Capital Markets Day
Tullow Oil plc | 2020 Capital Markets Day 25 November 2020
2020 Capital Markets Day
Agenda
Presenters
1
A NEW APPROACH
Delivering enhanced value and cashflow
3
GHANA
Maximise value from large resource
5
KENYA AND EMERGING BASINS
Material value to unlock
7
FINANCIALS
Underpinned by a robust financial framework
2
OPERATIONAL TURNAROUND
Improving production efficiency and reliability
4
NON-OPERATED
Investing in stable, sustainable production
6
ENVIRONMENT, SOCIAL, GOVERNANCE
Retaining a strong focus
8
CONCLUSIONS
Rahul Dhir | Les Wood | |||||||||
Chief Executive Officer | Chief Financial Officer | |||||||||
Wissam Al-Monthiry | Julia Ross | |
Managing Director, Ghana | Director, People and Sustainability | |
Tullow Oil plc | 2020 Capital Markets Day | Slide 2 |
A year of significant change: Putting Tullow back on track
Leadership
Operational turnaround
Cost focus
Capital discipline
Capital structure
ESG focus
Maximising value
New CEO, leadership and lean organisation
Focus on asset integrity, process safety, maintenance and reliability
Ghana operating costs and corporate G&A significantly reduced
Flexible opportunities identified to allocate future investment capital
Successful RBL redeterminations and Uganda proceeds received
Continue to create lasting social and economic benefits
New plans to deliver material value and cash flow
Tullow Oil plc | 2020 Capital Markets Day | Slide 3 |
Highly experienced, diverse and committed leadership team
Les | Wissam | |||
Wood | Al-Monthiry | |||
Chief Financial Officer | Ghana | |||
→ Commercial & Planning | → Health & Safety | |||
→ Finance | → Integrated technical | |||
→ IR & Corporate Affairs | functions | |||
→ M&A | → Stakeholder & JV | |||
→ Oil Marketing | Management | |||
→ Tax | ||||
→ Treasury | ||||
Joined Tullow in 2014 as | Joined Tullow in 2020; | |||
VP Commercial; | formerly at BP and | |||
formerly at BP | Goldman Sachs | |||
Senior Leadership Team (SLT) | ||||
Rahul Dhir
Chief Executive Officer
Joined Tullow 2020; formerly Delonex, Cairn India, Morgan Stanley
Mike | Julia | Jean-Medard | ||
Walsh | Ross | Madama | ||
General Counsel | People & Sustainability | Non-op | ||
→ Information Systems | → Shared Prosperity | → Gabon, CdI, EG | ||
→ Insurance | → Human Resources | → Non-op technical | ||
→ Internal Audit & Risk | → Internal Comms. | → Stakeholder & JV | ||
→ Legal | Management |
Joined Tullow in 2020; | Joined Tullow in 2001; | Joined Tullow in 2012; |
formerly at Delonex, | formerly Corporate | formerly at |
Cairn India | Finance at Tullow | Schlumberger |
Amalia | Madhan | |
Olivera-Riley | Srinivasan | |
Exploration | Kenya | |
→ Africa | → Development concept | |
→ NFE and ILX1 | → Licence renewal | |
→ South America | → Stakeholder & JV | |
→ Subsurface | Management | |
Joined Tullow in 2019; | Joined Tullow in 2014; |
formerly at Essar Energy | |
formerly at Repsol and | |
and BP | |
ExxonMobil | |
1 Near-field exploration and infrastructure-led exploration
Well Engineering | Subsurface & | |||||
Geoscience | ||||||
Technical | ||||||
Advisors | Baringa | Intera Petroleum | ||||
& Auditors | Partners in Performance | Consultants | ||||
Striatum | TRACS | |||||
Tullow Oil plc | 2020 Capital Markets Day | Slide 4 |
New approach delivers material value and cash flow
Production base with material resource play
Significant positions in discovered and emerging basins
Operational turnaround
Cost
focus
Capital
discipline
Geoscience
2021-30 | ||||
>95% | uptime target | |||
<$11 | opex/bbl target | |||
c.$2.7bn | 2021-30 capex | |||
>40% | oil recovery | |||
>600 | mmbbls 2P/2C | |||
from producing | ||||
assets | ||||
c.$7bn
operating CF1
c.$4bn
cash flow available for debt service and shareholder returns2
Upside
Undeveloped resource and gas commercialisation
171 | Net 2C Kenya | value | |
mmbbls | |||
Net risked | Unlocking | ||
c.900 | prospective | ||
