Slide 1: DNO Presentation April 2000
DNO PRESENTATION DNO PRESENTATION APRIL 2000 APRIL 2000
Slide 2: Introduction, Historical Review, Heather & Yemen Projects, Norway, Future Development
Introduction Historical Review Heather & Yemen Projects Norway Future Development
Slide 3: Introduction
Introduction
Slide 4: DNO Business Strategy
DNO BUSINESS STRATEGY TAIL-END PRODUCTION SMALL OIL FIELDS
Slide 5: Concepts and strategy
Concepts and strategy • Value creation by combining small Volume discoveries into unitized producing knowledge Type of clusters of at least 10 years company: Mature/combination explicate small Small • Value creation by extending the life discoveries of producing fields based on and tailend improved
Slide 6: DNO E & P Activities
DNO E & P ACTIVITIES Russia UK: 5 Licenses - Operator for Heather Area - 5.000 B/D Yemen: 2 Licenses - Operator for Tasour Development 1.000 B/D fm. 4 Q 2000 Norway: 3 Licenses - 1.850 BOPD Russia: 1 License with large proven oil reserves. UK Norway Yemen Heather Jotun Tasour Jotun
Slide 7: DNO ASA - Corporate Structure
DNO ASA - Corporate Structure DNOGROUP DNO GROUP DNOASA DNO ASA Offshore& Offshore & Services Oil& Oil &Gas Gas Services PDR PDR 34.0% 34.0 % DNO DNO DetNorske Norske IOT IOT 100.0% 100.0 % DNO DNO Det Clampon 24.5 Clampon 24.5% % BRITAINLTD. BRITAIN LTD. YEMEN YEMEN OljeselskapAS Oljeselskap AS Jot
Slide 8: DNO – Group Organization
DNO – Group Organization Fig.10 DNOASA DNO ASA BoardOf Board OfDirectors Directors BERGEG. BERGE G.LARSEN LARSEN GroupChief Group ChiefExecutive ExecutiveOfficer Officer HELGEEIDE HELGE EIDE GroupChief Group ChiefOperating OperatingOfficer Officer DetNorske Det NorskeOljeselskap OljeselskapAS AS DNO
Slide 9: Operational technology network
Operational technology network GEOLOGY OG GEOPHYSICS RESERVOIR WELL TECHNOLOGY AND SAFETY/ENVIRONMENT ASA DRILLING DEVELOPMENT AND IT/DESIGN OPERATION MERCANTILE SUPPORT
Slide 10: Historical Review
Historical Review
Slide 11: Main Events 1996 - 2000
MAIN EVENTS 1996 - 2000 JUNE 1996 NEW MAIN SHAREHOLDER - NEW MANAGEMENT -NEW STRATEGY JULY 1997 OPERATOR FOR HEATHER FIELD UK NOVEMBER 1998 OPERATOR FOR BLOCK 32 YEMEN FEBRUARY 2000 RE-ENTRY TO NORWAY
Slide 12: Reserves
Reserves Mill barrels 160 140 120 100 80 60 40 20 0 1995 1996 1997 1998 1999
Slide 13: Oil Production
Oil Production Mill barrels o.e./day 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 4th 1995 1996 1997 1998 1999 Qv. 1999
Slide 14: Revenue Development
Revenue Development NOK 1000 300 250 200 150 100 50 0 1995 1996 1997 1998 1999 Oil and gas Offshore & Services
Slide 15: Financial Performance - Net Profit
Financial Performance - Net Profit NOK 1000 200 150 PDR ASA EFFECT: 100 (44 MILL.) 50 0 -50 -100 1995 1996 1997 1998 1999
Slide 16: The Heather Project
THE HEATHER PROJECT
Slide 17: Greater Heather Area
Greater Heather Area 3 EIDER TERN EIDER MURCHISON STATFJORD MURCHISON 3 HUDSONTERN HUTTON STATFJORD / NW HUTTON CORMORANT HUDSON 2/4 2/5 3/1 206 207 1 PELICAN CORMORANT HEATHER PELICAN HUTTON / NW HUTTON BRENT BRENT STRATHSPEY LYELL 206 Shetland207 1 HEATHER STRATHSPEY ALWYN NORTH Islands LYELL Shet
Slide 18: Heather Production History
Heather Production History BBL/DAY 35.000 1996 1996 30.000 REVIEW REVIEW 25.000 20.000 15.000 COP ?? 10.000 5.000 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 • FIELD APPROACHING CESSATION OF PRODUCTION • PARTNER MIS-ALLIGNMENT
Slide 19: Heather Field Partner Arrangements
