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PA Resources Q4 Interim report

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PA Resources

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PA Resources Q4 Interim report

  1. 1. PA Resources – Q4 Report Q4 Presentation 26 February 2015
  2. 2. Q4 Impairments • Impairmentcharges with net impact of SEK 2,100 million » using forward curve of January 9th . • Breach of financial covenants for both SEK and NOK bond loans. • Balance sheet for liquidation purposes prepared. • Equity well below 50% of the registered share capital. • Decisionto continue operations or not at EGM February 27th . • Provided EGM votes to continue operations equity must be restored within 8 months 2
  3. 3. EnQuest termination • Two transactions agreed and SPA signed in May 2013 » Sale of 70% of producing Didon Field for $23 million » Farm-down of 70% of Zarat Permit for carry on Zarat development • Zarat deal was conditional on Didon completionand approval of Avenant 5 • In September2013, Didonshares transferred to EnQuest • EnQuest beganto pay cash calls and lift oil associated with a 70% interest • $23 million was placed in escrowawaiting a letter of non-objectionfrom DGE • This letter had not arrived by the January 31st backstop date • In the new oil price environment, EnQuest had no desire to complete on Didon • The transaction has now beenunwound and the $23 million returned to EnQuest • Didon is cash negative at current oil prices and a major Opex reduction programme is underway 3
  4. 4. Refinancing Process • Planned refinancing Q3/Q4 2014 postponeddue to delay in Tunisian approvals • Deferralof interest payment from early October2014 to early February 2015 approved by lenders in October • Termination of the EnQuest transaction at end January led to a more challenging short term financing situation • Oil prices down from $100+ to $45 and currently at $60 per barrel • Lenders yesterdayapproved further deferralof interest payments to March 31st2015 • The company will presenta proposalto the lenders in the next few days • Aim to have an agreementin place before March 31st 4
  5. 5. Asset Update 5 • Tunisia » ESP on Didon well failed due to breakdown of electricalinsulation downhole » Didon currently producing around 950 bopd from two wells. » Major Opexreduction programme underway » Remaining parties in Zaratare PA, ETAP and Joint Oil, following termination of EnQuest deal and liquidation of Sonde » All three parties are committed to submitting UPOD and agreeing UUOA by March 31st » ETAP and DGE advise that approval of Avenant is a priority for new Parliament • Denmark » Lille John 2 encountered oil with thicker reservoircolumn than in discoverywell » A number of well tests were performed with a maximum rate of 1,400bopd » A sidetrackwell was drilled to establish the location of the oil water contact » PA Resources to be fully carried through this appraisal drilling by Dana » Revised oil in place and recoverable volumes will be calculated following detailed analysis of the well cores taken
  6. 6. UKCS 28th Licensing Round • Rationale for PA Activity » Utilise subsurface team knowledge and experience to provide growth options » Balance of material exploration targets and existing discoveredresources » Minimise commitmentlevels and maximise ‘optionality’ • Central North Sea focus » Target areas containing sunder-explored plays in the Central North Sea » Utilising PA long-standing UK CNS knowledge and UK relationships » Leveraging continuing improvements in 3D seismic quality 6
  7. 7. Ekland prospect (22/18c,19d) • History » Block 22/18c is a prior PAR-operated licence dropped in 2012 owing to JV flux. » Re-bid by PAR/First Oil with solid new partnership » Operatorship to transfer to E.On on formal licence award • Licence Group » E.On (40%, Op), Cairn (25%), PA (25%), First Oil (10%) • Prospectivity » PAR as operator fully reprocessed 3D in 2012 » Ekland prospect – ready-to-drill, non-HPHT, mid-case prospective resources 750 bcf and 75 mmbo » On trend with the analogous Marnock Field (600 bcf and 50 mmbo), 15km south » Interesting wells nearby in 2015/16: 22/16 Dalziel (GdF, drilling now), 22/13 Manhattan (Nexen, 2015), 22/19 Rowallan (ENI, 2016) • Commitment » One firm well in first 4 yrs, likely 2017 or 2018 7
