PA Resources Q3 Interim report
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Transcript of PA Resources Q3 Interim report
PA Resources – Q3 Report
Q3 Presentation
29 October 2014
Laying the
Foundations
• Short term finance
• New leadership
• Portfolio
rationalisation
A period of change – for long term success
Building the platform
• Exploration and Appraisal drilling
• Development Plans completed
• Project execution underway
• Focus on Europe, North & West Africa
• Licence Round applications
• Review value enhancing M&A opportunities
Sustainable Future
• Increased and stable
production
• Projects funded from
cash flow
• Growth opportunities
2013 2014 - 2016 2017>
Short term focus
• Completed third party reserves audit
• Long term finance plan
• Resolving Tunisian situation
Third Party Reserves Audit Completed
3
Reserves and Resources audited by ERCE
during Q3, final figures released on Oct 1st
2014
PA first comprehensive reserves audit
performed by ERCE provide a reliable
overview of PA asset portfolio
Technical assessment of the assets has
been thorough and was undertaken over a
period of 4-5 months
Asset valuation of the assets were also
audited by ERCE, this work included a
review of development scenarios, cost
profiles and fiscal terms
ERCE report available on our web page
West Africa North Africa North Sea
Aseng Didon Broder Tuck
Alen DST Lille John
Diega Zarat
Block I Gas Elyssa
Didon North
El Nisr
Assets under review
Reserves and Contingent Resources – Summary
4
Assumptions going into
the review and valuation
of the core assets can be
found in the ERCE report
available on PA
Resources’ web page,
www.paresources.se
• Total unrisked portfolio NPV10 from core 2P+2C assets of USD 583 million
• Unrisked NPV10 values of development assets are not reflective of monetisable values today
» Significant amounts of capital will need to be deployed in order to realise the value of the portfolio
» Value estimates on certain assets are subject to successful appraisal drilling
1P 2P 3P 1C 2C 3C 1C 2C 3C 1P + 1C 2P + 2C 3P + 3C
mmbbl mmbbl mmbbl mmbbl mmbbl mmbbl bscf bscf bscf MUSD MUSD MUSD
Aseng 2.9 4.4 5.6 0.9 0.9 1.0
Alen 0.1 0.1 0.1 -- -- --
Diega -- -- -- 1.5 2.9 5.5
Block I gas -- -- -- -- -- -- 39 52 80
Didon 0.3 0.4 0.5 0.8 1.2 1.8 -- -- -- -5 15 40
DST 1.2 1.8 2.2 0.6 0.9 1.2 -- -- -- 13 21 30
Zarat -- -- -- 7.5 10.9 22.7 32 49 75 91 158 211
Elyssa -- -- -- 1.0 1.7 2.9 41 67 109 24 54 94
Didon North -- -- -- 0.4 0.8 1.8 -- -- -- n/a n/a n/a
El Nisr -- -- -- 0.3 0.4 0.5 5 8 11 n/a n/a n/a
Broder Tuck -- -- -- 0.9 1.2 1.8 18 25 33 41 53 81
Lille John -- -- -- 3.3 5.9 10.6 1 2 4 59 95 182
4.5 6.8 8.4 17.1 26.6 49.8 137 203 311 350 583 870
Denmark
Contingent Resources
Oil + Condensate GasOil + CondensateCountry Asset
Reserves NPV10
Equatorial
Guinea232
Tunisia
128 187
Material investments to realise portfolio values
5
• Over the next four years PA forecasts that it
will need to invest USD ~460 million to take
its key assets into production
» West Africa: USD ~60 million on further
developing Block I including the Diega field
» North Africa: USD ~160 million on developing
the Zarat and Elyssa fields as well as drilling
new wells on the Didon and DST fields
» North Sea: USD ~240 million on developing
the Broder Tuck and Lille John fields
• Over the same four year period PA
estimates cash flow from operations of USD
~270 million
• The cash flow forecast is based on the
audited 2P/2C cases and both amounts and
timing may change until the projects are
sanctioned
Cash flow from 2P Reserves + 2C Resources
-300
-200
-100
0
100
200
300
400
500
600
2015 2016 2017 2018 2019 2020 2021 2022
Cash Flow on 2P/2C Case at $100/bbl oil (MUSD)
West Africa CAPEX North Africa CAPEX North Sea CAPEX
Operations Cumulative Cash Flow
80
85
90
95
100
105
110
115
120
20
14
-01
20
14
-02
20
14
-03
20
14
-04
20
14
-05
20
14
-06
20
14
-07
20
14
-08
201
4-0
9
20
14
-10
Brent Oil Price (USD/barrel)
Oil Price Sensitivity
6
Since the beginning of Q3 the oil price
has fallen significantly
The price assumption in the ERCE
review is $100/bbl, which was a
reasonable assumption at that point.
