Petronor E&p Asa · OSL:PNOR
Petronor E&p Asa — Investor Presentation (March 2021)
43 slides from Petronor E&p Asa's investor presentation, Mar 11, 2021
Slide 1: Company Presentation
Company Presentation 11 March 2021 March 2020
Slide 2: Disclaimer
Disclaimer This Presentation has been prepared by PetroNor E&P Limited (Company). Investment risk An investment in the Company shares is subject to investment and other known and unknown risks, Summary information some of which are beyond the control of the Company Group. The Company does not guaran
Slide 3: Agenda
Agenda Section Page 1. Acquisition and financing summary 4 2. Company overview 11 3. Asset overview 21 4. Summary & appendix 36
Slide 4: Overview of risk factors
Overview of risk factors 1. Risk factors 1.3.13 Rising climate change concerns have led and could lead to additional legal and/or regulatory measures which could result in project delays or cancellations, a decrease in demand for fossil fuels and additional 1.1 Risks related to completion of the tra
Slide 5: Increasing ownership in PNGF Sud from 10.5% to 16.8%
Increasing ownership in PNGF Sud from 10.5% to 16.8% - NOK 275 – 340m contemplated equity financing Overview of transactions Key information PNGF Sud Increasing ownership in PNGF Sud from 10.5% to 16.8% > PetroNor to increase its net indirect interest in PNGF Sud in Congo Brazzaville from 10.5% to 1
Slide 6: Highly accretive transactions for PetroNor shareholders
Highly accretive transactions for PetroNor shareholders 1 2 3 Acquisition of 4.93% interest in Awarded 1.4% interest in Streamlining corporate PNGF Sud at material discount PNGF Sud due to partner’s structure with direct access to underlying values covenant breach to HEPCO USD/2P bbl kbbl/d 10 4.0 3
Slide 7: Material increase in production and cash flow
Material increase in production and cash flow Becoming a significant producer in Congo Significantly improving cash generation Production outlook (2P+2C+PNGF BIS 2C)1) Free cash flow – per year and accumulated kbbl/d USDm USDm Current 2P 10.5% 40 160 8 2C PNGF BisMGI enforcement (23.56%) IOR potenti
Slide 8: Consistent y-o-y reserves growth driven by strong production performance
Consistent y-o-y reserves growth driven by strong production performance Gross / net reserves increased 2.4x / 3.6x respectively1 2020 2P + 2C increase split on fields 2020 : 2P reserves replacement ratio of ~300% PNGF Sud embarking on infill drilling programs yielding reserves and resource increase
Slide 9: PetroNor increases its stake in PNGF Sud from 10.5% to 16.8%
PetroNor increases its stake in PNGF Sud from 10.5% to 16.8% Overview Structure Old structure Changes New improved structure Acquisition of remaining 29.293% in Hemla Africa Holding for USD 18m Acquiring remaining > PetroNor increases its ownership from 70.707% to 100% PetroNor E&P Limited 29.293% o
Slide 10: Contemplated equity financing
Contemplated equity financing Structure in brief Indicative timeline Month Event Contemplated • Tranche 1: Up to NOK ~92m new cash equity from equity external investors and Petromal (pro-rata allocation) February Investor meetings financing of • Tranche 2a: NOK ~153 (USD 18m) in-kind for Symero NOK
Slide 11: Agenda
Agenda Section Page 1. Acquisition and financing summary 4 2. Company overview 11 3. Asset overview 21 4. Summary & appendix 36
Slide 12: PetroNor – Company overview
PetroNor – Company overview PetroNor is a full-cycle Africa-focused independent Geographical focus > Full-cycle platform and sizeable production with significant growth potential Core: from existing assets Sub-Saharan Africa – Average 2020 production of 2,644 bopd – targeting a ten-fold increase by
Slide 13: Key financials
Key financials FY 2020 highlights Key financials FY 20201 vs. FY 2019 > Maintained positive EBITDA despite reduction in oil prices during spring Total revenue Cash and bank balances and summer, with strict cost discipline during the ongoing pandemic USD 67.5m USD 14.1m (FY 2019: USD 102.8m) (Dec 201
Slide 14: PetroNor history and key milestones
PetroNor history and key milestones 2020 and onwards 2007: 2014: 2014-2019: q Combination with African Petroleum completed Company IPO on the Oslo Focused on securing and established Stock Exchange maturing exploration q G&A reduced, redomicile to Norway in process prospects, including disputed Sene
Slide 15: Experienced board and management team
Experienced board and management team Management Knut Søvold: CEO Chris Butler: Group Financial Controller 30 years’ E&P experience (executive and technical) and focused on 15 years of financial and corporate experience from roles in public FSU, Africa and ME since 2000, including Nigeria and Angola
