You are on page 1of 34

Capital Markets Day

13 November 2014

DISCLAIMER
These materials are being supplied to you by Genel Energy plc (the Company) solely for your information and for use at this presentation. All numbers and charts included in this
presentation are from Company data unless specified otherwise. These materials may not be reproduced in any form, redistributed or passed on, directly or indirectly, to any other
person or published, in whole or in part, by any medium or for any purpose. Failure to comply with this restriction may constitute a violation of applicable securities laws.
The presentation and these materials do not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, or any offer
to underwrite or otherwise acquire any securities, nor shall any part of these materials or the fact of their distribution or communication form the basis of, or be relied on in
connection with, any contract, commitment or investment decision whatsoever in relation thereto. The information included in the presentation and these materials is subject to
updating, completion, revision and amendment, and such information may change materially. No person is under any obligation to update or keep current the information
contained in the presentation and these materials, and any opinions expressed in relation thereto are subject to change without notice.
The presentation and materials do not constitute an offer of securities for sale in the United States or in any other jurisdiction. Securities will not be registered under the US
Securities Act of 1933 (the "Securities Act"), and may not be offered or sold in the United States absent registration or an exemption from registration. The distribution of these
materials in other jurisdictions may also be restricted by law, and persons into whose possession these materials come should inform themselves about, and observe, any such
restrictions.

This presentation includes forward-looking statements that reflect the Company's intentions, beliefs or current expectations. Forward-looking statements involve all matters that
are not historical fact. The Company has tried to identify those forward-looking statements by using the words "may", "will", "would", "should", "expect", "intend", "estimate",
"anticipate", "project", "believe", "seek", "plan, "predict", "continue" and similar expressions or their negatives. Such statements are made on the basis of assumptions and
expectations that the Company currently believes are reasonable, but could prove to be wrong. Such forward-looking statements are subject to risks, uncertainties and
assumptions and other factors that could cause the Company's actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those
of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Important factors that could cause
those differences include, but are not limited to: changing business or other market conditions, general economic conditions, and the Company's ability to respond to trends in its
industry. Additional factors could cause actual results, performance or achievements to differ materially. The Company and each of its directors, officers, employees and advisors
expressly disclaim any obligation or undertaking to release any update of or revisions to any forward-looking statements in the presentation or these materials, and any change in
the Company's expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or
regulation. No information included in this presentation is intended to be a profit forecast or a financial projection or prediction.
By attending the presentation or by accepting any copy of the materials presented, you agree to be bound by the foregoing limitations.

Highlights and strategy


Political update
KRI oil business
KRI gas business
Exploration
Financials and guidance
Summary and Q&A

HIGHLIGHTS
KRI exports ramp-up
Pipeline capacity in Turkey no longer a constraint currently 500,000 bopd to increase to 700,000 bopd by

year-end 2014
Pipeline exports currently at c.300,000 bopd, expected to increase to 400,000 bopd by year-end and 500,000

bopd in Q1 2015
KRG on track to budget equilibrium in Q1 2015

Increasing production
Net working interest production up 47% YTD to 66,000 boepd
Strong future production growth: 2015 working interest production guidance of 90,000-100,000 boepd

New gas deal signed


Term sheet signed with the KRG Ministry of Natural Resources for development of Bina Bawi and Miran
Key terms agreed with OMVs to acquire its 36% operated stake in Bina Bawi

Strong financial position


Strong balance sheet with cash balances at end Q3 2014 of c.$660 million

STRATEGY

Maintain the highest level of corporate governance


Create value with the drill bit
Manage our KRI business on a broadly cash flow neutral basis
Maximise shareholder returns by monetising at all points in the exploration,
development and production cycle and return excess cash to shareholders

Build a material Exploration and Production company

Highlights and strategy


Political update
KRI oil business
KRI gas business
Exploration
Financials and guidance
Summary and Q&A

POLITICAL UPDATE KRI EMERGING AS A REGIONAL FORCE

KRI safe and secure


KRG consolidating power in expanded KRI with international support
KRG has a prominent position in new Iraqi Government
KRG on track to budget equilibrium in Q1 2015
Turkey remains resolute in its support for the KRG

