Capital Markets Day - Tullowoil
Capital Markets DayTullow Oil plc 2020 Capital Markets Day25 November 2020
2020 Capital Markets DayAgenda1Presenters2A NEW APPROACHOPERATIONAL TURNAROUNDDelivering enhanced value and cashflowImproving production efficiency and reliability34GHANANON-OPERATEDMaximise value from large resourceInvesting in stable, sustainable production5ENVIRONMENT, SOCIAL, GOVERNANCEMaterial value to unlockRetaining a strong focusFINANCIALSLes WoodChief Financial Officer6KENYA AND EMERGING BASINS7Rahul DhirChief Executive Officer8CONCLUSIONSWissam Al-MonthiryJulia RossManaging Director, GhanaDirector, People and SustainabilityUnderpinned by a robust financial frameworkTullow Oil plc 2020 Capital Markets DaySlide 2
A year of significant change: Putting Tullow back on trackLeadershipNew CEO, leadership and lean organisationOperational turnaroundFocus on asset integrity, process safety, maintenance and reliabilityCost focusGhana operating costs and corporate G&A significantly reducedCapital disciplineFlexible opportunities identified to allocate future investment capitalCapital structureSuccessful RBL redeterminations and Uganda proceeds receivedESG focusContinue to create lasting social and economic benefitsMaximising valueNew plans to deliver material value and cash flowTullow Oil plc 2020 Capital Markets DaySlide 3
Highly experienced, diverse and committed leadership teamRahul DhirChief Executive OfficerJoined Tullow 2020; formerly Delonex, Cairn India, Morgan nChief Financial OfficerGhanaGeneral CounselPeople & SustainabilityNon-opExplorationKenya Health & Safety Information Systems Shared Prosperity Gabon, CdI, EG Finance Integrated technical Insurance Human Resources Non-op technical NFE and IR & Corporate Affairsfunctions Stakeholder & JVManagement Internal Audit & Risk Internal Comms. Stakeholder & JV South America Commercial & Planning M&A Oil MarketingManagement Legal Development concept AfricaILX1 Subsurface Licence renewal Stakeholder & JVManagement Tax TreasuryJoined Tullow in 2014 asVP Commercial;formerly at BPJoined Tullow in 2020;formerly at BP andGoldman SachsJoined Tullow in 2020;formerly at Delonex,Cairn IndiaJoined Tullow in 2001;formerly CorporateFinance at TullowJoined Tullow in 2012;formerly atSchlumbergerJoined Tullow in 2019;formerly at Repsol andExxonMobilJoined Tullow in 2014;formerly at Essar Energyand BPSenior Leadership Team (SLT)TechnicalAdvisors& Auditors1Near-field exploration and infrastructure-led explorationWell EngineeringSubsurface &GeoscienceBaringaPartners in PerformanceStriatumIntera PetroleumConsultantsTRACSTullow Oil plc 2020 Capital Markets DaySlide 4
New approach delivers material value and cash flowProduction base with material resource playSignificant positions indiscovered and emerging ineGeoscience 95% 11c. 2.7bn 40% 600 7bnuptime targetc.operating CF1opex/bbl target2021-30 capexoil recoverymmbbls 2P/2Cfrom producingassetsmmbbls21&2Net 2C Kenya 4bnc.cash flow availablefor debt service andshareholder returns2UpsideUndeveloped resource andgas commercialisation 90% capital allocation1171900c.mmboeNet riskedprospectiveresources inemergingbasinsUnlocking value2021-30Managing capital exposureCash flow from operating activities, before debt service, capital investment and decommissioning expenditureCash flow from operating activities less capital investment and decommissioning expenditureBased on 45/bbl in 2021, 55/bbl flat nominal in 2022 Tullow Oil plc 2020 Capital Markets DaySlide 5
Well defined and profitable investment opportunitiesAttractive portfolio of African production investments200%80% IRR oninvestmentportfolio1150%c. 11/bblAveragedevelopment cost 65/bblValue accretive producing assets100%IRR (%)Combined IRR1 45/bbl50%0% 01 500 1,000 1,500Cumulative Capex ( m) 2,000 2,500 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 governmentsFlexibility to manage capital investmentBased on 45/bbl in 2021, 55/bbl flat nominal in 2022 Tullow Oil plc 2020 Capital Markets DaySlide 6
