Pareto securities corporate bond conference 23 January 2014

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Pareto Securities Corporate Bond Conference 23 January 2014

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Pareto securities corporate bond conference 23 January 2014

  1. 1. A New Story for PA Resources Mark McAllister, CEO Pareto Bond Conference Stockholm, 23 January 2014
  2. 2. The Renewal is underway.....  We have made very significant progress in 2013 in our regeneration plan  A highly experienced management team is now in place  A series of strategic farm-outs has shaped the portfolio for development  Equity raised has lowered leverage  Two new large owners with outstanding industry experience SEK 891m Equity May Jun Tunisian Farm-Out 2 Congo Farm-Out Jul Aug Sep Denmark Farm-Out Oct SEK 750m Bond Nov Dec Azurite Field Closure …and further drilling success in Equatorial Guinea!
  3. 3. Mark McAllister Chief Executive Officer  Monument Exploration » Director of Operations  LASMO plc » Managing Director (Europe and N Africa)  Acorn Oil & Gas » Founder and Managing Director  Fairfield Energy » Founder and CEO  Board Member of Oil & Gas UK  Founding Chairman of OSPRAG » North Sea response to Macondo blow-out  Decommissioning Security and Relief Steering Committee » Oil industry engagement with HMG on tax relief status  3 Honorary Doctorate from Robert Gordons University » Services to the Oil Industry
  4. 4. Tomas Hedstrom Chief Financial Officer  PWC » Auditor  SCA » Senior Vice President, Stockholm, Large cap » CFO, (North America) Philadelphia » Vice President Business Control, Stockholm » Managing Director SCA Recycling, London » Head of M&A, Packaging division, Brussels » Managing Director, Packaging sub, Stockholm  Rottneros » CFO, Stockholm, small cap 4
  5. 5. Kevin McGrory General Counsel  Unocal » Regional Counsel, MEA  Chevron » Senior Legal Adviser, Upstream Operations  Anadarko » Vice President, Legal & Negotiations EMEA  Delta Group » Group General Counsel  Fairfield Energy » General Manager, Legal & Commercial  Shepherd and Wedderburn LLP » Partner, Head of Oil & Gas Law  5 Seven Energy International Ltd » General Counsel
  6. 6. Graham Goffey SVP Exploration, MD N Sea and W Africa  Conoco » Geologist  LASMO plc » VP Exploration, Indonesia  Sterling Energy plc » Exploration Manager  Paladin Resources plc » Business Unit Manager, International   Member of Advisory Board, Petroleum Geoscience MSc, Royal Holloway University  Previous Chairman, Petroleum Group of Geological Society of London  6 Director of Oil and Gas Independent Association BSc (Birmingham), MSc (Imperial College), MBA (Warwick)
  7. 7. Paul Elstone Managing Director PA Tunisia  Aramco – Saudi Arabia » Field Engineer  NIOC - Iran » Engineering Superintendent  Mesa Petroleum - UKCS » Commissioning Manager  BP – UKCS & International » Offshore Installation Manager (OIM) » Mature Assets Business Manager, UKCS » Field Manager, New Project Start-up, Venezuela » Business Transformation and Start-up Manager, Azerbaijan » Area General Manager , GUPCO Egypt » HSE Business Transformation Advisor, Trinidad & Tobago and US Refining post Texas City 7
  8. 8. Slimane Bouabbane VP Business Development  Technip/Coflexip Stena (Aberdeen) » Engineering » Support to worldwide offshore project  IntecSea (Houston) » Project and Engineering » Support to E&P companies and contractors  Subsea 7 (London/Stavanger/Paris) » Management roles, commercial and strategy » Turn-around team of Acergy/Stolt Offshore  PA Resources (Stockholm) » VP Projects & Investments » Farm-out, Financing, Investment management   8 Board Member of The MacArtney Underwater Group (Denmark) MBA (INSEAD) and Engineering Deg. (Ecole Centrale Marseille)
  9. 9. The Portfolio Production Appraisal & Development Priority Upside Potential 9 • Tunisia Offshore: Didon • Tunisia Onshore: DST • Equatorial Guinea: Aseng & Alen • • • • • • • • Take out Greenland Tunisia: Zarat & Elyssa Equatorial Guinea: Diega Denmark: Broder Tuck & Lille John UK: Birgitta (22/19-1) Production Tunisia: Onshore exploration North Sea: Danish/German exploration Equatorial Guinea: Gas, exploration Congo: MPS exploration Exploration and development
  10. 10. A hat trick of successful farm-outs PA has undertaken a highly focused farm-out campaign. Each operator is a technical and strategic fit for the respective licence. Exploration Appraisal Production MPS Congo 12/06 Denmark Zarat Tunisia  Farmed out 40% to SOCO  Farmed out 40% to Dana  Farmed out 70% to EnQuest  PA retains significant upside with a 25% interest  PA retains significant upside with a 24% interest  PAR retains 30% interest in production & development  SOCO will carry PA share of exploration costs  $44m consideration including appraisal and development carry  $249m consideration including carry and contingent payments  Financial strength of KNOC behind Dana  EnQuest expert in mature field extension and new developments  An exploration well in the remaining license period  SOCO is an established operator in Congo  SOCO and PA AMI for further activity 10  Dana operates nearby licenses  Also includes German exploration acreage  Dana joining PA Danish 7th Round bidding group  EnQuest and PA AMI for further acquisitions
  11. 11. Didon Field 1976 1997 1998 2005 2006 2008-2009 2011 Discovery Concession First Oil PA Acquisition Platform + 2 Wells 4 New Wells Enhancement Study » Produced 32 million barrels since 1998 » Platform and tanker in place » 70 km offshore in 70m water depth » Tanker was repaired and recertified in 2013 » EnQuest has been highly successful in mature field rehabilitation at Thistle & Heather » Plan to install an Electrical Submersible Pump on one of three wells in 2014 » Will follow up with new production well » Further ESP installation and new wells likely in following years 11 2017 2013-2017 2013+ First production Development program: ESP, Infill, LEX
