Interim 2013 Cairn Energy PLC Earnings Conference Call
Aug 20, 2013 AM EDT
CNE.L - Cairn Energy PLC
Interim 2013 Cairn Energy PLC Earnings Conference Call
Aug 20, 2013 / 08:00AM GMT
==============================
Corporate Participants
==============================
* Simon Thomson
Cairn Energy plc - Chief Executive
* Jann Brown
Cairn Energy plc - MD and CFO
* Mike Watts
Cairn Energy plc - Deputy Chief Executive
==============================
Conference Call Participants
==============================
* Dan Ekstein
UBS - Analyst
* Nathan Piper
RBC - Analyst
* James Thompson
JP Morgan - Analyst
* David Mirzai
Societe Generale - Analyst
* Alessandro Pozzi
Barclays Capital - Analyst
* Alejandro Demichelis
BNP Paribas - Analyst
* Mike Alsford
Citigroup - Analyst
* Anish Kapadia
Tudor, Pickering, Holt & Co - Analyst
==============================
Presentation
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [1]
------------------------------
Morning everybody. Thanks for coming along. Welcome to Cairn's half-yearly results presentation. I'm Simon Thomson, Chief Executive, and with me are Jann Brown, Finance Director, and Mike Watts, Deputy CEO. As in the usual way we've got a presentation to run through with you. I'll provide an overview, Jann will cover the finances and Mike will do the interesting stuff. At the end we'd be very happy to take questions. It is being webcast so, please, if you do have a question, wait until the microphone is passed to you so everybody can hear it clearly.
Our message today is really one of continued delivery against our strategic objectives. So following almost two years of rebuilding and reshaping we're about to commence a 12-month operated frontier exploration portfolio.
We've upped our targets in terms of the potential resource size. It's now 4b barrels out of a total yet to find of 10b barrels. I'm sure Mike will cover that in some detail in the following slides, but I think it's worth noting that any one of these wells is potentially material to the Company and there is follow-on potential around all of these wells, and that they are in attractive commercial destinations in the event of success. They are valuable barrels that we are discovering. In particular we're very excited about Senegal and the increase in volumes that we see there and again Mike will talk about that.
I think the organic growth potential and the general attractiveness of our Atlantic Margin portfolio is evidenced by partnerships, Statoil obviously last year and more recently Conoco in Senegal. And the increased industry activity in general in the Atlantic Margin play I think also lends some comfort if you like in support of the Cairn strategy. And you just need to look to areas like Morocco where there is going to be a lot of industry activity over the coming 12 months to see that it's not just us who are pursuing these play types.
Looking at the balance and the North Sea portfolio, Kraken and Catcher are on track. As you know, EnQuest recently had their results announcement and we expect FID on that project in this second half and possibly also for Catcher and I know that Premier will be providing an update later on this week.
We continue to evidence financial discipline in everything that we're doing. Obviously last year there were well-downs of Cairn India. I've already talked about the partnerships in the frontier exploration which obviously reduces our CapEx exposure but leaves us still with material equity positions. But also I'd like to highlight in today's announcement the sale of our 6% non-core interest in Mariner, not so much from the point of view of the $40m received but more from the point of view of the approximately $290m of avoided CapEx going forward. And that is money that we'd already allocated and therefore can reallocate in our portfolio.
But again it's something that we signaled that we would do, that we would dispose of non-core, and we will continually shape that North Sea portfolio. And I think in terms of active portfolio management there are a number of other transactions that we've announced today in terms of swaps and a farm-in, all of which are about focusing on those areas that we find the most attractive, whether it's increasing our acreage position adjacent Skarfjell or doing a number of transactions to increase our acreage position adjacent Catcher. So a focusing on that portfolio and an expanding position where we believe there is more value to go for.
We retain balance strength. We've retained that throughout the period so we have the continued financial flexibility to pursue all of our strategic goals.
So I think in short we've done everything that we said we would do and we're now in a position where we're about to enter an intense operational period. And looking at that period, essentially there are two strands to the forward program, the transformational explorational position and the mature UK and Norwegian Continental Shelf position.
Dealing first of all with the transformational and using this Ibiza-themed pointer, we can see that we now have a firm line of sight on two wells in Morocco, two wells in Senegal and then, subject to a decision with Statoil which we'll make this second half, a well in Greenland in 2014. That's all with the Cajun Express which is contracted as you know for a year-long drilling contract.
We've also recently contracted the Blackford Dolphin and that will be drilling the Spanish Point well in Q2 of 2014. And we continue to look at other opportunities that we might be able to bring into the portfolio in the near term and the K prospect here which is, if you remember, the 100% position that Cairn have adjacent to the Kraken development, is a potential candidate for that for near-term drilling in the portfolio.
In addition we've got the longer lead items. We've built out a substantial portfolio in terms of exploration in the longer term, whether that's our Spanish acreage applications, our nascent position in Morocco, the recent farm-in deal in Mauritania or indeed new bid round applications like Lebanon. So all of these are able to eventually backfill and be added into the drilling portfolio.
In terms of the UK and Norway, I've mentioned the FDPs for Kraken and Catcher. That continues. We'll also have our rolling program of wells, between four and eight wells per annum, looking to access approximately 20m barrels of additional resource per annum. And addition, again there's a hopper of opportunities, whether through the APA or the UK bid rounds or through farm-in deals or indeed the swaps that we announced today.
Looking at all of that together, we believe it presents an attractive proposition for investors in terms of a transformational upside portfolio, drilling that commences next month, but balanced off against downside protection and clear line of sight on our forward cash flow.
And with that like to hand over to Jann. Jann?
