Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Q2 2010 Earnings Presentation
32 slides from Dno Asa Class A's earnings presentation, 2010
Slide 1: Q2 2010 Presentation
Helge Eide Managing Director Q2 2010 Presentation
Slide 2: Agenda
Agenda 1. Welcome Tom Bratlie, Communication Director 2. Highlights from Q2 and key priorities going forward Helge Eide, Managing Director 3. Q2 Financials Haakon Sandborg, CFO 4. Q&A For participants being present and by e-mail Q2 2010 Presentation 2
Slide 3: Highlights from Q2 2010
Highlights from Q2 2010 • Significant increase in production volumes • Good cost control in operations • Improved financial results from operations • Net profit negatively affected by NOK 199 million in impairment loss, mainly related to lower share price in Det norske oljeselskap • Management focus
Slide 4: Q2 production summary
Q2 production summary Kurdistan region of Iraq • Significant increase in deliveries from Tawke in June • New short term local sales contracts for crude oil entered into in June • Stable high deliveries from Tawke refinery Yemen • Somewhat lower production in Q2 compared with Q1 • Decrease in product
Slide 5: Continued satisfactory HSE performance
Continued satisfactory HSE performance Incidents per million working hours 3 2,5 2 Lost time incidents 1,5 Total recordable incidents Vehicle incidents 1 0,5 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2009 2010 Q2 2010 Presentation 5
Slide 6: Increase in production volumes
Increase in production volumes • Total working interest production up from 12,442 bopd in Q1 to 15,748 bopd in Q2 18 000 16 000 Working interest production I barrels per day 14 000 12 000 6 808 10 000 7 655 7 542 7 437 8 000 7 878 7 925 6 000 8 940 4 000 5 871 5 926 5 005 2 000 3 438 2 861 0 Q1 2009
Slide 7: Positive trend in financial performance
Positive trend in financial performance • Sales and EBITDA up around 10% from Q1 to Q2 300 284,7 258,6 250 235,5 223,9 225,9 200 183,8 Sales 155,6 171,2 150 140,6 138,7 100 79,5 50 62,8 45,6 5,5 -8,7 EBITDA NOK million 0 16,7 Netback -5,6 -44,2 -50 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Sal
Slide 8: Lower lifting costs
Lower lifting costs • Lifting cost per barrel down by more than 15% from Q1 to Q2 17 16,58 16,31 15 13 11,35 11 Average lifting cost in USD/bbl 10,27 9,98 9,57 9 7 5 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Lifting cost 16,58 16,31 10,27 9,98 11,35 9,57 Q2 2010 Presentation 8
Slide 9: Average sales price down in Q2
Average sales price down in Q2 • Increased share of the production delivered to the local Kurdistan market at discounted prices • Price for Yemen production close to Brent market price 65 61,55 60 Achieved sales price (USD/bbl), net entitlement 55 51,44 51,88 50 48,65 49,15 45 40 39,34 35 30 25 20 Q
Slide 10: Continued improved cash position
Continued improved cash position • Tight capital discipline • Sound financial platform for new investments 920 821,6 820 720 671,1 620 520 420 320 303,4 282,1 210,0 220 142,7 NOK million 120 20 End Q1 2009 End Q2 2009 End Q3 2009 End Q4 2009 End Q1 2010 End Q2 2010 Cash 142,7 210,0 282,1 303,4 671,1
Slide 11: License activities
License activities Maputo mOslo 2010 2011 Business Unit Activity Project Well 3Q 4Q 1Q 2Q 3Q 4Q Production 32, 43, 53 [EEE Yemen Field Development 47 ———== > Exploration 72 EE 117+ 6001/5 Production Tawke a Benenan/ LT | 25.6 Expl/ Appraisal 1 Kurdistan Bastora GW 10 return + 180 days Summail Explor
Slide 12: Yaalen / Sharnah Fast Track Development
Yemen Block 47 Yaalen / Sharnah Fast Track Development • Yaalen-3 well proved up the total field reserves by two successful tests • Combined estimated production potential close to 10,000 bopd • “Notice of Commercial Oil Well” submitted to the Ministry on 15 June • Yaalen is planned to be the hub wi
Slide 13: Exploration program
Exploration program • DNO is planning to drill at least 5 exploration wells within the next 12 months • 3 wells in Kurdistan • 1 well in Yemen • 1 well in Mozambique Q2 2010 Presentation 13
Slide 14: Exploration in Kurdistan
Exploration in Kurdistan • 3 exploration wells to be drilled • Commencing in Q4 2010 Tawke Hawler-1 Dohuk Erbil-2 Peshkabir Q2 2010 Presentation 14
Slide 15: Yemen BL 72 Basement Prospect
Yemen BL 72 Basement Prospect NE • The Basement Prospect in Block 72 will be drilled in the second half of 2010 • This well will test the same play as the producing Kharir and Bayoot fields within the same basin SW • Total, the operator for the Kharir basement field, has recently farmed-in to Block
