Independent Oil & Gas plc

Transcription

1 Independent Oil & Gas plc A development and production focused North Sea company November 2017

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3 Disclaimer The information contained in this confidential document ( Presentation ) has been prepared by Independent Oil and Gas plc (the Company ). While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers give, have given or have authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as Information ) and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation. This Presentation may contain forward-looking statements that involve substantial risks and uncertainties, and actual results and developments may differ materially from those expressed or implied by these statements. These forward-looking statements are statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, prospects, growth, strategies and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as of the date of this Presentation and the Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Presentation. Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent. This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. In particular, this Presentation does not constitute an offer or invitation to subscribe for or purchase any securities and neither this Presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters. Neither this Presentation nor any copy of it may be (a) taken or transmitted into Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or the United States of America (each a Restricted Territory ), their territories or possessions; (b) distributed to any U.S. person (as defined in Regulation S under the United States Securities Act of 1933 (as amended)) or (c) distributed to any individual outside a Restricted Territory who is a resident thereof in any such case for the purpose of offer for sale or solicitation or invitation to buy or subscribe any securities or in the context where its distribution may be construed as such offer, solicitation or invitation, in any such case except in compliance with any applicable exemption. The distribution of this document in or to persons subject to other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction. 3

4 Strategy and Company Overview Strategy Deliver the Company s significant gas reserves via two production hubs and fully owned infrastructure Company Overview North Sea development and production focus: Targeting over 200 MMcfd gas production from current portfolio (c.35 MMBOE [1],[2] ) Southern North Sea 54.7 BCF 2P gas reserves in Blythe Hub [2] BCF 2P gas reserves in Vulcan Satellites [2] MM NPV10 of 2P Reserves at Blythe and Vulcan Satellites Hubs [2] 114 BCF P50 to be appraised at Harvey [2] Portfolio offtake to be via 100% owned pipeline Dimlington Blythe Hub Vulcan Satellites Hub Experienced team with proven track record Gas hub strategy - CH4 Energy Clipper South development Fairfield Supportive investors providing working capital to progress development work Theddlethorpe Elgood Blythe Harvey Nailsworth Elland Southwark 4 Sources: [1] Conversion factor of 5.8 BCF per MMBOE plus gas condensate [2] ERC Equipoise CPR October & November 2017 Bacton Map: Wood Mackenzie PathFinder/IOG Thames Pipeline

5 Benefits of IOG s UK Gas Hub Strategy Economic Drivers UK s Rising Gas Import Dependency Strong cash flows and investor returns Low costs and breakeven prices Stable UK gas prices of 43-44p/therm (see below) Portfolio of 6 fields diversifies risk Macro & Energy Security Factors Gas will remain vital part of UK energy supply High UK gas import reliance (see right) IOG to provide 15+ years of stable domestic gas supplies Reduces need for higher LNG or pipeline imports Gas as bridge fuel to lower carbon energy mix IOG s 400+ BCF could heat up to 9 million UK homes for a year Source: OGA/Bloomberg UK Gas Forward Curve 5-Year Outlook (NBP in p/therm) Aligned with UK Oil & Gas Authority Fulfilling the UK government s Maximise Economic Recovery (MER UK) strategy Extending life of UK infrastructure (Thames Pipeline) Building on OGA s SNS Tight Gas Strategy 5 Source: ICE/IOG

