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Pa resources nordic energy summit 2013 21 march 2013

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  • 1. PA Resources Bo Askvik, President & CEO Swedbank First Securities Nordic Energy Summit 2013 Oslo, 21 March 2013
  • 2. Today’s three topics >> FOURTH QUARTER 2012 Q4 Financial highlights >> STRENGTHENED FINANCIALS Recapitalisation completed >> PA RESOURCES WAY FORWARD Strategy and investment focus2
  • 3. Attractive Asset Portfolio KEY FACTS: • Oil and gas company with operations and assets in nine countries • Exploration, development and production portfolio - key infrastructure assets in Africa • Oil production in Equatorial Guinea, Republic of Congo (Brazzaville) and Tunisia22 oil and gas licences • Average production of 7,100 bopd in Q46 producing fields 20129 potentially commercial • 38.1 mmboe in 1P reserves, 55.7 in 2Pdiscoveries reserves and 142 in contingent resourcesOperator of 11 licences • 124 employees in Tunisia, the UK and Sweden • The share, convertible bond and SEK bond Production are listed on NASDAQ OMX in Stockholm Development Exploration Infrastructure hub 3
  • 4. Changes in Reserves and Resources 2012 Proven and probable reserves* KEY COMMENTS: Working Net • Improved 1P to 2P ratio from 65 to 68% Interest Entitlement • 1P reserves impacted by; • Increase of 1P volume for the Aseng field 1P/P90 2P/P50 1P/P90 2P/P50 (1.03 mmboe) and the Tunisian fields (1.0 25.9 40.4 mmboe) based on production performanceEnd 2011: 39.1 60.2 • Reduction for Azurite of 0.15 mmboe • 2P reserves impacted primarily by;Production -2.9 -2.9 -2.1 -2.1 • Downwards revision of Azurite reserves by 2.9 mmboe on a working interest basedRevision +1.9 -1.6 +1.3 -1.4 • Upwards revision of the producing Tunisian fields (1 mmboe)End 2012: 38.1 55.7 25.1 36.9 • Resources approximately unchanged • Contingent resources of 142 mmboe (145)* Reserves are classified accordingly to the SPE-PRMS 2007 guideline • Risked prospective resources of 406 mmboe (409) at a mid-case level4
  • 5. Financial highlights Q1
  • 6. Production and sales Average production per country (bopd) 12 000 bopd Full-year Q4 February 10 000 2012 2012 2013 8 000 West Africa 5,600 4,900 4,700 6 000 North Africa 2,300 2,200 2,000 4 000 2 000 Group Total 7,900 7,100 6,700 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 Congo: Azurite EG: Aseng Tunisia: Didon & Onshore • ASENG: Average production level increased of 60,500 boepd in Q4 (3,400 net to PA Resources) Average sales price (USD/bbl) 140 • AZURITE: Production lower than expected due 117 113 119 110 to intermittently unstable flowing conditions on a 120 109 108 109 106 120 number of wells 100 109 109 109 97 106 104 106 • TUNISIA: Stable production 80 60 • PRICE: PA Resources realised price slightly under Brent average for the quarter due to local 40 discount in Tunisia 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 PA Resources Brent6
  • 7. Q4 - after one-offs and set-off issue SEK million Q4 Q4 Tax and Set-off Q4 2012 One-offs FX effects effects adjusted KEY COMMENTS Revenue 466,801 466,801 • Relinquishment of UK licenses amounted to SEK 18 million. Cost of sales & -201,046 -201,046 other expenses • After total Azurite impairment in Q3, Depreciation & WD -256,752 169,226 -87,526 all additional investments has been Operating profit 9,003 169,226 178,229 treated as direct costs, amounting to SEK 151 million in Q4 Financial revenue 1,908 1,908 Financial expenses -195,697 22,000 84,762 -88,935 • Q4 fx effects in financial net SEK -22 million mainly related to NOK Total financial items -193,789 0 22,000 84,762 -87,027 • New assessment on deductible costs in Equatorial Guinea increa- Profit before income -184,786 169,226 22,000 84,762 91,202 sed income taxes with approx. SEK tax 75 million. Income tax -154,797 75,000 -79,797 • Effect from set-off issue (convertible bond) amounting to SEK 85 million Profit for the period -339,583 169,226 97,000 84,764 11,4057
  • 8. Improved cash flow Q4 Q3 Q4 FY FY KEY COMMENTSSEK million 2012 2012 2011 2012 2011Operating cash flow 175 64 -106 838 812 • Improved operating cash flow • SEK 838 million for the full year 2012of which income 0 0 -7 -5 -45 • SEK 175 million in Q4taxes paid • Higher capex spending in Q4 mainlyCAPEX -186 -16 -135 -255 -1,613 relating to Azurite sidetrack preparations • Amortisations of SEK 568 million for full yearFinancing activities 65 -51 36 -568 -408 • Full year net cash flow of SEK 15 millionNet cash flow 54 -2 -204 15 -1,2098
