Bluenord Asa · OSL:BNOR
Bluenord Asa — Norwegian Energy Company ASA (Noreco) — Q2 2014 Earnings Presentation
49 slides from Bluenord Asa's earnings presentation, Aug 14, 2014
Slide 1: Second quarter 2014
Second quarter 2014 14 August 2014
Slide 2: Second quarter headlines
Second quarter headlines • Revenue and EBITDA at a higher level – Revenues NOK 318 million, up 29 per cent from Q2 2013 – EBITDA NOK 175 million exclusive of exploration costs • Towards end of production restrictions – CATS1 maintenance nearing completion – Siri repairs technically completed • Mixed
Slide 3: Production
Production YNOREcCO
Slide 4: Q2 production: Step up from last year, but no easy oil
Q2 production Step up from last year, but no easy oil • Huntington closed for 35 days Noreco production in Q2, with additional output (quarterly average in boepd) restrictions imposed by CATS 7000 Six month • Nini producing well through 6000 average temporary Siri solution. + 63 % 5000 Cecilie on-st
Slide 5: Huntington: Towards more stable conditions
Huntington Towards more stable conditions • CATS maintenance nearing Huntington production completion (monthly average in boepd) – Production restriction since May 6 000 – Shut-down since 31 July 5 000 – Expected to ramp up quickly towards plateau when back on 4 000 stream after on-going planned shu
Slide 6: Siri repairs technically completed in July
Siri Fairway Siri repairs technically completed in July • Production directly to tanker has worked • Final documentation and authority well. Average ~2 000 boepd to Noreco approval remain. Approval for use of since restart in February 2014 subsea storage tank expected in • Permanent repair on Siri p
Slide 7: Discoveries
Discoveries YNOREcCO
Slide 8: Gohta discovery: First appraisal well completed
Gohta discovery First appraisal well completed PL 492 Gohta Operated by Lundin • Confirmed carbonate reservoir Johan Castberg formation with oil shows as expected 20% • Coring and wireline logging over PL492 Noreco reservoir section was completed Gohta equity interest • Top 8-10 meters gas zone Disc
Slide 9: Huntington Deep: Maturing the Maxwell discovery
Huntington Deep Maturing the Maxwell discovery Forties • The Maxwell discovery is a Fulmar Formation formation reservoir that underlies the main Huntington Forties Field • Discovered in May 2007 by well 22/14b-8 22/14b-4 22/14b-5, which tested 4,600 bbl/day. Further appraised with sidetracks in Q3/Q
Slide 10: Exploration
Exploration
Slide 11: Noreco license portfolio 2005-2014: Barents Sea, Norwegian Sea
Noreco license portfolio 2005-2014 Refocusing towards mature, producing trends Barents Sea Norwegian Sea 12
Slide 12: Noreco license portfolio 2005-2014: North Sea
Noreco license portfolio 2005-2014 Refocusing towards mature, producing trends North Sea (Norway, UK and Denmark) Ref.: 127281-v6 13
Slide 13: Key focus areas matured
Since mid 2013 Key Focus areas matured PL639 Kanel • North Sea North North Sea – PL639 Kanel | Seismic interpretation work near North completion. Drill-or-drop decision expected in PL519 Q3-Q4 2014 Albert – PL519 Albert | Seismic reprocessing completed and interpretation work ongoing. Nearby drillin
Slide 14: Exploration strategy
Exploration strategy Overall objective: 3 - 5 wells per year • High grade the portfolio through active portfolio Key criteria management – Farm down or out in licenses with high ~ 20 % equity or too high risk equity – Identify and actively pursue farm-in opportunities to secure an attractive well pr
