Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Q4 2009 Earnings Presentation
40 slides from Dno Asa Class A's earnings presentation, 2010
Slide 1: Fourth Quarter 2009
DNO INTERNATIONAL ASA Fourth Quarter 2009
Slide 2: Agenda
Agenda Highlights and Operational Review • Helge Eide, Managing Director Financial Review • Haakon Sandborg, CFO Q&A Fourth Quarter 2009 | 2
Slide 3: Operational highlights 2009
Operational highlights 2009 • DNO’s average WI production was 13,500 bopd in Q4 and 21,500 bopd in 2009 • Passed another important milestone with commencement of export from Tawke • Bayoot development completed with steadily increasing production throughout the year • Recommenced drilling operations
Slide 4: Financial highlights 2009
Financial highlights 2009 • Revenue from exported crude oil from Tawke is not recorded in 2009 and accounts re-stated (ref. accounting standard IAS 18) • Revenue in 2009 was NOK 869 million, with a EBITDA of NOK 122 million and a netback of NOK 30 million • A total provision of NOK 389 million has b
Slide 5: Average Quarterly Production (WI)
Average Quarterly Production (WI) Average production (WI) 50000 IRAQ TURKEY "Tawke export "Kurdistan "Yemen 40000 30000 3 a fo} 2 20000 19000 ai 2.86 3,438 Se ) 62 | Ea Ea 2s | 2 | Q4 2008 Q1 2009 Q2 2009 Q3 2009 @4 2009 DNO’s Assets @ Producing assets @ Other Assets Fourth Quarter 2009| 5
Slide 6: Average WI production
Average WI production Quarterly WI production Annual WI production Q4 2009 • Kurdistan local: 5,926 bopd 25,000 25,000 Kurdistan Yemen Exports Kurdistan Yemen • Yemen: 7,655 bopd 20,000 20,000 • Total: 13,581 bopd FY 2009 15,000 15,000 • Kurdistan local: 4,537 bopd BOPD BOPD • Kurdistan export: 9,22
Slide 7: Annual financial highlights
Annual financial highlights Sales EBITDAX Netback Before restatement Full effect of exports Full effect of exports Before restatement Before restatement 2000 1200 1000 1,112 1,071 1800 1,719 900 867 974 1000 1600 800 1,376 810 690 1400 1,320 700 NOK million NOK million NOK million 1,193 800 708 1200
Slide 8: Operations
Operations Det norske oljeselskap ASA PL1067 Tawke Benenan (Hawler) Dohuk Sharyoof Tasour Nabrajah Bayoot Block 32, 43, 47, 52, 53, 72 and 84 Block P Inhaminga Fourth Quarter 2009 | 8
Slide 9: HSE Summary
HSE Summary Continued positive trend through Q4’09 HSE performance trends • No serious incidents year to date 4.5 Lost Time Incident Frequency* 4 Vehicle Incident Frequency* Total Recordable Incident Frequency* 3.5 KPIs by end of fourth quarter: 3 • Lost Time Incident Frequency: 0.0 2.5 • Total Reco
Slide 10: Yemen Summary
Yemen Summary Block 52 Block 32 - G&G work Ongoing: for Drilling of Godah infill 2nd commitment well wells (2) Harad #2 i Ez Block 43 Block 53 psila Basin : Fat Drilling Nabrajah-10S (pilot Bay +horizontal) is completed Continue Bayoot *. lab Possible additional drilling development drilling 6 Raoq
Slide 11: Yemen (BL43): Nabrajah-10S/S2
Yemen (BL43): Nabrajah-10S/S2 Combined Exploration and Production Well 0 r4 (e) Re-entry of the top section of N-10 Directionally drilled 8 %” pilot hole Plugged back and drilled 6” horizontal section from 2887 m to TD @ 3880 m. Complete well as a producer with gas-lift Well is currently cleaning up
Slide 12: Nabrajah-10S2 horizontal section projected on Oslo
Nabrajah-10S2 horizontal section projected on Oslo Dælenenga Akersberget Oslo Concert Hall Fourth Quarter 2009 | 12
Slide 13: Bayoot basement development (Block 53)
Bayoot basement development (Block 53) Production profile Bayoot (gross) 6 000 5 000 4000 3000 bopd 2000 1000 | | lan dd 23.09.2006 31.12.2009 E z fe) -2,640 -2,800 -2,960. -3120 -3,280 Bayoot 7 = Too ttt Thight limestone Goer get BAYOOT-7 © 50 100 150 200 250m | T T r -240 150-80 ° 80 160 240 320 4
Slide 14: Sharnah/Yaalen (Block 47): New possible fast-track development