Heather Field Partner Arrangements License Partners 1975-1997 Unocal – Operator (31.25 %) Texaco (31.25 %), British Gas (31.25 %), DNO (6.25%) License Partners 1997 - 1999: DNO – Operator (37.5 %) Texaco (31.25 %), British Gas (31.25 %) As of October 1999: DNO - Operates on 100 % basis Texaco, Briti
Slide 20: Investments 1997 – 1999
INVESTMENTS 1997 – 1999 (DNO 100 %) New 3-D Seismic for the Main Field Re-evaluation of the Heather Area Re-activation of Platform Drilling Rig
Slide 21: Greater Heather Area Reserves
GREATER HEATHER AREA RESERVES 2/4 2/5 3/1 New NewProspect Prospect 100 100 + millbbls + mill bbls potential potential Main Field Heather Alpha Platform ESTIMATED ESTIMATEDRESERVES RESERVES West Heather North Terrace 80 80MILL. MILL.BBLS BBLS South Terrace Main Field Satellites South-West Heather
Slide 22: Greater Heather Area Development Plan March 2000
Greater Heather Area Development Plan March 2000
Slide 23: Heather Area Conceptual Development Plan March 2000
Heather Area Conceptual Development Plan March 2000 Development of 48 mill. barrels of Reserves Production until 2010 ! 30.000 W Heather Triassic 2/4 2/5 3/1 North Terrace 25.000 Compartments Heather Field Export Oil Rate (BOPD) Infill Heather Field Baseline 20.000 West Heather 15.000 10.000 5.000 N
Slide 24: Heather Field Opex
Heather Field Opex BBL/DAY 35.000 30.000 DNO BECAME OPERATOR 25.000 20.000 15.000 10.000 5.000 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 £ MILL. ANNUAL “BASELINE” OPEX 25 £ 5 MILLION PER 20 ANNUM 25 % REDUCTION 15 10 5
Slide 25: Heather in Summary
Heather in Summary BBL/DAY 35.000 30.000 25.000 20.000 15.000 10.000 5.000 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 REMAINING RESOURCES COMBINED WITH COST REDUCTION FORMS THE BASIS FOR AT LEAST 10 YEARS EXTENDED PRODUCTION FROM HEATHER . CONTINUED PRODUCTION FR
Slide 26: The Tasour Project
THE TASOUR PROJECT
Slide 27: Yemen Block Location Map and Regional Setting
YEMEN Block 32 Location Map and Regional Setting rab ia d i A Sau men Ye Block 32 Je za Bas in Ma Sayun - rib Masila B Ras Issa - Jaw asin f-S hab wa Bas in Ash Shihr Terminal Red AL MUKALLAH Sea Bir Ali Terminal 100 km Gulf of Aden Africa
Slide 28: Block 32 Partners
Block 32 Partners DNO - 20 % and Operator Norsk Hydro - 25 % Ansan Wikfs - 44,5 % Transglobe Energy - 9,5 %
Slide 29: DNO Licenses - Republic of Yemen
DNO LICENSES - REPUBLIC OF YEMEN Tasour Area Block 32 DNO Tasour Tasour11 Tasour Oil OilTest Tasour11 Test Oil 2.200 2.200b/d OilTest Test b/d 4.800 4.800b/d b/d Abiyeet-1 Tasour-1,2,3,W-1 Yashaar Lead 2 Tasour West Tasour B Tasour C Tasour East Yashaar B Yashaar Lead 1 Atheib-1 Tasour F Tasour D Ta
Slide 30: Yemen Block 32 Area - Production & Infrastructure
YEMEN Block 32 Area - Production & Infrastructure BLOCK32 BLOCK 32 BLOCK53 BLOCK 53 DNO20 20% % DNO DNO24.45 DNO 24.45 % % (OPERATOR) (OPERATOR) TASOUR TASOURLOCATION LOCATION CANOXY CANOXY TOTAL 200.000b/d b/d TOTAL 200.000 20.000b/d 20.000 b/d Pipeline Pipeline 400.000b/d 400.000 b/d capacity capa
Slide 31: Tasour 3 Drilling Site - Block 32 Yemen
TASOUR 3 DRILLING SITE - BLOCK 32 YEMEN
Slide 32: Tasour Area Prospects and Leads
YEMEN Tasour Area Prospects and Leads DNO Block 32 Dove Block 53 Darbah-1 Darbah-1A Mishtah D Mishtah B Mishtah-1 Shariouf B Wadi Sana-1 Abiyeet-1 Wadi Sana-B Pr ospect2/Gamma Shariouf A Wadi Sana-C Tasour West Tasour B Tasour C Yashaar Lead 2 Tasour East Qishn S1 Atheib E Yashaar C Yashaar A Struct
Slide 33: Tasour B Production Profile (100%)
