1. Fourth Quarter 2012
Bo Askvik, President & CEO
Nicolas Adlercreutz, CFO
Stockholm, 6 February 2013
2. Today’s three topics
>> FOURTH QUARTER 2012
Q4 Financial highlights
>> STRENGTHENED FINANCIALS
Recapitalisation completed
>> PA RESOURCES WAY FORWARD
Strategy and investment focus
2
3. Tomas Hedström appointed as new CFO
BRIEF
• Broad international experience in accounting and finance
from listed companies
• Most recently CFO at Rottneros AB (publ)
• Several positions at SCA (publ), with sales of more than
SEK 100 billlion and 50,000 employees, most recently as
Senior Vice President Finance
• M.Sc. Business and Economics
• Assumes position as CFO by 1 August 2013 or earlier
3
5. Earnings and key ratios
Q4 Q3 Q4 FY FY
2012 2012 2011 2012 2011
KEY COMMENTS Q4 vs Q3
• Lower production and realised price
Production (bopd) 7,100 7,700 8,400 7,900 8,600
lowered revenue
Oil price (USD/barrel) 106 109 104 111 103 • Stable costs, to a large extent fixed.
• EBITDA margin improved to 56.9%
• Relinquishment of P1342 and
Revenue (SEK million) 467 525 535 2,184 2,154 P1802 of SEK 18 million and Azurite
direct costs of SEK 151 million
EBITDA (SEK million) 266 292 306 1,255 1,295 presented as one-off costs
EBITDA margin 56.9% 55.7% 57.2% 57.5% 60.1% • Financial net impacted by non-cash
item related to set-off issue of SEK
Profit before tax -16 64 11 85 158 70 million
(SEK million) * • New assessment of deductible
Profit for the period -340 -1,385 -1,855 -1,966 -2,084 costs in EG increased income taxes
(SEK million) with approx. SEK 75 million.
Earnings per share -0.24 -2.17 -2.91 -2.36 -3.27
(SEK)
* Figures for Q4 and full-year 2012, exclude non-cash, one-off costs of SEK 169 million respectively
SEK 1,748 million and for Q3 2012 of SEK 1,495 million. Figures for Q4 and full year 2011, exclude SEK
2,035 million in one-off costs
5
6. 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 licences
amounted to SEK 18 million.
Cost of sales & other
-201,046 -201,046
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 11,405
6
7. Improved cash flow
Q4 Q3 Q4 FY FY
KEY COMMENTS
SEK million 2012 2012 2011 2012 2011
Operating cash flow 175 64 -106 838 812 • Improved operating cash flow
• SEK 838 million for the full year 2012
of which income 0 0 -7 -5 -45 • SEK 175 million in Q4
taxes paid
• Higher capex spending in Q4 mainly
CAPEX -186 -16 -135 -255 -1,613 relating to Azurite sidetrack preparations
• Amortisations of SEK 568 million for full
Financing activities 65 -51 36 -568 -408 year
• Full year net cash flow of SEK 15 million
Net cash flow 54 -2 -204 15 -1,209
7
9. Recapitalisation completed
Completed two-step transaction strengthens equity with approx. SEK 1.570 billion
Set-off issue
» Offer to convertible bondholders to set-off their convertible bonds against newly
1 issued shares at SEK 0.15
» Approx. 90 percent of the nominal amount was converted into newly issued shares
» 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)
» 51% of shares (3,570 million) were subscribed with preferential right
2 » Additionally, 226 million shares were subscribed for with subsidiary preferential right
and without preferential right agreements
» The remaining 3,256 million shares were allocated to guarantors pro rata in relation to
total undertaking
» Total number of shares amounts to 14,146 million
» 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
9
10. Strengthened financial position
Equity and Net debt before and after transactions (SEK million)
RECAPITALISATION COMPLETED
2 500 4 000
3 410 3 500
• Equity significantly strengthened with
3 450
2 000 604 ,2 194 SEK 1 570 million after transactions
3 000
2 630 related costs
2 630
Net debt
1 500 2 500
Equity
968 ,1 590 2 028 • Cash and cash equivalents after rights
2 000
issue of SEK 569 million
1 000 1 500
956 334
1 000
• Net debt reduced by SEK 1 421 million
500
500
0 0
30 Sept. Q4, excl. Set-off 31 Dec. Pro After new
2012 set-off issue 2012 Forma Share
issue Issue
Equity Net Debt (RHS)
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/A
10
12. 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
level
12
13. Business plan – development for future growth
Operating cash flow and » Cash flow from producing assets to finance maintenance investments
strengthened liquidity enables in 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 certain prioritized assets
• Zarat license in Tunisia (Elyssa, Zarat and Didon)
Lower interest reduces both • 12/06 in Denmark (Broder Tuck and Lille John)
investments and risk » Reduced risk exposure to individual projects and share of investment
» Strengthened balance sheet improves position for future transactions
» Cash flow from producing fields combined with new debt financing
enables development of ~32 mmboe to production
Development of
prioritized assets for 2016 2017 2018
long-term production growth Elyssa & Lille John Broder Tuck Zarat
» Net debt to remain in line with the level following the transactions
Selective exploration to increase » Selective exploration and appraisal in Equatorial Guinea, Tunisia and
the resource base the Netherlands, a few scheduled commitment wells coming two years
13
14. Investments and key assumptions
Capex forecast 2013-2018 before and
after farm out transactions (SEK million) KEY ASSUMPTIONS:
Development is not progressed until farm-out
1 800 successful
1 600
• Maintenance investments on producing fields
1 400
• Farm-out of prioritised assets to reach
1 200
preferred working interest level and reduce
