REPOSITIONING SOCO Proposed Acquisition of Merlon & 2018 Interim Results 20 September 2018
REPOSITIONING SOCO Merlon Acquisition a Significant Step in Strategic Transformation MERLON Our Vision ACQUISITION Full-Cycle and Growth Orientated E&P of Scale 2P + 2C: +126% Portfolio balance across field life cycle Geographic…
SOCO STRATEGIC CONTEXT Repositioning the Company to Outperform on a Through-Cycle Basis Our Strengths Strategic Goals High margin free cash flow in Vietnam Increasing reserve life and replacement Stable, recurring cash dividends…
PROPOSED ACQUISITION OF MERLON
SUMMARY OF KEY DEAL TERMS Structured to Build Alignment with Counterparty and to Retain a Strong Pro-Forma Balance Sheet Acquisition of Merlon Petroleum El Fayum Company (Merlon) for an equity purchase price of approximately US215…
A COMPELLING TRANSACTION Proposed Acquisition of Merlon KEY STRATEGIC HIGHLIGHTS Diversifies existing Vietnam-focused portfolio by adding a second, material hub of operated oil production in the prolific Western Desert basin in…
PLATFORM TO BUILD MATERIAL BUSINESS IN EGYPT & MENA Free Cash flow Generating Oil Concession with Significant Development Upside and Exploration Optionality MERLON SUMMARY KEY METRICS LOCATION Privately-owned E&P company established 11…
WHY INVEST IN EGYPT NOW Egypt Had Been Identified as a Key Target Area by SOCO in its Screening for M&A Opportunities Established & Mature Hydrocarbon Province Rapidly Improving Macro and Investment Climate Significant Remaining…
A CATALYST FOR SOCOS STRATEGIC REPOSITIONING Significant Step Forward in Transition to a Full-Cycle and Growth Orientated E&P of Scale Cash Flow Accretive Tangible Production Growth Enhanced Exploration Optionality Transaction…
TANGIBLE PRODUCTION GROWTH FROM DISCOVERED RESOURCES 2P + 2C Supports Target Production in Excess of 15,000 bopd by 2023 ESTIMATED PRODUCTION PROFILE EL FAYUM CONCESSION 25,000 2P RESERVES + 2C RESOURCES 2P 2C 37 NPV10 20,000 62…
SCALABLE AND EFFICIENT DEVELOPMENT OPERATIONS Resource Base Characteristics and Western Desert Location Support Effective Well Factory Approach Relatively low risk development operations - Infill drilling, workover and waterflood…
ENHANCED EXPLORATION OPTIONALITY Multiple Identified Prospects in Proven Petroleum Systems, as well as a Large Underexplored Area in the North 1,570km2 of acreage of which c.70% covered by existing 3D seismic Exploration Play Trends…
A STRONGER ORGANISATION Merlon Acquisition to Create Operated Platform for Growth in Egypt and the Wider MENA region Merlon Team with Local Expertise Team with proven capability to create and realise value through exploration,…
BUILDING SCALE Significant Expansion of SOCOs Resource and Production Base Combined 2P + 2C Reserves and Resources (mmboe) Combined 2018E Production (kboepd) Vietnam (offshore) Vietnam (offshore) Egypt (onshore) Egypt (onshore)…
ROBUST FINANCIAL OUTLOOK & PRO-FORMA CAPITAL STRUCTURE SOCO Expects to Continue its Existing Commitment to a Strong Balance Sheet and Regular Distributions of Excess Free Cash Flow Cash consideration and redemption of Merlon net debt…
REPOSITIONING SOCO Significant Step Forward in Transition to a Full-Cycle and Growth Orientated E&P of Scale Cash Flow Portfolio Accretive Diversification Tangible Stronger Production Growth Organisation Enhanced…
INTERIM RESULTS UPDATE
UPDATE ON VIETNAM Vietnam is a Valued Asset in Our Portfolio H1 2018 Production Averaged 7,748 boepd (Net) Ca Ngu Vang (CNV) & Te Giac Trang (TGT) Two rigs currently operating: one on CNV and one on TGT Rig arrival delays and…
CNV UPDATE H1 2018 Production Averaged 1,571 boepd (Net) CNV 5PST1: SLICE VIEW & SECTION VIEW (8 Aug 2018) CNV-5PST1 abandoned for operational reasons Currently drilling for second sidetrack Rig will move onto TGT-H5 for…
