EnQuest 2018
Full Year Results
Amjad Bseisu
Chief Executive
Overview Amjad Bseisu, CEO
Operations overview Bob Davenport,
Managing Director - North Sea
Kraken subsurface Martin Mentiply,
Chief Petroleum Engineer
Financials Jonathan Swinney, CFO
Summary Amjad Bseisu, CEO
Agenda
EnQuestA clear strategy with a focused business model
3
Strategic vision
To be the operator of choice for maturing and underdeveloped hydrocarbon assets
Focused business model
A production and development led E&P business
Utilises EnQuest core strengths
Strategically aligned
Value-accretive portfolio opportunities continue
to be assessed
EnQuest priorities“Deliver, de-lever, grow”
4
Deliver
De-lever
Grow
Production
Cost control
Capital discipline
Scheduled bank amortisation
Targeting net debt:EBITDA ratio of 1-2x
Develop asset base
Consider selective, value enhancing acquisitions
EnQuest 2018 performanceOperational and financial targets met
5
Deliver
✔
37,405
55,447
20,000
30,000
40,000
50,000
60,000
2017 2018
Net production (Boepd)
26
23
20
22
24
26
2017 2018
Unit opex ($/boe)
368
220
0
100
200
300
400
2017 2018
Cash capex ($m)
Strong safety performance
Acquired remaining 75% interest in Magnus
Production increased 48% to 55,447 Boepd
Unit opex decreased by 10% to $23/boe, lower than guidance
Cash capital expenditure was $220m, lower than guidance
EnQuest 2018 performanceDebt reduction on track
6
De-lever
✔
75% Magnus acquisition brings significant cash generation
Gross bank debt lower by $340 million
Group net debt: $1,774 million; 11% lower vs 2017
1.7
3.33.8
6.6
2.5
0
1
2
3
4
5
6
7
2014 2015 2016 2017 2018
Net debt:EBITDA ratio
EnQuest 2018 performanceMagnus acquisition provides growth and portfolio balance
7
Grow
✔Material increase in production
Significant 2P and 2C resource additions
203 215 210245
146 151 164
198
0
50
100
150
200
250
300
350
400
450
500
31 Dec 2015 31 Dec 2016 31 Dec 2017 31 Dec 2018
Reserves and resources (MMboe)
2P 2C
21,263 18,88515,627
19,293
6,242 11,718
8,131 6,353
4,709
21,369
9,062 9,148
8,938
8,432
0
10,000
20,000
30,000
40,000
50,000
60,000
2015 2016 2017 2018
Net production (Boepd)
NNS CNS Kraken Malaysia
Operations overview
Bob Davenport
Managing Director - North Sea
9
Production performanceGrowth of 48%, in line with guidance
15,627
8,131
4,709
8,938
19,293
6,353
21,369
8,432
NNS CNS Kraken Malaysia
2017 2018
9
2018: 55,447 Boepd1
2017: 37,405 Boepd1Production growth:
✔ Delivered
Full year contribution from
Kraken and Magnus
Drilling at Heather, Magnus and
Seligi
Alma/Galia ESP replacements
Magnus wellwork and plant de-
bottlenecking
Strong production efficiency
1 Net working interest
10
Malaysia
PM8/Seligi
Tanjong Baram
Drilled 2 wells at PM8/Seligi; delivered target
production volumes
PM8/Seligi: idle well restoration and compression
train rejuvenation campaigns
Excellent production efficiency
2018 operational deliverySuccessful drilling in Malaysia; ESP replacements at Alma
Central
North Sea
Scolty/Crathes
Alma/Galia
Kittiwake
Alba
Maintained high production efficiency
Kittiwake: extended shutdown to install new
compressor
Alma/Galia: 3 ESP replacements
Scolty/Crathes: effective wax management;
replacement pipeline on schedule for Q3 2019
8,938 8,432
2017 2018
Net production (Boepd)
8,131
6,353
2017 2018
Net production (Boepd)
11
Northern
North Sea
Magnus
Heather/Broom
Thistle/Deveron
The Dons
Maintained high production and injection efficiency
Magnus: drilling, well interventions and plant
de-bottlenecking
Heather: strong H-67 well performance
Well abandonments at Heather and Thistle
Reduced SVT costs by 25%: efficient project
execution & focused supply chain management
2018 operational delivery cont.Magnus and Kraken drive production growth
Kraken
Production lower from FPSO system and weather
related outages
Positive reservoir and well performance; good well
connectivity
Increased daily water injection to 145,000 Bwipd;
improving reservoir voidage
Completed DC3; commenced DC4 drilling
