Slide 1: First Quarter 2010 Presentation
first Quarter 2010 Presentation
Slide 2: Agenda
Agenda Highlights, Reserves/Resources and Operational Review • Helge Eide, Managing Director Financial Review • Haakon Sandborg, CFO Q&A First Quarter 2010 | 2
Slide 3: Highlights Q1 2010
Highlights Q1 2010 Production in line with expectation • Total WI production of 12,442 bopd • Yemen – 7,437 bopd • Kurdistan – 5,005 bopd Encouraging appraisal and development in Yemen • Successful appraisal drilling in Block 47 • Bayoot production continued to increase Improved financials • Sales of
Slide 4: Average Quarterly Production (WI)
Average Quarterly Production (WI) Average production (WI) 50,000 IR A Q teeetr “Tawke export *Kurdistan * Yemen DNO's Assets © Prencng tue, © mer downs First Quarter 2010| 4
Slide 5: 4 year development in P50 reserves & resources
4 year development in P50 reserves & resources, Class 1-7 200 178.4 172.8 180 156.8 160 140 MMBOE 120 88 100 80 60 40 20 0 2006 2007 2008 2009 First Quarter 2010 | 5
Slide 6: Distribution of Reserves and Resources
Distribution of Reserves and Resources DNO’s WI Reserves & Resources as of Year End 2009 200.0 Kurdistan: 139.5 Tawke Euphrates: 1.1 Sharnah (BL47): 3.3 Mulle (UK): 10.0 180.0 172.8 Yemen: 9.9 Eq. Guinea: 1.5 Hekma (BL53): 1.2 Benenan (Erbil): 4.7 160.0 Yaleen (BL47): 1.6 149.4 140.0 120.0 MMBOE 100
Slide 7: Annual statement of reserves at 31.12.2009
Annual statement of reserves at 31.12.2009 Total reserves WI 2P Reserves development 200 • 149.4 million boe at 31.12.2009 • Changes in 2009: 180 162.6 3.3 -8.6 • Production: - 7.9 million boe -7.9 160 149.4 • Net revision: - 5.3 million boe 140 Yemen 120 • 9.9 million barrels at 31.12.2009 • Change
Slide 8: Operations
OPERATIONS First Quarter 20108|
Slide 9: Kurdistan Summary
Kurdistan Summary Tawke Production • Q1 Gross Production: 5,561 bopd • Q1 DNO WI Production: 5,505 bopd • Q1 DNO NE Production: 3,337 bopd Benenan discovery • Testing of Erbil-2 completed • Forward plan to be submitted to the KRG in June 2010 Exploration • Expected rig to be returned in October 2010
Slide 10: Tawke Facilities
Tawke Facilities Refinery CPF First Quarter 2010 | 10
Slide 11: Kurdistan (Erbil): Benenan Discovery
Kurdistan (Erbil): Benenan Discovery Benenan discovery • Hydrocarbons in several reservoirs • 3D seismic acquired post discovery well • Complex structure with high pressure and several fluid systems Hawler-1 The 2010 appraisal program consists of; • Re-entry and testing of Erbil-2 completed Erbil-2 •
Slide 12: Kurdistan leads/prospects
Kurdistan leads/prospects Tawke Dohuk Peshkabir • The 2010 license work program is to fullfill the remaining two well work commitment • Recommencement of exploration drilling expected in Q4 2010 First Quarter 2010 | 12
Slide 13: Kurdistan (Dohuk): Summail lead/prospect
Kurdistan (Dohuk): Summail lead/prospect • Summail is close to the Dohuk city • Next exploration well to be drilled in Kurdistan First Quarter 2010 | 13
Slide 14: Yemen Summary
Yemen Summary 8,000 Yemen Quarterly Production (WI) 7,800 Production (Block 32, 43 and 53) 7,600 • Q1 Gross Production: 18,963 bopd 7,400 • Q1 DNO WI Production: 7,437 bopd 7,200 • Q1 DNO NE Production: 4,889 bopd 7,000 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Reserves & Resurces at 31.12 2009 • Reserves & Res
Slide 15: Yemen Block 47: Yaalen-3 testing
Yemen Block 47: Yaalen-3 testing Test-1 results (barrels of oil per day) Well logg and interpretation 2000 1800 1600 Oil, bbls/d 1400 1200 1000 Test-2 (in progress) 800 600 Test-1 Tested 1,400 bopd 400 Expected capacity, 4,000-5,000 bopd 200 0 First Quarter 2010 | 15
Slide 16: Sharnah/Yaalen oil discovery (Block 47)
Sharnah/Yaalen oil discovery (Block 47) Fast-track field development • Resource potential prior to Yaalen-1: 10 million barrels • Resource potential to be re-evaluated after Yaalen-3 final results • Drilling Sharnah-2 in Q2/Q3 • Filing development plan in 2010 • Staged Development • Likely tie-back to
Slide 17: Bayoot basement field (Block 53)