  • 9. Capex 2012 and forecast 2013 Capex development and forecast (SEK million) KEY COMMENTS Actual Forecasted • Capex in Q4 amounted to SEK 186 million 1 800 1 600 • Azurite investments of SEK 151 million fully 1,613 expensed in Q4 1 400 1 200 • 2012 full year capex of SEK 255 million, at 1 000 the lower end of the forecast range of SEK 240 – 275 million 800 600 • 2013 forecast of SEK 250 – 380 million, 400 presuming maintained interest (no farm-outs) 200 250-380 255 0 2011 2012 20139
  • 10. Strengthened financial position Q1
  • 11. Strengthened financial position Completed two-step transaction strengthens equity with approx. SEK 1.570 billion Set-off issue 1 » Offer to convertible bondholders to set-off their convertible bonds against newly issued shares at SEK 0.15 » Equity increased with SEK 968 million and nominal debt decreased with SEK 890 million (net debt reduced by 819 MSEK) Fully underwritten rights issue » Fully underwritten rights issue at SEK 0.10 (~50% directed to old share holders and ~50% to convertible bondholders) 2 » Increases equity by SEK 604 million after transaction related costs and reduces net debt by SEK 602 million » Outcome of transactions to result in significant changes in shareholder structure Covenants and Net Debt development Pro forma Q4 2012 Q3 2012 Q2 2012 Covenants Book Equity (SEK million) 2, 194 1 590 956 2,608 >2,000 Book Equity to 46% 37% 22% 43% >40% Capital Employed Net debt (SEK million) 2 028 2 630 3,410 3,503 N/A11
  • 12. Strategy & focus Q1
  • 13. PA Resources way forward >> LONG TERM GROWTH Development of ~ 32 mmboe for 2013 - 2018 long-term production growth Development of prioritised projects with reduced risk >> BALANCED INVESTMENTS Farm-out of assets reducing invest- ments and risk, financing from production and debt financing at lower level13
  • 14. Business plan – development for future growth Operating cash flow and » Cash flow from producing assets to finance operational expenditures at strengthened liquidity enables the Aseng and Didon fields maintenance, financing and » Strengthened balance sheet, in combination with new debt financing, amortisations enables planned amortizations of bond loans and credit facilities » Farm-out processes ongoing to reduce interest in prioritised assets • Zarat license in Tunisia (Elyssa, Zarat and Didon) Lower interest reduces • 12/06 in Denmark (Broder Tuck and Lille John) the level of investment and risk » Reduced risk exposure to individual projects and share of investment » Strengthened balance sheet enhances position for future transactions » Cash flow from producing fields combined with new debt financing enables development of ~32 mmboe to production from 2016-2018 Development of » Advance Broder Tuck in Denmark and Zarat in Tunisia towards into prioritised assets for development. Progress the appraisal of Lille John in Denmark , Elyssa in long-term production growth Tunisia and Diega in EG towards development » Maintain debt level near post-transaction level during investment phase Selective exploration to further » Active and selective exploration activities to further expand the discovered resource base - few scheduled commitment wells in the expand the resource base coming two years14
  • 15. Investments and key assumptions Capex forecast 2013-2018 before and KEY ASSUMPTIONS: after farm out transactions (SEK million) Development is not progressed until farm-out1 800 successful1 600 • Continued operational expenditures on1 400 producing fields1 200 • Development of existing reserves and 970 resources of 155 MMBOE will after farm-out1 000 add 30 MMBOE 800 1,613 300 • Farm-out of prioritised assets to reach 600 680 preferred working interest level and reduce risk 400 520 on individual assets 540 590 200 • Zarat licence from 100% to 20% 255 270 170 230 0 • Didon field from 100%% to 50% 0 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E • 12/06 from 64% to 15% PA Resources share of investments Partners share of investments • Present operatorship in farm-out assets secures development planning • Oil price of 110 USD/bbl and USD/SEK of 6.5315
  • 16. Expected outcome of planned development Estimated development of net debt and average production KEY ASSUMPTIONS: 5,0 16 000 • Development of existing 14 000 reserves adding after farm-out 4,0 30 MMBOE for long-term 12 000 production growth 3,0 barrels per day 10 000 SEK billion • Debt maintained around 2,0 8 000 current level 1,0 6 000 • Expected net cash position in 4 000 2018 0,0 2 000 -1,0 0 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E Net debt actual Production Net debt estimate16
