PA Resources AGM 22 May 2012
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Transcript of PA Resources AGM 22 May 2012
PA Resources AGM 2012
Annual General Meeting
Bo Askvik, President & CEO
Stockholm, 22 May 2012
PA Resources where we are today
2
» No value in the North Sea
asset portfolio
» Marginal value recognised
in Block I, Equatorial Guinea
» High investment level,
capex/produced barrel
equal to 80 USD
» New play discoveries in
Denmark as operator
» Aseng investments recovered
after 9 months - strong future
cashflow
» Significantly lower investment
level, capex/produced barrel
equal to 6 USD in Q1 2012
2010 Today
Focusing on Africa and North Sea
* Million barrels of oil equivalents, Working Interest figures
per 31 Dec. 2011
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 Tunisia
• Average production of 8,700 bopd in Q1
2012
• 60.2 million mmboe in 2P reserves and
145 mmboe in contingent resources*
• 130 employees in Tunisia, the UK and
Sweden
25 oil and gas licences
6 producing fields
9 potential commercial
discoveries
Operator of 12 licences
Production
Development
Exploration
3
Infrastructure hub
Shareholder structure per March 2012
4
Number of shares Capital/votes
AVANZA PENSION 53,990,324 8.5%
NORDNET PENSIONSFÖRSÄKRING 21,657,208 3.4%
LÄNSFÖRSÄKRINGAR FONDER AB 17,270,874 2.7%
CBNY-DFA-INT SML CAP V 15,454,377 2.4%
ROBUR FÖRSÄKRING 10,883,241 1.7%
AB TRACTION 10,778,014 1.7%
VOB & T HOLDING AB 10,000,000 1.6%
SEB S.A., W8IMY 9,378,446 1.5%
JP MORGAN BANK 7,765,220 1.2%
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%
• The share listed on NASDAQ
OMX Stockholm (Mid Cap)
• Market capitalization of
approx. SEK 920 million
• Enterprise value of approx.
SEK 4.3 billion and
Nomination committee in 2011:
• Länsförsäkringar
• AB Traction
• Folksam
Financial Review
Q1
Macro perspective
• Geopolitical uncertainty continues
• European debt crisis and outlook of
global economy coming year uncertain
• Lack of extra production capacity
• Demand still driven by growth
economies such as China and India
• Transport sector increasing in pace
with population and GDP
• It is getting more difficult to find oil
• Existing producing fields have a natural
decline rate of 4% a year
• +40 million barrels per day needed from
new producing fields by 2030
6
0
20
40
60
80
100
120
140
160
2006 2007 2008 2009 2010 2011 2012
Brent price trend 2006 - 2012 (USD per barrel)
Production trend and update
CONGO: Azurite
• Marked decline in one well since February
2012, well flowing at minimal rate
• Technical and economic analysis of remedial
options ongoing
• One week shutdown for annual field
maintenance planned for in late May 2012
EG: Aseng
• Higher target level of around 60,000 boepd
reached in early March 2012
• Fifth production well on stream - all wells
contributing fully, gas re-injection fully
commissioned
• Frequent liftings
EG: Alen
• Delopment project on plan for production start
2013, significant cost synergies reducing opex
Average production per country/bopd
0
2 000
4 000
6 000
8 000
10 000
12 000
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012
Congo: Azurite EG: Aseng Tunisia: Didon & Onshore
7
8
Production and sales
Average quarterly production/bopd bopd Full Year
2011
Q1
2012
APRIL
2012
West Africa 5,300 6,200 5,700
North Africa 3,300 2,500 2,700
Group Total 8,600 8,700 8,400
Average sales price USD/bbl LIFTINGS IN 2012: Q1 - EARLY APRIL
• 546,000 bbls from Aseng and Tunisia in Q1
• 520,000 bbls from Azurite on 4 April (Q2 2012)
71
78 72
82
97 109 106 104
120
77 79 78 85
106 117 113 109
119
20
40
60
80
100
120
140
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
PA Resources
Brent
0
2 000
4 000
6 000
8 000
10 000
12 000
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Earnings and key ratios
9
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
(SEK million)*
-31 -96 -326 -316
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.
