Dno Asa Class A · OSL:DNO

Dno Asa Class A — Investor Presentation (March 2006)

37 slides from Dno Asa Class A's investor presentation, Mar 7, 2006

  1. Slide 1: DNO ASA - Transforming Resources to Reserves at Low Costs

    DNO ASA TRANSFORMING RESOURCES TO RESERVES AT LOW COSTS Helge Eide, President and Managing Director Haakon Sandborg, Chief Financial Officer

  2. 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

  3. Slide 3: A Leading European Independent

    A LEADING EUROPEAN INDEPENDENT Strong business fundament... Key facts about DNO • A pure-play E&P investment Operational Facts • Diversified, risk balanced Production January 06 17.700 BOPD portfolio Reserves (P+P) January 06 101 MBOE • High-margin production profile Financial Facts* • Excellent res

  4. Slide 4: New Growth Cycle

    NEW GROWTH CYCLE Realizing values in 2004 P50 Reserves (MBOE) 2001 - 2006e • USD 240 million sales proceeds 144 125 Returning values 100 86 • Cash and shares dividend of approximately USD 150 million 14 29 since 2003 2001 2002 2003 2004 2006 New growth opportunities • Balanced portfolio with Product

  5. Slide 5: Key Figures

    KEY FIGURES Sales (USD Million)* EBITDA (USD Million)* Net Profit (USD Million)* 74.1 +41% 48.2 +32% 21.7 +1,257% 80 60 25 70 50 20 60 15 40 50 10 40 30 5 30 20 20 0 10 -5 10 0 0 -10 Q404 Q105 Q205 Q305 Q405 Q404 Q105 Q205 Q305 Q405 Q404 Q105 Q205 Q305 Q405 • Strong improvements in key figures • Exp

  6. Slide 6: Our Mission

    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

  7. Slide 7: Strategy

    STRATEGY We are pursuing a strategy of low cost reserve replacement borne out by the following strategic aims : ƒ Further explore and develop unique position in Yemen, Iraq and North Sea ƒ Asset focus on both mature and frontier addresses ƒ Balanced risk based approach: technical, political, operati

  8. Slide 8: Low Risk - High Reward Exploration

    A LEADING EUROPEAN INDEPENDENT LOW RISK - HIGH REWARD EXPLORATION Smart exploration strategy: FD&A (USD/bbl)* • Targeted programme of converting resources to reserves at low cost • Operational expertise driving sector leading reserve economics 2,6 2,5 2,9 DNO business model 2003 2004 2005 • Sustaine

  9. Slide 9: High Margin Production

    A LEADING EUROPEAN INDEPENDENT HIGH MARGIN PRODUCTION High margin production Netback RoO (USD/bbl) • Focus on low lifting costs/high margin barrels • Building production profile for next 18 months DNO business model 15,5 11,3 • Maintain low operating unit costs 7,22 • Extend field life through infil

  10. Slide 10: Operational Review

    OPERATIONAL REVIEW  Copyright 2006 DNO ASA  March 7, 2006 Corporate Presentation 2006  10

  11. Slide 11: Worldwide Portfolio

    WORLDWIDE PORTFOLIO Northern Europe (23) Middle East (7) Norway Yemen „ PL 048B “Glitne Field” 10.00 „ Block 32 (Tasour) 38.95 „ PL 048D “Enoch” 10.00 „ Block 43 (Nabraj ah) 56.67 „ PL 305 (O) 30.00 „ Block 44 65.10 „ PL 305 B (O) 30.00 „ Block 72 34.00 „ PL 229 “Goliat” 15.00 „ Block 53 (Sharyoof)

  12. Slide 12: Production

    PRODUCTION Production (BOPD) 16,870 +20% 20 000 Tasour Sharyoof Nabrajah Glitne 15 000 10 000 5 000 0 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005  Copyright 2006 DNO ASA  March 7, 2006 Corporate Presentation 2006  12

  13. Slide 13: Reserve Development

    RESERVE DEVELOPMENT Reserves P+P (MBOE) Reserve increase 101.3 +257% • 153 percent increase in 2005 • From year end 2004 reserves 120 have increased with more than 250 percent 100 Goliat 80 Jan ’06 60 40 20 0 31.12.04 Expl. Acq. Prod. 31.01.06  Copyright 2006 DNO ASA  March 7, 2006 Corporate Prese