6 Experienced Team Board CEO & Interim Chairman Mark Routh Founder and Ex-MD of CH4 Energy Ltd Deputy CEO Andrew Hockey Ex-Fairfield, Sound Energy, Eni & Fina Non-Executive Director (LOG) Non-Executive Director (LOG) Non-Executive Director Charles Hendry Former UK Minister of State for Energy Martin Ruscoe Director of London Group plc Management Andrew Hay Adviser at Edmond de Rothschild CFO Head of Business Origination SNS Project Manager H S & E Manager James Chance Ex-Standard Chartered Oil & Gas Banker Peter Young Ex-Standard Chartered, Mitsui, and RBS Graham Cox Formerly Project Manager on Clipper South Development Ian Pollard Formerly H S & E Manager for Fairfield Energy Chief Petroleum Engineer Pipeline and Subsea Engineer Technical Director Financial Controller Colin Jones Roger Farrow Doug Fenwick Gavin Milne Ex-Norsk Hydro and DNO Former Chairman of Oslo SPE Ex-Hess and BG Founder and Ex-CEO of MPX Energy Ex-Sterling, Faroe, Celtique and Valiant 6 Directors and Management own 21.9% of IOG

7 Material Future Gas Production and Cash Flow First gas targeted by end of Q from Blythe and Southwark All five fields in production by 2020 Consistent strong cash flows throughout 2020s Economic life to mid-2030s Expected peak production of over 200 MMcfd (c.35,000 BOE/D) Harvey development could extend the 100 MMcfd+ plateau to 2023 Thames Pipeline provides offtake route for gas production for life of IOG s SNS Hub [1] 74 MMBOE total potential production at 5+ unrisked NPV/BOE Portfolio Gas Reserves [2] 1P/2P/3P = 201/303/435 BCF Portfolio Condensate Reserves [2] 1P/2P/3P = 1.1/1.7/2.4 MMBO Vulcan Satellites Revised Field Names Old Name Vulcan South Vulcan North West Vulcan East Revised Name Southwark Nailsworth Elland Thames Pipeline Landfall at Bacton Terminal 7 [1] Pipeline acquisition subject to completion [2] ERC Equipoise CPR - October 2017

8 Thames Pipeline: Enabling the Gas Hub Strategy 100%-owned 24-inch line with significant capacity Recommissioning gives control from field to market Export line for all IOG SNS gas Major cost savings of up to 100m No transportation tariff reduces opex Pigging and onshore facility refurbishment in Q [1] Enables IOG to maximise economic recovery in the area Potential further activity: Acquire and develop other nearby assets De-risk appraisal and exploration targets Third-party tariff income [1] Subject to completion of Thames pipeline acquisition Thames Pipeline section to be recommissioned shown in bold Map: Wood Mackenzie PathFinder/IOG Areas highlighted in yellow denote IOG licences 8

9 Thames Pipeline Recommissioning IOG s intelligent pigging operation in early 2018 will measure the status and wall thickness of the Thames Pipeline This will determine the safe Maximum Allowable Operating Pressure (MAOP) Engineering studies have demonstrated the low risks of recommissioning the line Estimated further life of years based on observed and expected corrosion rates Compared to year life of IOG assets Natural production declines will reduce need for operating pressure and wall thickness Use of onshore compression at Bacton also significantly further reduces need for operating pressure The line was decommissioned only in 2015 and no subsequent damage is expected In the event it is required, replacing damaged sections is technically and economically feasible In the extremely unlikely event the line is damaged beyond reuse, a new line could be installed inside the existing one from the terminal, with the same landfall section and onshore facilities still being used Thames Pipeline landfall at the Bacton Terminal Example of intelligent pig device 9

10 Vulcan Satellites Hub 100% owned Large gas hub close to Thames pipeline CPR conducted in October 2017 confirms development ready 2P reserves of BCF Low-cost shallow water developments using unmanned platforms Peak production of over 150 MMcfd from 8 hydraulically stimulated wells Target breakeven price <25p/therm ($20/BOE) FDP submitted October 2017 Vulcan Satellites Hub Location in relation to IOG s other assets Nailsworth Elland Southwark Current activities: Consultation on Environmental Impact Assessment Offtake and Contractor funding discussions Preparing for surveys Platform FEED Map: Wood Mackenzie PathFinder/IOG Vulcan Satellites Hub 2017 CPR [1] Vulcan Satellites Gas Initially in Place (BCF) [1] Gas Reserves (BCF) [1] Field Low Best High 1P 2P 3P Nailsworth Elland Source: [1] ERC Equipoise CPR - October 2017 Southwark Total (arithmetic sum)