Bayoot basement field (Block 53) Production profile Bayoot (gross) Bayoot 7 on stream in February 2010 7,000 • Completed and brought on stream in February 6,000 • Currently producing at a rate of ca 200 bopd 5,000 Bayoot 8 on stream in April 2010 • The well put on test-production in April 4,000 • Well
Slide 18: Yemen (BL72): Basement lead
Yemen (BL72): Basement lead • Basement fault blocks with possibilities for oil trapped in fractured basement • These basement structures are located in a ‘look alike’ position to the producing Bayoot and Kharir fractured basement fields • The partnership has decided to dedicate the next exploration w
Slide 19: Mozambique Update
Mozambique Update • Prospect evaluation has been performed based on the new 2D seismic acquired in 2009 • The work has revealed several drilling targets in the unexplored Urema Graben • Preparation for drilling Q4’10 • Tendering process for rig has started • Farm-out process is ongoing, prior to dri
Slide 20: New ventures
New ventures From current core areas • Develop current positions in proven basins, both known and new plays • Follow potential extensions of proven plays into adjacent basins Potential outside Kurdistan and Yemen • Pursue entries into frontier basins in the Middle-East – Eastern Africa region – main
Slide 21: Financials
FINANCIALS First Quarter 2010 | 21
Slide 22: A solid quarter for DNO
A solid quarter for DNO Quarterly key financials Increased revenues and cash flow 300 • Higher achieved oil prices Revenues EBITDAX EBITDA • Lower administrative expenses 250 Strengthened financial position 200 • Capex and exploration as guided • Full cash flow coverage of investments NOK million 150 •
Slide 23: Key financial indicators
Key financial indicators EBITDAX margin EBITDAX Netback 70 % 200 150 67 % 180 60 % 160 100 50 % 140 45 % 45 % 120 50 NOK million NOK million 40 % 35 % 100 30 % 80 0 20 % 60 40 -50 10 % 20 3% 0% 0 -100 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 First Quar
Slide 24: Condensed income statement
Condensed income statement NOK million Q1 2010 Q4 2009 Q1 2009 2009 2008 Sales 258.6 225.9 183.8 869.0 1,376.2 Cost of goods sold -133.3 -135.8 -190.2 -659.3 -745.5 Gross profit 125.3 90.2 -6.4 209.7 630.7 Dry well cost expensed - 1.2 -8.9 -56.2 -158.3 Seismic and other exploration expensed -16.5 -16
Slide 25: Cost of Goods Sold
Cost of Goods Sold Lifting cost Lifting cost per barrel Yemen Kurdistan Yemen Kurdistan 150 20 NOK million USD/barrel 15 100 10 50 5 0 0 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 DD&A DD&A per barrel Yemen Kurdistan 25 100 Yemen Kurdistan 20 80 USD/barrel NOK million 15 60 40 10 20
Slide 26: Cash flow statement
Cash flow statement NOK million Q1 2010 Q4 2009 Q1 2009 2009 2008 Profit from operations before exploration 111.1 -60.1 -18.9 -23.2 365.7 Exploration expenses -16.6 -15.1 -58.2 -155.8 -356.8 Taxes paid, DDA, other -29.0 -39.6 -43.7 126.3 736.6 Net cash from operations 65.5 -114.8 -120.9 -53.3 745.5 Ne
Slide 27: Cash flow coverage of investments
Cash flow coverage of investments Netback coverage Cash flow funding Netback before exploration CAPEX Exploration • DNO seeks to fund a major part if 200.0 its investments from cash flow • The cash flow coverage ratio 150.0 increased to 1.8x i Q1 2010 100.0 50.0 0.0 - 50.0 Sources Uses Sources Uses Sour
Slide 28: 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 4000 4000 Cash: NOK 671 million Net debt to capitalization: NOK Million NOK Million 31 per cent 3000 3
Slide 29: Geographic shareholder distribution
Geographic shareholder distribution 31.12.2009 05.05.2010 • International shareholding in DNO increased to 61.4% 100% Rest of World 8% 10 % • RAK Petroleum held 30% as of 30 90% 4% 4% Sweden April, 2010 5% 4% Luxembourg 80% 5% Netherland • Top 20 shareholders account for 9% 9% USA 55.9% of total sha
Slide 30: Outlook
Outlook Continued value creation • Increase production from our strong reserve base • Accelerate development programs in Yemen • Seek additional reserves and resources through selective exploration • Carry out planned 2010 investments, consider additional projects depending on drilling results and a
Slide 31: 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
Slide 32: Welcome Back
SECOND QUARTER 2010: 18 AUGUST 2010 WELCOME BACK First Quarter 2010 | 31