  14. Slide 14: Middle East - Yemen and Northern Iraq: Exploration and Production Update

    MIDDLE EAST - YEMEN AND NORTHERN IRAQ: EXPLORATION AND PRODUCTION UPDATE

  15. Slide 15: Yemen - A Continued Success

    YEMEN - A CONTINUED SUCCESS Production (BOPD) $35M +XX% Yemen Highlights • Good production performance • Third field on stream (Nabrajah) • Successful drilling results • Increased reserves  Copyright 2006 DNO ASA  March 7, 2006 Corporate Presentation 2006  15

  16. Slide 16: Yemen - Large Potential/Low Risk

    YEMEN - LARGE POTENTIAL/LOW RISK The highly prospective Masila Production (BOPD) area • High number of prospects at $35M +XX% Qishn, Sarr and Basement levels • 12 new exploration wells planned in 2006 • Favourable infrastructure - production is tied back to Block 14 facilities • Fast-track low cost

  17. Slide 17: Block 32: Tasour

    YEMEN BLOCK 32: TASOUR A success story • Upheld production through several appraisal wells 4,642* • Production from Qishn - possible extension in Basement 25 000 #9 #11 DNO Share #14 • Increased reserve estimates #8 #10 #12 #15 #19 20 000 #18 Drilling plan Block 32 • Finish Godah # 1 exploration wel

  18. Slide 18: Block 53: Sharyoof

    YEMEN BLOCK 53: SHARYOOF Large potential Production (WI) • Production still on plateau • Potential increase as a result of infill 5,241* wells 30 000 DNO Share • Increased reserve estimates 25 000 #13 Drilling plan Block 53 #15 • Finish Bayoot SW # 1 exploration well 20 000 (basement + overlaying ca

  19. Slide 19: Block 43: Nabrajah

    YEMEN BLOCK 43: NABRAJAH Field development status Production (WI) • Gross production increased to 12.000 BOPD at end of 2005 7,741* • Current gross well capacity 15000 DNO Share potential is approximately 15.000 BOPD. • Gross field processing capacity upgrade to 25.000 BOPD – 10000 scheduled for Apr

  20. Slide 20: Yemen Substantial Potential

    YEMEN SUBSTANTIAL POTENTIAL NEW WELLS ON PRODUCING FIELDS + 12 EXPLORATION WELLS Qishn prospects and leads Basement prospects and leads First exploration well Q2 06 Basement exploration well Q2 06 4 Infill wells in 2006 Godah #1 - new oil discovery Tasour #21 Q2 06 Bayoot SW #1 - testing in progress

  21. Slide 21: Northern Iraq - A Unique Opportunity

    NORTHERN IRAQ A UNIQUE OPPORTUNITY Summary - Northern Iraq • Acquisition of 440 km 2D seismic completed in Q3 2005 • First well spudded in November 2005 • Memorandum of Understanding (“MOU”) established with Ministry of Oil in Baghdad • Continuous drilling in 2006  Copyright 2006 DNO ASA  March 7,

  22. Slide 22: Tawke #1

    Tawke # 1 „ Spudded 28 November 2005 TAWKE #1 „ Casing design and well plan revised after influx of oil under pressure at the top of first prospect „ Drilling at ca. 2.300 meters (14.02.06) „ Evaluation to be undertaken after TD „ Testing contingent on outcome of evaluations - timing contingent on e

  23. Slide 23: Northern Europe - Norway and UK: Exploration and Production Update

    NORTHERN EUROPE - NORWAY AND UK: EXPLORATION AND PRODUCTION UPDATE

  24. Slide 24: Northern Europe - High Potential Prospects

    NORTHERN EUROPE HIGH POTENTIAL PROSPECTS Expanded portfolio • 23 Licenses • Nine as Operator • One producing asset Drilling activity • Secured 340 rig days (6-8 wells) for three years starting Q4 2006 (as part of a consortium) • DNO plans to participate in six exploration wells next 12-18 months (fo

  25. Slide 25: New Goliat Oil Discovery

    NORWAY NEW GOLIAT OIL DISCOVERY Adding new barrels to DNO • EM technology leading new target selection • Recoverable P50 reserves substantially higher than anticipated • 250 million barrels - 37,5 million barrels net to DNO • Next well in Q4 2006  Copyright 2006 DNO ASA  March 7, 2006 Corporate Pr

  26. Slide 26: Drilling Plan, Operated Licenses

    NORWAY DRILLING PLAN, OPERATED LICENSES PL 305 Lie (30 %) • 1 exploration well planned, late 2006 • P50 unrisked resource potential is 68 million barrels – 20,4 million barrels net to DNO Lie PL 341 Thorkildsen (30%) • 1 exploration well planned in 2007 Thorkildsen • P50 unrisked resource potential