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [2]
------------------------------
Thank you Simon. Good morning everybody. I'll try and get through the boring bit of the presentation as fast as possible. We'll start with a reminder of where we are in the investment cycle. On the funding side we are currently funding from our balance sheet strength, both our cash position and our Cairn India shares. On current levels of spend we expect the cash to last through 2014 well into 2015 so we're under no pressure to liquidate the Cairn India shares. Over time and particularly at project sanction of the development projects that we have debt finance will be introduced to help fund these, and again those development projects in time will turn into free cash flow which will fund the business on an ongoing basis.
If we look at how we allocate our capital, this is done with the overarching objective of maximizing shareholder returns over the cycle and that philosophy drives how we allocate across the constituent parts of the portfolio. And about 50% of the available liquidity, that's cash, Cairn India shares and debt, over the next five-year period is allocated to fund development CapEx with the balance going to our exploration and appraisal investment which of course is our key investment destination.
So a bit more detail about the planned program that Simon talked about. Over the two years 2013 and 2014 the total spend is about $700m. Approximately 70% of that is on frontier basin exploration where the prospect sizes tend to be larger, the commercial terms tend to be better and so the returns that you would expect in the success case are likely to be transformational. As Simon said, we have the rig contracts in place and the farm-downs that we have done have provided the balance between cost exposure and growth potential.
The development projects, in particular Kraken and Catcher, over time will provide the funding platform for the ongoing business. Kraken was an attractive project when we bought it last year about this time and as we've gone through the development planning process the economics have become even more robust. We expect project sanction, as Simon said, in the second half of this year and last week EnQuest, the operator, announced gross reserves of 137m barrels. We're broadly in line with that.
They also announced that they anticipate a second heavy oil allowance that will mean about $625m worth of tax allowances to Cairn should that second heavy oil allowance be available. And of course the economics for Cairn are even more attractive because we're carried for between $150m and $240m worth of the development spend and the precise level of the carry is based on the certified reserves level.
Catcher is coming up fast behind. We're now through the concept selection phase with a concept firmly on a leased FPSO. And we're awaiting the draft field development plan from the operator Premier within the next month and that will then go through the normal joint venture approval process.
So in summary, Mike will talk in detail about the program that we're about to embark on and the key messages from the financial side are that we're fully funded to deliver that program and beyond. We have financial sustainability underpinned by our North Sea developments. We are balancing our capital allocation over the various parts of our portfolio to generate maximum returns over the cycle. And our ongoing portfolio management is focused on our exposure to cost and exposure to upside. It's focused on value.
And with that I'll hand over to Mike.
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [3]
------------------------------
Thank you Jann. Good morning everyone and welcome to those listening in on the webcast. Simon's already gone through the rebuilding of the last 18 months. We've repositioned ourselves away from the Indian subcontinent and we've built a strong footprint along the Atlantic Margin and in the mature areas of the North Sea.
This has been against a background and we've adhered to a constant strategy of trying to create value. We are firm believers and we always have been throughout our careers in the creation of value. Organic growth for an oil company is really the way to establish value. The twin track approach, looking at the frontier areas where the fiscal terms are attractive and being either first movers or early movers, is important. But also to balance that in the mature areas where we think there are either some new play concepts, some new ideas or indeed where we can see the potential around existing positions.
That has led to us building an inventory, a prospect and lead inventory, which today has 62 prospects over the last 18 months, which on average is just over three prospects a month. So the portfolio will continue to grow and will continue to evolve.
Having said that, it's not just a focus on assets; it's also a focus on people. We've always prided ourselves within Cairn having core competencies, technical, commercial strengths allied to corporate financial skills. But in the last 18 months we've added offices in Stavanger, London and Madrid to the head office in Edinburgh and really added a significant number of high-caliber experienced people in the oil industry. Because when you have 62 prospects and a growing portfolio you need experienced people to go through and work that data up.
The real focus in a nutshell relates to the super-continent break-up, which we've mentioned before. So what is on a geographical basis on the right appears to be diffuse and unfocused, in reality it is focused. There's a timing difference to the unzipping of the Atlantic if you like and you can see the North Atlantic was well underway before the Transform and Southern Atlantic Margins even opened up.
There's nothing different here to what we did in the Indian subcontinent. The Rajasthan Basin, the Cambay Basin, failed rifts as the Indian subcontinent broke away from Africa. And indeed the present hot plays of the industry in East Africa are all failed rifts related to super-continental break-up.
When we look at the portfolio and we plot it on a risk and reserve plot, the important thing to notice straightaway is the additions of the deep water in Senegal. When we showed this before we were still working through that data. We've farmed into FAR, our partners FAR, Australian company, on the basis of what we saw on the shelf and we were working through the deep water prospects.
When you're finding prospects of the order of 500m barrels or more, if you're a credible operator you can attract majors to farm in and work with you. That's a sort of threshold size and that's why it's very important for us when we think of Mauritania, when we show this in March next year, that sort of gap between Senegal and Pitu I'm pretty sure will be filled by prospects in Mauritania. And that particular deal is very well-structured to allow us to grow and if we have a stronger position then also to think about bringing in strong partners.
But when you look at the portfolio as a whole there are interesting things. You notice sometimes in the North Sea, for example near the Catcher area, commercial risks are low, tying in satellites quite attractive. Generally the lower equity positions of our predecessors, Nautical and Agora, means that the prospects seem more immaterial but we're gradually changing that and acquiring higher equities. You can see the K lead or prospect here which is a candidate for drilling. We have that 100%. That's probably in the same position that Skarfjell was in before we drilled Skarfjell. Skarfjell now has been appraised so the risking doesn't plot on a prospect plot but obviously the risking is very close to 100% chance of success.
So this thing evolves and do not think of this as a static plot at all. It's something that will change. But we continually look at the cream, the top 10% or so, and that's what we're trying to have in our drilling program. And the program that Simon set out for the next 12 months, we are structured through the hopper process to repeat that as the years go on so that we have a material sustainable transformational exploration program.
