Half Year 2017 Cairn Energy PLC Earnings Call
Aug 22, 2017 AM EDT
CNE.L - Cairn Energy PLC
Half Year 2017 Cairn Energy PLC Earnings Call
Aug 22, 2017 / 08:00AM GMT
==============================
Corporate Participants
==============================
* Eric Hathon
Cairn Energy plc - Director of Exploration
* James Donald Smith
Cairn Energy plc - CFO & Executive Director
* Paul Joseph Mayland
Cairn Energy plc - COO
* Simon John Thomson
Cairn Energy plc - CEO & Executive Director
==============================
Conference Call Participants
==============================
* David Mirzai
Deutsche Bank AG, Research Division - Research Analyst
* James Alastair Carmichael
Peel Hunt LLP, Research Division - Analyst
* Malcolm Graham-Wood
VSA Capital Limited, Research Division
* Mark Wilson
* Nathan Piper
RBC Capital Markets, LLC, Research Division - Analyst
* Rafal Gutaj
BofA Merrill Lynch, Research Division - VP
* Robin Alfred Haworth
Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst
* Stephane Guy Patrick Foucaud
GMP Securities L.P., Research Division - MD of Institutional Research
==============================
Presentation
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [1]
------------------------------
Okay. Good morning, everybody, and welcome to Cairn's Half Yearly Results Presentation. I'm Simon Thomson, Chief Executive. With me are James Smith, CFO; Paul Mayland, COO, and I'm delighted to say for the first time in these presentations, Eric Hathon, Exploration Director.
So as in the usual way, we've got a presentation to run through with you this morning, and we'd be very happy to take questions at the end. It's being webcast, so there will be microphones available for any questions that you have.
And just a point of housekeeping before going through the presentation, there is no scheduled fire alarm. So if an alarm should sound, I'm sure you've been here before, but the exits are that door there, and more easily, that door there, and the muster point is out in the square.
So turning to first slide. Cairn strategy for value creation remains consistent and straightforward. We seek to create, add, and at the right time, the time of our choosing, realize value for shareholders all against the backdrop of financial flexibility and disciplined capital allocation. And in support of that strategy, really, there are 3 core pillars. The first are production and future development plans; the second, the significant exploration growth opportunities that we have within our portfolio; and the third, our ongoing funding flexibility. And I'll touch on each of these pillars in a little bit of detail before handing over to the team.
In terms of the first, and the production side of things, as you know, Kraken is now well into ramp-up. And Catcher is making excellent progress towards first oil at the end of this year. And together, they're on track to provide production of 25,000 barrels a day in 2018, which obviously help fund our sustainable business model.
In addition, Skarfjell is set for FID decision at the beginning of 2018. And Senegal, which obviously will be a main part of this presentation, which Paul will cover in some detail, is making excellent progress. We've confirmed the details today of the phased development, the first phase of the SNE development. We've confirmed that the resource number has increased to 2C independently audited number to 560 million barrels. And in addition, today, we've confirmed we have in excess of a Tcf of gas nonassociated. So everything is moving forward as we planned. The exploitation plan, as it's called, effectively development plan, will be submitted in the first half of next year. And we are targeting FID for Senegal in the back end of 2018. And a lot of activity ongoing in terms of transition work with Woodside which Paul will touch on.
And I guess importantly, when you look at that production and development set, Cairn can and will provide sustainable cash flow generation for all of its business needs from within assets that are currently in the current portfolio. So the timing of Kraken and Catcher declines will be met by first oil in Skarfjell and Senegal, ensuring that ongoing sustainability of cash generation.
We look at the second pillar, our expanding exploration portfolio, we believe offers significant upside potential. We've obviously just come to the end of a safe and successful 5-well program in Senegal. And the last well of that was SNE North. And as Eric will touch on, that showed us additional potential in the northern part of the Sangomar block. And that, together with the ongoing work looking at the shallow water Rufisque acreage, may provide potential prospects for drilling in a further phase. In addition, we built a relatively extensive acreage position in the Porcupine Basin, a number of different plays and prospects. And right now, we're acquiring a 3D survey. So we do see the potential for significant additional activity there over the coming years.
In the U.K. Norway, after a period of build and acreage acquisition and honing of the portfolio, we will quite soon commence a program of up to 10 wells. And that program will target in excess of 1 billion barrels of oil equivalent acquisition. And so I guess for us, this is coming to fruition of our strategy in U.K., Norway of creating a material drilling program at significant equity positions and some of those wells will also be operated.
We're obviously delighted to be awarded Blocks 7 and 9 in Mexico. We see that as a prolific hydrocarbon basin, and we're very excited to get exactly what we wanted. It was obviously highly competitive. We are looking at additional acreage opportunities in Mexico, and I'd like to think that it will form a core part of our portfolio in the coming years. Obviously, we're targeting, as we said, drilling there from 2019 onwards. In addition, we continue to actively assess further new venture opportunities to bring into the portfolio.
And that really links with the last point, the last pillar of funding flexibility. So as we said, we've got over $250 million of cash. Our debt facility currently remains undrawn. We've obviously got imminent cash flows coming from the North Sea. So we are well funded, fully funded in terms of all of our commitments and plans within the current portfolio. But in addition, we have the flexibility to add further opportunities whether on the exploration side or otherwise that meet our strict investment criteria and that we feel can offer value within the portfolio.
And on that funding point, I'll hand over to James. James?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [2]
------------------------------
Thanks, Simon, and good morning, everyone. So in the next few slides, I'll run through the current funding position, which Simon has described, provide an update on cash flows in the first half and the outlook for remaining spend for the second half of the year before moving on to give some updated guidance on SNE development assumptions and project economics, and then I'll hand over to Paul, who'll talk about those developments in some more operational detail.