11 Vulcan Satellites Hub: Subsurface Work Disciplined Subsurface In-House Work Flow 1H 2017 Acquire 3D seismic dataset Proprietary mapping and resource assessment Build in-house static model to estimate gas in place Model hydraulic stimulation to understand potential Build dynamic reservoir model to forecast production Elland Top Rotliegend Depth Map [1] 49/21c & 49/21d Outcome Proprietary reservoir model High quality input to field development plan Nailsworth Top Rotliegend Depth Map [1] Southwark Top Rotliegend Depth Map [1] 49/21c 11 Source: [1] Beagle Geoscience / IOG November 2016

12 Blythe Hub 100% owned Two proven gas discoveries to be developed jointly and exported via Thames Pipeline CPR conducted in October 2017 confirms Blythe 2P Gas Reserves of 33 BCF, Elgood 2P Gas Reserves of 22 BCF Unmanned platform at Blythe, Elgood subsea tie-back First gas in Q2 2019, target peak production 85 MMcfd [1] Target breakeven price <25p/therm ($20/BOE) Total recovery 54.4 BCF [1] (2P case) FDP submitted July 2017 Preparing for surveys Platform FEED underway Preparing Environmental Impact Assessment Contracting and funding processes combined with Vulcan Satellites hub Gas offtake agreement with BP Gas Marketing for Blythe Blythe Hub Location in relation to IOG s other assets Elgood Blythe Map: Wood Mackenzie PathFinder/IOG Blythe Hub 2017 CPR [1] Blythe Hub Gas Initially in Place (BCF) Gas Reserves (BCF) Field Low Best High 1P 2P 3P Blythe Elgood Total (arithmetic sum) Sources: [1] Competent Person's Report: ERC Equipoise - October

13 Blythe Hub: Subsurface Work Disciplined Subsurface In-House Work Flow: Blythe Top Rotliegend Depth Map [2] Work completed in Q3 16 Q2 17 Reprocessed 250 km 2 3D seismic data [1] Seismic mapping and amplitude analysis [2] Resource Assessment Blythe Reservoir Modelling [3] Static model confirms Gas in Place estimates Dynamic model forecasts gas production Outcome Proprietary IOG reservoir model High quality input to Field Development Plan Elgood Top Rotliegend Depth Map [2] Elgood Sources: [1] Schlumberger WesternGeCo [2] Beagle Geoscience / IOG November 2016 [3] ERC Equipoise / IOG May

14 Harvey Appraisal - Significant Upside A potential significant structure which could be the largest gas field across IOG s SNS portfolio Significant reprocessing and reinterpretation work completed Previous well indicated gas in system, appraisal well required to confirm gas column and volumes CPR Geological Chance of Success (50%) [1] Reservoir quality is good Over 400 ft relief in Maximum Case Unrisked prospective resource estimates (Low-Best-High) [1] GIIP (structure): BCF Resource (structure): BCF GIIP (on block): BCF Resource (on block): BCF N.B. Plans underway to licence all Harvey resources If successfully appraised, Harvey would be developed as a tieback to the Thames pipeline Appraisal well committed to be drilled by late Near term drilling under consideration Extension to the current licence term requested in order to plan and drill the appraisal well Current activity: Reservoir modelling and well design Harvey Top Rotliegend Depth Map 14 Source: [1] ERC Equipoise CPR - November 2017

15 Target Timeline to First Gas Hub Field Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Blythe Hub Vulcan Satellites Hub Blythe Elgood Southwark Nailsworth Elland Reservoir Studies Reservoir Studies Reservoir Studies Reservoir Studies Reservoir Studies Site Surveys Site Surveys Site Surveys Site Surveys Site Surveys Pipeline Intelligent Pigging Operations Construct & install infrastructure Construct & install subsea infrastructure Construct & install infrastructure Well permits Well permits Well permits Construct & install infrastructure Drilling Drilling Drilling Well permits Construct & install infrastructure First Gas First Gas First Gas Drilling Well permits First Gas Drilling First Gas FDP & EIA Application FDP Approval & Final Investment Decision 15