Material producing asset resourceWell-defined supply with replenishment potential3Visible production with acceleration potential37003002C resources402from producingassets only100%200100YTD 2020reservesreplacement2c.3802021-30 productionResidual recoverableresource112342.7 bncapex2002C resources from producing assets only, excludes Kenya and GuyanaAs at 30 SeptemberAll numbers Tullow working interestNear-field exploration and infrastructure-led exploration2021-3097%02P-2C reserves &resources13%40TENVolume (mmboe)4006075Jubileec.260500Improvedrecovery,NFE and ILX4Production (kbopd)6002P reserves243Non-op8020f212223242526272829Tullow Oil plc 2020 Capital Markets Day30Slide 7
Roadmap to creating a resilient, self-funded talstructureUnlockingvalueContinued operatingperformance improvementRefocused and definedinvestment portfolioSolid foundations toaddress debt maturitiesRevised Kenyadevelopment conceptSustain low-costproductionSelf-fundedcapexProgress refinancingoptionsNew resources in producingassets and prospect maturationReservoir managementto offset declineFlexible investment andacceleration opportunitiesDrive gearing to 1x-2x withappropriate headroomValue accretiveasset salesTullow Oil plc 2020 Capital Markets DaySlide 8
Operationalturnaround:Improving productionefficiency and reliabilityWissam Al-MonthiryTullow Oil plc 2020 Capital Markets Day
Operational turnaround to deliver value and cash flowJV partnersHealth and safety – Remains our highest priorityCommercial and relationship focus – Government and Joint Venture (JV) collaborationOrganisational capability – Team strengthened and integratedFacilities reliability – Enhanced maintenance and asset integrityDrilling efficiency – Reduce well complexity and rig downtimeCompetitive operating costs – Continuous improvementTullow Oil plc 2020 Capital Markets DaySlide 10
Focus on enhancing oil productionProduction efficiencyWater injection efficiency Closely integrated Tullow oversight Water injection remains a key area of focus on Jubilee Improvement to processing systems reliability Greater water injection volumes to sustain reservoirpressure and improve sweep efficiency Defect elimination process Well optimisation Maintenance and integrity management Sustaining performance by embedding efficiencies Three water injection pumps operational on Jubilee withinjection capacity building up to 300kbw/d Aligning full system infrastructure to sustain capabilityImproved uptime performance in GhanaAddressing water injection reliability and capacityUptime (%)Jubilee water rate (kbw/d)98% 95%91%201813092%20192020f2021 2017-19average1802703002020-21faverage2022YE23 Tullow Oil plc 2020 Capital Markets DaySlide 11
Improving gas offtake performanceOpportunity Higher gas export improves reservoir management, enhancesoil production and minimises emissionsReliable gas offtake supports oil productionGas rate (mmscf/d ) 200 mmscf/d including gas commercialisation Delivers material value for Ghana2020 Progress135exit rate 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 offtakeForward plan Maintain gas performance with sustained facilities uptimeDebottleneck gas handling capacity on Jubilee FPSOTarget to increase gas offtake beyond 130mmscf/dIntegrated delivery: subsurface, operations, commercial andGovernment130 130 20212022 10673652H 20191H 2020441H 20192H 2020fGrowing gas processing capacityGas rate (mmscf/d)14020191902020-23f250YE24 Tullow Oil plc 2020 Capital Markets DaySlide 12
