Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Investor Day (2008)
17 slides from Dno Asa Class A's investor day presentation, 2008
Slide 1: Financial Matters
DNO INTERNATIONAL ASA FINANCIAL MATTERS
Slide 2: Value Creation
VALUE CREATION
Slide 3: Our Financial Environment
OUR FINANCIAL ENVIRONMENT OIL PRICES EXCHANGE RATES Achieved oil price Brent blend USD/NOK 90 8,0 7,5 60 7,0 USD/NOK USD 6,5 30 6,0 5,5 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 CAPITAL MARKETS DAY 2008 3
Slide 4: Stable, High Margin Production
STABLE, HIGH MARGIN PRODUCTION PRODUCTION LIFTING COST 6 8,0 7,2 5 6,4 5,6 4 4,8 USD/BBL MBOE 3 4,0 3,2 2 2,4 1,6 1 0,8 0 0 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 CAPITAL MARKETS DAY 2008 4
Slide 5: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION NETBACK NETBACK PER BARREL NETBACK PER SHARE Netback Exploration expensed 1 000 25 0,8 0,7 800 20 0,6 0,5 600 15 NOK Million NOK USD 0,4 400 10 0,3 0,2 200 5 0,1 0 0 0 2005 2006 2007 2005 2006 2007 2005 2006 2007 CAPITAL MARKETS DAY 2008 │ 5
Slide 6: Transforming Resources to Reserves
TRANSFORMING RESOURCES TO RESERVES EXPLORATION EXPENDITURE CAPEX Yemen Kurdistan Other Yemen Kurdistan Other 600 1 400 1 200 500 1 000 400 NOK Million NOK Million 800 300 600 200 400 100 200 0 0 2003 2004 2005 2006 2007 2008E 2003 2004 2005 2006 2007 2008E CAPITAL MARKETS DAY 2008 6
Slide 7: Cash Flow Funding
CASH FLOW FUNDING GROWTH IN NETBACK SUPPORTS SOURCES AND USES OF CASH INVESTMENT PROGRAM Exploration Expensed Development Capex Netback bef. Exploration Divestment • Netback before exploration covered 64% of New Interest-Bearing Debt total 2007 investments 2 000 • Netback before exploration covered
Slide 8: Building Value Through Exploration
BUILDING VALUE THROUGH EXPLORATION CLASS 1-5 RESERVES* RESERVE REPLACEMENT RECYCLE RATIO 150 10 5 120 8 4 90 6 3 MBOE Times Times 60 4 2 30 2 1 0 0 0 2005 2006 2007 2005 2006 2007 2005 2006 2007 *Continued operations, excluding associated reserves CAPITAL MARKETS DAY 2008 │ 8
Slide 9: Finding Reserves at Low Cost
FINDING RESERVES AT LOW COST INDUSTRY FD&A COST DNO ANNUAL AVERAGE FD&A COST Proved acquisition Cost Finding and development cost 30 30 25 25 20 20 14 USD/boe USD/boe 15 15 11 10 10 7 11 8 6 5 11 5 6 6 7 4 4 3 2 0 0 2002 2003 2004 2005 2006 2004 2005 2006 2007 Source: J. S. Herold CAPITAL MARKETS DA
Slide 10: Highly Ranked in the Middle East
HIGHLY RANKED IN THE MIDDLE EAST 3-YEAR F&D COST (2004-06) 3-YEAR RESERVE REPLACEMENT (2004-06) Marathon DNO DNO Marathon Noble Tullow Apache Hess Petro-Canada Canadian BASF ConocoPhillips OMV Apache Corp. Canadian TransGlobe Eni Noble Energy TransGlobe Occidental PetroSA Burren Mitsui Mitsui Total
Slide 11: Taxation and PSA's
TAXATION AND PSA’S
Slide 12: How PSA's Work
HOW PSA’S WORK PRODUCTION SHARING EXAMPLE YEMEN PSA • Royalty Total production of oil • A fixed percentage 100 % • Cost oil (Cost recovery) Net production of oil Royalty • All recoverable cost is allocated to 1-X % X% the cost oil • Cost oil shared among the paying Cost oil Profit oil partners Maxim
Slide 13: PSA Example
PSA EXAMPLE PRODUCTION SHARING COST OIL AND PROFIT OIL IN YEMEN Government take Cost oil Profit Oil 100 Distribution of production Contractors DNO’s share Production 100 % 100,00 23% 16% - Royalty 3% 80 = Net production of oil 97 % Cost oil to contractors 50 % 48,50 32,33 43% Profit oil (100 %-3 %-c
Slide 14: DNO PSA's in the Kurdistan Region of Iraq
DNO PSA’S IN THE KURDISTAN REGION OF IRAQ PRODUCTION SHARING AGREEMENTS • Royalty • Royalty rate at 10% Mosul IRAQ • Cost oil (Cost recovery) KIRKUK International boundary Oil pipeline Oil Kirkuk • DNO will be entitled to 60% (net of royalty) of Gas Tanker terminal Bayji Pump station the revenues up
Slide 15: Working Interest and Net Entitlement
WORKING INTEREST AND NET ENTITLEMENT WORKING INTEREST AND NET ENTITLEMENT WORKING INTEREST VS NET ENTITLEMENT • Working interest Working Interest Contractors DNO’s share • Working interest of total oil produced (net of royalty) Profit oil + Cost oil 60.87 40.58 presented as revenue, and the correspo
Slide 16: Summary
SUMMARY BUILDING VALUE THROUGH EXPLORATION AND DEVELOPMENT • Strong organic growth in reserves and production capacity • Sector leading reserve economics • Continuing extensive exploration program SOLID FINANCIAL PERFORMANCE • High margin production providing increasing cash flow CAPITAL MARKETS DAY
Slide 17: Disclaimer: Forward Looking Statement
DISCLAIMER: FORWARD LOOKING STATEMENT 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, est