  12. 12. Zarat Field 1990 1992 1995 2005 2010-2011 2011-2012 2014 2015-2017 2017 Permit Award Discovery Appraisal Well PA Acquisition ZRT-N1 Appraisal POD Update, Unitisation UPOD, UUOA Development First production » Largest undeveloped discovery in Tunisia with 120mmboe of oil and gas » Active participation of ETAP to secure early production and offset decline in Tunisian gas production » Development may need CO2 sequestration and gas recycling » Local infrastructure can handle sour gas » Commercially complex since unitisation required with Joint Oil block 12
  13. 13. Elyssa Field 1974 Discovery 1992 Appraisal Well 2005 2006/2007 PA Acquisition Appraisal Well + ST 2010 » Another significant gas accumulation » Four well penetrations drilled to date with one further appraisal well planned » Straightforward development if appraisal is successful » Commercially simple with whole field in PA licence » Local infrastructure with ullage for gas » Tunisian need for gas will ensure active ETAP support once appraisal complete 13 2013 New 3D Seismic ELY-4 Appraisal Well 2014 POD 2014-2016 Development 2016 First Production
  14. 14. Broder Tuck 2006 2008 2011 2012 2014 2015 2017 6th license round Awarded to Scotsdale PA acquired Scotsdale Exploration well + ST Declaration of commerciality BT POD Development start First production » Gas field discovered by PA in 2011 » Estimated recovery 15-45mmboe » Development Plan will be completed in 2014 » In shallow water and adjacent to existing infrastructure » Preferred development concept to be determined in 2014 » Good progress in discussions with nearby host platform and an alternative host is under active review 14
  15. 15. Lille John 2006 2008 2011 2012 2014 2015 2017 6th license round Awarded to Scotsdale PA acquired Scotsdale Exploration well + ST Declaration of commerciality LJ appraisal well Development start First production » Oil field discovered by PA in 2011 » Estimated recovery ranges from uneconomic up to 60mmstb if appraisal well confirms reservoir model » Appraisal well required to confirm size of structure » Currently looking at 2014 slot in Dana rig programme » Straightforward tieback to existing infrastructure for oil export to Danish mainland » Appraisal well required to establish better reservoir development » Will pursue this trend together with Dana 15
  16. 16. Mer Profonde Sud 2002-2004 » Azurite Field now abandoned and vessel shortly to depart » Murphy exited after Azurite failure but remain in the Azurite Exploration Permit » MPS: prospective exploration block adjacent to and along trend from several large fields » Encouraging reprocessed 3D seismic was basis for PA re-evaluation and farm-out to SOCO » Once transaction complete, plan to drill RR prospect in 2014/2015 17 2010-2011 2014 WO & Infill Drilling 3D Seismic DL-23
  17. 17. Strong Supportive Shareholders  Since 2000 Gunvor has grown into one of the world’s leading energy commodity traders  In 2012 Gunvor traded 130 million tonnes of oil and ended the year with: » a turnover > $93 billion, » book equity > $2.2 billion » available liquidity of $5.6 billion  As part of its growth strategy, Gunvor has invested in a number of business related to its trading activities, including PA Resources  Apart from being our largest equity holder, Gunvor is a key stakeholder in PA through its reserve base lending facility  The second largest PA shareholder is Lorito, a trust owned by the Lundin family, founders of Sweden’s most successful oil company 17
  18. 18. Current debt in the market Following repayment of convertible bond on 15th January 2014, PA Resources currently have 2 outstanding bonds: NOK Bond SEK Bond ISIN ISIN NO0010605728 Amount outstanding Maturity date Amount outstanding NOK 810,000,000 Coupon 2016-03-03 Amortisations -- Coupon 12,25% Interest payments 13,50% Interest payments Semi-annually April/October Annually Covenants and Net Debt development Q3 2013 Q2 2013 Q1 2013 Covenants Book Equity (SEK million) 2,144 1,973 2,201 >1,000 Book Equity to Capital Employed 49% 46% 48% >40% 1,422 2,197 2,111 N/A Net debt (SEK million) 18 SEK 750,000,000 Maturity date 2016-04-05 2014-04-05: NOK 135m 2015-04-05: NOK 135m Amortisations SE0005392834
  19. 19. Earnings – Q1 to Q3 SEK million Profit for the period Jan – Sept 2013 -817 One-off costs Decommissioning costs 469 9/06 (Gita) 89 2008/17 (Block 8) 97 Tunisian farm-out 117 Remaining costs Azurite field 21 Net exchange gains/losses Didon 70% net result impact -88 3 Profit for the period (Adjusted) 19 -109
  20. 20. Cash flow – Q1 to Q3 SEK million Jan - Sept 2013 Cash flow from operations -110 Capex -171 Rights issues 1,413 Loans raised 38 Amortisation of debt Cash flow from financing Net cash flow 20 -392 1,059 778 KEY COMMENTS • Rights issues of SEK 810 million and SEK 604 million respectively, net after transaction costs • Full year capex forecast of SEK 250380 million, expected outcome in the lower part of the range • Cash and cash equivalents at the end of the period, SEK 835 million
  21. 21. .....progress will continue in 2014.......  Field rehabilitation in Didon  ESP on a current producer  A new production well  Development Plans approved:  Zarat  Diega  Development concepts worked:  Broder Tuck  Birgitta  Rigs secured and drilling plans in place:  Lille John  Elyssa 21  MPS

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