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Second Quarter 2013
Philippe Probst, CEO
Tomas Hedström, CFO
Stockholm, 14 August 2013
Today’s four topics
2
Q2
>> AN EVENTFUL QUARTER
Strategic review, farm-out processes
and operational progress
>> FINANCIAL HIGHLIGHTS
Earnings, key ratios and one-offs
>> RIGHTS ISSUE
Strengthened balance sheet and short-term financing
>> WAY FORWARD
Medium to long-term outlook
Operational progress
Q1
4
An eventful second quarter
HIGHLIGHTS
• New Board of Directors and Management
Team
• Initiated review of strategy, assets,
organisation and financing
• Short-term funding to be secured through
rights issue and planned new bond
• Gunvor Group becoming major
shareholder with industry expertise
• Farm-out in Tunisia signed, ongoing
process in Denmark and Congo
• Oil discovery and new field on stream in
Equatorial Guinea
Farm-out of Tunisian offshore to EnQuest
5
• Farm-out of 70% of PA Resources working interest in the Zarat
permit and Didon concession
• Operatorship transferred to EnQuest
• Structured as two separate transactions, effective date 1 January
2013, subject to necessary approvals
• Cash consideration of USD 23 million for Didon
• Additional payment of USD 93 million for PA Resources’ share of
Zarat development cost
• Additional considerations of up to USD 133 million, contingent on
achieving certain revenue and cost targets
• EnQuest - an experienced operator with track record
• PA Resources retains significant share of upside in its remaining
30% interest
Farm-out agreement
with EnQuest
signed in late May
Consideration
Secures assets’
underlying value with
remaining upside
potential
• Located in the Gulf of Gabes within access to existing
infrastructure
• Appraised discoveries with 7 wells drilled
• Zarat: largest remaining Tunisian field to be developed
• Total gross recoverable hydrocarbons of c. 123 mmboe
(c. 40% liquids)
• 2 additional undeveloped discoveries with tie-back
potential to existing/planned infrastructure
• Additional prospects and leads
Zarat and Elyssa Fields
Tunisia: Overview of farmed-out assets
Zarat Permit
• Onstream since 1998, 31 mmbbl oil produced to date
• Current gross production of some 1,400 bopd (approx.
400 bopd to PA Resources after farm-out)
• Infill production well(s) and ESPs to extend field life
• Didon FSO-vessel currently undergoing recertification
programme, field shut down until late September
BRING
MAP
6
Producing Didon Field
Tunisia: Significant onshore exploration acreage
Tunis
Sfax
4
3
1
2
Algeria Libya
Tunisia
1
Makthar Permit
Tunis
Sfax
4
3
1
2
Algeria Libya
Tunisia
Producing Asset
1
1
Jelma Permit
2
1
Douleb, Semmama
& Tamesmida
3
1
Jenein Centre Permit
4
Exploration Acreage
PA Resources onshore assets:
• Douleb, Semmama and Tamesmida (DST)
in production since late sixties. Current
production around 400 bopd
• Permits extended to 2035. Field reviews
initiated.
• Surrounding Makthar and Jelma permits
cover areas of 7,216 km² and 3,828 km²
• Seismic programme to mature prospects
and to identify deep potential
• Jenein Centre:
» Discovery in Accacus play
» Importance/extend to be assessed
» Additional prospectivity,
» Commitments fulfilled for current period
(to 2015)
7
8
Congo – Azurite field has reached its economic limit
PA Resources 35%
• Full field development reached in 2011
• Disappointing production performance due
to severe reservoir problems
• Remedial sidetrack failed in early 2013
• Total field recovery now estimated at <17 mmbbl,
compared with the initial plan of 40-98 mmbbl
• Plans for abandonment are well-advanced.
Expected to commence in H2 2013
• Final lifting in H2 2013 expected to mainly cover
PA Resources’ share of abandonment cash cost.
• Further provisions may be necessary.
Licence Group: Operator Murph Oil (50%),
PA Resources 35%, SNPC (15%)
Azurite field
Congo – MPS farm-out process initiated
PA Resources 85%
• Following Murphy’s withdrawal, PA Resources
obtained additional 50% working interest and
operatorship
• Second exploration phase extended until
November 2013, allowing time to assess
exploration potential and offering a farm-out to
industry
• Data room closed, visited by 14 Companies.
Awaiting responses
• Decision point expected in Q3 2013 whether to
enter the third and final exploration period which
carries one firm well commitment
• A possible relinquishment would give rise to an
impairment loss of current book value of approx.
