Dno Asa Class A · OSL:DNO
Dno Asa Class A — DNO International — Q4 2010 Earnings Presentation
39 slides from Dno Asa Class A's earnings presentation, February 2011
Slide 1: Q4 2010 Presentation
DNO International ASA Q4 2010 Presentation
Slide 2: Agenda
Agenda 1. Welcome and Introduction Tom Bratlie, Communication Director 2. Highlights and Operational Update Helge Eide, Managing Director 3. Q4 and Full Year 2010 Financials Haakon Sandborg, CFO 4. Q&A All Q4 2010 presentation 2
Slide 3: 2010 Highlights and Operational Update
2010 Highlights and Operational Update Helge Eide Managing Director
Slide 4: Positive results in 2010
Positive results in 2010 • Sales increased by 44 %, from NOK 869 million in 2009 to NOK 1.25 billion in 2010 • Increase mainly driven by strong increase in Kurdistan local sales • Group cash position increased from NOK 303 million at year end 2009 to NOK 1.38 billion in 2010 • Tight capital discipli
Slide 5: Continued satisfactory HSE performance
Continued satisfactory HSE performance Incidents per million working hours Q4 2010 presentation 5
Slide 6: 2010 Monthly production summary
2010 Monthly production summary WI Production 30 000 25 000 20 790 19 350 17 145 20 000 15 140 11 847 15 000 Tawke 14 604 5 429 4 440 5 091 5 420 Yemen 4 404 bopd 10 000 3 627 7 719 7 371 7 213 7 058 7 027 6 332 6 489 6 695 6 394 5 000 5 935 6 281 6 256 0 Jan Feb Mar Apr May June July Aug Sept Oct N
Slide 7: Working interest production, barrels per day
Lower Q4 production due to reduced local deliveries in Kurdistan in November • DNO’ working interest production down from 24 956 bopd in Q3 to 16 251 in Q4 • Q4 2010 well above Q4 2009 figures and second best quarter in two years 30 000 25 000 Working interest production I barrels per day 6 494 20 0
Slide 8: Q4 2010 financial results impacted by lower volumes
Q4 2010 financial results impacted by lower volumes This graph is adjusted for special (non-operational) items with negative effects in 2009 and 2010 on EBITDA and net back 450 400 406,6 350 309,2 302,0 300 284,7 281,9 258,6 250 235,5 Sales 223,9 225,9 200 EBITDA 183,8 171,7 167,9 Netback 150 155,4
Slide 9: Lifting cost somewhat up in Q4 due to lower volumes from Tawke
Lifting cost somewhat up in Q4 due to lower volumes from Tawke 20 19,04 18 18,07 17,03 16,58 16,34 16 15,48 15,10 14 13,51 12,59 12 11,72 11,2 11,35 10,28 10,27 Total lifting costs 10 9,98 9,57 Yemen 8,48 8,46 8,17 8,36 8 Tawke 6 5,31 4,39 4 4,06 2 1,87 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2
Slide 10: Average sales price up in Q4
Average sales price up in Q4 Some effect from higher international market oil price, but main impact from relatively higher share of volumes from Yemen in Q4 65 61,55 60 55 53,54 51,44 51,88 50 48,65 49,15 45 44,99 40 39,34 35 30 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q4 201
Slide 11: Further increase in cash position
Further increase in cash position • Cash position increased by NOK 449 million in Q4 1 600 1 385 1 400 1 200 936 1 000 NOK million 822 800 671 600 400 303 282 210 200 143 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q4 2010 presentation 11
Slide 12: Key figures 2008-2010
Key figures 2008-2010 1600 1376 1385 1400 1252 1200 1000 869 804 Sales NOK Million 800 651 Adjusted EBITDA 600 Cash at year end 400 303 262 176 200 0 2008* 2009** 2010** * Adjusted for impairment Bl 43 ** Adjusted for arbitration costs Q4 2010 presentation 12
Slide 13: Corporate management
Corporate management Helge Eide Managing Director Haakon Sandborg Trond Myrseth CFO COO Tom Bratlie Tore Lilloe-Olsen Corporate Head of Communication Director Exploration Ole-Andreas Isdahl QHSE Director Magne Norman Sven Erik Lie Erik Syrdalen Business Unit Manager, Kurdistan Business Unit Manager,