So on Slide 6, as you can see, the balance sheet continues to be in a strong position with cash in the bank and current debt facilities remain undrawn. And in terms of existing sources of funding in the second half of the year, net cash at the midyear of $254 million. Expected debt capacity -- debt availability, I should say, during the second half of $210 million. Together with the Norwegian tax receivable is the total sources of funding in the second half of approximately $500 million. And when we compare that to the near-term uses of capital, the second half CapEx forecast is about $260 million, in line with previous guidance, and I'll come to a breakdown of that in a moment. So as you can see, we expect to exit 2017 with significant funding headroom, and that will obviously be taking us into the strong cash flow generation phase of the business from the U.K. assets into 2018.
Final point to make on this slide, just as a reminder, clearly, that means that the business plan remains fully funded independently of what we expect to be a positive outcome of the Indian dispute next year. That dispute is now well advanced in the international arbitration forum that we are fighting it. And as you know, that is an award claim of at least $1 billion, now actually something in excess of that, that we anticipate to be awarded in our favor next year.
So just looking at the first half cash flows. Exploration spend in the first half was $86 million, principally on the first part of the 5 well Senegal program that has now completed. Development spend in the first half, $71 million across Kraken bringing it on stream; and Catcher, the Dyas carry in our favor on the Catcher project was fulfilled during Q1. Cash inflows during the period, we drew on our exploration financing facility, $22 million. That's effectively working capital funding on the tax rebate for exploration spend in Norway. And we also completed the previously announced royalty transaction with FlowStream during the first half as well, which took us to a closing cash position of $254 million.
If we look forward to the second half of the year now in terms of projected capital spend, $110 million on development spend, again across Catcher and Kraken, bringing Catcher towards first oil. That's in line with previous guidance. And the exploration spend, $150 million, again principally that's Senegal, so the completion of that 5-well exploration and appraisal program, Ireland, the Druid and Drombeg well in the second half, along with entry costs into Mexico and exploration activity in the U.K. and Norway, principally in Norway. So all of that, together with the first half, puts us in line with the guidance we gave at the beginning of the year of CapEx for the full year of approximately $400 million.
So if we just take a step back for a minute and look at the overall portfolio and perhaps think about the longer-term funding plan and capital allocation strategy. Starting in the top left, clearly, the producing asset base is now on-stream and ramping up. And we expect that to reach capacity production net to Cairn of 25,000 barrels a day by the middle of 2018. And that obviously represents, as Simon mentioned, the culmination of a 5-year portfolio rebuild to take us into that balanced model of cash flow-generating assets, ongoing development and exploration. Clearly, as I've mentioned throughout that rebuild, we've retained the balance sheet flexibility to support our ongoing investment plans. And indeed, we will exit this year with significant funding headroom in place.
So if we look at that sort of steady state, if you like, as it were 25,000 barrels a day, we expect that to generate, as I've mentioned before, it's low-cost production once on-stream from Catcher and Kraken. We'd expect it to generate about $300 million a year of operating cash flow at capacity at 25,000 barrels a day net to Cairn. And in terms of the allocation and reinvestment of those proceeds, approximately half of that on an ongoing basis, we expect to reinvest in the producing asset base. So there will be ongoing drilling in Catcher and Kraken next year. And as mentioned, Skarfjell is coming up for FID next year, we'd spend starting in 2019 to sustain that production base. And the other half of that operating cash flow is available to invest in exploration activity and new ventures activities, although, as we say, only to the extent we can secure opportunities that meet our investment criteria, which is principally driven by low breakeven opportunities. So as you can see, we have in front of us a solid, balanced portfolio model that's sustainable and fully funded. It's performed through the cycle. We continue to invest dollars only where they generate breakeven, low breakeven returns, and we're well positioned to continue investing as we go into 2018.
So moving on now to look at development assumptions for SNE. As Simon has mentioned, we expect that SNE will be a phased development plan with the first phase of development underpinned by the highest quality S500 sands taking us through to first production in the early 2020s in the range of 75,000 to 125,000 barrels a day. We are obviously still at a relatively early stage in determining precise cost estimates for that development, but we are already engaging with the contractor community prior to tendering key contracts later this year and moving on to feed in 2018. So on that basis, our current estimates of full-cycle development costs for the SNE field are in the region of $12 a barrel. And if we look at that in terms of the gross CapEx that's required to take us through to first oil, the current estimate is $2.3 billion from FID through to first production.
We've already commenced work on project financing of that development activity. And so as broad guidance, if we take that gross $2.3 billion, net it down to Cairn's participation, current participation in the project and conservatively assume that we 50% debt fund the project, then the net equity check to Cairn would be approximately $450 million over, say, 3 years to first oil commencing in 2019.
The right-hand side of the slide here gives a reminder of the fiscal terms. We'll be developing this project within a stable production sharing contract with pretty solid fiscal terms that will commensurate with the frontier nature of the block when we made the discoveries back in 2014. And as a reminder, the government as well as through the fiscal take participate directly in the project with a 10% stake through Petrosen currently, which they have the right to increase 18% of FID. And all of our resource, net resource and economic assumptions are stated net of that assumption if they increase to 18%.
So the final slide here really provides the economic output of those assumptions in terms of project value and project return at various different oil prices. And you can see the numbers on the screen. But I guess the key message here is really that this is a compellingly low breakeven project with pretty significant value even at today's oil prices, and actually in terms of meeting our threshold returns would do so even with Brent in the mid-30s.
So just to conclude on SNE before I hand over to Paul. It's becoming increasingly well defined as a development project. It's very robust at current oil prices. We are well-placed to fund the development of our current equity stakes. But clearly, as we've always said, we remain true to our track record, which is to be active managers of our portfolio. And clearly, if the opportunity arises to change our priority stake in the project, we will do that if it maximizes returns.
So on that, I'll hand over to Paul to talk a little bit more about SNE and then Kraken and Catcher.
