Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Investor Presentation (April 2008)
48 slides from Dno Asa Class A's investor presentation, April 2008
Slide 1: Corporate Presentation April 2008: DNO International ASA
APRIL 2008: DNO INTERNATIONAL ASA CORPORATE PRESENTATION
Slide 2: Disclaimer: Forward Looking Statements
DISCLAIMER: FORWARD LOOKING STATEMENTS 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, e
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS DNO INTERNATIONAL: • An exploration focused company with strong reserve growth potential • Exploration activities funded by high margin production • Unique position in the Middle East • Rig capacity for extensive exploration drilling during coming years Truck caravan in Kurdist
Slide 4: DNO in Brief
DNO IN BRIEF PRESENT IN SEVEN COUNTRIES ON THREE CONTINENTS • 500 staff • 15 nationalities • Corporate headquarter in Norway • International offices in: • London, UK • Sana'a, Yemen • Dubai, UAE • Erbil, Northern Iraq • Beira, Mozambique Photo from DNO Iraq AS’ international offices in Dubai, UAE CO
Slide 5: Business Overview
BUSINESS OVERVIEW NORWAY (PARTICIPATING INTEREST) UNITED KINGDOM • 50 % in an exploration license • 36.9 % equity interest in Det norske oljeselskap ASA • 1 promote licenses KURDISTAN REGION OF IRAQ • Three PSC’s signed March 2008 • Tawke fast-track development SYRIA • Unique position in a frontier
Slide 6: Operational Achievements
OPERATIONAL ACHIEVEMENTS GROWTH IN CYCLES RESERVES • First cycle from 1996 until divestment of UK an 160 NCS assets in 2003 • Realized and returned values to shareholders 120 • Second cycle from 2003 with exploration MMbbl 80 focused strategy • Restructured NCS in 2007 40 • Beginning of the third cy
Slide 7: Key Attributes
COMPETING IN A GLOBAL ENVIRONMENT EXPLORATION DRIVEN STRATEGY • With suitable risk mitigation VALUE CREATION KEY ATTRIBUTES ENTREPRENEURIAL COMPANY • Quick decisions/Risk taker OPERATING COMPANY • Controlling the asset base FOCUS ON LOW COST/HIGH MARGINS • Onshore fields desired basins
Slide 8: Exploration Driven Company
EXPLORATION DRIVEN COMPANY PROMOTE EXPLORATION PRODUCTION Market Value Acquire Explore Appraise Development commitment Develop and produce E&P Cycle CORPORATE PRESENTATION APRIL 2008 ! 8
Slide 9: Controlling the Pace of Development
CONTROLLING THE PACE OF DEVELOPMENT PROJECT TIMING Tullow Uganda Nexen Buzzard Cairn India Tullow Ghana DNO Yemen DNO Iraq 2 4 6 8 10 Number of Years CORPORATE PRESENTATION APRIL 2008 ! 9
Slide 10: Highly Ranked in the Middle East
HIGHLY RANKED IN THE MIDDLE EAST 3-YEAR F&D COST (2004-06) 3-YEAR RESERVE REPLACEMENT (2004-06) Marathon DNO DNO Marathon Noble Tullow Apache Hess Petro-Canada Canadian BASF ConocoPhillips OMV Apache Corp. Canadian TransGlobe Eni Noble Energy TransGlobe Occidental PetroSA Burren Mitsui Mitsui Total
Slide 11: 2007: An Important Year
2007: AN IMPORTANT YEAR PRODUCTION RESERVES STRATEGY • Commenced test production from • Successful exploration and • Restructured the NCS operations Tawke field at mid year resulting in increased production delineation drilling at the Tawke field • DNO became the largest owner of the new #2 Norwegia
Slide 12: Recent Operational Highlights
RECENT OPERATIONAL HIGHLIGHTS KURDISTAN REGION OF IRAQ • Appraisal and Development • Tawke well T-12 completed; tested gross rate of 9,000 bopd • Exploration • Discovery in well Hawler-1 in Erbil PSC tested 9,000 bopd and 11MM scf/d gas in the Jurassic. • Further testing in Jurassic and Cretaceous o