YEMEN Tasour B Production Profile (100 %) P-50: Oil Production Profile 12 000 10 000 Rate: bbl/d 8 000 6 000 4 000 2 000 8 mill. barrels 0 ju ju ju ju ju ju ja ja ja ja ja ja l.0 l.0 l.0 l.0 l.0 l.0 n. n. n. n. n. n. 01 02 03 04 05 06 0 1 2 3 4 5 Date
Slide 34: Tasour Area Prospects and Leads
YEMEN Tasour Area Prospects and Leads DNO Block 32 Dove Block 53 Darbah-1 D Structure Darbah-1A Mishtah D Mishtah B Mishtah-1 Shariouf B Wadi Sana-1 Abiyeet-1 Wadi Sana-B Pr ospect2/Gamma Shariouf A Wadi Sana-C F Structure Tasour West Tasour B Tasour C Yashaar Lead 2 Tasour East Qishn S1 Atheib E Ya
Slide 35: Tasour B, D and F Production Profile (100%)
YEMEN Tasour B, D and F Production Profile (100 %) P-50 + Tas.D&F (risked) 12000 10000 Rate: bbl/d 8000 + Tas.D and F 6000 P-50 Base Case 4000 12 mill. barrels 2000 0 0 1 2 3 4 5 01 02 03 04 05 06 l.0 l.0 l.0 l.0 l.0 l.0 n. n. n. n. n. n. ju ju ju ju ju ju ja ja ja ja ja ja Date
Slide 36: Yemen Block 32 Development Plan
YEMEN BLOCK 32 Development plan filed Dec. 99’ Located in area with substantial oil production Close to existing infrastructure - low development costs Production start up 4 Q 2000
Slide 37: Norway
NORWAY
Slide 38: Re-entry to Norway
RE-ENTRY TO NORWAY “DNO will build on it’s valuable experience and expertise from Heather and Tasour”
Slide 39: Opportunities
Opportunities • Imbalance between the three enabling factors; intellect, land and capital create a negative spiral • Small fields have become larger • Two decades of outsourcing have made technology an equal commodity for small and large companies • Competition related to why and where instead of ho
Slide 40: Concepts and strategy
Concepts and strategy • Value creation by combining small Volume discoveries into unitized producing knowledge Type of clusters of at least 10 years company: Mature/combination explicate small Small • Value creation by extending the life discoveries of producing fields based on and tailend improved
Slide 41: Areas of interest in Norway
Areas of interest in Norway • Mature part of North Sea south of 60°N • Discoveries with low GOR • Upper Cretaceous fields and discoveries
Slide 42: Tor Field (Tor Unit)
Tor Field (Tor Unit) Top Ekofisk Fm. depth Location map Operator Phillips : 32.02 % Geo DNO Share : 8.74 % profile Other Licensees: TotalFina/Elf : 41.01 % Agip : 11.30 % Norsk Hydro : 5.80 % Statoil : 1.13 % Seismic License expiry 2028 Seismic 8x E16 S N Production history 3.0 vertical scale: 1000
Slide 43: The cluster concept
The cluster concept • Identify discoveries with similar oil properties • Identify movable production units in relation to subsurface conditions • Create common incentive to maximize value for licensees
Slide 44: Mega Trends in the Petroleum Industry
Mega Trends in the Petroleum Industry Liquids Production v. Reserves Added (excluding North America) Liquids - Large energy companies 2500 - Production Total 1988 - 97: 200.936 1993 - 97: 103.046 2000 - MMb Volume of Liquids - Petroleum commodity 1500 - 1000 - Total 1988 - 97: 86.567 1993 - 97: 32.0
Slide 45: Cluster production
Cluster production Characteristics: Challenges: - Size 15 - 50 mill. bbl - Holistic agreement among companies - Number 20 - 50 low GOR across licenses boundaries - Small margins between expected - Increased volume to sustain failures and min. economic reserves - Timing of out-and in-phasing of field
Slide 46: Production forecast
Production forecast 6000 5000 4000 3000 Glitne 2000 1000 Jotun Tor 0 08 09 10 11 12 00 01 02 03 04 05 06 07 20 20 20 20 20 20 20 20 20 20 20 20 20
Slide 47: Potential for cluster growth
