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Pareto E&P conference, PA Resources
Citation preview
A New Story for PA Resources
Mark McAllister, CEO
Pareto E&P Conference
London, 13 March 2014
2
Q4 and full year Summary
• Strengthened balance sheet and refinancing
• Two large new owners with outstanding industry expertise
• A highly experienced management team now in place
• Portfolio rationalisation
» Strategic farm-outs bring in strong partners and reduce risk and investment
» Azurite field closed and field abandonment commenced
Dec Nov Oct Sep Aug Jul Jun May
Tunisian
Farm-Out
Congo
Farm-Out
Azurite
Field
Closure
Denmark
Farm-Out
SEK 891m
Equity
SEK 750m
Bond
An experienced Management Team
3
Tomas Hedström
CFO
Stockholm
Kevin McGrory
General Counsel
London
Graham Goffey
SVP Exploration
MD West Africa
and North Sea
London
Paul Elstone
MD Tunisia
Tunis
Slimane Bouabbane
VP Business
Development
Stockholm
Mark McAllister
CEO
London
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
Strong Supportive Shareholders
4
Shaping the asset portfolio
5
Take out Greenland
Production
Exploration and development
• Core areas: North Sea, North Africa and West Africa
• Project execution – moving our assets further
• Plan of development in the coming months
Production
Appraisal
&
Development
Priority
Upside
Potential
• Tunisia Offshore: Didon
• Tunisia Onshore: DST
• Equatorial Guinea: Aseng & Alen
• Tunisia: Onshore exploration
• North Sea: Danish/German exploration
• Equatorial Guinea: Gas, exploration
• Congo: MPS exploration
• Tunisia: Zarat & Elyssa
• Equatorial Guinea: Diega
• Denmark: Broder Tuck & Lille John
• UK: Birgitta (22/19-1)
Three strategic Farm-outs
6
MPS
Congo
Farmed out 60% to SOCO
PAR retains 25% - a
significant upside
SOCO will carry PAR share
of exploration costs
An exploration well in the
remaining license period
SOCO is an established
operator in Congo
SOCO and PA AMI for
further activity
Government approval of
transaction in early March
Zarat
Tunisia
Farmed out 70% to EnQuest
PAR retains 30% - in
production & development
$249m (gross) consideration
including carry and contingent
payments
EnQuest expert in mature field
extension and new
developments
EnQuest and PA AMI for
further acquisitions
Farmed out 40% to Dana
PAR retains 24 % - a
significant upside
$44m (gross) consideration
including appraisal and
development carry
Financial strength of KNOC
behind Dana
Dana operates nearby
licenses
Also includes German
exploration acreage
Dana joining PAR Danish 7th
Round bidding group
12/06
Denmark
Each operator is a technical and strategic fit for the respective licence.
Exploration Appraisal Production
Latest news – Diega towards development
• Block I, Equatorial Guinea
» PAR 5.7%
» Noble Energy, operator
• Encouraging results
» Good reservoir quality, no water
» Consistent with upside case expectations
• Tie Back to the Aseng FPSO
• Development plan in 2014
• First oil in 2016
7
The Atwood Hunter drill rig and
the tanker that collected the oil.