Slide 14: Operations
Drilling the Bastora-1 exploration well in the Erbil license in the Kurdistan Region of Iraq. Operations Managing Director Helge Eide
Slide 15: Export production tests started in Kurdistan
Export production tests started in Kurdistan • Testing of export production from the Tawke field commenced on 2 February • We are now testing at full capacity of 50,000 bopd • Close cooperation between KRG, North Oil Company, and DNO • After the test period, an interim period will continue until a n
Slide 16: The Tawke facilities and connection to the export pipeline
The Tawke facilities and connection CPF and refinery to the export pipeline State Oil Marketing Organization (SOMO) • Sales at outlet in Turkey Turkey’s Petroleum Pipeline Corporation (BOTAS) • Pipeline system in Turkey 50 000 bopd capacity (gross) Pipeline tie-in point North Oil Company (NOC) • Tie
Slide 17: Exploration and production in Kurdistan
Exploration and production in Kurdistan 25 000 20 000 15 000 10 000 5 000 0 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2010 Tawke WI production bopd Bastora Summail-1 Q4 2010 presentation 17
Slide 18: Bastora-1 Preliminary test results
Bastora-1 Preliminary test results Test #4 • Upper Behme • Tested 400-500 bopd. 18-20 API • Rate not stable. • Expect no fracture system; producing from matrix. • 1 acid job; 400 bbls with balls dropped @ 50% acid pumped Test #3 • Lower Bekme • Tested 500-600 bopd of 16-18 API. Rate not stable • Exp
Slide 19: 2010 Yemen production
2010 Yemen production 8 000 7 000 7 719 7 371 7 213 7 058 7 027 6 695 6 489 6 394 6 000 6 332 6 256 6 281 5 935 5 000 4 000 Yemen 3 000 2 000 1 000 0 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Block 48 • Some decline during 2010 as expected • Additional volumes from ongoing field development
Slide 20: Yemen Block 72: Hydrocarbons in Gabdain-1
Yemen Block 72: Hydrocarbons in Gabdain-1 Qishn • Oil-shows on core-samples • Basement probably not sufficiently fractured at location Kohlan • Kohlan sandstone tested 37API oil Basement at 130–180 bopd • Well suspended
Slide 21: Yemen Block 72: Drilling Gabdain-2
Yemen Block 72: Drilling Gabdain-2 Gabdain-1 Gas may fit w/ HC-colomn Gabdain-1 Gabdain-2 *) Gas data are shifted 13m down due to depth difference between the Top Qishn pick on the mud log and the PEX log
Slide 22: Mozambique
Mozambique Q4 2010 presentation 22
Slide 23: Exploration in Mozambique
Exploration in Mozambique Ihaminga High-1 • Chite-1 well completed in December (no discovery) • Inhaminga High-1 well spudded on 13 February Q4 2010 presentation 23
Slide 24: Key priorities going forward
Key priorities going forward • Ramp up and fully utilize production capacity • Add new production from fast track development of new discoveries • Continued increased exploration efforts to add new reserves and resources at low costs • Grow the asset base through new entries in the Middle East and A
Slide 25: Financials
FINANCIALS Haakon Sandborg CFO
Slide 26: Financial summary 2010
Financial summary 2010 Annual key financials Higher sales and cash flow • Increased sales through local deliveries from the 2000 Revenues Exploration Expensed Tawke field in Kurdistan Operating Profit • Development activity supports stable production and increased cash flow from Yemen 1500 • New exp
Slide 27: Key performance indicators