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [3]
------------------------------
Many thanks, James. Good morning, everyone. 2017 has been a busy year for Cairn operationally. We've been very pleased that the Senegal exploration and appraisal program has been executed in a timely, safe and incident-free manner with the Stena DrillMax drillship. And we're also pleased that the Catcher FPSO in Singapore, shown in this picture here, has recently passed 10 million man-hours without a loss time incident and has received an external safety award in Singapore. So that's credit to all involved, particularly the operator, the FPSO contractor and the yard.
On to the proposed SNE development. And really 3 words that capture our overall philosophy. First, phased and fast. So SNE will be the first offshore oil development in Senegal. So we want to ensure that it's designed, constructed and operated in a responsible way, meeting both international and local requirements, there will be a phased development with an initial focus, as both Simon and James have outlined, on the higher quality, lower reservoirs, and this gives us the most direct line to first oil. And we would as a joint venture like to move forward quickly to capture the opportunities within the current contract market. And we believe that the Senegal stakeholders will also share this vision, a vision which is illustrated on the right-hand side.
I will now go on to describe the phasing, the characterization of the field, reservoir and the oil and the time lines. So we have sought expressions of interest from a list of a high-graded contractors within the parameter shown on the slide. And really, the basis for that is to bring all potential opportunities to the fore, such that we can consider them in an appropriate manner. So the oil processing capacity is quite wide at 75,000 to 125,000 barrels of oil a day. Likewise, the storage capacity between 1 million and 2 million barrels, which can take you from a Suezmax vessel through to a VLCC. And we remain open to conversions, newbuilds or, indeed, redeployment of existing vessels. Phase 1 will focus on the lower reservoirs in a more confined area, but with a component of upper reservoir development. We would envisage developing up to 240 million barrels of 2C resources in this phase. And for those of you that are focused on classification, it's that quantity of 2C resources that we would envisage moving to 2P reserves on final investment decision. And although this is the primary focus of the joint venture at present, the exploitation plan, which Simon mentioned, is a life of field plan. And that will include and envisage further phases of development, both oil and potentially further with gas.
So the joint venture has concluded. That appraisal was complete on the SNE field, and we have recently released the rig. We've also completed an environmental baseline survey across the field this summer. By the end of 2017, we will have completed the geotechnical survey and gathered further metocean data. So consequently, we believe we've gathered all the required subsurface, seabed and surface data to adequately characterize the field in the manner in which we intend to develop it. As the diagram illustrates on the right, the S500 or lower reservoirs, which constitute around 30% to 40% of the overall resource base is contained with a much more confined area. Whereas the S400 lower reservoirs extend over a much larger area, and that in itself also leads to the phased approach.
On to the reservoir and oil quality. So as you're aware, this year, we've completed 3 further reservoir penetrations of the SNE field during 2017, the VR-1, which also had an exploration component to it; the SNE-5 and the SNE-6 wells, and the latter 2 were drilled with the specific purpose of interference testing in a more complex upper S400 reservoirs. The results demonstrated connectivity in a clearly preferred north-south orientation along the so-called described sediment waves, which is entirely consistent with our geological model. More limited communication was evident over several kilometers in the east-west direction based on pressure monitoring and limited perturbation at the SNE-3 and 4 wells. Our independent resource estimates have also increased by almost 20% at the 2C level. All of this increases within the S400 reservoirs, and a significant proportion is in the northern part of the field. Both the S500 and the S400 reservoirs will be developed by water flooding.
And in terms of the oil, the low viscosity, light nature 32 API and low sulfur less than 1% leads us to believe that we will attract international markets and good pricing probably close to parity to Brent.
Finally, in terms of the time line. So our time line remains on track with previous guidance. We now have Woodside working very closely with us. And we aim to finalize the evaluation report, commence front-end engineering and design in 2018 and submit the exploitation plan with the aim of taking a final investment decision on the first phase of the development by the end of next year. Once we have better definition of the development plan, but particularly the selected contractors, we will be positioned to reassess the first oil window. But at this stage, it remains 2021 to 2023. Clearly, we are motivated to achieve first oil earlier rather than later.
We move on to our North Sea projects, Kraken and Catcher. As Simon mentioned, both projects are making steady progress. Firstly, on Kraken, we were pleased to reach the first oil milestone towards the end of the second quarter, following the hookup of the FPSO. And during this quarter, we've been testing the wells and commissioning the first processing train. The well is tested to date predominantly from Drill Center 1, performed as per our expectation, with a range of individual well capacities up to 10,000 barrels of oil a day. The hydraulic submersible pumps and the subsea production system are functioning as per design. We aim to produce multiple wells through the first train. And we'd anticipate that during the remainder of 2017, we'll ramp-up production in a staged manner. There have been some normal commissioning challenges, which both the operator and the FPSO contractor are working to resolve. And we're confident that we'll be a plateau rate during 2018 when further wells will be added from Drill Centers 2, 3 and potentially 4.
On Catcher, as Simon said and as the picture showed, the FPSO is essentially mechanically complete and undergoing final commissioning in Singapore. We'd anticipate that it will depart from North West Europe imminently. 12 wells have been drilled, and drilling continues on Catcher, Burgman and Varadero accumulations, with expectations in terms of deliverability above what we'd previously assumed. We remain on track for hookup on first oil by the end of the year. But we'd anticipate a similar period of ramp-up on Catcher as we've seen and anticipate on Kraken and a similar level of plateau production rate of 50,000 barrels of oil a day, 10,000 net to Cairn, although the opportunity to increase that further following some of the well results is under investigation and reviewed by the operator. So both projects in the North Sea are progressing well. We're very happy to have concluded appraisal in SNE. And at this point, it's appropriate to hand over to Eric to talk you through the exploration.
