Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Debt Investor Presentation (March 2011)
41 slides from Dno Asa Class A's debt investor presentation, Mar 9, 2011
Slide 1: DNO International ASA USD 200-300 million senior unsecured bond
Drilling the Bastora-1 exploration well in D n the Erbil license in n the Kurdistan Reg gion of Iraq. 9 March 2011 DNO International ASA USD 200-300 million senior unsecured bond
Slide 2: Disclaimer
DISCLAIMER This Presentation was prepared solely for DNO International ASA`s corporate presentations in March, 2011, and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person. By reading this presentation, you agree to be
Slide 3: Table of content
Table of content • Transaction summary • Introduction • Kurdistan • Yemen • Other assets • Financials • Summary & Outlook • Appendix 3
Slide 4: Summary of terms
Summary of terms • Issuer: DNO International ASA • Issue size: The equivalent of minimum USD 200 million and maximum USD 300 million • Currency: USD and NOK tranche provided minimum subscriptions in excess of NOK 300m • Settlement date: Expected to be 25 March 2011 • Tenor: 5 years • Coupon: 3 month
Slide 5: Introduction
Introduction
Slide 6: DNO - A leading E&P company
DNO - A leading E&P company • Diversified independent E&P company Det norske oljeselskap ASA (11.7%) active in Middle East and Africa PL1067 Oslo • Production (WI) of 17,400 bopd in 2010 • Currently testing gross production capacity in Kurdistan at 50,000 bopd • Total company production capacity Taw
Slide 7: Distribution of reserves and resources
Distribution of reserves and resources • DNO’s WI Reserves & Resources as of Year-End 2009 • 1P reserves of 89.6 million boe • 2P reserves of 149 149.4 4 million boe • New reserve report in April, 2011 200 Kurdistan: 139.5 180 172 8 172.8 Y Yemen: 9.9 99 160 149.4 140 120 MBOE Tawke Euphrates 100 Eq
Slide 8: Increasing production in 2009-2010
Increasing production in 2009-2010 2009 2010 • Yemen production sold to the international market has averaged 7,200 bopd • Tawke production delivered to local markets has averaged 77,500 500 bopd without export 30 000 day est production I barrels per d 25 000 6 494 20 000 15 000 6 156 6 808 Working
Slide 9: Monthly production summary
Monthly production summary WI Production 30 000 25 000 20 000 22 873 B 20 790 19 350 O P 15 000 17 141 Tawke D 15 140 14 604 Yemen 11 842 5 429 10 000 4 440 5 091 5 420 4 404 3 627 5 000 7 719 7 371 7 213 7 058 7 027 6 489 6 695 6 394 6 332 5 935 6 256 6 281 6 125 0 Jan Feb Mar Apr May Jun Jul Aug S
Slide 10: Achieved oil prices reflecting local sales in 2009-2010
Achieved oil prices reflecting local sales in 2009 2009-2010 2010 • Production from Yemen is sold at international market price • Realized sales price on local sales in Kurdistan is typically $25-30/boe $25 30/boe • Export sales from Kurdistan is expected to increase achieved oil prices 65 61,6 60 5
Slide 11: Competitive lifting cost per barrel
Competitive lifting cost per barrel* 20 19,0 18,1 18 17,0 16,6 16,3 16 15,5 15,1 14 13,5 12,6 11,7 12 11,2 11,4 10,3 10 3 10,3 USD/boe e 10 0 10,0 Total lifting costs 9,6 10 8,5 8,5 8,2 8,4 Yemen 8 Tawke 6 5,3 4,4 4,1 4 1,9 2 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 * Liftin
Slide 12: Asset summary: Kurdistan
Drilling the Bastora-1 exploration well in D n the Erbil license in n the Kurdistan Reg gion of Iraq. A Asset t summary Kurdistan
Slide 13: DNO has a strong position
DNO has a strong position • Operator of three Production Sharing Contracts (PSC) in Kurdistan • Production from Tawke • Exploration at Dohuk and Erbil • Production capacity of 50,000 bopd (gross) • Production of >10,000 bopd during 2010 • Historical sales to local market • Invested USD 460 million i
Slide 14: The Tawke facilities and connection to the export pipeline
The Tawke facilities and connection CPF and refinery to the export pipeline State Oil Marketing Organization (SOMO) • Sales at outlet in Turkey Turkey’s Petroleum Pipeline Corporation (BOTAS) • Pipeline system in Turkey 50 000 bopd capacity (gross) Pipeline tie-in point North Oil Company (NOC) • Tie
