Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Q3 2010 Earnings Presentation
38 slides from Dno Asa Class A's earnings presentation, Nov 11, 2010
Slide 1: Q3 2010 Presentation
Q3 2010 Presentation 11 November 2010
Slide 2: Agenda
Agenda 1. Welcome Tom Bratlie, Communication Director 2. Q3 Highlights and Operational Review Helge Eide, Managing Director 3. Q3 Financials Haakon Sandborg, CFO 4. Q&A For participants being present and by e-mail Bastora-1, the Kurdistan Region of Iraq Q3 2010 presentation 2
Slide 3: Q3 Highlights and Operational Review
Drilling the Bastora-1 exploration well in the Erbil license in the Kurdistan Region of Iraq. Q3 Highlights and Operational Review Managing Director Helge Eide
Slide 4: Main items in Q3 2010
Main items in Q3 2010 Crude oil distribution from Tawke based on truck loading at Fishkabour. • Cash position further improved by NOK 114 million in Q3 • Significant increase in production volumes from Q2 to Q3 • Results negatively affected by special items of NOK 326 million • Revenues increased to
Slide 5: Q3 production summary
Q3 production summary The Tawke CPF has a lifting capacity of around 50,000 bopd. Kurdistan region of Iraq • Significant increase in local deliveries of crude oil from Tawke • Further reduction in unit lifting cost Yemen • Minor decrease in production from Q2 to Q3 Working interest production (2010
Slide 6: Continued satisfactory HSE performance
Continued satisfactory HSE performance Incidents per million working hours 2009 2010 Q3 2010 presentation 6
Slide 7: Increase in production volumes
Increase in production volumes • DNO’ working interest production up from 15,748 bopd in Q2 to 24,956 bopd in Q3 Working interest production I barrels per day Total 10 786 11 316 13 413 13 581 12 442 15 748 24 956 Q3 2010 presentation 7
Slide 8: Positive trend in financial results from operations
Positive trend in financial results from operations This graph is adjusted for special (non-operational) items with negative effects in 2009 and 2010 on EBITDA and net back Q3 2010 presentation 8
Slide 9: Lower lifting costs
Lower lifting costs • Continued unit lifting cost reduction Q3 2010 presentation 9
Slide 10: Development in average sales price
Development in average sales price • Increased share of the production delivered to the local market in the Kurdistan Region of Iraq at discounted prices • Price for Yemen production close to Brent market price Q3 2010 presentation 10
Slide 11: Further increase in cash position
Further increase in cash position • Cash position increased by NOK 114 million in Q3 • YTD cash position increase of NOK 633 million 1 000 936 900 822 800 700 671 600 NOK million 500 400 282 303 300 210 200 143 100 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q3 2010 presentation 11
Slide 12: Operations Update
Drilling the Bastora-1 exploration well in the Erbil license in the Kurdistan Region of Iraq. Operations Update
Slide 13: Kurdistan operational status
Kurdistan operational status Tawke PSC • Further increase in local sales in Q3 • Lower crude oil lifting in first part of Q4 • Peshkabir-1 exploration well expected to commence in Q1/Q2 2011 Dohuk PSC • Summail-1 exploration well now expected to commence in Q1 2011. Postponed one quarter due to furt
Slide 14: Tawke Facilities and Pipeline
Tawke Facilities and Pipeline State Oil Marketing Organization (SOMO) • Sales at outlet in Turkey DNO Iraq AS • Tawke facilities (CPF and refinery) • Tawke pipeline • Truck loading facilities at Tawke & Fishkabour Turkey’s Petroleum Pipeline Corporation (BOTAS) • Pipeline system in Turkey 230 millio
Slide 15: The Tawke CPF
The Tawke CPF Confirmed capacity of 56,000 bopd Q3 2010 presentation 15
Slide 16: The Tawke refinery
The Tawke refinery Confirmed capacity of > 6,000 bopd Q3 2010 presentation 16
Slide 17: Truck loading station at Fishkabour
Truck loading station at Fishkabour 40,000 bopd in capacity Q3 2010 presentation 17
Slide 18: The Summail-1 well site prepared for drilling
The Summail-1 well site prepared for drilling Q3 2010 presentation 18
Slide 19: Drilling the Bastora-1 well in the Erbil license
Drilling the Bastora-1 well in the Erbil license Q3 2010 presentation 19
Slide 20: Yemen operational overview
Yemen operational overview Block 32 Wells Godah-12 completed Block 53 Further wells considered in 2011 Wells Bayoot-10 completed Block 43 No further drilling planned at this time Projects Cost saving project initiated Wells 8 000 Infill wells and exploration wells 7 000 considered in 2011 6 000 5 00
