first half 2012 results presentation august 2012
TRANSCRIPT
First Half 2012 Results Presentation
August 2012
1
Donald Wolcott
CEO
• Founding shareholder of
RusPetro
• 26 years of experience in the oil
and gas business
• Senior technical and management
roles with YUKOS, Schlumberger
and ARCO
• Ran upstream operations in
YUKOS
− 1/3 of Russian production
− Increased production by c.
900kbopd and proven reserves
by over 5bn bbl in 5 years
Presenting Team
2
Position at RusPetro
Career highlights
Thomas Reed
CFO
• Founding shareholder of
RusPetro
• Private equity, M&A advisor and
investor based in Moscow (in
Russia since 1995)
− VR Capital (2001 – 2007) and
Raven Russia (2005 – 2007)
− Advised and invested in several
private companies in Russia
− Previously CFO of Rising Star
Media
What is RusPetro?
• World-class on-shore reserve base
− Proved reserves of 183 million barrels
− 2P reserves of over 1.5 billion barrels
− Oil-in-place of over 6.5 billion barrels
• Developed region and infrastructure
• Low cost assets - EV/2P = $0.68
• Current production at 6,100 bopd
• Reserves upgrades underpinned by improving
recovery rate
• Experienced management team with proven
track record
3
RusPetro’s blocks
Neighbouring
blocks
Krasnoleninsky
Arch
1,060
4,200
6,100
10,400
0
2,000
4,000
6,000
8,000
10,000
12,000
2010
(EoY)
2011
(EoY)
Current 2012E
(EoY)
RusPetro Reserves (MMboe) RusPetro Production (bopd)
183
1,544
1,947
0
1,000
2,000
3,000
Proved (1P) 2P 3PCont. ResourcesProved
(1P)
2P 3P
Oil
Milestones: H1 2012
4
• IPO raised $214 million, elevated to
FTSE250 at end March
• Completed 27 km sales pipeline
• Developed in-field pipeline network
• Constructed in-field power lines
• 4MW generating capacity installed utilising
associated gas
• Activated 3 additional rigs
• Production begins in the north-east of the
field
• 14 wells drilled (5 completed)
• Proved reserves increase to 183 million
barrels
• Accelerated pace of drilling
• Initiated water flood injection on Pad 21
• Initiated premium priced condensate rail
sales
• Building geosciences, drilling, engineering,
operations and administration teams
• Installed initial treatment facility in the north-
east
First Quarter Second Quarter
57
121
157
183
0
50
100
150
200
D&M, 2009 D&M, 2010 D&M, Aug 2011, as presented at IPO D&M, June 2012
Proved Reserves Growth
Evolution of Proved Reserves
5 (1) DeGolyer and MacNaughton reserves audit as at May 2009. (2) DeGolyer and MacNaughton reserves audit as at May 2010. (3) DeGolyer and MacNaughton reserves audit as at Aug 2011. (4) DeGolyer and MacNaughton reserves audit as at June 2012.
(MMbbl)
(1) (2) (3)
• 2P reserves currently stand at over: 1.5 billion barrels
5
+112%
+30%
+16%
(4)
Five Drilling Rigs Operational from September
6
Rigs
Future well
locations
Production wells
* Exploration wells
Pad
21
Pad
19
Pad
1
Pad
27
Pad
2
The Way Forward
7
Progressing our approach
Associated gas production
Maximize well head revenue
Develop gas and condensate business
Added 4 sales channels
8
Challenges Solutions
Geological
Operational
Commercial
Build the team
Refine the geological model
Build the team
Completions
Pressure maintenance
Geological team upgrade geophysical component of
geological model
Reprocess seismic (2-6 months)
Identify high grade bottom hole locations
Added key international team to deliver in geology,
drilling, operations and engineering
Scaling up to address the issue of fracture fleet
availability
Putting in place techniques for faster completion
Implement water flood programme
Key Hires Since IPO
9
Name Position
Robert Stewart Director of Production and Operations
John Richardson Drilling Manager
Nick De’Ath Subsurface team leader
John Krupa Senior Geophysicist
Graham Tribble Workover and Operations Manager
Randy Elliott Construction Manager
Vyacheslav Bolshakov Fracturing Engineer
Makhmuryan Grigory/Pustylnikov Sergey Drilling Superintendents
Tim McMurray Financial Controller
Rachel Hambrook Company Secretary and Chief Legal
Officer
Phil Lynch HR & HSSE Director
Tatiana Darkova HR Manager (Moscow)
Water Flood To Increase Production
10
• Water flood expected to impact production from
January 2013
• Water flood increases recovery by up to 28%
• Well conversions selected to maintain water
flood response
Improving Subsurface Understanding
11
Our 2012 drilling programme has reconfirmed our geological model
Refining the geophysical component of the geological model is now taking place
Seismic reprocessing underway
This will enable us to choose high grade locations more accurately
Original After Advanced Reprocessing
Financial Results
12
Financial Highlights
13
• Revenues of $33.82 million (H1 2011: $11.04 million)
• Operating cash flow before working capital adjustments of -$6.4 million (H1 2011: -$1.3
million)
• Capital expenditure of $52.7 million (H1 2011: $12.5 million)
• Cash balance of $90.15 million (31/12/2011: $1.3 million)
• Net debt of $277 million, a reduction of $128.2 million from 31 December 2011 (32%)
