Independent Oil & Gas plc

Transcription

1 Independent Oil & Gas plc A development and production focused North Sea company September 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 IOG owns substantial low-risk, high-value gas resources in the UK Southern North Sea. We are developing this gas via an efficient hub strategy, as well as targeting value accretive acquisitions, to generate significant shareholder returns. Southern North Sea Company Overview North Sea development and production focus: Hub strategy: creating synergies with 100%- owned assets and infrastructure Experienced team with proven track record Gas hub strategy - CH4 Energy Clipper South development Fairfield Targeting 170 MMcfd gas production from current portfolio of 500 BCF (88 MMBOE [1] ) 65.3 BCF 2P+2C in Blythe Hub [2] BCF 2C resources in Vulcan Satellites [3] Dimlington Theddlethorpe Elgood Vulcan North West Vulcan East 113 BCF P50 to be appraised at Harvey [3] Blythe Vulcan South Supportive investors providing working capital to progress development work Harvey 4 Sources: [1] Conversion factor of 5.8 BCF per MMBOE plus gas condensate [2] IOG internal estimate [3] IOG 2016 Annual Report 25 May 2017 Bacton Map: Wood Mackenzie PathFinder/IOG Thames Pipeline

5 Why follow a UK Gas Hub Strategy? Economic Logic Forecasting strong cash flows and low breakeven prices Excellent returns on capital invested Stable UK gas prices less volatile than oil Aligned with UK OGA IOG hubs fit with new OGA SNS Tight Gas Strategy Fulfilling the Maximise Economic Recovery (MER UK) policy Extending life of UK energy infrastructure (Thames) UK Energy Security Gas is increasingly vital component of UK energy supply High and rising import reliance (see chart) IOG s 500 BCF could heat up to 9 million UK homes for a year Macro Drivers Gas demand likely to outpace oil and coal Bridge fuel to lower carbon energy mix especially if not imported Gas prices are only partly correlated to oil prices UK Import Dependency UK Quarterly Imports vs Exports Source: OGA/Bloomberg Source: BEIS

6 Experienced Team Board Non-Executive Director (LOG) CEO & Interim Chairman Mark Routh Founder and Ex-MD of CH4 Energy Ltd Non-Executive Director (LOG) Deputy CEO Andrew Hockey Ex Fairfield and Sound Energy 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 Head of Business Origination SNS Project Manager CFO H S & E Manager Peter Young Ex-Standard Chartered, Mitsui, and RBS Graham Cox Formerly Project Manager on Clipper South Development James Chance Ex-Standard Chartered Oil & Gas Banker 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 MMcfd Material Future Gas Production and Cash Flow First gas targeted in Q Five fields in production by end of 2019 Consistently strong cash flows throughout 2020s Economic life to mid-2030s Base case plateau at 160 MMcfd Pipeline capacity 300 MMcfd Harvey would increase peak production to over 170 MMcfd and extend the 100 MMcfd+ plateau to 2025 Proprietary route to market via Thames pipeline into Bacton* 88 MMBOE total potential production at 4+ unrisked NPV/BOE SNS Economic Production (495.3 bcf) Harvey (113.0 bcf) Vulcan S (111.0 bcf) Vulcan NW (129.3 bcf) Vulcan E (76.7 bcf) Elgood (26.2 bcf) Blythe (39.1 bcf) Year Thames Pipeline Landfall at Bacton Terminal 7 * Acquisition subject to completion

8 Thames Pipeline: Enabling the Gas Hub Strategy 100%-owned 24-inch line with 300 MMcfd capacity Recommissioning gives control from field to market Export line for all IOG SNS gas Major cost savings No transportation tariff reduces life of field opex Pigging and onshore facility refurbishment in 2017* Enables IOG to maximise economic recovery in the area Potential further activity: Acquire and develop nearby assets De-risk appraisal and exploration targets Third-party tariff income Thames Pipeline section to be recommissioned shown in bold Map: Wood Mackenzie PathFinder/IOG Areas highlighted in yellow denote IOG licences * Subject to completion of Thames pipeline acquisition 8

9 Vulcan Satellites Hub Vulcan Satellites Hub Locations in relation to IOG s other assets Large gas hub close to Thames pipeline Vulcan North West Development ready discoveries XXVIII Rebellion Vulcan NW Low-cost shallow water developments using unmanned platforms Peak production of over 110 MMcfd from 7 hydraulically stimulated wells Target breakeven price <20p/therm ($16/BOE) 6 4 5,z I 1 Vulcan East Tetley c IOG 2 5 RHambleton Wherry Vulcan South Vulcan South Harvey 8a 8 FDP submission planned for Q Current activities: Dynamic reservoir modelling Well design Map: Wood Mackenzie PathFinder/IOG Drafting Environmental Impact Assessment Vulcan Satellites Offtake and Contractor funding discussions Field P90 P50 P10 1C 2C 3C Vulcan North West Vulcan East Vulcan South Total New CPR due Q Source: 9 [1] AGR TRACS Technical Summary April 2015 Gas Initially in Place (BCF)[1] Resources (BCF)[1]

