Dno Asa Class A · OSL:DNO
Dno Asa Class A — Investor Presentation (August 2006)
36 slides from Dno Asa Class A's investor presentation, Aug 29, 2006
Slide 1: Presentation of DNO ASA
PRESENTATION OF DNO ASA 29 August 2006 Helge Eide 2006 Managing Director Haakon Sandborg CFO
Slide 2: Disclaimer
DISCLAIMER This Presentation includes and is based, inter alia, on forward-looking information and state ments 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 ab
Slide 3: Our mission: leading exploration and production company
OUR MISSION IS TO BE A LEADING EXPLORATION AND PRODUCTION COMPANY FOCUSED ON TRANSFORMING 2006 RESOURCES TO RESERVES AT LOW COST, GENERATING SUBSTANTIAL AND CONSISTENT VALUE FOR OUR SHAREHOLDERS
Slide 4: New growth cycle
NEW GROWTH CYCLE Realizing and returning values WI P50 Reserves (MBOE) 2001 - 2006 • Initial focus on small and mature 1 st grow th cycle New grow th cycle fields in the North Sea 144 139 125,4 • Approximately NOK 1.5 billion in 85,5 sales proceeds in 2004 (USD/NOK = 64,3 72 6.2) 34 14,4 29 15 3 3 •
Slide 5: Production
PRODUCTION Working Interest BOPD YTD: 15,675 Q2: 14,470 2006E: 15,000 20 000 Tasour Sharyoof Nabrajah Glitne 15 000 10 000 5 000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr M ay Jun 2005 2006 Copyright 2006 DNO ASA August 29th, 2006 Presentation Glitnir 5
Slide 6: Second quarter key figures
NET ENTITLEMENT SECOND QUARTER KEY FIGURES Sales (NOK million) EBITDA (NOK million) Net Profit (NOK million) +120%* +290%* 400 180 80 350 160 168 60 75 359 140 300 120 40 250 100 200 20 80 150 0 163 60 -22 100 40 -20 50 20 43 0 0 -40 Q205 Q206 Q205 Q206 Q205 Q206 * Change from Q2 2005 • Strong impro
Slide 7: Year to date key figures
NET ENTITLEMENT YEAR TO DATE KEY FIGURES Sales (NOK million) EBITDA (NOK million) Net Profit (NOK million) +141%* +90%* -64%* 900 300 140 800 120 250 275 129 700 774 100 600 200 500 80 150 400 60 300 100 321 40 200 145 46 50 20 100 0 0 0 YTD 2005 YTD 2006 YTD 2005 YTD 2006 YTD 2005 YTD 2006 * Change
Slide 8: Reserve development
WORKING INTEREST RESERVE DEVELOPMENT WI Reserves P+P (MBOE) Strong organic reserve growth Last 18 months • Discoveries at Goliat (NCS) and 160 Tawke (N. Iraq) adds 70 million 140 barrels in P+P reserves (WI) to 120 DNO Taw ke 100 80 Goliath • Reserves have increased by 100 percent YTD 60 40 • Reserv
Slide 9: Operational review
OPERATIONAL REVIEW Copyright 2006 DNO ASA August 29th, 2006 Presentation Glitnir 9
Slide 10: World wide portfolio
WORLD WIDE PORTFOLIO 35 LICENSES - 16 AS OPERATOR Northern Europe (25) WI Middle East (8) WI Norway Yemen PL 048B “Glitne Field” 10.00 Block 32 (Tasour) (O) 38.95 PL 048D “Enoch” 10.00 Block 43 (Nabrajah) (O) 56.67 PL 305 (O) 30.00 Block 53 (Sharyoof) 24.45 PL 305 B (O) 30.00 Block 4
Slide 11: Operational highlights
SECOND QUARTER AND FIRST SIX MONTHS OPERATIONAL HIGHLIGHTS • YTD production increased by 14 % • Yemen (Nabrajah) production below plan – Glitne production in line with plan • Strong achievements in Northern Iraq – oil discovery at first well • Goliat gross P50 reserves increased from 50 to 250 milli
Slide 12: Yemen production update
YEMEN PRODUCTION UPDATE 20 000 Tasour Sharyoof Nabrajah • 2006 YTD production from Yemen increased by 21 percent 15 000 • Nabrajah production below plan • Godah Field will add new production 10 000 • Infill & appraisal wells at Tasour and Production (WI) Sharyoof aimed at arresting the decline 5 000
Slide 13: Yemen Block current activities: Tasour and Godah
YEMEN BLOCK 32 CURRENT ACTIVITIES Tasour Field • Tasour 22ST on TD, to Tasour 22ST Godah Field be tested • Next well to be drilled is a basement prospect Godah Field • Oil production to commence Q406 with estimated initial gross production of 2000 – 4000 BOPD. • Further drilling on is planned next 6