KRI INDEPENDENT EXPORT ROUTE ESTABLISHED


3 month track record of pipe exports to Ceyhan

Pipeline export capacity 500,000 bopd by end November, 700,000 bopd by


early 2015

Storage capacity of 2.5 mmbbls available for KRI crude at Ceyhan


30 cargoes with over 23 mmbbls of KRI crude lifted, regular sales made
24 cargoes delivered oil
5 en route to destinations
1 tanker offshore US as claim goes through US courts

Payment for KRI oil flowing to KRG via KRG controlled Halkbank account
KRI exports will continue to increase
Note: Information on cargoes, tankers and sales based on Platts and Bloomberg reports

KRI EXPORT EVOLUTION


Total export
volumes (kb/d)

58

107

101

163

184

310

380

430

495

525

545

700

700

700

480

500

800

600

KRI budget equilibrium:


c.500kbpd export volumes

500

kbopd

500

400

300

300

300

300
450

200

150

150
350

400

280

107

150

57

56

34

30

30

30

45

45

45

Jul-14

Aug-14

Sep-14

Oct-14E

End
Nov-14E

End
Dec-14E

End
Jan-15E

End
Feb-15E

End
Mar-15E

49

44

16
42

59

Q1-14

Q2-14

Trucked exports

Pipeline exports

Pipeline capacity

Note: Liquids export volumes are indicative based on publicly available information, media reports and internal estimates. Data reflects averages for historical periods and month end estimates for forecasts
Source: Company disclosures, media reports

REGIONAL PIPELINE INFRASTRUCTURE

40 Pipeline with 500,000 bopd of capacity,


upgrade to 700,000 bopd by year-end 2014

Tank Farm = 9.5 mmbbls capacity


Allocated to KRI = 2.5 mmbbls capacity

Tawke field, 100,000 bopd of


pipeline capacity, rising to
>350,000 bopd by year-end 2014
400,000 bopd
capacity pipeline to
expand to 700,000
bopd by early 2015

Taq Taq

46 Pipeline with
1mm bopd of capacity
Khurmala Dome
30 tankers shipped totaling over
23 mmbbls of Kurdish crude

Avana Dome
Bai Hassan

Baba Dome

Kurdistan Region of Iraq (KRI)


KRG controlled areas
KRI export pipeline
Iraq Turkey pipeline - Iraq section (currently disused)
Iraq Turkey pipeline Turkish section

Note: Information on cargoes, tankers and sales based on Platts and Bloomberg reports

10

Highlights and strategy


Political update
KRI oil business
KRI gas business
Exploration
Financials and guidance
Summary and Q&A

11

LOW COST AND RESILIENT KRI OIL AND GAS BUSINESS


Breakeven of non-producing and recently on-stream oil assets

Low cost onshore oil and gas:

160

Taq Taq and Tawke life of field F&D costs < $3/bbl

Taq Taq and Tawke opex < $2/bbl

150

Marginal
heavy oil
and deep
water,
Kashagan

140
130

Miran and Bina Bawi life of field F&D < $5/boe

Low breakeven oil price for KRI PSCs relative to other


fiscal regimes

Kurdistan PSCs relatively insensitive to oil price for


Contractors

120

Commercial breakeven (US$/bbl)

(1)

110
100
90
80

Brazil Campos basin, Bakken


core, Permian Delaware, Utica,
Iara, GoM and heavy oil

70

Taq Taq and Tawke: 10% fall in oil price = c.6% fall in
net Contractor proceeds over the next 2 years

60

Cash flow margins resilient to oil price volatility relative


to other fiscal regimes

40

50

Best of GoM, Brazil Santos


basin, Johan Sverdrup

30

Kurdistan
20
-

10,000

20,000

30,000

40,000

50,000

Cumulative peak oil production (kb/d)

1) Includes surface gas treatment facilities.