Driving down costs for a low cost operationJubilee1450400Cost savings being deliveredTENAsset operating costs (gross)50 450Opex 406mAsset operating costs (gross)45 400OpexOpex/bblOpex/bbl4035050403503530035300 304m3025030250c. 240m25200Continuous opportunityidentification with consultantsupport20015015 12.710 9.950c. 9.0-20191Reduction of equipmentvulnerabilities2520100452020fAxis Title20212019 and 2020 include opex associated with turret remediation20150 177m 148mc. 150m100c. 11.5550-- 7.9 8.315Maximise leverage through thesupply chain105Cost-driven performancemanagement-20192020f2021Axis TitleTullow Oil plc 2020 Capital Markets DaySlide 13
Delivering improved drilling performanceDriving future drilling costs down by c.20%Top quartile drilling performanceDrilling cost per well ( m gross)Simplified well design andreduced completion complexity7560Continuousimprovement 60mImproved rig reliability throughenhanced maintenance assuranceIntegrated planning acrosssubsurface, drilling and projectsteams2018-20 well costs11Advanced alignment with JVPartners on well targetsReduce rig downtimeNormalised for 2021 rig ratesReduce wellcomplexitySupply chain scaling2021 targetSlide 14
Ghana:Maximise value fromlarge resourceWissam Al-MonthiryTullow Oil plc 2020 Capital Markets Day
Building blocks to unlock value and cash flowOperational turnaroundSafely maximise productionefficiencyOptions to increase fieldrecovery, develop near-field and ILXdiscoveries and commercialise thesignificant gas resourcesCost focusDelivering a sustainable lowcost business and organisationPlans in place to develop discoveredresource base over the next 10 yearsCapital disciplineAllocate capital to high return,short cycle developmentopportunitiesLow-cost opportunities identified topursue from 2021 to build productionand cash flowGeoscienceMaximise recovery and deliversignificant upsideopportunities within licenceHigh quality portfolio of oil producingfields and infrastructure provides solidplatformTullow Oil plc 2020 Capital Markets DaySlide 16
Substantial Ghanaian resource base across two areasJubilee gross volumes (mmbbls)Only 393 mmbbls producedc.14% recoveryWells: 25 producers,18 water inj. and four gas inj.Two FPSOs and subseainfrastructure in placeMore than 550mmbbls grossyet to be producedPotential to increase RF2 tounlock additional reservesNear-field opportunitiespresent significant upsideTEN gross volumes (mmbbls)c. 1,800c. 1,000RF 41%RF 29%RF 17%220210RF 9%3081STOIIP12Production toSept-20Stock Tank Oil Initially In PlaceRecovery Factor85No further activity Defined projectsAdditionalrecoverySTOIIPProduction toSept-20RF 17%85RF 30%130No further activity Defined projectsAdditionalRecoveryTullow Oil plc 2020 Capital Markets DaySlide 17
Well-defined, high return drilling opportunitiesComprehensive review completedHighly efficient investments with shortpaybacks and high returnsEconomies of scale identifiedMinimal additional infrastructure requiredRevised investment phasing tomaximise recoveryUnit development costs of c. 12/bblOptimising capacity of both FPSOsDevelopment work supported by expert4D seismic analysisTullow Oil plc 2020 Capital Markets DaySlide 18
Defined set of opportunities to sustain productionRich drilling options126wells plannedover 2021-301-210-15kbopdinitial productionrate per well year paybackIRR2310-15wells plannedover 2021-301-2kbopdinitial productionrate per well year payback190%Based on 45/bbl in 2021, 55/bbl flat nominal in 2022 All numbers on a gross basis70%IRRDefined projectsJubileeSouth EastJubileeNorth East2022Producer/ injector pair140mmbbls oil2023Two producers online2024 Follow-on wellsin SE and NENtommeFar WestEnyenraNorth90mmbbls oil2022-24 Projects progressingtowards FIDEnyenraSouthTullow Oil plc 2020 Capital Markets DaySlide 19