------------------------------
Eric Hathon, Cairn Energy plc - Director of Exploration [4]
------------------------------
Thank you, Paul, and good morning, everyone. Well, it's been about 5 months since I assumed the role of Exploration Director at Cairn. And I have to say, I'm really pleased I've joined an outstanding team. So this morning, I want to talk a little bit about our significant success we've had in Senegal and elsewhere as well as our growing set of additional exploration opportunities we're adding to the portfolio. We have a number of diverse plays in a variety of water depths across the risk spectrum. We have acreage in mature basins, which are the basins that are lower risk, typically deliver very solid return projects and often have shorter cycle time. We're also focused in emerging basins, which have this great balance between risk and reward and often have significant running room you can exploit with success. And then finally, frontier basins, which while higher risk, they offer that opportunity for world-class discoveries and the returns are often commensurate with that risk. And Senegal is a great example where Cairn took a basin that was a frontier basin and has moved it to an emerging basin. So what I'll tell you is how vital it is that we create a portfolio of opportunities across that broad spectrum of risk and reward in order to maximize the chance of commercial success. And what we have is a rigorous criteria of evaluation and a proven workflow, and I'll think you'll see that from our upcoming opportunities, which should build the portfolio, which will deliver impact value for our shareholders. Look, in the current environment, you cannot just drill acceptable projects. We must focus on the very best projects, which, in aggregate, will deliver material returns over time. And remember, we cannot rely on any one prospect to deliver value. It's a portfolio of opportunities which will generate success. So we've had a very active 2017, exciting program coming up ahead. I'll just walk you through that briefly.
First of all, in Senegal, as you've heard, we just completed our third phase of drilling, including a significant exploration program. And again, I want to emphasize, every well was delivered under time, under budget and safely. It's an outstanding accomplishment. So the VR-1 well, we tested the carbonate play directly under the SNE field. We did it very economically on what we call a tail to an appraisal well, as Paul said. And while it was not commercially successful, we did recover oil, and we learned a lot of important information. The FAN south well, we returned to the basinal play, which was discovered by the FAN-1 well. Again, we found oil, but the net pay in that reservoir were not quite up to our expectations. And finally, the last well in the program was SNE North, which had the most significant result being a separate accumulation that found oil below the oil-water contact in SNE field. And that will set us up for opportunities in the future.
So what's next in Senegal? It's certainly very mature from an exploration standpoint, but believe me, there are still more to be done. And Cairn will continue to operate the exploration phase here doing what we do best. So the SNE North result demonstrates additional potential north of the well and deeper than the current oil-water contact in the field, and we are currently evaluating future appraisal options there. The results from the FAN and FAN South discoveries in the basinal area are being integrated together. And we're again looking at appraisal options there and the potential for commerciality. And finally, the Rufisque offshore and Sangomar offshore blocks, which are here and here, have potential to be significant value generators because they're in shallow water, and we're working towards drilling decisions there in 2018. And the Capitaine prospect, you can see right here, is currently the most promising. And we continue to evaluate maturities on newly reprocessed seismic data.
Now we'll move away from Senegal to one of our frontier areas in Ireland. Ireland is an area where we built a significant acreage position through both bid rounds and farm-ins and right now, we're participating in the 53/6 well with Providence as operator in the 2/14 concession. We've already drilled through the Druid target in this well, and while we found good high-quality reservoir, it was water wet. And we're currently drilling down towards the Drombeg target, and we'll have those results in the days ahead. Look, what I really like about this position and what it demonstrates about our strategy is, we built a large exploration position, we have multiple play types to exploit and we have the ability to quickly follow-up on exploration results whether they're ours or somebody else's. And again, the fiscal terms are commensurate with the risk. And that really defines our approach to frontier exploration.
Now we'll move to U.K., Norway. And here, as Simon said, we built a very strong portfolio of prospects. We've honed this basket of opportunities and really gotten it down to where we have a number of attractive targets to chase. And as he said, we plan to participate in up to 10 wells through 2019, including 2 wells this year here in the Norwegian North Sea, one called Tethys, and one called Raudåsen. So we're starting in the second half of this year. And again, subject to partner approval, we'll have drilled up to 10 wells, targeting over 1 billion barrels of gross unrisked resource. Again, this demonstrates our strategy. We grow in a region, we core up our acreage, we mature our evaluations, we drill the very best prospects and then we're positioned for follow-on success. Tethys is a good example. If that well is successful, we have over 250 million barrels of gross unrisked resource to chase in acreage we control in the immediate vicinity. And we continue to consolidate our position in U.K. and Norway, both in terms of improving our working interest position and gaining operatorship. And some of that will become apparent in the weeks and months ahead.
And finally, I'm going to come to something I'm really excited about, which is our latest new country entry into the offshore Sureste basin, offshore Mexico. And this geology reminds me of when I worked in the U.S. Gulf of Mexico over 20 years ago, where once again, you're seeing very large structures which have direct hydrocarbon indicators on them as defined by seismic. And in fact, we're already seeing companies that are replicating the success we're seeing in the U.S. portion of the Gulf here in Mexico. And our congratulations go out to Premier and their partners for the Zama discovery. So in the latest bid round, we captured 2 blocks, Block 7 and Block 9 with our partners, Eni and Citla. Eni is already an operator in Mexico and Citla is a Mexican-focused exploration company. And we're very excited to be working with both of them. It was our excellent technical work which identified this potential ahead of the drilling of the Zama well. So really, the results of that world-class discovery simply add further validation to our evaluation efforts. So the Zama well is here, and you can see just off the eastern border of our Block 9. And as Simon said, Mexico will be one of the cornerstones of our exploration portfolio going forward.
So I hope I've given you a snapshot of our success this year on what I think are our really exciting plans for exploration in the years to come. We continue to grow our portfolio across the risk spectrum, and in aggregate, that should continue to deliver consistent success. And in addition, this outstanding team of people continue to evaluate new opportunities globally, which fit our rigorous criteria, our critical success factors and should add more high-value impact opportunities to our portfolio.