Slide 16: Strong technical capabilities, wide geographic reach and on-ground presence
Strong technical capabilities, wide geographic reach and on-ground presence Strong technical base Organisational experience Selected experience Upstream ~7 development Business Facilities & Drilling ~3 Corporate ~7 In-country presence On-ground presence: A team of ~10 people active in West Africa, b
Slide 17: Significant operational improvements in PNGF Sud
Significant operational improvements in PNGF Sud Gross 2P Reserves (mmbbl) Gross field production (kbopd) OPEX (USD/bbl) +143% 150.4 30.2 Produced +33% +94% -58% 61.9 22.7 25.0 120.2 Remaining 17.0 10.4 2016 20201 2016 2020 2016 2020 Operational improvement Strong results seen to date High-in-place
Slide 18: Targeting transformational growth through M&A
Targeting transformational growth through M&A Aiming to become a leading E&P independent 3-year growth target (kboepd) > Targeting +10x reserves and production growth over three years 30 > Utilise competitive edge to access exclusive opportunities: 25 Reserves Production – Extensive Sub-Saharan netw
Slide 19: Robust financial position enables further growth
Robust financial position enables further growth Financial platform and key principles for growth > Healthy balance sheet Robust capital > PetroNor aims to maintain a low financial leverage and conservative structure capital structure Positions PetroNor with the Substantial > Cash flow from producin
Slide 20: Strong ESG commitment
Strong ESG commitment Environment / HSE1 Social Governance > Plan to eliminate existing gas flaring > 5% of HEPCO net profits are invested > Embrace the UN Sustainable on Aje in local community education Development Goals > Aje gas development displacing initiatives > Member of Extractive Industries
Slide 21: Agenda
Agenda Section Page 1. Acquisition and financing summary 4 2. Company overview 11 3. Asset overview i. Congo-Brazzaville – PNGF Sud/Bis 21 ii. Nigeria - Aje Field 28 iii. The Gambia/Senegal – A4 & ROP/SOSP 31 4. Summary & appendix 36
Slide 22: Balanced portfolio across the E&P value chain
Balanced portfolio across the E&P value chain Portfolio Overview 1 Production base – Congo-Brazzaville – PNGF Sud/Bis > Average 2020 production 2,385 bopd – a 4% increase from the 2019 average > Low cost and high margin production with significant organic growth potential > Operated by Perenco, a wo
Slide 23: Production Base – PNGF Sud
1 2 3 Production Base – PNGF Sud1 High margin producer with growth potential Key facts PNGF Sud '000 bopd gross mmbbl gross 40 200 > Mature oil asset which came on stream in 1987 and holds a 30 150 significant remaining potential 20 100 > Located in shallow waters (80-100m) with significant infrastr
Slide 24: Excellent operational achievements 2017-2020
1 2 3 Excellent operational achievements 2017-2020 2017 – 2020 PNGF production growth Budget discipline – OPEX USD/bbl 30 14 13.3 11.9 25 12 11.2 11.4 11.5 11.0 10.9 10.4 Oil production, kbopd 20 10 15 8 10 PNGF CAPEX, USDm 2017 2018 2019 2020 Total 6 Tchibouela 1 14 4 4 23 Tchendo 0 3 5 3 11 4 5 TL
Slide 25: PNGF Sud: Upcoming drilling program to fuel production growth
1 2 3 PNGF Sud: Upcoming drilling program to fuel production growth Litanzi infill drilling program Approved drilling targets > Infill drilling targeting proven undeveloped reserves in un-swept fault terraces – Currently one producing well and one water injector – Targeting to increase production fr
Slide 26: Attractive economics from drilling program
1 2 3 Attractive economics from drilling program Litanzi Tchendo Oil production, kbopd Oil production, kbopd Infill wells Infill wells 4 8 No further action No further action Production profile 3 6 (Gross field) 4 2 1 2 0 0 21 23 25 27 29 31 33 35 37 21 023 025 027 029 031 033 035 037 039 20 20 20 2
Slide 27: PNGF Bis – Near field opportunity adjacent to PNGF Sud
1 2 3 PNGF Bis – Near field opportunity adjacent to PNGF Sud Near field development tie-back to PNGF Sud > Located ~11km from existing PNGF Sud fields, containing Operator the Louissima discoveries – gross 2C contingent resources 23.56% 1 15% of 29 mmbbl 57% > PetroNor has right to enter the license
Slide 28: Agenda
Agenda Section Page 1. Acquisition and financing summary 4 2. Company overview 11 3. Asset overview i. Congo-Brazzaville – PNGF Sud/Bis 21 ii. Nigeria - Aje Field 28 iii. The Gambia/Senegal – A4 & ROP/SOSP 31 4. Summary & appendix 36
Slide 29: The Aje field: Intention to revitalize license
