Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Q3 2009 Earnings Presentation
42 slides from Dno Asa Class A's earnings presentation, 2009
Slide 1: Third Quarter 2009
DNO INTERNATIONAL ASA Third Quarter 2009
Slide 2: Agenda
Agenda Highlights and Operational Review • Helge Eide, Managing Director Financial Review • Haakon Sandborg, CFO Q&A Third Quarter 2009 | 2
Slide 3: Highlights third quarter
Highlights third quarter Operations • DNO delivered 44,500 bopd in the third quarter • Tawke export commenced 1 June 2009 and the facilities were tested at the design capacity of 50,000 bopd • The Bayoot field development in Yemen was completed and the production continued to increased in the third q
Slide 4: Production profile
Production profile Average production (WI) 50000 “Tawke export "Kurdistan "Yemen 40000 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 fd DNO 7 TURKEY DNO’s Assets @ Producing Assets © Other Assets Third Quarter 2009| 4
Slide 5: Q3 2009: Key financials
Q3 2009: Key financials Sales Netback Net profit 1000 350 50 900 300 40 800 700 250 30 600 714 NOK million NOK million NOK million 200 45 500 20 150 314 400 10 300 100 200 325 0 50 100 236 65 -3 0 0 -10 Q3 2008 Q3 2009 Q3 2008 Q3 2009 Q3 2008 Q3 2009 Third Quarter 2009 | 5
Slide 6: YTD 2009: Key financials
YTD 2009: Key financials Sales Netback Net profit 1600 600 450 1400 400 500 350 1200 844 400 300 1000 NOK million NOK million NOK million 250 800 300 414 200 481 506 600 1,159 200 150 400 100 648 100 200 50 73 0 0 0 YTD 2008 YTD 2009 YTD 2008 YTD 2009 YTD 2008 YTD 2009 Third Quarter 2009 | 6
Slide 7: The DNO Growth Story
THE DNO GROWTH STORY
Slide 8: DNO's Growth Cycles
DNO’s Growth Cycles First growth cycle Reserves 1st 2nd 3rd • Focus on offshore mature fields located in UKCS and NCS. Realized values and paid out 160 dividends in 2004 120 MMBOE 80 Second growth cycle 40 • Exploration focused strategy building reserves 00 at low costs. Yemen operations provided str
Slide 9: Yemen: Historical production
Yemen: Historical production Key Facts 50 Gross WI Gross WI 100 • Entry in 1998 45 90 40 80 • First oil in 2000 35 70 • Cumulative oil volumes produced to date Thousand bopd Milllion barrels 30 60 • Gross: 87 million barrels 25 50 • Net to DNO: 34 million barrels 20 40 • Current oil production 15 30
Slide 10: Yemen: Success to contractors creates value to the country
Yemen: Success to contractors creates value to the country Fast-track and low cost developments Cash flow from Yemen 100% Project payback within 12-18 months Net CF DNO 90% Net CF Partners Strong cash flow funding other investments 80% within the Group Net CF MOM/TYC 70% Provided a strong basis for ex
Slide 11: Kurdistan: Quickly developed full scale E&P operations
Kurdistan: Quickly developed full scale E&P operations Agreement Seismic Drilling, Tawke # 1 Tawke test production Tawke export 2004 24 months from entry to first discovery 2006 2006 36 months from first discovery to full scale production 2009 Third Quarter 2009 | 11
Slide 12: Kurdistan – high E&P activity
Kurdistan – high E&P activity High activity Tawke PSC TURKEY • 35 international companies DNO present in Kurdistan SYRIA Dohuk PSC • 16 nationalities IRAN • High drilling and seismic activity Erbil PSC Pioneers • DNO and Genel Enerji have been the frontrunners • Catalysts for other entrants KRG’s su
Slide 13: DNO's position in Kurdistan
DNO’s position in The June 2004: e Two PSA’s on same terms e DNO with 100% of PSC, 40% beneficial interest March 2008: e Three PSC’s e Tawke: 55% DNO, 45% KRG e Dohuk and Erbil: 40% DNO, 60% KRG April 2009: * Three PSC’s * Tawke: 55% DNO, 25% Genel Enerji, 20% KRG * Dohuk: 40% DNO, 40% Genel Enerji,
Slide 14: Arbitration
Arbitration As previously reported, DNO is involved in arbitration proceedings related to certain third party interests in the Kurdistan region of Iraq. Such third parties were not approved to be part of or have any rights in the PSC's following the reviews which were completed in March 2008. DNO ha
