Medco Investment Strategy during Downturn Oil Era

Transcription

1 Delivering Energy Medco Investment Strategy during Downturn Oil Era Hilmi Panigoro President Director of Medco Energi International SIEP Conference- Houston Texas, 19 November

2 Main Business Activities MedcoEnergi is a publicly listed, integrated energy company with significant interests in Power Generation and support services alongside its core Oil & Gas Exploration & Production activities in Indonesia, the Middle East, North Africa and the US. 2

3 Medco Journey to World Class Energy Company Established as Meta Epsi Pribumi Drilling Company Initial Public Offering in Indonesia Acquired 100% shares of Stanvac Indonesia from Exxon/Mobil Discovered largest onshore oil reserve (Kaji- Semoga) Awarded EPSA IV PSC Contract for Area 47 Libya Awarded Oman Service Contract. Increased production up to 100% in 5- years time Discovered 352 MMBOE hydrocarbon resources in Area 47 Libya; about 90% exploration success ratio LNG Sales Agreement signed with Japanese & Korean buyers, gas to be supplied from Senoro- Toili Block Obtained 20- year extension for 3 PSC contract area in Indonesia (South Sumatra, Block A and Bawean) Obtained Commerciality approval on Area 47, Libya Received Final Investment Decision for Senoro-Toili Gas and LNG projects Acquired 25% in Block 9 Malik, Yemen First coal sales shipment to China Acquired new assets in Tunisia and Oman Get Project Financing for DSLNG and Sarulla from JBIC of USD 2.7 Billion Senoro and DSNLG commence operation 25 year of extension for Karim, Oman Rimau Block received 5 th Gold PROPER Award Signed SPA with ConocoPhillips to acquire 40% WI in the Block B South Natuna Sea Finalized acquisition 50% PT Amman Mineral Investama which indirectly control 82.2% WI in PT Newmont Nusa Tenggara. 3

4 Global Energy Market faces continuous change Continuous change is the norm for energy markets Changing energy mix Fossil fuels continue to provide most of the world s energy Natural gas is the fastest growing fossil fuel Oil grows remain stable Coal is the slowest growing fuel Continuous rapid growth in renewables Source : BP & Woodmac

5 Fluctuation of oil price impacts to company s strategy Oil price fluctuations are common and sharply 5 times within 30 years. A challenge for oil and gas companies is how to adapt in a fluctuating environment, conducts adaptation and mitigation so that the company's goals can be achieved through the right strategy 5

6 Leveraging MedcoEnergi s strong domestic position Medco will create value by evaluating each opportunity against our return and profitability benchmarks. With commodity prices projected to remain low, there will be opportunities to acquire domestic resources. The acquisition of PT Newmont Nusa Tenggara and South Natuna Sea Block B are excellent examples of how targeted domestic resource acquisitions can create value for the Company s stakeholders. 6

7 PT Amman Mineral Nusa Tenggara MedcoEnergi Leads Indonesia, Inc. to Bring Back Indonesia s Strategic Assets from Newmont Transaction is completed on 2 November ,000 ha Copper & Gold mine located SW Sumbawa Island, W. Nusa Tenggara Province, 550 m above sea level. 81 km from Mataram. 4th generation CoW signed 1986, for 30 years operation from start of production in 2000 Producing Mine Batu Hijau mine Batu Hijau Mine Copper Gold Proved Reserves 2.6 bil lbs 2.7 mil oz Resources 10.3 bil lbs 13.9 mil oz 2015 Production Facilities mil lbs 0.3 mil oz 120,000 tpd processing facility, grinding facility, pipe assembly facilities for tailings management, warehousing, 158 mw coal-fired powerplant, port with ferry terminal, air services and town site for housing and school 7

8 PT Amman Mineral Nusa Tenggara MedcoEnergi Leads Indonesia, Inc. to Bring Back Indonesia s Strategic Assets from Newmont Potential Development: Elang with est. resources 12,945 mil lbs copper, 19.7 mil oz gold with potential to produce mil lbs copper and mil oz gold annually 8