And with that, I'll turn back over to Simon for the conclusion.
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [5]
------------------------------
Okay. Thanks, Eric. So in summary, as you've seen and as you've heard, Cairn continues to offer significant activity and catalyst across the portfolio in the near term. We're looking forward to having Catcher and Kraken producing a plateau production of 25,000 barrels a day in 2018, and they're on track to do that. We're looking forward to the FID of Skarfjell in the first part of 2018 and to the FID of the SNE field in the end of 2018. And as I said, together, those projects offer continuous, sustainable cash flow generation for Cairn leading out a number of years.
And on the exploration side, as you just heard from Eric, we remain very excited about what we built in the portfolio. Great results of Ireland, and we look forward to progressing other plays and prospects in our Irish acreage position. We're looking forward to an extensive and enlarged U.K., Norway drilling program over the next 2 years. We believe that we'll be able to add more prospectivity in Senegal. Mexico is obviously very exciting. And in addition, there are number of new venture opportunities that we're actively considering to add into the portfolio, provided they meet our investment criteria. As a management team, we remain absolutely focused on these 3 pillars, and really all they're doing is supporting our ambition to create, add and realize value for shareholders against that backdrop of financial flexibility and disciplined capital allocation. Thank you.
That's the end of the presentation. Now I'd like to hand over for any questions.
==============================
Questions and Answers
------------------------------
Nathan Piper, RBC Capital Markets, LLC, Research Division - Analyst [1]
------------------------------
Nathan Piper from RBC. I've got 3 questions, please. Just on the SNE development, you're obviously focused on the higher-quality lower reservoirs, and -- does that reflect the level of confidence you have in those reservoirs? Or put the other way, are you not fully convinced of the potential of the upper reservoirs? Or is it just sensible capital management? On Mexico, I guess, typically, E&P companies try and get in before everyone else wakes up. But you did bid the highest amount to get into Mexico. Now does that underline your confidence in Mexico or the need to add opportunities? And then lastly, I mean, I guess, you're going at it a few different ways, but could you provide 2018 production guidance, please?
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [2]
------------------------------
Sure. So let me answer the Mexico point first, and then maybe hand over to Paul on SNE and then to James on production guidance. Yes -- look, on Mexico, we're obviously very pleased to have got that acreage. As you say, it was a very competitive program. We bid what we believe was appropriate to win those blocks. That acreage for us works at $50 a barrel. Everything has to be stress tested for us at $50 a barrel. So we're entirely happy with the amount that we bid to secure that acreage. And I think if we hadn't come away, that acreage would've been very disappointed. We see tremendous upside in that. And indeed, we will be looking more in terms of Mexican opportunities to build a larger position if we're able to do so.
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [3]
------------------------------
Yes. On SNE, basically there's a number of factors that are playing into our mind in terms of capital allocation, physical location of the reservoirs and how they stack versus each other and the distribution of oil. And I guess it just makes a lot of sense to go with a focus, but not an exclusive focus on the 500 reservoirs with a component of the 400. And on every field we learn from performance. And Kraken and Catcher are, indeed, some of the large fields in Brazil are being developed in a phased manner, so we think this is pretty consistent with the approach the industry is taking. There'll be good wells and bad wells on every field, and I'm sure SNE will be no different. In terms of the production guidance, I think we've basically said we expect both fields to be on production plateau. So by the end of 2018, we should hit the numbers that were outlined, the 25,000.
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [4]
------------------------------
James?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [5]
------------------------------
Yes. I mean, we would expect that to be for the second half. So I mean, Kraken is clearly in -- still in the relatively early stages of commissioning and ramp-up, but we'd expect that to be complete in the next 2 quarters. So in the early part of 2018, our expectation is that will be a capacity production. If, as planned, Catcher is on stream towards the back-end of this year, then it'll be ramped-up during Q1 and Q2 of next year. So the second half should be capacity production.
------------------------------
Nathan Piper, RBC Capital Markets, LLC, Research Division - Analyst [6]
------------------------------
That's clear. One final clarification on SNE. So have you any indication of timing of further phases?
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [7]
------------------------------
Yes, I guess that will be set out in the exploitation plan. We would anticipate that's probably going to be several years between phases. But that's all being worked as we speak now, Nathan.
------------------------------
Stephane Guy Patrick Foucaud, GMP Securities L.P., Research Division - MD of Institutional Research [8]
------------------------------
Stephane Foucaud from GMP FirstEnergy. On SNE, the production range is quite large, 75 to 125. What's behind the range? Is it FPSO selection or something else? Then following the interference test, again at SNE, what sort of recovery factor are being assumed for the upper sands and lower sands? And lastly, on Kraken, you mentioned some commissioning challenges. Could you perhaps provide a bit more details, please?
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [9]
------------------------------
Yes. So maybe Paul can take the second 2 points. On the first point, yes, absolutely it's to provide us with the widest possible opportunity in terms of FPSO selection. As Paul mentioned, there are potential redeployment opportunities within that. What we need to assess is the balance of production capacity, storage capacity, cost and timing. So all of those coming together. So the wider range gives us the maximum possible choice in that. Paul, the other 2 questions?
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [10]
------------------------------
Yes. So on the other recovery factors, nothing has really significantly changed. So the recovery factors in the lower reservoirs are in the 30% range, 30% to 40%. And the recovery factors, as we've explained to another analyst, is really in the lower -- in the upper reservoirs is in the sort of 20s. But we've got to make sure that we contemplate that in terms of where the wells are drilled because obviously, the oil in the 400 series expands over a large area and there are sort of feather edges that need to be considered where probably development drilling wouldn't take place or directly under the gas cap. So against then that recovery factor is applied across the areas that are drilled up in phases of development. And so I think when you see some of the other numbers that may be reported in terms of recovery factors, it may be lower than the 20s, but that's when it's applied to the whole field.