SEK 800 million
9
Licence Group: Operator PA Resources (85%), SNPC (15%)
Mer Profonde Sud – exploration licence area
10
EG – Production summary Aseng Field
PA Resources 5.7.%
• Total field production of 36.8 mmbo since start
in November 2011 (+2 mmbo to PA Resources)
• Initial plateau level of around 50,000 was
increased to around 60,000
• Field began coming of plateau in April 2013,
average production of 50,000 bopd in Q2 2013
(2,850 bopd net to PA Resources)
• Production reduced due to increased associated
gas production having reached facility’s capacity
• Profitable barrels and frequent liftings
• Investments recovered in 2012, current
investments recovered almost immediately
Aseng field in Bock I
Licence Group: Operator Noble Energy (38%), Atlas Petroleum
(27.55%), Glencore (23.75%), PA Resources (5.7%),
GEPetrol (5%)
11
EG – Production commenced at the Alen field
PA Resources 0.29%
• Production commenced in Q3 2013
• Volumes slowly ramped up optimising all
major component systems, full operations
expected later in Q3 2013
• Alen field production contribution to PA
Resources modest ( ~100 bopd at peak
condensate production level)
• Sharing of facilities and costs with Aseng field
expected to reduce Aseng operating costs in
excess of USD 3 million for PA Resources
• Alen field development project delivered
ahead of schedule and slightly below
sanctioned cost of USD 1,370 million
(PA Resources’ share approx. USD 4.1 million)
Alen Field Unitisation: Operator Noble Energy (44.65%),
GEPetrol (28.75%), Glencore (27.55%), Atlas Petroleum (1.38%),
PA Resources (0.285%),
Alen field in Bock I/Block O
EG Block I – Successful drilling campaign underway
PA Resources 5.7%
Progressing two exciting fields towards development
1. Carla North and South exploration/appraisal
» 2011 discovery in adjacent Block O (’Carla
North’) appraised in 2013 with additional oil
reservoir found
» Carla South exploration well in Block I and
its sidetrack encountered oil in two different
good quality sandstone reservoirs
» Implication of results being evaluated
2. Diega appraisal
» Appraisal well currently being drilled
» Plans to perform a long-term flow test
following the drilling of a horizontal reservoir
penetration
12
Licence Group: Operator Noble Energy (38%), Atlas Petroleum
(27.55%), Glencore (23.75%), PA Resources (5.7%),
GEPetrol (5%)
Block I Drilling program
Carla South
1 2
Diega
Denmark 12/06 – Farm-out negotiations ongoing
PA Resources Operator with 64%
• 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 towards a
decision in Q1 2014 on either appraisal drilling or to move
into development Front End Engineering Design (FEED)
• Ongoing discussions with owners of infrastructure within
reach for a potential tie- back
• Wells established 35 API oil in Miocene sandstone
at c. 900m – exceptionally light oil for shallow depth
• Remaining deeper potential in Chalk and Middle Jurassic
• Efforts to locate available rig for appraisal drilling continue
for a 2014 drilling campaign
• Negotiations regarding a farm-out of a 40% interest
ongoing
13
Licence Group: Operator PA Resources (64%), Nordsøfonden
(20%), Spyker Energy (8%), Danoil (8%)
B20008-73
12/06 Broder Tuck-2
Lille John-1
Broder Tuck
Lille John
12/06 farm-out
Financial highlights
Q1
15
Production and sales in Q2
bopd Ytd
2013
Q2
2013
July
2013
West Africa 4,300 4,000 3,800
North Africa 800 800 400
Group Total 5,100 4,800 4,200
• ASENG: Oil production constrained by associated
gas production having reached facility’s capacity
• AZURITE: Declining production, field reached its
economic limit, abandonment planning underway
• PRICE: PA Resources realised price of USD 103
per barrel compared to Brent average of USD 102
• TUNISIA: Shut down of Didon on1 July due to
maintenance work programme with expected
completion in late September
Average production (bopd)
Average sales price (USD/bbl)
0
2 000
4 000
6 000
8 000
10 000
12 000
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
120
109 109 106
113
103
119
108 109 110 113
102
20
40
60
80
100
120
140
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
PA Resources Brent
Earnings and key ratios
16
Q2 2013 Q1 2013
Production (bopd)* 4,800 5,600
Oil price (USD/barrel) 103 113
Revenue (SEK million) 332 446
EBITDA (SEK million)** 140 242
Profit before tax
(SEK million)***
-2 131
Profit for the period
(SEK million)
-350 34
Earnings per share (SEK)**** -12.37 1.50
* 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.
The production numbers have been retrospectively adjusted to a 30% interest as per 1
January 2013.
** Figures for Q2 exclude non-cash, one-off costs of SEK 462 million
*** Figures for Q2 and Q1 exclude non-cash, one-off costs of SEK 647 million and SEK 21
million respectively.
**** The reverse share split in May 2013 gave rise to retrospective adjustments
KEY COMMENTS Q2 vs Q1
• Revenue negatively impacted by lower
production and lower sales price
• Capital loss from Tunisian farm-out:
before tax SEK -462 million and after
tax SEK -117 million, presented as
one-off costs
• Impairment loss of SEK 97 million due
to relinquished Greenlandic licence
2008/17 (Block 8), and of SEK 88
million due to impairment of Danish
licence 9/06, presented as one-off
costs
Q2 & Q1 comparison after one-offs
17
SEK million Q2 2013 Q1 2013
Profit for the period -350 34
One-off costs
Azurite 0 21
9/06 (Gita) 88 0
2008/17 (Block 8) 97 0
Tunisian farm-out 117 0
-48 55
Net exchange gains/losses 3 -45
Didon 70% net result impact 8 -5
Profit for the period
(Adjusted)
-38 6
KEY COMMENTS
• Adjusted profit for Q2 and Q1 amounted
to SEK -38 million and SEK 6 million
respectively
• Difference of SEK -44 million is mainly
explained by lower adjusted revenue of
SEK 63 million
Q2 2013 Q1 2013
Production (bopd) 4,800 5,600
Oil price USD(barrel) 103 113
Currency (USDSEK) 6.50 6.43
Q2 adjusted P&L
18
SEK million Q2 2013 Adjustments Q2 adjusted
Revenue 332 -31 301
Capital loss -462 462 0
Cost of sales & other
expenses
-192 11 -180
Depreciation & WD -246 206 -40
Operating profit -568 650 81
Total financial items -81 6 -75
Profit before income tax -648 656 6
Income tax 298 -343 -45
Profit for the period -350 313 -38
KEY COMMENTS
• Adjusted profit for the second quarter
amounted to SEK -38 million.
