Slide 1: Transforming Resources to Reserves at Low Costs
DNO ASA TRANSFORMING RESOURCES TO RESERVES AT LOW COSTS Helge Eide 2006 Managing Director
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
Slide 3: A Leading European Independent
A LEADING EUROPEAN INDEPENDENT Key facts about DNO Investment Highlights • A pure-play E&P investment Operational Facts* Production First Quarter 2006 16.900 BOPD • Diversified, risk balanced Reserves (P+P) March 06 100.3 MBOE portfolio • Strong position offshore Financial Facts* Sales Q1 2006 USD 9
Slide 4: New Growth Cycle
NEW GROWTH CYCLE Realizing values in 2004 WI P50 Reserves (MBOE) 2001 - 2006 • USD 240 million sales proceeds 144 125 Returning values 100 86 • Cash and shares dividend of approximately USD 150 million 14 29 72 since 2003 2001 2002 2003 2004 2005 2006 YTD New growth opportunities • Balanced portfoli
Slide 5: Our Mission
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 6: Strategy
STRATEGY We are pursuing a strategy of low cost reserve replacement borne out by the following strategic aims : § Further explore and develop strong position in Yemen, Iraq and North Sea § Asset focus primarily on mature oil producing provinces § Balanced risk based approach: technical, political, o
Slide 7: Operational Review
OPERATIONAL REVIEW Copyright 2006 DNO ASA May 12, 2006 Fondsfinans 7
Slide 8: World Wide Portfolio
WORLD WIDE PORTFOLIO 36 LICENSES - 16 AS OPERATOR Northern Europe (25) WI Middle East (8) WI Norway Yemen n PL 048B “Glitne Field” 10.00 n Block 32 (Tasour) (O) 38.95 n PL 048D “Enoch” 10.00 n Block 43 (Nabrajah) (O) 56.67 n PL 305 (O) 30.00 n Block 53 (Sharyoof) 24.45 n PL 305 B (O) 30.00 n Block 4
Slide 9: Middle East - Yemen and Northern Iraq: Exploration and Production Update
2006 MIDDLE EAST - YEMEN AND NORTHERN IRAQ: EXPLORATION AND PRODUCTION UPDATE
Slide 10: Yemen: A Continued Success
YEMEN A CONTINUED SUCCESS Yemen assets • Six licenses • Five as operator • Three producing assets Copyright 2006 DNO ASA May 12, 2006 Fondsfinans 10
Slide 11: Yemen: The Highly Prospective Masila Area
YEMEN THE HIGHLY PROSPECTIVE MASILA AREA Cost effective production: Production (BOPD) • Low cost / high margin production from Qishn and $35M +XX% Basement levels • Favourable infrastructure - production is tied back to Block 14 facilities • Fast-track low cost development - licence acquisition to p
Slide 12: Yemen: Production History
YEMEN PRODUCTION HISTORY A success story • Intital production net to DNO (WI) in December 2000 was 2,300 15,208* +663% BOPD 20 000 Tasour Sharyoof Nabrajah • Current production net to DNO is approximately 15,000 BOPD • Active drilling program has 15 000 resulted in increased production and increased
Slide 13: Yemen Block 32: Qishn Prospects & Leads
YEMEN BLOCK 32 QISHN PROSPECTS & LEADS Tasour # 21 appraisal well: Godah # 2 appraisal well: - Initial production of 785 BOPD - Produced ca. 1.100 BOPD during testing Copyright 2006 DNO ASA May 12, 2006 Fondsfinans 13
Slide 14: Yemen Block 43: Nabrajah Basement Appraisal
YEMEN BLOCK 43 NABRAJAH BASEMENT APPRAISAL Copyright 2006 DNO ASA May 12, 2006 Fondsfinans 14
Slide 15: Yemen Substantial Potential
YEMEN SUBSTANTIAL POTENTIAL NEW WELLS ON PRODUCING FIELDS + 12 EXPLORATION WELLS IN 2006 Qishn prospects and leads Basement prospects and leads Basement exploration well planned Q3 06 First exploration well planned Q2 06 Sharyoof # 20 Godah #2 Tasour #21 Nabrajah # 10 Bayoot SW #1 – more testing lat
Slide 16: Northern Iraq: A Unique Opportunity
NORTHERN IRAQ A UNIQUE OPPORTUNITY Summary - Northern Iraq • First award of two PSA’s in highly prospective area • Memorandum of Understanding (“MOU”) established with Ministry of Oil in Baghdad • Acquisition of 440 km 2D seismic completed in Q3 2005 • First well spudded in November 2005 • Contracte
Slide 17: Tawke #1
Tawke # 1 TAWKE #1 n Well Spudded 28 November 2005 n Drilling completed beginning of April n All exploration objectives fulfilled n Influx of oil under pressure while drilling at ca. 350 meters n Oil identified in 5 different reservoir layers n Several tests in progress n Fast-track development plan
Slide 18: Northern Europe - Norway and UK: Exploration and Production Update
2006 NORTHERN EUROPE - NORWAY AND UK: EXPLORATION AND PRODUCTION UPDATE
Slide 19: Northern Europe: High Potential Prospects
NORTHERN EUROPE HIGH POTENTIAL PROSPECTS Expanded portfolio • 24 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 will participate in at least six exploration wells next 12-18 month
Slide 20: Norway: New Goliat Oil Discovery