  • 17. Operations & Outlook Q1
  • 18. Capex forecast 2013/2014 – drilling programme Drilling programme/planned wells 2013-2014 Capex forecast 2013 includes: DK: 12/06 Lille John 2013/2014 Appraisal/1-2 • Drilling campaign on 12/06 high priority • Drilling on 12/06, Block H and Q7/10a Will Scarlet 2013/2014 Exploration/1 dependent on rig availability Appraisal/ • Drilling campaign in Block I in EG EG: Block I Block I 2013 Exploration/1-2 • Maintenance investments on producing fields EG: Block H Aleta 2013 Exploration/1 • Elyssa well assumes successful farm-out of Zarat license Q4 Appraisal/ NL: Q7/10a Q7-FA 2013/2014 Development/1 • The drilling programme is revised continuously based on the capex budget Tunisia: Zarat Elyssa 2013/2014 Appraisal/1 and prioritised commitments Tunisia: Makthar 2014 Exploration/118
  • 19. EG Block I - Plateau continues at foundation asset PA Resources 5.7% • First oil from Aseng in November 2011, plateau level of around 60,000 bopd sustained since March 2012 • Total field production since start in November 2011 of ~27 mmbo + 1.5 million barrels to PA Resources • Average production of 60,500 bopd in Q4, 3,400 net to PA Resources • 1P reserves upgrade substantially replaces 2012 production • Profitable barrels • Investments of SEK 500 million recovered in 2012 • Opex per barrel will reduce after Alen commencement • 6-9 liftings per quarter generate frequent cash flow • Alen field development – first oil expected in Q3 2013 Licence Group: Operator Noble Energy (38%), Atlas Petroleum Int. (27.55%), Glencore (23.75%), PA Resources (5.7%), GEPetrol (5%)19
  • 20. EG Block I - Exciting near term drilling program PA Resources 5.7% Block I • Firm 2013 drilling programme with Atwood Hunter rig • Progressing two exciting fields towards development • Carla North and South • 2011 discovery in adjacent Block O (’Carla North’) currently being appraised in Block O, where operator has announced additional oil reservoir found Carla South • Operator has announced plans for fast-track development tied back to Aseng vessel • Atwood Hunter rig will shortly move to Block I to spud Carla South exploration well on same trend as Carla North • Diega • Expect appraisal well and 3 to 4 week production test in Block I later in 2013 • Operator estimates Diega P75-P25 gross resource Licence Group: Operator Noble Energy (38%), Atlas range of 65-116 mmboe Petroleum Int. (27.55%), Glencore (23.75%), PA Resources (5.7%), GEPetrol (5%)20
  • 21. Tunisia Zarat & Elyssa – Gas Market pull on development PA Resources Operator with 100% Historic Gas Demand Demand - Supply Shortfall 600 544 ~5% CAGR 502 900 500 477 96 435 86 75 800Gas Consumption (mmcfd) 408 410 396 47 400 380 25 29 58 68 48 49 Demand 23 72 700 ~3% CAGR 63 70 68 45 50 74 71 outstrips Natural Gas (mmcfd) 300 54 59 61 63 68 600 Supply 500 from 200 329 2012 280 297 240 241 250 244 248 400 onwards 100 300 - 200 2003 2004 2005 2006 2007 2008 2009 2010 STEG IPP Industries (HP) Other (MP & BP) 100 - Historic & Forecasted Gas Supply 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 700 Demand Supply Note: Forecast supply does not include production from Zarat and Elyssa 600 fields 500 Production (mmcfd) 400 300 200 100 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Algerian Gas Miskar Hasdrubal El Franig Baguel Chergui Adam Fields Oued Zar Maamoura and Baraka Jbel Grouz Chouech Es Saida South Tunisia Gas Project Other Source: STEG 2012 21
  • 22. Tunisia Zarat & Elyssa - Beneficial economic environment Linkage of domestic gas price to oil price... …generates strong gas price for the project International Gas Prices Regional Gas Prices• Gas price enshrined in Tunisian Law 14 11.90 12• Formula is tied to 85% of Mediterranean high 11.00 10.83 9.63 sulphur fuel oil (HSFO) price 10 9.18 US$ / mcf• Assuming USD 90/bbl long term oil price, resultant 8 ~6.00 Tunisian gas price is c. USD 11/mcf 6 4.22• Assuming USD 100/bbl long term oil price, resultant 4 2.4 2.24 Tunisian gas price is c. USD 12/mcf 2 - Tunisia Asia TTF NBP Henry Libya Israel Egypt Hub (EPSA) Fiscal Incentives…. …results in Government share of profit comparable to OECD ~75% ~77%• Full recovery of exploration and development ~58% ~60% ~60% ~62% ~64% expenditure• Partial recovery of financing costs• One of the most attractive E&P fiscal regimes in North Africa Americas Tunisia OECD Middle Asia- North Sub- East Pacific Africa Saharan AfricaSource: Wood Mackenzie, Bloomberg, Factset 22