• Adjustment made for the following
figures:
» Tunisian farm-out:
1. Capital loss of SEK -462 million
reversed deferred tax liability of
SEK 345 million
2. Didon impact 2 months of 100%
(row by row)
» Write-downs of SEK -185 million
» FX effects of SEK -3 million
Cash flow
19
SEK million Q2 2013 Q1 2013 H1 2012
Cash flow from operations -27 -70 -98
Capex -38 -58 -96
New share issue 0 604 604
Loans raised 38 0 38
Amortisation of debt -121 -245 -365
Cash flow from financing -83 359 276
Net cash flow -149 231 82
KEY COMMENTS
• Q2 capex of SEK 38 million, mainly in
Alen, Aseng and 12/06
• Full year capex forecast of SEK 250-380
million, expected outcome at the lower
part of the range
• Amortisations of SEK 121 million in Q2
• Cash and cash equivalents at the end of
the period, SEK 141 million
Current equity and debt situation
20
KEY COMMENTS
• Equity just below SEK 2,000 million
• Granted waiver and amendment to reduce
covenant to SEK 1,000 million, conditional
upon rights issue completion in Q3
• NOK bond amortisation of SEK 101 million
in Q2
• Rights issue in Q3 of SEK 891 million
before transaction costs
• New bond loan of up to SEK 1 billion to
be issued in September
Q2 2013 Q1 2013 Q4 2012 Covenants
Book Equity (SEK
million)
1, 973 2,201 1,590 >2,000
Book Equity to
Capital Employed
46% 48% 37% >40%
Net debt (SEK million) 2,197 2,111 2,630 N/A
Covenants and Net Debt development
0
100
200
300
400
500
600
700
800
900
October 2013 January 2014 April 2014
Bond Loan 900m NOK
Bond Loan 850m SEK
Convertible Bond
Debt maturity (SEK million)
Reserves and resources after Tunisian farm-out
21
KEY COMMENTS
• 2P reserves reduced from
55.7 to 23.5 mmboe
• Contingent resources
reduced from 142 to
78 mmboe
mmboe Reserves
Contingent
resources
Key assets
1P 2P 2C
North Africa 11.0 16.2 27 Zarat, Elyssa, Didon
West Africa 4.9 7.3 18
Aseng, Alen, Diega,
Yolanda, Azurite
North Sea 0.0 0.0 34 Broder Tuck, Lille John
Total 15.9 23.5 78
Capital expenditure 2013
Actual Forecasted
Capex development and forecast (SEK million) KEY COMMENTS
• Capex in Q2 amounted to SEK 38 million
and for H1 period to SEK 96 million
• Main part of Q2 investments relates to
the Alen and Aseng fields in EG and
preparatory activities ahead of on Danish
licence 12/06
• 2013 forecast of SEK 250 – 380 million
unchanged, with outcome expected in the
lower part of the range
22
58
1,613
255
96
250-380
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2011 2012 2013
Rights issue
Q1
Minimum funding requirements of SEK 1.7 billion
24
-0.8
Estimated funding need Q3 2013 until year-end 2014 (SEK billion)
-0.8
-0.8
Assumptions for cash projection:
• Minimum funding requirements Q3
2013 – Q4 2014 are based on:
» Best estimate of production
profiles
» Oil price level of USD 100
» Current committed capex
» Does not include planned, but
not yet committed capex
Commited investment plan: Q3 2013-Q4 2014
25
*12/06 wells assume carry through farm-out
DRILLING PROGRAM/FIRM WELLS:
Tunisia:
Didon
Didon 2014 Development/1
Tunisia:
Zarat
Elyssa
2014
2015
Appraisal/1
Exploration/1
Tunisia:
Makthar
2014/
2015
Exploration/1
EG:
Block I
Diega Ongoing Appraisal/1
Denmark:
12/06*
Lille John 2014
Appraisal/
Exploration/1-2
Tunisia offshore: • Didon field: ESP + infill well
• Zarat permit: Elyssa appraisal well
and exploration well
Tunisia onshore
exploration:
• Seismic and exploration well
EG:
• Block I development (Alen),
exploration and appraisal (Carla
South and Diega)
Congo:
• MPS licence
reprocessing/interpretation of
seismic
Denmark:
• 12/06 work program ahead of
drilling
Committed capex projects – Total of USD 100 million
Rights issue key facts
• Shareholders with 17% holding/votes have committed to subscribe for their
pro rata share
• Remainder is underwritten by Gunvor Group, Lorito Holdings and a guarantee
consortium put together by Carnegie Investment Bank
• Each existing share will entitle to subscribe for 3 new shares at SEK 10.50
per new share
• Rights issue carried out at discount of approx. 19% to the theoretical
ex-rights price based on closing share price on 4 June 2013
• EGM on 5 July resolved on the rights issue
26
Rights issue of SEK 891 million fully underwritten
Debt refinancing
27
• PA Resources has secured commitments from two larger institutional
investors for undertakings in excess of SEK 500 million
• Terms for the bond undertakings similar to terms for the current SEK bond but
with a minimum equity covenant of SEK 1,000 million instead of
SEK 2,000 million
• Waivers granted for both the NOK and SEK bond and amendment of terms
and conditions
New bond issue in September/October of up to SEK 1,000 million
Rights issue time table
28
» 14 August The prospectus is made public
» 15 August Record date to participate
» 19 August – 2 September Subscription period
» Around 5 September Announcement of outcome
Q2 Report and prospectus
made public
14 August
Record date
15 August
Subscription period
19 August – 2 September