Slide 15: Stock Exchange Notice, October 2009
Stock Exchange Notice, 6 October 2009 DNO INTERNATIONAL ASA - RESTARTING OPERATIONS IN KURDISTAN REGION OF IRAQ 06.10.2009 Reference is made to DNO's Stock Exchange Notice dated 21 September 2009 in relation to the notice of the same date (the Notice) from the Kurdistan Regional Government (KRG) and
Slide 16: Suspension and reinstatements of the Kurdistan PSC's
Suspension and reinstatements of the Kurdistan PSC’s The KRG suspended all of DNO's operations in the Kurdistan region of Iraq on 21 September. All issues with respect to the suspension were resolved and on 5 October DNO's rights to its production sharing contracts were fully reinstated. The Company
Slide 17: 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 Third Quarter 2009 | 17
Slide 18: Kurdistan update
Kurdistan update Tawke * Commenced export of crude oil from Tawke on 1 June which continued until 22 September * Tawke #11 work over and completion finalized in October ° Tawke #11 flow line installation ongoing Benenan discovery * Testing of well #2 scheduled for Q1 2010 Exploration * Dohuk and Taw
Slide 19: Tawke production
Tawke production Start-up of export in line with Tawke production profile Export agreed step-up plan 70,000 Local sales 60,000 • Tawke facilities tested at the design 50,000 capacity 40,000 • Max field delivery to date has been 30,000 56,000 bopd with 50,000 for 20,000 export 10,000 0 02.06 02.07 01.0
Slide 20: 12" Oil pipeline
12" Oil pipeline === 40” and 46” Export pipeline Operator responsibilities TURKEY State Oil Marketing Organization (SOMO) Sales at outlet in Turkey SYRIA DNO Iraq AS TAWKE PSC + Tawke field + Tawke pipeline Turkey's Petroleum Pipeline Corporation (BOTAS) Pipeline system in Turkey METERING STA AT TIE
Slide 21: Yemen update
Yemen update Production e Stable production supported by successful infill drilling in 2008 and installation of ESPs in Bayoot wells in 2009 ° Tasour #26, BL32 (ongoing) * Bayoot #7, BL 53 (ongoing) * Basement Nabrajah-10S, BL 43 (planned) ° Bayoot #8, BL53 (planned) Development * Bayoot basement de
Slide 22: Bayoot basement development (Block 53)
Bayoot basement development (Block 53) Nabrajah Production profile Bayoot (gross) 6,000 5,000 4,000 3,000 bopd Sharnah 2,000 Yaarlen 1,000 ie) 23.09.2006 05.11.2010 Third Quarter 2009 | 22
Slide 23: Block Yemen
Block 47 Yemen The Yaalen and Sharnah oil discoveries * 10 million barrels (gross) in resource potential * Potential for fast track and low cost development e Further exploration/appraisal drilling required * 2010 work program yet to by decided by license partners L*] E 6 | Sharyoot Bayoot Hekna Tas
Slide 24: Mozambique update
Mozambique update Seismic 2D acquisition is ongoing ° 32% of 600 km completed (0n1.11.09) e ~65 more days left to complete the program e In field processing indicate high quality data Geological Field Work completed in October e Geological mapping and verification of the Inhaminga structure e Verifi
Slide 25: New Venture Projects
New Venture Projects • Tunisia Chorbane Exploration Permit • LOI with Audax signed DNO works in several new regions to build up • Farm-in process ongoing our knowledge base and to be ready for new entries Tunisia fits well into DNO’s strategy: • Similarities to Yemen • Well developed infrastructure •
Slide 26: HSE Summary
HSE Summary Continued positive trend through Q3’09 HSE performance trends • No serious incidents year to date 4 Lost Time Incident Frequency* Vehicle Incident Frequency* 3.5 Total Recordable Incident Frequency* KPIs by end of third quarter: 3 • Lost Time Incident Frequency: 0.25 2.5 • Total Recordab
Slide 27: Financials
FINANCIALS
Slide 28: Financial summary Q3 2009