9 South Natuna Sea Block B (SNSB) Enhancing capabilities through the integration of world-class offshore operations. An offshore PSC located in the South Natuna Sea with world class operating scale and large hydrocarbon base (gross 3P resources > 569 mmboe) Source: ConocoPhilips Oct 2015 Current Ownership Structure: ConocoPhillips : 40% (Operator) INPEX : 35% Chevron : 25% Current gross production: 266 mmcfd gas and 19 mbopd oil/condensate Current net production 28 mboepd SNSB is Operator of the PSC and the West Natuna Transportation System (WNTS), a 650 km natural gas pipelines, which services gas sales from 3 producing PSCs in the South Natuna Sea to the Onshore Receiving Facility in Singapore In place gas-liquids processing, storage and export infrastructure with additional capacity for future expansion Best in class Health, Safety, and Environmental Records Highly experienced and proven operating team of 800 employees and 320 contractors 9

10 Sarulla Phase I Geothermal Power Development The largest single-contract geothermal power project in the world Located in Tapanuli Utara district, North Sumatra with contracted capacity of 3X110MW. 30 years Energy Sales Contract with PT PLN with Take or Pay 90% capacity factor. Joint Operating Contract with PT PGE. Production Well Drilling Progress Ownership: MPI ( %), INPEX ( %), ORMAT (12.75%), ITOCHU (25%), KYUSHU (25%) Total project investment cost of US$1.6 billion. Secured project financing of US$1.17 billion for 20 years with JBIC, ADB, and 6 commercial banks. Power Plant Construction Front View As of September 2016 Phase I and Phase II power plant construction progress have reached 95.8% and 51.8% respectively. 10

11 Cost and capital efficiency, operational effectiveness Improving unit cash cost G&A Cost Sustainable reductions in our cash cost structure Lifting Cost US$/BOE A Managing capital delivery A A 315 < G* M1 6 Manage base production decline and reduce downtime Deferral and renegotiation of exploration commitments Selectively capture the benefits of further supplier market deflation Capex US$ mn 2013 A 2014 A 2015 A 2016 G* 9M1 6 Cash cost without Oman Service Contract * Excluding acquisitions 11

12 Well balanced 2P reserves 2P Reserves % Foreign Large well balanced 2P reserves backed by a strong resource base Foreign Domestic SNSB 57.2% 34.3% 8.5% Oil 17 Reserve Life Index 76.0% Domestic 14.6% SNSB Gas Monetize our resources through capital discipline and project execution Prioritize domestic projects for early cash generation Resources > 380 Oil Domestic 22.7% 71.4% SNSB 6.0% 6.0% SNSB 71.3% 22.5% Gas Foreign Reserves and resources in mmboe, Reserve life index in years Focus on lower risk, cost effective near field resources and exploration South Natuna Sea Block B acquisition will add 35 mmboe of 2P reserves and 23 mmboe of contingent resources 12

13 Healthy project pipeline Oil Gas Power Matang 2012 Kuala Langsa 1992 Tunisia 2014 Iliran High Arung Telisa Semoga North Temelat 2009 Temelat 2011 Phase I COD Q Block A 2013 Sarulla Simeng Geo- -garis Thermal 2013 Libya 2007 Mini Hydro POD Submission 2016 Libya 2007 Ijen Geo- Thermal Cibalapulang Senoro II FEED Completed 2016 Phase I COD Q Appraise Select Define Execution Production 13

14 MedcoEnergi s contribution to Goverment of Indonesia 1,600 1,400 1,200 Tax GOI's Shares Total Contribution 1, ,342 1,102 1,085 1, Medco s contribution to the Government of Indonesia in 2015 is US$ 272 million (IDR 3.6 Trillion) and US$ 12.1 billion in the last 15 years 14

15 Conclusion Global energy market faces continuous change. Changing energy mix, energy pattern and energy prices Delivering in 2016 Solid Liquidity Looking Forward Oil price fluctuations are common and fluctuate sharply 5 times within 30 years. A challenge for oil and gas companies is how to adapt in a fluctuating environment, conducts adaptation and mitigation so that the company's goals can be achieved through the right strategy Medco will create value by evaluating each opportunity against our return and profitability benchmarks. With commodity prices projected to remain low, there will be opportunities to acquire domestic resources. The acquisition of PT Newmont Nusa Tenggara and South Natuna Sea Block B are excellent examples of how targeted domestic resource acquisitions can create value for the Company s stakeholders 15