Summary Financials: Income Statement
14 Source: Company IFRS financials.
• Revenue increased to $33.8 million in H1 2012
compared to $11.0 million in H1 2011
• Revenue driven by increase in sales
• Sales: 712,809 bbls
• Improving well head revenue per barrel of $47
(H1 2011: $41) due to higher proportion of export
and condensate sales
• Exports: 261,151 bbls
• Condensate: 45,320 bbls
($m)
($m)
7.4
12.5
38.7
11.0
33.8
0
10
20
30
40
2009 2010 2011 1H 2011 1H 2012
-5.3-6.3
-5.5
-2.2
-6.4
-10
0
2009 2010 2011 1H 2011 1H 2012
Revenue
EBITDA
First Half 2012 Production and Sales Volumes
15
642,831
77,195
0
250,000
500,000
750,000
Production
Condensate
Crude
261,151
45,320
406,338
0
250,000
500,000
750,000
Total Sales
Domestic Crude Sales
Domestic Condensate Sales
Export Sales
EBITDA analysis
Revenue – EBITDA Bridge H1 2012
16
($m)
33.8
15.1
10.5
14.6
(6.4)
-10.0
0.0
10.0
20.0
30.0
40.0
Revenue Mineral Extraction Tax Operating Expenses SG&A EBITDA
Source: Company IFRS financials.
(1)
(1) Share-based payment compensation and depreciation and amortization deducted
Summary Financials: Cash Flow Statement
17 Source: Company IFRS financials.
• Operating cash flow affected by low
EBITDA and working capital
consumption
• Capex program progressing
Operating Cash Flow, before working capital adjustments
Capital Expenditure
($m)
($m)
1H 2012 Capital Expenditure Split
($m)
2.7
28.332.3
12.5
52.7
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2009 2010 2011 1H 2011 1H 2012
Cash Flow Profile
Closing Cash Balance as at 30 June 2012
18 Source: Company data
($m)
213.7
1.3
6.49.3
52.7
55.6
0.7
90.1
0.0
50.0
100.0
150.0
200.0
250.0
Opening CashBalance
Equity Financing Operating CashFlow
Change inWorking Capital
Capex Loans andInterest Paid
Exchange RateChanges and
Others
Closing CashBalance
Balance Sheet Highlights
19
Lender As at 30 June 2012 ($m) As at 31 December 2011 ($m)
Sberbank 289 April 2015
Shareholders 78 February 2013
Equity adjustments post-IPO
• Limolines debt to be converted into new shares in Feb 2013, converted at volume weighted average price
of the ordinary shares for the 30-day period, immediately prior to conversion date, subject to` LSE
regulations
• Company call option to acquire the 10,362,632 ordinary shares of Sberbank Capital at the IPO price minus
10%, expires on 18 April 2013
• Initial public offering and liability restructuring has improved capital structure
• Net debt as at 30 June 2012 - $277.0 million ($405.2 million as at 31 Dec 2011)
− Cash and cash equivalents of $90.1 million
Overview
Outlook
20
Production • Production will accelerate strongly through to the end of 2012
• Target unchanged for 2012 production exit rate of 10,400 bopd
Well
Performance
and Reserves
• Deliver improved well-performance, better targeted drilling and faster completions
• Continued uplifts to our proved reserves expected as our drilling programme
expands
Operations and
Infrastructure
• Commissioning a new fracturing fleet that will commit on a more permanent basis
• Upgrade in-field pipeline from Pad 1
• Installing stock tanks and heater treater at central processing facility to increase
capacity to 20,000 bopd
• Engineer gas sales pipeline and create corridor
New
Opportunities
• Develop a gas business
• Capitalise on improving completion services and potential fiscal relief to develop low
permeability reservoirs
Investor Calendar
21
Date Event
November 2012 Q3 IMS
January 2013 Q4 Operations update
Q&A
22