EMERGING MARKET GAS - Ophir Energy...Ophir’s projects relative to other unsanctioned LNG projects...

EMERGING MARKET GAS

5th October 2015

Numis Conference

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Emerging Market Gas - Numis Conference Slide 2

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1. Portfolio Overiew

2. LNG Market Overview

3. Overview of Fortuna FLNG and Tanzania LNG projects

4. Fortuna FLNG development plan and gas sales strategy

5. Funding strategy

6. Summary


CONTENTS

Focus: Commercialising our gas resources

LARGE RESERVES AND RESOURCE BASE

Slide 4

Significant 2P reserves base from Thai and Indonesian assets

• 60 MMboe 2P – over 10 years of production at current levels

• Underpins strong production and cash flow in the medium term

• Over 55% is high margin gas, which is sold on long-term contracts

Large 2C resources base from Thai, Indonesian and African LNG assets

• Strong economics from Thai and Indonesian 2C by leveraging on existing infrastructure at Bualuang, Sinphuhorm and Kerendan

• High value African LNG to drive longer term production and growth

LARGE 2P + 2C BASE SKEWED TOWARD HIGH MARGIN GAS IN THE LONG TERM

Reserves (MMboe) 1P 2P 3P

Bualuang 17.6 24.9 31.1

Sinphuhorm 5.1 17.9 17.9

Kerendan 16.5 16.8 16.8

Total Reserves (MMboe) 39.2 59.6 65.8

Resources (MMboe) 1C 2C 3C

Bualuang 6.7 15.5 31.3

Sinphuhorm & Dong Mun 5.0 18.0 126.8

Kerendan 3.6 62.3 144.3

Equatorial Guinea 283.3 353.2 400.0

Tanzania 366.7 501.0 483.3

Total Resources (MMboe) 665.3 950.0 1185.7

Total Reserves and Resources (MMboe) 704.5 1009.6 1251.5

2P + 2C BY GEOGRAPHY 2P + 2C BY PRODUCT

Thailand 7%

Indonesia 8%

Equatorial Guinea 35%

Tanzania 50%

Oil 4%

Gas 96%

Emerging Market Gas - Numis Conference




Scope for new capacity to be absorbed

GLOBAL LNG SUPPLY – DEMAND


Source: Wood Mackenzie, Ophir Energy

• Unsanctioned projects suggest a potential oversupply – this is always the case

• A number of these projects won’t get sanctioned or will be delayed

• Global LNG market runs at around 85% capacity

• Demand projections don’t capture old contracts that require a new supply source – this creates incremental demand as they expire

• Cost advantage projects that are mature are able to find buyers and FID at present

Estimated LNG Supply v Demand 2000-2024

0

100

200

300

400

500

600

700

00 03 06 09 12 15 18 21 24

Supply - operational projects

Supply - projects under construction

Supply - possible projects not sanctioned

LNG Demand

Total possible supply




World class resource with major partners

TANZANIA LNG


• Basin opening exploration success

• Resource supports 2 train LNG project

• Mark to market from Pavilion deal

• Strong JV partners

• Cost Competitive

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Net capex on equityinterest sold

Cash received

Realised ROCE Pre tax: 4.8x

Post-tax: 4.1x

US

$’ m

illio

ns

Realised Return on Capital




Oreja Marina

Resource underpins FLNG development concept

EQUATORIAL GUINEA


• 3.4Tcf (2C and P50 PR)

• Underpins 2.2mtpa for > 20 years

• >330 mmcf/d at plateau

• Fortuna well test flowed at 60 mmscf/d (equipment constrained), implied unconstrained rate of 180mmscf/d

• Significant additional high risk prospective resources throughout the block

Discovery

Silenus Hub Low Risk Prospective

Low Risk Prospective Gas

High Risk Prospective Gas

High Risk Prospective Oil

Tonel

Fortuna

Viscata

Undrilled Silenus Hub

Silenus East

Estrella Del Mar

Lykos




Ophir’s projects relative to other unsanctioned LNG projects

COST COMPETITIVE ON A GLOBAL BASIS


Source: Wood Mackenzie

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Kitimat LNG PacificNorthwest LNG

Coral FLNG LNG Canada Elba Island LNGExport

DouglasChannel LNG

Golden PassExport

Browse MozambiqueArea 4 LNG

Tanzania LNG MozambiqueArea 1 LNG

Tangguh Phase2

EG FLNG VladivostokLNG

NLNG SevenPlus

NP

V 1

0%

Bre

ak E

ven

DES

Jap

an

FOB Cost (Breakeven) (US$/mmBtu)

Shipping Cost (US/$mmBtu)

Four key things required to make an LNG project work

LNG OVERVIEW

MILESTONES

LAND / MIDSTREAM

JV PARTNER ALIGNMENT

FISCAL TERMS

RESOURCES

4 • Land identified but yet to be formally awarded • Chartering agreement to be finalised

