Dno Asa Class A · OSL:DNO
Dno Asa Class A — Investor Presentation (April 2007)
55 slides from Dno Asa Class A's investor presentation, Apr 11, 2007
Slide 1: Corporate Presentation
CORPORATE PRESENTATION CAR, April 11, 2007 Helge Eide 2007 Managing Director Haakon Sandborg Chief Financial Officer
Slide 2: 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 3: Our mission is to be a leading exploration and production company
OUR MISSION IS TO BE A LEADING EXPLORATION AND PRODUCTION COMPANY FOCUSED ON TRANSFORMING RESOURCES TO RESERVES AT LOW COST, GENERATING SUBSTANTIAL AND CONSISTENT VALUE FOR OUR SHAREHOLDERS. 2006 HAS BEEN A HIGHLY SUCCESSFUL YEAR IN THIS 2007 RESPECT – IN 2007 WE WILL BRING THIS ONE STEP FURTHER BY
Slide 4: New growth cycle
NEW GROWTH CYCLE Realizing and returning values WI P50 Reserves & Resources (MBOE) 2001 - 2006 1st growth cycle New growth cycle • Initial focus on small and mature fields in the North Sea 144 151 125,4 • Shift in strategy in 2004 - approximately USD 230 million in sales proceeds from 85,5 72 divest
Slide 5: 2006 Highlights
2006 HIGHLIGHTS Operations • Exploration drilling adding 98 million barrels of reserves & resources to DNO • Production averaged at 14,800 bopd • Commenced fast track development of Tawke oil discovery i Kurdistan • Continued high drilling activity in Yemen leading to several new oil discoveries Fin
Slide 6: 7 of 16 exploration wells discovered oil (44%)
RESULTS FROM 2006 EXPLORATION 7 of 16 EXPL. WELLS DISCOVERED OIL (44%) Reserve and Resource Additions 2006 (mboe) • Goliath discovery – additional 120 30 million barrels (Q1 06) 5 100 4 98 • Godah oil discovery in Yemen - 59 3.5 million barrels (Q1 06) 80 60 • Tawke oil discovery in Kurdistan – 59 m
Slide 7: Important key performance indicators
IMPORTANT KEY PERFORMANCE INDICATORS OUTSTANDING RESERVE ECONOMICS FDA (P+P) Recycle Ratio (P+P) Reserve Replacement (P+P) 3.7 USD/bbl 4.4 times 8.2 times 5 10 10 5 5 8,2 3,7 4,7 4,5 4,1 2,6 2,9 3,9 4,4 2,5 3,2 3,4 0 0 2003 2004 2005 YTD 0 2003 2004 2005 YTD 2006 2003 2004 2005 2006 2006 Low cost re
Slide 8: Another exciting year ahead
STRONG BASIS FOR INCREASED RESERVES AND PRODUCTION ANOTHER EXCITING YEAR AHEAD Reserves and resources Increased exploration • 23 exploration wells, 14 as Operator 23 expl. wells • Targeting 273 million barrels of 151 unrisked resource potential net to 16 expl. wells DNO (78 million barrels on risked
Slide 9: Operational Review
OPERATIONAL REVIEW © Copyright 2007 DNO ASA ⎮ April 11, 2007 CAR-Presentation ⏐ 9
Slide 10: World wide portfolio
WORLD WIDE PORTFOLIO 37 LICENSES - 17 AS OPERATOR Northern Europe Norway • 24 Licenses (8 as Operator) • One producing asset • Large exploration potential • Minimized financial exposure from exploration Middle East UK • 2 Licenses as Operator • 10 Licenses (8 as Operator) • 3 producing assets • Larg
Slide 11: Production
WORKING INTEREST PRODUCTION 2003 - 2006 Production (bopd) 2006 Production (BOPD) 30 000 20 000 Tasour Sharyoof Nabrajah Glitne Godah Divested production 15 000 20 000 10 000 10 000 5 000 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2003 2004 2005 2006 2006 2007 • Slight annual growth
Slide 12: Yemen portfolio
YEMEN PORTFOLIO Producing blocks in Yemen • Tasour & Godah Fields in Block 32 * • Nabrajah Field in Block 43 * • Sharyoof Field in Block 53 Exploration blocks in Yemen BLOCK 44 • Block 44 * • Block 47 * BLOCK 53 • Block 72 * BLOCK 32 • Block 84 * (recently awarded) BLOCK 43 BLOCK 47 BLOCK 72 BLOCK 8