resources in |
mmboe | emerging |
basins |
>90% capital allocation
- Cash flow from operating activities, before debt service, capital investment and decommissioning expenditure
- Cash flow from operating activities less capital investment and decommissioning expenditure
1&2 Based on $45/bbl in 2021, $55/bbl flat nominal in 2022+
Managing capital exposure
Tullow Oil plc | 2020 Capital Markets Day | Slide 5 |
Well defined and profitable investment opportunities
Attractive portfolio of African production investments
200%
150%
$65/bbl
100% | Combined IRR1 |
IRR (%) | |
$45/bbl | |
50% |
>80% | c.$11/bbl |
IRR on | Average | |||||
investment | ||||||
development cost | ||||||
portfolio1 | ||||||
Value accretive producing assets
- Significant improvement in reliability and profitability
- More than 60 well-defined and de-risked investment options identified
- Short payback projects and a self-funded cashflow profile
- Prioritising investments in producing assets (>90% of Group capex)
- Average IRR of >130% at $65/bbl and >70% at $45/bbl
- Significant value creation for host governments
0%
$0 | $500 | $1,000 | $1,500 | $2,000 | $2,500 |
Cumulative Capex ($m)
Flexibility to manage capital investment
1 Based on $45/bbl in 2021, $55/bbl flat nominal in 2022+
Tullow Oil plc | 2020 Capital Markets Day | Slide 6 |
Material producing asset resource
Well-defined supply with replenishment potential3
700 | |||||||
600 | 2P reserves | ||||||
243 | Improved | ||||||
recovery, | |||||||
500 | c.260 | NFE and ILX4 | |||||
(mmboe) | |||||||
400 | 2C resources | ||||||
Volume | 402 | ||||||
300 | from producing | ||||||
assets only | |||||||
200 | 100% | c.380 | |||||
YTD 2020 | |||||||
reserves | |||||||
100 | replacement2 | ||||||
0 | |||||||
2P-2C reserves & | 2021-30 production | Residual recoverable | |||||
resources1 | resource1 |
- 2C resourcesfromproducingassetsonly,excludesKenyaandGuyana
- Asat30September
- AllnumbersTullowworkinginterest
- Near-fieldexplorationandinfrastructure-ledexploration
Visible production with acceleration potential3
80
75
60 | Non-op | ||
(kbopd) | |||
Production | 40 | TEN | 3% |
$2.7bn | |||
2021-30 |
capex
20
97% | |||||||||||
0 | Jubilee | ||||||||||
20f | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
Tullow Oil plc | 2020 Capital Markets Day | Slide 7 |
Roadmap to creating a resilient, self-funded business
Operational | Capital | Capital | Unlocking |
turnaround | discipline | structure | value |
Continued operating | Refocused and defined | Solid foundations to | Revised Kenya |
performance improvement | investment portfolio | address debt maturities | development concept |
Sustain low-cost | Self-funded | Progress refinancing | New resources in producing |
production | capex | options | assets and prospect maturation |
Reservoir management | Flexible investment and | Drive gearing to 1x-2x with | Value accretive |
to offset decline | acceleration opportunities | appropriate headroom | asset sales |
Tullow Oil plc | 2020 Capital Markets Day | Slide 8 |
Operational turnaround:
Improving production efficiency and reliability
Wissam Al-Monthiry
Tullow Oil plc | 2020 Capital Markets Day
Operational turnaround to deliver value and cash flow
Health and safety - Remains our highest priority | JV partners | |
Commercial and relationship focus - Government and Joint Venture (JV) collaboration
Organisational capability - Team strengthened and integrated
Facilities reliability - Enhanced maintenance and asset integrity
Drilling efficiency - Reduce well complexity and rig downtime
Competitive operating costs - Continuous improvement
Tullow Oil plc | 2020 Capital Markets Day | Slide 10 |
Focus on enhancing oil production
Production efficiency
- Closely integrated Tullow oversight
- Improvement to processing systems reliability
- Defect elimination process
- Well optimisation
- Maintenance and integrity management