Key performance indicators Production net entitlement Achieved oil price Operational costs 12000 120 1600 1400 10000 100 1200 80 8000 1000 NOK million USD/bbl 60 800 BOPD 6000 600 40 4000 400 20 200 2000 0 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 0 2006 2007 2008 2009 2010 DNO* Brent COGS
Slide 28: Key figures
Key figures As reported Q4 2010 Q4 2009 Full year 2010 Full year 2009 Operating revenues 302.0 225.9 1,251.8 869.0 Operating profit 86.8 -75.2 156.8 -179.1 EBITDA 159.3 -8.7 473.7 121.9 Netback 139.9 -44.2 379.6 29.8 Net of arbitration Q4 2010 Q4 2009 Full year 2010 Full year 2009 items Operating re
Slide 29: Key financial indicators – before special items
Key financial indicators – before special items EBITDAX margin EBITDAX Netback 80 % 350 350 77 % 70 % 300 300 67 % 60 % 64 % 64 % 250 250 56 % 50 % NOK million NOK million 200 200 40 % 150 150 30 % 100 100 20 % 50 50 10 % 0% 0 0 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q4'09 Q1'10
Slide 30: Condensed income statement
Condensed income statement NOK million Q4 2010 Q3 2010 Q4 2009 Full year 2010 Full year 2009 Sales 302.0 406.6 225.9 1,251.8 869.0 Cost of goods sold -144.7 -185.1 -135.8 -618.7 -659.3 Gross profit 157.3 221.4 90.2 633.1 209.7 Dry well cost expensed -9.2 3.1 1.2 -17.2 -56.2 Seismic and other explora
Slide 31: Cash flow statement
Cash flow statement NOK million Q4 2010 Q3 2010 Q4 2009 Full year 2010 Full year 2009 Profit / (loss) before income tax -40.0 -118.2 -99.3 -206.2 28.0 Non cash items and changes in 222.4 312.9 42.0 933.4 124.0 working capital Taxes and interest paid -45.1 -55.1 -57.5 -202.3 -205.3 Net cash from oper
Slide 32: Exploration activity
Exploration activity Exploration expensed per segment Expensed exploration NOK 56 million in 2010 30 Mozambique: NOK 31 million Yemen Kurdistan Africa Other • Dry well Chite-1 25 • Seismic, other 20 Kurdistan: NOK 23 million • G&G work 15 • Seismic Tawke PSC NOK million 10 Yemen: NOK 8 million • Dry
Slide 33: Capital expenditure
Capital expenditure CAPEX per segment Capex NOK 152 million in 2010 Yemen Kurdistan Africa 80 Yemen: NOK 131 million • Discovery of Yaalen in BL 47 60 • Field development plan approved by partners • Infill drilling on Godah and Bayoot • Capitalized exploration BL 72 40 NOK million Kurdistan: NOK 18
Slide 34: 2011 Guiding
2011 Guiding Total investment per activity Plan for 2011 WPP Planned investments 1800 Exploration • Development CAPEX NOK 200 million 1600 Development • Exploration NOK 250 million Contingent additional investments 1400 • Development CAPEX NOK 400 million 1200 • Exploration NOK 20 million NOK millio
Slide 35: Capital structure
Capital structure Assets Equity and liabilities 6000 6000 Non-current assets Other current assets Cash and cash equivalents Shareholders equity Non-current liabilities Current liabilities 5000 5000 Cash: NOK 1385 million 4000 4000 Net debt to capitalization* NOK Million NOK Million 11 per cent 3000
Slide 36: Shareholder matters
Shareholder matters Geographic distribution* Norway Rest of World • 13,878 Norwegian shareholders 100 % 6% holding 35 percent Sweden 4% 90 % 5% Luxembourg International 80 % 8% • 476 international shareholders UK 12 % holding 65 percent 70 % USA • RAK Petroleum 30 percent 60 % • Oppenheimer 7 percen
Slide 37: Outlook 2011
Outlook 2011 • Production • Substantially higher deliveries from the Tawke field • Somewhat lower production in Yemen • Development • Complete Yaalen development • Initiate additional development projects at the Tawke field • Evaluate possible development of new discoveries • Exploration • Summail-1
Slide 38: Welcome back
FIRST QUARTER 2011: 11 MAY 2011 WELCOME BACK
Slide 39: 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