Slide 13: Tasour area: status and planned activities
TASOUR AREA STATUS AND PLANNED ACTIVITIES Tasour Field • Current production around 8,500 BOPD (Gross) • Test of Tasour # 23 (deeper levels) most likely in Q2 Godah Field • Godah # 2 & 3 brought on stream in Q406 • Current production Tasour 22ST Godah Field around 1,400 BOPD (Gross) Tasour 23 (Baseme
Slide 14: Sharyoof area: status and planned activities
SHARYOOF AREA STATUS AND PLANNED ACTIVITIES Prospective area close to Sharyoof Field • Sharyoof # 23 on stream in Q406 • Sharyoof # 24 on stream February 07, at around 1,100 BOPD (Gross) • Bayoot SW #2, Hekma # 1 and Bayoot South # 1 exporting oil by trucking • Current Production around 9,000 BOPD (
Slide 15: Nabrajah area: status and planned activities
NABRAJAH AREA STATUS AND PLANNED ACTIVITIES • Commissioning of water handling and gas injection facilities completed • Ultimate gross reserves reduced from 68 to 24 mill. barrels • 3-D seismic within Nabrajah area completed – recent interpretation could change the play concept Prospect/leads • Shaib
Slide 16: Yemen reserves update (P+P)
YEMEN Reserves Update (P+P) NOV 2000 Tasour DEC 2006 Tasour Gross DNO WI 25 000 Gross WI Tasour WI Godah 1999 Reserves estimate 6 2,3 20 000 Produced to date 29 11,6 15 000 Remaining reserves 6 2,3 10 000 Godah 5 000 Remaining reserves 9 3,5 0 DEC 2001 Sharyoof DEC 2006 Sharyoof Gross DNO WI 30 000
Slide 17: Continued high drilling activity
YEMEN CONTINUED HIGH DRILLING ACTIVITY 13 EXPLORATION WELLS: • Operated by DNO • BL 32: 3 wells • BL 43: 2 wells • BL 44: 3 wells • BL 72: 1 well • BL 47: 1 well • Operated by others • BL 53: 3 wells BLOCK 44 9 APPRAISAL & DEVELOPMENT WELLS: BLOCK 53 BLOCK 32 • Operated by DNO BLOCK 47 BLOCK 43 • BL
Slide 18: Kurdistan: summary of activities
KURDISTAN OF NORTHERN IRAQ SUMMARY OF ACTIVITIES Key achievements to date • 2D seismic acquisition • 5 exploration / appraisal wells • Confirmed Tawke oil discovery with first well (Tawke # 1) • 3-D seismic across Tawke structure • Tawke test production 4,000 – 8,500 bopd • Khanke # 1 exploration we
Slide 19: Tawke development key components
TAWKE DEVELOPMENT KEY COMPONENTS Flow lines 12” Export from wells Pipe Lines Crude Crude Tanks Tanks Water 2x10k bbls 2x10k bbls Tank 10k bbls Topping Plant Diesel 1,700 bpd of diesel Tank Process Modules 3k bbls Off-spec return Camp BS&W Probe Manifold Non-Fiscal Meter 3x 25k bopd Export Pumps Road
Slide 20: Tawke CPF facilities arrived in Kurdistan
TAWKE CPF Facilities arrived in Kurdistan early February 2007 © Copyright 2007 DNO ASA ⎮ April 11, 2007 CAR-Presentation ⏐ 20
Slide 21: Tawke Export Pipeline
Tawke Export Pipeline © Copyright 2007 DNO ASA ⎮ April 11, 2007 CAR-Presentation ⏐ 21
Slide 22: Tawke production forecast
TAWKE PRODUCTION FORECAST OBSERVATIONS TO DATE KEY ASSUMPTIONS FOR 2007 PRODUCTION FORECAST: • Well tests results ranging from 4,000 – 8,500 bopd excellent productivity • Gradually building production during Q2 07 • Well flows naturally – overpressure in the • Cumulative gross reservoir production o
Slide 23: North Sea: further strengthened NCS position
NORTH SEA FURTHER STRENGTHENED NCS POSITION EXPLORATION LICENSES • NCS - 24 licenses, 8 as Operator • UKCS – 2 license (1 as Operator) PRODUCING FIELDS • Glitne, in production (NCS 10%) • Enoch, start production Q2 07 (NCS 2 %) 2006 EXPLORATION RESULTS • 5 wells, 1 discovery (Goliath south) • Adding
