Slide 1: Second Quarter 2007 Results Announcement
SECOND QUARTER 2007 RESULTS ANNOUNCEMENT Helge Eide Ivar Brandvold, COO, DNO ASA President and Managing Director, DNO ASA Chief Operating Officer, DNO ASA Haakon Sandborg Roar Tessem Chief Financial Officer, DNO ASA Managing Director, Det Norske Oljeselskap ASA
Slide 2: 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
Slide 3: Agenda
SECOND QUARTER 2007 AGENDA Summary and Key Events Helge Eide, President and MD, DNO ASA Operational Review: International Ivar Brandvold, COO, DNO ASA Operational Review: NCS Roar Tessem, MD, Det Norske Oljeselskap ASA Financial Review Haakon Sandborg, CFO, DNO ASA Closing Remarks and Q&A Building v
Slide 4: Summary and Key Events
SECOND QUARTER 2007 SUMMARY AND KEY EVENTS Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 4
Slide 5: Key Events – Operations
SECOND QUARTER 2007 KEY EVENTS – OPERATIONS Continued progressing Tawke development towards completion Commenced long term testing with oil being delivered to domestic market by tanker trucking Progressed remaining installations and commissioning of CPF and pipeline Confirmed new oil discovery at Ta
Slide 6: Key Financial Highlights
SECOND QUARTER 2007 KEY FINANCIAL HIGHLIGHTS Stronger financial results compared to 2006 Profit from operations was NOK 234 mill. in second quarter and NOK 235 mill. in first six months Net profit increased to NOK 123 mill. in second quarter and to NOK 142 mill. in first six months Netback increased
Slide 7: Production
SECOND QUARTER 2007 PRODUCTION Production last twelve months bbl/day Production last 12 months has been reasonably stable Increased production towards end of second quarter July production – 19,640 bopd 2007 exit production target of 26,000 bopd remains unchanged – subject to export of Tawke oil 200
Slide 8: Production: 2006 versus 2007
SECOND QUARTER 2007 PRODUCTION: 2006 VERSUS 2007 YTD production per segment Bopd Quarterly Production per segment Bopd 16 000 18 000 Block 32 Block 53 Block 43 NCS Kurdistan Block 32 Block 53 Block 43 NCS Kurdistan 16 000 14 000 14 000 12 000 14,780 12 000 10 000 12,841 15,831 10 000 8 000 12,758 8
Slide 9: Quarterly Key Financials
SECOND QUARTER 207 QUARTERLY KEY FINANCIALS Sales NOK million Net Back NOK million Net profit NOK million 123 75 Q2 2006 Q2 2007* * Including asset sales proceeds Net profit increased by 64 % to NOK 123 million Pre-tax expensed exploration costs were NOK 67 million Sale of NCS assets contributed wit
Slide 10: Year to Date Key Financials
SECOND QUARTER 207 YEAR TO DATE KEY FINANCIALS Sales NOK million Net Back NOK million Net profit NOK million 321 158 142 46 H1 2006 H1 2007* H1 2006 H1 2007* * Including asset sales proceeds Net profit increased by 208 % to NOK 142 million Pre-tax expensed exploration costs were NOK 225 million Copy
Slide 11: Revised 2007 Drilling Plan
SECOND QUARTER 2007 REVISED 2007 DRILLING PLAN Drilled Ongoing YEE Plan NCS Exploration wells 0 2 3 8 Appraisal & development wells 0 1 1 2 Subtotal NCS 0 3 4 10 Kurdistan Exploration wells 1 0 1 1 Appraisal & development wells 2 3 *) 11 **) 18 Subtotal Kurdistan 3 3 12 19 Yemen Exploration wells 4
Slide 12: Operational Review International
SECOND QUARTER 2007 OPERATIONAL REVIEW INTERNATIONAL Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 12
Slide 13: World Wide Portfolio
OPERATIONAL REVIEW WORLD WIDE PORTFOLIO 41 licenses in six countries on three continents 22 licences as Operatior NORTHERN EUROPE UK and Norway 28 Licenses (12 as Operator) Two producing assets Large exploration potential Minimized financial exposure from exploration MIDDLE EAST 11 Licenses (9 as Op
Slide 14: Yemen: Summary
OPERATIONAL REVIEW YEMEN: SUMMARY 13 exploration wells Operated by DNO BL 32: 3 wells - 0 completed NEW BL 52 BL 43: 3 wells - 1 completed BL 44: 2 wells - 1 completed BL 72: 2 wells - 1 completed BL 47: 1 well - 0 completed Operated by others BL 53: 2 wells - 1 completed bbl/day Production 12 appra