1 000 970 risk on individual assets
800 1,613 • Zarat licence from 100% to 20%
300
• Didon field from 100%% to 50%
600 680
• 12/06 from 64% to 15%
400 520
540 590 • Present operatorship in farm-out assets
200 secures development planning
255 270 230
170 0
0
2011 2012 2013E 2014E 2015E 2016E 2017E 2018E • Oil price of 110 USD/bbl and USD/SEK of
6.53
PA Resources' share of investments Partners' share of investments
14
15. 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
• Debt stays around current
SEK billion
2,0 8 000 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 estimate
15
17. 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 performance
End 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 based
Revision +1.9 -1.6 +1.3 -1.4
• Upwards revision of the 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 level
17
18. 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 2013
18
19. Capex forecast 2013/2014 – drilling programme
Drilling programme/planned wells 2013-2014
Capex forecast 2013 includes:
Appraisal/
DK: 12/06 Lille John 2013/2014
Exploration/1-2 • Drilling campaign on 12/06 high priority
• Drilling on 12/06, Block H and Q7/10a
Appraisal/ dependent on rig availability
EG: Block I Block I 2013
Exploration/2
• Drilling campaign ín Block I in EG
EG: Block H Aleta 2013 Exploration/1 • Maintenance investments on producing
fields
Q4 Appraisal/
NL: Q7/10a Q7-FA • Elyssa well assumes successful farm-out
2013/2014 Development/1
of Zara tlicence
Tunisia: Zarat Elyssa 2013/2014 Appraisal/1 • The drilling programme is revised
continuously based on the capex budget
and prioritised commitments
Tunisia: Makthar 2014 Exploration/1
19
20. Production and sales
Average production per country (bopd)
12 000 bopd Full-year Q4 January
10 000 2012 2012 2013
8 000 West Africa 5,600 4,900 5,000
6 000
North Africa 2,300 2,200 2,100
4 000
2 000 Group Total 7,900 7,100 7,100
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 slightly lower than
117 113
119
110
expected in Q4 due to several short production
120 109 108 109
106
120
interruptions on the FDPSO
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 Brent
20
21. Recent development
HIGHLIGHTS
• Azurite workover operation suffered mechanical
downhole problem preventing sidetrack from the
existing wellbore. Ongoing evaluation of future options
for the field – awaiting operator’s proposal
• Alen field development progressing according to plan
and below budget, targeting first production in Q3
2013
• Following detailed studies, two licences in UK
were relinquished
• German licence farm-out to Danoil (10%, pending
approval)
• Tentative Unitization agreement of the Zarat field
• Tunisian farm-out process ongoing
21
22. 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%)
22
23. 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 drill
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%)
23
24. Tunisia Zarat & Elyssa - Gas market pull on development
Historic Gas Demand Demand - Supply Shortfall
600
544
~5% CAGR
502 900
500 477 96
435 86
75 800
Gas 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
24
25. 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
Africa
Source: Wood Mackenzie, Bloomberg, Factset
25
26. Tunisia - Makthar and Jelma permits’ potential
PA Resources 100%
• Jelma-Makthar permits surround producing Douleb,
Semmama and Tamesmida (DST) fields onshore
Tunisia NW Maiza
• Both permits cover areas of 7,216 km² and 3,828 km²
Makthar permit
• Jelma extended until 2016 and Makthar until 2014
• Makthar permit contains several onshore exploration
prospects
Friha
• Detailed analysis and modelling of 2D seismic over Boughanem
Makthar finalised Jelma permit
• Evalutaion of Jelma permit potential completed
• Regional mapping of reservoirs, seals and source rock
formations over both permits completed
Douleb & Semmama
• Awarded open acreage around Douleb (189km2) 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%
26
27. 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 Maersk (DUC) for infrastructure 12/06 Broder Tuck-2
tie back as one of range of possible development
concepts
• Assumed production start in 2017 Lille John-1
Lille John
B20008-73
• Wells established 35 API oil in Miocene sandstone
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 Licence Group: Operator PA Resources (64%),
in tight rig market Nordsøfonden (20%), Spyker Energy (8%), Danoil (8%)
• Development options dependent on appraisal results –
successful appraisal could lead to tieback to nearby
infrastructure or standalone development
• Assumed production start in 2016/17
27
28. Denmark 12/06 - Exploration and appraisal potential
PA Resources Operator with 64%
12/06 Prospectivity
• Prospects at Miocene,
Chalk & Middle
Jurassic levels
• Commitments fulfilled,
2 year extension to
2014
• Follow-on potential in
German licence
B20008-73
28
29. 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
• Decision to drill or drop at year end 2013
Hanze
Licence Group: Operator PA Resources (90%),
Danoil (10% subject to regulatory approvals)
29
30. 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
• Decision to drill well or drop after 2 years
Application group: PA Resources 50% (Operator),
First Oil & Gas Limited 50%.
30
31. 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
and well positioned 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 development of prioritised assets and increased farm out –
32 MMBOE with lower participation - expected net cash position in 2018
31