  8. 8. West Teal discovery (21/24b) 8 • History » Originally four parties but DECC would not award to Endeavour • Licence group » First Oil (Operator), PAR, Dyas (Each 33.3%) • Prospectivity » Licence contains the WestTeal discoveryand a number of analogous prospects,last well drilled 20 years ago » WestTeal – 1991 well with untested 80’ – 250’ oil column in Jurassic Fulmar sandstone » New 2013 multi-client 3D data available for a re-evaluation of the block/discovery • Commitment » One contingent well in 4 year license period
  9. 9. 2014 Close Out Exploration West Africa • Close farm-out to SOCO • Confirm MPS drilling target • Secure rig for MPS well • Acquire Block I 3D seismic Tunisia Onshore • Plan seismic programme • Execute seismic programme North Sea • Evaluate Danish 7th round • Apply in UK 28th round 9 Appraisal & Development Block I • Submit Diega POD Zarat • Close EnQuest farm-out • Complete UUOA • Submit Zarat POD Elyssa • Plan appraisal well • Secure rig for appraisal well Lille John • Close Dana farm-out • Develop drilling plan • Drill appraisal well Broder Tuck • Pre-Development evaluation Birgitta • Investigate export options • Initiate development planning if justified Production Didon • Close EnQuest farm-out • Install ESP • Install additional ESP or drill well Tunisian Onshore • Review DST fields • Identify enhancement opportunities West Africa • Drill Alen production well
  10. 10. Financial highlights Q1
  11. 11. 11 Production and prices in Q4 • ASENG: Continued natural decline. • TUNISIA: Newly installed ESP failed, production loss compensated by well D7. 100% Didon will be included from January 2015, 70% contribution in Q4, 800 boepd • AZURITE: Production ceased November 2013. • PRICE: Significant oil price drop. • CURRENCY: Continued strong USD. 5600 4800 4200 3600 3400 3200 3100 2900 1200 600 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Average production (boepd) PAR Production 70% Didon 113 103 108 106 109 108 100 72 113 102 110 109 108 110 102 77 65 70 75 80 85 90 95 100 105 110 115 120 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Average Sales Price (USD/bbl) PA Sales Brent 6,52 6,71 6,43 6,51 6,51 6,74 7,24 7,81 4,08 4,04 3,90 3,94 4,10 4,02 4,03 4,19 1,11 1,11 1,07 1,06 1,08 1,10 1,12 1,05 31/3-13 30/6-13 30/9-13 31/12-13 31/3-14 30/6-14 30/9-14 31/12-14 Closing Day F/X Rates USD/SEK TND/SEK NOK/SEK
  12. 12. Income statement 12 SEK million Q4 2014 Q3 2014 Jan-Dec 2014 Jan-Dec 2013 Revenue 88 155 603 1,049 Production costs -53 -49 -187 -490 Depletion O&G -57 -56 -195 -197 Gross profit -21 51 222 362 Other income and G&A -17 - -71 -124 Termination farm-out agreement -826 - -826 - WD, Capital loss & Decommissioning costs -1,991 - -1,991 -1,473 Operating profit -2,856 51 -2,667 -1,234 Financial items -65 -124 -365 -205 Profit before tax -2,921 -73 -3,032 -1,439 Income tax 175 -64 74 220 Profit for the period -2,745 -138 -2,957 -1,219 Q4 vs Q3 • Revenue decline due to lower sales price and lower production. • Other income and G&A included reversed Azurite provision of SEK 31m in Q3. • Terminated farm-out agreement Didon and Zarat of SEK -826 million. • Impairment charges of SEK -1,991 million mainly from annual impairment tests. • Financial items impacted by SEK 10m in exchange gains vs. SEK -56m in Q3. • Income tax positively impacted by reversed deferred taxes of SEK 137 million with respect to made impairment charges. 2014 vs 2013 • Significant impairments, capital loss, decommissioning costs and termination farm-out agreement for both years. • Financial items excluding exchange gains / losses amounted to SEK -278 (-305) million.