- Sustaining performance by embedding efficiencies
Improved uptime performance in Ghana
Uptime (%)
98% | |||
> 95% | |||
91% | 92% | ||
2018 | 2019 | 2020f | 2021+ |
Water injection efficiency
- Water injection remains a key area of focus on Jubilee
- Greater water injection volumes to sustain reservoir pressure and improve sweep efficiency
- Three water injection pumps operational on Jubilee with injection capacity building up to >300kbw/d
- Aligning full system infrastructure to sustain capability
Addressing water injection reliability and capacity
Jubilee water rate (kbw/d)
130 | 180 | 270 | 300 |
2017-19 | 2020-21f | 2022 | YE23+ |
average | average |
Tullow Oil plc | 2020 Capital Markets Day | Slide 11 |
Improving gas offtake performance
Opportunity
- Higher gas export improves reservoir management, enhances oil production and minimises emissions
- Delivers material value for Ghana
2020 Progress
- Record levels of gas export built up over 2020
- Improvements in facilities reliability through targeted interventions
- Onshore gas demand stabilising
- Alignment with Government on projected gas offtake
Forward plan
→ Maintain gas performance with sustained facilities uptime |
Reliable gas offtake supports oil production
Gas rate (mmscf/d )
>200 mmscf/d including gas commercialisation
135 | |||||
exit rate | 130+ | 130+ | |||
106 | |||||
73 | 65 | ||||
44 | |||||
1H 2019 | 2H 2019 | 1H 2020 | 2H 2020f | 2021 | 2022+ |
Growing gas processing capacity
Gas rate (mmscf/d) | 250 |
→ | Debottleneck gas handling capacity on Jubilee FPSO |
→ | Target to increase gas offtake beyond 130mmscf/d |
140
190
Integrated delivery: subsurface, operations, commercial and Government
2019 | 2020-23f | YE24+ |
Tullow Oil plc | 2020 Capital Markets Day | Slide 12 |
Driving down costs for a low cost operation
Jubilee1
450 | Asset operating costs (gross) | 50 450 | |||||||||||
400 | Opex | 45 400 | |||||||||||
$406m | |||||||||||||
Opex/bbl | |||||||||||||
350 | 40 350 | ||||||||||||
35 | |||||||||||||
300 | 300 | ||||||||||||
$304m | |||||||||||||
30 | |||||||||||||
250 | 250 | ||||||||||||
25 | |||||||||||||
c.$240m | |||||||||||||
200 | 200 | ||||||||||||
20 | |||||||||||||
150 | 15 | 150 | |||||||||||
100 | $12.7 | 10 100 | |||||||||||
$9.9 | c.$9.0 | ||||||||||||
50 | 5 | 50 | |||||||||||
- | - - | ||||||||||||
2019 | 2020f | 2021 | |||||||||||
Axis Title |
1 2019 and 2020 include opex associated with turret remediation
TEN
Asset operating costs (gross)
Opex
Opex/bbl
$177m
$148m c.$150m
c.$11.5
$7.9$8.3
2019 2020f 2021
Axis Title
50
45
40
35
30
25
20
15
10
5
-
Cost savings being delivered
Reduction of equipment
vulnerabilities
Continuous opportunity
identification with consultant
support
Maximise leverage through the
supply chain
Cost-driven performance
management
Tullow Oil plc | 2020 Capital Markets Day | Slide 13 |
Delivering improved drilling performance
Driving future drilling costs down by c.20% | Top quartile drilling performance |
Drilling cost per well ($m gross)
75 | |
60 | Continuous |
improvement | |
<$60m |
2018-20 well costs1 Reduce rig downtime | Reduce well | Supply chain scaling | 2021+ target |
complexity |
Simplified well design and
reduced completion complexity
Improved rig reliability through enhanced maintenance assurance
Integrated planning across
subsurface, drilling and projects
teams
Advanced alignment with JV
Partners on well targets
1 | Normalised for 2021 rig rates | Slide 14 |
Ghana:
Maximise value from large resource
Wissam Al-Monthiry
Tullow Oil plc | 2020 Capital Markets Day
Building blocks to unlock value and cash flow
Operational turnaround
Safely maximise production efficiency
Cost focus
Delivering a sustainable low- cost business and organisation
Capital discipline
Allocate capital to high return, short cycle development opportunities
Geoscience
Maximise recovery and deliver significant upside opportunities within licence