Slide 13: Production Update
PRODUCTION UPDATE MONTHLY PRODUCTION* DNO PRODUCTION 2008 (JAN/FEB): 25 000 NCS Block 32 Block 43 Block 53 Tawke • Yemen: 10,691 bopd • Kurdistan: 6,860 bopd • Total 17,551 bopd 20 000 DNO’S PRODUCTION CAPACITY: 15 000 • Yemen: 12,000 bopd • Kurdistan: 30,000 bopd** boe/day 10 000 • Total 42,000 bop
Slide 14: Republic of Yemen
REPUBLIC OF YEMEN
Slide 15: Yemen: A Promising Oil Region
YEMEN: A PROMISING OIL REGION A COUNTRY WITH POTENTIAL • The search and exploration for oil in Yemen goes back to the 1930s • Oil discovery in the summer of 1984, when Hunt Oil Company successfully drilled the wildcat well in the Marib Al-Jawf basin (Block 18) • In 1991, significant oil discoveries
Slide 16: DNO in Yemen
DNO IN YEMEN 10 YEARS IN YEMEN • Strong organization to handle exploration, field development and production • Proud of the HSE history • Good reputation and excellent cooperation with Ministry • Already proved success in four of the eight participating blocks • Strong record on drilling operations
Slide 17: DNO Assets
DNO ASSETS CORPORATE PRESENTATION APRIL 2008 ! 17
Slide 18: Tasour and Godah
TASOUR AND GODAH BARRELS OF OIL PER DAY (GROSS) 15 000 13 500 AVERAGE DAILY PRODUCTION: 8,987 BOPD BLOCK 32 12 000 Tasour Godah 10 500 9 000 T HE TASOU R FIEL D Tasour-13 Tasour-4 7 500 Tasour-1 Tasour-5S Tasour-6 Tasour-14 Tasour-3S Tasour-7 6 000 Tasour-11S Tasour-22S Tasour-10 Tasour-8 Tasour-12
Slide 19: Sharyoof and Bayoot/Hekma
SHARYOOF AND BAYOOT/HEKMA BARRELS OF OIL PER DAY (GROSS) T HE S HARYOOF FIEL D Sharyoof-14 16 000 Sharyoof-11 AVERAGE DAILY PRODUCTION: 10,820 BOPD Sharyoof-18 BLOCK 53 14 000 Sharyoof-16 Sharyoof-9 Sharyoof-23 Sharyoof-18 Sharyoof-4 Sharyoof-10 12 000 Sharyoof-23 Sharyoof-15 Sharyoof-1 Sharyoof-13
Slide 20: Nabrajah
NABRAJAH BARRELS OF OIL PER DAY (GROSS) 10 000 9 000 BLOCK 43 8 000 AVERAGE DAILY PRODUCTION: 6,987 BOPD Nabrajah 7 000 6 000 5 000 4 000 T HE N AB RAJAH FIEL D Nabrajah-3 3 000 Nabrajah-17 Nabrajah-12 Nabrajah-14 Nabrajah-4S Nabrajah-7 2 000 Nabrajah-16 Nabrajah-2 1 000 Nabrajah-1 0 Nabrajah-15 Jan
Slide 21: Exploring Yemen
EXPLORING YEMEN
Slide 22: Block 32: Overview
BLOCK 32: OVERVIEW DNO’S FIRST BLOCK IN YEMEN Partners Participating interest Paying interest • The block covers an area of 592 km2 DNO Yemen 38.95% 41.00% • DNO-operated since 1998 Ansn Wikfs Trans Globe 42.93% 13.12% 45.19% 13.81% • DNO will continue to appraisal the TYC 5.00% - block area to main
Slide 23: Block 43: Overview
BLOCK 43: OVERVIEW AN IMPORTANT CONTRIBUTOR • The block covers an area of 2,026 km 2 • Huge exploration potential • Exploration costs repaid by cost-oil • The block is situated on the rim of the Ghayl Bin Yumain basin - south/west of Block 32 • Nabrajah field on production since July 2005 • 3 infill
Slide 24: Block 53: Overview
BLOCK 53: OVERVIEW AT THE START OF A SECOND GROWTH • The block covers and area of 457 km and is 2 operated by Dove Energy • The Sharyoof field came on production late 2001 • Still successful contribution from infill drilling • 2 infill wells planned for 2008 • Bayoot/Hekma has promising potential EX
Slide 25: Block 53: Bayoot/Hekma
