Dno Asa Class A · OSL:DNO
Dno Asa Class A — Q3 2006 Earnings Presentation
24 slides from Dno Asa Class A's earnings presentation, Nov 15, 2006
Slide 1: Third Quarter Interim Presentation 2006
THIRD QUARTER INTERIM PRESENTATION Helge Eide 2006 President and Managing Director Haakon Sandborg Chief Financial Officer
Slide 2: Disclaimer; Highlights YTD
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
Slide 3: Third Quarter Key Figures
NET ENTITLEMENT THIRD QUARTER KEY FIGURES Sales (NOK million) EBITDA (NOK million) Net Profit (NOK million) +23%* +78%* +4500%* * Change from Q3 2005 • Improvements in all key figures – despite increased exploration Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 4 NET ENTITLEMENT THIRD
Slide 4: Year to Date Key Figures
NET ENTITLEMENT YEAR TO DATE KEY FIGURES Sales (NOK million) EBITDA (NOK million) Net Profit (NOK million) +92%* +86%* -29%* * Change from YTD 2005 • 2006 highly influenced by increased exploration Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 6 NET ENTITLEMENT YEAR TO DATE KEY FIGURES
Slide 5: Reserve Development; Outstanding Reserve Economics
WORKING INTEREST RESERVE DEVELOPMENT WI Reserves P+P (MBOE) Strong organic reserve growth Last 21 months • Discoveries at Goliat (NCS) and Tawke (N. Iraq) adds 70 million barrels in P+P reserves (WI) to DNO Taw ke • Reserves have increased by 92 percent YTD Goliath • Reserves have increased by 400 p
Slide 6: Adding Reserves at Low Cost; Production Review
OPERATIONS ADDING RESERVES AT LOW COST FDA Cost (USD) Exploration performance • DNO has consistently delivered top quartile exploration performance • DNO adds considerable shareholder value through the drill bit • DNO's exploration driven strategy is more cost effective than an acqusition * 2006 Yea
Slide 7: Production; Yemen Assets
WORKING INTEREST PRODUCTION 2003 - 2006 Production (BOPD) 2006 Production (BOPD) Divested production 2004 – 2006 2006 • Slight annual growth • Q3: 13,978 BOPD • 2006 and onwards – production • Q3 YTD: 15,206 BOPD to be increased on the back of exploration success • YEE: 15,000 BOPD Copyright 2006 DN
Slide 8: Yemen Production Update; Tasour Area Status
YEMEN PRODUCTION UPDATE Production (WI) (BOPD) High margin production • YTD (9 months) production from Yemen increased by 13 percent • Nabrajah production below plan • Successful appraisal well at Tasour adds new production at beginning of September • Godah Field adds new production during 4Q 2006 C
Slide 9: Sharyoof and Nabrajah Areas Status and Planned Activities
SHARYOOF AREA STATUS AND PLANNED ACTIVITIES Prospective area close to Sharyoof Field Summary: • Sharyoof # 23 recently on stream at initial flow of 1,700 bopd (gross) • Bayoot SW #2 exporting oil at 300 – 600 bopd (trucking) • Further clean-up of the well flow is planned. • 3 tests are planned in He
Slide 10: The Glitne Field; Exploration Review
THE GLITNE FIELD PRODUCTION UPDATE Production (WI) (BOPD) Production update • Glitne (10%) has delivered 5 000 stable production during the 4 500 past few months 4 000 • New well on Glitne considered 3 500 in 2007 3 000 • Enoch (2%) production start in 2 500 Q1 2007 – adds 200 bopd net to 2 000 DNO
Slide 11: Yemen Continued High Drilling Activity; Northern Iraq Exploration Update
YEMEN CONTINUED HIGH DRILLING ACTIVITY Yemen drilling plan next 18 months - > 30 wells: • Operated by DNO • BL 32, 43, 44, 47, 72 • 12 Exploration wells • 12 appraisal / development wells • Operated by others • BL 53 • 6 exploration wells plus development wells (plan yet to be finalised) Copyright 2
Slide 12: Tawke Early Production Development
TAWKE EARLY PRODUCTION DEVELOPMENT Tawke Early Production Plan TAWKE CPF Plan is based on test production from Tawke # 1 / 1A, and Tawke # 2 Capacity of Pipeline and Central Processing Facilities ; 50,000 bopd First oil planned Q1 2007 Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 22 R
Slide 13: Norwegian Continental Shelf Strong Position; Barents Sea
