension - tow-to-shore in summer 2016 Njord Future project FDP at end-2016 Njord, Hyme and Snilehorn 2P Reserves in excess of 200 mmboe (gross)* Pil, Bue and Boomerang 2014 and 2015 discoveries Pil gross columns ca 135m oil & 91m gas - flowed at stable rate 6,710 bopd of 37 degree API oil, 56/64 choke Bue and Boomerang added further volumes Pil project feasibility confirmed for subsea tie-back and leased FPSO stand alone solutions project now maturing towards concept selection Potential for significant further resource additions through exploration Significant infrastructure in the area Draugen and Njord large field developments Åsgard transportation gas trunk line to European gas market Draugen Shell operated * CPR Jan 2016 (Senergy) Njord Statoil operated 11

12 Contingent Resources Converting 2C Contingent Resources to 2P Reserves Field WI Operator Faroe Observations 2C Resources (1 Jan-16) Bue and Boomerang (Norway) 25% VNG 2014 and 2015 discoveries Being matured to concept selection in combination with Pil SE Tor (N) Others Lowlander/Perth/ Dolphin (UK) SE Tor (Norway) Fogelberg (Norway) 85% Faroe 1972 discovery Salt induced structure large in place volumes in Tor and Ekofisk formation Both production tested at >4000 bpd 15% Centrica 2010 discovery Proximity to infrastructure Awaiting export capacity Rodriguez/Solberg (N) Fogelberg (N) Fogelberg Bue and Boomerang (N) Total: 98.3 mmboe Lowlander / Perth Dolphin (UK) Rodriguez / Solberg (Norway) >50% Faroe / Parkmead 2011 / 2013 acquisitions Technical definition maturing Commercial framework for joint development being agreed 20% Wintershall 2013 / 2014 discoveries Lower Cretaceous Lange Channel system extends across several licences Bue & Boomerang Perth & Lowlander SE Tor Maximise project values through low-cost pre-development activities 12

13 2015 / 2016 Financials Highlights Production 2015 economic production* approximately 10,530 boepd 2016 production expected to be 7-9,000 boepd (approximately 55% liquids and 45% gas) 2016 gas hedging: 65% of gas production hedged at 45-50p/therm on post-tax basis Liquidity Cash at 31 Dec-15 of 91.0m (unaudited) $225m Reserve Based Lending facility (RBL) approximately $33m drawn at 31 Dec-15 Exploration Financing Facility (EFF) of approximately 150m (NOK 1.5 bn) (plus NOK 500 million accordion) Capex 2015 exploration and appraisal programme of approx. 61m or 15m post-tax (actual Faroe cost) 2016 expected exploration and appraisal programme of approx. 50m or 12m post-tax 2016 expected development and production capex approximately 20m (2015: 13m) Tax efficiency UK tax losses of 58m (June 15); production provides tax shield for UK exploration Norway: utilisation of 78% exploration tax rebate; EFF funds 75% of net exploration expenditure Strong balance sheet, low gearing, good hedging, cash flow from production, headroom * Economic production for 2015 includes 12.5% of Blane, where Faroe received the economic benefit from the associated production from 1 Jan-15 but can only account for it from the completion of the acquisition on 5 Nov-15 Accounting production for 2015 was 10,260 boepd 13

14 Summary and outlook Solid and proven business model delivering sustainable value growth, through drill-bit and transactions Exploration-led strategy continues to deliver material success, underpinned by production Balanced portfolio and world-class technical team Financially robust and operationally strong at low commodity prices Robust balance sheet Production generated cash flow Forward programme is material yet relatively low cost and benefits from Norwegian State refund Multi-well high impact E&A programme in Norway on track, fully funded Modest exploration, production and development capex in 2016 est. 32m post tax Planned growth Continuing strategy to progress 2C to 2P Strong balance sheet ensures we are well positioned to pursue multiple routes to create value Aim to grow significantly in the near term Strength at low oil price, high upside, funded 2016 programme, growth planned 14

15 Differentiators Excellent exploration track record - multi-well programme Experienced management & clear strategy Financial strength and prudence Production field operator Excellent asset monetisation track record Strong Norway position 15

16 Executive team Graham Stewart Chief Executive Officer Helge Hammer Chief Operating Officer Jonathan Cooper Chief Financial Officer Instrumental in founding Faroe Petroleum in 1998 Over 25 years experience in oil and gas technical and commercial affairs Previously finance director and commercial director at Dana Petroleum 1997 to 2002 Experience with Schlumberger, DNV Technica, Petroleum Science & Technology Institute Offshore Engineering degree (Heriot- Watt University) and MBA (University of Edinburgh ) Joined Faroe Petroleum in 2006 Over 25 years technical & business experience, incl. Shell (Norway, Oman, Australia and Holland) Managing Director of wholly owned Norwegian subsidiary, Faroe Petroleum Norge AS Previously Asset Manager and Deputy Managing Director at Paladin Resources Economics degree (Institut Français du Pétrole, Paris) Petroleum Engineering degree (NTH University of Trondheim) Joined Faroe Petroleum as Chief Financial Officer in July 2013 Former Finance Director of Gulf Keystone Petroleum and Sterling Energy and CFO of Lamprell plc Former Director of the Oil and Gas Corporate Finance Team of Dresdner Kleinwort Wasserstein Broad range of experience from mergers and acquisitions, public offerings and financing Chartered accountant by training having qualified with KPMG PhD Mechanical Engineering (University of Leeds) 16

17 Disclaimer These materials do not constitute or form any part of any offer or invitation to sell or issue or purchase or subscribe for any shares in Faroe Petroleum plc (the Company ) nor shall they or any part of them, or the fact of their distribution, form the basis of, or be relied on in connection with, any contract with the Company relating to any securities. Any decision regarding any proposed acquisition of shares in the Company must be made solely on the basis of public information on the Company. These materials are not intended to be distributed or passed on, directly or indirectly, to any other persons. They are available to you solely for your information and may not be reproduced, forwarded to any other person or published, in whole or in part, for any other purpose. No reliance may be placed for any purpose whatsoever on the information contained in these materials or on their completeness. Any reliance thereon could potentially expose you to a significant risk of losing all of the property invested by you or the incurring by you of additional liability. No representation or warranty, express or implied, is given by the Company, its directors or employees, or their professional advisers as to the accuracy, fairness, sufficiency or completeness of the information, opinions or beliefs contained in these materials. Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered or incurred as a result of the reliance on such information, opinions or beliefs. Certain statements and graphs throughout these materials are forward-looking statements and represent the Company s expectations or beliefs concerning, among other things, future operating results and various components thereof, including financial condition, results of operations, plans, objectives and estimates (including resource estimates), the Company s anticipated future cash-flow and expenditure and the Company s future economic performance. These statements, which may contain the words anticipate, believe, intend, estimate, expect and words of similar meaning, reflect the directors beliefs and expectations and involve a number of risks and uncertainties as they relate to events and depend on circumstances that will occur in the future. Forward-looking statements speak only as at the date of these materials and no representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. The Company expressly disclaims any obligation to update or revise any forward-looking statements in these materials, whether as a result of new information or future events. If you are considering buying shares in the Company, you should consult a person authorised by the Financial Conduct Authority who specialises in advising on securities of companies such as Faroe Petroleum plc. 17