Slide 15: Export production tests started in Kurdistan
Export production tests started in Kurdistan • Testing of export production from the Tawke field commenced on 2 February • We are now testing at full capacity of 50,000 bopd • The Iraq Federal Government budget has been approved by the parliament in Baghdad • Interpretation of the budget with respec
Slide 16: Solid production history from local sales
Solid production history from local sales • DNO has invested in a refinery and truck loading facilities to local sales • Loading station for local sales with 40,000 bopd capacity • Refinery with capacity to take 6,000 bopd of crude oil • Local sales at discounted oil price • Historically $25-30/bbl
Slide 17: Asset summary: Yemen
Asset Summary y Yemen 17
Slide 18: Yemen operational overview
Yemen operational overview Block 32 Wells Godah-12 completed F th infill Further i fill wells ll iin 2011 Block 53 Block 43 Wells Projects Bayoot-10 completed Cost saving project initiated Further wells considered in 2011 Wells Infill and exploration wells in 2011 Block 72 Wells Drilled Gabdain 1-2
Slide 19: Yemen operations
Yemen operations WI Production bopd 8 000 7 000 7 719 7 371 7 213 7 058 7 027 6 695 6 489 6 000 6 332 6 394 6 256 6 281 6 125 5 935 5 000 4 000 Yemen 3 000 2 000 1 000 0 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Block 48 2010 2011 • Some production decline during 2010 as expected • Addi
Slide 20: Yaalen Field Development
Yemen Block 47: Yaalen Field Development Block 48 • Production start in Q1 2012 • Production from 2-5 wells, one well for injection of produced water • Initial trucking of crude to Block 43 Nabrajah CPF • Expecting 5 5,000 000 bopd initial production with increase to 10 10,000 000 bopd in second pha
Slide 21: Other assets and activities in DNO
Other assets and activities in DNO • DNO is 11.7% shareholder in Det norske oljeselskap • DETNOR is listed on OSE with a mcap of NOK 3 billion • Exploration company focused on the Norwegian Continental Shelf • Result of spin-off from DNO and subsequent combination with Pertra and Aker Exploration •
Slide 22: Key priorities going forward
Key priorities going forward • Ramp p up p and fully y utilize p production capacity p y • Add new production from fast track development of new discoveries • Continued increased exploration p efforts to add new reserves and resources at low costs • Grow G the th assett base b through th h new entri
Slide 23: Financials
pee SIZES Wises Seaton == a Pi ZEA a
Slide 24: Key figures 2008-2010
Key figures 2008-2010 2008 2010 1600 1376 1385 1400 1252 1200 1000 869 804 Sales NOK Million 800 651 Adjusted EBITDA 600 Cash at year end 400 303 262 176 200 0 2008* 2009** 2010** * Adjusted for asset impairment ** Adjusted for special items 24
Slide 25: Key financial indicators – before special items
Key financial indicators – before special items EBITDAX1) margin EBITDAX Netback 80 % 350 350 77 % 70 % 300 300 67 % 60 % 64 % 64 % 250 250 56 % 50 % NOK milllion NOK milllion 200 200 40 % 150 150 30 % 100 100 20 % 50 50 10 % 0% 0 0 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q4'09 Q
Slide 26: Steady growth in revenues and netback
Steady growth in revenues and netback * This graph is adjusted for special (non-operational) items with negative effects in 2009 and 2010 on EBITDA and net back 70 65 9 65,9 35 Netback ($/boe) Sales 60 30 SD per barrel (grey bar) **** EBITDA Netback 50,1 51 0 51,0 on (lines) ** 50 25 45,7 44,1 39,8
Slide 27: Strong cash position
Strong cash position • In addition financial instruments of NOK 350 million (DETNOR shares) • Raised NOK 360 million in new equity 4Q 2010 1 600 1 385 USD equivalent of 1 400 242 million based on USD FX 5.7x 1 200 936 1 000 NOK million 822 800 671 N 600 400 303 282 210 200 143 0 Q1 2009 Q2 2009 Q3 2
Slide 28: Capital structure
Capital structure Assets Equity and liabilities 6000 6000 Non-current assets Other current assets Cash and cash equivalents Shareholders equity Non-current liabilities Current liabilities 5000 5000 Cash: NOK 1385 million 4000 4000 Net debt to capitalization* p NOK Million NOK Million 11 per cent 300