  13. 13. Impairment tests & Terminated farm-out agreement 13 Other write-downs pertain to Q7/Q10a disposal and ESP failure Equity impact calculated by using year-end rate of USDSEK 7.81 Average rate for the year USDSEK 6.86 2014 Impairmentlosses(Gross) MUSD MSEK Equity MSEK North Africa 155.8 1,068 1,217 West Africa 119.4 819 933 North Sea 10.1 70 79 Total 285.3 1,957 2,229 Other write-downs 5.0 34 39 Total Impairment losses 290.3 1,991 2,268 Reversal Deferred tax -19.9 -137 -156 Net impact 265.4 1,820 2,073 Reversal deferred taxes Other WD -1.1 -8 -9 Total net impact of impairment losses 269.3 1,846 2,103 Terminationfarm-out agreement MSEK Upfront payment expensed -180 Adjustment abandonment cost -259 Adjusted deferred taxes -372 Other -15 Total -826 Terminated farm-out agreement of 70% interest in each of the Didon field and Zarat license. PA now holder of 100% in each asset. Upfront payment of USD 23 million held in escrow returned to EnQuest. Didon valued to zero in impairment tests
  14. 14. Cash flow statement 14 SEK million Q4 2014 Q3 2014 Jan-Dec 2014 Jan-Dec 2013 CF from operations 17 -118 -108 -379 Proceeds from farm out - - 65 - CAPEX -28 -54 -166 -271 Rights issue - - - 1,413 Loans raised - 53 182 764 Amortisation of debt - - -237 -1,182 CF from financing - 53 -55 995 Net cash flow -11 -119 -264 345 Q4 - 2014 • CF from operations SEK 17m: • Tax payments SEK -15m in North Africa. No interest payments in fourth quarter. 2014 • Azurite abandonment costs to Murphy of c. SEK 170m in operations • Capex SEK -166m: Mainpart from Makthar seismic acquisition and Block I (Diega) • Loans raised Gunvor WCF $ 28m • Amortized net NOK -127m and CB SEK -94m
  15. 15. Balance sheet 15 SEK million 31 Dec 2014 31 Dec 2013 Non-current assets 3,162 4,599 Current assets 399 861 Whereof cash 148 403 Total assets 3,561 5,460 Equity -810 1,795 Total Interest bearing debt 2,468 2,194 Other Non-current liabilities 1,235 593 Other Current liabilities 667 877 Total Equity and Liabilities 3,561 5,460 KEY COMMENTS • Non-current assets mainly decreased due to impairment charges. • Current assets decreased mainly due to returned upfront payment held in escrow • Equity negatively impacted by annual impairment tests of net SEK -2,073 million as well as terminated farm-out agreement of SEK -918 million (equity effect corresponding to SEK -826m in P&L). • Other non-current liabilities increased with adjusted abandonment provision and deferred taxes from the terminated farm- out agreement
  16. 16. Balance sheet for liquidation purposes 16 • 1) 20 January: Equity effect in PA Resources AB after impairment tests on group level SEK-1,814. • 2) 23 January: Board approves Balance sheet for liquidation purposes in which Equity amounts to SEK 50m, still below 50% of registered share capital. Board called for EGM in press release 30 January. • 3) 31 January: Farm-out agreement Didon & Zarat terminated, press released 2 February. Equity effect in PA Resources AB SEK -878 million. • 4) Updated balance sheet post termination including adjustments further weakened. Equity amounts to SEK -828 million. 1) Positive headroom after impairment tests of the value of shares in subsidiaries. 31 Dec 2014 (Version 23 Jan) Adjustments 1) Balance sheet for liquidation purposes Termination farm-out agreement Updated balance sheet including adjustments1) SEK 000,000s Total assets 2,035 300 2,335 -894 1,441 Total shareholders' equity -250 300 50 -878 -828 Total liabilities 2,285 - 2,285 -15 2,270 Total shareholder's equity and liabilities 2,035 300 2,335 -894 1,441
  17. 17. Thank you

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