Slide 24: Barents Sea – Goliat discovery
NORWEGIAN CONTINENTAL SHELF BARENTS SEA – GOLIAT DISCOVERY 2006 EXPLORATION RESULTS • Following Goliat south well, P50 reseves / resources increased to 250 million boe - 37,5 million boe net to DNO • Goliat West well did not encounter hydrocarbons – but oil was found in side-track well • The North p
Slide 25: PL305 – Lie Prospect
NORWEGIAN CONTINENTAL SHELF PL305 – Lie Prospect • The Lie Prospect will be drilled with the first slot on Bredford Dolphin in 2007. • The Lie Prospect is a 4-way dip closure of Paleocene age. • The prospect has a total of 69 million boe of oil, in unrisked resource potential. DNO holds 30% of the l
Slide 26: PL341 – Thorkildsen Prospect
NORWEGIAN CONTINENTAL SHELF PL341 – Thorkildsen Prospect • The Thorkildsen Prospect will be drilled with Bredford Dolphin in 2007. • The Thorkildsen Prospect is a 4-way dip closure of Paleocene age. • The prospect has a total of 82 million boe of oil, in unrisked resource potential. DNO holds 30% of
Slide 27: PL001B – Draupne Prospect
NORWEGIAN CONTINENTAL SHELF PL001B – Draupne Prospect • The Draupne Prospect will be drilled with the Bredford Dolphin in 2007 • The Draupne prospect is a 4- way dip closure of Jurassic age. • The prospect has a total of 50 million boe of oil, in unrisked resource potential. DNO holds 35% of the lic
Slide 28: PL265 – Ragnarrock Prospect
NORWEGIAN CONTINENTAL SHELF PL265 – Ragnarrock Prospect • The Ragnarrock Prospect will be drilled in 2007 with the rig West Epsillon • The Ragnarrock prospect is a stratigraphic trap within the Chalk. • The presence of oil is proved by well 16/2-1, and the productivity will be tested by the well to
Slide 29: PL029B – Freke Prospect
NORWEGIAN CONTINENTAL SHELF PL029B – Freke Prospect • The Freke Prospect is proposed drilled in 2007. • The Freke prospect is a 4-way dip closure of Jurassic age. • The prospect has a total of 60 million boe of oil, in unrisked resource potential. DNO holds 20% of the license © Copyright 2007 DNO AS
Slide 30: PL380 – Fongen Prospect
NORWEGIAN CONTINENTAL SHELF PL380 – Fongen Prospect • The Fongen Prospect will be drilled with Bredford Dolphin late 2007 or early 2008. • The Fongen prospect is a structural closure of Jurassic age. • The prospect has a total of 44 million boe of oil, in unrisked resource potential. DNO holds 30% o
Slide 31: Increased drilling activity
NORTHERN EUROPE INCREASED DRILLING ACTIVITY 9 EXPLORATION WELLS: • Operated by DNO • Lie • Torkildsen • Draupne • Operated by others • Ragnarrock • Gere / Freke • Midgard West • Goliat • Natalia (to be divested) 2 APPRAISAL & DEVELOPMENT WELLS: • Operated by others • Goliat (appraisal) • Glitne (dev
Slide 32: 2007 drilling plan
2007 DRILLING PLAN DNO TO PARTICIPATE IN 53 WELLS IN 2007 – 39 as Operator Northern Europe Norway • 9 exploration/appraisal wells • 2 appraisal / development wells Middle East Northern Iraq • 18 development wells, plus possible exploration wells Yemen • 13 exploration wells • 9 appraisal and develop
Slide 33: 2007 Outlook
2007 OUTLOOK 23 EXPLORATION WELLS TARGETING SUBSTANTIAL RESOURCE POTENTIAL Unrisked Risked YEMEN 112 27 NCS 161 51 TOTAL 273 78 2007 ENTRY PRODUCTION OF 13,000 BOPD EXPECTED TO INCREASE TO 26,000 BOPD BY YEAR END Annualized production WI Production YEMEN* 11 300 KURDISTAN** 7 700 NCS 1 000 TOTAL 20
Slide 34: Building long term values