Slide 15: Yemen: Block 32
OPERATIONAL REVIEW YEMEN: BLOCK 32 Tasour Field Q2 2007 gross production - 7,400 bopd Test of Tasour #23 (deeper levels) is put on hold The current gross production is 6,500 bopd Godah Field Q2 2007 gross production - Production bbl/day 1,530 bopd Godah #5, #6 and #7 have been drilled and put on pro
Slide 16: Yemen: Block 43
OPERATIONAL REVIEW YEMEN: BLOCK 43 Nabrajah Field Status Q2 2007 gross production - 7,800 bopd Well Nabrajah #14 was drilled and put on production Drilling of Nabrajah #15 started and the well will be put on production in August The current gross production is 7,600 bopd Production bbl/day New targe
Slide 17: Yemen: Block 53
OPERATIONAL REVIEW YEMEN: BLOCK 53 Sharyoof Field Status Q2 2007 gross production was10,250 bopd, including oil from Bayoot/Hekma Re-completion of Sharyoof #6 and #20 has contributed to a significant increase in production Producing oil field The current gross production is Oil discovery wells 12,10
Slide 18: Yemen: Summary and Outlook
OPERATIONAL REVIEW YEMEN: SUMMARY AND OUTLOOK Yemen Assets YTD Summary 2007 Outlook New blocks; 52 and 84 both as Operator Guiding remains unchanged 4 exploration wells completed 7 additional exploration wells planned (no discoveries) - 3 currently in progress 3 additional development wells 9 succes
Slide 19: Kurdistan: Summary
OPERATIONAL REVIEW KURDISTAN: SUMMARY Iraq Commissioning activities undertaken at the Tawke installations Installed trucking facilities with max capacity of 35 000 bopd Extended test production from the upper reservoir started June 17th, delivering to the local market Started preparing the third rig
Slide 20: Kurdistan: Tawke Reservoir Update
OPERATIONAL REVIEW KURDISTAN: TAWKE RESERVOIR UPDATE Upper reservoir Schematic West - East profile over the Tawke structure Test production commenced late June – delivering 6,100 bopd in July Reservoir management strategy being prepared Lower reservoir Tawke #1 has been re- entered using the carrier
Slide 21: Kurdistan: Tawke Development
OPERATIONAL REVIEW KURDISTAN: TAWKE DEVELOPMENT Key Components Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 21
Slide 22: Kurdistan: Tawke Dev. Projects
OPERATIONAL REVIEW KURDISTAN: TAWKE DEV. PROJECTS Status Continued construction, hook-up and commissioning of central production facilities, pipeline and metering station Loading arms have been installed with a max capacity of 35 000 bopd Revised Milestones September: CPF ready for export November:
Slide 23: Kurdistan: Key Events
OPERATIONAL REVIEW KURDISTAN: KEY EVENTS Historic Key Events PSA signed Jun 2004 Interim Government Jul 2004 Iraq Constitution Agreed Aug 2005 Election to approve Constitution Dec 2005 New Iraqi Government, post Const. Apr 2006 Kurdistan Petroleum law Aug 2007 (Ratified by Kurdistan Parliament) Curr
Slide 24: Africa: Equatorial Guinea
OPERATIONAL REVIEW AFRICA: EQUATORIAL GUINEA Equatorial Guinea – Block P Plan of development submitted 12 August 2007 First DNO offshore development project in Africa Gross P50 resources is 33 Mbbl DNO share is 6.25 % Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 24
Slide 25: Africa: Mozambique
OPERATIONAL REVIEW AFRICA: MOZAMBIQUE Mozambique Third exploration period extended to end of 2008 2D seismic program starting August Exploration well planned to be drilled in 2008 Mozambique Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 25
Slide 26: Focus on transforming resources to reserves at low cost
The group’s focus is creating values through transforming resources to reserves at low cost. The extensive exploration drilling program during the short to medium term forms a strong basis for succeeding in achieving this important goal both in all geographical areas. Copyright 2007 DNO ASA | August
Slide 27: Det Norske Oljeselskap ASA
SECOND QUARTER 2007 DET NORSKE OLJESELSKAP ASA Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 27