  • 23. Tunisia Onshore Potential - Makthar and Jelma PA Resources 100% Makthar and Jelma permits • Jelma-Makthar permits surround producing NW Maiza Douleb, Semmama and Tamesmida (DST) fields onshore Tunisia Makthar permit • Both permits cover areas of 7,216 km² and 3,828 km² • Jelma extended until 2016 and Makthar until 2014 Friha Boughanem • Makthar permit contains several onshore exploration prospects Jelma permit • Regional mapping of reservoirs, seals and source rock formations over both permits completed • Awarded open acreage around Douleb (189km2) Douleb & Semmama as integrated into Makthar permit • New seismic to be acquired over Makthar’s most promising prospects and leads in 2013 to mature prospect for commitment well in 2014 Licence Group: Operator PA Resouces 100% ETAP has a back-in right of up to 55%23
  • 24. Denmark 12/06 - Progressing discoveries PA Resources Operator with 64% Broder Tuck • High quality Middle Jurassic reservoir proved by wells • Mid to high case assessment of c. 25-50 mmboe gross of contingent resources including liquids • Technical and commercial studies continuing with focus on eliminating need for further appraisal drilling • Ongoing discussions with owners of infrastructure for tie 12/06 Broder Tuck-2 back as one of range of possible development concepts Lille John-1 Lille John • Wells established 35 API oil in Miocene sandstone B20008-73 at c. 900m – exceptionally light oil for shallow depth • Remaining deeper potential likely – Chalk and Middle Jurassic • Efforts to locate available rig for appraisal drilling continue in tight rig market Licence Group: Operator PA Resources (64%), • Development options dependent on appraisal results – Nordsøfonden (20%), Spyker Energy (8%), Danoil (8%) successful appraisal could lead to tieback to nearby infrastructure or standalone development24
  • 25. Denmark 12/06 - Exploration and appraisal potentialPA Resources Operator with 64% 12/06 Prospectivity Broder Tuck (Chalk) 5 km’s • Existing U-1X Chalk • Prospects at Miocene, Chalk & discovery Middle Jurassic levels ~ 5-10 mmbo • Commitments fulfilled, 2 year extension to 2014 • Follow-on potential in German Broder Tuck (Jurassic) licence B20008-73 • M. Jurassic gas / condensate discovery ~25 – 50 mmboe Will Scarlet 12/06 • Tertiary prospect Lille John (Miocene) supported by seismic BT-1 • Shallow oil discovery anomaly per Lille John requires appraisal • Low to moderate risk • If appraisal is successful: 10-50 mmbo ~10-50 mmbo Lille John area Lille John area • Additional small, low • Additional potential in Chalk risk Tertiary and Middle Jurassic anomalies • Currently reprocessing 3D • Low risk 2-10 mmbo LJ-1 • Moderate risk, potential size comparable to Lille John = Planned/possible wells 2013/201425
  • 26. Germany B20008-73 - Farm-out PA Resources Operator with 90% Licence B20008/73 • Danish and Dutch sector prospectivity extends onto B20008-73 • Danoil farming in for 10% (subject to regulatory Broder Tuck approvals) • PA Resources’ 2011 Danish discoveries are seen Lille John to upgrade prospectivity of B20008-73 Regnar • Currently evaluating existing 3D over block and Vagn adjacent areas Tove Hanze Licence Group: Operator PA Resources (90%), Danoil (10% subject to regulatory approvals)26
  • 27. UK 22/19a - Undeveloped field in Central North Sea PA Resources Operator with 50% Discovered resources on 22/19a • Application group PA Resources 50% (Operator), First Oil & Gas Limited 50%, notified that award will be made. • 22/19-1 Fiddich Triassic gas condensate discovery (1984) flowed 15 mmcfg/d and ~1500 bcpd • Fiddich discovery and low risk Fiddich East segment – several 10’s mmboe combined • Key issue – minimum economic reserve size and availability of options for tieback Application group: PA Resources 50% (Operator), First Oil & Gas Limited 50%.27
  • 28. Summary and outlook >> OPERATING CASH FLOW FROM PRODUCING FIELDS Important cash flow with profitable barrels from the Aseng field – foundation for growth >> STRENGTHENED FINANCIAL POSITION Capacity to finance development capex and planned amortisations, enhanced position for future transactions >> EXPLORATION AND APPRAISAL WITH UPSIDE POTENTIAL Drilling activites on prioritised assets - Block I campaign in 2013 and 12/06 campaign possibly in 2013 or 2014 >> FOCUS ON ADDING LONG TERM PRODUCTION GROWTH Focus on farm out of prioritised assets and development – 32 MMBOE PA Resources net participation - expected net cash position in 201828
  • 29. Thank you!Q1 Report on 24 April 2013 Q1