Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Q3 2011 Earnings Presentation
30 slides from Dno Asa Class A's earnings presentation, Nov 9, 2011
Slide 1: Q3 2011 Presentation
9 November 2011 Q3 2011 Presentation
Slide 2: Agenda
Agenda 1. Welcome Tom Bratlie, Communication Director 2. Highlights and operational update Helge Eide, Managing Director 3. Financials Haakon Sandborg, CFO 4. Q&A
Slide 3: Highlights and Operational Update
Highlights and Operational Update Helge Eide, Managing Director
Slide 4: Improved results and strengthened financial position
Year to Date - Third quarter 2011 Improved results and strengthened financial position • Increased reserves and production • Working interest production of 41,755 bopd • 2P reserves of 354 million barrels (as of 1 July) • Solid financials results • Sales of NOK 1,166 million • EBITDA of NOK 756 mill
Slide 5: Quarterly production volumes 2010-2011
Quarterly production volumes 2010-2011 60,000 48,582 50,000 39,945 40,000 36,773 30,000 24,956 20,000 WI Bopd 15,748 16,252 12,442 10,000 0 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 5
Slide 6: Production YTD 2011 compared with 2010
Production YTD 2011 compared with 2010 YTD 2010 YTD 2011 40,000 36,524 35,000 30,000 25,000 20,000 15,000 10,852 10,000 6,909 WI Bopd 5,231 5,000 0 Kurdistan Yemen 6
Slide 7: Financial results YTD 2011 compared 2010
Financial results YTD 2011 compared 2010 YTD 2010 YTD 2011 2,500 1,969 2,000 1,500 1,166 950 936 1,000 672 450 500 NOK million 240 -252 0 Revenues Netback Net profit Cash position -500 7
Slide 8: Operations
Operations
Slide 9: Yemen operations
Yemen operations • Q3 production lower than plan due to temporary shut-in of 3 wells – work-overs now in progress • Yaalen/Sharnah development further delayed with current estimated first oil Q2 2013 • Three infill/development wells postponed to 2012 • Continuing negotiations for Block 48 and pursui
Slide 10: Kurdistan Production
Kurdistan Production • Gross capacity at Tawke facilities proved above 70,000 bopd • Q3 gross production was 52,235 bopd – 49,753 bopd for export 80,000 70,000 60,000 50,000 40,000 66,776 Bopd 30,000 From April 2011, the Tawke WI production is estimated 20,000 to vary between 62% and 64% over field
Slide 11: Kurdistan Exploration and Development
Kurdistan Exploration and Development Tawke PSC • Peshkabir-1 exploration well in progress • Planning Tawke-16 appraisal well to test additional potential at the northern flank (commencement after Summail-1 testing) Dohuk PSC • Summail-1 exploration well drilled to total well depth of 3,640 meter. C
Slide 12: Tunisia licenses
Tunisia licenses • DNO awarded license in Tunisia - the Fkirine prospecting permit • 2 years • 2,064 sq km • 200 km 2D seismic • 300 km seismic reprocessing • Increased Tunisia presence after DNO-RAK MENA Merger • RAK holds the Hammamet offshore license 12
Slide 13: DNO-RAK MENA merger: Diversification by adding new reserves and production
DNO-RAK MENA merger: Diversification by adding new reserves and production • 52 million boe in new 2P reserves to DNO • 7,000 boepd in immediate additional production outside Kurdistan and Yemen • Strong synergies expected from combining the two organizations = A stronger platform for future growth
Slide 14: A balanced portfolio
RAK MENA ASSETS: A balanced portfolio Portfolio of 8 blocks in well defined petroleum systems in Oman, the UAE and Tunisia Producing fields • Bukha & West Bukha, Block 8 offshore Oman Development • Saleh field, offshore UAE (re-development) • RAK B, offshore UAE Exploration • Block 30, onshore Oman
Slide 15: The enlarged DNO will be a stronger and more significant E&P player in the MENA region
The enlarged DNO will be a stronger and more significant E&P player in the MENA region Norway • Corporate head office in Oslo The Kurdistan Region of Iraq • Listed in Oslo • Local administration in Erbil • Operator of three licenses: Tawke (55%), Dohuk (40%), Erbil (40%) UK • UK Office DNO UK Ltd, i
Slide 16: DNO's ambition is to become a significant E&P company in the MENA region