Slide 14: Yemen Block current activities: Nabrajah
YEMEN BLOCK 43 CURRENT ACTIVITIES Nabrajah # 11 test from Kohlan /upper basement • Flowed max 650 BOPD after ESP installation (not-sustainable) • Nabrajah #11 may be re-entered at a later stage for further stimulation and re-testing • Further stimulation and testing of Nabrajah 9 and Nabrajah 10 wil
Slide 15: Yemen Block current activities: Bayoot SW
YEMEN: BLOCK 53 CURRENT ACTIVITIES Prospective area close to Sharyoof Field Basement and overlaying carbonates: • Bayoot SW # 1: currently testing carbonates overlaying basement with smaller rig. • Bayoot SW # 2: Drilled to a total depth of 3488 meter (MD) some 436 meters into basement. • Bayoot SW
Slide 16: Continued high drilling activity in Yemen
YEMEN CONTINUED HIGH DRILLING ACTIVITY Yemen drilling plan next 18 months - > 30 wells: • Operated by DNO • BL32, 43, 44, 47, 72 • 12 Exploration wells • 12 appraisal / development wells • Operated by others • BL 53 • 6 exploration wells plus development wells (plan yet to be finalised) Copyright
Slide 17: Northern Iraq exploration update
NORTHERN IRAQ EXPLORATION UPDATE Operations to date • Acquisition of 440 km 2D seismic Tawke • Drilled and tested Tawke # 1 • Drilled Tawke # 1A, currently testing • Aqcuired 3-D seismic accross Tawke • Commenced drilling Kanke # 1 with second drilling rig in July Forward plan • Complete Tawke # 1A
Slide 18: Tawke #1 early production plan
Tawke Early Production Plan TAWKE #1 Plan is based on test production of 5.000 BOPD achieved from both Tawke # 1 and repeated in Tawke # 1A (open hole) Investments in facilities and pipeline have been made – production capacity yet to be defined Additional producers planned to be drilled befor
Slide 19: Tawke #1 exploration and appraisal strategy
Short to medium term Exploration & Appraisal Strategy TAWKE #1 Tawke Area Finalise open hole testing of additional intervals in Tawke # 1A (< 1000 meters) Testing of deeper level(s) in Tawke # 1 (> 2000 meters) Drilling Tawke # 2 appraisal well Evaluate 3D seismic and locate new wells Dril
Slide 20: Tawke #1 & 1A each tested 5,000 BOPD
NORTHERN IRAQ TAWKE #1 & 1A EACH TESTED 5,000 BOPD Collecting oil for local use Flaring oil at well site Copyright 2006 DNO ASA August 29th, 2006 Presentation Glitnir 20
Slide 21: Northern Europe: exploration and production update
NORTHERN EUROPE: 2006 EXPLORATION AND PRODUCTION UPDATE
Slide 22: Goliat oil discovery
GOLIAT OIL DISCOVERY Potential for increased reserves Recoverable P50 reserves substantially higher than initially anticipated • 250 million barrels (P50) - 37,5 million barrels net to DNO • First of two wells program to comme nce in September 2006 • Western prospect has the potential of ”several hu
Slide 23: Zita prospect
ZITA PROSPECT Exciting potential PL 263/263B Zita (30%) • One exploration well planned to commence in October 2006 (Norsk Hydro is Operator) • P50 unrisked prospect resource potential is approc. 200 million barrels – 60 million barrels net to DNO Copyright 2006 DNO ASA August 29th, 2006 Presenta
Slide 24: High potential prospects
NORTHERN EUROPE HIGH POTENTIAL PROSPECTS 7+ wells to be drilled on NCS next 18 months: Operated by DNO • Lie, Torkildsen, Draupne • 3 exploration wells (commencing Q1 2007) Operated by others • Goliat, Zita, Ragnarrock • 4 exploration wells • Plus additional drilling at Goliat in 2007 Copyright 20
Slide 25: 18 months drilling plan