16 Boepd Valuation ( m) CH4 Energy: Proven Track Record of Gas Hub Strategy Mark Routh was the Founder and CEO of CH4 Energy Founded in 2002 with 750k from 3i and 250k from management Strategy Hub strategy focused on North Sea gas Key Actions Acquired 25% of ETS pipeline - instant tariff income Markham gas field acquired from Eni became CH4 s first hub Markham infill well increased production by 30% Acquired 100% of Chiswick field building on hub strategy Installed production platform at Chiswick for tie back via a new pipeline to a new compression platform at Markham Result CH4 was sold to Venture Production in 2006 for 154.4m Realised 7.3 multiple on initial investment for 3i Hub Strategy North Sea Venture Production also executed a successful Hub Strategy North Sea hub strategy now pursued by EnQuest, Faroe, Ithaca and others CH4 Energy: Investment vs. Sale Value Equity Debt Acquired Markham from ENI Invested >7.8x total equity multiple >7.3x equity multiple for 3i CH4 Energy Net Production & History Drilled B6 infill well, acquired Chiswick Realised Sold to Venture for 154.4m Year Year

17 Clipper South: Proven Track Record with SNS Tight Gas 1992 Appraisal Well (48/19c-13S1) High angle well 1200 ft net reservoir section Flowed 2 MMscfd 1983 Discovery Well (48/19a-3) Vertical well Small frac of 60 ft interval at top Flowed 3 MMscfd Added 120 ft unstimulated in lower sands Flowed 5 MMscfd Source: SPE Source: DEA IOG Deputy CEO Andrew Hockey was a founder and General Manager Joint Ventures and New Business of Fairfield Energy Founded in 2005 with $200 million from a consortium including Warburg Pincus and Kern Partners Strategy Late life production, redevelopment, dormant discoveries and stranded assets Key Actions Fairfield acquired dormant tight gas discovery Clipper South 100% from Shell and Esso in km north of Vulcan Satellites and similar characteristics No development funding requirement for Fairfield Farmed down 50% to RWE and 25% to Bayern Gas to finance development to first gas in 2012 Debt-funded remaining development drilling programme with Credit Suisse Drilled 4 horizontal hydraulically stimulated wells Increased per well productivity from 3-5 MMcfd to >35 MMcfd with stimulation Result Clipper South production exceeds expectations at 75 MMcfd 25% Clipper South interest was sold to Ineos in

18 IOG Conclusion: Creating value via high-margin gas hubs Monetising strong value Building genuine scale Creative commercial strategy Innovative funding approach Catalysts ahead Proven track record Efficient hub strategy Low capex in $10/BOE range ~$8/BOE unrisked 2P NPV 2P+P BCF (74 MMBOE) Peak production >200 MMcfd Target breakeven <25p/therm Thames recommissioning Full field-to-market control Contractor funding Raising offtake finance Partnering with supply chain Minimising equity dilution Development funding FDP approvals Potential acquisitions Extensive SNS experience CH4 7.3x return Clipper South development Vulcan Satellites, Blythe and Elgood [1] 1P 2P 3P Economic Gas Reserves BCF Oil Equivalent Reserves (incl. condensate) MMBoe Post-Tax NPV 10 (incl. IOG s tax losses) MM Pre-Tax NPV 10 MM Pre-Tax NPV 0 (undiscounted) MM ,530 Harvey [1] Low Best High Gas Resources (gross) [2] BCF Sources: [1] ERC Equipoise CPRs October & November 2017 [2] Net resources on block are 79%. Plans underway to licence all resources. Map: Wood Mackenzie PathFinder/IOG