Optimised 3-well DC4 programme, saved
$23 million
15,627
19,293
2017 2018
Net production (Boepd)
4,709
21,369
2017 2018
Net production (Boepd)
12
MagnusUnlocking production and reserve growth potential
Magnus
A giant field with c.2.0 billion boe HIIP and
significant remaining potential
Secured early wins
Production increased >20% in first year
Plant de-bottlenecking increased water
handling capacity by 40 Mbwpd
Drilled 2 wells; barrel-adding well
interventions
Improved reservoir understanding
Incorporated recent seismic into reservoir
simulation modelling
Reservoir surveillance
Unlocking future potential
Improved reservoir management
Drilling and well intervention
Higher operating efficiency
13
Kraken
Multiple areas improved since first oil
Water injection system including seawater
filters
Power load management
Steam and heating systems
Separation stability
Fuel gas availability
FPSO uptime has been poor; improvement
focused on three main areas:
Main power engines
HSP seal failures
Rundown cooler systems
Working with the FPSO operator on
improvement initiatives
Kraken Improve FPSO performance; realise long-term value
Kraken Field Development
Kraken subsurface
Martin Mentiply
Chief Petroleum Engineer
Kraken field water cut evolutionField data indicates effective reservoir sweep
15
Voidage recovery through water flood provides
the primary approach to maximising reserves
80% of the field volumes are now at voidage
Positive water cut trend
3 water cut trends have been observed
Coning: drove early rapid rise in water cut
Preferential channeling through underlying
water
Effective sweep and displacement efficiency
between producer/injector pairs
Tracers breakthrough times later than
anticipated; indicating effective lateral sweep
Coning
Channelling
Alternative potential water pathways
Water cut trend
Coning Channelling Efficient sweep
Lateral sweepWater injector
Kraken reservesLife of field reserves substantially unchanged
16
Field-wide STOIIP and reservoir properties remain
largely unchanged since FDP
High-quality seismic
Extensive drilling completed
Confirmed pressure communication
Injection and producer well performance is better than
anticipated since FDP submission
Positive producer/injector communication response at
DC4
Comprehensive suite of production and subsurface data
incorporated into reservoir model; used to predict field
performance
Excellent match to oil and water rates achieved;
supports long term production forecasts
Kraken life of field reserves are substantially unchanged
Further opportunities in Western Flank
Kraken well locations
Jonathan Swinney
Chief Financial Officer
Financial review
18
1 Including losses of $93.0 million (2017: loss of $20.6 million) associated with EnQuest’s oil price hedges2 EBITDA is calculated on a business performance basis, and is calculated by taking profit/loss from operations before tax and finance income/(costs) and adding back
depletion, depreciation, foreign exchange movements, inventory revaluation and the realised gains/loss on foreign currency and derivatives related to capital
expenditure3 Includes PIK
Unless otherwise stated all figures are before exceptional items and depletion of fair value uplift and are in US Dollars
Results summaryStrong 2018 performance
Production
55,447 Boepd
48%
Revenue1
$1,201 million
89%
EBITDA2
$716 million
136%
Cash generated by
operations
$789 million
141%
Cash capex
$220 million
40%
Net debt3
$1,774 million
11%
Operational and financial targets met
Debt reduction underway
Deliver
De-lever
Unit opex
$23/boe
10%
Net financing costs
$233 million
59%
302
794
210
203
50
50
(20)
200
300
400
500
600
700
800
900
2017 Price Volume,margin & mix
Other cashgen by ops
Thistle option Decom, Taxand other
2018
Net cash flow from operating activities
19
$m
Cash flowStrong cash generation
Improved cash generation:
✔ Delivered
Favourable prices
Material increase in volumes
Improved asset mix
Thistle decommissioning
option