CNV OPERATIONS The CNV-5ST1 well entered the granitic pay zone on prognosis and drilled CNV-5ST1 Composite Log Showing Top of Granitic Pay to TD before the BHA became stuck. After several attempts to retrieve the fish the decision has…
TGT UPDATE TGT Well Programme H1 2018 Production Averaged 6,177 boepd (Net) TGT- 16 AP PetroVietnam drilling rig, PVD-1, arrived at the TGT H1- WHP and commenced operations on the TGT-16AP well. The well is expected to complete in…
HY 2018 FINANCE RESULTS Operating Cash Flow from Continuing Operations of c.US27m and Cash and Liquid Investments of c.US129m Revenue (US million) Oil Price Realised (US/bbl)(1) 74.1 93.2 53.9 74.0 HY 2017 HY 2018 HY 2017 HY…
FINANCE FOCUS 2018 GUIDANCE Capital Investment in Assets CNV Allocation US5.1m US6.2m Capex Spend (including abandonment) TGT 125 & 126 US18.5m US2.6m US27.3m Capital Dividend Distributions Return US23.3m 24
AN EVOLUTIONARY PROCESS Repositioned for Growth Our Vision ORGANIC Full-Cycle and Growth GROWTH Orientated E&P of Scale Portfolio balance across CAPITAL M&A field life cycle STRUCTURE & ACTIVITY Geographic diversification…
APPENDIX
MERLON OWNERSHIP SUMMARY Merlons Shareholders will Continue to Retain Meaningful Exposure in Enlarged SOCO Shareholders Merlon Beneficial Ownership Yorktown Energy Partners - Headquartered in New York, established in 1991 Richmond…
ATTRACTIVE TIMING WINDOW FOR SOCO TO ENTER EGYPT Macroeconomic and Commercial Outlook for Energy Producers Has Significantly Improved EGP / USD Exchange Rate Egypt FX Reserves (US billion) 20 50 Devaluation of EGP Arab Spring IMF…
MERLON NET WORKING CAPITAL Stable Net Working Capital Position Since 2017 EGPC Payments Net Working Capital(1) / Receivables Position (US million) 50 c.80% of EGPC payments made in EGP in 2017 40 30 20 90% of local costs payable…
MERLON PRODUCTION EVOLUTION Merlon (Net) Production Evolution (kbopd) Reduced drilling activity, water breakthrough and operational issues 10.1 8.3 7.1 7.9 4.8 4.0 3.9 2.6 0.4 2009 2010 2011 2012 2013 2014 2015 2016…
EL FAYUM WELL INVENTORY SUMMARY Extensive Well Inventory Summary Overview X/Y: 570200 Well Inventory Summary 580200 590200 600200 610200 620200 630200 Meters 1 Silah 7 Ain Assillen Roughly spilt 1/3 exploration and 2/3…
EL FAYUM EXPLORATION WELLS High Historic Exploration Success Rates Exploration Drilling 2005 2017 Summary Overview Hediya BR3-1 X/Y: 570200 580200 590200 600200 610200 620200 630200 Meters Oil Well Oil Shows Water Injection…
SE Gindi 2X 776400 776400 EL FAYUM PRODUCTION & DEVELOPMENT WELLS 771400 771400 Q3-1 Bushra 1X Development Drilling Activity has Focused in Central Silah, North Silah Deep and North Silah. Limited Step-out Drilling to Date…
EL FAYUM FISCAL REGIME Well-Understood Fiscal Regime Fiscal Terms Summary Production Sharing Mechanisms Initial agreement signed in 2004 100% Oil Revenues Exploration period set to expire in November 2020 (subject to results from…
SOCO NEW DEBT FACILITY OVERVIEW SOCO announced on 17 September 2018 that it had signed Key Facility Terms a new US125 million RBL facility secured against its existing assets in Vietnam Facility Amount US125 million The El Fayum…
SOURCES OF INFORMATION AND BASES OF CALCULATION 1. The Equity Purchase Price of approximately US215 million has been calculated as the aggregate of: a. the cash consideration which will be paid to Merlon shareholders of approximately…
GLOSSARY OF TERMS API American Petroleum Institute gravity EBITDAX mmboe Earnings before Interest, Tax, Depreciation, Million barrels of oil equivalent 2C Contingent Resources Amortization and Exploration Expenses Best estimate…
CONTACT US Investor Relations SOCO International plc 48 Dover Street London W1S 4FF United Kingdom Tel: 020 7747 2000 Fax: 020 7747 2001 Registered No: 3300821 www.socointernational.com
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