Slide 15: Drilling programme
Exploration and appraisal Drilling programme Noreco Opera- Pot. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Well share tor vol.1 2014 2014 2014 2014 2015 2015 2015 2015 DK 9/95 20.1 % Maersk 47-475 Xana (Gita S) P1889 22.5 % Suncor 7 – 157 Niobe PL616 30 %3 Edison 69-1922 Haribo PL492 20 % Lundin 111-232 Gohta (appr) P
Slide 16: North Energy and Noreco asset swap
North Energy and Noreco asset swap PL 616 (Operator: Edison) PL 484 (Operator: Noreco) Featuring Haribo, Nanna and Amma Several prospects identified • Noreco increases equity in PL 616 from 20 to 30 % • Reduces equity in PL 484 from 30 to 15 % 30 % 15 % Noreco Noreco equity interest equity interest
Slide 17: PL616 – Haribo
Exploration programme PL616 – Haribo • Slumped chalk prospect on the flank of Valhall/Hod inside structural megaclosure • CoS: 42 % – Primary risk element: Trap PL616 Haribo Operated by Edison • 69 – 192 mmboe gross on block, 24 mmboe net P50 to Noreco • On schedule to be drilled in 2015 – rig optio
Slide 18: DK 09/95 – Xana
Exploration programme DK 09/95 – Xana DK 09/95 Xana • Upper Jurassic target in close vicinity (up-dip) to the Operated by Maersk Svane gas discovery and south of Gita discovery • CoS: 27% – Primary risk element: Trap • 47 – 475 mmboe gross (gas), 28 mmboe net P50 20.1 % • Expected spud Q4 2014 with
Slide 19: 2014 licence rounds
Building portfolio 2014 licence rounds • Norway APA 2014 – Focusing on mature areas in the North Sea and Mid Norway – Deadline 2 September • UK 28th Round – Submitted applications in late April focusing on prospectivity in producing areas • Denmark 7th Round – Focusing on known North Sea geologic pl
Slide 20: Key financials
Key financials YNOREcCO 21
Slide 21: Income statement
Income statement NOK million Q2 ‘14 Q1 ‘14 Q4 ‘13 • Revenues 2013 Total revenues 318 384 255 Production 894 shortfall on Production expenses (132) (138) (139) Huntington, (430) Nini performing well. Favourable USD/NOK and oil Exploration expenses (173) (25) (9) (666) price Payroll (22) (31) (23) (12
Slide 22: Revenue & EBITDA
Revenue & EBITDA (NOK mill) Revenues EBITDA / Exploration expenses 450 300 400 Six month 200 average 350 100 300 0 + 63 % 250 -100 200 -200 150 -300 -400 100 -500 50 -600 0 -700 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 2014 2012 2013 2014 EBITDA before expl Expl cost EBI
Slide 23: Balance sheet
Balance sheet NOK million 30.06.14 31.03.14 31.12.13 • Equity ratio 27 % Assets Small increase from Non-current assets 1 4 960 4 669 4 797 Q1 Current assets 1 1 041 1 084 1 005 • Restricted cash Cash (non-restricted) 507 497 403 502 mill Siri Fairway Total assets 6 508 6 250 6 205 abandonment se
Slide 24: Siri insurance claim
Siri insurance claim Status o Gross book value at the end of Q2 is NOK 363 mill, NOK 318 mill after tax o USD amount unchanged at 59 mill o Total claim is well above NOK 2 billion (~ USD 400 mill plus interests) o Writ filed for Danish court on 14 February 2014 o Writ response received from underwri
Slide 25: Cost consciousness
Cost consciousness • Number of permanent staff SG&A1 development and consultants reduced; (Last 18 months) organisation well aligned 70 with business needs Other G&A 60 • Pension scheme adjusted to Salary defined contribution 50 NOK million • New office lease reduces 40 ~ - 30% office cost by more t
Slide 26: Tommy Sundt new CFO