Slide 21: Signed MoU for new PSA in Block 48 in Yemen
Signed MoU for new PSA in Block 48 in Yemen • DNO has obtained exclusivity for concluding a PSA for Block 48 after having agreed a certain framework of terms and conditions (MoU) • DNO: 87,5% • TYC: 12,5% (carried) • Block 48 will add 3,767 sq km of exploration acreage to DNO’s portfolio Q3 2010 pre
Slide 22: The Inhaminga block in Mozambique
The Inhaminga block in Mozambique • Preparing to commence drilling in November • First of several well defined leads & prospects • Additional wells to be considered in 2011 Q3 2010 presentation 22
Slide 23: Road building in Mozambique
Road building in Mozambique Q3 2010 presentation 23
Slide 24: Well site prepared for the Chite-1 well in Mozambique
Well site prepared for the Chite-1 well in Mozambique Q3 2010 presentation 24
Slide 25: Additional acreage in Mozambique
Additional acreage in Mozambique • DNO holds 54% and is the operator on Inhaminga • New Age holds 41% Lower Zambesi • Harmattan holds 5% • DNO awarded exclusive negotiation rights for the Lower Zambesi block in Mozambique, adding another 19,181 sq km of exploration acreage in Mozambique Inhaminga •
Slide 26: Key priorities going forward
Key priorities going forward • Increase exploration efforts to add new reserves and resources at low costs • Utilize our existing WI production capacity of 40,000 – 50,000 bopd • Add new production based on DNO’s proven record of fast track/low cost field developments • Grow the asset base through n
Slide 27: Financials
FINANCIALS Haakon Sandborg CFO
Slide 28: Key financial indicators – before special items
Key financial indicators – before special items EBITDAX margin EBITDAX Netback 80 % 350 350 77 % 70 % 300 300 67 % 60 % 64 % 250 250 56 % 50 % 53 % NOK million NOK million 200 200 40 % 150 150 30 % 100 100 20 % 50 50 10 % 0% 0 0 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q3'09 Q4'09
Slide 29: Special items
Special items Arbitration The London Court of International Arbitration disclosed a partial decision in the arbitration process in October, 2010. DNO recorded a provision for arbitration claims of USD 12 million in its year-end accounts for 2009. DNO continues to dispute the terms and conditions of
Slide 30: Key figures
Key figures Before special Q3 2010 Q3 2009 YTD 2010 YTD 2009 items Operating revenues 406.6 235.5 949.8 643.1 Operating profit 198.0 -28.6 391.8 -103.9 EBITDA 309.2 45.6 636.3 130.6 Netback 281.9 16.7 561.5 74.0 As reported Q3 2010 Q3 2009 YTD 2010 YTD 2009 Operating revenues 406.6 235.5 949.8 643.1
Slide 31: Further strengthening of operational results
Further strengthening of operational results Quarterly key financials Solid operations • Revenue increase from growth in Kurdistan 400 production 350 • Low exploration expenses 300 • Doubling of quarterly operating profit, before special items 250 200 Providing increasing cash • Improving operationa
Slide 32: Key performance indicators
Key performance indicators Production net entitlement Achieved oil price Operational costs 14000 120 1600 1400 12000 100 1200 10000 80 1000 NOK million USD/bbl 8000 60 800 BOPD 6000 600 40 400 4000 20 200 2000 0 0 2006 2007 2008 2009 YTD 2006 2007 2008 2009 YTD 0 Q3'10 Q3'10 2006 2007 2008 2009 YTD
Slide 33: Condensed income statement
Condensed income statement NOK million Q3 2010 Q2 2010 Q3 2009 YTD 2010 YTD 2009 Sales 406.6 284.7 235.5 949.8 643.1 Cost of goods sold -185.1 -155.6 -149.3 -474.0 -523.5 Gross profit 221.4 129.0 86.1 475.8 119.6 Dry well cost expensed 3.1 -11.0 -43.9 -8.0 -57.4 Seismic and other exploration -6.2 -
Slide 34: Cash flow statement
Cash flow statement NOK million Q3 2010 Q2 2010 Q3 2009 YTD 2010 YTD 2009 Profit from operations before -120.4 110.1 31.9 100.8 36.9 exploration Exploration expenses -3.1 -11.1 -60.5 -30.8 -140.7 Taxes paid, DDA, other 263.2 83.6 192.3 317.8 165.8 Net cash from operations 139.7 182.6 100.7 387.8 62.
Slide 35: 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 936 million 4000 4000 Net debt to capitalization* NOK Million NOK Million 24 per cent 3000 3
Slide 36: Outlook
Outlook Oil production • Deliveries to the local market in Kurdistan may continue to show significant fluctuations • Some reduction in Yemen production until completion of Yaalen/Sharnah development • Lifting costs expected at USD 2-5 per barrel at Tawke and USD 15-20 in Yemen Exploration • Kick-off
Slide 37: Welcome back
FOURTH QUARTER AND FULL YEAR 2010: 16 FEBRUARY 2011 WELCOME BACK
Slide 38: 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