Outcome announced
Around 5 September
Where to find more info
• Prospectus and subscription
forms available on
www.carnegie.se or
www.paresources.se
Trading in subscription rights
19 August – 28 August
Outlook
Q1
Medium to long-term Outlook
30
FIRST SCENARIO BASED
ON ONGOING REVIEW
• A comprehensive review is currently
undertaken by the board and
management
• Such review is not completed and
therefore the outlook presented can
be subject to changes
• The objective is to present investors
a realistic scenario based on reason-
able, not too optimistic assumptions
DIVERSIFIED PORTFOLIO OF ASSETS
• PA Resources has a relatively large,
diversified portfolio of assets, both in
terms of geography and maturity
• The portfolio contains several assets
with a high likelihood for production
in the next few years
• A number of these assets are included
in the outlook for estimating future
capex and production levels
• However, a number of assets have not
been included, could provide additional
production in the future
Outlook scenario Assumptions
31
Didon
Field*
 Continuing production with one in-fill well and successful ESP installations
Zarat
Permit*
 Development of the Zarat and Elyssa fields in 2015-2017
(Capex includes the drilling of two committed exploration wells)
 No ETAP back-in has been assumed (ETAP back-in would reduce projected
development costs and production level proportionally)
Block I
 Continuation of the current production from the Aseng and Alen fields
 Development of one notional additional field in Block I (e.g. Diega) with total reserves
of 30 mmboe in 2015-2017 (given results of recent wells, such additional development
is considered likely)
Denmark
12/06**
 Development of only one of the two discoveries made, with assumed total field
reserves of 32 mmboe
Tunisia
onshore
 The capex profile includes USD 23 million for committed exploration expenditures
onshore Tunisia in 2014 and 2015, no success assumed
* 30% Equity after farm-out. Work programme from the new operator EnQuest not yet available, may lead to changed
** PA Resources’ working interest is assumed to be 24 per cent after farm-out (appraisal wells carried)
Investment outlook: Medium to long-term
32
Capital expenditure plan (MUSD) • Total capital expenditures of
approx. USD 600 million until 2017
• Majority of capital expenditures are
related to development costs
• Successful rights issue in
combination with new bond loan
expected to finance plans until year-
end 2014
• Further funding required after 2014
• Limited maintenance expenditures
in 2018 and onwards
0
50
100
150
200
250
300
2013 2014 2015 2016 2017 2018
Projected Capex 2013 H1
Production projection: Medium to long-term
33
Production profile (barrels per day) • The scenario entails an average
production of approx. 15,000 – 20.000
boepd in 2018 to PA Resources
• It includes the following assets to be
developed into production (PA Resources’
share of reserves)
» Zarat field (13.7 mmboe in 2P and 6
mmboe in 2C), first oil 2017
» Elyssa field (16 mmboe in 2C),
first gas 2016
» Notional field in Block I (Diega or Carla
South), first oil 2017.
» Notional field in Danish licence 12/06
(Broder Tuck or Lille John), first gas
2018
0
5 000
10 000
15 000
20 000
25 000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Fields to be developed Currently producing
Outlook scenario: Risks and upside
34
» Reserves in undeveloped fields may be lower than
projected
» Capex higher than projected
» One or several of the assumed new field develop-
ments (Zarat, Elyssa, Block I, 12/06) may not be
realised
» General risks in project execution (in particular in
terms of schedule)
• As in any projection, the
presented scenario is
subject to various risk
• All risks presented are
usually attached to any
E&P project and forward
projection
Main risks
Outlook scenario: Risks and upside
35
» EnQuest’s track record could lead to potential increase in
Didon reserves through enhanced recovery and
extended field life
» Over-performance of one or more developments, e.g.
• EnQuest development plans may be more efficient
• The notional field development in Block I may be larger than
assumed (well results point in this direction)
» Gas developments and sales in Block I
» Success in one or more ventures currently assumed
abortive, e.g.
• Only one development assumed in the North Sea, whereas
PA Resources’ portfolio has four discoveries in Denmark, UK
and Netherlands
• Successful farm-out of MPS license (not assumed)
• Successful farm-out of and/or development(s) of Tunisian
onshore assets
ADDITIONAL UPSIDE
• The presented scenario
is relatively conservative
• Tangible upside not
considered
Significant upsides not included, such as:
PA Resources’ short-term focus
36
• Complete the rights issue
• Issue of new bond loan in
September/October
• Proceed ongoing 12/06 farm-out
negotiations and MPS farm-out process
• Nominate permanent CEO
• Map PA Resources’ medium-term way
forward
Thank you!