Tommy Sundt new CFO • CFO for ten years at Rocksource, an exploration company with focus on the Norwegian continental shelf • Has held positions in companies dealing with business development, entrepreneurial activities Tommy Sundt, and investments. Early in his career he was an Chief Financial Offi
Slide 27: Recap from Q1 2014 presentation
Recap from Q1 2014 presentation 28
Slide 28: Main priorities going forward
Main priorities going forward • Work with operators to improve production – Towards a more stable production level – Move Maxwell forward to extend field life at Huntington • Continue focused development of license portfolio – Continue maturing 2015 drilling opportunities to determine potential in e
Slide 29: Presentation | Second quarter 2014
Presentation | Second quarter 2014 30
Slide 30: Additional information
Table of contents Noreco at a glance 32 Strategy and objectives 33 Production per field 34 Revenue per field 35 Production expences per field 36 Reserves and resources 37 Additional Reserves by field 38 Exploration Committed and potential wells 39 information UK P1889 – Niobe North Sea North APA 201
Slide 31: Noreco at a glance
Noreco at a glance An exploration driven E&P company in the North Sea Exploration Production (number of licenses) (in boepd) 7000 6000 NOR 5000 4000 DEN 3000 2000 UK 1000 Year 2011 2012 2013 14E 0 Wells 4 7 4 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Exploration wells only 12 12 12 12 13 13 13 13 14 14 32
Slide 32: Strategy and objectives
Strategy and objectives Production and Financial and Exploration development human capital o 3-5 attractive wells per o Monetise producing o Sound financial basis year fields through efficent and a capex program o Monetise discoveries and safe operation balanced accordingly through disposals or o Ma
Slide 33: Production per field
Production per field (boepd) Noreco Field share Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Oselvar 15 % 552 574 850 221 407 897 Enoch 4.36 % 0 0 0 0 0 0 Lulita 28.2 % 204 330 196 45 79 246 Nini 30 % 1 753 1 415 0 469 2 541 2 566 Cecilie 61 % 13 0 0 46 347 333 Huntington 20 % 3 187 4 646 3 637 2 336 1 188 0
Slide 34: Revenue per field
Revenue per field (NOK million) Noreco Field share Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Oselvar 15 % 25 30 40 8 18 41 Enoch 4.36 % 0 0 0 0 0 0 Lulita 28.2 % 8 15 10 2 3 11 Nini 30 % 113 82 0 29 142 146 Cecilie 61 % 1 0 0 3 19 19 Huntington 20 % 172 257 206 135 63 0 Total 318 384 255 177 246 216 Hunti
Slide 35: Production expenses per field
Production expenses per field (NOK million) Noreco Field share Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Oselvar 15 % 6 6 14 7 8 6 Enoch 4.36 % 0 2 15 -1 1 0 Lulita 28.2 % 2 3 4 1 2 3 Nini 30 % 55 48 38 67 48 45 Cecilie 61 % 7 14 7 11 9 13 Huntington 20 % 62 66 60 23 40 7 Total 132 138 139 108 108 74 Prod
Slide 36: Reserves and resources
Reserves and resources Certified reserves Contingent resources • Annual Statement of Reserves as of • Only including discoveries currently 31 Dec 2013, audited by DeGolyer and being matured by their licence groups MacNaughton (see next page for details) Reserves Resources 2012 2013 2013 in mmboe in
Slide 37: Oil and gas reserves by field
Oil and gas reserves by field As of 31.12.2013 Reserves per field 1P 2P Liquids Liquids Gas Interest Net (mill. Gas Interest Net (mill bbl) (bscf) Mill. boe % mill. boe bbl) (bscf) Mill. boe % mill. boe Nini 0.9 0.0 0.9 30.0 0.3 2.1 0.0 2.1 30.0 0.6 Nini East 2.6 0.0 2.6 30.0 0.8 7.7 0.0 7.7 30.0 2.