Production re-start on the Didon Field 2017
First production
2013-2017
Development 1976
Discovery
1998 First Oil
1997 Concession
2006 Platform + 2 Wells
2008-2009 4 New Wells
2005 PA Acquisition
2011 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 Electric Submersible
Pump on one of three wells in 2014, first
ESP planned in April 2014
• Will follow up with new production well
• Further ESP installation and new wells
likely in following years
8
2014 ESP, Infill Well
Plan of development for the Zarat Field
1992 Discovery
2012 Draft POD
1995 Appraisal Well
2013 EnQuest Farm-Out
2005 PA Acquisition
1990 Permit Award
• 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 Zarat gas
• Commercially complex since unitisation
required with Joint Oil block
• POD using existing infrastructure in the
Gulf of Gabes is being prepared together
with ETAP, completion in mid-2014
• Unitisation and Unit Operating Agreement
in an advanced state of negotiation
9
2014 UUOA, UPOD
• Another significant gas accumulation
• Four well penetrations drilled to date
with one further appraisal well
scheduled for late 2014 or early 2015
• Straightforward development if
appraisal is successful
• Commercially simple with whole field in
PAR licence
• Local infrastructure with spare capacity
• Tunisian need for gas will ensure active
ETAP support once appraisal complete
1974 Discovery
2006/2007 Appraisal Well + ST
1992 Appraisal
Well
2010 New 3D Seismic
2013 Enquest Farm-Out
2005 PA Acquisition
10
Plan appraisal well on the Elyssa field
2015 Appraisal Well
2006 6th license round
Awarded to Scotsdale
2011 Exploration well
2008 PA acquired
Scotsdale
2012 Discovery Evaluation
Report
2013 Dana Farm-out
• Gas field discovered by PA in 2011
• Estimated recovery 15-45 mmboe
• In shallow water and adjacent to
existing infrastructure
• Concept screening underway
• Good progress in discussions with
nearby host platform and an alternative
host is under active review
• Decision in 2014 on preferred
development concept or further
appraisal drilling
11
Commercialisation of Broder Tuck
2014 Pre-Development Evaluation
2006 6th license round
Awarded to Scotsdale
2011 Exploration well
+ ST
2008 PA acquired
Scotsdale
2012 Discovery Evaluation
Report
Appraisal drilling at Lille John
• Oil field discovered by PA in 2011
• Estimated recovery ranges from
uneconomic up to 60mmstb
• Appraisal well required to confirm size of
structure and reservoir model
• Appraisal well planned in late 2014 and a
drilling rig has been secured
• Straightforward tieback to existing
infrastructure for oil export to Danish
mainland
• Will pursue this trend together with Dana in
Denmark and Germany
12
2013 Dana Farm-out
2014 Appraisal Well
Identify drilling target at Mer Profonde Sud
• Abandonment on Azurite field
continues and is presently around
80% complete
• Murphy exited from remaining MPS
exploration licence
• MPS is a 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
• Government approval of transaction in
early March, subject to regulatory
approval to enter into the third and
final period of the licence
2014 DL-23
2010-2011 3D Seismic
2002-2004 WO & Infill Drilling
13
2014 Key activities
14
- Confirm drilling target - Submit Diega POD - Install ESP
- Secure rig for exploration well - Commence development - Install additional ESP or drill well
- Complete unitization agreement - Review DST fields
- Submit Zarat POD - Identify enhancement opportunities
- Plan appraisal well
- Develop and submit drilling plan
- Secure rig for appraisal well
- Develop and submit drilling plan
- Drill appraisal well
- Pre-Development evaluation
- Investigate export options
Lille John
Block I
Birgitta
Didon
Tunisian OnshoreZarat field
Elyssa field
Broder Tuck
Production
Closing of 12/06 farm-out to Dana Closing of Tunisian farm-out to EnQuest
Exploration
MPS
Appraisal/Development
Closing of MPS farm-out to SOCO
15
Production and sales in Q4
bopd Full year
2013
Q4
2013
Dec.