Q1Q3 Report on 23 October 2013

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Pa resources q2 2013 final_14 aug 2013

  • 1. Second Quarter 2013 Philippe Probst, CEO Tomas Hedström, CFO Stockholm, 14 August 2013
  • 2. Today’s four topics 2 Q2 >> AN EVENTFUL QUARTER Strategic review, farm-out processes and operational progress >> FINANCIAL HIGHLIGHTS Earnings, key ratios and one-offs >> RIGHTS ISSUE Strengthened balance sheet and short-term financing >> WAY FORWARD Medium to long-term outlook
  • 4. 4 An eventful second quarter HIGHLIGHTS • New Board of Directors and Management Team • Initiated review of strategy, assets, organisation and financing • Short-term funding to be secured through rights issue and planned new bond • Gunvor Group becoming major shareholder with industry expertise • Farm-out in Tunisia signed, ongoing process in Denmark and Congo • Oil discovery and new field on stream in Equatorial Guinea
  • 5. Farm-out of Tunisian offshore to EnQuest 5 • Farm-out of 70% of PA Resources working interest in the Zarat permit and Didon concession • Operatorship transferred to EnQuest • Structured as two separate transactions, effective date 1 January 2013, subject to necessary approvals • Cash consideration of USD 23 million for Didon • Additional payment of USD 93 million for PA Resources’ share of Zarat development cost • Additional considerations of up to USD 133 million, contingent on achieving certain revenue and cost targets • EnQuest - an experienced operator with track record • PA Resources retains significant share of upside in its remaining 30% interest Farm-out agreement with EnQuest signed in late May Consideration Secures assets’ underlying value with remaining upside potential
  • 6. • Located in the Gulf of Gabes within access to existing infrastructure • Appraised discoveries with 7 wells drilled • Zarat: largest remaining Tunisian field to be developed • Total gross recoverable hydrocarbons of c. 123 mmboe (c. 40% liquids) • 2 additional undeveloped discoveries with tie-back potential to existing/planned infrastructure • Additional prospects and leads Zarat and Elyssa Fields Tunisia: Overview of farmed-out assets Zarat Permit • Onstream since 1998, 31 mmbbl oil produced to date • Current gross production of some 1,400 bopd (approx. 400 bopd to PA Resources after farm-out) • Infill production well(s) and ESPs to extend field life • Didon FSO-vessel currently undergoing recertification programme, field shut down until late September BRING MAP 6 Producing Didon Field
  • 7. Tunisia: Significant onshore exploration acreage Tunis Sfax 4 3 1 2 Algeria Libya Tunisia 1 Makthar Permit Tunis Sfax 4 3 1 2 Algeria Libya Tunisia Producing Asset 1 1 Jelma Permit 2 1 Douleb, Semmama & Tamesmida 3 1 Jenein Centre Permit 4 Exploration Acreage PA Resources onshore assets: • Douleb, Semmama and Tamesmida (DST) in production since late sixties. Current production around 400 bopd • Permits extended to 2035. Field reviews initiated. • Surrounding Makthar and Jelma permits cover areas of 7,216 km² and 3,828 km² • Seismic programme to mature prospects and to identify deep potential • Jenein Centre: » Discovery in Accacus play » Importance/extend to be assessed » Additional prospectivity, » Commitments fulfilled for current period (to 2015) 7
  • 8. 8 Congo – Azurite field has reached its economic limit PA Resources 35% • Full field development reached in 2011 • Disappointing production performance due to severe reservoir problems • Remedial sidetrack failed in early 2013 • Total field recovery now estimated at <17 mmbbl, compared with the initial plan of 40-98 mmbbl • Plans for abandonment are well-advanced. Expected to commence in H2 2013 • Final lifting in H2 2013 expected to mainly cover PA Resources’ share of abandonment cash cost. • Further provisions may be necessary. Licence Group: Operator Murph Oil (50%), PA Resources 35%, SNPC (15%) Azurite field
  • 9. Congo – MPS farm-out process initiated PA Resources 85% • Following Murphy’s withdrawal, PA Resources obtained additional 50% working interest and operatorship • Second exploration phase extended until November 2013, allowing time to assess exploration potential and offering a farm-out to industry • Data room closed, visited by 14 Companies. Awaiting responses • Decision point expected in Q3 2013 whether to enter the third and final exploration period which carries one firm well commitment • A possible relinquishment would give rise to an impairment loss of current book value of approx. SEK 800 million 9 Licence Group: Operator PA Resources (85%), SNPC (15%) Mer Profonde Sud – exploration licence area
  • 10. 10 EG – Production summary Aseng Field PA Resources 5.7.% • Total field production of 36.8 mmbo since start in November 2011 (+2 mmbo to PA Resources) • Initial plateau level of around 50,000 was increased to around 60,000 • Field began coming of plateau in April 2013, average production of 50,000 bopd in Q2 2013 (2,850 bopd net to PA Resources) • Production reduced due to increased associated gas production having reached facility’s capacity • Profitable barrels and frequent liftings • Investments recovered in 2012, current investments recovered almost immediately Aseng field in Bock I Licence Group: Operator Noble Energy (38%), Atlas Petroleum (27.55%), Glencore (23.75%), PA Resources (5.7%), GEPetrol (5%)