18 MONTHS DRILLING PLAN Participate in > 40 wells NORWAY 7+ exploration wells N. IRAQ Continuous drilling with two rigs EQ. GUINEA 2 exploration / appraisal wells YEMEN Approiximately 30 wells – of which 15 is expected to be exploration wells Copyright 2006 DNO ASA August 29th, 2006 Presentation
Slide 26: Exciting and demanding next months
NEXT 18 MONTHS EXCITING AND DEMANDING Substantial upside potential 2500 Adding value through 2000 2000 • Increased exploration drilling 1500 • Continue to transfer resources to reserves at low costs 1000 • Maximise production from current assets 500 • Achieving first oil production 140 from Northern
Slide 27: Financial review
FINANCIAL REVIEW Copyright 2006 DNO ASA August 29th, 2006 Presentation Glitnir 27
Slide 28: Financial summary: building on DNO's business model
FINANCIAL SUMMARY BUILDING ON DNO’S BUSINESS MODEL Quarterly Key Figures (NOK Million) Adding value through exploration 450 Sales led strategy... 400 Exploration cost 415 • Confirming resource potential EBITDA through 40% reserve growth in Q2 350 359 • High investments in seismic data 217 300 acquis
Slide 29: EBIT and EBITDAX
FINANCIAL SUMMARY EBIT AND EBITDAX Producing assets (NOK Million) Increasing cash flow and 350 operating profit EBITDAX EBIT 325 • Strong increase (286% YTD) in 300 cash flow before exploration 278 and tax (EBITDAX) 250 • Production growth 200 • Higher achieved oil prices 150 • Low cost base 132 100
Slide 30: Exploration activity
FINANCIAL RESULTS EXPLORATION ACTIVITY Expensed and capitalized exploration (NOK Million) High level of 300 exploration 237 investments in Q2 250 • Expensing of NOK 200 57 mill. acquisition 150 115 cost for several seismic surveys Expensed 100 59 41 149 • Dry well of NOK 16 50 million 0 -50 Capitali
Slide 31: Key figures
FINANCIAL SUMMARY KEY FIGURES Q2 2006 Q2 2005 YTD 2006 YTD 2005 Last 12M 2005 WI Pr oduction ( mmboe) 1,317 1,212 2,837 2,479 5,739 5,380 WI Pr oduction per day (noe) 14 470 13 322 15 675 13 694 15 726 14 741 WI Reserves (mmboe) 139,0 74,7 139,0 74,7 139,0 71,8 NOK Million Q2 2006 Q2 2005 YTD 2006 Y
Slide 32: Netback to investment coverage
RESULT OF OPERATIONS NETBACK TO INVESTMENT COVERAGE Netback (RoO) to Total Investments (NOK million) Increasing investments 400 Netback producing activities • YTD increase of 250 percent Acquisition and development cost 350 Exploration cost expensed Strong netback coverage 300 • YTD netback coverage
Slide 33: Capital structure
FINANCIAL RESULTS CAPITAL STRUCTURE Net interest bearing debt (NOK million) Balance Sheets (NOK Million) 600 3 500 3 000 Other current 500 2 500 assets 514 2 000 Cash and money 1 500 market funds 400 1 000 Non-current assets 500 300 348 0 30.06.05 31.12.05 30.06.06 200 147 3 500 100 3 000 Current li
Slide 34: Outstanding reserve economics
INVESTMENTS OUTSTANDING RESERVE ECONOMICS FDA (P+P) Recycle Ratio (P+P) Reserve Replacement (P+P) 2.0 USD/bbl 8.2 times 10.4 times 5 10 10 5 10,4 5 8,2 2,6 2,9 4,5 4,7 2,5 4,1 2,0 3,4 3,9 3,2 0 0 0 2003 2004 2005 YTD 2003 2004 2005 YTD 2003 2004 2005 YTD 2006 2006 2006 Low cost reserve High netback
Slide 35: Outlook second half 2006
SECOND HALF 2006 OUTLOOK Continuing Investments • Exploration spending near forecast NOK 650 mill. in 2006 • Development CAPEX above 2006 forecast due to added Iraq investment • DNO participation in 28 wells of which 17 exploration wells in 2006 Production Estimates • Revised 2006 production guidanc
Slide 36: Our mission: leading exploration and production company
OUR MISSION IS TO BE A LEADING EXPLORATION AND PRODUCTION COMPANY FOCUSED ON TRANSFORMING 2006 RESOURCES TO RESERVES AT LOW COST, GENERATING SUBSTANTIAL AND CONSISTENT VALUE FOR OUR SHAREHOLDERS