Note: Estimates for breakeven prices do not include the costs of acreage acquisition or exploration that, if
included, would lead to higher breakeven commodity prices. This can be particularly material for North
American onshore resource plays
Source: Top 400 Projects, Goldman Sachs Global Investment Research

12

TAQ TAQ UPDATE


9M 2014 average production c.97,000 bopd
Taq Taq well locations:
Plan View

Wells

17 current producing wells with well production


capacity of c.150,000 bopd

First horizontal well TT-24 to spud in Q4 2014

One additional well to be drilled in 2015

Facilities and infrastructure

Installation of temporary production facility to increase


processing capacity to 150,000 bopd in Q1 2015

Completion of CPF II in Q3 2015 to permanently


increase facility capacity to 200,000 bopd

Taq Taq export pipeline capacity at 150,000 bopd

13

TAWKE UPDATE
9M 2014 average production of c.87,000 bopd
Wells

Tawke-25 and Tawke-26 (horizontal) recently completed,


initially tested at up to 7,500 bopd and 5,000 bopd respectively

New Tawke-28 well undergoing stimulation and testing, rig


moved and currently drilling Tawke-27

With five horizontal wells drilled in 2014, total number of wells


will reach 28 by year-end, of which 25 are on production

Two additional Cretaceous wells to be drilled in 2015

Facilities and infrastructure

Installation of 80,000 bopd EPF to increase processing


capacity to 200,000 bopd by early 2015

New 24 inch pipeline to Fishkhabour expected to be complete


by year-end to increase export capacity to >350,000 bopd and
deliver transportation system redundancy

14

Highlights and strategy


Political update
KRI oil business
KRI gas business
Exploration
Financials and guidance
Summary and Q&A

15

TRANSFORMATIONAL KRI GAS BUSINESS


World-class resource
11tcf mean gas resources, 80 mmbbls mean liquid resources

Material and growing domestic market opportunity


3-5 bcma of near-term domestic market demand from power plants and industrial users

Cost competitive
Well positioned on cost curve to meet Turkish gas demand

Next to one of worlds fastest growing, major gas markets


Turkey gas exports short, low-cost tie-in to Turkey infrastructure

KRG / Turkey GSA signed


4 bcma of gas exports from 2018
10 bcma by 2020 and option of increasing to 20 bcma thereafter

KRG to become major gas exporter


16

NEW DEAL A WIN-WIN FOR KRG AND GENEL


New gas deal signed
Detailed Gas term sheet signed, final PSC Amendment Agreement to be completed by year-end
Miran and Bina Bawi to be combined under one PSC
Genel to become sole Contractor at Miran & Bina Bawi
Genel to acquire OMVs 36% operated stake in Bina Bawi; $20m upfront and $130m staged after first gas

Financing solution
Contractor responsibilities: (i) oil development, (ii) gas wells & flowlines, (iii) first stage condensate
separation
KRG responsibilities: gas treatment facilities
Reduced gross Contractor gas capital exposure to c.$1bn until first gas

Unlocks significant value for KRI and Genel


Attractive life of field returns for Genels gas business including historic acquisition costs

17

NEW DEAL GAS & CONDENSATES


Structure

New structure (gas/condensates)

Miran and Bina Bawi combined under one PSC with one
aggregate production target: 1,400 mmscfd raw gas from 2018

Raw Gas
Wells

Gas wells and flow lines

First stage condensate (primarily C5+) removal plant

Condensate storage and loading facility

Contractor

Genels responsibilities (development & operation)

Export market
Trunk/flow lines

Condensates (C5+)

First Stage
Condensate
Removal Plant

Genels entitlement

$0.78 fee per mscf raw gas delivered to gas treatment plant

KRG responsibilities (development & operation)

Gas treatment facilities

Completed through a 3rd Party EPC contract KRG to begin


tender process H1 2015

KRG entitlement

100% sales gas

100% residual condensates and LPGs (primarily C3 to C5)

Condensate
Removal + Loading:

Residual
Gas Stream

3rd Party

100% condensates separated at first stage removal plant

3rd Party Gas


Processing
Facilities

Sulphur

Genel responsibility

Sales
Gas

KRG

Condensate
Loading Facilities

Residual
Condensates
& LPGs

KRG responsibility

Turkey
GSA

18

NEW DEAL OIL


Structure

Miran and Bina Bawi combined under one PSC

Responsibilities (development & operation)

Contractor responsible for the development and


operation of all oil resources

Contractor entitlement

100% oil produced until all licence back costs (including


historic oil, gas and acquisition costs) fully recovered

Thereafter 50% of oil produced

Resource
Range: 243471 mmbbls
30 mmbbls to be booked as 2P reserves at year-end

Development

Fast track development with Early Production Facilities

Provides early cash flow to offset against the gas


development capex

Miran cross-section

19

MIRAN AND BINA BAWI RESOURCES


Raw gas (tcf)

Liquids (mmbbls)(1)
19tcf

20
18

80

142mmbls

70

16

7
14

60
79mmbls

11tcf

50

12

50
60

40

10
4
8

48mmbls
6tcf

30

12
20

2
4
2

32
30
17

23

10
4

21
13

11

7
0

0
Low

Mean
Bina Bawi Raw Gas

High
Miran Raw Gas

1
Low
Condensate

Low Oil

Bina Bawi Condensate

Mean
Condensate

Mean Oil

Bina Bawi Oil

High
Condensate

Miran Oil

High Oil

Miran Condensate

Note: Downside / Upside show cumulative P10 / P90 figures


1) Condensate volumes are expected volumes from 1st stage separation (all net to Genel)
Source: Miran (RPS November 2012), Bina Bawi (RPS August 2013), Genel.

20

KRI GAS GAS / CONDENSATE DEVELOPMENT ASSUMPTIONS


Miran

Bina Bawi

Mean raw gas

4.3tcf

7.1tcf

Mean sales gas

3.5tcf

4.9tcf

32mmbbls

13mmbbls

c.35 development wells

c.35 development wells

Average well costs

$28m per well

$32m per well

Trunk/flowlines

$5m per well

$5m per well

$75m

$75m

$0.8/boe

$0.6/boe

Mean condensate(1)
Number of wells

Condensate loading
& separation facility
Opex

PSC restructuring lowers gross Contractor capital investment to $1bn until first gas
1) Condensate volumes are expected volumes from 1st stage separation (all net to Genel)

21

KRI GAS ROAD MAP TO MONETISATION


2013

2014

2015

2016

2017

2018

DOC

Miran

HORIZTONTAL
OIL WELL

EARLY OIL

EWT

DOC

OIL PRODUCTION

Bina Bawi

EXPORT GAS/CONDENSATE

OIL PRODUCTION

FEED

MW5

Miran
FID
TURKEY / KRG
ENERGY
AGREEMENT

Bina Bawi

BB4/5
TESTING

GENEL / KRG
TERM SHEET
AMENDMENT
SIGNED
GENEL / OMV
BINA BAWI
BUY-OUT
AGREEMENT
REACHED

EARLY DOMESTIC GAS & EXPORT


CONDENSATE SALES

EXPORT GAS &


CONDENSATE
SALES

EARLY DOMESTIC GAS & EXPORT


CONDENSATE SALES

EXPORT GAS &


CONDENSATE
SALES

PSC AMENDMENT
AGREEMENT
COMPLETED

FID

EWT: Extended Well Test; DOC: Declaration of Commerciality; FEED: Front End Engineering Design; FID: Final Investment Decision; PSC: Production Sharing Contract

22

Highlights and strategy


Political update
KRI oil business
KRI gas business
Exploration
Financials and guidance
Summary and Q&A

23

EXPLORATION FOCUSED AND DISCIPLINED


KRI

Peshkabir exploration

Chia Surkh appraisal

New opportunities

Africa

Exit Malta

No plans for further drilling offshore Angola

Evaluate Morocco

Ethiopia first well end 2015/early 2016

Somaliland commence seismic operations by end 2015

Refocus new ventures onshore sub-Sahara

Middle East

Continue to evaluate onshore opportunities

24

HORN OF AFRICA
Somaliland Blocks SL-10B/13 & Odewayne

Odewayne Block 50% Op

Seismic acquisition in Q4 2015 aimed at unlocking Yemeni equivalent fairway

Ethiopia Adigala Block

Berbera

Burao
Hargeisa

Mesozoic prospectivity defined c.200km2 structure identified on field


processed data (200-750 mmbbls prospect)