DNO´s ambition is to become a significant E&P company in the MENA region 2012 Grow the company through aggressive 2011-2012: participation in Creating a larger, mergers, acquisitions more robust and and restructuring diversified MENA Further develop and focused E&P leverage on our 2011: company lead
Slide 17: Financials
Financials Haakon Sandborg, CFO
Slide 18: Financial summary Q3 2011
Financial summary Q3 2011 Accounting for Tawke Export Payments Quarterly key financials • First payment of USD 104 million recorded as revenues in Q2 NOK million Q3 2010 Q2 2011 Q3 2011 • Second payment of USD 60 million received in 800 September not recorded as revenue in Q3 700 600 Strong Cash Flo
Slide 19: Key financial indicators
Key financial indicators EBITDAX* margin EBITDAX* Netback* NOK million NOK million 90 % As reported Incl USD 60 million 700 As reported Incl USD 60 million 700 As reported Incl USD 60 million 83 % 80 % 600 600 77 % 72 % 500 500 70 % 400 400 60 % 300 300 50 % 200 200 40 % 100 100 33 % 30 % 0 0 Q3 201
Slide 20: Condensed income statement
Condensed income statement NOK million Q3 2011 Q2 2011 Q3 2010 YTD 2011 YTD 2010 Sales 152.4 732.0 406.6 1 165.7 949.8 Cost of goods sold -100.1 -300.7 -185.1 -541.0 -474.0 Gross profit 52.3 431.3 221.5 624.7 475.8 Dry well cost expensed 0.9 -24.1 3.1 -51.8 -8.0 Seismic and other exploration expense
Slide 21: Pro forma income statement including USD 60 million in Q3
Pro forma income statement including USD 60 million in Q3 Q3 2011 NOK million Q3 2011 Pro forma incl As reported USD 60 Pro forma figures million Sales 152.4 482.4 • Assuming USD 60 million included as revenues. Cost of goods sold -100.1 -209.1 • Lifting costs and DD&A for Gross profit 52.3 273.3 ex
Slide 22: Higher lifting costs per barrel in Q3
Higher lifting costs per barrel in Q3 Pro forma (incl export from Tawke) Total lifting costs Yemen Tawke Main Q3 items: 35 31.59 30 • Reduced production and increased costs in Yemen due to logistical 25 challenges 22.66 20 USD/bbl • Drop in export volumes from Tawke 17.03 19.45 15 • Group units cost
Slide 23: Net finance income in Q3
Net finance income in Q3 NOK Million 300 Main Q3 items: 250 • Gain on sale of DETNOR NOK 255 million 200 • Unrealized FX gain 150 NOK 72 million 100 50 0 -50 -100 Q1 2011 Q2 2011 Q3 2011 Financial Income Sale of shares Interest expense WPP FX 23
Slide 24: Strong cash flow – increasing cash balances
Strong cash flow – increasing cash balances Q3 2011 Year-to-date 2011 800 900 700 800 700 600 600 500 NOK million NOK million 500 400 400 300 300 200 200 100 100 0 0 From Taxes Paid Investing Financing Net Increase From Taxes Paid Investing Financing Net Increase Operations, in Cash Operations, in C
Slide 25: Investments – expecting NOK 2011 guidance
Investments – expecting NOK 500 million in 2011 2011 Guiding Planned investments Capex Exploration • Development CAPEX NOK 200 million 160 • Exploration NOK 250 million Contingent additional investments 140 • Development CAPEX NOK 400 million • Exploration NOK 20 million 120 YTD 2011 100 NOK million
Slide 26: Solid balance sheet
Solid balance sheet Assets Equity and liabilities Non-current assets Other current assets Cash Shareholders equity Non-current liabilities 6000 6000 5000 5000 Cash: NOK 1,969 million 4000 NOK million 4000 NOK million Net debt <0 3000 3000 2000 2000 Equity ratio: 43 per cent 1000 1000 0 0 Q3 2010 Q3
Slide 27: RAK MENA Assets
RAK MENA Assets Key financials RAK MENA assets Harmonized with DNO accounting principles Near-term plans USD million 2010 YTD Q2 2011 • Targeting accounting consolidation Sales 110 48.5 1 December, 2011 • Merger completion early January, Gross Profit 60 36 2012, following 2 month creditor notice per
Slide 28: Outlook
Outlook Production • Production from Tawke expected to continue at current levels • Stabilize Yemen production through work-over of existing wells • New production added from RAK MENA assets Appraisal and development • Finalize Erbil PSC development plan by year-end • Commence drilling of Tawke-16 a
Slide 29: Welcome back February 2012
Welcome back 15 February 2012
Slide 30: Disclaimer
Disclaimer This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections abo