Favourable working capital
252
35
76
3 2
121
53
2419
3
0
50
100
150
200
250
300
Kraken NNS CNS Malaysia Other
2018 vs 2017 cash capex
2017 2018
$m
20
Capital disciplineMaterially lower capex requirement post Kraken development
2018: $220m
2017: $368m
1,058
751
609
368
220
275
0
200
400
600
800
1,000
1,200
2014 2015 2016 2017 2018 2019Outlook
Cash capex trend$m
Phasing &
deferrals
2018 cash capex:
✔ Delivered
Focused on drilling at Kraken,
Magnus, Heather and
PM8/Seligi
Capex outlook:
✔ Underpins production
Kraken, Magnus and
PM8/Seligi drilling
UK North Sea pipeline projects
Includes prior period deferrals
1,991
1,774
220
320 37
794
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
Opening net debt Net CF from ops Cash capex Net financing& other
Capitalised int.& Fx
Closing net debt
Movement in net debt
21
$m
Net debt and cash flowImproved cash generation facilitating debt reduction
Debt reduction:
✔ Delivered
Strong cash flow from
operations
Offset by
Production enhancing capex
Higher financing costs
Kraken lease
Vendor loan
Net interest paid
Capitalised interest
967
1,548
1,797
1,991
1,774
1.7
3.3
3.8
6.6
2.5
0
1
2
3
4
5
6
7
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2014 2015 2016 2017 2018
Net debt metrics
Net debt Net debt:EBITDA
$m
22
Deleveraging remains a priorityPortfolio cash generation underpinned by hedges
Ratio ✔ De-levering underway
End of high capex phase
Production volumes increasing
from improved portfolio mix
✔ 2019 outlook1
c.8 MMbbls hedged (c.6.5 at
avg floor price of c.$66/bbl)
EBITDA increases c.$150
million at $70/bbl vs $60/bbl
✔ Net debt:EBITDA
Approaching 2x in 2019
Intend to operate between
1-2x
1 Based on mid-point of 2019 production guidance of 63,000 to 70,000 Boepd
205 155
439
965
25
32
0
500
1,000
1,500
2,000
2019 2020 2021 2022 2023
5-year repayment profile1
Credit facility Bonds Other loans
23
Debt structureLong-dated, manageable repayment structure
874 799
965 965
179 179
72 72
0
500
1,000
1,500
2,000
2,500
Facilities Drawn
Debt structure1
Credit facility Bonds Oz Mgt Other loans
$m $m
1 As at 31 December 2018. Includes PIK on the Bonds ($117.6 million) and bank debt ($14.4 million), along with capitalised interest on the Oz Management facility
($3.5 million)
Scheduled amortisation on credit facility with long-dated bond repayment
Oz Management facility repaid out of ring-fenced cash flow over 5 years
24
Magnus generates strong cash flow75% interest cash waterfall1
Free cash flow Vendor loanrepayment
EnQuestrepayment
Profit share
Cash flow waterfall pre repayment of EnQuest’s $100m consideration
Free cash flow Vendor LoanRepayment
Profit share
Cash flow waterfall post repayment of EnQuest cash consideration
50%
50%
50%
50%
1 For illustrative purposes only
Vendor loan repaid in instalments over 5 years
EnQuest cash consideration expected to be repaid in 2019
2019 profit share forecast around $60/bbl Brent
25
2019 outlookPrioritising debt reduction
Production
63,000-70,000 Boepd
20%
Cash capex
$275 million
Net debt:EBITDA
Approaching 2x
Operating expense
$600 million
Hedging
c.8 MMbbl
Oil price sensitivity
EBITDA increases
c.$150 million at
$70/bbl vs $60/bbl
Operational performance and financial discipline
Focused on debt reduction; sensitive to price
Deliver
De-lever
Production Cash capex
Operating expense Hedging
Amjad Bseisu
Chief Executive
27
2019 outlookFocused on projects that maximise cash flow
Target: 63,000-70,000 Boepd
YTD Feb: 67,700 Boepd
✔
Operational priority to
improve Kraken FPSO
uptime:
30,000 to 35,000
Bopd (gross)
guidance unchanged
Magnus performing above
expectations
Rest of portfolio in line
with plans
Production
On track
✔
Maintain low unit costs
Drilling:
Kraken DC4 complete
Magnus: 2 wells
PM8/Seligi: 2 wells
Project expenditures:
Scolty/Crathes
pipeline
Dunlin bypass
Operating costs and
capital spend
Evaluation underway
✔
Kraken: infill drilling and
Western Flank
Magnus: production
optimisation; future drilling
targets
PM8/Seligi: future drilling