Slide 29: Capex history and 2011 guiding
Capex history and 2011 guiding Total investment per activity Plan for 2011 Planned in investments estments 1800 WPP Exploration • Development CAPEX NOK 200 million 1600 Development • Exploration NOK 250 million 1400 Contingent additional investments 1200 • Development CAPEX NOK 400 million • Explora
Slide 30: Debt amortization schedule
Debt amortization schedule • USD ~1.8 in debt per barrel (2P reserves) after repayment of 2011 maturities in March • Proposed new bond adds USD ~2.0 per barrel in debt 350 300 250 200 150 100 50 0 2011 2012 2013 2014 2015 2016 DNO08 FRN NOK DNO10 PRO FRN USD DNO05 FRN USD DNO06 FRN NOK DNO07 FIXED N
Slide 31: Market capitalization and ownership structure
Market capitalization and ownership structure Larsen Oil&Gas 3% RAK Petroleum Retail investors 20% 30% Market capitalization 1996-2011 12 000 10 000 12% 7% Other 8 000 Norwegian Oppenheimer K million 6 000 28% NOK As per 13 January 2011 4 000 Other non-Norwegian 2 000 0 96 97 98 99 00 01 02 03 04 05
Slide 32: Outlook 2011
Outlook 2011 • Production • Substantially S b t ti ll higher hi h deliveries d li i ffrom the th TTawke k field fi ld • Somewhat lower production in Yemen • Development • Complete Yaalen development • Initiate additional development projects at the Tawke field • Evaluate possible development of new
Slide 33: Appendix
Appendix • Legal structure • Financials • Arbitration 33
Slide 34: DNO International ASA legal structure
DNO International ASA legal structure Domiciled and listed in Oslo, 5 wholly owned susbidiaries DNO International ASA DNO Mozambique AS DNO Yemen AS DNO Iraq AS DNO Invest AS DNO UK Ltd 34
Slide 35: Corporate management
Corporate management Helge Eide Managing Director Haakon Sandborg Trond Myrseth CFO COO Tom Bratlie Tore Lilloe-Olsen Corporate Head of Communication Director Exploration Ole-Andreas Isdahl QHSE Director Magne Norman Sven Erik Lie Erik Syrdalen Business Unit Manager, Kurdistan Business Unit Manager,
Slide 36: Key performance indicators
Key performance indicators Production net entitlement Achieved oil price Operational costs 12000 120 1600 1400 10000 100 1200 80 8000 1000 NOK million bbl USD/b 60 800 BOPD 6000 600 40 4000 400 20 200 2000 0 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 0 2006 2007 2008 2009 2010 DNO* Brent CO
Slide 37: Key figures
Key figures As reported Q4 2010 Q4 2009 Full year 2010 Full year 2009 Operating revenues 302.0 225.9 1,251.8 869.0 Operating profit 86.8 -75.2 156.8 -179.1 EBITDA 159.3 -8.7 473.7 121.9 Netback 139.9 -44.2 379.6 29.8 Net of arbitration Q4 2010 Q4 2009 Full year 2010 Full year 2009 items Operating re
Slide 38: Condensed income statement
Condensed income statement NOK million 20101) 2009 Comments: S l Sales 1 251 8 1,251.8 869 0 869.0 • Increase in operating revenues from Cost of goods sold -618.7 -659.3 higher local deliveries from Tawke Gross profit 633.1 209.7 • Lifting costs reduced in Yemen Dry well cost expensed -17.2 -56.2 •
Slide 39: Balance sheet
Balance sheet NOK million 2010 2009 Comments year-end 2010:: Property, plant and equipment 2,213 2,402 Intangible assets 930.7 851 • Cash C h and d fifinancial i l assets t off NOK 1,745 million Available for sale investments 360 478 Total non-current assets 3,504 , 3,733 , • NOK 1,814 million in bo
Slide 40: Cash flow statement
Cash flow statement NOK million 2010 2009 Comments: P fit / (loss) Profit (l ) before b f income i tax t -206.2 206 2 28 0 28.0 • NOK 525 million in operating cash Non cash items and changes in working capital 933.4 124.0 flow in 2010 Taxes and interest p paid -202.3 -205.3 • Investments mainly in Y
Slide 41: Arbitration
Arbitration Arbitration proceedings • As reported to the market, DNO Iraq AS, a subsidiary of DNO International ASA, is involved in arbitration proceedings in London related to certain third party interests in Kurdistan. • In 2009 2009, the first part of the arbitration ruled the right to seek compe
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