PA Resources AGM 22 May 2012

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PA Resources AGM 22 May 2012

  1. 1. PA Resources AGM 2012 Annual General Meeting Bo Askvik, President & CEO Stockholm, 22 May 2012
  2. 2. PA Resources where we are today 2010 Today » No value in the North Sea » New play discoveries in asset portfolio Denmark as operator » Aseng investments recovered » Marginal value recognised after 9 months - strong future in Block I, Equatorial Guinea cashflow » High investment level, » Significantly lower investment capex/produced barrel level, capex/produced barrel equal to 80 USD equal to 6 USD in Q1 20122
  3. 3. Focusing on Africa and North Sea 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,25 oil and gas licences Republic of Congo (Brazzaville) and Tunisia6 producing fields • Average production of 8,700 bopd in Q19 potential commercial 2012discoveries • 60.2 million mmboe in 2P reserves andOperator of 12 licences 145 mmboe in contingent resources* • 130 employees in Tunisia, the UK and Sweden Production Development * Million barrels of oil equivalents, Working Interest figures per 31 Dec. 2011 Exploration Infrastructure hub3
  4. 4. Shareholder structure per March 2012 Number of shares Capital/votes • The share listed on NASDAQ AVANZA PENSION 53,990,324 8.5% OMX Stockholm (Mid Cap) NORDNET PENSIONSFÖRSÄKRING 21,657,208 3.4% • Market capitalization of LÄNSFÖRSÄKRINGAR FONDER AB 17,270,874 2.7% approx. SEK 920 million CBNY-DFA-INT SML CAP V 15,454,377 2.4% • Enterprise value of approx. ROBUR FÖRSÄKRING 10,883,241 1.7% SEK 4.3 billion and AB TRACTION 10,778,014 1.7% Nomination committee in 2011: VOB & T HOLDING AB 10,000,000 1.6% • Länsförsäkringar SEB S.A., W8IMY 9,378,446 1.5% • AB Traction JP MORGAN BANK 7,765,220 1.2% • Folksam JPM CHASE NA 7,724,045 1.2% Total - 10 largest shareholders 164,901,749 25.9% Total - other shareholders 472,575,144 74.1% Total number of shares 637,476,893 100%4
  5. 5. Financial Review Q1
  6. 6. Macro perspective Brent price trend 2006 - 2012 • Geopolitical uncertainty continues (USD per barrel) • European debt crisis and outlook of 160 global economy coming year uncertain 140 120 • Lack of extra production capacity 100 • Demand still driven by growth 80 economies such as China and India 60 40 • Transport sector increasing in pace 20 with population and GDP 0 • It is getting more difficult to find oil 2006 2007 2008 2009 2010 2011 2012 • Existing producing fields have a natural decline rate of 4% a year • +40 million barrels per day needed from new producing fields by 20306
  7. 7. Production trend and update CONGO: Azurite Average production per country/bopd • Marked decline in one well since February 2012, well flowing at minimal rate 12 000 Congo: Azurite EG: Aseng Tunisia: Didon & Onshore • Technical and economic analysis of remedial options ongoing 10 000 • One week shutdown for annual field 8 000 maintenance planned for in late May 2012 EG: Aseng 6 000 • Higher target level of around 60,000 boepd reached in early March 2012 4 000 • Fifth production well on stream - all wells 2 000 contributing fully, gas re-injection fully commissioned 0 • Frequent liftings Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 EG: Alen • Delopment project on plan for production start 2013, significant cost synergies reducing opex7
  8. 8. Production and sales Average quarterly production/bopd bopd Full Year Q1 APRIL 2011 2012 2012 12 000 10 000 West Africa 5,300 6,200 5,700 8 000 North Africa 3,300 2,500 2,700 6 000 4 000 Group Total 8,600 8,700 8,400 2 000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2010 2011 2011 2011 2011 2012 Average sales price USD/bbl LIFTINGS IN 2012: Q1 - EARLY APRIL 140 PA Resources 119 • 546,000 bbls from Aseng and Tunisia in Q1 Brent 117 113 120 109 106 100 85 120 • 520,000 bbls from Azurite on 4 April (Q2 2012) 79 109 106 104 77 78 80 97 78 82 60 71 72 40 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2010 2011 2011 2011 2011 20128