Slide 28: Our Mission: Largest Independent Norwegian E&P Company
OUR MISSION IS TO BUILD THE LARGEST INDEPENDENT NORWEGIAN EXPLORATION AND PRODUCTION COMPANY FOCUSED ON TRANSFORMING POSSIBLE RESOURCES TO RESERVES AT LOW COST, GENERATING SUBSTANTIAL AND CONSISTENT RETURNS TO OUR SHAREHOLDERS Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 28
Slide 29: Company Information
DET NORSKE OLJESELSKAP ASA COMPANY INFORMATION Production bbl/day Private placement – ownership Private placement of NOK Including Enoch from end May 445.5 mill in June 2007 Subsequent offering of NOK 18.1 million gross – close 17 August DNO ASA retains 83.7% Listed on OTC – ticker “NOIL” Copyright
Slide 30: Organisation
DET NORSKE OLJESELSKAP ASA ORGANISATION Functional Structure CORPORATE SUPPORT President and Managing Director Helge Eide Chief Operating Officer Chief Financial Officer Ivar Brandvold Haakon Sandborg Corporate Head of Exploration Tore Lilloe-Olsen DET NORSKE OLJESELSKAP ASA Managing Director Roar T
Slide 31: NCS Portfolio
DET NORSKE OLJESELSKAP ASA NCS PORTFOLIO Exploration licenses NCS - 26 licenses, 11 as Operator Producing fields Glitne, in production (10%) Enoch, start production Q2 2007 (2 %) Drilling Plan next 18 months 7 firm exploration wells 5 unconfirmed exploration wells 1 development well Det Norske Oljes
Slide 32: NCS: Two Exploration Wells
DET NORSKE OLJESELSKAP ASA NCS: TWO EXPLORATION WELLS Lie and Ragnarrock prospects The Lie Prospect, well 24/9-8 Spud 18 July, in operation First well on NCS with Det Norske Oljeselskap ASA as operator First well in the drilling schedule with Bredford Dolphin The Ragnarrock Prospect, well 16/2-3 Spu
Slide 33: Drilling Schedule 2007 & 2008
DET NORSKE OLJESELSKAP ASA DRILLING SCHEDULE 2007 & 2008 Drilling schedule next 18 months 2007/2008 2007 2008 August September October November December January February March April May June July August September October November December Lie 69 Mbbl, 30 % (PL305) Hanz Thorkildsen 57 Mbbl, 30 % (PL3
Slide 34: Financial Review
DET NORSKE OLJESELSKAP ASA FINANCIAL REVIEW Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 34
Slide 35: Income Statement
DET NORSKE OLJESELSKAP ASA INCOME STATEMENT Quarterly figures Year to date NOK Million Q2 07 Q2 06 2007 2006 Sale of petroleum products 26,0 40,9 53,3 77,9 Other operating revenues 15,2 12,2 29,5 24,6 Total sales 41,2 53,1 82,8 102,6 Cost of goods sold -17,0 -16,6 -34,1 -32,7 Tariff and transportati
Slide 36: Cash Flow Statement
DET NORSKE OLJESELSKAP ASA CASH FLOW STATEMENT Quarterly figures Year to date NOK Million Q2 07 Q2 06 2007 2006 Profit from operations before exploration 114,5 24,8 125,9 50,5 Exploration expenses (56,9) (34,5) (151,7) (113,1) Taxes paid, DD&A and other (12,5) (23,3) (31,1) (43,3) Net gain from sale
Slide 37: Capital Structure
DET NORSKE OLJESELSKAP ASA CAPITAL STRUCTURE Balance sheet (Assets) NOK million Strong Balance Sheet 1 600 Other 1 400 current assets Private placement 1 200 1 000 Cash and Total gross proceeds from the 800 money transaction are NOK 445,5 million 600 market funds 400 Non- Subsequent Offering 200 cur
Slide 38: Financial Review
DNO ASA: SECOND QUARTER 2007 FINANCIAL REVIEW Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 38
Slide 39: Summary
FINANCIAL REVIEW SUMMARY Quarterly Key Figures 400 NOK million Solid Second Quarter 2007: Sales EBITDA Exploration cost Profit Growth: 350 Increased revenues Stable production (net entitlement) 300 Higher oil price 250 Profit on NCS license sale to BayernGas 200 Lower expensed exploration 150 Growth
Slide 40: Key Figures
FINANCIAL REVIEW KEY FIGURES Quarterly figures Year to date Barrels of oil and oil equivalents Q2 2007 Q1 2007 Q2 2006 2007 2006 Working interest production per day 12 576 12 685 14 780 12 630 15 831 Net entitlement production per day 9 511 9 507 9 473 9 509 10 459 NOK Million Q2 2007 Q1 2007 Q2 200