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [11]
------------------------------
And then on Kraken?
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [12]
------------------------------
And then on Kraken. Yes, just a number of sort of normal challenges with heavy crude, so we're getting heat into the systems, stability of the plant, controls, but we believe that the operator and the FPSO contractor are doing all the things that they should we doing at this stage and bringing things forward and resolving those problems.
------------------------------
Robin Alfred Haworth, Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst [13]
------------------------------
Robin Haworth from Stifel. Just a question on SNE development again. You mentioned the $12 barrel full-cycle development cost. Can we assume that's for Phase 1 only? What do you think of -- I mean, I realize it's early days, but what do you think Phase 2 might look like? And just on the sort of follow-up to Nathan's point. The midpoint of production looks quite aggressively high on the reserves base, the 240 million reserves base. Do you think -- how do you feel -- think about the incremental production in terms of filling the pipe when that starts to decline after a few years? So does that become more of a necessity rather than an option?
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [14]
------------------------------
First point, James?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [15]
------------------------------
Yes. I mean, on development costs, the guidance was for a full-cycle development cost, although all phases fulfill development cost, although actually it's pretty similar across 3 phases. Clearly, in the first way -- in the first phase, the wells may be simpler. But you probably got more subsea infrastructure in there in the first phase. So actually $12 a barrel across the 3 phases would be pretty similar. And that's -- across the piece, it's roughly perhaps 60%, 2/3 drilling costs, and the rest, obviously, we're assuming that it's at least FPSO.
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [16]
------------------------------
On the target rate. Obviously, I think, as Simon said, we're trying to flush out really all the opportunities, particularly redeployment, but also get a better understanding of even on conversions what the cost structure is going to be like from the low end to the high end. If we take a midrange, as you've suggested, it's actually quite reasonable for an offshore field with good deliverability from the higher capacity wells. We would anticipate -- I mean, most fields have more wells drilled on than they originally anticipate as new opportunities emerge, but we would anticipate there would be further drilling on SNE within a couple of years after the first phase of investment. And indeed, the purpose of that would be obviously to maintain a plateau.
------------------------------
Rafal Gutaj, BofA Merrill Lynch, Research Division - VP [17]
------------------------------
It's Rafal Gutaj here from Bank of America Merrill Lynch. I just had a question on financing on Phase 1 and how you're thinking about that in terms of milestones and whether that would be done at a joint venture level? Or whether that would be done at a Cairn level?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [18]
------------------------------
In terms of milestones, I mean, we're commencing work now, really, in parallel with the exploitation plan such that the 2 will be ready together. So the idea is, we're submitting the exploitation plan to the government by the middle of next year for their approval and the financing work will continue in the same time frame and, therefore, will be ready for FID decision at the back end of next year. And -- I'm sorry, I forgot the second part of the question?
------------------------------
Rafal Gutaj, BofA Merrill Lynch, Research Division - VP [19]
------------------------------
Just an understanding of kind of A, the quantum and the timing of securing that. I guess...
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [20]
------------------------------
In terms of quantum, as I said, from a desktop exercises that we're 50% leverage is a pretty conservative estimate. And that's what's the basis of the numbers I gave. Of course, we're getting now into the reality of working with bank engineers and the projects and so on. And so we'll update as that progresses. But that's a reasonably conservative assumption for now. And in terms of the structure, look, it's early days. We'll investigate both.
------------------------------
Rafal Gutaj, BofA Merrill Lynch, Research Division - VP [21]
------------------------------
In terms of whether doing it at the JV level?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [22]
------------------------------
Yes.
------------------------------
Mark Wilson, [23]
------------------------------
I'm Mark Wilson from Citi. A couple of questions. Just firstly, picked up on a couple of points that James made on numbers. So the equity check for SNE, your current equity stake is quite high, you say $150 million per annum for a few years, which will starve the business of cash to allocate to other projects. So I'm just wondering to your point around maximizing returns, to selling now, you're seeing undeveloped resources not going for full value in the market. So what are you thinking around the timing on selling down? Do you think you can really maximize returns by selling down now? Or do you have to stay in through development to maximize the full value of SNE? And then secondly, on Skarfjell. What's the kind of equity check to Cairn on Skarfjell, because that's how cleared another near-term capital commitment for the company?
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [24]
------------------------------
Just on the first point, there's no intention of selling down now, just to be very clear. We -- I mean, everything in the company is for sale at the right time and at the right place -- price. But I think we want to ensure the flexibility such that if there is the right kind of situation and maybe it's beyond FID or whatever else, then we're in a position where we can sit across the table with somebody and say we can afford to do this and they know that we can. And therefore, we're negotiating from a position of strength. You're right, I mean, the end result of that would be in the event that we stayed in the current equity level, absent doing anything else in the portfolio, then there wouldn't be a lot of spare cash elsewhere. But that's not a bad problem to have. I mean, James, is there anything you want to add to that?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [25]
------------------------------
Yes. I mean, I think probably to say that the business will be starved of cash is not how we would put it. But you're right, it would be a heavy allocation towards development spend in, say, 2019 and 2020, particularly alongside Skarfjell. But as you've outlined, I think even with the oil price in the mid-50s, we know where the forecast is sitting, it should be deliverable out of North Sea production. And in terms of Skarfjell, working towards FID in the early part of next year, we haven't given specific CapEx guidance, but it's a subsea tieback to a host platform [on Yur] So you typically expect that to be in the mid- to low-teens dollar per barrel barebacks. It's roughly 100 million barrel field, 20% of that net to us to gives you some broad guidance.