Options to increase field
recovery, develop near-field and ILX discoveries and commercialise the significant gas resources
Plans in place to develop discovered resource base over the next 10 years
Low-cost opportunities identified to pursue from 2021 to build production and cash flow
High quality portfolio of oil producing fields and infrastructure provides solid platform
Tullow Oil plc | 2020 Capital Markets Day | Slide 16 |
Substantial Ghanaian resource base across two areas
Only 393 mmbbls produced | Wells: 25 producers, | |||
c.14% recovery | 18 water inj. and four gas inj. | |||
Two FPSOs and subsea | More than >550mmbbls gross | |||
infrastructure in place | yet to be produced | |||
Potential to increase RF2 to | Near-field opportunities | |||
unlock additional reserves | present significant upside | |||
Jubilee gross volumes (mmbbls) | TEN gross volumes (mmbbls) | |
c. 1,800 | |||||
RF 41% | c. 1,000 | ||||
RF 29% | 220 | ||||
RF 30% | |||||
RF 17% | 210 | RF 9% | RF 17% | ||
130 | |||||
308 | 85 | ||||
85 | |||||
STOIIP1 | Production to No further activity Defined projects | Additional | STOIIP | Production to No further activity Defined projects | Additional |
Sept-20 | recovery | Sept-20 | Recovery |
1
2
Stock Tank Oil Initially In Place | Tullow Oil plc | 2020 Capital Markets Day | Slide 17 |
Recovery Factor | ||
Well-defined, high return drilling opportunities
Comprehensive review completed
Highly efficient investments with short
paybacks and high returns
Economies of scale identified
Minimal additional infrastructure required
Revised investment phasing to maximise recovery
Unit development costs of c.$12/bbl
Optimising capacity of both FPSOs
Development work supported by expert
4D seismic analysis
Tullow Oil plc | 2020 Capital Markets Day | Slide 18 |
Defined set of opportunities to sustain production
Rich drilling options1
Defined projects
26
wells planned over 2021-30
1-2
year payback
23
wells planned over 2021-30
1-2
year payback
10-15
kbopd
initial production
rate per well
>90%
IRR
10-15
kbopd
initial production
rate per well
>70%
IRR
Jubilee
South East
Jubilee
North East
Ntomme Far West
Enyenra
North
Enyenra
South
2022 | |
140 | Producer/ injector pair |
2023 | |
mmbbls oil | Two producers online |
2024+ | |
Follow-on wells | |
in SE and NE | |
90 | 2022-24+ |
Projects progressing | |
mmbbls oil | towards FID |
1 Based on $45/bbl in 2021, $55/bbl flat nominal in 2022+ All numbers on a gross basis
Tullow Oil plc | 2020 Capital Markets Day | Slide 19 |
Additional opportunities to deliver upside
Maximising recovery1
Additional oil recovery in Jubilee
- Targeting more than 40% ultimate recovery in Jubilee
- Around 100mmbbls of additional recovery potential
Greater Ntomme Tweneboa (GNT) Area
- More than 350mmbbls of undeveloped STOIIP
- Utilising existing subsea infrastructure
Tweneboa West
- More than 30mmbbls of undeveloped STOIIP
- Fast development, tie back to existing infrastructure
1 All numbers on a gross basis
Significant opportunity to commercialise gas resource1
c.1TCF
of recoverable gas resource
Already connected to onshore
infrastructure
Long term supply
potential (10+ years)
Multiple gas
commercialisation options
Dedicated JV taskforce
to progress
Tullow Oil plc | 2020 Capital Markets Day | Slide 20 |
Near-field and infrastructure-led opportunities
Ghana
- Several near-field prospective opportunities identified
- Low risk, commercially attractive, accelerated tie-in targets
- Estimated volumes >100mmboe STOIIP (gross)
- Discussions with Government on access commenced
A | B |
Enyenra
Tweneboa West
Danta
Seismic anomalies (reds) representing reservoir | 2km |
Côte d'Ivoire
- Underexplored block adjacent to TEN field infrastructure
- Westward extension of proven plays in TEN/Jubilee
- Current focus: seismic re-processing and prospect maturation