Just before we go through the areas each in more detail, just to remind you, the break-up of the North Atlantic, this break-up happens at different places, different times in a diachronous way. The North Sea, as you know, is a failed, oil province is a failed rift, also part of this break-up process. But all along the length here there are data points which suggest that there are -- there is potential for oil. It's very important we're going at this whole area from an oil prospective point of view.
Simon's already alluded to the activity with other companies, particularly Morocco but also Senegal. Ireland, you've seen activity this year. Perhaps Shell will be drilling in Greenland in 2015 or so. So apart from the Eastern Seaboard of the US where there's a moratorium there's activity by the industry. Canada in December last year, you saw all the majors come into the offshore for Canada. And it's this strategy, the play concepts, whether they're Jurassic or cretaceous source rocks, that have been formed in restricted basin settings as this incipient rifting. The structures were formed by the tectonics of stretching before this became a true passive margin and it was pushed apart by volcanics as the present day Icelandic Ridge forced the continents apart.
So it's a well-known concept but we're in very early and I think we are having a pioneering role. Because the geological processes are very similar along this coastline, because the deep water plays are untested, we are extremely well positioned to take advantage of our early mover example.
So let's go through very quickly each of these areas. We're starting -- the rig should be arriving some time towards the end of September -- starting in Morocco in the Foum Draa block. Just as a reminder, this is an ex-Shell block. The data, the 3D seismic, was all acquired by Shell. But just south of our block there is an old well, Tan Tan well, which demonstrates the cretaceous deltaic input over the shelf edge. The Shell well that was drilled to the north, the Rak well, was drilled in 2004, three years before the Tullow Kosmos discoveries in Ghana. So at the time they drilled the well the modern play concepts, these cretaceous turbidites, were not a focus for the industry.
So that's the first prospect and we see 142m barrels. These are all pre-drill estimates. Some of them have a wide range. There are other prospects in this area and there are a number of leads. So Simon's quite right to point out the follow-on potential should we get success. One important point, this well will test the deepest known stratigraphy along this margin to date.
The second well in the sequence is the Cap Juby prospect. Here the numbers -- there is a wide range. We've just a pre-drill estimate which we haven't updated, 73m barrels. There is a very wide range of the potential of this prospect. There are some old wells, Esso well 1972, which encountered light oil shows in the middle Jurassic. There is of course a heavy oilfield in the upper Jurassic, about a kilometer above that, but that's not the focus of our exploration effort. Our focus is on the middle Jurassic.
The important point here is the well location we have chosen is about 240 meters up dip of the known oil point. So the uncertainties with Cap Juby are related to the reservoir itself and aspects of the depth conversion.
Probably early in the New Year we move the rig to Senegal where we have two wells to drill. We could drill either of these first. One is on the shelf, the fossil shelf, paleo shelf, and one is on a deep water. The deep water fan could be first or the shelf could be first. That will be an operational decision that we'll take later. The interesting thing is there are a lot of DHIs in the seismic, flat spots associated with faults and pock marks and oil seeps which give you real encouragement for a petroleum system on the block.
The prospects tend to have a number of objectives but the important point for me is when you look at some of these plays, and the Albian clastic play in the bottom left here shows you have a seismic amplitude anomaly which is more or less conformable with the structural closure. That is an extremely positive sign for hydrocarbons. It doesn't actually tell you whether they're live hydrocarbons or residual but it's a strong indicator of hydrocarbons. If you look at one of the other targets you can see it's for the carbonate clay and you can see various faulting structures, joints etc. which may or may not enhance productivity. So we've got two objectives there which we're estimating about 180m barrels and about 250m barrels each.
This is the exciting one. This is for me the exciting well in the program. This is the reason that Conoco farmed into our block as soon as we had this battened down and mapped. What you have off the shelf is a number of sediment entry points and a number of fan systems, also at different times, different ages. So you have multiple stacked fan systems and sometimes, you can see, with different orientations.
We're going to be drilling one which we call the Northern Fan. Remember we don't give our prospects names until they're discoveries; it's the traditional convention rather than the modern one. So we're drilling the Northern Fan which we can see 280m barrels in one of the horizons and over 0.5b in another. The point here is this is obviously super material for us, it's super material for a major, but also if it is successful the repeatability on the acreage and that really is a powerful I think message to understand if we do get the success. And everything we're talking about we're in that 20%, 25% chance of success, so not the one in 10s in the frontier phase of Greenland.
Coming to Greenland, we've got our Pitu prospect which we'll be proposing to drill with the Cajun Express rig. Decisions to be made on that later in the year. The important thing, just a reminder, is this is a massive structural closure. 1,400 square kilometers of closure is enormous. It is ideally situated to be the regional capture point for any hydrocarbons that are generated either on the east or the west.
When you look at the seismic, 3D seismic, we have incredibly strong hydrocarbon indicators, amplitude spots, AVO responses. We've had some of the top experts, Rob Simm from Agora, for example, a recognized world expert on AVO responses, is salivating at this sort of potential. And what's nice to see is all the trouble we had in the disco area just trying to get to the cretaceous, the cretaceous is there. That is the holy grail for us in Greenland.
Coming to Ireland and this will be, as Simon's already mentioned, will be with a different rig. This is an old discovery. Phillips made a gas discovery right against a fault. This is being looked at by others and a 3D seismic survey has been acquired since the discovery well. And so now you can put the whole thing in context and map quite a decent structure.
The estimates, whether they're CPR estimates or estimates by some of the majors and our own estimates, are all more or less in line. We're looking at round about a 400bcf gas field with upside. The economics say that we need 300bcf to make this attractive. The really attractive point for this and the reason we came in is for the green area, the condensate. The condensate estimates there are the current condensate estimates. Our engineers, our exploration team see this as where the upside is on the gas/oil condensate ratio and the possibility too of seeing more than three times that number through condensate can transform this particular project.
So there's a well planned in one fault block. If that comes in then you've got a potential follow-up well in an adjacent fault block, probably in the following year.