Sharnah/Yaalen (Block 47): New possible fast-track development BLOCK 47 Leads&Prospects Oil Discovery Summary • Total resource potential of 10 million Sharna barrels • Re-evaluation undertaken in 2009 • Yaalen-3 appraisal well planned in Yaalen April 2010 • Filing a plan for a staged development in
Slide 15: Yemen (BL72): Basement lead
Yemen (BL72): Basement lead Basement lead • Basement fault blocks with possibilities for oil trapped in fractured basement mapped on 3D seismic • The block 72 basement leads are located in a similar structural Bayoot Field position to the producing Bayoot and Kharir fractured basement fields Kharir F
Slide 16: Kurdistan summary
Kurdistan summary Tawke * Commenced export of crude oil from Tawke on 1 June which continued until 22 September e Current focus is on local sales * Tawke #11 work over and completion finalized in October O09. Tie-in to Tawke CPF ongoing Benenan discovery * Testing of well #2 ongoing Exploration * Do
Slide 17: Tawke Production
Tawke Production Monthly production since start-up 60,000 Export Local sales 50,000 40,000 bopd 30,000 20,000 10,000 0 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Fourth Quarter 2009 | 17
Slide 18: Kurdistan (Erbil): Benenan Discovery
Kurdistan (Erbil): Benenan Discovery Benenan was discovered by Hawler-1 in 2007 and appraised by Erbil-2 in 2008 • Hydrocarbons in several reservoirs • 3D seismic acquired post drilling • Benenan is a complex structure with high Hawler-1 pressure and several fluid systems The 2010 appraisal program c
Slide 19: Kurdistan leads/prospects
Kurdistan leads/prospects Tawke Dohuk Peshkabir • The 2010 license work program is to fullfill the remaining two well work commitment • Prospect evaluation ongoing • Final decision on drilling at Dohuk in Q1/2010 Fourth Quarter 2009 | 19
Slide 20: Kurdistan (Dohuk): Summail lead/prospect
Kurdistan (Dohuk): Summail lead/prospect Fourth Quarter 2009 | 20
Slide 21: Mozambique summary
Mozambique summary The Inhaminga Block Activities e Currently in the 4th Exploration period e« Seismic Processing and Interpretation (31.12.2008 - 30.6.2011) Ql10 e Block size: 10,715 sqkms e Mature first prospect for drilling in 2010 e Work Commitment: 1 Exploration well + « Farm-out process in pro
Slide 22: Tunisia opportunity
Tunisia opportunity Tunisia fits well with DNO’s strategy: e Similarities to Yemen e Well developed infrastructure * Potential for fast-track and low cost developments e Lol signed and farm-in process ongoing DNO is also looking for other opportunities in the Middle East and East/North Africa region
Slide 23: Planned and contingent activities in 2010
Planned and contingent activities in 2010 Exploration and appraisal • Yemen BL 47, Yaalen-3 activities • Yemen BL 52, Harad-2 (Commitment well) • Kurdistan Dohuk PSC, Summail-1 (Commitment well) • Kurdistan Tawke PSC, Peshkabir-1 (Commitment well) • Kurdistan Erbil PSC, Erbil-2 Well Testing • Mozamb
Slide 24: Financials
FINANCIALS
Slide 25: Financial summary 2009
Financial summary 2009 Annual key financials Firm E&P strategy Revenues • Increased production from delivery of initial 2000 crude exports from Tawke field in Kurdistan Exploration Expensed Operating Profit • Development activity supports stable 1500 production and cash flow from Yemen • Exploration in
Slide 26: Special items Q4 2009
Special items Q4 2009 Export revenues - Kurdistan • Based on PSC, revenues estimated and included in Q2-Q3 2009 interim financials • Q2: NOK 135 million • Q3: NOK 714 million • Uncertainty related to timing of payment and pricing • Provision of NOK 396 million (50% of carrying value of receivable) re
Slide 27: Special items Q4 2009
Special items Q4 2009 Other cost provisions • Provision for potential arbitration liability recorded in preliminary Q4 figures, based on experts’ advice DETNOR accounting effects • Below 20 percent the DETNOR investment is considered an AFS investment • Write-down NOK 47 million for the remaining sha