2013
West Africa 3,900 3,000 2,600
North Africa 700 600 1,000
Group Total 4,600 3,600 3,600
• ASENG: Production as forecast
• AZURITE: Production ceased and field
abandonment commenced
• TUNISIA: Production from Didon resumed in
November following the upgrade and
maintenance programme since 1 July
• PRICE: PA Resources realised price of USD 106
per barrel compared to Brent average of USD 109
Average production (bopd)
Average sales price (USD/bbl)
8,7
00
8,0
00
7,7
00
7,1
00
6,8
00
5,7
00
4,2
00
3,6
00
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
PAR production Before Tunisian farm-out
120
109 109 106
113
103
108 106
119
108 109 110
113
102
110 109
80
90
100
110
120
130
140
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
PA Resources Brent
Income Statement full year 2013
16
SEK million 2013
Profit for the period -1,219
One-off costs
Decommissioning costs 469
Impairments 542
Tunisian farm-out, net 117
Net exchange gains/losses -100
Profit for the period
(Adjusted) -191
KEY COMMENTS
• Impairments of:
Block 8, Greenland 97
9/06 (Gita), Denmark 90
MPS, Congo 326
Azurite, Congo 21
Block H, EG 8
totalling SEK 542 million
Cash flow
17
SEK million Q4 2013 Q3 2013 2013
Cash flow from operations -269 -13 -379
Capex -100 -74 -271
Rights issues 0 810 1,413
Loans raised 726 0 764
Amortisation of debt -791 -27 -1,182
Cash flow from financing -65 783 995
Net cash flow -434 696 345
KEY COMMENTS
• Q4 capex of SEK 100 million, mainly
related to drilling activities in Block I
in Equatorial Guinea
• Full year capex forecast of SEK 250-
380 million, outcome in the lower
part of the range
• Capex for full year 2014 are
expected to be some SEK 300
million
• Cash and cash equivalents at the
end of the period, SEK 403 million
Earnings and key ratios
18
Q4 2013 Q3 2013 2013
Production (bopd)* 3,600 4,200 4,600
Oil price (USD/barrel) 106 108 108
Revenue (SEK million) 241 293 1,312
EBITDA (SEK million)** 89 64 536
Profit before tax
(SEK million)*** -9 10 132
Profit for the period
(SEK million) -402 -501 -1,219
Earnings per share (SEK)**** -3.55 -8.53 -21.54
* Subject to the necessary approvals, PA Resources´ working interest in the Didon field in Tunisia
has been reduced from 100% to 30% through the farm-out transaction with EnQuest.
** Figures for Q3 and full year 2013 exclude non-cash, one-off costs of SEK 469 million and SEK
931 million respectively.
*** Figures for Q4, Q3 and full year 2013 exclude non-cash, one-off costs of SEK 335 million, SEK
469 million and SEK 1,473 million respectively.
**** The rights issue in September 2013 gave rise to retrospective adjustments
KEY COMMENTS Q4 vs Q3
• Revenue lower due to production
and oil price
• Fourth quarter impairment of MPS
and Block H, SEK 335 million
presented as one-off costs
Current equity and debt situation
19
KEY COMMENTS
• Equity amounted to SEK 1,795 million
• In compliance with both covenants as
per 31 December 2013
• Convertible bond SEK 94 million
amortized in January 2014
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Covenants
Book Equity
(SEK million) 1,795 2,144 1,973 2,201 >1,000
Book Equity to
Capital
Employed
45% 49% 46% 48% >40%
Net debt (SEK
million) 1,792 1,422 2,197 2,111 N/A
Covenants and Net Debt development
Debt maturity per 5 February 2014 (SEK million)
0
100
200
300
400
500
600
700
800
April 2014 April 2015 March 2016
April 2016
Bond Loan 900m NOK
Bond Loan 750m SEK
Start building the
platform
• Strengthened
balance sheet
and refinancing
• New Group
Management and
Board
• Farm-outs
according to plan
A period of change – for long term success
Developed platform for future growth
• Project execution
• Based on 2013 achievements
• Closing of farm-out contracts
• Cooperation for the future: competent
local mid-sized partners with local
connections and knowledge
• Reduced level of risk and
investments
• Continued business focus on North Sea,
North Africa and West Africa
• Increased pace of exploration, appraisal
and development
• Exploration of licenses with high
potential and with nearby
infrastructure, enabling cost-effective
development
• Start reviewing value enhancing M&A
opportunities to create economies of scale
and a wider asset portfolio
Development of
growth plans
• Acquiring new
reserves and
resources where
opportunities to
enhance value
• Securing financing
of long-term
development plans
Thank you