powerpoint presentation · tgt $10m. 125 & 126 $12m. cnv - no well activity tgt - drilling...

11 September 2019

2019Interim Results

Return to Growth

SOCO International plc - 2019 Interim Results | 11 September 2019

DisclaimerSlide 2

Nothing in this presentation or in any accompanying management discussion of this presentation constitutes, nor is it intended to constitute: (i) an invitation or inducement to engage in any investment activity, whetherin the United Kingdom or in any other jurisdiction; (ii) any recommendation or advice in respect of the ordinary shares (the Shares) in SOCO International plc or the group of companies of which it is the ultimate holdingcompany (together the Group); or (iii) any offer for the sale, purchase or subscription of any Shares.

The Shares are not registered under the US Securities Act of 1933 (as amended) (the US Securities Act) and may not be offered, sold or transferred except pursuant to an exemption from, or in a transaction not subjectto, the registration requirements of the US Securities Act and in compliance with any other applicable state securities laws.

This presentation contains certain forward-looking statements that are subject to risk factors and uncertainties associated with the oil and gas exploration and production business generally and specifically with thebusiness, operations and financial position of the Group. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates","projects", "expects", "intends", "may", "will", "seeks" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events orintentions. These forward-looking statements include all matters that are not historical facts.

There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Factors include, but are not limitedto, regulatory changes, future levels of industry product supply, demand and pricing, weather and weather-related impacts, wars and acts of terrorism, development and use of technology, acts of competitors and otherchanges to business conditions.

The Group undertakes no obligation to revise any such forward-looking statements to reflect any changes in the Group’s expectations or any change in circumstances, events or the Group’s plans and strategy.Accordingly, no reliance may be placed on the figures contained in such forward-looking statements. Forward-looking statements are not guarantees or representations of future performance. Similarly, past shareperformance cannot be relied on as a guide to future performance. Even if the Group’s results of operations, financial and market conditions, and the development of the industry in which the Group operates, areconsistent with the forward-looking statements contained in the presentation, those results, conditions or developments may not be indicative of results, conditions or developments in subsequent periods.

No representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information in this presentation and no responsibility or liability is or will be accepted by SOCOInternational plc or any of its respective subsidiaries, affiliates and associated companies (or by any of their respective officers, employees or agents) in relation to it. All written and oral forward-looking statementsattributable to the Group or to persons acting on the Group's behalf are expressly qualified in their entirety by the cautionary statements above and by all other cautionary statements and disclaimers containedelsewhere in the presentation.

By attending this presentation and/or accepting a copy of it, you agree to be bound by the foregoing limitations and conditions and, in particular, will be taken to have represented, warranted and undertaken that youhave read and agree to comply with the contents of this notice including, without limitation, the obligation to keep this presentation and its contents confidential.


1H 2019 Key highlightsSlide 3

FINANCIAL

• Revenues of $91.8m at an average realised price of $69.04/bbl• Operating cost < $10/bbl• Cash generated by operations $54.6m • Group net debt as at 30 June 2019 of $33.7m• $66.3m cash as at 30 June 2019

3

OPERATIONAL

• Total group working interest production 12,541 boepd- Vietnam Production 7,279 boepd

- Egypt Production 5,262 bopd

• Egypt: production guidance for the El Fayum concession continues to be a 2019 exit rate of 6,500 bopd

• Vietnam: production guidance for 2019 remains unchanged at an average of 6,500-7,500 boepd for the full year

STRATEGIC • Completion and integration of the Merlon transaction in Egypt • Organic growth through development drilling and capture of contingent resources


Strategy for Growth

RBL

Time

Angola Congo (Brazzaville)

M&A ACTIVITY

ORGANICGROWTH

Cash flow and balance sheet strength

Dividends

Slide 4

Our Vision

Portfolio balance across field life cycle

Geographic diversification

Scale & resource base longevity

Cash flow and balancesheet strength

TSR focus = dividend + capital growth

Improved liquidity of shares

Exploration | Bolt-ons|”Move the needle” mergers

SALE SALE SECURED AQUISITION NEW ACREAGE

PORTFOLIO RATIONALISATION EFFICIENTBALANCE SHEET

MENA ENTRY ORGANIC GROWTH POTENTIAL

North Beni SuefMerlon

OPTION VALUE

Israel

PORTFOLIO OPTIMISATION

POTENTIALFUTUREM & A

Accretiveopportunities


Commitment to ESGSlide 5

• To reflect SOCO’s ongoing commitment to operating a sustainable business the Board has established a new ESG Committee, chaired by John Martin

• Goal of establishing and maintaining the highest operating standards across ESG matters

Vietnam• Safety across our business is paramount • Zero Lost time Injury frequency rate in 24.19 million man-hours

since inception• A training levy of $150,000 for each JOC, a total of $300,000 per

year is ring-fenced fund to support developing future Vietnamese talent in the industry.