Financial summary Q3 2009 Quarterly key financials Key points 1200 Sales • Tawke exports increase production and sales, Exploration export revenues of NOK 714 million recognized 1000 EBITDA in the quarter • A provision of NOK 396 million has been made to reflect outstanding payment issues and other 80
Slide 29: Financial summary (net of export and provision)
Financial summary (net of export and provision) Sales EBITDAX Netback 1000 900 800 900 700 600 800 700 500 400 600 NOK million NOK million NOK million 500 300 200 400 100 0 300 200 -100 -200 100 0 -300 -400 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Thi
Slide 30: Financial summary (net of provision)
Financial summary (net of provision) Sales EBITDAX Netback 1000 900 800 900 Export Q3’09: 700 600 800 NOK 714 million 700 500 400 600 NOK million NOK million NOK million 500 Export Q2’09: 300 200 NOK 129 million 400 100 0 300 200 -100 -200 100 0 -300 -400 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q3'08 Q4'08 Q1
Slide 31: Financial summary (as reported)
Financial summary (as reported) Sales EBITDAX Netback 1000 900 800 900 Export Q3’09: 700 600 800 NOK 714 million 700 500 400 600 NOK million NOK million NOK million 500 Export Q2’09: 300 200 NOK 129 million 400 100 0 300 200 -100 -200 100 0 -300 -400 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q3'08 Q4'08 Q1'09 Q
Slide 32: Condensed income statement
Condensed income statement NOK million Q3 2009 Q2 2009 Q3 2008 YTD 2009 YTD 2008 Sales 949.9 358.7 324.5 1,492.3 1,158.9 Cost of goods sold -282.5 -203.1 -156.1 -675.8 -546.7 Gross profit 667.3 155.6 168.4 816.5 612.1 Dry well cost expensed -44.0 -4.5 -79.2 -57.4 -84.8 Seismic and other exploration e
Slide 33: 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 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 DD&A DD&A per barrel Yemen Kurdistan 40 250 Yemen Kurdistan 200 30 150 USD/barrel N
Slide 34: Water Purification Project – Kurdistan Region of Iraq
Water Purification Project – Kurdistan Region of Iraq Third Quarter 2009 | 34
Slide 35: Water Purification Project – Kurdistan Region of Iraq
Water Purification Project – Kurdistan Region of Iraq Social Responsibility Program • DNO and other contractors operating in the region are making substantial contributions to local society as part of oil rights under PSCs • DNO support and funding for a water project benefiting population in the Dohu
Slide 36: Investments in Q3 2009
Investments in Q3 2009 Exploration expensed per segment CAPEX per segment 140 800 Yemen Yemen Kurdistan 700 Kurdistan 120 Africa Africa 600 100 500 NOK million NOK million 80 400 60 300 200 40 100 20 0 0 -100 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Third Quart
Slide 37: Netback analysis
NOK million 100 300 500 800 600 900 0 400 700 200 Netback Q3'08 Production Price Q3 2008 – Q3 2009 FX OPEX Netback analysis Tax Other Netback Q3'09 NOK million 100 300 500 800 600 900 0 400 700 200 Netback Q2'09 Production Price Q2 2009 – Q3 2009 FX OPEX Tax Other Netback Q3'09 Third Quarter 2009 |
Slide 38: Sources and Uses
Sources and Uses Q3 2008 Q3 2009 Cash flow in the third quarter 2009 500 500 • Cash flow from operations before exploration of 450 Exploration 450 NOK 161 million • Tawke export receivable included under working 400 400 Other capital changes 350 Cash flow from operations before CAPEX 350 • Net cash inc
Slide 39: 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 Cash: NOK 282 million 4000 4000 Net debt to capitalization: NOK Million NOK Million 35 per cent 3000 F
Slide 40: Summary and key priorities
Summary and key priorities Restore market confidence and valuation • All issues are resolved with the KRG related to the suspension • Focus on operations and strategic development • Resume export sales once payment procedures are in place Maintain financial position • Strong operational performance •
Slide 41: Welcome Back
FOURTH QUARTER 2009: 17 FEBRUARY 201O WELCOME BACK
Slide 42: 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