North Energy Asa · OSL:NORTH

North Energy Asa — Q4 2013 Earnings Presentation

34 slides from North Energy Asa's earnings presentation, Feb 20, 2014

  1. Slide 1: North Energy Q4 2013

    North Energy Q4 2013 20 Februar 2014

  2. Slide 2: Important information

    Important information This presentation and its appendices (together the “Presentation”) have been prepared and delivered by North Energy ASA (“North Energy” or the “Company”). The Presentation is prepared for information purposes only, and is not to be used for any other purpose. The Presentation d

  3. Slide 3: Agenda

    Agenda  Highlights Q4  New financial situation  New exploration tools and the companies behind  Exploration status  Outlook North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no 3

  4. Slide 4: Highlights Q4 and later events

    Highlights Q4 and later events  Capital raise of NOK 360 million approved in EGM  New share issue of NOK 285 million in a private placement and convertible drawing facility of NOK 75 million  Acquisition of EMGS Barents Sea library of EM data  Enables financing of new drilling campaign of 8 - 12

  5. Slide 5: Agenda

    Agenda  Highlights Q4  New financial situation  New exploration tools and the companies behind  Exploration status  Outlook North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no 5

  6. Slide 6: Financial highlights

    Financial highlights  Capital raise of NOK 360 million approved in EGM  Share issue of NOK 285 million  Convertible loan of NOK 75 million  2012 tax refund confirmed  Tax refund from 2012 exploration activities: NOK 497 million  Tax refund from group restructuring: NOK 15 million  Previously

  7. Slide 7: Previously capitalised expenditure in Norvarg expensed

    Previously capitalised expenditure in Norvarg expensed  P & L:  Pre-tax: NOK 431 million  Post tax: NOK 95 million  Assets:  Reduction of fixed assets NOK 431 million  Equity & Liabilities:  Reduction of equity NOK 95 million  Reduced deferred tax NOK 336 million  Effect on cash: None North

  8. Slide 8: Profit & Loss Q4 2013

    Profit & Loss Q4 2013 NOK Million Q4 2013 Q4 2012 2013 2012 Profit 0,5 - 98,6 46,9 Exploration expenses (468,5) (257,1) (696,6) (540,1) Impairment of Norvarg Payroll (10,8) (11,5) (51,0) (56,8) Other operating expenses (8,0) (11,9) (33,4) (41,1) EBITDA (486,8) (280,4) (682,4) (591,1) Depreciation (2

  9. Slide 9: Balance sheet 31 December 2013

    Balance sheet 31 December 2013 NOK Million 31.12.2013 31.12.2012 31.12.2011 Assets Fixed Assets 145,7 304,2 418,6 Capitalized drilling cost + tax benefit Short term receivables 368,5 540,6 608,4 Tax receivable refund - Dec 2014 Cash 15,0 28,5 34,2 Total assets 529,3 873,3 1 061,2 Equity and liabilit

  10. Slide 10: Net cash position before capital raise and convertible loans

    Net cash position before capital raise and convertible loans  Net cash position of Net cash* position Q4 2013 NOK 164 million 400  Unused exploration 350 34 loan facility of NOK 300 780 million 250 170  Unused convertible 200 loan facility of NOK 353 259 million 150 100 164 50 15 0 Cash 2014 tax

  11. Slide 11: The share issue in brief

    The share issue in brief  North raising NOK 285 million in a private placement  Directed towards large North shareholders, close affiliates and other large investors  Approved at North EGM 13 February  Shares listed upon prospectus approval; expected ultimo February, subject to Norwegian FSA app

  12. Slide 12: Acquisition of EMGS Barents Sea library of EM data

    Acquisition of EMGS Barents Sea library of EM data  Convertible loan of NOK 75 million  Six months duration  Convertible between four to six months post issue  Conversion price of NOK 4.15 per share  Interest of 6.0 % p.a.  Other commitments  EMGS to provide North with services of NOK 15 mill

  13. Slide 13: Share issue of 285 MNOK and convertible loan of 75 MNOK

    Share issue of 285 MNOK and convertible loan of 75 MNOK New financial / industrial EMGS friends Current shareholders shareholders Contribution Contribution Contribution Contribution  EM data/competence  Cash – NOK 4 /  Cash – NOK 4 /  Cash – NOK 4 /  Cash – NOK 4 / share share share share  NOK

  14. Slide 14: Strong shareholder base post transaction

    Strong shareholder base post transaction Top 10 shareholders  Strong support from existing Investor shareholders 1 THS Partners 2 Elliott International  New technology based 3 Rex Technology Mgmt New shareholders 4 Odin New  Large investment funds 5 Isfjorden 6 Rex International Holding New  Lon

  15. Slide 15: Fully funded for 8 – 12 wells post-transaction

    Fully funded for 8 – 12 wells post-transaction  Q4 2013 net cash Balance sheet Private placement Off balance sheet position of NOK 800 164 million 686 700  Private placement 59 of NOK 285 million 600 63  TGS, Rex and 500 115 56 EMGS convertible 400 522 loans provides a 285 300 285 free cash poten

  16. Slide 16: Agenda

    Agenda  Highlights Q4  New financial situation  New exploration tools and the companies behind  Exploration status  Outlook North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no 16

  17. Slide 17: Dry Heilo in 2012 was a wake-up call. It raised a number of questions.

    Dry Heilo in 2012 was a wake-up call. It raised a number of questions. It changed North Energy  Was the migration through Heilo certain?  North Energy decided to evaluate new technology  New technology RVD from Rex based on low frequency seismic shows new picture  Also Electromagnetic data from