Additional opportunities to deliver upsideMaximising recovery1Additional oil recovery in JubileeSignificant opportunity tocommercialise gas resource1c.1TCFof recoverable gas resource Targeting more than 40% ultimate recovery in Jubilee Around 100mmbbls of additional recovery potentialGreater Ntomme Tweneboa (GNT) Area More than 350mmbbls of undeveloped STOIIPAlready connected to onshoreinfrastructureLong term supplypotential (10 years) Utilising existing subsea infrastructureMultiple gascommercialisation optionsTweneboa West More than 30mmbbls of undeveloped STOIIP Fast development, tie back to existing infrastructure1Dedicated JV taskforceto progressAll numbers on a gross basisTullow Oil plc 2020 Capital Markets DaySlide 20
Near-field and infrastructure-led opportunitiesGhanaCôte d’Ivoire Several near-field prospective opportunities identified Underexplored block adjacent to TEN field infrastructure Low risk, commercially attractive, accelerated tie-in targets Westward extension of proven plays in TEN/Jubilee Estimated volumes 100mmboe STOIIP (gross) Current focus: seismic re-processing and prospect maturation Discussions with Government on access commencedABEnyenraTweneboa WestDantaSeismic anomalies (reds) representing reservoir2kmTullow Oil plc 2020 Capital Markets DaySlide 21
Non-op:Investing in stable,sustainable productionRahul DhirTullow Oil plc 2020 Capital Markets Day
Non-op: Stable production from existing resource baseCôte d’IvoireSustainable production22 - 25 kboepdStable cash flow;Self-funded portfolioStrong JVpartnershipsProven executioncapabilityAccess toinfrastructureNear fieldopportunitiesEquatorial GuineaGabonMature fields with defined opportunities for stable production (kboepd)1302525Gabon252222Equatorial GuineaCôte d'IvoireGabon (c.15kbopd 2020) Light oil, 23 fields, off/onshore Working interest range 7.5-57.5%Equatorial Guinea (c.5kbopd 2020)22 Light oil, five fields, offshore Working interest 14.25%20152021-30 average production includingdefined projects and further opportunities10Côte d’Ivoire (c.2kboepd 2020) Light oil and gas, two fields, offshore Working interest 21.3%502016120172018All numbers Tullow working interest2019 2020f 2021202220232024202520262027202820292030Tullow Oil plc 2020 Capital Markets DaySlide 23
Non-op: Diverse set of low-risk projectsDefined investment options and projects1Expanding six key assetsGabon 40 wellsTwo newmobile production units14mmbbls oil1-3year payback40-150% IRREspoir Phase IV infill campaignCôte d’IvoireSix wells4mmbbls oilTwoyear payback80c.% IRROkume Complex infill campaignEquatorial Guinea1Three wells1mmbbls oilTwoyear payback70c.% IRRAll numbers Tullow working interestTullow Oil plc 2020 Capital Markets DaySlide 24
Kenya andemerging basins:Material value to unlockRahul DhirTullow Oil plc 2020 Capital Markets Day
Unlocking value across the portfolioKenyaGuyana37.5% to 60.0% Material recoverableTwo blocks3D repro.resource base Licences extended Development plan beingrevisited for low oil pricesEmerging basins Material positions in emergingoil provinces Significant intellectual capitalbeing investedKenya50.0% to 100.0%Côte d’Ivoire60.0% to 90.0%Four blocks Argentina 3D seismicBillion barrelsGross STOIIP1.5171Two blocks3D seismic reproSuriname50.0% to 100.0%Three blocksOne well2D seismicMillion barrels2C working interest resourcesProspective net risked resourcesin emerging basinsNamibia35.0% to 56.0%Two blocksGuyanaSurinamePeru35.0% to 100.0%16%Four blocks2D reproCote d'Ivoire44% Suriname well (GVN-1) Guyana prospect maturationKenya900mmboeArgentina6%10%Namibia40.0% to 100.0%Three blocks3D Seismic24%Argentina2021 drillingTullow Oil plc 2020 Capital Markets DaySlide 26
Kenya development concept under reviewIngredients for a profitable low-cost projectMaterial highquality onshoreresource base1.5 billion bblsSTOIIP (gross) Shallow, productive reservoirs Light waxy crude Large onshore acreage positionLicencesextendedDecember2021 Conditional on approval of budgets Plan to fully review development concept Ensure project robust to low oil pricesTechnicalUpstream and midstream FEED; upstream bids;pipeline tenderEOPSCritical data; first crude export;stakeholder engagementCommercialKey agreements drafted;regional and international interest for pipeline financingLand and water80% pipeline gazetted; ESIA work ongoingSignificantprogress madeto dateTullow Oil plc 2020 Capital Markets DaySlide 27