3 • Project team working well • All companies well respected • Ophir & GEPetrol

2 • Agreed • Agreed

1 • 15 TCF • 3 trains of LNG • 3.4 TCF • 2.2 Mtpa project

Award of Land Bringing in Upstream partner

BUYERS

TANZANIA EQUATORIAL GUINEA





Upstream component within Ophir’s ability to operate

FLNG IS RIGHT SOLUTION IN EG

Slide 10

Why FLNG appropriate solution • Biogenic gas, 99.7% methane – clean and simple

• Benign meta-oceanic conditions

Why Ophir can be the Upstream operator

• Operator’s role in Upstream development relatively straightforward

- Drill, complete and tie-back to vessel

- Manage reservoir performance over time

• $1.5bn of Midstream capex turned into opex

• c. $0.8bn of Upstream capex to first gas

• Self fund once farmed out

- Only progress to FID if equity has been reduced

Third Party validation of FLNG solution:

• High-quality upstream FEED consortia

• Leading midstream FLNG supplier

• Credible gas buyers (4Q)

• Equity investors (FID)

Fortuna Gas Field DST

Emerging Market Gas - Numis Conference




FORTUNA LNG - PROJECT PRINCIPLES


Prerequisites for successful Fortuna FLNG project

Buyer confidence

Lender confidence

Investor confidence

Midstream (Golar)

Government of Equatorial

Guinea

Upstream (Ophir/

GEPetrol)

Establish and maintain confidence in attractiveness

of project

Establish and demonstrate full support & alignment

Aligned project principal objectives:

• Highest possible market price for LNG: Early alignment on joint marketing; early-to-market (ahead of E Africa, US/Canada exports); buyer confidence in Government support to marketing objectives; flexibility

• Deliver a cost-competitive, reliable LNG supply solution: Fit for purpose vessel; phased upstream investment; rigorous oversight of Midstream mods; MMIE support for contracting strategy; lender confidence in Govt. support to project (approvals, fiscal concessions [if required]); competitive with US Gulf Coast exports

• Local Content & Skills development: Immediate impact and lasting legacy




Simple solution, proven technology

GOLAR LNG

• Heads of Terms concluded

• Lower cost conversion for Phase 1 development

• Proven concept - Cameroon FLNG project has taken FID

- Golar Hilli conversion (Cameroon) > 60% complete (Keppel, Singapore)

• Proven technology - Black & Veatch PRICO process - 4 trains

• Golar Gandria vessel conversion early 2016 for Block R

• $3.50/mmbtu liquefaction + ~$0.25/mmbtu for mods

• Golar’s strategy is to export the US low cost tolling model to independent producers

Golaandria

Golar FLNG Conversion





“EUROPEAN SINK” CONTRACTING STRATEGY (PRICES INDICATIVE)


LNG BUYERS SHIPPING MIDSTREAM

EUROPE

PACIFIC BASIN

BUYERS SHARE OF

DIVERSION UPSIDE

PRICE: $10/mmbtu

COST: $1.5/mmbtu

COST: $2.3/mmbtu

NETBACK: $2.7/mmbtu

UPSTREAM PSC

PRICE: $7/mmbtu

COST: $1.8/mmbtu

NETBACK $2.2/mmbtu

REGAS & SHIPPING

LIQUEFACTION NETBACK

COST: $3.0/mmbtu

COST: $3.5/mmbtu

BA

SE C

ASE

D

IVER

SIO

N




FUNDING FORTUNA FLNG


EQUITY

GAS BUYERS

BALANCE SHEET

@40% W.I.

$320MM COST TO

FIRST GAS • ‘European Sink’ targets pre-

purchase

• 1 year of gas sales at 40% W.I. generates revenue of c. $375 million

MID 2015

• $700MM cash

• $400MM net cash

•Up to 40% W.I. farm-out

•C.$300MM back costs

• Emerging market gas is a positive story for Ophir

• Finding costs can be cheap; require a clear path to monetisation

• Tanzanian LNG project we are ahead of the game and plan to realise further value

• Fortuna project is moving forward with key milestones in coming months

• Kerendan gas field in Indonesia on-stream in 2016

• Well positioned in Myanmar and ahead of our peers

• Strong balance sheet – fully funded for at least the next three years

• Significant financial flexibility – limited commitments and leverage combined with flexibility to sell assets to reduce capex and provide additional source of capital

SUMMARY AND OUTLOOK


POSITIONED FOR MATERIAL GROWTH AND VALUE CREATION

For further information contact:

Head of IR and Corporate Communications [email protected]

Geoff Callow

Level 4 123 Victoria Street London SW1E 6DE UNITED KINGDOM

Tel: +44 (0)29 7811 2400 Fax: +44 (0)20 7811 2421

EMERGING MARKET GAS - Ophir Energy...Ophir’s projects relative to other unsanctioned LNG projects...

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