North Energy ASA · OSL:NORTH
North Energy ASA — Investor Presentation (January 2014)
35 slides from North Energy ASA's investor presentation, January 2014
Slide 1: North Energy ASA – Capital raise of NOK 360 million
North Energy ASA Capital raise of NOK 360 million January, 2014
Slide 2: Important information
Important information This presentation and its appendices (together the “Presentation”) have been prepared and delivered by North Energy ASA (“North Energy”, “North” or the “Company”). The Presentation is prepared for information purposes only, and is not to be used for any other purpose. The Prese
Slide 3: Table of content
Table of content North Energy in brief The transaction North Energy - status and strategy Summary Appendix Historic financials Other information North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northenergy.no 3
Slide 4: North Energy – Pure exploration exposure to the attractive Norwegian Continental Shelf
North Energy – Pure exploration exposure to the attractive Norwegian Continental Shelf The northernmost oil and gas Portfolio development (# of licenses) company 22 Headquartered in Alta in Finnmark, northern Norway 14 Listed on Oslo Axess (ticker: NORTH) 8 Market cap of ~NOK 154 million (as
Slide 5: Table of content
Table of content North Energy in brief The transaction North Energy - status and strategy Summary Appendix Historic financials Other information North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northenergy.no 5
Slide 6: North Energy focuses resources towards the Barents Sea
North Energy focuses resources towards the Barents Sea Strengthen the company strategically, technologically and financially Stronger focus on core home market, the Barents Sea Positioned for technology arbitrage in Barents region Electromagnetic data (EM) Virtual Drilling (VD) Acquisiti
Slide 7: The transactions in brief
The transactions in brief North raising NOK 285 million in a private placement Directed towards large North and EMGS shareholders and close affiliates Subject to approval at North EGM, scheduled for mid February Shares listed upon prospectus approval; expected ultimo February, subject to Nor
Slide 8: Technology partnership with EMGS in the Barents Sea
Technology partnership with EMGS in the Barents Sea Acquisition of EMGS’s entire Barents Sea EM data library Important scanning and de-risking tool Well-suited for Barents Sea, North’s core home market EM an integral part of North’s exploration strategy Cooperate with EMGS on existing EM d
Slide 9: Technology arbitrage opportunity in Barents Sea
Technology arbitrage opportunity in Barents Sea Technology Partnership Barents Sea basin EM Barents Sea VD G&G Seismic Unique combination of EM, VD and G&G creates a technology arbitrage opportunity in the Barents Sea North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northenergy.no 9
Slide 10: Table of content
Table of content North Energy in brief The transaction North Energy - status and strategy Summary Appendix Historic financials Other information North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northenergy.no 10
Slide 11: Increasing Barents Sea focus with enhanced technology and recapitalized balance sheet
Increasing Barents Sea focus with enhanced technology and recapitalized balance sheet Focus on North’s primary exploration region; the Barents Sea Build on strengths in region to add additional wells through farm-ins and licensing rounds Strengthened technical analysis of prospects through ada
Slide 12: North Energy with attractive and unique position in the Barents Sea
North Energy with attractive and unique position in the Barents Sea Strong northern Norwegian identity Strong local presence, area knowledge and focus on coastal protection Contribute to industrial value creation in northern Norway Headquartered in Alta with regional office in Tromsø North
Slide 13: Strategic position in northern Norway demonstrated in recent licensing rounds
Strategic position in northern Norway demonstrated in recent licensing rounds 2013 22nd round awards Barents Sea awards since start-up Statoil 19 North Energy 14 OMV 13 Eni 12 Det norske 8 GDF Suez 7 Rocksource 7 Lundin 7 Wintershall 6 Edison 6 0 5 10 15 20 Six Barents Sea license awards in the 22
Slide 14: North's recent Barents Sea awards close to discoveries
North’s recent Barents Sea awards close to discoveries Well positioned with the license awards in the 22nd round At least three wells Større skrift! expected within next two years Several oil indications in new licenses North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northener
Slide 15: The EMGS library gives North a competitive edge in the Barents Sea
The EMGS library gives North a competitive edge in the Barents Sea 110 blocks covered > 30.000 km2 57 open blocks Strong technology track record EM results in Barents Sea substantiate a significant increase in drilling success rates Five North licenses covered by EMGS’ EM library EMGS EM
Slide 16: EM data - an effective exploration tool in the Barents Sea
EM data - an effective exploration tool in the Barents Sea Powerful exploration tool in shallow hydrocarbon basins such as the Barents Sea To be integrated into North’s exploration strategy Accurate volume indication Effective in combination with conventional seismic and VD Technology prov
Slide 17: VD - a powerful seismic data processing tool
VD - a powerful seismic data processing tool Searches for «resonance» in conventional seismic data Used on 2D and 3D data Analysis of 500 km2/week Direct indicator of source, migration and accumulation of oil Calculates frequency of oil from existing seismic data Two years of dry well in
Slide 18: VD predictive power