BUILDING LONG TERM VALUES Reserves and Resources (mboe) 2005 & 2006 • Organic growth of reserves and 23 expl. wells resources through the drill bit 151 16 expl. wells • Transforming resources into reserves at low costs 72 2005 2006 2007E Working Interest Production (bopd) 2007 and onwards 20 000 • T
Slide 35: Financial Review
FINANCIAL REVIEW © Copyright 2007 DNO ASA ⎮ April 11, 2007 CAR-Presentation ⏐ 35
Slide 36: Adding value through exploration
FINANCIAL SUMMARY 2006 ADDING VALUE THROUGH EXPLORATION Key Figures (USD Million) Focused E&P Strategy 250 Sales Exploration cost Operating Profit • High exploration activity • Organic reserves growth 218 200 Strong Operations 150 • Strong revenue growth 129 • Near doubling of operating profit 100 1
Slide 37: High exploration investments
FINANCIAL SUMMARY 2006 HIGH EXPLORATION INVESTMENTS Exploration Expensed (USD Million) Exploration as Guided for 2006 100 Middle East Northern Europe Africa • Middle East 90 • USD 18 million for seismic data, G&G and field surveys in Yemen 80 and Northern Iraq 70 • Dry well cost USD 12 million, pre-
Slide 38: High investments, strong cash flow
FINANCIAL SUMMARY 2006 HIGH INVESTMENTS, STRONG CASH FLOW Key Figures (USD Million) Accelerated development investments 350 New Interest-Bearing Debt Netback bef. Exploration • Start of Tawke development in Development Capex Northern Iraq 300 Exploration Expensed • Development on blocks 32, 53 & 43
Slide 39: Capex by segment
QUARTERLY FINANCIALS CAPEX BY SEGMENT CAPEX split 2006 (USD 227 Million) CAPEX per segment quarterly (USD Million) 140 Kurdistan Yemen North Europe Africa Kurdistan Yemen North Europe Africa 120 37% 100 8% 80 1% 60 40 20 0 -20 53% Q1 2006 Q2 2006 Q3 2006 Q4 2006 © Copyright 2007 DNO ASA ⎮ April 11,
Slide 40: Lifting costs
QUARTERLY FINANCIALS LIFTING COSTS Quarterly lifting cost (USD million) Quarterly lifting cost (USD/bbl) 14 Northern Europe Middle East 9 10,9 8 12 9,5 9,6 7,80 7,61 7,59 7 10 7,20 7,00 8,1 7,6 6 8 7,3 5 5 4 6 3 4 2 2 2,3 2,3 2,4 2,1 2,1 2,3 1 1,9 0 0 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006
Slide 41: Capital structure
FINANCIAL SUMMARY 2006 CAPITAL STRUCTURE Balance Sheet (USD Million) High Growth Investments 600 • PPE and exploration assets 500 Other current increased by 152% in 2006 assets 400 300 Cash and money • Total assets up 142% since 2004 market funds 200 PPE and non- 100 current assets 0 Secured Long-Te
Slide 42: Investor relations activities
FINANCIAL RESULTS INVESTOR RELATIONS ACTIVITIES Geographical Split Analytical Coverage ABG Sundal Collier Carnegie GBR DEN Corporate Advise & Research USA SWE Danske Equities LUX DnB Nor Markets SUI CYM Dresdner Kleinwort (London) NLD Enskilda Securities ISL First Securities Fondsfinans OTHER Glitni
Slide 43: Summary 2006
FINANCIAL RESULTS SUMMARY 2006 Successful growth strategy continued in 2006: • High exploration activity • Strong organic growth in reserves and resources in 2006 • Exploration cost near guided level for 2006 • Exploration success leading to strong growth in development • Accelerated development of
Slide 44: Outlook 2007
FINANCIAL RESULTS OUTLOOK 2007 Strategic Focus • Transforming resources to reserves at low cost • Field development and startup in Northern Iraq High Investment Levels • USD 147 mill. in exploration expenditures • USD 114 mill. in development capex Growth through Drilling • Participate in 53 wells i
Slide 45: Our mission is to be a leading exploration and production company