Tullow Oil plc | 2020 Capital Markets Day | Slide 21 |
Non-op:
Investing in stable, sustainable production
Rahul Dhir
Tullow Oil plc | 2020 Capital Markets Day
Non-op: Stable production from existing resource base
Côte d'Ivoire | Equatorial Guinea |
Gabon
Sustainable production | Stable cash flow; | ||
22 - 25 kboepd | Self-funded portfolio | ||
Strong JV | Proven execution | ||
partnerships | capability | ||
Access to | Near field | ||
infrastructure | opportunities | ||
Mature fields with defined opportunities for stable production (kboepd)1 | Gabon (c.15kbopd 2020) |
→ Light oil, 23 fields, off/onshore | |
30 | Gabon | Equatorial Guinea | Côte d'Ivoire | |||||||||||
25 | 25 | |||||||||||||
25 | 22 | 22 | 22 | |||||||||||
20 | ||||||||||||||
15 | 2021-30 average production including | |||||||||||||
10 | defined projects and further opportunities | |||||||||||||
5 | ||||||||||||||
0 | ||||||||||||||
2016 | 2017 | 2018 | 2019 | 2020f | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 |
- Working interest range 7.5-57.5%
Equatorial Guinea (c.5kbopd 2020)
- Light oil, five fields, offshore
- Working interest 14.25%
Côte d'Ivoire (c.2kboepd 2020)
- Light oil and gas, two fields, offshore
- Working interest 21.3%
1 AllnumbersTullowworkinginterest | Tullow Oil plc | 2020 Capital Markets Day | Slide 23 |
Non-op: Diverse set of low-risk projects
Defined investment options and projects1
Expanding six key assets
>40 wells | Two new | 14 | 1-3 | 40-150 | |||||||||||||||||
Gabon | mobile production units | mmbbls oil | year payback | %IRR | |||||||||||||||||
Espoir Phase IV infill campaign | |||||||||||||||||||||
Six wells | 4 | Two | c.80 | ||||||||||||||||||
Côte d'Ivoire | mmbbls oil | year payback | %IRR | ||||||||||||||||||
Okume Complex infill campaign
Three wells | 1 | Two | c.70 | ||||||
Equatorial Guinea | mmbbls oil | year payback | %IRR | ||||||
1 All numbers Tullow working interest
Tullow Oil plc | 2020 Capital Markets Day | Slide 24 |
Kenya and emerging basins:
Material value to unlock
Rahul Dhir
Tullow Oil plc | 2020 Capital Markets Day
Unlocking value across the portfolio
Kenya | Guyana |
37.5% to 60.0% | |
→ Material recoverable | Two blocks |
3D repro. | |
resource base | |
→ Licences extended | Suriname |
50.0% to 100.0% | |
→ Development plan being | Three blocks |
One well | |
revisited for low oil prices | 2D seismic |
Emerging basins
- Material positions in emerging oil provinces
- Significant intellectual capital being invested
→ Suriname well (GVN-1)
→ Guyana prospect maturation
- Argentina 3D seismic
Côte d'Ivoire
60.0% to 90.0%
Two blocks
3D seismic repro
Namibia
35.0% to 56.0%
Two blocks
Peru 35.0% to 100.0%
Four blocks 2D repro
Argentina
40.0% to 100.0%
Three blocks 3D Seismic
Kenya
50.0% to 100.0%
Four blocks
2021 drilling
Kenya
1.5 | Billion barrels |
Gross STOIIP | |
171 | Million barrels |
2C working interest resources |
Prospective net risked resources in emerging basins
Guyana Suriname
16%
Cote d'Ivoire
6%
44% 900
mmboe 10% Namibia
24%Argentina
Tullow Oil plc | 2020 Capital Markets Day | Slide 26 |
Kenya development concept under review
Ingredients for a profitable low-cost project
Material high quality onshore resource base
Licences extended
Significant progress made to date
1.5 billion bbls | • | Shallow, productive reservoirs |
• | Light waxy crude | |
STOIIP (gross) | ||
• | Large onshore acreage position | |
December | • Conditional on approval of budgets |
• Plan to fully review development concept | |
2021 | |
• Ensure project robust to low oil prices | |
Technical | Upstream and midstream FEED; upstream bids; |
pipeline tender | |
EOPS | Critical data; first crude export; |
stakeholder engagement | |
Commercial | Key agreements drafted; |
regional and international interest for pipeline financing | |
Land and water | 80% pipeline gazetted; ESIA work ongoing |
Tullow Oil plc | 2020 Capital Markets Day | Slide 27 |