1,613
32
240 - 375
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2011 2012
SE
K m
illi
on
Significantly lower capex in 2012
Actual Forecasted
Capex 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/1
Drilling program/planned wells 2012-2013
KEY COMMENTS
• 2012 forecast of SEK 240-375 million
• Capex of SEK 32 million in Q1
• Continued low investment activity in 2012
10
Improved cash flow
11
SEK million
Q1
2012
Q4
2011
FY
2011
FY
2010
Operating cash flow 175 -106 812 416
of which income
taxes paid
-3 -7 -45 -230
CAPEX -32 -135 -1,613 1,585
Financing activities -13 36 -408 2,321
Net cash flow 131 -204 -1,209 1,152
AZURITE LIFTING – Q2 2012
• Azurite lifting on 4 April adds
SEK 400 million cash flow, and
reduces net debt
• PA Resources’ next planned
lifting from Azurite in early 2013
Refinancing activities
• 5 year senior unsecured NOK 900
million bond loan issued in March
2011 to refinance maturing loans
in 2011 and 2012
• Total amortizations of net SEK
408 million in 2011
• As per 25 April net debt reduced
by SEK 580 million since year end
amounting to SEK 3.4 billion
• Next maturity in October 2013
12
0
200
400
600
800
1000
1200
May - Dec.2012
2013 2014 2015 2016
Maturity structure Bonds and convertibels (SEK million)
Bond (NOK 900 million) Convertible Bond Bond (SEK 850 million)
Reduced debt
13
KEY COMMENTS – Q4 2011
• Substantial reduction in 2P
reserves on Azurite field
resulted in impairment of SEK
1,436 million
• Write-down of SEK 599 million
related to Didon North and
divestment of El Bibane and
Ezzaouia fields in Tunisia
Balance Sheet (SEK million) 2011 2010
Non-current assets 7 910 8 952
Current assets 981 1 946
Total assets 8 892 10 898
Equity attributable to owners
of the parent 3 270 5 250
Non-current liabilities 4 031 3 606
Current liabilities 1 592 2 042
Total equity and liabilities 8 892 10 898
25 April* Q1 2012 Q4 2011 Covenant
Book Equity (SEK million) 2,994 2,994 3,270 >2,000
Book Equity to
Capital Employed 46% 43% 45% >40%
Net debt (SEK million) 3,400 3,803 3,982 N/A
Covenants and net debt
* Assuming fixed closing rate per 31 March
Operational update
Q1
IMPORTANT EVENTS
Equatorial Guinea:
• Early production start at the Aseng field
in November 2011, adding frequent
cash flow from Q1 2012
• Alen development in progress adding
significant cost synergies to PAR,
production start in 2013
• New operator for Block H
Congo:
• Azurite development completed with lower
production than expected, booked 2P
reserves written down by 6 mmboe
• Exploration well on Marine XIV found
non-commercial hydrocarbons
Highlights 2011: West Africa
15
12.2 20
62
0
10
20
30
40
50
60
70
2P Reserves ContingentResources
RiskedProspectiveResources
West Africa Reserves and resources (mmboe)
SEK 780 million in investments
SEK 3,304 million in non-current assets
5,300 barrels/day in average production
IMPORTANT EVENTS
• Allocation of reserves and development
planning of Zarat field in progress
• Production well on the satellite field
Didon North failed
• No commercial discoveries found on
Jelma
• Disposal of two small producing fields
- El Bibane and Ezzaouia
• Political situation resulting in social
instability affecting activities in the
country
Highlights 2011: North Africa
16
SEK 486 million in investments
SEK 3,848 million in non-current assets
3,300 barrels/day in average production
48
91
48
0
20
40
60
80
100
2P Reserves ContingentResources
RiskedProspectiveResources
North Africa: Reserves and resources (mmboe)
IMPORTANT EVENTS
• Discovery of gas and condensate on
Broder Tuck in Danish licence 12/06
• Oil discovery in the Miocene structure on
Lille John in Danish licence 12/06
• Seismic analysis completed in Greenland
resulting in a number of sizable prospects
and leads