• In Vietnam we continue to invest in long-term social projects through the HLHVJOC Charitable Donation programme. In 1H 2019, projects supported include:

- Donation to Light Your Hope Scholarship Fund

- Contributed equipment for Medical Clinic in Nghe An Province

Environmental, Social and Governance Committee (ESG)

Egypt – Steps forward in Environmental Management• Initiatives for GHG (Greenhouse Gas) reduction have been implemented

- Implementation of AggrekoTM associated-gas powered electricity generators, rather than diesel powered generators at the North Silah deep site

• Looking at further initiatives to reduce CO2 equivalent emissions

• The PetroSilah JV has obtained ISO 14001 (Environmental) and ISO 45001 (Health and Safety) certification in Egypt

• Recycling of used oil fluids, and disposal of solids, through Petrotrade Co.

• Prevention of environmental contamination during drilling, by closed system capture of all drill cuttings, solids, and fluids

FINANCIAL REVIEW


1H 2019 Results Summary*Slide 7

61%

12,541 boepd

1H 2018: 7,748 boepd

$92.7m**

1H 2018: $93.2m

$9.41/ boe

1H 2018: $13.83/boe

CASH GENERATED

$54.6m

1H 2018: $48.3m

0.05%

PRODUCTION REVENUE DIRECT CASH OPEX

32 %

13%

NET DEBT TO EBITDAX

0.59

1H 2018: No debt

CASH CAPEX

1H 2018: $3.6m

$21.5m

497%

*Vietnam – full six months (181 days)| Egypt – from 02/04/2019 (91 days)

** Before Hedging charge of $0.9m


1H 2019 Finance ResultsSlide 8

Cash GenerationOperating Cash Flow $29.8m

Net Debt of $33.7m

240.1

66.3

29.8 23.2

153.1

27.4 0.1

0

25

50

75

100

125

150

175

200

225

250

275

300

Cash at31 December

2018

Cash fromContinuingoperatingactivities

Investingactivities -

Capitalexpenditure

(IncludingAbandoment)

Cashconsideration

for acquisition,net of cashacquired

Dividendpaid

Other Cash at30 June 2019

Vietnam FPSO Costs Down

Active Hedging Programme

Opportunities in Egypt to:

‐ Improve Cost Base (HSE Paramount)

‐ Improve Commodity Pricing

‐ Access further RBL

$4 premium to Brent


Overall goal; allocate capital to generate sustainable returns for all investors

To maximise production cash flow: investing for short cycle payback periods and increases in value

To phase development spend: No large scale capital development needed, adds flexibility to use of cash

To continue to pay a regular dividend as part of financial framework; assessed against growth offered

by investment in asset base

EGYPTCommodity price reviewCost base review/ HSE

VIETNAMFPSO re-negotiated

TIA negotiations ongoing

HEAD OFFICERedundancy programme completed

Capital Allocation FrameworkSlide 9

Capital AllocationCapital Discipline & Liquidity

Target: Leverage always less than 1.5x; cash balances invested


1H 2019 Finance FocusSlide 10

Low Cash Operating Cost$9.41/boe

CapitalDiscipline

Investment in Assets (including abandonment)

$23.2mCapitalAllocation

Dividend Distributions$27.4m

CapitalReturn

EGYPT$28m

Capex Spend (including abandonment)

$50m

FY 2019 Forecast

TGT$10m

125 & 126 $12m

CNV - No well activity

TGT - Drilling campaign now in Q4

Block 125 & 126 - Purchase, processing and interpretation of 2D seismic data. Prepare for 3D Seismic acquisition and processing in 2020

Egypt - Two drilling rig programme


Egypt OverviewCompletion of Merlon Transaction April 2nd 2019

Slide 12

Pharos El Fayum - 100% WI

2019Grow-base production, offset declines from existing water floods• Target 1 well / drilling rig / month• Re-pressure depleted reservoirs• Optimize well spacing and waterflood

pattern• Delineate reservoir continuity and areal

extent• Achieve year end exit rate of 6,500 bopd

2020Sustainable production growth • Extend in-fill drilling• Expand water flood deployment• Selective drilling in satellite fields