Block SL-10B/13 75% Op


Adigala
AdigalaBlock
Block40%
40%Non
NonOp
Op

Target : Tilted Fault Block


100km

Prospect Area
defined by 2014 2D
Seismic Data

Exhumed Jurassic Oil Field

10km
2014 2D Seismic
2009 2D Seismic

Adigala cross-section

25

Highlights and strategy


Political update
KRI oil business
KRI gas business
Exploration
Financials and guidance
Summary and Q&A

26

PRODUCTION AND SALES


Net Genel production (kboepd)

kboepd

100
80

Net Genel revenues ($m)

YTD Average: 66kboepd

60
40

@ $100/bbl

Sep-14

Aug-14

Jul-14

Jun-14

May-14

Apr-14

Mar-14

Feb-14

$600-700m(1)
Jan-14

20

$500-600m(1)

90-100
kboepd

$500-600m(1)
@ $80/bbl

60-70
kboepd

348

44

FY 2013

2014E

2015E

FY 2013

2014E

2015E

(1) 2014E and 2015E guidance revenue recognition methodology on an accruals basis for domestic and export sales

27

BALANCE SHEET AND CAPITAL EXPENDITURE GUIDANCE


$650m

Strong balance sheet


$564m

Disciplined capital spend in KRI


Focused and disciplined exploration

$300-350m

programme
$229m

Potential for cash return to shareholders


$86m

2011

2012

KRI Development

2013

2014E

KRI Exploration & Appraisal

2015E
Africa Exploration

28

TRANSITION FROM DOMESTIC MARKET SALES TO EXPORTS


Increased profitability

75% of sales now benefitting from pipeline export netback

Pipeline transportation cost $5-10/bbl

Export cash flows

Q3 cash flow impacted by move to exports paid in arrears

Receivables currently less than 4 months of revenue


vs. 2-3 months expected once cash flows are normalised

Genel working interest production


(bopd)
100,000

2014
90,000
80,000
70,000
60,000

KRG assurance that Contractors will be paid in full in line with PSC

Future free cash flow benefit

50,000
40,000
30,000
20,000

2015 sales expected to be at export pricing


10,000

Export cash flow and reduced capex will generate sustainable


free cash flow going forward

0
2011

2012

2013

1Q

2Q

3Q

4QE 2015E

Increased potential for cash return to shareholders


Barrels benefitting from pipeline export pricing

29

Highlights and strategy


Political update
KRI oil business
KRI gas business
Exploration
Financials and guidance
Summary and Q&A

30

SUMMARY
Politics

KRI exports

KRI Oil

KRI Gas

Exploration

Financials

KRI remains safe and secure, KRG working closely with international community

Progress continues to be made following the formation of the new Iraqi Government

Pipeline capacity in Turkey not a constraint 700,000 bopd by early 2015

Pipeline export volumes currently at c.300,000 bopd to increase to 400,000 bopd by


year-end and 500,000 bopd in Q1 2015

KRG on track to budget equilibrium in Q1 2015

Significant production growth of 47% YTD to 66,000 bopd

Low cost and resilient KRI oil and gas business, relatively insensitive to oil price volatility

New Miran and Bina Bawi gas deal signed with the KRG

Genel acquisition of OMV interest in Bina Bawi

Significant value creation for KRI and Genel

Focused and disciplined

Balance sheet strengthened

Rising cash flows as pipeline exports become sustainable

Disciplined 2015 capital programme


31

Appendix

32

GENEL ENERGY KRI LICENSES

Khurmala to Fishkhabour, 400,000 bopd capacity

Taq Taq to Khurmala


150,000 bopd capacity

33

Capital Markets Day


13 November 2014