  9. 9. Earnings and key ratios Q1 2012 Q4 2011 FY 2011 FY 2010 Production (bopd) 8,700 8,400 8,600 10,700 Oil price (USD/barrel) 120 104 103 76 Revenue (SEK million) 650 535 2,154 2,227 EBITDA (SEK million) 395 306 1,295 1,276 EBITDA margin 60.8% 57.2% 60.1% 57.3% Profit before tax (SEK million)* 68 11 158 179 Profit for the period -31 -96 -326 -316 (SEK million)* Earnings per share (SEK) -0.05 -2.91 -3.27 -0.61 * Figures for 2011 exclude non-cash, one-off costs of SEK 2,035 million before tax and SEK 1,758 million after tax.9
  10. 10. Significantly lower capex in 2012 Capex 2011 - 2012 KEY COMMENTS 1 800 Actual Forecasted • 2012 forecast of SEK 240-375 million 1 600 1,613 1 400 • Capex of SEK 32 million in Q1 1 200 SEK million 1 000 • Continued low investment activity in 2012 800 600 400 200 240 - 375 Drilling program/planned wells 2012-2013 0 32 2011 2012 Tunisia: Zarat Elyssa Q4 2012/2013 Appraisal/1 Tunisia: Makthar 2013 Exploration/1 EG: Block H Aleta Q4 2012/2013 Exploration/1 DK: 12/06 Lille John 2013 Appraisal/110
  11. 11. Improved cash flow Q1 Q4 FY FY AZURITE LIFTING – Q2 2012 SEK million 2012 2011 2011 2010 Operating cash flow 175 -106 812 416 • Azurite lifting on 4 April adds SEK 400 million cash flow, and of which income -3 -7 -45 -230 reduces net debt taxes paid • PA Resources’ next planned CAPEX -32 -135 -1,613 1,585 lifting from Azurite in early 2013 Financing activities -13 36 -408 2,321 Net cash flow 131 -204 -1,209 1,15211
  12. 12. Refinancing activities Maturity structure Bonds and convertibels (SEK million) • 5 year senior unsecured NOK 900 1200 million bond loan issued in March 1000 2011 to refinance maturing loans in 2011 and 2012 800 • Total amortizations of net SEK 600 408 million in 2011 400 • As per 25 April net debt reduced 200 by SEK 580 million since year end 0 amounting to SEK 3.4 billion May - Dec. 2013 2014 2015 2016 2012 • Next maturity in October 2013 Bond (NOK 900 million) Convertible Bond Bond (SEK 850 million)12
  13. 13. Reduced debt Balance Sheet (SEK million) 2011 2010 KEY COMMENTS – Q4 2011 Non-current assets 7 910 8 952 • Substantial reduction in 2P Current assets 981 1 946 reserves on Azurite field Total assets 8 892 10 898 resulted in impairment of SEK 1,436 million Equity attributable to owners 3 270 5 250 • Write-down of SEK 599 million of the parent related to Didon North and Non-current liabilities 4 031 3 606 divestment of El Bibane and Current liabilities 1 592 2 042 Ezzaouia fields in Tunisia Total equity and liabilities 8 892 10 898 Covenants and net debt 25 April* Q1 2012 Q4 2011 Covenant Book Equity (SEK million) 2,994 2,994 3,270 >2,000 Book Equity to 46% 43% 45% >40% Capital Employed Net debt (SEK million) 3,400 3,803 3,982 N/A * Assuming fixed closing rate per 31 March13
  14. 14. Operational update Q1
  15. 15. Highlights 2011: West Africa West Africa Reserves and resources (mmboe) IMPORTANT EVENTS 70 Equatorial Guinea: 60 50 62 • Early production start at the Aseng field 40 in November 2011, adding frequent 30 cash flow from Q1 2012 20 10 12.2 20 • Alen development in progress adding 0 significant cost synergies to PAR, 2P Reserves Contingent Risked Resources Prospective production start in 2013 Resources • New operator for Block H Congo: SEK 780 million in investments • Azurite development completed with lower production than expected, booked 2P SEK 3,304 million in non-current assets reserves written down by 6 mmboe 5,300 barrels/day in average production • Exploration well on Marine XIV found non-commercial hydrocarbons15