Morocco. We've just come into Morocco. This was a Chariot block so in the bottom the volumetric, these are all Chariot numbers. They're more or less in line with ours but we've parked them until the 3D survey which was acquired this year is fully interpreted. So we will be coming in March with our results next year with our own fully worked numbers.
What we can see is the potential for large basin floor fan systems with potentially large closures. This block is on trend with known oil, the Aigrette well to the south and indeed oil on the shelf. So we're looking at the sediment input points again for cretaceous fans and these basin floor systems giving us multiple prospects. This is the hopper that Simon's talking about for the next phase of transformational drilling. This I think will give us enough if we -- because the deal is structured for us to, obviously on a second farm-in but to take the operatorship, to take control and be in a position to do hopefully some further deals.
To wrap up now the North Sea, to point out there's a number of announcements this morning. Perhaps on an individual basis it's not going to get anybody excited but it does I think cumulatively demonstrate that this Company is very much focused on working its portfolio and getting the best out of it. The Mariner sale, I think you've seen the cost-benefit analysis that Jann has spoken about. We've come in to Klara well; there's been a discovery that yet remains to be seen the significance and the size of that discovery. There's a lot more evaluation work to go.
But in the Catcher area we've increased our percentages. Obviously we're in 30% in Catcher but in the 27th round we came in with Premier we're at 46%, Premier the operator 54% in some blocks. Where we think -- and one of the transactions, Statoil coming in, has certainly confirmed -- others are seeing the potential. And I can certainly remember when I was mapping this area in the 80s thinking it was moose pasture, it was so far from the migration and charge part. All bunkum. This is an area where we've drilled 10 wells. They've all found oil and there's significant potential.
And finally the Ketos structure next to Kraken, which Simon's already mentioned about. So I believe it is possible to have transformational potential for the North Sea if you keep high enough equities. So a balanced portfolio, an exciting portfolio. I think we've got the team to deliver, Jann's got us in the financial position to deliver and I think Simon's going to close us out.
Thank you.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [4]
------------------------------
Thanks Mike. So in conclusion we're absolutely on track with the strategic delivery. We've achieved a balanced portfolio. We have regeared to the drill bit and drilling commences in September. We've entered into value-added partnerships, Conoco, Phillips, Statoil. It's worth noting that in the event of success in each of those deals those parties become development operators. But those partnerships evidence not only the industry interest in our acreage but also our approach to financial discipline in more capital-intensive projects. Key field developments are on track. We continue to actively manage our North Sea portfolio, as Mike's just outlined, and we're funded to deliver all of our objectives over the next few years.
So in summary there's a clear line of sight on the constituent elements of Cairn's value and we look forward to coming back to you in the next weeks and months reporting on further progress and in particular obviously on our high impact exploration campaign.
And with that I'd like to hand over to the floor for questions.
==============================
Questions and Answers
------------------------------
Unidentified Audience Member [1]
------------------------------
Hi, thanks guys. Just (technical difficulty).
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [2]
------------------------------
(Technical difficulty) basically it's as a result of TCMs, OCMs and then time given to take to Board for final decisions. That's what we had agreed with Statoil for well over a year so that's just the time process we're working to.
------------------------------
Unidentified Audience Member [3]
------------------------------
And if Statoil were to pull out, would you be able to drill this prospect anyway?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [4]
------------------------------
I think the nice thing is -- hopefully that's not going to be the case, but the nice thing is that we have flexibility. But for us it's very important to be in partnership in these high CapEx environments. I think this remains an interesting prospect for Statoil.
------------------------------
Unidentified Audience Member [5]
------------------------------
Then just finally, just on good housekeeping just on exploration CapEx, since the full year you highered the guidance from $530m to $700m, but it looks like you've cut two wells in Morocco and then just added one in Ireland. So just trying to understand the delta of where is actually cash going. It seems it's more appraisal and --
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [6]
------------------------------
We've added into the North Sea program. That $700m is over the full 24 months. We've added some North Sea but we've also added another well in Senegal since the last guidance. I think that's the major change.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [7]
------------------------------
Yes. We've not changed anything with the Morocco program. If you have a rig contract for a year basically you can, plus or minus, drill five wells a year with it, with some mobilization. So five wells is what we're going to drill.
------------------------------
Unidentified Audience Member [8]
------------------------------
Thanks.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [9]
------------------------------
Next question?
------------------------------
Dan Ekstein, UBS - Analyst [10]
------------------------------
Thanks. It's Dan Ekstein from UBS. Couple of questions. Firstly on the K prospect, what are the key parameters going to determine the drilling schedule there? Would you look to farm down pre-drill or is this the kind of thing you might do on 100% equity?
And then secondly, on Norway, could you just talk about your strategy there? You classify it as a mature base in exploration, but equally it could well be frontier exploration if you chose that path, thinking the Barents or Utgard High sorts of plays. And given the fiscal system that operates there, one of the most attractive exploration regimes in the world potentially, could we expect you to see -- to be more aggressive in that respect and what is the Agora team up to at the moment? And how does Klara, the recent farm-in, fit in with that strategy? Thanks.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [11]
------------------------------
Okay. I think I'll let Mike answer in detail. I think, yes, the Norwegian plays like Skarfjell was a new play type that the team had worked up. It had interest in over many years actually, as it turns out, and that's resulted in a very attractive discovery for us and I think is a great example of the kind of plays that can be pursued in Norway. I think we are mindful of CapEx, notwithstanding the attractive tax regimes, from the point of view of pushing out too far in terms of exploration drilling. We want to get that balance right in the North Sea and we want to concentrate on those areas where we have a particular skill-set.