• Awarded new licence in Germany,
adjacent to Danish 12/06
Highlights 2011: North Sea and Greenland
17
SEK 347 million in investments
SEK 758 million in non-current assets
34
299
0
50
100
150
200
250
300
350
2P Reserves ContingentResources
RiskedProspectiveResources
North Sea and Greenland: Reserves and resources (mmboe)
Successful drilling campaign on 12/06 in Denmark PA Resources 64% (Operator)
18
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
drilling
Denmark 12/06: Thorough geoscience analysis PA Resources 64% (Operator)
19
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 upside
Denmark 12/06: Discoveries and way forward PA Resources 64% (Operator)
20
Licence Group: Operator PA Resources (64%),
Danish North Sea Fund (20%),
Spyker Energy (8%), Danoil (8%)
Lille John-1
Broder Tuck - 2
B20008-73
12/06
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
planning towards commercialisation
Lille John
• Wells established 35 API oil in Miocene sandstone
at c. 900m – exceptionally light oil for shallow depth
• Obvious seismic anomaly at Miocene
• Recognition of shallow light oil re-focussed work
on developing a Miocene prospect inventory
• Likely to be remaining deeper potential – Chalk
remains and well result upgrades Middle Jurassic
• 2012 work programme to reprocess 3D to determine
prospect inventory and appraisal well location,
drilling project management tendered
PA Resources’ operator with focus on HSE
21
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 disposal
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 team
Fiona Goodfellow
Geoscience Project Leader
Dave Mackertich
Senior Geoscientist
Mark Attree
Exploration Manager
Jon Lucas
Geotechn. & HSE Manager Graham Goffey
Regional Director
William Tyrell
Geologist
Reserves and valuation
Q1
2011 Reserves and resources
24
2P Reserves
• Aseng derisked – 6 months in
production
• Alen production start in 2013
Contingent Resources
• Danish discoveries on 12/06 added
32 mmboe
Risked Prospective Resources
• Seismic analys of Greenland licence
added significant volumes
• Danish 12/06 exploration potential
60.2
145
409
72.5
141
297
0
50
100
150
200
250
300
350
400
450
2P Reserves ContingentResources
RiskedProspectiveResources
2011
2010
Overview: Assets per classification
25
● Azurite
● Didon
● Tunisia onshore
● Zarat liquids
● Block I:
● Aseng
● Alen
● Didon
● Zarat gas
● Elyssa
● Zarat permit
● Didon North
● Denmark 12/06
● Block I (other)
● Mer Profonde Sud
● Marine XIV
● Netherlands
● Tunisia: Jelma, Makthar,
Jenein Centre, Zarat permit
● UK
● Mer Profonde Sud
(Miocene & Sendji)
● Marine XIV
● Block I and Block H
● Netherlands: Schagen, Q7
● Denmark: 12/06, Gita/Maja
● Greenland, Block 8
60.2 mmboe 145 mmboe
409 mmboe
2P Reserves Contingent Resources
Risked
Prospective Resources
Producing assets Under development Priority development
Current valuation of 2P reserves
26
Peer group
2012*
PAR
AGM 2012
PAR
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 2012
Indicative valuation of selected assets
27
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
60.2 mmboe
145 mmboe
2P Reserves
Contingent
Resources Value range
(USD/boe)
Indicative value
(MUSD)
* USD/SEK 6.75
Strategic focus update
28
Develop
prioritised
assets
Increase
reserves and
resources
Strengthen
capital
structure
Increase value from
existing assets
• Azurite and Aseng completed
• Alen production start in 2013
Development of prioritised assets in Africa
Selective exploration activities
• Discoveries on 12/06 in Denmark
Strengthen captital structure
• Refinancing activities in 2011
• Net debt reduced by SEK 600
million in Jan. – April 2012
• Low capex – positive cash flow
in 2012
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 debt
Thank you! Q1