------------------------------
Mark Wilson, [26]
------------------------------
And just a quick follow-up just on Kraken, what discount should we assume in our models for the selling of the crude?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [27]
------------------------------
Yes. So I think we -- full field guidance, we assume something in the region of the 10% discount to Brent. Obviously, it's a new creed coming to market in a typical way. It may well be that that's a slightly deeper discount for the first few cargoes. But over the life of -- as we ramp-up to full production and get that marketing underway, we work on the basis of about a 10% discount.
------------------------------
Malcolm Graham-Wood, VSA Capital Limited, Research Division [28]
------------------------------
Malcolm Graham-Wood from HydroCarbon Capital. Clearly, arbitration is not something which is sort of a good word in the Cad Camp from the old days or from India. So I was just wondering what you think that the arbitration process is going to go any minute now, I guess, on Senegal? Is it going to make any effect to your position there or as the operator, which is going to carry on as normal depending on whose -- who you'll be working with in the future?
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [29]
------------------------------
Well, I mean, I don't think we have any comments on somebody else's arbitration. I mean, obviously, we're working within the joint venture that we have. We have transfer of operatorship plans that we're progressing. We have transition plans that we're progressing. The joint venture, actually together, are progressing those plans. It's not holding up the development in any way. So we'll just keep doing what we're doing.
------------------------------
Malcolm Graham-Wood, VSA Capital Limited, Research Division [30]
------------------------------
Could you give me a bit of color on the cost side of things for SNE? I'm thinking specifically with regards to the well cost. You're saying about 60% of the total costs are well costs. You've had very good drilling performance with the program to date, and rig rates are pretty much in the toilet. So have you factored -- how much of that you've factored into your CapEx guidance today as it stands? And a couple of other quick ones, if I could just be absolutely clear. For future phases of CNE Development, are we talking about extending the plateau on whatever FPSO you choose to put in? Or are additional FPSOs something you're considering? And third one is just on the 25 wells that you've spoken about for Phase 1 could you help us understand roughly what the split might be between producers and injectors? And should we be thinking producer-injector pairs where you have one oil producer for one water injector and a couple of gas injectors on that?
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [31]
------------------------------
Okay. So combination of Paul and James, I guess costings and wells.
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [32]
------------------------------
So on the first part of the question, on the development spend. We certainly haven't captured the full extent of the current contracting environment. So the rig rates that we've enjoyed in the last campaign in Senegal, we don't project those as being sustainable forever. We take a more cautious view than that. But clearly, the opportunity for us is to, as we take this to FID, try to capture as much of the current contracting environment as we can and tie it in for the development phase. In terms of actual well cost, as I said, this is our $12 a barrel guidances as we're going into the exploitation plan. And clearly, over the next 9 months, we'll be doing much more detailed well design so we can give more detailed guidance as that progresses.
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [33]
------------------------------
Yes. A couple of things, I guess, to address here. The plateau rate, obviously, we would anticipate to further investment would continue that plateau rate. And obviously, depending on performance, the FPSOs have been hooked up to field and they outperformed, inevitably go through a sort of debottlenecking process to squeeze out additional barrels through the process nameplate capacity. And indeed, to some degree, that's what we're looking at on Catcher as we speak. And we also have to consider future tiebacks and whether we would make a preinvestment or a postinvestment related to them in terms of FAN, SNE North that Eric talked about. And then just on well cost. I mean, obviously, we have been encouraged by the performance. And that's actually, I guess, one of the drivers why we're keen to move forward at pace is, there's an opportunity in the market over the next 1 to 2 years to obviously secure good contract structures, good contractors and give them what will be a pretty sizable drilling program spanning over several years. So I guess we're quietly encouraged as to what we may be able to achieve on drilling and completion of the development wells.
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [34]
------------------------------
Question here?
------------------------------
Unidentified Analyst, [35]
------------------------------
Can I just chance my arm and just say can you give us any indication in percentage terms of how much above current market rig rates, well costs have you on to determine you're factoring into your budget?
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [36]
------------------------------
Well...
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [37]
------------------------------
I think given the stage of the cost estimates, there are a number of similar variables in those estimates at the moment. So I wouldn't want to guide you to suggest that there was x percent potential upside in those estimates at this point because there's lots of other variables as well. And we'll update as the cost estimates become more defined.
------------------------------
Unidentified Analyst, [38]
------------------------------
Just had a question. First of all, going back to Catcher and Kraken and your production guidance for next year. Just wanted to get a sense of your confidence level or maybe what other are the kind of the key risks of achieving that plateau production in the middle of next year? And on the other side of that, if you can kind of give some more specific guidance in terms of what's the total CapEx that's expected in 2018 for Catcher and Kraken? The second question's on the exploration portfolio. So it sounds like you've got a number of wells planned in the next kind of 6 to 12 months. Just wondering if you could kind of give a bit more detail around some of the key prospects that your drilling over the next 12 months and some of the prospect sizes of those?
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [39]
------------------------------
Maybe, Eric, you can do the exploration point first. I mean, probably some of that relates to U.K., Norway where there's a selection process ongoing at the minute, so it's hard to actually tie down the specific prospects. But Eric?
------------------------------
Eric Hathon, Cairn Energy plc - Director of Exploration [40]
------------------------------
Yes. I think the key elements to focus on, for instance, the 2 wells, Tethys and Raudåsen, will drill in the back half of this year. Tethys is a significant size prospect. It's just shy of 100 million barrels. But the key element there is that we control the acreage all around it. So with success, as I said, we would be looking at in excess of 250 million barrels of total resource to target. Raudåsen is similar. That's a smaller target. But again, we have acreage all around it. So individual prospects are one thing, but controlling the opportunities around them and building with success is the key driver. And as Simon said, we'll update you on the actual programs as we move forward as that always depends in U.K. and Norway with partner approval. But as I said, on -- in aggregate, on average, there'd be 10 wells, 1.2 billion. We're looking at an average of 125 million per prospect. That doesn't focus on any particular one, but again, you have to drill a portfolio of opportunities. So that's what we're focused on.