But Mike, you want --
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [12]
------------------------------
Just on the K complex, the only really outstanding bit of homework is the possibility for a West Kraken well to be drilled by the EnQuest Group, which, if you remember, Kraken is a Paleocene Heimdal objective. But that well may actually just clip into the [mooring], which is what the K prospect is about. So there's an element of potential de-risking from another well, which may or may not be drilled. So ideally that well will be drilled early next year and our well, we'll take the data and drill our well.
------------------------------
Unidentified Audience Member [13]
------------------------------
(Inaudible - microphone inaccessible).
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [14]
------------------------------
All of the above, but the flow rate one is a difficult one to -- to fully test that you may want to frack a well such as this because it is a tight reservoir, whether you would do that next summer or the following summer at the same time as you drill the second appraisal well. It's the gas condensate ratio which can turn this from a nice project into a really super one.
------------------------------
Unidentified Audience Member [15]
------------------------------
(Inaudible - microphone inaccessible).
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [16]
------------------------------
Reservoir quality, yes. These are tight or these are tight-ish reservoirs. But for gas it's not a problem. But we need to gather away from the fault, you need to take cores, you need proper data. And whether you go on and test it and frack one year, it's probably better from an engineering point of view, do your homework and re-enter and do your second well. So it's probably a two-year appraisal program.
------------------------------
Unidentified Audience Member [17]
------------------------------
And second, the $700m of CapEx, is it net of Norwegian tax reforms?
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [18]
------------------------------
Yes, it is. Yes, it is.
------------------------------
Nathan Piper, RBC - Analyst [19]
------------------------------
Nathan, RBC. Couple of quick ones, and maybe perhaps a slightly more difficult one in the end. The quick one, you talk about a big range in the Cap Juby prospect and certainly in barrels does not seem to fit your high-impact drilling strategy and so on. Could you tempt us with what that range might be?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [20]
------------------------------
I'm deliberately not trying to put different numbers into the market, but we've had the government specifically saying there are too many numbers out in the market pre drill; drill the damn well and work out what it is then. The problem in this particular area is multi-fold. It's a carbonate reservoir. Carbonates in this setting are notorious for where are the best [facets] or the sweet spots, if you like, where are the not-so-good sweet spots. There will be variability. So there's a lot of uncertainty.
There's additional uncertainty with the velocity distribution here. You can just about see on that seismic line the variability in the overburden, tertiary overburden, which can tilt this structure dramatically. And if you notice on the map -- it's not on the screen, but if you notice on the map there's a whole northern area there which looks like the culmination of the structure with one depth conversion. With another depth conversion it's not.
So again, I think what we've in the joint venture, and people like John Hurst in Genel are more carbonate specialists, the agreement is let's get a modern well, get through the loss zone in the top of the upper Jurassic, which is why you get that little kink, take proper cause, do an evaluation and then extrapolate our thoughts from a known high-quality modern data point.
But you can imagine, 240 meters up-dip of known oil on a structure this size, you could get some big numbers, but only if the reservoir is of high quality over that area. And there's no way from the seismic that you can calibrate. So we need to upgrade our data. So I think all of these things, you bore them down to a single mean number pre drill. You then get your data and then you can -- you feed in hard information. So the guide -- all of these are guidance numbers.
------------------------------
Nathan Piper, RBC - Analyst [21]
------------------------------
Understood. Another quick one. In Mauritania there's quite a lot of drilling activity going on this year. Which wells are relevant to the play type you're looking at?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [22]
------------------------------
I think Tullow particularly, I think they have a three- or four-well program. They're to the south. What we're looking at is a basin which we believe is generative across its wave for oil, and any oil finds by any other company in this area just confirms this theory or concept. And like I say, it's not just Mauritania, it's along the length of this. So source rock is the important thing, generating. Then it's all a debate about which are the best traps.
------------------------------
Nathan Piper, RBC - Analyst [23]
------------------------------
Understood. And last one, you talk a lot about your prospect inventory and how you're drilling the top 10% and how you work your portfolio inventory fairly hard, which makes sense, but you seem to have added a lot of prospects in that you're going to drill. Can you give examples of ones that have now dropped to the back and are less favorite, just to show that you are actively managing it?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [24]
------------------------------
I think it's more, like I said, if you've got a rig then you can drill five wells. You've got to rank them. Once you've ranked them, everything is on hold. But if one were to come in then there's a lot of juggling goes on and all those spheres would move up the way or perhaps go down the way if it's a dry hole. So I wouldn't get hung up. Like I said, there's on average three a month being added.
This is a work in progress and it will be different in March than it is today. But you have to make decisions. You have to do site surveys. You have to go through partner approvals. The history of Cairn was decisive decision-making, 100%. Fantastic. As soon as you go down the joint venture, de-risking, sharing the finance, you go through process. And you have to have TCMs. You have to have OCMs. We didn't do all that. We could move more quickly, let me say.
------------------------------
Nathan Piper, RBC - Analyst [25]
------------------------------
Appreciate it. Thanks.
------------------------------
James Thompson, JP Morgan - Analyst [26]
------------------------------
Hi there. Good morning. It's James Thompson from JP Morgan. Just a couple of questions from me. First one's on Kraken. Just in terms of details of the carry, is the 137m barrels a number that the carry will be drawn from or is it another number? Just want confirmation there.
And secondly, you've spoken pretty fondly about amplitude performance and flat spots and other DHIs in Senegal, but I thought those statements were really missing, I would say, from Foum Draa. Now what is the risk associated with that cost base or perhaps what makes you confident that that could be a success?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [27]
------------------------------
Jann, can you cover the carry?
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [28]
------------------------------
So on the carry, the answer is it might be. The reserves can be determined over the development drilling period. So we'll go through that process. But at the moment that's what we're working on in our economics, 137m.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [29]
------------------------------
Yes. Just on Foum Draa, you could see on the map there, there's amplitude map on the top left of that page, similar sorts of comments. There's always risking, even at 20%, 25% chance of success. The odds are not with you in any exploration area. So there's always risk. This is the deepest stratigraphic and deepest well along the margin, so like I said, Shell drilled 10 kilometers away from here and didn't get to this horizon. So there are no data points and no control points apart from the Tan Tan well on the shelf. But you've got to get those sediments transported down the slope and into a fan system that is trapped.