Potential for cluster growth 18000 16000 14000 12000 10000 8000 6000 4000 present identified 2000 0 06 07 08 09 10 11 12 00 01 02 03 04 05 13 14 15 16 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Slide 48: Cluster v.s. conventional development
Cluster v.s. conventional development Accumulated cash flow before tax G NOK Paleocene, 3 x 33 mill bbl., cluster 3 Paleocene, 100 mill bbl., conventional 2 1 0 1 2 3 4 5 6 7 8 9 year -1 -2 -3 -4
Slide 49: DNO strategy in Norway
DNO strategy in Norway • Supplementary company • Value creation by cluster production of small discoveries • Extend the tail end production by reduced costs and increased reserves • Participate in exploration in relation to producing infrastructures • Active partner with the potential of being a net
Slide 50: DNO experience
DNO experience • Good dialog with oil companies and contractors • Alternate ways of obtaining production • Alternate ways of remuneration - direct payment - profit sharing - carrying of exploration • Strengthen position by actions
Slide 51: Operational technology network
Operational technology network GEOLOGY OG GEOPHYSICS RESERVOIR PGS RDS Geco/Schlumberger Technoguide Technoguide ROXAR APT Rogalandsforskning Geo Norge Triangel Aker Geo PGS TGS Nopec RWS Long Island Nordang Exploration WELL TECHNOLOGY AND Petroteam DRILLING SAFETY/ENVIRONMENT ASA Rogalandforskning
Slide 52: The network company
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Slide 53: Det Norske Oljeselskap AS - Functional intern network
Det Norske Oljeselskap AS - Functional intern network
Slide 54: DNO Heather Limited Safety Management System
DNO Heather Limited Safety Management System The DNO Safety Management System is designed to: • Protect the safety and welfare of everyone engaged in activities on behalf of the company. • Meet legislative and regulatory requirements. • Minimise financial loss caused by accidents, unplanned downtime
Slide 55: DNO Safety Management System
DNO Safety Management System Overall Structure • Board Policy Statement. • Management System Policy Manual. • Procedures Manual. • Detailed Work Instructions. • Reporting/Communication. – Toolbox Meetings – Dedicated Safety Meetings – Forms (Injuries, Losses, Non Conformance, Dangerous Occurrences,
Slide 56: HS&E Operational Performance
DNO Heather Limited HS&E Operational Performance 1997 1998 1999 Unplanned Facilities Downtime (%) 0.025 0.056 0.054 Unplanned Facilities Downtime (hrs) 2.2 4.9 4.7 Lost Time Accidents 2 1 1 Dangerous Occurrences 7 3 7 Loss/Damage Reports 18 15 8 Medical Treatment Cases 0 3 1 First Aid Cases 1 1 0 Ne
Slide 57: Future Development
Future Development
Slide 58: Company Growth based on Current Projects
Company Growth based on Current Projects Heather - Yemen - Norway
Slide 59: Oil Reserves as of 1Q 2000
OIL RESERVES AS OF 1 Q 2000 Mill barrels 160 140 120 Other 100 80 60 North Sea 40 20 0
Slide 60: Production Forecast from Current Projects
PRODUCTION FORECAST FROM CURREENT PROJECTS BARRELS / DAY 30000 25000 20000 Y E ME N 15000 NORW A Y UK 10000 5000 0 4 Q 1999 1 Q 2000 1 Q 2001 1 Q 2002 1 Q 2003 1 Q 2004
Slide 61: Growth Potential
GROWTH POTENTIAL Trippel Oil Production within 2-3 years from current projects Capitalize on the window of opportunity on NCS and UKCS DNO IS WELL POSITIONED FOR GROWTH !
Slide 62: Enterprise Value per Barrel Oil
ENTERPRICE VALUE PER BARREL OIL USD/BOE 4.5 4.0 Proven + Probable 3.5 3.0 60 % of NS 2.5 Reserves 54 mill. barels 2.0 1.5 1.0 0.5 0 Enterprise LASMO British European DNO Oil Borneo E&P (median) North Sea Reserves Current Projects Source: Sundal & Collier