  • 11. 11 EG – Production commenced at the Alen field PA Resources 0.29% • Production commenced in Q3 2013 • Volumes slowly ramped up optimising all major component systems, full operations expected later in Q3 2013 • Alen field production contribution to PA Resources modest ( ~100 bopd at peak condensate production level) • Sharing of facilities and costs with Aseng field expected to reduce Aseng operating costs in excess of USD 3 million for PA Resources • Alen field development project delivered ahead of schedule and slightly below sanctioned cost of USD 1,370 million (PA Resources’ share approx. USD 4.1 million) Alen Field Unitisation: Operator Noble Energy (44.65%), GEPetrol (28.75%), Glencore (27.55%), Atlas Petroleum (1.38%), PA Resources (0.285%), Alen field in Bock I/Block O
  • 12. EG Block I – Successful drilling campaign underway PA Resources 5.7% Progressing two exciting fields towards development 1. Carla North and South exploration/appraisal » 2011 discovery in adjacent Block O (’Carla North’) appraised in 2013 with additional oil reservoir found » Carla South exploration well in Block I and its sidetrack encountered oil in two different good quality sandstone reservoirs » Implication of results being evaluated 2. Diega appraisal » Appraisal well currently being drilled » Plans to perform a long-term flow test following the drilling of a horizontal reservoir penetration 12 Licence Group: Operator Noble Energy (38%), Atlas Petroleum (27.55%), Glencore (23.75%), PA Resources (5.7%), GEPetrol (5%) Block I Drilling program Carla South 1 2 Diega
  • 13. Denmark 12/06 – Farm-out negotiations ongoing PA Resources Operator with 64% • 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 towards a decision in Q1 2014 on either appraisal drilling or to move into development Front End Engineering Design (FEED) • Ongoing discussions with owners of infrastructure within reach for a potential tie- back • Wells established 35 API oil in Miocene sandstone at c. 900m – exceptionally light oil for shallow depth • Remaining deeper potential in Chalk and Middle Jurassic • Efforts to locate available rig for appraisal drilling continue for a 2014 drilling campaign • Negotiations regarding a farm-out of a 40% interest ongoing 13 Licence Group: Operator PA Resources (64%), Nordsøfonden (20%), Spyker Energy (8%), Danoil (8%) B20008-73 12/06 Broder Tuck-2 Lille John-1 Broder Tuck Lille John 12/06 farm-out
  • 15. 15 Production and sales in Q2 bopd Ytd 2013 Q2 2013 July 2013 West Africa 4,300 4,000 3,800 North Africa 800 800 400 Group Total 5,100 4,800 4,200 • ASENG: Oil production constrained by associated gas production having reached facility’s capacity • AZURITE: Declining production, field reached its economic limit, abandonment planning underway • PRICE: PA Resources realised price of USD 103 per barrel compared to Brent average of USD 102 • TUNISIA: Shut down of Didon on1 July due to maintenance work programme with expected completion in late September Average production (bopd) Average sales price (USD/bbl) 0 2 000 4 000 6 000 8 000 10 000 12 000 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 120 109 109 106 113 103 119 108 109 110 113 102 20 40 60 80 100 120 140 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 PA Resources Brent
  • 16. Earnings and key ratios 16 Q2 2013 Q1 2013 Production (bopd)* 4,800 5,600 Oil price (USD/barrel) 103 113 Revenue (SEK million) 332 446 EBITDA (SEK million)** 140 242 Profit before tax (SEK million)*** -2 131 Profit for the period (SEK million) -350 34 Earnings per share (SEK)**** -12.37 1.50 * 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. The production numbers have been retrospectively adjusted to a 30% interest as per 1 January 2013. ** Figures for Q2 exclude non-cash, one-off costs of SEK 462 million *** Figures for Q2 and Q1 exclude non-cash, one-off costs of SEK 647 million and SEK 21 million respectively. **** The reverse share split in May 2013 gave rise to retrospective adjustments KEY COMMENTS Q2 vs Q1 • Revenue negatively impacted by lower production and lower sales price • Capital loss from Tunisian farm-out: before tax SEK -462 million and after tax SEK -117 million, presented as one-off costs • Impairment loss of SEK 97 million due to relinquished Greenlandic licence 2008/17 (Block 8), and of SEK 88 million due to impairment of Danish licence 9/06, presented as one-off costs
  • 17. Q2 & Q1 comparison after one-offs 17 SEK million Q2 2013 Q1 2013 Profit for the period -350 34 One-off costs Azurite 0 21 9/06 (Gita) 88 0 2008/17 (Block 8) 97 0 Tunisian farm-out 117 0 -48 55 Net exchange gains/losses 3 -45 Didon 70% net result impact 8 -5 Profit for the period (Adjusted) -38 6 KEY COMMENTS • Adjusted profit for Q2 and Q1 amounted to SEK -38 million and SEK 6 million respectively • Difference of SEK -44 million is mainly explained by lower adjusted revenue of SEK 63 million Q2 2013 Q1 2013 Production (bopd) 4,800 5,600 Oil price USD(barrel) 103 113 Currency (USDSEK) 6.50 6.43