  16. 16. Highlights 2011: North Africa North Africa: IMPORTANT EVENTS Reserves and resources (mmboe) 100 • Allocation of reserves and development 80 91 planning of Zarat field in progress 60 • Production well on the satellite field 40 Didon North failed 48 48 20 • No commercial discoveries found on 0 2P Reserves Contingent Risked Jelma Resources Prospective Resources • Disposal of two small producing fields - El Bibane and Ezzaouia • Political situation resulting in social SEK 486 million in investments instability affecting activities in the country SEK 3,848 million in non-current assets 3,300 barrels/day in average production16
  17. 17. Highlights 2011: North Sea and Greenland North Sea and Greenland: Reserves and resources (mmboe) IMPORTANT EVENTS 350 • Discovery of gas and condensate on 300 Broder Tuck in Danish licence 12/06 250 299 200 • Oil discovery in the Miocene structure on 150 Lille John in Danish licence 12/06 100 50 34 • Seismic analysis completed in Greenland 0 resulting in a number of sizable prospects 2P Reserves Contingent Risked and leads Resources Prospective Resources • Awarded new licence in Germany, adjacent to Danish 12/06 SEK 347 million in investments SEK 758 million in non-current assets17
  18. 18. Successful drilling campaign on 12/06 in DenmarkPA Resources 64% (Operator) Background • 12/06 licence located in the Danish part of North Sea • Adjacent to existing oil and gas infrastructure • Exploration well drilled in 1975 (Broder Tuck field today), encountered a gas column • Awarded adjacent German licence in January 2011, before successful drilling18
  19. 19. Denmark 12/06: Thorough geoscience analysis PA Resources 64% (Operator) Pre-drill perceptions • 1975 well with small gas column in Middle Jurassic • Industry perception of Chalk as only target in area, with high risk on oil charge Our perceptions • Structures drilled historically on 2D data – 3D acquired in past but no subsequent exploration drilling • Lies in Danish Central Graben – large fields nearby What we did • Use of 3D to define Lille John as multi-target prospect (Miocene, Chalk, Middle Jurassic) • Evaluated historic well and recognised upside19
  20. 20. Denmark 12/06: Discoveries and way forward PA Resources 64% (Operator) Broder Tuck • 360m+ gas and condensate column proved by wells • High quality Middle Jurassic reservoir • Mid to high case assessment of c. 25-50 mmboe gross of contingent resources including liquids • 2012 work programme to progress development 12/06 Broder Tuck - 2 planning towards commercialisation Lille John Lille John-1 • Wells established 35 API oil in Miocene sandstone at c. 900m – exceptionally light oil for shallow depth • Obvious seismic anomaly at Miocene B20008-73 • Recognition of shallow light oil re-focussed work on developing a Miocene prospect inventory • Likely to be remaining deeper potential – Chalk Licence Group: Operator PA Resources (64%), remains and well result upgrades Middle Jurassic Danish North Sea Fund (20%), Spyker Energy (8%), Danoil (8%) • 2012 work programme to reprocess 3D to determine prospect inventory and appraisal well location, drilling project management tendered20
  21. 21. PA Resources’ operator with focus on HSE Objective - safe drilling campaign with minimal impact • Total working hours; 184,149 or 7,673 man days with an average of 72 personnel on board during operation • Reportable incidents; 0 environmental incidents, 3 reportable incidents, 0 lost time incidents, 1 first aid case • HSE audits; > 100 audits by PA Resources’ rig-based HSE supervisor • Transportations; 6,698 tonnes of equipment moved to/from rig in 68 supply boat sailings • Use of chemicals; 238.8 tonnes of chemicals discharged being 96.3% designated Green substances which pose little or no risk to environment • Use of environmentally harmful substances; usage of only 15.6 tonnes of 221 tonnes in total that PA Resources was permitted to use, of which, zero tonnes discharged to the environment • Disposal; 76.9 tonnes of waste shipped from the rig for safe disposal21