BLOCK 53: BAYOOT/HEKMA THE START OF A SECOND DEVELOPMENT GROSS PRODUCTION FROM BAYOOT/HEKMA • Successful exploration and appraisal drilling 5 000 through 2007 and 2008 has provided 4 wells already completed for production from this area • The current well production capacity is more 4 000 than 5 000
Slide 26: Block 47: Overview
BLOCK 47: OVERVIEW A HUGE EXPLORATION BLOCK • The Block covers and area of 7 606 km partly 2 situated along the flank of the prolific GBY-basin and adjacent to Block 84 and Block 43 EXPLORATION/APPRAISAL WORK IN 2008 • The Yaalen-1 discovery was made in January • The success is now followed up by ap
Slide 27: Yemen: Unrisked Resource Potential
YEMEN: UNRISKED RESOURCE POTENTIAL 44 52 47 72 84 Unrisked recoverable reserves Unrisked recoverable reserves 100% (MMboe) Net to DNO (MMboe) Total 1,000-1,500 400-600 CORPORATE PRESENTATION APRIL 2008 ! 27
Slide 28: The Kurdistan Region of Iraq
THE KURDISTAN REGION OF IRAQ
Slide 29: The New Frontier
THE NEW FRONTIER A REGION WITH HIGH POTENTIAL • Attractive • Kurdistan is unexplored relative to the rest of Iraq • Highly prospective area combined with early entry opportunity at a low cost on trend with very large fields including Kirkuk • Iraq has numerous undeveloped large fields and unexplored
Slide 30: DNO in Kurdistan
DNO IN KURDISTAN FIRST IN IRAQ • DNO was the first foreign company to explore for oil in Iraq for decades • We have a strong and competent organization divided between Kurdistan, Dubai, and Oslo • Excellent cooperation with Kurdistan Regional Government • Production facilities capable of delivering
Slide 31: Infrastructure in Iraq
INFRASTRUCTURE IN IRAQ ESTABLISHED OIL EXPORT ROUTES Mosul IRAQ • Iraq has 6,960 kilometers network of KIRKUK International boundary Oil pipeline pipelines Kirkuk Oil • Gas Two major pipelines are installed from Beiji Tanker terminal (near Kirkuk) to Ceyhan coastal terminal in Bayji Pump station Ref
Slide 32: Companies in Kurdistan
COMPANIES IN KURDISTAN Company name # of Blocks Aspect energy 1 Crescent 1 Perenco DNO Dana Gas 1 Hillwood DNO 3 Open DNO Aspect Open Gulf Key Stone 1 Gulf Key Stone Heritage 1 Hunt Oil MOL Reliance Open Hillwood 1 Open Reliance Open Open Hunt Oil 3 TNK-BP DNO Open OMV Open KEPCO 5 TNK-BP TNK-BP KNO
Slide 33: The Tawke Project: Overview
THE TAWKE PROJECT: OVERVIEW OIL FLARE GAS WATER WELL FLUID 2 X 10,000 bbls SEPARATOR - 2 stages CRUDE OIL TANKS 10,000 bopd WELL LOADING CAPACITY PUMP WATER INJECTION TANK (FUTURE) TAWKE FIELD PIPELINE TIE-IN AREA 45 km 12” EXPORT PIPELINE 50,000 bopd 2 X 70,000 bbls FISCAL METER TANKS 350,000 bopd
Slide 34: Gross Daily Production from Tawke
GROSS DAILY PRODUCTION FROM TAWKE BARRELS OF OIL PER DAY 15 000 13 500 2007 AVERAGE PRODUCTION: 5,645 BOPD 2008 AVERAGE PRODUCTION: 7,278 BOPD 12 000 10 500 9 000 7 500 6 000 4 500 3 000 2007 2008 1 500 0 17 June 2007 Februar 2008 CORPORATE PRESENTATION APRIL 2008 ! 34
Slide 35: Exploring Kurdistan
BEXBIORING KURDISTAN -
Slide 36: The Tawke PSC: Overview
THE TAWKE PSC: OVERVIEW “RING-FENCED” TAWKE OIL FIELD: • The license cover 406 km 2 • Two producing horizons DEVELOPMENT/APPRAISAL WORK • To date DNO has performed a 3D seismic campaign of 200 km2 and a 2D seismic campaign of 81 km • 10 development wells have been drilled, as well as an water inject
Slide 37: The Dohuk PSC: Overview
THE DOHUK PSC: OVERVIEW REVISED DOHUK PSC • PSC Agreement Area: 1,652 km 2 Dihok West • Tawke field is ‘ring-fenced’ and defined Dihok Central as a separate PSC EXPLORATION WORK Linava • More than 475 km of 2D seismic have been acquired since 2005 Bare Bahar • Two exploration wells Sariyah • The Kha