Slide 28: Key figures
Key figures NOK million 2009 2008 Operating revenues 869 1,376 Cost of goods sold -659 -746 Other costs and provisions -389 -622 Net finance 207 -699 Income tax expense -298 -214 Net profit -270 -904 Netback 30 255 Fourth Quarter 2009 | 28
Slide 29: Quarterly financials
Quarterly financials Sales EBITDAX Netback Before restatement Full effect of exports Full effect of exports Before restatement Before restatement 1000 950 1000 800 718 807 800 600 800 600 400 NOK million NOK million NOK million 314 600 403 198 400 200 400 359 234 63 17 200 0 236 102 106 217 224 226 6
Slide 30: Condensed income statement
Condensed income statement NOK million Q4 2009 Q3 2009 Q4 2008 2009 2008 Sales 225,9 235.5 217.3 869.0 1,376.2 Cost of goods sold -135.8 -149.3 -198.7 -659.3 -745.5 Gross profit 90.2 86.1 18.6 209.7 630.7 Dry well cost expensed 1.2 -44.0 -73.5 -56.2 -158.3 Seismic and other exploration expensed -16.3
Slide 31: Cost of Goods Sold
Cost of Goods Sold Lifting cost Lifting cost per barrel Yemen Kurdistan Yemen Kurdistan 150 20 15 100 USD/barrel NOK million 10 50 5 0 0 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 DD&A DD&A per barrel Yemen Kurdistan 25 150 Yemen Kurdistan 20 100 15 USD/barrel NO
Slide 32: Cash flow statement
Cash flow statement NOK million Q4 2009 Q3 2009 Q4 2008 2009 2008 Profit from operations before exploration -60.1 31.9 -184.8 -23.2 365.7 Exploration expenses -15.1 -60.5 -112.7 -155.8 -356.8 Taxes paid, DDA, other -39.6 129.2 526.0 126.3 736.6 Net cash from operations -114.8* 100.6 228.5 -53.1 745.5
Slide 33: Exploration activity
Exploration activity Exploration expensed per segment Expensed exploration in 2009 120 Yemen • Down 56% from 2008, as guided Kurdistan 100 Africa • Primarily expenses from activity in Yemen • Expensed seismic in block 47 in Q1 80 • Dry well costs in blocks 52 & 53 in Q3 NOK million • High activity i
Slide 34: Capital expenditure
Capital expenditure CAPEX per segment Capex in 2009 Yemen Kurdistan Africa WPP • Substantial reduction from 2008, as guided 600 • Ongoing development work in Yemen 500 • Bayoot field development • Infill drilling on Tasour, Bayoot and Nabrajah 400 • Tawke field in Kurdistan • Pipeline tie-in, export fa
Slide 35: 2010 CAPEX Guiding
2010 CAPEX Guiding Total investment per activity Plan for 2010 1800 WPP • Planned investments Exploration • Development CAPEX NOK 130 million 1600 Development • Exploration NOK 230 million 1400 • Contingent additional investments • Development CAPEX NOK 25 million 1200 • Exploration NOK 110 million
Slide 36: Capital structure
Capital structure Assets Equity and liabilities 6000 Non-current assets Cash and cash equivalents 6000 Shareholders equity Non-current liabilities Other current assets Current liabilities 5000 5000 4000 4000 Cash: Net debt to NOK 303 million capitalization: NOK Million NOK Million 44 per cent 3000 3
Slide 37: Shareholder matters
Shareholder matters Geographic distribution Shareholder categories Norway 100% Rest of World 100% Other • 15.927 Norwegian 4% 8% shareholders holding 51,6 Sweden 11 % 90% 4% 90% 5% Company related percent Luxembourg 80% 5% 80% 9% Netherland 23 % International 70% 70% USA Retail • 494 international 6
Slide 38: Outlook 2010 - balanced work program
Outlook 2010 - balanced work program Value creation in all phases • Stepping up exploration drilling in all business units • Continue successful development activity in Yemen, well test in Kurdistan • Production increase upon resolution of payment issue in Kurdistan Maintain financial position • Stab
Slide 39: Welcome back
FIRST QUARTER 2010: 11 MAY 201O WELCOME BACK
Slide 40: 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