Kenya project redesign for low oil prices
Phasing
Additional discovered fields;
increased plateau rate and duration
Production | Kenya |
Increased rates by | |
targeting high | An improving |
productive wells at | value proposition |
crest; EOPS learning |
Water
Improved sweep efficiency and increased number of injectors
Well count
More drilling; lower unit cost
Opex
Lower opex via similar field analogues, particularly reduced well opex
Capex
Economies of scale
Licence extensions
will provide time to evaluate options
Feedback
from farm down process is being
incorporated
Economics
to be improved through
development concept and cost
optimisation
Tullow Oil plc | 2020 Capital Markets Day | Slide 28 |
Guyana/Suriname: Material positions in emerging basins
Generating value through opportunity identification and maturation
Industry hot spot with multi- billion-barrel discoveries
Leveraging core expertise in turbidite plays
Strong relationships with host governments
Suriname - GVN-1 well with
significant follow-up
Guyana - Prospects maturing for drilling campaign
Tullow Oil plc | 2020 Capital Markets Day | Slide 29 |
Suriname: Goliathberg-VoltzbergNorth-1
Block 47
Tullow 50% (op)
GVN-1 paying interest c.36%
Block 62
Tullow 80% (op)
Planning for 1Q21 spud
Upper Cretaceous turbidite play
Dual targets in excess of
400mmboe (gross)1
Testing extension of working
hydrocarbon system
Potential to de-risk >1bnboe (gross) in
follow-up prospects1
1Pmean recoverable
Tullow Oil plc | 2020 Capital Markets Day | Slide 30 |
Guyana: Material equity in prospective blocks
TLW 60% (op) | TLW 37.5% (non-op) |
Inboard of >8bnboe discoveries in | Large portfolio of prospects - total over | |
Guyana-Suriname basin | 2bnboe net recoverable | |
Three plays proven on Tullow acreage | High grading drill candidates for Kanuku 2022 | |
and Orinduik 2022+ | ||
Tullow Oil plc | 2020 Capital Markets Day | Slide 31 |
Environment, Social and Governance:
Retaining a strong focus
Julia Ross
Tullow Oil plc | 2020 Capital Markets Day
Focused on reducing GHG emissions
Higher 2020 emissions intensity, from increased flaring in Ghana
Long-term gas offtake
options support
elimination of flaring
Net Zero delivery plan
being developed
Net Zero (Scope 1 and 2) commitment - possible decarbonisation levers
5 Year Plan | Options for decarbonisation roadmap | ||||||
2020 | Gas | ||||||
emissions | utilisation | ||||||
baseline | and gas | Carbon | |||||
reinjection | |||||||
addressable | reduction | ||||||
Ongoing | |||||||
initiatives | Remaining | ||||||
emissions | Small process | Carbon | options | ||||
Energy |
modifications | efficiency | Power | |
generation | |||
offsets | |||
JV partner collaboration | Alignment with government priorities | Governance and executive incentives
Tullow Oil plc | 2020 Capital Markets Day | Slide 33 |
Creating lasting social and economic benefits
Social investment in Ghana
>500 3,000
educational
bursaries
scholarships
Strategic local content in Ghana
- $1.5bn spent with local suppliers since 2015
- c.30% of supply chain expenditure has been with indigenous companies over last three years
c.25%
$10 millioncommitted over 5 years to Government of Ghana's flagship Free Senior High School initiative, providing access to education for all
Targeted | Upgrading aviation |
development: focus on | infrastructure at Takoradi |
marine sector led to | Airport Air Force Base |
first Ghanaian owned | creating an enhanced |
and flagged Offshore | operational base for oil and |
Supply Vessel | gas sector and beyond |
of Ghana's gas demand for domestic power supplied at zero cost, providing access to electricity to 6.7 million individuals
Shared Prosperity for all stakeholders
Tullow Oil plc | 2020 Capital Markets Day | Slide 34 |
Strong internal and external transparency and governance
c.$3.4bn
socio-economic contribution 2015-19
Socio-economic contribution ($m)