Slide 38: The Erbil PSC: Overview
THE ERBIL PSC: OVERVIEW AGREEMENT AREA • PSC Agreement Area: 313 km 2 EXPLORATION WORK • DNO have acquired 133 km of 2D seismic since 2005 Hawler-1 • Hawler #1 exploration well has been drilled Bastora and is currently being tested • In the lower horizon the well has tested 9,000 bopd and 11MM scf/d
Slide 39: Kurdistan: Unrisked Resource Potential
KURDISTAN: UNRISKED RESOURCE POTENTIAL Tawke PSC Dohuk PSC Unrisked recoverable reserves Unrisked recoverable reserves Erbil PSC 100% (MMboe) Net to DNO (MMboe) Total 1,500-2,500 600-1,000 CORPORATE PRESENTATION APRIL 2008 ! 39
Slide 40: Value Creation
VALUE CREATION
Slide 41: Stable, High Margin Production
STABLE, HIGH MARGIN PRODUCTION PRODUCTION LIFTING COST 6 8,0 7,2 5 6,4 5,6 4 4,8 USD/BBL MBOE 3 4,0 3,2 2 2,4 1,6 1 0,8 0 0 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 CORPORATE PRESENTATION APRIL 2008 ! 41
Slide 42: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION NETBACK NETBACK PER BARREL NETBACK PER SHARE Netback Exploration expensed 1 000 25 0,8 0,7 800 20 0,6 0,5 600 15 NOK Million NOK USD 0,4 400 10 0,3 0,2 200 5 0,1 0 0 0 2005 2006 2007 2005 2006 2007 2005 2006 2007 CORPORATE PRESENTATION APRIL 2008 ! 42
Slide 43: Transforming Resources to Reserves
TRANSFORMING RESOURCES TO RESERVES EXPLORATION EXPENDITURE CAPEX Yemen Kurdistan Other Yemen Kurdistan Other 600 1 400 1 200 500 1 000 400 NOK Million NOK Million 800 300 600 200 400 100 200 0 0 2003 2004 2005 2006 2007 2008E 2003 2004 2005 2006 2007 2008E CORPORATE PRESENTATION APRIL 2008 ! 43
Slide 44: Cash Flow Funding
CASH FLOW FUNDING GROWTH IN NETBACK SUPPORTS SOURCES AND USES OF CASH INVESTMENT PROGRAM Exploration Expensed Development Capex Netback bef. Exploration Divestment • Netback before exploration covered 64% of New Interest-Bearing Debt total 2007 investments 2 000 • Netback before exploration covered
Slide 45: Building Value Through Exploration
BUILDING VALUE THROUGH EXPLORATION CLASS 1-5 RESERVES* RESERVE REPLACEMENT RECYCLE RATIO 150 10 5 120 8 4 90 6 3 MBOE Times Times 60 4 2 30 2 1 0 0 0 2005 2006 2007 2005 2006 2007 2005 2006 2007 *Continued operations, excluding associated reserves CORPORATE PRESENTATION APRIL 2008 ! 45
Slide 46: Finding Reserves at Low Cost
FINDING RESERVES AT LOW COST INDUSTRY FD&A COST DNO ANNUAL AVERAGE FD&A COST Proved acquisition Cost Finding and development cost 30 30 25 25 20 20 14 USD/boe USD/boe 15 15 11 10 10 7 11 8 6 5 11 5 6 6 7 4 4 3 2 0 0 2002 2003 2004 2005 2006 2004 2005 2006 2007 Source: J. S. Herold CORPORATE PRESENTA
Slide 47: Summary
SUMMARY BUILDING VALUE THROUGH EXPLORATION AND DEVELOPMENT • Strong organic growth in reserves and production capacity • Sector leading reserve economics • Continuing extensive exploration program SOLID FINANCIAL PERFORMANCE • High margin production providing increasing cash flow Exploration in Moza
Slide 48: Going Forward
GOING FORWARD EXPLORATION • Build up prospect portfolio on existing assets • Extensive exploration drilling • Assess emerging areas DEVELOPMENT POTENTIAL FOR • Mature new discoveries to STEP-CHANGE production • Fast-track, flexible and cost IN PRODUCTION effective projects PRODUCTION • Efficient ope
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