  27. Slide 27: Drilling Plans, Other Licenses

    NORWAY DRILLING PLANS, OTHER LICENSES PL 263/263B Zita (30%) • One exploration well Zita planned in 2006 (Norsk Hydro is Operator) • P50 unrisked resource potential is approc. 200 million barrels – 60 million barrels net to DNO Ragnarock PL 265 Ragnarock (30%) • 1 exploration well planned in 2007 (S

  28. Slide 28: 2006 Exploration Drilling Plan

    2006 EXPLORATION DRILLING PLAN NORWAY Four exploration UK wells One exploration well on the Jaguar prospect N. IRAQ Continuous drilling EQ. GUINEA Two exploration/ appraisal wells (contingent on rig availibility) YEMEN 12 exploration wells  Copyright 2006 DNO ASA  March 7, 2006 Corporate Presentat

  29. Slide 29: Management Team

    MANAGEMENT TEAM DNO ASA MD Helge Eide CFO Haakon Sandborg HSE Mgr: „ Number of staff: 8 Åsm und Erlandsen Northern Europe Yemen Northern Iraq Africa EV P Roar Tessem EV P Sven-Erik Lie EV P Magne Nor mann EV P Ole Nygaard „ Number of staff: 30 „ Number of staff: 160 „ Number of staff: 25 „ Number of

  30. Slide 30: Financial Review

    FINANCIAL REVIEW  Copyright 2006 DNO ASA  March 7, 2006 Corporate Presentation 2006  30

  31. Slide 31: Financial Summary

    FINANCIAL SUMMARY Quarterly Key Figures (USD Million) Highlights • Solid Financial Performance 74.09 + 41% • Strong netback funding high 80 Sales 74 growth investments Exploration cost expensed 70 67 • Building financial strength EBITDA 60 • Excellent reserve economics 52 49 50 47 8 • Delivering val

  32. Slide 32: Lifting Costs

    LIFTING COSTS Quarterly lifting cost (USD/bbl) Lowering lifting costs • Increase in total lifting costs as 7.2 - 13% Nabrajah comes on-stream 9 • Increase in production from 8 Nabrajah reduces lifting cost 7 per barrel in Q4 6 5 4 3 2 1 0 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005  Copyright 2006 DNO

  33. Slide 33: Netback to Investment Coverage

    NETBACK TO INVESTMENT COVERAGE Netback (RoO) to Total Investments (USD Million) Re-investing cashflow 76 % • 2005 netback to total investment (acquisition, development and 50 Netback producing activities exploration) coverage 76 Acquisition and development cost percent Exploration cost expensed 40 •

  34. Slide 34: Preparing for Growth - Capital Structure

    CAPITAL STRUCTURE PREPARING FOR GROWTH Solid financial structure Balance Sheets • Increasing investments in 500 property, plant & equipment 400 Other current assets • Net interest bearing debt at USD 300 Cash and money market funds 23 mill. 200 Non-current assets 100 0 31.12.04 31.12.05 500 400 Curr

  35. Slide 35: Result of Operations

    RESULT OF OPERATIONS EFFICIENCY OF THE COMPANY’S PRODUCING ASSETS USD Million Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 2005 2004 Sale of petroleum products 85,5 79,7 58,6 54,1 58,2 277,8 197,5 Lifting costs -11,5 -11,2 -7,0 -8,0 -7,0 -37,7 -26,4 DD&A -6,9 -5,4 -4,8 -4,8 -4,9 -22,0 -18,7 Transportatio

  36. Slide 36: Reserve Economics

    INVESTMENTS RESERVE ECONOMICS FDA USD/bbl (P+P) Recycle Ratio USD/bbl (P+P) Reserve Replacement (P+P) 2.9 +16% 3.9 +11% 4.7 times +15% 4 5 5 4 4 3 3 3 2 2 2 1 1 1 0 0 0 2003 2004 2005 2003 2004 2005 2003 2004 2005 3 years rolling average 3 years rolling average 3 years rolling average „ Low cost res

  37. Slide 37: Outlook

    TRANSFORMING RESOURCES INTO RESERVES AT LOW COST OUTLOOK Transforming Resources to Reserves • Exploration expenditures estimated to USD 100 mill. • DNO participating in 22 new wells targeting substantial resource potential • Focus on Northern Europe, Yemen and Iraq Low Cost Development • Development

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