First oil company to publicly support
contract transparency
Leading disclosure on Modern Slavery in Transparency in the Supply Chain Report
Human Rights Policy embedded in
800
778
Code of Ethical Conduct
708 | 719 | 719 |
700
600
500 | 462 |
400
300
200
Strong Anti-Bribery and Corruption
governance
Female Board
representation at 33%
Workforce Advisory Panel meeting
regularly with Board
100
0
2015 | 2016 | 2017 | 2018 | 2019 |
Taxes to governments | Local Suppliers | Social Investment | Tullow Oil plc | 2020 Capital Markets Day | Slide 35 | ||
Financials:
Underpinned by a robust financial framework
Les Wood
Tullow Oil plc | 2020 Capital Markets Day
Oil market context: a volatile backdrop
80
60
Tullow plans based on $45/bbl in 2021, $55/bbl flat nominal in 2022+
($/bbl) | 40 | |||||
Oil price | ||||||
20 | ||||||
External range (sources below) | ||||||
Dated Brent | ||||||
FWD curve (24-Nov) | ||||||
Hedging floor protected1 | ||||||
0 | ||||||
2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
1 2020: 60% hedged at $57/bbl, 2021: 54% hedged at $49/bbl, 2022: 3% hedged at $51/bbl
1H20
Dramatic crash and rebound
following OPEC+ deal
Hedging
remains a key
risk management tool
$55/bbl
in line with low end of external range
Sources: Bloomberg, Tullow data and External range based on: Arden, Auctus, BAML, Barclays, Berenberg, BMO, BNP, Canaccord, Cenkos, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Hannam, Investec, Jefferies, JPM, Morgan Stanley, Mackie Research, Mirabaud, Panmure Gordon, Pareto, Peel Hunt, RBC, Shore Capital, Societe Generale, Stifel, UBS and WH Ireland
Tullow Oil plc | 2020 Capital Markets Day | Slide 37 |
New approach underpinned by a robust financial framework
Strengthened | Disciplined | Focused on | ||
balance sheet… | capital allocation… | value creation… | ||
- Drive Net Debt to $1.0bn - 1.5bn
- Gearing at lower end of range of 1-2x
- Liquidity headroom of no less than $500m
→ >90% of investment | → Prioritise investments with |
focused on producing | high returns and short |
assets | payback |
→ Flexible $150-450m capital | → Maximise value from |
expenditure range | producing asset portfolio |
→ Managing capital exposure | → Unlock value in discovered |
to Kenya and emerging | resource and emerging |
basins | basins |
… resilient to oil price | … with flexibility to respond | … with a clear set | ||
volatility | to oil price environment | of priorities | ||
Tullow Oil plc | 2020 Capital Markets Day | Slide 38 |
Delivering a sustainable lower cost business
A lean organisation | Pursuing lower steady state operating costs | Annual cash cost savings of >$125m |
G&A ($m) | $400 Group operating costs ($m & $/boe) | Net operating costs 25 |
Gross G&A |
369 | Net G&A | Unit opex | ||||||
$350 | ||||||||
351 | ||||||||
20 | ||||||||
$300 | 320 | |||||||
c.300 | ||||||||
280 1 | c.280 | |||||||
$250 | 15 | |||||||
$200 | 11.7 | c.12 | ||||||
11.1 | ||||||||
<11 | ||||||||
c.160 | c.160 | $150 | 10 | |||||
112 | ||||||||
75 | $100 | |||||||
50 | 50 | 5 | ||||||
$50 | ||||||||
$- | 0 | |||||||
2019 | 2020f | 2021 | 2021-30 average | 2019 | 2020f | 2021 | 2021-30 average |
Headcount reduced by c.60%
Outsourcing of certain routine activities
Continue to pursue further efficiencies
Operating cost reduction to <$11/boe
Bottom-up review with external consultants
Requirement for shuttle tankers removed
Cost-driven performance management
Tullow Oil plc | 2020 Capital Markets Day | Slide 39 |
1 Excluding restructuring costs
Disciplined capital allocation
Increasing allocation towards producing assets | Maintaining a flexible capex range ($m) |
500
400
80%>90%
50%60%
Ghana Non-op Kenya Exploration
325
300
2019 | 2020f | 2021 | 2022+ | ||
Producing assets | Other investments | ||||
200
Ability to reduce capital to respond to volatile oil price environment
290
85
20
65
60
5
80
Flexible range
150-450
100