Now all -- once you've got the 3D seismic, there's an element of de-risking. The problem with all this lateral prediction and geophysics is it doesn't actually distinguish between good hydrocarbons or good gas and residual hydrocarbons or residual gas. You can still have something which did -- drill something which did once have hydrocarbons but they've leaked off or it's been tilted and whatever. So there's a lot of science goes into it, but short of drilling, you cannot find for sure.
------------------------------
David Mirzai, Societe Generale - Analyst [30]
------------------------------
David Mirzai, SocGen. One for you, Jann, first. In terms of your balance capital allocation, how do you match having an asset like Cairn India, where you have roughly $1b worth of capital tied up in the company that pays you 3% to 4% dividend yield against the fact that you will be devoting capital expenditure for the next two or three years in the UK, which I would see as being non-capital tax efficient.
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [31]
------------------------------
If I needed that cash back in the UK or to invest right now, then we would liquidate the position. I think last year Simon talked about we made two moves, the first one a smaller one, the second one we sold 8.5%, and that was really to test how deep and how liquid the market was. So we're really confident about that liquidity now and we can move whenever we want to. But right now we've got the cash to fund the program and we'll leave that investment sitting there until we need to liquidate it.
------------------------------
David Mirzai, Societe Generale - Analyst [32]
------------------------------
Okay. And then second for you, Mike, from my perspective what can I see that's different from where I was three years ago before Greenland? Again, I see two or three different plays. I see seismic's been done. I see a lot of expectation and hope. But what makes you better qualified to drill in West Africa than the 10 or 20 wells that have already been drilled there targeting the same prospects that have come up dry/sub-commercial?
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [33]
------------------------------
I think the driver between our thinking, nothing has changed. And I found out last night that I'd been in my career longer than Jamie Buckland, since he was born. My career's longer than his age, if you like. Nothing has changed. The same approach, the same strategy. It's unlocking that value.
I think what we tried to demonstrate, there's a coherency to our focus. Different geographies but similar geologies is what's going on. The more data you get, the more 3Ds here, there, the more you start seeing the similarities, the more expertise you should bring in. These plays have not really been drilled. There's not a single well on the eastern seaboard of the US, so dismiss that for a start. Gulf of Mexico to Nova Scotia or Newfoundland is the only relevant well. This Morocco well would be the deepest stratigraphic well. I think these plays that we see in Senegal have been seen by something like Conoco.
There is no magic. You just have to have a focus and bring together the data and the team and the belief. And I think it's the belief that, for us, we've had to put together a program. People keep coming back to Greenland. Greenland was a one-off because it was the size of Europe and it was up for grabs at the same time, and we went for it on a one-in-10 basis, and there wasn't a single investor that didn't know that was a one-in-10 shot. These are different. We can position the wells better. But we still have to drill them.
But that's the business we're in. It seems to be people want guaranteed success. You should be investing in companies that appraise and develop and what have you if you want that sort of certainty. The exploration business is about backing your own judgment and taking the risk. That's what we do.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [34]
------------------------------
And I think the point is it's about, as Mike says, there's a consistency in our approach right the way through, whether a larger company or a smaller company. But it's all about getting that balance right. That's why we've worked so hard over the last couple of years to get that portfolio right in our eyes so that we do offer that high-risk potential, which is game-changing if it comes in, but you've got downside protection, there's an ongoing business. So there's that balance that allows us to do what we want to do that we believe it, but that allows us also to be a sustainable company.
------------------------------
David Mirzai, Societe Generale - Analyst [35]
------------------------------
Thanks very much. Very clear.
------------------------------
Unidentified Audience Member [36]
------------------------------
Can you give us an update on the situation in Greenland regarding using the second rig. Does that need to be clarified before you joint venture the (inaudible -- microphone inaccessible)?
Secondly, could you break down the $500m a year exploration CapEx by country?
And thirdly, if it's not too techy, why couldn't the (inaudible -- microphone inaccessible)?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [37]
------------------------------
I'll take the first point. I'll answer the first point. Then Mike can -- yes, we're still in discussions with the Greenland government and when those discussions resolve, we'll come back. I don't want to preempt anything, but I think when I say we, it is the industry as a whole who are present in Greenland. There's an aligned approach and the discussions are progressing very well.
Mike?
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [38]
------------------------------
I think that's right. There's -- with the cap-and-secure process and experience we've had in Greenland, there's an argument that, a very strong argument that we can proceed more safely than waiting for another year for, say, a Shell to be drilling with another rig at the same time. So there's an ongoing debate, to answer that point.
On the condensate, I think there's just an engineering view that measurements that were taken at the time preferentially recorded the gas rather than the condensate. And that would fit -- on this block we have the Burren oilfield, which is one of the significant cretaceous data points for oil along this margin. It's not, wouldn't be a surprise to have higher condensate ratios. So the estimate, I think, was 140. If there could be 500 per MCF then you're really smoking.
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [39]
------------------------------
So on the CapEx for the wells, the only wells that are in the 2013 budget are the Moroccan ones, and we're estimating about $150m for those. The rest of the wells fall into 2014 so we're going through the budgeting process for those and we'll have more definite figures when do our pre-close update in January. But we're also estimating that we've got about $1.2b, possibly $1.3b on the balance sheet at the year end, if that's helpful.
------------------------------
Unidentified Audience Member [40]
------------------------------
Can you break down how much you spend on Greenland in that total versus West Africa in total, and anywhere else?
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [41]
------------------------------
I have a number but it's too early for that to be made public. We're going through joint venture processes, as Mike said.