  18. Slide 18: EM data - an effective exploration tool in the Barents Sea

    EM data - an effective exploration tool in the Barents Sea  Powerful exploration tool in shallow hydrocarbon basins such as the Barents Sea  To be integrated into North’s exploration strategy  Accurate volume indication  Effective in combination with conventional seismic and RVD  Technology pro

  19. Slide 19: Joint use of EM and RVD as technological tools may give very high probability of oil discovery

    Joint use of EM and RVD as technological tools may give very high probability of oil discovery  EM proven technology especially effective in the Barents Sea  Detects both oil and gas volumes  RVD differentiates between oil and gas  Excellent negative indicator  Consistency between the technolog

  20. Slide 20: Predictive power of two independent geophysical tools

    Predictive power of two independent geophysical tools EM Barents Sea RVD NCS 25 25 Dry Sub-commercial 20 20 Traces Commercial Commercial Saving # of wells # of wells 15 15 by not Sources of error drilling 10 10 dry wells 5 5 0 0 Small prediction Large Prediction Oil prediction Dry prediction  Match

  21. Slide 21: More RVD data points are to give clusters of oil

    More RVD data points are to give clusters of oil in source position, migration routes and reservoir Oil in clastic reservoir Frequency Migration Route Coal Heilo migration Oil in carbonate Source Rock Amplitude North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no

  22. Slide 22: Prospect in North Energys drilling campaign seen from three independent perspectives

    Prospect in North Energys drilling campaign seen from three independent perspectives Seismic data interpretation Resonnance (RVD) Rex EMGS modelling Sample, taken from 8-9hz North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no

  23. Slide 23: Rex, listed in Singapore, started first two drilling campaigns based on RVD

    Rex, listed in Singapore, started first two drilling campaigns based on RVD last quarter  Market cap NOK 3,2bn.  Substantial contribution in North’s private placement  First drilling campaigns based on RVD started in US and Oman last quarter  RVD found oil in Oman after North Energy plays a role

  24. Slide 24: EMGS in brief

    EMGS in brief  Pioneered the EM  ~300 employees  Listed on OSE March industry 2007  Worldwide experience  Technology &  2012 revenues: USD market leader  Efficient & stable 201 million  Delivered >700 operations surveys  2012 EBITDA: USD 56 million North Energy ASA · post@northenergy.no · (

  25. Slide 25: Agenda

    Agenda  Highlights Q4  New financial situation  New exploration tools and the companies behind  Exploration status  Outlook North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no 25

  26. Slide 26: APA 2013

    APA 2013 Barents Sea North Sea 2  North Energy applied in six new areas 6 5 1  North Energy awarded six APA 2013 licences: 1. PL 503C North Sea 2. PL 509CS North Sea Norwegian Sea 3. PL 590B Norwegian Sea 4. PL 762 Norwegian Sea 4 Barents Sea 5. PL 769 Barents Sea 3 6. PL 770 Barents Sea Norwegian

  27. Slide 27: DoD schedule for next 10 licences

    DoD schedule for next 10 licences DoD Deadline Licence Prospect Interest Operator Location Rig 2014 2015 PL 590 Sierra 30% North Energy Norwegian Sea N/A Q1 PL 601 Nupen 20% Wintershall Norwegian Sea N/A Q2 PL 509 Albatross 40% North Energy North Sea N/A Q3 North Sea N/A PL 616 Skagastøl 15% Edison

  28. Slide 28: 12 licences awarded last year. Portfolio being refocused.

    12 licences awarded last year. Barents Sea Portfolio being refocused.  28 licences in total  Farm-ins and relinquishments planned in 2014  New technology to screen out the dry Norwegian Sea wells and focus on high POS  Drilling schedule will develop fast North Sea * TFO 2013 awards pending final

  29. Slide 29: 30 of 36 months spent on getting out of dry wells and building a new drilling portfolio

    30 of 36 months spent on getting out of dry wells and building a new drilling portfolio 20.02.14 45 40 Old licences 35 No. of wells New licences 30licenses and Wells (acc.) 25 20 15 10 5 0 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015

  30. Slide 30: Possible drilling program

    Mulig boreprogram Possible etter emisjonen. Hva er drilling program viktigst i et boreprogram? North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no

  31. Slide 31: Barents Sea in focus facing breakthrough with largest remaining potential

    Barents Sea in focus facing breakthrough with largest remaining potential Barents Sea licenses today Barents Sea awards since start-up Statoil 20 North Energy 16 OMV 15 Eni 12 Lundin 11 Det norske 8 GDF Suez 7 Rocksource 7 Wintershall 7 Edison 7 0 5 10 15 20 25 North Energy ASA · post@northenergy.no

  32. Slide 32: Agenda

    Agenda  Highlights Q4  New financial situation  New exploration tools and the companies behind  Exploration status  Outlook North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no 32

  33. Slide 33: Outlook

    Outlook  3 months  BOC decision on PL 535 in the Barents Sea  Define new Barents Sea blocks for EM acquisition  DoD on PL 601 in the Norwegian Sea  8 new RVD evaluations  12 months  Exploration well on PL 510  Exploration well on PL 713  7 DoD decisions  Awards APA 2014  30 new RVD evalua

  34. Slide 34: Q & A

    Q&A North Energy ASA · post@northenergy.no · (+47) 78 60 79 50 · www.northenergy.no 34

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