  22. 22. Success factors and the 12/06 team Key success factors • Careful, diligent work and formed own evidence-based views on prospectivity • Conducted a safe drilling campaign with minimal impact to highest standards • High degree transparency to joint venture partners and DEA • Professional team and good communication PA Resources UK – the 12/06 teamGraham Goffey Fiona Goodfellow Dave Mackertich Jon Lucas Mark Attree William TyrellRegional Director Geoscience Project Leader Senior Geoscientist Geotechn. & HSE Manager Exploration Manager Geologist22
  23. 23. Reserves and valuation Q1
  24. 24. 2011 Reserves and resources 450 2P Reserves 409 2011 400 • Aseng derisked – 6 months in 350 2010 production 297 • Alen production start in 2013 300 250 Contingent Resources • Danish discoveries on 12/06 added 200 32 mmboe 145 141 150 Risked Prospective Resources 100 • Seismic analys of Greenland licence 60.2 72.5 50 added significant volumes 0 • Danish 12/06 exploration potential 2P Reserves Contingent Risked Resources Prospective Resources24
  25. 25. Overview: Assets per classification 409 mmboe 145 mmboe Risked 60.2 mmboe Prospective Resources Contingent Resources 2P Reserves ● Azurite ● Didon ● Tunisia: Jelma, Makthar, ● Didon ● Zarat gas Jenein Centre, Zarat permit ● Tunisia onshore ● Elyssa ● UK ● Zarat liquids ● Zarat permit ● Mer Profonde Sud ● Block I: ● Didon North (Miocene & Sendji) ● Aseng ● Denmark 12/06 ● Marine XIV ● Alen ● Block I (other) ● Block I and Block H ● Mer Profonde Sud ● Netherlands: Schagen, Q7 ● Marine XIV ● Denmark: 12/06, Gita/Maja ● Netherlands ● Greenland, Block 8 Producing assets Under development Priority development25
  26. 26. Current valuation of 2P reserves Peer group PAR PAR 2012* AGM 2012 AGM 2011 Market capitalisation 920 2,665 Net debt 3,400 3,280 Enterprise value SEK million 4,320 5,945 Enterprise value USD million 1,124 640 950 2P boe million 77 60.2 72.5 Value/2P boe (USD) 14.60 10.60 13.10 PAR oil price (USD) 120 103 * Peer group includes 15 E&P companies per April 201226
  27. 27. Indicative valuation of selected assets 145 mmboe 60.2 mmboe Contingent Value range Indicative value 2P Reserves Resources (USD/boe) (MUSD) Producing: 17.2 18 - 28 310 - 482 North Africa: • Tunisia West Africa: • Congo (Azurite) • EG (Aseng) To be developed: 43.0 37.8 4.5 – 8.5 364 - 686 • Tunisia: Zarat field • EG: Block I • Denmark: Broder Tuck Total 674 – 1,168 Net debt -500 (Market) value 174 - 668 SEK/share *equivalent 1.85 – 7.00 * USD/SEK 6.7527
  28. 28. Strategic focus update Development of prioritised assets in Africa • Azurite and Aseng completed • Alen production start in 2013 Develop prioritised Selective exploration activities assets • Discoveries on 12/06 in Denmark Increase Strengthen reserves and capital resources structure Strengthen captital structure • Refinancing activities in 2011 Increase value from existing assets • Net debt reduced by SEK 600 million in Jan. – April 2012 • Low capex – positive cash flow in 201228
  29. 29. Outlook and focus 2012 • Technical and economic analysis of remedial options for Azurite well • Appraisal drilling and development planning of Danish discoveries towards commercialisation • Selective appraisal and exploration activity in EG: Block I and Block H • Progressing the Zarat field and Block I development projects • Positive cash flow and reduction of debt29
  30. 30. Thank you! Q1

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