  • 18. Q2 adjusted P&L 18 SEK million Q2 2013 Adjustments Q2 adjusted Revenue 332 -31 301 Capital loss -462 462 0 Cost of sales & other expenses -192 11 -180 Depreciation & WD -246 206 -40 Operating profit -568 650 81 Total financial items -81 6 -75 Profit before income tax -648 656 6 Income tax 298 -343 -45 Profit for the period -350 313 -38 KEY COMMENTS • Adjusted profit for the second quarter amounted to SEK -38 million. • Adjustment made for the following figures: » Tunisian farm-out: 1. Capital loss of SEK -462 million reversed deferred tax liability of SEK 345 million 2. Didon impact 2 months of 100% (row by row) » Write-downs of SEK -185 million » FX effects of SEK -3 million
  • 19. Cash flow 19 SEK million Q2 2013 Q1 2013 H1 2012 Cash flow from operations -27 -70 -98 Capex -38 -58 -96 New share issue 0 604 604 Loans raised 38 0 38 Amortisation of debt -121 -245 -365 Cash flow from financing -83 359 276 Net cash flow -149 231 82 KEY COMMENTS • Q2 capex of SEK 38 million, mainly in Alen, Aseng and 12/06 • Full year capex forecast of SEK 250-380 million, expected outcome at the lower part of the range • Amortisations of SEK 121 million in Q2 • Cash and cash equivalents at the end of the period, SEK 141 million
  • 20. Current equity and debt situation 20 KEY COMMENTS • Equity just below SEK 2,000 million • Granted waiver and amendment to reduce covenant to SEK 1,000 million, conditional upon rights issue completion in Q3 • NOK bond amortisation of SEK 101 million in Q2 • Rights issue in Q3 of SEK 891 million before transaction costs • New bond loan of up to SEK 1 billion to be issued in September Q2 2013 Q1 2013 Q4 2012 Covenants Book Equity (SEK million) 1, 973 2,201 1,590 >2,000 Book Equity to Capital Employed 46% 48% 37% >40% Net debt (SEK million) 2,197 2,111 2,630 N/A Covenants and Net Debt development 0 100 200 300 400 500 600 700 800 900 October 2013 January 2014 April 2014 Bond Loan 900m NOK Bond Loan 850m SEK Convertible Bond Debt maturity (SEK million)
  • 21. Reserves and resources after Tunisian farm-out 21 KEY COMMENTS • 2P reserves reduced from 55.7 to 23.5 mmboe • Contingent resources reduced from 142 to 78 mmboe mmboe Reserves Contingent resources Key assets 1P 2P 2C North Africa 11.0 16.2 27 Zarat, Elyssa, Didon West Africa 4.9 7.3 18 Aseng, Alen, Diega, Yolanda, Azurite North Sea 0.0 0.0 34 Broder Tuck, Lille John Total 15.9 23.5 78
  • 22. Capital expenditure 2013 Actual Forecasted Capex development and forecast (SEK million) KEY COMMENTS • Capex in Q2 amounted to SEK 38 million and for H1 period to SEK 96 million • Main part of Q2 investments relates to the Alen and Aseng fields in EG and preparatory activities ahead of on Danish licence 12/06 • 2013 forecast of SEK 250 – 380 million unchanged, with outcome expected in the lower part of the range 22 58 1,613 255 96 250-380 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2011 2012 2013
  • 24. Minimum funding requirements of SEK 1.7 billion 24 -0.8 Estimated funding need Q3 2013 until year-end 2014 (SEK billion) -0.8 -0.8 Assumptions for cash projection: • Minimum funding requirements Q3 2013 – Q4 2014 are based on: » Best estimate of production profiles » Oil price level of USD 100 » Current committed capex » Does not include planned, but not yet committed capex
  • 25. Commited investment plan: Q3 2013-Q4 2014 25 *12/06 wells assume carry through farm-out DRILLING PROGRAM/FIRM WELLS: Tunisia: Didon Didon 2014 Development/1 Tunisia: Zarat Elyssa 2014 2015 Appraisal/1 Exploration/1 Tunisia: Makthar 2014/ 2015 Exploration/1 EG: Block I Diega Ongoing Appraisal/1 Denmark: 12/06* Lille John 2014 Appraisal/ Exploration/1-2 Tunisia offshore: • Didon field: ESP + infill well • Zarat permit: Elyssa appraisal well and exploration well Tunisia onshore exploration: • Seismic and exploration well EG: • Block I development (Alen), exploration and appraisal (Carla South and Diega) Congo: • MPS licence reprocessing/interpretation of seismic Denmark: • 12/06 work program ahead of drilling Committed capex projects – Total of USD 100 million
  • 26. Rights issue key facts • Shareholders with 17% holding/votes have committed to subscribe for their pro rata share • Remainder is underwritten by Gunvor Group, Lorito Holdings and a guarantee consortium put together by Carnegie Investment Bank • Each existing share will entitle to subscribe for 3 new shares at SEK 10.50 per new share • Rights issue carried out at discount of approx. 19% to the theoretical ex-rights price based on closing share price on 4 June 2013 • EGM on 5 July resolved on the rights issue 26 Rights issue of SEK 891 million fully underwritten
  • 27. Debt refinancing 27 • PA Resources has secured commitments from two larger institutional investors for undertakings in excess of SEK 500 million • Terms for the bond undertakings similar to terms for the current SEK bond but with a minimum equity covenant of SEK 1,000 million instead of SEK 2,000 million • Waivers granted for both the NOK and SEK bond and amendment of terms and conditions New bond issue in September/October of up to SEK 1,000 million