Slide 41: Income Statement
FINANCIAL REVIEW INCOME STATEMENT Quarterly figures Year to date NOK Million Q2 07 Q1 07 Q4 06 Q3 06 Q2 06 2007 2006 Sales 342,6 290,6 277,5 283,7 359,0 633,2 774,0 Cost of goods sold -139,5 -124,2 -127,1 -98,3 -98,3 -263,7 -220,3 Gross profit 203,1 166,4 150,4 185,4 260,6 369,5 553,8 Tariffs and tr
Slide 42: Cost of Goods Sold
FINANCIAL REVIEW COST OF GOODS SOLD Cost of Goods Sold per quarter NOK million Increased Lifting Costs in Q2: Workover on the Sharyoof field Higher DD&A: Increased investments on the Glitne field Start-up on the Enoch field * Lifting costs consist of expenses relating to the production of oil and ga
Slide 43: Exploration Activity
FINANCIAL REVIEW EXPLORATION ACTIVITY Expensed and Capitalized Exploration NOK million Lower Expensed Exploration: 200 Other Seismic Dry wells Capitalized exploration No dry well costs in the 275 163 second quarter 150 115 Expensed NOK 36 mill. for seismic acquistion program 100 119 Expensed 84 50 0
Slide 44: Exploration per Segment
FINANCIAL REVIEW EXPLORATION PER SEGMENT Exploration Expensed NOK million Q2 Primarily Focused on NCS NOK 36 million for seismic exploration program on PL 387 NOK 16 million in drilling preparations, G&G and general exploration Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 44
Slide 45: Net Financial Items
FINANCIAL REVIEW NET FINANCIAL ITEMS Net financial items per quarter NOK million Higher Net Finance Costs Net other financial NOK 21 million in unrealized FX Exchange gain/loss (unrealized) loss on lower USD-rates Net interest 20 Higher net interest expense 10 0 -10 -20 -30 -40 -50 Q2 2006 Q3 2006 Q
Slide 46: Cash Flow Statement
FINANCIAL REVIEW CASH FLOW STATEMENT Quarterly figures Year to date NOK Million Q2 07 Q1 07 Q4 06 Q3 06 Q2 06 2007 2006 Profit from operations before exploration 300,9 159,6 154,1 170,6 242,3 460,5 524,4 Exploration expenses -67,3 -158,0 -155,7 -82,4 -110,8 -225,3 -327,6 Taxes paid, DDA, other -118,
Slide 47: Sources and Uses of Cash
FINANCIAL REVIEW SOURCES AND USES OF CASH Sources and uses of cash per quarter NOK million Sources Uses Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 47
Slide 48: Capex by Segment
FINANCIAL REVIEW CAPEX BY SEGMENT CAPEX split Q2 2007 (NOK 322 Million) Percent CAPEX per segment quarterly NOK million Africa North Europe Yemen Kurdistan 900 Africa North Europe Yemen Kurdistan 800 2% 11% 700 600 500 400 54% 33% 300 200 100 0 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Copyright 2007
Slide 49: Capex Kurdistan
FINANCIAL REVIEW CAPEX KURDISTAN Capitalized Investments NOK million NOK 174 million in Q2 Capex Drilling expenditures NOK 95 million Production facilities and pipelines NOK 53 million Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 49
Slide 50: Capital Structure
FINANCIAL REVIEW CAPITAL STRUCTURE Balance sheet (Assets) NOK million Raised New Equity in Norwegian Subsidiary Stronger group balance sheet Development investments increasing property, plant & equipment Balance sheet (Debt and Equity) NOK million Copyright 2007 DNO ASA | August 22, 2007 | Second Qu
Slide 51: Q2 2007 Summary and Outlook
FINANCIAL REVIEW Q2 2007 SUMMARY AND OUTLOOK Financials Profit growth and increasing cash flow Revised 2007 Production 2007 exit production target of 26,000 bopd remains unchanged – subject to export of oil from Iraq Estimated average 2007 production of 15-17,000 bopd The revised forecast is based o
Slide 52: Closing Remarks: Developing Value
CLOSING REMARKS DEVELOPING VALUE Continued progressing Tawke development towards completion Confirmed new oil discovery at Tawke Adding new production from Yemen Launched new strategy for NCS All approvals for NOIL as NCS drilling Operator in place Copyright 2007 DNO ASA | August 22, 2007 | Second Q
Slide 53: Welcome Back
THIRD QUARTER 2007 PRESENTATION: 14 NOVEMBER 2007 WELCOME BACK Copyright 2007 DNO ASA | August 22, 2007 | Second Quarter 2007 53