VD predictive power Auto-picked seismic horizon compared to VD oil saturation indication suggested oil saturation by VD VD clearly indicating location of oil in reservoir Detects oil only, not gas No indication means no oil North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.nor
Slide 19: Comparison of VD and EM on well to be drilled in August
Comparison of VD and EM on well to be drilled in August EM anomaly VD anomaly Note: North has 20% stake EM anomaly clearly indicating large volumes of oil or gas; VD indicating location and frequency of oil in reservoir North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northenergy.no
Slide 20: Predictive power of two independent geophysical tools
Predictive power of two independent geophysical tools EM Barents Sea VD NCS 25 25 Dry Sub-commercial 20 20 Traces Commercial Commercial # of wells # of wells 15 15 10 10 5 5 0 0 Small prediction Large Prediction Oil prediction Dry prediction Matching results in 20 of 20 59 prospects; 41 drilled
Slide 21: North Energy Licenses
North Energy Licenses PL Name Operator NE share 299* Frode Talisman 10 % 450* Storebjørn Det Norske 20 % 498* Skagen Lotos 20 % 503 & Valberget Lotos 12,5 % 503 B 509 S & Albatross North Energy 40% 509 BS 510 Tvilling sør Maersk 20 % 535 & Norvarg Total 20 % 535 B 587 Grenoble Edison 40 % 590 Sierra
Slide 22: Management team
Management team Erik Karlstrøm Knut Sæberg CEO CFO Key experience: Key experience: 20 years of exploration with the RWE-Group as Started as CFO in 2009 deputy CEO in Egypt and portfolio manager Previously worked as CFO in the Optimera Before this, Mr. Karlstrøm worked for six years Group and
Slide 23: Q3 net cash position pre-transaction
Q3 net cash position pre-transaction Net cash* position Q3 2013 Q3 net cash position of NOK 174 million (pre-transactions) Unused exploration loan facility of NOK 348 million Unused convertible loan facility of NOK 271 million * Excluding convertible loan balance of NOK 29.1 million towards TG
Slide 24: Fully funded for 8–12 wells post-transaction
Fully funded for 8 – 12 wells post-transaction Q3 2013 net cash Balance sheet Private placement Off balance sheet position of NOK 174 million 700 680 Private placement 600 109 of NOK 285 million 66 500 EMGS, Rex and 56 TGS convertible 400 loans provides a 300 285 free cash potential of approx.
Slide 25: Table of content
Table of content North Energy in brief The transaction North Energy - status and strategy Summary Appendix Historic financials Other information North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northenergy.no 25
Slide 26: Summary
Summary Strengthen the company strategically, technologically and financially Positioned for technology arbitrage in Barents region Electromagnetic data (EM) Virtual Drilling (VD) NOK 360 million capital raising to become fully funded for 8–12 wells Subject to shareholder’s approval in t
Slide 27: Table of content
Table of content North Energy in brief The transaction North Energy - status and strategy Summary Appendix Historic financials Other information North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northenergy.no 27
Slide 28: Profit & Loss Q3 2013
Profit & Loss Q3 2013 NOK Million Q3 2013 Q2 2013 Q3 2012 2012 Profit 32,0 66,1 46,9 46,9 Sale of licenses Exploration expenses (36,5) (163,9) (92,7) (540,1) No drilling activity in Q3 2013 Payroll (11,8) (12,2) (16,6) (56,8) Other operating expenses (8,4) (8,3) (8,6) (41,1) EBITDA (24,7) (120,4) 71
Slide 29: Balance sheet 30 September 2013
Balance sheet 30 September 2013 NOK Million 30.09.2013 31.12.2012 31.12.2011 Assets Fixed Assets 447,8 304,2 418,6 Capitalized drilling cost Long term receivables 319,1 0,0 0,0 Tax receivable refund - Dec 2014 Short term receivables 548,0 540,6 608,4 Tax receivable refund - Dec 2013 Cash 15,7 28,5 3
Slide 30: Credit facility with Rex
Credit facility with Rex Covering seismic interpretation over the next four years using Virtual Drilling technology Credit facility of MNOK 100 No commitments or obligations 8% interest payable No installments, but with full repayment option 12 months net debt convertible at three specif
Slide 31: Credit facility with TGS
Credit facility with TGS Covering purchase of seismic data and services over four years Cash payment of 35% Credit facility of MNOK 200 No commitments or obligations 8% interest payable No installments, but with full repayment option 12 months net debt convertible at three specific dat
Slide 32: EMGS convertible bond
EMGS convertible bond Covering acquisition of EMGS’s Barents Sea EM data library Six months duration Convertible between four to six months post issue Conversion price of NOK 4.15 per share Interest of 6.0 % p.a. North Energy ASA · [email protected] · (+47) 78 60 79 50 · www.northenergy.
Slide 33: Risk factors
Risk factors SUMMARY OF RISK FACTORS Investing in north energy involves inherent risks. In the following a high level overview of risk factors is provided. A prospective investor should consider carefully the factors set out below and investigate further if the indicated risks may be relevant to the
Slide 34: Risk factors cont'd
Risk factors cont’d North Energy cannot accurately predict its future decommissioning liabilities. North Energy, through its license interests, is expected to assume additional decommissioning liabilities in respect of its future operations. It is, difficult to forecast accurately the costs that Nor
Slide 35: Risk factors cont'd
Risk factors cont’d North Energy holds a number of licenses in their initial terms. These phases of the term of a license require high levels of relatively speculative capital expenditure without a commensurate degree of certainty of a return on such investment, which may have a material adverse eff