------------------------------
Unidentified Audience Member [42]
------------------------------
Thanks.
------------------------------
Alessandro Pozzi, Barclays Capital - Analyst [43]
------------------------------
Alessandro from Barclays. The first question is for Mike in terms of Morocco. I believe you mentioned the chances of success are between 20%, 25%. I was trying to understand how conservative or aggressive this number may be, and within that what is the chance of finding that gas condensate instead of oil, the risks are.
And second question is on asset swaps in the UK, whether it would make sense to swap position in Kraken and Catcher 4 and assets that are producing so you can limit your development CapEx even further.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [44]
------------------------------
Let me deal with the second question first. We continue to look at swaps. We continue to look at deals that might bring forward production if we believe that's attractive to us. But I would emphasize that we see Catcher and Kraken as core to our forward position in the North Sea. We very much like both developments. We've seen a value increase from our perspective. We regard them as core to the forward program. So we're not considering swapping those assets.
But yes, where you are right, and I think what we've demonstrated in the announcement today, is we will look at more complex transactions, if you like, to swap out, to exchange and to refine the portfolio. And if those happen to include existing productions, that may be of interest to us, yes.
Mike?
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [45]
------------------------------
We'll shortly find out, Alessandro. The well's due to spud in September so we'll find out. Obviously we have oil on Cap Juby. We float 2,500 barrels a day, heavy oil. We've seen light oil shows at the middle Jurassic. The [kitchen] for that oil is outboard in the place where we're going to be drilling for the first time for the industry, one of these cretaceous fans. Still a lot of unknowns. But we can't hide; we will know very shortly. So we can speculate forever, but we're going ahead.
------------------------------
Alessandro Pozzi, Barclays Capital - Analyst [46]
------------------------------
So it's like 50/50 or is it --
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [47]
------------------------------
No, no, we're going into this that this is oil, as I set out in the very beginning. These are obviously in parts different age source rocks, different depths of burial are going to generate -- be in the gas window. We're not looking at type 3 source rocks coming from inboard. This is marine, high-quality oil-prone source country.
------------------------------
Alejandro Demichelis, BNP Paribas - Analyst [48]
------------------------------
In terms of follow-up on the previous question, you have internal comparison the portfolio and (inaudible -- microphone inaccessible). How much more rebalancing do you think you need to get from here onwards and how much money do you still need to invest in that portfolio?
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [49]
------------------------------
None in terms of rebalancing. We may choose to continue to, for example, the swap transactions we've been talking about or potential additional farm-ins or indeed farm-outs in the frontier portfolio. But as far as we're concerned, and what I said in March was we're comfortable with the kind of balance we've achieved now. We think it's right. We think it's about the right level of cash exposure. We're covered. We know we are. And we know that in terms of the percentage of upside versus the downside risk, it's where we're comfortable and it's what we've been planning to achieve, so we don't need to do any more.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [50]
------------------------------
And Alejandro, this is the business. This is the normal business is to work your assets in the North Sea, to be doing farm-ins. We've got things in the pipeline that are coming with us. That's what you need. You need current activity and you need to feed the feedstock. The lifeblood of the industry is prospect generation. So you need to be generating it.
------------------------------
Alejandro Demichelis, BNP Paribas - Analyst [51]
------------------------------
(Inaudible -- microphone inaccessible).
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [52]
------------------------------
Yes. Yes. I think it's ongoing. It's work in progress. So we continually look at the stream of opportunities, and yes, as usual, most of them are rejected. But those that we feel fit strategically are bought in, and yes. So in two years' time there'll be a different hopper because these things will be worked up, work in progress.
------------------------------
Mike Alsford, Citigroup - Analyst [53]
------------------------------
Morning. Mike Alsford from Citi. A couple of questions if I could, please. Just firstly on the exploration portfolio. You've talked about obviously 4b barrels of un-risked resources, of which I guess it's quite a big skew given the Pitu prospect. But could you talk about what the risk resources that you're targeting with your 2013 and '14 program is?
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [54]
------------------------------
Well it's difficult to -- it's difficult to answer that properly, Mike, because there are some big numbers outwith Greenland here, you take out Senegal, that you have to consolidate those numbers in the proper, technical way, which is difficult to present in a forum like this. But there are some big numbers, and certainly big numbers in Senegal. So Greenland Pitu is very large. We're not shy of that. But it's part of the program.
------------------------------
Mike Alsford, Citigroup - Analyst [55]
------------------------------
But on a risk basis, what are the --
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [56]
------------------------------
The risking, as I said, they're all, it's all summarized on the one plot, which gives you the commercial, not only the technical risk, but it's the commercial chance of success. So you can see what numbers you come to. But the technical risks, if you like, are in that 20%, 25% chance of success, which I said is far better than a one in 10, but it's not one in one. It's exploration.
------------------------------
Mike Alsford, Citigroup - Analyst [57]
------------------------------
Okay. And then just following on on the CapEx point. Just you've given us a number, Jann, on the exploration CapEx. But could you give us a sense as to what '14 development CapEx is going to be?
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [58]
------------------------------
Well Kraken, we're mainly carry. Capture we don't now because we haven't got the field development plan yet.
------------------------------
Mike Alsford, Citigroup - Analyst [59]
------------------------------
Okay. And on that point, you're looking at your funding, your development CapEx, what kind of debt are we expecting in terms of percentage of spend. Are you looking at 20%, 30% or is it less than that? What are you thinking about?
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [60]
------------------------------
No, probably higher than that.
------------------------------
Mike Alsford, Citigroup - Analyst [61]
------------------------------
Higher than that.