NORWAY NEW GOLIAT OIL DISCOVERY Adding 30 million new barrels to DNO • Recoverable P50 reserves substantially higher than anticipated • 250 million barrels (P50) - 37,5 million barrels net to DNO • Additional drilling planned for fourth quarter 2006 Copyright 2006 DNO ASA May 12, 2006 Fondsfinan
Slide 21: 2006 Exploration Drilling Plan
2006 EXPLORATION DRILLING PLAN 22 EXPLORATION WELLS IN 2006 – 15 AS OPERATOR NORWAY Four exploration UK wells (one well completed Q1 One exploration 2006) well on the Jaguar prospect (completed Q1 2006) N. IRAQ Continuous drilling EQ. GUINEA Two exploration/ appraisal wells (contingent on rig availi
Slide 22: Management Team
MANAGEMENT TEAM DNO ASA MD Helge Eide CFO Haakon Sandborg HSE Mgr: TOTAL STAFF 227 n Number of staff: 8 Åsmund Erlandsen Northern Europe Yemen Northern Iraq Africa EVP Roar Tessem EVP Sven-Erik Lie EVP Magne Normann EVP Ole Nygaard n Number of staff: 30 n Number of staff: 160 n Number of staff: 25 n
Slide 23: Financial Review
FINANCIAL REVIEW Copyright 2006 DNO ASA May 12, 2006 Fondsfinans 23
Slide 24: Key Financial Figures
KEY FINANCIAL FIGURES Quarterly Key Figures (USD Million) Highlights 70 • Solid Financial Performance Sales EBITDAX • Strong netback funding high 60 62 growth investments • Building financial strength 50 49 • Excellent reserve economics 40 • Delivering value to Shareholders 36 30 34 • Substantial di
Slide 25: Production and Price
PRODUCTION AND PRICE WI Production (BOPD) Achieved oil price net of hedging 16,893* 60,2* 20 000 Tasour Sharyoof Nabrajah Glitne 70 60 15 000 50 40 10 000 30 20 5 000 10 0 0 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 *First quarter working interest production *Ac
Slide 26: Key Figures - Net Entitlement
KEY FIGURES - NET ENTITLEMENT Sales (USD million) EBITDA (USD million) NetProfit (USD million) 62 +71%* 16 +42%* -4 -117%* 70 18 30 60 16 25 62 14 16 25 50 15 20 23 12 15 40 10 11 11 10 30 36 8 34 5 6 20 24 24 6 4 0 10 -3 -4 2 -5 0 0 -10 Q105 Q205 Q305 Q405 Q106 Q105 Q205 Q305 Q405 Q106 Q105 Q205 Q3
Slide 27: Best Quarter Ever: Results of Operations
RESULTS OF OPERATIONS (RoO) BEST QUARTER EVER USD Million Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005 2005 2004 Sale of petroleum products 91,4 82,5 76,9 56,5 52,2 268,0 190,6 Lifting costs -11,9 -11,1 -10,8 -6,7 -7,7 -36,4 -25,4 DD&A -6,3 -6,7 -5,2 -4,6 -4,7 -21,2 -18,0 Transportation and other -1,9 -2
Slide 28: Netback to Investment Coverage
NETBACK TO INVESTMENT COVERAGE Netback (RoO) to Total Investments (USD million) Strong netback coverage 60 Netback producing activities • Netback coverage to total Acquisition and development cost investment of 76 percent Exploration cost expensed 50 • Netback coverage of exploration cost expensed o
Slide 29: Prepared for Growth: Capital Structure
CAPITAL STRUCTURE PREPARED FOR GROWTH Solid financial structure Balance Sheets (USD Million) • Increasing investments in 500 property, plant & equipment 400 Other current assets • Additional long-term funding 300 Cash and money secured through bond loan 200 market funds Non-current assets restructur
Slide 30: Lifting Costs: Top Tier Performance
LIFTING COSTS TOP TIER PERFORMANCE Quarterly lifting cost (USD million) Quarterly lifting cost (USD/bbl) 14 9 Northern Europe Middle East 8 12 7 10 6 8 5 6 4 3 4 2 2 1 0 0 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Copyright 2006 DNO ASA May 12, 2006 Fondsfin
Slide 31: Reserve Development
RESERVE DEVELOPMENT WI Reserves P+P (MBOE) Strong reserve growth from the 100.3 +257% drill-bit • 153 percent increase in reserves 120 in 2005 • From year end 2004 reserves 100 have increased with more than Goliat 250 percent 80 Jan ’06 60 40 20 0 01.01.05 Expl. Acq. Prod. 31.03.06 Copyright 2006
Slide 32: Reserve Economics
INVESTMENTS RESERVE ECONOMICS FDA USD/bbl (P+P) Recycle Ratio USD/bbl (P+P) Reserve Replacement (P+P) 2.3 -21%* 6.5 +67%* 8.2 +74%* 5 10 10 5 5 0 0 0 2003 2004 2005 YTD 2003 2004 2005 YTD 2003 2004 2005 YTD 2006 2006 2006 3 years rolling average 3 years rolling average 3 years rolling average n Low
Slide 33: 2006 Outlook
2006 OUTLOOK Transforming Resources to Reserves • Exploration expenditures estimated to USD 100 mill. • DNO participating in 22 new wells targeting substantial unrisked resource potential • Focus on Northern Europe, Yemen and Iraq Low Cost Development • Development CAPEX estimated at USD 45-55 mill.
Slide 34: An Exciting and Demanding Year
AN EXCITING AND DEMANDING YEAR Substantial upside potential 2500 Adding value through 2000 • Increased exploration • Focus on transferring 1500 resources to reserves at low costs 1000 • Maximise production from current core assets 500 0 P+P Reserves Max unrisked prospect resources (E) Copyright 20