OUR MISSION IS TO BE A LEADING EXPLORATION AND PRODUCTION COMPANY FOCUSED ON TRANSFORMING RESOURCES TO RESERVES AT LOW COST, GENERATING SUBSTANTIAL AND CONSISTENT VALUE FOR OUR SHAREHOLDERS. 2006 HAS BEEN A HIGHLY SUCCESSFUL YEAR IN THIS RESPECT – IN 2007 WE WILL BRING THIS ONE STEP 2007 FURTHER BY
Slide 46: Appendix
APPENDIX Key Financials Reserves Categories © Copyright 2007 DNO ASA ⎮ April 11, 2007 CAR-Presentation ⏐ 46
Slide 47: Key figures
QUARTERLY FINANCIALS KEY FIGURES Barrels of oil and oil equivalents Q4 2006 Q3 2006 Q4 2005 2006 2005 Working interest production per day 13 716 13 978 16 870 14 831 14 741 Net entitlement production per day 8 362 7 647 9 679 9 229 8 685 USD Million Q4 2006 Q3 2006 Q4 2005 2006 2005 EBITDA 11 21 12
Slide 48: Income statement
QUARTERLY FINANCIALS INCOME STATEMENT Quarterly figures Full year USD Million Q4 06 Q3 06 Q2 06 Q1 06 Q4 05 2006 2005 Sales 45,3 46,3 58,5 67,7 39,6 217,8 129,3 Cost of goods sold -20,7 -16,0 -16,0 -19,9 -19,5 -72,7 -63,0 Gross profit 24,5 30,2 42,5 47,8 20,1 145,1 66,3 Tariffs and transportation -1
Slide 49: Cash flow
QUARTERLY FINANCIALS CASH FLOW Quarterly figures Full year USD Million Q4 06 Q3 06 Q2 06 Q1 06 Q4 05 2006 2005 Profit from operations before exploration 25,1 27,8 39,5 46,0 14,2 138,5 51,7 Exploration expenses -25,4 -13,4 -18,1 -35,4 -8,2 -92,3 -26,2 Taxes paid, DDA, other 30,6 -20,9 -13,3 6,8 1,2 3
Slide 50: Financial summary
QUARTERLY FINANCIALS FINANCIAL SUMMARY Quarterly Key Figures (USD Million) Fourth Quarter 80 Sales EBITDA Exploration cost • Stable revenue through higher production (net entitlement) offset 70 by lower oil price 68 60 • Increase in exploration cost due to 59 dry well costs on the Khanke and 50 35 Z
Slide 51: Exploration by segment
QUARTERLY FINANCIALS EXPLORATION BY SEGMENT Exploration Expensed (USD Million) Q4 Exploration Expensed 40 000 Northern Europe Kurdistan Yemen Africa • Middle East • USD 2 million for seismic data 35 000 • Dry well cost USD 8 million on 30 000 Khanke 25 000 • G&G work USD 3 mill. • Northern Europe 20
Slide 52: Exploration activity: expensed and capitalized
QUARTERLY FINANCIALS EXPLORATION ACTIVITY Expensed and Capitalized Exploration (USD Million) Broad Q4 Activity 40 • Expensed USD 25 39 million 30 • USD 3 million is 45 related to seismic 20 19 data investments Expensed 19 • USD 14 million in dry 24 well costs 10 • USD 8 mill. in other 0 exploration
Slide 53: Reserve and resource classification
NEW GUIDELINES FROM OSLO STOCK EXCHANGE RESERVE AND RESOURCE CLASSIFICATION • Class 1-3: Reserves • Class 4: Resources, in planning for development • Class 5: Resources, likely to be developed • Class 7: Under evaluation © Copyright 2007 DNO ASA ⎮ April 11, 2007 CAR-Presentation ⏐ 53
Slide 54: Development through 2006
RESERVES AND RESOURCES DEVELOPMENT THROUGH 2006 Reserves and Resources Preliminary classification as per new OSE Guidelines 160 Reserves: 140 +64 151 120 Resources: Reserves: +34 100 +54 Resources: +18 98 80 60 72 Reserves: -29 (Nabrajah) 40 Resources: 20 +15 -14 -5 0 -20 -40 31.12.2005 Discoveries
Slide 55: Preliminary re-classification DNO WI (P50)
RESERVES AND RESOURCES PRELIMINARY RE-CLASSIFICATION Reserves and Resources DNO WI (P50) 160 • Class 1- 4: 125 million barrels 140 151 • Class 1- 5: 132 million barrels 120 100 80 84 60 40 41 20 7 19 0 -20 Total reserves and resources Reserves class 1-3 In planning phase (class 4) Development likely