  • 28. Rights issue time table 28 » 14 August The prospectus is made public » 15 August Record date to participate » 19 August – 2 September Subscription period » Around 5 September Announcement of outcome Q2 Report and prospectus made public 14 August Record date 15 August Subscription period 19 August – 2 September Outcome announced Around 5 September Where to find more info • Prospectus and subscription forms available on www.carnegie.se or www.paresources.se Trading in subscription rights 19 August – 28 August
  • 30. Medium to long-term Outlook 30 FIRST SCENARIO BASED ON ONGOING REVIEW • A comprehensive review is currently undertaken by the board and management • Such review is not completed and therefore the outlook presented can be subject to changes • The objective is to present investors a realistic scenario based on reason- able, not too optimistic assumptions DIVERSIFIED PORTFOLIO OF ASSETS • PA Resources has a relatively large, diversified portfolio of assets, both in terms of geography and maturity • The portfolio contains several assets with a high likelihood for production in the next few years • A number of these assets are included in the outlook for estimating future capex and production levels • However, a number of assets have not been included, could provide additional production in the future
  • 31. Outlook scenario Assumptions 31 Didon Field*  Continuing production with one in-fill well and successful ESP installations Zarat Permit*  Development of the Zarat and Elyssa fields in 2015-2017 (Capex includes the drilling of two committed exploration wells)  No ETAP back-in has been assumed (ETAP back-in would reduce projected development costs and production level proportionally) Block I  Continuation of the current production from the Aseng and Alen fields  Development of one notional additional field in Block I (e.g. Diega) with total reserves of 30 mmboe in 2015-2017 (given results of recent wells, such additional development is considered likely) Denmark 12/06**  Development of only one of the two discoveries made, with assumed total field reserves of 32 mmboe Tunisia onshore  The capex profile includes USD 23 million for committed exploration expenditures onshore Tunisia in 2014 and 2015, no success assumed * 30% Equity after farm-out. Work programme from the new operator EnQuest not yet available, may lead to changed ** PA Resources’ working interest is assumed to be 24 per cent after farm-out (appraisal wells carried)
  • 32. Investment outlook: Medium to long-term 32 Capital expenditure plan (MUSD) • Total capital expenditures of approx. USD 600 million until 2017 • Majority of capital expenditures are related to development costs • Successful rights issue in combination with new bond loan expected to finance plans until year- end 2014 • Further funding required after 2014 • Limited maintenance expenditures in 2018 and onwards 0 50 100 150 200 250 300 2013 2014 2015 2016 2017 2018 Projected Capex 2013 H1
  • 33. Production projection: Medium to long-term 33 Production profile (barrels per day) • The scenario entails an average production of approx. 15,000 – 20.000 boepd in 2018 to PA Resources • It includes the following assets to be developed into production (PA Resources’ share of reserves) » Zarat field (13.7 mmboe in 2P and 6 mmboe in 2C), first oil 2017 » Elyssa field (16 mmboe in 2C), first gas 2016 » Notional field in Block I (Diega or Carla South), first oil 2017. » Notional field in Danish licence 12/06 (Broder Tuck or Lille John), first gas 2018 0 5 000 10 000 15 000 20 000 25 000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Fields to be developed Currently producing
  • 34. Outlook scenario: Risks and upside 34 » Reserves in undeveloped fields may be lower than projected » Capex higher than projected » One or several of the assumed new field develop- ments (Zarat, Elyssa, Block I, 12/06) may not be realised » General risks in project execution (in particular in terms of schedule) • As in any projection, the presented scenario is subject to various risk • All risks presented are usually attached to any E&P project and forward projection Main risks
  • 35. Outlook scenario: Risks and upside 35 » EnQuest’s track record could lead to potential increase in Didon reserves through enhanced recovery and extended field life » Over-performance of one or more developments, e.g. • EnQuest development plans may be more efficient • The notional field development in Block I may be larger than assumed (well results point in this direction) » Gas developments and sales in Block I » Success in one or more ventures currently assumed abortive, e.g. • Only one development assumed in the North Sea, whereas PA Resources’ portfolio has four discoveries in Denmark, UK and Netherlands • Successful farm-out of MPS license (not assumed) • Successful farm-out of and/or development(s) of Tunisian onshore assets ADDITIONAL UPSIDE • The presented scenario is relatively conservative • Tangible upside not considered Significant upsides not included, such as:
  • 36. PA Resources’ short-term focus 36 • Complete the rights issue • Issue of new bond loan in September/October • Proceed ongoing 12/06 farm-out negotiations and MPS farm-out process • Nominate permanent CEO • Map PA Resources’ medium-term way forward
  • 37. Thank you! Q1Q3 Report on 23 October 2013