Slide 38: Committed and potential wells
PL492 Gohta Committed and potential wells • Xana spud Q4 2014 • Potential new wells being PL484 matured from our inventory of prospects PL639 Kanel • Work to optimise risk reward balance continues PL519 Albert Committed well Potential well PL 1889 Q2-3 15 Niobe DK 9/95 Q4 14 PL616 Q2-3 15 Haribo Xan
Slide 39: UK P1889 – Niobe
UK P1889 – Niobe P1889 Niobe Operated by Suncor • Jurassic stratigraphic pinch-out trap, up-dip of proven oil discovery, located in Inner Moray Firth in proven play east of Beatrice Field • Cos: 23 % – Primary risk element: Trap 22.5 % Noreco • 7 – 157 mmboe gross, 10 mmboe net P50 equity interest •
Slide 40: North Sea North
North Sea North • Albert well (2012) discovered oil at several levels • Appraisal well is being considered for Albert Chalk in 2015 • Albert Paleocene has no commercial value, but oil discovery positive for our Kanel prospects • Combined resource potential very large Albert Kanel Kanel PL519 PL639 P
Slide 41: APA 2013 licenses and total portfolio
APA 2013 licenses and total portfolio APA 2013 PL744 S PL748 PL755 PL761 PL762 Noreco role Licensee Licensee Licensee Operator Operator Equity 20 % 20 % 20 % 40 % 20 % Initial period 7 years 6 (8) years 7 years 6 years 8 years Acquire Acquire Reprocess Gather new 3D data. 3D data. Gather G&G studies
Slide 42: Balance sheet specifications: Producing assets
Balance sheet specifications Producing assets (NOK million) Gross Asset Deferred book retirement tax Net book Asset value obligation (-asset) value Oselvar 319 10 -138 447 Enoch 8 5 3 1 Lulita 33 11 5 18 Nini and Cecilie 335 220 14 101 Huntington Forties 2 268 140 865 1 264 Total producing assets 2
Slide 43: Balance sheet specifications: Intangible assets
Balance sheet specifications Intangible assets (NOK million) Gross Net book Deferred book Asset value tax (asset) value Goodwill UK 101 0 101 Goodwill Denmark 44 0 44 Total Goodwill 145 0 145 Gohta 204 159 45 Huntington Fulmar 582 339 243 Maja/Xana 31 8 24 Other licenses 2 1 1 Total license and capi
Slide 44: Write-downs and reversals
Write-downs and reversals Q2 2014 Write-downs and Write-downs and reversals Q2 reversals YTD Items (NOK mill) Before tax After tax Before tax After tax Goodwill UK (2) (2) (30) (30) Oselvar - - (34) (9) Enoch - - (10) (2) Siri Fairway (Nini and 56 42 96 72 Cecilie) Total 54 40 22 31 • The impairment
Slide 45: Bond restructuring: Effects on the accounts 2013 and forward
Bond Restructuring Q4 2013 Effects on the Accounts 2013 and forward 2013 2014 2015 2016 2017 2018 2019 Profit & Loss Effects Financial Income 523 Financial Cost to be -8 -149 -134 -123 -111 -97 -18 amortised* Tax (non cash) -24 +24 0 0 0 0 0 Balance Sheet Effects Value Bond debt -621 -474 -340 -217
Slide 46: Noreco bond structure
Noreco bond structure 600 NOR11 NOK million 400 NOR12 NOR10 NOR10 NOR10 NOR11 200 NOR11 NOR06 NOR11 NOR06 NOR06 NOR06 0 2014 2015 2016 2017 2018 2019 Bond Outstanding Due **) Main Terms NOR06 NOK 587.7 mill 9 Dec 2017 6.5 % fixed, pledge in Oselvar asset NOR10 NOK 1 372.1 mill 9 Dec 2016 6.0 %, pled
Slide 47: Shareholders
Shareholders Top 20 shareholders as of 11 August 2014 Shareholder Shares % of total SA B A R O INV E STME NTS LTD 1 541 363 572 27,24 % IK M INDUSTR I-INV E ST A S 1 029 470 893 18,19 % MP P E NSJO N P K 204 516 300 3,61 % O M HO LDING A S 159 615 900 2,82 % A LTO HO LDING A S 100 000 000 1,77 % JF
Slide 48: Important information
Important information This company presentation (the “Presentation”) has been prepared by Norwegian Energy Company ASA (“Noreco” or the “Company”). The Presentation has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place. The Company m
Slide 49: YF NORECO
YF NORECO
Norwegian Energy Company ASA (Noreco) — Q2 2014 Earnings Presentation on 6ix