2021 investing 80% of capital expenditure in producing assets
180
120
2021-30 $2.7bn of total investment
0
2020f | 2021 | 2021-30 |
Note: Majority of exploration expenditure in 2020-21 relates to existing commitments
Tullow Oil plc | 2020 Capital Markets Day | Slide 40 |
Effectively managing decommissioning liabilities
- Innovative contracting and collaboration strategies yield costs savings
- Increased scope and COVID-19 effect on operations offset by cost savings
- Tullow-operateddecommissioning obligations in the UK will be completed in 2020
- Expenditure offset by c.$140 million UK tax relief
UK and Mauritania decommissioning exposure ($m)
530300
Mauritania
190
UK
40
Liabilities | 2016-20 | 2021-221 | 2023-251 |
Annual
decommissioning costs set to reduce materially from 2022
1 | UK non-operated decommissioning liabilities post-2020 | Tullow Oil plc | 2020 Capital Markets Day | Slide 41 |
Material proceeds delivered from Uganda sale
Sale of Ugandan assets
$500m
Paid at completion: 10 November
$75m
Payment on Uganda FID
Contingent payments
Oil price related
Efficient execution
- Good collaboration with the Government and Total
- Closed 7 months from signing
- Tax agreement up front
- Operatorship agreed promptly
- No JV Partner pre-emption
- Employee transfers to Total
Reduced net
debt to $2.4bn
All future Uganda
capital exposure eliminated
No impact on RBL
Considering further asset sales provided they are value accretive and
strengthen the balance sheet
debt capacity
Tullow Oil plc | 2020 Capital Markets Day | Slide 42 |
New approach supports deleveraging and value creation
$1bn1 | $2.4bn1 | $4bn2 | ||||||||
Liquidity | Net | Cash |
Sources and uses of cash ($bn)
2021-30
headroom | debt | flow | ||||||||
A clear path to deliver net debt in range of $1-1.5bn and gearing at lower end of 1-2x range
Solid foundations in place to address debt maturities; advisors appointed to progress refinancing options
$10
$9
$8
$7
$6
$5
$4
$3
$2
$1
$0
$65/bbl
$55/bbl
Operating cash flow
Debt service and
shareholder
returns
Deleverage to
reach target
Decom
Capex
SourcesUses
1
2
As of 10 November 2020 | ||
10 year cumulative cash flow available for debt service assuming $45/bbl in 2021 and $55/bbl flat nominal 2022-30 | Tullow Oil plc | 2020 Capital Markets Day | Slide 43 |
Conclusion
Rahul Dhir
Tullow Oil plc | 2020 Capital Markets Day
New approach delivers material value and cash flow
Operational$7bn
turnaroundc.
operating CF1
Cost
focusc.$4bn
cash flow available
for debt service and
Capitalshareholder returns2discipline
Upside
Geoscience | Undeveloped resource and | |
gas commercialisation |
Discovered and emerging basins
Significant value underpinned by a large resource base
Focus on costs to maintain high margins at low prices
Delivering sustainable self-funded production
Material options to generate additional returns
Strong cash flows for debt reduction and equity growth
1
2
1&2
Cash flow from operating activities, before debt service, capital investment and decommissioning expenditure
Cash flow from operating activities less capital investment and decommissioning expenditure
Based on $45/bbl in 2021, $55/bbl flat nominal in 2022+
Tullow Oil plc | 2020 Capital Markets Day | Slide 45 |
Q&A
To ask a question, please dial into the conference call and enter the "Event Plus Passcode" shown below:
Free phone (UK): | 0800 694 1461 |
Tel: | +44 (0) 203 009 5709 |
Event Plus Passcode: | 27 09 187 |
Rahul Dhir, Les Wood, Wissam Al-Monthiry and Julia Ross Tullow Oil plc | 2020 Capital Markets Day
Tullow Oil plc
9 Chiswick Park,
566 Chiswick High Road
London
W4 5XT
United Kingdom
Tel: +44 (0)20 3249 9000
Fax: +44 (0)20 3249 8801
Email: ir@tullowoil.com
Web: www.tullowoil.com
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Tullow Oil plc published this content on 08 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 December 2020 17:08:02 UTC