Kenya project redesign for low oil pricesPhasingWell countAdditional discovered fields;increased plateau rate and durationMore drilling;lower unit costLicence extensionswill provide time to evaluate optionsProductionOpexKenyaIncreased rates bytargeting highproductive wells atcrest; EOPS learningLower opex viasimilar fieldanalogues,particularlyreduced well opexAn improvingvalue propositionWaterImproved sweep efficiency andincreased number of injectorsCapexEconomies of scaleFeedbackfrom farm down process is beingincorporatedEconomicsto be improved throughdevelopment concept and costoptimisationTullow Oil plc 2020 Capital Markets DaySlide 28
Guyana/Suriname: Material positions in emerging basinsGenerating value through opportunity identification and maturationIndustry hot spot with multibillion-barrel discoveriesLeveraging core expertise inturbidite playsStrong relationships with hostgovernmentsSuriname – GVN-1 well withsignificant follow-upGuyana – Prospects maturingfor drilling campaignTullow Oil plc 2020 Capital Markets DaySlide 29
Suriname: Goliathberg-Voltzberg North-1Block 47Tullow 50% (op)GVN-1 paying interest c.36%Block 62Planning for 1Q21 spudTullow 80% (op)Upper Cretaceous turbidite playDual targets in excess of400mmboe (gross)1Testing extension of workinghydrocarbon systemPotential to de-risk 1bnboe (gross) infollow-up prospects11PmeanTullow Oil plc 2020 Capital Markets DayrecoverableSlide 30
Guyana: Material equity in prospective blocksTLW 60% (op)TLW 37.5% (non-op)Inboard of 8bnboe discoveries inGuyana-Suriname basinLarge portfolio of prospects – total over2bnboe net recoverableThree plays proven on Tullow acreageHigh grading drill candidates for Kanuku 2022and Orinduik 2022 Tullow Oil plc 2020 Capital Markets DaySlide 31
Environment, Socialand Governance:Retaining a strong focusJulia RossTullow Oil plc 2020 Capital Markets Day
Focused on reducing GHG emissionsNet Zero (Scope 1 and 2) commitment – possible decarbonisation leversOptions for decarbonisation roadmap5 Year rm gas offtakeoptions supportelimination of flaringRemainingaddressableemissionsSmall nCarbonoffsetsCarbon reduction optionsHigher 2020 emissionsintensity, from increasedflaring in GhanaGasutilisationand gasreinjectionNet Zero delivery planbeing developedJV partner collaboration Alignment with government priorities Governance and executive incentivesTullow Oil plc 2020 Capital Markets DaySlide 33
Creating lasting social and economic benefitsSocial investment in Ghana 5003,000educationalscholarshipsbursariesStrategic local content in Ghana 1.5bn spent with local suppliers since 2015 c.30% of supply chain expenditure has beenwith indigenous companies over last three yearsc.25% 10 million committed over 5 yearsto Government of Ghana’s flagshipFree Senior High School initiative,providing access to education for allTargeteddevelopment: focus onmarine sector led tofirst Ghanaian ownedand flagged OffshoreSupply VesselUpgrading aviationinfrastructure at TakoradiAirport Air Force Basecreating an enhancedoperational base for oil andgas sector and beyondof Ghana's gas demand fordomestic power suppliedat zero cost, providingaccess to electricity to 6.7million individualsShared Prosperity for all stakeholdersTullow Oil plc 2020 Capital Markets DayS
Tullow Oil plc 2020 Capital Markets Day Slide 19 Defined set of opportunities to sustain production 26 wells planned over 2021-30 10-15 kbopd initial production rate per well 1-2 year payback 90 % IRR Rich drilling op
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