Current pricing of Brent forward shows
c. $90/bbl for 2016 and 2017
Based on the audited 2P/2C cases, a
$10/bbl reduction in oil price means a c.
USD 80 million decrease in core asset
NPV10
Net funding requirements also increase
with lower oil prices due to decreased
revenues.
$100/bbl $90/bbl $80/bbl
Didon 15 9 4
DST 21 18 14
Block I 187 166 145
Lille John 95 82 68
Broder Tuck 52 49 46
Zarat 158 135 115
Elyssa 54 43 30
TOTAL 583 501 423
Valuation Oil Price Sensitivity (MUSD)
ERCE review period
Financing
• As previously communicated, PA management has for the last year been working
on a financing plan designed to bring the Company’s portfolio of development
assets into production
• The financing plan will require a significant amount of new equity to fund the field
developments, and the Board expects that the Company’s debt position will also
have to be addressed
• With continued uncertainty related to approvals in Tunisia and the Company’s
overall debt position, PA is not well placed to raise new equity
• Therefore, to maintain liquidity until the uncertainty in Tunisia is resolved and the
financing plan can be executed PA Resources proposed to its senior secured
creditor and the unsecured bondholders to defer interest payments until February
2015
7
Deferral of interest payments
• PA Resources summoned the bondholders of the NOK and SEK bond respectively
to bondholders’ meetings on 20 October
• The proposal was to defer interest payments of USD 21 million due in early
October until 5 February 2015. The deferred interest will bear interest equal to the
prevailing interest rate of each bond loan during the deferral period
• The proposal received approval from the bondholders of both the NOK and the
SEK bond
• Gunvor, the Company’s largest creditor through the secured RBL and working
capital facilities, has agreed that it will roll up unpaid interest (in total USD 1 million)
and future interest payments up to and including 5 February 2015
• A majority of the bondholders under each bond agreement and Gunvor as the
senior secured creditor are independently entitled to bring the 5 February 2015
interest payment date forward to an earlier date with a 30 days’ notice period
• Legal and financial advisors has been appointed to represent the bondholders
during the period where PA Resources sets out its long term financing plan
• PA Resources expects to have made significant progress in the financing
discussions by year end to allow for completion of the process before the Working
Capital Facility expires
8
Short term cash flow forecast
9
• USD 21 million cash position as of 30
September 2014
• Working Capital Facility is currently drawn
by USD 28 million of USD 50 million
available
• Free cash flow from operations for the
period Q3´14 to Q1´15 expected at USD -
35 million
» Cost has moved from Q3 into Q4
» Previous expectation of free cash flow of
USD -25 million for the same period
» USD 7 million of the USD 10 million
variance comes from lower oil price
• Minimum CAPEX to progress our
development projects forward
• Liquidity forecast assumes non-
completion of the transactions with
EnQuest plc and does not include USD 23
million transaction payment due at
completion of Didon farm-in
Liquidity estimate 30 June 2014 – 31 March 2015
Overview excludes repayment of Working Capital Facility 31 March 2015
30 June '14 Q3 '14 Q4 '14 Q1 '15
Operating and Investment Cash Flow -26 -22 12
Financing
WCF drawdown 8 7 --
Interest payments -2 -- --
Cash Balance 41 21 7 19
WCF Balance 20 28 35 35
Asset update
10
• Tunisia
» Successful installation of an ESP on well D6 on the Didon field
» D6 well so far producing slightly above expected flow rates
» A further ESP installation is planned for 2015
» Closing of Didon transaction, confirmation of non-objection still not obtained
» Approval of Zarat permit extension is now on hold pending parliamentary
elections on October 26th
» Approval is not expected until the new assembly is in place
• Denmark
» Plans on track for drilling of appraisal well on Lille John in Q4
» PA Resources to be fully carried through this appraisal drilling
» Application for the Danish 7th Round
2014 Progress
Exploration
West Africa
• Close farm-out to SOCO
• Confirm MPS drilling target
• Secure rig for MPS well
• Acquire Block I 3D seismic
Tunisia Onshore
• Plan seismic programme
• Execute seismic programme
North Sea
• Evaluate Danish 7th round
• Apply in UK 28th round
11
Appraisal & Development
Block I
• Submit Diega POD
Zarat
• Close EnQuest farm-out
• Complete UUOA
• Submit Zarat POD
Elyssa
• Plan appraisal well
• Secure rig for appraisal well
Lille John
• Close Dana farm-out
• Develop drilling plan
• Drill appraisal well
Broder Tuck
• Pre-Development evaluation
Birgitta
• Investigate export options
• Initiate development planning if justified
Production
Didon
• Close EnQuest farm-out
• Install ESP
• Install additional ESP or drill well
Tunisian Onshore
• Review DST fields
• Identify enhancement opportunities
West Africa
• Drill Alen production well
Financial highlights
Q1
106
113
103
108
106
109 108
100
110
113
102
110 109108
110
102
90
95
100
105
110
115
120
Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14
Average sales price (USD/bbl)
PA Sales Brent
13
Production and prices in Q3
• ASENG: Continued natural decline.