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [41]
------------------------------
And Catcher and Kraken?
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [42]
------------------------------
Catcher and Kraken, yes. Catcher, obviously, we hope that in the coming weeks the FPSO will leave Singapore for the North West Europe. Obviously, we are a little bit dependent on the weather in terms of hookup. But obviously, if it departs imminently, then we've got a sort of 40- to 50-day sail, which is what we saw on Kraken. And obviously, the (inaudible) of the boy is a sort of critical phase. But that actually went pretty well. It's the same design on Kraken as per Catcher. And thereafter, we'd anticipate a similar sort of buildup period of production over a sort of 6-month period on Catcher to take you to sort of through the middle of next year and hitting a plateau there. On Kraken, I think it's fair to say, it is fairly complex, integrated production system incorporating seawater lift and treatment and water injection in the hydraulic submersible pumps with their associated heated power fluid, getting that fully commissioned over the next couple of months is probably the critical aspect.
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [43]
------------------------------
And on CapEx, for the next year, we're not giving specific guidance on that at the moment. We will, and the normal course of events is we go through the budgeting process and the joint venture during the next couple of months, and we'll provide specific guidance with the year-end. But as I said, on an ongoing basis, a fair assumption if you're modeling this out, is that ongoing investment annually of about $150 million a year into the releasing asset base next year that will be principally ongoing drilling in Catcher and Kraken. And then in 2019, our expectation of that would be principally in Skarfjell as that moves into development phase.
------------------------------
David Mirzai, Deutsche Bank AG, Research Division - Research Analyst [44]
------------------------------
David Mirzai, Deutsche. Three quick questions. First, Paul, I imagine, in terms of Kraken, when are you expecting your first lift? And you've been producing for 8 weeks now, what type of lift in size have you arranged? And when would you expect the first one? I suppose second one to James. Really, you talked about financial flexibility. Financial flexibility when you have no cash flow, when you have no production, obviously means one thing. What type of debt leverage to you think about when you talk about financial flexibility? Can we expect 25,000 barrels a day in 2018? And then just lastly, I suppose a group question, really around the exploration side. Has the board actually sat down and looked at the issue? Does the board need more role? Should we really be going into new jurisdictions? I can appreciate going into existing areas where you already have production, where other people already have production, I mean, you can bring down costs by tying back and new discoveries there. But going into new frontier areas. Are you really sure that these will be developed in 5, 10 years down the line?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [45]
------------------------------
Let me take the last one. Yes, I mean, the board sits down obviously on a regular basis. But in addition, we have a strategic challenge session every year, and we just had one in June. And of course, we look at all the variables across the sector. But the fact is, as an E&P company, I guess I've been there for 22 years now and been through a number of oil price cycles. A number of times when there's been twilight in the desert and a number of times when there hasn't been. And what we know is that actually demand has continued to increase over that period. And I think what our shareholders expect us to do is to do what we've been successful at in the past, which is continue to use our operating skill sets and try and create value with the drill bit and then monetize that value at the right time. So from our perspective, notwithstanding all the macroenvironments, I think, actually, we believe this is a good time for further investment in terms of the -- a point in the cycle. And that's why we're working very hard to pick up additional exploration opportunities where we can, provided that they work, of course, in the current oil price environment. And that's a challenging thing to do because a number of other people doing exactly the same thing. So that's the first point.
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [46]
------------------------------
Yes. The second one, I guess, simply -- obviously, we don't give out lift in guidance, but we would anticipate the first lead lifting would take place in this quarter. EnQuest marketing crude separately from ourselves, and we would then follow.
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [47]
------------------------------
On financial flexibility and what of long-term sort of leverage, I mean, we -- I certainly don't think of leverage in terms of an EBITDA multiple. I think that's been an unhappy target for others through a cyclical industry. We tend to think of it really in terms of project financing. So as I said in the guidance, in terms of the existing facilities for the North Sea, we expect capacity there to peak at $350 million to $400 million during next year once they're both fully onstream and that's a healthy debt capacity for those projects. Clearly, as we move into Senegal financing, we expect that we'd be able to finance at least 50% of that with debt. So that would, for a period of time, increase the leverage. But in terms of the shape of the Senegal cash flows, they're quite front-ended, so we'd expect to pay that down once it's onstream.
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [48]
------------------------------
One last question, and we'll probably need to wind up.
------------------------------
James Alastair Carmichael, Peel Hunt LLP, Research Division - Analyst [49]
------------------------------
James Carmichael from Peel Hunt. Just 2 quick ones. On the preference of debt structure, you've obviously got an RBL placed already, just thinking about whether you would look to bring another RBL in for Senegal or potentially some other structure? And then just wondering whether any of the additional phases of SNE are dependent on the integration of the SNE North resources or any further E&A success?
------------------------------
James Donald Smith, Cairn Energy plc - CFO & Executive Director [50]
------------------------------
In terms of Senegal financing, I mean, I think there we'll look at the number of pools of capital, but it's likely that a chunk of that is going to be something that looks like an RBL financing, yes. Whether there are other pools, export credit agencies and so on that we think we can tap, which we expect to be able to, those would really be structured probably around the traditional bank facility for this kind of project, yes.
------------------------------
Paul Joseph Mayland, Cairn Energy plc - COO [51]
------------------------------
Yes. So the exploitation plan will cover not just SNE, but the area and discoveries that we want to retain. And so there probably will indeed be future phases associated with SNE North and FAN, for example, where they're tied back to the main production center.
------------------------------
Simon John Thomson, Cairn Energy plc - CEO & Executive Director [52]
------------------------------
Okay. I think that brings us to an end. Thanks very much. Thanks for your time.
------------------------------
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.
------------------------------