• Grid drilling with optimized well spacing• Expand water floods across the fields• Target plateau 15,000 bopd• Add new reserves and open new production hubs • Focus on field economics / high-return investment

Long -term strategy

EGYPT

North Beni Suef• Announcement of Block award Feb 2019• Block signing expected before end 2019• Pharos 100% WI

Crude Offtake & Sales Arrangements

• Historically produced crude has been trucked to Tabeen station and piped to the Mostorod refinery

• In July PetroSilah commenced deliveries to Suez Oil Processing plant which has several advantages

EL FAYUM

NORTH BENI SUEF

Short-term strategy


El FayumSlide 13

2019 Activity

• Two drilling rigs and two (three from October) workover rigs deployed

• Six wells drilled in H1 of 2019 - four producers, one injector and one exploration well

• Post-Completion four production development wells have been put on production

• One injector well was drilled to start up a new water flood area• Second drilling rig commenced July• 16 – 17 wells anticipated for 2019

Completion April 2nd 2019

Capital Markets Day October 29th 2019

Actual to Sep 1st

Drilling Programme

North Silah Deep Field North Silah Field

Silah Field


El FayumExploration

Slide 14

• 50 identified prospects and leads – 15 high-graded• Forward well programme dependent on approvals,

3D seismic acquisition and timing of third rig

Conventional

Unconventional / resource plays

• Shallow Apollonia target test using a workover rig in Q4 2019

• 100m ARF core at Al Madinah:i. Special Core Analysis (SCAL) work complete ii. Geochemical analysis to be completed

• 1,570km2 of exploration acreage of which ~70% is covered by existing 3D seismic

Borhan

SOCO International plc - 2019 Interim Results | 11 September 2019 Slide 15

• SOCO is evaluating various options to optimise the crude-offtake and sales arrangements in El Fayum for planning purposes

• These studies include the evaluation of various refinery and pipeline options to provide maximum flexibility for future production growth

Crude Marketing Studies

Suez Oil Processing Company (Suez Refinery)

Discovered resource (2P + 2C)

Discovered Resource Risked prospective potential(NB: North Beni Suef potential not included)

El Fayum schematic production profile

Suez Refinery

Mostorod Refinery

El FayumOptimising sales and marketing

• Delivery to Suez has several advantages over Tebeen- Better handling capacity for future production growth- Dedicated storage tanks to SOCO- Fully tarmac road avoids built-up and residential areas; offers

safer driving conditions- Delivering oil directly to the refinery not to pumping station

(Tebeen)• Cost negotiations ongoing

Pipeline and Future Tie-In Potential

• Production of > 15,000 bopd could justify a pipeline tie-in to the Gulf of Suez/ Mediterranean line depending on crude quality

Main oil line from Gulf of

Suez to Mediterranean

Bopd

Time

VIETNAM


VietnamProduction

• 1 Jan - 30 June production average of 7,279 boepd (within guidance range of 6,500 – 7,500 boepd)− TGT production average 5,571 boepd net

− CNV production average 1,708 boepd net

• Upgrade work to restage compressors has commenced due for completion 1H 2020

• The proposed 2019 two well work programme isexpected to commencein November and JOC discussions continue onthe 2020 work programmebased on the updated FFDP to be submitted later this year

1. SOURCE: RISC

Group 2018 year-end Vietnam commercial (2P) reserves of 23.0 mmboe

CNV

16.26.823.0

(mmboe)1

TGT

TGT & CNV NET 2P RESERVES1

HST

TGT & CNV

TGT

CNV


Acquisition of 7,000 km of new 2D seismic acquisition in the under-explored Phu Khanh Basin was completed on 31 May 2019 on time and within budget

The seismic is being processed and will be interpreted end of 2019 to identify a prospects and leads inventory

Future Plans

3D seismic acquisition over selected area(s) is planned for 2020

ENI Block 124Offset exploration well expected 2020

Geo – Seismic Cross Section

Blocks 125 & 126 (SOCO WI 70%)Exploration


ESG is part of business strategy and is considered in all of our growth opportunities

OrganicPotential

El Fayum conventional exploration - Opportunity to increase the existing resource base with low cost, low-risk exploration