• TUNISIA: ESP successfully installed and
started during last week of the quarter.
• AZURITE: Production ceased November 2013.
• PRICE: Decline in line with Brent.
• CURRENCY: Stronger USD
5,6
00
4,80
0
4,2
00
3,60
0
3,4
00
3,20
0
3,10
0
1,2
00
600
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14
Average production (boepd)
PAR Production 70% Didon
6.52 6.52 6.716.43 6.51 6.51
6.747.24
4.20 4.08 4.04 3.90 3.94 4.10 4.02 4.03
1.17 1.11 1.11 1.07 1.06 1.08 1.10 1.12
31/12-12 31/3-13 30/6-13 30/9-13 31/12-13 31/3-14 30/6-14 30/9-14
Closing Day FX Rates
USD/SEK TND/SEK NOK/SEK
Income statement
14
SEK million Q3 2014 Q2 2014 Jan-Sep
2014
Jan-Sep
2013
Revenue 155 181 515 856
Production costs -49 -48 -134 -403
Depletion O&G -56 -39 -138 -162
Gross profit 51 94 243 292
Other income and
G&A0 -27 -54 -91
WD, Capital loss &
Decommissioning
costs
- - - -1,138
Operating profit 51 67 189 -938
Financial items -124 -87 -301 -143
Profit before tax -73 -19 -111 -1,081
Income tax -64 -7 -101 263
Profit for the period -138 -26 -212 -817
Q3 vs Q2
• Revenue decline due to lower production
and lower sales price.
• Other income and G&A includes reversed
Azurite provision of SEK 31m.
• Increase in depletion due to revised 2P.
• Financial items impacted by SEK -56m in
exchange losses vs. SEK -20m in Q2.
• Income tax negatively impacted by
reversed tax assets of SEK 50m.
2014 vs 2013
• Didon farm-out distorts comparison with
2013.
• SEK -793m capital loss, impairment and
decommissioning costs net after tax
included 2013.
• Financial items excluding exchange gains /
losses amounted to SEK -204m (-230).
Cash flow statement
15
SEK million Q3
2014
Q2 2014 Jan-Sep
2014
Jan-Sep
2013
CF from operations -118 45 -125 -110
Proceeds from farm out - 65 65 -
CAPEX -54 -43 -138 -171
Rights issue - - - 1,413
Loans raised 53 129 182 38
Amortisation of debt - -143 -237 -392
CF from financing 53 -14 -55 1,059
Net cash flow -119 53 -253 779
Q3 - 2014
• CF from operations SEK -118m:
• Tax payments SEK -102m, whereof
SEK -90m Block I
Interest payments c. SEK -10m
2014
• Capex SEK -138m:
Mainpart from Makthar seismic
acquisition and Block I (Diega)
• Loans raised Gunvor WCF $ 28m
• Amortized net NOK -127m and CB
SEK -94m
Balance sheet and covenants
16
SEK million 30 Sep
2014
31 Dec 2013
Non-current assets 5,073 4,599
Current assets 573 861
Whereof cash 155 403
Total assets 5,646 5,460
Equity 1,986 1,795
Total Interest bearing debt 2,430 2,194
Other Non-current liabilities 697 593
Other Current liabilities 533 877
Total Equity and Liabilities 5,646 5,460
Covenants
Book Equity > 1,000 MSEK OK OK
Book to Capital > 40% 45,0% 45,0%
KEY COMMENTS
• In compliance with covenants.
• Stronger USD positive impact on assets
and equity.
• Net equity increase in spite of net loss in
period.
Thank you