Slide 16: Exploration in Mozambique
Exploration in Mozambique • New exploration plays to be tested in the Urema graben • Highgrading of prospects ongoing • Exploraton well to be spudded in Q4 2010 • Farm-ins: Harmattan (5%) and New Age (41%) • DNO retains 54% and operatorship Q2 2010 Presentation 16
Slide 17: Key priorities going forward
Key priorities going forward • Increase production from a strong, developed reserve base • Utilize our production capacity of 40,000 – 50,000 bopd, net to DNO, without further investments • Bring additional production from new fast track/low cost field developments • Increased exploration efforts wi
Slide 18: Financials
Haakon Sandborg CFO FINANCIALS
Slide 19: Key figures
Key figures Q2 2010 Q2 2009 YTD 2010 YTD 2009 Operating 284.7 223.9 543.2 407.6 revenues Operating profit 99.0 1.9 193.5 -75.3 EBITDA 171.2 79.5 326.8 85.0 Netback 140.6 62.8 279.3 57.2 Q2 2010 Presentation 19
Slide 20: Improved financial results from operations
Improved financial results from operations Quarterly key financials Higher revenues and operating profit • Increase in Kurdistan production 325 • Low exploration cost expensed 275 Cash increase • Solid cash flow from operations 225 • Cash position strengthened through cash flow 175 • Investment leve
Slide 21: Operating profit drivers
Operating profit drivers Production net entitlement Achieved oil price Operational costs 12000 120 1600 1400 10000 100 1200 80 8000 1000 NOK million USD/bbl 60 800 BOPD 6000 600 40 4000 400 20 200 2000 0 0 2006 2007 2008 2009 YTD 2006 2007 2008 2009 YTD 0 Q2'10 Q2'10 2006 2007 2008 2009 YTD Q2'10 DN
Slide 22: Netback up on increase in production and oil prices
Netback up on increase in production and oil prices Netback Q2 2010 vs Q2 2009 Netback YTD 2010 vs YTD 2009 180 350 160 300 140 250 120 NOK million 200 NOK million 100 80 150 60 100 40 20 50 0 0 Production FX Price OPEX Taxes paid Q2 2009 Q2 2010 OPEX Production FX Price YTD 2009 Taxes paid YTD 2010
Slide 23: Key financial indicators
Key financial indicators EBITDAX margin EBITDAX Netback 80 % 200 150 180 70 % 67 % 160 100 60 % 64 % 140 50 % 120 50 NOK million NOK million 45 % 45 % 40 % 100 80 0 30 % 60 20 % 40 -50 10 % 20 0% 3% 0 -100 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 *EBI
Slide 24: Key financial indicators - net of arbitration costs
Key financial indicators - net of arbitration costs EBITDAX margin EBITDAX Netback 80 % 200 160 180 70 % 140 67 % 160 60 % 64 % 120 140 56 % 50 % 53 % 100 120 NOK million NOK million 45 % 40 % 100 80 80 30 % 60 60 20 % 40 40 10 % 20 20 0% 0 0 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q2'09 Q3'09 Q4'09 Q1'10 Q2'
Slide 25: Condensed income statement
Condensed income statement NOK million Q2 2010 Q1 2010 Q2 2009 YTD 2010 YTD 2009 Sales 284.7 258.6 223.9 543.2 407.6 Cost of goods sold -155.6 -133.3 -184.0 -288.9 -374.2 Gross profit 129.0 125.3 39.9 254.4 33.4 Dry well cost expensed -11.0 - -4.5 -11.0 -13.4 Seismic and other exploration expensed -
Slide 26: Cost of goods sold
Cost of goods sold Lifting cost Lifting cost per barrel Yemen Kurdistan Yemen Kurdistan 120 20 18 NOK million 100 16 USD/barrel 80 14 12 60 10 8 40 6 20 4 2 0 0 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 DD&A DD&A per barrel 25 Yemen Kurdistan Yemen Kurdistan 90 80 20 70 USD/barrel
Slide 27: Cash flow statement
Cash flow statement NOK million Q2 2010 Q1 2010 Q2 2009 YTD 2010 YTD 2009 Profit from operations before exploration 110.1 111.1 23.9 221.2 5.0 Exploration expenses -11.1 -16.6 -22.0 -27.7 -80.2 Taxes paid, DDA, other 83.6 -29.0 80.1 54.6 36.5 Net cash from operations 182.6 65.5 82.1 248.1 -38.7 Net
Slide 28: Cash flow coverage of investments
Cash flow coverage of investments Netback coverage Cash flow funding Netback before exploration CAPEX Exploration • The cash flow coverage ratio increased to 3.2x i Q2 2010 200,0 • Increase in netback • Reduced investment levels 150,0 Increase in investments planned 100,0 for Q3/Q4 2010 • New explor
Slide 29: 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 822 million 4000 4000 Financial assets: Net debt to NOK 288 million capitalization: NOK Mill
Slide 30: Outlook
Outlook Oil Production • Preliminary figures for July show a WI production of about 27,000 bopd • 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
Slide 31: Welcome back
THIRD QUARTER 2010: 11 NOVEMBER 2010 WELCOME BACK
Slide 32: 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