El Fayum unconventional resource play – Geochemical evaluation of the ARF core from the Al Madina exploration well. Apollonia wire-line test Q4 2019

North Beni Suef –Offers a potential low-risk drilling target. Prospects have already been identified on existing 3D over part of the block

Egypt

M & A We continue to consider value accretive M & A opportunities that fit with our strategy

Vietnam

Value Realisation

El Fayum discovered resources

Implementing the ~ 150 well development programme to move 2C to 2P

To facilitate production growth from the current 5,000 to a targeted 15,000 bopd

TGT & CNV production

Maintaining production and arresting natural decline, depends on drilling wells and employing reservoir management through an active well intervention programme

Since the TGT deep Oligocene discovery, the JOC is now more inclined to increase drilling activity, and a revised FFDP, which includes more wells, was submitted July 2019. The FFDP is expected to be approved before year end

This activity will be used to seek early confirmation of a TGT licence extension

TGT deep HPHT Oligocene play – Next appraisal well to be fracced before testing. Test analysis will help estimate the recovery factor and determine potential commerciality

Blocks 125 / 126 – Exploration blocks, in the under-explored Phu Khanh Basin.

Israel 8 Blocks - Submitted application for

eight blocks offer near large gas fields. Two main play types: Tamar (Leviathan) clastic play and Zohr carbonate play

Accretive opportunities

Strategic value creation and growth opportunities

First phase commitments are seismic studies only

SUMMARY & OUTLOOK


Outlook for 2019 and beyond Slide 21

OPERATIONS

21

• Vietnam production guidance for 2019 remains unchanged at 6,500 -7,500 boepd

• 2019 works programme – Two infill wells confirmed, rig secured, drilling to commence in November

• Egypt production guidance for the El Fayum concession continues to be a 2019 exit rate of 6,500 bopd

- Two drilling rigs will continue to focus on drilling new producers and injectors to roll-out new water flood projects, to arrest the natural decline and grow production.

- Two workover rigs will focus on augmenting production from long-term inactive wells, restoring production from short-term shut-in wells, and completion of new wells.

- A third workover rig (in October) will be added to accelerate new well completions and perform well maintenance activities

CORPORATE /STRATEGIC

• Investment programme will continue to be allocated over our asset base in a disciplined manner to deliver sustainable returns

• Organic growth through development drilling and capture of contingent resources

• Capital Markets Day on the 29 October 2019


Looking ForwardSlide 22

22

Ongoing commitment to operating a sustainable business

LOW RISK GROWTH OPPORTUNITIES

DELIVER SUSTAINABLE RETURNS

STRONG BALANCE SHEET

APPENDIX


1H 2019 FinancesSlide 25

26.6

33.8

0

10

20

30

40

50

60

1H 2018 1H 2019

Net Cash from Continuing Operating Activities ($m)

128.8

66.3

0

50

100

150

200

250

1H 2018 1H 2019

Cash, Cash Equivalents and Liquid Investments* ($m)

5.1

23.2

0

10

20

30

40

50

1H 2018 1H 2019

Capital Expenditure (Cash $m)*

13.83

9.41

0

5

10

15

20

1H 2018 1H 2019

Low Cash Operating Cost ($/boe)

5.25 5.5

0

2

4

6

8

10

1H 2018 1H 2019

Return to Shareholders (Pence per ordinary share)

93.2 91.8

0

50

100

150

200

1H 2018 1H 2019

Revenue ($m)

*$25.3m liquid investments as at 1H 2018, no liquid investment for 1H 2019

*

*includes a loss of $0.9m related to hedge accounting

*includes abandonment funding


Illustrative per barrel breakdown Slide 26

El Fayum TGT * CNV *

Brent Price $/bbl 65 65 65

Premium/(Discount) $/bbl -5 4 4

Realised Price $/bbl 60 69 69

Contractor share of revenue % 42% 64% 73%

Contractor share of revenue ** $/bbl 25 44 50

Less Opex $/bbl 8 13 9

Contribution to G&A & CAPEX $/bbl 17 31 41

* Indicative estimates assuming maximum cost recovery

** Represents weighted average oil and gas pricing and fiscal term

www.socointernational.com

Investor RelationsSOCO International plc48 Dover StreetLondon W1S 4FFUnited Kingdom

Tel: 020 7747 2000Fax: 020 7747 2001Company No: 3300821

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