10 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 Vulcan East Top Rotliegend Depth Map [1] 49/21c & 49/21d Outcome Proprietary reservoir model High quality input to field development plan Vulcan North-West Top Rotliegend Depth Map [1] Vulcan South Top Rotliegend Depth Map [1] 49/21c 10 Source: [1] Beagle Geoscience / IOG November 2016

11 Blythe Hub Two proven gas discoveries best commercialised jointly and exported via nearby Thames Pipeline Unmanned platform at Blythe, Elgood subsea tieback First gas in Q2 2019, peak production 85 MMcfd [1] Target breakeven price <25p/therm ($20/BOE) Total recovery 65 BCF [1] FDP submission due mid-2017 Reservoir modelling already complete Well design work underway Preparing Environmental Impact Assessment Contracting and funding processes combined with Vulcan Satellites hub Gas offtake agreement with BP Gas Marketing for Blythe New CPR due Q Map: Wood Mackenzie PathFinder/IOG Blythe Hub 2013 CPR [2] Blythe Hub Gas Initially in Place (BCF) Reserves/Resources (BCF) Field P90 P50 P10 1P 2P 3P Blythe P90 P50 P10 1C 2C 3C Elgood Sources: [1] ERC Equipoise / IOG May 2017 [2] Competent Person's Report: ERC Equipoise - September Total

12 Blythe Hub: Subsurface Work Blythe Top Rotliegend Depth Map [2] Disciplined Subsurface In-House Work Flow: Work Programme Q3 and Q Reprocessed 250 km 2 3D seismic data [1] Seismic mapping and amplitude analysis [2] Resource Assessment Blythe Work Programme: Q1 and Q 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 12 Sources: [1] Schlumberger Western GeCo [2] Beagle Geoscience / IOG November 2016 [3] ERC Equipoise / IOG May 2017

13 Harvey - Large Upside in Gas Portfolio A significant structure with the potential to be the largest single gas field across IOG s SNS portfolio Reprocessed of 85 km 2 of 3D seismic data completed Revised resource estimates from reprocessing and interpretation of 3D seismic data Current probabilistic resource estimates (P90-P50-P10) GIIP: BCF [1] Resource: BCF [1] If successfully appraised, Harvey would be developed as a tie-back to the Thames pipeline Reservoir quality is good, with hydraulic stimulation unlikely to be required Current activity: Reservoir modelling and well design Drill or drop well commitment by December 2017 Top Rotliegend Depth Map of Harvey [1] Discovery well demonstrated gas in system, appraisal well required to confirm volumes Source: [1] IOG 2016 Annual Report 25 May 2017 and Beagle Geoscience / IOG November 2016 Over 400 ft relief in Maximum Case 13

14 Target Timeline to First Gas IOG's Planned SNS Hubs Activity Activity Geological and Engineering Studies Final Investment Decision Construct & Install Infrastructure Drilling Programme First Gas All Fields Onstream 14

15 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

16 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

17 IOG Conclusion: Creating value via high-margin Gas Hubs Monetising strong value Building genuine scale Creative commercial strategy Efficient hub strategy Low $/BOE capex >$5/BOE unrisked NAV Delivers 500 BCF (88 MMBOE) >170 MMcfd plateau Target breakeven <20p/therm Thames recommissioning Full field-to-market control Avoiding partner drag Raising offtake finance Partnering with supply chain Minimising equity dilution Innovative funding approach IOG Portfolio Gas Initially in Place (BCF) Field P90 Catalysts ahead Proven track record 17 IOG 2016 Annual Report 25 May 2017 and ERC Equipoise / IOG May 2017 P90 P50 P10 Blythe Elgood Vulcan Satellites Hub Vulcan NW Vulcan East Vulcan South Harvey Harvey Appraisal Total XXVIII 1206 Rebellion Vulcan NW 6 Blythe Hub 4 5,z I 1 Tetley c IOG RHambleton Extensive SNS experience CH4 7.3x return Clipper South development Portfolio Resources Source: P10 Blythe Hub 5 Funding progress FDP approvals and CPRs Potential acquisitions P50 Reserves/Resources (BCF) 2 Wherry Harvey Thames - Bacton 24 inch Pipeline to be recommissioned Map: Wood Mackenzie PathFinder/IOG Vulcan Satellites Hub Vulcan South 8a 8