------------------------------
Unidentified Audience Member [62]
------------------------------
Just curious, you must be one of the most active participants in the screening of and negotiation of farm-ins and farm-outs just now in the independents. I'm just curious how much of a competitive advantage you think that cash pile is just now, i.e. are you receiving materially better terms than you would have done three years ago given the current environment for funding of exploration wells out in the capital market?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [63]
------------------------------
I think the cash definitely helps from the point of view therefore there is a clear ability on our part to match commitments going forward rather than just saying, yes, sure, we'll drill a well and we'll have to raise some money to do it, but I think almost more importantly it's the fact of our operational ability. So, for example, in Northwest Africa when we have a discussion and we say we're bringing a rig, even if it's Senegal, for example, that is powerful because it's a tight market in terms of the availability of the right kind of rig. And so somebody can come along with cash but also with a proven track record of operating in deep-water environments and with a rig, that is something that really gives you a (inaudible).
------------------------------
Unidentified Participant [64]
------------------------------
In relation to the Cairn India stake, keeping a close eye on currency effects recently, but do you have a view on how, in terms of fundamental value, of how fundamentally undervalued or overvalued that stake is relative to the Indian market valuation of that, do you think?
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [65]
------------------------------
I guess we've got legacy knowledge of that asset that puts us in quite a unique position in terms of investors. And we still think there's a lot to play for there, which is why we don't feel under any pressure to liquidate that position just now. I agree, I keep my eye on the currency markets very carefully as well and now it's not a great time for the rupee, but given the timescale that we're looking at, hopefully it will come back.
------------------------------
Unidentified Audience Member [66]
------------------------------
So do you think it's overvalued or undervalued?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [67]
------------------------------
Undervalued.
------------------------------
Jann Brown, Cairn Energy plc - MD and CFO [68]
------------------------------
Massively undervalued.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [69]
------------------------------
The last time we sold was at considerably higher price than this.
Last question or -- sorry.
------------------------------
Anish Kapadia, Tudor, Pickering, Holt & Co - Analyst [70]
------------------------------
Yes. It's Anish Kapadia from Tudor Pickering. Got three questions. Just given the state of the small cap E&P market, if you look at a lot of the AIM stocks, a number of distressed stocks out there when you look on valuation. Just wondering, in this market are you tempted once again to go out and look at acquisitions?
The second question, when I look at the plot that you talk about in terms of your exploration inventory versus chance of success, a little bit confused when we look at Morocco as you're talking about 25% chance of success, but looking at the plot it looks like more like 5% to 10% or 5% to 15% chance of success. So just wondering if you can explain that.
And further to that, it looks like Morocco's low risk, low reward. If it wasn't for extremely favorable fiscal terms, would you still be drilling there?
And then the final question is on the acquisition today from Premier of the Grosbeak field and the associated block. A number I've seen on that block in the past for Grosbeak was about 90m barrels or barrels of oil equivalent. Is that a number that you are happy with?
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [71]
------------------------------
Right. So the first question is no, we're not. We would of course consider additional corporate opportunities if they absolute fitted with what we're doing strategically, if we saw something that was distressed but was, most importantly to us, an attractive asset. And I think you're right; there are a lot of distressed companies out there. But we screened everything previously when we were building this portfolio and making a choice on particular acquisitions. We're comfortable with what we've got now. As I say, we don't need to do anything else. And if we were going to do something it would have to be for very, very good reasons that was a pure strategic fit.
Mike, on Moroccan?
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [72]
------------------------------
Just on your Grosbeak, it's not necessarily so that we've only just looked at what is known. We're about hidden value and trying to find additional potential. So don't just read into it that there's a known number out there which is relevant to our decision-making.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [73]
------------------------------
Yes. We're right to bring in the acreage first.
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [74]
------------------------------
Yes, yes.
------------------------------
Anish Kapadia, Tudor, Pickering, Holt & Co - Analyst [75]
------------------------------
I was more just wondering, are you aligned with that number for Grosbeak or do you see upside or downside to that number?
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [76]
------------------------------
Yes, but that's not the driver. The driver is putting the strategy together. We see other potential on that block which has not been identified by others.
The difference in -- you have technical risk, you have commercial risk. If you've got a big, big technical number, the difference between your technical risk and your commercial risk is very low because it's going to be commercial. The smaller you are in size, the bigger gap between your technical risk and your commercial risk. It's just the way you look at this. Morocco is a very, very good place to fund (inaudible) because of the fiscal terms. But again, this is not a static thing. This is a live thing. One well changes the whole thing, as I said. Skarfjell was on this profit one point and now it's off the scale.
------------------------------
Anish Kapadia, Tudor, Pickering, Holt & Co - Analyst [77]
------------------------------
So the way to think about it is lower geological risk but a higher commercialization risk on top?
------------------------------
Mike Watts, Cairn Energy plc - Deputy Chief Executive [78]
------------------------------
Yes, yes, just because it's on that threshold of the volume. It's all about Monte Carlo probability and how you approach it.
------------------------------
Simon Thomson, Cairn Energy plc - Chief Executive [79]
------------------------------
I'm conscious of time, so are you done? Any other questions? No questions on the meaning of the word diachronous? Listen, thanks very much for coming along and of course we're available for any questions after the presentation. Thank you.
------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the
Transcript has been published in near real-time by an experienced
professional transcriber. While the Preliminary Transcript is highly
accurate, it has not been edited to ensure the entire transcription
represents a verbatim report of the call.
EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional
editors have listened to the event a second time to confirm that the
content of the call has been transcribed accurately and in full.
------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other
information on this web site without obligation to notify any person of
such changes.
In the conference calls upon which Event Transcripts are based, companies
may make projections or other forward-looking statements regarding a variety
of items. Such forward-looking statements are based upon current
expectations and involve risks and uncertainties. Actual results may differ
materially from those stated in any forward-looking statement based on a
number of important factors and risks, which are more specifically
identified in the companies' most recent SEC filings. Although the companies
may indicate and believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate or
incorrect and, therefore, there can be no assurance that the results
contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2018 Thomson Reuters. All Rights Reserved.
------------------------------