and intervention; facility
upgrades
Eagle: progress to
sanction
Dons NE: potential
development options
Near-term opportunities
28
Operational growth beyond 2019Selected portfolio opportunities
Deliver 2P Reserves
Late-life asset /
life extension
Platform
drillingInfill drilling
Well
intervention
Plant
improvements
Sub-sea
tie-back
Magnus ✔ ✔ ✔ ✔ ✔
Kraken ✔ ✔ ✔
PM8/Seligi ✔ ✔ ✔
Thistle/Deveron ✔ ✔ ✔ ✔
Heather/Broom ✔ ✔ ✔ ✔
Grow 2C Resources
Late-life asset /
life extension
Platform
drillingInfill drilling
Well
intervention
Enhanced
recovery
Sub-sea
tie-back
Magnus ✔ ✔ ✔ ✔ ✔
Kraken ✔ ✔ ✔
PM8/Seligi ✔ ✔ ✔ ✔
Heather/Broom ✔ ✔ ✔ ✔
Eagle ✔
The Dons ✔ ✔ ✔ ✔
EnQuest prioritiesDebt reduction remains the priority
29
Deliver De-lever Grow
Production growth
Cost control
Capital discipline
Scheduled amortisation
Targeting net
debt:EBITDA of 1-2x
Potential for near-field,
short-cycle opportunities
Substantial 2C resources
EnQuestA clear strategy with a focused business model
30
Questions & Answers
Appendices
0
10000
20000
30000
40000
50000
60000
70000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
* Guidance range for 2019 is an average of between 63,000 Boepd and 70,000 Boepd
Average net production (Boepd)
63
,00
0 -
70
,00
0*
32
Well set for substantial growthStrong CAGR (c.17.2% to 2019 mid-point)
Q&A
33
No material cash tax expected to be paid on UK operation activities for the foreseeable
future - UK corporate tax payable in financial statements mainly relate to profits
generated by Magnus assets pre-completion of acquisition of remaining 75% on 1
December 2018;
Small cash tax payments are expected in Malaysia on the PM8/Seligi PSC
UK Tax Allowances $m
Tax losses at 31 December 2017 3,121.3
2018 net additions plus RFES 42.8
Prior year true up (38.8)
Tax losses at 31 December 2018 3,125.3
Tax allowances carried forward 100.0
Total tax losses and allowances at 31 December 2018 3,225.3
Group tax positionNo material UK cash CT/SCT on operational activities expected
34
ETR % $m’s
Loss Before Tax 94.0
UK CT Rate 40% 37.6
RFES 68% (64.2)
UK and overseas tax rate differences 22% 20.3
Permanent items (23%) (21.7)
Prior year adjustments (2%) (1.4)
Other 4% (3.8)
2018 Tax Charge/(Credit) (35%) (33.3)
Group tax positionEffective tax rate reconciliation
35
Post-tax exceptional itemsYear to 31 December 2018
$49.1 million post-tax gain on exceptionals, primarily made up of:
Net uplift associated with the 25% interest ‘step-acquisition’ of $74.3 million, comprising
$123.9 million associated with PP&E; partially offset by
$49.6 million deferred tax liability
Post-tax unrealised gain on commodity derivatives of $59.9 million
Post-tax impairment of oil and gas assets $78.7million
36
The Dons
Heather/Broom
Greater Kittiwake Area
Thistle/Deveron
Kraken
PM8/Seligi
Alma/Galia
Magnus
EnQuest: 8 HubsA strong platform for growth
81
245263
(99)
-50
0
50
100
150
200
250
300
Net 2P reservesstart 2010
Production 2010-2018
Reserve additions2010-2018
Net 2P reservesend 2018
MMboe Net 2P Reserves
37
Strong reserves growth in first nine yearsReserve life c. 13 years
This presentation may contain certain forward-looking statements with respect to EnQuest’s
expectation and plans, strategy, management’s objectives, future performance, production,
costs, revenues, reserves and other trend information. These statements and forecasts
involve risk and uncertainty because they relate to events and depend upon circumstances
that may occur in the future. There are a number of factors which could cause actual results
or developments to differ materially from those expressed or implied by these
forward-looking statements and forecasts. The statements have been made with reference
to forecast price changes, economic conditions and the current regulatory environment.
Nothing in this presentation should be construed as a profit forecast. Past share
performance cannot be relied on as a guide to future performance.
Forward-looking statements