1 2 3 The Aje field: Intention to revitalize license Key redevelopment Aje field location and partnership overview > Participating interest pending ministerial approval - process well advanced > Producing asset1 with significant upside potential to be unlocked through new partnership and different t
Slide 30: 2021 – 2023 re-development plan
1 2 3 Targeting improved gas and condensate recovery Forward plan for Aje New field development Bring-in new FPSO with increased gas processing capacity > 2021-22: Drilling of two new gas producers and one oil producer (in addition to the existing two wells) > Improve operational efficiencies and pr
Slide 31: Agenda
Agenda Section Page 1. Acquisition and financing summary 4 2. Company overview 11 3. Asset overview i. Congo-Brazzaville – PNGF Sud/Bis 21 ii. Nigeria - Aje Field 28 iii. The Gambia/Senegal – A4 & ROP/SOSP 31 4. Summary & appendix 36
Slide 32: West African exploration “hotspot” – the MSGBC basin
1 2 3 West African exploration “hotspot” – the MSGBC basin Exploration hotspot Overview map > The MSGBC Basin – Mauritania - Senegal - Gambia - Guinea Bissau - Guinea Conakry > Senegal ROP and SOSP PetroNor licences in arbitration > Sangomar Field1, operated by Woodside, is the key analogue – Phase
Slide 33: The Gambia Block A4 prospectivity
1 2 3 The Gambia Block A4 prospectivity Shelf and basin prospects Overview map > PetroNor operates with 90% equity > Similar structure to SNE field in Senegal and Fan discovery – all key FAN-1 Discovery success components in A4 > Portfolio in excess of 2 bnbbl1 (sum of unrisked net prospective mean
Slide 34: Guinea Bissau – Sinapa and Esperança
1 2 3 Guinea Bissau – Sinapa and Esperança Attractive licenses acquired from Svenska Cross-section from the Sangomar analogue field > PetroNor acquired SPE Guinea Bissau AB from Svenska Petroleum Exploration AB ("Svenska") > A significant addition to the MSGBC portfolio > The Sinapa license (Block 2
Slide 35: Senegal – high impact assets (disputed)
1 2 3 Senegal – high impact assets (disputed) Exploration assets with high potential Senegal prospect map > PetroNor has an interest (suspended arbitration) in two exploration blocks in Senegal (90% WI)1 > Net unrisked mean prospective recoverable resources in order of 1.8 bn bbls2 Status of the dis
Slide 36: Agenda
Agenda Section Page 1. Acquisition and financing summary 4 2. Company overview 11 3. Asset overview i. Congo-Brazzaville - PNGF Sud/Bis 21 ii. Nigeria - Aje Field 28 iii. The Gambia/Senegal – A4 & ROP/SOSP 31 4. Summary & appendix 36
Slide 37: High level of activity in coming years
High level of activity in coming years 2021 2022 Asset Comment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Infill drilling: Litanzi, Tchendo, Tchibeli (approved) Extensive infill drilling program PNGF Sud • Continuous workover program Workover program CORE ASSETS • Negotiations expected to be completed in 20211 PNGF
Slide 38: Summary
Summary > Sub-Saharan Africa focused E&P independent with proven track record > Full-cycle platform: Sizeable production with significant growth potential from existing assets > Strong operational experience combined with strong partnerships and local network in Africa > Targeting transformational g
Slide 39: Risk factors (1/5)
Risk factors (1/5) 1. RISK FACTORS Investing in the Shares involves a high degree of risk. Before making an investment decision, the following risk factors and all other information contained in this Company Presentation, including the financial statements and related notes, should be carefully cons
Slide 40: Risk factors (2/5)
Risk factors (2/5) Sustained lower oil and gas prices may also cause the Group to make substantial downward adjustments to its oil and gas reserves. If this occurs, or if the Group's estimates of production or economic factors change, the Group may be required to write-down the carrying value of its
Slide 41: Risk factors (3/5)
Risk factors (3/5) 1.3.8 Insurance Oil and natural gas exploration, development, and production operations are subject to associated risks and hazards, such as fire, explosion, blowouts, gas leakages and oil spills, each of which could result in substantial damage to oil and natural gas wells, produ
Slide 42: Risk factors (4/5)
Risk factors (4/5) 1.4 Financial risks 1.4.1 Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by continuously monito
Slide 43: Risk factors (5/5)
Risk factors (5/5) 1.5.6 Limitations on dividends The Company currently anticipates that it will retain all future earnings, if any, to finance the growth and development of its business. The Company does not intend to pay cash dividends in the foreseeable future. Any payment of cash dividends will