NORWEGIAN CONTINENTAL SHELF STRONG POSITION Norway • DNO holds 24 licenses in Norway and 1 in UK (9 as Operator) • Relatively unexplored compared to the UKCS • DNO has secured rig capacity Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 24 NORWEGIAN CONTINENTAL SHELF BARENTS SEA Recovera
Slide 14: The Norwegian Sea; High Potential Prospects
NORWEGIAN CONTINENTAL SHELF THE NORWEGIAN SEA PL 263/263B Zita (30%) • One exploration well planned to commence in November 2006 (Norsk Hydro is Operator) • P50 unrisked prospect resource potential is approx. 200 million barrels – 60 million barrels to DNO Copyright 2006 DNO ASA November 15, 2006 Th
Slide 15: 18 Months Drilling Plan; Building Values
18 MONTHS DRILLING PLAN PARTICIPATE IN 40-50 WELLS STARTING MID YEAR 2006 Northern Europe Norway • 9 exploration/appraisal wells Middle East Northern Iraq • Continuous drilling with two rigs Yemen • Approx. 30 wells – of which 18 exploration wells Africa Syria • One well • 3 exploration / appraisal
Slide 16: Financial Review; Financial Summary
FINANCIAL REVIEW Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 30 ADDING VALUE THROUGH EXPLORATION FINANCIAL SUMMARY Quarterly Key Figures (NOK Million) Third Quarter • Revenue reduction on lower oil price, production and overlift in Q1/Q2 • Solid EBIT at NOK 88 million Year to Date •
Slide 17: Key Financials
FUNDING EXPLORATION THROUGH PRODUCTION KEY FINANCIALS Operating revenues (NOK Mill) Lifting cost (NOK Mill) Exploration cost (NOK Mill) EBIT (NOK Mill) Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 32 LAST TWELVE MONTHS ROLLING AVERAGE KEY FINANCIALS Operating revenues (NOK Mill) Lifti
Slide 18: Strong Pre-Tax Cash Flow; Key Figures
FINANCIAL SUMMARY STRONG PRE-TAX CASH FLOW Quarterly Key Figures (NOK Million) LTM Key Figures (NOK Million) Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 34 FINANCIAL SUMMARY KEY FIGURES Q3 2006 Q3 2005 YTD 2006 YTD 2005 Last 12M 2005 WI Production (mmboe) 1,286 1,350 4,181 3,828 5,70
Slide 19: Income Statement
FINANCIAL RESULTS INCOME STATEMENT Quarterly figures Third Quarter NOK Million Q3 06 Q2 06 Q1 06 Q4 05 Q3 05 Sales 283,7 359,0 415,1 242,6 229,5 Lower Sales : Cost of goods sold -98,3 -98,3 -122,0 -119,6 -107,5 • Lower oil price and Gross profit 185,4 260,6 293,1 123,0 122,0 production vs. Q2 • Corr
Slide 20: Exploration Activity; Exploration by Segment
FINANCIAL RESULTS EXPLORATION ACTIVITY Expensed and capitalized exploration (NOK Million) Broad Q3 Activity • Expensed NOK 82 million • NOK 32 million is related to seismic data investments • NOK 10 million in dry well costs Expensed • High G&G activity • NOK 37 million in capitalized exploration we
Slide 21: Capex by Segment; Capital Structure
FINANCIAL RESULTS CAPEX BY SEGMENT CAPEX split Q3 (NOK 259 Million) CAPEX per segment (NOK Million) Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 40 FINANCIAL RESULTS CAPITAL STRUCTURE Net interest bearing debt (NOK million) Balance Sheets (NOK Million) Copyright 2006 DNO ASA November
Slide 22: Results of Operations: Strong Post-Tax Cash Flow
RESULTS OF OPERATIONS STRONG POST-TAX CASH FLOW Quarterly figures Year to date Twelve months NOK Million Q3 06 Q2 06 Q1 06 Q4 05 Q3 05 2006 2005 LTM 2005 Sale of petroleum products 523,4 566,9 610,8 551,1 513,4 1 701,1 1 239,4 2 252,2 1 790,5 Lifting costs -56,3 -62,5 -79,2 -74,1 -72,3 -198,1 -168,9
Slide 23: Lifting Costs; Netback to Investment Coverage
RESULT OF OPERATIONS LIFTING COSTS Quarterly lifting cost (NOK million) Quarterly lifting cost (USD/bbl) • Lifting cost reduced by lower diesel • Lower production and cost reductions and leasing costs in Yemen Copyright 2006 DNO ASA November 15, 2006 Third Quarter 2006 44 RESULT OF OPERATIONS NETBAC
Slide 24: Summary & Outlook
THIRD QUARTER SUMMARY & OUTLOOK Strong YTD financials • Q3 results reflect lower oil price environment and effect of previous overlift • Strong growth in YTD revenue and operating profit High exploration activity • 92 percent organic reserve growth YTD • Funded by strong cash flow • High impact expl